{"id":24498,"date":"2010-12-21T09:03:26","date_gmt":"2010-12-21T16:03:26","guid":{"rendered":"http:\/\/www.nmpolitics.net\/index\/?p=24498"},"modified":"2010-12-21T17:06:14","modified_gmt":"2010-12-22T00:06:14","slug":"audit-is-a-damning-report-on-lyons%e2%80%99-tenure","status":"publish","type":"post","link":"https:\/\/nmpolitics.net\/index\/2010\/12\/audit-is-a-damning-report-on-lyons%e2%80%99-tenure\/","title":{"rendered":"Audit is a damning report on Lyons\u2019 tenure"},"content":{"rendered":"<div id=\"attachment_10769\"  class=\"wp-caption module image alignright\" style=\"max-width: 250px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-10769\" title=\"Lyons-Pat-2\" src=\"http:\/\/www.nmpolitics.net\/index\/wp-content\/uploads\/2010\/01\/Lyons-Pat-2.jpg\" alt=\"\" width=\"250\" height=\"210\" \/><\/a><p class=\"wp-caption-text\">Patrick Lyons<\/p><\/div>\n<h4>Lyons responds by calling the audit flawed and Balderas delusional<\/h4>\n<p>State Auditor <a href=\"http:\/\/www.osanm.org\/about-hector-balderas\">Hector Balderas<\/a> released his long-awaited and hard-hitting audit of the New Mexico Land Office on Monday and accused the land office of \u201closing millions of dollars of valuable land.\u201d He referred the audit to prosecutors for investigation.<\/p>\n<p>Land Commissioner <a href=\"http:\/\/www.nmstatelands.org\/default.aspx?PageID=2\">Pat Lyons<\/a> responded by calling the audit \u201cfactually flawed, grossly incompetent, legally deficient, and purposefully misleading.\u201d He accused Balderas of playing partisan politics and called his assertion about losing millions of dollars in land \u201cdelusional.\u201d<\/p>\n<p>Balderas\u2019 audit, which sampled more than 100 state trust land transactions during Lyons\u2019 tenure, \u201cuncovered numerous troubling financial, operational and contractual practices that require reform,\u201d <a href=\"http:\/\/nmpolitics.net\/Documents\/LandOfficeAuditNR.doc\">a news release<\/a> from the auditor\u2019s office states.<\/p>\n<p>\u201cAfter nearly two years of careful review, we found a complex financial operation that didn\u2019t have adequate documentation to substantiate major financial transactions and arbitrary appraisal and improvement value credits,\u201d Balderas said. \u201cThis speculative practice has led to New Mexicans losing millions of dollars of valuable land that was benefiting the trust.\u201d<\/p>\n<p>The audit is a damning report on the way the Republican Lyons has conducted business during eight years as the state\u2019s land commissioner. You can read the full audit <a href=\"http:\/\/nmpolitics.net\/Documents\/LandOfficeAudit.pdf\">here<\/a>.<\/p>\n<div id=\"attachment_8844\"  class=\"wp-caption module image alignright\" style=\"max-width: 250px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-8844\" title=\"Balderas, Hector\" src=\"http:\/\/www.nmpolitics.net\/index\/wp-content\/uploads\/2009\/11\/Balderas-Hector.jpg\" alt=\"\" width=\"250\" height=\"234\" \/><\/a><p class=\"wp-caption-text\">Hector Balderas<\/p><\/div>\n<h3>The findings<\/h3>\n<p>Among the audit\u2019s 15 findings:<\/p>\n<ul>\n<li>Some land sales and exchanges were not in the best interest of the trust. For example, the land office\u2019s 2008 exchange with Bowlin Travel Center gave up $14,644 in annual lease revenue in exchange for a $14,400 increase in value of the land exchanged, the audit states. In other words, the trust was better off financially by not entering into the agreement with Bowlin.<\/li>\n<li>Planning and development lease payments weren\u2019t collected from companies owned by a controversial Las Cruces developer, Philip Philippou. Failure to collect rent payments, interest and penalties for the two leases has resulted in a loss of $335,975, the audit states.<\/li>\n<li>The audit identified problems with the way appraisals were done. Some were \u201cdeficient,\u201d one was accepted from an appraiser with an expired license, and appraisals were \u201cnot on income basis\u201d for the controversial White\u2019s Peak land exchanges.<\/li>\n<\/ul>\n<p>Among other \u201crisk observations\u201d that were noted:<\/p>\n<ul>\n<li>The land office didn\u2019t follow its publicized bidding process in the case of one of the leases with Philippou. That is within Lyons\u2019 authority, the audit states, but it \u201cdiminishes the perception that the Commissioner may have awarded the lease in the best interest of the trust.\u201d<\/li>\n<li>The audit noted that there were \u201ca large number\u201d of sampled transactions in which land deals were made \u201cin close temporal proximity\u201d to campaign contributions from the applicants who received the deals. The auditor does not allege that the transactions were made in exchange for campaign contributions, but states that it would be \u201cprudent and in the best interest of the trust and the public that disclosure requirements be considered.\u201d<\/li>\n<\/ul>\n<h3>A history with Philippou<\/h3>\n<p><!--more--><\/p>\n<p>Many of the findings relate to the land office\u2019s dealings with Philippou. Balderas\u2019 special audit\u00a0<a href=\"http:\/\/www.nmpolitics.net\/index\/2008\/05\/balderas-to-conduct-audit-of-land-offices-dealings\/\">was requested in 2008<\/a> by a handful of state representatives following a 2007 opinion from Attorney General\u00a0<a href=\"http:\/\/www.nmag.gov\/office\/Divisions\/EO\/kingbio.aspx\">Gary King<\/a> finding fault with Lyons\u2019 leasing of land on Las Cruces\u2019 East Mesa to Philippou for development.<\/p>\n<p>The AG\u2019s\u00a0<a href=\"http:\/\/www.haussamen.com\/AGOpinionOnSoloLandDeal.pdf\">formal opinion<\/a> on The Vistas at Presidio land deal states that the\u00a0<a href=\"http:\/\/www.haussamen.com\/LandOfficeAgreement.pdf\">lease agreement\u2019s<\/a> method of compensating Philippou\u2019s company is \u201cnot comprehended by and in conflict with\u201d 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 agreed to compensate Philippou for other project costs and 40 percent of the change in value of the land as a result of the improvements.<\/p>\n<p>Lyons\u2019 office has entered into a number of leases for land in Las Cruces, Albuquerque, Rio Rancho and Santa Fe that contain similar provisions.<\/p>\n<p>In the Philippou situation, Lyons not only bypassed the publicized bidding process, but Philippou also <a href=\"http:\/\/www.nmpolitics.net\/index\/2007\/04\/lyons-is-latest-to-prove-need-for-contribution-limits\/\">gave $20,500<\/a> to a political action committee run by lobbyists Philippou employs. The PAC gave most of the cash to Lyons, and the lobbyists gave another $3,600. After Lyons leased the land to Philippou, the developer gave another $6,000 directly to Lyons\u2019 campaign.<\/p>\n<h3>Land office response<\/h3>\n<p>The land office released two official documents it sent auditors in response to findings in the audit. You can read the first <a href=\"http:\/\/nmpolitics.net\/Documents\/LandOfficeResponse1.pdf\">here<\/a> and the second <a href=\"http:\/\/nmpolitics.net\/Documents\/LandOfficeResponse2.pdf\">here<\/a>. Both include a great deal of supporting documentation.<\/p>\n<p>The land office stopped requiring collection of the payments from Philippou, its response states, because of the AG opinion \u2013 which \u201ccast doubt on the enforceability\u201d of one lease with Philippou \u201cand all other similar leases\u201d \u2013 and because the developer refused following the AG opinion to make payments.<\/p>\n<div style=\"float: right; padding-left: 10px; padding-bottom: 10px; padding-top: 5px;\">\n<hr \/>\n<div style=\"font-size: 10px; margin: -14px 0 -14px 0;\">Advertisement<\/div>\n<\/div>\n<p>\u201cLitigation regarding a default under either lease could have produced a court decision casting doubt on all planning and development leases,\u201d the land office response states.<\/p>\n<p>But by allowing Philippou to stop making payments, the land office violated its own lease provisions, the audit states. It notes that the land office has continued collecting payments from other, similar leases.<\/p>\n<p>As to the observation that one of the deals with Philippou was entered into before the publicized bid submission deadline, the land office response states that, in retrospect, \u201cit would have been prudent to wait until all bids were submitted and reviewed before entering into a lease.\u201d<\/p>\n<p>\u201cIn the months that followed the public perception was that the land office did something wrong,\u201d the response states. \u201cNothing could be further from the truth.\u201d<\/p>\n<p>The lease generated $116,437 in revenue, the response states.<\/p>\n<p>The land office response doesn\u2019t directly address the \u201crisk observation\u201d about campaign contributions, but instead accuses Balderas of a partisan witch hunt.<\/p>\n<p>\u201c\u2026 the decision to spend two and a half years and countless auditors and investigators on the only executive agency run by an elected Republican and ignore the prominent, public and private reports of the &#8216;pay-to-play,&#8217; bribery and kickback culture of the Auditor\u2019s own political party deserves scrutiny as well,\u201d the land office response states. Balderas is a Democrat.<\/p>\n<p>Lyons, in a news release, said the audit \u201ccompletely misunderstands and misstates very basic business transactions that favored the trust beneficiaries and New Mexico taxpayers.\u201d<\/p>\n<p>\u201cBalderas actually recommends modifying transactions to lose money.\u00a0This may be the way the state auditor and Governor Richardson operate, but it is not how the Land Office operates,\u201d said Lyons, who leaves office at the end of the year but is becoming an elected member of the Public Regulation Commission.<\/p>\n<h3>Land office \u2018interfered throughout the process\u2019<\/h3>\n<p>Balderas alleged in his news release that the land office \u201cinterfered throughout the audit process, which had the effect of delaying the final completion of the report.\u201d<\/p>\n<p>The land office, he said, withheld documents from auditors and also \u201cblacked out significant portions of documents, including documents that included critical statements from land office employees who reviewed proposed transactions.\u201d<\/p>\n<p>Balderas said he referred the audit to the Legislative Finance Committee, the attorney general and the U.S. attorney.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>State Auditor Hector Balderas released his long-awaited audit of the New Mexico Land Office on Monday and accused the land office of \u201closing millions of dollars of valuable land.\u201d Land Commissioner Pat Lyons called the audit flawed and Balderas delusional.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,1],"tags":[138,107],"class_list":["post-24498","post","type-post","status-publish","format-standard","hentry","category-news-and-analysis","category-uncategorized","tag-growth-and-development","tag-roundhouse"],"_links":{"self":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/24498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/comments?post=24498"}],"version-history":[{"count":0,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/24498\/revisions"}],"wp:attachment":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media?parent=24498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/categories?post=24498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/tags?post=24498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}