The Jan. 11 Truth or Consequences city commission meeting has the sale of the city’s electric company to Sierra Electric Cooperative on the closed or executive session portion of the agenda.
It will be all of a piece that such a decision will be made for secret reasons in a secret meeting. Raiding the electric fund has made it possible for the city to run non-transparently. The city has historically transferred about $2 million or more a year out of its city-owned electric company’s cash instead of churning profits back into the utility. The practice stopped recently because the cash cow ran dry. The city merely switched horses, transferring cash out of the solid waste, water and wastewater utilities over the last decade or so. This modus operandi makes city budgets and audits opaque, the transfers as confusing as Daedalus’ labyrinth.
The public has been waiting on word of the sale for about a year and a half. City Manager Bruce Swingle, shortly after he was hired as city manager, proposed that the city sell its electric company to Sierra Electric Cooperative. Because the city utility was not subject to New Mexico Public Regulation Commission rules, Swingle said, the utility had been neglected and not maintained.
A few months after Swingle suggested the sale, he brought a contract agreement to the city commission. It stated Sierra Electric Cooperative would pay about $30,000 for an assessment of the city’s electric company. The study was to be conducted by the National Rural Electric Cooperative Association. The city commission approved the contract with no meaningful discussion.
About a year later, Swingle mentioned the study was completed and was being evaluated by city staff. The Sierra County Citizen submitted a public document request for the study and received this reply from the city:
“July 13, 2022.The documents you are requesting contain confidential information and cannot be released at this point. Information contained in the study will be used by the city for determining the value of city property in negotiations with Sierra Electric Coop.The information shall remain confidential until a decision is made to sell the electric property or not, and negotiations are complete. If the commission decides not to sell, the report will become public.”
The city has the authority to sell the electric company privately, without going out to bid. However, any city property valued at over $25,000 that is sold privately, is subject to referendum. The pertinent part of state law 3-54-1, emphasis mine:
“B. A municipality may lease or sell and exchange any municipal utility facilities or real property having an appraised value in excess of twenty-five thousand dollars ($25,000) by public or private sale or lease, subject to the referendum provisions set forth in this section. The value of municipal utility facilities or real property to be leased or sold and exchanged shall be determined by the appraised value of the municipal utility facilities or real property and not by the value of the lease. An appraisal shall be made by a qualified appraiser and submitted in writing to the governing body. If the sale price is less than the appraised value, the governing body shall cause a detailed written explanation of that difference to be prepared, and the written explanation shall be made available to any interested member of the public upon demand.”
The requirements for a citizen referendum are found in state law 3-14-17:
“Commission-manager; referendum; subjects petition; election; effect; repeal of emergency measure.
- If within thirty days following the adoption of an ordinance or resolution, a petition, signed by the qualified electors in a number more than twenty percent of the average number of voters who voted at the previous four regular municipal elections or more than twenty percent of the number of voters who voted at the previous regular municipal election, whichever is the greater, is presented to the commission asking that the ordinance or resolution in question be submitted to a special election for its adoption or rejection, the ordinance or resolution shall become ineffective upon verification of the petition and the commission shall within ten days of verification adopt a resolution calling for the holding of a special election on the measure within ninety days of the verification of the petition.
- The ballot shall contain the text of the ordinance or resolution in question. Below the text shall be the phrases:
“For the above measure”, and
“Against the above measure”,
followed by spaces for marking the ballot with a cross or check or other mark necessary for proper counting of the ballot, in order to cast a vote for the phrase desired. If a majority of the votes cast favor the measure, it shall take effect immediately. If a majority of the votes cast are against the measure, it shall not take effect.
- If an ordinance or resolution is an emergency measure, it shall go into effect immediately, but it may be repealed by an adverse majority at a referendum election.”
The city commission also has the authority to meet behind closed doors to discuss the sale of the electric utility. The pertinent part of the state’s Open Meetings Act:
“10-15-1. Formation of public policy; procedures for open meetings; exceptions and procedures for closed meetings.
H (8) meetings for the discussion of the purchase, acquisition or disposal of real property or water rights by the public body;”
The city commission must come into open session to take any action, including a vote on whether to sell the electric utility. The Sierra County Citizen will track whether action was taken and report back.
The Sierra County Sun did a comparison of electric rates throughout the state. Sierra Electric Cooperative’s was the highest: https://sierracountysun.org/government/t-or-c/how-t-or-cs-electric-utility-rate-compares-to-other-cities-in-new-mexico/
On the same agenda for Wed Jan 11, the commission will discuss?? and probably approve two other sales of T or C property to individuals. Both of these sales exhibit the typical characteristics of being in violation of the New Mexico’s Constitutional prohibition called Anti-Donation. Public entities are (in theory, not practice) barred by law from enriching individuals or other private enterprises with public monies. In the two instances up for consideration are the City’s stated acceptance of purchase prices well below the independently appraised valuation.
As this article also states in the relevant State Statue 3-54-1 -B a requirement for explanation;
” An appraisal shall be made by a qualified appraiser and submitted in writing to the governing body. If the sale price is less than the appraised value, the governing body shall cause a detailed written explanation of that difference to be prepared, and the written explanation shall be made available to any interested member of the public upon demand.”
In both instances the City spent public funds to enhance the deal for the offerors by paying for appraisals and surveys (not needed for properties under the value of $25,000 (3-54-1-A) as the assessed values were well under that limit and cost the taxpayers, not the “buyers” several thousand dollars which will not be recouped. Another important question is raised by this all too common practice; Why did the city take ownership of the properties in the first place, since they seem unlikely to benefit the taxpayers of T or C with their lack of business acumen. One property is a building lot in a decent neighborhood and the other is a drainage ditch (platted for flood control) No information has been presented by the City as to the true cost to the people or justification for accepting undervalue offers that only benefit the buyers at public expense. Any questions Commissioner? Call me.
These items should be removed from consideration until the anti-donation complaints are satisfactorily resolved, it’s you sworn duty.
Thanks for following this!
Two small glitches (not including a typo left as an exercise for the picky reader):
National Electric Cooperative Association => surely that’s the National Rural Electric Cooperative Association?
“… the cash cow ran dry. The city merely switched horses…”
And the writer switched metaphors!
Thanks for the close reading. I made the corrections, except for the switched metaphors. I was aware I was doing it and was hoping the reader would find humor in it, in a Mrs. Malaprop kinda way.
I was appalled to see this item on the Agenda, yet alone on Executive Session. So, I looked into the matter further.
Then I filed a complaint with the Attorney General.
Here is the core of what I just sent to the Mayor and Commissioners:
The sale of the City’s Electric system and service does not qualify under 10-15-1(H.8). Hence, its inclusion under Executive Session is a violation of the Open Meetings Act. Saturday I filed a complaint about this with the Attorney General’s office (NMOAG-ECS-20230107-739c).
I urge you to remove the item from your agenda until this matter is resolved.
The more appropriate law that you should be following, it EVEN has UTILITY FACILITIES in its title, is 3-54-1. I have attached it.
At the time of your approval of the MOU — the only earlier public mention of this possibility — I urged that Public Hearings be held in conjunction with this process which was, as written in the minutes of that meeting, “exploratory”. Where is that exploration? Further, as I also said, you sent this process down one rabbit hole without explorations of other options— let alone allowing it to go for a bidding process.
That your Commission and the Manager can hold a Public Hearing on one person’s request about a stop sign, and you hold no public hearings on the possibility of selling one of the City’s primary assets is egregious and lacks any SUNSHINE on public matters.
Ariel Dougherty, in her Open Meetings Act complaint, points out that 10-15-1(H.8) gives open-meetings exemptions for sale of “real property” or “water rights.” The electric utility is a utility, not real estate, she argues.