Guide to the Business Leasing Process at the New Mexico State Land Office
The State Land Commissioner may lease all surface lands managed by the State Land Office for appropriate commercial endeavors. There are two types of business leases: non-bid leases and bid leases. Applicants for both non-bid and bid leases are required to complete an application. Once the Commercial Resources Division receives and application, the Field Division will conduct a site review and submit a report which can take between 4 and 6 weeks. Leases with a term of greater than five years must be advertised and go to public auction. Leases with a term of less than five years do not require the bidding process and can be renewed at the Commissioner’s discretion. Money generated through the lease of state trust lands goes to the designated beneficiary, typically New Mexico’s public schools.
Bid Leasing: (Term greater than five years)
Informal Meeting: Arrange a time to meet with a representative from the Commercial Resources Division at the Land Office. Informal discussions will educate potential applicants about the process, costs and benefits associated with business leasing relationships.
Appraisal: If after informal discussions the Commissioner decides to seek a long-term lease for the proposed project, an appraisal of the land and any permanent improvements may be required. The applicant may be required to pay for the appraisal. A copy of the appraisal will be provided to the applicant and other interested parties. The appraisal will be used to negotiate the terms of the lease including a fair value rental rate.
Advertisment: A notice of the lease auction will be published once a week for ten consecutive weeks in a Santa Fe newspaper as well as in a local newspaper near the subject properties. The notice will give the date, time, and location of the auction and describe the lands offered for lease with any limitations on the uses of the lands including local land use restrictions, covenants, or master plans. The notice will also detail provisions of the lease including the term, rent, and allowable uses. The notice describes any requirements or qualifications for bidding and the amounts the bidder must deposit to pay the costs of the auction, the first rental payment, and any improvement value credits. Improvement value credits are granted to the owners of any permanent improvements and entitle the owner to certain rights and/or compensation. Finally, the notice will explain how the Commissioner will determine the highest and best bidder as well as the name of the person to contact for additional information.
Deposit: To qualify as a bidder, the prospective bidder must deposit the following amounts prior to the auction:
- The costs of the lease sale which may include appraisals, surveys, advertising, and land use planning expenses and
- The first rental payment and
- If the offered lands contain any permanent improvements, then the prospective bidder must deposit either a sum equal to the improvement value credit or a bill of sale or a waiver of payment signed by the owner of the improvements.
All deposits will be returned to unsuccessful bidders. The Commissioner may establish additional bidder requirements based on the nature of the bid lease and the proposed uses of the land.
Due Diligence: All bidders must undertake their own due diligence to prepare for the auction. Often this consists of inspecting the offered trust lands, reviewing pertinent records and files, and performing a financial analysis of the proposed project.
Auction: The auction may be conducted by oral auction or by the acceptance of sealed bids. A public auction will be held at the county seat of the county where the offered lands are located.
Bidder selection: If awarded at all, the bid lease shall be granted to the highest and best bidder. The criterion for choosing the highest and best bidder will be outlined in the auction notice. The criterion enables the Commissioner to select the bid that is in the best interests of the trust considering the requirements of the bid lease and the proposed uses of the land.
Execution of the lease: The successful bidder must deposit with the Commissioner any bonus bid amount within five business days of the auction and must enter into the bid lease within thirty days after the auction.