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

SPONSOR Griego

ORIGINAL DATE

LAST UPDATED

2/7/06

HB

SHORT TITLE Corrections Dept. Employee Land Lease

SJR 11

ANALYST Peery

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

NA

NA

NA

NA

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Response Received From

New Mexico Corrections Department (NMCD)

No Response Received From

General Services Department (GSD)

SUMMARY

Synopsis of Bill

Senate Joint Resolution 11 calls for the Property Control Division of the General Services De-

partment to be authorized to lease approximately 50 acres of the described property at the Peni-

tentiary of New Mexico in Santa Fe county for a period not exceeding 99 years to a state-

controlled nonprofit corporation for the sole purpose of providing housing to Corrections De-

partment and other governmental employees. The joint resolution calls for the lease to be con-

tingent on the completion of a feasibility analysis that shows that the lease and proposed use of

the property is in the best interest of the state.

FISCAL IMPLICATIONS

NMCD states there appears to be no direct fiscal impact to the state, Corrections Department or

General Services Department. NMCD states it is the lender or bank that would be impacted fi-

nancially if the homes are built and no one buys or rents them. NMCD states the feasibility

study will determine if there are enough Corrections Department and other governmental em-

ployees interested in affordable housing on the Penitentiary of New Mexico grounds.

Senate Joint Resolution 11 – Page

2

NMCD states it is possible that the housing project will generate a revenue stream for the state in

future years, after all the debt on the project is paid off by the non-profit corporation.

SIGNIFICANT ISSUES

NMCD states under the proposed joint resolution, Property Control would lease the land to a

non-profit corporation. The corporation would borrow money from a bank or other financial in-

stitution to build and manage homes on the Penitentiary of New Mexico grounds. NMCD states

the payments made by Corrections Department and other governmental employees who then rent

or buy the homes goes to the non-profit corporation to pay off the debt. NMCD states since the

land remains state property, the individuals who buy the homes will not earn large amounts of

equity that some homeowners earn who own their homes and land. NMCD states the homeown-

ers must sell the homes back to the non-profit corporation if they decide to sell.

NMCD reports the New Mexico Mortgage Finance Authority will provide an entity to construct

or build the homes on the Penitentiary of New Mexico grounds, if the feasibility study supports

the housing project. Because the non-profit corporation does not have to pay for the land, and

because the New Mexico Mortgage Finance Authority and its builder realize significant econo-

mies of scale, the Corrections Department would be able to offer housing to its employees and

other governmental employees at prices significantly lower than market.

NMCD reports it supports the proposed legislation because it may ultimately provide affordable

housing to its staff working at the Penitentiary of New Mexico. NMCD reports most department

staff who work at the Penitentiary of New Mexico can not afford to live or own a home in Santa

Fe. NMCD states this makes it much more difficult to recruit and keep qualified staff.

ADMINISTRATIVE IMPLICATIONS

NMCD states there may be minimal administrative impact on certain department staff who serve

on the non-profit corporation that develops and manages the housing. NMCD states the depart-

ment should be able to absorb this administrative impact.

RLP/yr