By Marjorie Childress and Gabriel Nims
SouthWest Organizing Project and 1000 Friends of New Mexico
New Mexico taxpayers take note: State and local "tax increment financing" law is ushering in the largest public subsidization of private land development in the nation, and lawmakers have little idea about how this may impact our existing communities and economy.
In fact, this approach to subsidizing private corporate ventures poses a significant threat to the state's financial standing and the health of our neighborhoods, small businesses and working families.
Tax increment financing— TIF— is an economic development tool that diverts a portion of our future tax revenue away from shared public needs for up to 25 years in order to pay for infrastructure built by private developers today.
Historically, TIF has legitimately been used to boost redevelopment of existing neighborhoods that are declining. It was never designed to fund massive lower-risk developments in fringe areas where development will occur anyway. But unfortunately, the state, city of Albuquerque and Bernalillo County have all in the past year passed legislation authorizing up to 75 percent of the future tax revenue of an area to be given to private developers who are building communities on vacant land on Albuquerque's edge.
Mesa del Sol, owned by Forest City Covington, was the first project to receive approval for up to five tax increment development districts (TIDDs). Mega-developer SunCal has already requested approval of nine TIDDs for its future development on 50,000 acres of the former Atrisco Land Grant. Together, TIF will be employed to offset the development costs of growing the region by hundreds of thousands of people, surpassing, in land area, the total acreage of Rio Rancho.
These multi-billion dollar development companies will divert, not millions, but billions of tax revenue away from existing communities and toward the infrastructure costs of these massive outlying developments. Other developers are lining up to make use of TIF in communities around the state.
A veritable Pandora's Box has been opened before any of our elected bodies can assess all the impacts of TIF.
Why the rush? Our elected leaders have been told that developing these projects in a "smarter" way than the status quo requires a public incentive. Developers claim they need TIF in order to build their projects according to "new urbanist" development principles that emphasize mixed-use, walkable communities.
However, they have yet to actually show anyone why a gift of public dollars to a private developer is necessary when studies of recent trends across the nation show resoundingly that communities built "smart" are in high demand by the market of potential homebuyers. And it is a gift because these public dollars pay for infrastructure (such as roads, sidewalks, sewer lines) after the fact, when we can assume the cost of that infrastructure has already been included in the price of homes and passed on to the homebuyer.
Other potential pitfalls, to list a few:
Lack of sufficient transparency of the deals and the developer's justified need for them in a project. The public has limited assurances that its tax dollars are being used for the public good rather than simply lining the pockets of private developers.
The negative economic impact to other parts of the city when existing businesses and homeowners relocate to TIDD areas. With hundreds of new homes on the fringe, the market for existing home sales may slow considerably.
The impact on future state revenue streams when the economy slows and millions in tax revenue is diverted to satisfy multiple large-scale TIDDs around the state. This is revenue the state needs to meet growing demands for schools, teachers, health care and other critical services.
With gas above $3 a gallon, water increasingly harder to find and the looming certainty of global warming, can the region and state afford to give our future away to accommodate the bottom lines of billion-dollar development corporations?
We are just beginning to embrace the economic and environmental benefits of reinvesting in existing communities, and many worry that TIDDs at the edge will diminish future redevelopment efforts that are required to bring us closer to a sustainable, "green" city.
We urge elected officials across the state, in every jurisdiction, to step back from the promises of fortune and "win-win" proclamations and take an honest look at the potential harm TIFs for fringe development can bring to the state.
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