SANTA FE, N.M. — El Castillo, a retirement community in downtown Santa Fe, is seeking $30 million in industrial revenue bonds through the city for expansion and renovation, including the construction of 11 rooms for a new “memory care” unit in the former Mission Cafe building.
“They do senior services that are more and more important, especially memory care,” said Mayor David Coss, who introduced the bond proposal last week at a City Council meeting. “And I like the idea of another (construction) project in Santa Fe.”
At a meeting of the council’s Finance Committee on Monday, councilors endorsed the plan to issue the bonds. However, councilors said they want to explore if, and how, the city can require El Castillo to do most of its hiring for the project locally.
The proposal goes before the entire City Council for a vote on Nov. 14.
Overall, the project will add 23 new units to the retirement community, whose population generally ranges between 160 and 180 residents, said Allen Jahner, CEO and administrator at El Castillo, located at 250 E. Alameda.
The old Mission Cafe site is behind El Castillo on East DeVargas Street.
El Castillo already has the approvals in place that it needs to proceed with construction, said Mel Morgan, the city’s finance director. With an industrial revenue bond, the business is using the city’s name and credit to issue bonds, likely bringing it a lower interest rate, while the business actually sells the bonds itself, he explained.
“We are the conduit,” Morgan said. “If you tie (the bond sale) to an organization like ours, you get better rates.”
El Castillo already had sold industrial revenue bonds through Santa Fe County in 1998 for various expansions and improvements. About $12.3 million of the latest proposed bonds would be used to refund the remaining amount owed on that sale, in hopes that money will be saved with an interest rate lower than the 5.83 percent on the outstanding bonds, according to Jahner.
“This is a normal financing method for a nonprofit senior center,” he said. “The only other way is bank financing, and they don’t like to go that far (30 years on the IRB) with senior business loans.”
Coss said the city previously has approved IRBs for new student housing at St. John’s College and six years ago for construction of the new Thornburg business campus on the north side of Santa Fe.
Some 108 construction jobs are expected to result from the El Castillo project, Morgan said. When the expansion is up and operating, the equivalent of about 20 full-time jobs will be added at the retirement community, according to Jahner.
The project includes the addition of seven new assisted living apartments and the conversion of existing nursing beds from semiprivate to private, with a net addition of five nursing beds, he said.
The memory unit, which will offer locked security to people with severe dementia, will open up another option for people with that condition, Jahner said, adding that only about two current residents would qualify.
The timeline calls for construction to start in mid-December and take about 14 months to complete for all the changes, he said.