The New Mexico
legislature is considering three pieces of legislation dealing with “greenfield”
Tax Increment Development Districts (TIDDs). Although originally used to
promote urban infill development in areas where investment would not happen but
for such subsidies, TIDDs have begun to be used to subsidize sprawling greenfield
development, encouraging unsustainable development that is contributing to global
warming. TIDDs also divert community resources: up to 75 percent of a TIDD’s
gross receipts and property tax revenues can be diverted directly into the
pockets of developers.
“The New Mexico
legislature has the opportunity to close some of the most egregious loopholes
associated with greenfieldLauren
Ketcham. TIDDs.
However, while solutions are stagnating in committee, a massive bond for the
SunCal TIDD is flying through the legislature, on a fast track to the
Governor’s desk,” said Environment New Mexico advocate
HB 276 (Silva), SunCal Tax Increment Project Bonds, cleared
the House Floor yesterday with a 44-23 vote. HB 276 authorizes a massive $629 million bond issue to provide
infrastructure to a sprawling development on Albuquerque’s west mesa. The bonds would be serviced by diverting
gross receipts tax revenues that would otherwise accrue to the state.
“Not only are these types of greenfield Tax Increment Development
Districts bad public policy from a land use and water planning perspective, but
they also deprive the Legislative and Executive branches from any oversight or
discretion over the diverted revenues for up to 25 years,” said Javier Benavidez,
Conservation Voter New Mexico’s outreach director.
Most importantly, the State Legislature’s Fiscal Impact Report
estimates that 90 percent of anticipated industrial development at SunCal will result
from turnover or relocation. In other words, the vast majority of industrial
development at SunCal would be generated by moving from an area where the state
would receive 100 percent of the tax revenue to a TIDD where 50 percent of
those revenues are diverted from the state. Incentivizing such development on
the fringe not only depletes state tax revenues but will also encourage many
businesses to move from established areas of the state to new TIDD areas,
cannibalizing established communities.
“The opposition to TIDDs is bi-partisan. Fiscal
conservatives, community advocates and environmentalists alike are sounding the
alarm bells on this dangerous blank check,” said Benavidez.
As a result of these and other concerns, the New
Mexico legislature is considering two proposals that would study the issue of greenfield
TIDDs and close some of the worst loopholes.
Democratic Representative Elias Barela and Republican Representative
Keith Gardner are sponsoring HB 451, which would:
- Lower the percentage of the incremental gross receipts
taxes that can be distributed to a TIDD from 75% to 50%
- Require that distributions to TIDDs that are greater
than needed for servicing the bonds and building a reserve be returned to the
relevant taxing authority
- Limit gross receipts tax distribution to a greenfield
TIDD to 20%, with incentives to increase that percentage by investing in
workforce housing and transit-oriented development
- Require greater state oversight and increase reporting
requirements
- Create a taskforce to research and analyze issues
related to TIDDs that must report to the legislature by June 2009.
Unfortunately, earlier this week, HB 451 was tabled in House
Tax and Revenue Committee. Three Republicans and one democrat voted in support
of the bill.
In the Senate, Senator McSorley is sponsoring SB 434 which would
place a moratorium on creating new Greenfield Tax Increment Development
Districts until 2010 and until a task force can report on its findings related
to the TIDD policy. TIDDs already approved would not be affected. SB 434 will
be heard in Senate Corporations Committee today.
“Although there is bi-partisan legislation that would help
bring some sanity to this process, powerful development interests continue to
block TIDD reform. At the same time, the legislature is poised to sign over
millions of dollars that will go to the General Fund to promote low risk
sprawling development. New Mexico’s
legislators should support SB 434 and HB 451, which would allow us to take a
step back and get our arms around this problem,” concluded Ketcham.
