KRWG

Las Cruces Debate: Should Special Tax District Be Used For Project With One Developer?

Jun 28, 2020

Credit Country Club Estates / Las Cruces

Commentary: In a work session Monday, the City Council will discuss an unusual deal with a Nebraska developer that could be a costly mistake. 

 

The deal concerns the old country club area, where Nebraska developers have built a “boutique” hospital that may help or hurt Las Cruces. They now want to add retail spaces near it. 

 

The developers want the City to create a Tax Incremental Development District (TIDD) in which city-authorized bonds would fund infrastructure and other costs that developers usually bear. The city would pledge substantial future increased GRT revenues to pay off the bonds. One document suggests that could be tens of millions of dollars. 

 

TIDDs can work well for public needs (such as downtown Las Cruces) where a city wants to develop or improve an area and increase GRT income, and uses a variety of developers to do so.

Las Cruces has never created a TIDD for a single developer. In Albuquerque, TIDDs to help single developers have a somewhat sorry history.

TIDDs are intended to draw new economic activity and jobs – not to move businesses into the district from surrounding areas. They shouldn’t be used unless they’re the only way to bring about desired development.

Here, the area is appealing, and the boutique hospital got built, so is a TIDD necessary? If developers screw this up, and bonds don’t get paid off, bondholders suffer. Does the City’s reputation or credit-rating? If the development just shifts business and jobs from downtown or El Paseo, that’s not NEW economic activity that enriches us – but Cruces tax monies would go to pay off the bonds. 

 

Legally, this developer is the brand-new “LC Nova LLC,” which lists Zachary Wiegert as manager and registered agent. The out-of-state entities that own the surrounding property are apparently involved, and the value of their property stands to increase, particularly if this works. 

 

Quick Google hits for Wiegert do not show mayors happily cutting ribbons.

Rather, one (from 2011) describes old friends of Wiegert’s trying to hold him and his partners to an oral agreement – but when they met, Wiegert “lost my temper” and shouted insults in an allegedly intimidating manner. The entity with which Wiegert was associated dropped out. The deal fell apart. 

 

In another, Project 19 LLC (for which Wiegert spoke) announced it was abandoning promised plans to develop the site of the old Omaha Civic Auditorium, though the same developers had expressed great excitement about the project. The deal required a major tenant. Omaha’s mayor said the developers’ failure to sign one was the reason they walked. 

 

Whoever was to blame, those reports don’t tend to instill absolute confidence these folks will do better by Las Cruces. Each included allegations Wiegert’s team wasn’t sticking to a deal. 

 

Perhaps more critical are the many questions the basic idea raises. If we use TIDDs in this way, won’t every developer want one? Should we do TIDDs at all? How do we protect our interests? How much potential “public good” do we require for a developer to get this help? If we’re now going to subsidize developments, hadn’t we better agree on coherent ground rules before facing the onslaught of applicants?

We owe it to ourselves, to residents near the TIDD, and to folks who buy the bonds – to be very cautious, and to be quite careful who gets help from our GRT revenues and gets to have the city’s good name behind their operations.