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The proposed Trinity Site lease makes no provision to protect Los Alamos Schools from inflation.
It’s easy to understand how time will erode the value of our community’s income. The basic rent is $511,000 per year.
First, from the terms of the lease, the best-case income after 25 years is $539,310. Second, what would the value of $511,000 be after 25 years of inflation?
Call this X. We then take the ratio of 539,310.10/X to compute the fraction of $511,000 that our schools will earn in 25 years.
Since we don’t know what inflation will do over the next 25 years, let’s consider historical data to get a range of possible outcomes.
For example, usinflationcalculator.com lets us easily try out different 25-year historical scenarios based on CPI data.
Under one of the best case scenarios, 1948-1973, $511,000 at the outset would command $941,427 after 25 years. The county would collect $539,310 out of the $941,427 required to break even.
Inflation would have wiped out nearly half of our schools’ income.
Under one of the worst case scenarios, 1965-1990, we would need $2,120,244 just to keep up with inflation. We would collect a fourth of that. So our schools lose half to three-quarters of their income to inflation after 25 years.
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