HOUSE BILL 781
48th legislature - STATE OF NEW MEXICO - first session, 2007
INTRODUCED BY
Ray Begaye
AN ACT
RELATING TO WATER; CREATING THE OFFICE OF WATER INFRASTRUCTURE DEVELOPMENT; TRANSFERRING FUNCTIONS OF THE CONSTRUCTION PROGRAMS BUREAU OF THE DEPARTMENT OF ENVIRONMENT TO THE OFFICE OF WATER INFRASTRUCTURE DEVELOPMENT; AMENDING THE WATER PROJECT FINANCE ACT, THE WASTEWATER FACILITY CONSTRUCTION LOAN ACT AND THE RURAL INFRASTRUCTURE ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. A new section of Chapter 72 NMSA 1978 is enacted to read:
"[NEW MATERIAL] OFFICE OF WATER INFRASTRUCTURE DEVELOPMENT--POWERS AND DUTIES--TRANSFER OF CONSTRUCTION PROGRAMS BUREAU.--
A. The "office of water infrastructure development" is created. The office is administratively attached to the department of finance and administration.
B. The office shall:
(1) provide staff support to and implement policy decisions of the water trust board pursuant to the Water Project Finance Act;
(2) analyze the development of water projects;
(3) monitor the implementation of water projects;
(4) develop and administer a uniform application for water project financing, including from the water project fund;
(5) make loans or grants to qualifying entities for water projects; provided that the service area for the project is wholly within the boundaries of the state or the project is an interstate project that directly and substantially benefits New Mexico and its citizens;
(6) coordinate financing of water projects from all sources and develop qualifying conditions for funding;
(7) administer technical assistance to water and wastewater systems and acequias;
(8) coordinate reviews of all sanitary surveys and water system inspection reports with the drinking water bureau of the department of environment;
(9) coordinate review of water projects with the water rights division of the office of the state engineer; and
(10) coordinate review of fiscal capacity and budgets of entities applying for funding of water projects with the department of finance and administration and the New Mexico finance authority.
C. As used in this section, "water project" includes qualifying water projects pursuant to the Water Project Finance Act, wastewater facilities pursuant to the Wastewater Facility Construction Loan Act and wastewater and water supply facilities pursuant to the Rural Infrastructure Act."
Section 2. Section 72-4A-1 NMSA 1978 (being Laws 2001, Chapter 164, Section 1) is amended to read:
"72-4A-1. SHORT TITLE.--[This act] Chapter 72, Article 4A NMSA 1978 may be cited as the "Water Project Finance Act"."
Section 3. Section 72-4A-3 NMSA 1978 (being Laws 2001, Chapter 164, Section 3, as amended) is amended to read:
"72-4A-3. DEFINITIONS.--As used in the Water Project Finance Act:
A. "authority" means the New Mexico finance authority;
B. "board" means the water trust board;
C. "office" means the office of water infrastructure development;
[C.] D. "political subdivision" means a municipality, county, irrigation district, conservancy district, special district, acequia, soil and water conservation district, water and sanitation district or an association organized and existing pursuant to the Sanitary Projects Act;
[D. "qualifying water project" means a project recommended by the board for funding by the legislature; and]
E. "qualifying entity" means a state agency,
a political subdivision of the state or a recognized Indian nation, tribe or pueblo, the boundaries of which are located wholly or partially in New Mexico; and
F. "qualifying water project" means a project recommended by the board for funding by the legislature."
Section 4. Section 72-4A-9 NMSA 1978 (being Laws 2001, Chapter 164, Section 9, as amended) is amended to read:
"72-4A-9. WATER PROJECT FUND--CREATED--PURPOSE.--
A. The "water project fund" is created in the [New Mexico finance authority] state treasury and shall consist of distributions made to the fund from the water trust fund and payments by the office of principal of and interest on loans for approved water projects. The fund shall also consist of any other money appropriated, distributed or otherwise allocated to the fund for the purpose of supporting water projects pursuant to provisions of the Water Project Finance Act. The fund shall be administered by the [authority] office. Income from investment of the water project fund shall be credited to the fund. Balances in the fund at the end of any fiscal year shall not revert to the general fund. The water project fund may consist of such subaccounts as the [authority] office deems necessary to carry out the purposes of the fund. The [authority] office may establish procedures and adopt rules as required to administer the fund and to recover from the fund costs of administering the fund and originating grants and loans. Ten percent of all water project funds shall be dedicated to the state engineer for water rights adjudications, and twenty percent of the money dedicated for water rights adjudications shall be allocated to the administrative office of the courts for the courts' costs associated with those adjudications.
B. Money in the water project fund may be used to make loans or grants to qualified entities for any project approved by the legislature and for water rights adjudications.
C. The authority is authorized to issue revenue bonds payable from the proceeds of loan repayments made into the water project fund upon a determination by the authority that issuance of the bonds is necessary to replenish the principal balance of the fund. The net proceeds from the sale of the bonds shall be deposited in the water project fund. The bonds shall be authorized and issued by the authority in accordance with the provisions of the New Mexico Finance Authority Act."
Section 5. Section 74-6A-3 NMSA 1978 (being Laws 1986, Chapter 72, Section 3, as amended) is amended to read:
"74-6A-3. DEFINITIONS.--As used in the Wastewater Facility Construction Loan Act:
A. "commission" means the water quality control commission;
[B. "division" means the environmental improvement division of the health and environment department;
C.] B. "financial assistance" means loans, the purchase or refinancing of existing local political subdivision obligations, loan guarantees, credit enhancement techniques to reduce interest on loans and bonds, bond insurance and bond guarantees or any combination of these purposes;
[D.] C. "fund" means the wastewater facility construction loan fund;
[E.] D. "local authority" means any municipality, county, incorporated county, sanitation district, water and sanitation district or any similar district, recognized Indian tribe or other issuing agency created pursuant to a joint powers agreement acting on behalf of any entity listed in this subsection;
E. "office" means the office of water infrastructure development;
F. "operate and maintain" means to perform all necessary activities, including replacement of equipment or appurtenances, to assure the dependable and economical function of a wastewater facility in accordance with its intended purpose;
G. "wastewater facility" means a publicly owned system for treating or disposing of sewage or wastes either by surface or underground methods, including any equipment, plant, treatment works, structure, machinery, apparatus or land, in any combination, that is acquired, used, constructed or operated for the storage, collection, reduction, recycling, reclamation, disposal, separation or treatment of water or wastes or for the final disposal of residues resulting from the treatment of water or wastes, such as pumping and ventilating stations, facilities, plants and works, outfall sewers, interceptor sewers and collector sewers and other real or personal property and appurtenances incident to their use or operation. "Wastewater facility" also includes a nonpoint source water pollution control project as eligible under the [federal] Clean Water Act [of 1977];
H. "account" means the wastewater suspense account;
I. "board" means the state board of finance;
J. "bonds" means wastewater bonds or other obligations authorized by the commission to be issued by the board pursuant to the Wastewater Facility Construction Loan Act;
K. "Clean Water Act" means the federal Clean Water Act of 1977 and its subsequent amendments or successor provisions;
L. "federal securities" means direct obligations of the United States, or obligations the principal and interest of which are unconditionally guaranteed by the United States, or an ownership interest in either of the foregoing;
M. "force account construction" means construction performed by the employees of a local authority rather than through a contractor;
N. "holders" means persons who are owners of bonds, whether registered or not, issued pursuant to the Wastewater Facility Construction Loan Act;
O. "issuing resolution" means a formal statement adopted by the board to issue bonds pursuant to the Wastewater Facility Construction Loan Act, including any trust agreement, trust indenture or similar instrument providing terms and conditions for the bonds to be issued; and
P. "recommending resolution" means a formal statement adopted by the commission recommending to the board that bonds be issued pursuant to the Wastewater Facility Construction Loan Act, including any trust agreement, trust indenture or similar instrument providing the terms and conditions for the bonds that are issued."
Section 6. Section 74-6A-4 NMSA 1978 (being Laws 1991, Chapter 172, Section 4) is amended to read:
"74-6A-4. FUND CREATED--ADMINISTRATION.--
A. There is created in the state treasury a revolving loan fund to be known as the "wastewater facility construction loan fund", which shall be administered by the [division] office as agent [for] of the commission and operated as a separate account. The commission is authorized to establish procedures and adopt regulations as required to administer the fund in accordance with the Clean Water Act and state law. Any regulations relating to the issuance of bonds, and the expenditure of proceeds of bond issues shall be approved by the board. The office as agent of the commission shall, whenever possible, coordinate application procedures and funding cycles with the New Mexico Community Assistance Act.
B. The following shall be deposited directly in the fund:
(1) grants from the federal government or its agencies allotted to the state for capitalization of the fund;
(2) funds [as] appropriated by the legislature to implement the provisions of the Wastewater Facility Construction Loan Act or to provide state matching funds that are required by the terms of any federal grant under the Clean Water Act;
(3) loan principal, interest and penalty payments if required by the terms of any federal grant under the Clean Water Act;
(4) money transferred from the account as needed to fulfill requirements of the Clean Water Act; and
(5) any other public or private money dedicated to the fund.
C. Money in the fund is appropriated for expenditure by the commission or office as agent of the commission in a manner consistent with the terms and conditions of the federal capitalization grants and the Clean Water Act and may be used:
(1) to provide loans for the construction or rehabilitation of wastewater facilities;
(2) to purchase, refund or refinance obligations incurred by local authorities in the state for wastewater facilities where the obligations were incurred and construction commenced after March 7, 1985;
(3) to guarantee, or purchase insurance for, obligations of local authorities to improve credit market access or reduce interest rates;
(4) to provide a source of revenue or security for the payments of principal and interest on bonds recommended by the commission and issued by the board if the proceeds of the bonds are deposited in the fund to the extent provided in the terms of the federal grant;
(5) to provide loan guarantees for similar revolving funds established by local authorities;
(6) to fund the administrative expenses of the board, the commission and the [division] office necessary to implement the provisions of the Wastewater Facility Construction Loan Act, including but not limited to costs of servicing loans and issuing bonds, fund start-up costs, financial management and legal consulting fees and reimbursement costs for support services from other state agencies; and
(7) to fund other programs for which the federal government authorizes use of wastewater grants or to provide for any other expenditure consistent with the Clean Water Act grant program and state law.
D. Pursuant to regulations adopted by the commission, the [division] office may impose and collect a fee from each local authority that receives financial assistance from the fund, which fee shall be used solely for the costs of administering the fund.
E. Money not currently needed for the operation of the fund or otherwise dedicated may be invested according to the provisions of Chapter 6, Article 10 NMSA 1978, and all interest earned on such investments shall be credited to the fund. Money remaining in the fund at the end of any fiscal year shall not revert to the general fund but shall accrue to the credit of the fund.
F. Acting as agent for the commission, the [division] office shall maintain full authority for the operation of the fund in accordance with applicable federal and state law, including but not limited to preparing the annual intended use plan and ensuring that loan recipients are on the state priority list or otherwise satisfy Clean Water Act requirements.
G. The [division] office shall establish fiscal controls and accounting procedures that are sufficient to assure proper accounting for fund payments, disbursements and balances and shall provide an annual report and an annual independent audit on the fund to the governor and to the United States environmental protection agency as required by the Clean Water Act."
Section 7. Section 74-6A-7 NMSA 1978 (being Laws 1991, Chapter 172, Section 5) is amended to read:
"74-6A-7. LOAN PROGRAM--ADMINISTRATION.--
A. The [division] office shall establish a program to provide financial assistance to local authorities, individually or jointly, for acquisition, construction or modification of wastewater facilities. The [division] office as agent of the commission is authorized to enter into contracts and other agreements to carry out the provisions of the Wastewater Facility Loan Construction Act, including but not limited to contracts and agreements with federal agencies, local authorities and other parties.
B. The [commission] office as agent of the commission shall adopt a system for the ranking of wastewater facility construction projects for financial assistance."
Section 8. Section 74-6A-8 NMSA 1978 (being Laws 1991, Chapter 172, Section 6) is amended to read:
"74-6A-8. FINANCIAL ASSISTANCE--CRITERIA.--
A. Financial assistance shall be provided only to local authorities that:
(1) meet the requirements for financial capability set by the [division] office to assure sufficient revenues to operate and maintain the wastewater facility for its useful life and to repay the financial assistance;
(2) agree to operate and maintain the wastewater facility so that the facility will function properly over its structural and material design life;
(3) agree to maintain separate project accounts, to maintain project accounts properly in accordance with generally accepted governmental accounting standards and to conduct an audit of the project's financial records;
(4) provide a written assurance, signed by an attorney, that the local authority has or will acquire proper title, easements and rights of way to the property upon or through which the wastewater facility proposed for funding is to be constructed or extended;
(5) require the contractor of the wastewater facility construction project to post a performance and payment bond in accordance with the requirements of Section 13-4-18 NMSA 1978 and its subsequent amendments and successor provisions;
(6) provide a written notice of completion and start of operation of the wastewater facility;
(7) appear on the priority list of the fund, regardless of rank on such list; and
(8) provide [such] information to the [division as required by the commission] office in order to comply with the provisions of the Clean Water Act and state law.
B. Loans shall be made only to local authorities that establish one or more dedicated sources of revenue to repay the money received from the commission and to provide for operation, maintenance and equipment replacement expenses. A local authority, any existing statute to the contrary notwithstanding, may do any of the following:
(1) obligate itself to pay to the office as agent of the commission at periodic intervals a sum sufficient to provide all or any part of bond debt service with respect to the bonds recommended by the commission and issued by the board to fund the loan for the wastewater facility project of the local authority and pay over the debt service to the account of the wastewater facility project for deposit to the fund;
(2) fulfill any obligation to pay the office as agent of the commission by the issuance of bonds, notes or other obligations in accordance with the laws authorizing issuance of local authority obligations; provided however that, notwithstanding the provisions of [Sections] Section 4-54-3 or 6-15-5 NMSA 1978 or other statute or law requiring the public sale of local authority obligations, such obligations may be sold at private sale to the office as agent of the commission at the price and upon the terms and conditions the local authority shall determine;
(3) levy, collect and pay over to the office as agent of the commission and obligate itself to continue to levy, collect and pay over to the office as agent of the commission the proceeds of one or more of the following:
(a) sewer or waste disposal service fees or charges;
(b) licenses, permits, taxes and fees;
(c) special assessments on the property served or benefited by the wastewater facility project; [and] or
(d) other revenue available to the local authority;
(4) undertake and obligate itself to pay its contractual obligation to the office as agent of the commission solely from the proceeds from any of the sources specified in Paragraph (3) of this subsection or, in accordance with the laws authorizing issuance of local authority obligations, impose upon itself a general obligation pledge to the office as agent of the commission additionally secured by a pledge of any of the sources specified in Paragraph (3) of this subsection; [and] or
(5) enter into agreements, perform acts and delegate functions and duties as its governing body shall determine is necessary or desirable to enable the [division] office as agent [for] of the commission to fund a loan to the local authority to aid it in the construction or acquisition of a wastewater facility project.
C. Each loan made by the [division] office as agent [for] of the commission shall provide that repayment of the loan shall begin not later than one year after completion of construction of the wastewater facility project for which the loan was made and shall be repaid in full no later than twenty years after completion of the construction. All principal and interest on loan payments shall be deposited in the fund.
D. Financial assistance shall be made with an annual interest rate to be five percent or less as determined by the commission.
E. A zero-percent interest rate may be approved by the division when the following conditions have been met by the local authority:
(1) the local authority's average user cost is at least fifteen dollars ($15.00) per month or a higher amount as determined by the commission; and
(2) the local authority's median household income is less than three-fourths of the statewide nonmetropolitan median household income.
F. A local authority may use the proceeds from financial assistance received under the Wastewater Facility Construction Loan Act to provide a local match or any other nonfederal share of a wastewater facility construction project as allowed pursuant to the Clean Water Act.
G. Financial assistance received pursuant to the Wastewater Facility Construction Loan Act shall not be used by a local authority on any wastewater facility project constructed in fulfillment or partial fulfillment of requirements made of a subdivider under the provisions of the Land Subdivision Act or the New Mexico Subdivision Act.
H. Financial assistance shall be made only to local authorities that employ or contract with a registered professional engineer to provide and be responsible for engineering services on the wastewater facility project. Such services include but are not limited to an engineering report, construction contract documents, supervision of construction and start-up services.
I. Financial assistance shall be made only for eligible items. For financial assistance composed entirely of state funds, eligible items include but are not limited to the costs of engineering feasibility reports, contracted engineering design, inspection of construction, special engineering services, start-up services, contracted construction, materials purchased or equipment leased for force account construction, land or acquisition of existing facilities, but eligible items do not include the costs of water rights and local authority administrative costs. For financial assistance made from federal funds, eligible items are those identified pursuant to the Clean Water Act.
J. In the event of default by the local authority, the [commission] office may enforce its rights by suit or mandamus or may utilize all other available remedies under state law."
Section 9. Section 74-6A-9 NMSA 1978 (being Laws 1991, Chapter 172, Section 7) is amended to read:
"74-6A-9. COMMISSION--POWERS.--
A. In administering the Wastewater Facility Construction Loan Act, the commission shall have the following powers [which] that may be implemented by the [division] office in addition to those specified in the Water Quality Act:
(1) to provide financial assistance to local authorities to finance all or part of a wastewater facility, including all forms of assistance for which the fund may be used pursuant to the Wastewater Facility Construction Loan Act;
(2) to adopt recommending resolutions [recommending] that the board issue bonds or refunding bonds pursuant to the provisions of the Wastewater Facility Construction Loan Act;
(3) to execute agreements concerning state contributions to the fund made pursuant to the Clean Water Act, including obligating the commission to pay a portion of the estimated reasonable cost of a wastewater facility of a local authority as may be required to meet the water quality goals of the Clean Water Act and the state;
(4) to foreclose upon, attach or condemn any wastewater facility, property or interest in the facility pledged, mortgaged or otherwise available as security for a project financed in whole or in part pursuant to the Wastewater Facility Construction Loan Act in the event of a default by a local authority;
(5) to acquire and hold title to or leasehold interest in real and personal property and to sell, convey or lease that property for the purpose of satisfying a default or enforcing the provisions of a loan agreement;
(6) through its agent the [division] office, to manage the fund, to grant and administer financial assistance to local authorities and to apply for and accept grants, including but not limited to capitalization grant awards made to the state in accordance with the Clean Water Act and the Wastewater Facility Construction Loan Act;
(7) to appoint and employ attorneys, financial advisors, underwriters and other experts and agents and employees as the business of the commission and the office may require;
(8) to sue or be sued and to prosecute and defend, at law or in equity, in any court having jurisdiction over the subject matter and the parties to the matter;
(9) to collect application, origination and administrative fees from the local authority, the total of which for any loan shall not exceed four percent of the value of the loan requested or authorized;
(10) to adopt regulations necessary and appropriate to implement the provisions of the Wastewater Facility Construction Loan Act; and
(11) to have and exercise all the rights and powers necessary, incidental to or implied from the specific powers enumerated in this section.
B. Specific powers enumerated in this section shall not limit any power necessary or appropriate to carry out the purposes and intent of the Wastewater Facility Construction Loan Act.
C. The office as agent of the commission shall use accounting, audit and fiscal procedures conforming to generally accepted government accounting standards and shall otherwise prepare audits and budgets in accordance with state law. The fiscal year of the office and the commission shall coincide with the fiscal year of the state.
D. The office as agent of the commission shall deliver an annual report during the first week of each regular session of the legislature on the status of the wastewater facility construction loan program and the fund to the governor and legislature."
Section 10. Section 74-6A-11 NMSA 1978 (being Laws 1991, Chapter 172, Section 9) is amended to read:
"74-6A-11. WASTEWATER SUSPENSE ACCOUNT CREATED.--
A. There is created in the state treasury a fund to be known as the "wastewater suspense account". The proceeds of bonds recommended by the commission and issued and sold by the board pursuant to provisions of the Wastewater Facility Construction Loan Act shall be deposited in the account. The office as agent of the commission shall be the administrator of the account. All expenditures or transfers from the account shall be approved by the office as agent of the commission. Money in the account shall be withdrawn, expended or transferred as necessary to comply with the provisions of the recommending and issuing resolutions for [the] bonds, the proceeds of which have been deposited in the account, and to fund the provisions of the Wastewater Facility Construction Loan Act and the Clean Water Act.
B. Money in the account may be invested according to provisions of Chapter 6, Article 10 NMSA 1978. All interest earned on the investments shall be credited to the account.
C. Money in the account shall not revert to the general fund but accrue to the credit of the account."
Section 11. Section 74-6A-13 NMSA 1978 (being Laws 1991, Chapter 172, Section 11) is amended to read:
"74-6A-13. AGREEMENT OF THE STATE NOT TO LIMIT OR ALTER RIGHTS OF OBLIGEES.--The state [hereby] pledges to and agrees with the holders of any bonds or other obligations issued under the Wastewater Facility Construction Loan Act and with those parties who enter into contracts with the commission or [with the division] the office pursuant to the provisions of the Wastewater Facility Construction Loan Act that the state shall not limit, alter, restrict or impair the rights vested in the commission or the office to fulfill the terms of agreements made with the holders of bonds or other obligations recommended and issued pursuant to the Wastewater Facility Construction Loan Act and with the parties who may enter into contracts with the commission or the office pursuant to the Wastewater Facility Construction Loan Act and that the state shall not limit, alter, restrict or impair the rights vested in a local authority or in the commission, the office or the board [or the division] to fulfill the terms of contracts made with the commission, the office or the board and with parties who enter into contracts with such local authorities or with the [division acting as agent of the] commission or the office pursuant to the Wastewater Facility Construction Loan Act. The state further agrees that it shall not in any way impair the rights or remedies of the holders of such bonds or other obligations of such parties until such bonds and other obligations, together with interest thereon, with interest on any unpaid installment of interest and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged and such contracts are fully performed on the part of the commission, the office as agent of the commission, the board or the local authorities [or the division acting as agent of the commission]. Nothing in this [subsection] section precludes such limitation or alteration if and when adequate provision is made by law for the protection of the holders of bonds or other obligations recommended by the commission and issued by the board or those entering into such contracts with the commission, or the commission under any contract with a local authority or with the [division] office acting as agent for the commission. The commission or the board may include this pledge and undertaking for the state in such bonds or other obligations and in such contracts."
Section 12. Section 74-6A-14 NMSA 1978 (being Laws 1991, Chapter 172, Section 12) is amended to read:
"74-6A-14. VALIDATION.--All outstanding securities of the state and of all local authorities, all loan or other agreements entered into between the state or the [division] office and any local authority, all regulations promulgated by the commission or the office and all acts and proceedings taken by or on behalf of the state or any local authority with respect to the financing of wastewater facilities are hereby validated, ratified, approved and confirmed. To the extent necessary to carry out its purposes, the commission or the office shall treat any bonds, obligations or agreements of the state or [the division] any state agency that were entered into prior to [the effective date hereof] April 4, 1991 for the purpose of effecting the provisions of the Wastewater Facility Construction Loan Act or the Clean Water Act as if such bonds, obligations or agreements were those recommended by the commission or the office and issued by the board."
Section 13. Section 75-1-2 NMSA 1978 (being Laws 1973, Chapter 333, Section 2, as amended by Laws 2001, Chapter 250, Section 1 and by Laws 2001, Chapter 265, Section 1) is amended to read:
"75-1-2. DEFINITIONS.--As used in the Rural Infrastructure Act:
[A. "department" means the department of environment;
B.] A. "fund" means the rural infrastructure revolving loan fund;
[C.] B. "local authority" means any incorporated city, town or village, county, mutual domestic association, public water cooperative association or sanitation district whose water supply facility serves a population of less than ten thousand;
C. "office" means the office of water infrastructure development;
D. "operate and maintain" means all necessary activities, including but not limited to replacement of equipment or appurtenances to assure the dependable and economical function of a water supply facility in accordance with its intended purpose;
[E. "secretary" means the secretary of environment;
F.] E. "wastewater facility" includes but is not limited to collection lines, pumping equipment, treatment works and disposal piping or process units; and
[G.] F. "water supply facility" includes but is not limited to the source of supply of water, pumping equipment, storage facilities, transmission lines, treatment works and distribution systems."
Section 14. Section 75-1-3 NMSA 1978 (being Laws 1973, Chapter 333, Section 3, as amended by Laws 2001, Chapter 250, Section 3 and by Laws 2001, Chapter 265, Section 3) is amended to read:
"75-1-3. FUND CREATED--ADMINISTRATION--EMERGENCY FUND.--
A. A special fund is created to be known as the "rural infrastructure revolving loan fund". Money appropriated to the fund or to the [department] office to carry out the provisions of the Rural Infrastructure Act may be used to make loans and grants to local authorities, individually or jointly, for water supply or wastewater facilities. Appropriations made to the fund but not expended at the end of the fiscal year for which appropriated shall not revert to the general fund but shall accrue to the credit of the fund. Earnings on the balance in the fund shall be credited to the fund. In addition, when the proceeds from the issuance of severance tax bonds appropriated to the fund are deposited in the state treasury, interest earned on that money during the period from deposit in the state treasury until the actual transfer of the money to the fund shall be credited to the fund.
B. Ten percent of any appropriation to the fund or to the [department] office to carry out the provisions of the Rural Infrastructure Act shall be set aside for emergency grants and loans pursuant to Section 75-1-5 NMSA 1978.
C. All water supply and wastewater facilities shall be designed in compliance with the engineering requirements established by the [secretary] office after consulting with and considering the recommendations of the professional engineering societies operating in New Mexico. The [secretary] office shall also establish, by [regulations] regulation, guidelines for the ranking of projects for top priority based on public health needs.
D. The [department] office shall administer the fund and shall make grant and loan disbursements in accordance with the Rural Infrastructure Act. The [secretary] office shall adopt regulations to govern the application procedure and requirements for disbursing grants and loans under the Rural Infrastructure Act, including requirements consistent with the purpose of the act for determining the eligibility and priority of local authorities for such grants and loans.
E. Receipts from the repayment of loans, including loans approved by the state board of finance pursuant to Section 75-1-5 NMSA 1978, shall be deposited in the fund by the [department] office, including receipts from the repayment of loans made pursuant to appropriations to carry out the purposes of the Water Supply Construction Act made prior to the effective date of the Rural Infrastructure Act.
F. Loans and grants made pursuant to the provisions of the Rural Infrastructure Act shall not be used by the local authority on any project constructed in fulfillment or partial fulfillment of requirements made of a subdivider by the provisions of the Land Subdivision Act or the New Mexico Subdivision Act."
Section 15. Section 75-1-4 NMSA 1978 (being Laws 1973, Chapter 333, Section 4, as amended by Laws 2001, Chapter 250, Section 4 and by Laws 2001, Chapter 265, Section 4) is amended to read:
"75-1-4. CONDITIONS FOR GRANTS AND LOANS.--
A. Grants and loans shall be made only to local authorities that:
(1) agree to operate and maintain the water supply and wastewater facilities so that the facilities will function properly over the structural and material design life, which shall not be less than twenty years;
(2) require the contractor of the construction project to post a performance and payment bond in accordance with the requirements of Section 13-4-18 NMSA 1978;
(3) provide a written assurance, signed by an attorney, that the local authority has proper title, easements and rights of way to the property upon or through which the water supply or wastewater facility proposed for funding is to be constructed or extended;
(4) meet the requirements of the financial capability set by the [department] office to assure sufficient revenues to operate and maintain the facility for its useful life and to repay the loan;
(5) pledge sufficient revenues for repayment of the loan, provided that such revenues may by law be pledged for that purpose; and
(6) agree to properly maintain financial records and to conduct an audit of the project's financial records.
B. Except as otherwise provided in the Rural Infrastructure Act, a loan shall be for a period of time not to exceed twenty years. Loans may be interest free or bear an annual interest rate set by the [secretary] office that is at or below market interest rates. The repayment of loans shall be in annual installments beginning one year after completion of the project. The repayment of the interest on the loan accumulated during the design and construction of a project may be included in the final loan amount, but it shall not be counted in determining the maximum loan amount.
C. No loan recipient eligible to receive a grant under the Rural Infrastructure Act shall receive grants in any one year totaling more than two hundred thousand dollars ($200,000).
D. The maximum assistance, including both loans and grants, [which] that a local authority may receive under the Rural Infrastructure Act in any one year is five hundred thousand dollars ($500,000).
E. Plans and specifications for a water supply or wastewater facility construction project shall be approved by the [department] office before grant or loan disbursements to pay for construction costs are made to a local authority. Interim loan disbursements to pay for engineering and other professional services may be made by the [department] office prior to the approval of the plans and specifications.
F. Privately owned water supply or wastewater facilities are not eligible for assistance under the Rural Infrastructure Act.
G. Grants and loans shall be made only for eligible items. Eligible items include but are not limited to the costs of engineering feasibility reports, contracted engineering design, inspection of construction, special engineering services, archaeological surveys and contracted construction. The costs of water rights, land, system acquisition, easements and rights of way, refinancing of program loans, legal costs and fiscal agents' fees are eligible items only for loan funds. Local authority administrative costs shall not be included as eligible items.
H. In the event the local authority fails to make the prescribed loan repayment, the [department] office is authorized to set water or wastewater user rates in the area of the local authority's jurisdiction in order to provide sufficient money for repayment of this loan and proper operation and maintenance."
Section 16. Section 75-1-5 NMSA 1978 (being Laws 1987, Chapter 175, Section 4, as amended by Laws 2001, Chapter 250, Section 5 and by Laws 2001, Chapter 265, Section 5) is amended to read:
"75-1-5. EMERGENCY LOANS AND GRANTS.--Ten percent of the proceeds of each severance tax bond issuance or other appropriation for the purpose of carrying out the provisions of the Rural Infrastructure Act shall be reserved for emergencies and shall be allocated by the [department] office only upon approval of the state board of finance. This amount shall not be deposited in the fund and shall be allocated only for emergency loans and grants. Emergency loans and grants shall be made in accordance with the applicable provisions for loans pursuant to the Rural Infrastructure Act; provided that a grant shall not exceed two hundred thousand dollars ($200,000). At the end of the third quarter of each fiscal year, the unexpended balance of the reserved amount may be transferred by the [department] office to the fund for use in accordance with the Rural Infrastructure Act."
Section 17. Section 75-1-6 NMSA 1978 (being Laws 1988, Chapter 28, Section 7, as amended by Laws 2001, Chapter 250, Section 6 and by Laws 2001, Chapter 265, Section 6) is amended to read:
"75-1-6. AVERAGE RESIDENTIAL USER COST REDUCTION GRANTS AND ZERO PERCENT LOANS.--
A. No more than twenty-five percent of the proceeds of each severance tax bond issuance or other appropriation for the purpose of carrying out the provisions of the Rural Infrastructure Act shall be reserved for average residential user cost reduction grants or zero percent loans to reduce average residential user cost to a reasonable level for eligible financially needy loan recipients whose water supply or wastewater facilities serve less than three thousand persons.
B. Average residential user cost reduction grants and zero percent loans shall be allocated by the [department] office in accordance with the provisions for grants and loans pursuant to the Rural Infrastructure Act, provided that an average residential user cost reduction grant or zero percent loan shall not exceed two hundred thousand dollars ($200,000). Such grants and loans shall reduce only the principal and interest portion of the average residential user cost to a reasonable cost as determined by the [department] office.
C. A zero percent loan or average residential user cost reduction grant shall be approved by the [department] office when, after construction bids have been received, the following conditions have been met by the local authority whose average residential user costs are in need of reduction:
(1) the construction project is designed using the most cost-effective and dependable option;
(2) the system is designed with adequate built-in expansion capacity;
(3) other sources of grant funds have been sought and are not available in a timely manner;
(4) the project cannot feasibly be reduced in scope or phased so as to bring it within available loan funds and within reasonable user cost; and
(5) the local authority's median household income is less than ninety percent of the statewide nonmetropolitan median household income based on the most current federal decennial census."
Section 18. TEMPORARY PROVISION--TRANSFER OF CONSTRUCTION PROGRAMS BUREAU DUTIES--OFFICE OF WATER INFRASTRUCTURE DEVELOPMENT.--On July 1, 2007, all powers and duties conferred by law upon the construction programs bureau of the department of environment shall be exercised by the office of water infrastructure development. On July 1, 2007, all references in law to the construction programs bureau of the department of environment shall be construed to be references to the office of water infrastructure development.
Section 19. TEMPORARY PROVISION--TRANSFER OF PERSONNEL, PROPERTY, MONEY AND CONTRACTS.--On July 1, 2007, all money, personnel, appropriations, records, equipment, supplies and other property of the construction programs bureau of the department of environment shall be transferred to the office of water infrastructure development, and all memoranda of understanding, joint powers agreements and contracts of the construction programs bureau shall be binding and effective on the office of water infrastructure development.
Section 20. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2007.
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