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

SPONSOR Garcia

DATE TYPED 3/5/05

HB

SHORT TITLE Historic Preservation Loan Fund

SB 760

ANALYST Hadwiger

APPROPRIATION

(in $000s)

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$500.0

Non-Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Cultural Affairs Department (DCA)

SUMMARY

Synopsis of Bill

Senate Bill 760 would appropriate $500,000 from the general fund to the Cultural Affairs De-

partment (DCA) for the Historic Preservation Loan Fund to carry out the provisions of Section

18-6-23 NMSA 1978.

Significant Issues

DCA noted that the Historic Preservation Loan Fund was established in 1987 by the State Legis-

lature as a self-sustaining revolving loan program to provide low interest loan assistance for res-

toration, rehabilitation and repair of properties listed on the State Register of Cultural Properties.

According to DCA, since 1989, a total of $3,659,718 in rehabilitation funds has been loaned by

the Historic Preservation Division (HPD) in concert with participating lending partners for reha-

bilitation of ten properties in eight counties. By statute the state funds are loaned out for five

years and typically at the end of that loan period, the loan is either paid off by the borrower or

the participating lending partner buys out the remaining portion of the state loan. The lending

partner usually combines the remainder of both loans into a traditional mortgage for the bor-

Senate Bill 760 -- Page 2

rower. Because this is a self-sustaining revolving loan fund, the $300.0 in state funds deposited

into the loan fund in the past have been loaned out several times and the HPD funds in the ten

loans totaled $635,152. For every dollar of state funds loaned out, five dollars of commercial

funds are loaned to the participating borrowers. Currently $280.0 is loaned out on three proper-

ties in Socorro, Union and Santa Fe counties.

FISCAL IMPLICATIONS

The appropriation of $500,000 contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY06 would revert to

the general fund.

ADMINISTRATIVE IMPLICATIONS

Since HPD has been running the loan fund for 16 years, the division has the technical and finan-

cial staff to administer any additions to the Historic Preservation Loan Fund.

TECHNICAL ISSUES

It is not clear how would an appropriation to a loan fund revert at the end of a fiscal year. As

loans are repaid, would these revenues revert to the General Fund. If money is not loaned out in

FY06, would the balance revert. DCA noted the purpose of the Historic Preservation Loan Fund

is described in Sections 18-6-18 through 23, NMSA 1978 as a self sustaining revolving loan

fund. The principal and interest repaid from each loan go back into the Fund and therefore the

balance of the fund grows and enables more preservation loans to be made in the future. A re-

version of unencumbered balance would be contrary to the intent of the statute. DCA recom-

mended that any unencumbered balance should stay in the fund for preservation of the state’s

cultural properties.

DH/lg