Netflix plans significant expansion in ABQ

Netflix is planning to boost its presence in New Mexico by adding 300 acres to its 30-acre existing property in Mesa Del Sol and making the city its North American production headquarters. (Roberto E. Rosales/Albuquerque Journal)

Copyright © 2020 Albuquerque Journal

Netflix is elevating its New Mexico presence to blockbuster status.

Two years after purchasing Albuquerque Studios, the streaming giant is planning to boost its presence in New Mexico by adding 300 acres to its 30-acre existing property in Mesa Del Sol and making the city its biggest North American production hub.

The company will add up to 10 new stages, post-production services, production offices, mills, backlots, training facilities, wardrobe suites, a commissary to support meals and craft services, and other flex buildings to support productions.

As part of the proposed expansion, Netflix will push job creation, as well as an additional $1 billion in production spend and $150 million in capital expenditures.

The investment will result in the creation of an estimated 1,000 project-based production jobs in New Mexico over the next 10 years. An additional 1,467 construction jobs will be created to complete the expansion. This is in addition to the current Netflix deal announced two years ago.

“This expansion secures New Mexico’s future as the place to make movies,” said Alicia J. Keyes, secretary of New Mexico Economic Development. “Because of COVID, people and businesses are looking for alternatives outside of big cities. It was important for us to jump off with this expansion. We’re seeing other companies from different industries seeking out New Mexico.”

The state of New Mexico will provide up to $17 million in Local Economic Development Act (LEDA) funding and the city of Albuquerque will commit up to $7 million in LEDA funding to the project, including $6 million for in-kind infrastructure, such as road and traffic improvements. In the 2018 deal, Netflix received a total of $14.5 million in LEDA funds from both entities.

The city of Albuquerque will issue an Industrial Revenue Bond (IRB) to partially abate property and other tax over a 20-year term for the first $500 million investment by Netflix to build out the production facility. It would be the largest IRB package in the city’s history, economic development officials said during an Albuquerque Development Commission meeting Monday.

According to the state, 130 of the total 300 acres will be leased from the State Land Office. The remaining acreage is private property.

Local impact

Stephanie Garcia Richard, commissioner of the New Mexico State Land Office, said the State Land Office exists to leverage state trust land to raise funds for public schools, hospitals and universities.

“Netflix’s expansion to state trust land is great news for our state. Because of this partnership, New Mexico will benefit from new jobs and more revenue flowing into communities that become filming locations,” Garcia Richard said. “Netflix has already been delivering on those promises, but by moving onto state trust land, an estimated $24 million will be going to the University of New Mexico – the beneficiary of the state trust land onto which they will expand their studios.”

The project is headed to the Albuquerque City Council. The city will act as the fiscal agent for the $24 million in LEDA funds. If approved, funding will be disbursed according to benchmarks set out in the Public Participation Agreement.

The City Council will review it Dec. 7.

“New Mexico provides an outstanding production and business environment in close proximity to Los Angeles, with some of the best crews and creative talent in the world,” said Ted Sarandos, Netflix co-CEO, in a statement. “The expansion will bring many new high-tech and production jobs to the region, while allowing us to be more nimble than ever in executing production plans for so many series and films enjoyed by our members all over the world, while cementing the status of the region as one of the leading production centers in North America.”

Keyes said the expansion deal is on the same lines as the previous deal. In the 2018 deal, Netflix agreed to a direct spend of $1 billion over the course of 10 years, as well as creating 1,000 jobs in that time.

The expansion project has been reviewed by the Mesa Del Sol Tax Increment Development District Board and, on Monday, was approved by the Albuquerque Development Commission.

Netflix will expand its studios in Mesa Del Sol. (Roberto E. Rosales/Journal)

Rajiv Dalal, who handles studio policy for Netflix, told the Development Commission on Monday that buying Albuquerque Studios two years ago was “nothing short of a remarkable investment” for the company, which will soon shoot one of its most popular series, “Stranger Things,” in the city.

“Plain and simple, Albuquerque is an excellent production center for Netflix,” Dalal said.

The new deal calls for Netflix to spend an additional $1 billion over the course of a decade. In addition, it will add 1,000 more jobs during that time.

In 2019, Netflix reached its benchmark of a $75 million direct spend within nine months.

The growth of the film and television industry has been a steady driver of economic development in New Mexico over the past two decades.

According to the New Mexico Film Office, direct spend in New Mexico in 2003 was $7 million.

In fiscal year 2019, it reached a record high of $525.5 million.

Netflix plans to expand its studios in Mesa Del Sol, adding new stages, post-production services, production offices and other spaces, and an estimated 1,000 project-based production jobs.

Netflix will generate an estimated $344 million in taxes to the state, local school districts and other local governments, according to state estimates.

As part of the proposed investment in the region, and in an effort to continue to grow and scale up the crew base and talent pool, Netflix has agreed to provide job training programs for below-the-line (crew, production team) positions in partnership with the New Mexico Film Office, local universities, labor and industry organizations.

Additionally, in partnership with the New Mexico Film Office, Netflix has committed to supporting New Mexico’s Native American, Latino, Black and other underrepresented groups’ content creators and filmmakers.

The state’s $17 million contribution to the new Netflix project leaves New Mexico with $21 million in available LEDA funds, according to state officials.

Cultivating an industry

Gov. Michelle Lujan Grisham said Netflix has been an incredible partner that pushes the boundaries of innovation and expansion, while providing fulfilling work opportunities.

“My administration has expanded our state’s competitive film incentives, facilitating more opportunities for rural communities and high-wage employment for New Mexicans all across the state,” Lujan Grisham said. “I am glad Netflix has chosen to double down on its commitment to our state, and our partnership will continue to grow for the benefit of New Mexicans across the board.”

In July 2019, the current film tax incentive package went into effect. It raised the cap on what can be paid to film and TV productions in a single year to $110 million.

Film companies currently receive a 25% rebate on goods and services expenses for most projects in New Mexico, and some TV shows get up to a 30% rebate. An additional 5% tax credit is given to companies that take productions to rural areas – which means 60 miles outside the Albuquerque/Santa Fe corridor.

Albuquerque Mayor Tim Keller said when the city brought Netflix to Albuquerque, “we put the spotlight on our city’s strong film economy and joined our brand to one of the top companies in the new global economy.”

“Now, with this expansion, we’re looking forward to doubling the impact to 2,000 jobs for folks from all walks of life and a $2 billion investment into Albuquerque’s economy over the next decade,” Keller said.

Albuquerque City Council President Pat Davis, who chairs the Mesa Del Sol TIDD board and whose district includes the area, said Monday that Netflix’s expansion reflects the concerted effort over the past decade to build the state’s film industry.

“When Netflix came back and decided they needed a new North America headquarters for production … Albuquerque not only was on the list, but also it was worthy of another major investment because we have the workforce,” Davis said.

Keyes is aware that the expansion will see some criticism during the pandemic, as film has been deemed an essential business.

“Part of our job is to help local businesses and get through the pandemic,” Keyes said. “The other part of our job is the future of New Mexico. We need a secure and diversified economy. We can’t rely on oil and gas, retail and tourism as much. We have to have things like aerospace and film to strike that balance.”

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