HOUSE BILL 497
56th legislature - STATE OF NEW MEXICO - first session, 2023
RELATING TO PUBLIC FINANCE; ENACTING THE BLIGHTED HOMES AND RESIDENTIAL BUILDINGS IMPROVEMENT ACT; PROVIDING BLIGHTED HOMES AND RESIDENTIAL BUILDINGS IMPROVEMENT LOANS FOR CERTAIN PERSONS AND BUSINESSES; REQUIRING THE NEW MEXICO FINANCE AUTHORITY TO ADMINISTER THE BLIGHTED HOMES AND RESIDENTIAL BUILDINGS IMPROVEMENT ACT; PROVIDING POWERS AND DUTIES; ESTABLISHING TERMS FOR BLIGHTED HOMES AND RESIDENTIAL BUILDINGS IMPROVEMENT LOANS AND CONTRACTS; REQUIRING REPAYMENT; ESTABLISHING REPORTING REQUIREMENTS; MAKING AN APPROPRIATION.
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 "Blighted Homes and Residential Building Improvement Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Blighted Homes and Residential Improvement Act:
A. "applicant" means a person or a nonprofit business entity that applies for a loan;
B. "authority" means the New Mexico finance authority;
C. "loan" means a blighted homes and residential buildings improvement loan, which is secured debt created by a contract as provided pursuant to the Blighted Homes and Residential Building Improvement Act between an applicant and the authority;
D. "loan servicer" means a federally insured depository institution or community development financial institution that assembles and submits the loan documents to the authority; and
E. "resident" means an individual who is domiciled in this state during any part of the year or an individual who is physically present in this state for one hundred eighty-five days or longer during the taxable year.
SECTION 3. [NEW MATERIAL] LOANS AUTHORIZED--QUALIFICATIONS.--
A. The authority may provide loans to qualified applicants who apply for a loan pursuant to the Blighted Homes and Residential Buildings Improvement Act. An applicant shall be qualified to receive a loan if the applicant:
(1) owns residential property in the state;
(2) had an annual gross revenue of no more than one million dollars ($1,000,000) as determined from the applicant's income tax return for all five taxable years preceding the application for a loan;
(3) is a person other than a nonprofit or for-profit business, the applicant shall have resided in the state for fifty percent or more of the year preceding the application as evidenced by the person's federal income tax return; and
(4) is a nonprofit business entity and the following applies:
(a) for a sole proprietorship, one hundred percent of the assets of the business are owned or
leased by a resident; and
(b) for a corporation, partnership, joint venture, limited liability company, limited partnership
or other business entity, at least eighty percent of the total voting power of the entity and at least eighty percent of the total value of the equity are owned by one or more residents.
B. An applicant who has met the qualifications provided pursuant to Subsection A of this section shall also be determined to be creditworthy by the authority prior to the grant of a loan. The authority shall evaluate the creditworthiness of an applicant based on information received from the applicant, which may include an independent credit reporting agency report when available.
SECTION 4. [NEW MATERIAL] LOANS--AUTHORITY--POWERS AND DUTIES--TERMS.--
A. The authority shall administer the Blighted Homes and Residential Buildings Improvement Act and shall:
(1) receive and review applications in the order in which completed applications are received; (2) provide a determination to the applicant as soon as practicable, if the applicant meets the requisite creditworthiness as determined by the authority;
(3) seek repayment of loans;
(4) enforce the terms of loan contracts;
(5) comply with reporting requirements pursuant to Section 6 of the Blighted Homes and Residential Buildings Improvement Act; and
(6) promulgate rules for the administration of the Blighted Homes and Residential Buildings Improvement Act.
B. The authority shall:
(1) use funding made available for the Blighted Homes and Residential Buildings Improvement Act to contract with a loan servicer to assist in carrying out the provisions of the Blighted Homes and Residential Buildings Improvement Act, including determining creditworthiness of applicants;
(2) issue loans and enter into contracts with applicants who are determined to be creditworthy; provided that funds are available; and
(3) exercise any power provided to the authority in the New Mexico Finance Authority Act to assist in the administration of the Blighted Homes and Residential Buildings Improvement Act; provided that the power is consistent with the provisions of the Blighted Homes and Residential Buildings Improvement Act.
C. If the authority determines that an applicant is creditworthy, the authority may issue loans and enter into a contract with the loan recipient in accordance with the following terms:
(1) the loan shall not exceed an amount equal to four hundred percent of the applicant's average adjusted yearly income from the previous calendar or fiscal year; provided that the maximum loan amount shall be no greater than two hundred thousand dollars ($200,000);
(2) the real property being improved with the loan shall not have a total appraised value of less than forty thousand dollars ($40,000) or more than four hundred thousand dollars ($400,000);
(3) the loan recipient shall be required to:
(a) use the loan for improvements to real property located within a designated blighted homes and residential buildings improvement zone, as determined by rules promulgated by the authority;
(b) include a written certification signed by the recipient, certifying that: 1) the loan shall be repaid by the recipient under the terms of the contract; 2) all documents submitted in support of the loan application are true and accurate to the best of the recipient's knowledge; 3) the recipient does not expect to file for bankruptcy; and 4) all loan proceeds will be used for purposes provided in the Blighted Homes and Residential Buildings Improvement Act; and
(c) provide the authority with ongoing information relevant to the reporting requirements pursuant to Section 6 of the Blighted Homes and Residential Buildings Improvement Act; and
(4) the loan shall be secured by a lien on the real property subject to the improvement; provided that no other security interest shall be created against the property of the recipient.
D. Loan applications shall be received no later than December 31, 2026.
SECTION 5. [NEW MATERIAL] REPAYMENT--CONTRACTS.--
A. Loans shall be made for a period of fifteen years. No interest shall accrue until the tenth anniversary of the date the loan is made. The loans shall bear an annual interest rate equal to one-half of the federal prime rate on the date the loan is made.
B. Payment of the interest accrued on a loan shall be due in monthly installments, with the first interest payment due at the end of the first full month following the tenth anniversary of the funding date of the loan and with each subsequent interest payment due monthly thereafter until the loan is paid in full.
C. The outstanding principal and interest of a loan remaining after the tenth anniversary may be refinanced at the request of the recipient, and with the consent of the authority, to be paid in monthly installments.
D. Receipts from the repayment of principal or interest accrued on the loans shall be deposited in the general fund.
E. No provision in a loan or the evidence of indebtedness of the loan made pursuant to the Blighted Homes and Residential Buildings Improvement Act shall include a penalty or premium for prepayment of the balance of the indebtedness.
F. The loan shall be evidenced by a contract between the loan recipient and the authority. The contract shall provide for the payment by the authority of the stated cost of the loan and shall be conditioned upon the repayment of the loan to the authority.
SECTION 6. [NEW MATERIAL] REPORTING--CONFIDENTIALITY.--
A. By October 1, 2025 and October 1 each year thereafter, the authority shall submit a report to the legislature, the legislative finance committee, the New Mexico finance authority oversight committee, the revenue stabilization and tax policy committee and any other appropriate legislative interim committee. The report shall include:
(1) the total number of loans made pursuant to the Blighted Homes and Residential Buildings Improvement Act;
(2) the total number of loan applications;
(3) the average amount of money provided to loan applicants;
(4) the total number of loans and the amount of those loans, if any, in a delinquent status or default;
(5) the total number of loan recipients that are in the process of filing or have filed for bankruptcy;
(6) the total number of employees currently employed by a business that received a loan; and
(7) an overview of the industries and types of business entities represented by loan recipients.
B. Information obtained by the authority regarding individual loan applicants shall be confidential and shall not subject to inspection pursuant to the Inspection of Public Records Act; provided that nothing in this section shall prevent the authority from disclosing broad demographic information and information relating to the total amount of loans made, the total outstanding balance of loans made pursuant to the Blighted Homes and Residential Buildings Improvement Act and the names of the loan recipients.
SECTION 7. [NEW MATERIAL] RULEMAKING.--The authority shall promulgate rules as are necessary to carry out the Blighted Homes and Residential Buildings Improvement Act, including rules:
A. governing the application procedures and requirements for disbursing loans; provided that the authority shall not create additional requirements for eligibility other than those provided by that act; and
B. for determining designated blighted homes and residential buildings improvement zones.
SECTION 8. APPROPRIATION.--Fifty-five million dollars ($55,000,000) is appropriated from the general fund to the New Mexico finance authority for expenditure in fiscal year 2024 to carry out the Blighted Homes and Residential Buildings Improvement Act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2024 shall revert to the general fund.
SECTION 9. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2023.
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