Mys­tery com­pany seeks $25M in IRBs

Ex­pan­sion of man­u­fac­tur­ing firm would add 139 jobs

Albuquerque Journal - - FRONT PAGE - BY MARIE C. BACA JOUR­NAL STAFF WRITER

Next month, Ber­nalillo County com­mis­sion­ers will vote on an eco­nomic de­vel­op­ment pro­posal — listed on pub­lic doc­u­ments only as “Project Oryx” — that would help an undis­closed com­pany grow from 15 em­ploy­ees to more than 150, with an aver­age an­nual salary of more than $70,000.

County fil­ings show that Project Oryx in­volves an Al­bu­querque-based man­u­fac­turer trans­fer­ring its op­er­a­tions into an ap­prox­i­mately 16,000-square­foot build­ing, a move the busi­ness says will al­low it to add 139 full-time jobs. The com­pany is seek­ing $2 mil­lion in state Lo­cal Eco­nomic De­vel­op­ment Act fund­ing for tenant im­prove­ments, as well as $25 mil­lion in in­dus­trial rev­enue bonds from the county, a fi­nan­cial ma­neu­ver that would give the busi­ness a tax abate­ment of about $1.5 mil­lion over a 20-year pe­riod.

At an ad­min­is­tra­tive meet­ing on Sept. 25, com­mis­sion­ers an­nounced their in­tent to vote on the pro­posal. That vote will take place at a reg­u­lar meet­ing on Nov. 13. If the project is ap­proved, the county will act as the fis­cal agent for the state LEDA funds.

The county’s in­terim eco­nomic de­vel­op­ment di­rec­tor, Deanna Archuleta, said the name of the

com­pany and ad­di­tional de­tails about the project will be pub­licly avail­able no later than Nov. 9.

Eco­nomic de­vel­op­ment of­fi­cials have long given code names to ma­jor projects as a way to grant anonymity to com­pa­nies un­til a deal is in its fi­nal stages. The Face­book data cen­ter, for ex­am­ple, was known as Project An­te­lope and the com­pany was called Greater Kudu when it re­ceived a $30 bil­lion in­dus­trial rev­enue bond pack­age from the vil­lage of Los Lu­nas in June 2016. Face­book’s iden­tity wasn’t re­vealed un­til the next month, when it filed a re­quest with the New Mex­ico Pub­lic Reg­u­la­tion Com­mis­sion un­der its own name.

But Archuleta said the county rarely uses code names for eco­nomic de­vel­op­ment pro­pos­als, and only at the re­quest of the com­pany or the state. She said some busi­nesses are con­cerned that a build­ing owner won’t ne­go­ti­ate in good faith if it’s known that as­sis­tance from the county is likely; oth­ers are con­cerned that in­for­ma­tion will leak about a client base or a pro­pri­etary tech­nol­ogy that could cre­ate changes in the mar­ket­place.

“I re­ally pre­fer not to use (code names) if at all pos­si­ble,” said Archuleta. “In our first con­ver­sa­tion with the com­pany, we make it clear their name is go­ing to be on ev­ery­thing, and ask them if there’s go­ing to be a prob­lem with that. Eighty to 90 per­cent of the time, they say ‘no.’ We make ex­cep­tions on a com­pany-by-com­pany ba­sis.”

Com­mis­sioner Lonnie Tal­bert, who is spon­sor­ing the pro­posal, said through a county spokesman that com­mis­sion­ers had signed a non-dis­clo­sure agree­ment with the com­pany and are un­able to com­ment on the project.

If ap­proved, the $25 mil­lion IRB pack­age would be less than the $30 mil­lion IRB of­fered to Ad­mi­ral Bev­er­age Corp. in 2012 but more than the $16 mil­lion IRB given to Lowe’s con­tact cen­ter in 2011. Among the largest IRBs of­fered in re­cent years were $100 mil­lion for Wag­ner Equip­ment Co. and $80 mil­lion for Gen­eral Mills, both in 2016.

An IRB pro­vides a tax break for a busi­ness with­out vi­o­lat­ing the state’s anti-dona­tion clause. Essen­tially, the com­pany’s prop­erty is deeded to a pub­lic en­tity like the county, which then leases it back to the com­pany. The bonds are a mech­a­nism for the busi­ness to bor­row money from it­self un­til the lease is paid off and the own­er­ship trans­fers back to the com­pany. Dur­ing the time that the county owns the prop­erty, the com­pany typ­i­cally pro­vides payments in lieu of taxes at a much lower rate than what they would owe if the IRB were not in place.

The com­pany be­hind Project Oryx plans to in­vest $23 mil­lion in its new op­er­a­tion, which will be en­gaged in high-vol­ume man­u­fac­tur­ing. The fil­ings do not con­tain in­for­ma­tion about the lo­ca­tion of the project.

The com­pany has com­mit­ted to an an­nual pay­roll of about $11 mil­lion within five years, un­der the terms of the IRB. Archuleta said there are claw­backs as­so­ci­ated with the pro­posal tied to both job num­bers and pay­roll.

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