New Mesa Apple Facility

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Apple has announced it will build a new “command center” in Mesa at the site of a previously planned sapphire glass plant that would have created more jobs. Former Mesa city councilman Scott Somers and economist Elliott D. Pollack of Elliott D. Pollack and Company will discuss the plant.

Ted Simons: Coming up next on "Arizona Horizon," we will take a closer look at the new apple data center in Mesa. And we will see how drone technology is raising concerns over privacy issues. Those stories next on "Arizona Horizon."

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Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. A new Apple command center in Mesa was touted as a plus for Arizona by Governor Doug Ducey and others at a press conference Monday.

Doug Ducey: A 3 million square foot facility in Mesa, Arizona. It means 300 to 500 construction and trade jobs, and 150 permanent Apple jobs. It means an investment in clean energy with projects that will eventually produce enough solar energy to power 15,000 homes. In all it means a $2 billion investment with a 30-year commitment to the state of Arizona.

Ted Simons: But there are some concerns amid the celebrations over the new high-tech facilities. Joining us tonight is former Mesa city councilman Scott Somers and economist Elliott Pollack of Elliot D Pollack and Company . Good to have you both here. This is - what exactly Apple doing with this site?

Scott Somers: Well, Apple intends to use this site largely for a data center. We have seen several data centers be built in the Phoenix metro area. I think E-bay built one not too long ago, employs about 20 people.

Ted Simons: And so it's basically the global command center. It's a data storage facility, isn't it?

Scott Somers: It's a data storage facility. So every time you down load something on itunes or you upload something on your cell phone, it has to go somewhere. So this would be one of many facilities where it would be stored.

Ted Simons: Cloud storage, that kind of thing.

Elliott Pollack: That's exactly what it is, cloud storage.

Ted Simons: Companies can also store data but they can run offsite software and this sort of thing there as well?

Elliott Pollack: Yes.

Ted Simons: So 150 full-time jobs, 500 temporary jobs, three to five hundred temporary construction jobs, is this a good thing for Arizona?

Elliott Pollack: Well, the thing is that there's good and bad. The good news is from an economic development stand point, it's a real victory. It's something we can use marketing-wise, attracting Apple is a big deal. Attracting Apple based on things related to the economic development package of the past few years ago was a big deal. The fact that it shouldn't cost the state money to get them here. And it use as facility that would have been nice to have full, but essentially has been vacant. It's a big deal. And there's a multiplier effect, that 150 jobs really means about 325 jobs. The 300 construction jobs really means about 600 jobs. So in total it means about 1100 jobs over the next few years. And the jobs, the 150 jobs are high-wage jobs so it's got positives from my standpoint.

Ted Simons: And yet those 150 jobs, the previous plan was for 700 some-odd jobs. What happened to that previous plan?

Scott Somers: That's a good question. We have taken a look at this area for a long time. We established a vision for it to create 100,000 high-wage jobs in the area and we buy that is certainly, we can accomplish that. So this 150 jobs, that's good. They meet the objective of that. Also having a data center meets the objective of the Elliott road technology corridor that we put together in the fourth quarter last year. Hanging the Apple brand as one of the first businesses to locate on that corridor is fantastic. There's a victory there. But it's 150 jobs, not 727 jobs. In addition the data center just really doesn't have the expansion capabilities necessarily that Apple or GT technologies. There had been talk of expansion to 4,000 jobs over time if that had been a successful program.

Elliott Pollack: Unfortunately, it hadn't been a successful program. For solar it would have created more jobs but it never happened. The glass company would have created a lot more jobs but it never happened. So we had an empty plant sitting there. We were talking before, it might have maybe you could have mothballed it and see what else you attracted but this was a bird in the hand and it was a very attractive bird in the hand from an economic development standpoint.

Ted Simons: But is the bird in the hand going to be a problem in the future in the sense of this maybe -- you tell me. Is this the best use for this kind of a facility?

Elliott Pollack: We don't know what the use might have been. That's the problem. So it's a bird in the hand versus two in the bush and given the economic situation of the present time I think the idea was, we better get some jobs in here. The place needs to grow more. We need some high-quality jobs. This meets the criteria. I will agree with Scott. It would have been nicer if there were more jobs but there weren't.

Ted Simons: There weren't but could there have been? In other words, could they have been a more patient, could they have waited around a little longer?

Scott Somers: That's what you wonder. When first solar went under, there was no Apple on the horizon for this facility. But what we have is 1.3 million square feet of brand-new manufacturing, ready to move in facility. Has power right across the street. Has dark fiber, sewer, streets, access to freeways. We don't have that kind of facility in Mesa for that fact, really don't have a lot of that type of space in Arizona. I think the possibility, it could have been quickly filled with a manufacturing facility. We did it once before, possibly we could have done it again. But it might have been mothballed. You don't know.

Elliott Pollack: That's the thing. Bird in the hand versus two in the bush. I agree with Scott. It would have been great. This is a huge facility. It's up to date. It's got everything that's needed for some type of high-tech manufacturing. But apparently nothing rolled in of the decision that the people in Mesa and the politicians have to make is, do we take what we can get? Especially when it will help us economic development-twise in terms of recruiting other companies because Apple is a big deal at least in the name? Or do we just say? You know what? We're going to hold out. And an expansion, having ready move-in space is a big deal.

Ted Simons: Is there a psychological boost for an area, just basically saying someone wants us?

Elliott Pollack: Well, it's not only that someone wants us. It's a big name that wants us. And it's a big name that you can try to market. Well, Apple moved here and here's why and here's what our economic development package did and here's what the tax situation is. And the economic development people should be able to make hay out of this.

Ted Simons: Please.

Scott Somers: And absolutely. When you hang Apple in any area that says that you are open for business and particularly for tech businesses. But Apple has said a lot of great things about Mesa and the state of Arizona when they did the first deal. And now, I think another benefit to this is, you have a new administration just came into office in January, and they got a deal done in 48 hours. And I think the early sign for that is that you have a Governor that's interested in economic development making deals, making sure that they work and moving forward quickly on economic development.

Elliott Pollack: That's a big deal. Because I think our present Governor, unlike any other Governor in the 50 years I have been a resident of Arizona, is all about business. He knows how business works. He knows what they think. He knows how to motivate them. He knows what they are looking for. And if he thinks it's a big deal, I'm willing to go along with that.

Ted Simons: But are data centers, are they magnets for other -- Apple is a magnet. I can see that. But a data center, we have seen these pop up around the country and they're just basically storing stuff. These are glorified storage facilities.

Elliott Pollack: Is it the -- could the facility have had more jobs in it? Certainly the glass experience said if you had a company that was successful it could. Certainly 10,000 square feet per employee which is what they have seems like, you know, let's get serious. And so I think it was really a tough decision. But it was there. It was Super Bowl weekend. There are a lot of executives around. And to show that we can attract something like from an economic development estimate, it was a great victory. We will never know what else could have been there. But I will agree that to have user ready space of any type whether it's office, whether it's industrial, whether it's manufacturing plant, in an expansion, when the economy is expanding is a positive. People like to move in right away.

Scott Somers: I believe data centers absolutely are appropriate to the mix in Arizona in general, but certainly in this technology corridor. But we have to think beyond data centers. Because you mentioned one job for every 10,000 square feet of floor space. If you calculate that up roughly in my head I would have to put 32 thousand square miles under roof in order to have 100,000 high-wage jobs in this area. The whole areas only 54 square miles. That's unrealistic. But certainly my concern with this particular deal is it's the one building, the one building that we had that could house manufacturing.

Ted Simons: With that in mind are we going to see more buildings perhaps built slightly on spec? I don't know if you can build something like that on spec but are you going to see folks coming in and building on spec, knowing that, well, they might just turn it into a data center?

Elliott Pollack: You don't build a building like this on spec.

Ted Simons: Or something like this. Something in the general territory. Will a spec building take a hit?

Elliott Pollack: A million 3 spec building? Not a chance.
Ted Simons: But other spec buildings?

Elliott Pollack: But that doesn't mean companies don't come in and build buildings like it that house more employees. Don't confuse this with call centers where people are making just above minimum wage. These are clearly high-wage jobs which means the multiplier effect is greater than would be if they weren't high-wage jobs.

Ted Simons: Foreign trade zone applies here apparently. The energy tax breaks, looks like energy tax breaks will apply because it's 100% renewable. Is it worth that?

Scott Somers: Well, that's going to be the question. As they finalize what the incentives are for this. I think we can get some investment in solar and renewable energies. Those are going to be worth it. The foreign trade zone does give me concern. It's really developed to help manufacturers and merchandisers who do international trade. I think it's a stretch to say this does any type of significant international trade. We only have 2,000 or so acres in Mesa to utilize, 50 are being utilized here. So I am concerned about that. Work force development has been discussed. For a community of 4 million people, with ASU, eVIT is up the road, MCC is up the road, you have a lot of solid work force.

Elliott Pollack: I think it will be a long, long, long, long, long time until Mesa runs out of developable industrial land. They were very thoughtful and have a very large base, industrial base to build upon so to me that's not the issue as much as, do you take the bird in the hand versus two in the bush? I just think they want to get something started. Clearly, the glass plant would have created more jobs except for one little thing. The glass plant went bankrupt.

Ted Simons: Alright gentlemen. We have to stop right there. Thank you so much. Good to have you both here.

Scott Somers:Former Councilman, Mesa; Elliott D. Pollack:Economist, Elliott D. Pollack and Company;

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