ALBUQUERQUE (KRQE) - A palatial estate complete with a luxury home and manicured gardens and grounds in Los Ranchos de Albuquerque is an illusion of sorts.
So are other high-end properties scattered around Bernalillo County.
All it takes is some governmental incompetence and bureaucratic indifference sprinkled with a bit of hocus-pocus and these magnificent estates are transformed.
You see, these aren't just lavish home sites. On paper, the Los Ranchos property is a working farm that’s supposed to include poultry and a horse-breeding facility.
"There are no horses or chicken coops on that property," Bernalillo County Deputy Assessor Damian Lara told KRQE News 13.
By creating the illusion of agricultural use, the homeowner got a big break on his property taxes. The claim of horses and chickens reduces the property's value by more than $300,000.
An eight-month investigation by KRQE News 13 found the same hocus-pocus all over Bernalillo County.
"You're kind of taken aback," said state Taxation and Revenue Secretary Demesia Padilla, who oversees the New Mexico Property Tax Division. "You're like, 'How is this happening?'"
"These are luxury homes on very large parcels of property, of acreage, and they don't appear to have an agricultural purpose."
What's going on? It has to do with the tax break extended to New Mexico's struggling farm industry. If you are a farmer growing corn or alfalfa, your land is taxed at a lower rate than residential property in the city.
KRQE News 13 investigation found palatial estates in Bernalillo County showing up in public records as farm land. By claiming acreage as agricultural under cultivation, owners can save big bucks on their property taxes.
To qualify, the property owner must prove the land is used primarily for agriculture. But in Bernalillo County, the reality is different.
For example, the owner of a three-acre Los Ranchos estate at 5200 Los Poblanos Lane NW gets a $300,000 break because he claims to have a two-acre orchard on his property.
"There are no fruit trees on that property," Lara said. "It needs to be updated."
The orchard owner is not some struggling subsistence farmer selling his apples and peaches from a roadside fruit stand. Don Hedges is a North Valley doctor.
When KRQE News 13 called to ask about his agricultural tax break, the good doctor said, "Go to hell."
When the owner of a Los Ranchos estate at 5101 Rio Grande Blvd. NW applied for an unspecified agricultural use, the assessor's office decided 18 fruit trees constituted a 1.25-acre orchard which reduced the property values by $170,000.
"That does not appear to be a farm; that appears to be a luxury home," Padilla said. "There might be a few fruit trees on there, but I really don't see what I would consider an orchard."
Lara had a similar reaction to the claim of a 1.25-acre orchard on the property.
"That appears to have been a mistake," he said. "It appears that this property has been allotted too much acreage under the [agricultural special valuation]."
In 1997, homeowner Paul Duncan asked the assessor to grant an agricultural exemption on his two-acre North Valley estate for a pasture, an orchard and a garden. But the assessor at the time thought his compound at 5549 Eakes Road NW looked too residential and not enough agricultural to qualify for a tax break.
Duncan took his case all the way to the New Mexico Court of Appeals and lost. In what is today considered a landmark opinion, the court said the tax break is intended to aid the small subsistence farmer.
Because Duncan’s property was primarily residential, the court agreed his land did not qualify for an agricultural tax break.
That was in 1999. Shortly after the court ruling, however, Duncan was handed an agricultural exemption anyway. Today the break reduces his property values by $150,000.
Still, the court ruling on who should qualify for an agricultural exemption seems clear to County Attorney Randy Autio.
"Essentially someone who is doing the majority of the use on their property as agricultural," he said. "You need to be primarily farming."
Despite the rules, the KRQE News 13 investigation found the assessor's office routinely ignoring the law by granting farm land to Bernalillo County residential properties that do not qualify. The abuses have been going on for years.
In 2007, Paul and Diana Maloof got a $200,000 break on their property values for an unspecified agricultural use on at their three-acre luxury estate at 4611 Rio Grande Blvd. NW in Los Ranchos.
And the agricultural use requested by the homeowner on the application?
"None is listed," Lara said. "That is a problem."
The Maloofs did not return a phone call for comment.
If a vacant 1.5-acre North Valley parcel on Bledsoe NW were just an unimproved lot, the land would be valued at $95,000. However, because there are beehives there, the owner gets an agricultural exemption for honey production. As a result, property taxes on the prime real estate are $12.
The property values on a three-acre estate at 5300 Los Poblanos Lane NW are reduced by more than $400,000 because a dozen years ago a previous owner claimed to be growing alfalfa. Is this a farm or a luxury estate? KRQE News 13 doesn't know, and neither does the assessor, who said there was no supporting documentation in the file.
"We have clearly individuals who should not be getting that huge tax break," Padilla said. "The files that you have shown me clearly show abuse."
Joseph Rivera gets a $156,000 break for his 3.8-acre North Valley estate because of a claimed bird habitat with fruit trees and a pond stocked with bluegill. Rivera hung up when KRQE News 13 asked about his agricultural exemption.
And then who can forget the $7 million estate with the $24 tax bill owned by Texas millionaire Michael Budagher? Not only did Budagher avoid paying tens of thousands of dollars in property taxes, he also got a $54,000 agricultural exemption he didn't apply for.
"It's a little shocking when somebody's got an exemption and no application in the file," Padilla said. "That's not good."
But that was enough to pull Budagher's exemption.
"We do not have in our possession an application from Mr. Budagher, and as such pursuant to state law that special-method valuation has been removed from this property," Lara said.
KRQE News 13 surveyed more than two dozen Bernalillo County properties with agricultural exemptions. None comply with state law.
"It's a problem," Padilla said. "There is no doubt that the agricultural exemption has been abused. The residents of Bernalillo County are getting shortchanged."
The assessor's office is now reviewing the farm status of the two dozen properties KRQE News 13 identified in this investigation. Agricultural tax breaks that can't be justified will be removed, and penalties may be imposed for intentional deception.
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