TITLE 19 NATURAL
RESOURCES AND WILDLIFE
CHAPTER 2 STATE
TRUST LANDS
PART 22 PLANNING
AND DEVELOPMENT LEASES
19.2.22.1 ISSUING
AGENCY: Commissioner of Public Lands - New Mexico State
Land Office - 310 Old Santa Fe Trail - P. O. Box 1148 - Santa Fe, New Mexico
87501.
[19.2.22.1 NMAC - Rp, 19.2.22.1 NMAC, 11/30/2012]
19.2.22.2 SCOPE: Pursuant
to Article XIII, Section 2, of the New Mexico Constitution, the commissioner
has jurisdiction over all lands and related resources that the United States
granted and confirmed to New Mexico under the New Mexico Enabling Act. This rule, 19.2.22 NMAC, governs the granting
of planning and development leases, on those lands within the commissioner’s constitutional
jurisdiction.
[19.2.22.2 NMAC - Rp, 19.2.22.2 NMAC, 11/30/2012]
19.2.22.3 STATUTORY
AUTHORITY: N.M. Const. Art. XIII;
Section 19-1-1 et seq. NMSA 1978; Section 19-7-1 et seq. NMSA 1978.
[19.2.22.3 NMAC - Rp, 19.2.22.3 NMAC, 11/30/2012]
19.2.22.4 DURATION: Permanent.
[19.2.22.4 NMAC - Rp, 19.2.22.4 NMAC, 11/30/2012]
19.2.22.5 EFFECTIVE
DATE: November 30, 2012, unless a later date is
cited at the end of a section.
[19.2.22.5 NMAC - Rp, 19.2.22.5 NMAC, 11/30/2012]
19.2.22.6 OBJECTIVE: The
objectives of 19.2.22 NMAC are to generate value to the trust by planning and
development of trust land for future sale, lease, or exchange through the
process of obtaining government approvals and the placement of infrastructure
pertinent to the planning and development of the land; to assure protection and
maintenance of trust assets and lands; to provide planning and development
lease terms and conditions; and to provide an efficient process for such
leasing.
[19.2.22.6 NMAC - Rp, 19.2.22.6 NMAC, 11/30/2012]
19.2.22.7 DEFINITIONS: As
used in 19.2.22 NMAC, the following terms have the meaning set forth in this
section. A planning and development
lease may add detail to a definition to accommodate lease specific issues.
A. “Applicant”
means the person or entity first applying to nominate trust land for a planning
and development lease.
B. “Approval / approved”
means written approval and includes only that which has been expressly approved
and nothing further which might be implied.
C. “Assignment” means any direct or indirect transfer or
partial transfer of all of a lessee’s interest in all or a part of a planning
and development lease, including, but not limited to, any conditional transfer
or transfer by operation of law, excluding subleases.
D. “Base
infrastructure” means tangible improvements consisting of main distribution
or arterial-level service lines, or the municipal or local equivalent,
including at a minimum, all of the following:
water, sanitary sewer, gas, electricity, telecommunications, and
roadways or other transportation facilities.
E. “Base value” means
the value that results from the base appraisal, as more specifically defined in
Paragraph (1) of Subsection A of 19.2.22.17 NMAC below.
F. “Collateral assignment” or
“leasehold mortgage” means
the conditional assignment to a creditor as security for a debt of a lessee’s
personal property interest in a planning and development lease, infrastructure,
governmental approvals, or improvement value credit.
G. “Commissioner” means the New Mexico commissioner of public lands.
The commissioner is the executive
officer of the state land office and may delegate to state land office staff
the performance of duties required of the commissioner under this rule.
H. “Disposition”
means a take-out sale, a take-out lease, or a take-out exchange of all or any
portion of trust land subject to a planning and development lease.
I. “Disposition
parcel” means the portion of the trust land under lease that is subject to
disposition.
J. “Government approvals” means legal rights granted by governments or
agencies that run with the leased land including but not limited to planning,
zoning, water and sewer service agreements, development agreements, platting, archaeological
clearances or mitigation, and such other rights as may be required for the
further development, improvement or use of the trust land; any property,
rights, approvals, or privileges obtained or developed for the benefit of, or
made appurtenant to, trust land and any other rights, permits or privileges
obtained or developed in connection with a lessee’s use of the leased trust
land including, but not limited to, development rights and approvals.
K. “Governmental
entity” means the state of New Mexico,
its agencies or political subdivisions, Indian tribes and pueblos, or federal
government agencies other than the department of interior.
L. “Infrastructure” means any improvements approved through a
governmental approval process and necessary to support or enhance future
planned development of all or the relevant parts of the leased premises, including
but not limited to utilities, erosion control structures and flood control
structures, roadways, sanitary sewers, water wells, water reservoirs, and
sanitary sewage treatment facilities.
M. “Improvements" means any item of
tangible property secured, developed, placed, created or constructed on the
leased premises including but not limited to buildings, structures,
infrastructure, permanent equipment and fixtures, and water rights developed as
appurtenant to the trust land and approved by the commissioner, including any
associated and required land use approvals.
N. “Improvement value
(IV)” means the increased value of the leased premises attributable to
improvements as established by appraisal, as more specifically defined in Subsection
C of 19.2.22.17 NMAC below.
O. “Improvement value credit (IVC)” means the lessee percentage multiplied by
the improvement value.
P. “Joint planning agreement”
means a written agreement or understanding entered between the commissioner and
a local government designed to facilitate planned growth of trust lands for the
greatest benefit to the trust and the local community.
Q. “Leased premises”
means that portion of trust land which is subject to a planning and development
lease.
R. “Lessee” means the party of record at the state land
office, who leases trust land from the commissioner under a planning and
development lease.
S. “Lessee percentage (LP)” means the
percentage to be determined through negotiation or bidding, and incorporated
into the lease, which sets the lessee’s proportional share of IV.
T. “Lessor” means the commissioner acting by and through
the state land office.
U. “Natural appreciation
(NA)” means any increase in the value of the leased premises not
attributable to improvements, as determined by appraisal or by a pre-negotiated
annual adjustment factor, as more specifically defined in Paragraph (3) of Subsection
A of 19.2.22.17 NMAC below.
V. “Planning and
development lease” means a written lease of trust land issued under this
part, 19.2.22 NMAC, designed to improve the value of trust land for future
sale, lease, or exchange. The commissioner,
in the commissioner’s discretion, shall determine the development potential of trust
land.
W. “Qualified bidder” means a prospective bidder that has
satisfied both the qualification deposit and all other bidder qualifications as
more specifically described in Subsections A and B of 19.2.22.11 NMAC.
X. “Rent” means the
total of estimated rent payments, including all periodic rents with applicable rent
adjustments, percentage rents, initial or periodic fees, or any other incentive
payment due during the lease term, and any other payments identified as rent in
a planning and development lease.
Y. “Rent adjustment” means a periodic increase of any rent amount.
Z. “Schedule of fees”
means a list of fees that must be paid for performance of certain
administrative functions. The schedule
of fees shall be published on the state land office website and is subject to
change at the discretion of the commissioner.
Unless otherwise noted in the schedule of fees or in this rule, the fee
shall be non-refundable.
AA. “State land
office” means the New Mexico
state land office.
BB. “Sublease” means a transaction or arrangement whereby a
planning and development lessee transfers to another anything less than the
full interest in the planning and development lease, including but not limited
to the rights to use, possess, manage or control all or part of the leased premises.
CC. “Subsequent value (SV)” means the value that results from any
subsequent appraisal, as more specifically defined in Paragraph (2) of
Subsection A of 19.2.22.17 NMAC below.
DD. “Take-out exchange”
means a relinquishment or a conditional relinquishment of all or a portion of
the leased premises from the planning and development lease together with, and
for the purpose of, an exchange of the same pursuant to 19.2.21 NMAC.
EE. “Take-out lease” means a relinquishment or a conditional relinquishment of all or a portion of the leased premises from a planning and development lease together with, and for the purpose of, a business lease of the same pursuant to 19.2.9 NMAC.
FF. “Take-out sale” means a relinquishment
or a conditional relinquishment of all or a portion of the leased premises from
a planning and development lease together with, and for the purpose of, a sale
of the same pursuant to 19.2.14 NMAC.
GG. “Termination” means
the end of a planning and development lease whether by cancellation,
relinquishment or the expiration of the lease term.
HH. “Trust” means the land
trust established by the Enabling Act (Act of June 20, 1910, 36 Statutes at
Large 557, Chapter 310), and that trust’s assets, which are administered
through the state land office by the commissioner.
II. “Trust land” means all land owned by the trust.
JJ. “Unapproved
infrastructure and government approvals” means infrastructure and governmental approvals that have not received
the commissioner’s approval.
[19.2.22.7 NMAC - Rp, 19.2.22.7 NMAC, 11/30/2012; A, 6/30/2016; A,
6/11/2019]
19.2.22.8 LEASING
STANDARDS:
A. The
surface estate of any parcel or combination of parcels of trust land may be leased
under a planning and development lease at the discretion of the commissioner.
B. A
planning and development lease may be initiated only through public notice and
a public auction in accordance with this rule and other applicable law,
including but not limited to Section 19-7-9(c) NMSA 1978 (2009).
C. In
making a determination as to whether to enter a planning and development lease,
the commissioner will make a determination as to whether the lease is in the
best interest of the trust based on specific considerations including but not
limited to:
(1) the present value and estimated future value that will be
created for the trust;
(2) the anticipated impact on trust lands adjacent to or near
the proposed planning and development lease;
(3) the proposed planning and development lease’s conformance
with any joint planning agreements or existing land use plans;
(4) the interests of the local community;
(5) the feasibility of the proposed development project; and
(6) the ability of a lessee to execute the proposed development
project.
D. Notwithstanding
any other provision of 19.2.22 NMAC, and at any time before the execution of a planning
and development lease, the commissioner may, at the commissioner’s discretion,
reject any application or bid submitted under 19.2.22 NMAC.
[19.2.22.8 NMAC - Rp, 19.2.22.8 NMAC, 11/30/2012]
19.2.22.9 INITIATING
A LEASE:
A. A planning and development lease may be initiated either by an
applicant or by the commissioner.
B. Any person, corporation or other legal entity registered with the New
Mexico public regulations commission, or any other legal entity authorized to
do business in New Mexico, may apply to lease any trust lands under a planning
and development lease by submitting an application on forms prescribed by the commissioner.
C. The
application for a planning and development lease must, at a minimum, be made
under oath and include the applicant’s full name and contact information, a
general description of the trust land proposed for leasing including its
present use and general location, a general description of the proposed planning
and development activities and a statement describing the anticipated benefits
to the trust.
D. The application must include a nonrefundable application fee and
advertising deposit in the amount established by the commissioner.
E. If, after an initial evaluation of an application, the commissioner
determines that proceeding with the proposed planning and development lease may
be in the best interest of the trust:
(1) the commissioner shall require that a base appraisal be performed consistent with Paragraph
(1) of Subsection A of 19.2.22.17 NMAC below;
(2) the
commissioner may also require a survey plat and legal description of the trust
lands performed by a licensed professional surveyor in the state of New Mexico;
and
(3) the
commissioner may require any other
supplemental information from the applicant deemed appropriate under the
circumstances.
F. An
applicant may withdraw an application for a planning and development lease at
any time.
G. If the applicant is not the successful bidder and the lease is awarded
to another party, the successful bidder shall reimburse the applicant for the
cost of the appraisal, survey and additional costs incurred by the applicant related
to the auction required by the commissioner and born by the applicant.
[19.2.22.9 NMAC - Rp, 19.2.22.9 NMAC, 11/30/2012]
19.2.22.10 PUBLIC
NOTICE OF A PROPOSED PLANNING AND DEVELOPMENT LEASE:
A. Advertisement. A notice of public auction must be published
once each week for not less than 10 consecutive weeks in a newspaper of general
circulation published in Santa Fe, and in a newspaper of general circulation
published nearest the offered land. The notice of lease sale must contain:
(1) the date, time and place of the auction;
(2) a
description of the trust land offered for lease and any limitations on the uses
of the land including any local land use restrictions, covenants, master plans,
joint planning agreements or any restrictions established by the commissioner;
(3) a statement as to whether the lease may be reasonably
amended after its execution; and
(4) the name of the person to contact at the state land office
for additional information on the auction and the trust land being offered for lease.
B. Notice at the property. The
applicant for the lease shall post notices of the proposed lease on the
boundaries of the proposed leased premises adjacent or nearest to public rights
of ways, in a similar manner as required by the local government through its
land use approval process. Such notice
shall be posted and maintained by the applicant for the 10 week public notice
period so as to be visible from the public right of way. Notices shall be in the form of a sign
identifying that a lease is being requested from the New Mexico state land office,
the size of the proposed lease in terms of acreage, the name and contact
information of the applicant, and purpose of the lease.
C. Bid information packet. Anyone requesting information on the auction will
be provided with a bid information packet which, at a minimum, will include:
(1) a form planning and development lease;
(2) a bid proposal form;
(3) the amount of the qualification deposit;
(4) a description of the public auction process;
(5) the
base value of the land together with a statement as to whether the
commissioner’s portion of the IV, if any, will be rolled over into the
subsequent lease; and
(6) a list of qualifications and statement of the criteria
established by the commissioner for determining the highest and best bid.
[19.2.22.10 NMAC - N,
11/30/2012]
19.2.22.11 PUBLIC
AUCTION: The commissioner may, under the following
procedures, offer a planning and development lease to the highest and best
bidder after public notice and a public auction. In order to qualify to bid at a public
auction, each prospective bidder must satisfy both a qualification deposit and
the bidder qualifications prescribed by the commissioner in accordance with the
following.
A. Qualification deposit. Each prospective bidder must deposit with the
commissioner the following amounts which are to be specifically described in the
public notice:
(1) the
costs of the auction, whether incurred by the state land office or the
applicant; such costs and expenses may include, but are not limited to, the
costs of appraisals, surveys, advertising, land use planning, and brokerage or
other real estate fees;
(2) the first rental payment under the planning and development
lease; and
(3) if the trust land offered for lease has IV or improvements from
a previous lease, all prospective bidders must deposit:
(a) a sum equal to the value of the IV, the improvements, or
both, or a bond or letter of credit sufficient to cover the value of these (the
holder of IVC or the owner of improvements need not make this deposit); or
(b) if the commissioner has agreed that its portion of the IV will
be rolled over into the subsequent lease all bidders except for the holder of
IVC must deposit:
(i) a sum equal
to the IVC or a bond or letter of credit sufficient to cover the IVC;
(ii) a bill of sale for the IVC executed by the holder of the IVC;
or
(iii) a waiver of payment signed by the holder of the IVC.
B. Bidder qualifications. In order to ensure the greatest return for
the trust, the commissioner will establish the minimum objective criteria that
must be satisfied by each prospective bidder in order to qualify to bid based
on the nature of the lease and the proposed uses of the trust land. Such requirements may include but are not
limited to:
(1) a preliminary, non-binding pro-forma or similar documentation
that identifies a minimum anticipated return rate to the trust and demonstrates
that a bid proposal is realistic and achievable;
(2) a financial statement that demonstrates solvency and
resources sufficient to accomplish the proposed development project; and
(3) some minimum level of experience in land use planning and
development.
C. Refunds. Upon
completion of the lease auction, the commissioner shall return any deposits to
the unsuccessful bidders.
D. Due diligence. All bidders must undertake their own due diligence,
including but not limited to, inspecting the offered trust land and reviewing
pertinent records and files of the state land office and other public
agencies. A prospective bidder must
obtain the approval of the commissioner before entering upon trust land.
E. Auction. The auction may be conducted by the
acceptance of oral or sealed bids. If
awarded at all, the planning and development lease will be awarded to the qualified
bidder offering the highest bid as determined by the following: For each auction, the commissioner shall set
a specific non-negotiable base rent. The
commissioner may accept bids based on the lessee percentage, or set a specific
non-negotiable lessee percentage and allow bidding in the form of a cash bonus
pursuant to the following:
(1) if the commissioner sets only a specific non-negotiable base
rent, the highest bid will be the bid offering the lowest lessee percentage; or
(2) if the commissioner sets both a specific non-negotiable base
rent and lessee percentage, the highest bid will be the bid offering the
highest cash bonus.
F. Bidding IVC. A
lessee may bid its accrued IVC attributable to the portion of the leased
premises subject to disposition at any public bid for the same disposition
parcel.
[19.2.22.11 NMAC - Rp, 19.2.22.11 NMAC, 11/30/2012]
19.2.22.12 PLANNING
AND DEVELOPMENT LEASE:
A. Execution of lease. The successful bidder must deposit with the commissioner all amounts due for the lease sale, including any bonus bid, no later than five business days after the auction, and shall, within 30 days after the auction, enter into the lease. The commissioner may extend the period for entering into a lease to no greater than 180 days after the auction. If the successful bidder does not deposit with the commissioner any amounts due, or enter into the lease offered by the commissioner, within the prescribed time periods, the commissioner may reject the bid and either declare another bidder to be the winner, or terminate the lease.
B. Lease terms. All planning
and development leases will contain, at a minimum, such provisions as may be
prescribed by the commissioner and must comply with all applicable laws in
effect at the time of lease execution.
C. Conditions. The commissioner
shall establish conditions in a planning and development lease necessary for
providing a secure return to the trust, managing the trust land in an
economically reasonable manner and protecting the trust land and any natural
and cultural resources on the trust land from waste. Each lessee under a planning and development
lease shall have an affirmative duty to diligently prevent and protect against
trespass and waste on trust land.
D. Uses. A planning
and development lease must designate the allowable uses of the leased trust
land. The commissioner may establish
restrictions on the uses of the trust land, including but not limited to
restrictions contained in local land use rules, covenants, or land use plans.
E. Rent. Unless
otherwise provided in a lease, rent will be paid in advance in annual
installments.
F. Mineral reservation. Each
planning and development lease will reserve the mineral estate, geothermal
resources, water, and pore spaces for exploration, development, conservation
and production and all related rights of access over, through or across trust
land. The commissioner may, in a
planning and development lease, agree, upon payment of a negotiated fee sufficient
to compensate the trust based on the commissioner’s evaluation of the potential
value of the reserved rights, not to exercise these reserved rights during the
term of the lease.
G. Easements and rights of way reservations. Each planning
and development lease will reserve to the commissioner the right to grant
easements and rights-of-way across trust land for any legal purpose. A planning and development lease may provide
that any easements or rights-of-way so granted across leased trust land must be
located to avoid, to the extent practicable, unreasonable interference with the
uses allowed under the lease and to be consistent with land use and development
plans approved by the commissioner.
H. Fish and game easement; recreational
access permit. Unless specifically stated otherwise, a planning
and development lease will be withdrawn by the commissioner from public use
under a fish and game easement or under recreational access permit.
I. Water rights. Water
rights developed on trust land under a planning and development lease must be
developed pursuant to a separate agreement with the commissioner.
J. Other terms, rents, fees. The commissioner may require such other terms, rents, or fees not otherwise disallowed by this rule or other applicable law.
[19.2.22.12 NMAC - Rp, 19.2.22.12 NMAC, 11/30/2012]
19.2.22.13 SUBLEASE;
ASSIGNMENT OR PARTIAL ASSIGNMENT:
A. Any
sublease, assignment or partial assignment for use of trust land is void
without the approval of the commissioner.
The commissioner’s approval may be conditioned upon such terms or
requirements as are deemed to be in the best interests of the trust including
but not limited to:
(1) additional consideration to the commissioner;
(2) disclosure of the value paid to the lessee in consideration
of the assignment or sublease; and
(3) that the sublessee, assignee or
partial assignee meets the same or substantially similar minimum qualifications
that were required of the lessee at the time of bidder qualification.
B. The commissioner may, in a lease, pre-approve certain assignments or subleases
that the commissioner deems to be in the best interests of the trust.
(1) No
assignment or sublease of trust land under a planning and development lease will
be approved unless the lessee is in compliance with the terms of the lease.
(2) The
commissioner’s approval of a sublease or assignment does not relieve the lessee
from any liability that may have arisen before the sublease or assignment. The commissioner’s approval of a sublease does
not release the lessee from its continuing and primary liability for
performance of all terms and obligations under the lease.
(3) The
commissioner’s approval of a sublease or assignment will not constitute approval
of any subsequent sublease or assignment.
C. Applications
to sublease or assign must be made by the current lessee under oath, on forms
prescribed by the commissioner, and must be accompanied by the fees shown on
the schedule of fees.
D. No
assignment or sublease will extend the term of a planning and development lease
and the lessee shall inform its sublessee or assignee
of the terms and conditions of the lessee’s planning and development lease.
E. The
termination of a planning and development lease will automatically, and without
notice, terminate any sublease, unless otherwise agreed to in writing by the commissioner
through an attornment or a similar agreement.
F. A
lessee or sublessee may not transfer, change the
purpose or use, or move the point of diversion of any water rights that are
appurtenant to trust land without the prior approval of the commissioner.
[19.2.22.13 NMAC - Rp, 19.2.22.13 NMAC, 11/30/2012; A, 6/11/2019]
19.2.22.14 COLLATERAL
ASSIGNMENTS; LEASEHOLD MORTGAGES:
A. Unless otherwise
provided in a planning and development lease, and subject to the prior approval
of the commissioner, a lessee’s interest in a planning and development lease or
infrastructure, inclusive of accrued IVC, may be collaterally assigned or
mortgaged by the lessee. An approved collateral
assignee or mortgagee shall not have a lien on the commissioner’s interest in
the trust land, the lease, any infrastructure, or the commissioner’s
reversionary interest in the real and personal property subject to the lease. Any attempt to collaterally assign or
mortgagee a lessee’s interest in a planning and development lease, or in any infrastructure,
without the approval of the commissioner, will be void and will not vest the
purported collateral assignee or mortgagee with any right, title, interest,
claim or privilege with respect to such lease or infrastructure.
(1) Prior
to making any collateral assignment a lessee shall apply to the commissioner,
under oath, and on such form as may be prescribed by the commissioner. The lessee shall include a copy of the
proposed collateral assignment or leasehold mortgage and pay any applicable
fees set out in the schedule of fees.
(2) The
commissioner may approve the collateral assignment or leasehold mortgage subject
to such terms and conditions that the commissioner deems to be in the best
interests of the trust, and may agree to such reasonable amendments to the
planning and development lease as may be necessary for the collateral
assignment or leasehold mortgage.
B. If
the commissioner gives written notice to a planning and development lessee of a
breach of the lease by the lessee, the commissioner shall also give written
notice of the breach to an approved collateral assignee or mortgagee of the
development planning lessee. Such notice
will be sent by certified mail to the most current name and address of the collateral
assignee or mortgagee in the official lease file of the commissioner and no
proof of receipt of such notice by the collateral assignee or mortgagee will be
required.
C. An
approved collateral assignee or mortgagee may cure a lessee’s breach within the
time periods provided to the lessee under the lease. A planning and development lease may provide
that a collateral assignee or mortgagee may succeed to the rights and duties of
the lessee of the planning and development lease under such conditions as are
provided in the lease. The commissioner’s
approval of a collateral assignment of infrastructure does not change the
status of any infrastructure as approved, unapproved, removable or permanent infrastructure.
D. A
collateral assignee or mortgagee shall take its interest subject to the
following terms and conditions, and the lessee is required to give notice of
such terms and conditions to its collateral assignee or mortgagee upon making a
collateral assignment or leasehold mortgage.
(1) The
commissioner is entitled to notice of all proceedings, judicial or
non-judicial, to enforce or foreclose the collateral assignment or leasehold
mortgage.
(2) Any
successor in interest to a lessee’s interest in a planning and development
lease, or in any infrastructure, that acquires an interest in such property as
the result of the enforcement or foreclosure of a collateral assignment or
leasehold mortgage, or an assignment or conveyance in lieu of such enforcement
or foreclosure, will be deemed to be an assignee under 19.2.22.13 NMAC, and
will be subject to the approval of the commissioner. Such approval will not be unreasonably
withheld; but no successor in interest will be approved by the commissioner
unless all sums due under the terms of the lease have been paid in full, and
all other pending duties discharged, or unless arrangements satisfactory to the
commissioner are made to fully pay such sums or discharge such duties.
[19.2.22.14 NMAC - Rp, 19.2.22.14 NMAC,
11/30/2012; A, 6/11/2019]
19.2.22.15 APPROVAL
OF GOVERNMENT APPROVALS AND INFRASTRUCTURE: No government approvals may be
secured, or infrastructure placed, developed, created or constructed on trust
land, or obtained or developed for the benefit of trust land, or made
appurtenant to trust land without prior approval by the commissioner. Such approval will not be unreasonably
withheld and may be conditioned upon certain requirements imposed by the commissioner
which may include, without limitation, consistency with previous government
approvals, and the provision of a bond or other adequate security to assure
proper removal of infrastructure (when appropriate) from trust land and the
restoration of trust land. Unless
otherwise required by the terms of a lease, all government approvals and
infrastructure will remain on the trust land even after cancellation or
termination of a lease.
A. A
request for the commissioner’s approval of improvements, governmental approvals
or infrastructure must be made in writing on such forms and in such manner as
may be required by the commissioner, and must be accompanied by the fee set
forth in the schedule of fees, if any. Once
received, the commissioner shall act to approve or reject the proposed
improvements or infrastructure within 30 days from the date of receipt. However, the commissioner is not obligated to
approve any infrastructure, improvements or government approvals, and failure
by the commissioner to act upon such requests within 30 days deems the request
denied.
B. The
commissioner may preapprove existing and proposed infrastructure or government
approvals with the lease when the commissioner determines it is in the best
interests of the trust.
C. If
the lessee fails to obtain the commissioner’s prior approval for infrastructure
or government approvals, the commissioner may, for an additional fee, approve
such items after they have been placed, developed, created or constructed on,
obtained or developed for the benefit of, or made appurtenant to trust land if
the commissioner determines that it is in the best interest of the trust to do
so.
[19.2.22.15 NMAC - Rp, 19.2.22.15 NMAC, 11/30/2012]
19.2.22.16 REMOVAL
OF PROPERTY:
A. Upon
the termination of a planning and development lease, all unapproved infrastructure
must be removed from the trust land unless otherwise provided in the lease or
in writing by the commissioner.
(1) No
item of infrastructure may be removed without the commissioner’s approval if a lessee
owes rent or any other sums to the commissioner or if any material duties
required under the lease remain unperformed.
(2) The
commissioner may require, in writing, that designated unapproved infrastructure
be left in place. Such infrastructure will
become the property of the commissioner and no person will be entitled to any IVC
for such infrastructure, and the lessee will be deemed to have waived any claim
of government taking or other damages.
(3) Any
unapproved infrastructure left on trust land without the commissioner’s approval
will remain the liability of the lessee.
The commissioner may elect to take any necessary action to remove such
infrastructure and all costs and fees incurred will constitute additional rent
due from the lessee under the lease. Alternatively,
the commissioner may declare the property abandoned and ownership transferred
to the commissioner and the lessee will be deemed to have waived any claim of
government taking or other damages.
B. In all cases
where infrastructure is removed from trust land, the lessee is solely liable
for the restoration of the trust land to its condition prior to the placement
of such infrastructure. The lessee’s
obligation to remove infrastructure and to restore the trust land survives the termination
of the lease.
C. All costs, fines
and fees incurred by the commissioner as a result of infrastructure left on trust
land without the commissioner’s approval, and all costs, fines and fees
incurred as a result of damage or waste to trust land during the term of the lease,
or arising from or in connection with the lessee’s use and occupancy of the trust
land, remains the sole liability of the lessee and will be deemed additional rent
due at the time incurred.
[19.2.22.16 NMAC - Rp, 19.2.22.16 NMAC, 11/30/2012]
19.2.22.17 IMPROVEMENT
VALUE; IMPROVEMENT VALUE CREDIT:
A. IV, when calculated. Improvement value (IV) must be calculated
when a planning and development lease terminates, upon a disposition or partial
disposition, or at lessor’s discretion including but not limited to at the time
of a sublease or assignment. IV is
generally determined through appraisal by comparing the subsequent value of the
leased premises to the base value of the leased premises with an adjustment for
natural appreciation pursuant to the following and as described in Paragraph
(1) of Subsection C of 19.2.22.17 NMAC below:
(1) Base appraisal. Prior to the effective date of the planning
and development lease, the applicant, at the applicant’s expense, shall cause
an appraisal of the trust land to be performed by a qualified appraiser conforming to the
uniform standards of professional appraisal practice (USPAP) to establish the
base value (BV). The commissioner may
require specific appraisal instructions and require that the appraiser be
approved in advance. The state land
office staff appraiser shall review the base appraisal pursuant to the USPAP Standard
3, and make a recommendation to the commissioner that the base appraisal be
accepted, rejected, or accepted with adjustments. The commissioner may approve a BV consistent
with the staff appraiser’s recommendation or make deviations therefrom if
appropriate based on the commissioner’s exercise of reasonable judgment,
documented in writing. The commissioner
reserves the right to reject any base appraisal.
(2) Subsequent appraisal. A subsequent appraisal is required in order
to update the current value of the leased premises for purposes of identifying
IV, if any. At least 60 but not more
than 90 days prior to the expiration of a lease, disposition or partial disposition,
or at lessor’s discretion including but not limited to at the time of a
sublease or assignment, lessee at lessee’s expense shall cause an appraisal of
the trust land to be performed by a qualified appraiser and conforming to USPAP to establish the
subsequent value of the leased premises (SV).
The commissioner may require specific appraisal instructions, including
but not limited to those described in Subparagraph (a) of Paragraph (3) below,
and require that the appraiser be approved in advance. The state land office staff appraiser shall
review the subsequent appraisal pursuant to USPAP Standard 3, and make a
recommendation to the commissioner that the subsequent appraisal be accepted,
rejected, or accepted with adjustments.
The commissioner may set the SV consistent with the staff appraiser’s
recommendation or make deviations therefrom if appropriate based on the
commissioner’s exercise of reasonable judgment, documented in writing. The commissioner reserves the right to reject
any subsequent appraisal.
(3) Adjustment for NA. Only the beneficiaries of the land trust are
entitled to increased value resulting from NA.
Accordingly, every planning and development lease must provide for one
of the following methodologies designed to adjust for NA when determining IV:
(a) Appraisal instructions method. In addition to any other specific appraisal
instructions required by the commissioner, each subsequent appraisal must be performed
pursuant to the following specific instructions requiring two iterations of the
appraisal:
(i) first iteration - the appraiser
shall first appraise the disposition parcel for its present value considering
only those improvements, if any, that were in place at the time that the base
appraisal was performed; if the value that results from this first iteration
exceeds BV as established by the base appraisal, this first iteration value
becomes the BV of the disposition parcel for purposes of calculating IV; and
(ii) second iteration - the appraiser shall next appraise the
disposition parcel at its full present value considering all present improvements;
the value that results from this second iteration becomes the SV of the
disposition parcel for purposes of calculating IV.
(b) Predetermined adjustment factor or other alternative
method. Any methodology
determined by the commissioner to protect the trust’s interest in the value
created by NA as opposed to the value created by lessee’s improvements may be
used, including but not limited to a pre-negotiated
periodic adjustment factor included in the lease to be applied to the BV to
account for the anticipated NA at the time of disposition.
B. IVC accrual; when payable. IVC accrues only upon completion of base
infrastructure at least up to the boundary of the leased premises, or in the
case of a partial disposition, sublease or partial assignment, at least to the present
boundary of the disposition parcel, sublease or partial assignment. Alternatively, pursuant to the terms of a
lease, IVC may accrue when the lessee has contractually obligated itself to construct such base infrastructure and where the
contractual obligation is adequately secured by a transferable bond or letter
of credit or other acceptable security. The
commissioner may require that base infrastructure be extended or guaranteed through
a given parcel prior to allowing a disposition, partial disposition, sublease
or assignment. Upon disposition to any
person or entity other than the holder of the IVC, the purchaser or new lessee
shall satisfy payment for the IVC pursuant to the following:
(1) in the case of a sale or exchange, the commissioner shall
convey payment of the IVC, if any, to the holder thereof from the sale or
exchange proceeds; or
(2) in
the case of a lease, the commissioner shall convey payment of the IVC, if any,
to the holder thereof from the deposit described in Paragraph (3) of Subsection
A of 19.2.22.11 NMAC above less any rent, costs, or damages owed to the commissioner;
however, no payment of the IVC will be made if a bill of sale or waiver of
payment signed by the holder of the IVC is filed with the commissioner.
C. IVC, how calculated. Subject to the conditions and restrictions
set forth in this provision, a lessee may be entitled to IVC as determined by
the following procedures and calculations and pursuant to the terms of the
lease:
(1) Step
1: The base value is subtracted from the
subsequent value, as adjusted for NA through one of the methodologies described
in Paragraph (3) of Subsection A of 19.2.22.17 NMAC above, to determine the improvement
value [SV – BV = IV].
(2) Step
2: The improvement value is multiplied
by the lessee percentage to determine improvement value credit [IV x LP = IVC].
EXAMPLE WHERE: SV (adjusted for NA) = 200, BV = 100,
and LP = 60%
200
– 100 = 100: IV = 100
100
x .60 = 60: IVC = 60
(3) A
lessee will not be liable for any negative IVC.
(4) Any
bonus offered at a lease auction, or any value bid at a sale or exchange
auction in excess of SV as set by Paragraph (2) of Subsection A of 19.2.22.17
NMAC above, will be payable solely to the commissioner and will not be
considered for purposes of IVC.
D. Depreciation of IVC. A planning
and development lease may provide that IVC may be lost or depreciated over a
stated time if, after termination of the planning and development lease, there
is no successor in interest other than the commissioner.
E. Commissioner not liable for IVC. Except
for the transfer of funds for IVC deposited by a lessee or to be paid from the
proceeds of a sale, the commissioner is not liable for the payment of any IVC. The commissioner may require a release or
indemnity from the party receiving payment of the IVC.
F. IVC holder must be identifiable. The
holder of the IVC must be identified in the records of the state land office. Unless otherwise provided in a lease,
leasehold mortgage or collateral assignment of IVC or infrastructure approved
by the commissioner and filed with the state land office, the commissioner
shall treat the lessee, not the collateral assignee or mortgagee, as the holder
of the IVC and the party entitled to payment
[19.2.22.17 NMAC - Rp, 19.2.22.17 NMAC, 11/30/2012]
19.2.22.18 TAKE-OUT
LEASES; TAKE-OUT SALES OR EXCHANGES AUTHORIZED: During
the term of a planning and development lease, a lessee may from time to time
apply for a take-out lease or take-out sale or exchange. Take-out sales will be considered most
appropriate where the final land use proposal is owner-occupied residential,
otherwise take-out leases in the form of long term business leases will be
considered most appropriate.
[19.2.22.18 NMAC - N,
11/30/2012]
19.2.22.19 ACQUISITION OF RIGHTS-OF-WAY BY LESSEE FOR
DEDICATION TO A GOVERNMENTAL ENTITY:
Trust lands within a planning and development lease may, from time to
time, be purchased by a lessee for dedication to a governmental entity as rights-of-way
pursuant to the following:
A. Dedications
through long term lease, sale, or exchange. A lessee may acquire
rights-of-way by lease, sale, or exchange only after 10 weeks public notice and
a public auction as required by applicable state land office rules and other
applicable law.
B. Dedications
through easement with right of reversion. A lessee may acquire
rights-of-way in the form of an easement where the easement is simultaneously
dedicated to a governmental entity for a term of “for so long as it used for a public
purpose.”
C. Pricing
of the easement. Rights-of-way acquired by a lessee on behalf
of a governmental entity and simultaneously dedicated to the governmental
entity will, at the sole discretion of the commissioner, be priced either on a
per rod basis pursuant to the commissioner’s standard price schedule, or at the
per acre value as extrapolated from BV without adjustment for NA or SVA. In determining the proper pricing for the
right-of-way, the commissioner shall consider the immediate and certain
economic impacts to adjacent trust lands, if any, that may reasonably result
from the right-of-way and associated infrastructure.
D. Effect
on IV. The acquisition or dedication of a
right-of-way pursuant to this section is not a disposition for purposes of IV,
and such dedications will in no way impact a lessee’s right or interest in IVC.
A lessee may claim IVC relating to
infrastructure on portions of the leased premises dedicated as rights-of-way at
the time of a subsequent disposition.
[19.2.22.19 NMAC - N, 11/30/2012; A, 6/30/2016]
19.2.22.20 RELINQUISHMENT:
A. A
lessee may, with the approval of the commissioner, relinquish to the
commissioner the lessee’s interest in a planning and development lease. The commissioner may establish in the terms of
a lease conditions pursuant to which the lessee may, at prescribed times,
relinquish all or portions of the lease.
B. A
lessee may request relinquishment of the lease on forms prescribed by the
commissioner and upon payment of a relinquishment fee, provided that:
(1) the lessee is in compliance with the terms of the lease; and
(2) all improvements made pursuant to the lease on, for, or
appurtenant to the lands leased have been approved by the commissioner and
arrangements satisfactory to the commissioner have been made for either the
removal or the retention of the improvements.
C. A
lessee shall not, by relinquishment, avoid or be released from any liability
for known or unknown waste or damage to trust lands, including but not limited to environmental
damage, arising from or connected with lessee’s use or occupancy of trust
lands.
D. A
relinquishment shall not be valid or effective until approved by the
commissioner. Any attempted
relinquishment of the lease, without the commissioner’s approval, shall be a
breach of the lease.
E. Upon
relinquishment, a lessee shall not be entitled to the refund of any rent
previously paid; however, a lessee seeking relinquishment in response to a
request by the commissioner shall not be charged a fee, and shall be entitled
to a pro-rata refund of prepaid rent to be paid only by the successor lessee,
purchaser or other successor in interest, if any.
[19.2.22.20 NMAC - N, 11/30/2012]
19.2.22.21 DEFAULT;
REMEDIES: Unless otherwise provided
in a planning and development lease, a lessee shall be in default under a planning
and development lease if a breach of the lease is not cured within 30 days
after the commissioner gives written notice of the breach to the lessee. A
breach of the lease may include, without limitation, a failure to pay any rent
or other monetary obligation due under the lease, or a violation of any term,
condition, or covenant of the lease, or the failure to perform or observe any
other obligation of the lessee under the lease.
A. Notice. Written
notice of a breach shall be sent to the lessee, and to the holder of any
collateral assignment or leasehold mortgage, at their addresses of record at
the state land office, by certified mail. The commissioner need only provide
proof of mailing to establish satisfactory compliance with this notice
requirement.
B. Remedies. On
the default of a lessee, the commissioner shall have all the remedies available
to the commissioner at law or in equity in New Mexico, and as provided in the planning
and development lease, including, without limitation, terminating the lease, retaking
possession of the leased trust land with or without termination of the lease,
and proceeding to recover any damages, including damages for any unpaid or
unperformed obligations of the lessee.
[19.2.22.21 NMAC - N, 11/30/2012]
19.2.22.22 EXISTING
LEASES: Except as provided in this section, the
commissioner may not lease under a planning and development lease any trust
land currently leased under an existing surface lease unless the existing
lessee relinquishes the lessee’s interest in the trust land or the commissioner
exercises any right of withdrawal of land which the commissioner may have. Notwithstanding the foregoing, the
commissioner may determine that a proposed planning and development lease will
not unreasonably interfere with the authorized uses under an existing lease,
and may allow a new planning and development lease in compliance with the
following requirements.
A. The
new planning and development lease shall identify the existing lease, shall
state that the new planning and development lessee’s rights and privileges are
subject to the existing lessee’s rights and privileges under the existing
lease, unless waived or amended, and shall provide that the new planning and
development lessee will not interfere with the uses permitted under the
existing lease.
B. The
existing lessee must consent in
writing to the new planning and development lease unless the commissioner
previously reserved the right to execute such a lease under the terms of the
existing lease.
[19.2.22.22 NMAC - Rp, 19.2.22.18, 11/30/2012;
A, 6/11/2019]
HISTORY of 19.2.22 NMAC:
History of Repealed Material:
19.2.22 NMAC,
Planning and Development Leases filed 10/15/09 repealed effective, 11/30/2012
and replaced with 19.2.22 NMAC, Planning and Development Leases effective, 11/30/2012