Sunday, June 18, 2006
State Buys Land From Richardson Donor
By Thomas J. Cole
Copyright © 2006 Albuquerque Journal; Journal Investigative Reporter
The administration of Gov. Bill Richardson bought 12 acres of vacant land from a major campaign contributor and his family, paying $3.2 million more than the family bought the property for 28 months earlier.
Santa Fe contractor Sonny Otero made a $50,000 donation to Richardson's re-election campaign about two months after the sale was finalized.
The state General Services Department in January paid $6.9 million for a total of 14 acres in the Valdes Industrial Park on Santa Fe's fast-growing south side.
O-Fam, a limited liability company owned by Otero and his family, owned 12 acres, making their share of the sale proceeds $5.9 million. The family paid $2.7 million for the land in September 2003.
"I think O-Fam did OK, but the state did even much better, having purchased this property well below market value," Otero said.
He said he never discussed the deal with the governor and said he made the contribution because he believes Richardson is New Mexico's best-ever chief executive.
"I have never asked him for anything in return," Otero said.
Richardson spokesman Gilbert Gallegos said the land purchase was in the best interest of the state and "absolutely not" a sweetheart deal for a campaign contributor.
"The governor knew nothing about this project" until a recent inquiry from the Journal, Gallegos said.
The General Services Department plans to use the land as a site for a campus of government buildings.
Under the original state law authorizing the land acquisition, the Otero property wouldn't have qualified because of its location.
The law was amended by the Legislature in 2004 to expand the area in which GSD could buy land. Richardson signed the change.
'A good deal'
The purchase involved a total of nine neighboring lots. O-Fam owned seven of them. Sonny Otero is the organizer of the company, with three family members serving as directors.
The other two lots were owned by another construction contractor, Chrys Jaschke, and his wife, Susan.
A combined appraisal completed for Sonny Otero in October 2005 gave the properties a market value of $7.2 million, or $12 per square foot.
The appraisal cited 16 sales of similar commercial properties dating back to 1998. Those sales ranged from $5.17 to $12 per square foot.
A review of the appraisal by the Taxation and Revenue Department found, "The value conclusions stated in the appraisal reports are adequately supported."
Sonny Otero signed the sales deal in January for the lots owned by his family, as well as those owned by the Jaschkes.
Based on lot size, the Oteros received $5.9 million and the Jaschkes $1 million, or $11.45 per square foot.
The Jaschkes also bought their lots in September 2003, paying $479,000.
The Jaschkes and Oteros made the purchases from a court-appointed receiver for the estate of the previous owner.
Otero said his family's profit was reduced by expenses associated with the sale, including interest and legal fees.
"As a real estate investor for the past 35 years, I have bought and sold property in various ways," he said.
On several occasions, Otero said, he grew frustrated by government red tape and tried to back out of the sale.
"I had other opportunities to sell ... ," he said. "GSD would not terminate, presumably because it knew it had a good deal."
Bill Taylor, who oversaw the buy for General Services, said he was unaware of what the Jaschkes and Oteros had paid for the land.
He noted the agency was able to negotiate a purchase price below the appraised market value of $12 per square foot.
"We felt comfortable that we got it less than the full $12," he said. As for what the Jaschkes and Oteros made on the deal, he added, "Santa Fe is a great real estate investment."
The sales agreement was finalized Jan. 3.
The deal was approved by the Board of Finance, which Richardson chairs. The governor was absent from the board meeting during which the OK was given.
In its finance report filed in May, the Richardson campaign reported a $50,000 contribution from Sonny Otero on March 3.
The contribution was one of seven $50,000 donations reported by the campaign over 12 months. The campaign reported only one larger contribution, for $75,000.
New Mexico is one of a few states that allows such large contributions.
Several of Richardson's largest campaign donors have contracts or other business with his administration, but he has said he makes decisions based on what is best for the state, not his contributors.
Otero was also a contributor to Richardson's gubernatorial run in 2002, donating at least $14,000.
"I have supported Bill Richardson throughout his political career, long before he became governor of New Mexico, and I will continue to support him," Sonny Otero said.
He said Richardson had nothing to do with the land deal. "I dealt strictly with GSD and reluctantly so," Otero added.
After Richardson's election in 2002, Otero's daughter Maxine was hired as a receptionist in the Governor's Office at an annual salary of $32,900. She had previously worked as a dental assistant and painting-crew supervisor for her father.
Maxine Otero is one of the directors listed for O-Fam. She works for the Corrections Department as a secretary, earning nearly $49,000 a year.
Clearing the path
The land purchased by GSD abuts the northern edge of the Department of Public Safety complex in Santa Fe, which includes the Law Enforcement Academy.
Just to the south of the DPS complex is the District 5 office for the Transportation Department.
In 2001, a state law was enacted authorizing General Services to purchase land adjacent to the District 5 office for building space.
The department made a deal in 2002 to buy 12 acres for $5.3 million, or $9.81 per square foot.
The purchase was rejected by the Board of Finance in March 2002, under the Johnson administration. Board members expressed concerns over the land price and costs in preparing it for development.
Two years later, the law was amended to permit GSD to "purchase land within or in close proximity to the public safety campus."
The effect was to widen the area of acquisition. That opened the door to the Otero property, which is just to the north of the DPS complex.
Otero said General Services approached him in 2005 about selling the family property.
"As an investor, I was open to an offer," he said. "Thereafter, negotiations took place, we struck a deal, followed procedures and the sale took place."
The change in law to widen the land acquisition area was backed by the Capitol Buildings Planning Commission, a panel created to study and plan for government needs.
The commission was concerned about development costs for any land adjacent to the District 5 office because of the need for infrastructure, such as water and sewer lines. The Otero/Jaschke property did not have those infrastructure problems.