BY MAIRE O’NEILL
Part 1 of a 3 part series
During Tuesday’s special Los Alamos County Council meeting, each of the seven councilors took the opportunity to speak at length about the proposed purchase by the County of the CB Fox and Reel Deal Theater buildings on Central Avenue. The meeting ended with a 5-2 vote against amending the purchase agreement, which was signed by Council in December, to extend the inspection by 30 days to April 21. Councilors Sara Scott and David Izraelevitz voted casted the dissenting votes.
A second motion to terminate the purchase agreement and direct the County Manager to provide written notice to the seller and escrow holder passed 5-2 with Councilors Scott and Izraelevitz voting against.
What was expected to be an extremely long meeting lasted a little over two hours and very few people opted to speak under public comment. A large portion of the meeting was devoted to a presentation by Public Works Department Director Anne Laurent who went through the scenario options for the two buildings and outlined the estimated costs. Her presentation may be viewed at: https://losalamos.legistar.com/LegislationDetail.aspx?ID=4853437&GUID=F4E77D18-5827-4B8D-9562-C031C7AAE018&Options=&Search=
The Los Alamos Reporter will cover the Councilors’ individual comments in three separate stories so that the community can read each Councilor’s reasons for voting the way they did on the proposed project.
Councilor Scott began the discussion saying her remarks regarding extending the option period would focus primarily on the CB Fox building but would be relevant to the Reel Deal as well.
“I’d like to suggest that the question to be addressed is not whether or not the project pencils out. We’ve heard a lot about that tonight, and that’s a term used to describe the property as attractive to a developer. As we can see from the numbers presented as a result of the due diligence efforts, the project would most likely not work out for a developer at this time for the tentative types of uses our community would like to see in the center of our downtown. And I feel that that is in fact the very heart of this issue,” she said.
Since that kind of development would not likely be of interest to a developer, Scott suggested that an extension would allow Councilors to consider in more detail whether they wanted to invest in the kind of downtown the community wants, whether they wanted to take the measures to make the property more attractive for the kind of businesses or other development that provides benefit to the local business environment, housing and the liveliness of downtown.
“It’s about whether we want to intervene in what we’ve seen happening for decades and to do something to help catalyze investments by others in other parts of our downtown,” she said. “If you look at our downtown today, do we really think if we don’t want to invest in it, others are going to want to invest in it?”
Scott said she very much appreciated reading through all of the comments and input provided in multiple ways, including the County’s Open Forum survey, emails, meetings and phone calls. She said of course she has looked back and reflected on the input from the many efforts that have been taken over the last five years and that he has personally spent significant time over the last three years exploring options for downtown development and redevelopment.
“As a result I feel like I have an informed view of our options base. That’s why I propose that we take this opportunity of giving the purchase of these properties continued consideration and for extending the inspection period for the properties,” she said.
Scott said that as a result of the County’s our due diligence studies, Council now understands the condition and challenges of the building and the financial costs associated with either renovating or rebuilding it.
“These are very significant. It will cost the County money if we decide to proceed,” she said. “As a result of multiple other studies we also know what our community needs and wants in terms of housing, support for our business environment and the vitality of our downtown areas. What most folks seem to agree on is that our downtown is not attractive and it’s not getting any better.”
Scott noted that governments have limited tools for addressing the types of issues downtown is facing and limited requirements that governments can place on private property owners.
“The property purchase was initially considered because Council was interested in exploring something different from what has been done in the past – an option that no one has really talked about yet. Respondents to the Open Forum regarding the property purchase thoughtfully proposed a number of options for consideration. I reviewed each and every comment and I think it’s important to share the most current information regarding some of the stated issues and reasons why many of the proposals are simple not viable,” she said.
On the question of whether the purchase of the property would be illegal because of the parking lot issues, she said there are viable options for addressing the issue but that it would take more time to finalize them which could be accomplished by extending the due diligence period.
“Another question we heard a lot is why don’t we do something about the other vacancies first. Marimac (Shopping Center) was, until recently, under contract with plans for redevelopment. This would have been mixed use with housing and commercial spaces. Additionally it would be a much bigger financial undertaking – well over $100 million. And we want to and need to honor the leases for our valued and existing businesses there, for example by finding or building spaces for them to continue their operations,” Scott said. “This is certainly something the community could consider pursuing in the future but CB Fox is in the middle of a dying main street and perhaps a more bite-sized problem to start to tackle.”
She added that considering and pursuing one project, doesn’t mean Council can’t and shouldn’t consider others in the future as appropriate. She noted that the Hilltop House property was purchased and is slated for redevelopment for housing.
“Why don’t we address other tools in our toolbox to address the future of CB Fox? A vacancy tax has been explored and is not a viable option at this time. It may be one of our options in the future but at this point it is not. Property or gross receipts tax abatements would require that this become a (Local Economic Development Act) project. It’s possible that would fit with this potential project but not likely applicable to this project,” she said.
To the suggestion of using code changes to encourage development, Scott said the Development Code is in the process of being update but that it’s not clear how this would help a developer overcome the significant challenges outlined earlier in the meeting and the costs associated with redevelopment of the CB Fox building.
She said she did not look at the proposed project as creating a precedent?
“This is a very specific intervention in a large and very central part of our downtown with a goal of working towards attracting investment in other areas. Why don’t we provide other incentives and disincentives and have the developer take all the risk of a project like this? There simply aren’t any other options and policies that can be brought to bear that I can see out there. I’ve looked, I’ve asked about other options. We cannot legally subsidize businesses, property owners or rents. That’s the reason why we’re talking about this possible purchase – because developer interest in investment in our town simply hasn’t been happening,” Scott said.
She noted that people also asked why the County was proposing to buy the property from someone else instead of having bought it in the first place themselves.
“We didn’t have that opportunity. Purchasing now or not purchasing is the option. Why would the County get involved in the real estate business? These types of investments are not something new. We successfully made them before and I anticipate we are going to evaluate other opportunities in the future as well. Many other towns and municipalities use these types of actions as a way to guide development for the benefit of the community,” Scott said. “Why don’t we undertake a public private partnership instead? That’s really what’s being proposed. I personally don’t anticipate long-term ownership of the CB Fox property by the County. It’s important to note that there are many types of public-private partnerships. The private partnership could include buyers of subdivided properties resulting from subdividing the first floor or working with a developer depending on the specific nature of the project that is envisioned.”
Scott explained what how it would look if the County decided to purchase the property.
“The County would identify key goals where we’d like to move the needle forward in our downtown, for example goals would include bringing vitality to our downtown, reducing vacancies, creating more and nicer spaces for business and options for businesses to own their own space as well as housing. The County would then solicit ideas for how to accomplish this from potentially interested buyers that would be in town, existing businesses or tenants of the commercial spaces as well as from developers. This step of finding the right partner or partners for more detailed options would be an important part of the new development process,” she said.
As an example to help folks understand how this could work, Scott explained how a path forward could be envisioned that included working with local and/or new businesses in some of the store front spaces and developers interested in building and leasing space at the south end of the building.
“Again, a specific project would be identified and agreed on that would be guided by using input from interested partners and the County would then proceed with implementing entitlements. These would be needed for example to separate parts of the commercial space for purchase, spending funds to support remediation or remodeling, demolition and building per agreement with the private partners “ she said.
Scott said the resulting space would then be appraised and then sold or rented at the appraised value.
“This is a key point. The cost to the end user would be based on the appraised value, not what is spent to get there. That is why the calculations that have been performed by Councilor Sean Williams, Los Alamos Commerce and Development Corporation and staffers are so important. They provide cost estimates – in the case of the County as we talked about – very conservative cost estimates of what three broad redevelopment possible scenarios presented would cost. They show that even for these types of estimates, without a public-private partnership, redevelopment that moves the needle on community goals and benefit is very unlikely to be undertaken by a developer,” she said.
Scott said that if the Council was to make the investment, it would build on and make the most of other significant investments of the type the County is able to make and has made to improve the vitality of the town and the local business environment.
“We’ve invested in enhancements to the (Ashley) Pond, the Canyon Rim and Urban Trails, a conference center to keep and draw folks to our downtown and the businesses in the downtown area, the Community building teen center renovation and other amenities like the Nature Center and the Los Alamos Visitor Center relocation” she said.
She noted that the vacancy rate downtown right now is 10 percent and that’s excluding that Marimac and Hilltop House areas.
“With our investments to increase tourism folks, conferences and events that would stimulate growth of our restaurant service and retail as well as keeping our existing businesses more healthy, I’m wondering where new businesses would go if we don’t incentivize the redevelopment of the CB Fox property and provide spaces that are nice for existing or new commercial enterprises.” Scott said. “We won’t always have an opportunity. One member of the community that I spoke with today, called it ‘a golden opportunity’ to make a difference in a key area of our downtown. I propose that we should continue to carefully consider this one while it’s here and while we have the resources to take advantage of it.”
She suggested that Councilors knew enough to decide to take one more month to make the decision, understanding that they have the staff to accomplish it.
“The cost of not proceeding is accepting the risk of development we don’t want or not. In closing, for the last three years, I’ve heard about our community’s frustration with our downtown vacant space. I’ve taken this to heart and I’ve worked hard at trying to identify options and opportunities as have other community members, staff and others on this and previous councils. But it turns out there isn’t a magic wand. There is no one ordinance or policy that is going to change our trajectory. Based on my research and analysis, if we want to change what’s happening we need to consider doing something different and making some investments to head us in a different direction,” she said.
She noted that her interest in further flushing out potential purchases came from discussions and ideas from members of the community as well as hearing about what other communities do.
“As I noted before, I would call this potential purchase an intervention – tackling a manageable piece of the problems we face in much of our downtown for a large and central strategic property. It would promote housing and commercial space – a place for the restaurant services and retail that our citizens said they want, support further consideration of this option to catalyze a different outcome than we’ve seen over the last 10-20 years for our downtown. As a part of multiple future strategies and investments, we’ll need to consider moving forward together to build a town that our community members have been asking for,” she concluded.