KUNM

Tax Benefits Proposal For Santolina Provokes Critique

Jul 29, 2016

Tax subsidies are often used as a kind of sweet carrot to incentivize developers to invest in abandoned or run down parts of cities, bringing resources where they wouldn’t go otherwise.

But critics of Santolina, a proposed 22 square mile housing development west of Albuquerque, say these subsidies shouldn’t be used for sprawling new suburban communities.

Albuquerque urban developer Robert Dickson has a passion for using public money to develop areas inside Albuquerque’s city limits, instead of on the outskirts.

Without public money, he said, the old Albuquerque High School near downtown would still be run down ruins instead of what they are today: elegant brown, brick condominiums.

“The Albuquerque High itself was five high school buildings that had been closed down for 27 years and were boarded up and had chain linked fence and concertina wire around them," said Dickson. 

Dickson said the public invested $12 million into the high school’s renovations. The project attracted new businesses to the once abandoned area and generated new revenue as a result – so the city is getting some of those public dollars back.

“Albuquerque High paid no property tax for its entire existence. Now it’s a private development. It pays property taxes," said Dickson.

The project worked, Dickson said, because it’s infill development - sewer systems and roads were already there, so the infrastructure cost was very low.

On the Santolina site on the mesa west of Albuquerque, there is no infrastructure, so developers are applying for public subsidies from the state and county. They’re called tax increment development districts, or TIDDs, and they allow the developer to be reimbursed for the money they spend building roads, sewers, sidewalks and parks.

With TIDDS, they’d share a portion of the new tax revenue they expect to create through construction costs and selling houses.

But economist Kelly O’Donnell said TIDDs were originally intended to incentivize projects in areas that developers wouldn’t touch.

“It has historically been used to revitalize neighborhoods that have been decimated by flight to the suburbs," said O'Donnell.

But in 2006, developers of Mesa Del Sol, a massive housing development similar in size and scope to Santolina, lobbied the state legislature hard so TIDDs could also be used for brand new construction outside of cities. Lawmakers went for it, and broadened the meaning of what TIDDs were meant to do.

“We’re no longer attempting to rehabilitate the urban core, we’re going to use a tool created for urban restoration to subsidize suburban sprawl," said O'Donnell.

She said that means people and businesses in other parts of Bernalillo County could move into the new and shiny development and a sizeable chunk of their taxes would go to developers instead of to the county to pay for things like emergency services and policing.

"Unless you can really articulate a vision that is something other than what we already have over on the west side, then you’re not adding value, you’re simply transferring value," said O'Donnell.

The Mid Region Council of Governments projects that Bernalillo county will have more than 300,000 new people by 2040. But O’Donnell says forecasts are just that, and 40 years is too long to project into the future.

No matter how many people move here, those people are still going to need jobs. Greg LeRoy, head of the think tank Good Jobs First, said Santolina has no strategy in place to create them. Without that plan in place, he says it is hard to forecast any added demand for housing – or to argue that Santolina is really creating anything new in the metro area.

“First people have to have a paycheck and if they have a paycheck, then they can afford a mortgage,” said LeRoy.

LeRoy said the best use for a TIDDs as a subsidy is to fill a community need, one that wouldn’t be profitable otherwise.

“We think it would be entirely appropriate to use incentives to bring grocery stores to food deserts, because that’s something that should happen and isn’t happening and won’t happen in most cases until public dollars reduce private risk,” said LeRoy. 

But LeRoy simply doesn’t see a community need for Santolina.

Robert Dickson said there was a community need for his project. But he said using public money to incentivize Santolina just doesn’t add up.

“Will it produce the property taxes and the gross receipt taxes from out there on the West Mesa to compare with the returns that we could get from small urban sites? My feeling is definitely no,” said Dickson. 

At the end of the day, Dickson says, investing public money in Santolina would be a terrible idea.

This story is the second of two - hear what supporters of TIDDs for Santolina have to say here.