Copyright © 2018 Albuquerque Journal
The next round begins.
Mayor Tim Keller late Monday vetoed a $2.6 million economic development package that would help Topgolf in constructing a $39 million restaurant/indoor golf entertainment complex at the site of the former Beach Waterpark.
The package for the Dallas-based company was approved by city councilors last month on an 8-1 vote, with City Councilor Don Harris casting the sole vote in opposition.
The veto is not a surprise, as Keller’s administration has sparred with the council on the merits of the proposal from the start.
Keller has called it a “raw deal for taxpayers,” while most councilors have expressed strong support for the project, slated for construction at the southwest corner of Montaño NE and Interstate 25.
“From the beginning, we have expressed our desire to welcome Topgolf, but this project failed to meet our criteria for growing the local economy and creating good-paying jobs. While we were able to improve the deal, we’re still not there yet,” Keller said in a statement.
“This deal also sends the wrong signal that we are prioritizing out-of-state companies over similar local efforts, and that a company can end-run an independent professional vetting process through a political process. It’s our job to protect taxpayers, and I know that we can do it better. We want to work together and take the time to get it this right.”
The project also raised concerns from the city’s Economic Development Department, which rejected the application earlier this year, and the Albuquerque Development Commission, which recommended the proposal to the council, but also adopted several changes to the proposal and questioned the amount of money the city is spending for every new job created.
The “project participation agreement” approved by councilors includes $400,000 of city general fund money unspent from the fiscal 2018 budget. The proposal also includes the city reimbursing 50 percent of incremental city gross receipts tax revenue, up to $1.8 million, to assist the site developer with costs of land, building or infrastructure.
Councilors also supported appropriating $326,000 from the city transportation infrastructure tax to extend Culture Road from Montaño to Desert Surf Circle.
Legally dedicated gross receipts taxes are exempt.
Clawbacks include a requirement for the company to hire 132 full-time employees. It includes penalties if the goals are not met.
Council President Ken Sanchez, cosponsor of the Topgolf bill, said the project and its financing is a first of a kind for the city and cannot be treated the way Local Economic Development Act projects have always been treated.
“The protections that the mayor is talking about are the traditional ones when a LEDA project involves nothing but up-front cash funding,” Sanchez said. “That’s not the case here, and it doesn’t make sense to require those protections of this project.”
In the case of this project, Sanchez said, most of the funding – about $1.8 million – comes from the use of gross receipts tax increment funding, where Topgolf only receives money from the city if it generates extra or “incremental” revenue.
“If it does not generate that extra revenue, it does not receive a penny,” he said. “The increment itself is the protection for the city because if the project does not perform, it will not receive a dime of taxpayer funding.”
Sanchez said that according to estimates agreed to by the county and the Albuquerque Development Commission, the majority of the revenue generated by the project will be net new to the city.
“The mayor says that ‘economic base jobs’ make Albuquerque’s economic pie bigger, well, generating more revenue from outside the city than inside is the very definition of growing Albuquerque’s economic pie,” Sanchez said.
The mayor’s veto forces the City Council to consider overriding it, and it requires six votes to do that.
The council is on July recess and is not scheduled to meet again until Aug. 6. Sanchez said the council will consider the override at that time.
Bernalillo County commissioners last week approved a $1.75 million economic development package to assist Topgolf.
That agreement includes a $250,000 county local economic development act grant. The agreement also includes the county reimbursing 50 percent of incremental county gross receipts tax revenue, up to $1.5 million, to assist the site developer with costs of land, building or infrastructure.
Once operating, the center expects to generate about $13 million to $16 million in annual taxable gross receipts.