Westland DevCo/SunCal Bankruptcy Was No Surprise To TIDD Opponents

Opponents of a state-backed tax scheme to help develop a parcel of land on Albuquerque’s West Mesa say they aren’t surprised by news that the company behind the plan has filed for bankruptcy.

Here’s a copy of the bankruptcy filing.

“What we all said was going to happen and what we knew was going to happen finally happened,” said Rep. Ben Rodefer, a Democrat from Corrales. “They were not viable financially and not of the caliber we should want to be in a relationship with.”

One year ago, Rodefer was one of the strongest voices against California-based Westland DevCo/SunCal’s quest for legislative approval of a plan to tap future state tax receipts to develop a 55,000-acre parcel of land into a master-planned community on Albuquerque’s West Side.

The funding scheme, called a tax increment development district, or TIDD, is supposed to be used to spur revitalization of historic districts or other infill development within cities – not to aid companies who want to build up previously undeveloped tracts of land.

Westland DevCo/SunCal announced this week that it has filed for bankruptcy on its New Mexico properties after defaulting on $188 million in loans. A number of the company’s developments in other states have also gone bankrupt.

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Bye Bye SunCal TIDD?

Looks like you dodged a bullet, New Mexico – this time.

The Albuquerque Journal reported Friday that the beleaguered California development company SunCal won’t seek the legislature’s approval for a tax increment development district, or TIDD, in the session that starts Jan. 19.

According to the paper, the company is currently involved in a lawsuit filed by three capital companies, who are seeking SunCal’s immediate payment of $182 million in loans it wanted to use to develop 55,000 acres of Westland property on the city’s West Side. If SunCal defaults on the loan, it will lose the land.

Creating a TIDD for SunCal would have required taxpayers to provide money upfront for providing SunCal land with roads, water and sewer lines. SunCal would have been allowed to reimburse taxpayers for the development costs later with property and gross receipts tax revenue garnered from the development.

Critics of the proposal protested the thought of more development on the West Side. After all, TIDD were originally developed to aid revitalization of inner city historic districts, not new development.

They also wondered how anyone could be sure that the SunCal would even be successful enough to reimburse taxpayers.

They noted that divisions of SunCal oversaw several failed developments in other states.

For it’s part, SunCal said its New Mexico holdings were solvent and had nothing to do with its operations in other states. I guess we know better now.

Good thing the legislature didn’t approve those TIDDS when SunCal asked for them back in 2008 or 2009, isn’t it?

From the Journal story:

The company has been denied approval for the incentives in the Legislature in the last two years.

In 2009, two tie votes in the House of Representatives stopped approval, despite a huge SunCal media campaign promoting the incentives and the company’s estimate of nearly 13,000 jobs it would help create. A year earlier, a Senate filibuster by Sen. Cisco McSorley, D-Albuquerque, stifled SunCal efforts.

SunCal president Will Steadman told the paper that the company will likely return to ask the New Mexico Legislature to reconsider the TIDD proposal “when the economy has improved.”

Let’s hope that, in fact, they’re gone for good.

TIDD Panel Draws Fire from Legislators

Senator Bernadette Sanchez

Senator Bernadette Sanchez

State Senator Bernadette Sanchez’s attempt to present a “balanced” panel to address the state legislature’s Economic and Rural Development Committee on the issue of TIDDs today backfired as several legislators questioned why no one “from the other side” was on the panel.

Legislators including Rep. Ben Rodefer, Sen. Tim Keller, Rep. Nate Cote, Sen. Steve Fischmann and Rep. Debbie Rodella all questioned the make-up of the expert panel Sanchez had assembled to answer legislators’ questions about TIDDs, or Tax Increment Development Districts.

TIDDs were a hot topic during the last Legislative session, when, in the wee hours, legislators narrowly rejected a proposal that would have seen the state give SunCal nearly $500 million in future tax revenue so the company could develop a parcel of land it owns on Albuquerque’s West Side.

Despite the defeat, SunCal has said it will push the TIDD proposal again during the next legislative session.

At today’s hearing, Rodella and others objected to the presence of SunCal lobbyist and former state Tax and Revenue Secretary Dick Minzner, who announced at the beginning of the panel that he was there to answer general questions about TIDDS and not just to talk about the SunCal proposal.

However, the hearing threatened to turn into the SunCal show as legislators fired most of their questions at Minzner.

Fischmann said he can’t understand how taxpayers could benefit from a deal that would see them paying hundreds of millions of dollars and ending up not even owning the development. “Would any reasonable person enter into this agreement?” he asked.

Minzner replied that the government and taxpayers get a portion of any gross receipts generated by the project.

Rodefer drilled into allegations of bad fiscal management by SunCal, noting that top Lehman Brothers executives publicly blamed SunCal for a number of failed development projects the two companies collaborated on in California.

“Do we really want to hand $500 million to a failed California developer?” he asked in a brief interview outside the hearing.

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SunCal TIDD: Reasons for optimism?

There’s a billboard on the side of interstate 40 near the Carlisle exit which reads, “20,000 jobs.” SunCal’s proposed development of the area surrounding Petroglyph National Monument on Unser Blvd. depends on the state government’s willingness to issue roughly $400 million in bonds to help pay for construction of roads, sewers, and water pipelines on SunCal land. SunCal’s position is simple: the state of New Mexico should pay for all this because SunCal’s development will end up paying for itself. To that end, SunCal proposed what is called a TIDD, or Tax Increment Development District, be created to around the site of their development. What is a TIDD? SunCal’s online site TIDDfacts.com says:

TIDDs issue bonds based upon the new businesses and values generated from within the 9 Districts. The bond sale proceeds reimburse SunCal for the costs of the public infrastructure. The bonds are repaid from the new business taxes and other taxes generated within the Districts – NOT from current Albuquerque taxpayers or current businesses. By using TIDDS, the new development pays for its own infrastructure instead of having the City pay for it from its general fund.

It would seem that the issue really is as simple as the billboard on I-40 states: the only way you can conceivably be opposed to a SunCal TIDD is if you object to 20,000 new jobs in New Mexico. Why, then, did 33 of 66 lawmakers at the state capital conspire to prevent the gainful employment of 20,000 people?

Economics, stupid. The proposed TIDD on SunCal lands would, by the time they are estimated to be paid off in 2047, require more than $1 billion in state, county, and city funding (viii). Forty years is a long time, you might say, but it’s not very long to the state. Furthermore, when it comes to ensuring tax revenue in the future, one might argue that development is the only viable way to proceed.

Yet SunCal admits that it hasn’t taken inflation into its accounting of future tax revenues or costs of maintaining all those new streets and underground pipes. Add this to the city’s estimate that an Albuquerque population growing at a middling 1% a year would run out of viable supplies of drinking water in 2060, and you realize that opposition to SunCal may not have been because legislators in Santa Fe hated the idea of more jobs for New Mexicans. (Part of SunCal’s 20,000 estimate consists of high-paying Aeronautics jobs).

When one takes in the whole of New Mexico politics, it is easy to be frustrated by the corruption, vagrance, and various chicaneries that seem to define it. Yet this is to miss the forest for the trees. SunCal, for all its high-paying lobbyists and advertising campaigns, could not see the simple truth, that it faced an all-too-rare moment of sanity in Santa Fe: SunCal’s last message on its Twitter account, dated March 19th, says “SunCal Tax Plan a Benefit to State!” On March 20th, Legislators defeated their proposal.

But this isn’t a reason to celebrate quite yet. The TIDD issue will almost certainly come up before the legislature again in the next session, and SunCal will continue to skew the facts as long as it thinks it can get massive amounts of bond money from a captive state legislature.

SunCal Ad Report: Double Standards and the Zombie TIDD

SunCal:  Selling a pig in a poke

SunCal: Selling a pig in a poke

The regular session of the 2009 Mexico State Legislature is over now, but the aftermath of what happened in and around the Roundhouse keeps floating down around us like tiny flecks of ash.

One detail that’s just been released is the amount of money that Westland/SunCal spent on advertising during the legislative session.

Many New Mexicans were curious to know just how much the California-based development company spent blanketing the state with print, broadcast and online advertisements touting the benefits of TIDDs – or tax increment development districts. The ads were part of Westland/SunCal’s effort to get legislators to approve a bill that would have given the financially-troubled company $408 million in future tax revenues to develop a parcel of land on Albuquerque’s West Mesa.

The Secretary of State’s office said state law allowed the company to take up to 15 days after the session to report the advertising expenses.

In the waning hours of the session, the Westland/SunCal TIDD was narrowly voted down  – and this week New Mexicans found out the price tag for the company’s huge public relations push.

According to a report  filed this week with the Secretary of  State’s office, Westland/SunCal spent $232,540 to tout the benefits of TIDDs, including about $80,000 on local network television advertising, $55,000 on cable, $23,000 on billboards and more than $10,000 on radio.

“Inadequate” Report

That near quarter-million dollar total is pretty shocking all by itself.

But at least one veteran legislator suspects the report barely scrapes the surface of what Westland/SunCal laid out to try to get New Mexico legislators to pass the TIDD bill.

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Accommodating SunCal’s Message Strategy

I’m glad someone else noticed that surreal statement from Westland/SunCal spokeswoman Catherine Wambach in Sunday’s Albuquerque Journal.

Wambach was asked how much the California-based development company spent wooing New Mexico legislators who are poised to consider legislation that could give the company over $400 million in tax increment development districts, or TIDDs, for a development on Albuquerque’s West Side.

That includes how much they spent for a massive web, television, radio and billboard advertising blitz in favor of TIDDS that recently blanketed the state.

From the Journal story:

SunCal spokeswoman Catherine Wambach on Thursday declined to say how much the company spent, saying the totals will be available in state-mandated reports 15 days after the legislative session ends later this month.

Providing the numbers in advance of that is “not part of our strategy. It’s not part of our messages,” Wambach said.

Matt Reichbach, who blogs at nmfbihop.com, gets it dead right in his analysis where he questions this ridiculous statement.

But it’s also interesting to note that the Secretary of State’s office has added a whole new section of their website, just to deal with lobbyist advertising campaign reports – like the kind Westland/SunCal is supposed to file?

What’s the rationale for that?

Again, why does SunCal get special favors?

SunCal’s Perverse Socialism

Today’s Albuquerque Journal reports the latest development in the taxpayer handout to SunCal story.

From the Journal:

SunCal Companies defaulted on $184 million in loans– losing five properties in foreclosure. At least nine lawsuits are pending in those states.

Moody’s last month removed a bond rating on one SunCal company responsible for four developments in Southern California.

Coco offers her take on all of this at Duke City Fix.There is a breathtaking perversity to the whole scheme: The handing over of millions of dollars tax revenues to an out-of-state developer to support the construction of more rooftops just when the economy is tanking and state revenues are already projected on a downward curve. (Watch the latest Eye on New Mexico for a sobering economic forecast.) Continue reading