HB0371

HOUSE BILL 371

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

Jason C. Harper

AN ACT

RELATING TO PROPERTY; REQUIRING APPROVAL FROM THE STATE BOARD OF FINANCE PRIOR TO A PUBLIC IMPROVEMENT DISTRICT ISSUING CERTAIN BONDS; LIMITING THE AMOUNT OF LEVIES IMPOSED ON AN AD VALOREM BASIS BY A PUBLIC IMPROVEMENT DISTRICT; REQUIRING DISCLOSURE OF ADDITIONAL PROPERTY TAX INFORMATION IN CERTAIN REAL ESTATE TRANSACTIONS.

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

SECTION 1. Section 5-11-1 NMSA 1978 (being Laws 2001, Chapter 305, Section 1) is amended to read:

"5-11-1. SHORT TITLE.--[Sections 1 through 27 of this act] Chapter 5, Article 11 NMSA 1978 may be cited as the "Public Improvement District Act"."

SECTION 2. Section 5-11-19 NMSA 1978 (being Laws 2001, Chapter 305, Section 19, as amended) is amended to read:

"5-11-19. GENERAL OBLIGATION BONDS--TAX LEVY--

EXCEPTION.--

A. At any time after the hearing on formation of the district, the district board, or, if before formation, the governing body may from time to time order and call a general obligation bond election to submit to the owners and qualified electors the question of authorizing the district to issue general obligation bonds of the district to provide money for any public infrastructure purposes consistent with the general plan. The question shall include authorization for a levy, including a limitation on the levy, of a property tax to pay debt service on the bonds. The election may be held in conjunction with the formation election.

B. If general obligation bonds are approved at an election, the district board may issue and sell general obligation bonds of the district.

C. Bonds may be sold in a public offering or in a negotiated sale.

D. Prior to being issued, bonds that meet either of the criteria of Subsection A of Section 4 of this 2013 act shall be approved by the state board of finance.

[D.] E. After the bonds are issued, the district board shall enter in its minutes a record of the bonds sold and their numbers and dates and shall annually levy and cause a property tax to be collected, at the same time and in the same manner as other property taxes are levied and collected on all taxable property in the district, sufficient, together with any money from the sources described in Section 5-11-17 NMSA 1978 to pay debt service on the bonds when due. Money derived from the levy of property taxes that are pledged to pay the debt service on the bonds shall be kept separately from other funds of the district. Property tax revenues not pledged to pay debt service on bonds may be used to pay other costs of the district, including costs of formation, administration, operation and maintenance, services or enhanced services. A district's levy of property taxes shall constitute a lien on all taxable property within the district, including, without limitation, all leased property or improvements to leased land, which shall be subject to foreclosure in the same manner as other property tax liens under the laws of this state. The lien shall include delinquencies and interest thereon at a rate not to exceed ten percent per year, the actual costs of foreclosure and any other costs of the district resulting from the delinquency. The proceeds of any foreclosure sale shall be deposited in the special bond fund for payment of any obligations secured thereby.

[E.] F. Subject to the election requirements of this section, a district may issue general obligation bonds at such times and in such amounts as the district deems appropriate to carry out a project or projects in phases.

[F.] G. Pursuant to this section, the district may issue and sell refunding bonds to refund general obligation bonds of the district authorized by the Public Improvement District Act. No election is required in connection with the issuance and sale of refunding bonds. Refunding bonds issued pursuant to this section shall have a final maturity date no later than the final maturity date of the bonds being refunded."

SECTION 3. Section 5-11-20 NMSA 1978 (being Laws 2001, Chapter 305, Section 20) is amended to read:

"5-11-20. SPECIAL LEVY--BONDS--IMPOSITION.--

A. At any time after the hearing on formation of the district, the district board may from time to time order that a hearing be held to determine whether a special levy should be imposed and special levy bonds issued to provide money for any public infrastructure purpose consistent with the general plan. The question of imposing a special levy may be considered at the hearing on district formation upon notice that both issues will be heard at that time, which notice shall include the information required in Subsection B of this section.

B. Notice of hearing shall be provided at least two weeks in advance of the hearing itself in a newspaper of general circulation in the municipality or county in which the district is located. The notice shall include the following:

(1) a description of the method by which the amount of the proposed special levy will be determined for each class of property to which the levy is proposed to apply, in sufficient detail to enable the owner of the affected parcel to determine the amount of the special levy;

(2) a description of the project to be financed with special levy bonds or revenues; and

(3) a statement that any person affected by the proposed special levy may object in writing or in person at the hearing.

C. Special levy bonds may be sold in a public offering or in a negotiated sale.

D. Prior to being issued, bonds that meet either of the criteria of Subsection A of Section 4 of this 2013 act shall be approved by the state board of finance.

[D.] E. After the bonds are issued, the district board shall enter in its minutes a record of the bonds sold and their numbers and dates and shall annually impose and cause a special levy to be collected, at the same time and in the same manner as property taxes are levied and collected on all property within the district that may be subject to the levy, including, without limitation, all leased property or improvements to leased land, sufficient, together with any other money lawfully available to pay debt service on the bonds when due, except to the extent that the district board has provided for other imposition, collection and foreclosure procedures in connection with special levies. Money derived from the imposition of the special levy when collected that is pledged to pay the debt service on the bonds shall be kept separately from other funds of the district. Special levy revenues not pledged to pay debt service on bonds may be used to pay other costs of the district, including costs of formation, administration, operation and maintenance, service or enhanced services.

[E.] F. The district board shall specify conditions under which the obligation to pay special levies may be prepaid and permanently satisfied.

[F.] G. Special levies against privately owned residential property shall be subject to the following provisions:

(1) the maximum amount of special levy that may be imposed shall not be increased over time by an amount exceeding two percent per year, except that the amount of special levy actually imposed may be increased by up to ten percent as a result of the delinquency or default by the owner of any other parcel within the district;

(2) the special levy shall be imposed for a specified time period, after which no further special levy shall be imposed and collected, except that special levies imposed solely to finance the cost of ongoing district services, maintenance or operations or enhanced services may be levied while such services, maintenance or operations or enhanced services are continuing; and

(3) nothing in this subsection shall preclude the establishment of different categories of residential property or changing the amount of the special levies for a parcel whose size or use is changed. A change in the amount of a special levy imposed upon a parcel due to a change in its size or use shall not require voter approval if the method for changing the amount of special levy was approved in the election approving the special levy in sufficient detail to enable the owner of the affected parcel to determine how the change in size or use of the parcel would affect the amount of the special levy.

[G.] H. A district's imposition of a special levy shall constitute a lien on the property within the district subject to the special levy, including property acquired by the state or its political subdivisions after imposition of the special levy, which shall be effective during the period in which the special levy is imposed and shall have priority co-equal to the lien of property taxes. A special levy shall be subject to foreclosure by the district at any time after six months following written notice of delinquency to the owner of the real property to which the delinquency applies. The lien shall include delinquencies, penalties and interest thereon at a rate not to exceed the maximum legal rate of interest per year and penalties otherwise applicable for delinquent property taxes, the district's actual costs of foreclosure and any other costs of the district resulting from the delinquency. All rights of redemption applicable to property sold in connection with property tax foreclosures pursuant to the laws of this state shall apply to property sold following foreclosure of a special levy lien. The portion of proceeds of any foreclosure sale necessary to discharge the lien for the special levy shall be deposited in the special bond fund for payment of any obligations secured thereby.

[H.] I. No holder of special levy bonds issued pursuant to the Public Improvement District Act may compel any exercise of the taxing power of the district, municipality or county to pay the bonds or the interest on the bonds. Special levy bonds issued pursuant to that act are not a debt of the district, municipality or county, nor is the payment of special levy bonds enforceable out of any money other than the revenue pledged to the payment of the bonds.

[I.] J. Subject to the requirements of this section, a district may issue special levy bonds at such times and in such amounts as the district deems appropriate to carry out a project or projects in phases.

[J.] K. Pursuant to this section, the district may issue and sell refunding bonds to refund any special levy bonds of the district authorized by the Public Improvement District Act. Refunding bonds issued pursuant to this section shall have a final maturity date no later than the final maturity date of the bonds being refunded."

SECTION 4. A new section of the Public Improvement District Act is enacted to read:

"[NEW MATERIAL] DEBT SERVICE DEPENDENT ON THIRD-PARTY PAYMENTS OR LARGE PROPERTY OWNERS--STATE BOARD OF FINANCE PRIOR APPROVAL REQUIRED.--

A. Before the bonds may be issued, the state board of finance shall approve general obligation or special levy bonds issued pursuant to Sections 5-11-19 and 5-11-20 NMSA 1978, including refunding bonds, if:

(1) a third party has agreed to make payments for the debt service on the bonds; provided that state board of finance approval is not required if the third party makes the agreement after the bonds to which the agreement relates have been issued; or

(2) there is a large property owner in the district, which shall be determined prior to the bonds being issued based on the net taxable value established pursuant to the Property Tax Code for the current property tax year, or if not then available, the prior property tax year.

B. The state board of finance shall approve or disapprove the issuance of general obligation or special levy bonds that require approval pursuant to Subsection A of this section by resolution and upon determining whether the proposed general obligation or special levy bonds are in the best interest of the property owners of the district. In making the required determination, the state board of finance shall consider, as applicable, the following factors:

(1) the impact on the property tax levy or special levy needed for debt service if the large property owner is delinquent in paying debt service levies or the third party agreeing to make payments for debt service defaults;

(2) the credit worthiness and solvency of the large property owner or the third party agreeing to make payments for debt service on the bonds;

(3) the security for the payments by a third party for debt service on the bonds;

(4) the impact of the public infrastructure purpose to be financed with the bonds on property within the district; and

(5) any other factors affecting the interests of property owners of the district as the state board of finance may establish.

C. The state board of finance may make and adopt rules to implement the provisions of this section. All rules shall be filed in accordance with the State Rules Act.

D. As used in this section:

(1) "large property owner" means a single person or related entities that collectively own property a levy on which will produce thirty-three percent or more of the required annual debt service on the general obligation or special levy bonds at issue;

(2) "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, joint venture, syndicate or other association; and

(3) "related entities" means two or more entities that are owned in an amount greater than fifty percent by the same person, either directly or through one or more persons."

SECTION 5. A new section of the Public Improvement District Act is enacted to read:

"[NEW MATERIAL] LIMITATION ON AD VALOREM TAXES.--

A. Notwithstanding the provisions of any section of the Public Improvement District Act that establishes a maximum for a specific type of levy on property, the aggregate total of all taxes and special levies imposed on an ad valorem basis levied pursuant to the Public Improvement District Act shall not exceed ten dollars ($10.00), or any lower maximum required pursuant to Section 7-37-7.1 NMSA 1978, on each one thousand dollars ($1,000) of net taxable value of taxable property within the district.

B. The limitation in Subsection A of this section does not apply to levies for debt service on general obligation or special levy bonds issued before July 1, 2013."

SECTION 6. Section 47-13-4 NMSA 1978 (being Laws 2009, Chapter 165, Section 3) is amended to read:

"47-13-4. FINDING--DISCLOSURE OF INFORMATION REQUIRED IN CERTAIN REAL ESTATE TRANSACTIONS.--

A. The legislature finds that property tax levied on a residential property for the current year can be a misleading guide to property tax levies in the years following the sale of that property and that a prospective buyer needs information regarding the property tax obligation in the year following the property's sale to properly judge the affordability of a contemplated purchase.

B. Prior to accepting an offer to purchase, the property seller or the seller's broker shall:

(1) request from the county assessor the [estimated amount of property tax levy with respect to the property and shall specify the listed price as the value of the property to be used in the estimate] information described in Subsection E of this section, with respect to the property, specifying in the request the listed price as the value of the property; and

(2) provide a copy of the assessor's response pursuant to Subsection D of this section in writing to the prospective buyer or the buyer's broker.

C. A buyer's broker shall provide to the prospective buyer the county assessor's [estimated amount of property tax levy] response to the request pursuant to Subsection B of this section immediately upon receiving it from the property seller or the seller's broker. The prospective buyer shall acknowledge in writing the receipt of the [estimated amount of property tax levy] county assessor's response.

D. Upon request, a county assessor shall furnish in writing [pursuant to the provisions of] the information described in Subsection E of this section, [an estimated amount of property tax levy with respect to a residential property in the county] calculated at a property value specified by the requestor. The request shall be complied with by the close of business of the business day following the day the request is received. A county may satisfy this obligation through an internet site or other automated format that allows a user to print the requested [estimated amount of property tax levy] information. A document associated with the request or the response is not a public record or a valuation record. County assessors shall not use information provided with a request, including the specified value, to assess the valuation of the property. Neither the county nor any jurisdiction levying a tax against residential property in the county is bound in any way by the [estimate] information given.

E. A county assessor's [estimated amount of property tax levy] response to a request from the property seller or the seller's broker pursuant to Subsection B of this section, with respect to a residential property in the county, shall contain the following:

(1) the actual amount of property tax levied for the property for the current calendar year if the tax rates for the current year have been imposed in accordance with Section 7-38-34 NMSA 1978 for the county in which the property is located or, in all other cases, the amount of property tax levied with respect to the property for the prior calendar year;

(2) the estimated amount of property tax levy, as calculated by the county assessor, for the property for the calendar year following the year in which the transaction takes place; [and]

(3) the actual amount of any special levy imposed on, against or with respect to the property by an authorized taxing authority for the current calendar year if the special levy is not included in the amount of property tax disclosed pursuant to Paragraph (1) of this subsection;

(4) the estimated amount of any special levy imposed on, against or with respect to the property by an authorized taxing authority if the special levy is not included in the estimated amount of property tax levy disclosed pursuant to Paragraph (2) of this subsection, as calculated by the county assessor, for the calendar year following the year in which the transaction takes place;

(5) the taxing authorities authorized to impose property taxes or special levies on the property;

(6) the imposed rates by each authorized taxing authority for the previous and, if set, current property tax year;

(7) the maximum property tax and special levy rates that each authorized taxing authority is authorized to impose without voter approval, as set forth in the annual notification from the department of finance and administration required by Subsection F of this section; and

[(3)] (8) a disclaimer substantially similar to the following:

"The estimated amount of property tax levy and estimated amount of a special levy is calculated using the stated price and estimates of the applicable tax rates. The county assessor is required by law to value the property at its "current and correct" value, which may differ from the listed price. Further, the estimated tax rates may be higher or lower than those that will actually be imposed. Accordingly, the actual tax levy may be higher or lower than the estimated amount. New Mexico law requires your real estate broker or agent to provide you [an estimate of the property tax levy] with information regarding actual and potential levies on the property on which you have submitted or intend to submit an offer to purchase. All real estate brokers and agents who have complied with these disclosure requirements shall be immune from suit and liability arising from suit relating to the [estimated amount of property tax levy] information regarding actual and potential levies.".

F. The department of finance and administration shall annually notify county assessors of the maximum property tax and special levy rates that each authorized taxing authority within their respective counties is authorized to impose without voter approval. The annual notification shall be given within thirty days after the secretary of finance and administration issues the written order setting property tax rates pursuant to Section 7-38-33 NMSA 1978.

[F.] G. A prospective buyer may waive the disclosure requirements of this section by signing a written document prior to the time the offer to purchase is to be made in which the buyer acknowledges that the required [estimated amount of property tax levy] information pursuant to Subsection E of this section is not readily available and waives disclosure of the [estimated amount of property tax levy] information.

[G.] H. All property sellers and real estate brokers and agents who have complied with the provisions of this section shall be immune from suit and liability arising from or relating to the [estimated amount of property tax levy] disclosure of information pursuant to this section.

[H.] I. The New Mexico real estate commission shall biannually inform all New Mexico real estate licensees of the statutory requirement for disclosure of the estimated amount of property tax levy and other information required pursuant to this section to prospective residential property purchasers."

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