SENATE FINANCE COMMITTEE SUBSTITUTE FOR
SENATE BILL 1130
48th legislature - STATE OF NEW MEXICO - first session, 2007
AN ACT
RELATING TO ECONOMIC DEVELOPMENT; PROVIDING THAT, UNDER CERTAIN CIRCUMSTANCES, A PORTION OF THE GENERAL FUND OPERATING RESERVE AND CERTAIN GROSS RECEIPTS TAX DISTRIBUTIONS MAY BE USED AS A CONTINGENT LIABILITY FOR LOAN GUARANTEES PURSUANT TO THE STATEWIDE ECONOMIC DEVELOPMENT FINANCE ACT; SPECIFICALLY APPROVING A PROJECT FOR LOAN GUARANTEES PURSUANT TO SUBSECTION D OF ARTICLE 9, SECTION 14 OF THE CONSTITUTION OF NEW MEXICO AND THE STATEWIDE ECONOMIC DEVELOPMENT FINANCE ACT; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 6-25-6 NMSA 1978 (being Laws 2003, Chapter 349, Section 6, as amended) is amended to read:
"6-25-6. NEW MEXICO FINANCE AUTHORITY--ADDITIONAL POWERS AND DUTIES.--
A. To implement a program to assist eligible entities in financing projects, the authority has the powers specified in this section.
B. Projects receiving financing assistance with money in the fund or loan guarantees pursuant to Section 6-25-6.2 NMSA 1978 shall first be approved by law. To protect public money in the fund or other public resources, rules of the authority relating to state projects shall include provisions to ensure achievement of the economic development goals of the state project and shall describe the means of recovering public money or other public resources if an eligible entity defaults on its obligations to the authority.
C. Standard projects shall be approved by the authority pursuant to rules approved by the New Mexico finance authority oversight committee.
D. The authority may:
(1) issue project revenue bonds on behalf of an eligible entity, payable from the revenues of a project and other revenues authorized as security for the bonds, to finance a project on behalf of an eligible entity;
(2) make loans from the fund for projects to eligible entities that establish one or more dedicated sources of revenue to repay the loan from the authority;
(3) enter into loan participation agreements from the fund for projects, whether in the form of an interest rate buy-down, the purchase of loans or portions of loans originated and underwritten by third-party lenders or other similar arrangements;
(4) provide loan guarantees from the fund or pursuant to Section 6-25-6.2 NMSA 1978 for projects;
(5) make, execute and enforce all contracts necessary, convenient or desirable for purposes of the authority or pertaining to project revenue bonds, economic development revolving fund bonds, loans, loan participations or loan guarantees and the Statewide Economic Development Finance Act and pay the reasonable value of services rendered to the authority pursuant to the contracts;
(6) purchase and hold loans and loan participations in the fund at prices and in a manner determined by the authority;
(7) sell loans and loan participations acquired or held by the authority in the fund at prices and in a manner determined by the authority;
(8) prescribe the form of application or procedure required of an eligible entity to apply for financing assistance;
(9) fix the terms and conditions of the financing assistance, including the priority of lien and type of collateral or other security, and enter into agreements with eligible entities with respect to financing assistance;
(10) fix, revise from time to time, charge and collect fees and other charges in connection with the issuance of bonds; the making, purchase, participation in or guarantee of loans; and the review of proposed financing assistance to an eligible entity, whether or not the financing assistance is provided;
(11) employ architects, engineers, accountants and attorneys; construction and financial experts; and such other advisors, consultants and agents as may be necessary in its judgment, and fix and pay their compensation;
(12) to the extent allowed under its contracts with the holders of bonds of the authority, consent to modification of the rate of interest, time and payment of installments of principal or interest, security or any other term of financing assistance;
(13) consider the ability of the eligible entity to secure financing for a project from other sources and the costs of that financing;
(14) acquire fee simple, leasehold, mortgagor's or mortgagee's interests in real or personal property and sell, mortgage, convey, lease or assign that property for authority purposes; and
(15) in the event of default by an eligible entity, enforce its rights by suit, mandamus and all other remedies available under law.
E. The authority shall adopt rules subject to approval of the New Mexico finance authority oversight committee to:
(1) establish procedures for applying for financing assistance;
(2) establish credit qualifications for eligible entities and establish terms and conditions for financing assistance;
(3) establish economic development goals for projects in consultation with the department;
(4) establish methods for determining quantifiable benefits;
(5) provide safeguards to protect public money and other public resources provided for a state project;
(6) establish procedures by which the authority requests approval by law for projects receiving financing assistance with money in the fund; and
(7) establish fees to pay the costs of evaluating, originating and administering financing assistance.
F. The authority shall coordinate with the department to provide staffing and other assistance to the department in carrying out the department's responsibilities and activities pursuant to the Statewide Economic Development Finance Act."
Section 2. A new section of the Statewide Economic Development Finance Act, Section 6-25-6.2 NMSA 1978, is enacted to read:
"6-25-6.2. [NEW MATERIAL] LOAN GUARANTEES--CONTINGENT LIABILITY OF GENERAL FUND OPERATING RESERVE.--
A. A loan guarantee, secured by a contingent appropriation from the general fund operating reserve and gross receipts tax distributions, may be provided by the authority for a project pursuant to the following criteria:
(1) the project, the amount of the loan guarantee and the amount of contingent liability of the general fund operating reserve shall be specifically approved and authorized by law;
(2) a special account shall be created in the fund into which a distribution shall be made that is equal to the amount of gross receipts tax revenue and compensating tax revenue attributable to the project and that would otherwise be distributed to the general fund, provided that no additional distribution shall be made:
(a) when the balance of the special account plus the total amount of any loan guarantee payments made equals the total amount of the loan guarantee; or
(b) upon payment of the total debt service due on the project revenue bonds;
(3) interest and other earnings of the special account shall be credited to the special account;
(4) the amount of the contingent liability of the general fund operating reserve shall initially be equal to the amount of the loan guarantee but shall be decreased by the amount of tax revenue distributed to the special account;
(5) the loan guarantee shall consist of the contingent liability of the general fund operating reserve and the balance of the special account;
(6) the loan guarantee shall guarantee payment to holders of project revenue bonds issued by the authority;
(7) the legislative 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;
(8) any payments from the loan guarantee shall be recouped from future project revenues in excess of debt service due on the project revenue bonds, provided that loan guarantees recouped shall be deposited into the general fund operating reserve and the special account in the same proportion as the loan guarantee payments were made;
(9) pursuant to Subsection D of Article 9, Section 14 of the constitution of New Mexico, the loan guarantee shall apply only to those bonds issued to provide land, buildings or infrastructure for the project;
(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 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) upon payment of the debt service of the project revenue bonds, any remaining amount in the special account shall be transferred to the general fund;
(13) no loan guarantee shall be entered into unless it has been approved by the state board of finance and been reviewed by the legislative finance committee and the New Mexico finance authority oversight committee; and
(14) the total amount of loan guarantees outstanding at any one time pursuant to this section shall not exceed thirty million dollars ($30,000,000).
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 general fund operating reserve and the special account 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 project revenue bonds that are secured by the loan guarantee that any law authorizing the distribution of tax revenues shall not be amended or repealed or otherwise modified so as to impair the bonds.
C. After adoption of a resolution authorizing a loan guarantee pursuant to this section, the authority shall publish notice of the adoption of the resolution once in a newspaper of general statewide circulation. After the passage of thirty days from the publication, any action attacking the validity of the proceedings taken by the authority preliminary to and in the authorization and issuance of the loan guarantee described in the notice is perpetually barred."
Section 3. Section 6-4-2.1 NMSA 1978 (being Laws 1987, Chapter 184, Section 1) is amended to read:
"6-4-2.1. GENERAL FUND OPERATING RESERVE CREATED--AUTHORIZING EXPENDITURES.--
A. There is hereby created within the general fund the "general fund operating reserve". [Notwithstanding any other provision of law to the contrary, there shall be deposited to the general fund operating reserve cash balances in the fund existing pursuant to Laws 1966, Chapter 66, Section 16; Laws 1968, Chapter 71, Section 13; Laws 1970, Chapter 89, Section 4; Laws 1971, Chapter 327, Section 6; Laws 1972, Chapter 98, Section 6; Laws 1973, Chapter 403, Section 6; Laws 1974 (S.S.), Chapter 3, Section 6; Laws 1975 (S.S.), Chapter 17, Section 6; Laws 1976, Chapter 58, Section 7; Laws 1979, Chapter 404, Section 7; Laws 1981, Chapter 38, Section 7; Laws 1983, Chapter 46, Section 8; Laws 1984 (S.S.), Chapter 7, Section 7; and Laws 1986, Chapter 116, Section 1.]
B. The general fund operating reserve may be expended only upon specific authorization by the legislature in an amount authorized by the legislature and only:
(1) in the event general fund revenues and balances, including all other transfers to the general fund authorized by law, are insufficient to meet the level of
appropriations authorized; or
(2) pursuant to a contingent appropriation as a loan guarantee provided pursuant to Subsection D of Article 9, Section 14 of the constitution of New Mexico and Section 6-25-6.2 NMSA 1978."
Section 4. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION--ECONOMIC DEVELOPMENT REVOLVING FUND--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. The distribution shall be made:
A. to each special account of the economic development revolving fund created pursuant to Section 6-25-6.2 NMSA 1978 in an amount equal to the sum of an amount equal to five percent of the taxable gross receipts attributable to the sale of services or property to be used in the project for which the special account was created plus an amount equal to eighty percent of the compensating tax attributable to that project and paid by the owner or operator of the project or an agent or contractor of the owner or operator, as determined by the department after consultation with the economic development department; provided that no additional distribution shall be made to a special account when the New Mexico finance authority certifies to the secretary that:
(1) the balance of the special account plus the amount of any loan guarantee payments made from the account equals the total amount of the loan guarantee; or
(2) the total debt service due on the project revenue bonds subject to the loan guarantee has been paid;
B. after the required distribution pursuant to Section 7-1-6.4 NMSA 1978;
C. 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
D. prior to any other distribution of net receipts attributable to the gross receipts tax."
Section 5. TEMPORARY PROVISION--PROJECT APPROVAL--LOAN GUARANTEE AUTHORIZATION--CONTINGENT APPROPRIATION.--
A. Pursuant to the provisions of Subsection D of Article 9, Section 14 of the constitution of New Mexico and the Statewide Economic Development Finance Act, the state grants its approval and authorizes loan guarantees for a project to be developed by the New Mexico Tilapia corporation for a tilapia aquaculture and hydroponic vegetable production project in Hidalgo county.
B. Pursuant to Section 6-25-6.2 NMSA 1978, up to thirty million dollars ($30,000,000) is appropriated from the general fund operating reserve to the New Mexico finance authority as a loan guarantee for the purpose of paying the holders of project revenue bonds issued to pay for land, buildings or infrastructure for the project approved in Subsection A of this section; provided that the appropriation is contingent upon the order of a court or upon certification by the New Mexico finance authority that revenue from the project is insufficient to make the bond payments and that, without the bond payments, the project would be in default on the project revenue bonds.
C. The approval and authorization granted by this section are contingent upon the filing by the New Mexico Tilapia corporation or its agent of a letter of credit or other security satisfactory to the New Mexico finance authority in the amount of ten million dollars ($10,000,000) to guarantee the repayment of any unrecouped loan guarantee payments made from the general fund operating reserve or from the special account created for the project in the economic development revolving fund to holders of project revenue bonds.
D. If, on July 1, 2010, project revenue bonds have not been issued for the project approved in Subsection A of this section, the approval and authorization granted by this section are void.
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