Mesa voters will decide whether to allow the city to raise hotel taxes and use other funds to build a new facility for the Chicago Cubs. Mark Killian, former lawmaker and head of the Department of Revenue, and Bob Kammrath of the Mesa Taxpayer’s Alliance will debate Proposition 420, which will be on the ballot in Mesa this November.
Ted Simons: On November 2nd, Mesa voters will decide on a ballot proposition that allows the city to spend money for a new Chicago Cubs Spring Training Facility. Earlier today the issue was debated with Former State Lawmaker Mark Killian in support of Prop 420, and speaking against the measure, Bob Kammrath of the Mesa Taxpayers alliance.
Ted Simons: Thank you so much for joining us tonight.
Mark Killian: Glad to be here.
Ted Simons: Mark, why should Mesa voters go for this?
Mark Killian: That's a great question. That is the question that everybody is talking about in Mesa. To me, the basic reason they need to vote for this is that we have a sure thing in the Cubs. Cubs have been in Mesa for 50 years. It's been a part of our economy, the Cubs Spring Training Program has provided many jobs and opportunities, it's infused millions of dollars into our economy, and it's not like we're going out and trying to get a new business to come to town. The whole deal makes sense. Economically, fiscally for the city, and to lose the Cubs and look at the economic impact it would have on our community right now would be devastating.
Ted Simons: Bob, why not? Why should the state not -- the city not go for this?
Bob Kammrath: Thanks for inviting me. Our position is basically that this does not make financial sense. The reason for it is that the cost to Mesa residents has quadrupled over the past six months. Going back to the inceptions of this project, the cost to Mesa residents was estimated to be $25 million, with the State of Arizona contributing a large portion of the rest of the money for this project. Since then, the State of Arizona for a number of reasons didn't get their act together on this project, and the City of Mesa has stepped up and said, we'll take over the entire public funding of the project. The last estimate that has been given by city officials is $99 million, including infrastructure. That of course if the money needs to be borrowed, would have to be upped with financing costs. So our position is that it's a much different transaction today than it was six months ago, and it's very difficult to justify a 400% increase in almost any project.
Ted Simons: Talk about that.
Mark Killian: Well, you know, what I can't understand, what I can't justify is losing the Cubs. And the economic impact it would have on Mesa. First of all, one of the things Mesa has benefited from over the years are all of our small businesses that are dependent on the tourism revenue that comes from that. We would lose that. We would also lose many hundreds if not thousands of homes. A lot of the Cub fans come and buy homes in Mesa. If the Cubs go to Florida, they're going to sell those houses and leave, which is going to impact already devastated real estate economy in Mesa. But the bottom line is, you're taking a nonperforming asset that the City of Mesa has, you're selling that and taking that money and putting it in a performing asset. That will generate revenue and taxes for the city. To me that makes a lot of sense.
Ted Simons: There doesn't seem to be a lot of question marks regarding the Cubs' impact on Mesa, and the valley in general. Shouldn't that be factored into the numbers, whether they're 25, 84, 99, whatever the final number is?
Bob Kammrath: I think Mark made a good point by saying if you look beyond the economics, you get into an image. You get into an image issue, and it's really hard to put numbers on to that. But there again, I think my point is basically that 99 million plus financing is a lot different than 25 million. And whether we sell nonproductive assets, which is perhaps a good idea, nevertheless, those assets were purchased with taxpayers' money.
Ted Simons: It's different, it changed. Is it still worth it? It -- just because it changes, does that mean it's not worth it?
Bob Kammrath: I'm not saying it's not worth it to the state as a whole, and all of the studies that were done and paid for by the City of Mesa, it envisioned the state of Arizona being involved in this project, and therefore, the numbers such as economic activity of $138 million annually, is statewide. Unfortunately, we can't control where the fans are going to spend their money.
Ted Simons: Well, that's an interesting point. The idea that Mesa is taking on too much of this on its own, how do you respond to that?
Mark Killian: Well, you know, if we had some leadership in the legislature, maybe we wouldn't have to worry about that. And there's a point at which the city has to say, we have to protect our interests. And the bottom line is, even in today's real estate market, if you could get an 8% return on your money, you would think that's a wonderful thing. I think you can get that at least at a minimum. Even if a third to 40% of that money that $138 million was spent in Mesa, you're getting a return on that 90 million. But again, remember, that money that's tied up in Pinal County in that water farm is not generating the city anything right now. Other than paying property taxes.
Ted Simons: But critics will say there might be better uses for that money than a Cubs' Spring Training Facility.
Mark Killian: And I would say, you know, could you make that argument on everything. Could you have made that argument about the city putting money into McDonald Douglas. That turned out to be a bonanza for the City of Mesa. The city has a tradition, and a history, because the city helped the Cubs when they first came. Helped them again, and again. And it's been a win for the city.
Ted Simons: Infrastructure is already in place, Cubs are already in place, a lot of history, a lot of tradition, people moving here, tourism, the whole nine yards. Voting no puts all of that in the rear view mirror apparently because it sound as though the Cubs are working with Florida, we can debate on whether that's serious or not. But something is going on there. Do you chance it?
Bob Kammrath: Well, I think there again, from our perspective, it's an economic issue. And there are lots of private enterprises, as Mark pointed out, that contribute to the economy of both Mesa and the state. So certainly the largest employer in the State of Arizona is Wal-Mart stores. And if we lost all the Wal-Mart stores, that would be a crisis. However, you have to draw the line somewhere and say, what will we do to facilitate these people coming in? And I think on this particular project, there's a certain line. There's sort of a line in the sand where certainly they're a major contributor, but on the other hand, if you go up to where we are today, that has crossed that line. And so certainly there again, we don't want to lose contributors like Wal-Mart and Costco, or any other major employer or retailer, but we don't build their stores.
Ted Simons: As far as retail is concerned, there's some concern regarding this site, you've got River View close by, Tempe marketplace, the cubs want to build Wrigleyville that has retail element there as well. Does that make sense?
Mark Killian: Absolutely. You see retail establishments congregating together. I don't see that as a problem. And again, if the bottom line is if you're trying to build economic development for the east valley for Mesa in particular, this makes a lot of sense. You want to talk about drawing the line? Let's lose 1600 jobs right now. Let's lose the Cubs to Florida right now. And the ripple effect in our economy. We can't afford that right now. This is a great deal. And the reason it's a great deal is because other cities should have done what Mesa has done by taking underperforming assets, not raising new taxes, not going out and creating new taxes to fund a stadium, but using an underperforming asset, converting it, and using it to generate revenue for the city. It's a win for all of us.
Ted Simons: Last question to you -- critics will say the publicly financed stadiums rarely, if ever pay for themselves. You say --
Mark Killian: I'm saying this project will pay for itself. It's a track record, and if we can do it for McDonald Douglas, we can do it for the Cubs.
Ted Simons: OK. Last question for you -- is Mesa a better place without the Cubs, without this deal?
Bob Kammrath: No. Mesa isn't a better place any more than Glendale would be a better place without the White Sox and the Dodgers. But Glendale is horribly in the hole on their project to the tune of $435 million according to the last report.
>> But the fact is, this is the deal. This is what's on the table. This is the vote yes, vote no. If you're saying vote no, you're saying losing the Cubs.
Bob Kammrath: I don't think that's necessarily true, Ted. I think what we're saying is, this deal has sort of gotten to the point it's at today because it's been rushed. By a number of factors that have been out of the control of any of the parties involved. We're saying, let's sit back and reanalyze this and bring some other people in here and do the deal.
Ted Simons: OK. Good point. Last question, can you do that? Has it been rushed?
Mark Killian: I don't think it's been rushed. I think the circumstances are as that we know Florida is trying to steal our teams. And we've got to do the best deal we can, and this deal makes sense. It really does. It's unique, it's different than it's ever been done before, and actually, I think it's a model that other cities ought to follow.
Ted Simons: All right. Great discussion. Gentlemen, thank you so much for joining us.
Mark Killian: Thank you.
Bob Kammrath: Good night.
Mark Killian:Former lawmaker and head of the Department of Revenue;Bob Kammrath:Mesa Taxpayer's Alliance;