Mesa is taking steps to sell more than two acres of land at less than half of what taxpayers paid for it to accommodate a controversial city redevelopment project
City officials said the move is designed to eliminate urban blight, but critics are complaining that it is nothing more than a city-engineered real estate deal that helps some business owners at the expense of others.
Mesa has spent $1,333,070 acquiring eight parcels of land totaling 93,795 square feet at the northwest corner of Country Club Drive and Main Street.
The City Council votes Monday on whether to sell six of the parcels for $525,582 to Lou and David Moses, owners of Mesa Discount electronics store at 456 W. Main St., so they can expand their operation. The other two parcels were sold earlier this year for $96,169 to Palm Court Investments, the Moses brothers' development company.
The $711,319 difference between what Mesa paid for the land and what it's being sold for is a subsidy from the city's General Fund.
The move clears the way for the Moses brothers to begin the first phase of their expansion, which includes construction of a 14,610-square-foot retail building and a 10,000-square-foot warehouse near the northwest corner of Country Club Drive and Main Street, a prominent downtown Mesa intersection.
The action is part of Mesa's overall effort to redevelop 5.22 acres on the corner, a move city officials said will clean up a gateway entrance into downtown. Plans also call for construction of a hardware store. The City Council authorized the redevelopment project in November 2000.
Councilman Kyle Jones, who represents the area, declined comment when asked about the land sale Thursday.
Councilwoman Janie Thom said it is a waste of scarce tax dollars. She said she will vote no on the sale.
"This is taxpayer money," Thom said. "This is not money that comes out of thin air or manna from heaven. We need to sell this land for what we have in it."
The plan also is drawing the ire of Patrick Dennis and Randy Bailey — whose properties are targeted for condemnation under the plan. Both men are waging court battles to save their businesses.
The city is using eminent domain to seize Dennis' Maaco Auto Painting and Bodyworks, 434 W. Main St., and Bailey's Brake Service, 18 N. Country Club Drive. Under eminent domain law, cities can force the acquisition of private property for a greater public need if the property owners are justly compensated. Critics, however, have questioned whether the redevelopment project qualifies as a significant public need. The business owners also have said the city's compensation offer is not enough to keep them operating elsewhere.
If the city is successful, Ken Lenhart will build a hardware store on Bailey's property. Dennis' business will be demolished and the land turned over to the Moses brothers for the second phase of their expansion. Both businesses expect to make significant investments in their new locations.
Mesa has offered to pay about $600,000 for Dennis' property. Dennis rejected the offer because he said he needs at least $1.6 million to $1.8 million to re-establish the business elsewhere.
Dennis said he is upset that Mesa is subsidizing the Moses brothers' expansion but won't offer what he needs to move.
"Why can't Randy Bailey and I get the same sweetheart deal they are?" Dennis said.
City redevelopment director Greg Marek defended the project, saying this type of public-private investment is common around the country. He said the city will recoup its investment over a number of years in sales tax revenue and city utility fees from the hardware and electronics stores. He also pointed out that the deal includes a nearly $9 million investment from the public sector.
Craig Crocker of Mesa's real estate services office said it isn't fair to compare what Mesa spent on the property and what it's charging the Moses brothers because the city's price included seven homes and a commercial building. The structures have since been demolished.
The Moses brothers didn't return calls Thursday seeking comment.
Meanwhile, Thom and Councilman Rex Griswold said they are upset that city staff members understated by nearly $126,000 what the city paid for the land being sold to the Moses brothers. The erroneous figure was listed on a report given to council members.
The Tribune discovered the error while analyzing cost figures. Crocker said it was an honest mistake and the error is being corrected in a new council report.
It's the second time this year that city leaders have complained about not receiving accurate cost figures from staff members. Mayor Keno Hawker and other council members expressed anger last month at a project to buy and relocate two downtown houses to make room for the new city arts center. That cost city taxpayers more than $600,000. The council members said they weren't aware of the full costs until it was too late.