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

SPONSOR SCORC

DATE TYPED 03/12/05 HB

SHORT TITLE Municipal Office Complex Financing Act

SB 577/SCORCS

ANALYST Hadwiger

APPROPRIATION

(in $000s)

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

Senate Bill 577 would authorize specified local governments to impose a $2.50 per room per day

(when rooms are occupied) “municipal office complex fee” at lodging facilities located within

the jurisdiction or, if enacted through a joint powers agreement between a qualified municipality

and the county, within 20 miles of the corporate limits of the municipality. Fee revenues could

be used to buy land for and build, operate and maintain a municipal office complex located

within the boundaries of the municipality, as well as to pay for the cost of administering the fee.

SB577 specifies mechanisms to collect and enforce the fees, as well as exemptions to the fees,

requirements for annual review of the fees by the governing body, and authorization to issue

revenue bonds payable from fee revenues. The bill would also set caps on the amounts of fees

collected, requiring the local governing body to adjust the fees accordingly.

Significant Issues

Senate Bill 557 defines a “qualified municipality” that would be authorized to impose the new

fee as “an incorporated municipality that has a population of more than 1,000 but less than

Senate Bill 577/SCORC-- Page 2

1,100…and is located in a class B county with a population greater than 11,000 but less than

15,000….” At this time, only the Village of Angel Fire would meet these criteria. SB577 would

provide a mechanism to finance construction, operation and maintenance of a municipal office

complex in Angel Fire. The particular financing mechanism proposed, a fee on lodging, would

impose little if any of the cost of the facilities upon local residents.

User fees are typically imposed to pay for governmental functions related to the activity upon

which the fee is imposed (i.e. highway toll charges are used to maintain the highway). In this

instance, there is not a clear nexus between the lodging fee and construction of general municipal

facilities. Because tourists place exceptional demands for public services in Angel Fire, a ration-

ale could be advanced that they should pay their share of the general operating and capital costs

of the village.

In New Mexico statute, local taxes on lodging are targeted to tourism promotion, construction of

convention center facilities, and other tourism-related costs. The proposed fee, although not a

tax, would be a departure from that general practice.

FISCAL IMPLICATIONS

SB577 would have limited direct fiscal impact on state government. The local government

would bear the cost of collecting and administering fees. However, enforcement would become

the duty of state agencies including the attorney general, district attorney and district courts. As

such, those entities might encounter additional costs if the fee were imposed.

TECHNICAL ISSUES

Section 6 of SB577 requires vendors to collect the fees and act as trustee for the fees collected,

but does not require the vendors to remit the fees to the local government at times and through

means determined by the ordinance that is enacted.

OTHER SUBSTANTIVE ISSUES

DFA provided the following background to SB577:

The 2004 legislature passed SB 236 which amended the Civic and Convention Center Fund-

ing Act. The criteria set forth in that bill was based upon the population of the municipality

and the classification of the county where the municipality is located. This bill only applied

to the City of Santa Fe. The allowable expenses are similar to those in SB 577.

The site for the proposed location of the municipal office complex in Angel Fire is currently

owned by the village. The complex will provide space for a post office, a performing arts

theater, an amphitheater, office space for the public safety division as well as city hall of-

fices. The village has also acquired $100,000 in federal funds to implement solar power at

the complex. The solar panels will be purchased from a company in Questa, thus keeping

economic development within the region. The village has also accumulated revenues from

dedicated GRT and plans to also utilize these funds in the development and construction of

the complex. Once the complex is completed the village will propose to sell the property

where the current city hall exists.

DH/lg