Voters approved ordinance 529 in 2007 authorizing the issuance of bonds to relocate county facilities and clear the Trinity Site, with the understanding that a new retail big box store would anchor the site and our public schools would receive lease revenue from the project. In 2011 the county council adopted as one of its strategic goals the 100% growth of retail activity in our community. During my time as county councilor I have been a champion of this vision for the Trinity Site because I am convinced that having a big box store on the site would generate the most revenue for our public schools. The lease agreement that has been negotiated between the county and NADG allows for the development of the site without requiring any financial contribution from the county. This is beneficial to the county because other alternatives to a big box store would most likely have the county taking on the role of developer with the county making lease payments to the public schools directly. The county might choose to build a civic-center or a similar type of county facility which would almost certainly require a substantial public contribution for project construction in addition to possible annual public subsidies. Another idea is to locate a higher educational institution on the Trinity Site. It is not clear whether such an educational organization or consortium would be willing to locate on the site, especially since other county land which could also be used for such a purpose has remained underutilized for several years.
Why not choose an option where a private developer pays both for the construction on the Trinity Site and for all the lease payments to the public schools? According to a 2009 study performed by a consulting firm hired by the county retail activity on the site could generate as much as $863,000 in GRT revenue. By utilizing GRT revenue from retail activity on the site the county can afford to give all the lease revenue from NADG to the public schools. The current agreement between the county and the public schools partitions the rent between the two entities with 82% going to the public schools ten years after the development lease is executed. I think we can do better than this arrangement and we should make it 100% in the first year. It seems to me that the county should start paying the public schools the full amount of the NADG sublease rent, about $511,000, upon approving the agreement with NADG, even though NADG does not pay the full rent amount on its sublease until the spring of 2014. I am willing to sponsor an ordinance implementing these changes into the master ground lease agreement between the county and the public schools so that our public schools receive the most lease revenue possible. Both the county and the public schools should benefit from retail activity on the site with the public schools receiving all the lease revenue and the county receiving the GRT revenue from retail sales.
The key element in maximizing the revenue for the public schools is the retail development by NADG. Several proposals were received by the county in 2010 for the development of the site with the NADG proposal offering the highest rent amount of about $500,000. Furthermore in the subsequent negotiated lease agreement NADG commits to paying $61,000 in rent for the non-anchor store portion of the lease, regardless of whether the non-anchor space is occupied or not. The non-anchor portion of the rent escalates by 10% every five years. The anchor portion of the rent is $450,000 which is fixed for the first 25 years of the lease. The fact both the developer NADG and the anchor chain Kroger are willing to invest in this project, committing to a 73 year lease, with escalating rent payments, and requiring substantial private financial contributions to build the site strongly suggests that there is sufficient market demand in Los Alamos for a successful project and the site will not be underutilized. As part of the negotiated lease agreement NADG is committed to constructing a portion of the Canyon Rim trail, as well as almost 45,000 square feet of additional space for retail, entertainment and restaurant uses, separate from the big box store. Both the Canyon Rim trail and the 45,000 square feet of non-anchor space represent the kind of lifestyle amenities in addition to the big box store that were part of the original vision for the Trinity site. We now have an opportunity to realize this original vision.
It is clear that NADG has a strong financial interest in not having empty store fronts on the site, since they will pay the $61,000 rent for the non-anchor space regardless of whether it is occupied or not. Furthermore Kroger has already purchased the Mari-Mac shopping center where its existing store is located at a cost of approximately 9 million. The new store will be substantially larger at 110,000 square feet, comparable to a Walmart Supercenter. Given its substantial investment in the Mari-Mac center I can’t imagine a scenario where Kroger forfeits its investment and does not redevelop the Mari-Mac center after moving into the Trinity site big box store. NADG and Kroger have strong relationships with national retail chains cultivated over many decades. Since expanding retail is one of the council’s strategic goals, it is appropriate to have experienced and established companies, like NADG and Kroger, bring us the kind of name brand retail that other communities take for granted and our young families having been wanting for many years. These kinds of retail companies are not interested in renting office space to the laboratory. After many years of difficulties in our retail economy with businesses closing, Los Alamos deserves something new and as county councilors we shouldn’t stand in the way of progress, especially when it is fueled by private investment.
Compared with other alternative ideas the big box store is most beneficial to the public schools because the lease money received by the public schools would not be tied to the county’s budget, wherein GRT revenue from LANL activities is the largest source of income. Last year the county received approximately 48 million in GRT revenue from LANL related activities whereas the county spent about 45 million to operate the county departments and provide public services. Looking to the future the possibility exists for reductions in the amount of GRT revenue received from LANL activities and the county has already committed to several expansive CIP projects including a new municipal building. In the long term it is not clear to me whether the county could make lease payments to the public schools in the absence of any income from activities on the Trinity site. Before we change course with regard to the Trinity Site development and discard the retail option we should carefully consider how much it will cost the taxpayers to build the alternative concepts and whether the county can afford to pay the lease payments to the public schools without additional county tax revenue.
Recently there has been a call to explore other options for the Trinity site. Haven’t the voters and the county council already decided the kind of development we want for the Trinity site? At this critical time I don’t support putting aside all the hard work of our staff and the citizen advisory committee to start down a fruitless path of entertaining nebulous ideas for the Trinity site supported by a new grandiose government spending project. Wouldn’t it be better for us to turn instead to private enterprise to enhance retail competition in Los Alamos and Northern New Mexico, while providing stable income for both the county and the public schools? I hope the council doesn’t forget all the voters who approved ordinance 529. When I cast my vote in favor of the Trinity site lease agreement I will be thinking not only of those voters but also of what is best for our public schools.
If you want more retail please email the school board members and county councilors, and tell them to vote yes. The email addresses are listed below.
m.mckinley@laschools.net
k.honnell@laschools.net
j.bjarke-mckenzie@laschools.net
d.foster@laschools.net
d.venhaus@laschools.net
countycouncil@lacnm.us
