SENATE BILL 238

56th legislature - STATE OF NEW MEXICO - second session, 2024

INTRODUCED BY

William F. Burt

 

 

 

 

 

AN ACT

RELATING TO PUBLIC FINANCE; ENACTING THE REGIONAL EDUCATION COOPERATIVE REVENUE BOND ACT; PROVIDING POWERS AND DUTIES; PROVIDING PROCESSES AND PROCEDURES FOR THE ISSUANCE OF TAX-EXEMPT REVENUE BONDS AND REFUNDING BONDS FOR CAPITAL PROJECTS NEEDED TO CARRY OUT THE FUNCTIONS OF A REGIONAL EDUCATION COOPERATIVE; ALLOWING A COORDINATING COUNCIL OF A REGIONAL EDUCATION COOPERATIVE TO ISSUE BONDS OR REQUEST THE NEW MEXICO FINANCE AUTHORITY TO ISSUE THE BONDS; MAKING AN APPROPRIATION.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Regional Education Cooperative Revenue Bond Act"."

     SECTION 2. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] DEFINITIONS.--As used in the Regional Education Cooperative Revenue Bond Act:

          A. "bonds" means regional education cooperative revenue bonds;

          B. "capital project" means the purchase, renovation, repair, planning, designing, construction, landscaping, equipping and furnishing necessary for buildings, structures or other facilities of the cooperative;

          C. "coordinating council" means the coordinating council of a cooperative that is designated as a board of finance by the department;

          D. "cooperative" means a regional education cooperative; and

          E. "pledgeable income" means all revenue of a cooperative sufficient to pay the principal, interest and service charges on the bonds, including all or any part of the revenues, income or receipts of the cooperative."

     SECTION 3. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] COOPERATIVE FACILITIES.--A coordinating council by bond resolution may issue and sell "regional education cooperative revenue bonds" or may request the New Mexico finance authority to issue and sell the bonds."

     SECTION 4. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] DETERMINATION BY COORDINATING COUNCIL--REPORT TO DEPARTMENT--DEPARTMENT APPROVAL.--

          A. Prior to the issuance of bonds to finance a capital project, a coordinating council shall make a determination that the capital project is necessary and that the cooperative has enough pledgeable income to repay and discharge any bonds issued pursuant to the Regional Education Cooperative Revenue Bond Act and to provide for the payment of operation, maintenance and other expenses of the property and buildings or structures resulting from the bond issuance as well as general operations of the cooperative.

          B. Prior to issuing bonds to finance some or all of a capital project, a coordinating council shall furnish to the department the following information:

                (1) a detailed description of the capital project;

                (2) an explanation of the necessity for the capital project;

                (3) an estimate of the total cost of the capital project;

                (4) an estimate of the amount of pledgeable income that will be pledged to pay for the capital project;

                (5) an estimate of the yearly operating cost of the capital project; and

                (6) an estimate of the anticipated yearly net income from the use of the capital project.

          C. Prior to giving written approval to the coordinating council to issue bonds, the department shall determine that the capital project is necessary and that sufficient income will be produced by a cooperative to repay and discharge the bonds issued pursuant to the Regional Education Cooperative Revenue Bond Act."

     SECTION 5. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] BONDS--PLEDGE OF REVENUE--SATISFACTION OF INDEBTEDNESS.--

          A. Bonds issued pursuant to the Regional Education Cooperative Revenue Bond Act shall irrevocably pledge, for the prompt payment of the principal, interest and service charges on the bonds, the cooperative's pledgeable income. The bonds shall be equally and ratably secured, without priority, by this pledge.

          B. Upon the issuance of bonds, the coordinating council shall establish a reserve fund in accordance with state or federal law to be used for the repayment of bonds if required.

          C. Satisfaction of any indebtedness created by any bonds issued pursuant to the Regional Education Cooperative Revenue Bond Act shall be limited solely to foreclosure of the capital project, without the right to a deficiency judgment."

     SECTION 6. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] PROCEEDS OF BOND SALES--RETIREMENT FUND.--

          A. Proceeds from the sale of bonds issued pursuant to the Regional Education Cooperative Revenue Bond Act shall be deposited into a separate account to be used solely for the specific purposes for which the bonds were issued. All costs incident to issuing and selling the bonds may be paid out of the proceeds of this account.

          B. The coordinating council, at the time of the issuance of bonds, shall establish a fund to be known as the "retirement fund". All proceeds remaining after completion of the capital project shall be deposited in the retirement fund, and pledgeable income sufficient to pay at least the next two principal and interest payments shall be deposited into the retirement fund. Money in the retirement fund shall be used solely for the purpose of repaying the principal, interest and service charges on the bonds."

     SECTION 7. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] BONDS--FORM--REQUIREMENTS.--All bonds issued pursuant to the Regional Education Cooperative Revenue Bond Act shall:

          A. be fully negotiable within the provisions of the Uniform Commercial Code;

          B. have a duration of time not to exceed thirty years from their date of issuance;

          C. bear interest at a rate not to exceed a net of twelve percent a year, with interest payable semiannually;

          D. be sold at a price that does not result in an actual net interest cost to maturity, computed on the basis of standard tables of bond values, in excess of six percent a year;

          E. have the principal of the bonds paid in yearly amounts beginning not later than two years from their date of issuance; and

          F. be issued in one or more series and may be sold at public or private sale, with or without a discount, as provided by Subsection D of this section."

     SECTION 8. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] REFUNDING BONDS.-- 

          A. A coordinating council or the New Mexico finance authority may issue refunding bonds to refund outstanding bonds.

          B. Except as otherwise provided in the Regional Education Cooperative Revenue Bond Act, refunding bonds shall conform to the provisions of that act that provide for the issuance of bonds by a coordinating council or the New Mexico finance authority.

          C. A refunding bond may have the same security or source of payment as was pledged for the payment of the bond being refunded or may have a different source of pledgeable income.

          D. A refunding bond may be delivered in exchange for a bond authorized to be refunded, sold at a public or private sale or sold in part and exchanged in part, as provided in the Supplemental Public Securities Act. If the refunding bond is sold, the proceeds shall be immediately applied to the retirement of the bond to be refunded or the proceeds shall be placed in trust to be held and applied to payment of the bonds to be refunded."

     SECTION 9. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] REFUNDING BONDS--ISSUANCE--SALE--PROCEEDS.--

          A. A bond shall not be refunded unless it matures or is callable for prior redemption under the terms of the refunding bond or unless the holder of the bond voluntarily surrenders it for exchange or payment.

          B. Outstanding bonds of more than one issue may be refunded by refunding bonds of one or more issues. Bonds and refunding bonds may be issued separately or in combinations of one or more series.

          C. When a refunding bond is sold, the net proceeds may, in the discretion of the coordinating council, be invested in obligations of the federal government or an agency of the federal government or in obligations fully guaranteed by the federal government, but the obligations purchased shall have a maturity and bear a rate of interest payable at times to ensure the existence of sufficient money to pay the bond to be refunded when it becomes due or redeemable pursuant to a call for redemption, together with interest and redemption premiums, if any.

          D. All obligations purchased with the net proceeds from refunding bonds shall be deposited in trust with a bank that has trust powers and that is a member of the federal deposit insurance corporation. The obligations shall be held and liquidated and the proceeds of the liquidation shall be paid out for payment of the principal, interest and redemption premium of the bonds to be refunded as the bonds to be refunded become due or where the bonds are subject to redemption under a call for redemption previously made or where there is a voluntary surrender with the approval of the local school board.

          E. The determination of the coordinating council or the New Mexico finance authority, if applicable, issuing refunding bonds that the issuance has been in compliance with the Regional Education Cooperative Revenue Bond Act is conclusively presumed correct in the absence of fraud or arbitrary and gross abuse of discretion.

          F. As used in this section, "net proceeds" means the gross proceeds of the refunding bonds after deducting all accrued interest and expenses incurred in connection with the authorization and issuance of the refunding bonds and the refunding of outstanding bonds, including fiscal agent fees, commissions and all discounts incurred in the resale of the refunding bonds to the original purchaser."

     SECTION 10. A new section of the Public School Code is enacted to read:

     "[NEW MATERIAL] TAX EXEMPTION--NO CHARGE AGAINST STATE.--Bonds are exempt from taxation by the state or any of its political subdivisions. No obligation created pursuant to the Regional Education Cooperative Revenue Bond Act shall be a charge against or a debt of the state or any of its political subdivisions."

     SECTION 11. APPROPRIATION.--Six million dollars ($6,000,000) is appropriated from the general fund to regional education cooperative nine for expenditure in fiscal years 2024 through 2028 to plan, design, construct, equip and furnish an early childhood center in Ruidoso. Any unexpended or unencumbered balance remaining at the end of fiscal year 2028 shall revert to the general fund.

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