Op-Ed: Allen Saenz Clarifies SALA’s Decision To Withdraw LEDA Application

Submitted by Carol A. Clark
on May 20, 2024
- 6:41 am

By Allen Saenz
Owner
SALA Event Center

Initial Thoughts on the County Manager’s Response

After reading the County Manager’s response to SALA’s announcement, I would like to offer further perspective. I am not surprised that the County Manager saw security preferences as the only issue. However, my perception is that the County was unable to respond to the SALA application in a timely manner due to the lack of a solid process and guidelines for handling LEDA applications. The County seemed to make up many rules and “explicit requirements” as we went along. I repeatedly requested objective standards but received nothing beyond the ordinance and State law citation, both of which are ambiguous about the amount of security required.

Restrictive Bureaucracy vs. Public-Private Partnership

Both the County ordinance and the State law seem open to interpretation, and I asked for a business-friendly interpretation given the strong potential public benefits of the project. My experience was that the County staff asserted very restrictive interpretations designed to eliminate risk rather than establish a partnership. The benefits of the project were rarely discussed relative to the assessment of risk. This indicated to me that there was not a serious interest in forming a public-private partnership. A true partnership should involve both the public and private sectors contributing to a project that benefits both parties, sharing risks and rewards.

Moving Target and Changing Requirements

I would rather not spend more time on an internet argument, but it is important to clarify my decision to explore other options and to counter misconceptions in response to my announcement.

I was encouraged by the County Council’s decision in December to approve the basic terms of an agreement, but since then, I spent considerable time and resources trying to meet the County Staff’s changing interpretations of the County Code and State law. It felt like a moving target. I would make a proposal that I believed met the letter and plain language of the law and code and, without much discussion, I would receive a lawyered document a week or more later that often introduced new concepts and concerns. I was told that the Council could not be presented with any of my proposals unless the Staff had already agreed to them. There seemed to be no way to present the cost/benefit/risk case and my arguments about how the Code and State law requirements were met to the ultimate decision-makers – presumably the County Council. This did not feel like anything close to being a partnership discussion.

Challenges with Security Proposals

From the beginning, SALA proposed “security” that we believed met the requirements of the Code and Law. It was clear from the beginning that there was going to be a change in that interpretation. We quickly gave in and provided necessary collateral in multiple ways, but it was never the preference of the county, which seemed focused on how to sell the collateral if SALA went bankrupt. We then proposed various forms of security, including pledging equity in another company and assets from another business, but these were rejected because the County said those assets wouldn’t be easy enough to liquidate in the hypothetical case that SALA did not perform the project as agreed.

At the County’s urging, we explored obtaining a letter of credit secured by these assets. Initially, we were told by the County that the costs could be rolled into the project, so we hired legal help and started pursuing it. Later, the County changed its position and said we could not include the costs of the letter of credit in the project, so we abandoned that approach. I then proposed that my wife and I would pledge our personal equity in our home as security to meet the County’s preference. This was also discouraged, with the explanation that using this approach could make the County look bad, even though it would have been the same security I would have needed to offer to a bank to obtain a letter of credit. Additionally, despite our lender having an independent appraisal performed to determine the equity value in our home, the County wanted yet another appraisal and to hire an outside lawyer if I pursued this path.

None of this seemed to be about meeting any explicit requirements of the Code or Law. There is nothing in the Code or Law that precludes the County Council from considering the costs, benefits, and risks of the proposed project and making an informed judgment about the adequacy of the security offered.

Decision to Withdraw and Future Outlook

The process dragged on for nearly a year, leading me to conclude that this was not what a partnership should be like. The decision to withdraw was not because I changed my mind, but because I realized the County would likely continue to be unpredictable, and it was unclear what additional obstacles I would need to overcome to satisfy their requirements.

The Bigger Picture

The personal risk I and my family are taking in this project is significant, and the contribution requested from the County was minimal compared to millions spent on lower-priority goals. The benefits to Los Alamos County far exceed the county’s risk. Before we created SALA, the County was discussing spending $2,000,000 – $8,000,000 to buy the Reel Deal theater property, renovating it as a Tween Center, and running the risk of operating and managing it. Yet, partnering with SALA to inject $600,000, matched by considerable SALA resources, proved challenging.

I need to focus my time on continuing to work on the businesses that I have in Los Alamos instead of sending documents back and forth. I hope the conversation continues about solutions and ways to improve in creating a county that is more willing to say yes than no, willing to assess and run reasonable risks, and focused on supporting small businesses to help them grow and prosper. If you want to discuss these things in a more productive setting, I am willing to do so. I will remain open to the idea that maybe things will change and there will be an opportunity to explore ways to have a true partnership or other ways to work together with the County for mutual benefit.

I have learned a lot, and I am also open to sharing my experience as input to helping the County to improve its programs and processes for helping our small business community. There is certainly room for improvement.

Encouraging Leadership and Community Participation

I encourage the County Councilors to review these documents and to lead county staff in prioritizing their goals and also to create metrics for economic development. I also encourage more people to join other community members who are involved in many areas and boards and who are working with the County in doing great things. Your support and participation are necessary, to be engaged, to know what is happening, to be involved, to participate in events and meetings, and to express the concerns and priorities of the people who live here in Los Alamos.

Thanks for listening,
Allan Saenz

SALA Los Alamos Event Center
asaenz@losalamos.com

Additional Resources

As I reviewed the past year of working on this, I think it could be valuable for anyone who wants a deeper understanding of my perspective to check out the following: