Senate Bill text for SB0509

SENATE BILL 509

49th legislature - STATE OF NEW MEXICO - first session, 2009

INTRODUCED BY

Cisco McSorley

AN ACT

RELATING TO PUBLIC FINANCE; AMENDING THE TAX INCREMENT FOR DEVELOPMENT ACT; CLARIFYING AND AMENDING REQUIREMENTS FOR FORMATION AND OPERATION OF TAX INCREMENT DEVELOPMENT DISTRICTS AND FOR DEDICATION OF TAX INCREMENTS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 5-15-1 NMSA 1978 (being Laws 2006, Chapter 75, Section 1) is amended to read:

"5-15-1. SHORT TITLE.--[Sections 1 through 27 of this act] Chapter 5, Article 15 NMSA 1978 may be cited as the "Tax Increment for Development Act"."

Section 2. Section 5-15-3 NMSA 1978 (being Laws 2006, Chapter 75, Section 3) is amended to read:

"5-15-3. DEFINITIONS.--As used in the Tax Increment for Development Act:

A. "base gross receipts taxes" means:

(1) the total amount of gross receipts taxes collected within a tax increment development district, as estimated by the governing body that adopted a resolution to form that district, in consultation with the taxation and revenue department, in the calendar year preceding the formation of the tax increment development district or, when an area is added to an existing district, the amount of gross receipts taxes collected in the calendar year preceding the effective date of the modification of the tax increment development plan and designated by the governing body to be available as part of the gross receipts tax increment; [and]

(2) plus any amount of gross receipts taxes that would have been collected in such year if any applicable additional gross receipts taxes imposed after that year had been imposed in that year;

(3) plus an inflation factor that shall be applied annually beginning January 1, 2010 and shall be calculated by multiplying the amount of the base gross receipts taxes in effect in the previous year by a percentage equal to the annual rate of increase for the previous calendar year of the consumer price index for all urban consumers for all items, as published by the United States bureau of labor statistics;

B. "base property taxes" means:

(1) the portion of property taxes produced by the total of all property tax levied at the rate fixed each year by each governing body levying a property tax on the assessed value of taxable property within the tax increment development area last certified for the year ending immediately prior to the year in which a tax increment development plan is approved for the tax increment development area, or, when an area is added to an existing tax increment development area, "base property taxes" means that portion of property taxes produced by the total of all property tax levied at the rate fixed each year by each governing body levying a property tax upon the assessed value of taxable property within the tax increment development area on the date of the modification of the tax increment development plan and designated by the governing body to be available as part of the property tax increment; [and]

(2) plus any amount of property taxes that would have been collected in such year if any applicable additional property taxes imposed after that year had been imposed in that year;

(3) plus an inflation factor that shall be applied annually beginning January 1, 2010 and shall be calculated by multiplying the amount of the base property taxes in effect in the previous year by a percentage equal to the annual rate of increase for the previous calendar year of the consumer price index for all urban consumers for all items, as published by the United States bureau of labor statistics;

C. "county option gross receipts taxes" means gross receipts taxes imposed by counties pursuant to the County Local Option Gross Receipts Taxes Act and designated by the governing body of the county to be available as part of the gross receipts tax increment;

D. "district" means a tax increment development district;

E. "district board" means a board formed in accordance with the provisions of the Tax Increment for Development Act to govern a tax increment development district;

F. "enhanced services" means public services provided by a municipality or county within the district at a higher level or to a greater degree than otherwise available to the land located in the district from the municipality or county, including such services as public safety, fire protection, street or sidewalk cleaning or landscape maintenance in public areas; provided that "enhanced services" does not include the basic operation and maintenance related to infrastructure improvements financed by the district pursuant to the Tax Increment for Development Act;

G. "governing body" means the city council or city commission of a city, the board of trustees or council of a town or village or the board of county commissioners of a county;

H. "greenfield tax increment development district" means a tax increment development district consisting of land the majority of which has not been previously developed and is not currently served by municipal or county public infrastructure adequate to serve the proposed development and for which the tax increment development plan primarily relies on the development of new residential or commercial structures and the infrastructure required to support them, rather than the redevelopment of existing residential or commercial structures and their infrastructure;

[H.] I. "gross receipts tax increment" means the gross receipts taxes collected within a tax increment development district in excess of the base gross receipts taxes collected for the duration of the existence of a tax increment development district and distributed to the district in the same manner as distributions are made under the provisions of the Tax Administration Act;

[I.] J. "gross receipts tax increment bonds" means bonds issued by a district in accordance with the Tax Increment for Development Act, the pledged revenue for which is a gross receipts tax increment;

[J.] K. "local government" means a municipality or county;

[K.] L. "municipal option gross receipts taxes" means those gross receipts taxes imposed by municipalities pursuant to the Municipal Local Option Gross Receipts Taxes Act and designated by the governing body of the municipality to be available as part of the gross receipts tax increment;

[L.] M. "municipality" means an incorporated city, town or village;

[M.] N. "owner" means a person owning real property within the boundaries of a district;

[N.] O. "person" means an individual, corporation, association, partnership, limited liability company or other legal entity;

[O.] P. "project" means a tax increment development project;

[P.] Q. "property tax increment" means all property tax collected on real property within the designated tax increment development area that is in excess of the base property tax until termination of the district and distributed to the district in the same manner as distributions are made under the provisions of the Tax Administration Act;

[Q.] R. "property tax increment bonds" means bonds issued by a district in accordance with the Tax Increment for Development Act, the pledged revenue for which is a property tax increment;

[R.] S. "public improvements" means on-site improvements and off-site improvements that directly or indirectly benefit a tax increment development district or facilitate development within a tax increment development area and that are dedicated to the governing body in which the district lies. "Public improvements" [include] includes:

(1) sanitary sewage systems, including collection, transport, treatment, dispersal, effluent use and discharge;

(2) drainage and flood control systems, including collection, transport, storage, treatment, dispersal, effluent use and discharge;

(3) water systems for domestic, commercial, office, hotel or motel, industrial, irrigation, municipal or fire protection purposes, including production, collection, storage, treatment, transport, delivery, connection and dispersal;

(4) highways, streets, roadways, bridges, crossing structures and parking facilities, including all areas for vehicular use for travel, ingress, egress and parking;

(5) trails and areas for pedestrian, equestrian, bicycle or other non-motor vehicle use for travel, ingress, egress and parking;

(6) pedestrian and transit facilities, parks, recreational facilities and open space areas for the use of members of the public for entertainment, assembly and recreation;

(7) landscaping, including earthworks, structures, plants, trees and related water delivery systems;

(8) public buildings, public safety facilities and fire protection and police facilities;

(9) electrical generation, transmission and distribution facilities;

(10) natural gas distribution facilities;

(11) lighting systems;

(12) cable or other telecommunications lines and related equipment;

(13) traffic control systems and devices, including signals, controls, markings and signage;

(14) school sites and facilities with the consent of the governing board of the public school district for which the facility is to be acquired, constructed or renovated;

(15) library and other public educational or cultural facilities;

(16) equipment, vehicles, furnishings and other personal property related to the items listed in this subsection;

(17) inspection, construction management, planning and program management and other professional services costs incidental to the project;

(18) workforce housing; and

(19) any other improvement that the governing body determines to be for the use or benefit of the public;

[S.] T. "resident qualified elector" means a person who resides within the boundaries of a tax increment development district or proposed tax increment development district and who is qualified to vote in the general elections held in the state pursuant to Section 1-1-4 NMSA 1978;

[T.] U. "state gross receipts tax" means the gross receipts tax imposed pursuant to the Gross Receipts and Compensating Tax Act, but does not include that portion distributed to municipalities pursuant to Sections 7-1-6.4 and 7-1-6.46 NMSA 1978 or to counties pursuant to Section 7-1-6.47 NMSA 1978;

[U.] V. "sustainable development" means land development that achieves sustainable economic and social goals in ways that can be supported for the long term by conserving resources, reducing vehicle miles traveled, protecting the environment and ensuring human health and welfare using mixed-use, pedestrian-oriented, multimodal land use planning;

[V.] W. "tax increment development area" means the land included within the boundaries of a tax increment development district;

[W.] X. "tax increment development district" means a district formed for the purposes of carrying out tax increment development projects;

[X.] Y. "tax increment development plan" means a plan for the undertaking of a tax increment development project;

[Y.] Z. "tax increment development project" means activities undertaken within a tax increment development area to enhance the sustainability of the local, regional or statewide economy; to support the creation of jobs, schools and workforce housing; and to generate tax revenue for the provision of public improvements and may include:

(1) acquisition of land within a designated tax increment development area or a portion of that tax increment development area;

(2) demolition and removal of buildings and improvements and installation, construction or reconstruction of streets, utilities, parks, playgrounds and improvements necessary to carry out the objectives of the Tax Increment for Development Act;

(3) installation, construction or reconstruction of streets, water utilities, sewer utilities, parks, playgrounds and other public improvements necessary to carry out the objectives of the Tax Increment for Development Act;

(4) disposition of property acquired or held by a tax increment development district as part of the undertaking of a tax increment development project at the fair market value of such property for uses in accordance with the Tax Increment Development Act;

(5) payments for professional services contracts necessary to implement a tax increment development plan or project;

(6) borrowing to purchase land, buildings or infrastructure in an amount not to exceed the revenue stream that may be derived from the gross receipts tax increment or the property tax increment estimated to be received by a tax increment development district; and

(7) grants for public improvements essential to the location or expansion of a business;

[Z.] AA. "taxing entity" means the governing body of a political subdivision of the state, the gross receipts tax increment or property tax increment of which may be used for a tax increment development project; and

[AA.] BB. "workforce housing" means decent, safe and sanitary dwellings, apartments, single-family dwellings or other living accommodations that are affordable for persons or families earning less than eighty percent of the median income within the county in which the tax increment development project is located; provided that an owner-occupied housing unit is affordable to a household if the expected sales price is reasonably anticipated to result in monthly housing costs that do not exceed thirty-three percent of the household's gross monthly income; provided that:

(1) determination of mortgage amounts and payments are to be based on down payment rates and interest rates generally available to lower- and moderate-income households; and

(2) a renter-occupied housing unit is affordable to a household if the unit's monthly housing costs, including rent and basic utility and energy costs, do not exceed thirty-three percent of the household's gross monthly income."

Section 3. Section 5-15-5 NMSA 1978 (being Laws 2006, Chapter 75, Section 5) is amended to read:

"5-15-5. CONTENTS OF TAX INCREMENT DEVELOPMENT PLAN.--A tax increment development plan shall include:

A. a map depicting the geographical boundaries of the area proposed for inclusion within the tax increment development area;

B. [the estimated time necessary to complete] a detailed time line for completion of the tax increment development project, including timing of public infrastructure expenditures;

C. a description and the estimated cost of all public improvements proposed for the tax increment development project, including management fees, contingencies and related costs;

D. the estimated operating and maintenance costs of the public infrastructure to be built and when that infrastructure is expected to be completed and conveyed to the municipality or county in which the district is located;

[D.] E. whether it is proposed to use gross receipts tax increment bonds or property tax increment bonds or both to finance all or part of the public improvements;

F. if gross receipts tax increment bonds or property tax increment bonds or both are proposed, a financing plan that includes information supporting why tax increment financing is needed; debt structure and terms, including maturity and estimated interest rates; pro forma for all bonds to be issued for the project; and projected coverage ratios for all bonds;

[E.] G. the estimated annual gross receipts tax increment to be generated by the tax increment development project and the portion of that gross receipts tax increment to be allocated during the time necessary to complete the payment of the tax increment development project;

[F.] H. the estimated annual property tax increment to be generated by the tax increment development project and the portion of that property tax increment to be allocated during the time necessary to complete the payment of the tax increment development project;

[G.] I. the general proposed land uses for the tax increment development project;

[H.] J. the number and types of jobs expected to be created by the tax increment development project;

[I.] K. the amount and characteristics of workforce housing expected to be created by the tax increment development project;

[J.] L. the location and characteristics of public school facilities expected to be created, improved, rehabilitated or constructed by the tax increment development project;

[K.] M. a description of innovative planning techniques, including mixed-use transit-oriented development, traditional neighborhood design or sustainable development techniques, that are deemed by the governing body to be beneficial and that will be incorporated into the tax increment development project; and

[L.] N. the amount and type of private investment in each tax increment development project."

Section 4. Section 5-15-6 NMSA 1978 (being Laws 2006, Chapter 75, Section 6) is amended to read:

"5-15-6. NOTICE OF PUBLIC HEARING.--

A. Upon adoption of a resolution indicating an intent to form a tax increment development district, a governing body shall set a date that is no sooner than thirty days and no later than sixty days after the adoption of the resolution for a public hearing regarding the formation of the district. Immediately after adoption of the resolution, the governing body shall make available on its web site all material submitted to the governing body in connection with the application for formation of the tax increment development district.

B. Notice of the hearing shall be provided by the governing body by:

(1) publication once each week for two consecutive weeks in a newspaper of general circulation in the municipality or county in which the proposed district is located;

(2) posting in a prominent location on property located within the proposed tax increment development area for fourteen days prior to the hearing; [and]

(3) written notice via registered or certified United States mail, postage prepaid, to all owners of real property within the proposed tax increment development area no later than ten days prior to the hearing; and

(4) posting on the governing body's web site.

C. The notice of the hearing shall contain:

(1) the date, time and place of the hearing;

(2) information regarding alternative methods for submission of objects or comments;

(3) a statement that the formation of a district is proposed;

(4) a map showing the boundaries of the proposed district; and

(5) a statement that a tax increment development plan is on file with the clerk of the governing body and may be reviewed upon request.

D. A summary of the resolution declaring the governing body's intent to form a tax increment development district shall be attached to a notice issued pursuant to this section. The clerk of the governing body shall mail a copy of the notice to each owner of real property within the proposed tax increment development area and to all other persons claiming an interest in the property who have filed a written request for a copy of the notice within the six months preceding or at any time following the adoption of the resolution. The clerk of the governing body shall publish a copy of the notice and resolution summary at least twice in a newspaper of general circulation in the municipality or county in which the proposed tax increment development district is located. The clerk of the governing body shall obtain an affidavit from that newspaper after each publication is made. The clerk of the governing body shall cause the affidavits to be placed in the official records of the municipality or county. The affidavits are conclusive evidence of the mailing and publishing of notice. Notice shall not be held invalid for failure of delivery to the addressee.

E. A clerk of a governing body who is informed of a transfer of ownership of real property within a proposed district and who obtains the name and address of the current property owner shall mail a copy of the notice and resolution as soon as practicable after learning of the transfer."

Section 5. Section 5-15-7 NMSA 1978 (being Laws 2006, Chapter 75, Section 7) is amended to read:

"5-15-7. PUBLIC HEARING.--

A. At a public hearing conducted pursuant to the Tax Increment for Development Act, the governing body shall hear all relevant evidence and testimony and make findings. A record of the hearing shall be kept and may consist of a transcription by a court reporter, an electronic recording or minutes taken by a designated person. The record shall be preserved in the official records of the governing body and shall be open to public inspection pursuant to the Inspection of Public Records Act.

B. Testimony at a hearing is not required to be given under oath.

C. At the conclusion of a hearing, the governing body shall determine whether the tax increment development district should be formed based upon the interests, convenience or necessity of the owners, the residents of the proposed tax increment development district and the residents of the municipality or county in which the proposed tax increment development district is to be located. The governing body shall make the following findings before adopting a resolution to approve the formation of a district:

(1) the proposed tax increment development district is not a greenfield tax increment development district;

(2) the proposed development or redevelopment upon which the tax increment development plan is based would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future;

(3) the increase in gross receipts tax and property tax revenues within the tax increment development district that could reasonably be expected to occur without the creation of a tax increment development district would be less than the increase in gross receipts tax and property tax revenues estimated to result from the proposed tax increment development district for the maximum permitted duration of the district. This finding shall not be required if the tax increment development plan is a metropolitan redevelopment project pursuant to the Metropolitan Redevelopment Code;

(4) dedication of a portion of a gross receipts tax increment or property tax increment for the purposes of the proposed tax increment development district would not jeopardize the ability of the governing body to provide government services within the tax increment development district or elsewhere within the governing body's jurisdiction;

[(1)] (5) the tax increment development plan reasonably protects the interests of the governing body in meeting its goals to support:

(a) job creation;

(b) workforce housing;

(c) public school facility creation and improvement, including the creation and improvement of facilities for charter schools; and

(d) underdeveloped area or historical area redevelopment;

[(2)] (6) the tax increment development plan demonstrates elements of innovative planning techniques, including mixed-use transit-oriented development, traditional neighborhood design or sustainable development techniques, that are deemed by the governing body to benefit community development;

[(3)] (7) the tax increment development plan incorporates sustainable development considerations; and

[(4)] (8) the tax increment development plan conforms to general or long-term land-use planning [of the governing body] for development or redevelopment of the municipality or county as a whole.

D. If the governing body determines that the district should be formed, it shall adopt a resolution ordering that the tax increment development district be formed and shall set the matter for an election or declare that an election is waived, as provided in the Tax Increment for Development Act."

Section 6. Section 5-15-10 NMSA 1978 (being Laws 2006, Chapter 75, Section 10) is amended to read:

"5-15-10. GOVERNANCE OF THE DISTRICT.--

A. Following formation of a tax increment development district, a district board shall administer in a reasonable manner the implementation of the tax increment development plan as approved by the governing body.

B. The district shall be governed by the governing body that adopted a resolution to form the district or by a five-member board composed of members appointed by that governing body. An appointed board shall include at least one member to represent the governing body, one member to represent state government and one member to represent owners of property within the district. Persons with no financial interest in the district shall constitute a majority of the members of an appointed board. The governing body may remove a board member for cause.

C. Three of the appointed [directors] members of the board shall serve an initial term of six years. Two of the appointed [directors] members shall serve an initial term of four years. The resolution forming the district shall state which [directors] members shall serve four-year terms and which shall serve six-year terms. If a vacancy occurs on the district board because of the death, termination, resignation or inability of [the director] a member to discharge the duties of the [director] member, the governing body shall appoint a [director] member to fill the vacancy, and the [director] member shall hold office for the remainder of the unexpired term until a successor is appointed [or elected].

D. A [director] member may be a [director] member of more than one district board.

[E. In the case of an appointed board of directors that is not the governing body, at the end of the appointed directors' initial terms, the board shall hold an election of new directors by majority vote of owners and qualified resident electors in accordance with the Tax Increment for Development Act. Each owner shall have the number of votes or portion of votes equal to the number of acres or portion of acres rounded upward to the nearest one-fifth of an acre owned in the district by that owner.]"

Section 7. Section 5-15-11 NMSA 1978 (being Laws 2006, Chapter 75, Section 11) is amended to read:

"5-15-11. RECORDS--OPEN MEETINGS.--

A. A district shall keep the following records, which shall be open to the public:

(1) minutes of all meetings of the district board;

(2) all resolutions;

(3) accounts showing all money received and disbursed;

(4) annual audits;

(5) accounts and reports required pursuant to Section 5-15-24 NMSA 1978;

[(4)] (6) the annual budget; and

[(5)] (7) all other records required to be maintained by law.

B. A district shall establish a web site on which all of the information required by Subsection A of this section shall be promptly posted. The web site shall also provide contact information for at least one member of the district board.

[B.] C. A district board shall appoint a clerk and treasurer for the district.

[C.] D. All meetings of a district shall be open meetings held in accordance with the Open Meetings Act."

Section 8. Section 5-15-12 NMSA 1978 (being Laws 2006, Chapter 75, Section 12) is amended to read:

"5-15-12. DISTRICT POWERS--LIMITATIONS.--

A. In addition to other express or implied authority granted by law, a district shall have the power to:

(1) enter into contracts or expend money for any public purpose with respect to the district;

(2) enter into agreements with a municipality, county or other local government entity in connection with real property located within the district;

(3) enter into an intergovernmental agreement in accordance with the Joint Powers Agreements Act for the planning, design, inspection, ownership, control, maintenance, operation or repair of public infrastructure or the provision of enhanced services by the municipality or county in which the district lies or for any other purpose authorized by the Tax Increment for Development Act;

(4) sell, lease or otherwise dispose of district property if the sale, lease or conveyance is not a violation of the terms of any contract or bond covenant of the district;

(5) reimburse a municipality or county in which the tax increment development district is located for providing services within the tax increment development area;

(6) operate, maintain and repair public infrastructure until dedicated to the governing body;

(7) employ staff, counsel, advisors and consultants;

(8) reimburse a municipality or county in which the district is located for staff and consultant services and support facilities supplied by the municipality or county;

(9) accept gifts or grants and incur and repay loans for a public purpose;

(10) enter into an agreement with an owner concerning the advance of money by an owner for a public purpose or the granting of real property by the owner for a public purpose;

(11) levy property taxes in accordance with election requirements of the Tax Increment for Development Act for a public purpose on real property located in the district;

(12) pay the financial, legal and administrative costs of the district;

(13) enter into contracts, agreements and trust indentures to obtain credit enhancement or liquidity support for its bonds and process the issuance, registration, transfer and payment of its bonds and the disbursement and investment of proceeds of the bonds in accordance with the provisions for investment of funds by municipal treasurers;

(14) borrow money within the limits of the Tax Increment for Development Act to fund the construction, operation and maintenance of public improvements until dedicated to the governing body or for any other lawful public purposes related to the purposes of the Tax Increment for Development Act; and

(15) use public easements and rights of way in or across public property, roadways, highways, streets or other thoroughfares and other public easements and rights of way of the district, municipality or county.

B. [Notwithstanding the provisions of the Procurement Code or local procurement requirements that may otherwise be applicable to the municipality or county in which the district is located] The district board may enter into contracts to carry out any of the tax increment development district's authorized powers, including the planning, design, engineering, financing, construction and acquisition of public improvements for the district, with a contractor, an owner or other person or entity, on such terms and with such persons as the district board determines to be appropriate; provided that the contracts shall conform to the provisions of the Procurement Code and the local procurement requirements of the municipality or county in which the district is located.

C. A district shall not have the power of eminent domain for any purpose.

D. A casino shall not be located in a district, and a district shall not use the proceeds of property tax increment bonds or gross receipts tax increment bonds to finance public improvements for a casino."

Section 9. Section 5-15-15 NMSA 1978 (being Laws 2006, Chapter 75, Section 15) is amended to read:

"5-15-15. TAX INCREMENT FINANCING--GROSS RECEIPTS TAX INCREMENT.--

A. Notwithstanding any law to the contrary, but in accordance with the provisions of the Tax Increment for Development Act, a tax increment development plan, as originally approved or as later modified, may contain a provision that a portion of certain gross receipts tax increments collected within the tax increment development area after the effective date of approval of the tax increment development plan may be dedicated for the purpose of securing gross receipts tax increment bonds pursuant to the Tax Increment for Development Act.

B. As to a district formed by a municipality, a portion of any of the following gross receipts tax increments may be paid by the state directly into a special fund of the district to pay the principal of, the interest on and any premium due in connection with the bonds of, loans or advances to, or any indebtedness incurred by, whether funded, refunded, assumed or otherwise, the authority for financing or refinancing, in whole or in part, a tax increment development project within the tax increment development area:

(1) municipal gross receipts tax authorized pursuant to the Municipal Local Option Gross Receipts Taxes Act;

(2) municipal environmental services gross receipts tax authorized pursuant to the Municipal Local Option Gross Receipts Taxes Act;

(3) municipal infrastructure gross receipts tax authorized pursuant to the Municipal Local Option Gross Receipts Taxes Act;

(4) municipal capital outlay gross receipts tax authorized pursuant to the Municipal Local Option Gross Receipts Taxes Act;

(5) municipal regional transit gross receipts tax authorized pursuant to the Municipal Local Option Gross Receipts Taxes Act;

(6) an amount distributed to municipalities pursuant to Sections 7-1-6.4 and 7-1-6.46 NMSA 1978; and

(7) the state gross receipts tax.

C. As to a district formed by a county, all or a portion of any of the following gross receipts tax increments may be paid by the state directly into a special fund of the district to pay the principal of, the interest on and any premium due in connection with the bonds of, loans or advances to or any indebtedness incurred by, whether funded, refunded, assumed or otherwise, the district for financing or refinancing, in whole or in part, a tax increment development project within the tax increment development area:

(1) county gross receipts tax authorized pursuant to the County Local Option Gross Receipts Taxes Act;

(2) county environmental services gross receipts tax authorized pursuant to the County Local Option Gross Receipts Taxes Act;

(3) county infrastructure gross receipts tax authorized pursuant to the County Local Option Gross Receipts Taxes Act;

(4) county capital outlay gross receipts tax authorized pursuant to the County Local Option Gross Receipts Taxes Act;

(5) county regional transit gross receipts tax authorized pursuant to the County Local Option Gross Receipts Taxes Act; and

(6) the state gross receipts tax.

D. The gross receipts tax increment generated by the imposition of municipal or county local option gross receipts taxes specified by statute for particular purposes may nonetheless be dedicated for the purposes of the Tax Increment for Development Act if intent to do so is set forth in the tax increment development plan approved by the governing body, if the purpose for which the increment is intended to be used is consistent with the purposes set forth in the statute authorizing the municipal or county local option gross receipts tax.

E. [An imposition] Subject to the requirements of Section 5-15-15.1 NMSA 1978, up to fifty percent of a gross receipts tax increment attributable to the imposition of a gross receipts tax by a taxing entity may be dedicated for the purpose of securing gross receipts tax increment bonds with the agreement of the taxing entity, evidenced by a resolution adopted by a majority vote of that taxing entity. [A taxing entity shall not agree to dedicate for the purposes of securing gross receipts tax increment bonds more than seventy-five percent of its gross receipts tax increment attributable to the imposition of gross receipts taxes by the taxing entity.] A resolution of the taxing entity to dedicate a gross receipts tax increment or to increase the dedication of a gross receipts tax increment shall find that:

(1) the revenue generated from the remaining gross receipts tax increment after such dedication will be sufficient to cover the estimated costs of providing government services within the tax increment development district; and

(2) such dedication will not jeopardize the ability of the taxing entity to provide government services elsewhere within its jurisdiction. The resolution shall become effective only on January 1 or July 1 of the calendar year.

F. [An imposition] Subject to the requirements of Section 5-15-15.1 NMSA 1978, up to fifty percent of a gross receipts tax increment attributable to the imposition of the state gross receipts tax within a district may be dedicated for the purpose of securing gross receipts tax increment bonds with the agreement of the state board of finance, evidenced by a resolution adopted by a majority vote of the state board of finance. [The state board of finance shall not agree to dedicate more than seventy-five percent of the gross receipts tax increment attributable to the imposition of the state gross receipts tax within the district.] Prior to the adoption of the resolution, the state board of finance shall provide an opportunity for public comment on the proposed dedication of the gross receipts tax increment. The resolution of the state board of finance shall not become effective until the issuance of the bonds to be secured by the gross receipts tax increment has been specifically authorized by law pursuant to Subsection B of Section 5-15-21 NMSA 1978. The effective date of the resolution shall only [on] be January 1 or July 1 of the calendar year [and]. The resolution shall find that:

(1) the tax increment development district is not a greenfield tax increment development district;

(3) the increase in gross receipts tax and property tax revenues within the tax increment development district that could reasonably be expected to occur without the creation of a tax increment development district would be less than the increase in gross receipts tax and property tax revenues estimated to result from the proposed tax increment development district. This finding shall not be required if the tax increment development plan is a metropolitan redevelopment project pursuant to the Metropolitan Redevelopment Code;

[(1)] (4) the state board of finance has reviewed the request for the use of the state gross receipts tax;

[(2)] (5) based upon review by the state board of finance of the applicable tax increment development plan, the dedication by the state board of finance of a portion of the gross receipts tax increment attributable to the imposition of the state gross receipts tax within the district for use in meeting the required goals of the tax increment plan is reasonable and will effectuate the public policy goals of the Tax Increment for Development Act and will be in the best interest of the state; and

[(3)] (6) the use of the state gross receipts tax is likely to stimulate the creation of jobs, economic opportunities and general revenue for the state through the addition of new businesses to the state and the expansion of existing businesses within the state.

G. A resolution pursuant to Subsection E or F of this section approving dedication of a gross receipts tax increment shall be applicable only to the tax increment development district as it existed at the time of the resolution. If an area is added to the district pursuant to the provisions of Section 5-15-25 NMSA 1978:

(1) dedication of a gross receipts tax increment attributable to the imposition by a taxing entity of a gross receipts tax within the additional area shall require a separate resolution by the taxing entity, pursuant to the provisions of Subsection E of this section; and

(2) dedication of a gross receipts tax increment attributable to the imposition of the state gross receipts tax within the additional area shall require a separate resolution by the state board of finance, pursuant to the provisions of Subsection F of this section.

[G.] H. The governing body of the jurisdiction in which a tax increment development district has been established shall timely notify the assessor of the county in which the district has been established, the taxation and revenue department and the local government division of the department of finance and administration when:

(1) a tax increment development plan has been approved that contains a provision for the allocation of a gross receipts tax increment;

(2) any outstanding bonds of the district have been paid off; and

(3) the purposes of the district have otherwise been achieved."

Section 10. A new section of the Tax Increment for Development Act, Section 5-15-15.1 NMSA 1978, is enacted to read:

"5-15-15.1. [NEW MATERIAL] GROSS RECEIPTS TAX INCREMENT--INCLUSION OF PUBLIC POLICY GOALS.--

A. The authorization in Subsections E and F of Section 5-15-15 NMSA 1978 for dedication of a portion of a gross receipts tax increment for the purpose of securing gross receipts tax increment bonds is subject to the provisions of this section requiring inclusion of public policy goals in the tax increment development plan.

B. Eligibility for dedication of up to ten percent of a gross receipts tax increment shall be achieved by each inclusion in the tax increment development plan of one of the policy goals set forth in this subsection. Eligibility for the maximum dedication percentage of fifty percent authorized in Section 5-15-15 NMSA 1978 can be achieved by inclusion in the tax increment development plan of all five of the following policy goals:

(1) dedicating land improved with infrastructure for public school facilities and contributing a one-time payment per dwelling unit for capital improvements to the public school facilities. The amount of the one-time payment shall be negotiated by the affected school district and the tax increment development district board;

(2) building a transit-oriented development that includes a park-once strategy, integrates all modes of transit and, if appropriate to the region within which the tax increment development district is located, provides a framework for a future mass transit system;

(3) building a minimum of twenty percent of all dwelling units within the tax increment development district as workforce housing, as defined in the Tax Increment for Development Act;

(4) meeting goals for sustainable development as defined in the Tax Increment for Development Act. These goals shall also include the application of environmentally protective technologies and energy and water efficiencies in the project, including all residential, commercial, industrial and government structures; and

(5) setting measurable goals for job creation within the district, including the number of permanent jobs to be created each calendar year during the lifetime of the district; the total number of permanent jobs to be created; and the total number of permanent high-wage jobs to be created. In setting and achieving these goals, a majority of the permanent jobs must be economic-based jobs in which employment is within the district with an employer engaged primarily in creating goods and services that are exported out of the state.

C. If the development of the district will be undertaken by a developer other than the governing body or the tax increment development district, a development agreement signed by the governing body, the district and the developer must be in place. The development agreement shall include specific commitments consistent with the tax increment development plan for job creation, workforce housing, transit-oriented development, sustainable development and funding of public school facilities. The development agreement shall establish phases for the development, with authorization for financing of successive phases to be contingent upon successful completion of earlier phases. The development agreement shall also include provisions for either full or prorated recovery of payments made from district funds to the developer if the developer fails to fulfill commitments made in the development agreement. If the governing body, the district and the developer sign a master development agreement, any subsequent development agreements executed under the master development agreement shall also be signed by all three parties.

D. As used in this section:

(1) "development agreement" means an agreement between a governing body, district and property owner or developer concerning the improvement of specific property within the district, which agreement may be used to establish obligations of the owner or developer, the governing body or the district concerning the zoning, subdivision, improvement, impact fees, financial responsibilities and other matters relating to the development, improvement and use of real property within a district;

(2) "dwelling unit" means a single unit or a portion of a building designated as a residence providing complete, independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation;

(3) "high-wage job" means a job occupied for at least forty-eight weeks in a calendar year by an employee who is paid wages for a calendar year calculated to be at least:

(a) forty thousand dollars ($40,000) if the job is performed or based in a municipality with a population of forty thousand or more according to the most recent federal decennial census; and

(b) twenty-eight thousand dollars ($28,000) if the job is performed or based in a municipality with a population of less than forty thousand according to the most recent federal decennial census or in the unincorporated area of a county;

(4) "master development agreement" means a development agreement under which subsequent development agreements are expected to be executed; and

(5) "park-once strategy" means a land-use strategy involving locating retail uses, higher-density housing, transit and public facilities in walkable, mixed-use centers that are easy to reach by car, transit and bicycle."

Section 11. Section 5-15-16 NMSA 1978 (being Laws 2006, Chapter 75, Section 16) is amended to read:

"5-15-16. BONDING AUTHORITY--GROSS RECEIPTS TAX INCREMENT.--

A. A district may issue gross receipts tax increment revenue bonds, the pledged revenue for which is a gross receipts tax increment, for any one or more of the purposes authorized by the Tax Increment for Development Act.

B. A district may pledge irrevocably any or all of a gross receipts tax increment received by the district to the payment of the interest on and principal of the gross receipts tax increment bonds for any of the purposes authorized in the Tax Increment for Development Act. A law that imposes or authorizes the imposition of a municipal or county gross receipts tax or that affects the municipal or county gross receipts tax shall not be repealed, amended or otherwise directly or indirectly modified in any manner to adversely impair any outstanding gross receipts increment bonds that may be secured by a pledge of any municipal or county gross receipts tax increment, unless those outstanding bonds have been discharged in full or provision has been fully made for those bonds.

C. Revenues in excess of the annual principal and interest due on gross receipts tax increment bonds secured by a pledge of gross receipts tax increment revenue shall first be used to accelerate bond payments and then may be accumulated in a debt service reserve account. The district may appoint a commercial bank trust department to act as paying agent or trustee of the gross receipts tax increment revenue and to administer the payment of principal of and interest on the bonds. Upon termination of a district, all excess funds, including those in a debt service reserve account, shall be returned to the taxing authorities based on their proportional contribution to tax increment dedications over the life of the district.

D. Except as otherwise provided in the Tax Increment for Development Act, gross receipts tax increment bonds:

(1) may have interest, principal value or any part thereof payable at intervals or at maturity as may be determined by the governing body;

(2) may be subject to a prior redemption at the district's option at a time and upon terms and conditions, with or without the payment of a premium, as determined by the district board;

(3) may mature at any time not exceeding twenty-five years after the date of issuance;

(4) may be serial in form and maturity, may consist of one bond payable at one time or in installments or may be in another form determined by the district board;

(5) shall be sold for cash at, above or below par and at a price that results in a net effective interest rate that does not exceed the maximum permitted by the Public Securities Act and the Public Securities Short-Term Interest Rate Act; and

(6) may be sold at public or negotiated sale.

E. At a regular or special meeting, the district board may adopt a resolution that:

(1) declares the necessity for issuing gross receipts tax increment bonds;

(2) authorizes the issuance of gross receipts tax increment bonds by an affirmative vote of a majority of all the members of the district board; and

(3) designates the sources of gross receipts taxes or portions thereof to be pledged to the repayment of the gross receipts tax increment bonds."

Section 12. Section 5-15-24 NMSA 1978 (being Laws 2006, Chapter 75, Section 24) is amended to read:

"5-15-24. TAX INCREMENT ACCOUNTING PROCEDURES--INDEPENDENT AUDIT REQUIRED.--

A. A district board shall separately account for all revenues and indebtedness based on gross receipts tax increments, [and] property tax increments and property tax levies imposed pursuant to Section 5-15-13 NMSA 1978. The district board shall individually account for all gross receipts tax increments.

B. A district board shall separately account for all expenditures made from revenue from gross receipts tax increments and property tax levies imposed pursuant to Section 5-15-13 NMSA 1978 or from the proceeds of the gross receipts tax increment bonds and property tax increment bonds issued for the tax increment development district.

C. A district board shall work with the department of finance and administration, the legislative finance committee and the appropriate taxing authority financial officer to establish annually:

(1) the total value of the state and local economic incentives provided to entities within the tax increment development district, including all relevant tax exemptions, credits or deductions, industrial revenue bonds, job training incentives and capital outlay appropriations; and

(2) the other financing tools that have been used within the tax increment development district, including public improvement districts and business improvement districts.

D. A district board shall contract for an audit by an independent auditor for each fiscal year. The audit shall encompass all of the information required by this section. The audit shall also include a point-by-point comparison of the current status of the district with the initial tax increment development plan that was the basis for the governing body and state board of finance dedication of tax increments. If the tax increment development plan has been modified since the most recent audit, all such modifications shall be specified and the governing body's approval of the modifications pursuant to Subsection C of Section 5-15-25 NMSA 1978 shall be documented.

If by December 1 of any year the audit for the previous fiscal year has not been completed, tax increment distributions to the district shall cease until all audit requirements have been fully met.

E. By December 1 of each year, the independent audit made pursuant to this section shall be submitted by the independent auditor to the district board, the state auditor, the legislative finance committee, the department of finance and administration and the chief financial officer of each county and municipality in which the district is located. The audit is a public record. The audit and all reports required pursuant to this section shall be publicly available on the tax increment development district web site and shall remain available until the district has been terminated."

Section 13. Section 5-15-25 NMSA 1978 (being Laws 2006, Chapter 75, Section 25) is amended to read:

"5-15-25. MODIFICATION OF TAX INCREMENT DEVELOPMENT AREA BOUNDARIES OR TAX INCREMENT DEVELOPMENT PLAN.--

A. After an election to form a district, an area may be eliminated from the tax increment development area only following a hearing conducted upon notice given to the owners of land in the tax increment development area in the manner prescribed for the formation hearing, adoption of a resolution of intention to do so by the district board and voter approval by the owners and resident qualified electors as provided in the Tax Increment for Development Act. Real property within the tax increment development area that is subject to the lien of property taxes, special levies or other charges imposed pursuant to the Tax Increment for Development Act shall not be eliminated from the district while there are bonds outstanding that are payable by those taxes, special levies or charges.

B. At any time after adoption of a resolution creating a district, an area may be added to the district [upon] subject to the approval of the governing body and subject to the approval of the owners of real property in the proposed additional area and the resident qualified electors residing therein, as well as the owners of real property in the district and resident qualified electors, in the same manner as required for the formation of a district.

C. The district board, following a hearing conducted upon notice given to the owners of real property located in the district in the manner prescribed for the formation hearing, may, subject to the approval of the governing body that approved the district's tax increment development plan, amend the tax increment development plan in any manner that it determines will not substantially reduce the benefits to be received by any land in the district from the public infrastructure on completion of the work to be performed under the general plan. An election shall not be required solely for the purposes of this subsection."

Section 14. Section 5-15-26 NMSA 1978 (being Laws 2006, Chapter 75, Section 26) is amended to read:

"5-15-26. TERMINATION OF TAX INCREMENT DEVELOPMENT DISTRICT.--

A. A district shall be terminated by [a] resolution of the [district board] state board of finance that all of the following conditions exist:

(1) all improvements owned by the district have been, or provision has been made for all improvements to be, conveyed to the municipality or county in which the district is located;

(2) an independent auditor has confirmed that either the district does not have any outstanding bond obligations or the municipality or county has assumed all of the outstanding bond obligations of the district; and

(3) an independent auditor has confirmed that all obligations of the district pursuant to any agreement with the municipality or county have been satisfied.

B. Property in the district that is subject to the lien of district taxes shall remain subject to the lien for the payment of bonds, notwithstanding termination of the district. The district shall not be terminated if any bonds of the district remain outstanding unless an amount of money sufficient, together with investment income thereon, to make all payments due on the bonds either at maturity or prior redemption has been deposited with a trustee or escrow agent and pledged to the payment and redemption of the bonds. The district may continue to operate after termination only as needed to collect money and make payments on any outstanding bonds."

Section 15. A new section of the Tax Increment for Development Act is enacted to read:

"[NEW MATERIAL] ANNUAL REPORT TO LEGISLATURE BY THE DEPARTMENT OF FINANCE AND ADMINISTRATION.--By September 1 of each year, the secretary of finance and administration shall present to the legislative finance committee or other appropriate interim legislative committee a report on the anticipated impact on general fund revenue of tax increment development districts established pursuant to the Tax Increment for Development Act. The report shall include:

A. the total number of tax increment development districts in existence in New Mexico, with information on the location of each district and the year of formation of the district;

B. the number of tax increment development districts receiving distributions of a state gross receipts tax increment;

C. the annual amounts and changes in amounts of revenue generated by state gross receipts, personal income tax and corporate income tax within each tax increment development district;

D. the total amount of state gross receipts tax generated within each tax increment development district since the inception of the district and the amount generated in the previous year, including an indication of the portion retained by the state versus the portion distributed to the district as a gross receipts tax increment;

E. a listing of the businesses in operation in each tax increment development district and, for each business, whether at the time it located in the district it was a new business, a business that relocated to the district from outside of New Mexico or a business that relocated to the district from elsewhere in New Mexico; and

F. the total number of new permanent jobs created in each tax increment development district."

Section 16. APPLICABILITY.--

A. The provisions of this act apply to tax increment development districts with respect to which either:

(1) the resolution by a governing body pursuant to Subsection D of Section 5-15-7 NMSA 1978 ordering formation of the district is adopted on or after January 1, 2009; or

(2) the resolution by the state board of finance pursuant to Subsection F of Section 5-15-15 NMSA 1978 approving dedication of a state gross receipts tax increment is adopted on or after January 1, 2009.

B. Except as provided in Subsection C of this section, the provisions of the Tax Increment for Development Act in effect prior to July 1, 2009 shall apply to a tax increment development district with respect to which both the resolution by a governing body ordering formation of the district and the resolution by the state board of finance approving dedication of a state gross receipts tax increment were adopted prior to January 1, 2009.

C. The provisions of Sections 5-15-11, 5-15-24 and 5-15-25 NMSA 1978 effective July 1, 2009 shall apply to all tax increment development districts, without regard to the date of the formation of the district.

Section 17. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2009.

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