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

SPONSOR Varela

ORIGINAL DATE

LAST UPDATED

1/22/07

2/13/07 HB 24/aHTRC/aHAFC

SHORT TITLE NMFA Public Project Revolving Fund Projects

SB

ANALYST Kehoe

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

Public Project

Revolving Loan Fund

(See narrative)

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Finance Authority (NMFA)

Department of Finance and Administration (DFA)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of HAFC amendment

House Appropriations & Finance Committee amendments provide as follows: 1) strikes the

House Taxation & Revenue Committee amendments in their entirety; 2) authorizes NMFA to

provide financial assistance to 115 eligible entities, including authorization to provide

refinancing assistance to 32 governmental entities.

Synopsis of HTRC amendment

House Taxation and Revenue Committee amendment proposes the following: 1) to expand the

purpose of projects for the Town of Carrizozo and Lincoln County to include “road" projects; 2)

to expand the projects in Torrance County to include water, wastewater, land, and road project;

3) requests authorization for NMFA to provide refinancing assistance to Torrance County; and,

4) authorizes NMFA to make loans to an additional 108 qualified entities for public projects

from the Public Project Revolving Fund.

House Bill 24/aHTRC/aHAFC – Page

2

Synopsis of Original Bill

House Bill 24 authorizes the New Mexico Finance Authority (NMFA) to make loans to qualified

entities for public projects from the Public Project Revolving Fund (PPRF)

Section 1

, describes the qualified entities and 32 projects (13 school projects and 19 local

projects) requesting legislative authority to make loans from PPRF.

Section 2

, voids legislative authorization if a qualified entity does not notify NMFA by the end

of fiscal year 2009 of its desire to continue to pursue a loan from PPRF.

Section 3

, contains an emergency clause.

FISCAL IMPLICATIONS

House Bill 24 does not appropriate funds; however, loans made in the interim as a result of

passage of this bill would result in reducing the current loan capacity of PPRF. The authority

issued five public project revolving fund bond issues totaling $165.9 million in FY06. To date,

PPRF has financed 451 projects statewide totaling $628 million.

A significant source of capital for infrastructure projects administered by NMFA, approximately

$18 million per year, is derived from an annual distribution of 75% of the state’s Governmental

Gross Receipts Tax (GGRT). In addition to GGRT, NMFA raises capital through the issuance of

tax-exempt pooled bonds and direct loan repayments. The following chart demonstrates the

annual distribution of GGRT for FYO6:

FY06 GGRT Di stribution

(Total $25.9 million-Unaudite d)

$3.6

$2.6

$0.3

$1.8

$17.6

$-

$5.0

$10.0

$15.0

$20.0

Demand for PPRF funding has increased significantly from fiscal year to fiscal year. The graph

below provided by NMFA depicts the growth of senior lien lending activity and shows the

demand trend for PPRF funding.

House Bill 24/aHTRC/aHAFC – Page

3

PPRF Annual Activity

by millions of dollars and numbers of projects

0

50

100

150

200

FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY05 FY 06

0

20

40

60

80

100

Millions

Number of projects

SIGNIFICANT ISSUES

Loans from PPRF benefit eligible entities by allowing them to borrow for infrastructure projects

at below market costs, based on terms and conditions established by NMFA. The authorization

provided in the bill does not guarantee that those projects will receive an NMFA loan. Loans

will be made to entities that can identify a sufficient revenue source for repayment of a loan and

are able to meet other financial criteria established by the Authority.

LMK/mt