Mesa Calls $14M Incentive for Auto Mall a Good Deal

Article originally posted on HERE on April 24, 2024


Looking to increase tax revenue from car sales, Mesa  is getting ready to sign off on a $14 million tax incentive for Berge Auto Group.

City Council last week approved a notice of intent to enter into a retail development tax incentive with Berge to construct a 127-acre mixed-use development called Destination Gateway north of Signal Butte Road at State Route 24.

The project is separate from the 88-acre Gateway Auto Mall by Horne Auto Group on the other side of SR 24, which was approved by the Planning and Zoning Board last month.

By state law, retail tax incentive agreements must appear on two council agendas.

The new tax incentive and development agreement with Berge is an expansion of a $6 million incentive approved in 2020 for the same location. 

Since then, the company has added over 30 acres to the site, which will host car dealerships, retail and multifamily housing on up to 40% of the project. 

The tax incentive works by reimbursing Berge for public improvements completed and deeded to the city by 2028.

“They’re only eligible for reimbursement on the frontage of basically where the auto mall will be. It won’t be for any of the other additional commercial or residential that’s coming,” Economic Development Project Manager Nick Juszczak said.

City staff told council members in a study session this month that Berge needed the larger tax rebate because the expanded site requires more infrastructure. 

Construction costs have also gone up since 2020.

Councilman Mark Freeman asked City Manager Chris Brady to sell the public on the agreement.

“When people hear the word ‘incentives,’ they get all wigged out,” Freeman said. “It’s important that you define what these incentives are and how they’re applied and that the city will own the infrastructure at the end of the day.”