ALBUQUERQUE, N.M. — Crews will soon start construction at the northeast corner of 1st and Central, transforming what is now a parking lot into One Central, a five-story residential/commercial building with an attached parking structure.
Albuquerque businessmen Jerry Mosher, Dale Armstrong and Tony Pisto will develop the site under One Central Operating Associates LLC. But the city of Albuquerque will play a major role in the undertaking too, ultimately contributing about half the total cost in a collaboration both parties say is essential to the project’s viability.
Developers conceived One Central to meet the city’s goal of a Downtown entertainment district. As planned, it will include 60 apartments above about 40,000 square feet of commercial space that developers hope to fill with a bowling alley, a brewery, restaurants and more. The parking garage will have 423 spaces, and the city will take over immediate management and operation duties, with an option to eventually buy it.
One Central will cost an estimated $40 million to develop. The city will chip in $17.55 million – most of it coming from lodgers’ tax collections – plus land valued at $1.4 million, accounting for just under $19 million. Bernalillo County has also approved an industrial revenue bond package that includes property and gross receipts tax breaks.
Albuquerque Mayor Richard Berry contends that the city is not paying for half the development, but rather buying a parking garage. Once One Central builds the structure – scheduled for completion next fall – the city will pay the developer $17.55 million for an “exclusive operating agreement” and option to purchase it for $1,000 after 10 years, according to an agreement between the parties.
“If I didn’t think it made sense, we wouldn’t look at it,” Berry said in an interview.
The mayor said it will provide much-needed Downtown parking, and touted the associated jobs created by One Central’s construction and long-term operation. Public-private partnerships can spur development that otherwise would not occur, Berry said, citing the Imperial Building as one example. The $19.3 million mixed-use building at 2nd and Silver SW brought Downtown’s new grocery store, new eateries and more apartments.
“We never would have gotten a grocery store Downtown without (a public-private partnership),” Berry said.
Geltmore LLC and YES Housing developed Imperial with a boost from the city, which contributed $4.4 million (including the land), low-income housing tax credits, and various county and federal incentives.
“We went everywhere we could for funding to make this work,” Michelle DenBleyker, YES’ vice president of development said in an email to the Journal.
Mosher said One Central’s current incentive package represents the minimum needed to make One Central happen. In fact, the project nearly died last month when the Bernalillo County Commission approved a shorter-term tax break than One Central requested. County staff said the difference amounted to just $46,000 because it considered only the taxes due if the land remained in its current state – a city-owned surface parking lot. But One Central and the city calculated it as a $2 million loss in value, assuming it gets developed as planned.
To save the project, the city upped its contribution by $300,000 and extended a free parking program for customers patronizing One Central’s businesses to 10 years from five years. The city values that benefit at $130,442 each year.
One Central would be impossible without incentives, Mosher said, noting that space could not command rental rates required to cover its costs. It will ask $19 per square foot for commercial space, much less than Mosher said it would get in a high-demand trade area like Uptown, where CBRE research recently found the median asking rate is $25 per square foot.
He said his group would be borrowing a total of about $34 million from Los Alamos National Bank to build One Central.
“It’s a matter of economics. The project has to work,” Mosher said. “If we could get $25 (a square foot) Downtown, it wouldn’t matter what the taxes are, but the truth is we can’t.”
Mosher, whose other companies include electrical contractor Mosher Enterprises and Consolidated Solar Technologies, still described the project as “pretty risky,” and noted that its vitality hinges in part on a larger Downtown renaissance that will include Innovate ABQ and Albuquerque Rapid Transit.
Still, he called the project a “win-win” for the involved parties.
“The city helped us get it done and we solved a parking problem for the city,” he said.