County Commissioner Debbie O’Malley says county executives are vastly underestimating the value of tax breaks when they analyze economic-development projects before the County Commission.
As an example, she points to the One Central development proposed at First and Central in Downtown Albuquerque.
The county’s economic development department estimated the value of one component of the proposal — tax breaks over a 15-year period — at just $46,000.
But stripping that component out of the deal actually cost the developer about $2 million in value, according to the developer and Mayor Richard Berry’s office, which also worked on the deal.
The difference in calculations hinges on several assumptions. County staff estimated that the county and other government agencies were giving up only the revenue they would have received if the property remained in its current state — a parking lot, largely undeveloped.
The city and developer, meanwhile, estimated the value based on how much in extra taxes the developer would pay if the $40 million project were developed as planned.
The county calculation “doesn’t give me a real picture of what’s going on,” O’Malley, a Democrat, said Thursday. “It skews the numbers when it comes to the cost-benefit analysis.”
Commissioner Wayne Johnson flatly disagrees. It’s inappropriate to estimate the value of the tax breaks based on the full development of the project — because the project might not go forward at all, if not for the tax breaks, he said.
In other words, what the county really gives up in a deal like this, he said, is whatever tax revenue the property already generates.
“I honestly don’t think we should be tinkering with a formula that’s brought in a half billion dollars of private investment to Bernalillo County and the city of Albuquerque,” said Johnson, a Republican.
The debate focuses on the county’s industrial-revenue-bond program. Generally speaking, the proposals allow companies to receive an exemption on property taxes, among other benefits.
In the case of One Central, the commission — on a 3-2 party-line vote, Democrats in the majority — voted to cut the length of one of the tax breaks from 30 years to 15 years. That reduced the value of the tax break from $164,000 to about $117,000, according to county staff.
But the city said it was actually a $2 million hit. City officials later boosted some of their own incentives to keep the project alive.
The project is to include a bowling alley, brewery, apartments, restaurant and concert space. It’s supposed to create 300 permanent jobs.