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AN ACT

RELATING TO ECONOMIC DEVELOPMENT; INCREASING THE PERCENTAGE OF

THE SEVERANCE TAX PERMANENT FUND INVESTED IN THE SMALL

BUSINESS INVESTMENT CORPORATION; AMENDING A SECTION OF THE

NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-27-5.15 NMSA 1978 (being Laws

1990, Chapter 126, Section 5, as amended) is amended to read:

"7-27-5.15. NEW MEXICO PRIVATE EQUITY FUNDS AND

BUSINESS INVESTMENTS.--

A. No more than six percent of the market value of

the severance tax permanent fund may be invested in New Mexico

private equity funds or New Mexico businesses under this

section.

B. In making investments pursuant to Subsection A

of this section, the council shall make investments in New

Mexico private equity funds or New Mexico businesses whose

investments or enterprises enhance the economic development

objectives of the state.

C. The state investment officer shall make

investments pursuant to Subsection A of this section only upon

approval of the council, upon review of the recommendation of

the private equity investment advisory committee and within

guidelines and policies established by the council.

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D. As used in this section:

(1) "New Mexico business" means, in the case

of a corporation or limited liability company, a business with

its principal office and a majority of its full-time employees

located in New Mexico or, in the case of a limited

partnership, a business with its principal place of business

and eighty percent of its assets located in New Mexico; and

(2) "New Mexico private equity fund" means a

limited partnership, limited liability company or corporation

organized and operating in the United States and maintaining

an office staffed by a full-time investment officer in New

Mexico that:

(a) has as its primary business

activity the investment of funds in return for equity in or

debt of businesses for the purpose of providing capital for

start-up, expansion, product or market development,

recapitalization or similar business purposes;

(b) holds out the prospects for capital

appreciation from such investments;

(c) has at least one full-time manager

with at least three years of professional experience in

assessing the growth prospects of businesses or evaluating

business plans and who has established permanent residency in

the state;

(d) is committed to investing or helps

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secure investing by others, in an amount at least equal to the

total investment made by the state investment officer in that

fund pursuant to this section, in businesses with a principal

place of business in the state and that hold promise for

attracting additional capital from individual or institutional

investors nationwide for businesses in the state; and

(e) accepts investments only from

accredited investors as that term is defined in Section 2 of

the federal Securities Act of 1933, as amended (15 USCA

Section 77(b)), and rules and regulations promulgated pursuant

to that section.

E. The state investment officer is authorized to

make investments in New Mexico businesses to create new job

opportunities and to support new, emerging or expanding

businesses in a manner consistent with the constitution of New

Mexico if:

(1) the investments are made:

(a) in conjunction with cooperative

investment agreements with parties that have demonstrated

abilities and relationships in making investments in new,

emerging or expanding businesses; or

(b) in New Mexico aerospace businesses

that have received an award from the United States government

or one of its agencies or instrumentalities: 1) in an amount,

not less than one hundred million dollars ($100,000,000), that

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is equal to at least ten times the investment from the

severance tax permanent fund; and 2) for the purpose of

stimulating commercial enterprises;

(2) an investment in any one business does

not exceed ten percent of the amount available for investment

pursuant to this section; and

(3) the investments represent no more than

fifty-one percent of the total investment capital in a

business; provided, however, that nothing in this subsection

prohibits the ownership of more than fifty-one percent of the

total investment capital in a New Mexico business if the

additional ownership interest:

(a) is due to foreclosure or other

action by the state investment officer pursuant to agreements

with the business or other investors in that business;

(b) is necessary to protect the

investment; and

(c) does not require an additional

investment of the severance tax permanent fund.

F. The state investment officer shall make a

commitment to the small business investment corporation

pursuant to the Small Business Investment Act to invest one

percent of the market value of the severance tax permanent

fund to create new job opportunities by providing capital for

land, buildings or infrastructure for facilities to support

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new or expanding businesses and to otherwise make investments

to create new job opportunities to support new or expanding

businesses in a manner consistent with the constitution of New

Mexico. On July 1 of each year, the state investment officer

shall determine whether the invested capital in the small

business investment corporation is less than one percent of

the market value of the severance tax permanent fund. If the

invested capital in the small business investment corporation

equals less than one percent of the market value of the

severance tax permanent fund, further commitments shall be

made until the invested capital is equal to one percent of the

market value of the fund.

G. The state investment officer shall report

semiannually on the New Mexico private equity investments made

pursuant to this section. Annually, a report shall be

submitted to the legislature prior to the beginning of each

regular legislative session and a second report no later than

October 1 each year to the legislative finance committee, the

revenue stabilization and tax policy committee and any other

appropriate interim committee. Each report shall provide the

amounts invested in each New Mexico private equity fund, as

well as information about the objectives of the funds, the

companies in which each fund is invested and how each

investment enhances the economic development objectives of the

state. Each report shall provide the amounts invested in each

New Mexico business."

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