Censuring and removing Director Shannon Reynolds from the Regional Spaceport District board was on the Jan. 9 agenda.
Any of the six directors could have put the resolution on the agenda, but my bet is Jim Paxon, the chairperson of the Spaceport District board, crafted it with Sierra County Attorney Dave Pato. In the six years Paxon has been a Sierra County Commissioner, I have seen the increased use of resolutions as weapons of spin cloaked in legalese.
Of course Paxon didn’t claim authorship and this is necessarily a supposition on my part, which is the point–leave it vague who is behind this degradation and elimination.
The resolution lays out several reasons for Reynold’s censure and removal.
One claim is that Reynolds missed “most” of the 2024 meetings. It looks like there were four meetings over the year, with Reynolds missing two or half the meetings.
A second claim is that Reynolds presented a resolution document to fellow directors the day of the March 15 meeting instead of giving them time to consider the matter. The resolution was also said not to match the subject matter indicated by the agenda–an Open Meetings Act violation.
Reynolds’ resolution was taken off the agenda. ”There was no harm, no foul,” Reynolds said. “I disagree with the AG–they got a ruling from the AG’s office before the meeting. It’s possible they didn’t match, but it’s moot because it was never heard.”
Concerning the late submission of the resolution, Reynolds admits he messed up. “It was the week of my wife’s memorial service and I was preoccupied with that. We were married 42 years.”
A third claim is that Reynolds sought the removal of previous-Director Wayne Savage from the board because Savage was in favor of “establishing an account to receive Spaceport District funds, thus engaging in divisive and disruptive behavior.”
That is not what happened. Reynolds pointed out that the “formation document” that was passed in 2009, shortly after the legislature passed state law 5-16-1, et seq., forming the Spaceport District, stated that the governor’s two appointees on the board must be elected officials. Savage is the executive director of New Mexico State University’s Arrowhead Park, not an elected official. I attended the meeting, which was over four years ago, in which Reynolds pointed out that both of the Governor’s appointees were not elected officials. Governor Michelle Lujan Grisham had also appointed Sid Bryan, a real estate broker. They have since been replaced with Kim Skinner, Elephant Butte city council member, and Eric Enriquez, Las Cruces mayor.
Of course, Reynolds could have been trying to get members more favorable to his positions on the board–elected officials rooting for spending the people’s tax money on projects meant to make the spaceport self-sufficient. But couldn’t Paxon’s (if he is the author) censure-and-removal resolution be a similar move, albeit to get a less critical-thinking, questioning Dona Ana County commissioner on the board?
A fourth claim is that Reynolds is not fulfilling his “statutory and contractual obligations to facilitate the transfer of revenue collected, as mandated by the Spaceport District Formation Agreement.”
This fourth claim gets to the nub of the matter. The state legislature passed 5-16-1 that creates a District board that is supposed to exercise fiscal oversight–to watch over the people’s gross-receipts-tax revenue, ensuring it is well spent. But the state law was tricky, with traps that undermined the county-members’ authority. The Spaceport District is not a taxing authority, and It’s a subdivision of the state, and the law said the state could join the district if the other members agreed. This ensured the state held sway over local GRT monies.
The law said counties or cities joining the district had to pass a local gross receipts tax with 75 percent of the revenue going to “financing, planning, designing, engineering, and construction of a regional spaceport.” Two seats on the board for each member, no matter the size or money the county or city brought to the table. The state, on the other hand, was required to provide zero tax revenue, yet it too was given two board members with the same “oversight” powers for gratis and for nothing.
The formation document shows that the state, “acting through the New Mexico Spaceport Authority” was allowed into the District January 2009, about six months after Dona Ana and Sierra counties became members. The formation document was signed by Walter Armijo, who was a Sierra County Commissioner at the time and the Regional Spaceport District board’s chairperson. The document is also signed by Daniela Glick, who was deputy director of the New Mexico Economic Development Department and the chair of the New Mexico Spaceport Authority at the time. By law the New Mexico Spaceport Authority is under the aegis of the Economic Development Department and its secretary or his or her designee is the chairperson of the NMSA executive directors’ board.
For the six years that Reynolds and Paxon have been on the Spaceport District board, they have disagreed on the level of oversight and control the board should exercise over the GRT revenue.Reynolds wants the District to exercise more control and Paxon wants the District to simply hand over the money to NMSA.
But the thing is, Dona Ana County is collecting 20 times more GRT than Sierra County. In 2024 Sierra County’s 75 percent of its .25 percent GRT tax was about $630,000 and Dona Ana’s was about $12 million. Reynolds thinks Dona Ana County should have more members on the District board to reflect its far greater monetary contribution.
It’s not as if the New Mexico Spaceport Authority has a good record on fiduciary oversight of Spaceport America’s spending. In 2019 Spaceport America’s then-Chief Executive Officer Dan Hicks was accused of malfeasance, which subsequent investigation revealed, among many other things, that about $7 million of Dona Ana County’s GRT had been spent on salaries and other operations costs. Operations costs are not what the people’s tax money was for–it was to create a regional spaceport, that is, for capital projects.
Hicks was accused by then-Spaceport America Chief Financial Officer Zachary DeGregorio. who claims he was retaliated against for blowing the whistle on the malfeasance. His lawsuit is still ongoing.
Dona Ana County has never been repaid the misused $7 million. Since the Hicks scandal, Reynolds succeeded in having Dona Ana County receive the GRT that is left over after the nearly $5 million-a-year bond debt is paid. Before the HIcks case, the New Mexico Finance Authority, which holds the bond debt, got all the money. It sent what was left over to the New Mexico Spaceport Authority. NMFA only did so after the District board of directors passed resolutions giving them permission to do so. Reynolds threw a wrench in that process.
Sierra County has opted to still give its excess GRT to the New Mexico Spaceport Authority. In the last five years Sierra County has given NMSA about $1.5 million in excess GRT, while Dona Ana County is sitting on over $19 million in excess GRT.
Reynolds and his fellow Dona Ana Commissioner and District board member, Manny Sanchez, contend that they have cooperated with NMSA in creating a spaceport. The District took out nearly $80 million in bond debt, not including interest, and the spaceport was completed 10 years ago, they have said in District meetings.
The further claim that Reynolds is failing in his “statutory and contractual” duty “to facilitate the transfer of revenue collected to support the spaceport and related activities as mandated by the Spaceport District Formation Agreement” is an oversimplification of what the laws and formation document state.
The laws creating the District, 5-16-1, et seq., say the District should support the spaceport’s building with the cooperation of the New Mexico Spaceport Authority. The NMSA hasn’t asked the District what projects it wants to support. It hasn’t shared a master plan or consulted with the District on a 10-years-late master plan that will supposedly be revealed soon. Hopefully cost/benefit/marketing/revenue-generating analysis geared toward self-sufficiency is part of the master plan.
Reynolds, in past District meetings, has suggested the excess GRT form a borrowing fund, with prospective projects chosen based on business plans demonstrating how and when they will generate revenue necessary to pay off the loan. The fund would become ever-renewing, and much more likely to deliver the economic benefits promised to the people.
The other “statutory” requirement the censure/removal resolution cites is state tax law 7-19D-15. It states that “each of the Participating Counties is obligated to transfer a minimum of 75 percent of all proceeds from the County Spaceport gross receipts tax to the District.” To the District, not the spaceport, as the censure/removal resolution mis-claims.
The District’s past boards exercised so little fiscal oversight that they didn’t bother to set up a District bank account, therefore Reynolds couldn’t have obeyed this statutory requirement. Only now is the board attempting to set up an account. They passed a resolution at the Jan. 9 meeting to open an account at Citizens Bank. Reynolds voted no. His was the only no vote among the six board member. He should be able to vote no without censure or removal.
The District board wants an account because they want to invest excess GRT with the State Investment Council and the SIC requires they do so from a District bank account. They also want to transfer money for NMSA capital projects from the SIC investment fund. The board passed an SIC investment resolution at the Dec. 4, 2024 meeting. The catch is that only a class A county can open an investment account with the SIC, which is defined as one with over $75 million in revenue and a population of over 100,000.
Reynolds said the Dona Ana County Commission agrees with him that opening such an account is not good for Dona Ana County. It’s good for Sierra County, NMSA and the state, since Dona Ana County would carry the major burden of building out the spaceport indefinitely–not them. It is unlikely that Dona Ana County will open the SIC investment account, despite pressure from the District board.
The censure/removal resolution is a power play to try to intimidate Reynolds and Dona Ana County into handing over its GRT with no input into the projects it buys. The resolution contains falsehoods and simplifications to make it appear as if Reynolds is not doing his job as a board member. In fact, he is looking out for his constituents as best he can given state laws that rigged the system to arrogate state power over local GRT funds.
It’s too bad for Sierra Countians that Paxon, Day and Skinner aren’t also scrutinizing how GRT funds are used. They obviously still believe that billion-dollar corporations will come if the people build a massively expensive spaceport. The people already built Virgin Galactic a $220 million runway and The Gateway to Space building, which were supposed to bring 400,000 tourists a year to Sierra County. That hunkydory fantasy is still just that. Now, without question or explanation, without vetting, without cost analysis, Paxon, Day, Skinner and Enriquez, expect the people to build out a much larger spaceport?
At the Jan. 9 meeting, Reynolds said the Dona Ana County attorney advised him to ask the District board to cite the authority giving them the power to censure him. They couldn’t and the resolution, after a tied and thus null vote, was tabled until the next meeting, June 12.