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F I S C A L I M P A C T R E P O R T
SPONSOR Lujan, B.
ORIGINAL DATE
LAST UPDATED
2/14/07
2/28/07 HB 1088/aHBIC
SHORT TITLE Mesa Del Sol Development Gross Receipts
SB
ANALYST Francis
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
* See Narrative
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates SB839 except title
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department (TRD)
Mesa Del Sol, Inc/Forest Covington
State Land Office (SLO)
City of Albuquerque
Department of Finance and Administration (DFA)
Responses Received From
Commissioner of Public Lands (CPL)
Department of Finance and Administration (DFA)
New Mexico Finance Authority (NMFA)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of HBIC Amendment
The House Business and Industry Committee amended House Bill 1088 by prohibiting capital
outlay authorizations for projects within Mesa del Sol increment development district during the
period when tax increment bonds are outstanding. Exceptions to the prohibition include
buildings owned by the state or agencies, institutions or political subdivisions that are for public
schools, higher education, cultural buildings or facilities, buildings used for public safety or
building used for other purposes. See “Technical Issues" below for an analysis of the
amendment.
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House Bill 1088/aHBIC – Page
2
Synopsis of Original Bill
House Bill 1088 authorizes bonds issued by Mesa del Sol, a tax increment for development
district, secured by 75 percent of the gross receipts tax revenue generated within MdS. The
maximum issuance is $500 million and subject to:
1.
a determination by New Mexico Finance Authority (NMFA) that the proceeds of the
bonds are used according to the development plan
2.
review of the master indenture by NMFA
3.
review of any proposed amendments to the master indenture prior to issuance.
There is an emergency clause so the authorization will be immediate upon passage and signing
by the Governor. The duration of the authorization is unlimited unless modified or repealed by
the legislature.
The Tax Increment for Development Act was enacted in 2006. This act allows property owners
within an area that is a subset of a city or county to form a special district for development
(TIDD). A district would propose a plan of infrastructure investments that would encourage
economic development among other goals that would be paid for out of the increased revenue
from the development. This increment comes from either increased property taxes or increased
gross receipts taxes. The property tax is the smallest component of the potential increase since
property taxes are generally low in New Mexico and much of the revenue is already dedicated to
debt service constitutionally. It is the gross receipts tax where the increment is important and
particularly the state share of the gross receipts tax.
MdS materials:
Mesa del Sol is a master planned development which will include a mixed use of
industrial, commercial, and residential properties. In its first phase involving 3,082 acres
over $2.4 billion is expected to be invested in the construction of public infrastructure as
well as in housing, commercial and industrial buildings and related improvements.
This first phase will include 8,136 residential units, 6.25 million square feet of
industrial/commercial/retail space, and $600 million in public infrastructure such as
roads, water/sewer lines, and drainage.
SUMMARY
•
Mesa del Sol Tax Increment for Development District will receive 75 percent of all
state gross receipts tax revenues generated within the district.
•
Mesa Del Sol projections indicate a net positive fiscal impact on the state of $38
million over 25 years. Fiscal impact positive in the first fifteen years and negative in
the last ten years.
•
After 25 years, revenues begin returning to state general fund.
•
Mesa Del Sol’s assumes that all activity is new activity and not relocation from other
parts of NM.
•
If 10 percent of the economic activity would have otherwise happened elsewhere in
the state, the impact is negative.
•
The City of Albuquerque approved the district in December 2006 and approved 67
percent of the tax increment rather than the maximum 75 percent.
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House Bill 1088/aHBIC – Page
3
•
NM Board of Finance approved 75 percent in January 2007. Of the seven members
of the board, three were absent and two abstained from the vote. The other two
members voted for the resolution.
•
New Mexico Finance Authority passed a resolution that the bond financing as
presented by Mesa Del Sol was reasonable.
•
NMFA has already provided loans to Advent Solar, located in Mesa del Sol, through
its Smart Money program.
•
UNM has a 15 percent participation percentage in the profits from the development.
•
State Land Office may see land values appreciate.
•
Bonds for infrastructure will likely be privately placed at first. Forest Covington,
the parent company of Mesa del Sol, has purchased the bonds from other
developments that use tax increment financing. NMFA has reported that there will
be a three to six year call on the bonds to allow them to be competitively placed
when the revenue stream is adequate.
•
Companies at Mesa del Sol will also receive other credits, particularly investment
tax credits, film production credits, and solar-related credits, which could
significantly lower the revenue estimates presented by Mesa del Sol.
•
TRD reports significant administrative burdens associated with identifying
taxpayers within TIDDs.
FISCAL IMPLICATIONS
The Taxation and Revenue Department (TRD) has scored HB1088 as an $8 million
decrease in gross receipts tax revenue to the state. Under current fiscal impact procedures,
dynamic analysis is not used for determining fiscal impact. Without counting the dynamic
impacts discussed below, the fiscal impact would be the lost gross receipts taxes that are
diverted to the TIDD.
Unfortunately, there is no precise way of knowing the fiscal impact because the TIDD is
within Albuquerque and so is not broken out separately from the Albuquerque gross
receipts data. In 2006, there was significant construction that generated gross receipts
taxes to the state and local governments. Since the base year is 2005 under the TIDD law,
75 percent of GRT revenue beginning in FY08 will be distributed to the TIDD.
HBIC Amendment:
As NMFA reports below, it is unclear whether this the amendment prevents capital projects
under their jurisdiction, most importantly the Smart Money program. They have already
participated in two loans not to exceed $5 million to Advent Solar, which is located within Mesa
del Sol.
There is no appropriate method to determine the fiscal impact under the current fiscal impact
report process. The revenues and costs associated with the Mesa del Sol project go out more
than 25 years and in the beginning years, there is estimated to be a net gain to the state due to the
construction projects. However, as people move into the development, demand for state
government services will rise causing the fiscal impact to be negative.
If the development is successful, both the University of New Mexico and the State Land Office
will gain. UNM, as part of their sale of the land to Mesa Del Sol, has a 15 percent interest in the
pg_0004
House Bill 1088/aHBIC – Page
4
profit Mesa del Sol realizes from the housing development. Likewise, SLO owns 9,000 acres
around the Mesa del Sol TIDD which will appreciate in value as the development grows.
Bernalillo County also owns a small portion of land adjacent to the TIDD where the Journal
Pavilion is located.
How the TIDD will work. Since the TIDD was formed in 2006 by the City of Albuquerque, the
base year for determining the increment will be tax year 2005, when there was virtually no
taxable activity at the site. Mesa del Sol will receive a distribution equal to 75 percent of the
“incremental" revenue from gross receipts within the TIDD or, since the base year had zero tax
revenue, 75 percent of all of the revenue for over 25 years. The state will still receive income
and property taxes and other fees and taxes.
Fiscal projections for the state. According to projections by Mesa del Sol, the fiscal impact is a
positive $37 million over 25 years (Table one). The first years are positive due to high
construction activity which generates significant gross receipts tax revenues. Later in the life of
the project there is a net cost as the population increases. There are 5 TIDDs within Mesa del
Sol, each with a 25 year time frame so the last bond will not mature until 2044. At that time, the
distribution of tax revenue to Mesa del Sol will cease and return to the state and local
governments. Figure 1 shows the timeline of each district, relating to a 25 year bond issue for
each district.
Figure 1: Timeline of Mesa Del Sol Tax Increment Districts
District One
District Two
District Three
District Four
District Five
The key assumption Mesa del Sol uses to project a net fiscal benefit is that all activity will be
new activity to New Mexico. LFC analysis has shown that if as little as 7 percent of the activity
is relocated from other parts of the state (or came to Mesa del Sol at the expense of other parts of
the state), the fiscal impact begins to be a net cost to the state (table two). There are reasons to
believe this is not unlikely. The first reason is that the state Economic Development Department
touts the same projects—Advent Solar, Albuquerque Studios—as the Mesa del Sol developers
suggesting coordination between the two groups. If Mesa del Sol is being promoted by the state
economic development groups over other parts of the state, then projects that would result in
increased revenue to the state end up increasing revenue within the TIDD.
The City of Albuquerque found that at 75 percent distribution Mesa del Sol did not meet their
required “no net expense" criteria for development. As a result, the City lowered the share of
distribution to 67 percent.
pg_0005
House Bill 1088/aHBIC – Page
5
Table 1: Fiscal Impact as Projected by Mesa Del Sol
2007-2011 2012-2016 2017-2021 2022-2026 2027-2031
Total
(2007-2031)
Revenue to TIDD
Property Taxes
-
-
-
-
-
-
75% of TIF-able GRT
Retail
4,618,477
26,466,879
47,639,957
65,310,921
65,310,921
209,347,155
Other Business Activities
7,524,185
21,104,400
36,184,393
41,517,685
41,517,685
147,848,348
Utilities
7,853,415
18,702,916
30,401,505
34,439,606
34,439,606
125,837,048
Construction
22,376,831
23,750,854
22,148,586
-
-
68,276,271
Total TIF-able GRT
42,372,908
90,025,049
136,374,441
141,268,212
141,268,212
551,308,822
Estimated Revenue to TIDD
42,372,908
90,025,049
136,374,441
141,268,212
141,268,212
551,308,822
Revenue To State of NM
Property Taxes
177,425
1,371,637
2,844,301
3,973,837
4,025,217
12,392,417
25% of TIF-able GRT
Retail
1,539,492
8,822,293
15,879,986
21,770,307
21,770,307
69,782,385
Other Business Activities
2,508,062
7,034,800
12,061,464
13,839,228
13,839,228
49,282,782
Utilities
2,617,805
6,234,305
10,133,835
11,479,869
11,479,869
41,945,683
Construction
7,458,944
7,916,951
7,382,862
-
-
22,758,757
Total GRT
14,124,303
30,008,349
45,458,147
47,089,404
47,089,404
183,769,607
Personal Income Taxes
15,437,840
38,327,741
63,226,379
67,307,905
66,524,271
250,824,136
Estimated Revenue to State of NM
29,739,568
69,707,727
111,528,827
118,371,146
117,638,892
446,986,160
Cost to State of NM
Public School Operating Cost
10,388,034
38,766,187
69,618,808
82,017,215
82,017,215
282,807,459
Higher Education Operating Cost
4,136,034
15,434,900
27,718,985
32,655,457
32,655,457
112,600,833
Hold Harmless City/County Payment
-
1,282,199
2,853,926
4,756,544
4,756,544
13,649,213
Total
14,524,068
55,483,286
100,191,719
119,429,216
119,429,216
409,057,505
MDS Calculated Benefit
15,215,500
14,224,441
11,337,108
(1,058,070)
(1,790,324)
37,928,655
Source: Mesa Del Sol
Table 2: Different Assumptions Regarding New Activity
2007-2011 2012-2016 2017-2021 2022-2026 2027-2031
Total
(2007-2031)
100% New
15,215,500
14,224,441
11,337,108
(1,058,070)
(1,790,324)
37,928,655
90% New
10,978,209
5,221,936
(2,300,336)
(15,184,891)
(15,917,145)
(17,202,227)
75% New
4,622,273
(8,281,821)
(22,756,502)
(36,375,123)
(37,107,377)
(99,898,551)
Source: LFC
SIGNIFICANT ISSUES
Mesa del Sol, a development south of the Albuquerque Sunport and part of the City of
Albuquerque, has received approval from the city for the formation of a Tax Increment
Development District (TIDD). As the TIDD is formed, they are now seeking the state’s share of
gross receipts tax revenue in the area.
The Mesa del Sol TIDD was formed by the City of Albuquerque in December, 2006. In January,
2007, the City agreed to distribute 67 percent of the incremental revenue generated within Mesa
del Sol to the TIDD for infrastructure investments. The state Board of Finance (BOF) approved
a 75 percent distribution of state gross receipts taxes generated within Mesa del Sol in January as
well. Of the seven members, three were not present and two abstained. The remaining two
members voted for the resolution.
pg_0006
House Bill 1088/aHBIC – Page
6
NMFA reviewed the plan and the bond financing structure and submitted a resolution to the
legislature on February 5, 2007. Bernalillo County has not acted on the proposal.
Mesa Del Sol Bonds. The provisions of this bill cap the amount of bonds that can be issued to
$500 million which is $300 million more than Mesa del Sol projects needing from the state
increment. Mesa del Sol plans $635 million in public infrastructure and projects that the
incremental revenues granted by the City, County and State will fund $390 million. They
estimate that the total bonding capacity of the incremental revenue is $561 million, leaving
coverage of approximately 1.4x which is reasonable for a bond issue.
Mesa del Sol has reported that because the revenue stream is uncertain the bonds will likely be
privately placed. Forest Covington, Mesa del Sol’ parent company, according to SEC filings has
purchased bonds issued by the Stapleton tax increment development. It will be incumbent on the
board of directors of Mesa del Sol to ensure that some effort was made to find the best rate when
the bonds are issued and to publicly issue the bonds when the revenue stream is sufficient to
attract a competitive bid process. NMFA has raised this issue and they have reported that the
bonds will initially be placed with Forest Covington but that there is a three year call which will
allow the bonds to be more competitively placed.
NMFA:
At the request of NMFA, the Mesa del Sol finance team incorporated specific bond
structuring requirements into a revised Plan submitted to the State Board of Finance and
approved as part of the State’s dedication of 75% of State Gross Receipts Tax.
Specifically, Section D of the Plan incorporates certain provisions related to bond
structuring and protection of bondholders, the State and local taxing authorities. Among
other provisions, the Plan outlines requirements of a minimum coverage ratio for each
series of bonds as 1.25x maximum annual debt service, debt service reserves, trust
indenture covenants concerning use of bond proceeds for public infrastructure, the
collection and deposit of tax increment revenues, and investment rating/sophisticated
investor requirements.
Additionally, the development plan clarifies the allowable uses of surplus tax increment
revenues after payment of debt service and the funding of debt service reserves. The Plan
now provides that dedicated tax increment revenues (excluding non-recurring gross
receipts tax revenues generated by construction within the districts) that exceed the
amount needed to pay debt service on district bonds and to fund debt service reserve
accounts shall be accumulated, likely with the trustee under the bond indenture, on an
annual basis. These excess tax increment revenues will be available annually, as needed,
to satisfy the City’s “No Net Expense" calculation should there be a shortfall. If the
excess tax increment revenues are not needed for the “No Net Expense" calculation, as
anticipated and forecast under the economic models, these revenues will be available to
Mesa del Sol to secure short term bonds (“sponge" bonds), the proceeds of which will be
used to construct public infrastructure within the districts, and/or to pay costs of operation
and maintenance of the infrastructure built within the districts.
Mesa del Sol representatives presented NMFA with a draft finance plan that outlines the
expected structure of the bonds. The initial series of bonds will be privately placed,
uninsured, with Mesa del Sol’s parent company and will have a 3-6 year call protection.
pg_0007
House Bill 1088/aHBIC – Page
7
After revenues have stabilized, the bonds could then be sold to sophisticated investors in
minimum $100,000 denominations.
Economic Development. Mesa del Sol has already attracted three facilities that promise to
provide hundreds of jobs. Advent Solar, a solar power products manufacturer, has already begun
to build their facility and expects to have 300 people working there. Albuquerque Studios, a film
production facility, has broken ground and will provide studio space for films and commercials
as well as ancillary retail. The National Nuclear Service Agency is planning to move off of
Kirtland and set up on Mesa del Sol. They will have a secure access point to Kirtland and Mesa
del Sol representatives expect them to anchor several defense related companies. All of these
facilities will be paying property and gross receipts tax and only Advent Solar received an
industrial revenue bond and only for an unexpected part of their facility.
The development plan includes an employment center of industrial and commercial tenants,
“village" retail such as grocery stores and small retail operations, and a “regional retail" center
along I-25 that would be made up of large retailers (“big box retail"). To the extent that the
employment center attracts out of state investment that are export-based industries, the
development should provide significant economic development. The large retailers, however,
could supplant retail activity at other developments, such as the new Uptown Centre or one of
the malls in Albuquerque. On the other hand, if 100,000 people move to New Mexico to live in
Mesa del Sol, the additional retail options will be necessary.
According to Mesa del Sol, it has already invested over $40 million in the development. They
have invested $11 million in land (which was mostly the purchase price from the University of
New Mexico), $11 million in engineering and construction, $1.6 million for economic
development and marketing, $5 million for Advent Solar’s facility, and $13 million for
predevelopment costs.
State Land Office:
There are approximately 20,000 acres of property adjacent to Mesa Del Sol held in the
state land trust for its beneficiaries. By enhancing the infrastructure development of
Mesa Del Sol utilizing TIF financing, the adjacent Trust property will be summarily
enhanced.
When using the TIF method, it must be made clear that:
1)
the bond proceeds can only be used for public infrastructure;
2)
all infrastructure improvements are dedicated to the local government, in this case
the city of Albuquerque;
3)
all infrastructure improvements must be built to local government guidelines;
4)
debt service on the bonds are paid from the increase in the established TIF district
tax base and no new taxes are imposed.
Other issues. In addition to the TID financing proposal, Mesa del Sol tenants will be looking for
other incentives. Mesa del Sol has reported that they are encouraging tenants not to apply for
industrial revenue bonds (IRB) or other property or gross receipts tax incentives as those would
run counter to the increment financing program.
The New Markets Tax Credit, a federal program, that will be routed through Finance NM!, a
New Mexico Finance Authority subsidiary, is expected to benefit Albuquerque Studios in
attracting investment. While this may be new out-of-state investment, it may also come at the
pg_0008
House Bill 1088/aHBIC – Page
8
expense of investments that would have been made in other parts of the state.
Also related to Albuquerque Studios is the film production tax credit which will be used by the
production companies using Albuquerque Studios facilities. The revenue generated by
Albuquerque Studios will mostly go to the TIDD whereas the tax on a film produced at the
proposed Lionsgate studio in Rio Rancho will flow to the state, city and county.
Other major developments have also begun exploring establishing a TIDD. One, the Westland
land owned now by SunCal, makes up most of the remaining developable land in Albuquerque.
The two major tracts that can be developed on a grand scale are Mesa del Sol and Westland. If
they form a TIDD as well, this could seriously affect the funding of services for the remaining
part of the city since most if not all of any growth in revenues will take place in these two areas.
Another important issue is the use of other tax credits within TIDDs. Two of the major projects
touted by Mesa del Sol are the film production facilities and the solar manufacturer. Both of
these industries are already recipients of significant and expanding tax credits that are not
necessarily tied to their tax liability. For example, a film that is produced at Mesa del Sol will
pay gross receipts tax, most of which will be diverted to the TIDD. However, they will also
apply for a 25 percent credit on taxable expenditures. In other words, the state pays the company
a credit and misses out on most of the tax revenues. Investment tax credits will be the same
since they are most useful against withholding by companies rather than the gross receipts taxes.
Key to Mesa del Sol’s assumptions is the personal income tax revenue that the state is going
to receive. To the extent that that revenue is rebated or refunded through various credits,
the state could realize a net negative impact.
ADMINISTRATIVE IMPLICATIONS
Taxation and Revenue Department (TRD):
Administering the distribution of a portion of the state’s GRT to the development will be
difficult, time-consuming and expensive. The Department’s Combined Revenue System
(“CRS") will require major modifications to handle the collection and distribution of
gross receipts tax increment revenue. As it is currently configured, the CRS system has
no way to integrate the base revenue/increment revenue concept. As more cities
implement districts, there will be a proliferation of location codes with their
accompanying base/increment calculations. These will encumber the system, and could
result in slower and less accurate distributions.
The Department has no information that could be used to determine whether a business is
located in a district. The only geographic information available to the Department is
whether a business is located within municipal or county boundaries. This information
would have to be generated with a new type of report. The new location information –
along with a history of tax payments – would be needed to generate the base gross
receipts tax estimate. This information will also be needed to determine how to distribute
the tax increment amounts. Major revision to reports and to revenue processing and
distribution systems will be required. No additional funds have been provided to the
Department to address these administrative challenges.
pg_0009
House Bill 1088/aHBIC – Page
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BOF:
Actions taken by Mesa del Sol Tax Increment Development Districts 1 through 5 during the
development process should remain consistent with the tax increment development plan,
application and other information submitted to the State Board of Finance on January 16, 2007.
If implementation of the plan would become materially different from the plan represented to
the Board in the submitted documents, Board approval of such changes would likely become
necessary. If Board approval of the changes is not obtained, the Board's approval for the
dedication of the State gross receipts tax increment to secure the gross receipts tax increment
bonds might cease to be effective.
If HB-1088 becomes effective, legislative approval of the issuance of the gross receipts tax
increment bonds would remain subject to the New Mexico Finance Authority's determination
that the bond proceeds will be used in accordance with the tax increment development plan
approved by the City of Albuquerque and the New Mexico Finance Authority's review of the
master indenture governing the use of the bond proceeds and any amendments to the master
indenture. By resolution on January 18, 2007, the New Mexico Finance Authority determined
that the proceeds of the bonds would be used upon the terms and with the protections described
in the tax increment development plan approved by the City of Albuquerque. Pursuant to the
same resolution, the New Mexico Finance Authority also required that a master indenture
governing the bonds and any amendment to the master indenture modifying the use of the
bonds be submitted to the New Mexico Finance Authority.
TECHNICAL ISSUES
The HBIC amendment intends to restrict capital outlay but the scope of the exceptions is fairly
wide. Since the Mesa del Sol TIDD is a political subdivision in the eyes of the state, the
amendment likely does not prevent any capital outlay projects for buildings and facilities
[Section 5-15-9.C NMSA 1978]. It would prevent capital outlay from being used for roads,
infrastructure, parks (except those that are part of a “cultural facility") and other amenities that
the bonds will be used for. Mesa del Sol representatives have indicated that they are working
with Albuquerque Public Schools on a master plan for education and presumably using the TIDD
bonding mechanism for those investments. The University of New Mexico has a profit stake in
the development and owns significant land adjacent to the development.
It also is unclear what capital projects are prohibited. NMFA makes a number of grants and
loans that are authorized by the legislature but are not part of the traditional capital outlay
process.
BOF:
Only 75 percent of the State share of the State gross receipts tax increment generated within the
Mesa del Sol Tax Increment Development Districts can be used to secure the bonds subject to
legislative approval in HB-1088. This might be more accurately reflected by adding "portion of
the" after "a" on page 1, line 20.
On page 1, the bill states that the bonds issued are to be "secured by a gross receipts tax
increment attributed to the imposition of the State gross receipts tax for the Mesa del Sol tax
increment development project." According to Forest City Covington, the $500 million
limitation should apply to the issuance of bonds secured by tax increments attributable to 75
percent of the State share of the gross receipts tax, as well as tax increments attributable to local
pg_0010
House Bill 1088/aHBIC – Page
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gross receipts taxes and property taxes. Thus, on page 1, line 20, after "secured", the addition of
"in part" might provide additional clarity.
In addition, "Mesa del Sol tax increment development project" is not defined, but likely refers to
projects funded pursuant to the issuance of bonds by the established Mesa del Sol Tax Increment
Development Districts 1 through 5. On line 18, after "bonds" it is suggested to insert "by Mesa
del Sol tax increment development districts 1 through 5 in an amount" and to strike "for the
Mesa del Sol tax increment development project" on lines 22 and 23.
NMFA:
NMFA received and thoroughly reviewed various documents submitted by Mesa del Sol,
including:
.
Application to the City of Albuquerque for the creation of the Tax
Increment for Development District (October 2006);
.
City of Albuquerque ordinance and resolutions:
i.
Policy Formation Guidance Ordinance (November 2006);
ii.
TIDD Formation Resolution (December 2006);
iii.
Tax Dedication Resolution (January 2007);
.
Application to the State Board of Finance for the use of State Gross
Receipts Tax to back the issuance of Tax Increment Bonds (November
2006);
.
Revised Tax Increment Development Plan (as submitted and approved by
State Board of Finance at its January 16, 2007 Board Meeting);
.
Draft Finance Plan; and
.
Project update on construction projects within Mesa del Sol.
NMFA focused its review of the project to the structure of the proposed bond issuances
as it relates both to the Tax Increment Development Plan and to assure that the proposed
bonds will be structured to provide certain protections to the bondholders. In its review,
the finance authority determined that it needed to review and approve the master
indenture governing the proposed issuance of bonds, and any amendments to the master
indenture, to be certain the bond proceeds would be used in accordance with the tax
increment development plan. The finance authority’s recommendation to the legislature
is contingent upon this review and approval of the master indenture.
ALTERNATIVES
One alternative is for the state to finance the infrastructure necessary for the development. Using
the state’s credit rating, the costs would be significantly less than a private placement as will be
required with the TIDD financing. It would be similar to the GRIP projects in scale, however.
The incremental GRT could still be used to finance the bonds but there would be no distribution
to the TIDD.
For credits that are not directly tied to liability such as the film production credit, legislation may
be necessary to disallow these credits within TIDDs.
The scope of the prohibitions on capital outlay provide by the HBIC amendment could be
narrowed and could be changed to include any TIDD and not just Mesa del Sol.
pg_0011
House Bill 1088/aHBIC – Page
11
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
Mesa del Sol has reported on several occasions that this piece of the financing is crucial to their
business plan. They are still the master developer for the SLO parcels and so some form of
development will happen but that form may be significantly scaled back.
NF/nt