April 21, 2005
Both sides in the Riverview at Dobson debate claimed victory Wednesday with their interpretation of Ernst and Young’s rebuttal to a "No on Riverview" economic analysis.
Ernst and Young, which was paid about $58,000 by Mesa, dismissed conclusions made by retired Arizona State University economics professor Tim Hogan that Riverview would create far less in sales tax revenue for the city than projected in the accounting firm’s initial report.
The five-page letter sent to the city this week notes several errors in Hogan’s analysis on the topics of adjustments to Wal-Mart’s sales figures, retail sales growth rates, declining sales at older centers and adjustments for a second sports stores in the area.
Ernst and Young states its Riverview market analysis is an "impartial third-party report" created to assist Mesa in making decisions.
The Riverview developers are using the firm’s projection that Riverview will create $170 million in new sales tax revenue over 30 years.
Hogan, who was paid $5,000 by the "No" campaign, countered that the figure is between $21 million and $56 million.
"This analysis today clearly points out the enormous flaws in Mr. Hogan’s report, which can be anticipated when funded by a campaign," said Doug Cole, "Yes on Riverview" campaign spokesman. "This was paid by Tempe Marketplace interests, and it fully ignored the effect of Tempe Marketplace."
But "No on Riverview" campaign spokesman Jason Rose points to admissions in the Ernst and Young response that the company never factored in the net sales tax gains for the city and that Fiesta Mall, although remaining viable, will be competing for regional sales dollars with Riverview.
"It doesn’t surprise me that people who got caught with their pants down would now be trying to pull them up in an effort to somehow justify the largest retail tax subsidy in Arizona history," Rose said.
The Ernst and Young letter states that the firm "was not asked to provide an estimate of net new sales dollars to Mesa."
Ernst and Young report author Steve Klett could not be reached for comment Wednesday.
The cost of the Ernst and Young analysis has been reported at $25,000.
City Manager Mike Hutchinson said last week the actual expense paid by Mesa is $58,162, an increase due to changes requested by the city.
The election on the Riverview retail center and its incentive package is May 17.