Friday, June 21, 2013

BAIT AND SWITCH: LAS CRUCES GOLF COURSE RE-ZONING PROPOSAL


As I write this extra blog, I expect the Planning and Zoning Commission to bite, and City Council to swallow, the bait which allows the Galichia developer and Pofahl contractor team to switch plans in developing the site of the defunct Las Cruces Golf Course site.  The team has signaled that it intends to offer one plan to secure a zoning change and then to operate according to another plan.

I believe that the site should be a multi-purpose site with mixed-use buildings.  But I also believe that Las Cruces should ensure that its private-sector development accords with public-sector interests.

Neither the developer nor the contractor has done much to show the compatibility of the two sets of interests.  Galichia has been unresponsive to inquiries from the press and the public.  Pofahl has conducted several public meetings.  But he has stated that he as contractor does not speak for Galichia as developer.  Since the developer decides what the contractor does, nothing which Pofahl says necessarily represents anything which Galichia intends.  So the public cannot trust that what Pofahl talks Galichia will walk.  If the developer and contractor were honest about their purposes, they would not operate in this fashion.

For instance, on Tuesday, 18 June, Pofahl conducted a final, information-only meeting to address many major issues of public concern.  However, Pofahl failed to do more than describe minor changes to the site design, which he showed in a brochure available to all.  Yet he and his brochure omitted mention or designation of the helipad.  And he ruled out questions from attendees because, as is usual in such meetings, he feared that their questions might inform other attendees of issues which they had not considered and compound his problems with the public.

The brochure which Pofahl distributed to attendees was an attractive, four-color pitch for the 110-acre site to be developed for living, working, playing, and shopping.  Pofahl described the 30-acre sub-site for a medical complex at one point as an adjunct service for residents, at another point as a regional resource.  He has also described it as both a specialized facility for cardiac care and as a full-service facility.  What this either-or, both-and double-talk reveals about the developer’s or the contractor’s real intentions is anybody’s guess.  Fortunately, a small-print legal advisory note makes clear that the Galichia/Pofahl team plan is puffery:

“All improvements, plans, amenities and land uses herein are proposed and subject to change without notice per the developers [sic] discretion.  There can be no assurance that the current proposed improvements or amenities will be completed.”

In short, the attractiveness of the contractor’s site design is part of the developer’s plan to win a change in the zoning without making any commitment to implement the design.  Given the open-endedness of “the developers discretion,” the Galichia/Pofahl team can change from this plan to another plan about which no one—not the Planning and Zoning Commission, not City Council, not the citizens—has any knowledge.  In effect, the team wants a worthless promise to pay for real benefits: a zoning change which enhances the value of the property.

The Galichia/Pofahl team’s approach is a strange one and should create suspicion about its purposes.  The team has indicated that the offer to buy the entire 110-acre site is contingent on its rezoning to a high-density residential and commercial site.  And it has developed an attractive site design for the entire site.  Yet it is making its purchase contingent on the prior approval of rezoning for a 30-acre parcel for a medical complex consisting of a hospital and a seniors’ assisted-living facility.  The inevitable question is why the team wants prior approval to build a medical facility on a part of the site as a condition of its purchase of the whole site.

My answer is a simple one.  Galichia is known for developing or operating medical facilities but not for developing or operating high-density residential and commercial sites.  It can easily build a medical and assisted living complex, and it can readily accept the city’s requirements for, or restrictions on, the design and development of this parcel.  But rezoning of the entire parcel leaves the design and development of the remaining 80-acre parcel entirely to the teams’ discretion, without any requirements or restrictions.  Although it offers a mixed-use, multi-purpose site design for that parcel, it has indicated that the design is subject to change at the developer’s discretion.  So many alternative designs and developments are possible, including sale of the land itself to yet another developer and contractor.  In short, the Galichia/Pofahl team is using an apparently plausible plan for a 30-acre medical complex and an attractive but commitment-free promise for the 80-acre remainder of the site as the bait to a switch to unfettered and, from the city’s and the citizenry’s perspective, potentially undesirable disposition, design, and development of the remaining land.

Good reasons exist to question the bona fides of this proposal.  Despite Galichia’s business in such complexes, its proposal makes dubious business sense in the first place and less public-interest sense in the second place.  Of course, the devil is in the details, but it is also in the design.  (Many thanks to Connie Potter for calling attention to many legal and technical problems with the medical complex.)  Adding a third hospital to two full-service hospitals operating at less than full capacity is unnecessary because more excess capacity and greater competition is likely to jeopardize its and their profitability, even its or their financial viability.  If the third hospital achieves viability, it will do so by specializing in expensive procedures, attracting doctors and patients from the other hospitals, and jeopardizing their quality of care and viability.  If the third hospital does not achieve viability, it will still have damaged the other two hospitals.  Its loss will be modest, however, because the medical complex, if it fails to thrive as intended, can survive by converting its facilities to serve as an office or business park.  To repeat, given these obvious risks to all parties, the proposed 30-acre medical complex may be the real bait on the hook for the design and development of a very different kind on the remaining 80-acre parcel.

 In all likelihood, the Galichia/Pofahl team has agreed on a purchase price of the golf course site as it is, a price probably substantially less than the original asking price of $7 million though far more than the city’s bad-faith offer of $1 million—perhaps in the $4.5-to-$5.5 million-dollar range.  If the team gets the zoning change, the value of the site will increase and create an instant potential for profit by reselling parts or all of the 80-acre parcel.  Presently, the developer-contractor proposal asks City Council to approve a zoning change which gives away great value and to accept plans subject to change and promises liable to breakage in return.  In the end, the city not only may not benefit, but also may lose in many economic, social, and cultural ways. 

There is an alternative.  The city can do what it should have done long ago: purchase the site, change the zoning, and make the sale of parts or all of the site contingent on binding conditions on design and development.  The city would lose little, if any, money, and might even make some; and would ensure that the site not only serves private-sector interests, but also ensures public-sector interests.

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