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F I S C A L I M P A C T R E P O R T
SPONSOR Griego
ORIGINAL DATE
LAST UPDATED
2/7/06
HB
SHORT TITLE Corrections Dept. Employee Land Lease
SJR 11
ANALYST Peery
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
NA
NA
NA
NA
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Response Received From
New Mexico Corrections Department (NMCD)
No Response Received From
General Services Department (GSD)
SUMMARY
Synopsis of Bill
Senate Joint Resolution 11 calls for the Property Control Division of the General Services De-
partment to be authorized to lease approximately 50 acres of the described property at the Peni-
tentiary of New Mexico in Santa Fe county for a period not exceeding 99 years to a state-
controlled nonprofit corporation for the sole purpose of providing housing to Corrections De-
partment and other governmental employees. The joint resolution calls for the lease to be con-
tingent on the completion of a feasibility analysis that shows that the lease and proposed use of
the property is in the best interest of the state.
FISCAL IMPLICATIONS
NMCD states there appears to be no direct fiscal impact to the state, Corrections Department or
General Services Department. NMCD states it is the lender or bank that would be impacted fi-
nancially if the homes are built and no one buys or rents them. NMCD states the feasibility
study will determine if there are enough Corrections Department and other governmental em-
ployees interested in affordable housing on the Penitentiary of New Mexico grounds.
pg_0002
Senate Joint Resolution 11 Page
2
NMCD states it is possible that the housing project will generate a revenue stream for the state in
future years, after all the debt on the project is paid off by the non-profit corporation.
SIGNIFICANT ISSUES
NMCD states under the proposed joint resolution, Property Control would lease the land to a
non-profit corporation. The corporation would borrow money from a bank or other financial in-
stitution to build and manage homes on the Penitentiary of New Mexico grounds. NMCD states
the payments made by Corrections Department and other governmental employees who then rent
or buy the homes goes to the non-profit corporation to pay off the debt. NMCD states since the
land remains state property, the individuals who buy the homes will not earn large amounts of
equity that some homeowners earn who own their homes and land. NMCD states the homeown-
ers must sell the homes back to the non-profit corporation if they decide to sell.
NMCD reports the New Mexico Mortgage Finance Authority will provide an entity to construct
or build the homes on the Penitentiary of New Mexico grounds, if the feasibility study supports
the housing project. Because the non-profit corporation does not have to pay for the land, and
because the New Mexico Mortgage Finance Authority and its builder realize significant econo-
mies of scale, the Corrections Department would be able to offer housing to its employees and
other governmental employees at prices significantly lower than market.
NMCD reports it supports the proposed legislation because it may ultimately provide affordable
housing to its staff working at the Penitentiary of New Mexico. NMCD reports most department
staff who work at the Penitentiary of New Mexico can not afford to live or own a home in Santa
Fe. NMCD states this makes it much more difficult to recruit and keep qualified staff.
ADMINISTRATIVE IMPLICATIONS
NMCD states there may be minimal administrative impact on certain department staff who serve
on the non-profit corporation that develops and manages the housing. NMCD states the depart-
ment should be able to absorb this administrative impact.
RLP/yr