Stalled NM capital outlay projects at risk of reversion
GALLUP
At a time when the state of New Mexico may have to revert capital outlay projects to shore up its budget, Navajo Nation Division of Community Development Director Pearl Yellowman, who oversees the Capital Projects Management Department, was short on specifics in a presentation to the Resources and Development Committee last week.
Bottleneck in Window Rock
By Rima Krisst
Navajo Times
GALLUP – Reached by phone, state Sen. George Muñoz, D-Cibola/McKinley/San Juan, said every year he works directly with Navajo Nation chapters to try to fund projects, but there are often delays in launching and completing the projects.
“The real problem is that the chapters get hung up in Window Rock, because they take their stuff over there and it sits on somebody’s desk and unless they go and walk it through, it’s going to go from one place to the next, to the next, and then it just doesn’t get done,” he said.
Muñoz says he has about $16 million worth of projects in his own district “just sitting out there,” and about 90% are Navajo.
“The chapters try everything they can to get their projects done, but it takes a long time to get the easements or it gets bottlenecked in Window Rock,” he said.
For example, a chapter might want a power line, but it can take a year or two to get an easement, he said.
The same thing applies to roads.
“You have to go to big Navajo and then to the BIA and maybe the BIE and the BLM to get the easement,” he said.
“The chapters say, ‘We’ve done everything we can and they just hold us up,’” said Muñoz. “At the end of the day, the people suffer.”
Muñoz confirmed there are also problems with the Nation’s reporting to the New Mexico Department of Finance and Administration as to the status of the projects.
“All state-funded capital outlay projects are supposed to be reporting progress quarterly to the state,” he said. “A lot of that doesn’t get done.”
Muñoz clarified that the big problem with the 2019 capital outlay projects right now is that the state did not bond anything.
“The biggest risk is that in 2019 we did not bond — we expended that cash,” said Muñoz.
He indicated it is much harder to pull back on bonded projects than cash projects where the money is “sitting in the bank” and can be more easily reverted back to the general fund.
Muñoz said with COVID-19, state lawmakers have to “look at every dollar.”
New Mexico’s projected revenues have taken a deep hit due to the COVID-19 pandemic and the steep decline in oil prices.
“The cash projects are what they’ll look at first,” said Muñoz.
He explained that those inactive projects that are older than two or three years and are also at risk.
Muñoz said he told OPVP Chief of Staff Paulson Chaco that for 10 years they’ve been “trying to get capital outlay moving.”
“I said, every year we go through the same scenario,” said Muñoz. “You guys have to get the 2019 money spent.”
The good news is that if the projects are under contract and have expended even a small amount of money it locks a project down, confirmed Muñoz.
“As long as the project is moving, we’re good,” he said.
However, the Nation needs to report that.
Muñoz clarified that if there are older projects that had already expended monies, but hadn’t moved forward and were going to terminate as of July 31. The state will extend that decision for 90 days.
State capital outlay projects normally expire after five years, but can be reauthorized by legislators.
Yellowman told delegates she is proud of the progress DCD and CPMD have made toward streamlining projects even during the pandemic.
She said CPMD’s director, James Adakai, who came into the position in 2019, has been overwhelmed with the production of infrastructure policies in an effort to simplify and quicken application, review and contract processes.
Adakai said that just in the past couple of weeks, his team has reached out to all chapters by teleconference for project updates.
Yellowman acknowledged that many projects are time sensitive and CPMD’s new lead project manager, Andy Thomas, is up to the task of helping guide projects through the cumbersome Navajo Nation processes.
One of the challenges, she said, is that between 2016 and 2018, CPMD had less than 100 projects, but now they have over 300 with only 16 project managers who have 25 projects apiece.
On the bright side, Yellowman said CPMD has expanded the capacity to hire professional services such as engineering and architecture firms.
Delegate Mark Freeland told Yellowman that while he appreciated all of the positive changes and improvements she and Adakai were making, he had hoped for a more detailed status report.
“I was hoping to get an update on the current projects that are open right now because it was made known in Santa Fe recently that the Navajo Nation is currently ‘on the watch,’” said Freeland. “Any time a statement like that is made it is of concern because they are looking at all of our projects.”
Closing out projects
Freeland said any of the state’s committees could start bringing up reversions and there is a risk of projects being closed out.
He suggested that the Nation should be reacting to the possibility of reversions with an “all hands on deck” approach.
“The state has put us on notice and will come after us at some point and start reverting our projects,” he said. “What’s going to happen is our chapters and our people lose out. What are we going to do to avoid that?”
Freeland mentioned that state Sen. George Muñoz, D-Cibola/McKinley/San Juan, sits on New Mexico’s Finance Committee.
“They are a very powerful committee, and they can, at the drop of a hat, take these projects away from us,” said Freehand. “If that’s going to be the case, what are we going to do to show them we are spending money, that we are moving these projects? We have to prove ourselves to the state to avoid these reversions.”
Freeland said in the last administration, there were regular project reconciliation meetings.
“We have to figure things out so we can tell the state how things are moving and how we’re spending the money,” he said.
Freeland asked how real-time data is being shared with the New Mexico Department of Finance and Administration.
“I’ve always had issues with the information that DFA gets from the Nation because it’s not precise and it’s not up to date,” he said. “How are we sending real-time data to Santa Fe?”
Yellowman said DCD relies on other Navajo Nation departments such as the Office of Management and Budget, controller’s office, Department of Justice, Department of Natural Resources, Navajo Tribal Utility Authority, Land Department and Risk Management Department for information about projects.
Yellowman pointed to DCD’s progress in building and repairing working relationships with some of these departments.
“All of these entities have moving parts and we have to maintain consistency,” she said.
Still, securing clearances, rights-of-way, easements, and consent agreements can take a lot of time and can cause delays, she said.
Yellowman said she hopes at some point DCD, the Land Department and DNR will be able to offer “one-stop shop” solutions, but that will require an “overhaul” of the system.
“It’s literally like paving the road and driving on it at the same time,” she said. “I truly believe our staff and our project managers know the contracting and procurement process and all of the steps necessary. Now we’re in a place where we can expedite these projects.”
‘What’s our plan?’
Not getting specific answers to his questions, a frustrated Freeland repeated, “The Navajo Nation is now on notice. That’s what Senator Muñoz specifically said. When a statement like that is made by a very powerful senator, that should be a red flag for us. What’s our plan?”
Freeland acknowledged time has been lost due to the COVID-19 pandemic, but said that does not mean the issues stop or go away.
“They continue to grow,” he said.
“These monies are there and are given to our chapters,” said Freeland. “Reversions could be a huge possibility. How are we going to support the chapters?”
Yellowman conceded that in order for DCD and CPMD to respond to over 300 projects, they have to “become a different division and a different department.”
“We need to make amendments to the plan of operation so that we can respond appropriately,” she said. “We manage millions of dollars. We do not even have a senior budget person in our division.”
A concerned RDC Chairman Rickie Nez suggested a meeting needs to happen with all New Mexico delegates, chapters, and state legislators so that everyone can get on the same page regarding projects.
President’s office Chief of Staff Paulson Chaco chimed in saying that he had talked to Muñoz.
“Mainly what he told me was that in 2019, most of that capital outlay was cash and he wanted to make sure that we can move those projects,” he said.
Chaco said he would provide directives to DCD and share their plans with RDC.
He acknowledged there is a better way of building infrastructure for the Navajo people.
Chaco compared what DCD is trying to do with the model implemented at the Navajo Division of Transportation.
“There’s really no support with regard to professionals that DCD can rely on to do their work,” said Chaco. “That’s similar to NDOT — we provided them with the ability to have engineering services and all the necessary professionals at their disposal to do roadwork. We’re now doing that with DCD.”
Delegate Eugenia Charles-Newton said in her experience, “CPMD does not answer questions.”
“I am not getting any information at all on any projects or where we stand,” she said. “I have absolutely no belief that DCD is handling any of these issues and as a result our chapters and our people are suffering. I have no confidence whatsoever in the leadership of DCD.”
Keeping lines open
Yellowman responded, saying her division has been working to keep lines of communications open and said some project updates have been provided on the weekly agency calls.
“It was noted that the state will be coming back in 90 days to reevaluate our current position on all of our projects,” said Freeland. “I don’t know if that means they’re going to start looking at reversions or freezing our projects, but what we need to do is expend up to five percent to tie up these projects and let the state know they are encumbered.”
CPMD Director James Adakai told Navajo Times he feels the Navajo Nation has also been hit hard with COVID-19 and needs all of the resources that have been allocated from the state for basic infrastructure, including waterlines, power lines and roads. He said he hopes the state keeps its obligations.
“We are working to get these projects off the ground or whatever we need to do,” said Adakai. “We’re strategizing right now to really focus on the New Mexico projects.”
As far as the project status reports go, those are done in conjunction with the Navajo Nation controller’s office, he said, the department responsible for cutting checks and monitoring funds.
Unfortunately, the controller’s office is often known to be the bottleneck of bottlenecks in Window Rock.
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