On November 10, 2022, Mayor Tim Keller announced his “Housing Forward ABQ” plan to add 5,000 housing units to the existing housing supply by 2025. Keller called his plan “transformative” and it includes updates to Albuquerque’s Integrated Development Ordinance (IDO) to carry it out. A critical component of Keller’s “Housing Forward ABQ” are Motel Conversions.
CITY BUYS SURE STAY HOTEL
On February 11, it was reported that the City of Albuquerque has executed a purchase agreement for the purchase of the Sure Stay hotel located at 10330 Hotel NE for $5.7 million to convert the 104-room hotel into 100 efficiency units. The $5.7 million purchase price for the 104-unit complex translates into $53,807.69 per unit ($5.7 Million ÷ 104 = $53,807.69 per unit). At a December 6 meeting on motel conversions, city officials said that the city’s estimated cost is $100,000 per unit to fix up or remodel existing motels. Therefore, using the city’s own estimated remodeling costs for the Sure Stay Motel, an additional $10 Million will be needed to remodel the motel for low income housing. ($100,000 per unit X 100 efficiency apartments = $10 Million). Therefore, the entire Sure Stay conversion project will have an estimated cost of $15,700,000. ($5.7 purchase cost + $10 Million remodeling cost = $15,700,000)
The City Department of Family & Community Services purchased the Sure Stay Hotel by using Housing and Urban Development (HUD) funding of $3,059,662.12 in Community Development Block Grant and available funding from the city’s Public Facilities monies and from Foreclosure Prevention monies for a total property purchase of $5.7 million. The Department of Family and Community Services submitted a request to the HUD Albuquerque Field Office for the release of CARES and HOME American Rescue Plan funding to be used to purchase Sure Stay Hotel and the renovation project for the permanent housing with supportive services.
City officials said the purchase should close this spring and said the project’s total cost, including necessary renovations of the Sure Stay hotel will not be known until later this year as the city still must put the work out to bid. The goal is to have the housing open within a year. City officials have said funding is available for at least one additional motel purchase and is asking the New Mexico Legislature for funding. The city officials have also said it is continuing to look at additional properties but has declined to identify them.
MOTEL CONVERSIONS
“Motel conversions” is the creation of affordable housing where the City’s Family & Community Services Department will acquire and renovate existing motels to develop low-income affordable housing options. Mayor Keller’s plan calls for hotel or motel conversions to house 1,000 people with low and moderate incomes by 2025.
The Keller Administration proclaims that motel conversions are a critical strategy for addressing the city’s housing shortage. The city proclaims motels conversions are a simpler, lower-cost alternative to ground-up construction. It will require city social services to regularly assist residents. The homeless or the near homeless would be offered the housing likely on a first come first served basis and with rules and regulations they will have to agree to.
The existing layout of motels makes it cost-prohibitive to renovate them into living units with full sized kitchens. A zoning change already enacted by the city council earlier this year eased the process for city-funded motel conversions by allowing microwaves or hot plates to serve as a substitute for the standard requirement that every kitchen have a cooking stove or oven. The zoning code update reduces the kitchen requirements for such affordable housing conversions that receive city funding. The zoning changes allow the substitution of a microwave or hot plate for a standard oven or range. The exception applies only to those conversions using city money, but the city council is considering a proposal to expand it to all housing developments.
TARGETED AREA IDENTIFIED
One area of the city has been targeted in particular by the Keller Administration for motel conversions is “Hotel Circle” in the North East Heights. Located in the area are a number of motels in the largest shopping area in SE and NE Albuquerque near I-40. The businesses in the area include Target, Office Depot, Best Buy, Home Store, PetCo and the Mattress Store and restaurants such as Sadies, the Owl Café, and Applebee’s and other businesses. In December, 2022, confidential sources with the city confirmed the Keller Administration was negotiating to buy the former Sure Stay Hotel and also has its eye on purchasing the abandoned and boarded up Ramada Inn for a motel conversion.
Strong neighborhood and business opposition emerged and galvanized around the city’s attempted purchase of the Sure Stay Motel, with some petitioning the city to change the zoning code to disallow motel conversions. A petition with well over 250 signatures of business owners and residents in the area was secured within a few days has been submitted to the city. The city and the Keller Administration essentially ignored the opposition and has now proceeded with the purchase of the Sure Stay Motel.
The link to quoted news source material is here:
https://www.abqjournal.com/2572591/city-negotiates-57m-deal-to-buy-hotel-property.html
CITY HOLDS MEETING TO GET INPUT, ANSWERS FEW QUESTIONS
It was On December 6, with only a 4-day public notice and reservations required, the City’s Family and Community Services Department and the Planning Department held a public meeting at the Albuquerque Convention Center to discuss the Keller Administration’s motel conversions plans. A little over 100 people attended the meeting which had a mediator oversee the meeting. In attendance to present the program were Family Community Service Director Carol Pierce, Deputy Director Lisa Huval and Albuquerque Police and APD Deputy Chief Josh Brown. Notably absent from the meeting was Mayor Tim Keller with no explanation given. Not a single Albuquerque City Councilor attended.
PATHS FORWARD
The City presented a short “power point” slide to the audience entitled “THE PATH FORWARD”. The power point said in part that there are “several possible paths all of which the Department of Family and community services is exploring” to deal with the housing shortage. Those options listed in the power point were:
“The city can acquire motels, contract with a contractor/architect to complete renovations and then identify an entity to own and operate the facility through a Request for Proposal (RFP), which is the city bidding process.
The city can acquire motels and then identify and entity to rehabilitate, own and operate through an RFP process. The RFP would include funding to rehab the motel.
The city can use an RFP to select one or more entities to acquire, rehab, own and operate a motel.
Currently, [the] City has funding available to complete at least two motel conversions.”
CITY VISION OUTLINED FOR MOTEL CONVERSIONS
City officials outlined in the power point the vision it has for hotel conversions as follows:
Creation of “basic but safe” apartments.
There will be “Public-Partnerships”.
Conversions would be located throughout the city and not in one location.
Conversions will be in mixed communities. Some will have rental units with lower rents affordable to low-income households while other units will be rented at fair market rates.
The converted motels will be professionally managed by a property management company.
The conversions will have “onsite service” coordinators.
They will be sustainable.
KITCHEN REQUIREMENTS FOR MOTEL CONVERSIONS
The city officials noted that kitchen requirement for conversions would be changed dramatically. Under recent zoning changes, there are reduced kitchen requirements for projects funded by the Family Community Services Department. With motel conversions under taken by the Family and Community Services Department, stoves, ovens or ranges are not required. However, refrigerators, countertops, and kitchen sinks are still required. Proposed changes to the Integrated Development Ordinance (IDO) will allow the same to all conversions by the private sector.
TARGETTED POPULATION
Another power point slide identified the “qualifying incomes” of the population that would be served by the motel conversions in terms of income levels. Those qualifying income levels listed were “Supplemental Social Security Income” recipients, “Social Security Disability” recipients, “Warehouse Workers”, “In Home Care” workers and “Tipped Workers”. The power point noted that the fair market value for an efficiency apartment in Albuquerque is approximately $666 per month.
According to the power point, the monthly cost of $666 is “naturally affordable for single adults who earn $27, 000 a year” which is 50% of the city’s Median Income level. It was noted that some of the units will be for subsidized or for affordable housing for those making $16,000 a year which is 30% of the city’s Median Income.
CITY’S FINANCIAL COMMITMENT TO HELP LOW INCOME HOUSING AND NEAR HOMLESS
The city has increased funding to the Family Community Services Department for assistance to the homeless with $35,145,851 million spent in fiscal year 2021 and $59,498,915 million being spent in fiscal 2022 with the city adopting a “housing first” policy. On June 23, 2022 Mayor Tim Keller announced that the City of Albuquerque was adding $48 million to the FY23 budget to address housing and homelessness issues in Albuquerque. The City also announced it was working on policy changes to create more housing and make housing more accessible.
The key appropriations passed by City Council included in the $48 million are:
- $20.7 million for affordable and supportive housing
- $1.5 million for improvements to the Westside Emergency Housing Center
- $4 million to expand the Wellness Hotel Program
- $7 million for a youth shelter
- $6.8 million for medical respite and sobering centers
- $7 million for Gateway Phases I and II, and improvements to the Gibson Gateway Shelter facility
- $555,000 for services including mental health and food insecurity prevention
The link to the quoted source is here:
The 2022-2023 enacted budget for the Department of Community Services is $72.4 million and the department is funded for 335 full time employees, an increase of 22 full time employees. A breakdown of the amounts to help the homeless and those in need of housing assistance is as follows:
$42,598,361 total for affordable housing and community contracts with a major emphasis on permanent housing for chronically homeless. It is $24,353,064 more than last year.
$6,025,544 total for emergency shelter contracts (Budget page 102.).
$3,773,860 total for mental health contracts (Budget page105.).
$4,282,794 total for homeless support services.
$2,818,356 total substance abuse contracts for counseling (Budget page 106.).
The 2022-2023 adopted city contains $4 million in recurring funding and $2 million in one-time funding for supportive housing programs in the City’s Housing First model and $24 million in Emergency Rental Assistance from the federal government.
The link to the 2022-2023 budget it here:
https://www.cabq.gov/dfa/documents/fy23-proposed-final-web-version.pdf
COMMENTARY AND ANALYSIS
The first biggest take away from the City’s plans for motel conversions is that they are not intended to be used as “homeless shelters” such as the new Gateway Homeless Shelter on Gibson, but there is no guarantee that will not happen. The intent is that those who will be housed in them must have some sort of income, either through social security or other government assistance or be gainfully employed, and they must pay rent. The city has yet to publicly identify the screening criteria that will be utilized for occupants and the minimum income levels.
The second biggest takeaway from the city’s plans for motel conversions is that the motel conversion program has been haphazardly put together in order to make it part of Keller’s “Housing Forward ABQ” plan. The city officials were clearly on the defensive feeling there was need to have a professional mediator who announced repeatedly how people should conduct themselves and not be confrontational with city officials.
The third major and most serious takeaway from the city’s plans for motel conversions is that the city’s estimated cost of $100,000 per unit to fix up or remodel existing motels is likely a waste of taxpayer money and financing. If the city in fact spends $100,000 per unit to fix up or remodel as it has stated, the estimated cost for the planned 1,000 units will be $100,000,000 not including purchase price of the motels.
Simply put, many times it is cheaper and makes more sense to demolish and rebuild motels. Approximately 15 years ago, the city’s Safe City Strike Force took civil code enforcement action against a number of the 150 motels up and down central with many ordered shut down. The motel owners were ordered to bring their properties into code compliance that usually cost thousands before they were allowed to reopen.
The Safe City Strike Force was responsible for the demolition of at least seven (7) blighted motels that were beyond repair. Those motels were demolished because it was cheaper and made more sense to tear them down rather than spends hundreds to remodel. The Central motels that the Safe City Strike Force took action against include the Gaslight (demolished), The Zia Motel (demolished), The Royal Inn (demolished), Route 66 (demolished), the Aztec Motel (demolished), the Hacienda, Cibola Court, Super-8 (renovated by owner), the Travel Inn (renovated by owner), Nob Hill Motel (renovated by owner), the Premier Motel (renovated by owner) the De Anza (purchased by City for historical significance), the No Name, the Canyon Road (demolished), Hill Top Lodge, American Inn (demolished), the El Vado (purchased by City for historical significance), the Interstate Inn (demolished).
Simply put, the city’s “motel conversion” plan is severely lacking on many levels. It appears Mayor Keller rushed to have it included as part of his “Housing Forward ABQ” plan without it being completely formulated or vetted. There has been a total lack of transparency by the city with the public and it has been very sketchy and short on details as to what motels have been targeted, the projected overall funding for the program, no details as to the private-public partnerships and no identifying those in the real estate and development community and the construction industry the Keller administration is working with.
The city is spending between $60 million and upwards of $100 million a year on affordable and supportive housing. The biggest unanswered question is does the city have any business going into the “hotel conversion” business and begin operating such facilities in addition to what it is already being spent? It is not at all likely that the city has a realistic plan in place to achieve its goal of 1,000-units relying on motel conversions.
The link to news source material is here:
https://www.abqjournal.com/2572591/city-negotiates-57m-deal-to-buy-hotel-property.html