A Marriott Towneplace Suites brochure included in the agenda packet for Tuesday’s Los Alamos County Council meeting. Courtesy image
BY MAIRE O’NEILL
Los Alamos County Councilors approved an ordinance Tuesday evening during their workshop session in White Rock adopting an economic development project for public support of TNJLA LLC. The vote was 5-2, with Councilors Randy Ryti and Antonio Maggiore voting no.
TNJLA will presumably now move forward on construction of a Marriott extended-stay hotel and a conference center at the 20th Street Extension off Diamond Drive. The proposed development was announced to the press Aug. 2 by Councilor David Izraelevitz, the same day the Council agenda for its Aug. 6 meeting which included the ordinance.
TNJLA applied for support under the County’s Economic Development Plan in compliance with the Local Economic Development Act (LEDA). Part of the agreement was that the County would turn over six lots to the company in return for TNJLA building and operating a conference center which would hold 300 people banquet-style. While local economic development and tourism advocates hailed the project as beneficial to the County and providing a conference center that would bring economic benefits to the County, there was community opposition to handing over the land, appraised at $1.8 million for the project to the developer. Some community members criticized the Council for lack of transparency and complained about the lack of background information released along with the initial agenda item.
At the Aug. 6 meeting, when it became obvious that the proposed ordinance would not have the support of the majority of the Council, the ordinance was tabled for some five weeks to allow the developer and the County to come up with an agreement that would be acceptable to more Council members. When the Council discussed the proposed changes Oct.1, the agreement was amended to indicate that TNJLA would operate the conference center for 15 years instead of the originally proposed 10 years
Jim Colson, a consultant for TNJLA, told the Council Tuesday that the ordinance process had allowed them to understand sensitivities that existed in the community and that the company has worked diligently to understand and respond.
“I think we have identified a pathway to move forward with confidence in this project,” he said.
He said the $1.8 million that has been identified as the value of the land is most appropriately matched to the $1.9 million approximately that it is going to cost to build the conference portion of the project. In addition to that, Colson said, there will be an additional $400,000 to $500,000 in annual operating costs for the conference center.
Colson said one of the issues that had been talked about a great length was parking and that not counting the parking spaces at Ashley Pond, the company now believes it can provide 226 parking spaces. He noted that TNJLA had patiently and diligently worked through a lot of issues on the project.
Council vice-chair Pete Sheehey said the initial introduction of the ordinance started out with very little information and he didn’t feel the community was informed enough about it to support it.
“There’s been a significant effort to get the information out. I have listened to the criticism that there will be undue impact on the existing hotels.,” Sheehey said adding that he felt a conference center and hotel downtown would stimulate the entire economy.
“If we have a conference for 200 people going on, this hotel can only accommodate 86 of them. That means the other hotels will pick up business, the restaurants in town will pick up business. By doing this deal we minimize the impact on the other hotels because this conference center will increase the number of people coming to town.,” he said.
Councilor David Izraelevitz said he appreciated the developer’s flexibility to add more certainty. He said he didn’t have the qualms other Councilors had about the project and was looking forward to many happy memories of events at the conference center.
Councilor Katrina Martin said in making the decision she felt it was important for Councilors to look at the potential risks versus the potential rewards. She noted the goals of the project included increasing tourism, developing a share of the market that isn’t currently filled right now by the existing facilities and also increased traffic to local businesses.
Councilor Scott said she wanted to take time to thank those who participated in all the strategic planning over the last 30 years.
“They used broad community perspectives and outreach that resulted in the recommendation of investment in the conference center to help support some local economic diversification in our town,” she said. “Most importantly it will help our existing businesses while encouraging new ones by getting more folks to stay here, shop here, visit here, and spend their money in our community. ”
She said the project complements progressive efforts to grow housing opportunities and make available additional parcels in the future for businesses.
“The benefits to the community are broad and longer term. It’s an opportunity to have a few more businesses in town. It’s an opportunity we have not been able to attain. We’ve not had an opportunity like this despite efforts to attract developers interested in building a conference center,” Scott said.
She said the release of this property which was in the right location, which was underutilized or not utilized for all intents and purposes is a good return on the County’s investment.
“Our investment is about the cost of building the conference center in a deal proposed by a reputable developer who will bear the financial risks associated risks required by 15 years of conference center operation,” Scott said.
Sheehey said that certainly the developer has heard both sides and some opposition.
“Local businesses do have difficulty attaining property where they can fix their costs and succeed. A single thing that you could do to really indicate a commitment to the local business community is if you can find a suitable partner to run that food and beverage establishment, I think this could benefit you, not only that, but the local community will appreciate it,” Sheehey said.
He later told the Los Alamos Reporter that in approving the deal with TNJLA, the County avoided the minimum cost of $2 million to build a conference center. He said the conference center construction would generate $100,000 to $300,000 in gross receipts tax. He estimated that property tax for the conference center would be roughly $20,000 a year for 15 years.
“GRT and Lodgers Tax depend on hotel rooms available. If no new hotels were built, perhaps only 4,000 additional room-nights could be accommodated whereas if a new hotel is built, at lease 14,000 room-nights could be accommodated, generating $1.05 million dollars over 15 years,” he said. Adding up all the taxes that would be generated if the hotel was built would bring in $4.125 million to $4.325 million, Sheehey said.
“That’s why I say, even with very conservative assumptions, we are getting at least a 2:1 and arguably a 3:1 or better return on our investment of the ~$2 million land in the Return of Investment, over 15 years,” Sheehey said.
The Return of Investment published by County staff as back-up for Tuesday’s agenda reads as follows:
Contributions from the County:
$1,825,000 in Land (Includes value of Smart House)
Forego Descartes rent for the remaining 5.5 years of the lease. The lease is a sliding scale from $41,874 per year – $77,766 per year
Initially, it was assumed that a $175,000 in contribution to the traffic signal might be needed, but recent developments indicate that the cost of a traffic signal will be included in a recently acquired grant from the State of New Mexico’s DOT Safety Committee.
What does the County get in return:
$10 million investment in Los Alamos County’s economy
+/- $86,000 in property tax per year after project build-out $1,290,000 in property tax over 15 years
+/- $130,000 per year in Lodger’s Tax revenue $1,950,000 in Lodger’s Tax revenue over 15 years
Approximately $45,000 in GRT from meeting venue revenue
(catering, equipment rental, room rental, etc…) $675,000 in GRT over 15 years
Los Alamos County will receive some portion of GRT revenue on the construction of the project, however, based upon type of construction and methodology of FF&E purchasing this number can fluctuate between $110,000 – $350,000.
A minimum of 17 new jobs with an estimated payroll of (~$465,000 per year) $6,975,000 in payroll over 15 years
(17 jobs does not count any ancillary – non hotel/event center – jobs potentially created)
Strategic Community Benefits:
Support of the EVSP 2010 and 2019, Comp Plan 2016, Tourism Strategic Plan 2018 and Council strategic goals (2017 & 2018)
Construction and operation of a conference center – previous County estimates for building this type of facility = ~$2M and operation of the conference center (based on experience in Fuller Lodge operations the estimated cost of operating the conference center) = ~$2M over 10 years, for a total of $4M in avoided costs to taxpayers.
Support for the local economy – strategic planning documents call for a conference center to minimize current leakage of dollars from the County businesses; by hosting just one 4 day – 200 person event per month the County economy would retain ~$500K/year (assuming a conservative $50/day/person expenditure)
Support for LANL, N3B, Pebble Labs, and other employers by providing a needed meeting venue here in Los Alamos
Support of local businesses that specialize in catering
Support of our citizens by providing a venue for reunions, weddings, and special events