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Downs Lease Protest Denied

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Copyright © 2012 Albuquerque Journal

Expo New Mexico general manager Dan Mourning has denied Laguna Development Corp.’s protest of the Downs at Albuquerque’s new 25-year lease at the state-owned fairgrounds.

Laguna Development Corp., which operates Route 66 and Dancing Eagle casinos west of Albuquerque for Laguna Pueblo, filed a protest in January challenging the State Fair Commission’s 4-3 vote to give the Downs a new lease to operate the racino and build a new multimillion-dollar casino near Central and Louisiana.

The contract to operate the racino was put out to bid in July, less than six months before the Downs’ old lease was set to expire, and gave interested parties 31 days to respond.

Only Laguna Development and the Downs, which has leased the Expo property since 1985, submitted bids.

Through a spokesman, Laguna Development declined to comment on Tuesday. Under state law, Laguna Development has the option of challenging the lease in state district court.

The bid process has been criticized by neighborhood groups, some members of the State Fair Commission, a consultant for the state Legislative Finance Committee and others as being too rushed and too secretive. Expo officials have maintained that the process was fair and transparent.

In its 47-page protest, Laguna Development raised 14 specific concerns with the process that led to the Downs receiving the lease, and said it could not prove some of its claims because Expo had refused to provide documents necessary to do so.

Among Laguna Development’s claims were that the Downs likely had access to the contents of its confidential proposal and that the Downs was allowed improper involvement in the procurement process.

Mourning, appointed just over a year ago by Gov. Susana Martinez, assigned state Purchasing Agent Larry Maxwell to review the protest. Maxwell ruled against all 14 of Laguna Development’s claims and recommended that the protest be denied.

In a letter dated this past Friday to Laguna Development CEO Jerry Smith and attorneys representing both bidders, Mourning formally accepted Maxwell’s recommendations and denied the protest.

In the letter, Mourning says that although Laguna Development “contends its bid is financially superior, the Downs lease is in fact much better … and provides much greater financial return to the State Fair and the citizens of New Mexico.”

In support of that, Mourning said that over the life of the lease, the Downs will pay a “base rent of $67,250,000″ along with “participation rent” that boost those payments by $1.3 million annually. Together, Mourning says, Expo could see “a maximum possible rent of $99.8 million.” In contrast, Mourning says, Laguna Development’s “maximum possible rent” would be about $80.6 million.

As a state enterprise fund, the Expo New Mexico fairgrounds must pay for itself – a task virtually impossible without the racino’s annual $2 million lease payments.
— This article appeared on page C01 of the Albuquerque Journal

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