SENATE JUDICIARY COMMITTEE SUBSTITUTE FOR
SENATE CORPORATIONS AND TRANSPORTATION COMMITTEE SUBSTITUTE FOR
SENATE BILL 143
53rd legislature - STATE OF NEW MEXICO - first session, 2017
AN ACT
RELATING TO PUBLIC PROJECTS; ENACTING THE NEW MEXICO INFRASTRUCTURE INVESTMENT ACT; ALLOWING THE STATE AND LOCAL GOVERNMENTS TO ENTER INTO LONG-TERM PARTNERSHIPS WITH PRIVATE SECTOR PARTNERS TO FACILITATE PUBLIC PROJECTS; PROVIDING POWERS AND DUTIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "New Mexico Infrastructure Investment Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the New Mexico Infrastructure Investment Act:
A. "department" means the general services department;
B. "local government" means a municipality; a county; or a regional entity created by a joint powers agreement between one or more public agencies;
C. "material default" means a failure of a private partner to perform any duties under a public-private partnership, which failure jeopardizes delivery of adequate service to the public and remains unsatisfied after a reasonable time and after the private partner has received written notice from the public partner of the failure;
D. "private partner" means one or more persons who have entered into a public-private partnership with a public partner and who are not the federal government or any agency or instrumentality of the federal government; another state or territory of the United States; a sovereign or foreign government; or the state or an agency, branch, institution, instrumentality or political subdivision of the state;
E. "public partner" means a local government, state agency, state institution or an instrumentality of the state;
F. "public-private partnership" means an agreement between one or more public partners and one or more private partners for the design, development, financing or construction of a public project;
G. "public project":
(1) means:
(a) telecommunications infrastructure, other communications infrastructure that is ancillary to the development or operation of a public project and broadband infrastructure that will be located in an area identified as an underserved area by the federal communications commission; and
(b) a project in a public building or infrastructure in a public building that involves conservation of natural resources; and
(2) does not include a project that changes the franchise rights or territory of a regulated public utility; and
H. "user fee" means a rate, fee or other charge imposed by a partner for use of all or part of a public project.
SECTION 3. [NEW MATERIAL] PROJECT DEVELOPMENT--PROCUREMENT.--
A. A public partner may procure a public project using any of the following:
(1) a request for proposals in which the public partner describes a class of public project or a geographic area in which a person is invited to submit a proposal to develop a public project;
(2) a solicitation using a request for qualifications, short-listing of qualified offerors, a request for proposals, negotiations or other procurement procedures; and
(3) a procurement seeking development and finance plans that are most advantageous to the public partner and suitable for the public project.
B. For a procurement in which the public partner issues a request for qualifications or similar solicitation document, the public partner shall issue a request that sets forth the factors that will be evaluated and the manner in which responses will be evaluated.
C. In evaluating proposals, the public partner shall require specific justification and support for a proposal that may affect:
(1) public employees' employment; or
(2) the cost of public service delivery.
D. The public partner may charge and retain a reasonable administrative fee for the cost of experts that are consulted pursuant to Subsection E of this section; provided that the administrative fee shall not exceed the reasonable cost of evaluating the proposal.
E. The public partner shall consult with in-house or contracted financial, legal, architectural or other experts and advisors to assist in the design, evaluation, negotiation, construction administration and development of a public-private partnership agreement for a public project.
F. In addition to making proposals available to the public pursuant to Subsection G of this section and providing the opportunity for written comments from the public, the public partner shall hold at least three public hearings prior to entering into a public-private partnership, the last of which shall be held at least thirty days before the public partner gives final approval to the public-private partnership and all of which shall be preceded by at least thirty days' notice. The meetings shall be subject to the Open Meetings Act.
G. A request for proposals issued pursuant to the New Mexico Infrastructure Investment Act shall require the offeror to include with its proposal an executive summary covering the major elements of its proposal that do not address the offeror's price, financing plan or other confidential or proprietary information or trade secrets that the offeror intends to be exempt from disclosure. After the public-private partnership is awarded and before the conclusion of any challenge to the award, the Inspection of Public Records Act applies to any release of any part of the proposals.
H. An offeror shall identify those portions of a proposal or other submission that the offeror, with the public partner's concurrence, considers to be a trade secret or confidential commercial, financial or proprietary information. For trade secrets and confidential and proprietary information to be exempt from disclosure, the offeror shall do all of the following:
(1) invoke exclusion upon submission of the information or materials for which protection is sought;
(2) identify with conspicuous labeling the information or materials for which protection is sought;
(3) state the reasons why protection is necessary; and
(4) fully comply with any applicable state law with respect to information or materials that the offeror contends should be exempt from disclosure.
I. A public partner shall consider an offeror's request to withhold certain information in a proposal from disclosure and shall issue a written determination either accepting or rejecting the offeror's request. Following the public partner's determination, any portions of the proposal not withheld from disclosure shall be made available to the public by request and the public partner shall maximize public access to the disclosed portions of the proposal through reasonable means available to the public partner.
SECTION 4. [NEW MATERIAL] PROCUREMENTS--RESTRICTIONS.--
A. The resident preferences provided in Sections 13-1-21 and 13-1-22 NMSA 1978 apply to procurements pursuant to the New Mexico Infrastructure Investment Act. The construction of a public project is a public works for the purposes of the Public Works Minimum Wage Act, the Subcontractors Fair Practice Act, any other provisions of Chapter 13, Article 4 NMSA 1978 and the Public Works Apprentice and Training Act.
B. Every public-private partnership agreement shall include a provision that defines the roles and responsibilities of the partners. A private partner may require that a public project be operated and maintained to the private partner's standards and specifications as set out in the agreement.
SECTION 5. [NEW MATERIAL] DEPARTMENT--POWERS AND DUTIES--ASSISTANCE WITH DUTIES.--
A. The department shall:
(1) in consultation with the state purchasing agent, the New Mexico finance authority, the economic development department, the department of finance and administration, the office of the state engineer and any other person that the department deems necessary, develop a minimum set of guidelines to implement the provisions of the New Mexico Infrastructure Investment Act, including guidelines on the process that the department shall follow when it reviews and approves public-private partnership agreements and the information that is required to be included in a requested proposal;
(2) before a public-private partnership may be established, review and approve all public-private partnership agreements;
(3) establish an evaluation process to determine whether projects should be developed as public-private partnerships or using traditional procurement and funding methods prior to the initiation of contract negotiations with a private partner;
(4) encourage maximum competition among private entities to pursue the development and operation of public projects;
(5) provide technical assistance to local governments and regional entities on the use of public-private partnerships to meet their needs;
(6) assist the public partner in negotiating agreements;
(7) assist the public partner in preparing any documents related to a specific agreement;
(8) assist the public partner regarding any relevant federal securities or other laws and related disclosure requirements;
(9) assist the public partner regarding accounting, investment and tax requirements applicable to the specific public project; and
(10) on or before December 1 of each year, submit a report to the legislature on any proposed or pending agreements and any agreements completed during the preceding year. The report shall specifically name each proposed, pending or completed public project and include a summary of the project, a description of the project's scope and finance plan and the status of any related permitting or land acquisition under way.
B. The department or a local government may:
(1) in accordance with Subsection D of Section 3 of the New Mexico Infrastructure Investment Act, retain, as necessary, financial, legal and other experts to assist it in carrying out its duties pursuant to the New Mexico Infrastructure Investment Act, including assistance with the review of public-private partnership agreements;
(2) solicit the expertise of state agencies, state institutions, state instrumentalities and local governments to assist the department or local government in carrying out its duties pursuant to the New Mexico Infrastructure Investment Act, including reviewing public-private partnership proposals; and
(3) receive appropriations and money from any other source, including other state agencies or local governments, regional organizations or the federal government, to carry out its duties pursuant to the New Mexico Infrastructure Investment Act.
SECTION 6. [NEW MATERIAL] EVALUATION CRITERIA.--Before entering into a public-private partnership, a public partner and the department shall consider:
A. the ability of the public project to meet the needs of the community in which it is to be located, including improving and streamlining services to the public; providing or enhancing educational, cultural and recreational opportunities; promoting economic growth or job creation; or otherwise serving a public purpose;
B. the proposed cost and financial plan for the public project;
C. the performance benchmarks contained in the proposal;
D. the estimated operating costs of the public project;
E. the financial commitment of the private partner;
F. risk associated with the project's proposed financing;
G. the general reputation, qualifications, industry experience and financial capacity of the offeror;
H. the compatibility of the public project with local and regional land and water plans or other infrastructure plans;
I. the feasibility and proposed design and management of the public project;
J. the degree of innovation; efficiency; and technical, scientific, technological and socioeconomic merit of the proposal;
K. comments from potential users, local citizens, affected jurisdictions and other interested persons;
L. benefits to the public, including improvements in economic growth, job creation, public safety and quality of life;
M. the offeror's safety record;
N. retention and training of New Mexico residents in occupations and professions related to planning, design, construction, project management, general management, administration, legal, accounting and other areas of the public project over the life of the public-private partnership;
O. the offeror's commitment to use New Mexico building materials and manufactured goods and local services to the extent possible;
P. green building design and construction certification by a nationally recognized organization; and
Q. innovations in energy efficiency or generation.
SECTION 7. [NEW MATERIAL] PUBLIC-PRIVATE PARTNERSHIP AGREEMENTS--REQUIREMENTS.--
A. A public partner and the department shall require a public-private partnership agreement to include provisions that:
(1) require operations and maintenance of a public project, except a public project that is broadband infrastructure, to be performed by the public partner;
(2) if applicable, authorize the public partner or the private partner to establish and collect user fees, rents, advertising and sponsorship charges, service charges or other charges allowed in the agreement, including provisions that:
(a) specify how revenue will be collected, accounted for and audited;
(b) establish circumstances under which the public partner may receive all or a share of revenue from such charges; and
(c) govern enforcement of user fees, including provisions for mechanisms to ensure that users are identified and notified of fees owed;
(3) require a maximum negotiated rate of return on the private partner's investment, including:
(a) fees and charges that may be collected directly by the private partner or a third party engaged by the private partner for that purpose;
(b) a formula for the adjustment of user fees and other charges during the term of the public-private partnership; and
(c) for an agreement that does not include a formula described in Subparagraph (b) of this paragraph, provisions regulating the private partner's return on investment;
(4) if applicable, allow for payments to be made by the public partner to the private partner, including availability payments or performance-based payments;
(5) if applicable, allow the public partner to accept payments from and share revenue with the private partner;
(6) describe how the public and private partners will share management of the risks of the public project;
(7) specify how the public and private partners will share the costs of development of the public project;
(8) allocate financial responsibility for cost overruns to the partner or partners that are responsible for the cost overruns;
(9) establish the damages to be assessed for a partner's nonperformance;
(10) establish performance criteria or incentives, or both;
(11) address the acquisition of property interests that may be required, including provisions that allow the public or private partner to acquire real property, including acquisition by exchange of other real property that is owned by the state, a local government or the federal government;
(12) establish recordkeeping, accounting and auditing standards to be used for the public project;
(13) with respect to a public project that is broadband infrastructure, identify to which partner the project will revert upon termination of the public-private partnership;
(14) establish how the condition and maintenance level of a public project will be measured and require a public project that reverts to the public partner to meet a condition and maintenance level measurement of eighty-five percent when the project reverts;
(15) for a public project with a term that is longer than twenty-five years and that reverts to the public partner, address responsibility for reconstruction or renovations that are required so that the public project meets all applicable government standards before the project reverts;
(16) provide for responsibilities for law enforcement on public projects;
(17) identify public partner specifications that must be satisfied, including provisions allowing the private partner to request and receive authorization to deviate from the specifications on a showing satisfactory to the public partner that the deviation is necessary;
(18) require a private partner to provide, either directly or through the principal contractor who is in charge of the project, performance and payment bonds as required by Section 13-4-18 NMSA 1978 for those components of a public project that involve construction. For components that do not involve construction, require parent company guarantees, letters of credit or other acceptable forms of security or a combination of any of these, the penal sum or amount of which may be less than one hundred percent of the value of the contract involved based on the public partner's or the department's determination of what is required to adequately protect the public partner, made on a project-by-project basis;
(19) provide clawback or recapture provisions that protect public investment in the public project; and
(20) specify dispute resolution procedures to be followed and remedies available to the partners.
B. A public-private partnership agreement may include a provision for public workers to be trained on the operation and maintenance of the public project.
C. The public-private partnership agreement shall include a clear statement of:
(1) when a public project that is broadband infrastructure will revert to the public partner or private partner, or when a public project that is not broadband infrastructure will revert to the public partner; and
(2) which partner will own any real property pertaining to the public project when the project reverts.
D. The term of initial agreements entered into pursuant to the New Mexico Infrastructure Investment Act may be for a term not to exceed fifty years, and such agreements may be extended for additional terms; provided that an extension shall be subject to the same review and negotiation process as the original agreement.
E. The public-private partnership agreement shall contain a provision by which the private partner expressly agrees that it is prohibited from seeking injunctive or other equitable relief to delay, prevent or otherwise hinder the public partner or any other jurisdiction from developing, constructing or maintaining a public project that was planned and that would or might affect the revenue that the private partner would or might derive from the public project developed pursuant to the New Mexico Infrastructure Investment Act, except that the agreement may provide for reasonable compensation to the private partner for the adverse effect resulting from the public partner's development, construction and maintenance of an unplanned facility that affects the public project's revenue.
F. The state board of finance shall approve the assignment, transfer or sale of assets or investment in a public project that creates debt obligation of the public partner.
SECTION 8. [NEW MATERIAL] FUNDING AND FINANCING.--
A. Any lawful source of funding may be used for the development or management of a public project, including:
(1) proceeds of grant anticipation revenue bonds, private activity bonds, revenue bonds or other bonds allowed by federal or state law;
(2) grants, loans, loan guarantees, lines of credit, revolving lines of credit or other arrangements as allowed by federal or state law;
(3) other federal, state or local revenues;
(4) user fees, lease payments, availability payments, gross or net receipts from sales, proceeds from the sale of development rights, franchise charges, permit charges, advertising and sponsorship charges, service charges or any other lawful form of consideration; and
(5) other available forms of public and private capital.
B. As security for the payment of financing described in this section, the revenues from a public project may be pledged, but no pledge of revenues or property constitutes in any manner or to any extent a general obligation of the state or local government. Financing may be structured on a senior, parity or subordinate basis to any other financing.
C. The public partner may accept money from the United States or any of its agencies to carry out the provisions of the New Mexico Infrastructure Investment Act, whether the money is made available by grant, loan or other financing arrangement. The public partner assents to any federal requirements, conditions or terms of any federal funding accepted by the public partner pursuant to this subsection. The public partner may enter into agreements or other arrangements with the United States or any of its agencies as may be necessary to carry out the provisions of that act.
D. The public partner may accept from any source any grant, donation, gift, conveyance of land, other real or personal property or other thing of value made to the public partner for the purposes of a public project.
E. A public project may be funded in whole or in part by contributions of money or property made by a private person, a private entity or the state or any agency, institution, instrumentality or political subdivision of the state.
F. Federal, state and local money may be combined with private sector money for public project purposes as allowed by law or by the provisions of a grant, gift or donation.
G. Any revenue bonds issued as a result of the New Mexico Infrastructure Investment Act are not general obligations of this state or any local government and are not secured by or payable from any money or assets of the state or any local government other than the money and revenues specifically pledged to the repayment of the revenue bonds.
SECTION 9. [NEW MATERIAL] REVERSION OF A PUBLIC PROJECT.--At the end of the term of the public-private partnership agreement:
A. if the public project is broadband infrastructure, the public project shall revert to the public partner or private partner as provided in the public-private partnership agreement; or
B. for all other public projects, the public project shall revert to the public partner.
SECTION 10. [NEW MATERIAL] MATERIAL DEFAULT--REMEDIES.--
A. Upon the occurrence and during the continuation of material default by the private partner, the public partner may elect to take over the public project, including the succession of all right, title and interest in the public project, subject to any liens on revenue previously granted by the private partner.
B. If the public partner elects to take over a public project pursuant to Subsection A of this section, the public partner:
(1) shall collect and pay any revenue that is subject to lien to satisfy an obligation; and
(2) may develop and operate the public project, impose user fees for the use of the public project and comply with any service contracts.
SECTION 11. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2017.
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