11-14-2008
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Friday, November 14, 2008
2 Councilors Want Vote on Arena
By Dan McKay Journal Staff Writer
At least two city councilors intend to push for a public election on whether Albuquerque should move forward with a tax increase to fund a $400 million hotel and event-center complex. Councilors Isaac Benton and Debbie O'Malley said they hope to have an election sooner rather than later, perhaps this spring. The regular municipal election is in October, but they believe the Downtown site might not be available if the city waits that long. "This is a huge step for any city," O'Malley said. "I see this as an opportunity." Mayor Martin Chávez supports putting the possible tax increase to a vote, spokeswoman Deborah James said. The announcement came shortly before the project ran into significant skepticism Thursday at a City Council study session. Several consultants studying the project presented their findings. Councilor Michael Cadigan cut them off after about 45 minutes, launching a round of questions from councilors. "I need to hear the risk," he said. "You can't just come in here with a sales job and expect us to accept it." The talk turned to whether the nation is entering a seven- to 10-year recession that will squeeze government revenue and reduce the amount people are willing to spend on concerts, sporting events and other activities. The presentations Thursday were part of a $700,000 assessment the city is paying a development team to oversee. An independent team reviewing the consultants' work is expected to speak at Monday's regular council meeting. Benton pointed out that an economic analysis by one consultant indicated that the construction of an event center and hotel would stimulate the local economy. That might help provide jobs in a time of recession, he said. Dale Lockett, president of the Albuquerque Convention and Visitors Bureau, said the city risks losing convention business without the project. The city already provides a roughly $1 million subsidy to the Albuquerque Convention Center, a consequence of not having enough hotel rooms for big conventions, he said. "Cities after cities are lining up to do these projects," Lockett said. "It's our competition. ... We are in serious jeopardy of being completely out of the convention industry." The city has been weighing whether to go forward with the $344 million event center and hotel complex, which would sit next to the Convention Center and the railroad tracks. Another $53 million in related parking garages, plazas and other improvements are also under consideration. Supporters are hopeful that state government will help pay for those. Benton broached the idea of scaling back on the parking garages. One of the studies indicated there are already enough public parking spaces nearby to handle event-center traffic. Benton also said a mail-in ballot might be the way to quickly get the issue before voters. Waiting until October might not work because the group that owns the First Baptist Church — part of the planned site — could sell it before then to someone else. "The sooner we deal with this, the better," O'Malley said. They haven't introduced a formal proposal for an election yet but said they would. They also haven't worked out the details. An election would cost money. The 2001 special election for Isotopes Park cost about $300,000. Councilor Don Harris said the city shouldn't raise taxes without an election. The current financing arrangement calls for a one-eighth-cent increase in the gross-receipts tax. That would add 12.5 cents to a $100 purchase and push the tax rate to 7 percent after a separate Rail Runner tax kicks in. Councilor Sally Mayer said she likes the project but isn't sure the city should go forward with all of it. She broached the idea of just doing the hotel. "I just don't know that we can do it now," she said. Some said the presentation sounded too positive before councilors asked questions. "We didn't spend $700,000 for a sales promotion," Council President Brad Winter said. "We spent it for an assessment."
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Wednesday, November 12, 2008
New Tax Possible for Arena Albuquerque
By Dan McKay Journal Staff Writer
City Hall could finance a $344 million events center and hotel complex by imposing a new one-eighth percent gross-receipts tax and by tapping revenue generated by the project — but it would need to find other money for related improvements. And the city must also be willing to use its existing tax revenue as a "backstop" in case the new tax isn't enough to pay off the debt, according to a financial analysis by the firm Piper Jaffray. City Hall would need to find separate funding for about $53 million in related improvements around the project's Downtown site, such as a canopy over the railroad tracks, plazas, road improvements and parking garages, the report said. City officials say the state government is one potential source for that money, plus some of the city roadwork would have to be done even if the project isn't built. The financial overview by Piper Jaffray was presented to the City Council's finance committee this week. The full council will hear about it in a study session Thursday and in a presentation at Monday's regular City Council meeting. Piper Jaffray was hired by the development team designing and studying the feasibility of a Downtown event center and hotel. The work of Piper Jaffray, along with all the other consultants, is being reviewed by an independent team with no stake in the project, according to the city Department of Municipal Development. RBC Capital Markets, for example, is reviewing the Piper Jaffray report. The city hasn't decided whether to move forward with the project. The tight economy and meltdown on Wall Street could complicate matters. The city and state governments each plan to cut spending because of lower-than-expected revenues. City Council President Brad Winter said that, amid a budget crunch, he's skeptical about the possibility of finding money for the extra $53 million not covered by the new tax and operating revenue. "Things are just down. It's a bad time," he said. The developers are "not looking at reality." But Councilor Debbie O'Malley said the project would create construction jobs, boost the economy and revitalize the city at a time when help is needed. "Families are going to be out of work, and here's an opportunity to employ hundreds of people," she said. "It's an investment." The city administration, meanwhile, has stressed that it's doing independent evaluations of the studies and moving cautiously. "Every report gets vetted," said Michael Riordan, deputy director of municipal development. The council has several reports to consider in the coming days. Here are some highlights: n A traffic study by Bohannan Huston Inc. recommends closing part of Central Avenue to traffic during special events. The area between Broadway and First Street would be reserved for pedestrians and the loading and unloading of buses and shuttles. The city might also need to station people at nearby intersections to direct traffic and post message boards. n A report by Economics Research Associates estimated that the "economic benefits will be larger than the costs over the life of the project." There would be a boom in construction jobs while the project is being built in the early years. After that, however, the new one-eighth cent tax would slow down the economy slightly, creating a negative impact for a while. But those negatives don't outweigh the initial positive impact or the benefits enjoyed in later years of the project, the report said. n The ERA report also says the project might erase or minimize the $1 million-a-year subsidy the city now provides to the Convention Center because new business would be coming in. The company called that "icing on the cake" for the city. n Turner Construction Co. estimates the events center and hotel would cost about $344 million to build. It would cost another $53 million for two parking garages; a plaza on the West Side of the project; a railroad canopy, plaza and platforms; and city road and utility improvements. Some of the road improvements would have to be made over the next 30 years anyway, even if the project isn't built, city officials said. n The existing revenue used as "backstop" for the project might not be needed. It should be available, however, in case the project's operating income or revenue from the new tax don't cover costs, officials said. Plans at this point call for a 550-room hotel next to the Convention Center and a 10,000- to 11,000-seat event center nearby at the railroad tracks. Winter questioned whether supporters of the project would put the tax increase before voters or just have the council consider it. The renderings are "absolutely breathtaking, but it's like we're building with a blank checkbook because it's taxpayer money," he said. "I have an issue with that." Councilor Isaac Benton said the city has potential as a better tourist destination. "I'm optimistic," he said. "I still want to digest all this. I'm looking forward to looking at this in more detail."
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