BY MAIRE O’NEILL
Los Alamos County Council Chair Randall Ryti cast the dissenting vote at the August 9 County Council meeting against the ordinance terminating a Local Economic Development Act (LEDA) agreement between the County and TNJLA, LLC for support of the development of a Marriott hotel and conference center at the 20th Street Extension across from Ashley Pond.
Ryti told the Los Alamos Reporter he was in favor of terminating the agreement so that the lots can now be used to benefit businesses and the community.
“I voted against this ordinance because I was concerned about the payment to TNJLA and the length of time that has elapsed since the site plan was approved in January 2021 with basically no progress on this project for 18 months,” he said.
The LEDA agreement included the transfer of title for six lots to TNJLA upon completion of the proposed project. County staff had announced that a payment of $17,000 to TNJLA would be made as part of the termination agreement.
While introducing the agenda item for the ordinance, County Manager Steven Lynne noted that because of changing circumstances it does not appear that TNJLA was going to be able to meet the performance metric that would have the project completed about 13 months from now.
“So we have talked with them and negotiated a waiver agreement which includes a payment for release and what this ordinance does that’s being considered tonight is sort of the third leg on the stool here. All three elements together will fully unencumber the property and allow the County to move ahead with considering other options for the property,” Lynne said.
He said the ordinance being considered officially terminates the LEDA project under the terms of the project participation agreement and under the County’s ordinance. He said in conversations with TNJLA one of the things that came up was a suggestion for a settlement payment.
“This was something that was negotiated. Again it fully releases the County so that the property is completely unencumbered. There is no claim on it. The amount that was negotiated was based on approximately what TNJLA had previously paid in planning fees. They had done a fair bit of work, actually they’re out of pocket for quite a bit more than just the $17,000. Those are what the paid in County planning fees and pursuant to discussions it seemed like a pretty reasonable settlement amount in order to free the property up a year early for other County purposes. That’s what was agreed upon and paid and again this ordinance takes care of the last piece of cleaning this up which eliminates the private participation and officially ends the project,” Lynne said.
When Councilor David Reagor asked if the $17,000 was refunding the planning fees, Lynne responded that the County is not refunding the planning fees.
“It’s a negotiated settlement amount that goes along with the waiver and release. It just happens to be similar to the amount that they paid in planning fees,” he said.
Chair Ryti asked what point TNJLA had gotten to with the project since November 2019 in terms of overall process.
“I do know they had done a fair bit of design work. They had gone through some of the planning process, the planning fees having been paid. I know the stumbling block they couldn’t get past was ultimately the construction financing because that was condition precedent to the land actually being transferred under the project participation agreement,” Lynne responded.
County Economic Development Director Dan Ungerleider said the last step TNJLA had done was the application for a building permit.
“They had submitted a set of plans that were incomplete and then they went dark, so we didn’t hear from them again for quite some time. I reached out to them to provide assistance and found that they were having difficulty obtaining their construction financing. That’s when we started looking at how to proceed or to make a determination whether they could move forward given the time limitations in the participation agreement,” he said.
He added that TNJLA was short of meeting their building permit approvals.
“They were short of receiving their building permit approvals. They had not received a set of drawings that me our code and sometime around that point, they decided that they didn’t think they were able to move forward,” Ungerleider said.
Ryti asked if there were no interim milestones on the project participation agreement and Ungerleider responded that there were not. He asked if the basis for setting the $17,000 amount was setting a precedent for refunding fees on this kind of project if the agreement was approved. Ungerleiter said he didn’t think so. He said TNJA had stopped paying an architect to modify their plans to meet the County’s code and that they weren’t able to provide a letter from their bank indicating that they had financial support for the project.
Ryti asked about lessons learned from the TNJLA deal and if there is something that might change in project participation agreements of this kind in the future.
“While some of what occurred here was situational, I do think for sure one of the things I’d be looking for in any future project participation agreements is at least a few more incremental performance milestones instead of just the single end point. I think that was a little bit of an obstacle in this particular situation,” Lynne replied. “The other possibility is maybe considering a more incremental approach when it comes to development type agreements that include a little more of the entitlement process before some of the other commitments kick in”.
Ungerleider agreed that incremental steps and performance measures throughout such an agreement would help set expectations for both the County and the developer.
Libertarian candidate for County Council James Wernicke said under public comment that he was frustrated that the County is paying TNJLA $17,000 to get out of a contract that the County gave then $1.8 million head start on.
“I appreciate that the past few years have been hard but if you can’t take the risk you don’t deserve the profit. They should be paying us for the opportunity lost on that property not the other way around. If you don’t have plans for that property then why the rush to get out? Since everybody agrees this deal isn’t going to happen, why can’t we look at other opportunities while we let the contract expire and pay whatever penalties are negotiated if they fail, or even better, renegotiate,” Wernicke said. “If you’re going to walk away anyway, at least make the opportunity more inclusive of local entrepreneurs who are willing to not only pay fair market value for the property but have an honest commitment and sound business plan to develop it next time”