Condemnation Denied

The property is enveloped by the Rio Grande State Park and bordered by the city of Albuquerque and the owner, real estate developer D. McCall, plans to rename it the Bosque Wilderness Subdivision. Mr. McCall wants to build as many as 138 luxury homes up to the river's edge and said the city is wasting its time and resources fighting him in court.

City Attorney Bob White, however, said State District Judge Geraldine Rivera will be asked to reconsider her ruling in the next 30 to 60 days.

“The judge took a very different approach to the city's ability to condemn outside the municipal limits than other courts have taken,” said White, referring to Los Poblanos Fields, another condemnation case between McCall and the City Attorney's Office that involved land outside the municipal limits. That dispute was resolved seven years ago, when the city purchased the land after a jury determined the price.

If Judge Rivera does not change her mind, city officials will take their case to the district Court of Appeals, White said, which could take an additional 12 to 18 months to make a decision.

Down in the Floodway

Last week's ruling prompted a wayward headline on the Albuquerque Journal frontpage that proclaimed, “Developer Can Build on Bosque Land.”

Judge Rivera's interpretation of the law nullified the city's act of condemnation, but it had nothing to do with building on Bosque land.

McCall would still need approval from Bernalillo County officials to build in the floodway. And according to Sandy Fish, director of Bernalillo County Department of Zoning, Building, Planning and Environmental Health, McCall has not obtained a single permit.

“(McCall) said he has already received permits for septic tanks and wells and the building plans,” the Journal reported. However, when interviewed by the Alibi last week, McCall and Fish both said the process hasn't gone that far yet.

Because the property resides in a “special flood hazard area,” as designated by the Federal Emergency Management Agency (FEMA), obtaining permits for water, sewage, drainage and grating requires extraordinary engineering plans, none of which have been submitted to the county, Fish said.

The land in question is broken into two parcels, one approximately 110 acres and the other roughly 15 acres. McCall did recently request a building permit for a single home on the smaller parcel, which was approved temporarily by the county. However, that permit was reviewed by a new employee who didn't recognize the property was in the floodway, said Fish. “That approval was rescinded once the department realized it was in the Bosque.”

“They're going to have to answer to that, because they had no right to rescind that,” said McCall. “Somebody higher up must have said this is a political issue.”

More Detail

Bet Lotosky, Floodplain Manager at the U.S. Army Corps in Engineers in Albuquerque explained the difficulties of building a Bosque subdivision in more detail. Because Bernalillo County participates in a national flood insurance program, the county has to comply with FEMA ordinance which says the area in the flood channel must “be left open” in response to a theoretical 100-year flood.

“He is in a floodway—which is a section of the river known as a main conveyance channel,” said Kotosky. “You can develop there, but you have to hire a professional engineer to show the development wouldn't reduce the carrying capacity of the 100 year flow, when it would obviously have to divert water flow.”

“If you ask an engineer, any problem is solvable if you throw enough money at it,” said Fish, “but we haven't seen any proposed solutions yet.”

Such a design would need to be submitted to FEMA for review and then submitted to the county for final approval.

McCall has said he'll build a levee to address these requirements. Last week he said his engineer, Ron Bohannan of Tierra West, Inc., has already designed a plan to divert water in the floodway. McCall said the plan will be submitted to FEMA in the next two to four weeks.

Bohannan has a proven track record of getting FEMA approval to build in the Bosque, McCall said, citing the Bosque Encantado property in Sandoval County. “That's the reason I hired him,” said McCall.

Besides obtaining building permits, though, there are other obstacles to Mr. McCall's plan, according to Fritz Blake, a project manager at the corps of engineers.

“A federally insured bank is not supposed to lend money to build in a floodway,” said Blake, “and you're not going to get any (federally-backed homeowner's) insurance.”

So where would a prospective homeowner go to obtain a mortgage and damage insurance to live in a floodway?

“My understanding is State Farm will sell me flood insurance,” said McCall. “Like in Florida, if you live on the beach, the federal government subsidizes the insurance. Well, I'm not asking the federal government to subsidize anything. I can get FEMA approval, then its not any trouble.”

Negotiations

According to a deed of trust filed with the Bernalillo County Clerk on Dec. 2, 2003, McCall purchased the large Bosque parcel from the Joel and Nina Taylor Foundation on Oct. 1, 2003, financing $3.3 million of the undisclosed price in an owner-financed transaction.

After McCall's development plans became public, the city offered him $3.7 million for it on Feb. 9, 2004. McCall, however, suggested at that time the land should be valued at $31.5 million—the estimated value with a completed subdivision—and rejected the city's offer.

Two months later, the city purchased a near identical 126-acre parcel of land from philanthropist/investor Ray Graham for $4.5 million, leaving McCall with the only private parcel of Bosque land in Albuquerque. The Graham property sat on the south side of Montaño Bridge, a short walk from McCall’s proposed Bosque Wilderness Subdivision, and is now managed by City Open Space.

After the $3.7 million offer was rejected, mediation proceedings between McCall, his attorney Alan Wilson, and the City Attorney's Office followed from April to May without compromise on a price. Then the city filed its lawsuit to condemn the land in June.

Although McCall seemed willing to work toward a compromise sale price a few months ago, he said last week that he no longer wants to sell the property. McCall said he has had the property appraised at $17.5 million and the city's best offer “is somewhere near $5 million.” McCall said he was willing to negotiate a selling price somewhere “near the middle” of those two numbers, but the city “wasn't even close.”

“If you don't want to pay what a dealer wants on a car, then you go down the road,” said McCall. “That's what I want them to do.”

“It basically comes down to money,” said City Councilor Michael Cadigan, an attorney who has been involved in the negotiations. “He clearly wants to sell, because of substantial risk to develop. He wants much more than it's worth, and he knows the city doesn't have all the money he wants.”

Cadigan said “it's a little suspicious” that McCall has asked the Army Corps of Engineers and the city to buy his Bosque property “and then when we take action to condemn it, he objects on this technicality.”

McCall, however, called it “prudent business” to build on the land and increase the property value.

Meanwhile, Mayor Martin Chavez has called McCall's practice of proposing a residential development in an environmentally sensitive area and then fighting the city over the condemnation value, “quite a system,” and remarked that Mr. McCall “represents much of what people dislike about the development community.”

As you might expect, McCall sees the matter differently. “The thing that is disheartening to me, Cadigan and the mayor are acting like I'm hurting them personally,” said McCall. “But it's my land. Leave me alone so I can go develop it.”

No Money Down

Cadigan said the city “served discovery” on McCall during mediation, requesting full disclosure of the transaction with the Taylor Foundation, but McCall has refused to discuss the terms of the deal.

As previously noted, county records show the owner-financed transaction between McCall and the Taylor Foundation, which owned the land for decades, took place between October and December 2003, involving at least $3.3 million.

However, the Taylor Foundation lists its total revenue as “$0” in the state Registry of Charitable Organizations, filed with the New Mexico Attorney General's Office for the accounting period ending on Dec. 12, 2003. In other words, if the filing is accurate, McCall and the Taylor Foundation worked out a no-money-down deal.

As a nonprofit, charitable organization, the foundation is tax-exempt, which requires its financial records to be made public. If the foundation engaged in a land transaction to solicit funds for reasons other than funding charitable causes, the profit from that transaction could be taxable.

Mike Jones, the Taylor Foundation's president, told the Alibi several months ago the money from the sale will be used to benefit the “lifetime income” of the elderly Nina Taylor (Joel passed away a few years ago) as well as benefit charitable causes associated with the Church of Christ.

Nonetheless, Mr. McCall can move forward with the permitting process until the city summons him to court, once again.

“We aren't just going to walk away with our tail between our legs,” said Cadigan. “We're willing to pay a fair price and will continue to negotiate.”