UTEP to Develop Mesa Property

El Paso Inc.

What happened to the Whole Foods deal?

For years, the city has been hoping for a developer to build a transit-friendly, high-density mixed-use neighborhood, but it has yet to happen.

The University of Texas at El Paso might be first to make that a hope a reality.

The university has a number of proposals from developers for the former Rudolph auto dealership. The almost eight-acre site is next to the Don Haskins Center and has frontage on both North Mesa Street and Sun Bowl Drive.

According to the university’s request for proposals, the development should include “large and small retail uses complementary to the University, multi-family housing as a part of the retail complex, and structured parking to serve the retail and residential uses.”

UTEP would maintain ownership of the land through a ground lease, similar to the deal it made with the developers of the Hilton Garden Inn, located a few blocks away at University and Oregon.

It won’t happen immediately. UTEP has requested proposals previously, and about three years ago almost had a deal with food retailer Whole Foods.

The deal fell through when the recession squeezed the life out of negotiations, said Cindy Villa, UTEP vice president for business affairs.

“We certainly were disappointed. It would have been a very good tenant for that area and would have fit with our vision of how to develop that area,” she said.

UTEP officials are hoping this turn of the wheel brings such a deal to conclusion, but the university can afford to wait.

“We’ll take the time to try to do this right and ensure we have the best possible options available to the university,” she said. “What the RFP does is give you the opportunity to view the proposals from various developers and then negotiate from there, so it can be a fairly lengthy process.”

The university was scheduling presentations from the bidders. Villa declined to say how many bidders made proposals or who they were, citing the need for confidentiality during the bidding and negotiating periods.

Negotiating points include the length, cost and other terms of the ground lease, and the possibilities for development are fairly wide open, Villa said.

“We may not get into whether Texas apartments have granite countertops but we want to have control or say over the nature of businesses on the site,” she said. “The other thing we definitely want control over is design. We would envision having it in the style of the university architecture.”

UTEP’s trademark building style is based on the ancient architecture of Bhutan.

The Rudolph site makes sense for mixed-use development for several reasons: Its location next to the Don Haskins Center draws crowds for evening and weekend events, and during the day, UTEP is a major employment center with the population of a small city.

The site is within walking distance of the medical cluster that includes Sierra Providence and Las Palmas hospitals, also major employment centers, and the Cincinnati Street nightclub and restaurant district.

The lot is flat, clear land along a major arterial, Mesa Street, which means it has plenty of traffic. According to the request for proposal, which uses 2002 figures, 32,646 cars per day pass the location.

Also, the city is working with UTEP on the Glory Road Transit Terminal, which will connect a high-speed bus line from Downtown to the university district.

Taking an even broader view, the site is less than two miles from Downtown to the south and the large-scale Montecillo proposed high-density mixed-use developments to the north.

“If there was a site for mixed use development, this is it,” said Mathew McElroy, the city’s deputy director for planning. “There’s ridiculous density in that area because of the hospitals and UTEP. You could have nurses walk or take the bus. People who work Downtown probably wouldn’t even need to own a car because they can walk to the Glory Road station.”

But despite all the promise, the fact is that such a development model doesn’t exist in El Paso.

“It’s hard to do those types of developments when you don’t have an area that can support it. This is the one area of El Paso that can,” said Bob Ayoub, president of Mimco, a real estate development company that made a proposal previously.

“We’d be interested in pursuing it again. It’s a great site. UTEP needs more housing and I think it’s great they’re finally getting going on it,” Ayoub said. “That piece of dirt needs to be developed.”

City Rep. Beto O’Rourke, who represents the area and has been a leading proponent for this kind of development, said the RFP had potential.

“I hope that UTEP and the developer they choose do something truly innovative here because the past history of development along Mesa is really uninspired. I think our community deserves a lot better,” he said. “I’m optimistic UTEP will be able to do that.”

City Incentives Spurring El Paso Apartments

El Paso Inc.

Incentives designed to stimulate the construction of apartments in El Paso are working, city officials say.

Almost 2,000 units have been put under contract since the incentives were approved by City Council less than a year ago, according to Kathy Dodson, the city’s director of economic development.

“I am thrilled about the results we are having,” she said. The program was created to provide off-post housing for the influx of soldiers coming to Fort Bliss.

One project taking advantage of the incentive program is The Bungalows, a 431-unit complex on the Eastside that’s being built by Bohannon Development.

Tom Bohannon, the company’s president, said units in the first phase will be ready to rent as early as next month. The rest should be finished by September 2011, he says.

But even with incentives, Bohannon says it’s still not the level of return on investment that would normally attract outside companies.

In the slow economy, builders are finding it hard to secure financing, while the cost of construction is high.

“You really need to want to build in El Paso, because it is very difficult to make the numbers work,” Bohannon said. “We have made some sacrifices in terms of the money we earn to do it.”

The incentive program rebates developers up to 100 percent of fees normally required by the city. It will expire when 4,000 units have been put under contract, unless City Council extends it, Dodson said.

Trouble brewing

In early 2009, the message was that this summer would be the breaking point when there would be more demand for off-post housing then there are places to live.

That spawned forums, studies and meetings between Fort Bliss leadership, the development community and city officials.

Many of the new soldiers are young, low in rank and not ready to be homeowners. They’d be looking for apartment in a market with a 94-percent occupancy rate for existing units, according to the El Paso Apartment Association.

And all that led to the city passing the incentives package.

Tom Fullerton, professor of economics and finance at the University of Texas at El Paso, cautions that there can be unintended consequences.

“Incentivising” the construction of that many units could put other apartment complexes out of business, he said, so the net gain might not be as high as expected.

Right now, Dodson said, they estimate that about 6,000 multi-family units need to be built to accommodate the incoming soldiers, but the number is only a rough estimate.

The stock of multi-family units in the city is projected to increase by about 200 this year, according to a report released in December by the University of Texas at El Paso’s Department of Economics and Finance. It also projects that multi-family starts will increase 32 percent.

The influx of troops to Fort Bliss is now 60-percent complete, according to Col. Edward Manning, garrison commander of Fort Bliss. The movement is projected to draw to a close sometime in 2012.

That timeline is important for builders, since it typically takes a year to work through the planning and financing stages of a new apartment complex, and two to three years to finish construction.

Bohannon says his company is approaching new projects conservatively, and not basing decisions solely on the hope of some future demand driven by growth at Fort Bliss.

“In today’s lending environment, that is really the approach to take,” he said.

What is clear is that soldiers have been able to find housing so far.

“Despite a high occupancy rate in the city, we don’t have people coming and saying they can’t find a place to live off-post,” said Col. Edward Manning, garrison commander of Fort Bliss.

To help soldiers who want to buy a home, Fort Bliss holds quarterly home buying seminars and classes.

“It makes better sense to help (soldiers) purchase homes because it is an investment,” said Yolanda Brown, director of the Fort Bliss housing office.

According to Desert View Homes’ marketing director Linda Cara, although they do see soldiers, there hasn’t been a major influx.

The company builds homes priced as low as $90,000 aimed at the first-time homebuyer.

“One of the neat things we are seeing,” Cara said, “is that they’re coming in and surprised that they can afford a home in El Paso.”

Incentives program

• Incentives available for new multi-family Texas apartments projects with at least 250 units

• Property tax increases resulting from new development will be used to rebate builders the city fees they pay

• One quarter of fees will be rebated for building 250-500 units, half of fees for 501-749 units, and all fees will be rebated for 750 or more units

• Developers must submit detailed site plan for approval by Development Services

County Turns Down Multi-Family Housing Incentives Proposal

KFOX TV

EL PASO, Texas -- The Department of Defense says El Paso is thousands of multi-family housing units short for all the troops coming to the Sun City, and on Monday, El Paso County leaders were asked to take up a policy that could help with the shortage.

The deal to developers is a simple one -- build an apartment or condo complex with at least 150 units and get a full rebate on any increase in county property taxes for the first five years your complex is open.

"We know that the Department of Defense has said that we have an 8,000 unit deficit coming in the Texas apartments as the soldiers start to get here from BRAC," said Kathy Dodson with the city of El Paso.

The city has a similar incentive policy in place to get developers to start building, but on Monday in a 3-1 vote, the county shot down the idea.

"I'm not convinced that we need an incentive policy to create more multi-family housing for the future," said Commissioner Veronica Escobar.

Escobar said the real issue is the lack of credit nationwide.

"I don't think this incentive would necessarily help with that part of the problem," she said.

Commissioner Anna Perez didn't necessarily agree with this policy, but wanted to have a discussion about alternatives to help with the impending problem.

"I thought by deleting it, it ignored the problem, it ignored the advice and the situation that was being described to us," said Perez.

City officials said in the end, soldiers won't necessarily be the ones without Texas apartments to live in.

"Our main concern, and the reason for bringing it to the city and the county is that we're concerned the soldiers who have a monthly housing allowance, might displace El Pasoans who don't have that $892 a month to spend on housing," said Dodson.

Dodson also went on to say hopefully developers will still recognize that the city has an incentives policy and decide to build in El Paso before all of the troops arrive.