pg_0001

SB 662

Page 1

AN ACT

RELATING TO INVESTMENT OF THE SEVERANCE TAX PERMANENT FUND;

PERMITTING INVESTMENT IN PRIVATE EQUITY FUNDS WITH TRIBAL

INVESTORS.

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.

pg_0002

SB 662

Page 2

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;

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

pg_0003

SB 662

Page 3

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, or federally recognized Indian

tribes, nations and pueblos with at least five million

dollars ($5,000,000) in overall investment assets.

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

pg_0004

SB 662

Page 4

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 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

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

pg_0005

SB 662

Page 5

three-fourths 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 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 three-fourths percent of the market value of the

severance tax permanent fund. If the invested capital in the

small business investment corporation equals less than

three-fourths percent of the market value of the severance

tax permanent fund, further commitments shall be made until

the invested capital is equal to three-fourths 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

pg_0006

SB 662

Page 6

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."

Section 2. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.