SB 511 — INDUSTRIAL REVENUE BOND CHANGES

[NEW MATERIAL ] INDUSTRIAL REVENUE BOND e= a= nl b] 2419 PROJECTS--LOCAL GOVERNMENT POWERS AND RESTRICTIONS.-- ua [l r i 20 A.

A local government may issue industrial revenue .210910.8t -e 4a -t bonds to acquire, whether by construction, purchase, gift or m m 21 e d lease, one or more projects, including a project of a 501(c)(3) r e 22 c e r c 23 corporation, subject to the following limitations:

e a n b 24 (1) a local government may acquire an u [ electricity generation or transmission facility only:

.214961.4 - 5 - SFC/SB 511 (a) with the approval, which shall not be unreasonably withheld, of the board of education of the school district in which the project is situated;

(2) for a localproject governmentor mayprojects acquireunder acommon projectownership onlyor ifcontrol thethat is or are proposed to be situated in more than one county, each county assessor, each local government and each other entity authorized to levy an ad valorem tax on property on which the project isor eprojects eis 17or are proposed to be situated andmay thebe personprovided proposingwith thenotice project e e n d 18 agree in writing, within sixty days after the local government, = = l ] 19 by certified mail,mail return receipt requested,requested notifiesor theby aemail lwith rdelivery ireceipt 20confirming countythat assessorthe ofmessage eachwas countydelivered into which the projectrecipient's ise proposed t e a17 temail toserver, befrom situatedone andor eachmore entityof authorizedthe tolocal levygovernments ane ad valorem m m 21 e n d r18 eproposing 22to taxissue onindustrial propertyrevenue onbonds whichof the projectopportunity is= proposed= tol be] situated19 c e r c 23 of the need to commence negotiations among the local egovernment, aeach nlocal ba 24l government,r eachi local20 taxing entity and the person proposing u [ the project,project regarding an t e a t annual amount in lieu of taxes that .210910.8 - 5 - the person will pay,pay or m m 21 e d other consideration that the person will give to the local r e 22 c e r c 23 government and each local taxing entity for the period that the e a n b 24 local government owns and leases the project;

provided that, if u [ a local government, one or more of those local taxing entities .214961.4 - 6 - SFC/SB 511 and the person proposing the project fail to agree in writing as described in this paragraph to that payment or giving of consideration, then each local taxing entity that fails to agree shall forfeit its right to that remuneration;remuneration.

(3)The forstate ashall projectreceive orannual projectspayments underin commonlieu ownershipof ortaxes control that is or areother proposedconsideration to be situated in morethe thanamount oneof localfive government,percent eachof local government and each entity authorized to levy an ad valorem tax on property on which the projecttotal oramount projectsof ispayments or are proposed to be situated may be provided with notice as provided in Paragraphlieu (2) of thistaxes subsection,paid andto eachlocal ofgovernments theand partiesother shalllocal conducttaxing jointentities eand efive 17percent negotiations upon receipt of the notificationvalue and may agree in e e n d 18 writing to payments in lieu of taxes or other consideration = = l ] 19 applicable to allany projectsproject for which notice is provided a l r i 20 pursuant to this paragraph,paragraph. subject to the requirements of t e a t Paragraph (2) of this subsection.

The state shall receive m m 21 e d r e 22 annual payments in lieu of taxes in the amount of five percent c e r c 23 of the total amount of payments in lieu of taxes paid to local e a n b 24 governments and other local taxing entities and five percent of u [ the value of other consideration applicable to any project for .210910.8 - 6 - which notice is provided pursuant to this paragraph.

(4)(3) a municipality may acquire a project only if:

e e 17 (a) the project is situated within a e e n d 18 perimeter fifteen miles past the municipality's boundaries, as = = l ] 19 those boundaries are shown in the records of the county clerk a l r i 20 of the county in which the municipality is located;

andt e a t (b) eachfor a project that is situated m m 21 e d outside the boundaries of the municipality proposing to issue r e 22 c e r c 23 industrial revenue bonds, as those boundaries are shown in the e a n b 24 records of the county clerk, the municipality provides notice, u [ by certified mail return receipt requested or by email with .214961.4 - 7 - SFC/SB 511 delivery receipt confirming that the message was delivered to the recipient's email server, to the county in which the project is proposed to be situated certifiesat thatleast thesixty projectdays compliesprior withto adoption of an ordinance authorizing the county'sissuance ordinances;of industrial revenue bonds.

(5)The acounty classshall Bhave orthe anopportunity Hto classsubmit countyto maythe acquiremunicipality aand projectthe onlyperson ifproposing the project isa situatedproposal entirelyfor withinthe person proposing the eproject eto 17make countypayments andin notlieu situatedof withintaxes theor boundariespay ofother aconsideration eto ethe ncounty, dbut 18such municipality,payments asin thoselieu boundariesof aretaxes shownor inother theconsideration recordsshall ofnot =be =required lunless ]agreed 19to by the countymunicipality clerkand ofthe person proposing the county;proposed project;

aand l(c) reach i 20 (6) a class A county within awhich population of five t e a t hundred thousand or more according to the mostproject recentis federalsituated mcertifies mthat 21 e d r e 22 decennial census may acquire a project only if the project iscomplies cwith e r c 23 situated entirely within the county;county's ordinances;

and(4) e a nclass bB 24or (7)an aH class A county with a population of less u [ than five hundred thousand according to the most recent federal .210910.8 - 7 - decennial census may acquire a project only if the project is situated entirely within the countye and,e if17 thecounty projectand isnot situated within the boundaries of a municipalitye e n d 18 municipality, as suchthose boundaries are shown in the records of the= county= clerkl of] the19 county, only if the municipalitycounty certifiesclerk thatof the projectcounty; complies with the municipality's ordinances.

B.a l r i 20 (5) a class A county with a population of five t e a t hundred thousand or more according to the most recent federal m m 21 e d decennial census may acquire a project only if the project is r e 22 c e r c 23 situated entirely within the county;

Aand locale governmenta mayn lease,b sell24 or(6) otherwisea disposeclass ofA county with a project,population includingof less u [ than five hundred thousand according to the most recent federal .214961.4 - 8 - SFC/SB 511 decennial census may acquire a project only if the project is situated entirely within the county and, if the project is situated within the boundaries of a 501(c)(3)municipality corporation,as onthose termsboundaries andare conditionsshown not in conflictthe withrecords of the Industrialcounty Revenueclerk Bondof Act.the county, only if:

(a) the county provides notice, by certified mail return receipt requested or by email with delivery receipt confirming that the message was delivered to the recipient's email server, to the municipality of its proposal to issue industrial revenue bonds at least sixty days prior to the adoption of an ordinance authorizing the issuance of industrial revenue bonds;

(b) the municipality shall have the opportunity to submit to the county and the person proposing the project a proposal that payments in lieu of taxes or other consideration be made to the municipality during the period e e 17 that the county owns or leases the project, but payments in e e n d 18 lieu of taxes or other consideration shall not be required = = l ] 19 unless agreed to by the county and the person proposing the a l r i 20 project;

and t e a t (c) the municipality certifies that the m m 21 e d project complies with the municipality's ordinances.

r e 22 c e r c 23 B.

A local government may lease, sell or otherwise e a n b 24 dispose of a project, including a project of a 501(c)(3) u [ corporation, on terms and conditions not in conflict with the .214961.4 - 9 - SFC/SB 511 Industrial Revenue Bond Act.

As used in this section, "refinance" means e e 17 issuing bonds and using all or substantially all of the e e n d 18 proceeds from that issuance to liquidate the obligations = = l ] 19 incurred in financing or aiding in the finance of a project.

a l r i 20 F.

A municipality that issues industrial revenue t e a t bonds shall timely notify the board of county commissioners and m m 21 e d r e 22 the county assessor of each county in which the municipality is c e r c 23 located of the bonds' maturity, expiration or replacement by e a n b 24 refunding bonds.

u [ G.

A county that issues industrial revenue bonds .210910.8e -e 817 - shall timely notify each entity that levies a tax on property e e n d 18 in the county of the bonds' maturity, expiration or replacement = = l ] 19 by refunding bonds." a l r i 20 SECTION 5.

A new Section 5-20-5 NMSA 1978 is enacted to t e a t read:

m m 21 e d "5-20-5.

[NEW MATERIAL ] APPROVAL NOT REQUIRED.--Except as r e 22 c e r c 23 provided in the Industrial Revenue Bond Act, the notice to, e a n b 24 consent of or approval by a governmental body, public officer u [ or voters is not required as a condition of the sale or .214961.4 - 10 - SFC/SB 511 issuance of industrial revenue bonds or the making of a mortgage under that act." SECTION 6.

A local government that issues industrial revenue bonds shall issue them and interest coupons, if any, e e 17 associated with the bonds not as a general obligation of the e e n d 18 local government, nor as an indebtedness of the local = = l ] 19 government within the meaning of any state constitutional or a l r i 20 statutory provision, nor as constituting or giving rise to a t e a t pecuniary liability of the local government or a charge against m m 21 e d r e 22 its general credit or taxing powers, but, rather, as payable c e r c 23 solely out of the revenue derived from the projects for which e a n b 24 they are issued.

The local government shall cause to have u [ plainly stated on the face of each industrial revenue bond it .210910.8e -e 917 - issues that the bond:limitations required in this subsection.

(1)e ise notn issuedd as:18 B.

(a)Subject to the limitations of the Industrial = = l ] 19 Revenue Bond Act, and as provided by the ordinance and a generall obligationr i 20 proceeding under which the issuance of the bonds is authorized, t e a t a local government;government may:

orm (b)m an21 indebtednesse ofd the(1) localhave governmentindustrial withinrevenue thebonds meaningexecuted ofand r e 22 c e r c 23 delivered at any statetime constitutionaland sold at public or statutoryprivate provision;sale;

and (2)e doesa notn constituteb or24 give(2) riseissue to a pecuniary liability of the localbonds: government or a charge against its general credit or taxing powers.

B.u [ (a) in any form and denomination;

Subject.214961.4 to- the11 limitations- ofSFC/SB the511 Industrial(b) Revenuein Bondany Act,tenor; and as provided by the ordinance and proceeding under which the issuance of the bonds is authorized, a local government may:

(1)(c) havein industrialregistered revenueor bondsbearer executedform andas deliveredto atprincipal any time and sold at public or privateinterest; sale;

(d) as payable in any installment and eat eany 17time (2)or issuetimes equal to or less than thirty years from the bonds:issuance date;

e(e) eas npayable dat 18 (a) in any formplace; and denomination;

=(f) =as lbearing ]interest 19at (b) in any tenor;rate;

a l r i 20 (c) in registered or bearer form as to t e a t principal or interest;

m m 21 e d r e 22 (d) as payable in any installment and at c e r c 23 any time or times equal to or less than thirty years from the e a n b 24 issuance date;

u [ (e) as payable at any place;

.210910.8 - 10 - (f) as bearing interest at any rate;

e e 17 D.

A local government that issues industrial e e n d 18 revenue bonds shall ensure that the bonds and interest coupons, = = l ] 19 if any, associated with the bonds are construed to be a l r i 20 negotiable." t e a t SECTION 7.

A new Section 5-20-7 NMSA 1978 is enacted to m m 21 e d read:

r e 22 c e r c 23 "5-20-7.

[NEW MATERIAL ] SECURITY FOR BONDS.-- e ea 17n b 24 A.

A local government that issues industrial eu e[ n d 18 revenue bonds may have the principal of and interest on them =.214961.4 =- l12 ]- 19SFC/SB 511 secured by a mortgage covering all or part of the project for a l r i 20 which the bonds are issued or secured by a pledge of the lease t e a t of the project.

mThe mprincipal 21of eor dinterest ron ebonds 22issued B.under the authority of the Industrial Revenue Bond Act shall also be secured by a pledge of the revenues out of which the bonds shall be payable.

ExceptB. as otherwise provided in the Industrial c e r c 23 Revenue Bond Act:

eExcept aas notherwise bprovided 24in (1) the ordinanceIndustrial andRevenue proceedingsBond underAct: which u [ a local government authorizes the issuance of industrial .210910.8 - 11 - revenue bonds or a mortgage securing the bonds may contain agreements and provisions customarily contained in instruments securing bonds, including agreements and provisions concerning the:

(1) the ordinance and proceedings under which a local government authorizes the issuance of industrial revenue bonds or a mortgage securing the bonds may contain agreements and provisions customarily contained in instruments securing bonds, including agreements and provisions concerning the:

e e 17 (b) lease of the project;

e e n d 18 (c) maintenance and insurance of the = = l ] 19 project;

a l r i 20 (d) creation and maintenance of special t e a t funds in which to deposit revenue from the project;

and m m 21 e d (e) rights and remedies available in the r e 22 c e r c 23 event of default to the bondholders or, under a mortgage, the e a n b 24 trustee;

u [ (2) in making those agreements and provisions, .214961.4 - 13 - SFC/SB 511 the local government shall not obligate itself except with e e 17 respect to the project and the application of the revenue from e e n d 18 the project, and itits obligation shall notbe incurlimited aas pecuniaryprovided liabilityin orSubsection aA =of =Section l5-20-6 ]NMSA 191978; charge on its general credit or against its taxing powers;

and a l r i 20 (3) in the proceedings under which a local t e a t government authorizes the issuance of industrial revenue bonds m m 21 e d r e 22 or a mortgage securing the bonds, the local government may c e r c 23 provide the procedure and remedies available in the event of e a n b 24 default in payment of the principal of or interest on the bonds u [ or in the performance of an agreement, but it shall not provide .210910.8 - 12 - in the agreement that a breach of the agreement imposes a pecuniary liability on the local government or a charge on its general credit or against its taxing powers." SECTION 8.

[NEW MATERIAL ] PROJECT LEASING OR SALE.-- e e 17 A.

Before a local government leases a project e e n d 18 financed with industrial revenue bonds, it shall determine:

= = l ] 19 (1) the amount necessary each year to pay the a l r i 20 principal of and interest on the bonds issued to finance the t e a t project;

and m m 21 e d (2) the amount necessary each year to pay into r e 22 c e r c 23 reserve funds, if any, the local government establishes in e a n b 24 connection with the retirement of the bonds and, unless the u [ terms of the project lease require the lessee to maintain the .214961.4 - 14 - SFC/SB 511 project and assume the responsibility for having the project e e 17 properly insured, the estimated costs of maintaining the e e n d 18 project in good condition and having it properly insured.

= = l ] 19 B.

A local government shall set forth the a l r i 20 determinations it makes in accordance with Subsection A of this t e a t section in the proceedings under which it issues industrial m m 21 e d r e 22 revenue bonds.

Before issuing those bonds, the local c e r c 23 government shall lease or sell the project to a lessee or e a n b 24 purchaser under an agreement conditioned on the completion of u [ the project and providing for payment to the local government .210910.8 - 13 - of rentals or payments in amounts based on the local government's determinations and sufficient to:

(2) build and maintain the reserve, if any, the local government establishes in connection with the e e 17 retirement of the bonds;

and e e n d 18 (3) if the terms of the project lease do not = = l ] 19 require the lessee to pay the costs of maintaining the project a l r i 20 in good condition and having it properly insured, pay for that t e a t maintenance and insurance." m m 21 e d SECTION 9.

A new Section 5-20-9 NMSA 1978 is enacted to r e 22 c e r c 23 read:

e a n b 24 "5-20-9.

[NEW MATERIAL ] SALE OF BONDS--USE OF u [ PROCEEDS.--A local government shall apply the proceeds from the .214961.4 - 15 - SFC/SB 511 sale of industrial revenue bonds only as follows:

e e 17 A.

to the extent that the proceeds constitute e e n d 18 accrued interest and premiums, then to the payment of the = = l ] 19 principal of and interest on the bonds sold;

a l r i 20 B.

t e a t and m m 21 e d r e 22 C.

to the extent that the proceeds are not needed c e r c 23 for the purpose for which the bonds were issued, then to:

e a n b 24 (1) the payment of the principal and interest u [ on the bonds;

or .210910.8 - 14 - (2) investment in short-term, interest-bearing securities." SECTION 10.

A local government may have industrial revenue e e 17 bonds it has issued refunded through its issuance of refunding e e n d 18 bonds:

= = l ] 19 (1) whose principal amount is equal to, less a l r i 20 than or greater than the principal amount of the original t e a t bonds;

m m 21 e d (2) regardless of whether the original bonds r e 22 c e r c 23 have matured;

and e a n b 24 (3) either by sale, the application of the u [ proceeds of which are applied to the payment of the original .214961.4 - 16 - SFC/SB 511 bonds, or by exchange of the original bonds, but only if the e e 17 holders of the original bonds are not compelled to surrender e e n d 18 their bonds for payment or exchange before the date on which = = l ] 19 they are payable or, if they are called for redemption, before a l r i 20 the date on which, by their terms, they are subject to t e a t redemption.

m m 21 e d r e 22 B.

In issuing industrial revenue refunding bonds, a c e r c 23 local government:

e a n b 24 (1) may:

u [ (a) pay all unpaid accrued and unaccrued .210910.8 - 15 - interest on the original bonds to the normal maturity date of the bonds or to selected prior redemption dates;

and (c) have the bonds secured in accordance e e 17 with Section 5-20-7 NMSA 1978;

and e e n d 18 (2) shall:

= = l ] 19 (a) have the bonds payable solely from a l r i 20 the revenue out of which other industrial revenue bonds are t e a t payable or solely from those amounts derived from an escrow as m m 21 e d provided in this section, including amounts derived from the r e 22 c e r c 23 investment of refunding bond proceeds and other legally e a n b 24 available amounts also as provided in this section or from any u [ combination of those sources;

and .214961.4 - 17 - SFC/SB 511 (b) make the bonds compliant with e e 17 Section 5-20-6 NMSA 1978.

e e n d 18 C.

A local government that issues industrial = = l ] 19 revenue refunding bonds shall immediately apply the proceeds of a l r i 20 the refunding bonds to the retirement of the original bonds or t e a t place the proceeds, which, notwithstanding any other provision m m 21 e d r e 22 of law to the contrary, may be invested in short-term c e r c 23 securities, long-term securities or both, in escrow in a e a n b 24 commercial bank or trust company that possesses and exercises u [ trust powers.

Except as otherwise provided expressly by the .210910.8 - 16 - Industrial Revenue Bond Act, the ordinance and proceedings under which a local government authorizes the issuance of industrial revenue refunding bonds or a mortgage securing the refunding bonds govern the establishment of escrow, if any, connected with the refunding bonds and the investment or reinvestment of escrowed proceeds, if any." e e 17 SECTION 11.

A new Section 5-20-11 NMSA 1978 is enacted to e e n d 18 read:

= = l ] 19 "5-20-11.

[NEW MATERIAL ] CONTRIBUTION BY A LOCAL a l r i 20 GOVERNMENT.-- t e a t A.

Except as allowed by the Local Economic m m 21 e d Development Act, a local government shall not usehave the power to r e 22 c e r c 23 pay out of its general funds or otherwise contribute itspart propertyof e a n b 24 the costs to acquire a project, nor shall it have the power to u [ use any part of landproperty it owns or in which it has an equity .214961.4 - 18 - SFC/SB 511 for the construction of any part of a project unless the local government is fully reimbursed for the value,value eof ethat 17property, as determined by a current appraisal, of the land or unless the e e n d 18 local government leases the landproperty at an annual rental fee of at = = l ] 19 least five percent of the appraised value.

A local government a l r i 20 that acquires a project shall pay the cost of that acquisition t e a t out of the proceeds from the sale of industrial revenue bonds m m 21 e d r e 22 it issues.

This section shall not be construed as prohibiting c e r c 23 a local government from accepting donations of property for use e a n b 24 in any part of a project or money for use in defraying the cost u [ of a project.

.210910.8 - 17 - B.

e e 17 (b) for a project acquired by purchase, e e n d 18 the project's purchase price;

= = l ] 19 (c) the actual cost of the extension of a l r i 20 any utility to the project site and all expenses connected with t e a t the authorization, sale and issuance of the bonds to finance m m 21 e d the acquisition;

and r e 22 c e r c 23 (d) the interest on the bonds for a e a n b 24 reasonable time before construction, during construction and u [ for no more than six months after the completion of .214961.4 - 19 - SFC/SB 511 construction;

and (2) "property" means the land, improvements on e e 17 the land, buildings, improvements to the buildings, machinery, e e n d 18 equipment, operating capital and other types of personal = = l ] 19 property necessary to a project." a l r i 20 SECTION 12.

A new Section 5-20-12 NMSA 1978 is enacted to t e a t read:

m m 21 e d r e 22 "5-20-12.

[NEW MATERIAL ] INDUSTRIAL REVENUE BONDS--LEGAL c e r c 23 INVESTMENTS.--Industrial revenue bonds issued under the e a n b 24 Industrial Revenue Bond Act are legal investments for savings u [ banks and insurance companies organized under the laws of the .210910.8 - 18 - state." SECTION 13.

[NEW MATERIAL ] EXEMPTION FROM TAXATION.-- Industrial revenue bonds issued under the Industrial Revenue e e 17 Bond Act and the income from them, all mortgages or other e e n d 18 security instrument executed as security for the bonds, all = = l ] 19 lease agreements made under that act and revenue derived from a a l r i 20 lease or sale by a local government of a project are exempt t e a t from all taxation by the state and its subdivisions." m m 21 e d r e 22 SECTION 14.

A new Section 5-20-14 NMSA 1978 is enacted to c e r c 23 read:

e a n b 24 "5-20-14.

[NEW MATERIAL ] CONSTRUCTION OF ACT.--The u [ Industrial Revenue Bond Act shall be construed liberally to .214961.4 - 20 - SFC/SB 511 promote its purpose." SECTION 15.

TEMPORARY PROVISION.--The repeal of and e e 17 changes made by this 2019 act to the Industrial Revenue Bond e e n d 18 Act and the County Industrial Revenue Bond Act shall not impair =the =validity lof ] 19 or otherwise apply to outstanding bonds issued under the aIndustrial lRevenue rBond iAct 20or the County Industrial Revenue Bond Act or impair the Countyvalidity Industrialof Revenueor totherwise eapply ato tproceedings Bondof Act.any local government that has adopted resolutions or ordinances with respect to an industrial revenue bond project prior to the effective date of this 2019 act.

m m 21 e d r e 22 SECTION 16.

REPEAL.--Sections 3-32-1 through 3-32-16 and c e r c 23 4-59-1 through 4-59-16 NMSA 1978 (being Laws 1965, Chapter 300, e a n b 24 Section 14-31-1;

Laws u [ 1965, Chapter 300, Section 14-31-2;

Laws 1967, Chapter 84, .210910.8 - 19 - Section 3;

Laws 1997, Chapter 216, Section 2 and e e 17 Laws 1997, Chapter 226, Section 2;

Laws 1965, Chapter 300, e e n d 18 Sections 14-31-4 through 14-31-13;

Laws 1975, Chapter 286, = = l ] 19 Sections 1 through 4;

Laws 1997, Chapter 216, Section 4 and a l r i 20 Laws 1997, Chapter 226, Section 4;

Laws 1975, Chapter 286, t e a t Sections 5 through 9;

and m m 21 e d Laws 1975, Chapter 286, Sections 10 through 16, as amended) are r e 22 c e r c 23 repealed.

e a n b 24 SECTION 17.

EFFECTIVE DATE.--The effective date of the u [ provisions of this act is July 1, 2019.

-.214961.4 20 - 14 16 e e 17 e e n d 18 = = l ] 19 a l r i 20 t e a t m m 21 e- d r e 22 c e r c 23 e a n b 24 u [ .210910.8