BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  1

DATE: February 20, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY   
BILL NUMBER: HB-618

SPONSOR: Representative Burpo

BILL SHORT TITLE: Private Property Protection Act

DESCRIPTION: This legislation would allow property owners to challenge the State of New Mexico and local governments when government regulatory actions, including land use planning or zoning, diminish property value by apparently 25 percent or more (see the Technical Issues section below). Owners would initiate the challenges by filing a complaint and written demand for binding arbitration with the government that initiated the regulatory program. Within 30 days of the complaint, the owners and government units would be required to designate an arbitrator. The two arbitrators selected would be required to select a third arbitrator. Arbitrators are to be individuals versed in property law. Arbitrators are required to conduct a hearing within 30 days after the complaint is filed. Their decisions are to be final and binding. Owners and the government units are required to share the costs of the arbitration proceeding. If the panel rules against the government, the government is required to either pay the owner compensation determined by the arbitration panel, or rescind the program that causes loss of value by the owner. If the government opts to rescind the action, the government is required to pay the owner for costs associated with the inverse condemnation action, as well as costs imposed by the government on the owner when the regulatory program was in effect. 
	The bill would also require county assessors to reassess properties in due to public regulatory actions that diminish their value. Final assessed values should, as is the case under current law, reflect market values. 
	The proposed measure would not allow complaints for compensation and arbitration due to damages caused by regulatory programs in effect or proposed and pending prior to the effective date of the proposed legislation. 

EFFECTIVE DATE:  Not specified – assume 90 days after adjournment (June 15, 2001)

FISCAL IMPACT: No apparent significant impacts on state or local revenues would result from enactment of the proposed legislation. For additional discussion, of this issue, see the Technical Issues section below.

ADMINISTRATIVE IMPACT: How the proposal would affect administrative actions by the Department would depend on how broadly arbitration panels interpret the term “regulatory action” in the proposed statute.

TECHNICAL ISSUES: 
1)	TRD legal council suggests the proposed measure would provide a very significant change in statute pertaining to regulatory takings. How it would affect the Department and taxpayers would probably depend on how term “regulatory program” is interpreted.  It is defined in the proposal to describe:

“...an action of a government unit that affects an owner’s private property in whole or in part, temporarily or permanently, in a manner that restricts or limits the owner’s vested rights in property that would otherwise exist in the absence of the government action.”

Under the definition above, selling property for delinquent taxes, or even imposing any taxes on property could be interpreted as restricting  the owner’s vested rights in the property.  In any case, a more precise definition of  the term “regulatory program” would make intent and effects of the proposed statute clearer.

2)	Language in the proposal on page 2, line 21 specifies that a property has been deemed to have been taken from the public if its value is diminished by exactly 25 percent.  Apparent intent is to specify 25 percent or more.

OTHER IMPACTS AND ISSUES: 
1)	The proposed measure could potentially subject the state to a plethora of  requests for arbitration.

2)	Sections in the proposed statute requiring assessors to reassess in response to actions by political entities that change market value of a taxpayer’s property are unnecessary. Current statutes require these types of adjustments.