Copyright © 2019 Albuquerque Journal
Preparing the Albuquerque Rail Yards for redevelopment could cost the city between $50 million and $80 million in infrastructure, environmental remediation and structural renovations, according to a preliminary analysis by an outside consultant.
Leland Consulting Group said in a draft report filed with the city this month that the range reflects three development scenarios: $50 million is the estimated cost to ready the Rail Yards for a low-density redevelopment strategy, while $80 million is for a more intensive plan. The Portland, Oregon-based firm is recommending the city pursue a medium-density strategy and estimates the associated prep work would run about $55 million.
Those costs would include utilities, landscaping, cleaning up contamination and making improvements to the aging structures on the 27.3-acre property, which was once used for steam locomotive repair.
“As a conservative starting point, LCG recommends viewing these as costs that are likely to be borne by the City,” Leland’s Brian Vanneman wrote of the report’s financial analysis. “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).”
The report cautions that the estimates are rough preliminary figures.
The consultant’s estimates do not include other potential expenses, such as structural retrofits to two buildings “where evidence of past fire(s) were observed, which could affect the structure,” and foundational retrofits and floor resurfacing in some of the buildings that are about 100 years old.
Leland urges the city to conduct a more thorough “property and building conditions assessment.”
City officials are not challenging Leland’s site preparation figures.
But Chief Operating Officer Lawrence Rael called them an “estimate intended to help us plan,” and said the planning process is ongoing and involves many groups.
“As we gather input from the community and from the Rail Yards Advisory Board, we will refine the plan and the numbers will come into more focus,” Rael wrote Wednesday in response to Journal questions.
The city has begun the recommended property and building conditions assessment, he added.
The Rail Yards Advisory Board is slated to meet Thursday morning.
Just how the city could fund the required preparation work should it cost $55 million is not yet clear.
The state allocated $7.5 million in capital funding for the Rail Yards this year. The city is also hoping to generate $5.5 million for the project through a $128 million general obligation bond package going to voters in November.
Rael said the city has $2 million left from previous bond elections and is also applying for grants.
Leland cites several other potential revenue sources, including a tax increment development district, or TIDD, for the site and possibly some adjacent areas. A TIDD would mean most of the new gross receipts and property tax created by the development could be used to pay the infrastructure costs.
That could yield $16 million, according to Leland’s analysis.
“There is a compelling case for (a) TIDD at the Rail Yards, given the extent of necessary improvements, without which employment, commercial and housing development are unlikely to occur,” the report says, though it notes that a TIDD requires at least 50% of the affected property owners to give the OK and that there are no existing TIDDs in Downtown Albuquerque “or other highly urban areas of the city.”
Leland also proposes $5.2 million in “philanthropic” funds, another $14.5 million from the state and other mechanisms, such as $5 million in public funds through the Local Economic Development Act.
“Most of the funding sources … are subject to a political decision-making and allocation process; the Rail Yards site and vision will need to compete with other projects on the basis of its potential to advance the community’s economic development, equity and place making goals,” the report says.
Rael said a TIDD “may be considered” and that the city will explore funding options.
“This is a once-in-a-generation opportunity to create an economic and neighborhood catalyst in the heart of our city,” he wrote. “We will continue to seek funding in partnership with the State, County, and private sector to keep moving forward on this project.”
Mayor Tim Keller has prioritized the Rail Yards’ redevelopment since assuming office in late 2017. He last year broke ties with the out-of-state developer that the previous administration had contracted to redevelop the sprawling property half a mile south of the heart of Downtown. He said the city would take control of the property, which goes mostly unused, except for the Wheels Museum, the seasonal Rail Yards Market and film productions.
“Eventually, we are gonna get this place to be the community treasure that we know it is,” Keller said at the time.
