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Lacking a trustworthy local leadership
Michael Swickard
In the last month I have had a front-row seat to a controversy in which the Las Cruces leadership has acted improperly. At stake are millions of dollars and jobs for our local economy. Also at stake is the reputation of our city, with companies wanting to do business but unsure if the city leadership can be trusted.
Several years ago a golf course to replace the Las Cruces County Club course was built on the East Mesa as the centerpiece to a large development. Last year a road was put in by the developer of the project to the golf course but the city council said a second road was necessary for the facility to be used.
So the golf course has sat as a stranded asset for a long time using water but not generating tax revenue.
Concurrently, the Las Cruces Public Schools (LCPS) decided to build an elementary and a middle school near the golf course, in part to use a planned four-lane road for access and the water and sewage development. The first developer left the project unresolved, and the current developer, who has been in the community for 20 years and has successfully done several large projects, tried to find a win/win method to resolve getting the development project done while providing infrastructure for the schools.
Special assessment district stalls
The stimulus money that might have built the $10 million, two-mile, four-lane road with the water and sewer was lost when the funds dried up last year. So late last year the four-lane road was planned using a financing method called a special assessment district. This is an often used method of privately financing infrastructure development.
Staff members at both LCPS and the city, along with city bond counsel, the city finance director, and the single property owner/developer in the special assessment district worked diligently and reached detailed agreements in January of 2010.
The Las Cruces City Council reviewed the proposal and voted 7-0 in favor of a resolution to get the private funding for the special assessment district finalized and the road completed. Detailed descriptions and surveys of the property to be assessed to pay for the project were sent out for an independent appraisal after the council’s unanimous vote.
Then, inexplicably and without any notice to LCPS staff or the business people funding the special assessment district, in an early April work session it became clear that six city councilors, all speaking from what seems the same talking points, reversed their January positions, so the project stalled. The schools have moved as quickly as they could and hope to have a temporary two-lane road to their schools. But in doing so they have had to spend money they had not intended to lose to the infrastructure cost.
Thousands of hours of planning and untold dollars spent in good faith were squandered. These six councilors left LCPS, local area residents, the business people providing the financing, and all local unemployed road building and construction workers in the lurch. During the April work session, only the mayor tried desperately to avert the disaster.
LCPS loses out on $1 million reimbursement
On the talk show I do with Jim Spence, News New Mexico, Mayor Ken Miyagishima attributed the problem to the “inexperience” of the other six councilors as well as misinformation fed to councilors by still unknown parties. The mayor also made it known for the first time that the school district would lose out on a $1 million reimbursement commitment from the special assessment district property owner so now the schools must spend their own money and the temporary road will be removed when the real four-lane road is finally built.
Confirming the details of this was LCPS Associate Superintendant Herb Torres. Local businessman John Moscato, representing the sole property owner providing the assessed property for the entire road building project, also confirmed what Mayor Miyagishima had said.
What is obvious at this point is that this is no way for the city of Las Cruces to do business. Many other companies will be watching to see if the city can be trusted to stand by their word. One thing is for sure: This time they did not.
Swickard is a weekly columnist for this site. You can reach him at michael@swickard.com.
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OK – Rocklooper, you say you are not the author, I, Michael Swickard do hereby apologize for my remarks. I stand corrected. Sorry.
Still, focus that there is a process for the SAD which the state and city professionals handle. It is not for the city to be involved in which property is included in the SAD because the NM Finance Authority makes that ruling, not the City of Las Cruces. That is one of the talking points that each city councilor made as if off a talking points memo. It is wrong wrong wrong.
The professional staff at the state went forward with this SAD as they have many other SADs in the state. The city is just the administrative agent, not the bond authority; they have no risk in this. All of the other questions you ask are outside of what the city council is supposed to do in a New Mexico Finance Authority SAD. The questions about the golf course are especially out of bonds because this is about two miles of road, not the road into the golf course. When and if the developer does the SAD into the golf course the state of New Mexico will ask those questions.
What you cannot align is that everyone was blindsided according to professional staff for the state, city and school district on April 5th when this was supposedly a done deal. They went on record about this concern that everything was correct, all of the paperwork was correct and out of nowhere the city council manufactured these concerns which stopped and is still stopping the process. The state and developer cannot go forward because it does not make any sense what the city council wants. Dolores Connor said on the radio she wants another mile paved for two million dollars. She wants the SAD redone so that it is $12 million for three miles instead of $10 million for two miles. This SAD and all of the paperwork is a five million a mile project for two miles. That is not a professional way for the city council to act. They voted 7-0 in January and then blindsided everyone on April 5th with stuff the city staff had not heard. Why blindside your own professional city staff. It is so unprofessional.
Again, Rocklooper, sorry I thought you were the author. Michael
Just for the record, I’m not the author of the mysterious memo Mr. Swickard is so concerned about, and I’m not anti-growth. I like the amenities and increased opportunities that have come to Las Cruces in the many years I’ve lived here. I just don’t want to return to the days where a developer comes up with a scheme and the city blindly rushes to enact it, no matter how detrimental it may be to the community or its financial future.
Mr. Swickard is quick to make assumptions, and that was my original complaint about his column on this issue, when he claimed there was some kind of conspiracy blocking this project. There are legitimate questions that should be raised in situations like this, and the councilors were exercising due diligence in raising them. My impression is that most, if not all, of the councilors would still like to create the SAD if key concerns can be answered.
Mr. Swickard claims that I am misreading state statute. I again invite Mr. Swickard and other interested parties to read it for themselves at http://www.conwaygreene.com/nmsu/lpext.dll?f=templates&fn=main-hit-h.htm&2.0 It sure looks like all benefiting properties are supposed to be included in the assessment district. As far as I know, this is the way it’s always been done.
Legalities aside, I think it’s peculiar that Mr. Moscato is asking for an special assessment district to build a road out to his golf course and Metro Verde subdivision, but is leaving these properties out of the assessment part of the equation. This just doesn’t seem right to me. I know the mayor is enthusiastic about SAD’s from seeing them used in the county, but the principle (which I think is a legal requirement) is that all of the properties benefiting from the road ought to be assessed. I don’t have the means to append a pdf of my hard copy of the proposed SAD’s hopscotch pattern of assessment, but Mr. Swickard or anyone else can ask for a copy from the city clerk.
If I were making assumptions, I might assume that Mr. Moscato is trying to circumvent normal city procedures and growth plans with this SAD, a pattern of behavior that the city doesn’t want to establish without considerable thought. I might assume that he’s trying to get the city to take on a large amount of risk in order to build a road to his property, and question why, if he’s all that confident of the payback, he didn’t include his Metro Verde land in the package. But these are complicated questions, and these assumptions might be wrong.
My point has been that Mr. Swickard, full of assumption, has attacked without a good understanding of the issue. And I felt this was unfair.
I like what I’ve heard about Mr. Moscato’s Metro Verde project. The golf course may be a fine centerpiece for the proposed subdivisions that surround it. Let’s just do things right – we’ve come too far from the “jam it through” mindset of past administrations to go back now.
Rocklooper – I assume since you continue to remain anonymous that you are the source of the misinformation given to the city councilors in April and it was done for your political agenda which I suspect is anti-growth. Prove me wrong and I will apologize immediately.
I base the statements in my column on the state of New Mexico Finance Authority which does other Special Assessment Districts all over the state. They have a specific mechanism to handle these SAD projects. The NMFA experts were involved in this process along with the City of Las Cruces bond counsel, the city finance director, and the single property owner in the Special Assessment District, John Moscato.
Rocklooper, where are your experts?
As to the law – you are confusing two parts of that law: A […for the purpose of assessment] B [or imposition of an improvement property tax…]. This was A, not B.
In the case of A what was needed was the funding authority (not the city of Las Cruces, rather, the State of New Mexico Finance Authority) to be assured that the bonds were fully collateralized. The city never had a risk position.
Now you question why not include other property? The project is 100% collateralized to the satisfaction of the funding authority. Why more collateral? The imposition of including more land into the SAD is totally unwarranted and is a violation of the process which the city council voted 7-0 to endorse in January. The process was explicit, especially as to procedures.
Further, at least one city council said on the record that she wanted more pavement than the two miles of the SAD. The procedure does not work that way and in asking for a different SAD it was what destroyed the mechanism where the Las Cruces Public Schools was set to save $1 million on infrastructure costs. Again, it seems to me that the anti-growth people do not want golf courses and new schools. However, it is not the business of the city council administering a SAD to have ANY opinion on new schools and golf courses.
Finally, to do business a governing body should be trustworthy. They must be explicit as to what the procedures are to do something like a SAD. Then, when it is presented exactly as agreed upon, there CANNOT be a change or the city council will be tainted with the charge that they are a body that cannot be trusted to do what they say in business deals.
Mr. Swickard speaks with such assurance that it’s easy to think that his assertions are based on fact. Unfortunately, this often isn’t the case.
In his posting below he says “Rocklooper wrote, “…properties (that) would benefit that were not — as required by law — included in the (special assessment) district…” This is false. The requirement is that the Special Assessment District bond be fully collateralized which an independent bond appraiser certified.”
I refer Mr. Swickard and readers of these postings to New Mexico Statutes 3-33-1, paragraph C, which says:
“The improvement district shall include, for the purpose of assessment or imposition of an improvement district property tax, all the property that the governing body determines is benefitted by the improvement, including property lying without the municipality creating the improvement district if such property abuts or is served by improvements authorized by Chapter 3, Article 33 NMSA 1978…”
(to see this passage and the statute in their entirety, visit http://www.conwaygreene.com/nmsu/lpext.dll?f=templates&fn=main-hit-h.htm&2.0 )
Is this statute open to interpretation? Maybe – I’m not an expert. But when one looks at the hopscotch designation of which properties would actually be included in the assessment district, it sure looks like several properties are going to benefit without being assessed, including Mr. Philippou’s (and now Mr. Moscato’s) golf course.
In any case, these are questions that the councilors were right to ask, and there need to be real answers from the developer and city staff before moving forward with the SAD. These are not the good old days – not so long ago — when questionable deals were pushed through the council without proper oversight. These councilors are doing their job, and they deserve our gratitude, not Mr. Swickard’s ill-informed accusations and bluster.
I rarely agree with Michael Swickard’s political views, but I agree with him in this case about disclosure. I’m finding generally that most comment sections on blogs have become painful to read. I think putting one’s name on one’s opinion is a good idea and would eliminate much of the internet bluster. And those needing anonymity can always post to wikileaks.
Rocklooper you are all wet about your information. Michael Swickard has the facts straight and he calls it like it falls. I find his views to be very refreshing and honest. You should possibly go back to your sources and clarify the facts before you attack Mr Swickard.
I post with my real name and have the backup data for this column. Rocklooper does not use his/her name while posting incorrect data. I could refute more but I will make two points:
1 – these incorrect charges were sent to the Las Cruces City Councilors by person or persons who did not want their names known and it blindsided the City of Las Cruces professional staff, state bond company, the school district and the developer when it surfaced at the April 5th meeting.
As to one of the charges – I could do all of them but the first is instructive enough:
2 – Rocklooper wrote, “…properties that would benefit that were not — as required by law — included in the (special assessment) district…” This is false. The requirement is that the Special Assessment District bond be fully collateralized which an independent bond appraiser certified. More importantly, when the developer contacted the State Land office which has 300 acres right next to the road, the State Land Office said they would go to court (a three to five year halting of the project) to keep the state land out of the SAD. So the developer, city staff and bond officials realized they had more than enough land to secure the bonds and did not include that land in the SAD.
Rocklooper – show us your name so we can know who is doing this anonymously. The harm to our area is enormous. The truth may not fit your political agenda but it remains the truth.
There’s a reason for citizen outrage here, but not for any of the reasons Swickard names, and certainly not because city councilors raised serious and valid questions about the Special Assessment District. The outrage should be directed at the Las Cruces schools for planning so poorly and putting the city in a situation where there was no way to legally bail them out. Here’s the story:
The developer that Swickard conveniently refuses to mention by name is Phillip Philippou, who promised to build a road for the school district — a road that not incidentally would run out to his new golf course project. When he abandoned both the golf course and the road, the schools, having gone ahead with their building projects based on their friendly relationship with Philippou, were desperate to find someone to complete the road. So the council, even though this was a mess not of their making, voted to set up a Special Assessment District (SAD) in which property owners who benefited from the road would pay for it over time. It seemed like a solution had been found.
Unfortunately, problems began to surface about the SAD, especially about properties that would benefit that were not — as required by law — included in the district, the mechanism for collecting the money owed, and uncertainty about whether the bonds would be paid off. In the April work session these questions were raised by a council that is — thankfully — paying much closer attention to city business than previous councils were accustomed to doing. There was no vote taken at the work session, and enthusiasts for the SAD were free to find answers to the concerns the councilors raised.
On a larger level the story — which Swickard totally misreads — is that city councilors are now acting on behalf of the citizens they represent, and not making bad decisions to help out specific developers. Even though the school district continues to act irresponsibly in its school siting decisions, the council tried to build the road through the SAD mechanism. They weren’t able to make that work, and the two lane road (which, contrary to Swickard’s assertions will be built to standards and is fully expandable) is the best that can be done at this time.
I know Swickard is trying to make a name for himself as political commentator, but I wish he would do his homework and try to understand the situation before sitting down to write.
I am not surpirsed that the Mayor has thrown the other council members under the bus. This is the man who says things before determing if what he says is accurate. These schools were supposed to be filled with children from houses that have not been built. But, since the funding was there, the schools had to be built. The road entrance to the schools and golf course was supposed to be through the housing development. Since the road was never put in and the money for schools was there, they built the schools and now Jornada Rd., a county road, is the main road to the schools which are on property annexed to the city. This is a two lane road with a 30 mph speed limit, not meant for all the construction traffic that has used it for the past many months. The traffic, uncontrolled noise (school construction falls under state, so city and county codes cannot enforce noise ordinances) and forthcoming everyday school traffic will totally destroy this road. The county says they have no funds for repairs. The city annexed portions of Peachtree Hills and Norh Jornada in order to accomodate the school even though, again, these were county dirt or gravel roads. The school has paved only one side of each road, which is all they are required to do for the school. They have put in a bend in Jornada so that it can meet up with the paved portion, and they have now blocked off the dirt side. It is just an unbeleivable situation for county residents. Had the city gotten their act together and had the other road been done, none of this hodge podge would have been necessary. Again, the city does not consider how county residents are affected by their actions……or lack of. Now they want to take over our water service ???? God help us !
Sure would like to know some names, although “inexperience” is a good start.
In any case the list of entities left damaged in the wake of developer 1 is long and diverse, from rich to poor.