COMMENTARY: There’s is no easier mark for corporate con artists than local politicians presiding over a struggling economy. Desperately wanting to create jobs, they are as vulnerable to bogus economic development schemes as a gambling addict is to the next “can’t miss” sports bet.
The all-too-familiar pursuit of fool’s gold is being played out once again with the proposed 14,000-acre Santolina development on Albuquerque’s West Side.
Though the project is currently hung up in the courts, Bernalillo county has already signaled its intention to fork over $500 million in tax subsidies to help fund roads, water and other infrastructure. The developers, Western Albuquerque Landholdings (controlled by Barclays Bank), will undoubtedly ask for billions more in state tax subsidies as the project moves forward.
The fatal flaw in the deal is so obvious that it’s laughable. There is no way to prevent public funds from being siphoned off as profit before they are invested in the development.
Santolina proponents will tell you taxpayer investment is protected because subsidies are not available to the developers until the project generates tax revenue. But the workaround for Barclays Bank is simple.
Once zoning, platting and tax subsidy status are approved for successive phases of the development, Barclays sells the land before physical work begins. The future value of the subsidies is included in the price, allowing Barclays and their partners to walk off with our future tax investment long before it can serve any useful purpose.
Meanwhile, the new landowners, having paid for the future subsidies, now require them just to stay competitive. Without the subsidies, they will wind up paying for infrastructure twice. Net result: The tax subsidies will do little to stimulate more rapid development.
If you doubt Barclays will sell prior to build out, consider that they obtained the land through foreclosure on a delinquent loan to the former Sun Cal developers. Barclays is not in the development business. They will flip this turkey at the first profitable opportunity.
So let’s tally the economic impact of public funding for the Santolina project as currently planned:
- Developers skim future tax subsidies off the top as profit by selling before construction of infrastructure begins.
- Reduced net tax revenues for up to 70 years will require policymakers to either raise taxes or reduce already stretched services. The virtually guaranteed legislative tax subsidies will spread the pain across all New Mexico. Wish your grandchildren good luck when they need rapid response in an emergency.
- Other development projects are put at a disadvantage because they cannot obtain similar subsidies. Rather than creating jobs, Santolina steals them from competing projects.
By favoring a tiny group of winners, elected officials will only succeed in creating a huge list of losers. There are no credible independent studies showing that the kinds of subsidies being offered to Santolina stimulate regional economic growth. This after more than 50 years of experience across the country.
The timing of the Santolina project makes even less sense than the tax subsidies. After ten years, the similarly subsidized Mesa Del Sol Development, just a few miles away, is less than 1 percent built out. We can all see the limited impact that project has had on job growth in Albuquerque. The last thing Bernalillo County needs is another stalled mega-development.
Premature approval of the Santolina development and associated tax subsidies benefits only one group, Barclays Bank and their Western Albuquerque Landholdings partners. Let’s keep their hands out of the public till.
Steve Fischmann is a former Democratic state senator from Las Cruces.