August 1, 2016

All in the Family: State Rep directs capital outlay to big brother’s big building project, and no one noticed

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ProgressNow New Mexico filed a complaint with the Office of the Attorney General on Monday alleging that State Representative Paul Pacheco (R- Corrales, Rio Rancho, Albuquerque) used his position as a state legislator to  help a construction project designed and managed by his brother secure hundreds-of-thousands of dollars of taxpayer funds, in apparent violation of state laws and ethics rules.

  • A full copy of the complaint filed with the Attorney General is included at the bottom of this post, but here’s what you need to know.

The report has people asking if the project his brother designed and managed would have been completed without Rep. Pacheco’s earmarked capital outlay.


PachecoKRQE (1)Update: After we shared our investigation with KRQE-TV, they asked Paul Pacheco for a response.

View their preview of the investigation and hear Pacheco’s response.

 


The Pacheco family business

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If you don’t know Paul Pacheco (pronounced pah-cheek-o) by name, you likely know his legislative work.  A reliable vote for the Republican agenda in Santa Fe, the Corrales/Rio Rancho/Northern ABQ-area legislator frequently carries priority bills for Gov. Martinez and the Republican leadership, including the governor’s anti-immigrant driver’s license bill.

A one time police officer turned business owner, Pacheco has already had some very public challenges to his personal and financial relationships.  Court records show that he falsely accused his wife of domestic violence during a divorce proceeding (a hearing officer later ordered the claim expunged after it was determined to be without merit) and his business ventures have left a trail of unpaid debts and bounced checks to contractors who did work for him.

Paul Pacheco’s first venture into business appears to come in the late 1980’s when he and his brothers appear in corporate documents as directors of their family’s general contracting business in Albuquerque.

While Paul went on to pursue a career with the City of Albuquerque and later in the State Legislator, his brother David J. Pacheco continued the family’s architecture, planning and construction business.


Requests for Capital Outlay go unchecked

Paul Pacheco was elected by voters in 2012 as part of a conservative rise that sent several new conservative legislators to Santa Fe. He was reelected in 2014. As the 2014 legislative session gets underway, legislators begin receiving requests for capital outlay projects to sponsor through a process explained by the Legislative Council Services:

“Capital outlay funds, in the context of government, are those used to build, improve or equip physical property that will be used by the public…  Commonly, the Legislature and executive prioritize funds for regional and state-owned and -operated projects. The remaining money is genearally (sic) split between the House and Senate, which then allot an amount to each member for possible projects… When money is available, legislators introduce House or Senate capital outlay requests for projects requested by advocates, constituents, and local governments within their districts…

The selected projects, sometimes referred as ‘pork,’ then become part of the capital outlay bill.”

Rep. Pacheco 2014 Capital Outlay, HC023 (2014) Click to enlarge (new tab)

Rep. Pacheco 2014 Capital Outlay, HC023 (2014) Click to enlarge (new tab)

The decision on which projects to support with their percentage of available “pork” dollars occur solely at the discretion of individual legislators and there are no public documents detailing who each legislator consulted with on each project or how he or she decides which projects to fund.

Just 10 days before the end of the legislative session, the Council Service published Bill HC023 (2014), titled “CAPITAL PROJECTS FOR REPRESENTATIVE PAUL A. PACHECO.” It begins by stating “I request that the following be funded:”.

That year, Rep. Pacheco personally requested $900,000 in various capital outlay appropriations for the ASK Academy.  $230,000 of those funds were signed by Governor Martinez and appropriated to the project.

Records with the Capital Outlay Bureau show that three different severance tax bonds were issued in June 2014 for the “ASK Academy” projects corresponding to Rep. Pacheco’s capital outlay project descriptions.

 

 


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Construction Begins; Records Show David Pacheco placed in charge of dispersing public funds

How the ASK Academy project went from a private to public one is not well known.

In their 2009 application for a charter school license, the ASK Academy applicants wrote “it is our understanding that schools are not allowed to spend public money to improved privately leased buildings. Unless we have misunderstood, no application for capital outlay assistance will be made at this time.”

However, by 2011 or 2012 that plan had changed.

In early February 2016, bond counsel for the Public Finance Authority published a 200+ page bond statement titled “Public Finance Authority Educational Facility Revenue Bonds (The ASK Academy Project).”

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Buried in that document are details on how “state capital outlay funds” would be used along with proceeds from publicly sold bonds to build and equip the ASK Academy site.

Notes in the funding document indicate that capital outlay funds would reimburse unlisted project costs for the project “overseen” and “approved by” Rep. Pacheco’s brother.

Though not required, the bond documents also disclosed the unusual responsibility given to the project’s architect, David Pacheco.  In addition to serving as architect, Pacheco would be responsible for overseeing and approving expenditures from public funds dedicated to the project.

“In order to assist the Foundation in the development, design and construction of the Facility, pursuant to the Construction Contract, David Pacheco (the “Architect”) with the assistance of Adwelling Design will work under the Contractor to design the Facility. In addition, the Architect will be responsible for overseeing the construction of the Facility and reviewing and approving the disbursements of the proceeds of the Bonds from the Project Fund for the payment of construction costs in accordance with the provisions of the Disbursing Agreement.”

The proceeds of bonds and capital outlay were made available to David J. Pacheco who would be responsible for “reviewing and approving” the disbursements and making “payment of construction costs” which the documents said were to be reimbursed directly from capital outlay funds Rep. Paul Pacheco had requested.

By November of 2014, plans were final.  In an interview with the Albuquerque Journal about the process to plan, finance and build a new campus, the school’s co-founder said this:

Coming up with capital funding for large projects can be a challenge for charter schools. School districts get much of the money for building new schools through bond money approved by voters. Charter schools do not have that option so they must be creative, Stephenson said.

The school’s foundation will take out a loan and be the actual owners of the building. The school will then enter into a lease-to-buy agreement and eventually become the owners.

In December 2014, the Albuquerque Business First reported that ASK Academy had “unveiled” plans for a new 39,000 square foot facility to be owned by the ASK Academy Foundation and leased to the ASK Academy.  One project manager, noted that “He also said it has been a long road to get where they are, which was why Saturday’s event was so special.  “We have worked three years on different building solutions and it’s finally happening.”

That indicates that planning for the construction began as early as 2011, but failed to come to fruition until the plan including capital outlay backed by Rep. Paul Pacheco materialized after his election to the legislature in 2012.

On December 17, 2014, the askcatalyst.net blog posted a report on the unveiling of the plans for the building.  It notes that the Foundation “is in the process of closing on a $6 million deal.” It also notes that Rep. Paul Pacheco was in attendance at the event and he can be seen in pictures from that event.

askacademy

Dec. 17, 2014 event, ASK Academy, Rio Rancho

Three years after a new building was considered, ASK Academy building finally opened in 2015 thanks to $230,000 in taxpayer-funded capital outlay directed to the project managed by his brother.

Disclosure of relationships like this required by law

From 2014 through 2016, Rep. Pacheco, at his sole discretion, sponsored more than $1.2 million in taxpayer-funded capital outlay funds to the project managed by and for the profit of his family, without disclosing such relationship as required by law.

State law requires such disclosure, specifically for construction projects where a legislator’s family member has a substantial interest.

New Mexico’s Governmental Conduct Act, NMSA §10-16-9(A), prohibits the use of state funds for projects – specifically including construction – with any business in which a legislator or a legislator’s family has an interest unless the legislator discloses that conflict and the agreement is reviewed through the public Procurement Code process.

NMSA §10-16-9(A), “A state agency shall not enter into a contract for services, construction or items of tangible personal property with a legislator, the legislator’s family or with a business in which the legislator or the legislator’s family has a substantial interest unless the legislator has disclosed the legislator’s substantial interest and unless the contract is awarded in accordance with the provisions of the Procurement Code..

Family is clearly defined in the same section as “ an individual’s spouse, parents, children or siblings, by consanguinity or affinity…”

Other sections of the same Act place an affirmative duty on legislators to disclose conflicts of interest like these and require them to adhere to the highest standards of public trust.

NMSA § 10-16-3(A). “A legislator…shall treat the legislator’s or public officer’s or employee’s government position as a public trust. The legislator or public officer or employee shall use the powers and resources of public office only to advance the public interest and not to obtain personal benefits or pursue private interests.”

NMSA § 10-16-3(B) “Legislators…shall conduct themselves in a manner that justifies the confidence placed in them by the people, at all times maintaining the integrity and discharging ethically the high responsibilities of public service.”

NMSA § 10-16A-3(C). “Full disclosure of real or potential conflicts of interest shall be a guiding principle for determining appropriate conduct. At all times, reasonable efforts shall be made to avoid undue influence and abuse of office in public service.”

The State Constitution and House Ethics Rules require the same.

“When we saw that so much money for this project came from one legislator, in one very tight budget year, it got our attention.  The decision to fund projects is an important one and one of the only actions that can be decided entirely by a single representative,” says Pat Davis of ProgressNow New Mexico.

Complaint text

Click to view the full complaint we filed with the Attorney General (new tab)

“In this case, the Pacheco family project received money but left other projects like Corrales’s water system without the full funding it needed.  Rep. Pacheco chose this school over the needs of constituent projects in his district,” adds Davis.

“Once we realized the relationship between the representative and the project, we pulled all of our work together and turned it over to the experts in the Attorney General’s Office Public Corruption Unit.”

The initiative to build a school is an important one for a community, but shadowy deals and hidden relationships between public officials and those who make a profit on the project can cast a cloud over the school. That isn’t fair to taxpayers or the students and teachers who call that building home.

Pat Davis, Executive Director of ProgressNow, added this comment: “For me, the question is simple: if there wasn’t anything wrong with the arrangement, why not just follow the law and tell the public about the relationship between the man funding it and the man being paid to design and build it?”


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