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MORA – Things seem to be humming along at the Mora Valley Spinning Mill, despite a foreclosure suit looming in federal court.

Dozens of bags of sheared wool await processing by human hands and an impressive array of old-school machines. The contraptions clean, claw and spool, date from 1912 through the 1970s, and produce yarns and other wool products of different styles, blends and colors.

Employee Daryll Encinias shows how various kinds of wool – including alpaca and mohair from goats, even rabbit fur – give the finished product softness or luster. He adds a creative touch with special blends or dyes of his own.

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Some of the wool is from local ranches, but the mill handles material from hundreds of customers from all over the world. It’s apparently the biggest wool mill of its kind west of the Mississippi River.

“We’ve spun camel hair from Saudi Arabia,” said Joseph Weathers, executive director the Tapetes de Lana nonprofit that runs the mill. “We’ve spun dogs from Santa Fe – just their hair, not the dogs.”

The mill opened in 2005 and evolved from what started as a weaving center in 1998. Back then, Tapetes founder Carla Gomez, a life-long weaver, was training welfare recipients how to make a living from a revival of traditional Hispanic textiles. The operation got statewide attention as a way to boost a rural economy in a sustainable way based on traditional work and methods.

There have been a lot of changes since the 11,000-square-foot mill opened. Gomez, the enthusiastic face of Tapetes for years, is no longer with the organization. Weathers says the mill provides 12 full-time and temporary jobs in low-income Mora County, has an annual payroll of about $250,000 a year for its workers and subcontractors, and spends about $120,000 in goods and services.

There’s a gift shop featuring the goods of local artisans, with an espresso coffee shop. The Tapetes operation also is the center of a new, state-designated “arts and culture compound” in Mora’s historic center, opening avenues for public support.

After years of receiving major public grants or loans, Weathers describes Tapetes as self-sustaining. The organization hasn’t received a grant for a couple of years, he said.

Still, not all is rosy.

The North Central New Mexico Economic Development District, a multi-county nonprofit agency that serves to provide federal support for startups and other economic development efforts, has filed a foreclosure suit against Tapetes de Lana.

The agency’s lawsuit says the nonprofit owes $395,000 on loans from 2003 and 2006.

Beyond the federally financed loans involved in the litigation, the public has a bigger stake in what happens to the Mora wool operation. North Central has funneled between $1 million and $2 million in support, and Weathers says the operation has received about $3.2 million in various federal grants or loans over the years.

‘Last resort’

Tim Armer, executive director of the North Central district, said Tapetes was a year and half behind on its loan payments when his agency decided to file for foreclosure “as an action of last resort.”

“It’s not our intention to shut down the business,” Armer said. “But we have an obligation to the taxpayers to recover the money from the loans.”

Armer said North Central has made several attempts to reach an accommodation with Tapetes and made “an offer we thought was really good” to resolve the debt. He said part of the loan money goes back to the federal Economic Development Administration and eventually must be repaid, while there is some flexibility for handling a second portion of the loan.

“If they had made a reasonable offer, I think our board would have listened to that,” Armer said. He said Tapetes probably would have been foreclosed on long before now with any other lender.

Weathers sees things differently. He describes North Central as helping to create the situation Tapetes finds itself in.

He says North Central was acting as Tapetes’ fiscal agent when the loans were made and the mill was being developed. “Since we weren’t in control of the money, we couldn’t pay off the loans ourselves,” he said. And he questions the size of the loan that North Central made for Tapetes before his tenure.

He also maintains that North Central took over the “complete and total operation of the mill” for a period after founder Gomez was moved out in 2007 and the result was the loss of most of the mill’s customer base.

Armer says North Central never managed Tapetes and only provided bookkeeping services when asked to help.

He says Weathers made “strong arguments” about the mill’s profitability before the foreclosure. Not paying on the debt, Armer said, is “like me saying I could be making a heck of a lot of money if only I didn’t have that mortgage.”

Weathers’ position is that North Central can forgive the debt and says the elected officials on North Central’s board – including the president, state Rep. Nick Salazar of Ohkay Owingeh – could make that happen and save a project that is finally performing as it was planned to.

“My people are taxpayers,” he said. “My community is taxpayers. Is Mora County not taxpayers? Who’s looking out for our community and our taxpayers?”

“Our sole mission here is so people have jobs,” said Weathers, the Mora County Democratic Party chairman who is retired from the military, owns rental homes and runs Tapetes without pay.

Armer says, “We can’t forgive the loan … . It’s taxpayers’ money.”

Other options?

Weathers took over in 2012, when he says the organization was “basically on the verge of bankruptcy,” owing taxes and wages.

Tapetes’ most recent available nonprofit federal disclosure form, for 2013, shows the organization had $287,182 in revenue for the year; spent $207,226, including $96,819 in salaries and benefits, and $25,080 in professional fees and for independent contractors; and netted $79,950, but had only $3,508 in cash savings at the end of the year.

The report shows no contributions or grants for 2013, but a total of $848,579 in such support in the previous four years. Liabilities were listed as $365,000 to North Central; about $142,000 in other loans; and $23,988 owed to state government’s unemployment fund.

There’s a whiff of local politics over what happens with the wool operation, which Weathers said may be the fifth-largest employer in the county. One player in the controversy called infighting among locals over Tapetes “like the Balkan wars.”

John Olivas, a former Mora County commissioner who was defeated for re-election last year after leading a fight to ban oil and gas drilling in the county, said he tried to get county government interested in the possibility of purchasing the wool operation if it fails financially.

“We didn’t want to lose those jobs,” Olivas said, especially as an alternative to the drilling business.

Olivas said that when he reviewed Tapetes’ financial reports, “I was like, man, no way can it survive.” He said the organization years ago was buying equipment and going into debt before developing a market for the spinning mill’s work. Weathers, he said, inherited a debt “that he doesn’t feel he should be paying.”

“If J.D. (Weathers) didn’t have the debt, it would be successful, because he’s generated a lot of business,” said Olivas.

Olivas said that both with the county and through a nonprofit called the Mora County Economic Development Corp. that’s also interested in the wool operation, he and others “wish J.D. nothing but the best. There’s nothing about taking over the business.”

Gomez, the Tapetes founder, also sits on the board of the Mora County Economic Development Corp. The group stands ready to seek funding and help if the foreclosure goes through, said Olivas. “In no way do we want it to be lost, but if J.D. loses it, we don’t want an outsider to come in and take over,” he added.

Gomez, for her part, says she has no interest recapturing her old role as director of Tapetes. “I’m 60 years old,” she said. “I have a ranch. I’m happy.

“In the beginning, it was just weavers and stuff,” Gomez added. “When the mill came in, it got a lot more difficult.”

“I’m a life-time weaver,” she said. “I’m not an accountant or CPA.” But she said she would like to serve as an advisor to the operation. According to documents in the foreclosure suit, part of the loan money from North Central went to cover balances on credit cards, including one in Gomez’s name, and for about $34,000 in income taxes for a for-profit enterprise called Sangre de Cristo Wool Mills, Inc., in which Gomez was involved.

Gomez said any credit card expenses covered by the loan would have been for Tapetes-related expenses and that Tapetes always had majority control of Sangre de Cristo, which was formed “when everybody thought we were going to be so successful.”

Gomez said she doesn’t want to get into “negative stuff” about the mill and whether people want to blame her for financial problems.

“It was a vision, an incredible journey,” she said of starting the organization in tiny Mora. She said she worked every machine in the mill. “All I know is I worked my ass off.

“I still think this is an incredible project,” she added, “and no matter what happens, this mill is going to be in Mora.”