BY PETE SHEEHEY
Los Alamos County Council Vice Chair
The New Mexico Local Economic Development Act (LEDA) allows public-private partnerships that make possible community economic opportunities that would not otherwise happen, or would take much longer to get started. LEDA support for a hotel-conference center on 20th Street, proposed at the August 27 Council meeting, prompted significant and appreciated public comment. Opinions fell into three categories: support, to fill a long need for hotel rooms and meeting space that will boost the local economy; opposition, on the grounds that it is unnecessary and/or unfair to offer this land to the developer (or that the deal does not provide a good enough return to the county); and simple concern that this project has not been sufficiently vetted in the community.
After Council discussion, we voted unanimously to continue the item until the October 1 meeting. More information is being made publicly available (see the County website https://losalamosnm.us/government/projects/economic_development_projects_/20th_st_hotel_conference_ctr . Staff and Councilors have met with the developers, to obtain more information, and discuss possible amendments to the deal.
This article will discuss how the county under LEDA must evaluate such a proposal, and present the relevant facts. Transparency in this process is vital. With some changes, I believe a win-win deal is possible: a good private investment and a fair return for our community.
The single biggest thing the developer could do to indicate their commitment to the community would be to extend the term of the LEDA agreement beyond ten years. In that way, whatever the exact yearly savings or benefits to the county are, they are increased by the larger number of years, so that our initial investment is more clearly justified. Provisions that would allow a local business to operate on (and potentially own) lot 5C on Trinity would also underscore the developer’s understanding of our community goals.
Los Alamos County Ordinance Number 543 (June 9, 2009) implements LEDA for the county, with objectives including economic diversification, expansion of the tax base, increased job opportunities, redevelopment of unused space, and enhancing the ability to keep business in the county. Approval of such partnerships must be based upon local economic development plans, cost-benefit analysis (public benefit should outweigh cost), and a commitment of the private partner to the goals of the community. An important feature of all such agreements is the “claw-back” provision: if a company fails to live up to its investment and job obligations, the county get its money back. Los Alamos has had success with LEDA projects, such as one that helped the New Mexico Consortium get started, and a more recent LEDA with Pebble Labs, a spinoff company, which should bring $60 million in new lab/office space and more than 100 new technical jobs.
A conference center, preferably integrated with a hotel, has long been considered an important way to boost the local economy. A 2012 Study (https://losalamosnm.us/UserFiles/Servers/Server_6435726/File/Government/Projects/Economic%20Dev.%20Projects/TNJLA/SAG_ConferenceCenter_MarketStudy_Jan2012.pdf ) consulted with LANL (which indicated at least 60 additional meetings per year could be kept local rather than going off the hill) and other potential users. The study made the case that a hotel-conference center would add 14,000 room-night stays per year, adding $2.7 million per year into the local economy. However, adding the then-proposed 134-room hotel to the existing supply of hotel rooms (including 80 at the Hilltop House) would have potentially put one or more local hotels out of business, due to oversupply. In the event one or more then-existing hotels closed, the study predicted that the new proposed hotel-conference center would benefit the local economy overall.
Los Alamos Commerce and Development Corporation had a similar study done in 2017. (https://losalamosnm.us/UserFiles/Servers/Server_6435726/File/Government/Projects/Economic%20Dev.%20Projects/TNJLA/HVS_MarketStudy_FINAL_103017.pdf ). With the closing of Hilltop House and the upswing in the Lab budget and overall economy of the last 5 years, this study concludes that an extended-stay 100-room hotel and conference center would have good occupancy without substantially reducing existing hotels’ occupancy. The additional room rentals (some of which would go to existing hotels) and economic activity (catering, restaurants, services) noted in the previous study would now clearly benefit the whole community.
The clarified preliminary site plan on the county’s website https://losalamosnm.us/UserFiles/Servers/Server_6435726/File/Government/Projects/Economic%20Dev.%20Projects/TNJLA/LosAlamos_TownePlace_Suites_Proposed_Site_Map.pdf describes a 250- to 300-person conference facility, with parking as required by county code. The developer and county agree that more parking is desirable. Both the developer and the county are pursuing additional parking nearby; land is available within a 5-minute walk. The Comfort Inn on Trinity, which would expect to accommodate conference attendees who won’t fit in the 86-room conference hotel, is also a 5-minute walk away. Lab employees participating in meetings can utilize our excellent and free Atomic City Transit to avoid the need for a parking space.
An updated proposed LEDA Return on Investment page is provided on the county website https://losalamosnm.us/UserFiles/Servers/Server_6435726/File/Government/Projects/Economic%20Dev.%20Projects/TNJLA/ROI_for_LEDA_on_20th.pdf ). There is the developer’s $10 million capital investment in Los Alamos, accompanied by yearly additional property tax, GRT, and Lodgers Tax payments, and 17 jobs paying an estimated $465,000 per year. One could question exactly how much additional yearly revenue these provide the county, compared to what other potential buyers of this property would pay. What I see as the major return to the county for our $1.8 million land contribution is the building of the convention center, which would cost the county at least $2 million, and its operation for at least 10 years, which would cost the county as much as $200,000 per year ($2 million over 10 years). A longer term should be negotiated, which will make the payoff to the county of taxes and avoided yearly operating expenses higher.