ALBUQUERQUE — Many New Mexicans don’t realize the impact that the State Land Office has on its urban areas, but it’s immense. The land office currently controls 9 million acres of land throughout the state, held in “trust” to generate revenue for New Mexico’s schools and other institutions.

 

In the past decade, the land office has aggressively pursued partnerships with private land developers as a way to make money on the significant acreage it controls in urban areas. And as a result, there are serious questions at play regarding who gets to shape the way cities look in the future: the people who actually live there or the State Land Office and the developers it partners with.

 

These partnerships follow from a policy put in place by former land commissioner Ray Powell Jr. in the 1990s to develop the 13,000-acre Mesa del Sol project in Albuquerque. Essentially, the land office leases land to a private developer, in return for a percentage of profit from the project. The process is conducted in two parts: a short-term (under five years) no-bid lease is negotiated for the planning phase; then the project is put out to bid at a public "auction" for the tangible build-out.



The Independent recently reviewed nine of the most recent "planning and development" leases entered into by the land office, all but one negotiated in the last four years. These leases are at the heart of a disagreement between Attorney General Gary King and Land Commissioner Pat Lyons over whether or not two aspects of the compensation arrangement for the short-term planning phase is legal.

 

King issued an opinion in February saying that state law does not allow compensation for work on state trust land that results in no tangible improvements. It also does not, he says, allow for compensation based on appreciation in land value from the beginning to the end of the planning period.

 

State Land Office General Counsel Robert Stranahan explained why he believes King is incorrect in a previous interview with the Independent.

 

Stranahan argues that the work of the developers provides benefits that can be interpreted as "tangible" even if they do not provide any actual built infrastructure, and that the change in land value is an appropriate measure of those improvements. The leases the Independent reviewed followed a general pattern, calling for only "intangible" improvements. In fact, they explicitly prohibited the addition of "tangible" improvements to the land, with just a few exceptions.

 

The attorney general’s legal opinion was requested by state legislators concerned about a short-term planning lease to a Las Cruces developer, Philip Philippou.

 

Potentially worth millions to Philippou for planning work over a couple of years, the lease was made during the same period in which Philippou made a couple of very large contributions to Lyons’ re-election bid in 2006. At the same time, public displeasure was pervasive in Las Cruces over lack of community input into how thousands of acres of state trust land was being developed on the East Mesa of the city. This displeasure was largely directed at city government, and is credited in large measure for a significant change of representation on the city council, as well as a new mayor, in November of 2007. But the issue of the state land office’s approach to development in Las Cruces was lurking throughout, and continues to do so.

 

According to Las Cruces Mayor Ken Miyagashima, the land office is having a huge impact on the city and the majority of the residents have not had substantive opportunities to provide input into how the city should look in the future. Six of the nine leases the Independent reviewed are on land adjacent to or now annexed to Las Cruces, with various estimates placing the total land put out to lease at over 8,000 acres. The land office has identified up to 11,000 acres in Las Cruces that has potential for development. In a letter to Commissioner Lyons, dated February 11, 2008, Miyagashima described the difficulty the city had with an annexation requested by Philippou in 2007:

The size of the annexation request was one problem since, under current law, we had a relatively short period of time to review and approve a complex and extensive proposal. Also, since the agent himself was adverse to any delay in the proceedings there was simply not enough time to properly evaluate the impact of the master plan on traffic patterns, drainage, schools, conformance with open space and trails plans, or any of the other myriad implications of a proposal of this size.



To this end, I am requesting that the State Land Office work more closely with local governments and agencies throughout your land development and release process. We ask specifically that you not only work with the City of Las Cruces on this planning, but also work with other area agencies, including Dona Ana County, the local school district and the BLM.

Prior to winning the mayoral seat last Fall, Miyagashima was a Las Cruces city councilor. He told the Independent about his experience with land office annexation requests in the past:

In 2005, I didn’t vote for the annexation, it just seemed like it was hammered out pretty fast. It happened again in 2007 with Philippou. We’re talking 150 zoning designations, 4,400 acres—no one raised any questions. They may be rigorous in their own planning and they indicated that they had worked with some of our city staff, but during those annexations I wasn’t even aware of their work until asked to vote for annexation.

This description was echoed by Stephen Fischmann of the Quality Growth Alliance, and now a candidate for state Senate. Fischmann says the problem is ongoing:

I’ve asked the City Manager, the City Assistant Manager and the head of planning about how to involve residents in the planning process. The response is that the State Land Office does what the State Land Office wants to do. But the State Land Office hasn’t bothered to involve the public at all in the planning for these lands. It’s the height of arrogance and irresponsibility on the part of government.

The land office’s Kristin Haase told the Independent that it was true that the Lyons administration does no pre-planning work in terms of community participation. Instead, she said, the projects go through the normal development and review process mandated by municipalities in which they exist. But otherwise, the land office determines what land to develop, what its best suited for, and who should develop it.

 

On the question of why the agreements don’t go through a public bidding process, which would be one way to notify the public of the land office’s intentions, Robert Stranahan said it isn’t legally required, and that bypassing the bidding process saves time and money. Plus, he said, the mandate to make money ensures they choose developers who are best able to do the job on a case-by-case basis.

 

In an interview, Powell, however, told the Independent that he believes a competitive bidding process is essential:

The bidding process on these leases is essential even if it is not required legally. Leases during my administration were all put out to bid except for the first one. And that case proved to us how important community involvement is to a successful project in which the community is able to achieve its vision at the same time the land office is able to make money for the kids. This is putting state trust land to its best and most effective use.

Powell, who served two terms prior to the Lyons administration, also said that during his administration the planning work was done in-house, and private developers were primarily brought into the project only after it went out to public auction. He said his office had an "award-winning planning team" that worked with adjacent communities to plan projects while still being very profit-oriented for the state, an approach that was “abandoned,” he said, by the Lyons administration.

 

A study conducted by the University of Michigan bolsters Powell’s description, but described it as a difference in ideology. According to the study of how Mesa del Sol has been developed over time, the authors state that in contrast to the Powell administration, the Lyons administration has "markedly different business philosophies" from Powell’s, "minimizing the SLO’s role in planning and placing the responsibility of collaboration on the private developer."

 

Ex-land commissioner Jim Baca, who is credited with the original Mesa del Sol concept, also weighed in with the Independent on the topic. He said that public-private partnerships are good, but that current state law doesn’t safeguard against “sweetheart deals.” The Michigan study supports this assessment by describing New Mexico’s land commissioner as having "unchecked authority" over trust lands.

 

According to Baca, the State Land Office is a “creature of 1910, with immense amounts of power in the hands of the land commissioner. It’s time for reform.”

 

Baca says the no-bid leases used by the land office lack transparency, and that a board should be in place with veto power over land deals. He also said the land office should be getting “fair market value” for its property, rather than giving millions to developers.



Regardless of how the legal question of compensation for the development work is resolved, the issue of citizen participation remains. According to Miyagashima, Lyons contacted him after receiving his letter but they have yet to arrange a good time to discuss the issues in detail. The city is currently conducting a public process called Vision 2040, a long-range comprehensive planning project for Las Cruces and the surrounding county. Miyagashima also indicated that his administration in conjunction with the City Council is looking into how they might pass laws to ensure they have more input into the development of state trust land in the future.



The impact of state land office development projects on Las Cruces is quite large, but the office also has active leases in other areas of the state, and in all has identified approximately 30,000 acres of land for development throughout New Mexico. The land office website has an interactive map that shows current leases of all varieties along with the acreage and leaseholder information here.