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Rio Rancho Governing Body members have decided to host work sessions review city area plans and any recommended changes.
They reached that consensus after a presentation by Councilor Chuck Wilkins at their meeting Wednesday at City Hall.
Rio Rancho has 13 area plans that give specifics as to land use, access management (meaning roads) and facility design standards for certain parts of the city.
Wilkins said strict design standards in area plans make lessened regulation in the zoning ordinance symbolic instead of practical.
Everywhere likely to develop in the next 10 or 20 years has an area plan, he said.
“Planning is essential for our city, but we can do it more efficiently with less confusion,” Wilkins said.
Land use and access management guidelines are good, he said, but stricter standards aren’t. Even some access management rules need fixing, Wilkins said.
The city has a lot of plans for developers to figure out before they can start work, he said, and having two sets of rules can lead to misinterpretation.
Wilkins proposes to fix or remove design standards in most area plans. He’d prefer to move land use and access management guidelines to the city comprehensive plan and get rid of most, though not all, area plans.
He said the zoning ordinance should set design standards.
“I don’t think the whole city should look like Loma Colorado or Cabezon,” he said. “Some areas need to, and there’s nothing wrong with them, but there’s people that don’t like that.”
Repealing area plans would allow Rio Rancho to get ahead of Albuquerque and be more business-friendly, he said.
Wilkins proposed reviewing one area plan a month, starting after the election in March.
NAIOP Commercial Real Estate Development Association New Mexico Chapter President Lynne Andersen asked the governing body not to follow in Albuquerque’s footsteps. Some sites there have up to seven sector plans, akin to Rio Rancho’s area plans, overlapping, she said.
“It is total confusion,” Andersen said. “It is frustrating.”
Such arrangements are a way to stop growth, she continued. Rio Rancho only has 13 area plans, Andersen said, but the second layer of regulations makes development harder.
“I would just like you to look at these very closely because they do create a hurdle to economic development,” she said.
Mayor Tom Swisstack said the city must be doing something right since it has received recognition from top journals as one of the best places to live in the nation. He suggested holding work sessions to lay out a baseline of concerns so the governing body didn’t have to handle every line.
Councilor Tamara Gutierrez said she agreed with holding a work session, but hadn’t agreed with getting rid of area plans. Some plans were created with input from area residents, she added.
Gutierrez said she wanted the business community involved.
“We’re not trying to make that investment outrageous for them,” she said.
Area plans aim to protect someone doing quality development from someone who isn’t, she continued.
The governing body agreed to accept Swisstack’s suggestion.
They didn’t decide on the composition of the group to be involved in the work sessions.
By: Argen Duncan (Rio Rancho Observer)
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The Albuquerque metro area’s economy continues to play out in the commercial real estate market, reflecting in bricks and mortar the challenge of rebuilding the labor force while pink slips continue to be handed out.

The 323,541-square-foot Albuquerque Office Park, shown here, originally built for federal contractor BDM and most recently Presbyterian Healthcare Services headquarters, is now for sale at an asking price of $28.74 a square foot. (Courtesy of Joel White)
The vacancy rate for offices ended the year at 19.3 percent, up from 18.9 percent in the fourth quarter of 2012 but down from 19.6 percent in the preceding third quarter, according the latest market data from Colliers International.
The office market, which had an average vacancy rate of 12.3 percent in 2005-08, tends to thrive or dive with the job market.
The vacancy rate for industrial real estate such as warehouses and R&D buildings ended the year at 9.3 percent, down from both 10.3 percent in the fourth quarter of 2012 and 9.9 percent in the preceding third quarter, Colliers reported. The industrial market’s average vacancy rate was 7.8 percent in 2005-08.
The retail real-estate market appears to have fully recovered, sporting its lowest vacancy rate in six years at 7.6 percent in the fourth quarter.
According to the Chicago-based CCIM Institute’s Quarterly Market Trends report for the fourth quarter, the average vacancy rates nationwide were 15.6 percent for office, 9.2 percent for industrial and 10.4 percent for retail.
Compared to signs of a national economic recovery, the turnaround in Albuquerque’s economy appears hesitant, which is particularly evident in the office market. The local office vacancy rate approached 4 percentage points higher than the national average at year end.
“There are silver linings to everything and we can try to be optimistic, but the improvement we expect to see in 2014 is not going to be substantial,” said John Ransom, managing director of Colliers’ Albuquerque office.
“We’ve been fortunate but too reliant on the government for jobs,” he said. “The question is what’s going to be the next spark (in the local economy)?”
In addition, commercial real-estate brokers point to the fact that Albuquerque has a lot of old, obsolete office, industrial and retail properties that nobody wants to rent – at least not without an infusion of renovation money. Those properties prop up vacancy rates.
“It’s not that we’re overbuilt, but under-demolished,” Ransom said.
The month-over-month improvement in the office vacancy rate during the fourth quarter was based largely on one large deal, Blue Cross and Blue Shield of New Mexico’s expansion into 84,724 square feet at The 25 Way, said Ken Schaefer, director of brokerage services at Colliers’ Albuquerque office.
The 25 Way mixed-use business park is in the Albuquerque’s strongest and biggest office submarket, the North I-25 corridor which straddles Interstate 25 north of the Big I. The vacancy rate was 14.2 percent at year end, down from 18.5 percent in the fourth quarter of 2012, according to Colliers.
“The North I-25 (corridor) has the newer product – more energy efficient buildings, fiber (optics) and ample parking – with good access from both sides of the river,” said Terri Dettweiler of commercial real estate services firm CBRE.
The North I-25′s popularity reflects a continuing trend in the office market for companies to house more employees in less space, thus saving on the overhead costs of leasing, she said. As a result, contemporary buildings designed with open layouts, suitable for so-called “cube farms,” see more demand.
The Downtown office submarket is a different story. The year-end vacancy rate was 29 percent at year end, an improvement over 32.2 percent in the third quarter when Albuquerque had the distinction of having the highest office vacancy rate of any city’s central business district in the country.
“The problem is not Downtown being Downtown,” said Tom Jenkins of Real Estate Advisors. “The problem is the aging inventory.”
Improving the Downtown office market will take more than building more parking garages, he said. Many of the office buildings are basically tired and in need of upgrades to infrastructure like heating and cooling systems and elevators, he said.
Overall in the office market in the fourth quarter, Schaefer said leasing activity was “a mixed bag with positives outweighing the negatives. Growing deal activity is setting up the next two quarters for positive absorption (of vacant space).”
In the third quarter, however, the office market could take a big hit when Presbyterian Healthcare Services vacates most of its 323,541 square feet of leased space at the Albuquerque Office Complex near the airport. Presbyterian is moving to a corporate-owned headquarters near Balloon Fiesta Park.
That big of a vacancy hitting the market could push up the office vacancy rate by 2.3 percentage points, Colliers has said. While leased space is tracked as part of the office market inventory, owner-occupied buildings like Presbyterian’s new headquarters are not.
Originally built for a predecessor firm of Northrop Grumman in 1980-88, the four-building Albuquerque Office Complex is not currently being marketed for lease. A team of brokers at Sperry Van Ness/Walt Arnold Commercial Brokerage has listed it for sale at an asking price of $9.3 million.
Improvement in the industrial vacancy rate is based less on positive moves in the market, as in empty space filling up, and more on fewer negative moves from downsizings and closings, said Jim Smith of CBRE.
“Space vacated in 2013 – about 1 million square feet – was half the space vacated in 2009,” he said. “What that says, especially for a smaller market (like Albuquerque) with not a lot of business growth, is most businesses that decided to downsize have done so.”
An uptick in construction activity, most of it in multifamily and retail projects, has given the industrial market some buoyancy, Schaefer said. Construction-related businesses, including contractors and suppliers, have traditionally been a major user of warehouse space in the metro.
The metro’s construction sector gained back lost jobs for much of 2013, but the preliminary count of 19,900 jobs as of November is still well below the peak of 31,700 in mid 2007, according to state labor data.
By: Richard Metcalf (Albuquerque Journal)
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On Jan. 16, 2014, NAR joined with a group of 18 other real estate associations in sending a comment letter to Senate Finance Committee Chairman Max Baucus (D-MT) regarding a staff discussion draft released by the Committee on Nov. 21, 2013.  The discussion draft, one of a series of such drafts that set forth possible options for tax reform, was focused on cost recovery and tax accounting issues.
The Finance Committee draft included several proposals that would, if enacted, have serious negative effects on the investment in and ownership of commercial real estate.  These include proposals to:
Increase the depreciable life of all real property to 43 years (the current tax law provides a depreciable life of 39 years for non-residential property, 27.5 years for residential property, and 15 years for qualified leasehold improvements*).
Repeal the provisions in section 1031 of the Internal Revenue Code, which allow owners of real property to exchange it for like-kind property on a tax-deferred basis.
Change the tax rate of gain on sale of real property that represents depreciation recapture from the current-law rate of 25 percent to ordinary income tax rates.
In short, the letter argues that the Committee’s cost recovery and accounting tax reform discussion draft could have a severe, widespread, and chilling effect on U.S. real estate activity.  By creating an arbitrary and discriminatory cost recovery system that is disconnected from the economic life of actual structures, the proposed reforms would reduce real estate investment and development, result in lower real estate values, and stifle the real estate industry’s ability to continue creating new jobs as the economic recovery picks up steam.
The following is a summary of the 17-page comment letter:
The letter focuses on four main elements of the tax reform proposal:  (1) the extension of the cost recovery period to 43 years for all real property; (2) the repeal of like-kind exchange rules; (3) the increase in the tax rate on recaptured depreciation; and (4) the retroactive application of all three of these proposals to preexisting investments.
We see a strong a parallel with the unintended consequences that the sweeping reforms enacted in the Tax Reform Act of 1986 had on real estate in the late 1980s and early 1990s, when retroactive tax changes ushered in a real estate depression and led to the taxpayer bailout of savings and loan institutions.  In many respects, the proposals in the discussion draft go beyond the prior reforms by raising taxes on sound and economically motivated real estate transactions.
First, modernizing cost recovery rules to accurately measure business income would require reducing, not lengthening, the depreciation schedules for real property.  Today’s depreciation system is less favorable for real property investment than at any time in the last 40 years.  Unfortunately, the depreciation estimates underlying the discussion draft rely on outdated studies from the 1960s and 1970s.  Recent research by a broad range of economists, academics, and government agencies has shown how technological change, transformations in the workplace, and other factors affect the useful life of structures.  Without constant capital improvements, buildings become obsolete faster than ever.
Second, the deferral of gain on like-kind exchanges is a bedrock principle of tax policy and the statutory rule is nearly as old as the income tax itself.  Rather than raising revenue, the proposal in the discussion draft to repeal like-kind exchange rules would have the undesired effect of “locking up” real estate assets in the hands of current owners.  It would deter the transfer of real estate to owners with the resources to invest in job-creating building upgrades and improvements, undermine land conservation efforts, and deprive states and localities of much-needed tax revenue.
Third, by treating all recaptured depreciation in real estate transactions as ordinary income, the discussion draft would raise the tax rate nearly 60 percent on a significant share of the income from real estate transactions.  The proposal would reverse the longstanding Congressional policy of applying different depreciation recapture rules to long-lived, capital-intensive real estate assets, where gain is more likely to reflect inflation than excessive depreciation.
Fourth, in applying all of these provisions to preexisting real estate investments, the discussion draft would penalize taxpayers who relied on well-established tax rules when committing their capital and sweat equity to a long-term investment.  The retroactive application would undermine confidence in the tax system and raise doubts about future “rules of the road” for capital-intensive property investments.
The signatories are also concerned  with the proposed repeal of the energy-efficient commercial buildings deduction, section 179D, which helps address a failure of the market to accurately take into account the value of energy-efficiency improvements to commercial buildings.
We recognize that the discussion draft is a first effort, the issues are complex, and the tradeoffs are significant.  As mentioned, we are very grateful for the transparent and open process the Committee has created.  With the right tax and regulatory policies—reforms that treat the industry consistently with other types of businesses, assure predictability for long-term investment, recognize the economically useful life of assets, and encourage capital formation—we believe real estate could create millions of new, middle-class jobs while also contributing to a more efficient and productive domestic economy and workforce.
The comments represent the collective and unified views of the real estate industry on the issues and proposals raised in the draft, and the letter has been signed by 19 real estate-related trade associations.  The signatories include:
The Real Estate Roundtable
American Institute of Architects
American Land Title Association
American Resort Development Association
Appraisal Institute
Associated General Contractors of America
Building Owners and Managers Association International
CCIM Institute
Institute of Real Estate Management
International Council of Shopping Centers
NAIOP, the Commercial Real Estate Development Association
National Apartment Association
National Association of Home Builders
National Association of Real Estate Investment Trusts
National Association of REALTORS®
National Multi Housing Council
Real Estate Board of New York
REALTORS® Land Institute
Society of Industrial and Office REALTORS®
(* The provision allowing a 15-year depreciation period for qualified leasehold improvements expired at the end of 2013.)
(National Association of REALTORS®)
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