Records show water company paid its owner rent

• AV Water Co. moved its offices into a building owned by owner Mark Iuppenlatz in 2011.
• The company paid Iuppenlatz $3,000 a month to rent the building located on County Road 3900.
• A company attorney says Iuppenlatz has not billed the company for rent since November.

FARMINGTON — While customers on the Morningstar and Harvest Gold water systems were on boil-water advisories, AV Water Co. owner Mark Iuppenlatz collected $3,000 a month in rent for the office building where the utility is located.

AV Water owns the Morningstar and Harvest Gold systems. Both water systems were issued a boil-water advisory in June last year. While the boil-water advisory has been lifted for the Morningstar system, which serves Crouch Mesa, it remains in place for Harvest Gold, which serves a subdivision east of Bloomfield.

AV Water attorney Germaine Chappelle said the financial state of the company prompted Iuppenlatz to stop collecting rent payments during the fall.

"There have been a couple months now when Mark said, 'Don't pay me,'" Chappelle said.

According to financial statements AV Water provided to the New Mexico Public Regulation Commission, the last rent payment was made Nov. 1. The documents show the payments being sent to Farmington Office 1 LLC. County assessor records show that the property that the AV Water Co. operates out of at 31 County Road 3900 is owned by Farmington Office 1 LLC. The address listed for the owner is a three-story luxury townhouse that Iuppenlatz owns in Houston, according to Harris County, Texas, records.

During a PRC hearing in April 2015, Tom Eckert, one of Iuppenlatz' business partners, told commissioners that AV Water moved into the building in 2011 to allow the company to move out of offices that are owned by Geoff McMahon, the water system's former owner.

"That lease is actually with an affiliate," Eckert said during the hearing. "Two of our partners, Mr. Iuppenlatz and Mr. (Todd) Bryant own that ... but we run other businesses out of there, so the water company does not pay the entirety of the lease."

Chappelle said Bryant is not one of the building's owners. She said AV Water is now the only business located in the building.

While AV Water owns both the Morningstar and Harvest Gold systems, it is currently only operating the Harvest Gold system. When AV Water was unable to pay back a loan from Stonetown Animas Lenders LLC., the lender filed a petition in district court for receivership of the water utility's assets. The Harvest Gold infrastructure was excluded from the receivership, but the water rights were included.

"Because it was left outside of the receivership, it was basically orphaned," Chappelle said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652.