SWOPblogger

Dear Albuquerque City Councilors:

The SouthWest Organizing Project (SWOP) is opposed to the creation of Tax Increment Development Districts (TIDDs) in “Greenfield Developments” for the following reasons:

1. TIDDs subsidize developers (and MdS and SunCal are owned by large, out of state developers) by diverting tax revenues from the state and city general funds, and are inherently unfair.

a. Paying for new infrastructure with TIDD’ed tax money mocks the “no net expense” policy of the City of Albuquerque, which states that growth will pay for itself.

b. By covering development costs which should be paid for by the developers, TIDDs create an uneven playing field for developers (mostly local) who have to pay their way with impact fees and regular development costs.

c. There is no transparency requirement built into the legislation requiring the developer to show infrastructure costs are not passed on to the public through the price of homes. Without this requirement, we can assume the costs of infrastructure are being paid twice: once when homes are sold, and again when tax revenue pays off the bonds.

2. TIDD financing in new developments is bad government replacing private enterprise investments.

a. State Government should not be paying for infrastructure in fringe developments in Albuquerque or Santa Teresa.

b. City Government should not be paying for infrastructure in fringe development in Albuquerque or Santa Teresa.

c. TIDD financing increases the cost of infrastructure because the privately placed bonds (for MdS and Suncal to be purchased by their parent companies, verifying that they can pay for the development up front and providing them income on top of the free development money) are at interest rates higher than Albuquerque can command.

3. TIDD financing will have a negative effect on the non-TIDD areas of Albuquerque.

a. The total cost in lost revenue to the City from the MdS TIDD is estimated at $750,000,000 using the MdS projections and including the portion of State GRT which would be returned to the City under the current state distribution policy.

b. This financing method assumes that the residents of a TIDD area do not use or need any of the government related services in other parts of the city. It also does not consider the collective needs of the city, in effect Balkanizing Albuquerque for decades to come.

c. Again, paying for new infrastructure with TIDD’ed tax money mocks the “no net expense” policy of the City of Albuquerque, which states that growth will pay for itself, because it assumes future collective needs can be predicted, or that current needs on which projections are based are sufficiently being met today.

4. TIDD financing veils the income transfer and thus is not the kind of open, transparent government Albuquerque deserves.

a. The TIDD tax revenues pay off infrastructure bonds, which were bought by the developer building the infrastructure. In effect, the developer is actually paying upfront for the infrastructure and then being paid by the tax monies. The bond process obscures the fact that the tax revenue is going to pay a private enterprise’s development cost.

b. The diversion of the revenue streams and the impacts are not easily understood—MdS and SunCal tell you they are paying their own way and probably believe it after they have repeated it enough times. But in fact, with TIDD’ed tax money they are the beneficiaries of large public revenue streams.

SWOP believes that Councilor Cadigan had it right the first time when he introduced his bill to remove greenfield development from the Albuquerque TIDD legislation. We commend him for all of his hard work on the issue. Politics have forced him to modify and modify.

Faced with no other alternative, SWOP can support proposed modifications, but only with severe clawbacks assuring that developers who fail to achieve stated goals will repay all associated TIDD monies. In the long run, however, the TIDD financing at both the state and local level must be amended or all of the rest of us (the non TIDD dwellers) will be paying higher taxes for reduced services for decades to come.

# posted by marjorie @ 2:38 PM