In a city where daily bread — gross receipt taxes — is derived almost exclusively by hospitality, food, retail and large gatherings of out-of-towners, the COVID-19 economic crisis creates terrible problems. With the tourist high season basically cooked, we’re in trouble.

There is one industry, however, that can pile in a lot of gross receipts revenue relatively quickly.

Unfortunately, it’s going to take an infusion of speculative cash coupled with an urgency and drive to make it happen.

Homebuilding and construction are never thought of as quick cash turnarounds. The development process can take years, and actual construction many months more, so the final sale of something is on a far horizon.

But gross receipts taxes start to be paid within 30 days of a project breaking ground. The ramp-up curve is fast and steep. There are projects ready to spend tens of millions of dollars — maybe hundreds of millions — that could get started almost immediately. They’re teed up, ready to go and aren’t on the midtown campus, where we will be gazing at the horizon for a long time.

Two large projects come to mind: Tierra Contenta and Las Soleras. Tierra Contenta would bring on at least 1,100 new dwelling units and as many as 1,800 if the New Mexico School for the Deaf can be cajoled or compelled to finally bring its land into the deal as the original master plan for the property showed.

The city should immediately, and finally, bond for the extension of Paseo del Sol in Tierra Contenta and provide the spine infrastructure, as it pledged to do five years ago. The repayment of the bond should be borne by developers and tract purchases. It should be short lived and not on the backs of existing taxpayers.

Further, the city should create a revolving fund for sub-tract infrastructure, paid back by homebuilders upon sale of a home. This would get local builders, hampered by lack of conventional high-risk infrastructure loans, back in the game. This should happen immediately. For its “gift,” which is really just being the financial backstop, the city can up the ante considerably on sustainability and affordability requirements for developers.

In Las Soleras, the issue is a legal one between the city and owners of undeveloped property who wish to get a credit for expensive improvements they made to Beckner Road. As happened with the improvements made on Airport Road years ago, they want that credit applied to impact fees assessed for roads at the time building permits are picked up and paid.

Though the owner-developers were not builders and don’t use the credits themselves, the credits have significant value. They were one of the enticements used to attract the Pulte development. The company got the credits when it bought the land and didn’t pay road impact fees when pulling permits.

Resolving this legal issue immediately would likely move something forward that could be a significant game-changer for Santa Fe’s south side. Imagine a mix of high-density housing with office parks and campuses, catering to and attracting high-tech firms to start or relocate there. An innovation village — perhaps even with its own rail stop.

Not only will it generate tons of gross receipts taxes during its years of construction, but the businesses, restaurants, shops and services will supply endless tax revenue — the kind that is not a tithe for our daily bread.

Beyond these two near-term notions, there needs to be a speculative focus on the city’s Land Use Office — currently rudderless, understaffed and overworked. There is a slew of highly competent and dedicated staffers who recognize and understand how to help move things faster, but they need the direction set and resources to accomplish them.

It won’t be popular to furlough some and cut others while investing heavily in another, but for the sake of keeping us fed, we need to do it.

Kim Shanahan is a longtime

Santa Fe builder and former executive officer of the Santa Fe Area Home Builders Association. Contact him at shanafe@aol.com.

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(4) comments

William Mee

Build a house and the City must increase it's budget currently $46 million in the hole to provide: police, fire department, sewer, water, roads, libraries, parks, social services, trash, etc. It is often estimate at $10,000 per unit per year.

An interesting thing also was many of the Apartment building companies are out of Albuquerque since the big firms here have all retired. They buy their materials and and often hire out of Albuquerque so the GRT is paid there.

Elizabeth Pettus

Can we have any idea how much New Mexico has received from online shopping? We are paying the GRT, but are state and local governments receiving the funds?

Brent Bolen

That is a good question. I recently bought a new phone, online from my wireless provider, and noticed I was only charged the State portion of the GRT, 5.125%, not the county rate of 7.125%, or the Santa Fe City rate of 8.4375%.

I have wondered if this is standard, if online sales are only subject to State GRT, or if the online retailer goofed.

Richard Reinders

That is the question will the city go against a long time tradition of holding up projects due to not wanting to hire staff. I am not sure how a city operates but private industry puts the money where the revenue comes from.

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