HOUSE BILL 286
54th legislature - STATE OF NEW MEXICO - first session, 2019
Patricia A. Lundstrom and Roberto “Bobby” J. Gonzales and
Jim R. Trujillo and Jane E. Powdrell-Culbert
and Clemente Sanchez
FOR THE LEGISLATIVE FINANCE COMMITTEE
RELATING TO PUBLIC PROJECTS; ENACTING THE PUBLIC-PRIVATE PARTNERSHIPS ACT; CREATING THE PUBLIC-PRIVATE PARTNERSHIPS BOARD; CREATING THE PUBLIC-PRIVATE PARTNERSHIP PROJECT FUND; ALLOWING THE STATE AND LOCAL GOVERNMENTS TO ENTER INTO PARTNERSHIPS WITH PRIVATE SECTOR PARTNERS TO FACILITATE PUBLIC PROJECTS; PROVIDING POWERS AND DUTIES; REQUIRING REPORTS.
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 "Public-Private Partnerships Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Public-Private Partnerships Act:
A. "authority" means the New Mexico finance authority;
B. "board" means the public-private partnership board;
C. "capital project" means the acquisition, improvement, alteration or reconstruction of assets of a long-term character, including land and infrastructure;
D. "force majeure" means an uncontrollable force or natural disaster not within the power of the public or private partner;
E. "lease payments" means any form of payment, including a land lease, by a governmental entity to a private partner for the use of a qualifying project;
F. "local government" means a municipality; a county; or a regional entity created by a joint powers agreement between one or more public agencies;
G. "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;
H. "non-state money" means money that does not derive from revenue acquired from taxes, fees or other money accruing to the state treasury or a fund established pursuant to a state statute;
I. "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;
J. "public partner" means a local government, state agency, state institution or instrumentality of the state;
K. "public-private partnership agreement" means a contract between a public partner and a private partner for the delivery of a capital asset or the maintenance of a capital asset that is negotiated pursuant to the Public-Private Partnerships Act as an alternative to the contractual processes and requirements of the Procurement Code;
L. "qualifying project" means a project that has been certified pursuant to Section 6 of the Public-Private Partnerships Act;
M. "revenue" means all revenue, income, earnings, user fees, lease payments or other service payments that support the development or operation of a qualifying project, including money received as a grant or otherwise from the federal government, a governmental entity or any agency or instrumentality of the federal government or governmental entity in aid of the project;
N. "unsolicited offer" means a request to a public partner for a governmental action, barter or payment by a potential private partner in exchange for a capital project or public service where the public partner has not published a request for proposals to contract for that capital project or public service; and
O. "user fee" means a rate, fee or other charge imposed by a partner for use of all or part of a capital project.
SECTION 3. [NEW MATERIAL] PUBLIC-PRIVATE PARTNERSHIPS BOARD--CREATED--MEMBERSHIP.--
A. The "public-private partnerships board" is created and is administratively attached to the authority. The authority shall provide necessary administrative services to the board.
B. The board consists of:
(1) the secretary of economic development or the secretary's designee;
(2) the secretary of finance and administration or the secretary's designee;
(3) the secretary of general services or the secretary's designee;
(4) the secretary of transportation or the secretary's designee;
(5) the chief executive officer of the authority or the chief executive officer's designee; and
(6) four public members appointed by the New Mexico legislative council.
C. The public members appointed initially shall draw lots for staggered terms in such a way that two members shall serve for six years, one member shall serve for four years and one member shall serve for two years. Thereafter, the public members shall serve for six-year terms.
D. The members shall select a chair and vice chair, who shall serve a terms of two years.
E. Members who are not public employees are entitled to per diem and mileage as provided in the Per Diem and Mileage Act but shall receive no other compensation, perquisite or allowance.
SECTION 4. [NEW MATERIAL] BOARD--DUTIES.--
A. The board shall meet at least every other month or at the call of the chair.
B. The board shall review and approve grant and loan applications made to the public-private partnership project fund and approve public-private partnership agreements.
C. The board shall promulgate rules to implement the provisions of the Public-Private Partnerships Act, including the review process that the board will follow for review of grant and loan applications made to the public-private partnership project fund and approval of public-private partnership agreements.
SECTION 5. [NEW MATERIAL] NEW MEXICO FINANCE AUTHORITY--POWERS AND DUTIES.--The authority shall:
A. provide staff support to the board;
B. promulgate rules for the implementation of the Public-Private Partnerships Act, including the review process that the board will follow for review of grant and loan applications made to the public-private partnership project fund and of public-private partnership agreements; provided that the authority shall consult with the state purchasing agent, the department of finance and administration, the secretary of general services and the secretary of public education in the development of the rules; and
C. make final approval decisions for grant and loan applications made to the public-private partnership project fund and for public-private partnership agreements.
SECTION 6. [NEW MATERIAL] PUBLIC-PRIVATE PARTNERSHIP PROJECT FUND CREATED--STUDY GRANTS--INFRASTRUCTURE LOANS.--
A. The "public-private partnership project fund" is created within the authority and shall be administered by the authority. The fund consists of appropriations, payments of principal and interest on loans made from the fund, income from investment of the fund and any other money distributed or otherwise allocated to the fund. Balances in the fund at the end of any fiscal year shall not revert to the general fund. The fund may consist of such subaccounts as the authority deems necessary to carry out the purposes of the fund.
B. The board shall establish procedures and adopt rules as required to administer the public-private partnership project fund and to recover from the fund the costs of administering the fund and originating grants and loans.
C. Money in the public-private partnership project fund may be used to make a grant of up to seventy-five thousand dollars ($75,000) to a local government for the purposes of studying the costs and benefits of using a public-private partnership agreement as an alternative to the requirements and processes of the Procurement Code or other methods allowed by statute to procure or maintain a capital project; provided that the grant applicant shall provide matching funding in non-state money equal to at least twenty-five percent of the total cost of the study.
D. Money in the public-private partnership project fund may be used to provide a loan as funding for the procurement or maintenance of a capital asset through a public-private partnership agreement; provided that:
(1) a loan award shall be made on a competitive basis pursuant to a point system established pursuant to Subsection E of this section;
(2) a loan applicant shall provide matching funding in non-state money that equals at least thirty percent of the entire cost of the applicant's monetary obligation for the public-private partnership agreement; and
(3) the loan applicant submits to the board the certification and analysis required in Section 8 of the Public-Private Partnerships Act.
E. The board shall establish by rule:
(1) the standards for the certification and analysis required in Section 8 of the Public-Private Partnerships Act; and
(2) a point system to be used for competitive ranking of loans to qualifying projects.
SECTION 7. [NEW MATERIAL] PROCUREMENTS--REQUIREMENTS.--
A. A public-private partnership agreement must be approved by the board if the:
(1) public project cost is greater than twenty million dollars ($20,000,000); or
(2) public-private partnership term is longer than five years.
B. The resident preferences provided in Sections 13-1-21 and 13-1-22 NMSA 1978 apply to procurements pursuant to the Public-Private Partnerships Act. The construction of a public project is a public works for the purposes of the Public Works Minimum Wage Act, the Subcontractors Fair Practices Act, any other provisions of Chapter 13, Article 4 NMSA 1978 and the Public Works Apprentice and Training Act.
C. A public-private partnership agreement shall include an operating agreement that defines the roles and responsibilities of the partners. The operating agreement shall require that a public project be operated and maintained to the operating and maintenance standards and specifications as set out in the agreement.
D. A public-private partnership agreement shall:
(1) provide clawback or recapture provisions that protect the public investment;
(2) specify remedies available to the parties and dispute resolution procedures to be followed;
(3) for those components of a public project that involve construction, require a private partner to provide, either directly or through the principal contractor that is in charge of the project, performance and payment bonds as required by Section 13-4-18 NMSA 1978; and
(4) for those components of a public project that do not involve construction, require a private partner to provide parent company guarantees, letters of credit or other acceptable forms of security, 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 board's determination of what is required to adequately protect the public partner.
SECTION 8. [NEW MATERIAL] PUBLIC-PRIVATE PARTNERSHIP AGREEMENTS--REQUIREMENTS--RESTRICTIONS.--
A. Prior to entering into a public-private partnership agreement, a public partner shall:
(1) publish a cost-benefit analysis of the life-cycle cost of using a public-private partnership agreement to procure the project in comparison with the life-cycle cost of using the methods authorized in the Procurement Code or other laws outside of the Public-Private Partnerships Act;
(2) certify to the board that use of governmental procurement processes within the Procurement Code or other laws outside of the Public-Private Partnerships Act would prohibitively delay or increase the cost of the project; and
(3) hold at least one public meeting pursuant to the Open Meetings Act dedicated to an examination of the purpose of the public-private partnership and the analysis and certification required pursuant to this subsection.
B. In a public-private partnership, the public partner, and the board, with respect to public-private partnership proposals that it approves, shall require, at a minimum, an agreement to include provisions, as applicable, that:
(1) specify how revenue will be collected, accounted for and audited; and
(2) address how the public and private partners will share management of the risks of the public project.
C. A public-private partnership agreement shall include a clear statement of which partner will own any real property pertaining to the public project when the project reverts to the public partner based on the terms of the agreement.
D. The term of initial agreements entered into pursuant to the Public-Private Partnerships 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. A 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 Public-Private Partnerships Act, except that the agreement may provide for reasonable compensation to the private partner for the adverse effect resulting from 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.
G. A pledge of revenues or property from a public-private partnership as security for financing shall not constitute in any manner or to any extent a general obligation of the state or local government, unless explicitly agreed to by the state or local government.
H. Any revenue bonds issued as a result of the Public-Private Partnerships Act are not general obligations of the 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] USER FEES AT END OF AGREEMENT PERIOD.--The public partner may continue or cease collection of user fees after the end of the term of the public-private partnership agreement, based on a determination of the public project's future operations.
SECTION 10. [NEW MATERIAL] REVERSION OF PUBLIC PROJECT TO PUBLIC PARTNER.--If the public-private partnership is terminated, the powers and duties of the private partner cease, except for any duties and obligations that extend beyond the termination as provided in the public-private partnership agreement, and the public project reverts to the public partner and shall be dedicated for public use.
SECTION 11. [NEW MATERIAL] MATERIAL DEFAULT--REMEDIES.--
A. Upon the occurrence and during the continuation of material default by the private partner, not related to an event of force majeure, the public partner may:
(1) 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; and
(2) terminate the public-private partnership and exercise any other rights and remedies that may be available.
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;
(2) may develop and operate the public project, impose user fees for the use of the public project and comply with any service contracts; and
(3) may solicit proposals for the maintenance and operation of the public project as provided in the Public-
Private Partnerships Act for original proposals.
SECTION 12. [NEW MATERIAL] POLICE POWERS--VIOLATIONS OF LAW.--All law enforcement officers of the state or local government have the same powers and jurisdiction within the limits of the public project as they have in their respective areas of jurisdiction and access to the public project at any time to exercise such powers and jurisdictions.
SECTION 13. [NEW MATERIAL] UTILITY CROSSINGS.--Subject to the requirements of federal and state laws, contractual agreements and land conveyance documents, a public or private partner and any utility whose facility is to be crossed or relocated shall cooperate fully in planning and arranging the manner of the crossing or relocation of the utility facility.
SECTION 14. [NEW MATERIAL] REPORT.--By November 1, 2019 and by November 1 of each year thereafter, the board shall provide a report to the legislature regarding:
A. the grant and loan applications made to the public-private partnership project fund and approved by the board;
B. the public-private partnership agreements reviewed by the board;
C. the status of the public-private partnership project fund; and
D. any recommended changes to the Public-Private Partnerships Act.
SECTION 15. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2019.
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