History Lesson 
Should You Buy This Land?
Our writer becomes a salesperson, then a buyer, as she tries to unearth the answer. Hint: The Brooklyn Bridge isn't such a bad buy.
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That ad said a typical Horizon buyer paid $395 for his lot 10 years ago. Today, the same buyer would pay $1,100 for a similar piece of Horizon land. Horizon says those aren't arbitrary price increases; they're the result of the law of supply and demand.
But a New York Magazine article last fall by Anthony Wolff quotes some anonymous Horizon executive as saying about one of Horizon's Albuquerque developments: "We started at $600 a lot—couldn't sell it. Sixty days later, we raised the price to $800, then 60 days later we raised it to $1,000 a lot. Then our pitch was simple: 'Look, had you bought it four months ago, you'd have made four hundred bucks.' And then sales really began to pick up."
Even the Horizon Corporation seems to be having trouble selling its land. An article in The Albuquerque Journal quotes Horizon executives last summer as expecting a decrease in sales, which they attributed to adverse publicity. Horizon Corporation stock also dropped from $44 a share to $14 a share.
Before that stock drop, Standard & Poor's Stock Reports noted that Horizon had had rapid growth which reflected its aggressive sales and promotion effort. However, considering the potential negative factors—like the financial reporting methods of the industry and the marketing practices used by land developers, Standard & Poor's recommended that commitments should be limited to accounts willing to assume a high degree of risk.
The report also shows that the Federal Trade Commission began an investigation in October, 1971, into the advertising and sales procedures of the Horizon Corporation and several other land developers. (FTC says that investigation is not completed.)
Standard & Poor's describes Horizon's holdings as "generally uninhabited, consisting of desert-type acreage covered with low vegetation or grazing lands, although increasing emphasis is being placed on housing activity and the construction of support facilities so as to enhance the value of the remaining holdings."
Future potential may well hinge on the building of viable communities in the land sales areas, the report notes. "This is important if Horizon's investment-minded customers are to sell their lots profitably, thereby supporting market acceptance of the company's product."
Horizon is apparently planning to do more building. Trainers in Dallas said Horizon had recently purchased one of the major building outfits in Arizona.
To see what sort of viable communities were being built by Horizon, I talked to some of the residents already there.
Probably most residents in Enchanted Mesa, where Horizon does its building, like where they are living. I stopped one man out in his yard who had been living there for six years, and he thought the place was great. Some, however, are not so happy, the Seer's Catalogue, an Albuquerque newspaper, points out.
Paul and Rita Gates, a retired couple from Chicago, and George and Michele Pafundi, from New York City, found Enchanted Mesa to be a "desert of despair," the newspaper says.
The Gates were out of town when I was in Belen, and the Pafundis had just reached a settlement with Horizon and could not talk about their problems, but they said the Seer's Catalogue story was essentially correct.
According to the newspaper, both families had been promised completed homes within 120 days after signing their contracts. Neither date was met, and Horizon took a full nine months to get the Pafundis into their house.
Once the Gates moved in, things got no better. The driveway was of different materials than they had been promised. The furnace didn't operate properly. During the first hard rain, the house flooded because the roof bellies in the middle and the ground floor has no elevation to prevent seepage. The back bedroom and bath get no heat. The outside stucco is falling off, the doors have warped, and the septic tank caved in.
So much for the Gates. The Pafundis claimed that their house is slowly sliding off its foundation, and in the process is cracking walls, gapping walls from floors, and separating the room from its supports. All their utilities didn't go underground as promised; telephone wires drape the property. The water heater flooded the basement. The ground is eroding and refuses to accept a fence, and the septic tank is about to cave in.
The Pafundis and the Gates said Horizon ignored their complaints. Then, George Pafundi erected a huge sign in front of his house for all potential Horizon buyers to see. "Const. By Horizon," it says. "Not Fit to Live in—10 months of lies."
Horizon says the problems were misunderstandings all around. Russ Wilde, a spokesman for Horizon, said the company never could get the Pafundis to tell them what was wrong. However, he said, all parties had reached an amicable settlement.
Horizon's ability to build houses is perhaps only indirectly related to the future potential appreciation of a piece of land one buys in Rio Del Oro or Canyon Del Rio. Since most people do buy for investment, the investment potential remains the key question.
In other words, I still needed to know if Albuquerque was growing by leaps and bounds and if those hordes were headed toward Rio Communities, raising its value as they approached.
The Horizon training manual teaches the salesman to say that the city of Albuquerque had a population of around 100,000 people in 1940; in 1950, a population of around 200,000; in 1960, around 300,000; and in 1970, around 400,000. The authorities project it will have a population of almost one million by the year 2000.
Those figures are not exactly accurate. Horizon appears to be using the population for Bernalillo County, where Albuquerque is located, but even then the training manual figures seem to be incorrect. The back of a map of Rio Communities which Horizon gives away does use the official U.S. Government population figures for Bernalillo County: 69,391 in 1940; 145,673 in 1950; 262,199 in 1960; and 315,774 in 1970. For its year 2006 projections, Horizon uses the Albuquerque Planning Commission Kirschner Study of 1967.
There are, however, other less grand projections for the future growth of the Albuquerque area. The Albuquerque Industrial Development Service, the agency charged with attracting industry to the area, uses U. S. Bureau of Census population projections. Those projections only go as far as 1990, when Albuquerque is expected to have just under 560,000 people. Using their percentage increases for each decade, one could estimate that the Albuquerque area's population at the turn of the century would be closer to three-quarters of a million rather than a million.
Still there are going to be a fair number of additional people around Albuquerque, even if one goes by the more conservative estimate. But are they going to be heading south?
Some of them undoubtedly will be. Every Albuquerque area expert says some of the growth is going that way; except, of course, the other land developers in the Albuquerque area. AMREP, Horizon's biggest competitor, claims the inevitable pattern of growth is north, towards its Rio Rancho community which is being planned for 100,000 people.
Horizon's Russ Wilde told me he couldn't find out how many people were projected for Rio Communities, an unusual problem for a community that claims to have a controlled population density. However, the Middle Rio Grande Council of Governments had told me that planners figure there are 3.2 people per family. So, if just one family goes on each acre, Rio Communities's 230,000 acres could hold nearly 800,000, almost the entire projected population for the Albuquerque area.
There is still another problem: water.
New Mexico environmentalists believe that someday there will be more people in the state than its limited water resources can support. Under New Mexico water law, one has no right to the use of water simply because it flows by or through or under his land. New Mexico considers that all surface and ground waters in the state belong to the public and can be appropriated for beneficial use. The idea of priority is also an important feature in New Mexico law. The earlier user of water has a better and stronger right to it than a later user, which means the earlier user gets all his water before the later one gets any of his. If a user needs more water than he has been appropriated, he must buy additional water rights from those who have them.
Russ Wilde, Horizon's spokesman, assured me that Horizon had had surveys made that showed there was sufficient water to meet the needs of the anticipated population. The question had to be answered negatively in the Canyon Del Rio report since no special survey had been made there; however, he pointed out that Canyon Del Rio is adjacent to the other properties.
"We've got water out there now," he said. "We've bought enough water rights now that we can more than meet the needs of the community for a number of years. After all, we're in the Rio Grande Basin."
The Central Clearing House, an environmental group in Santa Fe keeping an eye on subdividers, says it's not quite as simple as Horizon says. Sally Rogers, Central Clearing House's director, says Horizon does not know how much water is available, what the quality of that water is, or whether it is economically feasible to use it. As underground water is pumped out, it gradually becomes too brackish to use. Furthermore, she says, what water exists in the area already belongs to someone else; it has been appropriated for other uses.
At this time, subdivision homeowners can legally "steal" water for their own use. The state permits families to drill wells even if it takes water from an already appropriated source. But strong attempts are being made in the State Legislature to change that law. Quite probably by the time Rio Communities is developed, that loophole will be closed.
The federal government now requires land developers selling subdivisions of 50 or more unimproved lots with each lot smaller than five acres to register their property with the Office of Interstate Land Sales Registration. In addition, these developers must give purchasers copies of their federal property reports which require full disclosure of such information as when the deed is recordable, if water and other utilities are available, restrictions on the land, road access, and so forth. The federal law doesn't restrict land developers from selling property that is under water, for example; all it does is require the developer to tell the buyer about it.
The problem is that salesmen sometimes don't give buyers copies of their property reports. But even more often, buyers fail to read them.
If a Horizon lot purchaser receives his property report and reads it, he'll discover some of the problems that come with his land. For example:
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