Mayor: Businesses’ Frustration is ‘Wake-up Call’ to Ease Obstacles
November 7, 2015
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  • When the city of Santa Fe surveyed business owners earlier this year, just 3 percent rated the overall business climate in the city as “excellent.”

    On Friday, Mayor Javier Gonzales acknowledged the critics. “That has to be a wake-up call to the governing body,” he said, speaking to about 40 business owners and managers.

    His comments were made at a summit hosted by the city’s Economic Development Department at the new Higher Education Center. Participants included a bank president, homebuilders, hotel and hospitality executives, brewery and taproom operators, a nightclub owner, a car dealer and a solar panel installer.

    Though Gonzales and Councilors Signe Lindell and Peter Ives got points for just showing up, the criticism of city policies from the business community was hot and heavy — from poor communication and inefficient permitting to slow Internet, a troubled future for the Santa Fe Municipal Airport and a shortage of affordable housing rentals.

    In a series of announcements after the summit, Gonzales said the city is rebranding its economic development effort to focus on expanding the economy for both existing businesses and startups. He said he would support revising the Railyard master plan, and he wants to move ahead with longer runways at the Santa Fe Municipal Airport, as well as an effort to bring fiber-optic connectivity citywide.
    “Until you have full deployment of high-speed fiber in the community, you cannot say to a business that we have infrastructure that will allow you to compete globally,” Gonzales said.

    At the top of the list stood housing rentals in the city — and the impact the shortage of available units is having on businesses looking to expand or relocate to Santa Fe. The high rents and lack of new construction have been a drag on economic development, according to the group.

    Many in the room remain critical of the City Council for turning down the 400-unit El Rio apartment complex along Agua Fría Street that would have helped alleviate the rental crunch in an area close to the city’s job center.

    The latest housing survey by CBRE in Albuquerque indicates that Santa Fe has the tightest rental market since the firm began gathering data in 2008. The firm doesn’t measure rentals in single-family homes or smaller apartments, and its data here is for complexes with an average of 158 units.

    In that market, the occupancy rate is 97.5 percent, and rents are up about 6 percent from a year ago.

    “Continued strong occupancy indicates a more permanent supply/demand imbalance,” David Eagle, senior vice president of investment properties for CBRE, wrote in a September analysis of the Santa Fe housing market.

    Gonzales says he is aware of the business community’s frustrations over the City Council’s decisions to prohibit both the El Rio project and the MorningStar Senior Living project on Old Pecos Trail.

    Gonzales said he is close to introducing a resolution that would spur some multifamily apartment development in areas where there is sufficient infrastructure and transportation, such as the Siler Road and St. Michael’s Drive corridors.

    The measure would create targeted zones and then clear away some of the building requirements, he said, which should mean faster approvals. For instance, the city currently requires any residential project to offer 20 percent of its units at affordable rates for low-income residents.

    For projects like El Rio, that requirement forces a developer to propose a larger development to offset the costs of the lower-priced housing. El Rio ultimately was rejected by the council, which said the larger project was too dense for the traditional neighborhood.

    With construction costs high in Santa Fe, the mandate for subsidized units squeezes profit margins, and that makes financing difficult for any new multifamily construction in the city, Gonzales said.

    “My desire would be to eliminate the requirement for these dedicated zones, to accelerate the private investment in multifamily housing,” he said.

    He added that there might be other requirements that can be eased, including the need for new projects to supply their own water rights in order to get a building permit. The city already has an allocation of water for affordable housing and economic development, and that might be used to spur growth in these targeted corridors, he said.

    With regard to the city’s airport, Gonzales said the loss of the American Airlines direct flight to Los Angeles was a blow. But it also should been seen as a challenge to improve the airport for heavier planes that are designed to carry more passengers, he said.

    These planes are quieter, he said, but also require longer runways. If Santa Fe doesn’t make improvements at the municipal airport, it might very well lose other flights, he added.

    In response to a question, Gonzales said he would support revisiting the Railyard master plan so more businesses that want to relocate there could be given the chance. Currently, local businesses have a priority for leasing space, and some national chains may be pushed out as result.

    Finally, Gonzales announced the city was rebranding its economic development office into the Office for Business Growth. The change will use current staff and resources but serve notice that the government will be more proactive and focus on growing the city economy by being a one-stop advocate for business.

    That will include an effort to build startup businesses with mentoring and matching private investors with startup entrepreneurs who need capital to create jobs.
    Unlike his predecessor, Davis Coss, who promised to create 4,000 new jobs, Gonzales said the challenges for Santa Fe are more complex.

    At 5.7 percent, the unemployment rate for the city is relatively low, but that does not reflect the number of workers who are underemployed. He also said the average age of the workforce is 53.

    “Very soon there will be shortage of labor,” he said. “We won’t have the workers to support our businesses.”