The expansion earlier this week of a special audit that will now look for wrongdoing in the New Mexico Land Office caught officials in that office off guard, they claim. Because of that, they’re questioning the motives behind the action.
“We were completely surprised,” said Kristin Haase, spokeswoman for the land office. “… we are puzzled by the auditor’s decision and curious about his motivation.”
That’s because, Haase claimed, State Auditor Hector Balderas had already notified the land office that the special audit was completed and was “clean.”
Balderas announced the expansion of the special audit on Wednesday. What started as a review of policies and procedures that govern the sale, exchange and leasing of trust lands is now an investigation into whether there has been any wrongdoing in the office’s dealings related to state trust land.
Balderas is a Democrat. Land Commissioner Pat Lyons is the only Republican statewide elected official.
Auditor spokeswoman Caroline Buerkle said Balderas’ office did tell the land office that it had completed “test work” related to the land office’s method of compensating some developers for improving land on behalf of the state — the original reason for the audit — but that didn’t mean the auditing process was over.
“We expanded the scope of the special audit after coming across information that compelled the state auditor to do so,” Buerkle said. “The continued and sole motivation of the state auditor is good government — ensuring accountability and transparency at every level of government, irrespective of position or party affiliation.”
Balderas says he expanded the audit because he identified “areas of risk,” including “related-party transactions,” “instances of financial benefit in exchange for land transactions” and “transactions executed between government employees and officials.” He has not elaborated.
The history
Balderas’ special audit was requested in May by a handful of state representatives following a 2007 opinion by Attorney General Gary King finding fault with Lyons’ leasing of land on Las Cruces’ East Mesa to Philip Philippou for development.
The AG’s formal opinion on The Vistas at Presidio land deal states that the lease agreement’s method of compensating Philippou’s company is “not comprehended by and in conflict with” a statute that allows developers who improve land for the state to be compensated only for the appraised value of the improvements. In the lease, the land office also agrees to compensate Philippou for other project costs and 40 percent of the change in value of the land as a result of the improvements.
There are a number of leases for land in Las Cruces, Albuquerque, Rio Rancho and Santa Fe that contain similar provisions.
But the Philippou lease has been the most controversial. In that situation, Lyons bypassed his own bidding process — which he’s not currently required by law to use — to lease the thousands of acres to Philippou in December 2006. Months earlier, while Lyons was running for re-election, Philippou gave $20,500 to a political action committee run by lobbyists he employs. The PAC gave most of the cash to Lyons’ campaign, and the lobbyists gave another $3,600. After Lyons leased the land to Philippou, the developer gave another $6,000 directly to Lyons’ campaign.
A legislative controversy
Several reform bills have also been proposed in response to the controversy, and Lyons has worked with lawmakers on some of the proposals. The House approved on Wednesday a bill that would require competitive bidding for the land office’s development contracts. House Bill 606, sponsored by Rep. Jeff Steinborn, D-Las Cruces, was endorsed by Lyons.
But Lyons got into a fight with Steinborn and Rep. Nate Cote, D-Las Cruces, over another bill on Thursday. Cote’s House Bill 607 would solidify in law how developers can be compensated for improving land for the land office.
A committee substitute for the bill was heard for the first time on Thursday in the Health and Government Affairs Committee. Lyons put out a news release saying that, though he had endorsed what he believed the bill was going to state, he was “blindsided” by the committee substitute, which he characterized as a “backroom deal” between Cote and Steinborn, the committee’s vice chair.
Back and forth
The dispute is over whether law will allow developers to be compensated for the increased value of land they improve. The new bill allows them to be compensated for 25 percent in the change in value. Lyons says he never agreed to that.
“The bill presented this morning in committee doesn’t reflect any agreement we’ve made, reverses the work we’ve accomplished over the last few weeks, undermines the authority of the state land commissioner and threatens the land office’s mission to generate revenue for public schools,” Lyons said.
The bill was approved by the committee without recommendation on a vote of 5-3 and now heads to the House floor for a vote.
Cote said in a news release that he presented a bill to the committee that “reflected my negotiations” with the land office, but “it’s the committee’s prerogative to introduce substitutes.” Cote’s proposal would have allowed developers to be compensated for 35 percent in the change of value of land they improve.
Steinborn said in the release that the committee chose to “strengthen this legislation.”
“Clearly, our committee action was in the best interest of public schools and New Mexico residents,” he said. “It’s sad to see Commissioner Lyons once again return to making baseless comments and personal attacks.”
Lyons has accused Steinborn of pushing reform of the land office because he plans to run for land commissioner in 2010. Steinborn says he has “never really seriously contemplated running for that office.”