Article in The Albuquerque Tribune: To woo retailers, programs offer vow: `Can do’

From 1980 to 1998, Robert Fraser kept tabs on refrigeration units – long as a UPS truck and half as tall – that were kept inside Intel’s Rio Rancho facility at just the right temperature.

Upon retirement, his title was supervisor of the company’s energy center, but he had another one: the guy who came with the building.

Before the microchip producer landed in Sandoval County, Fraser worked as maintenance supervisor in a building Intel wanted to buy.

“I escorted them through the building,” Fraser said, “and more or less showed them what was there and how it worked.”

Shortly after, the building was acquired, and Fraser was hired – “the first New Mexico Intel employee,” he says.

Since Fraser’s day as a tour guide, the emptiness that once abutted N.M. 528 in southern Rio Rancho has grown into a microchip-pumping hive of modern manufacturing, changing the shape of the city he has called home since 1976.

“When we moved out here, it was about 8,000 (people),” he said. “When Intel came . . . it was a big influence on this city.”

The city drank of Intel’s economic might and grew like a tree in rich soil – bigger and stronger. The population swelled from 9,985 in 1980 to about 70,000 today. The new residents poured in with new needs: more roads, more sewers and more schools.

But with Intel sitting outside the city limits of Rio Rancho, the company remains free of the tax obligation to help pay for such infrastructure. It still contributes in many ways – it funded the $30 million construction of Rio Rancho High School in return for $8 billion worth of industrial revenue bonds from Sandoval County.

But city leaders are eagerly courting a diversity of businesses to pump up the tax base. Especially coveted are retailers and their gross receipts tax revenues.

Their efforts are starting to pay off: Call centers for Victoria’s Secret and Bank of America have joined the landscape. So has a motor manufacturer that fled Los Angeles because of a declining quality of life and rising expenses. One of the world’s leading producers of audio equipment calls Rio Rancho home, and the city has plans for a new Downtown to be born in 2006. It will come with shops, residences, entertainment venues, a new City Hall and a sports arena.

“When I came here in 1994, we had an economic base that was 75 percent Intel,” says Noreen Scott, executive director of the Rio Rancho Economic Development Corp. “Today, Intel is about 29 percent of all of our jobs.”

City leaders say more manufacturing will surely come, more call centers, too. Economic base jobs, or those that do most of their sales outside of the state, are wanted because they draw money to New Mexico without taking dollars from in-state residents and businesses.

But it’s retailers that are topping the city’s list of businesses to be seduced by the Rio Rancho lifestyle, a citywide can-do attitude and innovative incentives.

Move it!

To businesses shopping the country – and sometimes the world – for their next location, how long it takes to set up shop can clinch it, says Kyle Bodhaine, president of development company Reid & Associates.

So when Rio Rancho’s Fast Track Build-to-Suit Program knocks six to eight weeks off a project’s build time, Bodhaine says, businesses listen.

The program brings together a “SWAT team,” Scott says: The company, developers and city officials from every department are involved, all the way down to site inspectors. The participants hammer out a plan to ensure a new project gets all the permits it needs when it needs them. The result is a project timeline that lasts 90 to 120 days, as opposed to 120 days, if not 150, Bodhaine says.

He credits the program with helping his company win a call center project for Gateway in 1997.

“In Gateway’s case, we were competing with a structure they had found in Colorado Springs,” he says. “The city as a group put together a program that could put them in a new building quicker than they could retrofit the old building, and the cost was close to the same.”

“Inspectors are on call,” he says. “That is unusual. They’ll even come at night so that we can continue pours.”

Despite that success of drawing Gateway, the company closed its Rio Rancho call center in January 2002 as part of a companywide cutback. The closing cost the city 430 jobs.

Still, Rick Homans, secretary of the state Economic Development Department, calls the fast-track program “one of the unique attributes of Rio Rancho right from the beginning.”

“It’s surprising that it’s unusual, but it is, and companies love it,” he says. “It’s completely customer service oriented right from day one. It was key to their early success and they’ve never lost it as they’ve grown, and I think some communities would have. Rio Rancho has maintained this entrepreneurial, customer service approach to this day, and it’s a very positive thing.”

Getting a GRIP

Maribel Castillo wants to shop in the city she has called home for just under a year. The 27-year-old understands how gross receipts taxes work in New Mexico: Taxes on goods bought in Rio Rancho stay in Rio Rancho.

But Castillo can’t always get what she wants.

“As far as clothing stores and stuff like that, we don’t really have much of a choice . . . besides sticking with Albuquerque,” she says. “If they had more stuff there, I would stick with Rio Rancho, just because of the fact that you’ve got to support the city.”

Consumers like Castillo are whom Rio Rancho business leaders want to bring back by building up the city’s retailers. The goal: more shopping convenience for locals and more gross receipts taxes for roads, parks and police.

“All services provided by the city are offered for the most part through gross receipts tax,” says Scott with the Rio Rancho Economic Development Corp. “Rio Rancho has really been strapped because the bulk of their gross receipts tax came from construction and still does.”

A study of Rio Rancho’s retail market and gross receipt tax collections in fiscal year 2003 concludes the city lost $296.5 million in retail sales to other communities, most likely to the Cottonwood Mall area in Albuquerque. The associated gross receipts tax loss came to $6.35 million.

“With our source of revenues – our gross receipt taxes – produced in our own community . . . we’re naturally having to compete,” Rio Rancho City Administrator Jim Palenick says. “If we have no retailers, we get nothing. You have all the retailers, you get it all.”

To help stanch the flow, the city passed an ordinance in January 2004 – the Gross Receipts Investment Policy, or GRIP – allowing new, large retailers to apply half of the gross receipts tax they pay in a year toward certain expenses they might incur while setting up shop.

If, for example, a new business invests in roads, stoplights or waterlines that serve the public, it would be eligible for the tax program. Impact fees also qualify.

But no businesses have used the program, Scott says, although two or three are looking at it.

The program’s goal, Palenick says, is to help create a Rio Rancho that will be a “more complete city that’s providing more of the things that its residents are accustomed to and want to have in their own community.”

“When you come up short on any of those, you’re somebody’s suburb and you’re somebody’s extension and you’re somebody’s whatever,” he says. “Our goal . . . we want to be complete, self-sustaining.”

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