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Wednesday, January 13, 2010
Plan: $9.5M More for Developers
By Thomas J. Cole
Journal Staff Writer
This is Chapter 2 in the story about the development of the old Albuquerque Indian school property.
I'm going to tell you today about a plan by the Indian-owned development corporation to pay its private partners another $9.5 million as a result of a falling-out. That would be on top of the $11.2 million the partners reportedly have received already.
I'm also going to tell you about a not-so-minor problem with the plan to pay the additional money. The Indian corporation is broke or close to it and needs the help of the federal government in coming up with the additional dough.
Before I go on, let's recap Chapter 1.
The old Indian School property, on 12th Street just north of Interstate 40, is held in trust by the federal government for the 19 pueblos of New Mexico, which opened a cultural center on the land in the 1970s.
The pueblos later created the Indian Pueblos Federal Development Corp. to develop the remainder of the property. The corporation then teamed up with private partners to do that.
The Indian corporation and its partners formed companies that borrowed $75.3 million to put up two buildings for lease to the U.S. Bureau of Indian Affairs. The buildings were completed in the mid-2000s, with the construction loans to be paid off with lease payments.
Of the money borrowed for construction, at least $8.9 million went to the Indian corporation and $11.2 million to its partners for such things as development and management fees and so-called contingencies, project documents show.
But with all that honey, there were bound to be flies.
The Indian corporation and its private partners have had a falling-out in recent years. Exactly why isn't clear. The corporation has complained about the partners failing to attract more development and refusing to put up money for infrastructure needed for construction.
So the Indian corporation and its private partners have been trying to reach a deal for the corporation to buy out the partners. That's where the additional $9.5 million comes in.
The private partners are partnerships affiliated with Albuquerque businessmen Gary Plante and Brent DePonte.
Plante and Bruce Sanchez, the president of the Indian corporation and governor of Santa Ana Pueblo, have a long history of business dealings.
Under a buyout agreement signed in September by Sanchez, the Indian corporation would pay $9.5 million to the partnerships and companies affiliated with Plante and DePonte.
In exchange, the private partners would give up their interests in the BIA buildings, a hotel on the property that opened last May and some unspecified future commercial development on the land. The partners would retain interests in any additional development of federal offices.
The agreement also would settle a lawsuit that business entities affiliated with Plante and DePonte filed last year against the Indian corporation over the hotel development.
They contend the Indian corporation failed to follow through on a promise to pay a Plante company more than $750,000. The money was due, the suit says, because the corporation decided to develop the hotel without the involvement of the Plante company.
Not a bad deal, huh? Not involved, make $750,000.
It isn't clear whether Plante and DePonte have agreed to the settlement. Neither they nor their attorneys are talking to me.
You might recall from Chapter 1 that the Indian corporation considered filing a lawsuit to cut its ties with a Plante company but never did.
Using the Bernalillo County Metropolitan Courthouse scandal and prosecution as an analogy, a corporation attorney warned that a lawsuit might be a bad idea because it could generate evidence for FBI agents.
Now, let's look at that not-so-minor glitch involved with the Indian corporation buying out the interests of the private partners.
Despite the $8.9 million in construction loan money it received, the payments by the BIA to lease the two buildings and the money paid by the BIA to have the buildings managed, the Indian corporation has big money troubles.
The corporation lost more than $2.5 million in calendar years 2007 and 2008. During that time, it spent nearly $1 million on consulting services and made more than $278,000 in political contributions, according to profit and loss statements.
As of April 30 of last year, the Indian corporation had less than $1 million in the bank and had debts totaling nearly $1.1 million.
So what's the plan to come up with the $9.5 million for the private partners?
The construction loans on the BIA buildings have been paid down to $58.7 million but would be refinanced for nearly $80 million, generating more than $21 million in cash for the Indian corporation.
But to secure the refinancing, the corporation needs to get the BIA to extend its leases of the buildings until 2030. That's an income stream guaranteed by the U.S. government and the lease for at least one of the buildings has a built-in rent increase every year.
The Indian corporation says it has lobbied the BIA for the lease extensions and contacted members of the state's congressional delegation for help in getting the deals done.
I'll let you know how it works out.
UpFront is a daily front-page news and opinion column. Thom Cole can be reached in Santa Fe at 505-992-6280 or at tcole@abqjournal.com
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