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AN ACT

RELATING TO THE PUBLIC SCHOOLS; ENACTING THE PUBLIC SCHOOL

LEASE PURCHASE ACT; ALLOWING, UNDER CERTAIN CIRCUMSTANCES,

PUBLIC SCHOOL FACILITIES TO BE ACQUIRED PURSUANT TO LEASE

PURCHASE ARRANGEMENTS; AUTHORIZING ADDITIONAL PROPERTY TAXES

FOR SCHOOL DISTRICTS UPON THE APPROVAL OF THE QUALIFIED

ELECTORS; MAKING AN APPROPRIATION.

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

Section 1. A new section of the Public School Code is

enacted to read:

"SHORT TITLE.--Sections 1 through 20 of this act may be

cited as the "Public School Lease Purchase Act"."

Section 2. A new section of the Public School Code is

enacted to read:

"PURPOSE.--The purpose of the Public School Lease

Purchase Act is to implement the provision of Article 9,

Section 11 of the constitution of New Mexico, as approved by

the voters of the state of New Mexico at the general election

held in November 2006, which declares that a financing

agreement entered into by a school district or a charter

school for leasing of a building or other real property with

an option to purchase for a price that is reduced according to

the payments made by the school district or charter school

pursuant to the financing agreement is not a debt if:

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A. there is no legal obligation for the school

district or charter school to continue the lease from year to

year or to purchase the real property; and

B. the agreement provides that the lease shall be

terminated if sufficient money is not available to meet the

current lease payments."

Section 3. A new section of the Public School Code is

enacted to read:

"DEFINITIONS.--As used in the Public School Lease

Purchase Act:

A. "financing agreement" or "lease purchase

arrangement" means an agreement for the leasing of a building

or other real property with an option to purchase for a price

that is reduced according to the payments made, which periodic

lease payments composed of principal and interest components

are to be paid to the holder of the agreement and pursuant to

which the owner of the building or other real property may

retain title to or a security interest in the building or

other real property and may agree to release the security

interest or transfer title to the building or other real

property to the school district for nominal consideration

after payment of the final periodic lease payment;

B. except as limited by Section 19 of the Public

School Lease Purchase Act, "local school board" includes the

governing body of a locally chartered or state-chartered

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charter school; and

C. except as limited by Section 19 of the Public

School Lease Purchase Act, "school district" includes a

locally chartered or state-chartered charter school."

Section 4. A new section of the Public School Code is

enacted to read:

"NOTICE OF PROPOSED LEASE PURCHASE ARRANGEMENT--APPROVAL

OF DEPARTMENT.--

A. When a school district contemplates entering

into a lease purchase arrangement for a building or other real

property payable in whole or in part from ad valorem taxes,

the local school board, before initiating any proceedings for

approval of such a lease purchase arrangement, shall forward

to the department a copy of the proposed lease purchase

arrangement and the source of funds that the local school

board has identified to make payments due under the lease

purchase arrangement.

B. A local school board shall not enter into a

lease purchase arrangement without the approval of the

department."

Section 5. A new section of the Public School Code is

enacted to read:

"LEASE PURCHASE ARRANGEMENTS--TERMS.--Lease purchase

arrangements:

A. may have payments payable at intervals or at

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maturity as may be determined by the local school board;

B. may be subject to prepayment at the option of

the local school board at such time or times and upon such

terms and conditions with or without the payment of such

premium or premiums as may be determined by the local school

board;

C. may have a final payment date or mature at any

time or times not exceeding twenty years after the date of

execution;

D. may be payable at one time or in installments

or may be in such other form as may be determined by the local

school board;

E. may be priced at, above or below par and at a

price that results in a net effective interest rate that does

not exceed the maximum permitted by the Public Securities Act;

F. may be acquired or executed by public bid, by

negotiated sale or placement or directly negotiated or placed

with the owner of the building or other real property subject

to the lease purchase arrangement;

G. shall provide that there is no legal obligation

for the school district to continue the lease purchase

arrangement from year to year or to purchase the building or

other real property; and

H. shall provide that the lease purchase

arrangement shall be terminated if sufficient money is not

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available to meet any current lease payment."

Section 6. A new section of the Public School Code is

enacted to read:

"AUTHORIZING LEASE PURCHASE ARRANGEMENTS--RESOLUTION.--

A. If a local school board proposes to acquire a

building or other real property through a lease purchase

arrangement, it shall comply with the requirements of this

section.

B. At a regular meeting or at a special meeting

called for the purpose of considering the acquisition of a

building or other real property through a lease purchase

arrangement, a local school board shall:

(1) make a determination of the necessity

for acquiring the building or other real property through a

lease purchase arrangement;

(2) determine the estimated cost of the

buildings or other real property needed;

(3) review a summary of the terms of the

proposed lease purchase arrangement;

(4) identify the source of funds for the

lease purchase payments;

(5) if obtaining all or part of the funds

needed requires or anticipates the imposition of a property

tax, determine the estimated rate of the tax and what, if any,

the percentage increase in property taxes will be for real

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property owners in the school district; and

(6) if the board agrees that the lease

purchase arrangement is in the best interest of the school

district, forward a copy of the arrangement to the department

pursuant to Section 4 of the Public School Lease Purchase Act.

C. After receiving department approval of the

lease purchase arrangement, the local school board may adopt a

final resolution approving the lease purchase of the building

or other real property. If the local school board finds that

obtaining all or part of the funds needed for the lease

purchase arrangement requires the imposition of a property

tax, the board may also adopt a resolution to be presented to

the voters pursuant to Section 8 of the Public School Lease

Purchase Act, provided that, before adopting the resolution,

the local school board shall consider, at a public meeting,

requests by a charter school for funds needed for a lease

purchase arrangement entered into by the charter school. If

the local school board determines that the revenue from the

proposed tax should also be used for the lease purchase

arrangement entered into by the charter school, then, if the

tax is approved in an election pursuant to Sections 8 through

12 of the Public School Lease Purchase Act, the local school

board shall distribute an amount of the tax revenue, as

established in its determination, to the charter school to be

used in the lease purchase arrangement.

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D. The local school board shall not adopt a

resolution for or approve a lease purchase arrangement for a

term that exceeds twenty years."

Section 7. A new section of the Public School Code is

enacted to read:

"PAYMENTS UNDER LEASE PURCHASE ARRANGEMENTS.--A school

district may apply any legally available funds to the payments

due on or any prepayment premium payable in connection with

lease purchase arrangements as they become due, including any

combination of:

A. money from the school district's general fund;

B. investment income actually received from

investments;

C. proceeds from taxes imposed to pay school

district general obligation bonds or taxes imposed pursuant to

the Public School Capital Improvements Act, the Public School

Buildings Act or the Educational Technology Equipment Act;

D. revenues received from the sale of bonds or

notes pursuant to the School Revenue Bond Act or the School

District Bond Anticipation Notes Act;

E. loans, grants or lease payments received from

the public school capital outlay council pursuant to the

Public School Capital Outlay Act;

F. state distributions to the school district

pursuant to the Public School Improvements Act;

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G. fees or assessments received by the school

district;

H. proceeds from the sale of real property and

rental income received from the rental or leasing of school

district property;

I. grants from the federal government as

assistance to those areas affected by federal activity

authorized in accordance with Title 20 of the United States

Code, commonly known as "PL 874 funds" or "impact aid"; and

J. revenues from the tax authorized pursuant to

Sections 8 through 12 of the Public School Lease Purchase Act,

if proposed by the local school board and approved by the

voters."

Section 8. A new section of the Public School Code is

enacted to read:

"AUTHORIZATION FOR LOCAL SCHOOL BOARD TO SUBMIT QUESTION

OF LEASE PURCHASE TAX.--A local school board may adopt a

resolution to submit to the qualified electors of the school

district the question of whether a property tax at a rate not

to exceed the rate specified in the resolution should be

imposed upon the net taxable value of property allocated to

the school district under the Property Tax Code for the

purpose of making payments under a specific lease purchase

arrangement. The resolution shall:

A. specify the rate of the proposed tax, which

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shall not exceed ten dollars ($10.00) on each one thousand

dollars ($1,000) of net taxable value of property allocated to

the school district under the Property Tax Code;

B. specify the date an election will be held to

submit the question of imposition of the tax to the qualified

electors of the district; and

C. limit the imposition of the proposed tax to no

more than twenty property tax years."

Section 9. A new section of the Public School Code is

enacted to read:

"AUTHORIZING RESOLUTION--TIME LIMITATION.--The

resolution authorized under Section 8 of the Public School

Lease Purchase Act shall be adopted no later than May 15 in

the year in which the tax is proposed to be imposed."

Section 10. A new section of the Public School Code is

enacted to read:

"CONDUCT OF ELECTION--NOTICE--BALLOT.--

A. An election on the question of imposing a tax

under Sections 8 through 12 of the Public School Lease

Purchase Act may be held in conjunction with a regular school

district election or may be conducted as or held in

conjunction with a special school district election, but the

election shall be held prior to July 1 of the property tax

year in which the tax is proposed to be imposed. Conduct of

the election shall be as prescribed in the School Election Law

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for regular and special school district elections.

B. The resolution required to be published as

notice of the election under Section 1-22-4 or 1-22-5 NMSA

1978 shall include as the question to be submitted to the

voters whether a property tax at a rate not to exceed the rate

specified in the authorizing resolution should be imposed for

the specified number of property tax years not exceeding

twenty years upon the net taxable value of all property

allocated to the school district for payments due under lease

purchase arrangements.

C. The ballot shall include the information

specified in Subsection B of this section and shall present

the voter the choice of voting "for the lease purchase tax" or

"against the lease purchase tax"."

Section 11. A new section of the Public School Code is

enacted to read:

"ELECTION RESULTS--CERTIFICATION.--The certification of

the results of an election held on the question of imposition

of a lease purchase tax shall be made in accordance with the

School Election Law, and a copy of the certificate of results

shall be mailed immediately to the secretary."

Section 12. A new section of the Public School Code is

enacted to read:

"IMPOSITION OF TAX--LIMITATIONS.--If as a result of an

election held in accordance with Sections 8 through 11 of the

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Public School Lease Purchase Act a majority of the qualified

electors voting on the question votes in favor of the

imposition of the tax, the tax rate shall be certified, unless

the local school board directs that the tax levy not be made

for the year, by the department of finance and administration

at the rate specified in the authorizing resolution and the

tax shall be imposed at the rate certified in accordance with

the provisions of the Property Tax Code. The revenue produced

by the tax shall be expended only for payments due under lease

purchase arrangements, as specified in the authorizing

resolution."

Section 13. A new section of the Public School Code is

enacted to read:

"PUBLICATION OF NOTICE--VALIDATION.--

A. After adoption of a resolution approving a

lease purchase arrangement, the local school board shall

publish notice of the adoption of the resolution once in a

newspaper of general circulation in the school district.

B. After the passage of thirty days from the

publication required by Subsection A of this section, any

action attacking the validity of the proceedings taken by the

local school board preliminary to and in the authorization of

and entering into the lease purchase arrangement described in

the notice is perpetually barred."

Section 14. A new section of the Public School Code is

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enacted to read:

"REFUNDING OR REFINANCING LEASE PURCHASE ARRANGEMENTS.--

School districts may enter into lease purchase arrangements

for the purpose of refunding or refinancing any lease purchase

arrangements then outstanding, including the payment of any

prepayment premiums thereon and any interest accrued or to

accrue to the date of prepayment maturity of the outstanding

lease purchase arrangements. Until the proceeds of the lease

purchase arrangements issued for the purpose of refunding or

refinancing outstanding lease purchase arrangements are

applied to the prepayment or retirement of the outstanding

lease purchase arrangements, the proceeds may be placed in

escrow and invested and reinvested. The interest, income and

profits, if any, earned or realized on any such investment

may, in the discretion of the local school board, also be

applied to the payment of the outstanding lease purchase

arrangements to be refunded or refinanced by prepayment or

retirement, as the case may be. After the terms of the escrow

have been fully satisfied and carried out, any balance of such

proceeds and interest, if any, earned or realized on the

investments thereof may be returned to the local school board

to be used for payment of the refunding or refinancing lease

purchase arrangement. If the proceeds from a tax imposed

pursuant to Sections 8 through 12 of the Public School Lease

Purchase Act were used as a source of payments for the

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refunded lease purchase arrangement, the proceeds may continue

to be used for the refunding or refinancing lease purchase

arrangements without the requirement of an additional election

on the issue."

Section 15. A new section of the Public School Code is

enacted to read:

"AGREEMENT OF THE STATE.--The state does hereby pledge

to and agree with the holders of any lease purchase

arrangement entered into under the Public School Lease

Purchase Act that the state will not limit or alter the rights

hereby vested in school districts to fulfill the terms of any

lease purchase arrangement or in any way impair the rights and

remedies of the holders of lease purchase arrangements until

the payments due thereon, and all costs and expenses in

connection with any action or proceedings by or on behalf of

those holders, are fully met and discharged. School districts

are authorized to include this pledge and agreement of the

state in any lease purchase arrangement."

Section 16. A new section of the Public School Code is

enacted to read:

"LEGAL INVESTMENTS FOR PUBLIC OFFICERS AND

FIDUCIARIES.--Lease purchase arrangements entered into under

the authority of the Public School Lease Purchase Act shall be

legal investments in which all insurance companies, banks and

savings and loan associations organized under the laws of the

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state, public officers and public bodies and all

administrators, guardians, executors, trustees and other

fiduciaries may properly and legally invest funds."

Section 17. A new section of the Public School Code is

enacted to read:

"TAX EXEMPTION.--The state covenants with the original

holder and all subsequent holders and transferees of lease

purchase arrangements entered into by the local school boards,

in consideration of the acceptance of and payment for the

lease purchase arrangements entered into pursuant to the

Public School Lease Purchase Act, that lease purchase

arrangements and the income from the lease purchase

arrangements shall at all times be free from taxation by the

state, except for estate or gift taxes and taxes on

transfers."

Section 18. A new section of the Public School Code is

enacted to read:

"CUMULATIVE AND COMPLETE AUTHORITY.--The Public School

Lease Purchase Act shall be deemed to provide an additional

and alternative method for acquiring buildings and other real

property authorized thereby and shall be regarded as

supplemental and additional to powers conferred by other laws

and shall not be regarded as a derogation of any powers now

existing. The Public School Lease Purchase Act shall be

deemed to provide complete authority for acquiring buildings

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and other real property and entering into lease purchase

arrangements contemplated thereby, and no other approval of

any state agency or officer, except as provided therein, shall

be required with respect to any lease purchase arrangements,

and the local school board acting thereunder need not comply

with the requirements of any other law applicable to the

issuance of debt by school districts."

Section 19. A new section of the Public School Code is

enacted to read:

"LEASE PURCHASE ARRANGEMENTS FOR CHARTER SCHOOLS.--A

locally chartered or state-chartered charter school may enter

into a lease purchase arrangement pursuant to the Public

School Lease Purchase Act, provided that a governing body of a

charter school shall not propose a tax or conduct an election

pursuant to Sections 8 through 12 of that act, but nothing in

this section prevents a charter school from receiving revenue

from a tax proposed by the local school board for the district

in which the charter school is located and approved by the

voters."

Section 20. A new section of the Public School Code is

enacted to read:

"LIBERAL INTERPRETATION.--The Public School Lease

Purchase Act, being necessary for the welfare of the state and

its inhabitants, shall be liberally construed to effect its

purposes."

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Section 21. Section 22-18-1 NMSA 1978 (being Laws 1967,

Chapter 16, Section 228, as amended) is amended to read:

"22-18-1. GENERAL OBLIGATION BONDS--AUTHORITY TO

ISSUE.--

A. After consideration of the priorities for the

school district's capital needs as shown by the facility

assessment database maintained by the public school facilities

authority and subject to the provisions of Article 9, Section

11 of the constitution of New Mexico and Sections 6-15-1 and

6-15-2 NMSA 1978, a school district may issue general

obligation bonds for the purpose of:

(1) erecting, remodeling, making additions

to and furnishing school buildings;

(2) purchasing or improving school grounds;

(3) purchasing computer software and

hardware for student use in public schools;

(4) providing matching funds for capital

outlay projects funded pursuant to the Public School Capital

Outlay Act;

(5) making payments pursuant to a financing

agreement entered into by the school district or a charter

school located in the school district for the leasing of a

building or other real property with an option to purchase for

a price that is reduced according to payments made; or

(6) any combination of these purposes.

B. The bonds shall be fully negotiable and

constitute negotiable instruments within the meaning and for

all purposes of the Uniform Commercial Code."

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