BY PAUL ANDRUS
Director
Los Alamos County Community Development Department
This coming August 9, the Los Alamos County Council will consider an ordinance to terminate the Project Participation Agreement (PPA) executed on November 16, 2019, between Los Alamos County and TNJLA, LLC.
There is some disappointment as this project promised to create opportunities to significantly enhance the vibrancy of our downtown as well as complement efforts to diversify the economic base for Los Alamos County. We know that as the numbers of tourists and laboratory visitors in general continue to grow, the need for additional hotel rooms would grow as well. While the County and TNJLA negotiated with the best intentions in 2018 and 2019, external circumstances drastically changed in 2020 through no fault of either party.
In the 2019 PPA, TNJLA agreed to build an 86-room Towneplace Suites by Marriott and conference center to accommodate 250-300 people banquet style and an 1800 square foot stand-alone food and beverage retail space. Moreover, the Towneplace Suites would be open and fully operational by November 16, 2023, 48 months from the Agreement’s effective date. TNJLA also agreed to create a minimum of 17 full-time jobs and would promote Los Alamos as a desirable place to visit, live and work. In return, the PPA stipulated that Los Alamos County would grant TNJLA the property located at the 20th Street Extension through a quitclaim deed on the condition that TNJLA secured construction financing.
Acting in good faith, TNJLA developed site plans and earnestly began the process to secure financing in accord with the Agreement. As of today, they have not been successful. The timing of this project was off as the last couple of years have proved challenging for everyone, including the construction industry for non-residential buildings. According to Statista Research Department, year-on-year growth for hotels plunged to -20.5 percent in 2020, -19.9 percent in 2021 and is expected to be -0.4 percent in 2022 (see chart).
Several drivers contributed to this changing landscape from 2019 to the present:
- COVID-19 was declared a pandemic in March 2020,
- Unemployment rose into double digits during the pandemic,
- Demand for travel was stunted,
- The price for resources such as wood and steel escalated,
- Supply chains were disrupted,
- Companies found it difficult to hire laborers, and now,
- Inflation rates are increasing.
Even though TNJLA has more than a year left to secure construction financing, and the hotel construction industry is favorably forecasted to be on an upswing in 2023, the County and TNJLA mutually resolved to terminate the Agreement.
We recognize that should TNJLA secure funding, it would be difficult to fast-track construction to have a fully operational Marriott by November 2023, as outlined in the Agreement. Rather than waiting for the Agreement to expire, the parties negotiated the price of $17,000 that the County would pay to TNJLA to release the County now from all obligations.
Should the County Council adopt the ordinance to terminate the Agreement at the August 9th public hearing, we can begin investigating other opportunities for the 20th Street Extension property. This could include a mix of different uses, potentially addressing business and residential needs, as envisioned in the recently adopted Downtown Master Plan. Moving forward, we will explore various development options to identify project opportunities that optimize economic vitality and enhances the community’s quality of life. The community will be invited to participate and provide input when Council assesses other options.