Developer to delay Belen interchange work
Thursday, February 18, 2010, 10:14am
Coast Range Investments, the company developing Rancho Cielo west of Los Chavez, said during a meeting with Belen business owners yesterday that the company won’t commit money to finishing improvements to the North Belen interchange that was expected to provide access to the west side of Interstate 25.
The project has been in question since last week when Sen. Michael Sanchez included it on a list of projects that could be cut by the state. On Tuesday, Sanchez said he took that action to show the developer isn’t living up to its promise to pay for a portion of the interchange reconstruction.
The interchange project is estimated to cost approximately $7 million. The governor, through the City of Belen and the New Mexico Department of Transportation (NMDOT), contributed $3 million in capital outlay funding, money that will be spent, according to Sanchez and NMDOT officials.
The Rancho Cielo developer “pledged” it would pay the remainder, approximately $4 million, according to Jim Wood, executive vice president for Coast Range Investments. He said his company is taking a position that it has no contractual obligation to provide that $4 million to the project.
“We entered into a third-party agreement with the city and NMDOT for the development of the North Belen interchange. This three-party agreement was from our end, as documented by our attorneys, dependent on Signet Solar being approved by the DOE.”
Signet Solar, a solar technology manufacturer, has been expected to locate in Belen but was denied a United States Department of Energy (DOE) loan guarantee to help with financing the construction of a plant. Wood said his company won’t contribute the money to the North Belen interchange reconstruction unless he has a “user” in place, something like Signet Solar.
The denial of the federal loan guarantee is now undergoing a DOE appeal process some say could take nine months to a year to complete.
Andrew DiCamillo, the City of Belen Planning and Zoning Department director, said the city interprets the contract differently, with Coast Range Investments being contractually obligated to put forward its $4 million to finish the interchange regardless of whether or not there’s a “user.”
Wood said the interchange project was postponed last year because it took so long to get an answer on Signet Solar’s loan guarantee. He said his company is again delaying the interchange project, this time because of the denial of the loan guarantee.
“The city feels a little cheated, in certain respects, that the project has been carried this far and now we’re going to have a postponement,” DiCamillo said.
Wood suggested Coast Range Investments has the $4 million but can’t contribute it.
“Paying the last $4 million would have seriously depleted our funds – we’ve already invested over $40 million – and limited our viability to work with other people. We are pledged to complete the interchange,” Wood said, calling the postponement a “corporate decision.”
Mary Aragon, a candidate running for a seat on the Belen City Council, questioned why the attorneys with NMDOT and the City of Belen didn’t find it odd that construction would start on the interchange without Coast Range Investments contractually committing its money to the project.
“It seems like they’re not acting in good faith at all. You have to have your money there,” she said.
NMDOT said it’s terminating the construction contract for the interchange project to avoid financial or legal problems.
“We’re in the process right now of terminating the contract with A.S. Horner pending a funding source, whoever it may be, whether it comes from a private developer or not,” Plese said, noting it’s the first time he’s ever had to terminate a construction contract.
If the contract isn’t canceled now, the state could get stuck with paying into the project more than it has available for it.
“We can’t continue this job because we don’t have the money to complete it as designed,” Plese said.
Because construction of the interchange is already underway, utilizing the state’s contribution of $3 million, Plese said a postponement could increase the total cost of the project by a million or more dollars, partly because the construction crew and its equipment will vacate the construction site.
Wood said despite the delay Coast Range Investments isn’t going away. It’s invested $40 million in Rancho Cielo already, buying land, securing water rights and engineering the master-planned development. He called Rancho Cielo a 25-year project.
“We are not walking away from our phase of the interchange,” Wood said, adding, “Never in our history since 1991 have we walked away from a project. We’ve completed them all.”
Belen business owners at the meeting we’re unhappy about the situation.
“What I’m hearing today, and I’m not happy about it, is we’re not going to get our interchange because of the private funding and attorneys,” said Neil Hise, who owns CEMCO Inc. near the North Belen interchange.
As a businessman, Hise said he understands why a company might not want to spend more money on a project that’s not yet profitable. He was also “pissed off” with NMDOT for sounding like it doesn’t want to continue the project.
Another business owner near the North Belen interchange was also disappointed by the direction of the project.
“You are dead in the water without that interchange,” Bruce Prater, who owns the Graphic Arts Station, told Wood, adding, “Without the interchange, you can’t get into your property. I feel like we’re being held hostage right now as the negotiations go on, because without the interchange we’re dead.”
Meanwhile, with the legislative session ending today, the fight over capital outlay and other state funding for Rancho Cielo continues. As of yesterday, it appeared all attempts to cut funding for the development had been stopped by reps. Andrew Barreras and Elias Barela.
