Council moved a proposed IRB policy to a future work session, where members will take a deeper look at rules that could force companies to repay tax benefits when promised economic gains fall short

Damien Willis, Organ Mountain News

LAS CRUCES - Las Cruces will take a longer look at proposed safeguards governing millions of dollars in potential corporate tax breaks after City Council pulled a new industrial revenue bond policy from Monday’s agenda and sent it to a future work session.

The proposed policy would establish standards for companies seeking Industrial Revenue Bond financing through the city and require projects that fail to deliver anticipated economic benefits to repay property tax abatements and gross receipts and compensating tax benefits they received.

Council had been scheduled to consider the policy Monday, but Mayor Pro Tem John Muñoz announced before the council began its discussion agenda that the item would be removed and discussed at a future work session.

Councilor Becky Corran moved to accept the agenda without the IRB item, Councilor Michael Harris seconded and the six councilors present approved the change. Mayor Eric Enriquez was absent.

The delay does not kill the policy. Instead, it gives councilors an opportunity to dig further into how Las Cruces decides which projects deserve major tax incentives — and what happens when companies do not live up to the economic promises used to justify them.

Councilor Johana Bencomo later welcomed the decision to move the proposal into a work session, saying the city has learned considerably about industrial revenue bonds in recent months.

“I do feel like in the last, I don’t know, eight months or so, we’ve learned a lot about IRB and what to do, what not to do,” Bencomo said.

She said she wants the policy to emerge from the work session as strong as possible.

“To be very frank, I’m pretty tired of feeling like we get taken advantage of as a community from outside corporations,” Bencomo said. “And while we want to encourage economic development, we want to encourage it in a way that uplifts our dignity and our values and our resources.”

Putting strings on tax breaks

Industrial revenue bonds are an economic development tool cities can use to help qualifying private projects finance construction, equipment and other costs. Because the issuing government generally holds property involved in an IRB transaction during the bond term, projects can receive substantial property tax and other tax benefits.

The draft Las Cruces policy is intended to put a more consistent framework around how the city evaluates those requests.

Under the proposal presented in Monday’s council packet, projects would be evaluated based on their expected costs and benefits to Las Cruces and its residents. Companies would also be responsible for costs the city incurs reviewing and implementing an IRB project.

Most significantly, the policy calls for companies whose projects fail to produce the economic benefits anticipated when an IRB was approved to return tax benefits to the city.

The policy specifically contemplates repayment of property tax abatements as well as gross receipts and compensating tax benefits.

The proposal would also establish a formal process for evaluating applications before they reach the City Council.

No new date for council action was announced Monday.

Bencomo said she believes the policy has the potential to strengthen the city’s approach to economic development without abandoning efforts to attract new investment.

“I think this policy has absolutely that potential,” she said. “And so I’m excited to talk about it a little bit more at a work session.”

The council’s decision means the proposed safeguards will return for additional public discussion before members decide whether to put them into effect.

Damien Willis is founder and editor of Organ Mountain News. If you have a personal story to share or a lead we should follow up on, reach out at OrganMountainNews@gmail.com or connect with him on X at @damienwillis.