Garrett’s operator could soon be chosen
One bidder is offering the state land office millions more in revenue over 20 years
Five months after pulling the plug on bids to lease and operate Garrett’s Desert Inn on its behalf, the New Mexico State Land Office appears poised to choose another bidder.
The highest bid of three in the second round of bidding promises $5 million more in revenue over 20 years than either of two competing proposals.
A group of hoteliers, 311 Old Santa Fe LLC, offered to pay $300,000 annually to lease the inn for 20 years, or $75,000 a year above the minimum required. It also offered a signing bonus of $311,000; the request for proposals set a minimum of $10,000. And 311 Old Santa Fe offered higher shares of the hotel operating revenue and the rent paid by the Santa Fe Bite restaurant than the other bidders offered.
“They blew me out the water,” said Paul Margetson, a member of a rival group, Santa Fe Desert Inn LLC, that submitted its own bid. “Right off the bat: ‘We’ll pay you an extra $300,000.’ How do you do that?”
The 311 Old Santa Fe group calculated its offer would bring the State Land Office $12.03 million over 20 years. The lease payments and revenue the hotel would generate benefits the University of New Mexico. Tuesday, State Land Commissioner Aubrey Dunn in an interview called the 311 Old Santa Fe bid “strong.”
A panel of four land office staffers and three Santa Fe city representatives reviewed the bids and may recommend Dunn accept one of them after it meets Monday for the second time, said Craig Johnson, the State Land Office acting commercial resources director.
“Monday, we may have a candidate,” Johnson said.
The land office request for proposals stipulated a minimum annual lease rate of $225,000, with 2 percent annual increases after the first year; a minimum 1 percent of gross revenues to the land office; a one-time minimum bonus to the state of $10,000; and an optional share of the rent payments by the Santa Fe Bite restaurant, which occupies space at the hotel.
The strength of the basic lease requirements are worth 30 of the 100 points possible from the panel assigned to review the proposals.
Plans to develop the hotel also count for 30 points. The 311 Old Santa Fe group and Santa Fe Desert Inn both proposed about $3 million in renovations. A bid from Los Poblanos Hospitality Santa Fe LLC, a group led by brothers Jay and Matthew Rembe of Albuquerque laid out an ambitious redevelopment plan.
Matthew Rembe on Friday said Los Poblanos planned to invest about $7 million in the Garrett’s property.
The 311 Old Santa Fe bid may be largest but in the long run may not produce the most revenue, the brothers said.
“On the surface, you can look at that and say which one is the strongest,” Jay Rembe said. “But until you outline every aspect of the proposal, it’s hard to say.”
Matthew Rembe said the Los Poblanos investment in Garrett’s in the long run would create as much revenue as the 311 Old Santa Fe group projected it would generate.
“If [Dunn] is interpreting all the moving parts of the plan, then we feel the plan is going to have the most value for UNM,” Matthew Rembe said Friday.
The financial strength of each bidder and their experience on similar projects count for 10 points each for a possible total of 20.
The strength of bidders’ plans to finance improvements to the hotel and generate revenue for the university together count for 20 points. The State Land Office provided the bid documents in response to a public records request, but withheld as exempt from disclosure the documents that detailed each group’s financial health.
In December, the first lease award fell through after the bidders, GreenTree Hospitality and Peak Hospitality, failed to obtain a $250,000 performance bond, Dunn said at the time. The lease contract was advertised again in February and the three bids received were opened in April. The winning bidder has 60 days to obtain a performance bond equal to the annual base lease amount offered in its proposal, according to the land office.
In its bid, Los Poblanos Hospitality offered the minimum lease rate of $225,000 and a $50,000 bonus.
Margetson’s group, Santa Fe Desert Inn, also bid the minimum lease rate, $225,000 annually, plus a $25,000 bonus. The group includes Picuris Pueblo, which partners with Margetson at Hotel Santa Fe.
Margetson said his group’s basic bid would produce $7.5 million over 20 years, but he said the group also offered to increase to 10 percent of net profit the revenue it shares with the State Land Office as early as two years after taking over the hotel.
“The first couple years after renovating, it’s tough,” Margetson said Thursday.
The 311 Old Santa Fe group, of which former Santa Fe Fire Chief Barbara Salas, is a minority shareholder, projected revenues at Garrett’s Inn to grow from $1.5 million the first year to $4.6 million in the 20th.
The 311 group also proposed to pay the land office half the restaurant rent payments — $22,500 to the state the first year growing to nearly $61,000 in 2038. It also proposed setting up a scholarship fund for female students at UNM’s Anderson School of Management.
All three bidders proposed renovating the 83-room hotel and its adjoining property to some extent. The 311 group envisioned $3 million worth of “extensive remodeling to update the facility’s outer facade and modernize the room interiors.” The bid also proposed to “affiliate with a multi-national chain that has a top-of-the-line reservation system, while keeping the local flavor as a boutique hotel.”
The 311 bid did not identify the chain. Salas, a spokeswoman for the group, did not return calls seeking comment. The 311 Old Santa Fe bid identified its members as Amisha Bhakta, Minaxi Patel, Barbara Salas, Veena Bhakta, all women, and two men, Tapas Bhakta and Pintu Patel.
They formed the 311 group to bid on the Garrett’s property but also operate the 83-room Comfort Inn in Santa Fe, the 60-room Comfort Suites and the 48-room Econolodge Inn & Suites in Santa Fe.
The group also has properties in Phoenix and El Paso.
In their proposals, Los Poblanos and Santa Fe Desert Inn proposed opening up the property on the side facing Alameda Street and the walled-in channel through which runs the Santa Fe River. Margetson said his group would build a riverfront deck as an extension of the hotel bar along with other improvements and renovation of the hotel’s 83 rooms.
Los Poblanos would open a restaurant patio fronting the river. The Rembes also proposed to turn the parking lot into “a series of more intimate spaces between the motel rooms and a dramatic central canopy,” that would shade a new outdoor lounge.
“We believe there is a place for 1950s nostalgia and room to correct some of the urban flaws of this motel, primarily the large parking lot and lack of connection to the river,” the proposal states.
The Rembes also proposed to build on the property a new gallery for the Tamarind Institute, a nonprofit center for fine art lithography and a part of the University of New Mexico College of Fine Arts. Along with the Tamarind proposal, the Rembes also proposed to generate revenue by using the State Land Office parking lot across Old Santa Fe Trail after working hours and to hold an annual fundraiser for the university, Dunn said. Those proposals, he said, were not considered because the money they generated would not flow through the land office.
The State Land Office acquired the 62-year-old Garrett’s Desert Inn, at 311 Old Santa Fe Trail, from Cochiti Pueblo in exchange for 9,400 acres of state land in 2016.