The City of T or C’s insurance will pay Hot Springs Land Development $100,300 in an out-of-court settlement that will put to bed a 2014 court case brought by HSLD against the city.
The city’s insurance is through the New Mexico Municipal League’s Self Insurers’ Fund.
Over 10 years ago, HSLD sued the city for breach of an option agreement, breach of an airport development agreement, breach of a water well agreement and breach of covenant of good faith and fair dealing implied in the contracts.
HSLD bought 7,388 acres surrounding the city’s airport in April 2008, according to the court case documents, paying the state land office $2.53 million and “$1.47 million in pre-acquisition expenses,” or $4 million total.
Before closing on the land deal, HSLD signed two contracts with the city, court documents state, relying on those contracts to provide the means to develop the property.
August 2007, the city and HSLD signed an “Airport Development Agreement,” which gave HSLD exclusive commercial development rights to the airport in exchange for engineering the “Airport Layout Plan,” court documents state.
August 2007, the city and HSLD signed an “Option Agreement,” that gave HSLD the exclusive option to purchase 80 percent of then-current excess water and sewer capacity and 95 percent of planned future water and sewer capacity, in exchange for an initial deposit of $200,000, court documents state.
August 2008, the city commission approved the annexation of HSLD’s nearly 7,400 acres into the city.
In September 2008, the city and HSLD signed a water well agreement. The city promised HSLD that if HSLD paid for and succeeded in developing a Cuchillo Creek exploratory well, the city would service the HSLD development with water from that well, court documents state.
Less than a month later, the “city abandoned the Cuchillo Creek well project and refused to deliver water for reasons unrelated to the viability of the well,” court documents state. HSLD paid $79,000 to develop the well, with the city reimbursing HSLD $47,000 when it abandoned the project.
September 2008, “Mayor Lori Montgomery, City Clerk Mary Penner and Attorney Jaime Rubin drafted and signed the termination of the Airport Development Agreement,” court documents state. The termination was based on the “misrepresentation” that the Federal Aviation Administration had to approve the Airport Development Agreement and that the FAA failed to approve it, the HSLD complaint asserted.
September 2010, HSLD “formally requested utility service,” which was ignored “in violation of the Option Agreement and 4-412 of city code,” the HSLD complaint stated. City code 4-412 states, “Any new development for which an impact fee has been paid is entitled to the permanent use and benefit of the services for which the fee was exacted and is entitled to receive prompt service from any existing facilities with actual capacity to serve the new service units.”
July 2012, HSLD was trying to work out an airport lease agreement with the city, but the city would only agree if HSLD signed a release that waived all rights to sue the city for damages, which HSLD would not do. January 2013, when HSLD again tried to work out an airport lease, the city made the same stipulation. HSLD would not release the city from its $200,000 water and sewer option agreement or the exclusive airport development agreement, having fulfilled its engineering obligations, which cost about $750,000, according to HSLD’s complaint.
August 2012, HSLD requested the city pay back the $200,000, with interest, but the city refused.
HSLD waited nearly two years–July 2014– before suing the city for breaches of contracts and good faith.
The settlement agreement “discharges all claims” arising out of the lawsuit and dealings the city and HSLD had from 2007 to 2014. Each party will pay their own legal fees. The settlement agreement is dated Feb. 5.
HSLD sold off most of its nearly 7,400 acres in July 2023, when Higgenbotham Auctioneers held an auction. However, according to Sierra County Assessor Mike Huston, none of those titles have changed hands because the subdivision process for the parcels is incomplete, leaving the metes and bounds of each land sale officially undefined.
Let’s get an assessment of how much time and money (tax-payer funds) city commissioners, city personnel and the city attorney (and other attorney’s) wasted on HSLD!!! The TorC public was vehemently opposed to bringing all this land into the City and told the Commission in a very lengthy meeting that went on to after 1 AM. But Commissioners failed to heed public warnings. Amongst us opposed, the very first thought among ourselves was a suit by HSLD would eventually follow.