Technology giant Google is coming to Mesa, lured by a tax incentive agreement to build a massive data center in the emerging Elliot Road Technology Corridor.
In a major coup for the city, Google will join fellow tech heavyweight Apple, which already operates a large data center in the same area of southeast Mesa.
The Mesa City Council is primed to approve the Google development agreement at its meeting on Monday night.
“In terms of a financial deal, this is home run. This is a great day,’’ Mayor John Giles said, after the council discussed the deal Thursday morning during an hour-long executive session.
Giles said there are still elements of the project that need to be worked out – such as Google buying the property, 186 acres located at Elliot and Sossaman roads in southeast Mesa.
Giles said Google’s decision to build the data center in Mesa means that the Elliot Road Tech Corridor will be anchored at each end by one of the world’s largest tech companies, Apple and Google.
“There’s no city that would not be envious of that,’’ Giles said.
He said the project has been known to insiders by a code name, “Project Red Hawk,’’ for more than a year because Mesa signed a confidentiality agreement with Google.
Vice Mayor Mark Freeman said that Google would be buying the property from the Morrison family, long time East Valley farmers who have been selling off parts of their holdings for different types of developments, including the Morrison Ranch subdivision in southeast Gilbert.
Bill Jabjiniak, Mesa’s economic development director, played a major role in the negotiations. In a slideshow after the executive session, estimated the Google project will produce $156,567,507 in revenues for the city.
The slideshow said the property would produce $3,604 in property tax in 2019 as an agricultural use and $162,007 during a 25-year period if the use remains unchanged.
If the tax incentive plan takes effect, the projected revenue to the city in excise taxes is estimated at nearly $33 million during the same 25-year period, as opposed to nearly $49 million if Google were to build the data center without the tax incentive.
The city anticipates generating at least another $28.1 million in revenues from a combination of construction sales tax, electricity sales tax and property taxes, Jabiniak said.
“It’s an economic development tool approved by the Legislature. We have been very judicious about using this over the years,’’ Jabiniak said.
He said the incentive plan, called a “GPLET,’’ or Government Property Lease Excise Tax, would be in effect for 25 years if it is approved by the council.
A GBLET is calculated based upon the gross square footage of a building and is a viewed as an incentive that reduces a project’s operating costs, according to the Arizona Commerce Authority’s web site.
The financing tool, approved by the legislature in 2013, requires that the land be conveyed to a government entity and leased back for private use, the web site said.
Jabiniak said during his presentation that the data center would cover a staggering 750,000 square feet.
“Data centers are the engines of the internet,’’ Jabiniak said.
“We are talking about a $1 billion corporate investment.’’
He said Google would join Apple, ATT, and Boeing as top Fortune 50 corporations with operations in Mesa.
Google lists eight data centers, one in South America, four in Europe and two in Asia.
The agreement also requires Mesa to make available 1,120-acre feet of water to Google initially, and that the amount can eventually grow to 4,480-acre feet per year if Google reaches certain development milestones.
Jabiniak said data centers use the water for evaporative cooling. He said the availability of electricity from Salt River Project also was vital in Mesa’s efforts to recruit Google.
Google has up to five years to begin construction on data center and up to 10 years to finish building it, under the terms of the agreement, Jabiniak said.
“That could be as much as five years or it could be sooner,’’ Jabiniak said. “We were trying to give them some flexibility.’’