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LAS CRUCES, N.M. -- The state Land Office is delaying a plan to sell 260 acres of trust land at Las Cruces to a developer after an attorney general's opinion in another land deal called into question a similar business planning lease with the same developer.
"We're putting things on hold until we can visit with the attorney general's office," Land Commissioner Patrick Lyons said Friday.
Las Cruces developer Philip Philippou could make about $8 million from the business planning lease involved in the sale of the 260 acres, while the state Land Office could earn the same amount for public schools and other beneficiaries of revenue from state trust land, the Albuquerque Journal said Friday in a copyright story.
On Feb. 27, Attorney General Gary King's office concluded Lyons overstepped the bounds of the Land Office's legal authority in a similar business lease for a master plan for 2,450 acres of a planned Philippou development called the Vistas at Presidio.
Lyons disagreed, saying he can exercise discretion in his duty to generate revenue for public education. He also said the transactions are not unique in the Land Office's history.
"The existence of these transactions and their subsequent benefit to public education is a testament to the ... broad latitude the commissioner of public lands is granted" by law, he said.
When the Land Office sells property in the Vistas development at auction, the high bidder will have to pay Philippou's Solo Investments LLC for "reasonable projects costs" associated with readying the land for sale, along with 40 percent of the land's increased value.
The Land Office has not yet scheduled a sale of any of the land in that development.
However, last week -- before the attorney general's opinion -- the Land Office said it would sell a separate 260-acre parcel of state trust land leased by Philippou. In that case, a Philippou company, Katerina Inc., holds a planning lease for 323 acres within a 2,000-acre development called Sierra Norte that Philippou plans.
The 260 acres involve the sale or exchange of 13 parcels within the property Philippou began leasing in September 2005.
The business planning lease for Sierra Norte is similar to that for the Vistas, except that Philippou would receive 60 percent of the increased value when the trust land at Sierra Norte is sold, rather than the 40 percent he would get under a sale at the Vistas.
King said last month state law does not allow for reimbursement of the "intangible improvements" as described in the business lease for the Vistas.
In December 2005, an appraisal put the value of the 323 acres at Sierra Norte at $8,668 an acre. The 260 acres -- now annexed, zone and master-planned -- were recently appraised at $61,500 million an acre, a sevenfold increase, said Laura Riley, who did the first independent appraisal and who now works for the Philippou Group.
If the 260 acres sell at the appraised value, Philippou's 60 percent for preparing the land for sale would amount to $8 million, Philippou representatives and the Land Office said. The Land Office would receive $5.5 million.
Those preparations are the kind of intangible improvements cited in the attorney general's opinion.
According to news media materials distributed by the Land Office, it would receive about $8 million from the sale of the 260 acres, a "risk-free" multimillion dollar gain over the original appraisal.
Although the Land Office might be motivated by a desire to make the property more valuable, it is limited by state law, Assistant Attorney General Andrea Buzzard wrote in the Feb. 27 opinion.
"Under current law, the state Land Office can achieve the ends it is attempting to reach in the Solo lease only by the Legislature's changing the statute," she wrote.
Information from: Albuquerque Journal http://www.abqjournal.com/
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