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F I S C A L I M P A C T R E P O R T

SPONSOR Varela

DATE TYPED 03/14/05 HB

95/aHTRC/aHAFC/aSFl#1/

aSFl#2/aSFl#3

SHORT TITLE Public Project Revolving Fund Authorizations SB

ANALYST Kehoe

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

Public Project

Revolving Fund

(See narrative)

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of SFl #3 Amendment

The Senate Floor amendment #3 authorizes the NMFA to make loans from the public project

revolving fund to the Angel Fire Public Improvement District for equipment, buildings, infra-

structure and refinancing projects; to the Department of Health for a building and associated

equipment in Albuquerque; to La Union for infrastructure and water projects; to the Las Vegas

Public Housing Authority and/or Las Vegas for equipment, buildings, infrastructure and refi-

nancing projects; to the Monticello Mutual Domestic Water Consumers Association for building,

infrastructure and water projects and to Tierra y Montes for building projects. Loans requested

and authorized will be according to terms and conditions established by the NMFA.

Synopsis of SFl #2 Amendment

The Senate Floor amendment #2 authorizes the NMFA to make a loan from the public project

revolving fund to the Board of Regents of the University of New Mexico (UNM) for the purpose

of designing, constructing, equipping and furnishing additions and improvements to UNM Hos-

pital and the Cancer Research and Treatment Center at the UNM Health Sciences Center on

terms and conditions established by the NMFA.

House Bill 95/aHTRC/aHAFC/aSFl#1/aSFl#2/aSFl#3 -- Page 2

Synopsis of SFl #1 Amendment

The Senate Floor amendment #1 authorizes the NMFA to make a loan from the public project

revolving fund for a solid waste project in Ruidoso on terms and conditions established by the

NMFA.

Synopsis of HAFC Amendment

The House Appropriations and Finance Committee amendments provide for an additional 99 en-

tities and projects to be considered for legislative authority to make loans from the Public Project

Revolving Fund.

Synopsis of HTRC Amendment

The House Taxation & Revenue Committee amendment provides for punctuation corrections

throughout the bill; and adds 43 entities and projects with an approximate value of $60 million

within the bill to be considered for legislative authority to make loans from the Public Project

Revolving Fund.

Synopsis of Original Bill

House Bill 95 authorizes NMFA to provide loans from the Public Project Revolving Fund

(PPRF) to 108 statewide qualified entities for public infrastructure projects under the conditions

established by NMFA.

Significant Issues

Section 1, describes the 108 projects and identifies the state and local entities requesting legisla-

tive authority to make loans from PPRF. According to NMFA, the approximate value of all the

projects contained in this section totals approximately $216 million in statewide needs.

Loans from PPRF benefit eligible entities by allowing them to borrow for infrastructure projects

at below market costs, based on terms and conditions established by NMFA. The authorization

provided in the bill does not guarantee that those projects will receive an NMFA loan. Loans

will be made to entities that can identify a sufficient revenue source for repayment of a loan and

are able to meet other financial criteria established by the Authority.

Section 2, voids legislative authorization if a qualified entity does not notify the Authority by the

end of fiscal year 2008 of its desire to continue to pursue a loan from NMFA.

Section 3, contains an emergency clause.

FISCAL IMPLICATIONS

House Bill 95 does not appropriate funds. However, loans made in the interim as a result of pas-

sage of this bill would result in reducing the loan capacity of the Public Project Revolving Fund.

PPRF capacity for direct cash loans as of December 2004 was approximately $15 million.

A significant source of capital for infrastructure projects administered by NMFA, approximately

House Bill 95/aHTRC/aHAFC/aSFl#1/aSFl#2/aSFl#3 -- Page 3

$18 million per year, is derived from an annual distribution of 75% of the state’s Governmental

Gross Receipts Tax (GGRT). In addition to GGRT, NMFA raises capital through the issuance of

tax-exempt pooled bonds and direct loan repayments. To date, PPRF has financed 420 loans

statewide totaling $599 million. Demand for PPRF funding has increased significantly from fis-

cal year to fiscal year. The graph below provided by NMFA depicts the growth of senior lien

lending activity and shows the demand trend for PPRF funding.

PPRF Annual Activity

by millions of dollars and numbers of projects

0

20

40

60

80

100

120

140

160

180

FY

96

FY

97

FY

98

FY

99

FY

00

FY

01

FY

02

FY

03

FY

04

FY05

0

10

20

30

40

50

60

70

80

90

100

M illion s Number of projects

LMK/yr:lg