Hoteliers get provisional 20-year lease to operate Garrett’s Desert Inn
The hoteliers group 311 Old Santa Fe LLC was provisionally awarded a 20-year lease this week to operate the downtown Garrett’s Desert Inn, the State Land Office announced Friday.
To seal the deal, the group, which includes former Santa Fe Fire Chief Barbara Salas, must obtain a $250,000 performance bond, or show evidence it can do so, said State Land Commissioner Aubrey Dunn, whose office is headquartered across the street from the inn. He expects to see the bond by the end of next week, he said.
“It shouldn’t be an issue,” Dunn said. “We just want to be doubly sure.”
A previous bid for the lease was accepted and then canceled in December when the partnering bidders, GreenTree Hospitality and Peak Hospitality, failed to obtain a performance bond. The lease contract was advertised again in February.
Dunn said the 311 group’s financial details showed it was positioned, on paper, at least, to obtain the bond. Company financial information on all three bidders was withheld from information provided The New Mexican in response to a public records request. To qualify, each bidding group had to attest to a net worth or creditworthiness of at least $20 million.
Salas did not return messages Friday seeking comment. Her group, composed of Amisha Bhakta, Minaxi Patel, Veena Bhakta, Tapas Bhakta and Pintu Patel, operate three properties in Santa Fe — Comfort Inn, Comfort Suites and EconoLodge Inn & Suites — and two properties in Phoenix and El Paso.
Theirs was the financially strongest of three new bids opened in April. The 311 group calculated it would generate $12.03 million over 20 years for the State Land Office, money that would flow to the University of New Mexico.
The State Land Office acquired the 83-room hotel at 311 Old Santa Fe Trail in 2016 in a swap with Cochiti Pueblo for 9,400 acres considered sacred to the tribe. The property formerly was the home of the Dixon Apple Orchard near Cochiti, which was destroyed by a fire and flooding. Money from the orchard property had benefited UNM, but the land office believed the deal with Cochiti would lead to greater revenues for the university.
The 311 bid offered $300,000 annually in lease payments, or $75,000 more than the minimum set in the request for proposals; a signing bonus of $311,000 — $10,000 more than the minimum; and 5.25 percent of annual gross revenues to the State Land Office, while the minimum required was 1 percent.
The request for proposals also stipulated a 2 percent annual increase in lease payments after the first year.
311 Old Santa Fe also offered a greater share of the lease payments from the hotel tenant, Santa Fe Bite restaurant, than the two competing bidding groups.
The 311 group, in its proposal, explained that it has extensive experience transforming “dated and/or underperforming hotels into high-performing modern operations.” Every room will be “gutted and remodeled” in phases, with work to start in October and finish within a year, according to the proposal.
The 311 proposal also includes an exterior remodel and a name change. The group’s vision “is to create a boutique hotel with a reputation as one of the best in the Santa Fe Plaza area.”
Dunn said the review committee recommended the 311 bid, which by 311 calculations would produce $11.3 million in 20 years, apart from the $311,000 bonus.
“Their bid was financially superior,” Dunn said.
That was a bid from Los Poblanos Hospitality Santa Fe LLC, represented by brothers Matthew and Jay Rembe of Albuquerque. Their bid proposed an ambitious remodel of Garrett’s and an operation that resembled their family’s Los Poblanos Historic Inn & Organic Farm in Albuquerque.
Matthew Rembe estimated spending $7 million to remodel the property; the 311 Old Santa Fe proposal estimated spending $3 million.
Los Poblanos “had a somewhat more attractive package as far as what they were going to do with the property,” Dunn said, “and had their bid been financially closer, we might have gone with their bid.”
Los Poblanos bid an annual lease amount of $225,000, with a signing bonus of $50,000 and 1 percent of gross revenues annually to the State Land Office.
Matthew Rembe said he had hoped his group would meet with the bid review committee to further explain its proposal, but said he wished the 311 group well.
“We were a little perplexed by the process,” he said. “Not having the opportunity to propose the project in person was definitely disappointing.
“If [the 311 bid] is going to yield the most success for UNM, we can only wish them the best of luck.”
The third bid was submitted by Santa Fe Desert Inn LLC, a group led by Paul Margetson, managing partner of Hotel Santa Fe, and included his wife, Ashley Margetson, and Picuris Pueblo. Margetson bid an annual lease of $225,000, with a $25,000 bonus and 1.5 percent of gross revenues. He said the bid would yield $7.5 million over 20 years, but he also offered to add 10 percent of net profit annually to the land office share as early as two years after renovating the hotel.
“Yes, I am disappointed, but I got outbid,” Margetson said Friday. “It came down to the money. It wasn’t a question of talent or knowledge or experience. The bottom line was the cash return.”