By LISA SHIN
Los Alamos
Here are 5 brief points in response to Councilor Suzie Havemann at the last Council meeting on November 19th, 2024.
- Affordable housing: On May 15, 2024, Bernalillo County commissioners voted to acquire two plots of land in the International District, which the county will put in an affordable housing community land trust and are slated for the construction of affordable housing projects to be planned at a later date. The acquisitions are funded by a $2.5 million New Mexico Department of Finance grant that the County Commission also voted to accept at last night’s (Tuesday) commission meeting.
Taking advantage of state grants for this specific purpose rather than using our local economic development and capital improvement funds is a far more reasonable proposal.
- Public input: If she is unwilling to reject this purchase, based on the strong public outcry against it, what makes us think that public input will matter for what can go there? Will she listen to public comments to “amend and massage” plans for these properties?
- Mari-mac redevelopment: Recall that Columbus Capital finalized the $8M purchase of the former Smith’s building and the $5.5M purchase of 800 and 820 Trinity Drive/911-991 Central Avenue properties. Columbus has been meeting regularly with County Manager Anne Laurent to discuss their redevelopment plans, as well as a $31.5M public funding request.
- 1031 like-kind exchange: Councilor Havemann cited a 1031 exchange as a possible reason for the urgency of the sale by the proposed closing date. This means that the owner has 45 days after this sale to purchase another property to avoid capital gains tax. Here, it appears that she is more concerned about protecting the owner’s financial interests than she is about being fiscally prudent with our tax dollars. It is NOT our responsibility to ensure that the owner avoids massive taxes with this sale.
- Philip Gursky’s comments. Councilor Havemann remarked that they were helpful and stuck with her. They stuck with me, too and prompted me to ask my attorney, Tim Bullock, to write a letter. It has been delivered to each of your mailboxes at the Municipal building and is attached to this email. I have also attached a copy of the New Mexico Administrative Code 1.5.23.8.
Letter from Attorney Tim Bullock:
BULLOCK LAW L.L.C.
1505 15th Street, Suite C, Los Alamos, New Mexico 87547
(p) 303.552.7099, BullockLaw@Gmail.com
Los Alamos County Commissioners:
Randall Ryti
Denise Derkacs
Theresa Cull
Melanie Hand
Suzie Havemann
Keith Lepsch
David Reagor
Los Alamos County
Administrative Offices
1000 Central Avenue
Los Alamos, NM 87544
November 28, 2024
Re: Proposed purchase of parcels on Diamond Drive
Commissioners:
I represent Lisa Shin who asked me to summarize her arguments against the proposal now before the County Commission to purchase three adjoining parcels on Diamond Drive: the old Metzgers lot, the Anderson’s Pharmacy/Morning Glory lot, and the land and building formerly known as Ed’s Market.
The Role of County Government
Local governments are tasked with basic community functions. They meet needs and solve problems which traditionally include water, sanitation, streets, fire, police, criminal justice, elections, recording of documents and citizen protection. Property development is not a government function. The County’s entry into the real estate market as a competitor negatively impacts the value of other commercial property, as well as the ability to lease and sell competing commercial property.
The Governments Insensitivity to Price
Government officials are less sensitive to price when spending ‘other peoples money’. The three parcels were assessed earlier this year at $5.6M. This value was confirmed by professional appraisal. The appraiser considered the typical factors: price, location, the availability of alternative buyers, unique features, the market and other miscellaneous considerations. Citizens are now informed that the ‘negotiated’ purchase price between the seller and county staff is $9.85M – almost double the appraised amount.
Purchase of Real Property by a Government Entity Above Fair Market Value is Prohibited
Commissioners will be breaking the law if real property is purchased above fair market value.
Acquisition of Real Property
- Acquisition of real property for more than fair market value, as determined by the requirements of Paragraph (2) of Subsection B of 1.5.23.8 NMAC, is not permitted.
N.M. Admin. Code § 1.5.23.8
Relative Value of Land to Project Cost
Land value as a percentage of commercial project cost is typically 25% to 33% of overall value. In these circumstances, a $9.86M purchase price for the land would equate to an overall future project cost of between $29.58 to $39.44M. Monthly mortgage payments on $30M at 5% over thirty years is $216,721.
A Rush to Decide
The private owner of the three parcels is in a rush for the Commissioners to decide. By itself, the ‘rush’ should be a red flag given the amount of money involved and particularly when no project, public or private, has been identified. If the numbers worked, the land would be in demand and developers would take full advantage.
Unidentified Use Prior to Purchase Is Prohibited
New Mexico Administrative Code prohibits the acquisition of land without a description of proposed use. This is meant to forestall land speculation by public officials.
Acquisition of Real Property
- In order to attain approval for acquisition of real property, the board [of the public body] requires that the following information be provided at the time of submission to the board:
(4) a description of the proposed use;
. . . .
N.M. Admin. Code § 1.5.23.8
Anti Donation Clause in the New Mexico Constitution
Paying over the fair market value for a piece of real property violates the Anti-Donation Clause in the New Mexico Constitution even if the project or recipient of the largess is deserving. Los Alamos County Commissioners forget that they do not have the authority to dispose of public funds or assets in any way they choose. The key phrase from the New Mexico Constitution states: “Neither the state nor any county, school district or municipality . . . . shall directly or indirectly lend or pledge its credit or make any donation to or in aid of any person, association or public or private corporation . . . .” This Constitutional restriction applies even if Los Alamos County Commissioners have well-meaning intentions.
Proponents of the purchase will likely argue that there are a number of exceptions to the prohibitions on governmental donations, the most relevant of which allow government to:
- provide land, buildings or infrastructure for facilities to support new or expanding businesses in order to create new jobs, but only when authorized by specific legislation; and;
- make donations to assist in the creation of affordable housing, but only when authorized by specific legislation.
The community has experienced how Los Alamos County Commissioners have ‘helped’ promote new businesses in commercially vacant White Rock. More recently we’ve witnessed the County Commissioners rebuff SALA’s modest request for expansion assistance. At a recent Council meeting the City Manager claimed that “The County has a very good track record of using land and trying to put it back out into the private sector as well”. Is she the force driving this proposed boondoggle?
The County is not a developer and should stay within the traditional role of county government. There are far better ways to support our small business community.
Affordable housing is a sympathetic and noble goal but the numbers still have to work. They don’t.
Respectfully, my client urges withdrawal of any consideration of the purchase of the properties on Diamond Drive. On behalf of my client Lisa Shin O.D.,
BULLOCK LAW L.L.C.
s/: Tim Bullock
Copy of New Mexico Administrative Code 1.5.23.8:
Section 1.5.23.8 – ACQUISITION OF REAL PROPERTY
A. Public bodies requiring board approval before acquiring real property include, but are not limited to, the following:
(1) general services department;
(2) department of game and fish for expenditures from the game and fish capital outlay fund;
(3) the state for state parks or recreational areas pursuant to section 16-11(J) NMSA 1978.
B. In order to attain approval for acquisition of real property, the board requires that the following information be provided at the time of submission to the board:
(1) the form of general warranty deed by which the public entity will take title in fee simple absolute containing legal description of the property and warranty covenants; reversions or other forfeiture provisions in the deed shall be accepted only under extraordinary circumstances; special warranty deeds will be accepted only under extraordinary circumstances; when the seller is a public body, transfer of title shall be by quitclaim deed;
(2) a copy of a current appraisal completed by a general certified appraiser for commercial property or a general certified appraiser or a residential certified appraiser for residential property and report of review from the property tax division of the taxation and revenue department if appraisal was not done by the property tax division; the public entity seeking property tax division review must submit necessary information to the property tax division within time frame specified by the property tax division; when the seller is another governmental entity, neither an appraisal nor property tax division review is required;
(3) full sized site improvement survey plat to verify legal description and to identify the existence of recorded easements and encroachments, if applicable;
(4) a description of the proposed use;
(5) sources of funds used for the purchase;
(6) current title binder evidencing clear title with no non-standard exceptions, and agreement by the title company that it will delete general exceptions 1 through 6, and the first two-thirds of 7 and, to the extent that special exceptions are listed, an explanation of each special exception shown in Schedule B Section II and a statement of impact on intended use of the property as to each special exception;
(7) purchase agreement, if applicable;
(8) phase 1 environmental assessment for all properties; phase II environmental assessment if recommended by the phase I assessment; explanation of any recognized environmental conditions contained in such assessments and statement of how recognized environmental conditions will impact intended use of the property;
(9) resolution or minutes of the governing body, if applicable, authorizing the purchase and containing a provision making the acquisition subject to approval by the board; and
(10) approval of the disposition by the local government division of the department of finance and administration pursuant to section 3-54-2(D) NMSA 1978 if the entity selling, exchanging or donating the real property is a municipality.
C. Acquisition of real property for more than fair market value, as determined by the requirements of Paragraph (2) of Subsection B of 1.5.23.8 NMAC, is not permitted.
N.M. Admin. Code § 1.5.23.8
1.5.23.8 NMAC – N, 2-14-2001; A, 6-28-2002; A, 9-30-2004; A, 3-15-2010; A, 8-15-2011
