Due Diligence Period Kicks In For County’s Purchase Agreement For Reel Deal Theater And CB Fox Building


Developer Matt Miles of Tigard Pacific RC, LLC and Trinity Los Alamos, LLC, two Colorado limited liability companies, is pleased that Los Alamos County Council voted Tuesday to enter into a purchase agreement on the CB Fox building and the Reel Deal Theater. Asked why the two properties are tied together in the purchase agreement, Miles told the Los Alamos Reporter he has no interest in selling them separately citing economy of scale as being one of the factors.

Miles said in each case, the County had been talking to the previous owners but that he had been able to move a little quicker than the County to purchase them. He said he had planned to clean the properties up and use them for office space. Miles was instrumental in the new Natural Grocers business coming to Los Alamos. He also purchased property at 195 East Road.

At Tuesday’s meeting, Council Chair Sara Scott said based on community input and the associated priorities developed, Council has been working on and will continue to work on priorities that include supporting the local business climate, providing more housing options, improving utilization of vacant spaces in the County and increasing the vibrancy and amenities in the downtown area.

“We heard from citizens regarding a desire to have more restaurants, businesses and amenities as part of our downtown redevelopment. And we’ve heard from businesses in town that being able to purchase rather than rent property would increase their sustainability. However, the County has very little land available to help address these priorities,” she said.

Scott said the County has no property currently available for purchase by smaller businesses or even new businesses that want to come to the downtown areas.

“As a result of recent business closures, two properties in the downtown area were recently purchased by a developer. What we’ll be discussing tonight is a purchase agreement with that developer for their sale to us and this agreement that we will vote on tonight will be contingent on a 90-day due diligence period,” she said.

The agreement would allow the County 90 days to consider and explore whether or not to proceed with the purchase. Scott said some of the things Council could evaluate would be opportunities for addressing community goals and priorities regarding the downtown areas, some of which Council has heard through its downtown master-planning process and the comprehensive planning process.

“We also have a chance to look at effective options and mechanisms for development and lease of these properties to local businesses. It’s not the intention of the County to have a long-term ownership or management of properties that would be rented to businesses. We could have an opportunity to look at inspections, condition reports, costs that would be associated with using these properties for benefits that the community has identified and development conditions that would be imposed by the County as the property owner should the decision be made to proceed with the purchase,” she said.

Scott said the decision would be informed by vigorous discussion, public input, staff input and looking at the actual condition and other specifics of the buildings.

“Some of the comments we’ve heard asked what the plan of usage for these properties is, how much it would cost to achieve that, and what the overall economics of such a transaction would be. These are the types of questions that potentially could be answered during the due diligence period if we decide to proceed,” Scott said. “It may be that we decide that it’s not worth the price tag, but the agreement to generate the needed information and the discussion for making the decision before the properties could be developed in ways not in the best interest of our community or potentially stand vacant for some years, could be a pragmatic path forward given our other options which are few for achieving some of the community goals I’ve listed and perhaps in hindsight might be one we wish we’d explored maybe five or 10 years down the road.”

County Manager Harry Burgess said this is an area the County has been looking at for a variety of reasons to support local businesses.

“In fact I was in conversation in at least one of these two purchases with the original owner for the County’s consideration of purchase before we were able to move quick enough basically and it got purchased by another individual prior to the County being able to move,” he said. “We’d been looking at these properties for a while. They do have some ancillary benefits as has been stated – everything from the location to the potential for access for parking as well as County uses that have been discussed over time – all of which would need to go through some sort of process.”

Burgess said the County’s doesn’t have a specific use in mind for the two properties but a number of potential uses.

“Therefore I was asked to pursue this agreement with the developer that had previously purchased these properties to see if we could arrange for Council’s consideration and have a timeframe to have that consideration,” he said. “So the agreement for your consideration this evening is for a total of $4 million. It comes with a 90-day due diligence period and that 90-days was intended not only to look at the facilities themselves but to allow for that conversation both amongst the community as well as we have to recognize there will be a newly-seated council prior to that decision being made and we need to bring the new councilors up to speed prior to their weighing in on that decision as well.”

Burgess said also in the contract there is the potential to extend that due diligence period by an additional 30 days. The County would have to put down an additional $10,000 above the initial $25,000 for this due diligence period.

“If the County decides not to purchase the property within the stated due diligence timeframe, that money reverts to the County so there is no loss in that consideration period, however it does allow us to also look at the buildings and understand what potential costs may be entailed in their development as we move forward so that Council can make a decision based on all those factors when the time presents itself,” Burgess said. “With your approval this evening we would begin that process and would be reporting back to Council as well as I anticipate putting together a subcommittee for its discussion to gather input from the community, from staff, from Councilors as to its use and also to direct staff in bringing back numbers in support of those uses so that we can fully consider those at the proper time.”

There are some issues that need to be ironed out during the due diligence period concerning the parking area behind the CB Fox building which is actually owned by an association. There are also some questions about the parking arrangements at the Reel Deal property.

Council voted 6-1 to enter into the proposed purchase agreement for the 60-day due diligence period. Council Katrina Martin cast the dissenting vote saying she can’t get behind the $4 million price for the two properties which she said is more than the developer paid for them.

“To me that just smacks of not only a bail out but almost an incentive for a business deal that this man regrets. It is clear that if he was able to use these properties as he had intended in a way that he felt was profitable, he would have retained them. I have no problem with the County acquiring these properties; I think there is a lot of potential for both of them. I think that’s really exciting however I think we at most should be paying him what he paid for them, not more. I don’t think we should be incentivizing business deals outside developers come to our community to make and then regret,” Martin said. Councilor Pete Sheehey said he also did not like the overall price.

Earlier, Councilor Antonio Maggiore noted that he felt buying the Reel Deal property makes “an awful lot of sense” but buying the CB Fox location makes a lot less sense. He said the Reel Deal could be used for a black box, a theater, possibly a Los Alamos Museum of Art and more. He said the CB Fox property is not the right piece of property to buy and that the old bank building now occupied by the Indian Grocery would be a more strategic purchase with “fewer ownership headaches attached”. Maggiore, who leaves office Dec. 31, said he would support the motion to see what the future council chooses to do.

The community can expect to have many questions answered by Council prior to an ultimate decision being made on the purchase of the two properties. As Councilor David Izraelevitz noted during Tuesday’s meeting, the County is buying time to understand the possibilities and uncertainties.