Lyons disputes AG opinion on Cruces land deal

Posted 2/29/2008 04:09:00 PM

State Land Commissioner Pat Lyons is disputing a legal opinion the attorney general released this week that found fault with a Las Cruces land deal between the State Land Office and developer Philip Philippou.

Lyons’ legal staff, according to a news release, believes that, unless there is a specific law prohibiting an action by the land commissioner, he is “vested with discretion in the exercise of his duties to generate revenue for public education.” That includes the discretion to determine how to market, lease or sell trust lands, the release states.

“While I appreciate the attorney general’s input, this opinion attempts to constrain my authority and ability to perform my constitutional duties,” Lyons said in the release. “Consequently, I will continue to perform and execute my duties to the best of my ability, consistent with my oath of office, which is to generate revenue for public schools and universities. The lease in question stands to earn hundreds of millions of dollars for New Mexico’s school children.”

Attorney General Gary King’s office has said he has no plans to try to enforce the opinion in court, but has said another party with legal standing could sue. The Las Cruces City Council is expected to discuss the possibility, but whether it would have legal standing isn’t clear.

King’s long-awaited opinion states that the lease agreement’s method of compensating Philippou’s Solo Investments for developing The Vistas at Presidio 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.

While King said portions of the compensation provision in the lease agreement are not authorized by state law, he didn’t use the word illegal to describe the agreement, saying the issue of whether it is enforceable should be determined by the courts.

Conflicting views

The AG opinion, authored by Assistant Attorney General Andrea Buzzard, argues that the New Mexico Constitution gives the land commissioner authority over public lands “under the provisions of the acts of congress relating thereto and such regulations as may be provided by law.” The opinion states that Lyons “has no authority to promulgate rules or regulations that are inconsistent with legislative enactments.”

The opinion also states that state law only allows compensation to lessees for the appraised value of improvements to the land, not the other compensation Lyons agreed to in the lease with Philippou.

But Lyons cited a 1991 AG opinion stated that “New Mexico’s courts have generally concluded that the commissioner has complete dominion over public lands limited only by the explicit restrictions in the state constitution, the Enabling Act and the statutes.” King’s opinion, the Lyons release says, does not cite any statute or court decision that prohibits the relevant lease provisions.

The AG opinion does cite the state statute that says a purchaser of state land shall pay the lessee for the improvements, which the AG says are defined to include water rights and tangible improvements but not intangible improvements or other costs.

The bottom line: The AG says the provisions in the lease agreement are not authorized by and in conflict with state law but has not called the lease illegal or unenforceable. Lyons claims that if the statute doesn’t explicitly prohibit the terms of the lease, they are allowable.

Lyons selling land in another Philippou development

Lyons also pointed out in the news release that the land office’s planning and development leases allow master-planned communities on state land that wouldn’t otherwise be developed because the land office doesn’t have its own budget for such projects. In exchange, Lyons has agreed to share an “improvement value credit” with the developers.

In the case of The Vistas at Presidio, that means Philippou gets 40 percent of the change in value of the land because of the improvements he makes to the land. After the lessee finishes improvements, the land is put up for sale, and the lessee has to compete with other developers to buy it.

Such is currently the case with another development Philippou is creating in Las Cruces for the land office, the Sierra Norte project north of Highway 70 and east of the Las Colinas subdivision. Lyons is in the process of soliciting bids for 323 acres of land in that development along Sonoma Ranch Boulevard.

I’ve requested, but not yet received, a copy of the lease agreement between the land office and Philippou for that development. I don’t know if it contains similar provisions to those which King has called into question in the other lease.