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F I S C A L I M P A C T R E P O R T

SPONSOR Ortiz y Pino

ORIGINAL DATE

LAST UPDATED

2/28/2007

HB

SHORT TITLE Business Improvement District Property Types

SB 1113

ANALYST Schuss

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

Senate Bill 1113 amends Section 3-63-5 NMSA 1978 of the Business Improvement District Act

to exempt multifamily residential rental property with at least four units or homeowners

associations of multifamily ownership properties from the district benefit fee assessment

schedule. It also exempts residential real property located within an existing district that became

eligible for a business improvement benefit fee assessment after the district was created, unless

the ordinance that created the district is amended to include the new business or property after

notice and hearing in accordance with Section 3-63-10 NMSA 1978.

The Bill then amends Section 3-63-13 to state that the council may annually assess a business

improvement benefit fee exclusive of governmentally owned real property, residential real

property other than multifamily residential rental property with at least four units or homeowners

associations of multifamily ownership properties and residential real property located within an

existing district that became eligible for a business improvement benefit fee assessment after the

district was created, unless the ordinance that created the district is amended to include the new

business or property after notice and hearing in accordance with Section 3-63-10 NMSA 1978.

Senate Bill 1113 – Page

2

SIGNIFICANT ISSUES

The AGO has included the following in their analysis:

The Business Development Improvement Act, NMSA Sections 3-63-1 to 3-63-16, allows a

municipality to create a business improvement district in order to provide services that will

attempt to restore or promote the economic vitality of the district and the general welfare of the

incorporated municipality. The municipality may levy and assess a business improvement benefit

fee on real property located within the district, with certain exceptions. Residential real property

is currently exempted from the fee. This bill would exempt multifamily residential rental

property with at least four units, or homeowners associations of multifamily ownership

properties, from the fee exception for residential real property, apparently in an attempt to

include that property and those organizations within the fee schedule. However, it would then

exempt that “property" from the fee if it became eligible for the fee assessment after the district

was created, presumably by increasing the number of rental units or becoming organized as a

homeowner’s association. The bill would then subject that property and organizations to the fee

if the ordinance is amended to include that property.

By exempting certain real property from the exemption for residential real property, the bill

appears intended to actually include that property within the fee schedule. If so, the real property

included will be multifamily residential real property with at least four units, or homeowners

associations of multifamily ownership properties, presumably without regard to the number of

units. However, homeowners associations are not normally considered to be real property. They

are organizations of owners or residents owning or occupying real property. It is unclear whether

the bill intends to confer real property status or characteristics on the organizations themselves.

According to DFA, redeveloping downtowns in New Mexico cities reflect a nationwide trend of

accommodating persons seeking to live there, either as renters or owners. Buildings reincarnated

from banks, retail or other business uses into lofts lead many a downtown's turnaround. While

this trend brings life back to downtowns, it also means a greater demand on services, often at

rates above that which city coffers can afford. Business Improvement Districts, or BIDs, have

sprung up around the country since 1990, offering to provide those services, including events

management, graffiti removal, panhandling reduction, promotional activities and other things

that promote downtowns. The Downtown Action Team in Albuquerque runs the first one in the

state, encompassing 82 blocks. A second BID is planned for downtown Gallup. BIDs as

authorized under state statute are funded by an assessment of businesses located within a BID

district.

BS/nt