SB 10 — SEVERANCE TAX FUND SMALL BUSINESS INVESTMENT

SENATEAN BILLACT 10RELATING 54TO THTHE LEGISLATURE-SEVERANCE STATETAX OFPERMANENT NEWFUND; MEXICO - FIRST SESSIO, 2019 INTRODUCED BY Carlos R.

Cisneros 6 8 10 AN ACT RELATING TO THE SEVERANCE TAX PERMANENT FUND;

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

e t 17 "7-27-5.15.

NEW MEXICO PRIVATE EQUITY FUNDS AND NEW w l n d 18 MEXICO BUSINESS INVESTMENTS.-- = = 19 A.

No more than nine percent of the market value of a l i a e r 20 the severance tax permanent fund may be invested in New Mexico a t m m 21 private equity funds or New Mexico businesses under this d r e 22 section.

c e s k 23 B.

In making investments pursuant to Subsection A e a n b 24 of this section, the council shall make investments in New u [ Mexico private equity funds or New Mexico businesses whose .212826.2GLG investments or enterprises enhance the economic development objectives of the state.

(1) "New Mexico business" means, in the case SB 10 of a corporation or limited liability company, a business Page 1 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;

e e 17 (a) has as its primary business activity e e n d 18 the investment of funds in return for equity in or debt of = = l ] 19 businesses for the purpose of providing capital for start-up, a l r i 20 expansion, product or market development, recapitalization or t e a t similar business purposes;

m m 21 e d r e 22 (b) holds out the prospects for capital c e r c 23 appreciation from such investments;

e a n b 24 (c) has at least one full-time manager u [ with at least three years of professional experience in .212826.2GLG - 2 - assessing the growth prospects of businesses or evaluating business plans;

(d) is committed to investing or helps 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 New Mexico and that hold promise for attracting additional capital from individual or institutional investors nationwide for businesses in SB 10 Page 2 New Mexico;

e e 17 E.

The state investment officer is authorized to e e n d 18 make investments in New Mexico businesses to create new job = = l ] 19 opportunities and to support new, emerging or expanding a l r i 20 businesses in a manner consistent with the constitution of New t e a t Mexico if:

m m 21 e d r e 22 (1) the investments are made:

c e r c 23 (a) in conjunction with cooperative e a n b 24 investment agreements with parties that have demonstrated u [ abilities and relationships in making investments in new, .212826.2GLG - 3 - emerging or expanding businesses;

or SB 10 Page 3 (c) in a New Mexico business that:

1) is established to perform technology transfer, research and development, research commercialization, manufacturing, training, marketing or public relations in any field of science or technology, including but not limited to energy, security, defense, aerospace, automotives, electronics, telecommunications, computer and information science, environmental science, biomedical science, life science, e e 17 physical science, materials science or nanoscience, using e e n d 18 research developed in whole or in part by a state institution = = l ] 19 of higher education or a prime contractor designated as a a l r i 20 national laboratory by an act of congress that is operating a t e a t facility in the state, or an affiliated entity;

and 2) has an m m 21 e d r e 22 agreement to operate the business on state lands;

c e r c 23 (2) an investment in any one business does not e a n b 24 exceed ten percent of the amount available for investment u [ pursuant to this section;

and .212826.2GLG - 4 - (3) the investments represent no more than fifty-one percent of the total investment capital in a business;

(a) is due to foreclosure or other action by the state investment officer pursuant to agreements SB 10 Page 4 with the business or other investors in that business;

The state investment officer shall make a commitment to the small business investment corporation ] pursuant to the Small Business Investment Act to invest [one e e 17 two percent of the market value of the severance tax permanent e e n d 18 fund to create new job opportunities by providing capital for = = l ] 19 land, buildings or infrastructure for facilities to support new a l r i 20 or expanding businesses and to otherwise make investments to t e a t create new job opportunities to support new or expanding m m 21 e d r e 22 businesses in a manner consistent with the constitution of New c e r c 23 Mexico.

On July 1 of each year, the state investment officer e a n b 24 shall determine whether the invested capital in the small u [ business investment corporation is less than [one ] two percent .212826.2GLG - 5 - of the market value of the severance tax permanent fund.

If the invested capital in the small business investment corporation equals less than [one ] two percent of the market value of the severance tax permanent fund, further commitments ] two shall be made until the invested capital is equal to [onetwo percent of the market value of the fund.

SB 10 Page 5 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 e e 17 private equity fund is invested and how each private equity e e n d 18 investment enhances the economic development objectives of the = = l ] 19 state.

Each report also shall provide the amounts invested in a l r i 20 each New Mexico business." tSB e10 aPage t - 6 -25 m m 21 e d r e 22 c e r c 23 e a n b 24 u [ .212826.2GLG