BY PAUL ANDRUS
Los Alamos County Community Development Department
On August 9, the Los Alamos County Council will consider an order terminating the Project Participation Agreement (PPA) signed 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 of Los Alamos County. We know that as the number of tourists and lab visitors in general continue to increase, the need for additional hotel rooms will also increase. While the county and the TNJLA negotiated with the best of intentions in 2018 and 2019, external circumstances changed dramatically 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 a self-contained 1,800-foot food and beverage retail space squares. Additionally, Towneplace Suites would be open and fully operational by November 16, 2023, 48 months from the effective date of the Agreement. TNJLA also agreed to create a minimum of 17 full-time jobs and would promote Los Alamos as a great place to visit, live and work. In return, the PPA stipulated that Los Alamos County would grant TNJLA the property at the 20th Street Extension through a Quitclaim Deed on the condition that TNJLA obtain construction financing.
Acting in good faith, TNJLA developed site plans and began the process of obtaining financing in accordance with the agreement in earnest. To date, they have not succeeded. The timing of this project was not good, as the last two years have been difficult for everyone, including the non-residential building construction industry. According Statista Research Departmenthotel annual growth fell to -20.5% in 2020, -19.9% in 2021 and is expected to be -0.4% in 2022 (see chart).
Several factors have contributed to this changing landscape from 2019 to today:
- COVID-19 was declared a pandemic in March 2020,
- Unemployment has increased by double digits during the pandemic,
- Travel demand has been stunted,
- The price of resources such as wood and steel has increased,
- Supply chains have been disrupted,
- Companies were struggling to hire workers, and now,
- Inflation rates are rising.
Although TNJLA has over a year to go to obtain construction financing and the hotel construction industry is favorably expected to resume in 2023, the County and TNJLA have mutually agreed to terminate the OK.
We recognize that should TNJLA obtain funding, it would be difficult to accelerate construction to have a fully operational Marriott by November 2023, as outlined in the agreement. Rather than wait for the agreement to expire, the parties negotiated the $17,000 price the county would pay TNJLA to now release the county from all of its obligations.
If the County Board passes the order terminating the agreement at the August 9 public hearing, we can begin to pursue other opportunities for the 20th Street Extension property. This could include a mix of different uses, potentially meeting both commercial and residential needs, as envisioned in the Downtown Master Plan. Going forward, we will explore various development options to identify project opportunities that optimize economic vitality and improve the community’s quality of life. The community will be invited to participate and provide feedback as the Council evaluates other options.