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TIDD Analysis Leaves Out Concerns

By Jeff Jones
Journal Staff Writer
       Critics of a plan to give $408 million in future tax money to a California-based developer are questioning why a state analysis provided to lawmakers omitted major concerns about the deal that were described in a similar document last year.
    A 2008 legislative analysis of a so-called TIDD deal for SunCal Cos. said the firm's planned development on Albuquerque's West Side might not generate nearly as much tax revenue as SunCal claimed.
    Last year's analysis also said that according to one of SunCal's own studies, most of the demand for industrial space in the giant new development would come from firms already doing business in the Albuquerque area rather than new, out-of-state firms — a top concern of critics who warn the tax break amounts to "cannibalism."
    The issue could have a "potentially huge impact for the state," the 2008 analysis said.
    Neither of those criticisms was detailed in this year's Legislative Finance Committee analysis given to lawmakers considering the controversial deal, which was approved by the Senate in late February and is pending in the House.
    "I absolutely think it (this year's analysis) does not tell the whole story," said Sen. Eric Griego, D-Albuquerque, a TIDD critic who questioned whether the LFC was pressured on the new analysis.
    LFC director David Abbey told the Journal on Tuesday that he was indeed pressured on the TIDD issue.
    He declined to say who applied pressure and insisted it had no impact.
    "We absolutely didn't bow to pressure," Abbey said. "We prize our objectivity."
    While he defended the objectivity of both the 2008 and 2009 analyses, he said this year's report should have detailed the cannibalism concern. And the LFC analysis was amended for lawmakers Wednesday morning after the Journal's inquiry.
    Since a SunCal TIDD bill died in the Roundhouse last year, the developer has embarked on a major push to get a similar measure through this year's Legislature.
    SunCal has spent a chunk of cash — it refuses to say how much — on pro-TIDD billboards, advertising and mailers. It also has a team of 11 top lobbyists and has spread more than $50,000 in campaign cash among dozens of Democratic and Republican lawmakers and the state Democratic Party.
    TIDDs, shorthand for tax increment development districts, involve the formation of special tax districts in which portions of the gross receipts and property taxes are set aside to pay the developer for infrastructure such as roads and water and sewer systems. The TIDDs issue bonds secured by the tax money.
    Backers of TIDDs say developers get none of the future tax money until they build their projects and say they benefit the state because they bring new jobs and tax revenue.
    Opponents equate them to a tax giveaway. And some maintain that much of the business locating in the SunCal TIDD would be existing Albuquerque-area companies enticed to relocate or expand there by lower rent or construction costs made possible by the TIDD tax subsidy.
    Cannibalism concerns stem from the possibility of existing companies moving to a TIDD-subsidized development, shifting some of the existing tax revenue from local government to the TIDD.
    The LFC's 2008 analysis, prepared by agency chief economist Norton Francis, said a study done for SunCal assumed most of the industrial growth would be from "intramarket" demand.
    "This is activity that would have generated revenue for the state that is moving to an area where half of the revenue is redistributed to the development, a potentially huge impact for the state," Francis wrote.
    The analysis added that according to a separate state study, the amount of permanent gross receipts tax revenue generated in several of the areas in the TIDD "will be less than 20 percent of the amount calculated by the (SunCal) study."
    The shorter, 2009 analysis that did not detail the concerns was done by another LFC staffer.
    SunCal chief spokesman David Soyka in written responses to Journal questions said the study done for his firm was" clearly based only upon historical averages" concerning typical Albuquerque growth and does not address SunCal's emphasis on recruiting firms from other states and countries.
    "TIDDs will allow us to attract large out-of-state companies to New Mexico by providing infrastructure and shovel-ready industrial land," Soyka wrote. "We have met with more than 30 international companies in our recruitment efforts to date."



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