New Mexico State, Las Cruces consider large development district along University Ave.

New Mexico State University wants to collaborate with Las Cruces on establishing a tax increment development district that could potentially attract new business along University Avenue.

But the first step toward a partnership hit a speed bump during a special work session on Monday. City council members said they need more information before they sign off on an agreement with the school that would trigger a study that looks at financing responsibilities and whether the two parties should move ahead with the project.

The proposed district, or multiple TIDDs, consists of 1,481 acres of land primarily owned by the university. The city would need to annex the land.

Councilors generally seemed open to eventually entering the agreement, but it became apparent that NMSU's timeline was not realistic for them.

The council raised issues the proposed district needs to address.

They asked about how the annexation of NMSU land into the city would work. They spoke of the strain on city staff due to their workload, and they also brought up whether they were taking resources from two Metropolitan Redevelopment Areas.

Two other factors that may affect how the council views and discusses the proposal have to do with its nearness to tribal lands and the outcome of the Nov. 7 election. Las Cruces will have at least one new councilor and a new mayor next year.

A study prepared for the NMSU Board of Regents estimated the city would need to invest $60 million in the TIDD area and be responsible for infrastructure such as streets, utilities, and drainage. The regents approved moving forward to establish an agreement at a July 17 meeting.

NMSU representatives, along with Mayor Ken Miyagishima, first wanted to put a vote on entering the agreement on the Nov. 6 agenda to meet state Board of Finance application deadlines, but Miyagishima determined that the council will either vote or table the issue at its Nov. 20 meeting.

"If you want to table it, fine, but this is just non-binding," Miyagishima said. "This is just to get staff to answer the questions you want answered. It's not like you are voting for the actual TIDD."

Summary of the potential NMSU TIDD

A TIDD is a financial incentive under which a portion — or increment — of new tax revenue generated in an area is reinvested to encourage and support more private development there. While the city would be responsible for infrastructure, the district would not cost the city money until the district begins to generate tax revenue.

The result could be an estimated $581 million of new tax revenue to local and state government over 28 years, according to a presentation by developers and NMSU representatives.

"Right now, Las Cruces gets no tax revenue (from University Avenue property), except the Courtyard Hotel and the Convention Center," said Kim Murphy, who worked with developers to prepare a financial analysis for the NMSU Board of Regents. "The rest of the land is not within city limits. There is no Gross Receipt Tax or property tax.

"This is very consistent with (the City comprehensive plan). ... The process of doing the financial analysis; it sets the existing base of tax revenue from these properties. The word, 'increment' means it's only money above that base that gets dedicated to (infrastructure)."

The NMSU TIDD would have three areas on campus.

• The University Avenue corridor along the main campus is a 267-acre area that would include retail, mixed housing, along with parking improvements and other amenities.

• The Arrowhead Park project is 311 acres that would be similar to land uses already in the area, including health, innovation, education, aerospace, mixed commercial and residential real estate, and energy/water research.

• Aggie Uptown/East Campus is 903 acres and involves the phased relocation of the New Mexico State University Golf Course east of the current course, as well as mixed use/commercial housing, retirement housing and institutional uses.

"I would just go back to (the city's) comprehensive plan that recognized that as an institution, New Mexico State University is a major employer in this area," Murphy said. "They are an economic engine for the south part of the state and the TIDD would provide additional opportunities to expand their footprint and create opportunities for the entire population."

Las Cruces council voices concerns before voting on agreement

Murphy said the state only considers TIDD applications twice a year - January 1 and July 1.

NMSU officials had hoped to complete the TIDD application and annexation request with council approval by April 2024 so that administrators can submit the application to the state by July 1, 2024, with state Board of Finance approval by December 2024. They would then approach state lawmakers in January 2025.

"It was an aggressive timeline," said Scott Eschenbrenner, NMSU specialist assistant to the president. "We are not trying to run anything through. If it takes another year, it takes another year."

But Miyagishima characterized the concerns voiced by councilors as being "not with the university" if they don't vote to move forward with the agreement.

"I think from this point forward, when you say, 'Hey, we should work with the university and how can we help bring more economic development into the community,' for those who vote 'No,' please don't ever say that again because we will address these concerns," said Miyagishima, who also suggested to NMSU representatives that city staff should be reimbursed by the school and that the Tortugas Pueblo have a seat at the table to voice concerns.

Councilors Johana Bencomo and Becki Graham responded directly to that sentiment.

"We have ongoing collaborations with NMSU," Graham said. "I feel that we are being asked to essentially create another pocket of wealth in the city and then rely on trickle-down economics or supply-side economics ... which has failed spectacularly throughout history to raise up folks who need economic development the most."

Bencomo addressed the NMSU representatives directly, "I really hope to our guests that you don't walk away here today with the completely inaccurate and immature assertion that if I am not in support of this for whatever reason that I don't want to collaborate with New Mexico State University, the place that ultimately kept me here in this community. ... In the role that I have, I have to make a big decision with very little information."

As to functional concerns raised by the council, the established redevelopment areas were discussed multiple times.

"We are really delighted that we have our two recent Metropolitan Revitalization Area designations," Graham said. "My fear being the more we invest in this new development, the less resources, time, bandwidth we have for these projects to which we are already committing to addressing some of the most disadvantaged areas of the city."

MRAs enable municipalities to acquire and then cheaply sell land in the designated area. It also allows the city to create infrastructure like roads in private developments, for example.

"We have committed time, sweat, and tears to two Metropolitan Redevelopment Areas," Bencomo said. "From between now and the implementation of the potential TIDD now and the implementation of the two MRAs, to me is the concern of capacity and for me, the priorities are the two MRAs.

"For me, as I think about what I'm sort of hearing is it would be all hands on deck in order to meet some of these deadlines and would further push our priorities for these two MRA that are trying to have an impact for a very different population in our community."

According to city staff, the annexation process alone could take up to at least eight months.

"I think there are a number of things that need to happen, if it's the will of council to move into a MOU, that these things have to be done," said Mayor Pro Tem, Kasandra Gandara, who currently represents District 1, but is running for mayor. "I don't think we have the capacity to do it in the timeframes you are putting out here."

NMSU's presentation mentioned the Las Cruces Downtown TIDD in 2006, as well as the ongoing University of New Mexico South Campus project in Albuquerque. The NMSU district would present some variables in that there was already development and a financial base in the downtown Las Cruces space while NMSUs lands are currently underdeveloped or undeveloped. Additionally, UNM's lands were already annexed by the city of Albuquerque.

Eschenbrenner said the NMSU group used the UNM project to determine some of the challenges they may face with a NMSU district.

As to the potential demands that a NMSU district would put on city staff, City Manager Ifo Pili said the potential upside of the project would be worth exploring even it meant stretching the current staff or hiring additional staff.

"I wanted to assure council that the questions you’ve asked have been brought up by staff," Pili said. "I've realized that there are so many points in the process for it to go off the rails. There are a lot of deal breakers on both sides. From the city, it's if the benefit is less than what it costs."

Pili suggested the only cost of signing onto an agreement with NMSU would be staff time and that there is potential synergy between aspects of the NMSU district and the city's established areas of redevelopment. He added that the city would likely develop its own feasibility study as well if council does approve a resolution next month.

"We would not bring anything to you with all of these unanswered questions," Pili said. "From a staff perspective, this MOU is probably less important to us than it is to them. It's really so that they can go back and say the city is willing to commit time. There are a lot of unchecked boxes that we have to go down. Every one of us up here have boxes that need to be checked."

Jason Groves can be reached at 575-541-5459 or jgroves@lcsun-news.com. Follow him on X, formerly Twitter @jpgroves.

This article originally appeared on Las Cruces Sun-News: New Mexico State University eyeing development district in Las Cruces