On July 24, 2003 Judge James A. Hall of the First Judicial District Court, County of Santa Fe ruled that in the event of a water shortage Las Campanas Limited Partnership (LCLP) is required by the Lease of Water Facilities (Lease) to “reduce its demand [for fresh water] by the same percentage that Lessor’s [City of Santa Fe] delivery of water to other similar customers is reduced”.

Since the only other customer for City fresh water with a golf course is Quail Run this ruling should require that LCLP reduce its water consumption by the same percentage as Quail Run. Quail Run is subject to the City Water Shortage Emergency Ordinance (Ordinance) in all its particulars but Judge Hall ruled that LCLP is not subject to the specific requirements/clauses of the Ordinance, e.g. watering days/times, etc., only that LCLP must reduce its water consumption by an as yet undeterminded amount in the event of a water shortage.

Judge Hall also found that the City, as a third party to the County of Santa Fe Master Plan Development Agreement For Las Campanas De Santa Fe (Agreement) does have the right to enforce the Agreement clause that states, “Developer [LCLP] must agree that if the City of Santa Fe adopts an ordinance allocating or restricting water use, Developer will restrict the total water delivered to the Project [Las Campanas] which is either taken from the Buckman Wells or delivered through pipelines developed to deliver water to the City of Santa Fe, to an amount calculated by assuming that it is subject to the Ordinance adopted by the City. This agreement applies to water used for both residential and other purposes [golf courses]”.

Inexplicably Judge Hall ruled that the following clause in the Lease is not applicable, “Lessee [LCLP] and Lessor [City] shall comply with and abide by all federal, state, county, municipal, and other governmental statutes, ordinances, laws, codes and requirements affecting the Buckman facilities and the use thereof.

Please click on Ruling for a transcript of Judge Hall’s observations, directions and rulings.

On August 14 lawyers for the City and LCLP agreed to temporarily limit the supply of water provided by the City for the two golf courses at Las Campanas to 6 million gallons/week for the period ending October 31, 2003.

On Friday September 12, 2003 at 1:30 PM there will be another hearing on this suit in Judge Hall’s courtroom in the Judge Steve Herrera Judicial Complex, 100 Catron Street, Santa Fe.

Unfortunately the City’s ambivalent and dilatory effort to reduce the use of City water provided to LCLP’s two private golf courses outside of the city limits falls far short of the needs of the residents of Santa Fe and the protection of the public welfare.

The City purchased the Sangre de Cristo Water Company from PNM in 1995. For the following seven years LCLP was not required by the City to reduce its use of fresh water from the City’s Buckman wells on its two private golf courses in times of water shortage that began in 1996 even though, as Judge Hall has just ruled, it had the authority to do so.

In 2002 the outcry against LCLP became so great that Mayor Delgado was forced to appear to partially abandon his unflagging favoritism toward LCLP. In private he agreed to allow LCLP to substitute 400 thousand gallons/day of the City’s limited supply of treated effluent for Buckman well water until October of that year.

In recent years during the growing season LCLP has used up to 1.5 million gallons/day of Buckman well water to sprinkle irrigate its two private golf courses. This is the equivalent of the usage of 6,500 typical Santa Fe homes and is over 10% of the output of the Buckman wells.

The amount of water used by LCLP on its golf courses represents the greatest amount of additional fresh water available to Santa Fe from any foreseeable source. The City unrealistically hopes to eventually draw substantial amounts of water from the Rio Grande but that long and historic river already runs dry during parts of the year and the Native American pueblos have yet to assert all of their rights to its water.

The water being mined from the Buckman wells aquifer for LCLP is not being replaced and the water being wasted on its golf courses will not be available to Santa Feans in the future.

Other than for the existence of the Lease, the City would not be required to provide water to LCLP for its golf courses and would have no reason whatsoever to do so. Those golf courses offer no benefit to Santa Feans or Santa Fe and the Mayor and City Council have never explained why they have favored LCLP at the expense of their Santa Fe constituents for many years.

The Lease was contrived in 1987 by Jerry Geist, CEO of PNM and Lyle H. Anderson, presently chairman of the Lyle Anderson Company that is the developer and operator of Las Campanas. The Lease was between the Sangre de Cristo Water Company, a division of PNM (the lessor), and Santa Fe Ranch Resort (the lessee), a New Mexico general partnership composed of Meadows Resources, Inc., a wholly owned subsidiary of PNM and Lyle Anderson, a resident of Arizona.

The successor to the original lessee, Santa Fe Ranch Resort, was and is LCLP and when the City purchased SDCW it became the lessor.

It is believed that Geist and several officers of PNM had an interest in the partnership that was the original lessee and since the Lease was designed by Geist to be favorable to the lessee the entire conflict of interest and lack of arm’s length transaction is understandable if not defensible.

Certainly the Lease did not provide any benefits to PNM or its stock holders since a substantial amount of water was made available to the lessee at a fraction of the price that other customers of Sangre de Cristo Water Company were paying.

As a result of the price favoritism to the lessee built into the Lease the City of Santa Fe looses over $4 per 1,000 gallons for the water provided to LCLP or approximately $1 million per year! The City’s current suit against LCLP does not address this issue at all!

The lessee is allowed to extend the Lease until 12/31/2027 and has the right to terminate the Lease, which right is not granted to the lessor.

Since this Lease was designed to favor the lessee and PNM insiders at the expense of their corporate lessor and was clearly not an arm’s length transaction and furthermore since it favors the interests of a private developer outside of the city limits at the expense of the welfare of the 70,000 residents of the municipality of Santa Fe it seems to this writer that adequate legal representation on behalf of the City should be able to achieve a nullification of the Lease.

This is the course that the City should pursue and not its current faint hearted halfway attempt to slightly reduce the huge waste of City water by LCLP on its two private golf courses and its continuing to deprive the City of $hundreds of thousands annually of sorely need revenue.

Wm. J. Salman