Auditor Johnson Warns Alamogordo About Potential ‘Job Fund’ Violations

Wayne Johnson
ALBUQUERQUE New Mexico State Auditor Wayne Johnson this week warned Alamogordo city leaders about potential violations of the Local Economic Development Act and other missteps as they built an entertainment venue.
Johnson says his office received more than a dozen complaints about the project, and initiated a special investigation.
“There appears to have been lots of confusion over the years as this project staggered along,” Johnson said. “Unfortunately, such chaos creates an environment that is ripe for waste or abuse. Economic development funds are valuable dollars that we should use to create jobs and stimulate our local economies. It’s a shame when a faulty process causes those dollars to be wasted and not used properly.”
Johnson’s office found several possible violations that could result in findings in the City’s upcoming annual audit:
  • The City appears to have wasted taxpayer dollars by paying $60,575.60 to an architect for detailed site plans and floor plans for the FFC that were not used in the final construction.
  • The City did not comply with provisions of the Home Rule city ordinance, which mandates that when the City rejects proposals, the rejection include a written statement noting the reasons for the rejection. There were two instances where proposals were rejected and no reason for the rejection was noted.
  • The City did not comply with provisions of LEDA.
    • The City passed an ordinance to allow LEDA funds to be used for retail projects and this did not appear to comply with state statute section 5-10-4(D) which requires an election and a majority of the voters’ approval.
    • The City provided $1.5 million in LEDA funds to an entity that does not appear to be a qualifying entity. Downtown Venture Corporation (DTVC) appears to be a retail or service establishment and since the use of LEDA for retail purposes was not approved by voters, this does not appear allowable. Additionally, the New Mexico Economic Development Department reviewed the equipment DTVC was allowed to purchase and stated that of the 12 items only 1 would have been eligible, if this had been a qualifying entity.
    • The City did not comply with state statute section 3-54-1. This requires that when a municipality leases a building having a value greater than $25,000 there be an appraisal. The FFC was constructed for over $6 million and no appraisal was conducted by the City.
  • An employee of the City may have violated the Governmental Conduct Act.
The State Auditor’s office says these concerns will be referred to the independent public accountant performing the City’s annual audit.
“There are numerous indications of problems revolving around a process that was not fully understood by the City of Alamogordo and resulted in multiple violations and potential misuse of public funds,” Johnson said. “Our job is to bring these problems to light so policymakers can correctthem and learn from them.”
The full text of the State Auditor’s letter can be seen here:
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