As expected, the $4.5 million police station was approved

The Truth or Consequences city commission approved the issuance of $4.5 million in bonds to be used to renovate the old National Guard armory building as the city’s police station, as well as pay off two loans with $65,000 principal remaining, during the Nov. 15 city commission meeting.

The city hired Mark Valenzuela of Bosque Advisors in Albuquerque and Chris Muirhead of Modrall Sperling law firm, also in Albuquerque, as financial advisors.

Valenzuela said the bonds will be sold on the open market, the ordinance setting the debt period up to 30 years and the interest rate up to 12 percent, the caps set by state law. Both Valenzuela and Muirhead said the sale of the bonds will probably result in a 25-year debt and “a much lower interest rate” than 12 percent.

Valenzuela, Muirhead, Mayor Pro Tem Rolf Hechler and City Manager Angela Gonzales traveled to New York City earlier in the week to meet with bond-rating companies in preparation for the public sale of the bonds. They did not state which bond-rating firm will be evaluating the city’s credit worthiness, but Valenzuela said the chosen firm will be paid about $15,000. Valenzuela said Hechler and Gonzales “made my job easy,” selling the firms on the beauty of T or C and the plans to renovate the old armory as a police station.

The higher the bond rating, the lower the interest rate the people will have to pay back on the debt. Valenzuela said getting a bond rating is a process and “investment.” Ruidoso started out with a “triple D” bond rating, but after each successive bond issuance the bond rating rose and is now “AA-minus,” he said.

Valenzuela said that the ordinance for the bond issue includes all of the city’s gross receipts taxes, 1.225 percent, even though only the .25 percent dedicated to public safety will be used to pay off the bond debt. That was done “because it’s more money,” and will therefore lower the interest rate and achieve a higher bond rating.

The two old debts totaling about $65,000 principal will only be paid off “if it makes sense,” Muirhead said, giving the example that bond buyers might pay as much as a $10 premium per $100 bond.

I asked Chief of Police Luis Tavizon how much new vs. renovation would cost at the Oct. 11 meeting. He said then he thought they were about the same, but subsequently asked the architect. He received a letter Oct. 17.  He shared the contents of the letter during the public hearing. The armory building is 13,375 square feet and the architect said it would cost $250 a square foot or $3.3 million to renovate. A new building the same size, plus $400,000 for “site work,” would cost $730 a square foot. The architect said the rule of thumb is that if a renovation costs 50 percent of what a new building would cost, then a new building is probably the better choice. Since $250 is 27 percent of $730 per square foot, the renovation is a good option, Tavizon said, and since the building was originally military grade, it should serve well as a police station.

During the public hearing, Sheriff Josh Baker and Caleb Cooper of New Hope Revival Church spoke as proponents for the project.

Baker said he was working for the T or C police department in 2011 when the city residents approved the .25 percent gross receipts tax, stating it was not just for police salaries and retention and recruitment, but “to improve the police department and public safety.” He said he has watched the last three chiefs of police spend “tens of thousands of dollars” to maintain the current building that is a repurposed funeral parlor and has witnessed it flood several times.

Cooper said Baker and Tavizon are great leaders and Tavizon is the best police chief the city has ever had. Tavizon has done his research and has a plan and the city should therefore take advantage of his leadership to see the project through now, he said.

City Commissioner Shelly Harrelson said the .25 percent GRT passed in 2011 for the police department “can not be used for anything else,” and Mayor Amanda Forrister agreed, saying “we would love to use it for water,” referring to the city’s declaration of a waterline “disaster” that was also on the meeting agenda.

Harrelson also said someone, probably meaning me, was misinforming the community that if this bond issue were approved to renovate the armory as a police station then the money could be used to fund waterline repairs or be put to other uses.

I spoke, neither as a proponent or opponent, during the public hearing. I repeated what I had said at the Oct. 11 city commission meeting. In reference to Baker’s claim, I said then-Chief of Police Patrick Gallagher had proposed the .25 percent GRT specifically for police salaries and retention and that’s why the community passed the referendum, even though the space-limited ballot language reduced his proposed uses to “public safety.”

In reference to Harrelson’s claim I had misinformed the community, I repeated that in 2019 the state legislature took away the “earmarking” local governments had imposed on GRT, thus allowing cities to use the revenues generated for broader municipal purposes, such as for waterline repairs.

I also stated that the issue was not if a new police building is needed—it probably is—but rather if we have the money for the project, especially in light of the water “disaster.”

Muirhead said I was correct that a 2019 law had been passed removing earmarking, but that if the earmarking had been done by referendum, then the city would have to hold another vote to amend the use of the .25 percent GRT currently dedicated to public safety.

I researched House Bill 479, regular session, 2019, that amended state law 7-19D-9. Muirhead is correct. The city would have to hold another election to change the use of the .25 percent GRT.

Since the city can’t have it both ways, that means the city commission broke the law when it took $300,000 from the police department’s .25 percent GRT to build the animal shelter in 2018 and again this year when it passed a budget that transferred about $800,000 from the same source to cover deficit spending.

The 2019 law “consolidating” municipal GRT dedications did not automatically undo ordinances and referendums. If the GRT was dedicated via public vote, it has to go back to a public vote to change the use of its revenue. If the GRT was dedicated to a particular use via ordinance, the city must pass a new ordinance to change its revenue use.

Just before the city commission unanimously voted to approve the measure, Mayor Pro Tem Rolf Hechler said the community had been given “misinformation” in 2017 when the armory renovation as a police station was attempted the first time. Hechler didn’t indicate what he was referring to. He was serving as a city commissioner at the time. The people pushed the question to referendum and disapproved of the project. “We would have saved money and been done with it. It’s not going to get any cheaper,” he said.