Rail Yard Plan Under Fire (page 2)

By Mike Gallagher

Albuquerque Journal

Sunday July 20, 2003

Why haven't the buildings been nominated for the federal and state historic registers and for city landmark designation? (Urban Council officials say they are working on it.)

Why hasn't the Urban Council filed required tax returns? (Urban Council officials say they have filed all the legally required documents.)

Why won't the Wheels Museum fit in the project design? (Urban Council says this is open to negotiation.)

What equity does the Wheels Museum have in return for the money it has pumped into the project? (Urban Council says the answer is "none.")

Earlier this month, the Wheels Museum sent the Urban Council a demand letter asking for $718,000 the museum says it invested in the project.

According to Bernalillo County records, the Wheels Museum spent more than $500,000 on the shop site. That includes more than $200,000 in interest on Urban Council's mortgage on the property and more than $100,000 paid to Conaway.

Wheels raised the money from government sources, private donations and fund-raisers.

But Conaway said Wheels has no equity, describing Wheels as a conduit for money intended to save and develop the buildings. That doesn't guarantee a site for Wheels in one of the old shop buildings, he said.

Ashcraft concurred with Conaway's assessment.

Internal memos by Conaway show that early on there was no place for Wheels in the huge glass, steel and concrete shop buildings.

Records also show that Urban Council members saw the entire project as a private development in which the Wheels Museum had too high a public profile. They wanted all information released about the project to go through Conaway.

"It is a private development," Ashcraft said. "We're in sensitive negotiations for land now. We needed to keep things private."

Craig and Clark agree that saving the buildings was a priority, but also say that finding a home for the Wheels Museum was one of the reasons for saving them — and for attracting public and private funding.

The paper trail for the city and county money shows public officials tied the museum and saving the buildings into one package.

The one time the Urban Council attempted to get money from the Legislature, the appropriation didn't make it out of committee.

The Wheels Museum has been much more successful.

Wheels received a federal Housing and Urban Development grant for $277,500 in 2000 for feasibility and design studies for the Wheels Museum in the railroad buildings.

Bernalillo County and the city of Albuquerque kicked in $200,000 to the Wheels Museum project to help with closing costs on the railroad property and interest charges on the mortgage.

The 2003 Legislature approved more than $500,000 for Wheels, and Gov. Bill Richardson signed the measure into law.

Wheels, which has no paid employees, also has had success in private fund raising, generating about $100,000 a year in memberships, fund-raisers, cash and in-kind donations in 2001 and 2002.

Financial statements show the Wheels Museum has more than $500,000 cash on hand, while the Urban Council has $400,000 in unpaid bills.

Ashcraft says Conaway hasn't been paid since Wheels cut off the cash, and that he is owed more than $60,000. An engineering company and a design firm are owed more than $300,000.

Meanwhile, the underwriters have been paying interest payments and some other bills. In return, they are building an equity position in the project.

Private vs. public
Outside observers say the split between the two boards spells trouble for development of the site.

"The biggest obstacle to this project are the differences between the Urban Council and the Wheels Museum," City planning director Victor Chavez said in an interview. "I was hoping mediation would bring them closer."

Mayor Chávez said he urged the two sides to go into mediation and is disappointed it didn't work.

"This project is not going to have any city involvement unless the Wheels Museum is part of it," Chávez said.

Chávez also said he has "a lack of confidence" in Conaway.

And he echoed a refrain from the Wheels board members about being kept in the dark.

"I learned a long time ago that there are no secrets in government worth keeping, and they just won't share their information," Chávez said.

The mayor has tried to interest Christopher Leinberger, managing partner of the Historic District Improvement Co., in the project.

Leinberger oversees development of the 12-block Downtown entertainment district.

Leinberger said he would like the project to succeed but has serious doubts about the ability of a privately owned exposition center to compete against publicly owned and subsidized convention centers.

"I learned early on that private dollars have a hard time competing with public dollars," he said.

"In the best of all worlds, the Urban Council and Wheels Museum would kiss and make up," Leinberger said.

Crux of the dispute
Wheels officials maintained the money Wheels "invested" through the Urban Council in the rail yards was to preserve the historic buildings and provide a home for the museum.

Urban Council members didn't see it that way.

"We have to find a viable way to develop the property, preserve the buildings and do it with 70 percent private money," Conaway said.

Minutes of Urban Council meetings show disagreements ran deep — even involving such arcane matters as how to approve the organization by-laws.

But the crux of the dispute comes from the Wheels group questioning the viability of Conaway's proposed exposition center.

There are now competing studies. One supports the idea of an exposition center to compete with Phoenix and other cities for convention business. Another found that Albuquerque already has too much convention center space and not enough downtown hotels to support it. Still another found that Albuquerque would be competing for a small share of the national market.

"We have done our due diligence," Ashcraft said. "We believe our studies show that this project will work."

Tax matters
When he was president of the Urban Council until the fall of 2001, Joe Craig said he worried about the organization's tax-exempt status as a 501 (c) 3 organization.

"One of the things we did was work out what was needed with the Attorney General's Office. But they haven't filed tax returns."

Ashcraft said the organization had less than $25,000 in income and under IRS regulations doesn't have to file nonprofit tax forms called 990s.

He said he doesn't consider as income the money Wheels Museum put out because the Wheels Museum paid bills directly instead of funneling the money through Urban Council.

Instead of 990s, the Urban Council files a charitable organization report with the state Attorney General's Office. The one on file shows that between June 2001 and May 2002, Urban Council expenditures exceeded $900,000, while its income was less than $25,000.

The Attorney General's Office agrees that a nonprofit with less than $25,000 income doesn't have to file a form 990. The source of the money spent doesn't have to be reported on the form.

According to a financial statement Ashcraft allowed the Journal to review in his office, the Urban Council is more than $400,000 in debt.

That doesn't include any equity acquired by the underwriters, who have advanced the council money and paid interest on its bank loan. Ashcraft said he and his partner, Bond, are among the board members who have loaned the organization money in the last two years.

According to minutes of Urban Council meetings, Clark raised concerns about whether the council was actually operating as a nonprofit organization.

He was later voted off the board.

Historic Protection Of Buildings Stalled  >> more