Vacant office building on San Mateo to be turned into apartments

One of Albuquerque’s tallest buildings outside of Downtown is being turned into apartments, and a city councilor and the mayor want to incentivize the project with a tax abatement.

The city administration is also asking for tax abatements on three other housing projects: affordable housing in the International District, new townhomes near the University of New Mexico, and a food hall and long-term residency inn across the street from Presbyterian Hospital.

“We know we have a massive housing shortage,” said Mayor Tim Keller. “So the sooner we can develop more units, the better for everyone in Albuquerque, because it relieves housing stress, whether it’s housing prices or folks who are unhoused. ... I think everyone in Albuquerque has probably seen what Central and San Mateo looks like, and it is, unfortunately, a reflection of some of the biggest challenges that we’re facing in our city. And one of these projects would literally make that awesome housing.

Even developing expensive apartments can benefit people who need cheaper housing, according to the Director of the Metropolitan Redevelopment Agency Terry Brunner. The city lacks all types of housing, so creating new market-rate housing or apartments could give people who can afford that type of housing the opportunity to move into it and leave available the more affordable apartment or house that they’re living in for someone who needs lower-cost accommodations.

Keeping the industries involved in housing development, like builders and financers, working year-round also makes it easier for affordable housing to be developed, Brunner said.

From vacant space to apartments on San Mateo

A Houston-based developer plans to turn the vacant office building at 300 San Mateo into housing.

The 10-story, 101,000-square-foot Two Park Central Tower sold in August 2023 for just under $2 million. The development project will create 101 units in the old office building and is being undertaken by Route 66 Multifamily, LLC, according to a summary from Albuquerque’s Metro Redevelopment Department staff.

“I was born and raised here, so I remember when that building was full of people during the work day, and what that meant is that there were restaurants all around it that were also busy,” Keller said.

The same company plans to convert the neighboring 17-story Bank of the West tower into 160 apartments with “high-end” features like a roof deck, a pool and pickleball court, according to the city staff summary.

The area has recently seen disinvestment — the Walgreens across the street and the Walmart a few blocks away were shuttered last year.

The developer takes “a very long-term view, and what they see is available space and real estate at an iconic intersection on Route 66,” Keller said. “They see, obviously, that Nob Hill has its own wonderful aspects and is not far away. And they also see access to the VA and (Kirtland Air Force Base) going in the other direction, and it’s close, even to Uptown. ... If you look at a 40-year horizon, it’s a great place to invest, and right now also very reasonably priced.”

City Councilor Nichole Rogers and Keller’s administration want to give the developer a break on taxes.

The Two Park Central Tower property tax bill is currently $87,090, but is expected to increase to $205,238 after the apartments are developed. Rogers will ask the city council at the Sept. 4 council meeting to approve a seven-year tax abatement that could save the developer a total of $744,332 on its property tax bills.

Rogers tried to get the tax abatement added to last week’s city council agenda at the last minute as an emergency action. But the council voted against it. Several councilors said they wanted more than a few days to think about the tax abatements before voting on them.

Getting the approval is an emergency, Brunner tried to convince the council. People keep breaking into the tower, Brunner told the Journal, and lighting fires or throwing furniture from the roof. City officials are worried that someone could be injured or the property could be set on fire. The city has tried to stop the break-ins by putting mobile units on the site and welding iron bars onto the first floor.

The developer is eager to start, Brunner said, and getting the project into the construction phase could cut down the number of trespassers.

What is a tax abatement?

The city of Albuquerque offers tax abatements for projects in the city’s 22 metropolitan redevelopment areas, most of which are in older parts of the city like Downtown or on Broadway.

For seven years, the tax abatement freezes the developer’s taxes at the amount they paid before the property gets any new buildings or upgrades. The developer might be transforming a vacant lot into new housing, for example, which dramatically increases the value of the property. Without the tax abatement, the property tax would have a corresponding increase.

Technically, the city takes the title of the property and leases it back to the developer, exempting the property from property taxes, and the developer makes a payment in lieu of taxes to Bernalillo County that is equivalent to the pre-development property tax.

“It’s a really good technique to relieve developers of that tax payment in the first seven years of the development, which helps, usually, with their initial cash flow and getting them going on the project,” Brunner said.

The city’s tax abatement program is relatively new, and about 10 properties have been approved for it.

“But it is rising pretty dramatically in popularity, partially because the assessor is now assessing at highest and best use, so some folks that are on vacant lots are seeing a larger property tax bill,” Brunner said.

After the seven years are up, the property taxes will be based on the property’s value at that moment and presumably go up. In the long term, the tax abatement program can increase city revenue, according to Brunner, because it can incentivize developers to build when they might otherwise leave the property vacant.

Developers have to get the tax abatement approved by city council before securing a building permit.

More affordable housing and townhomes

The only affordable housing project of the four is the 70-unit Somos affordable housing complex being developed by nonprofit Sol Housing and planned for the corner of Central and Alcazar SE. The project would set aside 84% of the units for income-restricted affordable housing. The land has been vacant for almost 20 years, according to a planning department staff analysis.

The city already owns the vacant land that Sol Housing wants to turn into affordable housing, so the property tax is $0. But Sol Housing will own the property, and the tax bill is expected to be $81,647 annually after the development is completed. A tax abatement would save $514,376 over seven years.

Titan Development is requesting a tax abatement for a new resident inn and food hall that would be built on a vacant lot at the corner of Central and Cedar NE. The project would include a 14,900-square-foot food hall and 126 units in a residence inn. Because of the project, the annual property taxes are expected to increase from $4,164 to $162,597. If approved, the tax abatement could save the developers $998,128 over seven years, according to a memo from development department staff to the mayor’s office.

Sunlight Properties and Garfield Townhomes could get a tax abatement for 16 town homes planned in the University Heights neighborhood. The townhomes would be built on a vacant lot on Garfield. The current property tax bill of $1,509 would increase to an estimated $25,511 after development, so approval of the abatement could save the developer $151,209 over seven years.