SENATE BILL 1119
48th legislature - STATE OF NEW MEXICO - first session, 2007
INTRODUCED BY
Michael S. Sanchez
AN ACT
RELATING TO ECONOMIC DEVELOPMENT; AMENDING THE STATEWIDE ECONOMIC DEVELOPMENT FINANCE ACT TO PROVIDE THAT, UNDER CERTAIN CIRCUMSTANCES, A GROSS RECEIPTS TAX DISTRIBUTION MAY BE PLEDGED FOR ECONOMIC DEVELOPMENT REVOLVING FUND BONDS ISSUED FOR THE PURPOSE OF LOAN GUARANTEES; PROVIDING THAT THE SEVERANCE TAX PERMANENT FUND MAY BE INVESTED IN THE BONDS; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 6-25-18 NMSA 1978 (being Laws 2005, Chapter 103, Section 15) is amended to read:
"6-25-18. ECONOMIC DEVELOPMENT REVOLVING FUND BONDS--AUTHORIZATION FOR ISSUANCE--TERMS AND CONDITIONS.--
A. Economic development revolving fund bonds of the authority shall be authorized by resolution of the authority and may be issued in one or more series. The economic development revolving fund bonds shall bear the dates, be in the form, be issued in the denominations, have terms and maturities, bear or accrete interest at rates and be payable and evidenced in the manner and times as the resolution of the authority or the trust agreement securing the economic development revolving fund bonds provides. The economic development revolving fund bonds may be redeemed with or without premiums prior to maturity, may be ranked or assigned priority status and may contain provisions not inconsistent with this subsection.
B. The economic development revolving fund bonds issued by the authority may be sold at any time at private or public sale at prices agreed upon by the authority.
C. Except for economic development revolving fund bonds issued pursuant to Section 6-25-18.1 NMSA 1978 for loan guarantees, economic development revolving fund bonds may be issued pursuant to the Statewide Economic Development Finance Act without obtaining the consent of any agency of the state and without any other proceeding or condition other than the proceedings or conditions specified in that act.
D. The economic development revolving fund bonds issued by the authority are negotiable instruments for all purposes of the Uniform Commercial Code.
E. Any resolution for the issuance of economic development revolving fund bonds shall provide that each economic development revolving fund bond authorized shall recite that it is issued by the authority. The recital shall clearly state that the economic development revolving fund bonds are in full compliance with all of the provisions of the Statewide Economic Development Finance Act."
Section 2. A new section of the Statewide Economic Development Finance Act, Section 6-25-18.1 NMSA 1978, is enacted to read:
"6-25-18.1. [NEW MATERIAL] ECONOMIC DEVELOPMENT REVOLVING FUND BONDS--GROSS RECEIPTS TAX DISTRIBUTION.--
A. Economic development revolving fund bonds may be issued and secured by a distribution of gross receipts tax revenue pursuant to the following criteria:
(1) the bonds shall be sold exclusively to the state investment council pursuant to Section 7-27-5.27 NMSA 1978;
(2) the proceeds of the bonds shall be deposited into a special account within the fund and used as a loan guarantee to guarantee payment to holders of project revenue bonds issued by the authority for a specific project;
(3) interest and other earnings of the special account shall be credited to the special account and used to pay debt service on the economic development revolving fund bonds;
(4) the distribution of gross receipts tax revenue shall be made to the special account in the fund and be in an amount necessary to pay the remaining debt service on the economic development revolving fund bonds after taking into account the debt service payable from the earnings on the investment of the special account;
(5) the project, the amount of economic development revolving fund bonds to be issued and the contingent liability of the bond proceeds as a loan guarantee shall be specifically approved and authorized by law;
(6) the authorization shall provide that, pursuant to a court order or certification of the authority, the amount of the guarantee or so much thereof as necessary to avoid a default in project revenue bond payments shall be paid to the holders of the project revenue bonds;
(7) the principal paid to the holders of the economic development revolving fund bonds and the corresponding interest shall be reduced by any unrecouped amounts paid to the holders of the project revenue bonds;
(8) pursuant to Subsection D of Article 9, Section 14 of the constitution of New Mexico, the loan guarantee shall apply only to those project revenue bonds issued to provide land, buildings or infrastructure for the project;
(9) the economic development revolving fund bonds shall be issued under terms that provide that no principal shall be payable to the bond holders until the term of the loan guarantee has expired;
(10) the loan guarantee shall be for a term contemporaneous with the project revenue bonds to which it applies;
(11) no loan guarantee shall be provided and no economic development revolving fund bonds shall be issued unless the authority receives a mortgage on the project and project property, second only to the rights of holders of the project revenue bonds;
(12) no loan guarantee shall be entered into and no economic development revolving fund bonds shall be issued unless they have been approved by the state board of finance and been reviewed by the legislative finance committee and the New Mexico finance authority oversight committee;
(13) upon the defeasement of the economic development revolving fund bonds, any remaining amount in the special account for those bonds shall be transferred to the general fund; and
(14) the total amount of economic development revolving fund bonds outstanding at any one time pursuant to this section shall not exceed one hundred million dollars ($100,000,000).
B. The state pledges to the holders of the project revenue bonds that are secured by the loan guarantee that the authorized amount of the loan guarantee shall be a contingent liability of the fund until the bonds are paid and shall not be expended or dedicated to another purpose in a manner that will impair the rights or remedies of the bond holders. The state further pledges to the holders of the economic development revolving fund bonds issued pursuant to this section that the earnings credited to the bond proceeds shall be used solely for paying debt service and that any law authorizing the distribution of taxes or other revenues for the purpose of paying debt service shall not be amended or repealed or otherwise modified so as to impair the bonds."
Section 3. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION--ECONOMIC DEVELOPMENT REVOLVING FUND BONDS--GROSS RECEIPTS TAX.--A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the economic development revolving fund from the net receipts attributable to the gross receipts tax imposed by the Gross Receipts and Compensating Tax Act in an amount necessary to make the required bond debt service payments pursuant to Section 6-25-18.1 NMSA 1978 as determined by the New Mexico finance authority. The distribution shall be made:
A. after the required distribution pursuant to Section 7-1-6.4 NMSA 1978;
B. contemporaneously with other distributions of net receipts attributable to the gross receipts tax for payment of debt service on outstanding bonds or to a fund dedicated for that purpose; and
C. prior to any other distribution of net receipts attributable to the gross receipts tax."
Section 4. Section 7-27-5 NMSA 1978 (being Laws 1983, Chapter 306, Section 7, as amended) is amended to read:
"7-27-5. INVESTMENT OF SEVERANCE TAX PERMANENT FUND.--The severance tax permanent fund shall be invested in separate differential rate and market rate investment classes. "Differential rate investments" are permitted in Sections
7-27-5.3 through 7-27-5.5, 7-27-5.13 through 7-27-5.17, 7-27-5.22, [and] 7-27-5.24, [through] 7-27-5.26 and 7-27-5.27 NMSA 1978 and are intended to stimulate the economy of New Mexico and to provide income to the severance tax permanent fund. "Market rate investments" are investments that are not differential rate investments and are intended to provide income to the severance tax permanent fund. All market rate investments and differential rate investments shall be invested in accordance with the Uniform Prudent Investor Act and shall be accounted for in accordance with generally accepted accounting principles."
Section 5. A new section of the Severance Tax Bonding Act, Section 7-27-5.27 NMSA 1978, is enacted to read:
"7-27-5.27. [NEW MATERIAL] SEVERANCE TAX PERMANENT FUND--INVESTMENT IN ECONOMIC DEVELOPMENT REVOLVING FUND BONDS.--Subject to the approval of the council, the severance tax permanent fund may be invested in economic development revolving fund bonds issued by the New Mexico finance authority for loan guarantees pursuant to Section 6-25-18.1 NMSA 1978. The amount invested shall not exceed one hundred million dollars ($100,000,000)."
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