City Council approves sale of Railyard building for $175,000
Former Santa Fe Clay now expected to sell for $175K
Mayor Alan Webber and the City Council approved a contentious proposal Wednesday to sell a city-owned warehouse in the Santa Fe Railyard for $175,000 — $25,000 more than the original asking price, which was based on an appraisal that some elected officials had complained was too low for a building on a prime piece of real estate close to downtown.
The 8-1 vote came after a grueling discussion and nagging questions that have continued to plague the proposed deal since it was first presented by the Santa Fe Railyard Community Corp., which is the nonprofit that manages the leases and implements the master plan of the Railyard, as well as the Baca District, both of which are owned by the city.
City Councilor Michael Garcia cast the lone dissenting vote, raising repeated concerns about what he called a lack of transparency in a deal that started out as a lease and then morphed into a sale.
“I’m not against looking into selling our assets,” said Garcia, who took office this month. “What I’m against is the process right now because the process was not open [and] it wasn’t transparent.”
After the vote, Kris Axtell, CEO and founding partner of Luna Capital Advisors of Santa Fe, which is buying the building, expressed relief.
“We’re excited for our client more than anything,” said Axtell, who declined to identify the business that is poised to move into the building formerly occupied by Santa Fe Clay. “This is a good opportunity for them, and that’s why we did this transaction. We’re
a client-focused, client-centric business, and this was important for our consulting firm to accomplish.”
Axtell said the deal turned out to be more complicated than he first imagined, particularly because the city owns the property but the Railyard corporation manages it and elected officials “not necessarily understanding the roles of each.” Asked whether his experience would give him pause about doing business with the city in the future, Axtell smiled.
“I think I just need to rest a little bit,” he said.
The Mayor’s Office issued a news release about the proposed sale ahead of Wednesday’s vote, listing several benefits to the city if it unloaded the warehouse, including the renovation and improvement of a 70-year-old building that “cannot currently be occupied and is a liability to the city.”
“The proposed sale of the [Santa Fe Clay building] cannot be fairly compared with straightforward real estate transactions,” the news release stated. “This is a unique hybrid property that operates differently than other property in Santa Fe due to the arrangement between the city and” the Railyard corporation.
When the owners of Santa Fe Clay moved out of the Railyard, the corporation advertised the property for lease in July.
The only interested lessee, Luna Capital, brought an undisclosed proposal to the corporation’s board and successfully negotiated a lease.
But as Luna Capital evaluated the property and what improvements it required, the firm determined it needed to buy the building to secure the capital necessary to completely remodel the building.
Luna obtained an appraisal from Hippauf Dry & Connelly, a Santa Fe-based real estate appraisal and consulting firm, which appraised the value of the building at $150,000 “due to the age and numerous updates necessary to bring the building up to code,” city documents state.
The appraisal, however, was about half the Santa Fe County assessor’s, raising doubts in councilors’ minds about whether taxpayers were getting a good deal and whether Luna Capital had been given an unfair advantage in purchasing the building.
The $150,000 appraisal included only the value of the 10,242-square-foot building, not the value of the land or the location.
“The city, in its efforts to decrease the maintenance costs of owning buildings, wishes to sell the building to Luna Capital,” according to a memo in support of the sale from the city’s Economic Development Department.
Two council committees previously signed off on the deal, though the Public Works Committee endorsed it contingent on a second appraisal or a higher asking price. The Finance Committee requested a cost benefit analysis that showed the city would receive $150,000 from the proposed sale, as well as an estimated $200,000 a year in gross receipts taxes. The sale of the building would also lead to the creation of 61 full- and part-time jobs over the first five years as a result of the yet-to-be-identified business moving into the nowempty space.