Copyright © 2012 Albuquerque Journal
High Desert Investment Corp. was created 22 years ago for the express purpose of making money to benefit Albuquerque Academy, an independent prep school founded in 1955 in the Northeast Heights.
And for 15 years, the real estate development company delivered with its profitable High Desert Communities and Journal Center 2 projects, helping to build the academy’s endowment to a level that rivaled the most prestigious, ivy-covered prep schools in the Northeast.
In the same way elite private colleges and universities use their endowments — basically investment portfolios — Albuquerque Academy uses the money to provide financial aid to students in need as well as subsidize its overall operation.
Financed largely by High Desert Investment’s success, the school’s endowment spending grew from $5.2 million in fiscal year 1991 to a budgeted $13.6 million in fiscal year 2009, just as the real estate collapse became apparent.
Today, endowment spending is budgeted at $6 million in fiscal year 2013, which begins July 1, a 56 percent drop from four years earlier.
“Whereas the academy has historically been able to meet the demonstrated financial aid need of every admitted student, the school must now inform some students that they are admitted but the school has insufficient financial aid funds to meet all needs,” Gary Gordon, Albuquerque Academy’s treasurer and a member of the High Desert Investment board, told the Journal.
The real estate collapse stalled lot sales and, to a lesser extent, home construction at Mariposa, High Desert Investment’s master-planned community in far north Rio Rancho.
Cash flow slowed, pushing the development — and possibly High Desert Investment — to the brink of insolvency.
The cash-flow problems threaten the public improvement district formed in 2006 to secure bond financing for infrastructure to be built at Mariposa. Some believe the potential for the Mariposa PID to fail could have a ripple effect on real estate development in general.
“Our concern (stems from) the significant reduction in the availability of bank financing for developing master-planned communities,” said Jim Folkman of the Home Builders Association of Central New Mexico. “PIDs are a viable alternative. There is concern that future PIDs could be put in jeopardy.”
The Mariposa PID is structured differently than other PIDs operating successfully in other master-planned communities in the metro area, he said. “Apparently, the bond counsel for the Mariposa bonds came from Colorado, and therein lies difference.”
A black mark
The Mariposa controversy is a black mark on a highly successful track record of the for-profit company wholly owned by nonprofit Albuquerque Academy.
High Desert Investment was incorporated in July 1991 to develop 987 acres on the east side of Tramway at Academy in the foothills of the Sandia Mountains.
The acreage traces back to the 17th-century Elena Gallegos Land Grant. Albuquerque rancher, financier and congressman Albert Simms bought 9,000 acres of the land grant in 1934. When he died in 1964, it was willed to Albuquerque Academy.
The school sold 7,800 acres to the city of Albuquerque in 1982. Much of the remaining land was to become High Desert Communities.
The master plan began to take shape by the spring of 1992 with High Desert employing elements of what today would be considered green building. Arroyo channels and much of the land were left in their natural state in the less dense upper reaches of the development.
And during home construction, an emphasis was placed on restricting the impact on surrounding natural vegetation.
When the first 28 of High Desert’s 2,630 planned lots hit the real estate market at the end of 1993, interest in the lots was described by the Journal as at a “fever pitch.”
Through the years, the master plan was refined, reducing the residential density to 1,605 home sites, plus apartments. High Desert Investment sold the last of its lots by 2004, although lots were still available through subsequent owners. In February 2011, the development company signed over the last remaining rights and authority to the High Desert Residential Owners’ Association.
There are still a couple dozen unbuilt lots in High Desert Communities, which is part of the priciest area for homes in the metro area.
A second slam dunk
High Desert Investment scored again in 2000-04 with its development of the second phase of the Journal Center, a roughly 300-acre business park near the southwest corner of the Paseo del Norte and Interstate 25 interchange.
“Journal Center is a highly desirable area,” said High Desert’s Jack Eichorn. “At the time, it was the place to be.”
The second phase of the Journal Center, which was marketed as “Journal Center 2” by Grubb & Ellis New Mexico, consists of 41 lots ranging in size from one-half acre to 10 acres. The total 56-acre site lies a half-block south of the Jefferson and Masthead NE intersection.
The second phase today is home to 35 commercial buildings with 950,000 square feet of space, said Ken Schaefer of Grubb & Ellis.
There are still about 30 acres of land available for development immediately west of the second phase.
The entire Journal Center sits on land bequeathed by Simms to Albuquerque Academy. The school and Journal Center Corp. entered into a joint venture to develop the land as a business park in 1979.
In 1987, Journal Center Corp. purchased and over time developed the 130 acres that make up the majority of the original first phase of the business park. The original business park also has about 35 buildings, many of which have been recognized with awards for their design and construction.
— This article appeared on page A1 of the Albuquerque Journal