County Attorney’s Memo Reveals Legal Barriers With Parking Lot Covenants For CB Fox Property Purchase


Los Alamos County Council members were informed in a privileged memorandum Dec. 14 that the way the CB Fox property is structured, it cannot be lawfully purchased by the County.  The memo was the subject of an agenda item at Council’s Tuesday evening where by a 4-3 vote Council voted to waive the attorney-client privilege associated with the document which was prepared by County Attorney Alvin Leaphart. (See separate story:

The Council approved a purchase agreement for both the CB Fox and Reel Deal properties Dec. 15, just a day after receiving Leaphart’s memo. The agreement included a 90-day due diligence period and there is speculation that County officials thought they might be able to solve the parking issue during the due diligence time frame.

Leaphart advised Councilors in the memo that in order to remove the legal barriers to the purchase of the CB Fox property, the Central Parking Lot Corporation (CPLC) would have to agree to the change the covenants that burden the property.  He noted that the County could walk away from the purchase and sale agreement within the 90 days for any reason or for no reason and would not lose its $25,000 in earnest money. He advised Council that the County had 90 days to overcome the legal barriers and acquire an appropriate interest in the parking lot or lots associated with the property without putting taxpayers at risk.

The original purchase and sale agreement contained a provision that the County purchase an 18 percent of Common Stock which is the share of the CPLC stock owned by Matthew Miles, the current owner of the CB Fox property. Property owners abutting the various parking lots agreed to bind their respective abutting properties to the covenants and in exchange, CPLC conveyed Common Stock to them.  Leaphart’s memo says that the covenants run the land so anyone who buys the CB Fox property would be obliged to obey them. The covenants mandate that if the property changes ownership, the ownership of the Common Stock changes with it.

Leaphart’s memo says this means that the County would become the owner of 18 percent of a for-profit closely-held corporation which means the only way the County could divest itself of the obligations of owning the stock would be to sell the building. If the County was a shareholder of CPLC, it would be bound to pay any future debt obligations established by a vote of either the shareholders or the board of directors until it sold the property. Leaphart advised Council that the Debt Clause constitutionally prohibits County ownership of Common Stock. In fact, that ownership would constitute a misdemeanor. Leaphart also noted that the County can’t pledge its credit or make any donation to or in aid of any person, association or private corporation under the New Mexico Constitution.

Los Alamos County Manager Harry Burgess and then Council Chair Sara Scott met with CPLC in January at the County’s request to discuss the situation. On January 11, CPLC notified Burgess and Scott that after much discussion they had decided not to consider a lease or sale of any of their parking lots at that time and that they were contacting a real estate attorney to help them move through a thorough review of their concerns as well as ways to resolve their issues associated with a sale or lease of any of their parking lots. CPLC noted that that this would take more time than the 90-day window for the due diligence on the CB Fox property.

There is speculation that the County may seek to extend the due diligence period in the hope that an appropriate method to acquire the parking area can be found.