Lynda Aiman-Smith


We will soon have a special election to vote on a Gross Receipts Tax increase, ostensibly to fund five projects. As a long-time practicing manager, and as an instructor teaching management courses, I find one proposed project particularly appalling – the proposal to build a multiplex theater here in Grant County. Our Grant County Commissioners say we are losing young families, that youth have nothing to do – and that a multiplex theater is necessary to provide entertainment. They further say the multiplex theater will pay for itself.

It is as if they have refused to learn from an example of absolutely “Worst Practices” in using taxpayer money, just south of us in Deming.  The story of the Deming Starmax should be a cautionary tale to our County Commissioners and others who want us to go down the same path of fiscal foolishness.

Luna County taxpayers approved a Gross Receipts Tax increase in March 2007, after an intensive marketing effort of the Luna County Commissioners.  Construction of the Deming Starmax Family Entertainment Complex cost $8.5 MILLION, and then required more money -- $392,000 -- to do up-fitting [1,2].

The Luna County Commissioners confidently assured the taxpayers that the revenue from the theater would pay off the bond early (they predicted five years after issue).[3] They were confident they had a good contract operator to run the multiplex, and that it would bring in revenue quickly. However, troubles started early – starting with the fact that to get the theater open and running in 2009, the County had to PAY the contract operator, David Kowert of Starmax Entertainment Group, LLC,out of South Carolina, $10,000 a month to run the facility.[4]

In May 2011 Luna County got another contract operator to take over operations of the Deming Starmax. At least Luna County did not pay him, but William Kellen from American Family Entertainment PAID NOTHING TO THE COUNTY for six months. The agreement between Kellen and the County was for him to begin paying $5000/month in rent in Jan 2012.  After Mr. Kellen realized the revenues from the multiplex would not sustain the operation and pay rent to Luna County, he left. [5] [6]

In September 2012 the County HIRED Ira Pearson - who reports to the County Manager - to run the theater. They formed an LLC - Deming Starmax LLC for actual operations.  But Pearson is still a county employee -- on the Luna county payroll at a reported $52,000 a year. [7]

According to an official 2012 audit of Luna County, the Deming Starmax multiplex COST Luna County $182,000 in 2011-2012. This is above the cost of the debt service. The debt service on the bond they are paying off with their increased gross receipts tax is $544,000 a year.  Rather than paying the bond off in five years -- as the Commissioners confidently predicted -- there is still over $6 million to be paid back from an original $7.2 million dollar bond.[8]

Let me make this clear. The Deming Starmax multiplex is a case example of terrible judgment and terrible use of taxpayer money.  True, the Deming Starmax is a larger facility than the still vague hand-waving discussion of a multiplex theater in Grant County. Yet, I contend, our County Commissioners should learn from this awful example. And it would be wise for us voters to think about the money pit that Luna taxpayer keep funding, and how that could so easily happen here.

And to make matters worse, the Deming Starmax multiplex theater does not seem to have met any of the hopes of Luna’s County Commissioners. Luna County teens still get in trouble. Young families still move away from Luna County. And the economic nightmare that is the Starmax Entertainment Center continues to siphon Luna County taxpayer funds away from other projects that actually might benefit their county.

Add up the numbers. Think about how little transparency and planning have been put into this project idea. Think how the Grant County Commissioners seem to refuse to learn from the nightmare example in Luna County. Let’s not make the same mistake here. Vote NO on the upcoming Gross Receipts Tax.

References

 [1]Robinson, Matt. (04/14/2009) Luna County's Entertainment Complex may be done by May. Deming Headlight.
“Approximately $7 million has been bonded for the project, which is expected to come in at approximately $8.5 million”

[2] Robinson, Matt (11/12/2012). County run theater makes improvements. Deming Headlight “You should notice an obvious improvement in the aesthetic and visual quality of movies being played at the Deming Starmax after an investment of about $390,000 into a digital conversion of projectors.”

[3] Minutes of Luna County Commissioners meeting 2/1/2007.
“In addition to the gross receipts revenue there will also be lease payment funds to be paid towards the bonds, providing the possibility of the complex being paid off in five years.”
Accessed from:
http://www.lunacountynm.us/2007.html

[4]Source: Robinson. Matt (1/26/2011) County considers management change at Starmax. Deming Headlight. Interview with then County Manager John Sutherland .
“Currently, the county pays Starmax $10,000 per month to manage the facility, a point he would like to change.”

[5] Robinson, Matt (4/20/2011) County considers Starmax management team. Deming Headlight.
“Unlike the previous agreement, the new contract includes terms that will pay the county, which is essentially acting as a landlord for the facility. Rent payments of $5,000 per month will be made to the county from Jan. 1, 2012 through Dec. 2012.”

[6] Minutes of Luna County Commissioners meeting, 9/4/2012
“County Manager Kelly Kuenstler said American Family Entertainment Center  notified her last week that the company was no longer able to meet the  conditions of its management contract with the county. Reportedly, officials with American Family determined they could not make  a profit under the current contract, which required them to pay the county a  fixed rent payment of $5,000 a  month.”
Accessed from:
http://www.lunacountynm.us/2012.html

[7] Robinson, Matt (09/18/2012) Kuenstler, Pearson head Starmax mgt. team. Deming Headlight.
“During Tuesday's special meeting of the Luna County Board of Commissioners, county manager Kelly Kuenstler was approved to take on an additional title overseeing Starmax and the theater's new manager, Ira Pearson, was introduced.” …” Pearson - said to paid $52,000 annually - and Kuenstler will be the only county employees working with the facility.”

[8] Kriegel, Gray & Shaw, Independent Auditors Report, County of Luna audit, June 30, 2012
Accessed from:
http://lunacountynm.us/News%20Flyers/2012%20County%20Of%20Luna%20Audit.pdf