By DANIEL J. CHACÓN
The Santa Fe New Mexican

As the New Mexico Department of Transportation takes center stage amid a push to pass a $1.5 billion bonding package, a costly and embarrassing mistake is percolating behind the scenes.

In July 2024, the department bought five mobile office units for $1.23 million. Problem is, they didn’t meet permitting requirements in a commercial setting, prompting staff to make the decision to sell them back to the vendor for $375,000 — resulting in a net loss of $857,000.

The foul-up is one of a handful of instances in which the department was out of compliance with the state’s regulatory requirements, according to its most recent audit.

“The buyback check of $375,000 … was deposited prior to obtaining final disposition approval and providing notice to the State Auditor,” according to the audit, which notes state agencies are required to obtain written approval and provide notice “before disposing of tangible personal property.”

Transportation Secretary Ricky Serna called the blunder avoidable when communication, or lack thereof, is at the center of what went wrong.

“It would have been great at some point along the line that somebody said, ‘We should elevate this to our leader to see what the best decision is moving forward,’” Serna said in a telephone interview Monday night.

“But that didn’t happen, so … when that was brought to our attention, we got to work on figuring out what happened and who we had to hold accountable,” he said.“We’re in the midst of doing that, and to be sure, we’re going to because nothing irks me more than that kind of decision making in silos.”

Despite rumors to the contrary, Serna said the buildings were office units, not mobile homes.

Andrea Brown, a spokesperson for the New Mexico Regulation and Licensing Department, said its Construction Industries Division was responsible for evaluating whether the units met state-adopted commercial building codes.

“The purchased units were not constructed to comply with the 2021 International Building Code, which governs construction of commercial office spaces in New Mexico,” she wrote in an email. “Commercial buildings must follow much stricter code requirements for occupancy loads, accessibility compliance, and structural reinforcements that are not present in standard residential housing. Therefore, the units did not meet regulatory requirements for commercial property.”

Serna said nobody checked in with the division before ordering the units, which were going to be used in five different locations in the southern part of the state.

“They just decided, ‘We’ll order them.’ So, they ordered them, and they got here. When they got here, and we called CID, and CID did the inevitable, I guess, which was [say], ‘You should have called first because we’re not going to be able to permit these for their use.’ Not because they were family dwellings, but because they didn’t meet the requirements for using them as office space in a commercial setting.”

When the division rendered its decision, Serna said the matter should’ve been elevated to his office.

“But that didn’t happen,” he said.

“Instead, we had managers unilaterally decide, ‘Well, we’re going to have to send them back.’ When that decision was made, the company and that group of decision makers settled on [$375,000] in exchange for the $1.2 million we paid for them. They agreed to that, and they decided to send them back, and that fundamentally cost the agency over $800,000.”

The money came out of the State Road Fund, which Gov. Michelle Lujan Grisham and others are trying to prop up.

The bonding package — which Lujan Grisham and others want to see passed by the halfway point of the 30-day session — would increase taxes and fees to generate additional revenue for the road fund, including a 35% increase to the weight-distance tax on heavy commercial vehicles, a 25% increase to vehicle registration fees and a new fee for electric and plug-in hybrid vehicles.

Serna said the mistake not only cost the agency money but is creating a ripple effect that could lead to distrust in how the organization is managed.

“I’m not going to let some bad apples ruin what otherwise is just years and years of good financial management,” he said.

Serna said the department is going to deal with the matter “from a personnel perspective,” though he didn’t elaborate. He also said he wished he could go back in time to approach it “from a public resource perspective.”

“The communication internally could have gone a long way to maybe figure out how we could have made them work in different settings that would have been still valuable to the organization or maybe gone to the vendor directly to negotiate a higher return on what we paid for them,” he said.

“But none of that occurred,” he added, “so I take responsibility leading the organization, but not for bad decision making.”