A. Within thirty days of the effective date of this 2020 act, the state investment officer shall make a commitment to the authority to invest one percent of the average of the year-end market values of the severance tax permanent fund for the immediately preceding five calendar years for the purpose of making loans to local governments pursuant to this section; provided that investments made pursuant to this section are in compliance with the prudent investor rule set forth in the Uniform Prudent Investor Act [45-7-601 to 45-7-612 NMSA 1978]. The authority may expend no more than one percent of the funding made available to it pursuant to this section for administering the provisions of this section.
B. The authority shall receive and review applications for loans from the amount committed pursuant to Subsection A of this section to a local government that can demonstrate that the local government experienced at least a ten percent decline in local option gross receipts tax revenue for the last quarter of fiscal year 2020 due to the economic impacts of the coronavirus disease 2019 pandemic. The authority shall adopt rules to govern the application procedures and requirements for disbursing the loans.
C. The authority shall make loans from the amount committed pursuant to Subsection A of this section in accordance with the following:
(1) an application for a loan shall be received by the authority no later than December 31, 2020;
(2) the authority shall determine the proper amount for a loan in consultation with the local government division of the department of finance and administration and the local government; provided that:
(a) the authority shall take into consideration the local government's actual decline of local gross receipts tax revenue in the determination of a loan amount; and
(b) a loan shall not exceed fifty percent of the local government's actual decline of local gross receipts tax revenue; and
(3) terms of the loan shall include that:
(a) a local government may use loan proceeds for general operating expenses and revenue replacement;
(b) a local government shall dedicate future local option gross receipts tax revenue to secure the loan at a lien level as determined by the authority;
(c) a loan shall bear an annual interest rate equal to two percent;
(d) a loan shall be structured as an interest-only loan for a period of three years, at which time the local government shall begin making monthly payments on the principal and interest of any balance of the loan;
(e) interest on a loan shall not compound until twelve months following the date the loan proceeds are made available to the local government; and
(f) a loan shall be made for a period of no more than five years.
D. Receipts from the repayment of loans made pursuant to this section shall be transferred to the severance tax permanent fund.
E. No provision in a loan or the evidence of indebtedness of a loan shall include a penalty or premium for prepayment of the balance of the indebtedness.
F. On or before October 1 of a year that a loan made pursuant to this section is outstanding, the authority shall audit the loan program and submit a report of the findings to the New Mexico finance authority oversight committee, the legislative finance committee and the office of the governor. The report shall provide details regarding the loans made pursuant to this section, including:
(1) the name of each local government that received a loan, the loan amount, the balance owed and if the loan is in a delinquent status or default; and
(2) the number of jobs saved that can be attributed to receiving the loan, with evidence of how the loan saved each job.
G. The authority may exercise any power provided to the authority in the New Mexico Finance Authority Act [Chapter 6, Article 21 NMSA 1978] to assist in the administration of section; provided that the power is consistent with the provisions of this section.
H. As used in this section:
(1) "authority" means the New Mexico finance authority;
(2) "local government" means a municipality or county; and
(3) "local option gross receipts tax revenue" means:
(a) for a municipality, revenue distributed to the municipality pursuant to Section 7-1-6.4 NMSA 1978 and transferred to the municipality pursuant to Section 7-1-6.12 NMSA 1978; and
(b) for a county, revenue transferred to the county pursuant to Section 7-1-6.13 NMSA 1978.
History: Laws 2020 (1st S.S.), ch. 6, § 8.
ANNOTATIONSEmergency clauses. — Laws 2020 (1st S.S.), ch. 6, § 13 contained an emergency clause and was approved July 7, 2020.