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Topgolf to face key vote today as company seeks public funding

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Topgolf, a restaurant and indoor golf entertainment complex, has venues in various cities, including this one in Tucson, Ariz. The company is looking to add a center in Albuquerque.(Courtesy: Topgolf/Michael Baxter)

Copyright © 2018 Albuquerque Journal

The journey to bring Topgolf to Albuquerque has included its share of slices and mulligans since the Dallas-based company announced in January it was pursuing a location at the former Beach Waterpark at the southwest corner of Montaño Road NE and Interstate 25.

Today, a major player – the Albuquerque Development Commission – is expected to recommend to the City Council whether the city should use nearly $3 million in public funding to help Topgolf build a proposed $39 million restaurant/indoor golf entertainment complex in Albuquerque. The popular recreation venue is already located in 41 cities, including Phoenix, Denver and El Paso.

The commission is meeting in special session today at 2 p.m. at the city-county building downtown; the City Council will then take up the issue on Monday.

Topgolf is a fast-growing operation that most everyone agrees would be an asset to Albuquerque.

What’s at issue is whether the project is a proper use of public funds – which are usually limited to developments that can prove they will bring new revenue and mid- to high-paying jobs to the Metro area.

The City Council has been solidly behind the proposal, while Mayor Tim Keller has expressed reservations. Bernalillo County has already given initial approval to the idea of spending an additional $1.75 million in public money to help fund the project.

But – like the mayor – the Albuquerque Development Commission has not been so fast to get on board. The commission delayed making a recommendation to the City Council, sending the parties – the council, the city’s Economic Development Department, Topgolf and site developer Albuquerque Investors LLC – back to the drawing board to renegotiate the “project participation agreement” to better comply with Local Economic Development Act (LEDA) requirements.

According to an Albuquerque Economic Development backgrounder, LEDA funds are targeted toward employers that will create full-time, private-sector jobs. New or existing employers may use funds to assist with land acquisition, building renovations and infrastructure needs, but cannot use them for working capital, operating costs or equipment.

The city’s development commissioners expressed concern that the proposed agreement contained no requirement for Topgolf to create or maintain jobs, nor sufficient clawback provisions that install penalties should the jobs disappear or not materialize. Both are usually a condition of receiving LEDA funding.

“Growing Albuquerque’s economy requires a multi-faceted approach,” said Synthia Jaramillo, director of the city’s Economic Development Department, in a statement. “Our strategy is about doing what’s best for Albuquerque and our residents – not chasing national fads or saying yes to every project that comes to town. We’ll be focusing resources on the highest net return for the city.”

When the Journal reached out to Topgolf officials in Dallas for comment, spokeswoman Morgan Schaaf said in a statement: “We see a lot of potential in the Albuquerque market, and residents have been reaching out to us for years asking us to build a venue. We are excited about the possibility of opening in this community and partnering with the city on terms that will be mutually beneficial.”

Negotiations questioned

The Albuquerque Economic Development Commission has also taken exception to the path the proposed project participation agreement took – it was negotiated through council staff instead of city economic development personnel.

Attorney Justin Horwitz, representing Albuquerque Investors, told commissioners the original application was submitted to the Economic Development Department in November. He said the department notified them in January that it would not pursue the project because of issues that would preclude LEDA funding.

At that time, councilors got involved and expressed their support. On June 4, they passed a resolution reinforcing their support, but wanted to wait for the Economic Development Commission’s recommendation before taking a final vote.

Councilors also approved an amendment taking LEDA money off the table and replacing it with $500,000 of city general fund money unspent from the fiscal 2018 budget. That would be part of a $2.7 million economic development package proposal that includes a contribution of up to $1.8 million in incremental city gross receipts tax revenue to assist the site developer with costs of land, building or infrastructure and $326,000 appropriated from city transportation infrastructure tax revenue for improvements to Culture Road, leading to the project.

The proposal could change before today’s ADC meeting.

Meanwhile, Bernalillo County commissioners in April voted to approve publication of a notice of intent to adopt its own ordinance under LEDA. Commissioners are expected to consider the ordinance that would include about $1.75 million in LEDA funding for land and construction activities as part of an agreement containing a new job creation commitment.

Pending approval from the various entities, the location would open in spring 2019.

Incentives sometimes needed

“In smaller markets, it’s not uncommon for Topgolf to need an incentive,” Tanner Micheli, Topgolf’s director of real estate development, told councilors during the June 4 meeting. “Incentives are not something we go for in every municipality. It’s something that’s only needed to get the job done. We feel that the numbers are strong at this specific location in Albuquerque.”

Topgolf would create 123 new full-time jobs and 227 part-time positions at the Albuquerque facility with an estimated annual payroll of $3.5 million to $4.5 million. Most salaries are estimated to be from about $8 an hour to up to $12 an hour, according to an information sheet from the city.

Once operating, the center expects to generate about $13 million to $16 million in annual taxable gross receipts.

“I believe this project would be a tremendous benefit to the community,” Council President Ken Sanchez said during the June 4 meeting. “I’m also concerned that when we put this agreement together, the (project participation agreement), that we protect the taxpayers and the citizens of our community.”

‘Can’t justify $3 million’

A main issue, Mayor Tim Keller told the Journal, is what kind of jobs the center will create.

He also has expressed concerns about the site, which his administration says does not have space nearby so it could attract other, related activity.

“It’s a great program in terms that it’s fun, and we would enjoy having Topgolf,” Keller said. But, “Topgolf is retail/entertainment. It’s not economic-based jobs. These are jobs that do not bring new money into the economy. They are also relatively low-wage jobs. We can’t justify $3 million for this project in this location.”

Keller’s Economic Development Department recently released a memo outlining some of its concerns. It stated that LEDA is for economic base projects that create higher-than-average pay and employment opportunities, which Topgolf does not. In addition, it said the agreement is significantly more favorable to Topgolf and less protective of the city than the usual agreements.

Also, the University of New Mexico Bureau of Business and Economic Research estimated that about 5 percent of the project’s revenue would come from outside the city. The city said that contrasted sharply with Topgolf’s analysts that “unrealistically assumes 100 percent of the sales will come from people who do not already spend their entertainment/sports dollars in Albuquerque.”

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