Albuquerque Journal from Albuquerque, New Mexico • Page 14

A14 ALBUQUERQUE JOURNAL Sun.lay, September 4, 1994 mm EMPIRE BUILDERS Despite ranching's hard times, King still one of N.M.'s premier cattUmen CONTINUED FROM PAGE A1 King family collects thousands in federal crop subsidies .1 I JOURNAL STAFF REPORT 1 SANTA FE Gov. Bruce King and other-" yS ia members of his ranching and farming family -A id last year collected nearly $117,000 in federal A agricultural payments. "I know to the guy in the city it sounds like sweetheart deal," King said in a recent no view. But, he says, that isn't the case. So far this year, King alone has received t', $14,802 in crop-subsidy payments, according to information provided by U.S.

Agricultural Stabkl lization and Conservation Service offices in ta Fe and Torrance counties. ibd. The payments, primarily for corn, are 'irs. designed to ensure a profit for raising The overall goal of the federal subsidy pre--vJ gram is to stabilize the amount of money that' farmers receive for their products and, cons" quently, how much consumers later pay the gro- eery store. v-oa King says he would lose money raising corn without the subsidies.

He adds that any Jim losses would reduce profits on cattle sales. The corn is fed to cattle. "You either do it (take the money) or get out '-1 of the business," the governor says. Wi? The Agricultural Stabilization and ConserVa- ltl tion Service also administers a program vug pays farmers for leaving some land idle and planting grasses, trees or other vegetation on it- ra The aim of that program is to protect land that jc-i has been designated by federal soil "nS tionists as highly erodible. 1 vjn In 1993, King family members and businesses, oni received a total of $116,564 under the two fedetwr al agricultural programs.

1 1. DEAN HANSON JOURNAL Gov. Bruce King checks on cattle grazing in the Estancia Valiey. In 1993, the King Brothers and Kings Butane operations held deeds and government leases to more than 350,000 acres in at least five New Mexico counties. of cash-flow difficulties.

"It was too much (money) to take for the development costs from the ranching operations," he said in 1985. King left the Sunwest board in 1990, but his borrowing from the bank continued at least until 1991. In February 1993, Sunwest filed a mortgage in Santa In addition to the brothers, Sam King's children state Treasurer David King, Sam L. King and Wanda Fishburn inherited interests in King Brothers and Kings Butane when the elder Sam King's wife, Margaret, died in 1981. Additional enterprises involve the third generation of the King Key Financial Interests ASSETS WORTH DEBT One-third interest $10 million estimated $4 million King Kings Butane land, inventory and (estimated) (Cattle, farming, land other assets development, gas distributors) Annual income from $50,000 estimated King Butane Home In Stanley, N.M $246, 570 (house) None (One -story brick house on $365,400 (land) 1 ,720 acres) (Assessed value) Income as governor $90,000 annually King Brothers and Kings Butane apparently have assets of about $10 million; but the companies, in turn, have debts of around $4 million, according to Gov.

King. The King Brothers and Kings Butane operations employ about 40 people on any given day and sell about $6 million to $8 million a year in agricultural products, the governor said. The governor said he is worth about $2 million, including his personal holdings and his interests in King Brothers and Kings Butane. The family has had some success over the years selling land to developers, but ranching and farming remain its bread and butter. During his nearly 12 years as governor over the past 24 years, Bruce King has been reluctant to provide details of the financial affairs of the empire, saying it would invade his and his family's right to privacy.

But the general information he has provided over the years and public records of the family's business dealings sketch the up-and-down history of one of the state's best-known ranching and farming giants. 'The land was cheap' To some unsuccessful homesteaders at the turn of the century, the Estancia Valley in Santa Fe and Torrance counties became known as "The Valley of Broken Hearts." Not so for Will and Mollie Sue King. As the family tells the story, the newlywed Kings came from Texas to the valley in the late 1910s in a Model Ford and traded the car to a homesick Texan for a 160-acre homestead and a rough-hewn wood shelter shaped like a railroad boxcar. They planted corn and pinto beans and bought a few cows. The couple had a daughter, Leota, and the three sons Sam, Bruce and Don.

And they rapidly acquired additional land. The Kings homesteaded their own 160-acre government allotment and bought out neighbors, according to records in the Santa Fe County Clerk's Office. They also picked up more than two dozen parcels at government sales after the owners failed to keep up with county property taxes. Sometimes they paid just cents on the acre. "The land was cheap in those days, so they could afford to buy a bunch or it," Bruce King said of his parents in a 1987 newspaper story.

"They knew it was an investment that would last forever." In the early years, the Kings were dry-land farmers. But that began to change in the late 1940s with the discovery of an ample water supply under their land and the development of technology to bring it to the surface at a reasonable cost. By the time Will King died in July 1949, the operation had spread to 8,330 acres, including 1,500 irrigated acres, and 337 head of cattle, according to an inventory of his estate filed in state District Court in Santa Fe. His estate was valued at $130,044, roughly equivalent to $808,403 in today's dollars. Leota King Vinion lived in Libby, leaving Mollie Sue King and her sons in charge of the farming and ranching operation.

And they built on what Will King had left behind. 'The first good break' The King Brothers partnership was formed. And in 1957, along with a cousin, the brothers created Kings Butane, a privately held corporation in Moriarty that distributes propane and has land holdings. Less than a decade later, the brothers expanded their cattle operations outside the Estancia Valley, purchasing the Los Alamos Ranch in Sandoval County, generally to the northwest of Albuquerque. It was renamed the Alamo Ranch.

Bruce King said in a recent interview that the sale price was $2.5 million and that King Brothers put 20 percent down. A $1.4 million mortgage is on file in Sandoval County. The brothers' next major expansion came in 1970. In a complicated deal involving AMREP, which was developing the community of Rio Rancho in Sandoval County, the Kings obtained the York Ranch in what are today Cibola and Catron counties. AMREFs Rio Rancho Estates, in turn, received 10,661 acres of the King Brothers Alamo Ranch.

King said recently that the deal to acquire the York Ranch "was the first good break" financially for the King Brothers. The cattle ranch, which had been owned by a Texan, was well maintained. "I'd never been exposed to that kind of ranching," the governor said. Rio Rancho Estates received another 16,360 acres from the brothers in other transactions. Additional Alamo Ranch land was sold to another developer, but the brothers still held at least 115,000 acres of it in 1993.

The land deals didn't end up as profitable as envi-. sioned by the Kings, but the family still made millions, primarily from the deals with Rio Rancho Estates, according to county records. The profits were generally plowed into the cattle and farming operation. Some of the land sold to Rio Rancho Estates is dotted with homes, while other parcels remain undeveloped, according to an AMREP spokesman. In another major land deal in late 1992 and early 1993, the brothers traded 21,034 acres of the York Ranch to the U.S.

Bureau of Land Management for 800 acres just west of Santa Fe and another 697 acres in the Estancia Valley. The BLM approached the Kings to obtain the land for expansion of the El Malpais National Conservation Area. The Kings retained the right to graze livestock on it. Critics have alleged that the brothers fared better financially than the government in the trade, and King has been attacked on the issue during his reelection bid this year. But a federal judge recently dismissed a challenge to the trade, and King has said that allegations of a sweetheart deal are "total lies." All told, by 1993, the deeded and leased land holdings of King Brothers and Kings Butane totaled more than 350,000 acres in Santa Fe, Torrance, Sandoval, Catron and Cibola counties.

family couldn't continue to operate successfully while carrying such a large amount of debt. Other farmers and ranchers around New Mexico1 had similar problems about the same time. King and Kalangis also said King's membership oft1, the board of directors of the Sunwest banks holding company had nothing t6 do with loans to the family "Directors, poor guys, are scrutinized more than 4 anyone," Kalangis said. Although Kalangis and King said the reorganization was amicable, the King family enterprises their business to United New Mexico Bank. Asked whether he received preferential treatment from Sunwest, the governor said, "I feel the other, way." He complained about the interest rates qn loans.

Cattle come first Today, the King family farming and ranching enterprise is primarily a cattle operation. Before sale, the livestock are fattened at family tan feedlots in the Estancia Valley, which can handle about 15,000 head at a time. UK Feed comes from the farming side of the enter- i prise. The Kings' crops include alfalfa, corn and wheat. The operation is successful in part because of itsv large number of irrigated acres, which are visible for several miles along NM 41 in the Estancia Over the decades, the King family businesses have-, obtained permission from the state Engineer's Office: to irrigate more than 8,000 acres roughly enongh water for some 80,000 homes.

The family in recent years has received permission, to divert some of its water from agricultural td h6us-ing and other development purposes, but those sions haven't taken placeaccording to records at the State Engineer's Office. Kings Butane recently announced that it planned to develop a 310-acre, 99-home subdivision near Edge- wood along 1-40 east of Albuquerque. Selling land and water rights for development in the Estancia Valley, East Mountain and Santa Fe areas could be the financial future of the King family, but so far it has had limited success in such tures. got a full-time Job' I'M The King companies and partnerships are privately held and not required to file public documents on income, assets and And King refused a recent request to provide, fedr eral and state income tax returns, saying he would release such information only if his Republican oppo nent, Gary Johnson, did so. But the governor said he and his wife, Alice one-third of King Brothers and Kings Butane; and he estimated the value of the companies' land holdings Fe County showing the King family businesses owing money on notes totaling nearly $21 million.

A month later, the family businesses were reorganized. King Brothers, Pine Canyon Ranch and King Land and Cattle sold Zorro Trust of New York at least 6,720 acres and water rights in Santa Fe County. Zorro Trust is headed by Jeffrey Epstein of New York City, who, King said, planned to form Zorro Ranch. Epstein couldn't be reached for comment. The family also deeded to Sunwest the York Ranch, water rights in Cibola and Sandoval counties, at least 12,280 acres in Santa Fe and San Miguel counties and at least 7,669 acres of the Alamo Ranch in Sandoval County, including land the family had planned to use for a housing and recreation development called Mariposa just west of Rio Rancho.

The family retained most of the Alamo Ranch and the core of its operations in the Estancia Valley. At the time of the reorganization, John McKean, the governor's press secretary, estimated that King Brothers had unloaded holdings worth a total of about $10 million. King said in a recent interview that the $10 million figure was accurate. 'Been a tough business' King says high interest rates and drops in cattle prices were the primary reasons for the family's financial reorganization. Cattle prices dropped in 1983 because of well-publicized health concerns about beef, and a year or two later they plunged again as dairies trimmed their herds and placed them on the beef market, he said.

"It's been a tough business," King said. The financial reorganization took place after Boatmen's Bancshares of St. Louis took over Sunwest Financial Services. Both King and Ike Kalangis, chairman and chief executive officer of Sunwest Bank of Albuquerque and the holding company for the chain of Sunwest banks, said the reorganization was amicable. It had become apparent, both said, that the King family farming and ranching dynasty, including Bruce King's sons Bill, who serves as the governor's legislative liaison, and state Rep.

Gary King. Those ventures include Pine Canyon Ranch, King Land and Cattle and King Farms, all based in the Estancia Valley. Bruce King acknowledged that the businesses are closely affiliated with King Brothers and Kings Butane but said he doesn't have a financial stake in them. Before the family's financial reorganization in 1993, Pine Canyon Ranch, King Land and Cattle and King Farms held more than 40,000 acres in Santa Fe and San Miguel counties. 'It was too much' Borrowing money until the next generation of livestock is sold or the crops are harvested is a way of life for many ranching and farming families.

The Kings are no exception, routinely borrowing millions of dollars until cattle are fattened and sold. In 1980, the Kings borrowed at least $13.9 million from Production Credit Association of Albuquerque, records show. The next year, they borrowed at least another $15.3 million from Production Credit and at least $4.5 million from the Federal Land Bank of Wichita. And, in 1983, there were loans for $13.5 million from Production Credit and another $2 million from Albuquerque National Bank, which later became Sun-west Bank. In 1984, Bruce King was appointed to join the board of directors of Sunwest Financial Services, the holding company for Sunwest banks.

The Kings continued to borrow millions of dollars, and many of the loans were with Sunwest. The public got a hint of King family financial problems in 1985. Bruce King announced that the family, in a multimillion-dollar deal, had sold about 10,000 acres on the Alamo Ranch that it had planned to develop into a community of luxury "ranchettes." King said the development was scrapped because and other assets at about $10 million. ('I From that, debts of about $4 million must be Governor's dealings have raised conflict-of-interest specter JOURNAL STAFF REPORT tracted to come up with net worth. For loan purposes before the financial reorganiza-" tion, the value of the equipment inventory of King 'j Brothers had been set at $18.5 million, but King said it is far less today due in part to a reduction in inyen-tory and depreciation.

King said he and his wife are worth about $2 mil- lion in real estate, business and other about $50,000 a year in income from King Brothers and Kings Butane. 2 The governor said he doesn't have any stock or F-financial interests in other companies. As governor, he is paid $90,000 a year and has an $80,000 unaudited expense account. Z'''l'z King said he tries to put in some time each week on the family businesses, but he added that he isn't actively involved. "I got a full-time job," he Since 1975, the governor and his wife have lived in" a one-story white brick house on a low hill norh of -Stanley.

The house is surrounded by 1,720 acres thati they own independently of the other nearby family land. The house is valued by the Santa Fe County Asses sor's Office for tax purposes at $246,570, the land at $365,400. Journal staff writers Richard Parker and Mike Gallagher contributed to( this report -r road runs through our ranch," he said. The King Brothers in March 1993 deeded the York Ranch including about 176,000 acres of leased federal land to the Sunwest chain of banks. The Kings now sublease the federal land from Sunwest.

This year, King signed legislation that could lead to construction of a new road from NM 117 across ranch land to a proposed observatory site in Cibola County. John McKean, the governor's press secretary, says he couldn't see how King Brothers would benefit from having a busy highway built where the partnership is running cattle. Albuquerque. As a private citizen, before his most recent term began in 1992, King had been a promoter of the loop because of the potential development of his family's land holdings in the area. King shrugged off questions, about approving the money for the Northwest Loop after he took office again.

He said it would be hard to build a road that wouldn't eventually wind up on some King ranch property. In a 1982 newspaper article, the governor said that people in Quemado and Grants pressured the administration to pave NM 117 through the York Ranch. "It's just a coincidence that the SANTA FE Bruce King has faced questions several times during his three terms as governor about possible conflicts of interest concerning state road projects. For example, during his first two terms, the state highway department paved NM 117 as it runs from Grants to Quemado through the York Ranch, then owned by King Brothers. The ranch is in Cibola and Catron counties.

And in 1991, after election to his third term, King signed a bill authorizing $500,000 for construction of a leg of the long-envisioned Northwest Loop around. A. 1.