Even with the pandemic raging, Mesa had what might be called a “career year” for economic development.
That’s the theme of Mesa Economic Director William Jabjiniak’s annual report for the fiscal year that ended July 1.
“At the same time the pandemic was raging, the Office of Economic Development experienced a record pace for number of leads generated and active projects in our pipeline,” Jabjiniak crowed.
His annual report, released Monday, boasted of “record-setting growth,” noting “More than 2,600 jobs were created or announced by 46 different companies including Amazon, Comarch, ElectraMeccanica, Auer Precision, CMC Steel and Dexcom.
“Growth and expansion projects resulted in the creation and absorption of more than 3.7 million square feet of space and capital investment that exceeded $1.2 billion.”
Also on Monday, and perhaps not coincidentally, Mesa City Council approved a $4.3 million water and sewer project on Warner Road, a $6.2 million street to connect Ray to Warner roads and a $25 million “six-lane roadway” on Elliot Road.
Those three infrastructure projects total more than $35 million, though funding from the Maricopa Association of Governments covers about half of that.
But wait, there’s more – much, much more: Water projects totaling far in excess of $200 million are being floated, so to speak.
As the development report points out, Mesa is a growing city — and not just commercially. The city’s population grew from 439,995 a decade ago to 504,258 in last year’s U.S. Census count. In another five years, the population is expected to be north of 550,000.
The city handed out 5,687 permits to build homes in 2020.
More people plus more businesses equals more water needed.
The water projects were not approved, though City Council voted for a “notice of intention to increase rates” of its electric, water, natural gas, solid waste and wastewater utilities. The proposed increases range from around 2 to 5 percent.
Before rates are raised, citizens will have the chance to speak on the issue at a Dec. 8 meeting.
“We may not raise any rates,” Councilman Mark Freeman later noted. “But we have to inform the public” that a study is underway.
Discussion of the rate increase is scheduled for the Oct. 21 council meeting, with an introduction to utility rate ordinances scheduled for Nov. 15.
The action on rates kicked off at a Sept. 9 meeting of the Audit, Finance and Enterprise Committee, chaired by Freeman. During it, various city staff members presented a recommendation on proposed utility increases to massive projects.
According to meeting minutes, Freeman and Vice Mayor Jenn Duff exchanged differing views.
A key departure point was the city’s largest water users – notably data centers either operating, such as Apple, or building, like Facebook near Eastmark.
“Committeemember Duff indicated mega water users should have a greater share in the cost,” the minutes state.
“Chairman Freeman reported a lot of the large water users are bringing in their own water but using Mesa’s infrastructure to get the water to their facilities.”
In an interview, Freeman explained his reaction to Duff’s comments.
“My response was informative to the fact that when we ask mega water users, during negotiations we require them to bring additional water to their facilities,” Freeman said.
“That’s exactly what Facebook has done... they negotiated water rights that are long term. That water is delivered in conduits,” Freeman said. “This is one of the great things about mega water users: they do use a lot of water, but they bring their own water to the table. And they reuse it and reuse it.”
Some might say Apple, Facebook and other giants are driving the city to multi-million-dollar water treatment expansions while not paying their share of the infrastructure costs. Freeman sharply disagrees with that view.
“Nobody gets a free ride,” he said. “Facebook, for example, in meeting with them, they bring a large sustainable program to make sure the water they use has long term benefit, not only themselves but the community.
“Large companies get no incentive for reduced water rates,” he added.
But at a Sept. 23 study session, Duff said it was unfair that rates for residents go up, the more they use.
“On commercial users,” Duff said, “the more you use, you get a 40 percent discount. I’m uncomfortable with that.”
And she said of four mega users, “Facebook is the only one bringing water credits to the table. The others are not.”
Duff also questioned the city’s water policies at the committee meeting Sept. 9.
“In response to a question from Committeemember Duff regarding commercial water costs for mega water users, (Water Department employee Erik) Hansen explained a discounted rate is applied when commercial users reach the threshold of 6,000 kgals per month.
"He added the proposal is for a 6 percent increase and raising the threshold for that rate to 7,500 kgals per month,” the minutes state.
“In response to additional questions from Committeemember Duff, (City Manager Chris) Brady commented part of the pressure of getting the Signal Butte Water Treatment Plant completed is to deliver water to the new projects.”
The Signal Butte plant alone will cost around $100 million.
Water on the brain
Freeman knows more than a drop or two about water.
He is doubly elected, as the Mesa City Council representative of District 1, in the northeast part of the city, and as one of three District 9 representatives of the Salt River Project Association Council.
The council’s mission is to “amend bylaws relating to the governing bodies of SRP and also serve as liaisons to landowners.”
How are his two positions related?
“There’s no correlation between the two,” he said, “other than city Mesa and SRP have long-standing water agreements.”
Though hardly a “mega” user, Freeman is a pretty big customer of the Mesa Water Department: He’s an alfalfa farmer, working 50 acres in the city.
While Colorado River drought conditions are driving up Central Arizona Project (CAP) rates, what Freeman hears at SRP meetings confirms the Arizona water and electric company is in good shape, thanks to a hearty monsoon season.
However, the AccuWeather late last week reported, “Over 92 percent of the western U.S. remains in a drought, with extreme drought or worse conditions covering almost 59 percent of the region.”
Freeman said, “At SRP, they’re kind of bragging of the fact the amount of runoff from the last monsoon storms met capacity of what they were delivering. It kind of put us back to zero, filled up reservoirs. So it was a great thing.”
Even so, SRP rates are increasing, according to the presentation, though SRP is still far cheaper than CAP water, which is projected to increase dramatically.
As such, is Freeman concerned about Mesa luring so many huge water users here?
“I think that we’re always concerned about water usage in the state of Arizona. We live in a desert,” Freeman said. “Myself being a farmer, water conversation is one of the most important components.
“When they come into Mesa, (mega users) have a diversified water portfolio that does not impact our supply of water... they bring a lot of water to the table. They can even drill wells on their properties, which they’re doing.
“We don’t want to hinder our water supplies for the residents. These large users stay within their water budget... they’re just using our water infrastructure, pipelines and water treatment.”
Freeman noted that mega users indirectly pay for infrastructure, through the rates they pay.
As the rate increase presentation noted, “The debt service on utility revenue bonds is funded through the utility rates paid by customers. The city issues bonds on an as-needed basis in order to minimize the interest cost. Anticipated future debt service has been included in the forecast and rate recommendations.”