HB0511

HOUSE BILL 511

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

INTRODUCED BY

Rebecca Dow and Jonathan A. Henry and Alan T. Martinez

and Andrea Romero

AN ACT

RELATING TO TAXATION; CREATING THE RETAIL CENTER RENOVATION INCOME TAX CREDIT AND THE RETAIL CENTER RENOVATION CORPORATE INCOME TAX CREDIT.

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

SECTION 1. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] RETAIL CENTER RENOVATION INCOME TAX CREDIT.--

A. A taxpayer who, beginning on the effective date of this section and prior to January 1, 2035, incurs qualifying renovation costs for a retail center renovation project may claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The tax credit provided by this section may be referred to as the "retail center renovation income tax credit".

B. The credit provided by this section shall be in an amount equal to ten percent of the qualifying renovation costs, not to exceed one million five hundred thousand dollars ($1,500,000) per retail center renovation project.

C. A taxpayer who seeks to claim a tax credit provided by this section shall, within one calendar year of the date the retail center renovation project is completed, apply for certification of eligibility from the economic development department on forms and in the manner prescribed by that department. In addition to any other proof required by that department, the application shall include a compliance certificate issued by the local jurisdiction verifying that the retail center renovation project was completed in compliance with applicable building codes and permitting requirements; and a notarized declaration from the property owner or project manager affirming that at least fifty percent of the total leaseable square footage of the retail center was renovated with qualifying renovation costs incurred by the taxpayer. The aggregate amount of credits pursuant to this section and Section 2 of this 2025 act that may be certified as eligible in a calendar year is fifteen million dollars ($15,000,000). Completed applications shall be considered in the order received. If a taxpayer is eligible for the credit, a dated certificate of eligibility shall be issued to the taxpayer providing the amount of credit for which the taxpayer is eligible; provided that applications for certification received after the limitation on the aggregate amount of credits has been met in a calendar year shall not be approved.

D. That portion of approved credit claimed by a taxpayer that exceeds the taxpayer's income tax liability in the taxable year in which the credit is claimed may be carried forward for five consecutive taxable years.

E. To receive a tax credit provided by this section, a taxpayer shall claim the credit on forms and in the manner prescribed by the department within twelve months following the calendar year in which the certificate of eligibility was issued.

F. A taxpayer who claims a retail center renovation income tax credit shall not be eligible to claim another tax credit for the same qualifying renovation costs or renovation project, including the retail center renovation corporate income tax credit pursuant to Section 2 of this 2025 act or the federal new markets tax credit under Section 45D of the Internal Revenue Code.

G. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the retail center renovation income tax credit that would have been claimed on a joint return.

H. A taxpayer may be allocated the right to claim a retail center renovation income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or limited liability company and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to this section.

I. A taxpayer whose application pursuant to this section for certification of eligibility is denied may appeal to the administrative hearings office for a hearing.

J. The credit provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the annual aggregate cost of the credit, number of taxpayers claiming the credit and economic impact of the credit, including job creation and change in property values.

K. As used in this section:

(1) "retail center" means a commercial real estate property that:

(a) is located in New Mexico;

(b) contains at least three separate businesses engaged in retail, food or beverage sales;

(d) is primarily zoned for commercial use or mixed-use development;

(2) "retail center renovation project" means the restoration, renovation, rehabilitation or adaptive reuse of at least fifty percent of the overall square footage of a retail center, including both indoor and outdoor property within the exterior boundaries of the retail center; and includes:

(a) conversion of a retail center into a mixed-use development with a combination of commercial, office or residential spaces; or

(b) adaptive reuse of a retail center into multifamily residential housing; and

(3) "qualifying renovation costs" means expenditures, with regard to a retail center renovation project, for:

(a) planning, designing or engineering of the retail center renovation project;

(b) construction, structural and site improvements, roofing, heating, ventilation and air conditioning, plumbing, electrical work and facade enhancements;

(d) energy efficiency enhancements, such as installation of solar panels or high-efficiency heating, ventilation and air conditioning systems; and

(e) construction-related equipment, whether purchased or rented."

SECTION 2. A new section of the Corporate Income and

Franchise Tax Act is enacted to read:

"[NEW MATERIAL] RETAIL CENTER RENOVATION CORPORATE INCOME TAX CREDIT.--

A. A taxpayer that, beginning on the effective date of this section and prior to January 1, 2035, incurs qualifying renovation costs for a retail center renovation project may claim a credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act. The tax credit provided by this section may be referred to as the "retail center renovation corporate income tax credit".

C. A taxpayer that seeks to claim a tax credit provided by this section shall, within one calendar year of the date the retail center renovation project is completed, apply for certification of eligibility from the economic development department on forms and in the manner prescribed by that department. In addition to any other proof required by that department, the application shall include a compliance certificate issued by the local jurisdiction verifying that the retail center renovation project was completed in compliance with applicable building codes and permitting requirements; and a notarized declaration from the property owner or project manager affirming that at least fifty percent of the total leaseable square footage of the retail center was renovated with qualifying renovation costs incurred by the taxpayer. The aggregate amount of credits pursuant to this section and Section 1 of this 2025 act that may be certified as eligible in a calendar year is fifteen million dollars ($15,000,000). Completed applications shall be considered in the order received. If a taxpayer is eligible for the credit, a dated certificate of eligibility shall be issued to the taxpayer providing the amount of credit for which the taxpayer is eligible; provided that applications for certification received after the limitation on the aggregate amount of credits has been met in a calendar year shall not be approved.

F. A taxpayer that claims a retail center renovation corporate income tax credit shall not be eligible to claim another tax credit for the same qualifying renovation costs or renovation project, including the retail center renovation income tax credit pursuant to Section 1 of this 2025 act or the federal new markets tax credit under Section 45D of the Internal Revenue Code.

G. A taxpayer whose application pursuant to this section for certification of eligibility is denied may appeal to the administrative hearings office for a hearing.

H. The credit provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the annual aggregate cost of the credit, number of taxpayers claiming the credit and economic impact of the credit, including job creation and change in property values.

I. As used in this section:

(1) "retail center" means a commercial real estate property that:

(a) is located in New Mexico;

(b) contains at least three separate businesses engaged in retail, food or beverage sales;

(d) is primarily zoned for commercial use or mixed-used development;

(a) conversion of a retail center into a mixed-use development with a combination of commercial, office or residential spaces; or

(b) adaptive reuse of a retail center into multifamily residential housing; and

(3) "qualifying renovation costs" means expenditures, with regard to a retail center renovation project, for:

(a) planning, designing or engineering of the retail center renovation project;

(b) construction, structural and site improvements, roofing, heating, ventilation and air conditioning, plumbing, electrical work and facade enhancements;

(d) energy efficiency enhancements, such as installation of solar panels or high-efficiency heating, ventilation and air conditioning systems; and

(e) construction-related equipment, whether purchased or rented."

SECTION 3. DELAYED REPEAL.--Sections 1 and 2 of this act are repealed effective January 1, 2036.

SECTION 4. APPLICABILITY.--The provisions of this act

apply to taxable years beginning on or after January 1, 2025.

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