HOUSE BILL 240

57th legislature - STATE OF NEW MEXICO - first session, 2025

INTRODUCED BY

Susan K. Herrera and Kristina Ortez and Dayan Hochman-Vigil

and Anita Gonzales and Sarah Silva

 

ENDORSED BY THE NEW MEXICO FINANCE AUTHORITY

OVERSIGHT COMMITTEE

 

AN ACT

RELATING TO THE DRINKING WATER STATE REVOLVING LOAN FUND ACT; ALLOWING THE NEW MEXICO FINANCE AUTHORITY TO PROVIDE GRANTS FOR THE CONSTRUCTION OR REHABILITATION OF DRINKING WATER FACILITIES; REQUIRING THE NEW MEXICO FINANCE AUTHORITY, IN COOPERATION WITH THE DEPARTMENT OF ENVIRONMENT, TO PROVIDE ANNUAL REPORTS ON THE DRINKING WATER STATE REVOLVING LOAN FUND; REDISTRIBUTING DUTIES HELD BETWEEN THE NEW MEXICO FINANCE AUTHORITY AND THE DEPARTMENT OF ENVIRONMENT; EXTENDING REPAYMENT PERIOD REQUIREMENTS FOR LOANS MADE PURSUANT TO THE DRINKING WATER STATE REVOLVING LOAN FUND ACT; RENEWING THE AUTHORITY OF THE NEW MEXICO FINANCE AUTHORITY TO TRANSFER UP TO ONE-THIRD OF CERTAIN GRANTS TO THE DRINKING WATER STATE REVOLVING LOAN FUND AND TO THE WASTEWATER FACILITY CONSTRUCTION LOAN FUND.

 

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

     SECTION 1. Section 6-21A-3 NMSA 1978 (being Laws 1997, Chapter 144, Section 3, as amended) is amended to read:

     "6-21A-3. DEFINITIONS.--As used in the Drinking Water State Revolving Loan Fund Act:

          A. "authority" means the New Mexico finance authority;

          B. "department" means the department of environment;

          C. "drinking water facility construction project" means the acquisition, design, construction, improvement, expansion, repair or rehabilitation of all or part of any structure, facility or equipment necessary for a drinking water system or water supply system;

          D. "drinking water supply facility" means any structure, facility or equipment necessary for a drinking water system or water supply system;

          E. "federal Safe Drinking Water Act" means the federal Safe Drinking Water Act as amended in 1996 and its subsequent amendments or successor provisions;

          [E.] F. "financial assistance" means loans, the purchase or refinancing of debt obligation of a local authority at an interest rate that is less than or equal to the market interest rate in any case in which a debt obligation is incurred after July 1, 1993, loan guarantees, grants, bond insurance or security for revenue bonds issued by the authority;

          [F.] G. "fund" means the drinking water state revolving loan fund;

          [G.] H. "local authority" means any municipality, county, incorporated county, sanitation district, water and sanitation district or any similar district, public or private water cooperative or association or any similar organization, public or private community water system or nonprofit noncommunity water system or any other agency created pursuant to a joint powers agreement acting on behalf of any entity listed in this subsection with a publicly owned drinking water system or water supply system that qualifies as a community water system or nonprofit noncommunity system as defined by the federal Safe Drinking Water Act. "Local authority" does not include systems owned by federal agencies; and

          [H.] I. "operate and maintain" means to perform all necessary activities, including the replacement of equipment or appurtenances, to assure the dependable and economical function of a drinking water facility in accordance with its intended purpose [and

          I. "Safe Drinking Water Act" means the federal Safe Drinking Water Act as amended in 1996 and its subsequent amendments or successor provisions]."

     SECTION 2. Section 6-21A-4 NMSA 1978 (being Laws 1997, Chapter 144, Section 4, as amended) is amended to read:

     "6-21A-4. FUND CREATED--ADMINISTRATION.--

          A. There is created in the authority a revolving loan fund to be known as the "drinking water state revolving loan fund", which shall be administered by the authority. The authority is authorized to establish procedures required to administer the fund in accordance with the federal Safe Drinking Water Act and state laws. The authority and the department 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 Drinking Water State Revolving Loan Fund Act or to provide state matching funds that are required by the terms of any federal grant under the federal Safe Drinking Water Act;

                (3) loan principal, interest and penalty payments if required by the terms of any federal grant under the federal Safe Drinking Water Act;

                (4) any other public or private money dedicated to the fund; and

                (5) revenue transferred from other state revolving funds.

          C. Money in the fund is appropriated for expenditure by the authority in a manner consistent with the terms and conditions of the federal capitalization grants and the federal Safe Drinking Water Act and may be used:

                (1) to provide loans and grants for the construction or rehabilitation of drinking water facilities;

                (2) to buy or refinance the debt obligation of a local authority at an interest rate that is less than or equal to the market interest rate in any case in which a debt obligation is incurred after July 1, 1993;

                (3) to guarantee or purchase insurance for obligations of local authorities to improve credit market access or reduce interest rates;

                (4) to provide loan guarantees for similar revolving funds established by local authorities; and

                (5) to provide a source of revenue or security for the repayment of principal and interest on bonds issued by the authority if the proceeds of the bonds are deposited in the fund or if the proceeds of the bonds are used to make loans to local authorities to the extent provided in the terms of the federal grant.

          D. If needed to cover administrative expenses, pursuant to procedures established by the authority and to the extent permitted by federal regulations, the authority 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 and which fee shall be kept outside the fund.

          E. Money not currently needed for the operation of the fund or otherwise dedicated may be invested pursuant to the New Mexico Finance Authority Act and all interest earned on such investments shall be credited to the fund. Money remaining in the fund at the end of the fiscal year shall not revert to the general fund but shall accrue to the credit of the fund.

          F. The authority shall maintain full authority for the operation of the fund in accordance with applicable federal and state law, including, in cooperation with the department, ensuring the loan recipients are on the state priority list or otherwise satisfy the federal Safe Drinking Water Act requirements.

          G. The authority shall establish fiscal controls and accounting procedures that are sufficient to assure proper accounting for fund payments, disbursements and balances and shall provide, in cooperation with the department, [a biannual] 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 federal Safe Drinking Water Act."

     SECTION 3. Section 6-21A-5 NMSA 1978 (being Laws 1997, Chapter 144, Section 5) is amended to read:

     "6-21A-5. LOAN PROGRAM--ADMINISTRATION.--

          A. The authority shall establish a program to provide financial assistance from the fund to local authorities, individually or jointly, for acquisition, construction or modification of drinking water facilities. The authority is authorized to enter into memoranda of understanding, contracts and other agreements to carry out the provisions of the Drinking Water State Revolving Loan Fund Act, including [but not limited to] memoranda of understanding, contracts and agreements with federal agencies, the department, local authorities and other parties.

          B. The department shall adopt, by [regulation] rule, a system for the ranking of drinking water facility construction projects requesting financial assistance and for the development of a priority list [which] that will be part of the annual intended use plan, as required by the federal Safe Drinking Water Act.

          C. The department shall adopt [regulations] rules or internal procedures addressing the mechanism for the preparation of the annual intended use plan and the content of [such] the plan and shall prepare [such] the plan, with the assistance of the authority, as required by the federal Safe Drinking Water Act and the federal capitalization grant agreement. The department shall review all proposals for drinking water facility construction projects, including [but not limited to] project plans and specifications for compliance with the requirements of the federal Safe Drinking Water Act and the requirements of state laws and [regulations] rules governing the construction and operation of drinking water supply facilities. The department also shall determine whether a local authority has demonstrated adequate technical and managerial capability to operate the drinking water supply facility for its useful life in compliance with the requirements of the federal Safe Drinking Water Act and with the requirements of state laws and [regulations] rules governing the operation of drinking water supply facilities.

          D. The department and the authority shall enter into an agreement for the purpose of describing and allocating duties and responsibilities with respect to monitoring the construction of drinking water facility construction projects that have been provided financial assistance pursuant to the provisions of the Drinking Water State Revolving Loan Fund Act to ensure compliance with the requirements of the federal Safe Drinking Water Act and with the requirements of state laws and [regulations] rules governing construction and operation of drinking water supply facilities.

          E. The department shall adopt [regulations] rules or internal procedures establishing the criteria and method for the distribution of federal annual capitalization grant funds between the fund and the nonproject activities [(set-asides)], also known as set-asides, allowed by the federal Safe Drinking Water Act and for the description in the intended use plan and annual report of the financial programmatic status of the nonproject activities [(set-asides)], also known as set-asides, allowed by the federal Safe Drinking Water Act.

          F. The authority, with the assistance of the department, shall establish procedures to identify affordability criteria for a disadvantaged community and to extend a program to assist such communities.

          G. The department shall set up separate accounts outside the fund to use for nonproject [(set-asides)] activities, also known as set-asides, authorized under the federal Safe Drinking Water Act, Sections 1452(g) and 1452(k), and the authority shall set up a separate account outside the fund for administration of the fund. The department shall also provide the additional match for federal Safe Drinking Water Act, Section 1452(g)(2) activities.

          H. The [department] authority shall prepare and submit applications for federal capitalization grants to the United States environmental protection agency as required by the federal Safe Drinking Water Act."

     SECTION 4. Section 6-21A-6 NMSA 1978 (being Laws 1997, Chapter 144, Section 6) is amended to read:

     "6-21A-6. FINANCIAL ASSISTANCE--CRITERIA.--

          A. Financial assistance shall be provided only to local authorities that:

                (1) meet the requirements for financial capability set by the authority to assure sufficient revenues to operate and maintain the drinking water facility for its useful life and to repay the financial assistance;

                (2) appear on the priority list for the fund, developed and maintained by the department, regardless of rank on such list;

                (3) are considered by the authority and the department ready to proceed with the project;

                (4) demonstrate adequate technical and managerial capability to operate the drinking water facility for its useful life; and

                (5) meet other requirements established by the authority and state laws, including [but not limited to] procurement, recordkeeping and accounting.

          B. Loans from the fund shall be made by the authority only to local authorities that establish one or more dedicated sources of revenue to repay the money received from the fund and to provide for operation, maintenance and equipment replacement expenses of the drinking water facility proposed for funding.

          C. The authority, with assistance from the department, shall establish procedures addressing methods to provide financial assistance to local authorities in accordance with the criteria set forth in the federal Safe Drinking Water Act, Section 1452(a)(3).

          D. Each loan made by the authority shall provide that repayment of the loan shall begin not later than [one year] eighteen months after completion of construction of the drinking water facility for which the loan was made and shall be repaid in full no later than [twenty] thirty years after completion of the construction, except in the case of a disadvantaged community [in which case]. The authority may extend the term of the loan to a disadvantaged community, as long as the extended term:

                (1) terminates not later than the date that is [thirty] forty years after the date of project completion; and

                (2) does not exceed the expected design life of the project.

          E. Financial assistance may be made with an annual interest rate [which] that is less than a market rate as determined by procedures established by the authority and reported annually in the intended use plan prepared by the department, with the assistance of the authority.

          F. Financial assistance pursuant to the Drinking Water State Revolving Loan Fund Act shall not be given to a local authority if the authority determines that the financial assistance is for a drinking water facility to be 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.

          G. Financial assistance may be made to local authorities that employ or contract with a registered professional engineer to provide and be responsible for engineering services on the drinking water facility. Such services, if the authority determines [such] the services are needed, may include [but are not limited to] an engineering report, facility plans, environmental evaluations, construction contract documents, supervision of construction and start-up services.

          H. Financial assistance shall be made only for eligible items as described by authority procedures and as identified pursuant to the federal Safe Drinking Water Act."

     SECTION 5. Section 6-21A-7 NMSA 1978 (being Laws 1997, Chapter 144, Section 7) is amended to read:

     "6-21A-7. DEPARTMENT DUTIES--POWERS.--

          A. The department with the approval of the governor and as authorized in the intended use plan may transfer up to one-third of a federal wastewater facility construction loan fund capitalization grant to the drinking water state revolving loan fund; provided the Wastewater Facility Construction Loan Act is amended to allow for such transfer. [This provision is available one year after the receipt of the first full capitalization grant for the Drinking Water State Revolving Loan Fund Act and will expire with the capitalization grant of the year 2002.] Before the department makes the transfer, the department shall:

                (1) outline the transfer in the applicable intended use plans for both the drinking water state revolving loan fund and the wastewater facility construction loan fund; and

                (2) report the intended transfer to the legislature.

          B. The department in the annual intended use plan shall certify to the United States environmental protection agency the progress made regarding operator certification and capacity development programs as they relate to the receipt of capitalization grants available from the environmental protection agency under the federal Safe Drinking Water Act."

     SECTION 6. Section 6-21A-8 NMSA 1978 (being Laws 1997, Chapter 144, Section 8) is amended to read:

     "6-21A-8. AUTHORITY DUTIES--POWERS.--

          A. The authority with the approval of the governor and as authorized in the intended use plan may transfer up to one-third of a federal drinking water state revolving loan fund capitalization grant to the wastewater facility construction loan fund. [This provision is available one year after the receipt of the first full capitalization grant and will expire with the capitalization grant of the year 2002.] Before the authority makes the transfer, the authority shall:

                (1) outline the transfer in the applicable intended use plans for both the drinking water state revolving loan fund and the wastewater facility construction loan fund; and

                (2) report the intended transfer to the legislature.

          B. The authority [will have] has the power:

                (1) to foreclose upon or attach any drinking water 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 Drinking Water State Revolving Loan Fund Act in the event of a default by a local authority;

                (2) 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; and

                (3) to enforce its rights by suit or mandamus or may [utilize] use all other available remedies under state law in the event of default by a local authority.

          C. The authority [will have] has the power to issue bonds or refunding bonds pursuant to the New Mexico Finance Authority Act and the Drinking Water State Revolving Loan Fund Act when the authority determines that a bond issue is required or desirable to implement the provisions of the Drinking Water State Revolving Loan Fund Act.

          D. As security for the payment of the principal and interest on bonds issued by the authority, the authority is authorized to pledge, transfer and assign:

                (1) any obligations of each local authority, payable to the authority;

                (2) the security for the local authority obligations;

                (3) any grant, subsidy or contribution from the United States or any of its agencies or instrumentalities; or

                (4) any income, revenues, funds or other money of the authority from any other source appropriated or authorized for use for the purpose of implementing the provisions of the Drinking Water State Revolving Loan Fund Act, including the fund.

          E. The bonds and other obligations issued by the authority shall be issued and delivered in accordance with the provisions of the New Mexico Finance Authority Act and may be sold at any time the authority determines appropriate. The authority may apply the proceeds of the sale of the bonds to:

                (1) the purposes of the Drinking Water State Revolving Loan Fund Act or the purposes for which the fund may be used;

                (2) the payment of interest on bonds issued by the authority for a period not to exceed three years from the date of issuance of the bonds; and

                (3) the payment of all expenses, including publication and printing charges, attorney fees, financial advisory and underwriter fees and premiums or commissions that the authority determines are necessary or advantageous in connection with the recommendation, advertisement, sale, creation and issuance of bonds.

          F. In the event that [funds are] money is not available for a loan for a drinking water facility project when application is made, in order to accelerate the completion of any drinking water facility project, the local authority may, with the approval of the authority, obligate [such local authority] itself to provide local funds to pay that portion of the cost of the drinking water facility project that the authority agrees to make available by loan, and the authority may reimburse the amount expended on its behalf by the local authority.

          G. Authority members or employees and any person executing bonds issued pursuant to the New Mexico Finance Authority Act and Drinking Water State Revolving Loan Fund Act shall not be liable personally on [such] the bonds or be subject to [any] personal liability or accountability by reason of the issuance [thereof] of the bonds.

          H. All bonds, notes and certificates issued by the authority shall be special obligations of the authority, payable solely from the revenue, income, fees or charges that may, pursuant to the provisions of the New Mexico Finance Authority Act and the Drinking Water State Revolving Loan Fund Act, be pledged to the payment of such obligations, and the bonds, notes or certificates shall not create an obligation, debt or liability of the state. No breach of any pledge, obligation or agreement of the authority shall impose a pecuniary liability upon the state or a charge upon its general credit or taxing power."

- 17 -