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 V.15 No.52 | December 28 - January 3, 2007 

Council Watch

Build Now, Pay Later

Jeremy Eaton

On Monday, Dec. 18, the City Council hedged part of Council President Debbie O'Malley's proposed big-box legislation. It voted 5-4 against a moratorium on approving new retail giants that don't comply with proposed regulations. In October, O'Malley introduced a bill that would regulate the look and location of big-box stores. The Council opted unanimously to refer the bill to the Environmental Planning Commission with amendments. The regulations will go to the commission and endure a public comment period before coming back to the Council for the final word.

Slippery Weazel showed up at the Council meeting to plea for help negotiating the permitting process required to play outdoors Downtown. At least one of the band's musicians is not yet 21, so the trio took to the streets on weekend nights instead of playing in bars. Police started giving them a hard time, said drummer Ryan McComas. The group went to four different city departments to try to find out the rules for outdoor performances, none of which gave them an answer. Councilor Isaac Benton said he's ridden his bike Downtown on Saturday nights and seen Slippery Weazel performing "really entertaining music" on the street corner. "I thought it contributed to the liveliness of Central Avenue," he said. Bruce Perlman, the city's chief administrative officer, said he would take McComas' name and number and connect him with someone who could help Slippery Weazel work out its permitting troubles.

To contact the author, e-mail marisa@alibi.com.

Issue Council's Take Reporter's Take
Mesa Del Sol Wants Cash from the Future

Forest City Covington is building Mesa Del Sol, a 12,900-acre development in the south of Albuquerque that needs about $688 million in infrastructure (roads, sewers, water pipes) for its first phase. The company came up with a creative way to finance those needs: With money from future Mesa Del Sol taxpayers.

Here's how it would work: The developer sells $400 million worth of bonds to pay for the basics required to set up businesses and homes. Forest City Covington is asking the city to pay off those bonds with 75 percent of gross receipts taxes and 28 percent of property taxes from Mesa Del Sol.

"We're not going after the existing tax base of Albuquerque. We're creating a tax base that, but for Mesa Del Sol, would not exist," said Michael Daly, representing Forest City.

Gabriel Nims, executive director of the community interest group 1,000 Friends of New Mexico, warned the Council against rushing the issue. City residents should have a chance to understand and debate it, Nims said. "Any insinuation by Forest City to withdraw from the project should not be allowed to determine reasonable community processes."

Future Mesa Del Sol residents would cost the city no money, Daly said, estimating a surplus of $94 million over 25 years for the city after paying expenses and an additional ongoing $22 million per year for Albuquerque after the bonds expire. This is the first deal of it's kind in New Mexico. The state this year approved tax increment finance districts (TIF districts), which are required for this build-now-pay-later plan.
"I kind of feel like I'm in a used car lot," O'Malley said, adding that it wasn't fair to the Council to be asked to negotiate such a weighty decision at the 11th hour. "I support this development. It's just a matter of how do we do our due diligence and protect the city as best we can."

Forest City Covington will request a portion of county and state taxes as well. The developer needed the Council to approve the districts and agree on a percentage so Forest City can present its proposal to state agencies before the next Legislative Session begins on Jan. 16, Daly said. If the timing is bungled and the company is forced to wait a year, Forest City could be left staring at millions in lost revenue, he added.

Councilor Michael Cadigan said it was in the Council's best interest to settle the matter. "Every dollar they bring down from Santa Fe is a dollar we don't have to pay later." Councilor Sally Mayer asked if the developer could work with an "up to" number, possibly amending the language to read "up to 75 percent." Daly said the company was looking for a minimum, something it could use to support its cause while petitioning the state and county.

Feeling rushed, the councilors unanimously passed the creation of the special tax districts, but they didn't set a percentage. Instead, they will hold a special meeting Jan. 10 to decide on the number, giving Forest City time to prepare its pitch for the State Legislature.
Moderation is key in this potentially costly policy call. The city hired Economic Research Associates, a firm out of San Francisco, to evaluate the situation. Bill Lee, a representative, said although Forest City was right in saying its development would accrue the city no net cost, it overshot the surplus by about $50 million.

At one point in the meeting, Daly said Forest City could work with 65 percent of the future taxes. "There's no reason for your range to go over 65 percent," Lee said. That sounds like reasonable fiscal advice.

Projections and predictions amount to the same thing: fortune telling. There's really no way of knowing how successful Mesa Del Sol will be or how many tax dollars it will rope in for the city. Still, you've got to spend money to make money, and as Lee said: "If we tighten the negotiation down to its bare minimum, you're going to see it in the project as well."

This is also a prime opportunity for the city to do its own negotiating. The developer needs those bonds to begin. What better time could there be to wheel and deal on, for example, affordable housing. And when you're talking about figures as big as these, the difference between 65 percent and 75 percent is millions. Those are millions the rest of the city could use for ... oh, I don't know ... Schools? Storm drains? Public transportation?

If Forest City Covington is a smart negotiator, and I bet it is, it probably asked for a smidgen more than it absolutely needs. The Council should be smart enough to tone down that figure and find the magic number.
 

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