Tuesday, January 3, 2012

A boondoggle brewing in downtown Los Alamos?

Update 1/7: Please see the comments below, from members of the community advisory committee, for useful additional perspective.

Update 1/8: Comments on this post are closed. Please see the follow-up post.

There’s a large plot of vacant land in downtown Los Alamos, across Trinity Drive from Smith’s and the rest of the Mari-Mac Shopping Center. I believe it was formerly occupied by the school administration complex which has moved out past the airport.

The current plan to redevelop the parcel (awkwardly named Trinity Site — folks, there’s already one of those) is to build a new and bigger Smith’s along with some other unspecified retail; you can read about the gory details on the county’s website.

I hadn’t paid much attention to the project until I read Robert Gibson’s editorial in the January 1 Monitor (login required, sorry). He points out several problems, but here’s the one I find most troublesome. The root of the problem is that Smith’s (and its parent company, Kroger) already controls the entire Mari-Mac Shopping Center (the retail area surrounding Smith’s). I quote:
Kroger/Smith’s has declined to say what they would do with Mari-Mac but they have been clear that no competition with their new Marketplace store would be allowed.... [B]y controlling two very large parcels of prime land, Kroger/Smith’s would effectively have monopoly control of retail in Los Alamos. We should take charge of our own downtown, not make ourselves hostage to a remote corporate monolith.
To be clear, the plan will grant Kroger, based in Cincinnati, Ohio, control over both Mari-Mac and the new Trinity Site, i.e., much of Los Alamos’ retail.

Sounds like a terrible idea to me. If the project goes forward with a Smith’s anchor in the new site, Kroger should be required to divest its interest in Mari-Mac. Or, we could just scrap the plan and do something better.

If you agree, please send your comments to the county. Kelly Stewart is collecting them at trinitysite.info@lacnm.us (note that as of this writing, the e-mail address at the bottom of the county web page is incorrect).


  1. Hi,

    There is a lot more to the story than Robert Gibson put in his letter to the editor.

    That land is not randomly vacant. It took a lot of planning and negotiating on the part of the County and Schools, sign off from the state, and involved a bequest from the Federal Government for the land where the joint County and School facilities have now been moved to.

    The point of the grant was for Los Alamos to have more retail space that can also provide financial support to the Los Alamos schools.

    Robert would like a school or incubator there. There are none interested in coming here. They also pay the lowest rents and the incubator is one of the least reliable of tenants.

    I am on a citizen's committee that was tasked with working on the site. None of us wanted a Smiths monopoly. But we learned a few things. First, grocers want minimum 20,000 people to have two brands in a community. We don't have that. Secondly, you need a grocer in the state to get it in your town; NM has Smiths and Albertsons Albertsons is in bankruptcy.

    Yes, Smiths owns Mari-mac. They cannot both renovate there and provide groceries; they also have leases to the other businesses they will honor and size issues with renovating there. If they are allowed to move, they will rent it to other businesses. If you believe in capitalism, it will be another business we need - there are plenty of options.

    Finally, the Smiths at Trinity Site will be a flagship store. Wide aisles, specialty counters, many more grocery items. They are also willing to build a general retail store, which it goes without saying most of us need here. Target will not come here, they've been approached innumerable times and want 100k in populace.

    Robert has been opposed to Trinity Site the entire time he was on County Council. If he can convince the businesses that own existing buildings along the alley from Mari-mac to LANB to demo and rebuild along the street - his dream is to make that the new main street - more power to him.

    I encourage you and all of your readers to learn more about it. They can feel free to contact me as a citizen-member of that committee, or Kelly Stewart the communications person at the County.

    Kristin Henderson
    random citizen

  2. I served on the committee that extended the RFP to over 80 local and national companies. The committee interviewed the five best proposals and fianlly chose North American Development Corporation to develope Trinity Site. No other large retailor was interested except Kroger. They do own Mari-Mac and intent to lease it when they move. I belive the choice we have is a new state of the art store, three times larger then the existing Smiths or having a large vacant parcel of land with no income. Generating about $500,000.00 a year in lease income, half of which goes to the Los Alamos School system. The County will also receive gross receipt taxes and property taxes along with a developed canyon walk and green space. The new Smiths will also serve as a draw for other complimentry business to locate on the property. It is not ideal but it is the best alternative in this enviroment. It is not a boondoggle. It is easy to avoid critisism if you do nothing.
    Bill Enloe

  3. Kristin and Bill's comments about Trinity Site are well informed and right on the mark. All of the concerns that Bob Gibson raised have been concerns of the County and the advisory group and have received very substantial evaluation and thought. It is not a perfect world and there are no perfect solutions. On balance and with well informed consideration of all of the various concerns, alternatives, and reasonable options, proceeding with the proposed project is the way to go.

    If we had been able to move more quickly as a community prior to the onset of the current economic downturn, it would have been great and things could have been alot different. Unfortunately we can't turn back the clock.

    Robert's call for more tech and educational activities is something I support, but it doesn't depend in any way on what happens at Trinity Site. For example, the Los Alamos Research Park is a readily available place for such things if we were able to identify demand and help it come to pass. A first building there houses more than 80,000 square feet of such activities that did not take place in the community prior to the existence of the research park project. UC San Diego, UC Santa Barbara, UC Davis, UC Santa Cruz, and the New Mexico Consortium (UNM, NM Tech, NMSU) have tech/educational activities there already and there is room for multiple additional buildings there if demand for them were to materialize or be developed.

  4. Kristin, Bill, and Kevin,

    Thanks for your comments! It is great to see that thoughtful people are reading my blog and taking the time to write meaningful comments. I appreciate the additional point of view.

    I still worry about the monopoly issue, though. Isn’t it a conflict of interest to own a large block of retail space as well as be the largest retailer in town? For example, what if the co-op wanted to move into the old Smith’s space? It seems to me like that should be allowed. Smith’s shouldn’t be able to control our options potentially competitive retail.

    I’m sure there are many arrangements that would lead to an independently managed Mari-Mac. To me that seems important to pursue.

  5. Reid,

    The very questions you are asking were definitely raised in the course of the committee's and County's evaluation of all this ... the competition issue was an important concern of the committee and most (if not all) of its members. The conclusion (in my words) was that if there were any viable options for pursuing a competitive option that allowed for achieving the key aims of the project (increasing the ability of the community to meet retail needs locally, providing substantial operating support for the schools, decreasing retail leakage, helping to implement the downtown plan) we definitely wanted to pursue that. In fact, there were efforts to identify viable competitive potentials to what Kroger offers. The evaluation turned up some theoretical possibilities, but at the end of the day the relative benefits of the Kroger option greatly outweighed any perceived benefits that may have come from any of these theoretical possibilities ... beyond that, the Kroger option is a specific, real option, not just a theoretical one.

    I'd like to note that all of this was already part of the public vetting that led to selection of North American Development Group to be the developer. This was a known factor that was already heavily discussed and vetted as that decision was made.

    Your question about the co-op is an interesting one given the fact that it already does exist and is operating in the community. It already demonstrates that the Trinity/Mari Mac situation does not mean that such a business is prevented from operating here. Interesting to me, LACDC has already been engaged in discussion with another property owner in town that is looking at new opportunities for their property that would come from the Trinity project moving ahead -- one of the specific opportunities they are looking at is how their property can be an option for businesses excluded from locating at Trinity/Mari Mac because of competitive exclusions. Trinity/Mari Mac IS the only likely place for a >100,000 square feet grocery/general merchandise store, but it IS NOT the only place in town for retail.

    Also, there are a considerable range of retail categories that are in no way excluded (they would be welcomed by Kroger) that North American Development/Kroger are motivated to pursue. A flip-side advantage of the situation is that Kroger is highly motivated for Mari-Mac to be a successful commercial property ... it is not in their interest for their property to atrophy.

    Sorry to be so windy, but I really do want you and your readers to understand that the competitive concern was noted as a serious issue, it received considerable, serious consideration, and it has not been neglected in any way. It is but one of the important issues in what is a complex initiative.

  6. Reid,

    I do not think there is a conflict of interest in Smith's owning one plot and renting another. That is just capitalism. They bought it because it came available, the leases (they have a couple)on their space was coming up, they had a hard enough time providing groceries in a decent way in the space they were in, and the previous owner took a good price. They would prefer to be in the new space. It would be bigger, it would be nicer, it would sell more.

    In the end they said they would turn Mari-mac over to their internal group that manages properties; they have to make money on it, they paid $9m for it (or 8-not sure now), it has to make money. They know there are tons of other business needs not met up here. They also said they're a grocer and not a retail developer....so don't be surprised if in the next five years or so they sell it. But we have no control over that and throwing it into the mix of current negotiations - when it is beyond a completely non-standard term - is not viable and we shouldn't pretend that totally non-business solutions are a possible reality.

    We have some negotiating room with them, but based on the input of retail contract negotiators with combined twenty or thirty or more years of experience, forcing control of what Smith's will do with Mari-mac is not one of them.

    We can't magically make another major grocer retailer in NM. The Co-op just spent a ton of money to create the space it's in; it is not moving anytime soon. There are no other grocers interested in coming here. We would make more from Smith's if they were in our town's property than in their own space. All around it is a good deal for the town.

    Finally. we have a lot of theoretical wishful thinking about business in this town - like Bob Gibson's dream that existing businesses tear down their current buildings and rebuild along their alley because he wants them to - and it is not productive.
    -Kristin Henderson again