Robert Garza
Article courtesy of the Las Cruces Bulletin
By Richard Coltharp
For City Manager Robert Garza, helping guide Las Cruces in the right direction regarding economic development is a little like driving a car cross country.
You have to keep an eye on the gauges of your dashboard.
Garza spoke Tuesday, Aug. 2, at the monthly Business on the Border luncheon presented by the Mesilla Valley Economic Development Alliance at Hotel Encanto de Las Cruces. Also speaking was Chuck McMahon, the economic liaison for Doña Ana County.
Garza said he is regularly apprised of several key indicators he calls his “economic dashboard.” They include non-farm payroll, unemployment rates, single-family building permits, permit valuation, the city’s general fund and total permitted value.
Everyone’s aware of the recession of the last few years, and the city’s gauges reflect that downturn. Some of the indicators show Las Cruces and the El Paso area have rebounded better than the rest of New Mexico.
But the key from the city’s perspective is gross receipts tax (GRT).
“When people have money, they buy things,” Garza said. “And that’s our bread and butter.”
Just five years ago, in 2006, the city’s GRT revenue saw a 13.4 percent increase. The number slid the next three years: 7.2 percent in 2007, 5.8 percent in 2008 and -3.4 percent in 2009. But 2010 and 2011 saw slight rebounds, to 0.8 and 1.7 percent, respectively.
“So the question became, ‘Why was it not going back down again?’” Garza said. “And the answer was this: public construction.”
Major public projects, such as the new Las Cruces City Hall, the Las Cruces Aquatic Center and the Las Cruces Convention Center, the past few years infused life into the GRT.
Fiscal year 2010 saw $91 million in public construction, and fiscal year 2011 saw $89.9 million. Fiscal year 2012 was scheduled to see $31.5 million and for a GRT forecast of 1.3 percent growth.
Without the public projects, the GRT of 2010 and 2011 would have been in the negative, Garza said.
“Those public projects were artificially putting money in our coffers,” he said.
While much of the private economy remained in a holding pattern, the city found a way to create another construction vitamin.
With the benefit of some bonds and some planning, the city was able to fund $73.6 million in capital improvements through fiscal year 2012.
“Now, we add that to the $31 million,” Garza said. The number becomes $104.6 million higher than in 2010 and 2011.
While the side effect may be a boost to the GRT, the tangible results will be capital improvements to city infrastructure. About half the projects are rehabilitation and half are new, Garza said. They include work on the airport, facilities, parks and recreation, drainage, gas, water, wastewater and streets, specifically streets providing access to the new Centennial High School on Dripping Springs Road.
Those improvements also play a role in job creation, Garza said.
“Some people come here because they get a great job here,” he said. “Others come because of the quality of life.”
Job creation, Garza said, comes from three areas: expanding existing companies, attracting new companies and enhancing collaboration.
“Eighty percent of jobs are added one by one,” Garza said of the importance of expanding existing companies.
One benefit, he said, is the revitalization of existing areas, citing Downtown Main Street as an example as well as improvements to the University Avenue corridor and plans for El Paseo Road and Picacho Avenue.
He also recognized ways the city can better facilitate speed and timing for developers in construction.
“Our permitting and inspecting process needs to be cleaner,” he said. “In too many cases, we’ve got different eyes looking at the same things. I know it’s a problem. And we’re working on it.”
McMahon cited an instance where the county’s collaboration with the city has helped facilitate projects.
“NRG Solar is putting 250,000 solar panels up on the West Mesa,” McMahon said. “The county implemented a commercial property exemption for the first 10 years of the company’s 25-year agreement. That will help them make progress sooner.
“The county also supports the (Tax Incremental Development District),” McMahon said of the incremental tax downtown property owners are paying that will go exclusively toward revitalization in that area.
Other county projects include $6 million for an arsenic treatment facility in Santa Teresa, and an agreement with the New Mexico Spaceport Authority and Sierra County for 25 miles of road from Upham at Interstate 25 to the Spaceport America. Doña Ana has agreed to fund the survey, alignment, design and drainage.
One hitch for the road, Mc Mahon said, could be environmental clearance. Because the road would be adjacent to the historical El Camino Real, extra care must be taken to avoid damage.
“It could take months, it could take years,” McMahon said. “In general fiscal terms, the county is in good shape. We’ll be ending the year with very healthy cash reserves. We have three times the legal required amount. We’re required to have $11 million, and we have three times that.”
Garza said the city is also in good shape financially. He acknowledged the city can no longer depend on once-flowing funds from federal and state sources, but they have adjusted accordingly.
“We have one threat,” Garza said. “That’s the hold harmless clause on food and medical tax.”
When the state eliminated the tax on food and medicine that instantly reduced GRT for municipalities. So the state instituted the hold harmless clause, basically a payment to offset what municipalities lost.
“We face the constant threat of (the state’s) trying to repeal that,” he said. “If they do it, is it going to crash the plane? No. Will it hurt us? Yes. But if they do it slowly, incrementally, then we can adjust over time.”
