On December 4, it was announced that a $1.2 million federal grant to improve infrastructure at the Rail Yards has been awarded to the City of Albuquerque. The federal grant will require a $1.2 million match from the city. The federal grant will fund water, sewer, street scape infrastructure and broadband internet to the facility that will house Central New Mexico Community College’s Film Production School of Excellence. The combined funding of $2.4 million is expected to help create 316 jobs and generate $9 million in private investment
John Fleming the Assistant Secretary of Commerce for Economic Development for the Trump Administration was in Albuquerque to make the announcement with Mayor Tim Keller. Fleming commented on the matching fund aspect of the grant and said:
“It represents a significant buy-in from the community. … We love to see skin in the game. We find that these projects succeed when the city or community foundations match our investment. [The federal grant] … will help shore up infrastructure so the private sector can come up and make things happen. … This will be state of the art in terms of infrastructure … This is what private companies require before they invest their money to make things happen.”
Mayor Tim Keller during the joint appearance with Fleming said the city tried to get the private sector involved in addressing the areas that will be funded by the Department of Commerce Economic Development Association grant. According to Mayor Keller:
“No private company was going to invest in all of the infrastructure. .. And they would tell us in all of these meetings, ‘When are you going to fix up the water, the plumbing and the electricity, and the security, and bring in broadband?’ We thought, ‘Wow, we thought that’s what you were going to do.’ … Finally, we decided we had to do this. In any way you look at it, the responsibility, for better or worse …. to restore a lot of these properties, the responsibility of building that infrastructure is in many ways the government’s. … We do believe if we can build out the infrastructure and make this a leasable, occupied space that, it will be a huge economic benefit”
According to Keller, the city’s commitment exceeded the matching amount required for the grant. On November 5, City voters approved $5 million in general obligation bond funding for the Rail yards, and during the 2019 New Mexico Legislative session, the state legislature appropriated $7.5 million for the rail yards.
KELLER SUFFERS FROM POLITICAL AMNESIA ON RAIL YARDS INVESTORS
Mayor Tim Keller is suffering from political amnesia. It is simply not true when Keller says that the city tried to get the private sector involved with the Rail Yard Development and no one showed any interest or will to deal with the infrastructure. Keller had private meetings with private investors willing to take over the Railyards project, but he said no.
John Strong has lived in New Mexico since 1997. He is a highly successful private business owner and has been investing in business startups since 2004. He is a co-founder or board member at several different companies, mostly in technology, healthcare, and financial services. Mr. Strong describes himself as being “obsessed” with entrepreneurship and small businesses.
John Strong had a reaction to Mayor Tim Keller’s announcement of the federal grant for the railyards:
“Recently, I’ve read … that Mayor Tim Keller had wished there was a private developer interested in the Railyards project, but that no one was. That is not only false, it’s a lie. Here’s how I know that.
In November of 2018 I was contacted by Stu Jones, a developer in Dallas, Texas who had an interest in the Railyards. Here’s a little background on him. Stu Jones is arguably one of the nation’s most prominent “Brownfield” developers. Brownfield projects are those that require environmental remediation, water table cleanup, or toxic waste cleanup. Jones’ company has completed billions of dollars of these re-developments in the United States including recently the re-development of a 5 million square foot former aircraft manufacturing facility in Dallas. He is recognized nationally as an expert in this area.
His company was a finalist for the contract on the Railyards when it was originally awarded to Samitaur several years ago, so he is very familiar with the project. When it became apparent that the city might cancel the Samitaur contract he indicated an interest in revisiting it. So when he reached out to me it was to request my help in facilitating a meeting with Mayor Keller to discuss the project. I did so, and a meeting was set for an evening at my home with Mayor Keller, Stu Jones, Stephen Martinez, a consultant on tax incentives, Kevin McDonald , a friend and associate of both myself and Jones, and two others. The Mayor had no staff at this meeting. The discussion centered on what Jones and his company could provide to the city with regards to the project.
Mayor Keller was immediately pretty disinterested in the discussion, stating that the city had all of the funds needed to begin remediation of the project. Mayor Keller had said that the remediation estimate that he had was about $7 million dollars. Jones said that was far too low, but the Mayor insisted it was not and that was all he was going to spend on it regardless. When asked if the city has this money the Mayor said yes, and much more because he could re-direct as much funding as he wished from capital improvements projects that had been funded but either not completed or not started.
Later in January, as the legislative session started the Mayor sent a staff member to the session to lobby for $7 million for this remediation, which was eventually granted. That led me to believe that the city did not have the money the Mayor had referenced in our meeting in November. The issue here for me is not whether the Mayor wishes to have any private sector involvement and funding for the railyards. That’s his prerogative. The issue is why he would say to the Albuquerque Journal and social media that no private parties were interested .That is simply a lie.
I have been a supporter of Tim Keller’s since his days in the Senate. I have hosted fundraisers for him, I gave substantial funds to the PAC supporting his election as Mayor, and I encouraged my friends to do the same. I cannot understand why he felt it was necessary to lie to the citizens of Albuquerque about a project that is deeply important to us all, and in particular to the citizens of the historic Barelas neighborhood. There is simply no justification for this. It is especially grievous when lately we are asked to have confidence in the Mayor in the face of the Crime Stats issue and others.
When the Mayor broke his first promise to us that he would never raise our taxes without our vote of approval, I gave him the benefit of the doubt because the excuse was that time was of the essence and market conditions demanded a speedy response. When recently the crime stats issue come to light it was blamed on out of date software. But this is different. There is no excuse. It is simply a lie to the citizens of Albuquerque and nothing else. It is a lie about an issue that is vitally important to all of us, and especially in the face of the disastrous ART project, we are desperate to believe in our elected leaders. This does nothing to instill the confidence we need.
At this point I have only two requests for Mayor Keller. I want an explanation for why he feels compelled to mislead us about the Railyards project by lying about no private sector interest in the project, and I want an apology from him to every citizen for having done so.”
$14.4 MILLION NOT ENOUGH
The $1.2 million federal grant and the city’s matching $1.2 million, the state’s $7 million and the $5 million in voter approved bonds falls short of what is actually needed for site preparation and development.
Leland Consulting Group is a Portland-based development consulting firm that was contracted to study the financial feasibility of redeveloping the Albuquerque Rail Yards. This past summer, the Leland Consulting Group determined that it will cost the city between $50 million and $80 million in infrastructure, environmental remediation and structural renovations to develop the property.
The city has completed an environmental study of the site and has submitted a voluntary remediation plan to the state. The Leland report suggested 3 different levels of development of varying levels of density. The report notes redevelopment will occur over many years, making it impossible to predict the exact mix that would work. All the levels of redevelopment call for “adaptive reuse” of buildings on the property’s north side, which the report calls the Rail Yards’ “front door.” Proposed uses include Central New Mexico Community College’s film center, the existing Rail Yards Market, and new retail, restaurants and commercial tenants and residential homes.
According to the financial analysis:
“As a conservative starting point, LCG recommends viewing these as costs [of $55 million to $80 million] that are likely to be borne by the City … These costs associated with ‘horizontal’ development (site preparation, transportation, utilities) will be necessary in order to set the stage for ‘vertical’ development (i.e., building improvements and new building construction, which are not shown).”
In other words, Leland suggested the taxpayer money be used for the $55 million to $80 million site preparation. In comparison, the ART Bus project was $130 million to build infrastructure and platforms up and down central.
The consultant’s estimates do not include the many other possible expenses, or hidden costs, associated with structural retrofits of two of the buildings “where evidence of past fire(s) were observed, which could affect the structure,” and the foundation retrofits and floor resurfacing in some of the buildings that are 100 years old. According to the report a more thorough “property and building conditions assessment” is required.
COMMENTARY AND ANALYSIS
Successful cities that have transformed blighted and struggling older areas of their cities have been Tulsa, Oklahoma, Oklahoma City, Oklahoma, Denver, Colorado, Phoenix and Scottsdale, Arizona. El Paso, Texas has dramatically transformed its downtown area. The way each one of these cities did it was with a massive infusion of capital and building large capital projects costing billions of dollars.
Some of the best examples of billion-dollar investments are the building of the BOK Center in downtown Tulsa, the Chesapeake Arena in Oklahoma City, the municipal railway running from the outskirts of Denver and through downtown Denver, Colorado or the River Area in downtown Scottsdale, Arizona. In Tulsa the BOK Center sparked hundreds of millions of dollars of redevelopment in adjoining neighborhoods.
In Oklahoma City, the Chesapeake Arena and adjoining Bricktown continue to expand. Previously blighted areas are being ﬁlled in with business developments, new housing, recreational facilities, and even cultural amenities. A key component has also been law enforcement to make people feel safe enough to move into those areas as they were being redeveloped. A key involvement to most if not all was seeking voter approval of the projects. Tulsa and Oklahoma City have been so successful that voters continue to approve new ones.
What is ill advise is for Mayor Tim Keller to think the Rail Yard redevelopment can all be done with local talent and local and state investment tax dollars.
The established Albuquerque business and development community and the accompanying construction industry tend to suckle at the tit of city government for projects without making any financial investment of their own. Such massive amounts of capital, usually in the billions of dollars, is needed to build large capital projects that could be built on the Railyards.
Mayor Tim Keller needs to set aside his ego for a legacy project and seek out major investors to get the rail yards development accomplished and stop saying that no private investor is interested in the project. Otherwise, the city will be dealing with an even bigger fiasco than the ART Bus project.