Title
Update on the Purchase, Sale, and Development Agreement for Mixed-Income Workforce Housing on the A-8-A Parcel
Body
This agenda item is to introduce the proposed A-8-A Purchase, Sale and Development Agreement with Servitas prior to requesting Council take formal action. Los Alamos County is dedicated to the effective redevelopment of County-owned land. This is a crucial step towards downtown revitalization and boosting economic vitality. County staff's role is to facilitate site development by identifying and partnering with experienced, financially capable developers, ensuring timely project progress, and overseeing alignment with our Comprehensive Plan, Affordable Housing Plan, and County Council Strategic Leadership Plan priorities.
This development proposal includes a total of 380 units:
- 120 deed-restricted units for households earning between 60% and 100% AMI, with an average of 80% AMI (1-, 2-, and 3-bedroom).
- 260 market-rate units (1-, 2-, and 3-bedroom).
Project Origins
In July 2024, Los Alamos County issued a solicitation for the sale, purchase, and development of the County-owned parcel known as A-8-A. The County sought a dynamic mixed-density, mixed-income residential development that would incorporate higher residential densities of apartments or condominiums, in addition to low-maintenance, moderate-density homes like row homes or patio-style units.
The proposed density, in line with the Comprehensive Land Use Plan and Mixed-Use zoning district, was to be no less than 15 dwelling units per acre upon completion, with higher-density apartments or condos encouraged for a portion of the development. The County received three formal proposals, which staff thoroughly evaluated in early 2024. The proposal presented tonight was identified as the most responsive to the solicitation. County staff then presented these options to the County Council in a closed session, leading to negotiations with the selected development partner on the concepts and a draft agreement.
Developer Selection
The selected developer, Servitas, is a client-services organization focused exclusively on Public-Private Partnerships (P3) that serve public interests. As a 100% Minority and Women's Business Enterprise (MWBE) owned Limited Liability Corporation, Servitas has provided design-build-finance-operate-maintain/manage ("DBFOM") services for over 20 years. Specializing in P3 developments, Servitas uses a conduit non-profit borrower with tax-exempt bonding capacity to fund projects.
The Servitas team has significant experience with similar projects, having delivered and currently developing over 20,000 beds in a variety of unit types. The Servitas executive team has financed and constructed more than 60,000 student and multifamily beds, totaling over $4.4 billion.
Servitas pioneered the P3 development model while working with the Department of Defense and higher education institutions and has adapted it to serve municipal clients. This P3 model can serve both market rate as well as households that do not qualify for low-income housing but cannot afford market-rate housing. This proposal specifically targets both groups by providing units for higher-income renters as well as units for those that are priced out of local market-rate housing and do not qualify for other government assistance for subsidized housing.
The full development team includes:
- PGAL: A national design firm with more than 250 architects, engineers, planners, and designers.
- Norris Design: Specializes in land planning, responsive design, landscape architecture, and entitlements in remote communities.
- Moss Construction: A construction firm with extensive bonding capacity and a record of high-quality multifamily construction in remote locations.
- Western Spaces: Provides market insights and data for workforce and "missing middle" housing.
- Raymond James: A diversified financial services company providing project financing, underwriting, and tax-exempt bond structuring.
- Servitas Management Group: Property managers who provide exemplary customer service and investor reporting tools.
- Squire Patton Boggs: Legal support for all parties involved in land use, project transaction structuring, and bond counsel.
Design Vision and Project Overview
The County and developer's shared goal is to maximize site density, fully aligning with the Comprehensive Land Use Plan, Affordable Housing Plan, and by-right zoning to provide mixed-income, "missing middle" housing. The proposed project will contribute to Los Alamos County's Strategic Economic Vitality Goal to increase housing supply, support downtown revitalization, and boost local businesses. This goal specifically directs staff to increase the capacity for new housing developments and broaden the variety of housing types provided to both meet changing preferences and support a growing population by paying special attention to missing middle housing.
The developer, in coordination with their consultant Western Spaces, has conducted market research to understand and be responsive to the workforce housing market and the community's needs.
The design concept includes a mix of 1-, 2-, and 3-bedroom units, community amenities, trail connections, and outdoor spaces. The plan connects the new residential neighborhood to downtown and local businesses via DP Road’s improved sidewalks and the Canyon Rim trail. Approximately 84% of the property is developable, with the remaining areas reserved for open and recreational spaces.
Overall, the site plan creates internal community and external open spaces. The western portion of the site includes a 4-story articulated building designed to complement the street frontage along DP Road. The articulated design of this building breaks up the massing, provides internal courtyards, and maximizes views for all units. An internal structured parking garage will provide off-street parking for residents, complying with County requirements. The southwest corner provides a dog run area, seating, views, and a connection point to the existing Canyon Rim trail.
The eastern portion, running down the mesa, will feature lower-density residential units adapted to the site's topography. There will be 10 smaller, 2- and 3-story walk-up flat buildings with 12-15 units each, comprised of a mix of 1-, 2-, and 3-bedroom units. Parking will be provided in small lots between buildings and as on-street parallel parking. Additionally, there will be 12 two-story, 2- or 3-bedroom connected townhomes.
Within the development, streets will be pedestrian-friendly and include on-street parking to slow traffic. Streets will have generous sidewalks and shaded landscaping to encourage walking. A multi-use path will connect to public spaces, amenities, trails, and the natural environment. The development is within a 5-10-minute walk of scheduled bus service (at Smith's and Central and 6th), which will likely be expanded to DP Road.
The proposed project will use sustainable design best practices, including eco-friendly materials, green building methods (advanced framing, thermal insulation, high-efficiency HVAC systems), and may include energy-efficient elements (solar panels, high-performance windows, and LED lighting). Public spaces will utilize native materials, water conservation techniques, rain gardens, and permeable surfaces to reduce runoff.
Strategic Alignment & Community Integration
The solicitation and project proposal are based on goals and implementation guidance established by adopted community plans. The proposed residential uses are by-right within the Development Code, conform to the Comprehensive Land Use Plan - Future Land Use Map (FLUM), and align with adopted County strategic plans, including:
- County Council’s Strategic Leadership Plan priorities
- Affordable Housing Plan
- Comprehensive Plan
- Future Land Use Map (FLUM)
- Economic Vitality Strategic Plan - housing in support of local businesses
An increased full-time residential population adjacent to downtown will benefit Los Alamos businesses and the environment. New market-rate housing and affordable units will increase supply and help stabilize or lower existing rents through a more competitive market. Additionally, new units will allow current commuters a local housing option, reducing driver miles, traffic congestion, and carbon emissions. A secondary impact will be the improved quality of life for new residents who were previously unable to live in the community. This influx of new residents will also increase support for local businesses and community programs.
The parcel's location adds appropriate density to an area with minimal impact on existing neighborhoods. It is within a 5-10-minute walk of Smith's, a major grocery store, and associated retail and commercial businesses. Central Avenue and Central Park Square retailers, Ashley Pond, Fuller Lodge, and the library-all central community and social gathering spaces-are about a 12-15-minute walk away. The property is also adjacent to the canyon rim, offering outstanding views of the Pajarito Plateau, Jemez and Sangre de Cristo mountains, and distant views of Santa Fe and Taos, NM.
The total investment by the developer will be in the tens of millions of dollars. Construction and development are subject to the Gross Receipts Tax (GRT). This includes construction, construction materials, and taxable receipts like design fees, labor, materials, and profit. With the local GRT set at 7.0625%, the County can anticipate significant GRT revenues starting from construction and continuing through the life of the project.
Alignment with Affordable Housing Plan and Provisions for County Support
In September 2024, the Los Alamos County Council adopted the Los Alamos County Affordable Housing Plan (the Plan). The Plan's findings revealed that low vacancy rates make it difficult for all but the highest earners to find suitable housing. To foster a vibrant community with a functional economy made up of desirable goods, services, and local businesses, the supply of housing must be increased across all income levels, especially for low- and moderate-income households, often referred to as the "missing middle."
The Plan, in compliance with the New Mexico Mortgage Finance Authority and the state's Affordable Housing Act, establishes the legal foundation for the county to assist with or fully cover costs related to the acquisition, development, construction, financing, and operation of public or private affordable housing projects.
Specifically, the Plan directs the County to prioritize "missing middle," compact, efficient, and higher-density housing types, as well as housing reserved for targeted incomes. Special consideration was given to proposals that included mixed residential densities with a managed affordable housing component for households earning up to 120% of the Area Median Income (AMI).
This development proposal includes a total of 380 units:
- 120 deed-restricted units for households earning between 60% and 100% AMI, with an average of 80% AMI (1-, 2-, and 3-bedroom).
- 260 market-rate units (1-, 2-, and 3-bedroom).
The County will purchase a permanent rent restriction on 88 of the 120 units for $5,500,000. These units will be:
- 22 one-bedroom units
- 44 two-bedroom units
- 22 three-bedroom units
The remaining 32 deed-restricted units will be acquired by the County as a reimbursement for pre-development expenses, such as design, permitting fees, and studies. The cost for these deed restrictions, and maximum reimbursement, will be $2,000,000.00. The rent restrictions on these units will become permanent once the full reimbursement has been paid. These units will be:
- 8 one-bedroom units
- 16 two-bedroom units
- 8 three-bedroom units
To achieve the required 80% average AMI across all 120 deed-restricted units, rents will be allocated as follows:
- 1/3 of the units (40 units) at 60% AMI
- 1/3 of the units (40 units) at 80% AMI
- 1/3 of the units (40 units) at 100% AMI
This proposal equates to an approximate cost to the County of $22,917.00 per bedroom for the deed restriction.
Purchase and Development Agreement Overview
The Purchase, Sale, and Development Agreement for the A-8-A parcel outlines the key business terms for the mixed-income workforce housing project. Key Terms and Provisions:
- Property Purchase: The development team will purchase the property from the County for its appraised value of $5,500,000.00.
- Earnest Money Deposit: A $55,000.00 Due Diligence Earnest Money Deposit will be provided.
- Site Plan Approval: The developer is obligated to seek final approval for a complete site plan that is in substantial compliance with the Concept Plan presented and with all County code requirements and standards.
- Affordable Housing Alignment: The proposal includes a total of 380 units. This includes 260 market-rate units (1-, 2-, and 3-bedroom) and 120 deed-restricted units (1-, 2-, and 3-bedroom) for households earning between 60% and 100% AMI, with an average of 80% AMI.
- Total Investment: The total County investment for the 120 deed-restricted units is $7,500,000.00, which equates to approximately $22,917.00 per bedroom in perpetuity.
Fiscal and Staff Impact/Planned Item
Funding for County participation in the redevelopment of the A-8-A parcel has been previously budgeted and is available in the Community Development Economic Development Fund.
Attachments
A - Project Overview Presentation