On Thursday, November 12, the City of Albuquerque Environmental Planning Commission approved the new site plan for the “Orion Center.” It is an aerospace and technology facility that will be built on the 122-acre plot of land located between Kirtland Air Force Base and Albuquerque International Sunport. “Group Orion”, the developer, is a subsidiary of Theia Group Inc., a Washington D.C. based, privately held aerospace company. The Theia Group is attempting to develop a network of satellites to digitally image and collect data on the physical world, providing solutions in areas from logistics to biology.
The mass area acreage was originally where the North-South airport runway was located. The land has now been designated for industrial development by the city. In 2017 after the runway was removed, the City named the acreage as the “Aviation Center for Excellence”. The city began to offer the vacant land area for commercial and office developers . According to Nyika Allen, Albuquerque’s Director of Aviation, the city began working with “Group Orion” in late 2018.
CAMPUS CONCEPT
According to city officials, the city will seek to secure permission from the Federal Aviation Administration (FAA) and complete a lease agreement with “The Group Orion” for the property. Group Orion is seeking to build a “campus” like facility that will include a 2 million square foot manufacturing center, an eight-story office and laboratory building, a new food hall and an extended-stay hotel. The campus will be named the Orion Center. Other long-term developments and expansion is envisioned. The campus as originally envisioned is to house 1,000 jobs once it opens. The plans submitted to the City on behalf of Group Orion includes a 2,500 jobs expansion plan.
The campus will have a number of separate buildings, spread out on both sides of Girard Boulevard, south of Gibson Boulevard. The square footage size of the campus is estimated to be 4.1 million square feet spread out across a total of 6 buildings to be built. The focal point of the campus will be an assembly building consisting of a 2 million square-foot, single-story building that will serve as the company’s main manufacturing and testing center.
Plans for the campus also include an 8-story building that will include laboratories, offices and additional assembly space. Plans on the western side of the campus call for an “extended stay” hotel to house new hires and other guests, a food hall for employees and an 8 story parking garage. A skybridge over Girard to help employees cross the street safely is also being proposed.
Group Orion has hired local engineers and has paid the city $125,000 as a retainer to hold the land. If the Federal Aviation Administration (FAA) approves the Center, then construction of the Orion Center could start in spring 2021 with the projected opening of the campus being in 2023.
The Group Orion has not requested any economic development incentives from the Local Economic Development Act funds.
WHY ALBUQUERQUE?
During the November 12th press conference announcing the development, Albuquerque Economic Development Director Synthia Jaramillo said the Orion Project represents a real opportunity to attract development from the commercial space industry. According to Jaramillo:
“The global space economy is projected to be worth $3 trillion by 2045.”
Jaramillo cited Albuquerque’s “engineering-savvy” workforce, low property tax rates, which are some of the lowest in the country, and tax deductions that target the aviation and aerospace industries. In addition, the city boasts “large swaths of vacant land, unrestricted air space and low population density.”
James Reid Gorman, Vice President of Administration for Theia, said Albuquerque was appealing to the company because of its “pipeline of engineering talent” from the University of New Mexico Engineering College. One goal is for the company to partner with all New Mexico universities to attract graduates and he said “It’s going to be a big part of our strategy in recruiting.”
Links to news coverage sources are here:
https://www.koat.com/article/aerospace-center-one-step-closer-to-being-built-in-albuquerque/34662638
https://www.abqjournal.com/1517515/aerospace-firm-targets-abq-for-new-campus.html
A PATHETIC $5.8 MILLION FOR ECONOMIC DEVELOPLEMENT OUT OF A $1.1 BILLION BUDET
According to the 2020-2021 enacted City Budget:
“The Economic Development Department provides services intended to bring long term economic vitality to the City. Included in the department are the economic development division, the film and music offices, the international trade division, the management of contracts for tourism, the Albuquerque Convention Center and the program for economic development investments.”
The mission statement of the City of Albuquerque Economic Development Department states its purpose is to “develop a more diversified and vital economy through the expansion and retention of businesses; develop appropriate industry clusters and recruit target industries; and assist new business start-ups and promote the film and music industries.” According to its mission statement, the department supports the tourism and hospitality industries through collaboration and oversight of the City’s contractors. The department also fosters international trade efforts and increased international business opportunities for Albuquerque companies.”
On Monday, October 19, the Albuquerque City Council enacted the 2020-2021 fiscal year budget on a unanimous vote with little or no debate. The newly enacted budget totals $1.1 Billion dollars for second year in a row and for that reason is considered a zero-growth budget. The fiscal year began on July 1 and will end June 30, 2021.
Included in the $1.1 Billion dollar budget is funding for the City of Albuquerque Economic Development Department. The City’s Economic Development Department employs 12 full time employees. The approved adjusted proposed FY/21 General Fund budget of $5.8 million, a decrease of 4.0% or $237 thousand below the FY/20 original budget. The approved budget includes funding for the following:
Convention Center Funding: $ 2,202,000
Economic Development: $1,943,000
Econ Development Investment: $474,000
International Trade Program: $198,000
The balance of the $5.8 million is primarily for salaries
https://www.cabq.gov/dfa/documents/budget-documents/fy21-adjusted-proposed-w-hyperlinks.pdf
KELLER ADMINISTRATION’S UNINSPIRING ECONOMIC DEVELOPMENT PLAN
It was on July 20, 2018, after a near full 8 months in office, Mayor Tim Keller unveiled his long anticipated economic development strategy for the city.
The Keller Economic Development plan has six main areas:
A. INCREMENT OF ONE: supporting homegrown entrepreneurship and “game-changer” business already in the community.
B. SMART RECRUITMENT: recruiting business in a strategic way. Recruitment outside of the state will focus on businesses that align with the city’s priorities.
C. INTERNATIONAL BUSINESS: capitalizing on “unique placement” along two interstates with an international airport and foreign trade zone. Keller cited the Railyards as an example of the “Placemaking” initiative. In 2007, the city purchased the Railyards for $8.5 million and it is now being used for weekend markets and other events.
D. CREATIVE ECONOMY & FILM: emphasizing culture, cuisine, art music and film industries as key to economic development. The Keller Administration wants to establish a code of conduct for film productions here.
E. INTERNATIONAL MARKETING: The city will continue to market itself to businesses internationally, targeting Israel, Singapore, Taiwan, Germany and Japan, and is exploring how to bring a direct flight to Guadalajara, Mexico, to the Albuquerque International Sunport.
F. CITY BUYING LOCAL: Directing more government purchases to local businesses. City departments will be required to seek out local vendors with vendor registrations made available to all who want to register to do business with the city.
When Keller ran for Mayor, he proclaimed he would bring in “bold ideas” such as individualized “tax increment districts” to allow small business development. When Mayor Keller announced his economic development plan, he scaled down his comments about what could be done and said there is “no silver bullet” to bring jobs to Albuquerque. When announced, Keller’s economic development plan was met with more than a few snickers and considered very lackluster, totally uninspiring by many within the business and development community. The plan was viewed as nothing more than “the same old same old” from the previous Republican administration that brought the city the disaster and failed ART Bus project.
NEW MEXICO’S EMERGING FILM INDUSTRY
It was in 2019 that the film industry began to seriously emerge to be one of the biggest hopes for Albuquerque and New Mexico to diversify both the city and states economies. The unmistakable evidence was the immense investment in the city and state by NBC Universal and the Netflix purchase of Albuquerque studios as the site of a new production hub. Both announced NBC and Netflix announced opening film production facilities in Albuquerque.
NBC DEAL
On June 14, NBC Universal announce it would open a studio in Albuquerque as part of a 10-year venture with Garcia Realty and Development. The media giant took over and renovated and created sound stages at a now vacant industrial building south of I-40 on Commercial Street, north of downtown in the vicinity of historic Martinez town. The media giant is expected to provide more than 330 full-time jobs year-round at the film studio.
NBC Universal employees earn about $58,000 a year which is a far cry from the minimum wage jobs the city is use to announcing with the arrival of new businesses. The studio operation is projected to generate an economic impact of $1.1 billion over a 10-year period.
The state’s Economic Development Department is providing $7.7 million through the Local Economic Development Act (LEDA) to the redevelopment and production commitment. The City of Albuquerque will provide another $3 million from its LEDA fund which was approved by the Albuquerque City Council on June 17, 2019 by a unanimous vote.
NETFLEX DEAL
On October 8, 2018, it was announced that Netflix was buying Albuquerque Studios. The State contributed $10 million of Local Economic Development Act funds. The City of Albuquerque contributed another $4.5 million of Local Economic Development Funds. Albuquerque beat out other places such as Denver, Salt Lake City, Austin, New York, Georgia and Los Angeles. The Albuquerque site will be Netflix’s first hub purchased in the United States. Albuquerque Studios is an enormous complex that includes 9 sound stages, a backlot and management offices. New Mexico’s other 4 production studios are I-25 Studios, Garson Studios, Santa Fe Studios and Las Cruces Studios as other productions seek studio space for their projects.
https://www.abqjournal.com/1230755/netflix-to-buy-abq-studios.html
https://www.krqe.com/news/new-mexico/netflix-buys-albuquerque-studios/1507392854
It is estimated that at least 1,000 well-paying jobs per year will be created. The jobs will run the gamut of film and TV production work, most of which is project-based contract labor. Many of the jobs are expected to pay $70,000 a year. The purchase deal also calls for $1 billion worth of production spent over 10 years which will have a dramatic effect on the City and State economies.
https://www.petedinelli.com/2019/06/17/lights-camera-action-means-jobs-repeal-nm-criminal-abortion-law/
PAST ECONOMIC DEVELOPMENT INITIATIVES
The City Council and Mayor Keller have a track record of bickering on development projects. Mayor Tim Keller took a backhanded approach on the use of the lodger’s tax funding for city wide recreational facilities that are not tourist related nor economic development related.
TOP GOLF BICKERING
It was on July 3, 2018, that it was reported that Mayor Tim Keller vetoed the $2.6 million economic development package that would help Topgolf in constructing a $39 million entertainment complex at the site of the former Beach Waterpark. The City Council had voted 8-1 to give the incentives after a 9-0 veto override Keller’s veto of a resolution expressing the city councils support.
At the time Mayor Keller called the incentive’s a “raw deal for taxpayers” which is probably the case given the fact that much construction work has now been done on the project, but after two full years, the facility is still under construction and has yet to open. Keller undercut his own veto message when he said:
“From the beginning, we have expressed our desire to welcome Topgolf, but this project failed to meet our criteria for growing the local economy and creating good-paying jobs. While we were able to improve the deal, we’re still not there yet. … This deal also sends the wrong signal that we are prioritizing out-of-state companies over similar local efforts, and that a company can end-run an independent professional vetting process through a political process. It’s our job to protect taxpayers, and I know that we can do it better. We want to work together and take the time to get it this right.”
When you do not have a job, you’re not interested in hearing economic doublespeak from government officials of creating high paying “economic based jobs”.
https://www.abqjournal.com/1192145/keller-vetoes-topgolf-economic-development-package.html
https://www.petedinelli.com/2018/07/03/you-gotta-pick-your-battles-wisely/
KELLER’S SNEAKY SPORTS TOURISM “LOGERS TAX”
Least anyone has forgotten, on September 6, 2019, Mayor Tim Keller submitted his $29 million infrastructure bond tax package to the Albuquerque City Council to be financed by the City’s Lodger’s Tax. The Keller Administration labeled the lodger tax bond package as a “Sports – Tourism Lodger Tax ” because it was to be used for a number of projects around the city labeled as “sports tourism opportunities” that would help with economic development and tourism.
On October 7, the City Council approved a $30.5 million “Sports -Tourism” lodger tax package on a unanimous vote to upgrade and build sports facilities throughout the city. Revenue generated by the lodgers tax will be used to pay off the $30.5 million bond debt.
Seven of the 10 projects are not tourism related and are used overwhelming by the general public and not the tourist industry nor by the hotel or lodger tax industry. It is a real stretch of the imagination to say the projects will attract tourism and help economic development. Without any financial analysis or actual proof to back him up, Mayor Keller and his administration simply argued that the projects would attract conventions or other sports-related tourism and events to Albuquerque and help with the city’s economic development efforts making the city more attractive to businesses to relocate to the city.
https://www.petedinelli.com/2019/10/15/sneaky-sports-tourism-lodger-tax-raid-is-invitation-to-litigate-and-investigate-by-lodger-industry-and-nm-state-auditor/
COMMENTARY AND ANALYSIS
The Orion Center Development is truly and exceptional development using the city property and resources to expand the city’s economy, especially during the time of a pandemic. There is no doubt that the success of the project will fit squarely into the long-term need for the city to expand its economy and recruit in a targeted and expanding global aerospace industry. Surprisingly, the Group Orion has not requested any economic development incentives from the Local Economic Development Act funds. With any real luck, the Orion Group will not seek such funding from the city.
FAMILIAR TO “ENERGIZE ALB” PLAN
The proposed “Orion Center” approved by the city’s Albuquerque Environmental Planning Commission sounds very familiar to the economic development plan called “Energize ABQ” proposed by yours truly during the 2013 election for Mayor. Energize ABQ called for a $300 million expansion at the Albuquerque International Sunport. It called for pursuing partnerships with private groups to build a manufacturing or assembly center at the Sunport or at the Westside “Double Eagle Two” airport.
“Energizer ABQ” proposed a Sunport expansion for a manufacturing, assembly or airline shipping terminal center at either airport. Construction would not have begun until a major shipping company, manufacturing or assembly company or a delivery company like FedEx made a commitment to invest with the city. An initial development by AMAZON would have been a natural and given the fact the Jeff Bezos is from Albuquerque and is known to still come to the city from time to time, it is something that may have not have been farfetched. Another potential source would be to contact Bill Gates who got his start first in Albuquerque but moved on to another State where there was more opportunities for investment.
The problem in the 2013 Mayor’s race was that the local media and the incumbent Republican Mayor seized upon the idea of a Sunport expansion and proceeded to “gut” the idea by lampooning it and falsely characterizing the idea as just building another “passenger terminal” at the airport. It was not. That was never the intent of Energize ABQ, but such is politics, especially when your outspent 3 to 1 during a campaign and try to rely on ideas that have merit while the local media is too damn lazy or biased toward an incumbent. The same incumbent Mayor had the advantage of having two well-known news reporters in prominent positions who also influenced news coverage in his favor.
https://www.abqjournal.com/227673/dinelli-to-reveal-his-economic-development-plan.html
PROMOTER IN CHIEF
On August 28, 2019, Mayor Keller called himself the “promoter in chief” when it comes to promoting Albuquerque as a good place to live, work, play and invest. Saying “We rise and fall on Downtown” Keller announced 3 new initiatives to make Downtown Albuquerque as a safer, more attractive place for visitors and for economic development.
The three initiatives were:
1. Opening a police substation at the Alvarado Transportation Center to address the serious crime and homeless problems in the Central Avenue downtown area that have reached a crisis point.
2. In order to create a tourist draw and spur economic development, Keller announced the city would begin remediation efforts and activate a second building at the Albuquerque Rail Yards The historic and vacant Albuquerque Rail Yards has 18 buildings still standing erected between 1915 and 1925 and include four major maintenance facilities built by the Atchison, Topeka and Santa Fe Railway.
3. Keller announced he wanted to ramp up plans to reinvent the historic Albuquerque Rail Yards by finding a development partner to transform a city-owned parking lot into “an amenity where thousands can gather year-round.”
Mayor Tim Keller’s claim “We rise and fall on downtown” resulted in more than a few snickers within the development community. The reason is that it no way reflects the truth and what has been going on in the city for the last 60 years. The truth is “Downtown Albuquerque” has been transforming during Mayor Tim Keller’s entire life of 42 years plus another 20 years before he was born. As one who was born and raised in Albuquerque, Keller showed very little knowledge of the city’s history of downtown revitalization and the city’s expansion away from the downtown he was referring to in his announced plan.
CITY NEEDS TO MAKE BIGGER COMMITMENT TO ECONOMIC DEVELOPMENT
If Mayor Keller views himself as the city’s “promoter in chief”, his approved budget of $5.8 million for the Economic Development Department is an embarrassment to his efforts to promote the city given the fact that the city has a total operating revenue and approved budget of $1.1 Billion dollars for fiscal year 2020-2021. Truth be known Mayor Keller has only given lip service to economic development for the last three years, and then it was to get publicity over projects and to somehow take some credit for the development projects that did come to the city on their own, which were still too few and far between.
Mayor Tim Keller and his Administration have taken great pains to take credit to some extent for the NBC Deal, the Net Flex Deal and the “Orion Center” development by making sure Mayor Keller held press conferences to announce all 3 projects. On Thursday, November 12, standing in the middle of the “Orion Center” vacant land site next to mock up photo of the completed project and accompanied by Chief Operating Officer Lawrence Rael, and no one from the Orion Group, Mayor Keller called the Orion Center project potentially “transformative” for central New Mexico and had this to say:
“It is a frankly unbelievable bright spot in the midst of a pandemic … This project is such a big deal we haven’t wanted to talk about it that much. We basically don’t want to jinx it.”
The link to the FACEBOOK post is here: https://www.facebook.com/watch/?ref=search&v=369142731079028&external_log_id=75f6f723-31de-4c9f-a111-b8572513ea51&q=tim%20keller
Keller made sure the press announcement was posted on his FACEBOOK page and no one from the Orion Group appeared with him. It is more likely than not the Orion Group did not want Keller to talk about it given his publicity seeking ways and to force development on parties like he did with the University of New Mexico and his proposed the homeless shelter. The truth is that all 3 projects have essentially landed in Albuquerque with little or no help from the Keller Administration and with some help from the State of New Mexico.
SOFTWARE DEVELOPMENT, DATA SCIENTIST BOOTCAMPS ARE OPTION
John Strong has written guest columns for this blog on “Boot Camps” for software developers and programmers and data scientists as on where city and state government can spend money to help with economic development. Boot Camps are immersive, intensive training programs of up to 12 weeks or so lasting a full time, 40 hours per week plus. When you exit them, a person is certified as a software programmer and developer or data scientist.
According to one John Strong guest column:
“These Boot Camps are an increasingly important part of the technology ecosystem and are professional occupations that are in very high demand. The Bureau of Labor Statistics says these are the 5th fastest growing professional jobs in the country, and we will be needing in excess of 300,000 of them at a minimum in the next 10 years. Extrapolated for population New Mexico should be getting over 6,000 of these jobs, but we can get many more if we make the commitment. …
We [can] get an incredible return on the investment in boot camps, but don’t spend nearly enough money on them. The demand for software programmers and data science graduates in boot camps is off the charts, and we need them more than ever. We also need technical grads from certificate programs for the film industry in fields such as film and video editing. …
… The placement rate for graduates in these Boot Camps is in excess of 85% in the first 6 months. The average starting salary for a Software developer/programmer or full stack developer is $50,000 per year and increasing to around $60-$70,000 from there. For a Data Scientist it is $95,000 rising to over $110,000 after a year or two. In addition to that for each Data Scientist that we create , they will need the support of as many 5-software developer/programmers. … .”
The link to the full John Strong guest column entitled “New Mexico Needs A Moonshot In Technology” is here:
https://www.petedinelli.com/2019/10/31/john-strong-new-mexico-needs-a-moonshot-in-technology/
ON MANY LEVELS ECONOMIC DEVELOPMENT JUST AS IMPORTANT AS PUBLIC SAFETY
During the last 3 fiscal budget cycles, Mayor Keller failed to seek any significant increased appropriation for economic development. Ostensibly, the reason for the failure to seek such funding for economic development is that from day one, Keller’s priorities have been public safety, police reforms, increasing APD’s budgets by millions and growing the ranks of APD in an effort to implement community-based policing and increasing the size of APD to bring down the city’s crime rates. The Keller Administration has committed $88 Million dollars to grow the department to 1,200 full time sworn police over 4 years with an additional $35 million in none recurring costs. Keller’s efforts with APD have fallen severely short given the recent Federal Monitor’s report on the police reforms that said that APD was on the “brink of catastrophe” and has failed to police itself.
It is very regrettable that Tim Keller has not made the same type of political commitment to economic development as he has with public safety. On many levels, economic development is ultimately just as important as public safety. A sound and expanding economy go to eliminating major contributors or causes of crime: poverty, reducing high unemployment rates and education and training.
Albuquerque can and must expand and find better ways to use financial incentives for economic development such as tax increment districts (TIDS), industrial revenue bonds, and even fund economic development investment programs such as initial startup funding with claw back provisions. A good start would also be the funding of “Boot Camps” for software developers and programmers and data scientists. Help from Intel who has now severely reduced its operations in the state just may be interested in reviving its relations with the state.
The city needs to get serious with spending more on economic development. Another good start would be creating a $20 million fund for initial startup funds for new businesses with claw back provisions with the program administered by the Economic Development Department. Public-private partnerships in the growth industries where ever possible should be encouraged and developed. Albuquerque needs to pursue with a vengeance real growth industry like heath care, transportation and manufacturing, the film industry and the aerospace industry to diversify our economy.
CONCLUSION
A $5.8 million dollar budget for an Economic Development Department just is not going to cut it and will never get much done with the City relying more on luck as it has with the NBC Deal, the Netflex deal, and now the Orion Center. Sooner rather than later, the city and its elected officials and the business community need to get their act together and work more to invest far more when it comes to economic development. Otherwise Albuquerque is destined to become a dusty little dying city in the Southwest that failed itself because it failed to make any effort to expand its economy or do any meanifull economic development.
