Now, the suits are involved: Los Ranchos and Village Center developer meeting in hopes of heading off litigation

Lawsuits seeking damages of more than $50 million from the Village of Los Ranchos de Albuquerque are possible if a controversial affordable housing project at Fourth and Osuna is terminated and razed.

“That is ultimately what a damages claim would be in the worst-case scenario of tearing it down altogether,” said Chad Rennaker, chief executive officer of Palindrome Communities, the Portland, Oregon, company building the project — 204 apartment units divided among three three-story structures plus micro-retail spaces — on the southeast corner of Fourth and Osuna.

On May 29, village trustees voted 2-1 to seek a court injunction to stop the project.

But during a phone interview from Portland on Friday, Rennaker told the Journal that Palindrome and the village met Friday to discuss the situation and agreed to continue working this week toward an agreement about what can be done with the current phase of the Village Center Project and to come to terms on an approval process for future phases.

Also, the village issued notice that it will meet in closed session at 6 p.m. Wednesday to discuss a possible resolution of pending litigation between the village and Palindrome. Following that session, there will be a special meeting of the board of trustees to vote on any matters arising from the closed session that require a vote.

Rennaker said Palindrome wants to avoid legal action.

“It costs a lot of money, hundreds of thousands of dollars that could be spent on making better things for the project,” he said. “It is just such a waste.”

A turn of events

The Village Center Project broke ground in the summer of 2022 during a previous village administration headed by Mayor Donald Lopez.

Even as the project got underway, some village residents were protesting the intrusion of a high-density project into a village incorporated in 1958 with the goal of retaining a rural and agricultural lifestyle.

From that point, the complexities of the dispute stacked up almost as quickly as the development itself, which is nearing completion after nearly two years of construction.

The Friends of Los Ranchos, an organization that favors the preservation of open space, filed a number of lawsuits against the village aimed at stopping the project.

Among the issues raised in the suits was the charge that the village violated the state Open Meetings Act by failing to discuss the project in public meetings before the village’s Planning and Zoning Commission and its Board of Trustees.

Another charge in the lawsuits was that the village improperly condemned the site of the project so it could sell the ground and the buildings on it to Palindrome for a few dollars, a violation of the state anti-donation clause.

“The Friends have filed multiple lawsuits against the village, but Palindrome stands to lose the most after having followed all the village’s guidance, processes and requirements,” Rennaker said. “We assumed we had met all the requirements and it was approved.”

Joe Craig, president of Friends of Los Ranchos, spearheaded the lawsuits. But in November, Craig was elected mayor, defeating incumbent Lopez and village trustees Gilbert Benavides and George Radnovich.

Jennifer Kueffer and Frank Reinow, campaigning on pro-open space platforms, were elected to vacant seats on the board of trustees.

Trustees Benavides and Radnovich lost their respective bids for mayor, but retained their seats on the board because those terms have not expired.

When elected mayor, Craig resigned as president of Friends of Los Ranchos. But the board, counting the mayor who votes to break ties, had a pro-open space, anti-high-density development edge of 3-2 at the start of this year. Craig, who had played an integral role in suing the village, was then the village’s top elected official.

Strict schedules

On May 2, state District Judge Denise Barela-Shepherd, acting on one of the lawsuits filed by the Friends, ruled that the process used by the previous village administration to approve the Village Center Project violated the state’s Open Meetings Act.

That was a victory for Craig. But on May 21, following treatment for a medical condition that began to emerge just after he took office, Craig died.

Now, the village board of trustees was back to a 2-2 divide, two trustees from the previous administration and two elected in November after campaigns that stressed their opposition to the Village Center project.

The 2-1 vote in favor of seeking an injunction to stop the project was achieved only because Trustee Radnovich, whose company has the landscape architecture contract for the Village Center Project, recused himself.

Rennaker said just stopping the project will cost $100,000 a week.

“We have spent $40 million to this point,” he said. “Two years of litigation at $100,000 per week would add to that figure. Fifteen million for future lost revenue would be part of the damages suit.”

Rennaker said Palindrome never considered delaying the start of the project, even though rumblings against it were gaining force as work on it was starting.

“We couldn’t have,” he said. “It’s not just Palindrome in the project. There are investors and lenders that have strict schedules that we have to adhere to. Frankly, we were a little behind to begin with.”

He said Palindrome is characterized as big-shot developers from out of state who don’t care about local communities, but that’s far from the truth.

“The Friends of Los Ranchos are very vocal, but there may be other people in the village who don’t share their opinion,” Rennaker said. “I was having informal meetings with concerned citizens about what could be done in future phases of the project, or even in the initial stage. Then it got litigious. There was talk about lawsuits, and people were told to quit talking to the enemy.”

Tear it down

In May, following Judge Barela-Shepherd’s ruling on the Open Meetings violation, Palindrome, the village and the Friends of Los Ranchos met in a mediation session.

Rennaker said Palindrome was willing to make concessions such as allowing public input on colors selected for the development, adding trees to the site, making open-space areas more appealing by adding benches, community gardens and other features and allowing larger retail spaces along Fourth Street.

“We could accommodate that,” he said. “In addition, we were open to allowing more public input in future phases.”

But he said Friends insisted on removing the third floor on several units and demolishing a building in the center of the site, actions that would considerably reduce the number of units in the project and add more than $10 million to the development’s price tag.

Marsha Adams, who succeeded Craig as president of Friends, said the organization did not make any of those demands.

“There have been proposals for modification, but that’s not what we are advocating for,” she said. “We want it torn down. That’s basically it. We want it gone. Palindrome was aware all through this that they did not have the proper approval and proper permits and they continued to build — even faster. They are accountable.”

She said that as far as Palindrome suing the village for damages goes, she has heard more than once, and believes it to be true, that there is language in the contract that protects the village from such action.

Rennaker disagrees.

“There are differences of opinion on the interpretation of the indemnification clause,” he said. “We obviously don’t believe it exempts the village from financial responsibility.”

Totally wrong

Rennaker said Palindrome is getting a bad rap for some things it is not responsible for and for other things that are not true — for example, he said, complaints that the project is built too close to the sidewalk and there will not be enough parking spaces on the site.

“We actually had the buildings set back farther from the sidewalk, and we were forced by the village code to put them closer to the sidewalk,” he said. “As part of the first phase of construction, we will have 427 parking spaces when it is completed. As future phases (a hotel, brewpub, grocery store, housing) are added, we will retain a one-to-one ratio for affordable housing residents. One parking space for one unit.”

Rennaker said Palindrome’s mission is to create high-quality affordable housing opportunities.

“The attitude of Friends against building affordable housing in an affluent community is just plain wrong,” he said. “We already have a waiting list for prospective residents eager to move in, including educators, first responders and fixed-income seniors. With housing costs skyrocketing and income levels not keeping up, New Mexico has a dire need for affordable housing.”

Adams said Rennaker’s comment is off base.

“It is totally wrong that we are against affordable housing,” she said. “We are against the way this project was done without proper permits.”