City councils enliven a proposal to create a “local preference” reservation in the bidding process for developers interested in purchasing 288 acres of urban land near NM 599 and Ridgetop Road. But the property’s former manager fears that such a move could backfire without further refinement.
Terry Lease, Santa Fe city’s wealth development manager, said councilors Renee Villarreal and Michael Garcia held meetings with the city’s legal team to discuss a better solution to local preferences for the Las Estrellas property, sometimes called Las Estrellas in Santa Fe is known to be stalls.
The measure, if passed, would give a local builder or developer an advantage in the bidding process.
“Basically it’s ready for sale as soon as we take that decision,” said Lease.
The city council debated a resolution tabled by former councilor JoAnne Vigil Coppler last month that would have imposed a local preference on the potential buyer of Las Estrellas. The move was rejected after councilors raised concerns about the definition of “local”.
Garcia said a new resolution would include a provision that applicants must obtain a resident trade license from the state in order to qualify for local preference. A company that does not qualify for the local preference can still apply.
David Gurule, who was the managing agent of Santa Fe Estates Inc. for 22 years, said that while he agreed with the concept of a local preference approach, the city’s desire to sell the property as a whole was almost grand national developers could make a competitive offer.
Gurule said he prefers the city to sell the property in parts or phases so that local developers, bankers, builders, title companies and real estate agents can circulate the revenue across the community.
“The city shouldn’t try to sell it in one fell swoop,” said Gurule. “That limits the chances of a local group or a local developer even having a chance. The only ones that could roll to the top or meet those financial criteria would be like a KB Home or a [PulteGroup] or any other national company on the New York Stock Exchange. ”
The property is valued at $ 5.6 million, Lease said.
Gurule said it could take nearly two decades to fully develop the property, which could potentially cost a buyer millions more. That is a non-runner, he said, for smaller potential bidders.
Gurule said that while a larger developer would likely sign a contract with local companies to make the project happen, a large chunk of the profit would be sent elsewhere.
Miles D. Conway, executive director of the Santa Fe Area Home Builders Association, said a local coalition of businesses could generate far more revenue for the local market.
“Pulte will be excited to hire local contractors to build this project, but a company like this one based in Atlanta or Utah has a responsibility to its shareholders,” he said. “They’re a big company, so they have to export a lot of our assets to make it all make sense to them.”
Conway said local units of the city’s housing industry were discussing creating a group to buy the property. But the city’s decision to bring the property onto the market as a single piece of land put the idea on hold.
The buyer of the property must adhere to the Las Estrellas master plan, approved in 1995 and amended in 2005. The plan envisages the construction of 753 residential units on 290 hectares, 200 hectares of open space and 14 hectares of commercial space in front of the square.
Gurule said that around 240 apartments have been built in the Las Estrellas settlement since the master plan was last amended in 2005. Before that, around 380 units were built.
Conway said it could cost up to $ 50 million to meet the master plan.
Garcia, who plans to introduce the language of local preferences with Villareal, said while open to sharing the development, a city council decision would likely be required to divide the property into smaller pieces for sale.
“I understand where some of our local builders and potential local buyers are from,” he said. “It would be a more affordable opportunity if it were split up, but that’s not the current proposition for the property right now.”
Santa Fe Estates was founded in 1930 by John Dempsey, who later became the governor of New Mexico. In the deal with the city, Santa Fe Estates worked on property rights clearance and land development for sale, including utility installation and road construction.
The idea behind the agreement was to increase property tax revenue and drive development. The proceeds from property sales were then split 50-50 between the city and Santa Fe Estates after accounting for the sale and development costs.
Since 1930, the city has raised approximately $ 4.5 million in property sales.
These rights were later transferred to Santa Fe Estates Inc.
After the collapse of the real estate market during the 2008 recession, development stagnated. The city and Santa Fe Estates terminated the agreement in 2019, and a year later the city acquired sole ownership with the intention of bringing the 288 acres to market.
City councils have pointed to the Santa Fe Estates as an important cog in solving the city’s crisis with affordable housing.
Conway said while most of the homes recently built in Las Estrellas cost around $ 700,000, the development has a 20 percent affordable housing contract and is earmarked for some apartment buildings.
He said that any new home at market prices would reduce the stress on the rental and home purchase market.
Previous plans to increase affordable housing in the area met with opposition. A planned development on 122 acres east of NM 599 and adjacent to the Casa Solana neighborhood would have included more than 750 apartments and some commercial space almost a decade ago. But local residents spoke out against it, arguing the city hadn’t resolved traffic concerns.
In January 2021, the city put the property out to tender, but decided to repeat the process. Lease said the decision was tied to promoting a local preference.
Lease agreement said that once a resolution is passed, another tender will be issued, after which the selection will be forwarded to the city council for approval.
Garcia said he expected a decision on local preferences to be negotiated at the January 26 council meeting.