The former Hilltop House Hotel property, now owned by New Mexico Innovation Triangle is located at the junction of Trinity Drive and Central Avenue. Photo by Maire O’Neill/losalamosreporter.com
BY MAIRE O’NEILL
After multiple attempts over the last year to obtain information on the future plans for the former Hilltop House property at the entrance to Los Alamos by the new roundabout, now owned by New Mexico Innovation Triangle (NMIT), the Los Alamos Reporter chatted recently with John F. Rizzo, CEO and co-founder of NMIT, the current owners.
The purchase of the property by NMIT was announced in June 2020 by Los Alamos County Councilor Sara Scott. At that time, the announcement included the purchase of the Meri-Mac Shopping Center by NMIT, but that sale did not go through.
Rizzo said that since acquirng the hotel property about a year ago, NMIT has been working on architectural plans, renderings, cost estimates, etc. “to essentially build apartments on that property to start to make a dent in the acute housing need in Los Alamos”.
“We have a range of plans that alternate between higher density with more height and lower density with lower height – all these trade-offs that can be made depending on whether or not you can do wood construction or steel construction, whether or not you want to build a parking structure underneath the apartments, whether or not you want to use surface parking,” Rizzo said. “There’s a fairly complicated set of scenarios depending on how many units, how high, what the County will allow and so on.”
He said NMIT is pulling the plans together and is at about 90 percent.
“When we get close to 100 percent, the next step would be to sit down with officials in the County to review the plans, get their feedback on them and then once we’ve made adjustments based on their feedback and input, we would make an attempt to get all the appropriate entitlements,” Rizzo said.
He noted that Larry Hawker has been NMIT’s main interface with the County.
“He has been talking to Paul Andrus (Community Development Department Manager). There have also been conversations with (Councilor) Sara Scott, I believe,” Rizzo said. “We’ve been having these discussions for about six months and the next step is that once the County presumably agrees to what we want to do, then we work on a financing plan to essentially get the construction financing in place and we can’t do that until such time that we have support from the community and from the County. We need to have the legal I’s dotted and T’s crossed before the investors will come in. We don’t anticipate problems but we want to make sure we’re doing it appropriately, properly and thoughtfully.”
Rizzo said the problem NMIT faces is that because of the size of the site which is two acres, it’s challenging to get enough units on it to be able to afford to do workforce affordable housing.
“There is capital available from financial sources that exclusively funds workforce housing. At the moment, the thinking is market rate, but that could change based on the final plans that we get feedback on. For example, if we can go higher, and we can build what’s called podium-style parking, which is essentially under the apartment complex, then there may be enough units to do some affordable workforce housing but that’s part of the conversation we’re wanting to have when it’s time to have the conversation,” he said.
Asked if the COVID pandemic is causing delays with the project, Rizzo said he doesn’t think COVID is an issue for NMIT in Los Alamos.
“We’ve got some projects underway in Santa Fe and things are certainly going a little more slowly because of COVID but in Los Alamos, the town is very efficient, the County and city officials are very efficient so any delay has largely been based on us working through the cost estimates and making sure that we get our ducks in a row,” he said.
Rizzo noted that part of the challenge is because of Los Alamos’s location and its distance from large construction hubs and sites, the costs to build are substantially higher in Los Alamos.
“So when you make a presentation to an investor, they want to be very clear on how much higher the cost of construction will be and they want to have clarity on the rents that they can expect to get,” he said.
Rizzo said NMIT did a market study with a third-party firm back in January so it understands the demand.
“But given that the construction costs are inflated as you move away from primary markets, you get more risk associated with those and that’s why it’s taking us a little longer to get things really clearly defined,” he said. “Not specific to Los Alamos but to New Mexico more generally, a ton of money is being pumped into real estate development primarily in what we refer to as primary markets, which are places like Dallas, Austin, San Francisco or Phoenix. Albuquerque itself is considered a tertiary market and Los Alamos is probably a tertiary market at best.”
Rizzo said part of the trick is to educate people on why they should choose New Mexico and then why Los Alamos and why Santa Fe
“It just takes time to create familiarity with this market so that’s been part of the challenge. We expect we’re going to get there – we’d just like to get there sooner,” he said.
Asked about the concept of an “Innovation Triangle” which the Los Alamos Reporter first recalled being described by Los Alamos National Laboratory’s deputy director of operations, Kelly Beierschmitt during an October 2019 presentation to Los Alamos County Council, Rizzo explained that the triangle of Los Alamos, Santa Fe and Albuquerque is the core strategy NMIT is pursuing.
At that meeting, Beierschmitt said Triad National Security, LLC always finds that the states they live and work in actually leverage the national labs – that they are “like a national treasure to them”. He noted that working with Los Alamos and Sandia National Laboratories, Triad has not been exploited by the state to help recruit other industries, little innovation groups, start-up businesses or people from Silicon Valley.
“Let’s get some of those small start-ups going in our back yard, hiring our students, keeping our students here in New Mexico. So we dreamed of this innovation triangle idea – the business community was very engaged with that discussion. I met with several chambers and we brainstormed it and they felt like that was a pretty good idea,” Beierschmitt said.
Just a few months later, in June 2020, representatives of Triad and Texas A&M University along with Councilor Scott and NMIT’s Larry Hawker traveled to Chicago to meet with Kroger regarding the proposed purchase of the Meri-Mac Shopping Center which has since fallen through. When Scott made the announcement in June 2020 about the Kroger property being under contract with NMIT, the Los Alamos Reporter noticed the correlation between the name of the developer and the Triad’s name for their overall plans as mentioned by Beierschmitt in October 2019, but no information was available about the connection at the time.
“If you step way back and look at the latest census results in the state, we know that older people are arriving and younger people are leaving and it’s expected that in about 10 years, our population is going to shrink in this state and that’s not a recipe for robust economic growth. So what the New Mexico Innovation Triangle was meant to do was essentially to add another pillar to our economy to complement tourism and oil and gas and in government and national labs,” Rizzo told the Reporter.
He said NMIT discovered during COVID that tourism is not a great leg to stand on and oil and gas are being replaced by renewables.
“So we wanted to build an innovation economy in Northern New Mexico and the reason we felt that was a good and possible thing to do was clearly the state needs another economic pillar,” Rizzo said.
He noted that with COVID, the whole world in tech has changed to where employees can work for their company but live anywhere which creates an opportunity for them to locate to Northern New Mexico.
“And with the three national labs, we’re technology and innovation rich across the state. In fact I did a calculation a few months ago where I took research and development spending per dollar and I excluded the beltway and I discovered that at least at the time, we were at 10 times more R&D per capita than Texas and four times the R&D per capita than California,” Rizzo said. “If you think about the war for talent in innovation jobs, you think about the need to create innovations around technology, New Mexico is a undiscovered gem in that regard.”
He said that with about a million people living in the counties surrounding Los Alamos, Santa Fe and Albuquerque there’s enough critical mass that a whole new set of employers could be attracted to New Mexico that has never been in the state before.
“They then hire locally, create an upward mobility for people in all walks of life, drive improvements in the education system and curriculum changes at the university level, etc. So Los Alamos is part of that, given the history of the Lab and the intellectual capability of the city. Santa Fe is clearly relevant given its sort of cultural and creative approach as exemplified by Meow Wolf, and Albuquerque with all the stuff going on with Netflix, etc.,” he said. “NMIT is a strategy whereby an innovation village in each of these cities will hopefully be developed and the Hilltop House will hopefully be the first part of that in Los Alamos. We just wish we could move faster.”