Developer Sues for Control of City Rail Yard

The Albuquerque Journal
By Mike Gallagher

Thursday, August 5, 2004
An Ohio developer has filed a federal lawsuit seeking control of the old Santa Fe railroad yard south of Albuquerque’s Downtown redevelopment area.

The lawsuit filed by Richard D. Maron and MRN Limited Partnership of Cleveland against the Urban Council of Albuquerque Inc. describes a financial relationship that began in May 2003 and had soured by November.

Maron claims he had given the Urban Council $410,000 in cash and has an underwriting stake in the project of more than $1.1 million.

The historic 27-acre tract currently is controlled by the Urban Council, a nonprofit redevelopment corporation that has been seeking partners to develop a $260 million exposition center to compete with convention centers in Phoenix and San Antonio, Texas.

A message left with the Urban Council of Albuquerque on Wednesday was not returned.

The property, with its two large glass and metal rail shops, originally was touted as a home for the Wheels Museum. The buildings on the site at one point were slated for razing by a Texas development company.

The Wheels Museum successfully sought federal, state and city tax dollars, and political pressure, to help save the buildings.

However, museum supporters and Urban Council members had a falling out over the best use for the property.

Museum supporters said the council’s plan was too grandiose and didn’t provide a home for the museum on the site. Urban Council members said they had a different vision for the site supported by the majority of their board.

The Wheels Museum claimed in a demand letter to the Urban Council in 2003 to have invested $780,000 in the rail-yard project. The Urban Council maintains that money was meant for the preservation of the rail shops and didn’t belong to any individual or party involved in the project.

Plans for development of the site have languished while the Urban Council sought financial backers for its project. Most recently the council has been wooing a Texas developer, Renaissance Co.

According to the lawsuit, Maron and the limited partnership bought out the original underwriters of the $2.5 million mortgage in the summer of 2003.

The underwriters’ interest in the Urban Council’s property was more than $1.1 million at the time Maron purchased the property, the lawsuit said.

According to the lawsuit, an amendment to the underwriting agreement gave Maron the right to sell the property but contained an erroneous property description that has prevented him from finding a title company willing to insure a conveyance.

He is asking the court to correct the legal description.

Maron’s lawsuit also claims that the Urban Council agreed to sell MRN Limited Partnership the property in September 2003 for $1.1 million.

MRN was supposed to make two installment payments of $250,000 each and pay the remainder when the transaction closed, the lawsuit said.

MRN claims it made one payment of $250,000. The purchase agreement was terminated by the Urban Council but the money was not returned, the lawsuit said.

The lawsuit claims that during 2003, Maron or an affiliate advanced money to the Urban Council to cover expenses, including payments to the council’s consultant.

In all, the lawsuit claims, Maron advanced the council $160,000 in addition to the $250,000 payment.

It also claims the Urban Council has not secured financing for paying off the original mortgage or developed plans for the property, which damage Maron’s position as underwriter.

The lawsuit seeks damages plus interest and correction of the property description contained in a power-of-attorney signed over to Maron.

The case is assigned to U.S. District Judge Judith Herrera.