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Officials had eyes on permanent funds when Amazon offer prepared

Copyright © 2018 Albuquerque Journal

Officials explored using the state’s permanent funds as well as the Albuquerque Convention Center to entice Amazon to build its new $5 billion headquarters in New Mexico, according to emails obtained by the Journal.

Seattle-based Amazon is expected to create up to 50,000 jobs at the location it selects for its new headquarters, also known as HQ2. The e-commerce giant announced in January that it had selected 20 potential sites from the 238 proposals it received. No New Mexico locations were on the short list, though Albuquerque and several entities in Doña Ana County said they had submitted proposals.

In an Oct. 2 email to Albuquerque’s former economic development director, Gary Oppedahl, State Investment Officer Steven K. Moise wrote that he had “examined any options available using the permanent funds, as we discussed at lunch.”

Moise pointed to a 9 percent allocation of the state’s Severance Tax Permanent Fund that could be used for “economically targeted investments.” Moise said much of the allocation had already been invested, leaving approximately $124 million.

“However, investments in this program may only be made in NM-based entities,” Moise wrote in the email. “We know of no other manner in which the permanent funds might be helpful.”

In a subsequent email, Oppedahl asked whether Amazon would qualify as New Mexico-based if the company built its headquarters in the state, and whether the 9 percent could be increased in a special legislative session. Moise responded that statutory changes would probably be required.

Questions to Moise were directed to a State Investment Council spokesman, who called the conversation between Moise and Oppedahl “limited” with no specific plans or details. He also said it was not unusual for officers to have exploratory conversations about economic development projects, though any financial decisions would have to be discussed and approved by the council.

In an interview, Oppedahl said the final proposal included the permanent funds as one of the incentives offered to Amazon. That money could legally be used for infrastructure, he said, such as construction of a building or a rail spur.

Permanent funds were not the only incentives for Amazon discussed by the city and its partners. In another email, Albuquerque Economic Development President Gary Tonjes, whose not-for-profit organization prepared the proposal on behalf of the city, described the Albuquerque Convention Center as a “potential real estate opportunity” for Amazon.

“We absolutely do not want it to be known publicly that the convention center could be in play. … We’re also waiting for approval on another site,” Tonjes wrote in an Oct. 10 email.

Tonjes declined to comment. But Oppedahl said the convention center was offered as a temporary space for Amazon until a full headquarters could be constructed.

A spokeswoman for Albuquerque Mayor Tim Keller said in a statement that his administration “would not support” either the use of permanent funds for an out-of-state entity or “giving away the Albuquerque Convention Center,” though it would support welcoming “big businesses to Albuquerque, using reasonable tools to do so.”

“Mayor Keller has appointed new leadership at Economic Development to create an innovative economic engine in our city that works for local small businesses and as well as larger companies,” the spokeswoman said in the statement.

An Oct. 8 email shows that Steve McKee, president of ad agency McKee Wallwork & Co., one of several organizations involved in the project, suggested not offering any incentives because they would be a “rounding error to (Amazon) in the long term,” he wrote to Oppedahl and others. It is unclear whether the final proposal reflected McKee’s idea, although subsequent emails show others disagreeing with him.

McKee declined to comment, citing the confidentiality of the process.

The emails, which were selected for release by a city attorney, are the result of a Journal request for records from the city’s Economic Development Department during the time the proposal was being developed. City staff under both former Mayor Richard Berry and Mayor Tim Keller have said the Amazon proposal itself falls outside the scope of New Mexico public records law and have rejected several requests for the document.

Documents obtained as part of the record request include a nondisclosure agreement with Amazon signed by Tonjes, and a letter prepared by an attorney on behalf of Albuquerque Economic Development addressed to the city of Albuquerque. The letter said the city had located two drafts of the proposal that were “potentially responsive” to what appeared to be the Journal’s record request, but the city did not release those drafts.

A spokeswoman for Keller said the proposal places the city in a “legal bind.” AED’s letter describes the proposal as a trade secret protected under state law and said that AED “must protect its trade secrets if it is to continue to generate economic development opportunities.”

Among the other information disclosed by the emails and related documents:

• Officials nicknamed the proposal Project Golden.

• AED said it invested “hundreds of hours as well as approximately $30,000” in the proposal.

• A draft of the proposal included Rancho Cielo in Belen as a potential headquarters site.

• Another potential, unnamed site was described as being “literally adjacent” to 400 acres owned by the University of New Mexico.

• Copies of Albuquerque’s paper proposal were delivered to Seattle at 7:59 a.m. Oct. 19 and signed by “E. Golden.” The proposal also contained a link to a password-protected website with additional information.

Amazon is expected to make its final selection on its headquarters site sometime this year.

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