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CONVERSATIONS WITH THE MAYOR

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CONVERSATIONS WITH THE MAYOR ...

    CONVERSATIONS WITH THE MAYOR

    City of Rio Rancho

    Episode 2 June 2008

Mayor: Hello. Welcome back to Conversations the Mayor. My name is

    Tom Swisstack again. Today, we are going to be talking about economic

    developments and the business community in Rio Rancho. You’ve often

    heard me over the last ninety days to a hundred talk about the importance

    of having diversity in our community so people will have the ability

    to go and buy the appliances, clothing or any other item they might

    need and that’s a very strenuous effort to try do that because a lot

    of times it is based upon the number of rooftops in a respective

    community. Today, I am going to be dealing with two experts who have

    been working on this and have been very successful in their areas.

Debbi, Matt, welcome. Debbi, you are the CEO for the Chamber of

    Commerce, the Director. Why don’t you explain a little bit about what

    your role is with the Chamber of Commerce is here in Rio Rancho?

Debbi: The role of the Chamber in Rio Rancho, I think is like a heart

    of the community and our main focus is to help business’s stay in business

    and we provide tools such as business education, We provide debt working

    opportunities. Anything to further a business in growth as well as

    helping new ones from the baby. We provide free counseling through

    the Small Business Development Center in score. So, there are a lot

    of avenues we can offer though the Chamber of Commerce.

Mayor: Matt Spangler, you are presently the Chair of the Board for

    Rio Rancho Economic Development?

Matt: Yes, that’s correct.

Mayor: What is your role with the Economic Development Board?

Matt: Well, my role is to assist the staff in bringing new base business

    jobs to the Rio Rancho community. Our essential focus is to bring

    industrial and businesses that are new to the community into Rio Rancho

    so we can produce more jobs for the community.

Mayor: So Matt, let me start with you. There has been a lot of growth

    in Rio Rancho and a lot of rooftops. Isn’t that a lot of economic

    growth? Why do we need more economic growth?

Matt: No, we don’t consider rooftops economic growth. I think that

    is a good question. What we are trying to do is bring companies that bring money from outside the community into it. In other words, we are looking for a company that will manufacture something that will be sold outside Rio Rancho but probably outside the State of New Mexico and that way dollars from outside of the community are coming into the community making the community more wealthy not just churning dollars that are inside the community.

    Mayor: So Matt, the houses I guess are a one time expenditure and what I think I hear you telling me the economic development is a recurring expense?

    Matt: Yes, economic development jobs bring money in on continual basis. For instance, I will just give you an example of what we have done in the past. Take Aero Parts Mechanical. That’s a business that is out on 528, they build airplane parts. So what do is they will build parts then they will sell to Boeing or some other company outside of New Mexico and that money comes into New Mexico and it goes into pockets of the people who work there and then that money gets spread throughout the community in Rio Rancho helping the business’s, building new homes, helping the city and that type of thing.

Mayor: Debbi, so then your role as a Chamber person, you’ve talked

    about businesses, I know you are doing very successful with our Rio Rancho Chamber. How does that differ from what Mr. Spangler’s talking about the economic development? Do I just go in and say I want to start a business, get my permit, open my doors and just start?

    Debbi: Well, two parts to that. I want to follow along, when Matt brings in economic development, corporation bring in new money, that money gets into the community and its what we call in the industry is rollover. For example, the money that an employee will get at Aero Mechanical, they spend at our local services, providers and retail stores and they will spend it at the local and retail services, so it’s called a rollover. In fact, that new money starts rolling over within our community. Typically, I’d say new money rolls over three to four times then the initial thing. So that helps our local businesses maybe to hire new people and look at expanding and things of that nature. The other piece of that and yes, people do come in the door and they will say, I want to start a new business. It’s kind of daunting and so that’s why we immediately give them to the Small Business Development Center and start at the very basics. Help them write a business plan, help them know what their market analysis is. All of this is free. Help them walk through, help them how to get a permit through the City of Rio Rancho, their state ID number. So, we provide all that and then we can ask them of course to join the Chamber which is a membership investment for them but I guarantee that they will get it back because

    what we provide in networking and opportunities and involvement, we speak on behalf of the business legislatively whether it’s city level,

    county state or federal. We are there to help them stay in business. And so, basically your EDC and your Chamber compliments the business they grow and retain and stay in the community and that’s the goal

    of all of us is to keep business in Rio Rancho.

    Mayor: Let me ask you a question, Mr. Spangler, what does it take, I mean is seems it would be real easy to bring business in our community. It’s growing. We have a young population, we have a good school system.

    What does it take to bring a business in? Do we just go out and knock on somebody’s door and say do you want to come to Rio Rancho? How does that actually work?

Debbi: We wish.

Matt: It’s actually extremely difficult because the type of businesses

    we are talking about generally are industrial businesses with large amounts of jobs. So Every State, ever city in our country is looking to bring an employer like that to their community for the very reasons we want them. So, what we in is, we’re in a competition with a number

    of communities throughout the country. What we do is we put together packages. First we find a lead, someone who is looking for relocation. Say there is somebody in the upper Midwest who wants to be down in the southwest because of the sun and other things. So they are looking somewhere in New Mexico, Arizona and Texas. We discover who those people are and then we will put together a marketing package and send it to them, we will make calls, actual personal visits to their company. If we can get them interested in, normally first in New Mexico, then the Albuquerque area then what will happen is that they will come and visit the area and then we will take them around and them the different sites we have in Rio Rancho. We will introduce them to Debbie or to you so you can get to know them. See if they are a fit without community. Some industries we just don’t want. You and I have talked about that. We don’t want those. But, the ones that we want, we make sure they are a fit, we try to develop a personal relationship, we try to bring them the financial incentives that would make them want to come here. Infrastructure, job training, different things we can give to them or promote them if it will make them come here. And then we are just trying to get them to move here at that point.

    Mayor: Thank you Matt. We will be back in just a minute. We will be back with our special guest about more economic development and what that really means to our tax base in the City of Rio Rancho. Thank you.

    Mayor: Welcome back with Conversations with the Mayor. My name is

    Tom Swisstack. My special quests today are Debbi Moore from the Chamber and Matt Sanger, the Chairman of the Economic Development Center in Rio Rancho. Matt, I want to follow-up, before we took our break, we talked about industry and jobs and sending products out of state or sometimes within state. I know governments biggest source of revenue for their budget is gross receipts taxes and property taxes. So I guess my question to you is does industry bring in gross receipt taxes?

Matt: Well, that’s a great question. Sometimes people will say, what

    does economic development do for the city because industry generally doesn’t pay gross receipts tax. So you would think the answer to that

    question would be no, we don’t bring in any gross receipts taxes. I think that is the wrong answer because what happens, is when an industry comes in, then people actually live within the City of Rio Rancho and work within the City of Rio Rancho. So where are they going to shop? Where are they going to spend their money at the businesses? They are going to spend their money somewhere between where they live and where they work. And so if we can get enough jobs in Rio Rancho, we won’t have this gross receipts tax leakage so much that you hear about

    because people will be living and working in Rio Rancho and spending their gross receipts tax dollars there. So, even though the industry doesn’t bring in gross receipts tax directly from that industry, in

    my mind it is really the key component to keeping gross receipts tax in the City of Rio Rancho. And of course, you mentioned property taxes, as people get better paying jobs, have jobs that are in the city and they will want to live in the city which increases the property tax revenue for the city. So the reason I am doing this, I am the Chairman this year, is because, I truly believe economic development is the key to the city’s finances.

    Mayor: We will be come back that because I want to ask Debbi then, I am assuming then that the businesses you work with in conjunction with the economic development, though they are separate, I am assuming most of your businesses then are members of the Chamber bring most of the gross receipt taxes. Is that correct or is it wrong?

    Debbi: That is correct, basically, economic development provides the shoppers and the people who live and work in Rio Rancho then we encourage them through our shop Rio program and other programs we have to keep those gross receipts locally. I think part of citizenry and the mis-communication is that people don’t understand. They know gross

    receipts taxes are really vital to our community but they don’t know exactly how they are used and the role basic economic jobs and industrial businesses provides that. Again, it’s the rollover effect. You know, the more jobs the economic development provides the more shoppers they are providing which then keeps going. The shopping circle begins and that helps us have better roads, infrastructure and things of that

    nature. The thing goes back to economic development if you follow the circle around it gives them opportunity and has a better quality of life for them to recruit another industrial. So to me, it is a huge wonderful business development economically to filament quality life circle and if you don’t have all those pieces in play, it’s not going to work for continued growth of the community.

    Mayor: Let me, either one of you can answer this question or both of you. A lot of times we talk about the gross receipts taxes and do we really know what the impact is on our community? We talk about leakages. Do we know how much leakages maybe goes down the bottom of the hill to other areas and I understand people are always going to do that. But I think that the important question here, is why is it important that we try to get as many of our people shopping or open up as many economic jobs or gross receipts job here. I guess we recently had some shopping center, Wal-Mart, move to another part of town because we were unable to locate them within our respective community and it didn’t have to be in that area that they were looking at but what does that really mean to our community. Do we know how much money that meant in loss age for our city?

Debbi: Well, I’ll start with the answer. I think it is millions. Yyou

    look over the years at the leakage part. But, it more than just shopping. When we started our Rio shop program, we have researched the millions of dollars that we have lost we didn’t concentrate on the leakage as

    much as the education piece. Our citizenry, our citizens, our parents, our children, they need to understand and the need to educate them to be an educated shopper. To understand that why those dollars need to be spent locally. We are always going to have the drive by’s and

    we will always have a percentage of the population that drives back and forth to different areas around our city to work. So you are always going to get those drive by’s but if you could change the philosophical

    shopping difference and get the citizens of Rio Rancho to understand why it’s important for the gross receipts to stay and if not in Rio Rancho, the go to Sandoval County. You have a tenure there when you are talking regionally. But, we really felt like in our research, Mayor, that is was more critical that they understand why those gross receipts need to stay versus the shopping and it’s the philosophical shopping difference and we still have a leakage but I still think we are doing our best to, for example, you are going to see your tax dollars at work at different projects. I think the city is putting up those signs and that they understand a new park. Those are all influenced by the amount of gross receipts tax. It’s a huge part of our community.

    Mayor: Matt, what I want to talk about a little bit now, it think then what becomes real critical is that we work collectively together. Economic Development and the Chamber and what we try to do is start

to target to try to bring businesses and I know that’s difficult because

    most businesses probably know our communities better than we do, the demographics and so forth and what it’s going to take for them to sustain. And before I ask you the question about tax incentives and what does that really and why do we use those tax incentives to bring in the street to our community and is it worth it and do we get anything out of this. I would like to take one more break over here before we get to that point but give you some time to think about that.

    Ladies and gentleman we will see you in a few moments and look forward to kind of talking about why do we offer incentives to businesses to come to our respective community. Thank you.

    Mayor: Welcome back again. This is Mayor Tom Swisstack of Rio Rancho with Debbi Moore from the Chamber Of Commerce, Matt Spangler, Chairman Economic Developments. We were talking a little bit ago before we took our break. Debbie I would like for you to give me some information. What does gross receipts tax actually buy in our respective community. You told me why it was important because it is the general fund money that goes into the city coffers to help kind of sustain or expand or take care of projects. What are some of those projects that gross receipts taxes has bought in our community.

    Debbi: Well, roads, sidewalks, parks, the new aquatic center, the new library. I could go on and on and I think you need to remember that our average age is thirty-four and we have, I always laugh, 2.7 children which I’m not sure where we get the point seven but that means we have larger families. We have young kids. They like to go swing in the park, that like to play in the sand boxes and those gross receipts taxes go into the city coffers and are allocated out to make that quality of life so crucial and I think sometimes we miss that connection between our children playing in the swings in a park is a direct effect on how we do our shopping. It impacts it tremendously because if we don’t keep those gross receipts and those dollars locally intact, then we lose those swings and we lose that ability to improve our roads and sidewalks and the lighting. Everything you see is basically on the gross receipts and again, it goes back to the cycle.

    Mayor: A very good point and I appreciate that. And again, this is not a commercial to talk about just gross receipts but it is a commercial about how this community is growing and the importance of bringing in a diversity of businesses to sustain the rooftops that come in here. And it’s challenging because we need the rooftops but at the same time we need those businesses to accommodate it. Matt, I often hear about how legislators, Mayors, governing bodies provide incentives for businesses to come here. You hear a lot about our GRIP program in the State of New Mexico and you hear about bond issues that we give

    to big corporations to come in and why are those important and what is grip?

    Matt: I think the two major incentive programs that we have and use in the City of Rio Rancho are the IRB program, the industrial revenue bonds IRB and then the grip plan, gross receipts incentive program. So let me talk about those two right now. The first one is the IRB. What an IRB is, it’s an industrial revenue bond which means that there

    is a bond that is put in place to allow an industrial facility to locate in our community. One of the things that the IRB program does is it waves the property tax for that particular facility. So somebody would say on first blush, why in the world would you wave your property taxes for that industrial facility. The reason is, is because if you don’t do that, if you don’t make it more economical for this industry to come here, then you wouldn’t have that tax because the tax is based on the company coming here. If the company doesn’t come here you don’t

    have the tax anyway. So, you are actually waving something that wouldn’t be there anyway, and then if you wave the tax and the company comes, number one, as Debbie and I were talking about, it doesn’t wave

    the portion of the property tax that goes for schools. So you get the portion of the property tax that helps with education. So you get that benefit, plus you get the jobs and those jobs create additional property taxes by people moving here, building homes, etc. And in addition, usually in one industrial location will spawn smaller industrial locations to support those which aren’t IRB supported. So it kind of a way to build additional tax revenue even though initially you are waving it. The second program is the GRIP program and again that’s an incentive to a business to make it more economical to come here, whereas, the IRB is for an industrial business, the GRIP program is generally for the retail business such as the large Wal-Mart that went in on Southern and Unser I think was the first one to use it. The way the GRIP program works is when you put a large facility in like that there is a tremendous amount of infrastructure, water, sewer, roads, different things that have to be put in, in order for that business to run and locate there. What the GRIP program does is it allows a portion of the gross receipts tax that that business generates to actually pay for those facilities. So say Wal-Mart comes in at Southern and Unser and they generate, and I am making this number up, but a million dollars a month in gross receipts tax. A portion of that gross receipts tax is then allocated to pay for the cost of the infrastructure that went in to support that business. So really, both the IRB and the GRIP program are ways that we can make it more economical for businesses to locate here so we become competitive, so we get these businesses here

    and then we the citizens of the city benefit.

    Mayor: Economic development and I know Noreen does this too, but I

    just want to make something real clear here. When you are putting these plans together and your are offering these incentives, whatever they may be whether its GRIP, industrial revenue bonds, what other state incentives there might be that we can partner with, I am assuming there is a formula that you are following that if you are giving something to bring a company in or a corporation in that somewhere you are determining that it’s going to have a better impact in our community even if you gave the incentives. Like you told about holding the schools harmless. I am assuming those jobs are taken in consideration, how much those jobs are being paid to the people that are going to receive those jobs and then the multiplier effect of how they spend their money, where they spend their money in their respective community. Is that all taken into consideration?

    Matt: Yes, you are correct. In order to do either an IRB or a GRIP it has to be approved by the City Counsel and in order to do those, the company who or whoever is promoting this particular thing, has to present to the City Counsel and to the city staff before it even gets to the City Council, a report which shows that either one of these incentive programs has a net benefit to the city. So unless there is a net benefit the city can’t do it.

Mayor: So there is a net benefit to our community.

Matt: That’s correct.

Mayor: Debbi and Matt alluded to this and so there is a Lowe’s going

    up on Northern boulevard and Matt indicated that sometimes you get a nucleus and then you start to have other shops or other business come around there. Is it probably a safe assumption that as the Lowe’s continues to go up that you are going to see some other businesses in respective area begin to develop because there is an anchor store there?

Debbi: That’s a natural. They just kind of go to where a big box can

    attract either large boxes or regional retail or local retail, or local service or regional service. That forms the shopping center. I mean, that’s how years ago the shopping center concept actually came about

    was there wanting to be where the traffic is. And I think as our gas prices go higher people want to do one stop. They want to go one place. And I think another thing Mr. Mayor, in the cycle that I was alluding to, is becoming a full service community. The live/work place scenario. But also, when economic development brings in a new industry that provides economic base jobs, perhaps someone that is working now, let’s

    just say in Santa Fe or Albuquerque, that might provide an opportunity. So therefore, they might be saving money, therefore, they might buy up, and so they are getting a larger home but they are maintaining

    their commitment to our community. So I think in the cycle of things, it’s not always new people coming in but it is the people residents

    here that is looking to better themselves but want to stay in our community. I think we kind of forget that moving up to a larger home or children and I will allude to the 2.7 or the business owner saying, oh, I need another location in Rio Rancho. So sometimes you blend the new and existing business as we do with the industries too and that goes to have our full service community because we want those residents to have their starter home but then we want them to maintain and with our great education, again I go back full circle and that full service community have. Back to your original question, I kind of got off track, but I think it’s people who shop at the Lowe’s, hopefully there will be a coffee shop place there and a restaurant there, but I will be sort of a shopping center and maybe it will have walkways and benches and so it becomes a gathering place and that’s what makes our community a full service community. But, really, in all reality it starts with those economic based jobs because of you don’t have the people to spend the money can’t get the gross receipts.

    Matt: Can I add one thing to that? Debbie brought up a great point that I’ve seen and that is that sometimes the complaints I hear about

    Rio Rancho are the road are so crowded. We can’t get out on 528 to the south to Albuquerque and we can’t get out through the Bernalillo intersection over in Bernalillo and the highway. Well, if we can do what Debbie is talking about and have the jobs in Rio Rancho, then what happens is there is not people going to Albuquerque I the morning. There is not people going to Santa Fe in the morning. Instead, they are in our community so we actually take care of a traffic problem without building more roads, without spending more money. So there are a lot of benefits, that are side benefits.

Debbi: Environmental too. Air pollution, again, it’s the wonderful

    circle of life so to speak that we have in our community. I think sometimes people don’t understand that. They don’t understand gross receipts, they don’t understand the value of taxes that seems to bring in industry, and I think, Mr. Mayor, one piece I have learned from my experience having been in retail recruitment, is that you just don’t knock on Lowe’s door on Monday and have them move in on Friday. Sometimes that whole process of getting them to look at our rooftops that someone in the transition team and residence but it is our residence and their spending habits. That process can take five, ten years for them to decide because they do know us better then we know ourselves a lot of times. But with the economy we need to sell, I think, our vision, our passion of where we are going to be. Let the Lowe’s of the world think outside the box and join our vision. That’s what has made Rio

    Rancho. That’s what I have been so fortunate in the six years I have been here, to build on your dreams and your dreams that were here before

me and that’s I thing I think is the key in really getting those retailers

    to enhance us. Having them follow our passion and our vision because we might not have those rooftops that they normally need. But getting them to see but also our people to see the vision of where the gross receipts tax is going to go.

    Mayor: Well listen, our time has run short. Matt, Debbi, I want to thank you very much. It’s real obvious that Chamber and Economics Development have to work together and we hope that you continue. To you, the public, the people that are watching the show, please understand that we as a community in partnership with the both the public and private sector and the Chamber and the Rio Rancho Economic Development will continue to move forward aggressively in trying to expand our economic base so you have those opportunities to shop in our community. Thank you and have a great day.

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