KRQE Investigation uncovers City’s gross misuse of Lodgers’ Tax

Larry Barker

A three-month-long KRQE News 13 investigation

ALBUQUERQUE, N.M. (KRQE) – It’s been going on for years. Albuquerque officials have quietly misspent tens of thousands of tax dollars, and the evidence is scattered all over the city.

Stashed away at the Albuquerque Sunport is “Exhibit A”. Thousands of people pass by it every day and not one of them likely knows what it is. “Exhibit A” is an 8-foot tall steel Olympic style cauldron constructed for the Senior Olympics held in Albuquerque last summer. The problem is not that the city had a cauldron. The problem is how they paid for it.

When City officials shelled out $20,000 for the custom made steel apparatus, and a rented propane tank to keep it lit, they improperly raided a little known pot of money earmarked for tourism. “Those are dollars intended for a very specific purpose,” State Senator George Munoz says. “When you take those dollars and shift them to something that you’re not supposed to use them for, then we have issues.”

We’re talking about an obscure treasure trove of cash called Lodgers’ Tax. Authorized by the legislature, Lodgers’ Tax is a fee collected from hotel guests and then turned over to the city to promote tourism.

Last year Albuquerque collected more than $13,000,000 in Lodgers’ Tax.

“The Lodgers’ Tax was a piece of legislation passed in 1969. The purpose was to expand tourism. In local areas the dollars should be directed towards efforts to encourage greater tourism,” says Senate Finance Committee Chair, Senator John Arthur Smith.

The idea behind Lodgers’ Tax is to attract out of town visitors. City officials are permitted to spend the proceeds on advertising, publicizing and promoting tourist facilities and attractions as well as construction, financing, and maintenance of convention centers.

“It’s the lifeblood of marketing our destination,” says Adrian Perez, President of Heritage Hotels and Resorts. “It is absolutely critical. The taxes our guests pay on departure when they leave our hotels should be applied to marketing the destination,” Perez says.

While a flaming Olympic style cauldron was a nice touch for the Senior Games, the use of Lodgers’ Tax to pay for it was contrary to the statute.

In 2016 someone at City Hall apparently thought spending $414,000 in Lodgers’ Tax funds on parking meters would somehow attract out of town tourists to Albuquerque.

“I would tell you that (state legislators) never thought about parking meters when they did the original statute,” says New Mexico Municipal League’s Bill Fulginiti.

When asked if parking meters would be an appropriate expenditure of Lodgers’ Tax, Heritage Hotels President Adrian Perez, replied, “Absolutely not.”

“In my opinion, it was not an appropriate use of Lodgers’ Tax,” says Pat Montoya, Director of Albuquerque’s Municipal Development Division. “I would have questioned the use of those funds,” Montoya said. He notes the parking meters were bought by an unknown staffer during the Berry administration.

In 2017, city officials used Lodgers’ Tax to buy gates, ticket booths, and computer equipment for the Copper Avenue Parking Garage in downtown Albuquerque. Price tag? $59,142.

“That… does not appear to be an appropriate use of Lodgers’ Tax,” says Michelle Dressler, President of the Albuquerque Hotel and Lodgers’ Association. “It’s not bringing tourists here. It’s not advertising our city. It’s just a parking garage,” Dressler says.

City Municipal Development Director Pat Montoya says that expenditure was also made during the previous administration. “I would not have used (Lodgers’ Tax) for the parking structure,” Montoya says.

And then there’s the quarter of a million dollars the city spent last year on a mountain of dirt, sod, and clay.

The expense relates to Albuquerque’s new soccer franchise which uses the city-owned Isotopes Park to play its matches. Because the soccer season overlaps with the baseball season, every time New Mexico United has a match, the playing area must be converted from a baseball field to a soccer field. After the soccer game, crews reverse the process, hauling off soccer dirt and sod and replacing it with baseball dirt and sod.

Last year the city converted the Isotopes Park baseball field to a soccer field six times using $270,000 in Lodgers’ Tax to pay for it.

Remember, Lodgers’ Tax expenditures are supposed to generate tourism from out of town visitors.

“I’m a huge fan of the soccer team. I think it’s been great for our community,” says Heritage Hotels President Adrian Perez. “I just don’t think soccer conversions and fields are the best and wisest use of those dollars,” Perez says.

Albuquerque’s Pat Montoya believes the use of Lodgers’ Tax to convert the sod at Isotopes Park was a permissible expenditure because “the soccer team has actually been a draw for Albuquerque.”

“The (soccer) team needs a field to play on,” Montoya says. “Once you have that you’re attracting people to come to those games. … I still consider it to be a promotion of some sort,” according to Pat Montoya.

Montoya says the city did not have money appropriated for the soccer field conversion in 2019 so he authorized the use of Lodgers’ Tax to cover the $270,000 expense. He says later in the year (2019), when the new budget kicked in, the money for the field conversion came from the City’s General Fund.

And, every time New Mexico United plays at Isotopes Park, soccer players borrow the use of the Isotope’s locker room. To protect the baseball player’s personal belongings, Pat Montoya authorized the expenditure of $2,634 from Lodgers’ Tax for locker protective coverings.

“I don’t know that we can actually stretch to say that would be an appropriate use (of Lodgers’ Tax),” says Albuquerque Hotel and Lodgers Association President Michelle Dressler.

“How do we justify using Lodgers’ Tax (for the locker coverings)? I guess Larry, I can’t justify it. I mean, it’s a $2,600 expenditure that could be questionable,” Pat Montoya said.

And then there’s Mayor Tim Keller’s pet project, the 17,000-pound steel art rendition, ONE ALBUQUERQUE.

“It’s a sign that says One Albuquerque. It’s a One Albuquerque sculpture,” Mayor Keller says.

City Hall paid for the sign using $39,017 from the Lodgers’ Tax fund. And even though it’s touted as a mobile sculpture, it takes a crane and a flat-bed truck to move it. Cost of the crane? $10,134 from Lodgers’ Tax.

“I was okay doing it. It’s not something that I put a whole lot of thought into, which type of funding,” Mayor Keller says. “I think fundamentally I was okay with it because it’s marketing and it is trying to promote our city,” the Mayor said.

Mayor Keller is somewhat of an expert on Lodgers’ Tax. When he was State Auditor, he issued a special report detailing the appropriate use of Lodgers’ Tax expenditures.

“It’s a nice thing to have for people to see and take pictures with, but people aren’t coming here (to see the sign),” says Michelle Dressler.

“That’s what we’re looking for, ‘what’s going to bring them here to the city?’ (The sign is) just another thing that you see while you’re here. It definitely is a questionable use of the Lodgers’ Tax,” Dressler said.

KRQE News 13 asked State Senator George Munoz if the ONE ALBUQUERQUE sign is an appropriate use of Lodgers’ Tax? “Absolutely not. What does a mobile sign have to do for tourism,” Senator Munoz said.

The Lodgers’ Tax Statute does not specify any oversight or penalties for misuse of the Tax. “I think the intent is that (Lodgers’ Tax) has to be used to promote and enhance and entice people to come into a municipality,” says Municipal Development Director Pat Montoya.

“We as civil servants are obligated to use that money in the most appropriate way that the legislation requires,” Montoya said.

State Senator John Arthur Smith has his own message for any municipality that misspends Lodgers’ Tax, “As Chair of the Senate Finance Committee, my message is, you better stop it. You better correct it.”

Read Transparency Report Lodgers’ Tax Expenditures

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