Nearly two years after a split Mesa City Council approved the Arizona State University@mesacitycenter project, the innovative building continues to generate controversy.
Councilman Jeremy Whittaker has been consistent in voting against each authorization of funds to pay for the $73. 5 million building, dedicated to movie studios and innovative technology. ASU is contributing $10 million of that price tag.
The building is under construction behind a fence on a site at Center and First Street, between Mesa City Hall and council chambers.
Whittaker again attacked the project last week, based upon its reliance on the Enterprise Fund, which mostly includes profits from city utilities.
“I won’t support any of these projects that continue to drain our utilities,’’ Whittaker said. “As long as the voters voted against this building, I will vote against this building.’’
Whittaker’s criticism, though not unexpected, touched off an effort by city officials to explain the project’s financing, which has evolved since Council approves it by a 5-2 vote in June 2018.
Council members Jen Duff, Dave Luna, Vice Mayor Mark Freeman and Mayor John Giles all reiterated their support in one way or another while Councilman Kevin Thompson, who voted against it initially in deference to his constituents, voted for the latest authorization.
The 6-1 council vote approves a $48.8 million payment to DPR Construction, representing the remaining funds needed to complete the project after the council initially approved a $16.9 million payment. The building is scheduled for completion in fall 2021.
“The ASU project is going to be transformative for our downtown area. I am definitely in support of this project,’’ Luna said.
The original project envisioned for ASU was a much larger campus with financing through a sales tax increase that would have also funded hiring more police officers and firefighters.
After Mesa voters rejected that proposal, Giles, a staunch advocate of education and downtown redevelopment, came up with another plan to finance a smaller project through excise bonds backed by the Enterprise Fund.
But City Manager Chris Brady and Budget Director Candace Cannistraro described somewhat different financing as the project moves ahead.
Brady adamantly assured Whittaker that no additional funds for the building will come from the Enterprise Fund.
Brady said revenues from land sales in Pinal County and elsewhere, along with development fees such as construction sales taxes and building permit revenues generated by The Grove and The Grid redevelopment projects, will be applied to paying for the ASU building.
“It’s not just the building itself, it’s the economic activity being leveraged downtown,’’ he said. “They have indicated that the reason they are here is because of the ASU building.’’
Cannistraro, who frequently is questioned by Whittaker, said the building’s initial $9 million in revenues came through payments from the Enterprise Fund to the Economic Investment Fund.
She said all additional payments, including the debt service, are coming from the General Fund.
“We are doing many land sales that offset that,’’ Cannistraro said.
Brady said the land sales and development-related revenues will go toward the principal before the city issues the excise bonds, but for a lower amount than originally planned.
Brady noted that the utility revenues associated with ASU, and other development related to the university, is projected at more than $4 million while the overall economic impact is projected at nearly $10 million.
While voters rejected the sales tax, Giles said, they did not necessarily reject the idea of bringing ASU to downtown Mesa.
“The silver lining in all of this financial disruption is that municipal bond rates went dramatically down,’’ Giles said, noting that his support was based on avoiding a sales tax or a water rate increase.
Cannistraro said the city now anticipates that the debt service on the ASU bonds will drop from about $5 million a year to $3.3 million, but the exact number will not be known until the bond sale is completed.
“I think what we are doing is very consistent with the will of the voters,’’ Giles said. “The money for this is going to come from the economic activity generated many times over.’’