When pioneering Mormons crossed the Salt River to establish Mesa, one of their first acts was to clear ancient Hohokam canals and create lush farmland.
More than 130 years later, Mesa is asking whether the city should return to its roots and get into the business of farming.
The city’s interest isn’t so much in the crops as it is another type of green — money.
Mesa owns 11,600 acres of farmland sprinkled across Pinal County that it leases to farmers, at a profit of only $65,000 a year.
An agricultural consultant has told Mesa the land can generate more money, and a study is under way to outline how the city can go about it. Options include renegotiating lease terms, hiring a farming manager or putting the farms directly under city control.
Mesa plans to sell the land eventually but is holding out until the real estate market recovers. Councilman Alex Finter heads an audit committee that’s studying the land and said he was shocked when he learned the city made so little money.
“The first thing that came to my mind was, why do we have a nonperforming asset?” Finter said.
Chandler-based Scythe & Spade Co. has managed leases for the city and told Finter’s committee that Mesa could charge more but that city staff held the consultant back. Finter said he couldn’t understand why Mesa has done that. Finter said an audit committee meeting he held didn’t produce answers but at least it revealed the issue.
“That meeting was awkward and uncomfortable and it needed to be,” he said.
Mesa can make more money but it’s too early — and complex — to say just how much, said Monte Nevitt, farm manager and director of client services at Scythe & Spade. The city-owned land was assembled from multiple farms between Coolidge and Eloy and some areas are cheaper to farm than others. Each property is different because of soil types and the source and cost of water, Nevitt said.
The value of crops can shift dramatically, Nevitt said. Cotton is selling at high prices today, but the value could plummet if too many farmers try to cash in and inadvertently create a glut of the commodity.
To futher complicate matters, the nine current leases expire in December 2012. That means a study completed today could be outdated by the time the city would be ready to negotiate.
The most common crops grown on the land are cotton, alfalfa, barley and wheat.
Mesa wants to sell the land, but not at today’s low prices. The city plans to sell it over the next 20 years and use much of the proceeds to fund the $99 million Chicago Cubs training complex. Mesa doesn’t have an estimate of the land’s value, said Natalie Lewis, an assistant to the city manager.
“There’s not a number that I’ve heard,” Lewis said. “We’re just trying to sell it for the highest and best value and maximize our revenue.”
Mesa bought the land about 30 years ago for water rights but no longer needs the farms. A 2004 study estimated it would cost $90 million to build wells, a water treatment plant and a pipeline to get the water to Mesa. The city has secured other water rights, and changes in law could make it difficult to tap into the water.
Mesa should be able to make more than $65,000 a year on that land, said Jeff Silvertooth, an agronomist at the University of Arizona. He’s familiar with the land near Mesa’s farms and told the Tribune he’d take a closer look at the lease terms to boost revenue.
“The way the agricultural economy is going, I would think they would have as good a chance as any to maximize profits,” Silvertooth said.
He would hesitate to have Mesa take over farming operations because of the steep learning curve that would be required. Also, Silvertooth said most prisons or other government entities that once raised crops decided to leave farming to farmers.
“It’s like Dwight Eisenhower said: Farming is real easy when you’re a thousand miles away and your plow is a pencil,” Silvertooth said.
Silvertooth said Mesa should think twice about selling all its farms. Worldwide food prices are likely to soar, he said, as the world’s booming population continues replace farmland with cities. He noted that Beijing, with a population of 19.6 million, has farm plots scattered through the city to supply fresh, local produce.
“I go to international conferences and most of the nations around the world are thinking about that,” Silvertooth said. “I remember being in Beijing and being asked by people all over the world, ‘Why aren’t you thinking about it?’ ”
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