ALBUQUERQUE DEVELOPMENT COMMISSION September 29,1998

STAFF REPORT Agenda Item 2

COAL AVENUE MULTI-FAMILY HOUSING

  1. BACKGROUND

The City of Albuquerque has assembled the vacant parcels of blocks forty, forty-one, and forty-two of the original town site. This property is located between 8th and 5th Streets along the north side of Coal Avenue. The City owns the vacant land between 6th and 8th Streets. It is acquiring the vacant land between 5th and 6th Streets through condemnation proceedings, and is currently dominion in control of the property. Albuquerque Development Services has vacated the alleys, which run east to west through the site, in addition to the section of 7th Street north of Coal Avenue. The land has been replatted and is 127,800 square feet. It is zoned SU-3.

The assembled property does not include the house located at 611 Coal Avenue. The City will maintain access to the property through the alley located between 6th and 8th Streets.

The Albuquerque Development Commission, City Council and the Mayorís Office have expressed a need to develop high-density residential units in downtown. This development site has been assembled for mixed income multi-family rental housing. It will provide affordable housing options for those who want to move to downtown. The creation of multi-family housing will enhance commercial activity in downtown.

The development of this site is scheduled to coincide with the construction of the new GSA building. GSA has expressed a need to provide housing options for its employees in downtown. This site is planned to accommodate this need.

  1. PROCESS

Albuquerque Development Services prepared Request for Proposals #ADS 98-06, requesting development proposals for a mixed income multi-family housing development, in April of 1998. Prior to drafting the RFP, an outside consultant was hired to prepare a market study. This market study provided the basis for developing the scope of the RFP, and determine a fair value for the land offered for development. The intent of the RFP was to create additional housing opportunities for the downtown area. These housing units would be provided at market rates, with at least twenty percent offered at affordable rates. ADS received three responses to the RFP on June 16, 1998.

ADS staff reviewed all three proposals. Upon their review, two proposals were selected onto a short list. ADS staff interviewed the two development teams between August 4 and August 7. Additional questions were prepared for each development team. These questions focused on financing packages for each proposal. Responses to these questions were received on August 31, 1998. A final review of proposals was scheduled on September 3, 1998.

PROPOSALS

The following section provides an overview of both proposals.

Proposal Teams:

Developer

Armstrong Brothers

John Hampson

Tesch Development

Architect

RMKM Architecture

Garrett Smith LTD

Dekker/Perich

Contractor

Armstrong Brothers

Zeta Construction

Bradbury & Stamm

Engineers

Armstrong Brothers

Tierra West LLC

Isaacson & Arfman,P.A.

Marketing Agent

Lewinger/Hamilton

Lewinger/Hamilton

Charles Williams Corp.

Property Management

Lewinger/Hamilton

Lewinger/Hamilton

Charles Williams Corp.

Attorney

Hughes & Strumor LTD Co.

Rowe & Rowe P.C.

Myers Oliver & Price P.C.

Development Consultant

Ben Butler

Construction Consultant

Don Erickson

Proposals:

The following is a comparison of unit mix, total site development, parking, rents, and unit sizes.

Armstrong

Hampson

Tesch

# of Units

190

202

140

affordable units

38-143*

41-75*

56

studios

30

75

46

1 bed/1 bath

52

68

52

2 beds/1 bath

74

17

0

2 beds/1.5 bath

5

0

0

2 beds/2 bath

27

30

42

3 beds/2 bath

2

12

0

total site work

155,308 sf

166,620 sf

130,995 sf

parking

160 covered

125 underground

54 garage

34 surface

87 covered

187 surface

*dependent upon financing package.

rents

Armstrong

Hampson

Tesch

square feet

Armstrong

Hampson

Tesch

studios

$460-480

$465-470

$ 425.00

studios

415-450

440-460

350

1 bed/1 bath

$550-600

$555-595

$ 575.00

1 bed/1 bath

525-575

630-700

580

2 beds/1 bath

$605-725

$665-760

2 beds/1 bath

825-842

775-1000

2 beds/1.5 bath

$690-775

2 beds/1.5 bath

1000

2 beds/2 bath

$750-895

$740-915

$ 820.00

2 beds/2 bath

1000-1075

900-1270

820

3 beds/2 bath

$650.00

$1,005.00

3 beds/2 bath

1090

1380

Armstrong Brothers

This proposal develops the property as two building styles. The property located west of 6th street will include two and three story apartment complexes. Eighty apartments will be on this site. These units will front along Coal Avenue, 8th Street, and the alley. This will provide open spaces between units. A pedestrian walkway will meander along the vacated portion of 7th street. A mural wall will be created on the northern edge of this walking path. Parking for these units will be covered and accessible from the alley. A commons area will be developed on the northwest corner of 6th and Coal Avenue. A day care center (1,550 square feet) is proposed as one of the uses for this commons area. The day care center will be constructed and leased to a professional operator by the Armstrong Brothers.

The property located east of 6th street includes a five-story apartment high rise. This site will have open space along Coal Avenue and facing the alley. One hundred and ten apartments will be constructed on this site. Open space will exist along Coal Avenue and the alley. A swimming pool will be placed on either the north side of these units, or on the roof of the structure. Parking for these units will be provided underground and will be accessible from the alley.

The high rise includes 5,000 square feet of commercial space on first floor.

Proposed tenants for commercial space: neighborhood grocery store, drug store, restaurant, or a dry cleaner.

Site amenities: day care, playground, private garden paths, storage units, alarm system, internet ready rooms, natural lighting, covered parking, commercial sites east of 6th street, pool, fitness center, community room, distributed laundry rooms.

 

Tesch Development

This proposal calls for three-story walk up apartment complexes with interior corridors on the site. These complexes would front along the northeast corner of 8th Street and Coal Avenue, along Coal Avenue, the northeast corner of 6th Street and Coal Avenue, and the northwest corner of 5th Street and Coal Avenue. Community buildings and management offices are proposed for the northwest corner of 6th and Coal Avenue. Sixty-two units are to be constructed east of 6th Street and Seventy-eight units west of 6th Street.

The complexes are designed with patio and balcony areas. The buildings will use a variety of colors. Landscaping is designed to provide open spaces and a natural boundary for the property along Coal Avenue.

Parking for this site is accessible from both alleys. It is controlled and uncovered. Additional parking spaces are available along the east side of 8th street, the west side of 5th street, and both sides of 6th street between Coal Avenue and the alley.

Site amenities: laundry facilities, pool, fitness center and on site management.

Hampson

This proposal invisions townhouses, three, and five story apartment complexes on the site. The five story complexes would be located on the northwest and northeast corner of 6th and Coal Avenue. The townhouses would front Coal Avenue and 8th Street. Three story apartment complexes would be placed at the northwest corner of 5th and Coal, the northwest and northeast corners of 7th Street and Coal Avenue. Parking is accessible from alleys.

This proposal includes two commercial sites. Proposed commercial space (2800 square feet) is along alleyway located between 6th and 8th Streets. Proposed tenants for this space include day care and laundry services.

Proposed commercial space is also on first floor of high rise structures located between 6th and 5th Streets. This commercial space is 9900 square feet. Proposed tenants for this commercial space range from a grocery store, day care center, professional offices, dry cleaners, and deli.

Site amenities: commercial sites along 6th street, pool, exercise room, day care, vending machines, laundry facilities, covered parking, storage facilities, cable and computer ready apartments, 25,000 square feet of open space, secured postal boxes, private front and backyards for townhouse units.

Project Costs

Armstrong1

Armstrong2

Hampson

Tesch1

Tesch 2

Tesch 3

Sources

Loan

4,375,778

10,347,123

10,810,717

4,358,900

4,358,900

4,903,800

Equity/Subsidy

486,198

1,397,625

2,702,679

0

0

0

GMAC Subordinate

0

0

0

656,900

674,400

370,200

Tax Credit Equity

7,546,761

0

0

670,858

676,355

673,161

Land Equity

0

0

0

0

0

0

Required LOCs

0

0

0

207,564

425,000

305,640

Total

12,408,737

11,744,748

13,513,396

5,894,222

6,134,655

6,252,802

Uses

construction costs

9,902,600

9,902,600

10,700,370

4,757,259

4,757,259

4,757,259

carrying/fin costs

384,377

384,377

1,342,510

579,822

604,756

598,323

development costs

1,738,359

1,074,370

932,526

722,972

745,857

728,662

LOCs

0

0

0

207,564

425,000

305,640

Acquisition costs

383,400

383,400

287,990

367,860

367,860

367,860

Total

12,408,737

11,744,748

13,263,396

6,635,477

6,900,732

6,757,744

Armstrong 1 utilizes Low Income Housing Tax Credits and conventional financing

Armstrong 2 utilizes Metropolitan Redevelopment Bonds with credit enhancement

Tesch 1 utilizes COA multifamily housing revenue bonds with a 30 year amortization

Tesch 2 utilizes COA multifamily housing revenue bonds with a 40 year amortization

Tesch 3 utilizes NMMFA multifamily housing revenue bonds

IV. STAFF EVALUATION

The evaluation of the proposals was based on the following six (6) selection criteria.

  1. Experience and Success Record of Proposer. Criteria for evaluation will include factors such as the offerorís performance in similar types of development, familiarity and experience with the Cityís development approval process, and the capacities of other Team Members (including subcontractors, and others that may play a role in implementing the proposed project):
  2. In reviewing all three proposals, the following strengths and weaknesses were discussed: Tesch Development retained the services of architects and contractors who have demonstrated an extensive background in multi-family housing. The architects and contractors have worked with the developer in previous projects. However, the developer has limited experience in multi-family housing projects. The Armstrong Brothers have built, owned, and managed numerous properties in New Mexico. They own and manage property in downtown. The Armstrong Brothers have retained the services of two additional multi-family housing consultants to assist with their project. The Hampson proposal represented limited experience in multi-family housing design, construction, and development. This project represented the first time any of the team members would work on a joint development.

    The Tesch proposal best meets this criteria.

  3. Proposerís Overall Plan. Prepare a narrative, not to exceed two pages, explaining how the proposal will meet the objectives of the Coal Avenue Development. An overall assessment of the project will consider the positive net effect of the project on the Downtown area:
  4. Although the request for proposals did not require a mixed use site, two development teams, Armstrong Brothers and Hampson, recommended commercial and residential use. Producing a greater number of housing units combined with commercial amenities creates the most positive net effect for downtown. The proposed neighborhood commercial spaces benefit not only the project but the surrounding neighborhood as well. The mix of uses will open the project to the surrounding area. The Armstrong proposal balanced the 190 unit housing site with five thousand square feet of commercial space. It is an innovative design that utilizes underground parking, a diverse housing style to achieve density, and blends well with the GSA site, Alvarado Apartments, and the Barelas neighborhood. Hampson proposed 202 units of housing and almost ten thousand square feet of commercial space. It provides underground parking and private yards for townhouse residents. However, the placement of two high rise towers on each side of 6th street does not blend well with the surrounding sites. The Tesch proposal with 140 units is attractive and creates a pleasant residential street front along Coal Avenue. It is a sound housing proposal that has proven successful with other sites, such as the Alvarado Apartments.

    The Armstrong submittal best meets this selection criteria.

  5. Price Offered. Purchase offers for the Parcel should be bid as "a per square foot price", and should be a minimum of three (3) dollars per square foot.:

The Armstrong Brothers and Tesch Development offered the minimum requirement of $3.00 per square foot for the property. The Hampson Proposal offered $2.00 per square foot in their proposal.

4. Financial Feasibility. The proposal must provide a detailed budget of the project, including price, cost, and developer fee. Rental units must include projected lease income and expenses by year for the first five years, as well as, costs and return on investment estimates. A development schedule which includes significant events in the form of a timeline should also be included:

The Hampson proposal did not present a clear approach for the long term financing of the project. Their lenderís letter suggested 100% financing would be available. However, this seemed to be inconsistent with the value as determined by capitalizing the projectís net operating income. Other inconsistencies occurred in the financial information provided.

The Tesch proposal identified three financing options. No preference was suggested by the developer, nor was a critical path to ultimately identify the permanent source of financing outlined. The package lacked a commitment letter from a lender. Two of the suggested financing alternatives require the City to issue private activity project revenue bonds.

The Armstrong Brothers proposal put forth two viable methods to finance the project. The preferred method is to obtain Low Income Housing Tax Credits which provide the project with substantial equity. The balance of the project would be financed by a mortgage loan. The second option would be to finance the project utilizing City issued Metropolitan Redevelopment Project Revenue Bonds. Equity under this scenario will be provided by the developer. Both alternatives are clearly outlined in sufficient detail, and provide credible means the developer will take to obtain financing for the project.

Of the three proposals, the Armstrong submittal best meets the selection criteria.

5. Financial Ability of Proposer. The City will use the information provided by the proposer to evaluate the proposerís financial capability to deliver the project as proposed. A current Balance Sheet and Income Statement for the organization that will be liable for the development must be submitted and signed by the officers or individuals responsible:

All three proposals met the necessary requirements for this category.

6. Project Design. The City will consider the Proposalís quality of design and how it will relate to the surrounding neighborhood and enhance the Coal Avenue streetscape:

The Armstrong proposal features a mix of building types including a two and three story walk-ups, townhomes, and mid rise structures. This design relates very well to the existing surroundings and should be compatible with the GSA building. The mid rise structure will be located between 5th and 6th Street adjacent to the GSA building. This portion of the site plan calls for open court yard areas that could allow for shared open spaces with its neighbors. Between 6th and 8th Streets two and three story structures are proposed. This will integrate well with the existing Alvarado and provide an effective transition to the neighborhood to the west. The floor plans are designed in a manner that will serve the target population as determined by the market study. Parking requirements are met onsite. This plan also incorporates many elements from the Coal Avenue design guidelines, including an attractive streetscape.

The Hampson design also includes a mix of building types similar to the Armstrong proposal. Hampson places their mid rise structures on the northwest and northeast corners of 6th and Coal. The concern is with the compatibility between the mid rise located west of 6th street and the existing house at 611 Coal SW, and to a lesser degree the Alvarado Apartments. The marketability of some of their floor plans are questionable.

The Tesch proposal is an attractive two and three story walk up structure throughout the entire site. The design is distinctive but does not attempt to be compatible with the GSA, nor does it provide for shared open spaces with its neighbors. This design creates less of a transition between the residential scale of the neighborhood and the GSA building. Similar design concepts constructed throughout our community have proven to be very successful. However, the proposed density is at the lower end of the desired range. The proposed unit mix and floor plans will serve the target market.

Of the three proposals, the Armstrong submittal best meets the selection criteria.

 

  1. NEIGHBORHOOD COMMENTS

Members of ADS staff conducted presentations with the Downtown Action Team on August 20, 1998 and the Barelas Neighborhood Association on August 26, 1998. Staff members provided an overview of the selection process, and highlighted elements of each proposal.

ADS addressed concerns and questions expressed by these community groups. Common concerns raised by each group included: accessibility and placement of parking on site, unit mix, and site amenities.

The Downtown Action Team expressed some concern in creating additional commercial space along Coal Avenue. Members mentioned the need for day care services in downtown. They expressed the need for high density housing to compliment the GSA building, and for three bedroom units. Concerns were also raised that we did not give more allowance for inexperienced developers.

The Barelas Neighborhood Association expressed concern about rents for each proposal. They also stated that they do not want to see another wrought iron fence around the site similar to the Alvarado Apartments. Concerns were raised with on site parking. They expressed favor in the mixed-use concept, and the need for day care services in downtown. Association directors inquired on the possibility of including the Barelas Community Development Corporation with these proposals.

VI. ROYAL FORK

The Royal Fork site is located at the northwest corner of 4th Street and Coal Avenue. This site has been offered in a previous RFP. Proposals on this site have not resulted in a development agreement. ADS proposes to offer this site to the successful developer of this RFP for inclusion in this development. The purpose of this offer is to create additional housing downtown. The contract for the Royal Fork portion of this development will require City Council approval.

 

VII. STAFF RECOMMENDATIONS

Upon the review of all three proposals, Albuquerque Development Services recommends the approval of the Armstrong Brothers proposal. The Armstrong Brothers utilize an innovative design which addresses the housing requirements listed in the RFP and commercial services for downtown employees and residents. The placement of a day care center on site and other commercial uses enhances the amenities available for its residents. The project is compatible with the scale of the proposed Social Security building between 6th and 5th Streets, and the Alvarado Apartments between 6th and 8th Streets. It provides a higher density of 190 units which was a preference in the RFP. The Armstrong Brothers have expressed a willingness to move ahead on design while applying for Low Income Tax Credits and will use Metropolitan Redevelopment Bonds as an alternative if not awarded the LIHTC.

Albuquerque Development Services acknowledges that the proposal submitted by Tesch Development is a viable alternative. ADS would recommend the approval of the Tesch proposal should negotiations with the Armstrong Brothers prove to be unsuccessful.

 

 

 

Staff recommends the following motion:

The Albuquerque Development Commission selects the Armstrong Brothers as the developers of the Coal Avenue Apartments.

Conditions:

  1. Negotiations should proceed with the developer and the resulting development agreement to be brought to the Chair for signature.
  2. Offer the Royal Fork property for development of apartments on the same terms as other property.
  3. That developer agree to a mixed use rental tenant mix of not less than 20% and not more than 50% of the units being made affordable to households earning less than 60% of median income.