Donnerstag, Dezember 23, 2010

The Face of Corruption...

This is typical: in a largely Democratic state, more than $500,000 is being spent on a new film studio near Santa Fe, the first use of a $10mn package to help local industries. In addition, $3.6mn is being spent to improve the local infrastructure.

Doesn't sound so bad, does it? A film studio for New Mexico, what's so bad about that?


Father and son Lance Hool and Jason Hool — longtime friends of Gov. Bill Richardson — are the principal shareholders in Santa Fe Studios. State Democratic Party chair Javier Gonzalez is also a partner in the venture.

Further, after initial approval, the agreement has been changed multiple times, with the local government paying for more and more of the project:

The most recent version of the deal includes the following commitments of public resources:

  • Santa Fe County will administer the $10 million economic- development grant on the project.
  • Santa Fe County will provide $3.6 million worth of infrastructure improvements to the project, including dedicating as many as 25 acre-feet of water for the studio.
  • Los Alamos National Bank will loan the project developers at least $6.5 million, which Santa Fe County will guarantee by placing $6.5 million worth of "cash reserves" in a "lock box" account at the bank.

According to the motion filed Wednesday, if there is a default of the terms of the Project Participation Agreement, Santa Fe County will also be obligated to reimburse the state for any of the grant money spent on the project.

So, from a modest spending proposal, Santa Fe county is now administering the project and, most importantly, is guaranteeing the project, removing any and all risk for anyone investing...and those investing just happen to be longtime friends of the Governor and the State Democratic Party Chair.

This is the face of corruption today: instead of taking on risk in a commercial undertaking, your friendly local government takes that on instead, but only if you are the right people.

At least some is trying to fight this:

But Wednesday's filing claims the new agreement still violates laws meant to prevent the government from donating public resources to private developers or from lending or pledging its credit to aid "any person, association or public or private corporation."

The motion alleges that:
  • Neither Santa Fe Studios nor its holding company, La Luz Holdings, qualifies for public assistance under Local Economic Development Act rules.
  • Santa Fe County changed the terms of its own ordinance governing the use of county gross-receipts tax revenue to allow the use without posing the question to voters as is required by law.
  • Only 16.5 of the 65 acres purchased by Santa Fe Studios and La Luz Holdings for the studio project will be used to build the studios that are named as the focus of the $10 million grant, while the remainder will be a private real-estate development.
See how all of a sudden there's something additional, something simply not mentioned? Only a small portion of acquired land will be used for the studio, the rest is a private real-estate development.

Corruption, in the eyes of the corrupted, is simply a way of doing business. It costs the taxpayers massive amounts of money, but because there isn't one single person "hurt", a blind eye is turned and those with connections make out like bandits. In a town facing real problems with oversupply of housing, foreclosures and bankruptcies, someone is using his leverage with the local government to build more housing.

But hey, what's the rule of law to these friends of the Governor and the State Democratic Party Chair?

At least someone is trying to stop this: it may well get nowhere, because all of those involved are either corrupt or complicit: oddly enough, no one involved could be reached for comment, or declined to comment because they weren't aware of what is going on.

Now that's convenient.

And kudos to the Santa Fe New Mexican: they are doing their job, reporting on what is obviously a sweetheart deal for political friends.

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