On October 18, declaring that the city is in need of between 13,000 and 28,000 housing units to address the city’s short supply of housing, Mayor Tim Keller announced his “Housing Forward Abq” plan. It is a “multifaceted initiative” where Mayor Keller has set the goal of adding 5,000 new housing units across the city by 2025 above and beyond what private developments and the construction industry normally creates each year. The multifaceted initiatives include major amendments to the Integrated Development Ordinance (IDO) to allow the construction of 750 square foot “casitas” and duplexes on all existing single family homes and “motel conversions”. According to Keller, the city needs to work in close conjunction with the city’s residential and commercial real estate developers to solve the city’s housing shortage crisis.
MOTEL CONVERSIONS
Mayor Keller’s “Housing Forward ABQ” places great emphasis on “motel conversions”. A zoning change already enacted by the city council in early 2022 year eased the process for city-funded motel conversions by allowing microwaves or hot plates to serve as a substitute for the standard requirement that every kitchen have a cooking stove or oven.
“Motel conversions” includes affordable housing where the City’s Family & Community Services Department will acquire and renovate existing motels to develop low-income affordable housing options. Keller’s plan calls for hotel or motel conversions to house 1,000 people by 2025.
The Keller Administration proclaims that motel conversions are a critical strategy for addressing the city’s housing shortage. The city proclaims motels conversions are a simpler, lower-cost alternative to ground-up construction. According to the Keller Administration, the cost per unit for new construction is $300,000, while the cost per unit for a renovated motel conversion is $100,000.
The existing layout of the motels makes it cost-prohibitive to renovate them into living units with full sized kitchens. An Integrated Development Ordinance amendment provides an exemption for affordable housing projects funded by the city, allowing kitchens to be small, without full-sized ovens and refrigerators. It will require city social services to regularly assist residents.
On March 1 it was reported that the City of Albuquerque is moving forward with its plans to transform existing hotels and motels into housing units for low-income housing by issuing a Request for Information (RIF) from any and all property owners who might be interested in selling their motels or renovating them into affordable housing units. The city is moving forward with the plan despite objections from the private sector, affected business owners, neighborhood associations and community activist organizations such as “Woman Taking Back Our Neighborhoods”.
The link to the full news report is here:
The Keller Administration has already made it known it wants to add 1,000 housing units to it already existing 500-unit inventory and it intends to buy 5 more motels to renovate them into low income housing. Informed city sources have said that the city has had at least 15 motel owners who have expressed an interest in selling their motels. However, the city has not disclosed the properties not the amounts. The city source also confirmed that none of the 15 motels are in motel circle.
CITY BUYS “SURE STAY” HOTEL
One area of the city that has been targeted in particular by the Keller Administration for motel conversions is “Hotel Circle” in the North East Heights. The area is considered a “high crime” volume area because of the thousands of APD calls for service to deal with crime at the motels. Located in the area are not only a number of motels but it is also the largest shopping area in SE and NE Albuquerque near I-40. The businesses in the area include Target, Office Depot, Best Buy, Home Store, PetCo and the Mattress Store and restaurants such as Sadies, the Owl Café, and Applebee’s and other businesses.
On February 11 it was reported that the City of Albuquerque has executed a purchase agreement for the purchase of the Sure Stay Hotel located at 10330 Hotel NE for $5.7. million to convert the 104-room hotel into 100 efficiency units. On April 17, Mayor Tim Keller held a press conference and announced the city had finalized purchase of the Sure Stay Hotel and the city intended to renovate the building into 100 apartments for low and moderate-earning households. Keller said the new apartments will help address the housing shortage while providing a quality living situation.
Keller said this about the Sure Stay Hotel purchase and renovation:
“We think this particular area of town has had a lot of crime challenges and I want to remind people in the surrounding areas, we’re going to take care of this property. … This is going to be sustainable housing. It’s going to be much better than transient hotel situations we’ve had in this area. … We’re doing limited things to the rooms. We’re going to make sure there’s kitchen appliances, then they’re ready to go. … A lot of these hotels have community space. It has a swimming pool that we’ll probably keep, so these will be great places to live.”
City officials said that $3-4 million has been earmarked for renovations. City officials said that converting and remodeling the property is much cheaper than building a new structure. Dan Jiron, with the city’s Family and Community Services Department said this:
“If we wanted to build a new 100-unit apartment community, it would cost between 20 and 25 million dollars. …. This is substantially less and gets online quicker.”
The construction is expected to take between six and nine months. Keller said that this is just the beginning and that the city intends to purchase other motels for conversions.
Links to quoted news sources are here:
https://www.koat.com/article/albuquerque-hotel-affordable-housing/43625253
https://www.kob.com/new-mexico/city-of-albuquerque-plans-to-convert-hotel-into-100-apartments/
COMMUNITY MEETING HELD ON SURE STAY MOTEL CONVERSION
On April 18, the City of Albuquerque held a community meeting at the Manzano Mesa Multigenerational Center to make a presentation on the motel conversion by the city of the Sure Stay motel. Present were representative of the city including Family and Community Services Director Carol Pierce, the Mayor’s Office and the APD Area Commander as well as 3 representatives of Monarch Properties, the private property management company that has been contracted to manage the property. Family Community Services Director Carol Pierce announced that the city is conducting a contest to rename the motel.
Public attendance at the April 18 meeting was somewhat sparse with about 12 people in attendance. A number of the attendees expressed open hostility towards the city making the purchase and proceeding to with motel conversions. Notwithstanding, the city proceeded with its presentation.
ABOUT MONARCH PROPETIES
Monarch Properties, Inc was established in 1982 and it specializes managing local, reginal and federal funded low income housing, including USDA, HUD, LIHT funding. Currently, Monarch manages properties in 96 communities containing over 8,000 housing units with upwards of 24 property owners throughout the country. Monarch Property Management has a 20 year history of doing business with the City of Albuquerque and currently manages the 500 housing units the city already has in its inventory owned and rents to low income and government housed subsidized tenants.
Once renovations of the Sure Stay Motel are completed, Monarch will add the 100 units to the inventory it already manages for the city. Monarch’s current property management contract will expire in about two years subject to renewal. According to Monarch Officials, it will charge the city 4% to 6% of the total yearly gross rental income from the property as its management fee which is standard within the industry. The City and Monarch Properties made it clear that the property will not be operated to turn a profit for the city but will be managed and operated at a “break even” level. As it stands, no proposed operating budget is in place but is expected to be developed over the coming months.
PROPERTY OVERVIEW
The city gave the following property overview of the motel:
The Stay Motel was purchased on April 10, 2023 for $5.7 Million using funding from HUD and the State of New Mexico.
The property was purchased by the city because it is considered above average in conditions and was properly maintained. The facility is structurally sound and up to all city codes needing very little if any major repairs to the overall facility. The motel was purchased with all furnishings.
The facility has 104 hotel rooms, approximately 250 square feet each.
Existing amenities include the following:
A dining room
Small conference room
Indoor pool
Fitness room
Courtyard
TIME LINE GIVEN
During the April 18 community meeting, the city gave the following time line:
April 10: City acquires the property after about 6 months of negotiations
April 10: Monarch Property Management is put in place
April 14: 24/7 security plan is established until construction concludes
May 5: The city completes installation of permanent rod iron fencing for security
May: Renovations will commence
December: First phase of construction will be completed
January, 2024: Phase One of the leasing will begin with all units leased over a 6 to 9 month period.
VISION FOR THE CONVERSION
According to city officials, the goal is to convert the 104 existing motel units into 90 to 100 single room efficiency apartments or one-bedroom apartments. Architectural design plans exhibited reflected single room studio efficiency apartments or one bedroom and a separate living room area apartment. The facility will be owned debt free by the city but managed by a professional property management company with Monarch Property Management selected. The facility will be a “mixed-income” community and it will have an “on-site” government services coordinator. The financial stability of the tenants will be a major goal.
TARGETED CLIENTELE
According to city officials, those who might live in the efficiency apartments would include the following:
A person who is exiting homelessness and who ostensibly has secured steady employment and who can pay some rent
A single parent with a full time job and a young child
A person with a disability who is living on disability benefits
A senior on social security
A full-time college or graduate student with a full-time job
TERMS AND CONDITIONS OF THE LEASE
During the April 18 community meeting, Monarch Property Management outlined the screening process it will use to rent the motel conversion and the terms and conditions of the leases. Monarch Proprieties declined to state with any certainty what the studio apartments and efficiency apartments will rent for a month stating that the rents still need to be determined. The motel conversion market is new terrain for the company and cannot be compared to the existing city property it is managing.
According to Monarch official’s, a screening process for potential tenants will be implemented. The following will be required:
Written applications will be required
Low income qualifying levels will be established with affordability of rent below market a major goal
Federal government subsidized housing will be accepted
There will be no screening nor requirement for United States citizenship in that federal law prohibits such screening to prevent the undocumented from renting
Credit checks will be required, not as a qualifying factor with a minimum credit score, but to determine ability to pay rent
Criminal background checks will be required but only recent convictions of 5 years or less, depending on the type of crimes such as violent crime, will be considered as disqualifying
Registered sex offenders will not be allowed to lease.
Deposits will be required but deposit amounts based on ability to pay and deposits will not be the same for all tenants
One year leases will required with no “week to week” and no “month to month” leases
Utilities will be included for all rental units
There will be no maintenance fees for exterior maintenance or courtyard area
There will no fees charged for use of the property’s amenities (indoor pool, fitness room, dining room)
Rules and regulations for occupancy will be established
The standard breach of lease provisions and “notice of eviction” process as provided for in the New Mexico Owner- Resident Relations Act will be implemented
CITY’S FINANCIAL COMMITMENT TO LOW INCOME SUBSIDIZED HOUSING
An examination of the City of Albuquerque’s financial commitment to affordable and supportive housing is in order. It is the Family and Community’s Services Department that is funded each year by the City Council to provide affordable and supportive housing to the low income, those that live in poverty and the near homeless.
In fiscal year 2021-2022, the Family and Community Services Department and the Keller Administration spent upwards of $30 Million to benefit the homeless or near homeless. The 2021 enacted city budget lists 31 separate contracts for affordable housing and community housing totaling $18,191,960, twenty (20) separate emergency shelter contracts which included motel vouchers totaling $6,421,898, twenty nine (29) separate homeless support services contracts totaling $3,624,213 for a total of $28,238,071.
The link to the 2021-2022 city approved budget is here:
https://www.cabq.gov/dfa/documents/fy22-approved-budget-numbered-w-hyperlinks-final.pdf
Mayor Keller’s 2022-2023 approved budget significantly increased the Family and Community Services budget by $24,353,064 to assist the homeless or near homeless by going from $35,145,851 to $59,498,915. A breakdown of the amounts to help the those in need of housing assistance included 33 separate contracts totaling $42,598,361 for affordable housing and community contracts, nineteen (19) emergency shelter contracts, including motel vouchers, totaling $6,025,544 for a total of $48,623,905. The 2022-2023 adopted city contains $4 million in recurring funding and $2 million in one-time funding for supportive housing programs in the City’s Housing First model and $24 million in Emergency Rental Assistance from the federal government.
The link to the 2022-2023 budget it here:
https://www.cabq.gov/dfa/documents/fy23-proposed-final-web-version.pdf
On April 1, 2023, Mayor Tim Keller submitted to the City Council for its review and approval his 2023-2024 proposed budget. The Fiscal Year 2024 budget includes $14 million in non-recurring funding for supportive housing programs in the City’s Housing First model. The Family and Community Services proposed budget lists forty five (45) separate affordable housing contracts totaling $39,580,738, fifteen (15) separate emergency shelter contracts totaling $5,575,690, and twenty seven (27) separate homeless support service contracts totaling $5,104,938 for a total of $50,261,366.
The link to the 2023-2024 proposed budget it here:
https://www.cabq.gov/dfa/documents/fy24-proposed-web-version.pdf
COMMENTARY AND ANALYSIS
Mayor Tim Keller has given his Family and Community Services Department an astonishing amount of authority and funding to acquire existing motels and hotels and they are doing so with little or no oversight by the Albuquerque City Council. At one of his recent telephone town hall meeting, Keller proclaimed that if he had it his way, the city would purchase all derelict motels along Central and convert them into low-income housing.
Simply put, motel conversions is the acquisition of private property to promote a politcal agenda to supplement the housing market and the private sector when the city is already spending $50 to $60 million each year for low income and affordable housing. The city already owns and operates 8 existing housing facilities with 500 units managed by the Family Community Services Department and Monarch properties. Mayor Keller wants to triple that number by adding 1,000 units to the city’s inventory of low-income housing. When is enough enough?
At issue and what must not be overlooked is the astronomical cost of motel conversions. The purchase of the Sure Stay Motel is a prime example. The $5.7 million purchase price for the 104-unit complex translates into $53,807.69 per unit ($5.7 million ÷ 104 = $53,807.69 per unit). City officials said that the city’s estimated cost is $100,000 per unit to fix up or remodel existing motels. The city is now saying it has said aside $3 to $4 million for renovations of the Sure Stay Motel, but the amount is difficult to believe as being be enough.
Using the city’s own estimated remodeling costs for the Sure Stay Motel, an additional $10 Million will be needed to remodel the motel for low income housing. ($100,000 per unit X 100 efficiency apartments = $10 Million). Therefore, the entire Sure Stay conversion project will likely have a final cost of $15,700,000. ($5.7 purchase cost + $10 Million remodeling cost = $15,700,000)
The biggest issue is does the city have any business getting involved with the motel-hotel conversion business and should there be any limit on the number of housing units the city can have in its inventory for low-income housing?