March 11, 2017

Senate yanks real estate bill; lawmaker says pay-to-play maneuver exposed


New Mexico State Senate.

In an extraordinary maneuver, state senators killed a bill Saturday that they had approved four days earlier after one of them said he had misled his colleagues about connections between Republican Gov. Susana Martinez and real estate developers who stood to benefit from the legislation.

Democrats charged that the bill, which would have extended a building lease for state offices in Albuquerque, had turned into an example of pay-to-play politics, while members of Martinez’s administration maintained they had made an honest mistake based on incomplete information. For her part, Martinez said through a spokesman that neither she nor her staff ever discussed with campaign donors the leases addressed in the measure.

At issue was an unusual and late-breaking piece of legislation, Senate Bill 430, that met with skepticism at just about every step of its journey through the Capitol until its sudden death Saturday.

Sponsored by Sen. Steve Neville, R-Aztec, the bill would have carved out an exception to state rules on renting property. This would have allowed the Children, Youth and Families Department to extend its lease on office space in Albuquerque. The owners of the property have donated a total of $26,200 to the governor and her political action committee since 2014, according to an analysis of campaign finance reports by The New Mexican.

But Neville had told senators the property owners did not have any connection to lawmakers or the governor and had not made any significant political contributions.

Neville also had told fellow senators that the deal was sound and responsible because the property’s owners would make improvements and build a 20,000-square-foot receiving center for children who are in the state’s care. He said the total cost to taxpayers would remain flat.

But an analysis by the legislative staff called into question whether the deal would benefit taxpayers, who would be stuck as renters when the department needs its own building.

When the bill first reached the Senate floor Tuesday, Sen. George Muñoz, D-Gallup, railed against it as “fishy” and “a sweetheart deal” for somebody.

The Senate nonetheless approved Neville’s bill on a 30-10 vote, but the untrue claims about the property owners having made no political contributions turned out to be its undoing.

The contributions came in the years after investors bought the foreclosed property at San Mateo Boulevard and Central Avenue in 2013. The investors included California-based ICO Development. Alexander Moradi, founder of ICO Development, did not return a message seeking comment. Other staff members at the company also did not respond to messages seeking comment.

State records also show that Aaron Hazelrigg, who has a minority stake in the property, also has given $5,000 to New Mexico Democrats since 2008. Hazelrigg referred questions about the property to Moradi.

The complex encompasses two office towers, one that was once the tallest in Albuquerque. But the anchor tenant, Bank of the West, moved out, and the buildings now primarily house the offices of state agencies, including Children, Youth and Families, the Department of Health and the Taxation and Revenue Department.

The lease costs the Children, Youth and Families Department alone about $1.9 million annually.

And the leases for each agency are scheduled to expire in 2019 and 2020. A state rule prohibiting the rental of a property for more than 20 years would ordinarily bar the government from extending those leases. This led Monique Jacobson, Cabinet secretary of the Children, Youth and Families Department, to ask Sen. Neville if he would carry a bill to extend the lease. This bothered other senators, who said the agencies could change the rule to accommodate a new lease.

Sen. Joseph Cervantes, D-Las Cruces, an opponent of Neville’s bill from the outset, said the state regularly enters into lease agreements without enshrining them in law. He saw no reason why this case should be different, and his suspicions about the bill and those who might profiteer from it grew.

“It’s the classic Santa Fe pay to play,” Cervantes said. “… They wanted cover [through state legislation] so they couldn’t be accused of doing what Phil Griego did.”

Griego is a former state senator who resigned in 2015 during a Senate ethics investigation over his brokering a real estate deal involving state property. Griego, a Democrat from San Jose, has since been charged with nine criminal counts of public corruption.

Neville, though, said there was nothing sinister about his bill or any bad intention by the state department heads who sought the lease arrangement.

“I don’t think there was an intentional misleading,” he said.

Nonetheless, Neville asked the Senate to kill the very bill for which he had sought approval days earlier.

“I just can’t in good conscience continue legislation that I misled my colleagues on,” he told The New Mexican, referencing his having vouched for the property owners as people who had not made political contributions.

Legislative analysts who reviewed Neville’s bill questioned whether it was a good a deal for the public. Their assessment was that the state would be better off buying or constructing a building than continuing to pay rent.

As The New Mexican worked on a story about the controversy surrounding Neville’s bill, Jacobson said in an interview Friday that her department had sought a different building, one more welcoming for children in state care. But concerns about cost scuttled plans to buy one property, and the department does not have the money to build its own, she said.

It turned out, she said, that the best option was a plan for a seven-year extension of the existing leases.

Ed Burckle, Cabinet secretary of the General Services Department, said there was nothing underhanded about any of the negotiations.

“We were evaluating this strictly on its merits,” he told reporters Saturday.

Burckle added that his department, which handles real estate matters for state agencies, “never felt any pressure whatsoever from the Governor’s Office” about the lease.

But on Saturday morning, both Cabinet secretaries and Sen. Neville abruptly backed away from the bill that would have put the lease arrangement in place.

Neville said he had only become aware Saturday of the campaign donations to Martinez and her political organization when Burckle and Jacobson told him they had found records of the contributions.

In turn, the two Cabinet secretaries said they had only learned of the donations because concerns about the bill escalated throughout the week. The New Mexican was investigating the proposed deal at the same time.

As senators were convening Saturday morning, Jacobson and Burckle made the rounds, apologizing for the inaccurate information about the property owners having made no political contributions.

Neville then withdrew his bill, which already had been sent to the House of Representatives for hearings.

A quick announcement on Neville’s decision was made on the Senate floor without any background or context as to why he suddenly pulled the bill. It sounded like a routine procedural maneuver to many. But then Sen. Cervantes spoke up, asking for an open discussion as to why Neville no longer stood behind his own bill.

Cervantes and Muñoz, who had never liked the bill or the lease deal, were among the senators who said the deal-making was a black eye for the state.

“It didn’t feel right. It didn’t smell right. The math never added up,” Muñoz said.

None of the senators criticized Neville, who is well-liked. Instead, Sen. Michael Padilla, D-Albuquerque, said Martinez’s administration owed Neville an apology for ensnaring him in a questionable lease deal.

Most Senate Democrats did not point their fingers at Burckle, Neville and Jacobson. Instead, they blamed the governor and some called for an investigation by the Senate Rules Committee.

Martinez’s press aide fired back.

“The idea that we would try to hide information that the governor has publicly reported and disclosed and is readily available to the public on a government website is absurd,” Mike Lonergan said in an email. “… If Democrat senators want to have a debate on ethics and conflicts of interest in state government, we are more than happy to have that debate, though they probably want to wait until after their latest indicted colleague finishes his pending trial.”

That reference was to Griego, who often was an ally of Republican Martinez until his forced resignation from the Senate.

At least these concerns were aired publicly, Albuquerque Republican Sen. Mark Moores said, drawing a contrast with Griego’s downfall after lengthy meetings by senators behind closed doors.

“I wish we had investigated that more publicly at the time,” Moores said.

Contact Andrew Oxford at 986-3093 or Follow him on Twitter at @andrewboxford.