Santa Fe County agreed conceptually Tuesday to sell 65 acres of land to a film-production company and to help the company develop the property through industrial-revenue bonds and tax-increment financing.

Santa Fe Studios — which is proposing to build an eco-friendly film studio on the property, located on N.M. 14 near the Penitentiary of New Mexico — is also asking the county to provide about 16.8 acre-feet of water for the project.

The commission as a whole has been enthusiastic about the economic development potential of the proposed studio. But Commissioner Jack Sullivan balked at the studio's request for free water Tuesday, telling owner Lance Hool that in New Mexico just finding water rights and wet water is a boon and paying for it is customary. "I think the contribution from Santa Fe Studios should include paying for the water, and we would set a not-so-good precedent by waiving that," Sullivan said.

Hool said it would be difficult for his company to pay for the water and still keep its rates competitive with those of Albuquerque studios.

About 30 people turned out to support Santa Fe Studios' proposal Tuesday, including Gary Credle, executive vice president of Time Warner's studio operations. "We're interested in Santa Fe," said Credle. "It's beautiful, and creative talent like to come here and want to come here."

Lisa Strout, director of the New Mexico Film Office, also urged the commission to support the project. Strout said Santa Fe has been losing out to Albuquerque on film projects because Santa Fe doesn't have the infrastructure the industry needs. Strout said hundreds of Santa Fe-area film workers commute to Albuquerque and would like to stay home.

Under the terms of a proposed agreement, Santa Fe Studios will pay the county $2.3 million for the property and invest about $40 million building four sound stages in phase one of the project. Santa Fe County is being asked to forgo property taxes on the land for 20 to 30 years and approve a tax-increment financing plan to help fund $3.6 million of infrastructure needs, such as improvements to N.M. 14.

Sullivan said he had concerns about granting industrial-revenue bonds, which waive property taxes for a period of time, on the entire project. But he and the rest of the commission were enthusiastic enough about the studios' potential to be a clean industry that provides well-paying jobs to agree to the project in principal. Next, Santa Fe Studios will detail the specifics of the deal in a participation agreement that will need at least one public hearing before it is approved.

Contact Phaedra Haywood at 986-3068 or phaywood@sfnewmexican.com.