News and Events
Albuquerque Tribune
December 18, 2006
Editorial: Alternative Financing Makes Good Sense
Albuquerque's smart growth debate resumes tonight at the City Council, although the discussion, and any argument, should be short and the decision sweet.
The council is being asked to venture into unchartered territory and approve the city and state's first tax increment development district, or TIDD, to fund costly community infrastructure - from roads and parks to police stations and schools - at the massive Mesa del Sol development in south Albuquerque.
It sounds dramatic, complicated, historic and maybe a bit scary. It is - all of those. But the prognosis for success - in particular in promoting common-sense growth and potentially enormous economic development - actually is quite good. Once the unusual concept of financing this essential community infrastructure - using bonds sold against future tax revenues - is understood, it makes really good sense.
Indeed, the council would be foolish not to approve the proposed TIDD based on the need for a new, efficient and progressive way to do growth and development in such master-planned communities. This approach virtually is risk-free to the city and its taxpayers, and is being requested in the light of the already impressive performance by the Mesa del Sol developer, Forest City Enterprises Inc.
In advance of any housing development, Forest City has attracted substantial job-producing ventures to the 12,900-acre development and has $40 million of investment riding on its successful outcome. Mind you, one of the fundamental promises of Mesa del Sol is that it will be a nearly self-sufficient, self-sustaining, environmentally friendly development that is to include its own job base, and pedestrian-accessible homes, jobs, shopping and schools.
As an infrastructure mechanism, TIDD is an alternative to impact fees - the more conventional, and often difficult, approach in government's recent struggle to get developers to pay for infrastructure by requiring them to pay a gross fee up front per unit to cover all these community costs.
The proposed alternative is novel in New Mexico. It allows for the sale of bonds based on a portion of future tax revenues, allowing the developer to use that bond money to build the essential infrastructure based on property and gross receipts tax revenues that are projected to be generated by the development itself.
The bonds are backed only by the promise of that future revenue from that particular development district, and are not a burden either to the city or its taxpayers. The proposal is being fast-tracked to first get city approval of the TIDD so it can then be submitted to the Legislature in the coming session for necessary state approval.
Despite concerns of some critics, including 1,000 Friends of New Mexico, the City Council should not be deterred in taking a giant step forward in approving a mechanism that hopefully brings private and public sanity to the growth and development process. This move offers Mesa del Sol, and Albuquerque as a whole, a bright, balanced future where quality of life is a prime asset.