BY MAIRE O’NEILL
maire@losalamosreporter.com
The Los Alamos Reporter sat down last week for a long conversation with Jeff Branch of Columbus Capital for a recap and another update on the company’s plans and progress with the redevelopment of the former Mari-Mac Shopping Center in Los Alamos.
Columbus is expected to submit an application in the coming weeks for assistance under the public-private partnership tools of the County Metropolitan Redevelopment Area (MRA) ordinance.
“We have not yet put in a formal ‘ask’ for anything. The MRA took so long to put in place. There are a lot of pieces to it,” Branch said.
Any chat with Branch about the Mari-Mac Center includes his memories of his and business partner Greg Gonzales’s invitation by the County’s former Economic Director Joanie Ahlers to visit Los Alamos right before COVID.
“Joanie Ahlers was a fantastic ambassador for the County. She shared that the County desperately needed additional housing, retail, restaurants, hotel rooms and more. She was such a cheerleader for Los Alamos and White Rock,” Branch said. “I remember walking out of that meeting and saying to Greg, ‘We ought to get an office up here. There’s a lot to do.'”
He said Columbus Capital immediately went out and bought 3500 Trinity with the idea of building something there.
“Now it’s the daycare center! Then we heard loud and clear from the community that everybody was not a fan of Kroger and that they were letting the Mari-Mac Center fall apart and not doing anything or fixing anything. That’s when we put it into escrow. We were able to strike a deal. Our timing was good, and we said let’s potentially buy it and see what we can do,” Branch said.
Columbus was open with the community from the beginning, holding neighborhood meetings, business meetings, and a community meeting at UNM-LA to discuss their plans.
“We have been transparent from the beginning and we continue to be transparent. We don’t have anything to hide. We have really been trying to follow the request to do something at the vacant properties on the way into town. We showed our commitment by investing $10 million into buying the Mari-Mac Center, when we don’t even know if we can do what we want to do there yet. But we still invested in it,” Branch said.
He spoke of a former college professor of his who told him, “When you look at real estate in order to develop it or buy it, if the dog can’t hunt, then you don’t need the dog.”
“So we’re still trying to get this dog to hunt. After all the conversations we had with the community, everyone knows the plan. We went out to get construction costs and at the same time as we were doing all that, interest rates rose from 3.75 percent to more than 7 percent. That was a big blow,” Branch said. “Then the construction costs came in and they were extremely high. As part of our due diligence, one thing we’ve learned is that it is expensive and that’s why there’s not a lot of new development up here. It’s just not cheap to build in Los Alamos County.”
Branch and Gonzales haven’t allowed any of that to dissuade them from trying to achieve their goal.
“We can’t do anything about interest rates, but we can get creative in our financing. We can try to look at cheaper pots of money to help with that overage. On the construction side, we realized that building conventional construction—like everyone else builds—wasn’t going to solve the issue, so we got innovative. We went up to Boise, Idaho and met with three different manufacturers who build modular construction—meaning they build modules in a factory. It’s not that much cheaper because it’s going to cost us about $4 million to truck those from Boise, but it’s going to save us about 15 months in construction time, which is a lot of interest,” Branch said.
Columbus Capital’s architects are now looking at the use of modulars more deeply, and Gonzales and Branch have been to Boise in recent weeks to select the manufacturers they wish to use. Schematic design is underway and Branch said Columbus has devoted significant funds and significant time to moving forward.
“We have been transparent from the get-go. We have let everybody know what we are doing at all points along the journey. We meet every week with the architects and civil engineers. We’re doing a lot of work in the background to see if this dog can hunt… The cost estimates are $185 million. I’m trying to bring it down to $150 million without hurting the integrity of the project,” Branch said.
Columbus has some private financing for the apartment piece of the development. Ten percent, or 22 units, will be affordable housing. The apartment complex will have its own set of financing, Branch said, and so will the hotel piece.
“We are working on the numbers with Marriott to see if we can get a TownePlace Suites and a Fairfield Inn that will be modular as well, and the designs are looking great,” Branch said.
The biggest component of the development is the requirement for a 500-car parking structure.
“While the Code allows for less, we functionally need that level of parking until cars go autonomous. Today, the cost of the parking structure is estimated at $32 million, and it will not bring Columbus Capital in any revenue. A portion of that parking structure is going to be built by the apartments project and the difference is around $21–$22 million that we need to raise in some fashion. The rest of that parking structure would provide public parking,” he said.
The MRA that includes the former Mari-Mac Center allows different tools that are legal to raise money using the revenue stream of property taxes, gross receipts tax, and lodgers’ tax, Branch noted.
“These revenue streams for that property don’t exist today. If we don’t build this thing, they won’t exist anyway,” he said. “Under the MRA, there are tools that MRAs all over the country use every day, so we’re hoping that we can find a few of these tools—perhaps one where the County would float a bond against the revenue stream. Tax-increment–backed financing can be materially cheaper than private capital, with terms dependent on market conditions and structure.”
Branch said. “We are finalizing our numbers with bond companies to put together an ‘MRA ask.’ That’s why we have been meeting with County Manager Anne Laurent and her staff. They hired an attorney to help them on their side and we have legal counsel on our side, so everybody is talking and trying to understand the rules of the game so that we can put together a formal ‘ask’ under that application that’s on the County’s website.”
He said Columbus is working on a draft that will be submitted to the County in the coming weeks and become public record.
Asked about the former Smith’s Supermarket area that is currently leased to LANL for storage, Branch said that building will be part of the second phase of the project.
“We will start the whole process over with public meetings for that. We’re going to have to extend the special use permit with the Planning & Zoning Commission a little longer because we thought we would be a little further ahead in this whole process, but we’re probably a year and a half behind where we would like to have been,” he said. “LANL wants to use that space for as long as they can have it. The good news is that’s what has allowed us for the most part to buy that property and pay for it. If we hadn’t had the Lab there, we couldn’t have bought that property.”
He said the storage area is an integral part of getting the whole development done, noting that Columbus spent a lot of money putting the new facade on that building.
“That was costly and will only be temporary, but that was a commitment we made to the community as part of being a good neighbor,” Branch said.
Once the first phase is under construction, Columbus will come back with some ideas on what the second phase will look like.
“That’s the exciting part. It’s difficult to develop up here. We are passionate about this project. If we weren’t, we probably would have given up within a few months,” he said.