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F I S C A L I M P A C T R E P O R T

SPONSOR Rehm

ORIGINAL DATE

LAST UPDATED

2-3-06

HB 558

SHORT TITLE

DOWNTOWN ALBUQUERQUE BUSINESS

INCUBATOR

SB

ANALYST Hadwiger

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$50.0

Non-Rec

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 558 appropriates $50 thousand from the general fund to the Local Government Divi-

sion (LGD) of the Department of Finance and Administration (DFA) in FY07 for development

of a business incubator in east downtown Albuquerque.

FISCAL IMPLICATIONS

The appropriation of $50 thousand contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY07 would revert to

the general fund.

SIGNIFICANT ISSUES

DFA indicated the appropriated funds will help pay for the design, plans, construction and

equipment of a business incubator called the "WESST Corp Enterprise Center: A business incu-

bator in Downtown Albuquerque in Bernalillo county. The building will be located in Martinez

Town, the federally designated Pocket of Poverty in East Downtown Albuquerque; the site is

cleared of all blighted buildings and ready for construction. Total cost of project is approxi-

House Bill 558 – Page 2

mately $3.25 million. This appropriation appears to be a capital outlay request and not a service

program. DFA recommended the bill that it be reintroduced as a capital outlay request. Nor-

mally Capital Outlay requests allow up to five years for completion of a such a project that re-

quires planning, designing and construction of a facility. The city of Albuquerque will own this

building.

DFA added that the business incubator received state certification on December 1, 2005. Gover-

nor Richardson promised $2 million. At least 87 percent of businesses that start in a business

incubator are still in business five years later. This business incubator center will assist new and

fledging businesses to develop in a facility that provides efficient space, shared services, hands-

on business training and micro loans. The WESST Corp Enterprise Center will target digital

media production, artisan manufacturing and "green" industry businesses. WESST Corp. busi-

nesses have contributed $75 million in taxable gross receipts in the last 5 years. The corporation

serves primarily women and minorities in the low to moderate income range starting over 1,850

businesses and creating 2,600 jobs since inception in 1989.

ADMINISTRATIVE IMPLICATIONS

LGD/DFA and City of Albuquerque will enter into a grant agreement for services for the devel-

opment of a business incubator in the east downtown Albuquerque. The project will be assigned

to a project manager in the Community Development Bureau.

TECHNICAL ISSUES

DFA noted that this appropriation appears to be a capital outlay request and not a service pro-

gram and recommended the bill be reintroduced as a House capital outlay request

DH/nt