RIO RANCHO, N.M. — The Mariposa East Public Improvement District property tax might be going up because of the lawsuit filed by some of the property owners.
The public improvement district (PID) board, composed of all seven members of the Rio Rancho Governing Body, voted unanimously May 22 to raise the administrative tax levy in the PID from 1 mil, or $1 per $1,000 of taxable property value, to 3 mils in the preliminary budget for next fiscal year.
Board members have said the increase is needed to cover legal expenses from the lawsuit a group of Mariposa property owners filed against the PID, the city, Mariposa developer High Desert Investment Corp. and Albuquerque Academy, which owns High Desert, and several individuals associated with High Desert or the academy after High Desert pulled its support from the development last year.
The separate assessment to repay the PID’s bond debt remains at 12 mils, as it is now, in the preliminary budget.
“However, the preliminary budget and final budget could be very different, depending on the results of the restructuring of the bond,” said city spokesman Peter Wells.
The final budget is due to the state July 31.
Mariposa property owner Martha Greenleaf said she wasn’t concerned about the preliminary budget because it isn’t firmly decided and she believes the bondholders and representatives of the lawsuit plaintiffs are working on a settlement.
“I say we sit back and let the dust settle and see where it goes,” she said.
Obviously, there will be legal fees and someone will have to pay them, Greenleaf said. She isn’t participating in the lawsuit.
She said it is “unbelievable” that property owners who are taking part didn’t see that it would land back in their laps and the laps of their neighbors.
“And so the longer this drags out, the more it hurts everyone,” she said.
The attorneys representing the plaintiffs could not be reached for comment.
Last summer, High Desert announced it was pulling out of Mariposa because it no longer had the money to help make payments on the $16 million in bonds that financed infrastructure there. That move left property owners facing a tenfold property tax increase to repay the bonds themselves.
A smaller increase is in effect now for a year.
Late last year, 25 property owners filed the civil lawsuit on allegations including breach of contract and misrepresentation or fraud.
Wells said the city has paid almost $33,000 from its general fund for legal services for the PID’s defense and has requested reimbursement.
The PID is a separate entity from the city.
Wells and City Councilor Chuck Wilkins said they don’t foresee the PID failing to reimburse the city.
In a worst-case scenario, if there were a mass exodus of property owners from Mariposa, the bondholders would foreclose on the land and homes, and then, as the owners, would be responsible for repaying the city, Wilkins said.
Because Mariposa property owners are the members of the PID, he said, those suing are essentially suing themselves by including the PID as a defendant.
Brian Crumbaker, a Florida attorney representing the holders of the PID bonds, presented a proposal this spring that would drop most debt service assessments below historic rates and make each property owner responsible for a set amount of the debt regardless of what happened with other properties.
However, he said the bondholders would not agree to the bond restructuring unless the city and PID were dropped from the lawsuit, because their inclusion created uncertainty.
A check of district court files reveals no motions to remove the city and PID as defendants. The most recent filing was dated June 12.
Also, while the lawsuit is intended to be a class-action suit, Wilkins said as far as he knew, it hadn’t been certified as such yet. The court files showed no documentation of certification.
Wilkins said the case was scheduled to go before a judge May 29, but the plaintiffs’ attorneys asked for postponement. He thinks it would be best for property owners to drop the PID and city from the suit, let the restructuring go through and then continue to pursue action against High Desert and Albuquerque Academy if they chose.
“Let’s get this settled,” he said.
Greenleaf said she’d heard her neighbors and even some of the lawsuit plaintiffs say they wanted the suit to go away. She blamed only High Desert for the trouble in the PID.
“This was all done by High Desert, this was a financial move on their part, and they ought to be held accountable,” she said.