A proposal to develop a Santa Fe facility for high-pressure food processing is one step closer to reality.
Mayor Alan Webber and the City Council unanimously approved a resolution Wednesday declaring the city’s intent to issue up to $18 million in industrial revenue bonds to help finance the nearly $27 million project, which proponents say has the potential to revolutionize the area’s food economy.
On Sept. 25, the governing body will hold a public hearing to consider an ordinance authorizing the city to issue the tax-advantaged bonds on behalf of New Mexico Fresh Foods LLC.
“I have nothing but enthusiasm for this project,” City Councilor Mike Harris said. “I see nothing but great potential.”
If the city issues the bonds, it would only be lending its name to the deal and wouldn’t be on the hook financially.
“The city is not financially responsible to the bond holders whether the project succeeds or fails,” Fabian Trujillo, manager of the city’s Office for Business Growth, said in an email. “NMFF has raised funds through the traditional equity and debt financing markets to finance this project. Therefore, if the NMFF fails, then they would be responsible in paying the financial institutions like any other business.”
The proposed facility, which would be housed in a 42,000-square-foot building on Sixth Street between Cerrillos Road and St. Michael’s Drive, would use a cold-water pressure process that can extend the shelf life of juices, hummus, salsa and other food products. Backers expect it will create 162 new jobs in Santa Fe County and indirectly create an additional 640 jobs statewide in food production, agriculture and transportation, according to an economic analysis.
Kelly Egolf, managing partner and CEO of the company, said the jobs will be targeted toward blue-collar workers .
“These are relatively low-skill jobs — they’re factory worker jobs,” Egolf, who is married to New Mexico House Speaker Brian Egolf, said at a recent Finance Committee meeting. “Nonetheless, average wages are $43,000 a year.”
Egolf told the council on Wednesday that the project “is about creating jobs and partnering with the local community to bring a revolution to local foods in not only Santa Fe, Santa Fe County, Northern New Mexico but truly a regional development project.”
In a news release issued earlier this week, Webber touted the potential of the proposed facility, which the economic analysis projects will generate $21 million in new taxes, fees and revenues for the city over 10 years.
“Santa Fe is perfectly positioned to grow a thriving business in value-added food industry,” the mayor said in a statement. “Healthy food, locally grown and locally produced are important parts of Santa Fe’s historic identity and, just as important, a great opportunity for our future. It means jobs, but it’s also another part of a sustainable, healthy way of life.”
The proposal to issue tax-advantaged bonds to finance “the acquisition, construction, renovation, installation and equipping” of the facility comes as the governing body considers a separate request to issue up to $80 million in industrial revenue bonds to help finance construction of a new retirement complex at 401 Old Taos Highway.
Council members are less enthusiastic about the request from El Castillo Retirement Residences. That proposal calls for the city to issue bonds to finance the purchase of property at Old Taos Highway and Paseo de Peralta, as well as build and equip a 68-unit independent living facility run by El Castillo, which operates a facility for the elderly downtown on East Alameda Street. One city councilor has called the proposed retirement center “the country club of assisted living centers.”
Follow Daniel J. Chacón on Twitter @danieljchacon.
Industrial revenue bonds
Municipalities are authorized by law to issue industrial revenue bonds for projects that promote economic development, as well as projects undertaken by certain nonprofits.
A municipality is allowed to hold “bare legal title” to a project financed with such bonds until the debt is paid off with revenue from the project, which allows an exemption from property taxes. But the city is not allowed to repay or support the bond issue with any of its own revenues, or to operate or maintain the project.
An industrial revenue bond isn’t considered a debt obligation of the city because the municipality is legally prohibited from paying debt service on the bonds, which do not affect the city’s credit rating or its ability to borrow money for government-related purposes.
When the bonds are issued, the city leases the project to the company overseeing the project. The lease payments are used to repay the principal and interest to the bond buyer. No other city funds or resources can be used.
Regardless of whether an industrial revenue bond is sold to an affiliate of the project company or a third-party lender, the purchaser has no recourse against the city for repayment.
Source: City of Santa Fe