Pebble Labs Corporate Counsel Michelle Henrie addresses Los Alamos County Council members during their Tuesday meeting. Photo by Maire O’Neill/losalamosreporter.com

Los Alamos Council Chambers were filled Tuesday evening with employees and family members of Pebble Labs and New Mexico Consortium personnel. Photo by Maire O’Neill/losalamosreporter.com 

BY MAIRE O’NEILL
maire@losalamosreporter.com

There was palpable excitement in Los Alamos County Council chambers Tuesday night as a room full of Pebble Labs USA representatives and staff awaited the Council’s vote on two related ordinances.

The ordinances pertain to first ordinance pertains to support for Pebble Labs under the Local Economic Development Act (LEDA) and the issuance of an industrial revenue bond to help finance the project. The Act allows local governments to enter into public-private partnerships for economic benefit.

While presenting an overview of the two agenda items, Council Chair Sara Scott said Pebble Labs, a spin-off from New Mexico Consortium, would like to remain in Los Alamos County and invest some $60 million in expansion.

Scott first noted what the County is being asked to give under the partnership.

“We are being asked to give an estimated $1.5 million in Los Alamos County property, an estimated $3.5 million over 20 years in property tax abatement and some gross receipts tax abatement,” she said. “An estimated $2.4 million of GRT on equipment-type purchases over 20 years will be abated, however it’s anticipated that most of this would occur outside Los Alamos County.”

Scott said the contractual agreement with Pebble is that 120 jobs at an average salary of $80,000 over 10 years would be added to their payroll for an estimated $10 million payroll increase.

“The total estimated payroll over 10 years would be $150 million. This will have direct and indirect impacts which will include expenditures within the County that benefit our businesses and generate GRT. Another thing the County will get is an estimated $1.1 million in GRT from construction activities over the next five years. Additionally $3.5 million to our schools and to UNM-LA over the next 20 years,” she said.

She said without the proposed investment in the property, at the current valuation the schools and UNM-LA would receive approximately $50,000 a year for 20 years but that the development of the property would mean some  $1.5 million net increase in funds for Los Alamos Public Schools and UNM-LA.

“After 20 years of tax abatement is finished, because of the property tax increase, about $200,000 would go to the schools as opposed to the $50,000 they’re currently receiving,” Scott said.

She said the worst case scenario for the sake of discussion would be if the grant was to be tied up pending resolution of some legal proceeding such as bankruptcy but noted that if that were to occur, the positive impact of the project for the community would be lost.

“The risk of not doing the project is there is no investment in the expansion of the existing site – the New Mexico Consortium doesn’t expand because there are no revenues from the sale of this site to accomplish expansion at a new site and potentially Pebble Labs seeks ways to do their growth elsewhere,” Scott said.

County Manager Harry Burgess said it struck him that unlike many other economic development projects he has been involved with in the past, the County should all appreciate the fact that under consideration was assistance for a prior LEDA grant.

“In this case we had a LEDA grant establishing the New Mexico Consortium. Then they came back to us before the end of their agreement to ask us to consider a subsequent agreement for one of their spinoffs to purchase additional land as well as what they started in. That’s kind of unique,” he said.

He said often when an economic development project comes back for discussion it is unfortunately because of some failure.

“This is exactly the opposite. It’s a great success on the first try and we hope to duplicate that again on the same property a second time with some additions that you will be considering tonight,” Burgess said. “I think you should all be proud of the County’s initial investment. I know that that has brought Pebble here to the community and they wish to stay. That’s the important thing we need to be cognizant of and your consideration this evening could enable that very action.”

County Economic Development Administrator Joan Ahlers said she believes the Pebble Labs LEDA application is a success story for the County.

“This follow-up LEDA application is actually what we want to have happen with our LEDA grants. Pebble Labs currently has 44 employees and plans to grow by 125 new employees through their growth by the LEDA grant and the proposed industrial revenue bonds,” she said.

Ahlers explained that in order to accommodate their growth, New Mexico Consortium and Pebble Labs jointly approached the County and asked about the 6.23 acres at the end of Entrada Drive saying they would like to potentially build a corporate campus there. The proposed project involves purchasing the existing NMC biolab acre of land privately held and the donation of a piece of County land so that they can develop a new additional laboratory facility. The County land involved is Lot 2B of Entrada Business Park and a newly-created 14,286 square-foot proposed Lot 1-C with a combined appraised value of $1,406,500.

Ahlers noted that the County land would only be released to Pebble Labs upon entering into a Project Participation Agreement (PPA) with the County. She said Pebble Labs would have to close on and possess title for the privately held parcels within the project prior to the County land being deeded to Pebble Labs. The company would have to request and be issued a building permit for new construction for the new bio lab within 24 months of the effective date of the PPA or the land would go back to the County.

Under the agreement, Pebble Labs would issue the County a financial guarantee for the balance of the grant amount in decreasing value for the 10 year period of the PPA. Once the land is deeded to Pebble Labs, the County is no longer in control of it.

“The only mechanism that we have to make sure that they’re going to bring the jobs that they say they’re going to bring and make the $60 million investment is via some kind of financial guarantee which will decrease every year that they fulfill their obligation within the grant,” Ahlers said.

The agreement is that Pebble Labs will invest $60 million over the course of the 10 years in private property acquisition, capital improvements, new construction, working capital, infrastructure and equipment.

New Mexico Consortium Chief Executive Officer Dr. Steven Buelow told the Council that Pebble Labs is researching ways to eliminate pesticides in crops, antibiotics in seafood and to eradicate Zika Virus and other vector borne diseases around the world. He said the proposed expansion will include room for more greenhouses field trials and a parking structure for new employees who will work at the buildings that are being constructed for the expansion.

Buelow said initial research at the facility focused on energy and biofuels.

“Since then the portfolio has broadened considerably and includes enhanced crop production, crop protection, aquaculture and pharmaceuticals and the development of new antibody libraries. The usefulness of the biolab as an incubator for start-up companies has far exceeded expectations. Today the biolab is operating at full capacity and New Mexico Consortium has no room to grow. To move forward the Consortium plans to sell the biolab to Pebble Labs USA,” he said.

Buelow said the success of the biolab has been due to the support and cooperation of Los Alamos County Council, Los Alamos County Administration and staff, and Los Alamos National Laboratory. He said the biolab would not have been built without the efforts and determination of Katharine Chartrand, the previous co-founder and executive director who led the Consortium for seven years, who passed away in February.

“I wish she was here tonight to continue the successful fulfillment of her efforts. Katharine had a passion for economic development in Los Alamos,” Buelow said.

He said the resources the County invested in the biolab back in 2011 will continue to work for the County. He said The Consortium will recover the initial investment and support the construction by Los Alamos Commerce and Development of a new larger facility to be located at Los Alamos Research Park.

John Bloodworth, Chief Operating Officer at Pebble Labs said the company could not have achieved the growth they have without the support of the New Mexico Consortium. He said the Consortium provided a deep mix of administration, facilities, equipment and proximity to intellectual capital which made it a very compelling proposition so that Pebble Labs could begin to assimilate the talent they wanted.

Bloodworth said Chief Dr. Richard Sayre has developed together with the Pebble team a platform science using RNA interference that they believe is very robust.

“It can be applied across a number of different market segments. So we’re fighting pathogens for crop protection, we’re fighting pathogens in aquaculture, in salmon and shrimp farming and in vector diseases,” Bloodworth said. “It’s a very broad platform and it’s going to require a significant business acumen to be able to pull off monetizing or commercializing those things.”

Council unanimously approved the LEDA support ordinance and agreed to changes to the ordinance which would authorize the sale of the industrial revenue bonds in the amount of $60 million. A special session of the Council has been set for June 19 at 2:30 p.m. to adopt the IRB ordinance itself.

Los Alamos County Economic Development Administrator Joanie Ahlers speaks with John Garcia, Executive Director of the Homebuilders Association following Tuesday’s County Council meeting. Photo by Maire O’Neill/losalamosreporter.com

Clearly pleased with the outcome of Tuesday evening’s Los Alamos County Council meeting, New Mexico Consortium CEO Dr. Steven Buelow, left, chats with Pebble Labs officials at the Municipal Building following the meeting. Photo by Maire O’Neill/losalamosreporter.com