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--- version:introduced version+++ version:(document, no version)@@ -1,270 +1,114 @@-HOUSE BILL 165+Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance+committees of the Legislature. LFC does not assume respon sibility for the accuracy of these reports if they+are used for other purposes.-57th legislature - STATE OF NEW MEXICO - second session, 2026+F I S C A L I M P A C T R E P O R T-INTRODUCED BY+BILL NUMBER: House Bill 165+SHORT TITLE: Payment Of Certain IRB Special Assessments+SPONSOR: Serrato/Dixon+LAST+UPDATE:+ORIGINAL+DATE: 1/30/25-Linda Serrato and Meredith A. Dixon and D. Wonda Johnson+ANALYST: Torres-and Cynthia Borrego+REVENUE*+(dollars in thousands)+Type FY26 FY27 FY28 FY29 FY30 Recurring or+Nonrecurring+Fund+Affected+Property Tax+Assessments No fiscal impact Nonrecurring Local+Governments+Parentheses indicate revenue decreases.+*Amounts reflect most recent analysis of this legislation.-AN ACT+Sources of Information-RELATING TO LOCAL GOVERNMENT; CLARIFYING THAT SPECIAL-ASSESSMENTS UNDER THE IMPROVEMENT SPECIAL ASSESSMENT ACT SHALL-BE PAID BY PROPERTY OWNERS OR LESSEES WHO HOLD INDUSTRIAL-REVENUE BOND LEASES.+LFC Files-BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:+Agency or Agencies Providing Analysis+New Mexico Attorney General+Economic Development Department+State Ethics Commission- SECTION 1. Section 4-55D-2 NMSA 1978 (being Laws 2023,-Chapter 150, Section 2) is amended to read:+SUMMARY- "4-55D-2. DEFINITIONS.--As used in the Improvement-Special Assessment Act:+Synopsis of House Bill 165- A. "capital provider" means a private entity or its-designee, successor or assigns that finances or refinances an-eligible improvement pursuant to the Improvement Special-Assessment Act;+House Bill 165 (HB165) amends the Improvement Special Assessment Act to clarify that special+assessments imposed under the act must be paid by the property owner, or by the lessee when the+property is subject to an industrial revenue bond (IRB) lease. The bill makes conforming changes+to statutory definitions and enforcement provisions to ensure that lessees under IRB leases are+explicitly responsible for payment of special assessments associated with eligible improvements.- B. "county" means a county, including an H class-county;+Specifically, the bill amends Section 4 -55D-2 NMSA 1978 to add property interests held by a+lessee under eligible properties for special assessment improvements. The bill amends Section 4-+55D-5 NMSA 1978 to explicitly state that a special assessment shall be paid by the lessee when+property is under an IRB lease , and that under no circumstances shall a local government be+responsible for payment of a special assessment. The bill also clarifies that counties and+municipalities do not pledge their credit or assume liability for special assessment financing and+reinforces existing immunity provisions.+House Bill 165 – Page 2- C. "county ordinance" means an ordinance adopted by-a county pursuant to the Improvement Special Assessment Act to-establish a program within a designated region;+This bill does not contain an effective date and, as a result, would go into effect 90 days after the+Legislature adjourns, which is May 20, 2026.+FISCAL IMPLICATIONS- D. "department" means the economic development-department;+House Bill 165 has no direct fiscal impact on the general fund or state revenues. The bill does+not impose new taxes, create new credits or exemptions, or authorize state expenditures.- E. "eligible improvement" means a permanently-affixed energy efficiency improvement, renewable energy-improvement, water conservation improvement or resiliency-improvement installed on eligible property as part of the-construction or renovation of the property;+At the local government level, the bill may have indirect fiscal implications by allowing+properties under an IRB to access special assessment improvements. These assessments are used+as a financing mechanism called Commercial Property Assessed Clean Energy (C -PACE)+financing. C-PACE is a financing mechanism enabling owners of commercial, industrial, and+multifamily properties to secure low -cost, long- term funding for energy efficiency, water+conservation, and renewable energy upgrades. It provides up to 100 percent of project costs —+often 20 percent to 35 percent of total development costs —repaid through a voluntary property+tax assessment over 20 -30 years. As a local assessment, there may be some additional, but de+minimis administrative costs for local governments to administer another transaction.- F. "eligible property" means:+Since properties under an IRB do not have a property tax assessment, the bill clarifies that the+voluntary payment can be made by the lessee for the purpose of the improvements and allows+IRB properties to engage with the C-PACE funding mechanism.- (1) any privately owned commercial,-industrial, agricultural or multifamily residential real-property with five or more dwelling units, including real-property owned by an entity formally recognized as tax exempt-pursuant to Internal Revenue Code of 1986, as amended; or+The strong protections included in the bill ensure IRB lessees—not counties or municipalities —+are responsible for special assessments, and the bill reduces the risk that local governments could+be exposed to payment obligations or collection shortfalls.- (2) property interests of a lessee under an-industrial revenue bond lease for commercial, industrial,-agricultural or multifamily residential real property with five-or more dwelling units;+By expanding the pool of eligible candidates for C -PACE funding, the bill may improve the+credit quality and enforceability of special assessment liens on IRB -developed property,+lowering financing costs for development of such properties . To the extent this facilitates+additional private financing of energy, water conservation, or resiliency improvements, there+could be secondary economic activity with associated gross receipts tax and employment impacts+from increased development activity.- G. "energy efficiency improvement" means measures,-equipment or devices that result in a decrease in consumption-of or demand for electricity or natural gas;+SIGNIFICANT ISSUES- H. "industrial revenue bond lease" means the lease-of property by a county or municipality to a person in-connection with a project under the authority of the Industrial-Revenue Bond Act or the County Industrial Revenue Bond Act;+HB165 addresses a structural ambiguity that arises when publicly owned property subject to an+IRB lease would like to participate in a special assessment financing program. Under IRB+arrangements, legal title is held by a county or municipality, while the private lessee enjoys+beneficial use and economic control. Without statutory clarification, this structure prevents IRB+lessees from accessing certain financing mechanisms. This bill would allow lessees to access+special assessment improvement financing such as C -PACE financing, as described in the fiscal+implications section above. The bill also ensures clarity that a local government could not be+deemed responsible for assessment payments.- I. "lessee" means a lessee under an industrial-revenue bond lease;+By explicitly assigning responsibility to the lessee, the bill:+• aligns payment obligations with the party receiving the economic benefit of the+improvements;+• reinforces the principle that IRBs should not expose local governments to financial+House Bill 165 – Page 3- [H.] J. "local government" means a municipality,-county or other general function governmental unit established-by state law;+liability beyond their intended role; and+• reduces legal and financial risk to counties and municipalities participating in+improvement special assessment programs.- [I.] K. "municipal" or "municipality" means any-incorporated city, town or village, whether incorporated under-general act, special act or special charter, incorporated-counties and H class counties;+The clarification may also increase participation by IRB lessees in special assessment programs+by providing certainty to capital providers that assessments are enforceable against the+appropriate obligor.- [J.] L. "program" means a special assessment-program that utilizes and conforms to the program guidebook and-uniform special assessment documents established by the-department pursuant to the Improvement Special Assessment Act;-- [K.] M. "program administrator" means a person-designated by a county to administer a program; "program-administrator" may be the department, the county or a third-party; provided that the administration procedures used conform-to the requirements of the Improvement Special Assessment Act;-- [L.] N. "program guidebook" means a comprehensive-document created by the department pursuant to the Improvement-Special Assessment Act, including uniform assessment documents,-appropriate guidelines, specifications, approval criteria and-other standard forms consistent with the administration of a-program that are not detailed in the Improvement Special-Assessment Act;-- [M.] O. "project application" means an application-submitted to a program administrator to demonstrate that a-proposed project qualifies for special assessment financing-pursuant to a program;-- [N.] P. "region" means a geographical area as-designated by a county pursuant to the Improvement Special-Assessment Act;-- [O.] Q. "renewable energy improvement" means an-energy system that generates energy by use of low- or zero-emissions generation technology with substantial long-term-production, including solar, wind and geothermal resources,-fuel cell equipment using an electrochemical process to-generate electricity and heat or biomass resources;-- [P.] R. "resiliency improvement" means improvements-that increase the resilience of a property, including air-quality, flood mitigation, storm water management, energy-storage and microgrids, alternative vehicle charging-infrastructure, fire or wind resistance or inundation-adaptation;-- [Q.] S. "special assessment" means a voluntary-assessment imposed on a property pursuant to the Improvement-Special Assessment Act for the total amount of special-assessment financing together with interest, penalties, fees-and charges related thereto;-- [R.] T. "special assessment agreement" means a-voluntary agreement of a property owner to allow a county to-place an assessment on the owner's property to repay special-assessment financing pursuant to the Improvement Special-Assessment Act;-- [S.] U. "special assessment assignable certificate"-means a document assigning a special assessment lien from the-county to a capital provider in an amount not to exceed the-amount of the special assessment financing for the term of the-special assessment lien;-- [T.] V. "special assessment financing" means the-total amount of financing provided by a capital provider-pursuant to a special assessment financing agreement, including-accrual of interest and penalties, charges, fees and costs of-enforcement of a special assessment lien;-- [U.] W. "special assessment financing agreement"-means a contract pursuant to which a property owner agrees to-repay a capital provider for special assessment financing and-to the terms of the special assessment financing, including the-treatment of prepayment and partial payment of a special-assessment, servicing arrangements, the payment of any finance-charges and fees and accrual of interest and penalties;-- [V.] X. "special assessment lien" means a lien-recorded in all counties in which the eligible property is-located to secure the special assessment, which assessment-remains on the property until paid in full;-- [W.] Y. "uniform assessment documents" means the-forms of county ordinance, special assessment agreement,-special assessment lien, special assessment assignable-certificate and other model documents prepared by the-department pursuant to the Improvement Special Assessment Act-for use in the program; provided, however, the department shall-not mandate a form of special financing agreement that shall be-supplied by a capital provider; and-- [X.] Z. "water conservation improvement" means-measures, equipment or devices that decrease the consumption of-or demand for water, address safe drinking water or eliminate-lead from water used for drinking or cooking."-- SECTION 2. Section 4-55D-5 NMSA 1978 (being Laws 2023,-Chapter 150, Section 5) is amended to read:-- "4-55D-5. IMPOSITION OF SPECIAL ASSESSMENT--AMOUNT--COLLECTION--SPECIAL ASSESSMENT LIEN CREATED.---- A. Upon entering into a special assessment-agreement, the county shall record a special assessment lien on-the subject property in the real property records of the county-in which the property is located.-- B. The recording of the lien pursuant to Subsection-A of this section shall include:-- (1) the legal description of the property;-- (2) the county assessor's parcel number of the-property;-- (3) the grantor's name, which shall be the-same as the property owner on the special assessment agreement;-- (4) the grantee's name, which shall be the-county in which the property is located;-- (5) the date on which the special assessment-lien was created;-- (6) the principal amount of the special-assessment lien;-- (7) the terms and length of the special-assessment lien; and-- (8) a copy of the special assessment-agreement.-- C. A special assessment lien shall be effective-during the period in which the special assessment is imposed-and shall have priority superior to all liens, claims and-titles except a lien for general ad valorem property taxes or-an improvement district lien that is coequal to property taxes.-- D. A special assessment lien runs with the land,-and that portion of the special assessment lien that has not-yet become due is not accelerated or eliminated by foreclosure-of the special assessment lien or any lien for taxes or-assessments imposed by the state, a local government or taxing-district against the property on which the special assessment-lien is imposed.-- E. A special assessment shall be paid by a property-owner unless the property is under an industrial revenue bond-lease, in which case the lessee shall pay the special-assessment, but under no circumstance shall a local government-pay a special assessment.-- [E.] F. Upon entering into a special assessment-agreement, the county shall execute and record a special-assessment assignable certificate from the county to the-appropriate capital provider. The special assessment-assignable certificate shall convey the special assessment lien-including all of the characteristics described in Subsection B-of this section. The holder of the special assessment-assignable certificate shall be solely responsible for the-billing and collection of the related special assessment and-for the enforcement of the special assessment lien.-- [F.] G. When the underlying special assessment-financing has been satisfied, the special assessment shall be-removed from the property and the county shall record a release-of the special assessment lien."-- SECTION 3. Section 4-55D-7 NMSA 1978 (being Laws 2023,-Chapter 150, Section 7) is amended to read:-- "4-55D-7. SPECIAL ASSESSMENT FINANCING.---- A. Special assessment financing shall be provided-by capital providers and disbursed directly by capital-providers to fund eligible improvements subject to a special-assessment financing agreement.-- B. A county [is] or municipality shall not be-liable in any way for the debt of the property owner [is] or-the debt of the special assessment financing, shall not be a-third-party obligor and [is] shall not [pledging] pledge or-[lending] lend its credit to the property owner, [or] the-capital provider or the special assessment financing."-- SECTION 4. Section 4-55D-10 NMSA 1978 (being Laws 2023,-Chapter 150, Section 10) is amended to read:-- "4-55D-10. IMMUNITY.--Nothing in the Improvement Special-Assessment Act shall be interpreted to pledge, offer or-encumber the full faith and credit of a county or-municipality."--- 9 -+IT/dw/sgs
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