Tres Amigas switching finance partners

Tres Amigas is switching partners in the middle of its dance to finance a $1.9 billion electric power distribution center north of Clovis.

Company spokesperson Adrienne Smith confirmed Tres Amigas has stopped courting Curry County and is now preparing to ask Clovis to issue an almost $2 billion Industrial Revenue Bond .

The switch is not a snub for the county, according to Smith. Rather, Smith and others said, the city has experience in issuing IRBs and the county has none.

The city also collects an estimated $800,000 a year in a local economic development tax money that can be used to help ventures such as Tres Amigas, said Chase Gentry, executive director of the Clovis Industrial Development Corp. The county doesn't have any such fund.

"It's available," Gentry said, quickly stressing, however, "We haven't told them (Tres Amigas) they can use it. We've made no offers."

At stake is an estimated $155 million in property taxes Tres Amigas may not have to pay over a 20-year period if the city issues the IRBs.

The bonds are a device allowing the city to abate or forgive as much as 100 percent of property and gross receipts taxes Tres Amigas would otherwise be obligated to pay.

IRBs are an inducement devised to get around the anti-donation clause in the New Mexico Constitution, county commissioners were recently told by their bond attorneys.

The county was considering a plan that had commissioners authorizing up to $1.9 billion in bonds and to be purchased by a subsidiary of Tres Amigas. The project would have then been owned by the county and leased back to Tres Amigas, taking it off property tax rolls because it would be publicly owned.

The plan also called for writing safeguards in the lease agreement to protect the county from any legal liability caused by the Tres Amigas project.

The CDIC's plan could contain similar caveats, depending on what is negotiated with Tres Amigas.

Tres Amigas is also proposing a change that would move its transmission plant about five miles closer to Clovis. Changing the location from a point near Curry Road 31 to Curry Road 26 "shortens our transmission line and provides shorter access for construction and operating crews from the city of Clovis," Smith said in a recent email.

The move also takes the bulk of the plant's footprint out of the Texico school district and puts it in the Clovis Municipal Schools district.

"We find that to be good news," said Clovis Superintendent Terry Myers, "not just for the school district but for the community as well."

Myers said he wasn't prepared to discuss financial ramifications of the proposed IRB.

A 100 percent tax abatement such as the one Tres Amigas had proposed to the county would also mean no tax dollars for the school district. That doesn't preclude the CDIC from negotiating some form of payment in lieu of taxes, as it did with Southwest Cheese.

Southwest Cheese agreed to donate $100,000 each year for the next 25 years to the school district's Education Foundation.

Another example of options — when Tres Amigas settled on Albuquerque and Rio Rancho to locate its business offices with an estimated 100 new jobs, Bernalillo County agreed to front a $20 million IRB but limited the abatement on property and gross receipts taxes to 90 percent.

Myers said any discussion of payment of lieu of taxes or other options now is premature.

"Should all this be finalized ... then, indeed, we would sit down at the table and talk about options," said Myers. " I'm just not familiar with all the options."

Smith said construction of the superstation is initially expected to create anywhere from 200 to 400 new jobs, adding, " Some will be permanent and some temporary."

The superstation connecting the nation's three major electrical power grids is expected to be built in a series of phases over many years.

City and county economic and elected officials have said they expect the Tres Amigas superstation to spark a boom in new alternative energy industries — wind and solar — across the region.

Once complete, the superstation would present a place to sell excess electric power for distribution to other areas of the country.

As for costs the county incurred in its short dance with Tres Amigas, commission Chairman Wendell Bostwick said they were "minimal" and money well spent. Bostwick looks at as a learning exercise for establishing policies that would enable the county to be prepared for IRB requests in the future.

"It was one of those things that was kind of an educational process for us," Bostwick said, "to tell us what we needed to do and the questions we needed to ask."

Bostwick said he was assured by Tres Amigas officials the county would be included in negotiations for payment in lieu of taxes for such things as road improvements.