By Rory McClannahan
Journal Staff Writer
The city of Rio Rancho is a step closer to having a film studio.
The State Land Office and the city announced Monday they have finalized a deal with Lions Gate Entertainment regarding land the film company wants to use to build a $15 million studio north of the planned City Centre.
"Everything associated with the land deal is now fully and completely executed," City Manager Jim Palenick said. "We at the city are excited."
The land deal opens up nearly 53 acres for Lions Gate.
The city owns about 13 acres of the property and will buy an additional seven from the state. That 20 acres will be given to Lions Gate by the city and another 33 acres are being purchased from the land office.
Palenick explained that the state land would be bought by the city and then immediately bought by Lions Gate for about $1.1 million. The deal was structured in that manner because transfers of state land to municipalities is easier than transfers to private companies, he said.
"Although Rio Rancho is giving away the land, the city benefits in the jobs it brings to the area and by having a world-class film production studio in our backyard," Palenick said.
Lions Gate, the city and the state have been working on the land deal for at least eight months, he said. Construction could begin sometime this fall.
"We liked to see it sooner rather than later," Palenick said.
He added that the deal wouldn't have happened without the help from the state.
In its last session, the state Legislature passed a law increasing tax breaks for film companies working in the state to 25 percent.
The tax breaks, plus Rio Rancho giving the company land and at least $7 million from the State Investment Council, helped seal the deal.
In exchange for the land, Lions Gate is required to build a studio within two years and must provide 800,000 hours of work within five years to keep the land.
Lions Gate has called the $15 million studio a first phase. Possible uses for the additional 32 acres from the State Land Office include hotels and other entertainment and retail developments.
Under the land agreement, the Land Office will benefit from any development Lions Gate completes, earning 3.5 percent of any profit Lions Gate makes.
According to the agreement with the city, Lions Gate and the State Investment Council will partner to form a new company called Newco. Lions Gate and the state will invest $15 million for the construction of the studio and acquisition of equipment.
"A lot of people put in a lot of work on this deal," Palenick said. "It's good for Rio Rancho, but it's also good for the state."
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