Mesa, Ariz., Voters Approve Tax Subsidy for Entertainment Resort

DALLAS - Mesa, Ariz., the Phoenix suburb that rejected the Arizona Cardinals' stadium, voted in surprisingly strong numbers to provide a $51 million tax subsidy for a Gaylord Entertainment resort.

The proposed $1 billion resort won 84% of the votes cast in Mesa's Tuesday elections.

Promoters urged approval of the tax incentive as a job creation and economic revival measure in a state hard hit by the housing crisis and a downturn in tourism.

Bennett D. Westbrook, Gaylord's senior vice president of development, design and construction, said the Nashville-based operator of four resorts in the U.S. would be "watching the capital markets and the economy closely and come up with a specific time line and schedule after we do our analysis and get a better handle of how to proceed."

Standard & Poor's lowered its issuer-level corporate rating on Gaylord Entertainment to B-minus from B-plus on Feb. 10, noting the possibility of a prolonged downturn in travel and tourism.

Under the plan approved by voters Tuesday, Mesa would exempt the 1,500-room hotel from the city's bed tax, equaling a subsidy of $51 million.

The resort would be built on land owned by DMB Associates of Scottsdale near the Phoenix-Mesa Gateway Airport. DMB says the development would bring Mesa more than $800 million in net new revenue over 50 years, adding $555 million in sales tax revenue and 4,000 jobs.

Mesa, Phoenix's largest suburb, saw its Standard & Poor's rating raised one notch from AA-minus to AA in May 2008. The city's general obligation debt is rated A1 by Moody's Investors Service, with no underlying rating from Fitch Ratings.

Located in the East Valley area of Phoenix, Mesa is known as being extremely fiscally conservative. Voters in 1999 turned down a $1.8 billion plan to build a stadium for the Arizona Cardinals that later went to Glendale in the West Valley. After rejecting the stadium, Mesans approved tax subsidies for a mall known as Riverview that has proved disappointing while Glendale has turned the stadium site into a major sports and retailing hub.

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