SANTA FE – The Santa Fe County Commission voted Tuesday to send a letter of concern to Mayor Alan Webber over plans to issue up to $80 million in city industrial revenue bonds to finance expansion of El Castillo’s senior housing facilities.
The letter says that El Castillo’s recent agreement to expand the “payments in lieu of taxes,” or PILOTs, it will pay to offset property tax breaks that come with IRBs is a “significant improvement.”
But the letter says the county remains concerned that the public financing would give El Castillo “an undue competitive advantage” against other retirement homes and questions whether El Castillo needs any tax breaks.
“Based upon the strength of El Castillo’s balance sheet and apparent competitiveness in the market, it is not clear to us based upon information we have that El Castillo needs any property tax abatement for the Project to succeed,” the letter says.
At an afternoon meeting, commissioners also said they’d like to see affordable units included in the El Castillo project.
“I could never afford to live in El Castillo,” said Commissioner Anna Hansen. “I think that it is a place for people with more means than many of the people in this room.”
El Castillo initially agreed to pay the equivalent of the annual property taxes due to the Santa Fe Public Schools and to the Santa Fe Community College during the 30-year-life of the bond issue that would finance a 68-unit expansion at Paseo de Peralta and Old Taos Highway downtown.
Under IRBs, recipients legally aren’t responsible for property taxes on the financed project, which technically becomes city property during the life of the bonds. Also, investors who buy the bonds don’t pay state or federal income taxes on the interest they earn. That means IRBs have lower interest rates, or cheaper financing, for IRB-supported projects.
El Castillo recently agreed to make PILOT payments to the other standard government recipients of property tax revenue, including county government, but starting in year six of the bond issue.
While the El Castillo expansion is only expected to create 17-22 permanent jobs, Fabian Trujillo, the city’s interim economic development director, told the commission Tuesday it would mean 1,000 construction jobs — up from 600 jobs estimated in documents presented to the City Council — and that 40 percent of the jobs must go to Santa Fe area residents.
David Buchholtz, attorney for El Castillo, said that while the county wouldn’t get property taxes for the first five years of the project, it would get the taxes from a $50-million-plus completed project over the final 25 years of the bond issue’s life.
County Manager Katherine Miller said the county’s share of property taxes from the facility once it’s built normally would be more than $200,000. Buchholtz said the total property tax on the site as it sits now, for all government recipients, is about $40,000 a year.
The mayor and City Council will decide the fate of the proposed IRBs, but the city is required to notify the county of IRB proposals.