SBA 504 Car Wash Feasibility Study Case Study: Resizing an Express Tunnel in a Saturated Mesa, Arizona Market

A 150-foot express tunnel proposed for an arterial corner in east Mesa, tested against seven established express platforms, the 2027 to 2028 Colorado River cuts and Mesa's 600-foot clustering rule. As submitted, the $8,231,000 program covers its debt 0.83 times at stabilization and cannot be entitled at the corner. Resized to a 110-foot tunnel on a 1.0-acre mid-block pad with an 80 percent reclaim design, the $5,586,300 project reaches 1.01x in Year 2 and 1.38x in Year 3. Written determination: feasible as resized.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 1, 2026

MMCG concludes that the express tunnel car wash as submitted, a 150-foot tunnel on a 1.6-acre arterial corner in east Mesa with a total project cost of $8,231,000, is not feasible as proposed. Two findings decide it. First, under MMCG's demand case for a trade area served by at least seven established express platforms, the submitted program covers its debt service 0.83 times in Year 3 and 0.94 times in Year 5; the sponsor's 1.85x rests on 4,500 members and flat retail volume that the market does not support. Second, Mesa limits automobile-related uses, including car washes, to two within 600 feet of an intersection of arterial streets, and the submitted corner already holds two. The project is feasible as resized: a 110-foot express tunnel on a 1.0-acre mid-block pad on the same arterial, outside the 600-foot radius, with a reclaim system designed to recycle 80 percent of wash water, at a total project cost of $5,586,300. The resized project reaches 1.01x coverage in Year 2, 1.38x at stabilization in Year 3 and 1.56x in Year 5, funded through the Year 1 shortfall by a financial reserve of $363,000. The determination is conditioned on a pre-application meeting confirming the use permit path for the resized pad, a Mesa will-serve letter for water and sewer, and executed land control at or below the land basis used here.

This is an MMCG model study: a complete feasibility analysis performed on a model site in a real market using public data, prepared to show lenders and sponsors how MMCG tests a proposal in a saturated market and what resizing looks like in practice. The subject is a composite. The trade area, supply, water regime, zoning rules, wage floor and capital market inputs come from the public record for east Mesa and the Phoenix-Mesa-Chandler metropolitan area; the specific corner, the mid-block pad, the sponsor's pro forma and the land prices are modeled and labeled as such. MMCG has no relationship with any landowner, operator or sponsor in the trade area. Items that could not be verified at the study date are disclosed in the Conditions and Limitations section.

The sponsor proposed a 150-foot express exterior tunnel in a 5,400 SF building on a 1.6-acre hard corner at an arterial intersection in east Mesa, priced at $1.5 million per acre for land of $2,400,000. The sponsor's pro forma projected 2,000 members in Year 1 rising to 4,500 by Year 3 at a blended $28.00 per month escalating 3 percent per year, with retail volume flat at 36,000 washes a year, producing Year 3 revenue of $2,119,678 and coverage of 1.85x.

MMCG rebuilt the demand case from the trade area. With Quick Quack, Super Star, Cobblestone, DASH, Raceway, Jackson's and Clean Freak all operating or developing express tunnels in the East Valley, a new entrant takes membership share rather than finding unserved demand. MMCG's case for the corner holds 3,100 members by Year 3 at a blended price that starts at $26.00 and escalates 2 percent per year, because published plans in the trade area start near $23, and it reduces retail volume each year in line with the industry's 2026 retail decline.

The submitted program's cost basis, not the market, is what the trade area cannot carry: land of $2,445,000 including closing, hard cost of $3,050,000, equipment of $1,560,000, a financial reserve of $921,000, lender fees of $145,000 and pre-opening costs of $110,000. At MMCG demand the program never reaches 1.0x within five years.

The Project will operate as a 110-foot express exterior tunnel car wash under an unlimited monthly membership model on a 1.0-acre mid-block pad fronting an east Mesa arterial, located outside the 600-foot radius of the nearest arterial intersection so that it falls outside Mesa's limit of two automobile-related uses at each intersection. The physical program comprises a 3,900 SF masonry tunnel building housing a 110-foot conveyor with friction and high-pressure wash, a protectant arch and a high-velocity drying package, a mechanical and chemical room and a staff office, served by two automated pay lanes with license plate recognition including a dedicated member lane, stacking for approximately 22 vehicles, 16 free vacuum stalls under shade canopy, and a reclaim system designed to recycle 80 percent of wash and rinse water, above the 50 percent minimum in the Arizona Department of Water Resources model ordinance for new commercial car washes. The wash will operate seven days a week from 7:00 a.m. to 8:00 p.m., with summer hours shifted earlier, staffed by a general manager and four full-time-equivalent attendants. The borrower will hold the real estate in a passive company leasing to the affiliated operating company. The Project is positioned as a high-throughput member wash on the arterial's commuter flow, with a plan ladder of $21.99, $26.99, $31.99 and $36.99 per month inside the price range of the national express brands operating in the East Valley.

Marketing and Sales Strategy

The launch is anchored on a grand opening with free top-package washes for app registrants and a first-month member price, converted at the pay station through license plate recognition. Because the trade area's drivers already hold memberships elsewhere, acquisition targets switching: a price-match offer for the first three months for members who show an active plan at another express brand, family plans that add vehicles at a discount, and geofenced mobile advertising within three miles. Business outreach targets fleet accounts for home service, landscaping and pool service companies, which run large truck fleets in the East Valley. Retention is managed through card-failure recovery, pause options during summer travel months and plan upgrades at the pay station.

Amenities

The East Valley is one of the most heavily supplied express car wash markets in the country. Quick Quack's own Arizona location list shows 21 sites, seven of them in the East Valley. Super Star reported 41 locations across the Phoenix metropolitan area in 2023 and now operates approximately 117 locations across four states, and its members have unlimited access to more than 110 of them. Cobblestone reports more than 80 locations across Phoenix, Scottsdale, Tempe, Mesa, Chandler and Denver. DASH, formerly Rinse N Ride, has been opening or rebranding more than a dozen Phoenix-area locations, Jackson's operates 12 locations, and Circle K has pursued Clean Freak tunnels in Mesa. Trade press has described Phoenix as having more than 100 express locations, with competing tunnels operating within blocks of each other.

MMCG identified the following express competitors on the corridors serving the subject. Membership pricing for individual locations was not displayed on the operators' location pages at the study date.

Competitor Number 1 Quick Quack Car Wash, Signal Butte Road This express exterior tunnel is located at 1310 S Signal Butte Road, Mesa, AZ. It operates the brand's Unlimited Wash Club; aggregator listings place the brand's plans between $22.99 and $37.99 per month.

Competitor Number 2 Quick Quack Car Wash, Power Road This express exterior tunnel is located at 5621 S Power Road, Mesa, AZ, under the same plan structure as Competitor Number 1.

Competitor Number 3 Quick Quack Car Wash, McKellips Road This express exterior tunnel is located at 2844 E McKellips Road, Mesa, AZ, under the same plan structure as Competitor Number 1.

Competitor Number 4 Super Star Car Wash, Ellsworth Road This express exterior tunnel is located at 7252 S Ellsworth Road, Mesa, AZ, on the operator's own location list. Members have unlimited access across the network.

Competitor Number 5 Super Star Car Wash, Crismon Road This express exterior tunnel is located at 1245 S Crismon Road, Mesa, AZ, on the operator's own location list.

Competitor Number 6 Raceway Car Wash, Gilbert Road This express exterior tunnel operates on Gilbert Road in Mesa, on the operator's own location page.

Cobblestone operates two Mesa locations and DASH operates locations on Country Club Drive in Mesa and Val Vista Drive in Gilbert; those sites lie outside the subject's immediate corridor. With at least six express tunnels on the corridors serving the subject and network-wide memberships at the two largest operators, the trade area offers switching demand rather than unserved demand, and the membership ramp is set accordingly.

Water is the defining constraint on new car washes in the Phoenix market, and the study treats it as an operating and design risk rather than a bar to development. In June 2023 the Arizona Department of Water Resources found unmet groundwater demand over 100 years in the Phoenix Active Management Area and stopped approving new assured water supply determinations based on groundwater; a 2024 model update reduced the 100-year unmet demand estimate from 4.86 million acre-feet to 3.6 million. Those determinations govern subdivisions. A commercial car wash served by Mesa, which is a designated provider with an assured water supply, does not require its own determination, and the study conditions the determination on a Mesa will-serve letter rather than assuming service.

The Colorado River supply is tightening. Arizona took a 512,000 acre-foot Tier 1 reduction in 2026, about 30 percent of the Central Arizona Project's normal supply. Under the federal operating guidelines finalized in August 2026, the City of Phoenix reports that Arizona's reduction would be 760,000 acre-feet in each of 2027 and 2028 under the proposed lower basin sharing arrangement. Mesa remains in Stage 1, Water Watch, of its Water Shortage Management Plan and states that the federal decision does not automatically trigger new restrictions; Mesa's Stage 2 trigger is a 20 percent cut to the city's Colorado River allocation.

The Arizona Department of Water Resources model ordinance for cities provides that new commercial car washes should recycle a minimum of 50 percent of water used for washing and rinsing, and its sample drought stages require commercial car washes to recycle at the highest stage. The resized design recycles 80 percent, and the Arizona Department of Environmental Quality permit path for reclaimed water use is part of the design scope. The water budget uses a fresh water draw of approximately 18 gallons per vehicle at the 80 percent design, against the EPA WaterSense benchmark of 30 gallons for conveyor washes, and the sensitivity cases include both a doubling of water cost and a two-month restriction period.

Mesa regulates automobile and vehicle washing under Section 11-31-7 of its zoning ordinance, and its land use tables list the use as requiring a special use permit in the commercial districts. Mesa's ordinance limits automobile-related activities, including car washes, automobile service stations and auto sales, to two within 600 feet of an intersection of arterial streets. The rule has already decided at least one express tunnel: a 2.24-acre parcel north of University Drive and Ellsworth Road was under a ground lease letter of intent with Circle K for a Clean Freak car wash at $1.4 million of annual rent, Circle K terminated the letter of intent in June 2024, and the owner filed a claim against the city under the state's Private Property Rights Protection Act seeking $780,852 in compensation, $1.4 million in lost rent and $20,000 in fees.

The submitted corner already holds two automobile-related uses within 600 feet of the intersection, a fuel station and an existing car wash, so the submitted program cannot be entitled there. The resized mid-block pad lies outside the radius. Its path runs through Mesa's Council Use Permit process: staff provide written comments within eight working days of submittal, the Planning and Zoning Board makes a recommendation, and the City Council acts at a public hearing, typically on the Monday two weeks after introduction. The pro forma carries the hearing schedule inside the construction timeline. Arizona use permit conditions in comparable cases have included landscape screening from adjacent properties and streets, and the resized program includes masonry screening walls and vacuum placement away from any residential edge.

The same rule that blocks the submitted corner limits new supply. Because Mesa allows no more than two automobile-related uses at each arterial intersection, the corners where an express tunnel would most likely locate are progressively closed to new entrants, which constrains the competitive response to the subject.

Sources: U.S. Census Bureau, QuickFacts; City of Mesa Office of Economic Development, ESRI Community Analyst 2025.

Mesa is a mature, slowly growing city of more than 500,000 residents with incomes near the national median and a projected 2.97 percent population gain from 2025 to 2030. The demand base is broad; the constraint is supply.

The resized plan ladder of $21.99, $26.99, $31.99 and $36.99 per month sits inside the aggregator-reported range of $22.99 to $37.99 for the largest express brand in the trade area. Blended revenue per member is modeled at $26.00 in Year 1, escalating 2 percent per year, below the 3 percent escalation used in markets with less competition. Retail single washes are modeled at an average ticket of $12.50 in Year 1, escalating 3 percent per year.

Arizona taxes car washes through the transaction privilege tax under the rental, leasing and licensing for use of tangible personal property classification. Municipal guidance administered with the Arizona Department of Revenue shows a state and county rate of 0.00 percent on that classification and a city rate that applies, and states that membership fees for repeated access to car washing facilities are taxable. Prices are modeled exclusive of the city transaction privilege tax, which the operator collects and remits; Mesa's rate for the classification was not confirmed at the study date.

Arizona's minimum wage is $15.15 per hour in 2026 and rises to $15.65 on January 1, 2027, and the state indexes it each year to inflation. Attendants are modeled at $16.50 per hour with a 15 percent burden, escalating 4 percent per year.

Members are modeled at 2.5 washes per month. Holding 2,900 members at 7.5 percent monthly churn requires 218 new members a month; in a trade area where most express customers already hold a membership, a material share of those sign-ups are switches from competing plans, which is why the launch strategy is built on switching offers and why the membership target sits below the 4,000-member level at which conversion accelerates.

Location: Mid-block arterial pad, east Mesa, Maricopa County, AZ Size in SF (Gross): 3,900

Source: Marshall & Swift CoreLogic, MMCG

The land basis is an MMCG assumption for a mid-block arterial pad; prime one-acre Sunbelt corner pads trade at $1.0 million to $2.5 million or more. The reclaim line carries a larger system than a standard installation to reach the 80 percent design. The equipment contingency carries a tariff allowance because Section 232 duties on imported steel and aluminum have stood at 50 percent since June 4, 2025. The financial reserve covers construction-period interest and the Year 1 shortfall of $268,507.

Loan Assumptions

Car washes are special purpose properties, and under 13 CFR 120.910 a project for a limited or single purpose building operated by a business of two years or less requires a borrower contribution of at least 20 percent; the structure carries 20 percent. The Project's five FTE support $475,000 of debenture at SBA's standard of one job per $95,000, against a debenture of $1,675,890; the Project therefore qualifies through a community development goal under 13 CFR 120.862, with the CDC's portfolio meeting the job average. SBA's environmental policy permits a Transaction Screen as the starting point for car wash only facilities, and no fuel sales are proposed.

Variable cost per car comprises chemicals at $0.85, water and sewer at $0.38 at the 80 percent reclaim design, electricity at $0.57 reflecting cooling and dryer load, and maintenance at $0.50, escalating 3 percent per year. Labor is a general manager at $58,000 and four FTE attendants. Marketing is front-loaded because a new entrant in a supplied market buys its first members. Property tax is an MMCG estimate.

The resized project reaches coverage in Year 2 and stabilizes at 1.38x. Its stabilized revenue is lower than the submitted program's under the same market conditions, but its cost basis is $2,644,700 lower, and that difference converts a project that never covers its debt into one that does.

At Year 3 pricing, revenue per car is $11.41 and contribution after variable cost and card processing is $8.64 per car against fixed operating costs of $451,652.

Year 3 volume exceeds the 1.25x threshold by 16 cars per day, a margin of 5 percent. In a supplied market the margin is thin by design: the resizing removed the costs the market could not carry, and it did not assume demand the market does not offer.

The resized project holds coverage above 1.0x in every single-factor case except a new competitor, which reduces Year 3 coverage to 0.99x. Water cost and drought restrictions, the risks most often cited for Phoenix car washes, move coverage less than competition does, because the 80 percent reclaim design reduces the fresh water draw and because commercial washes operate under Mesa's current shortage stage. Mesa's 600-foot rule is the structural mitigant to the competition case: it limits new tunnels at the arterial corners where they would most likely open.

The determination of feasible as resized is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: a complete count of operating express tunnels by city and washes per 10,000 residents; location-level membership prices for Quick Quack, Super Star, Cobblestone, DASH and Raceway; Mesa's stacking, noise and hours standards under Section 11-31-7; the outcome of the property owner's claim against the city; Mesa's transaction privilege tax rate for the rental, leasing and licensing classification; Mesa commercial water and sewer rates, development fees and interceptor rules; whether Mesa has adopted the 50 percent recycling standard by ordinance; ADOT and Maricopa Association of Governments traffic counts; May 2025 Phoenix-area wages for cleaners of vehicles and equipment; APS and SRP commercial rate schedules; Maricopa County assessment ratios and tax rates; and Phoenix-area car wash land sale prices. The submitted program, the corner, the mid-block pad and the sponsor's pro forma are modeled.

This model study applies the methodology described on MMCG's car wash feasibility study and SBA car wash feasibility study pages. MMCG prepares car wash feasibility studies for SBA 504, SBA 7(a), USDA B&I and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.