Las Cruces City Council is planning to issue $28.5 million dollars in bonds that would be paid off using gross receipts taxes. An estimated $12.6 million dollars of this funding is being put toward business development projects.
35% of the Hold Harmless GRT bond funding is being put toward business development projects. According to City Manager Robert Garza one of the first projects the council will be voting on is the expansion of the Las Cruces Convention Center.
Garza estimates the expansion will cost around $3 million dollars and says there was no economic impact study completed to measure a return on investment.
“We have a list that the convention center provided me,” Garza said. “Since they opened which was 4 ½ years ago, they’ve lost over $7.5 million dollars of business where people say gosh we really wanted to come to your city, but you don’t have a hotel nearby and you don’t have enough breakout rooms so people walked away. So to be able to measure the value of our investment, we are looking at lost opportunities from the past, and hoping to capture those same opportunities in the future.”
Currently, the Las Cruces Convention Center operates on a deficit funded by the Las Cruces Lodger’s tax.
Las Cruces Convention Center General Manager Rebecca Bolton says nationwide about 80% of convention centers operate on a deficit, because the facilities are not intended to make money.
“They’re intended to book hotel rooms inside the destination,” Bolton said. “Those hotel room’s produce a lodger’s tax, and that lodger’s tax is what funds that deficit. So, those people also spend money in the community. They go to the movies, they go out to eat, they go to entertain themselves, so that creates additional economic impact, which is very substantial.”
Bolton says a return on investment won’t come directly from Convention Center bookings, instead investment in the convention center could bring more people to the city, staying in hotels and visiting local businesses.
She says once plans for the expansion are outlined, she could better estimate additional convention business.
“There hasn’t been a specific economic study to the specific expansion,” Bolton said. “Because that expansion has not been outlined exactly yet. If I were to know right now exactly how large that expansion would be then I would be able to go in and say ok well this is what we would be looking at.”
The city is expected to vote on the expansion of the convention center next month.
Some economists note that municipalities should consider quality of life initiatives when working to boost the economy. Doctor Chris Erickson of New Mexico State University says having a high quality of life attracts the high quality workforce businesses want to see in an area.
“Also part of a good lifestyle is having parks to go to,” Erickson said. “Having bike trails, and having a nice place to live, and so issuing bonds to fund that kind of investment makes perfect sense.”
