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F I S C A L I M P A C T R E P O R T
SPONSOR Varela
ORIGINAL DATE
LAST UPDATED
1/27/06
2/15/06 HB 233/aHBIC/aSFC
SHORT TITLE NMFA Public Project Revolving Fund Projects
SB
ANALYST Kehoe/Earp
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
NFI
Public Project Revolving
Fund (see narrative)
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
New Mexico Finance Authority (NMFA)
Public Education Department (PED)
SUMMARY
Synopsis of SFC Amendment
The Senate Finance Committee amendment authorizes NMFA to make loans to qualified entities
for 17 additional projects.
Synopsis of HBIC Amendment
The House Business and Industry Committee amendment provides as follows:
Item 1 and Item 4 expand the authorization for financial assistance to include “land purchase” to
the City of Bayard and the New Mexico Border Authority.
Item 2 makes a technical correction to reflect the proper name of a county.
Item 3 expands the purpose of the project to include the Navajo Nation.
Item 4 expands the purpose of the project to include teacherages.
Item 6 and Item 7 make technical corrections
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House Bill 233/aHBIC/aSFC – Page
2
Item 8 authorizes NMFA to make loans to qualified entities for an additional 17 projects.
Synopsis of Original Bill
House Bill 233 authorizes the New Mexico Finance Authority (NMFA) to make loans for public
projects from the Public Project Revolving Fund (PPRF)
Section 1, describes the 110 projects and identifies the state and local entities requesting legisla-
tive authority to make loans from PPRF.
Section 2, voids legislative authorization if a qualified entity does not notify NMFA by the end
of fiscal year 2009 of its desire to continue to pursue a loan from NMFA.
Section 3, contains an emergency clause.
SIGNIFICANT ISSUES
Loans from PPRF benefit eligible entities by allowing them to borrow for infrastructure projects
at below market costs, based on terms and conditions established by NMFA. The authorization
provided in the bill does not guarantee that those projects will receive an NMFA loan. Loans
will be made to entities that can identify a sufficient revenue source for repayment of a loan and
are able to meet other financial criteria established by the Authority.
FISCAL IMPLICATIONS
House Bill 233 does not appropriate funds. Loans made in the interim as a result of passage of
this bill would result in reducing the current loan capacity of PPRF.
A significant source of capital for infrastructure projects administered by NMFA, approximately
$18 million per year, is derived from an annual distribution of 75% of the state’s Governmental
Gross Receipts Tax (GGRT). In addition to GGRT, NMFA raises capital through the issuance of
tax-exempt pooled bonds and direct loan repayments. To date, PPRF has financed 451 projects
statewide totaling $628 million. According to the Public Education Department, in FY05 NMFA
issued bonds totaling $10.4 million for eight school districts. Demand for PPRF funding has in-
creased significantly from fiscal year to fiscal year. The graph below provided by NMFA de-
picts the growth of senior lien lending activity and shows the demand trend for PPRF funding.
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House Bill 233/aHBIC/aSFC – Page
3
PPRF Annual Activity
by millions of dollars and numbers of projects
0
20
40
60
80
100
120
140
160
180
200
FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY05
0
10
20
30
40
50
60
70
80
90
100
Millions Number of projects
LMK/mt:yr