City, business leaders bet big on tools aimed at improving Downtown Albuquerque

Arrive Enterprises is remodeling the former Hotel Blue, a Route 66 landmark on the corner of Eighth Street and Central Avenue, turning the building into a modern 134-room inn with a restaurant and retail space.

The company, based out of California, is spending $30 million on rehabilitating the 75,000-square-foot property in Downtown Albuquerque. They hope to open the hotel, called Arrive Albuquerque, next year.

For project developers, the investment is a no-brainer. They see the hotel as an example of coming change in the heart of New Mexico’s most populated city.

“I believe Downtown today is safer than it was two years ago, but I also would argue that the perception has not caught up to what the reality is,” said Jonah Dicker, a developer with Arrive Enterprises. “The onus is on us to help improve that perception and make people feel safe.”

Dicker and Arrive Enterprises are not alone in wanting to see the opinion of Downtown Albuquerque change. They are also not alone in seeing a vision of what that area of town can be.

City officials and property and business owners are betting big on two mechanisms — a Tax Increment Financing District and a Business Improvement District — to help revitalize Downtown, hoping that those tools can create economic prosperity in an area that has been a sight for sore eyes.

“Our interest is in making it a better place to live, work and play for residents of Albuquerque — return it to its glory days as a center of commerce, but also tourism. Those are the things we would like to see,” said Terry Brunner, Mayor Tim Keller’s newly appointed chief of staff and interim director for the city’s Metropolitan Redevelopment Agency. “When people come to your city, they want to know what you have going Downtown. We want to really have a vibrant area that people are connecting with every day.”

‘Better than what we have’

Bill Keleher, an Albuquerque attorney, is leading the charge in forming a new Business Improvement District, or BID, in Downtown Albuquerque.

Still in its early stages, the BID would encompass a group of collective property owners that would be assessed a fee that would in turn provide services, like marketing or security, for that area, Keleher said.

But a BID is not new to Downtown. A BID from 2000-2015 existed before Albuquerque city councilors voted to end the city’s involvement and investment in the district, according to previous reporting. The BID, then led by the Downtown Action Team, also collected fees based on “straight-up valuation of the properties,” Keleher said, noting that particular type of fee assessment created some “resentment” amongst property owners in the area.

“If you had a very valuable property … you were paying a big portion of it, even if what the BID was doing didn’t really benefit your property,” Keleher said.

In forming a new BID, which Keleher hopes to get in front of city officials by the end of this year, he said officials are seeking professional help in how to assess a fee to property owners in the area, including frontage and square footage calculations “in a fixed formula so it’s predictable.”

The proposal from property owners would also include a base services agreement with the city so it keeps offering the same services it already does.

The BID by statute also means that 51% of commercial property owners need to sign on to form the district, Keleher said, meaning the boundaries can change based on the support. Right now, Keleher has been making calls to property owners located between Lomas Boulevard to Coal Avenue and Eighth Street to the railroad tracks.

Since the BID is still in the initial phase of development, it’s unclear what services more broadly would fall under the BID.

“They want a little enhanced feeling of security. They want responsiveness,” Keleher said. “If there’s a problem like immediate responsiveness, they want that special phone number to call to get somebody there within a few minutes. But that’s up to the property owners to decide.”

David Silverman, a qualified broker with commercial real estate firm Geltmore, has a particular interest in Downtown.

His family’s firm is the largest proportionate owner in the partnership that helped bring Ex Novo Brewing Co. to the area. Geltmore also owns the 3,000-square-foot space that houses the company’s offices. The firm, Silverman said, is also under contract for a “pretty large office building” in Downtown that will be transformed into residential, office and retail space.

Silverman said the previous BID stirred up distrust for city government by some private property owners, noting that “the ship had holes in it and (it was) kind of going down.”

But the new BID led by Keleher has sowed some sense of optimism for Silverman.

“I think everybody can agree that we can have something better than what we have,” Silverman said. “It’s going to require some leadership and some vision and some commitment from the public and the private sector to try to set the table for something better to come.”

Mark Baker, principal of Baker Architecture + Design, owns the 505 Central Food Hall and some residential properties, including Villa Agave, in Downtown Albuquerque. Baker has been involved in the planning process for the current BID and said it’s “something we should definitely try.”

Baker, both a property and business owner, said the pandemic negatively affected Downtown revitalization and growth, noting that the area had seen some positive momentum in the three years leading up to COVID.

“I felt like there was a lot of positive momentum of Downtown getting cleaner and safer and more occupied and more fun,” he said. “Frankly, ever since the pandemic the offices have kind of emptied. A lot of businesses unfortunately closed, and it’s taken us longer to bounce back than I had anticipated.”

He said he’s heard of other positive BID success stories, including in the downtowns of Tucson and Memphis that have been “quite amazing.”

“I don’t know what it is about downtowns and Business Improvement Districts, but they really go well together,” he said. “There’s no reason that Downtown Albuquerque can’t be vibrant. We have, from an architect’s point of view, the urban fabric and we have the density. … It’s just a matter of getting it back occupied. I think it’s within our grasp to do so.”

Incentivizing growth

Another tool highly touted to help spur economic activity in Downtown Albuquerque is creating a Tax Increment Financing District. The TIF will allow the city to collect up to 75% of the increment of growth of property and gross receipts taxes in the area for reinvestment, Brunner said. City officials estimate up to $200 million could be generated through a TIF District over a 20-year period.

Brunner said the city expects to start collecting property taxes starting next year and “will encourage the county to participate in devoting some of their tax (revenue)” as well.

But the big moneymaker comes from gross receipts taxes, which are imposed on goods and services. Brunner said the city plans to begin collecting those taxes in 2026, pending City Council approval, and is asking the state and county to pitch in their share of GRT money.

Danielle Casey, president and CEO of Albuquerque Regional Economic Alliance, an economic development organization, said private and public investment “are both critical to getting any project going.”

“Whether you’re talking about TIFs or BIDs or other types of investment or economic development incentives, really, it’s all about sharing risk,” Casey said.

Casey said when she arrived in Albuquerque four years ago, she realized the city was “extremely under-equipped in comparison to other communities with the tools we have to spur and attract investment in our Downtown core.”

She said when businesses are looking to expand to a place like Albuquerque, “they all look at the health of your downtown as a quality of life indicator.”

“Your urban core matters tremendously,” Casey said, noting that a TIF “is critical just to get us on an even playing field with being able to leverage mechanisms like this that other communities use at a significant level and on a highly regular basis.”

Baker believes a TIF District could be a huge win for economic growth in the area.

“Sometimes we feel like we don’t get our fair share of tax expenditure in capital outlay in the downtown area,” Baker said. “And so hopefully this can change that.”

Silverman said tax increment financing might also allow property owners to get much-need investment for renovated spaces.

Either way, they know private sector investment is needed to boost tax revenue in such a district. Arrive Albuquerque’s so-called arrival could be a big win.

“That’s why this is the perfect time to start something like this,” Brunner said of the hotel. “You want to always start a TIF District in a place that is just about to grow. You’re going to see a growth in revenue over time. If we don’t get any growth, we’re not getting any revenue.

“You’re trying to incentivize growth and then use that growth to incentivize more growth, and that’s where this gets super powerful and super helpful as a tool.”