Balderas to conduct audit of land office’s dealings

The State Auditor’s Office will conduct a special audit to review the policies and procedures the State Land Office follows in the sale, exchange and leasing of trust lands.

State Auditor Hector Balderas formally informed Land Commissioner Pat Lyons of the audit in a letter he sent Thursday. In the letter, he thanked Lyons for having his staff provide “a summary of SLO land sales, land exchanges, closed and ongoing land lease transactions, and SLO administrative rules.” Balderas also informed Lyons that his office needs access to additional information.

Lyons’ spokeswoman, Kristin Haase, said the land office “is cooperating fully” with the auditor.

“We look forward to the auditor’s findings that will undoubtedly show that the leases, exchanges and land sales facilitated by this administration are in the best interest of the trust,” she said.

The audit comes at the request of five state representatives – Nate Cote of Organ, Ray Begaye of Shiprock, Mimi Stewart of Albuquerque, Elias Barela of Belen and Thomas Garcia of Ocate. They wrote a letter to Balderas in April asking him to scrutinize the land office’s dealings in light of an opinion by Attorney General Gary King finding fault with a land lease in Las Cruces.

The AG’s formal opinion related to The Vistas at Presidio land deal on Las Cruces’ East Mesa states that the lease agreement’s method of compensating Philip Philippou’s company for developing the land 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 other leases for land in Las Cruces, Albuquerque, Rio Rancho and Santa Fe that contain similar provisions. Lyons briefly put all land deals on hold several weeks ago while he met with King about the situation, but he has since decided to proceed and said he suggests that “the attorney general work with us, not against us.”

‘A necessary first step’

In an interview, Cote said he’s pleased that Balderas has agreed to scrutinize the land office’s dealings.

“I think as a result we’re either going to clarify any misperception of wrongdoing or mismanagement, or we’re going to find something that’s inappropriate, but probably most important of all is that we’ll probably, from this, be able to look at what might be needed for future legislation… to ensure we’re doing what is right and appropriate for public education and the children of our state,” he said.

Barela agreed.

“I believe this is a necessary first step for the citizens of New Mexico to determine if their state trust land is being managed for their maximum benefit and solely with their interest in mind or for the benefit of special interests and the politically well-connected,” he said. “I trust State Auditor Hector Balderas will be fair to all concerned and deliver the facts to all New Mexicans.”

Stewart pointed out that state lands are put into trust to fund public education.

“It’s important that the policies and practices of the SLO are designed to maximize funding for our publicly funded educational systems,” she said. “This audit will help the public have faith in our state systems. If policies need to be changed, we will have sound reasoning and documentation for those changes.”

The first phase of the audit, Balderas wrote in his letter to Lyons, will be to document any written land-office policies and procedures “that support the SLO decision-making process underlying state trust land transactions.” The auditor wrote that he will also “attempt to independently verify the completeness of summaries provided by the SLO to ensure that your office can account for all state trust land transactions.”

In addition, the auditor will examine the monetary terms of closed land deals and, in the case of pending deals, will “review and test SLO’s policies, procedures and internal controls to ensure that the SLO has systems in place that track and account for the land transactions,” Balderas’ letter states.

Balderas gave no timeline for completion of the audit in his letter to Lyons.