City's planned shelter site embroiled in lawsuit - Albuquerque Journal

City’s planned shelter site embroiled in lawsuit

The city of Albuquerque has an agreement to buy the old Lovelace hospital on Gibson for its “Gateway Center” homeless shelter and services hub, but now the city is being sued as part of a dispute between former business partners. (Jim Thompson/Albuquerque Journal)

Copyright © 2021 Albuquerque Journal

Albuquerque city leaders think they have settled on a logical place for their long-awaited “Gateway Center” homeless shelter and services hub: the former Lovelace hospital in Southeast Albuquerque.

They see the onetime hospital’s size, design and location as assets for a facility that will combine emergency shelter beds with other resources intended to help people transition out of homelessness.

But the city’s attempted purchase of the property has landed in court because two former business partners who owned the property are in an acrimonious fight over whether the city is getting too sweet a deal.

The property – now called Gibson Medical Center – was owned by Nick Kapnison and Jimmy Daskalos. The city’s $13 million purchase agreement for the property was with Kapnison; Daskalos is suing both the city and Kapnison to stop the purchase.

After about 30 years of partnership in a variety of enterprises – even including an eponymous restaurant, Nick & Jimmy’s – Daskalos and Kapnison in early 2020 executed a buyout/settlement agreement to part ways, according to court records. Daskalos was to pay Kapnison $5 million, a debt secured by property, including Gibson Medical Center, records show.

But Daskalos and his wife, Nadine, are alleging breach of contract and more in the lawsuit they filed in state District Court in Albuquerque. They claim in their October 2020 suit that Kapnison is selling the Gibson Medical Center against their wishes, has violated the terms of his power of attorney and is offering the property at less than a “commercially reasonable” price.

Kapnison has not filed a formal response with the court, but his attorney on Friday denied the allegations in a Journal interview.

“We expect to be vindicated on all claims,” said Kapnison’s attorney, Paul Kennedy.

City also responds in land dispute

The city has also denied the Daskaloses’ allegations, contending in its response and counterclaim that Kapnison had the legal authority to negotiate the sale. The city also disputes the claim that the purchase price is far below the property’s value.

The Daskaloses have asked for a temporary restraining order to stop Kapnison and the city from closing the deal. The city has a competing request seeking an order that would force the Daskaloses to proceed with the sale.

A hearing on the case is scheduled for Jan. 21, though the Daskaloses have a pending motion to delay it.

Attorney Jason Bowles, who along with Todd Bullion represents the Daskaloses, said he could offer only one public statement: “Mr. Bullion and I believe that (the Daskaloses) are the lawful owners of the Gibson Medical Center, and we are attempting to work out the issues raised by the lawsuit currently.”

Albuquerque Mayor Tim Keller announced the city’s plan to purchase Gibson Medical Center in early December. At the time, officials declined to reveal the purchase price.

But court records include the $13 million purchase agreement, which was signed in mid-October by Kapnison and Carol Pierce, director of the city’s Family and Community Services Department.

The Daskaloses filed suit about a week later.

They allege that a June 2020 appraisal valued the property, which covers nearly 21 acres and has buildings with a total floor space of about 570,000 square feet, at $18.5 million. They also argue it is a unique property that presents various business opportunities, including a major lease with New Mexico state government. The state currently is leasing 360,000 square feet at the center for COVID-19 patient overflow, paying $8.6 million for one year, according to previous Journal reporting.

The property’s value “appreciated significantly” due to that lease, the Daskaloses’ suit says. There is an option to extend the lease for another year, which they say is likely given the COVID-19 crisis.

“Plaintiffs would lose the ability to profit from that option and would lose the ability to further develop a business relationship with the State of New Mexico and their other tenants,” their complaint says.

The suit says the planned sale would cause the Daskaloses “immediate and irreparable harm due to the loss of the significant revenues and profits from the Gibson property.”

They contend that the power of attorney that granted Kapnison authority to sell property to collect his money entitled them to step in as alternative buyers as long as they signaled their intention within 15 days, which their suit says they did. But Kapnison still proceeded to sign the $13 million purchase agreement.

They allege Kapnison is intentionally trying to damage them.

“Upon information and belief, Defendant is acting in bad faith to purposefully sell Gibson Medical for less than its fair market value to cause harm to Plaintiffs,” the suit says.

Kennedy said that is not true.

“He has no interest in trying to hurt them,” Kennedy said.

He contends that the sale price is reasonable, noting that the ownership was repeatedly unsuccessful when trying to find a buyer.

“Because it’s unique, doesn’t mean it’s easy to sell,” Kennedy said.

Homeless facility without a home

Keller has for a few years discussed the need for a Gateway Center to help address Albuquerque’s growing homelessness crisis. His administration previously presented the idea of a 300-bed shelter combined with what Keller calls a clearinghouse function that helps connect clients with services and other tools they need to obtain permanent housing.

City voters in 2019 approved $14 million for the project in a bond question.

But the project lost some momentum in early 2020 when University of New Mexico leaders announced they would not let the city use a piece of UNM property it had been pursuing for the facility. It had been the city’s top choice for a location.

A few months later, Keller revealed the city was scrapping the 300-bed facility idea in favor of multiple smaller sites. The city has since convened a “Homeless Coordinating Council” with city, Bernalillo County and UNM officials to help guide the community’s overall response to people without any place to live.

In December, Keller said the city had made an offer to buy the old Lovelace facility for the initial Gateway Center.

According to court records, the city plans to purchase the facility with $5 million from the 2019 bond issue, $5 million in federal CARES Act COVID-19 relief money, $2 million in other federal funds and $1 million from Bernalillo County.

The city did not directly answer several specific Journal questions about the Gateway purchase and the potential backup plan should it fall through, but it provided a statement reiterating its focus on “lifesaving emergency housing” for people who are homeless, including the 100 children currently using shelter services.

“It is our intent to proceed with the purchase of the property at the original price that was agreed upon, pending the legal proceedings later this month,” spokeswoman Alicia Manzano said in the emailed statement. “The dispute between the sellers arose after the legally binding purchase was executed, and our goal is to make sure that taxpayer money and people suffering from homelessness during a pandemic aren’t compromised.”

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