AGO 08-02.

• Case Date: February 27, 2008
• Court: New Mexico

New Mexico Attorney Gen eral Opinions 2008. AGO 08-02. OPINION OF GARY K. KING Attorney General February 27, 2008Opinion No. 08-02BY: Andrea R. Buzzard Assistant Attorney General TO: The Honorable Nathan "Nate" Cote New Mexico State Representative P.O. Box 537Organ, NM 88052 The Honorable Mary Jane Garcia New Mexico State Senator P.O. Box 22 Dona Ana, NM 88032QUESTION:

Did the Commissioner of Public Lands violate the Enabling Act, the Constitution of New Mexico, New Mexico Statutes or the Commissioner's administrative rules by entering into Business Planning Lease No. BL-1775 with Solo Investments LLC, effective January 1, 2007?

CONCLUSION: Business Planning Lease No. BL-1775 by and between the Commissioner of Public Lands and Solo Investments, LLC contains provisions that are not authorized by New Mexico law. Because we have not examined the specific terms and conditions of other business planning leases that the Commissioner of Public Lands has entered into, our opinion necessarily is limited to Business Planning Lease No. BL-1775. FACTS: The New Mexico Commissioner of Public Lands (Commissioner) entered into Business Planning Lease No. BL-1775 with Solo Investments, LLC (Solo) on or about December 26, 2006, effective January 1, 2007, under which the Commissioner, as lessor, leased certain state trust land to Solo. Under its lease, lessee Solo is permitted, under paragraph 12.1, to enter upon, occupy and perform activities with respect to the leased land solely to complete a land development "project," which the lease defines at paragraph 1(m) as:

(1) applying to the City of Las Cruces (the "City") for annexation of the Land into the City, provided that the City is legally permitted to do so, and using reasonable efforts to obtain approval of such annexation;

(2) preparing a master plan for development of the Land and submitting such plan to the Local Government for approval and using reasonable efforts to obtain approval of such plan;

(3) applying for, and using reasonable efforts to obtain, approval from the Local Government of reasonably desirable zoning of the Land;

(4) at Lessee's discretion, applying for, and using reasonable efforts to obtain, approval from the Local Government of subdivision of the Land; and

(5) at Lessee's discretion, constructing the infrastructure necessary or desirable for any approved subdivision of the Land.

In return for completing this land development project, Solo receives payment when the leased land is sold. Paragraph 14.5 of the lease requires the Commissioner to publicly offer the land for lease, sale or exchange to the highest and best bidder within 180 days after the expiration of Solo's lease. If the Commissioner enters into a subsequent lease, sale or exchange within two years following the expiration of Solo's lease, the subsequent lessee or purchaser will be obliged to pay the Commissioner the amount of the "improvement value credit," as calculated in paragraph 14.4, and the Commissioner must pay that sum to Solo, less any amount due the Commissioner from Solo. The "Improvement Value Credit,"(fn1) payable to Solo is described in paragraph 14.4:

Subject to the conditions and restrictions set forth in this provision, Lessee shall be entitled to Improvement Value Credit equal to the sum of

(a) Lessee's Reasonable Project Costs approved by the Commissioner of Public Lands, plus

(b) forty percent (40%) of the Change in Value if the Change in Value is a positive figure of the total consideration received by Lessor from a lease, sale or exchange of the Land pursuant to

...