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  • This Oct. 8, 2018 image shows the entrance to ABQ Studios in Albuquerque, N.M., on Monday, Oct. 8, 2018. Netflix announced at the studio complex Monday that it chose Albuquerque as a new production hub and was in the process of buying the property, which includes several sound stages, offices and a back lot. (AP Photo/Susan Montoya Bryan)

  • FILE - This July 17, 2017, file photo shows a Netflix logo on an iPhone in Philadelphia. Netflix has chosen New Mexico as the site of a new U.S. production hub and is in final negotiations to buy an existing multimillion-dollar studio complex on the edge of the state's largest city, government and corporate leaders announced Monday, Oct. 8, 2018. (AP Photo/Matt Rourke, File)

  • New Mexico Gov. Susana Martinez, from left, Albuquerque Mayor Tim Keller, Netflix vice president for physical production Ty Warren and Albuquerque film liaison Alicia Keyes headline a news conference at ABQ Studios in Albuquerque, N.M., on Monday, Oct. 8, 2018. Netflix has chosen Albuquerque as its new production hub and is in the process of buying the existing studio complex that includes several sound stages, offices and a back lot. (AP Photo/Susan Montoya Bryan)

Friday, October 12, 2018 1:46 pm

Netflix production hub incentive package clears first hurdle

The Associated Press

ALBUQUERQUE, N.M. (AP) Part of a multimillion-dollar incentive package offered to Netflix for locating its new U.S. production hub in New Mexico has cleared its first hurdle.

The Albuquerque Development Commission voted unanimously Thursday to recommend the City Council approve the $4.5 million deal. A vote could come as early as next week.

Netflix announced this week that it chose Albuquerque and was negotiating to purchase a sprawling studio complex on the city's southern edge that includes sound stages, offices and a back lot where it will produce original series and films.

It will mark the company's first purchase of such a property. Work there and elsewhere around the state is expected to result in $1 billion in spending over the next decade.

"We whole heartedly feel this is a transformation project for our community. Netflix continues to be a major force in the entertainment industry," said Debra Inman, senior vice president for the nonprofit Albuquerque Economic Development.

Officials estimate that 30 percent of a film or series budget will go toward local vendors and the majority of that spending will take place in the Albuquerque area.

Incentives for Netflix also include $10 million in economic development funding from the state. City councilors will have to approve that part of the package as well since the city will serve as the fiscal agent for the funds.

In exchange, Netflix is committing to direct spending on its own productions in New Mexico of at least $600 million in the first five years and $400 million in direct and indirect spending in the following five years. That will include leasing studio space to other companies.

Netflix plans to spend at least $2.5 million in capital improvements on the studio complex.

Netflix will have to pay penalties if its spending by the end of 2023 is less than 90 percent of the $600 million performance target or if spending is not at least an additional $400 million by Dec. 31, 2028.

There also would be penalties if Netflix ceases operations at the studio before the end of 2028.

Netflix projects produced in New Mexico include the Emmy-winning limited series "Godless" and "Longmire."

Company officials said during a news conference Monday that previous experience working in the state inspired them to jump at the opportunity to establish a new production hub in Albuquerque.