An economic analysis from the University of New Mexico found that developer targets “are likely overstated,” for Santolina, a controversial development on Albuquerque’s far west side, and warrants further study of its potential revenues and potential costs.

UNM’s Bureau of Business and Economic Research further found that under more realistic hypothetical scenarios for housing, population and employment growth, New Mexico governments’ spending to build public facilities and services could outstrip the tax revenues.

Currently the Santolina project is structured to allow tax revenues from Bernalillo County to reimburse development costs through the creation of a Tax Increment Development District (TIDD).

Developers for Santolina are required to show the development will meet a “no net expense provision,” as part of the Planned Communities policy adopted by the county.

UNM researchers said the data was limited in some of the projections, but their findings raised questions about whether the development can realistically meet its stated goals.

“Just based on our results from our study, which is a snapshot, not comprehensive, the county may want to examine the revenues versus costs, in order to evaluate the ‘no new net cost’ criteria of the project,” said Julian Baca, one of the researchers in an interview with Source NM.

The Bernalillo County Commission invited Baca to present the findings for 10 minutes to the commission Tuesday evening.

Commissioner Eric Olivas called the findings “eye-popping,” and said further discussion should occur with the county manager, economic development staff and planning staff.

“The level of public investment to subsidize a private developer is massive, and I don’t see the return on investment for the jobs that are projected to be created,” Olivas said.

He called it a “cautionary tale” in approving economic development agreements, when the county requires further investments in infrastructure.

Commissioner Walt Benson asked who funded the study. It was funded in 2022 from Senate Joint Memorial 3, brought by Sen. Linda Lopez (D-Albuquerque), who represents the district.

Benson asked for “further information,” of what property taxes, which were not part of the analysis, would contribute to reimbursing the developer.

“Trying to make a decision based on a partial [analysis], it’s not fair to us up here,” he said.

Commission chair Barbara Baca said that the council was constrained by time limits, but said future discussions may happen.

“This is a very short time to cover a very large issue, we could do a study session or something like that, where we can really delve into these kinds of very important questions,” Baca said.

“We will continue the conversation,” she concluded.

What is Santolina?

Santolina is a long-debated effort to build a “planned community” over 13,700 acres for a projected 100,000 people (just smaller than Rio Rancho’s current population).

Once a portion of the Atrisco Land Grant, the 21-square miles sandwiched by Interstate 40, 118th Street and Rio Puerco is now owned by developer Western Albuquerque Land Holdings. In the 2015 master plan, the eventual goal is to build 38,000 homes and create 75,000 jobs.

Bernalillo County Commissioners approved the first phase of Santolina planning in June 2015.

There has been no development at Santolina, as several phases of planning need approval.

In 2022, the board unanimously approved two requests from developers; including speeding up the timeline to 30 years, and designated more granular zoning for industrial use in a small portion of the proposed development. The board approved the plans over the objections of the planning commission and residents.

Farmers in the South Valley, community members and environmental groups have opposed the development for nearly a decade, contributing to the Contra Santolina group. Their objections have often centered around the development’s proposed water consumption, which residents said would push farmers out as climate change shrinks water supply from the Rio Grande.

The Bureau of Business and Economic Research report

The developer’s goals for Santolina are more optimistic than historic employment and population growth in Albuquerque suggest.

New Mexico is in the bottom five nationally in terms of population growth in the past ten years, Baca said.

“In terms of forecasts, all the data points to much more conservative growth, housing stock and population,” he said.

The targets set by Santolina developers are potentially way too high.

If Santolina met its stated goals issued to public officials, it would account for 49% of new housing in the area,165% of population growth and 62% of employment, the report found.

Researchers found the most active neighborhoods accounted for “no more than 10-15% of new housing in the last five years,” according to building permit data from the city of Albuquerque.

The report also looked at a case study of Mesa Del Sol, another planned community project, within city limits in southeastern Albuquerque.

While both developments have similarly stated goals, Mesa Del Sol has been in development for the past 18 years. Mesa Del Sol is way below developer expectations, the report found, only accounting for under 2% of housing permits over the last decade in Bernalillo County.

The 56-page report, commissioned by the state legislature, uses data from public sources, such as the New Mexico Department of Transportation, and interviews with public entities, but also a feasibility study commissioned by the developer and details from the master plan.

“In our assessment, recent economic, demographic and housing data do not appear to support the targets sought by Santolina Developers,” the report said in its conclusion, requesting further research on actual costs for government services and potential tax revenues.

The report further notes that if Santolina only meets 20% of its goals (an 80% reduction) it would “reduce the employment, population and potential tax revenues substantially.”

Water infrastructure and roads would be an up-front cost to the developer, Baca said, but portions of those costs could be reimbursed under the tax incentives.

A 2018 estimate from Albuquerque Bernalillo County Water Utility Authority, said water infrastructure to the development would cost $659 million over three phases.

With rising costs in construction and labor, that number could potentially double to $1.3 billion, Baca said.

Officials from the Albuquerque Bernalillo County Water Authority said Thursday that costs on water infrastructure construction spiked by varying degrees over the last few years.

“Depending on the type of work being done we’ve seen a 30% to 70% cost increase over the last five years,” said David Morris, a spokesperson for the water utility.

Baca emphasized this study is independent research.

“We have a reputation, a track record of doing good independent, third-party, objective research,” he said.

Previous commissioners authorized Bernalillo County tax revenues to reimburse the Santolina development, but potentially state tax revenues could be in the mix as well. Part of the fiscal analysis the developer’s commissioned looked at seeking state reimbursements, but that would require additional authorization.

“That would make it not just a Bernalillo County issue, but a statewide issue,” Baca said.

What’s next?

A handful of public commenters urged the commissioners to reconsider further approval of the Santolina development Tuesday night.

Linda Starr, a South Valley resident said the previous commissioners approved the development without checking the facts.

“I hope you will review [Santolina] thoroughly, and please consider the fact that this area should have never been up for development,” she told the commission.

The Bernalillo County Commission has adopted two rounds of planning (called a Level A plan and a portion of Level B plans), and county commissioners are the final authority on planning and development on these first levels.

A third, more granular, level of planning called the Site Development Plan (Level C), only needs approval from Bernalillo County staff before any development can happen, according to the Planned Communities policy.

Groups against the project are asking commissioners to reconsider the Bernalillo Comprehensive Plan which guides development and planning in the county. The draft will be presented at a March 19 meeting.

“Taking a harder look at the reliance on Santolina in the comprehensive plan is one thing, ” said Maslyn Locke, a senior staff attorney with the New Mexico Environmental Law Center, who has represented people opposing the project.

“The bigger thing the (Bernalillo County Commission) needs to do is really look at whether or not Santolina should have been approved in the first place.”