New Mexico developers’ little secret: greenfield TIF

By Carter Bundy

When you were a kid, did you ever think you’d be reading about tax increment financing (TIF)? I didn’t, and unless your name is Alex P. Keaton, you didn’t either. But it’s an issue worth billions, so it can’t be that dull. It isn’t talked about as much as Alec Baldwin’s parenting skills, but TIF is important, especially in New Mexico. Truth is, it might the best kept secret this side of Vlad Guerrero.

TIF was designed as a way to incent development – business or residential – in blighted parts of town. You take the baseline tax revenue for an area; then, in the future, any additional tax revenue (the tax “increment”) following new development is specifically dedicated to improving infrastructure and services in that area. The theory is that the general funds of the state, city and/or county aren’t hurt, because they still get the baseline revenue, and taxpayers aren’t strapped too badly because there is already basic infrastructure. Everybody wins at little cost, mas o menos.

But what happens when you apply TIF to greenfields – undeveloped areas? Greenfields have no existing tax baseline, meaning all future taxes are part of full TIF. Full greenfield TIF gives all the tax revenue to the new development (and none to the general fund), while simultaneously putting massive new infrastructure and operating burdens on you, the taxpayer. That’s the essence of why taxpayers and voters need to be wary of greenfield TIF.

While the issue is popping up all over the state, I’ll use the example of SunCal (Westland) in Albuquerque, because it’s the biggest potential greenfield TIF in state history. The SunCal developers, to their credit, have designed a new urbanist dream mix of residential, retail, commercial and recreational areas. It’s not unlike Denver’s new Stapleton.

The good news is that it will be the opposite of the junky sprawl that dominates Phoenix and Atlanta. The bad news is that SunCal is looking to have you, the taxpayer, subsidize almost the entire thing using greenfield TIF.

If new urbanist developments are so desirable, why do they need taxpayer subsidies to exist? The short answer is they don’t. Say you’re looking for a house and might pay $200,000 to live with congestion and no recreational or retail outlets (or schools) within 5 miles. Yuck. Then SunCal offers a beautiful recreation center and pool one block away from one of your house, a nice ABQ Uptown-style shopping area down the street and a new school with a big park right across from you. As Stapleton has already proven, people will spend much more to live in that kind of community – up to 20 percent more. That’s about $40,000 more per house.

Unless you’re putting a spaceport on every block, the market should be able to absorb the extra costs. SunCal has kindly shared its designs, as has Forest City Covington, who built Stapleton and is building a similar Albuquerque community called Mesa del Sol. The more I see their plans, the more I like them, and the more convinced I am that the market will pay for it.

Juárez or Montreal – your choice

So should there be any TIF for greenfields at all? At the very least, they should meet the following conditions:

• Any greenfield TIF should be limited to the difference between the taxes generated by this type of development and the taxes that would otherwise have occurred. It’s simply not true that in the absence of SunCal or Mesa del Sol that there would never have been a tax base. Ask anyone who bought on Eubank 30 years ago.

• Increment calculations should be realistic. Greenfield developments generate revenue, in part, at the expense of older areas. When SunCal builds its shiny new retail areas, a big part of that business will be cannibalized from Downtown, Cottonwood, and Coors. If our tax dollars all go to build SunCal, they cannibalize other Albuquerque retail, and SunCal keeps all the resulting revenue, the rest of Albuquerque is going to start to resemble Detroit.

And don’t think people won’t travel five miles to shop at SunCal. Heck, I know women who fly to Dallas for Nordstrom’s. Seriously.

• If reasonable TIF agreements can’t be reached, don’t get scared into taxpayer giveaways just to avoid crappy sprawl. This is the trump card developers hint at: “If we don’t get TIF, we’ll build more sprawl.” Don’t believe the hype. Elected leaders control zoning. What’s wrong with insisting on sustainable, attractive, mixed-use development?

Something to consider for upcoming Albuquerque and Las Cruces elections: City councilors and mayors elected by developers have traditionally given away the store, at the expense of taxpayers and the future of their city.

What kind of future can we have? Las Cruces and Albuquerque are historic, university boomtowns becoming large enough to join the list of great world cities, but each is still small enough that we have time to avoid becoming Phoenix or Atlanta. We can be Montreal with Hispanic and Native heritage and culture. Portland with sunshine. Austin with more history. San Francisco with summers. Charlottesville with more diversity. New Orleans or San Antonio with mountains.

Or we can be Phoenix, Atlanta, or Juárez.

If developers insist the market can’t support a New Mexico Stapleton, that means new development will create a glut of housing, office space and retail. Who needs that? But my bet is the market here is ready. We deserve developers and politicians who will deliver quality future growth without milking taxpayers or gutting the rest of the city.

Bundy is the political and legislative director for AFSCME in New Mexico. The opinions in his column are personal and in no way reflect any official AFSCME position. You can learn more about him by clicking here. Contact him at carterbundy@yahoo.com.