HOUSE BILL 459
54th legislature - STATE OF NEW MEXICO - first session, 2019
RELATING TO ECONOMIC DEVELOPMENT; AMENDING THE LOCAL ECONOMIC DEVELOPMENT ACT TO AUTHORIZE MUNICIPALITIES AND COUNTIES TO MAKE LOANS TO CERTAIN RETAIL BUSINESSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 5-10-2 NMSA 1978 (being Laws 1993, Chapter 297, Section 2, as amended) is amended to read:
"5-10-2. FINDINGS AND PURPOSE OF ACT.--
A. The legislature finds that:
(1) development of the New Mexico economy is vital to the well-being of the state and its residents;
(2) it is difficult for municipalities and counties in New Mexico to attract and retain businesses capable of enhancing the local and state economy without the resources necessary to compete with other states and locales;
(3) municipalities and counties may need to be able to provide land, buildings [and] infrastructure and direct forgivable loans as a tool for basic business growth and the introduction of basic business ventures into the state;
(4) it is in the best interest of the state, municipalities and counties to encourage local or regional solutions to economic development; and
(5) the access to public resources needs to be carefully controlled and managed for the continued and future benefit of New Mexico citizens.
B. The purpose of the Local Economic Development Act is to implement the provisions of the 1994 constitutional amendment to Article 9, Section 14 of the constitution of New Mexico to allow public support of economic development to foster, promote and enhance local economic development efforts while continuing to protect against the unauthorized use of public money and other public resources. Further, the purpose of that act is to allow municipalities and counties to enter into joint powers agreements to plan and support regional economic development projects, including investments in arts and cultural districts created pursuant to the Arts and Cultural District Act."
SECTION 2. Section 5-10-3 NMSA 1978 (being Laws 1993, Chapter 297, Section 3, as amended) is amended to read:
"5-10-3. DEFINITIONS.--As used in the Local Economic Development Act:
A. "arts and cultural district" means a developed district of public and private uses that is created pursuant to the Arts and Cultural District Act;
B. "broadband telecommunications network facilities" means the electronics, equipment, transmission facilities, fiber-optic cables and any other item directly related to a system capable of transmission of internet protocol or other formatted data at current federal communications commission minimum speed standard, all of which will be owned and used by a provider of internet access services;
C. "cultural facility" means a facility that is owned by the state, a county, a municipality or a qualifying entity that serves the public through preserving, educating and promoting the arts and culture of a particular locale, including theaters, museums, libraries, galleries, cultural compounds, educational organizations, performing arts venues and organizations, fine arts organizations, studios and media laboratories and live-work housing facilities;
D. "department" means the economic development department;
E. "economic development project" or "project" means the provision of direct or indirect assistance to a qualifying entity by a local or regional government and includes the purchase, lease, grant, construction, reconstruction, improvement or other acquisition or conveyance of land, buildings or other infrastructure; rights-of-way infrastructure, including trenching and conduit, for the placement of new broadband telecommunications network facilities; public works improvements essential to the location or expansion of a qualifying entity; payments for professional services contracts necessary for local or regional governments to implement a plan or project; the provision of direct loans or grants for land, buildings or infrastructure; the provision of direct forgivable loans for opening, expanding, renovating or purchasing grocery stores or small food retailers; technical assistance to cultural facilities; loan guarantees securing the cost of land, buildings or infrastructure in an amount not to exceed the revenue that may be derived from the municipal infrastructure gross receipts tax or the county infrastructure gross receipts tax; grants for public works infrastructure improvements essential to the location or expansion of a qualifying entity; grants or subsidies to cultural facilities; purchase of land for a publicly held industrial park or a publicly owned cultural facility; and the construction of a building for use by a qualifying entity;
F. "governing body" means the city council, city commission or board of trustees of a municipality or the board of county commissioners of a county;
G. "grocery store" means a for-profit or nonprofit
establishment that primarily sells meat, seafood, fruits, vegetables, dairy products, dry groceries, household products and other healthy or fresh food;
[G.] H. "local government" means a municipality or county;
[H.] I. "municipality" means an incorporated city, town or village;
[I.] J. "person" means an individual, corporation, association, partnership or other legal entity;
[J.] K. "qualifying entity" means a corporation, limited liability company, partnership, joint venture, syndicate, association or other person that is one or a combination of two or more of the following:
(1) an industry for the manufacturing, processing or assembling of agricultural or manufactured products;
(2) a commercial enterprise for storing, warehousing, distributing or selling products of agriculture, mining or industry, but, other than as provided in Paragraph (5), (6) or (9) of this subsection, not including any enterprise for sale of goods or commodities at retail or for distribution to the public of electricity, gas, water or telephone or other services commonly classified as public utilities;
(3) a business, including a restaurant or lodging establishment, in which all or part of the activities of the business involves the supplying of services to the general public or to governmental agencies or to a specific industry or customer, but, other than as provided in Paragraph (5) or (9) of this subsection, not including businesses primarily engaged in the sale of goods or commodities at retail;
(4) an Indian nation, tribe or pueblo or a federally chartered tribal corporation;
(5) a telecommunications sales enterprise that makes the majority of its sales to persons outside New Mexico;
(6) a facility for the direct sales by growers of agricultural products, commonly known as farmers' markets;
(7) a business that is the developer of a metropolitan redevelopment project;
(8) a cultural facility; and
(9) a retail business;
[K.] L. "regional government" means any combination of municipalities and counties that enter into a joint powers agreement to provide for economic development projects pursuant to a plan adopted by all parties to the joint powers agreement; [and
L.] M. "retail business" means a business, including a grocery store and small food retailer, that is primarily engaged in the sale of goods or commodities at retail and that is located in a municipality with a population, according to the most recent federal decennial census, of:
(1) ten thousand or less; or
(2) more than ten thousand but less than thirty-five thousand if:
(a) the economic development project is not funded or financed with state government revenues; and (b) the business created through the project will not directly compete with an existing business that is: 1) in the municipality; and 2) engaged in the sale of the same or similar goods or commodities at retail; provided that the provisions of this subparagraph shall not apply to a grocery store or small food retailer; and
N. "small food retailer" means a grocery store containing less than two thousand five hundred square feet and includes a small-scale store, corner store, convenience store, neighborhood store, small grocery, farm stand, mobile market, food hub or bodega."
SECTION 3. Section 5-10-6 NMSA 1978 (being Laws 1993, Chapter 297, Section 6, as amended) is amended to read:
"5-10-6. ECONOMIC DEVELOPMENT PLAN--CONTENTS--PUBLICATION.--
A. Every local or regional government seeking to pursue economic development projects shall adopt an economic development plan or a comprehensive plan that includes an economic development component, and an economic development plan or comprehensive plan may include an analysis of the role of arts and cultural activities in economic development. The plan may be specific to a single economic development goal or strategy or may include several goals or strategies, including any goals or strategies relating to economic development through arts and cultural activities. Any plan or plan amendment shall be adopted by ordinance of the governing body of the local government or each local government of a regional government proposing the plan or plan amendment.
B. The economic development plan or the ordinance adopting the plan may:
(1) describe the local or regional government's economic development and community goals, including any economic development goals with an arts and cultural component, and assign priority to and strategies for achieving those goals;
(2) describe the types of qualifying entities and economic activities that will qualify for economic development projects;
(3) describe the criteria to be used to determine eligibility of an economic development project and a qualifying entity to participate in an economic development project;
(4) describe the manner in which a qualifying entity may submit an economic development project application, including the type of information required from the qualifying entity sufficient to ensure its solvency and ability to perform its contractual obligations, its commitment to remain in the community and its commitment to the stated economic development goals of the local or regional government;
(5) describe the process the local or regional government will use to verify the information submitted on an economic development project application;
(6) if an economic development project is determined to be unsuccessful or if a qualifying entity seeks to leave the area, describe the methods the local or regional government will use to terminate its economic assistance and recoup its investment;
(7) identify revenue sources, including those of the local or regional government, that will be used to support economic development projects;
(8) identify other resources the local or regional government is prepared to offer qualifying entities, including specific land or buildings it is willing to lease, sell or grant a qualifying entity; community infrastructure it is willing to build, extend or expand, including roads, water, sewers or other utilities; direct loans it is willing to offer to open, expand or renovate grocery stores or small food retailers; and professional services contracts by local or regional governments necessary to provide these resources;
(9) detail the minimum benefit the local or regional government requires from a qualifying entity, including the number and types of jobs to be created; the proposed payroll; repayment of loans, if any; purchase by the qualifying entity of local or regional government-provided land, buildings or infrastructure; the public to private investment ratio; and direct local tax base expansion;
(10) describe the safeguards of public resources that will be ensured, including specific ways the local or regional government can recover any costs, land, buildings, money or other thing of value if a qualifying entity ceases operation, relocates or otherwise defaults or reneges on its contractual or implied obligations to the local or regional government; and
(11) if a regional government, describe the joint powers agreement, including whether it can be terminated and, if so, how the contractual or other obligations, risks and any property will be assigned or divided among the local governments who are party to the agreement.
C. The economic development plan shall be printed and made available to the residents within the local or regional government area."
SECTION 4. Section 5-10-10 NMSA 1978 (being Laws 1993, Chapter 297, Section 10, as amended) is amended to read:
"5-10-10. PROJECT PARTICIPATION AGREEMENT--DUTIES AND REQUIREMENTS.--
A. The local or regional government and the qualifying entity shall enter into a project participation agreement.
B. The local or regional government shall require a substantive contribution from the qualifying entity for each economic development project, or if the public support is a direct loan, repayment of the loan. Public support provided for an economic development project shall be in exchange for a substantive contribution from the qualifying entity, or if the public support is a direct loan, repayment of the loan. The substantive contribution shall be of value and may be paid in money, in-kind services, jobs, expanded tax base, property or other thing or service of value for the expansion of the economy.
C. The qualifying entity shall provide security to each local or regional government, the state or any other New Mexico governmental entity providing public support for an economic development project. The security shall secure the qualifying entity's obligations based on terms stated in the project participation agreement with the local or regional government and shall reflect the amount of public support provided to the qualifying entity and the substantive contribution expected from the qualifying entity, or if the public support is a direct loan, the amount of the loan and the terms of repayment.
D. If a qualifying entity fails to perform its substantive contribution or repay a direct loan, the local or regional government shall enforce the project participation agreement to recover the amount due under the loan or that portion of the public support for which the qualifying entity failed to provide a substantive contribution. [The]
E. If the public support is a direct loan, the recovery shall be the amount due under the terms of the loan and may include the costs of the action and reasonable attorney fees.
F. If the public support is not a direct loan, the recovery shall be proportional to the failed performance of the substantive contribution and shall take into account all previous substantive contributions for the economic development project performed by the qualifying entity, based on the terms stated in the project participation agreement. The project participation agreement for an economic development project that uses public support provided by the state to a local or regional government shall include a recapture agreement for the state.
[E.] G. The project participation agreement at a minimum shall set out:
(1) the contributions to be made by each party to the participation agreement;
(2) the security provided to each governmental entity that provides public support for an economic development project by the qualifying entity in the form of a lien, mortgage or other indenture and the pledge of the qualifying business's financial or material participation and cooperation to guarantee the qualifying entity's performance pursuant to the project participation agreement;
(3) a schedule for project development and completion, including measurable goals and time limits for those goals; [and]
(4) provisions for performance review and actions to be taken upon a determination that project performance is unsatisfactory; and
(5) if the public support is a direct loan, the amount and terms of the loan."
SECTION 5. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2019.
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