BY MAIRE O’NEILL
maire@losalamosreporter.com

An ordinance proposed by Los Alamos County Councilor Sean Williams that could create an “overlay district” in the downtown area to ban offices on the ground floor is causing some consternation among commercial property owners businesses. An overlay district applies an additional layer of standards within a boundary regardless of base zoning.

At a meeting last Wednesday hosted by the Los Alamos Chamber of Commerce, several property owners and businesses voiced their concerns about the proposal. Also present were County Councilors David Izraelevitz and David Reagor.

Los Alamos Commerce & Development Corporation Executive Director Patrick Sullivan explained the purpose of the proposed ordinance and that’s its intent is to help catalyze retail and restaurant development and occupancy within the pedestrian walking area in the downtown. It should be pointed out that the LACDC is not affiliated with Los Alamos County but is a private not-for-profit organization governed by a board of directors representing major business constituencies in the community, including Chamber members, major employers, commercial property owners, entrepreneurs, the financial industry and elected officials.

According to the County’s Community Development Director Paul Andrus who also attended the meeting, it’s reasonable to assume the overlay is in the downtown but that it’s not necessarily known  that at this stage.

“The text amendment if it’s approved by the Planning & Zoning Commission would then go to Council for final approval. The operational assumption is that Part 2 would be to establish where the district would go and it would follow the same process,” Andrus said.

Sullivan noted that the proposed pedestrian overlay would be a very significant change to the way zoning has been done in with downtown.

“Because it’s such a significant change, our position would be not to immediately take this forward for formal approval or denial of the creation of this overlay which is going to happen, On June 9, this is going before the Planning and Zoning Commission for approval or denial,” he said. “This deserves a lot of thought and discussion and analysis rather than going straight into an approval or denial process. That being said, there is a consultant under contract to the County already that is doing a complete review of the development code and will come out with a series of recommendations on how to change or improve the development code.”

Sullivan said LACDC feels the proposal would better be discussed and analyzed through that process so that there would be a thorough understanding what the intended and unintended impacts may be as well as a look at where ordinances like this have worked, why they worked or where they failed and why they failed and what the positive outcome or negative outcome of something like this has been.

“The process it’s going through now, I don’t believe allows for the same level of input and discussion. That’s one of the reasons that we’re holding meetings like this. A P&Z meeting or a County Council meeting allows for people to make public comment but there’s not the opportunity for discussion in a give and take exchange of ideas. You kind of make a statement and then the next person gets up and makes a statement. We want people to talk about their concerns, why they feel this is a good idea, and not a good idea and go from there,” he said.

Commercial property owner Shannon C’de Baca, said she was probably like some other people in the meeting a little bit stunned that so much time and energy was being spent bringing forward on the overlay issue. She said she went back through her potential tenants list of retail folks she has talked to over the past six years and none of them are planning on opening a retail venue anywhere, much less in Los Alamos.

“Their concerns about Los Alamos weren’t rent, they weren’t anything else, they said they just were not able at this time to expend the energy to do that and risk. I do know that office people support the restaurants, support the banks and any small businesses we do have in town, so a mix is healthy. To have a segregated first and second floor makes no sense. My main concern is the energy that we’re expending on this without having done significant due diligence prior to bringing it to this level. I would love to spend my energy elsewhere.,” C’de Baca said.

Sullivan explained that existing buildings and existing uses would be grandfathered in under the proposed ordiance.

“The way the amendment to the existing code is written it would require a space to be vacant for 12 months before it is required to come into compliance with this overlay. Another trigger that would cause compliance is if a property owner made improvements to their property that totaled more than 25 percent of the appraised value. That clause actually exists today, that if a property owner does that they must come into compliance with code. It would also trigger compliance with this overlay,” he said.

Central Park Square owner and developer Philip Kunsberg said he agreed that the proposal is “a diversion of resources and time”.

“I think there needs to be more respect for the work of the County staff and the processes that they’ve undertaken. I think they understand the town and the problems perhaps better than the Council does. In any case, they have a methodical process going on to try and improve the zoning ordinances and that should be respected and allowed to take its course,” he said. “I also personally feel this is the wrong approach to problems”.

Kunsberg said he has dealt with retail tenants in the past 10 years and has done his best to encourage and support them.

“The problems faced by retail in Los Alamos have to do with the scarcity of employees, the inadequacy of the population base now online shopping has had a huge impact and this kind of coercive approach to remove options from the landlords that constrain property ownership is the wrong approach. The County has so many other positive tools at its disposal in terms of incentives and investment in the downtown space. What you want is a downtown that is attractive to investors and to bring in resources and creativity. The idea is to produce economic results by regulation rather than by incentive I think is a very negative and short-sighted approach to revitalizing the downtown,” he said.

Kunsberg said the incentives can be provided to the retail businesses themselves.

“I know there are legal restraints to what the County can do but they have also found creative ways around that. There were a lot of incentives for the development of the new Smith’s complex. So there are positive ways to support retailers and this in my mind is a negative and ill-conceived way of doing it. I think we should let the experts understand and analyze what the options are. I think this is a very damaging and offensive idea,” Kunsberg said.

Sullivan noted that the Local Economic Development Act (LEDA) has been traditionally the main mechanism that allows legal participation by a municipality with a private business. He said LEDA has not traditionally and historically been available to retail but that changed about three or four years ago, but that a clause was added stating that funds could only go to retail if it was not directly in competition with existing retail in the community. He said the rules changed again in last legislative session and that he was waiting for the new guidance from the state that should be released by when the new legislation will take effect.

Commercial property owner Roger Waterman  said his company has had retail tenants.

“But if you pay attention to what’s happening in the world, retail is a non-starter for most developers and for most retailers. Examples such as Sears, K-Mart, Macy’s, Tiffany’s, Blockbuster, are all huge retail outlets and they found that they couldn’t compete. There are three major things with successful retail – dollars per square foot in sales, cost of goods vis a vis sales and traffic through the door. Those things are what determine success. Rent is a piece of it. Payroll is a piece of it,” he said.

Waterman noted that there have been retailers that have been successful but found that they could no longer compete such as the Otowi Bookstore.

“I don’t know about other landlords. I don’t keep track of rates or charges but we try to give retailers as good a rent as we can because we want them to be successful. There’s nothing to be gained for a landlord in having a transition in tenants. It doesn’t do anyone any good and by the time you make the tenant improvements and then you take out the tenant improvements and start over again, it doesn’t pay to have a failure in your real estate no matter who it is,” Waterman said. “Failures cost a lot of money.”

He said he thinks “someone” isn’t paying attention to the news of what’s happening in the world.

“You can’t legislate success. You can help, but you can’t legislate it. If we do, we’re going to end up hurting all the things that made this country strong. The County has a lot of resources that the private sector doesn’t have and that’s fine. This is a government town. It always has been. We have the wonderful blessing of an entity that is important to us, important to the nation and important to the world and it hasn’t been comprised by the latest crisis. As a landlord here, I still count my blessings,” Waterman said.

He said he thinks what the County is doing – making the town attractive – is the best thing for pedestrian traffic.

“Landscaping is the easiest and least expensive way of doing that and I think they’re doing a marvelous job but there’s a limit to what landlords can do for retail. We’ve had successes, but we’ve had recently more failures. I don’t think this is the right street to waste our time on. There are a lot of other things that should be consuming a lot more time,” Waterman said.

C d’Baca noted that she has been talking to a lot of people offline from her Facebook feed and from social media which is not a really great force in Los Alamos.

“Facebook has spread a lot of really awful misconceptions that really hurt people about every industry from banking to real estate to whatever. But the biggest misconception I’m running into right now is that someone on Facebook posted that if you pay $17 or $15 per foot for a 500 square foot it will cost $3,000 a month,” she said. “What they don’t realize is when we quote a $17 per square foot cost to a tenant, on a 500 square foot office or retail facility, that’s about $700 a month. They’ve got the numbers inflated because they did not understand the mathematical computation by which we charge. There’s a misconception in this town that’s running pretty deep that there are people that are paying $10,000, $7,000, $15,000 a month on a very small office and that’s just not true. We’re not an overpriced market by any means.”

Sullivan noted that the way prices are quoted in Los Alamos is on a square foot basis per year. For example of the cost is $15 per square foot, you take the total square footage and multiply it by $15 and that’s the yearly rent. When you divide that amount by 12, you get the monthly lease rate.

Business owner John Courtright said renting to “someone who’s trying to get their feet wet” most of the time means the landlord ends up taking a loss which he said is one of the biggest problems.

“Everybody wants it a certain way but they don’t want to pay for the remodeling even if it’s a paint job. So there’s the big hook – is that the public does not understand how much taxes and all that has to go on just to maintain that building and thinks that we have nothing else to do but go out there and paint that building. I don’t think that’s explained quite enough to a lot of people. They don’t quite understand what it takes to keep everything up all the time when you don’t have renters coming in,” he said.  

Metzger’s Hardware General Manager David Jolly said one of the good things about the proposed ordinance is it has brought the discussion to the forefront about what needs to be done about retail.

“That’s a discussion I’ve been wanting to have for a long time. The unfortunate part is because of the way this was handled it’s almost become a distraction because now instead of thinking about all the ways that we can help our situation, we’re all focused on one and I think that’s kind of unfortunate,” Jolly said.

He said misinformation on Facebook is important because “that is where this battle is being fought if you want to call it that”. He said it even came up at a Council meeting that overwhelmingly the public was opposed to the Marriot (Hotel & Conference project) and that is simply not true,” he said.

Waterman gave an account of how White Rock was basically developed by Home Planning And Development which owned White Rock Builders and the Smith’s store. He described the businesses that eventually opened in White Rock and eventually closed.

“So even in a small market 20 years ago, competition improved on source of retail satisfaction meaning a much bigger grocery store and it closed down. The Village was no longer successful and now it’s vacant ground. So it’s not just a matter of wishful thinking. It’s a matter of investments that go south. We’ve made a lot of mistakes and we’ve had some successes,” Waterman said.

In response to a question from the Los Alamos Reporter as to what the recommendation of Dekker/Perich/Sabatini is on the overlay, Andrus said they don’t have a recommendation at this point.

“We just haven’t really been offered an opportunity to weigh in on it. Our approach to the downtown as far as the process is concerned is really to present a menu of options as opposed to one very specific thing. The menu includes looking at incentives, looking at other ways to approach how we could stimulate retail in the downtown,” he said. “I would suggest the core of our plans have been really to focus on how we can bring more residents downtown, how we can look at incentivizing that piece. We’re supporting that piece from the County’s perspective, looking at parking strategies, and looking at things like densities and building heights as well.

Andrus said there have not been a lot of specific targeted approaches like the overlay.

“It’s been discussed, we’ve received some feedback and we’ve had some conversations frankly over the last year and a half or two years to see if this is an approach that one ought to take and we’ve not come to any conclusion. It’s partly because of all the comments that have been received today, because of the market changing as such and a comment made was, ‘There’s one thing worse than having a block with lots of offices, and that’s a block with a lot of empty storefronts’. So I think that’s really the balance that we’re trying to achieve. That’s what DPS will present on,” he said. “This is one tool; we were hoping this doesn’t become a distraction for the overall plan and discussion because we really are bringing some good concepts we feel very strongly about and we don’t want them to become sort of occluded.”