BERNALILLO — Sandoval County reached a settlement with Rio Metro Regional Transit District after an illegal land transaction a decade ago.
The Sandoval County Board of Commissioners unanimously approved the settlement agreement Thursday night at the county administrative building.
In 2009, then-Commission Chairman Donnie Leonard sold parcels of county land under a lease-purchase agreement to Rio Metro Regional Transit District, the board of which he also chaired at the time, and didn’t get proper approval, said county financial advisor Rob Burpo in October.
Leonard later said he didn’t remember the sale, but it was probably done differently because it was a government-to-government transaction.
The transit district signed the lease-purchase agreement for about $1.2 million in January 2010, Burpo said.
The property at 301 Rail Runner Ave. in Bernalillo was never appraised, according to the settlement agreement. This land includes the US 550 Rail Runner Express station.
In March 2011, almost four-fifths of an acre was added to the land sold in 2010, increasing the total amount the transit district would pay to $1.5 million, Burpo said. This verbal agreement was documented in 2016, he said.
These transactions were never approved or presented to the county commission at the time, nor submitted to the New Mexico Board of Finance as required by state statute, according to the settlement.
Due to the unlawfulness of the lease-purchase agreement, the state board said the agreement “is invalid as a matter of law,” according to the settlement. To be efficient in deliberations, the county treated the prior transaction as a lease agreement.
This change allows the county to retain ownership of the premises, according to the settlement.
The lease-purchase agreement to the transit district would have been for $80,000 less than the property’s value. The forensic appraisal for Jan. 1, 2010, valued the property at $1.33 million.
Adding the rate of return for 10 years — $275,000 — the county lost about $350,000 in the 2010 transaction, Burpo said. But due to the unlawfulness of the transaction, the lease-purchase agreement became void and faltered into a lease agreement.
“In short, instead of the county having a lease-purchase agreement with RMRTD, which RMRTD paid certain amounts that would have been less than the market required, it turns out all they had was a lease agreement. That means RMRTD overpaid,” Burpo said in an email to the Observer Friday morning.
According to a market rent analysis prepared by third parties at the request of the county and the transit district, RMRTD paid over the fair market rent value. In turn, the county has agreed to pay back $300,000 in compensation, according to the agreement.
Through negotiations, the county will pay the transit district $150,000 up front and another $150,000 over the next five years, at no less than $30,000 per year, according to the settlement.
The reasoning behind the compensation is if the transit district entered a lease agreement to begin with, the organization would have paid less, but because it was originally a lease-purchase agreement, the district paid above the rent market value, said County Manager Wayne Johnson.
“So the county is trying to make them whole by paying back a portion of that money to them, so that is the way it worked and what the settlement is based on,” Johnson said. “These things do take time. But now it is officially resolved and I think this is the way you want to work out these problems, is sit down and work with them and come to an agreement that is beneficial to both parties.”
The county intends to use the US 550 Rail Runner Express station to house county fire department offices, storage and parking needs, according to the settlement. Thursday night, commissioner approved awarding over $404,000 to Nieto Custom Builders to renovate the station.
The next county commission meeting on March 18 will be lived streamed at, under “Quick links” in a tab called “meeting videos.”