Rio Rancho Schadenfreude

Photo by Rick Scibelli Jr. for The New York Times.






This article is from last May, but I'm glad someone wrote about it. Building that Santa Ana Star Center was madness - utter madness - and just another example (like we need another example) of headlong real estate development run amok. But that's why God created Rio Rancho anyway: as an unusually-spectacular example of mental corruption and the evils of real estate development. And it's no surprise that that Mayor Jim Owen, the Napoleon Bonaparte of the Southwest, with his mad plans to make Rio Rancho among the largest cities in the world - as big as LA - expanding all the way to Mt. Taylor, and beyond, was in the thick of this fiasco:

RIO RANCHO, N.M. — The plan sounded great during the real estate boom: build a midsize arena, stuff it with sports, music acts and monster trucks and create a centerpiece for the new city center being developed on a dusty mesa here, 20 miles north of downtown Albuquerque.

But trouble started almost from the day the doors of Santa Ana Star Center opened in 2006. Global Entertainment, the company hired to build and manage the arena, failed to book enough events, and the minor league hockey team it recruited folded. Attendance was light because of high ticket prices and the arena’s remote location. Unrealistic sales targets and high turnover among the arena’s staff added to the problems.

The arena, which Global Entertainment said would be profitable in a year, has lost so much money that Rio Rancho has had to spend millions of dollars each year to keep it afloat. The city fired Global Entertainment in 2009 and sued it to recoup hundreds of thousands of dollars in unpaid bills.

A new arena manager has brought in more business, but the losses have continued to mount, eating into the city’s already tight budget and pushing lawmakers to eliminate jobs and cut costs, including asking police officers to buy their own practice ammunition.

“If you look at the numbers that Global Entertainment presented to us, it was really, really questionable then, let alone during a recession,” said James C. Jimenez, the city manager in Rio Rancho, who was hired after the arena foundered. “If we didn’t have to allocate the money for debt service, our employees would have had raises and our budget would be in a better position.”

...And although larger cities often have more wherewithal to absorb these kinds of long-term obligations, bedroom communities like Rio Rancho (population 87,000) have less leeway because they have smaller budgets.

So the towns are not just stuck with buyer’s remorse, but also growing financial headaches.

This, of course, was not anticipated when plans for Santa Ana Star Center were taking shape almost a decade ago. Rio Rancho was flush because of a boom in home building, a growing Intel chip factory and several new call centers. But because the city had too few stores, residents shopped in Albuquerque, leaving their retail dollars there, a problem in a state where sales taxes account for a large part of municipal revenue.

So Jim Owen, the mayor of Rio Rancho at the time, conceived of a new city center in a distant part of town away from Albuquerque. It would be anchored by city hall and the arena and would include new stores that would generate sales tax revenue that would be kept in the city.

Yet the city center, with its windswept views of the Sandia Mountains, remains mostly a concept. Other than city hall and the arena, there are only a few buildings for offices and for the University of New Mexico West campus and Central New Mexico Community College. Coyotes routinely run through the parking lots.

The collapse of the real estate market undoubtedly helped stall the development. But Owen also blames his successor and developers for undoing his work. The arena, he said, remains a good idea in the context of the larger development.

“The arena was one piece to get the city center going,” he said. “We knew it was difficult to start with, and we knew we would subsidize it for a while. But a hundred years from now, people will look back and say, ‘Gee, this was planned.’ ”

...The arena was a money loser from the beginning. It lost $241,000 in its first nine months, ending in mid-2007, and millions of dollars since. Rio Rancho expects to pay $3.6 million this year to keep the arena running and to pay for its bonds, money that was supposed to be covered by profits from the arena.

The arena now consumes nearly 7 percent of the city’s $53.8 million budget, and workers have been furloughed, spending on parks has been curtailed and a reserve fund has been drawn down. In January, Jimenez, the city manager, asked for an additional $550,000 for arena upkeep and repairs, including refinishing the basketball court and buying new glass for the hockey rink.

The city is also suing Global Entertainment to recoup more than $300,000 that it claims the company owes dozens of local businesses that provided services at the arena. Gary Williams, who owns a video-production company in Albuquerque named in the suit, said he was owed $6,000 for work he did at hockey games.

“I gave up after a year of trying,” Williams said of his attempts to be paid. “I turned around and paid all my employees out of my pocket. It’s a live-and-learn experience.”