AN ACT

RELATING TO PUBLIC FINANCES; INCREASING THE AMOUNT OF THE ALLOWABLE INVESTMENT OF THE SEVERANCE TAX PERMANENT FUND IN NEW MEXICO FILM PRIVATE EQUITY FUNDS OR A NEW MEXICO FILM PROJECT.

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

     Section 1. Section 7-27-5.26 NMSA 1978 (being Laws 2000 (2nd S.S.), Chapter 6, Section 2, as amended) is amended to read:

     "7-27-5.26. INVESTMENT IN FILMS TO BE PRODUCED IN NEW MEXICO.--

          A. No more than five percent of the market value of the severance tax permanent fund may be invested in New Mexico film private equity funds or a New Mexico film project under this section.

          B. If an investment is made under this section, not more than fifteen million dollars ($15,000,000) of the amount authorized for investment pursuant to Subsection A of this section shall be invested in any one New Mexico film private equity fund or any one New Mexico film project.

          C. The state investment officer shall make investments pursuant to this section only upon approval of the state investment council after a review by the private equity investment advisory committee and the New Mexico film division of the economic development department. The state investment officer may make debt or equity investments pursuant to this section only in New Mexico film projects or New Mexico film private equity funds that invest only in film projects that:

                (1) are filmed wholly or substantially in New Mexico;

                (2) have shown to the satisfaction of the New Mexico film division that a distribution contract is in place with a reputable distribution company;

                (3) have agreed that, while filming in New Mexico, a majority of the production crew will be New Mexico residents;

                (4) have posted a completion bond that has been approved by the New Mexico film division; provided that a completion bond shall not be required if the fund or project is guaranteed pursuant to Paragraph (5) of this subsection; and

                (5) have obtained a full, unconditional and irrevocable guarantee of repayment of the invested amount in favor of the severance tax permanent fund:

                     (a) from an entity that has a credit rating of not less than Baa or BBB by a national rating agency;

                     (b) from a substantial subsidiary of an entity that has a credit rating of not less than Baa or BBB by a national rating agency;

                     (c) by providing a full, unconditional and irrevocable letter of credit from a United States incorporated bank with a credit rating of not less than A by a national rating agency; or

                     (d) from a substantial and solvent entity as determined by the state investment council in accordance with its standards and practices; or

                (6) if not guaranteed pursuant to Paragraph (5) of this subsection, have obtained no less than one-third of the estimated total production costs from other sources as approved by the state investment officer.

          D. The state investment officer may purchase at a discount, from an eligible New Mexico film project, up to eighty percent of an expected and estimated film production tax credit available to a film production company pursuant to the provisions of Section 7-2F-1 NMSA 1978. The New Mexico film division of the economic development department shall determine the estimated amount of a film production tax credit. The state investment council shall establish guidelines for the state investment officer's initiation of a purchase and the terms of the purchase.

          E. As used in this section:

                (1) "committed capital" means the sum of the fixed amounts of money that accredited investors have obligated for investment in a New Mexico film private equity fund, which fixed amounts may be invested in that fund in one or more payments over time;

                (2) "film project" means a single media or multimedia program, including advertising messages, fixed on film, videotape, computer disc, laser disc or other similar delivery medium from which the program can be viewed or reproduced and that is intended to be exhibited in theaters; licensed for exhibition by individual television stations, groups of stations, networks, cable television stations or other means; or licensed for the home viewing market; and

                (3) "New Mexico film private equity fund" means any limited partnership, limited liability company or corporation organized and operating in the United States that:

                     (a) has as its primary business activity the investment of funds in return for equity in film projects produced wholly or partly in New Mexico;

                     (b) holds out the prospects for capital appreciation from such investments; and

                     (c) accepts investments only from accredited investors as that term is defined in Section 2 of the federal Securities Act of 1933, as amended, and rules promulgated pursuant to that section."