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State renovates building for $600,000, sells it for $39,000

SANTA FE – Legislative auditors criticized the state on Monday for spending nearly $600,000 to renovate an abandoned schoolhouse in northern New Mexico and later selling the still unfinished building for $39,000 to a nonprofit group that originally donated it.

The project began when Democrat Bill Richardson was governor, but Republican Gov. Susan Martinez’s administration last year approved the sale of the old school in the community of Ribera in San Miguel County.

A report by Legislative Finance Committee auditors said the Department of Cultural Affairs poorly managed the capital improvements to the school, which dates to the 1800s and was last used for a preschool program in the 1970s.

The department manages the state’s museums and historic sites.

State auditors say the state spent $600,000 renovating this old schoolhouse in Ribera before selling it back to a non-profit for $39,000. (JOURNAL FILE)

State auditors say the state spent $600,000 renovating this old schoolhouse in Ribera before selling it back to a non-profit for $39,000. (JOURNAL FILE)

Auditors faulted the agency for selecting a contractor in 2009 to do the school improvements, although the company’s owner had been convicted of embezzlement several months earlier in an unrelated case. The company, Omni Development Inc., wasn’t barred from state procurement contracts until June 2012, however. Martinez took office in 2011.

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The state Board of Finance last October approved the sale of the school to the nonprofit group Los Pueblos Community Council, which originally promoted the renovation project and plans to use the building as a community center. The group donated the school to the state in 2009 – two years after obtaining $600,000 from the state to renovate and preserve the building. Federal grants also were provided for the project.

Auditors said there were questions about whether the sale of the building violated the New Mexico Constitution’s anti-donation clause, which bars the state from making donations to private individuals or entities. Auditors have sent a letter to the Attorney General’s Office outlining their concerns.

Cultural Affairs Secretary Veronica Gonzales defended the sale of the building, saying it was the best course of action.

“The project was placed under DCA without proper planning and without proper funding,” she told the Legislature’s Revenue Stabilization and Tax Policy Committee, which reviewed the audit. “The cost to the state would have been significantly higher if we had continued improving the structure and had attempted to cover operating costs for programs without a statewide mission.”

Sen. John Arthur Smith, D-Deming, said the state lacked good oversight of capital improvements. “We’re having somebody make off with a ton of taxpayer dollars,” Smith said.

The report said there’s inadequate funding for maintaining museums and historic sites. The department receives an earmarked piece of tax revenue, averaging $307,000 a year. The Legislature also provides extra money for capital improvements for the agency, but auditors said it doesn’t do a good job of setting priorities for projects with the greatest need.

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