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F I S C A L I M P A C T R E P O R T

SPONSOR Rep. Varela

ORIGINAL DATE

LAST UPDATED

1/22/07

HB 26

SHORT TITLE

Making an Appropriation for Community Develop-

ment Equity Capital

SB

ANALYST Wayne Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$350.0

Recurring

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From:

Department of Finance and Administration. (DFA)

SUMMARY

Synopsis of Bill

House Bill 26 makes an appropriation of $350,000 from the general fund to the Department of

Finance and Administration for expenditure in FY08. The appropriation is for the purpose of

providing community development equity capital for underserved sectors and communities

through a social and financial bottom-line equity organization that will invest in and provide ca-

pacity building services to small businesses throughout the state, focusing on rural communities.

FISCAL IMPLICATIONS

$350,000 in general fund monies would be appropriated to DFA in FY08 to provide community

development equity capital through an organization that would invest in and provide capacity

building to small businesses throughout the state, focusing particular attention on rural areas.

Any unexpended or unencumbered balance at the end of FY08 would revert to the general fund.

House Bill 26 – Page

2

SIGNIFICANT ISSUES

The Department of Finance and Administration reports that New Mexico Community Capital, or

NMCC, was incorporated in 2004 as three separate entities, including a not-for-profit 501(c)(3)

entity. The funding pursuant to HB-26 will be used by the not-for-profit entity. State funds will

not be used by the for-profit entity nor will they be used to fund an investment portfolio.

NMCC provides capacity building services to assist small local business grow smartly, upgrade

or install updated technology, and become “lender-ready" for financing by the private banking

industry. NMCC also connects seasoned business owners who have years of experience with

smaller, less experienced businesses in order to mentor the small business as it grows and ex-

pands.

HB-26 funds will provide funds to enable NMCC to hire more staff to go out in the field and

work one-on-one with local businesses as well as provide workshops around the state. This ap-

propriation will enable NMCC to expand their existing program and serve more small businesses

throughout the State.

NMCC received a legislative appropriation in 2006 of $150,000. A balance of approximately

$32,500 remains to be disbursed but will be spent prior to the end of FY07 as required by the

legislation. The DFA contract administrator states that NMCC is in good standing and has suc-

cessfully met its contract obligations during the past year.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

$350,000 would not be available to provide community development equity to small business

throughout the state and fewer small businesses around the state will benefit from the knowledge

and expertise of NMCC due to fiscal restraints in its capacity building program.

WEP/mt