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AN ACT
RELATING TO TAXATION; INCREASING THE PERCENTAGE OF THE
SEVERANCE TAX PERMANENT FUND ALLOWED TO BE INVESTED IN NEW
MEXICO FILM PRIVATE EQUITY FUNDS; RECONCILING MULTIPLE
AMENDMENTS TO THE SAME SECTION OF LAW IN LAWS 2005.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 7-27-5.26 NMSA 1978 (being Laws 2000
(2nd S.S.), Chapter 6, Section 2, as amended by Laws 2005,
Chapter 101, Section 2 and by Laws 2005, Chapter 106, Section
1) is amended to read:
"7-27-5.26. INVESTMENT IN FILMS TO BE PRODUCED IN NEW
MEXICO.--
A. No more than six percent of the market value of
the severance tax permanent fund may be invested in New
Mexico film private equity funds or a New Mexico film project
under this section.
B. If an investment is made under this section,
not more than fifteen million dollars ($15,000,000) of the
amount authorized for investment pursuant to Subsection A of
this section shall be invested in any one New Mexico film
private equity fund or any one New Mexico film project.
C. The state investment officer shall make
investments pursuant to this section only upon approval of
the state investment council after a review by the private
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equity investment advisory committee and the New Mexico film
division of the economic development department. The state
investment officer may make debt or equity investments
pursuant to this section only in New Mexico film projects or
New Mexico film private equity funds that invest only in film
projects that:
(1) are filmed wholly or substantially in
New Mexico;
(2) have shown to the satisfaction of the
New Mexico film division that a distribution contract is in
place with a reputable distribution company;
(3) have agreed that, while filming in New
Mexico, a majority of the production crew will be New Mexico
residents;
(4) have posted a completion bond that has
been approved by the New Mexico film division; provided that
a completion bond shall not be required if the fund or
project is guaranteed pursuant to Paragraph (5) of this
subsection; and
(5) have obtained a full, unconditional and
irrevocable guarantee of repayment of the invested amount in
favor of the severance tax permanent fund:
(a) from an entity that has a credit
rating of not less than Baa or BBB by a national rating
agency;
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(b) from a substantial subsidiary of an
entity that has a credit rating of not less than Baa or BBB
by a national rating agency;
(c) by providing a full, unconditional
and irrevocable letter of credit from a United States
incorporated bank with a credit rating of not less than A by
a national rating agency; or
(d) from a substantial and solvent
entity as determined by the state investment council in
accordance with its standards and practices; or
(6) if not guaranteed pursuant to Paragraph
(5) of this subsection, have obtained no less than one-third
of the estimated total production costs from other sources as
approved by the state investment officer.
D. The state investment officer may loan at a
market rate of interest, with respect to an eligible New
Mexico film project, up to eighty percent of an expected and
estimated film production tax credit available to a film
production company pursuant to the provisions of Section 7-
2F-1 NMSA 1978; provided that the film production company
agrees to name the state investment officer as its agent for
the purpose of filing an application for the film production
tax credit to which the company is entitled if the company
does not apply for the film production tax credit. The New
Mexico film division of the economic development department
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shall determine the estimated amount of a film production tax
credit. The state investment council shall establish
guidelines for the state investment officer's initiation of a
loan and the terms of the loan.
E. As used in this section:
(1) "film project" means a single media or
multimedia program, including advertising messages, fixed on
film, videotape, computer disc, laser disc or other similar
delivery medium from which the program can be viewed or
reproduced and that is intended to be exhibited in theaters;
licensed for exhibition by individual television stations,
groups of stations, networks, cable television stations or
other means; or licensed for the home viewing market; and
(2) "New Mexico film private equity fund"
means any limited partnership, limited liability company or
corporation organized and operating in the United States
that:
(a) has as its primary business
activity the investment of funds in return for equity in film
projects produced wholly or partly in New Mexico;
(b) holds out the prospects for capital
appreciation from such investments; and
(c) accepts investments only from
accredited investors as that term is defined in Section 2 of
the federal Securities Act of 1933, as amended, and rules
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promulgated pursuant to that section."