City greenlights $227M in industrial revenue bonds as Sawmill developer looks to build hotels, mixed-use space

Albuquerque is betting big on luxury developments in the Sawmill District — to the tune of $227.5 million in tax breaks.

The package of three industrial revenue bonds, or IRBs, aims to stimulate the buildout of a hotel, extended-stay suites and an apartment-retail complex by developer Heritage Cos. The Albuquerque City Council approved the bonds unanimously, despite criticism that the project lacked affordable housing and concerns from unions over contracts.

“In some ways, it really is a jewel of Albuquerque,” Economic Development Director Max Gruner said of Sawmill Market. “It is exciting. It is a vibrant place. And this further development ... is absolutely going to continue on that path.”

The IRBs are between the city of Albuquerque and Heritage, the firm behind Sawmill Market and Hotel Chaco and many other high-end properties across New Mexico.

Union leaders, including Rosendo Najar, the president of Carpenters Union Local 1319, feared that the timing of the bonds aimed to undermine a state law designed to guarantee better wages for workers of IRB-supported projects. However, a review of council processes and an amendment ensured that state law would take effect before the bonds were issued.

While some on the council chafed at the lack of affordable housing inclusion, all voted in favor of the project.

“Our city is fortunate to have people (who) are from Albuquerque that can invest their hard-earned money, their investment, their name, their reputation — that can create just phenomenal cultural places,” Councilor Dan Lewis said.

Monica Mitchell, the city’s economic development deputy director, said the developments will create hundreds of full-time and part-time jobs, as well as 750 construction jobs.

Plans for the boutique hotel, located west of Sawmill Market on Bellamah NW, include 115 guest rooms, 10 suites, restaurants and a conference space. The estimated cost to develop the hotel is $76.3 million, according to an information packet provided to the council.

Chaco Residences, an extended stay hotel south of Sawmill Market, on the corner of Bellamah and 20th NW, will have an anticipated 107 guest rooms, eight suites, wellness areas, restaurants and conference spaces, the packet said. The $70.4 million property will have offerings similar to Hotel Chaco but will add kitchenettes, washers and dryers, allowing for long-term stays.

The $80.8 million mixed-use development will feature 140 apartments, entertainment venues, restaurants and retail space, according to the packet. This development will go south of Chaco Residences on 20th NW, and include retail, dining, galleries and other amenities geared toward local entrepreneurs. There would also be multi-level parking.

Mitchell said city officials estimate the Sawmill mixed-use space will generate $2.3 million in tax revenue by 2047, the Chaco Residences will generate $5.6 million in taxes by 2042 and the Sawmill hotel will generate $8.2 million in taxes by 2049.

All in all, the project will require an investment of more than $227 million, of which Heritage will set aside about $14 million to help launch the New Mexico businesses that the properties will house, according to Heritage CEO Jim Long.

Long said that while the IRB, which includes a 70% property tax abatement, will help “offset” the high development costs and bring financial stability to the project, the city is not lending Heritage the money — a common misconception when it comes to IRBs. Heritage’s next step is to secure financing from lenders and bids from contractors who can build the projects for the right price.

“So there are two big steps still in front of us,” Long said.

If Heritage can secure bids and financing, Long said the hope is to break ground on Chaco Residences and the mixed-use development this year. The boutique hotel has been designed, but the construction blueprints haven’t been drawn up yet. Long said it could be three years before the hotel starts construction, as he wants to see Chaco Residences “economically stabilized” before starting on the hotel.

Each project will take two years to build, meaning those breaking ground this year could potentially open in 2027.

“We’re creating exciting places for people to work, to live, to play that we know are going to be an attraction — to bringing jobs to New Mexico, to bringing people back to New Mexico that might have left our community,” Long said.