City says criticism about proposed Downtown investments is unfounded

As the City of Albuquerque continues to push for two initiatives officials say will help revitalize the Downtown area, a prominent property owner and frequent critic of Mayor Tim Keller’s administration says he isn’t buying it.

Keller announced his plans for a new business improvement district (BID) and tax increment financing (TIF) at a press conference in August, which Metropolitan Redevelopment Agency (MRA) Director Terry Brunner said are common throughout the country and will help grow Downtown’s revenue.

Douglas Peterson — who owns several properties Downtown — says a BID and TIF will only raise taxes for Downtown business owners without actually helping them. 

However, Brunner said that’s a misperception and “neither of the things increases taxes.”

What is tax increment financing and how will it work in Downtown?

TIF is a financing method that takes a portion of property taxes and uses it toward improvement projects in a certain area. 

According to Brunner, as property taxes and gross receipts tax naturally increase over time, the MRA would take a portion of that financial growth over a certain threshold and reinvest it in Downtown. 

“We’re able to take a percentage, up to 75% of the growth of Downtown property tax and gross receipts tax… and then you reinvest them through the MRA in Downtown over the course of 20 years,” Brunner said. 

Peterson said improvement projects and more infrastructure are not what Downtown needs. He said the area needs more safety and security, not something that will “take taxes from elsewhere and concentrate it on Downtown.”

Brunner said tax increment financing will keep the money in Downtown. Without it, those taxes and tax increases go into the city’s general fund for use in any part of the city. 

Taking 75%, Brunner said, ensures the city still sees 25% of the growth. 

“If we don’t have TIF Downtown, and it just grows the way it’s always been growing, you’re really not doing much to change the revenue equation for the entire city,” he said. “But if you incentivize it with the TIF, you’re really raising the potential.” 

TIF would also help the vacant properties in Downtown, according to Brunner. 

“We can’t play much of a role in those because we have so little revenue, but we’re much more likely to buy those vacant properties… if we have a more substantial revenue source,” he said. “You’re not fighting year by year for funding like we do right now at City Council, we could see a more consistent pathway forward.”

A tax increment district (TID) is a similar method and can be confused with TIF. Brunner said with tax increment financing, the MRA can make public and private investments but a TID can only be used for public improvements. 

The TIF for Downtown is expected to be implemented on Jan. 1.

What is a BID and how will it work Downtown? 

A BID is a designated area where a group of property and business owners form an association to come up with improvements or “extra investments” in the area, according to Brunner. 

The city expects to see a petition from property and business owners “any week” to start a new BID. 

“It’s really supposed to be property owners or business owners, or the combination of the two, that are coming up with some special idea for their area,” Brunner said. 

Peterson said a BID would charge business and property owners in the district an annual fee. He said the city needs to do more to tackle crime because safety is the “most important thing in Downtown.” 

“I don’t see any reason I’m going to pay more money to the same government that’s already not giving me the basic services I’m paying with my real estate taxes,” Peterson said. 

Why do both?  

While they can be used individually, it is common to use a BID and TIF together. 

According to Brunner, tax increment financing allows investment in private industry and a BID would generate a business support group to advocate for that commercial activity. 

“They kind of are complimentary,” he said. “I think that Downtown will see a change starting next year, hopefully with the start of the BID, and then we should see revenue from the TIF coming in at the end of 2025.”