Clovis’ city commission approved a $1.4 million loan commitment letter to develop Hotel Clovis into a residential property, but not without concerns.
The approved letter shows the city is committed to extending a loan to Tierra Realty Trust LLC for development of the downtown building.
Approved 6-2, commissioners Juan Garza and Randy Crowder gave the dissenting votes.
Though the letter expresses commitment, the loan is subject to the commission approving final loan documentation and the developer must use the loan solely on the project, according to the resolution passed during a regular meeting Thursday night.
Under terms of the proposed loan, the developer would repay the loan over 15 years at a rate of up to 4 percent, city attorney Dave Richards said.
Richards said tax breaks received by the developer didn’t generate the expected revenue needed for the project and the developer, working against a Nov. 15 deadline to submit a financial plan to the New Mexico Finance Authority, needs the city’s commitment to move forward on the project.
“It’s a commitment letter; we’re not voting tonight to give a $1.4 million loan,” Commissioner Fred Van Soelen said, expressing he has reservations but recognizes the letter is needed to move the project forward and there is still time to examine the issue.
Mayor Gayla Brumfield said with the city on the cusp of enacting an affordable housing plan that would allow state and federal grants to be obtained for projects like the hotel, the loan terms could be significantly reduced by an infusion of grant money.
The plan should be completed in the next three to four months, at which time the loan could be restructured, she said.
The project, estimated at $13 million, would create more than 60 residences inside the building, Brumfield said, and almost 30 around the hotel.
“It’s an amazing plan for downtown Clovis and it would also address some of our affordable housing needs,” she said. “This is a $13 million project that’s coming into our community.
Crowder said he had evaluated the plan and proposed loan and could not make himself agree.
“I simply cannot get comfortable with this proposal. Why should eight commissioners with no background in financing loan $1.4 million of taxpayer money?” he said.
“The city is deciding to go into the grant loan business and I’m not sure that’s a business we want to be in.”
Crowder said he also had issue with the fact the loan would be paid from the city’s workman’s compensation reserve fund.
“I don’t want to encumber workman’s comp funds,” he said, making the comparison of the federal government creating shortfalls in the Social Security fund by using it for other things.
“I still think the developer has an opportunity to go back into the private market (and pursue loan opportunities),” he said.
Van Soelen said he, too, thinks the proposal has hurdles to overcome and said he wants the developer to meet the commission and participate in discussions prior to a loan being approved.
Commissioner Bobby Sandoval agreed he wants to see the issue studied further before a loan is granted.
“I still have a few questions myself,” he said. “But if we don’t do this tonight we’re going to lose every bit of (the planning that has been done and project’s potential).”
In other business commissioners:
• Approved recommendations of the revenue review committee, raising rates for some city services. City departments increasing rates included the airport, parks and recreation, building safety and public works.
Commissioners voted 7-1 in favor, despite objections from residents who said the increases hurt residents and will increase rent costs over increases to solid waste rate increases.
Effective April 1, solid waste pickup rates for residents will go to $33.12 every quarter, an increase of $1.54 per month. Residents will also be charged $3 for using the landfill where there was no fee before and large loads will be charged a $30 per-ton “tipping fee,” up from $26.
• Presented a sign recognizing Citizen’s Bank for a $15,000 donation that assisted the city in purchasing a male giraffe for the zoo. The sign will be mounted near the giraffe pen at the zoo, according to Bill Bizzell, parks director.
• Announced the hiring of Margaret Hinchee as Clovis-Carver Library Director.
Hinchee will begin Nov. 15.