Understanding the joint lease agreement

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By The Staff

  On Oct. 6, the Los Alamos County Council announced that an agreement with the Los Alamos Public School District had been reached regarding lease of structures for the schools’ maintenance facilities at the county-owned Airport Basin Site (north of DeColores Restaurant on N.M. 502) and the lease of school-owned land to the county for future revenue from the redevelopment of the Trinity Site.

  The school board confirmed their desire to enter into these agreements at their board meeting on Oct. 8, and a joint session with the council and board will be held on Thursday, Nov. 12 to officially complete the transactions.

  This action comes after many years and months of negotiation and discussion between the county and school district.

  We would like to take this opportunity to explain “how” the agreements will be handled in easy-to-understand terms covering the highlights of the agreements.

  First of all, we’ve heard about concerns that the schools must pay rent at the Airport Basin Site in order to vacate Trinity Site. We’ve addressed that in the agreements: the county will lease facilities to the schools for 40 years, but the district won’t pay any rent until revenue is generated from the lease of the Trinity Site. This has been a consistent point of discussion and agreement for the last two years.   

  The lease rate for these facilities is based upon a percentage of the revenues derived from the Trinity Redevelopment and, as such, it rises and falls with this lease revenue stream.   

  This structure keeps the schools “cash neutral” until the Trinity Site project is realized and with minimal risk to manage until then.

  We know that there are those in the public who have asked: what if Trinity Site fails to be developed? Despite ending an exclusive agreement with The Boyer Company last month, both of us continue to be positive and optimistic in our belief that the county can and will succeed in attracting a developer to come to Los Alamos.   

  However, the agreements do address the possibility of no development occurring on the Trinity Site anytime soon. After 15 years, the two parties can renegotiate the “Master Ground Lease” or end the agreement. Basically, we can “unwind” the land transactions that will become a part of the agreements on Nov. 12.

  What are those land transactions? This is where it might seem complicated! However, it’s basically a land swap between the two parties so that the schools can own almost all of the land at Trinity Site.   

  Once that’s done (by ordinance), the schools lease the land back to the county to develop the site. The county is then the one who collects the lease revenues, but has agreed to give over half the revenue (52 percent) to schools, and the other 48 percent as rent for the Airport Basin facilities leased by the schools.

  This is probably one of the most important outcomes of the negotiations that has happened recently. The schools truly need lease income to supplement their operating budgets — they don’t have any interest in selling the land for a one-time cash infusion into their bank account — and state law dictates that the dollars from land sales can only be used for new school capital projects.

  Therefore, collecting revenue from leases is much better for the schools’ on-going operational needs. The schools also realize increased property tax revenue from the redevelopment. The county’s interest lies in the increase in new tax revenues, new jobs, new residents and generally creating a better quality of life (more shopping locally) that will come from redeveloping the Trinity Site.

  When Trinity Site excels and there’s a healthy cash flow coming in, both schools and county will benefit.

  Where does that leave the old buildings on the Trinity Site? Once the staff is relocated, the county buildings and schools’ administration buildings have to be demolished in order to clear the site.   

  In addition to the land swap, the county has agreed to pay all costs of demolition on the Trinity Site, including the schools’ portion, in order to pave the way for a developer to bring retail to the site.    

  The county will also pay schools up to $169,000 for two years if the schools have to displace a current rent-paying tenant, which again keeps this transaction as “cost neutral” as possible for the schools for now. In the event a rent-paying tenant is not displaced, the county will make a one-time payment in the same amount to the schools to offset some of their relocation expenses.

  Much of this information will be discussed in more detail with the public at the joint meeting on Nov. 12, and we encourage you to be there (7 p.m. in Council Chambers, Los Alamos).

  While the deal seems complicated, the goal is simple: vacate and redevelop the Trinity Site into a dynamic, mixed-use lifestyle center with plenty of retail. If you believe we’ve achieved a win/win solution, we hope you’ll be there on Nov. 12 to show us your support.

  We still need to have the State Board of Finance approve the schools’ transaction later this year, and we need to know that the community is behind us in taking the next big step forward.

Michael Wheeler  is chair of the county council.

Joan Ahlers is the school board president.