April 27, 2015

Another look at tax dollars for Santolina

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This week, New Mexico Political Report takes an in-depth look at commercial development plans west of the Rio Grande, which include the controversial Santolina master plan.

Money flyingToward the end of the story, we mention the potential use of tax dollars to pay for development, specifically through what are called Tax Increment Development Districts (TIDDs) and Property Improvement Districts (PIDs). Santolina, a 13,700-acre planned community that plans to house nearly 93,000 people is seeking both TIDDs and PIDs to pay for its development.

It’s an idea that Juan Reynosa, a field organizer for Southwest Organizing Project, is quoted as criticizing in today’s story:

“They want to use taxpayer dollars to develop that land and sell it,” Reynosa said.

This morning, the Albuquerque Journal takes a further look into how Santolina is planning to use these tax mechanisms, which reporter Dan McKay describes as “esoteric:”

Here’s how they work:

• Whatever tax revenue the land is generating now is considered the “base” and isn’t part of the tax increment. In Santolina’s case, the land is undeveloped, so it’s not generating much in the way of gross receipts or property tax revenue.

• But as the area develops, the land should increase in value and there should be economic activity subject to taxes. That new revenue would be subject to the “tax increment.”

• Some of the new tax revenue could be diverted to reimburse the developer for the public infrastructure it builds. The county can decide what percentage of the new revenue to divert.

• If there is no TIDD, the developer would generally have to pay to build the streets, curbs and other infrastructure within the development. It would recoup the money by selling the land to homeowners and others who buy there.

While McKay quotes a proponent of the TIDD who argues that it will “incentivize the developer” to build on the land quickly “because there’s a mechanism in place for them to get paid back over time,” others challenge that idea:

One potential problem is “cannibalization,” skeptics say. That’s the idea that if people and economic activity now in the rest of the city or county – outside a TIDD – move to Santolina – inside a TIDD – the county will lose revenue for basic operations.

Read McKay’s full report here.

In 2009, the state House of Representatives rejected a proposed TIDD for SunCal after two tie votes on the House floor.

SunCal later went bankrupt and the company’s New Mexico assets were taken over by Barclays, a British bank.

As we wrote in our initial piece on Santolina:

Amidst the tangled messes sat SunCal. In addition to its floundering California ventures, the developer had borrowed almost all the money for that initial Atrisco Land Grant purchase from three lenders, primarily Barclays. After the British bank was finished devouring the last choice cuts from the Lehman Brothers carcass, it turned to SunCal in New Mexico. And when its demands for repayment weren’t met, it simply took ownership of the Westside land holdings under the newly formed corporate umbrella of WALH.

Now, a push for another TIDD begins.

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