[HISTORY: Adopted by the Board of County Commissioners of Doña Ana County 9-9-2009 by Res. No. 2009-87. Amendments noted where applicable.]
GENERAL REFERENCESAttachment 1 - Exhibit A, Application for Industrial Revenue Bond Financing Attachment 2 - Appendix A, Annual Company Revenue and Expense Estimates
Economic development plan — See Ch. 166.
Fees — See Ch. 179.
Foreign trade zone — See Ch. 213.
The County Industrial Revenue Bond Act, NMSA §§ 4-59-1 through 4-59-16 (the "Act"), authorizes counties to acquire, own, lease or sell "projects" (as defined in the Act) for the purpose of promoting industry and trade and for the purpose of inducing manufacturing, industrial and commercial enterprises to locate and expand in New Mexico. The Act also authorizes counties to issue revenue bonds to finance the acquisition and/or construction of such projects.
Industrial revenue bonds have three principal benefits for companies: property tax exemptions, gross receipts tax exemptions and lower interest rates than other types of borrowings. The first two are available for a variety of projects. The third depends on the industrial revenue bonds being tax-exempt, under federal tax regulations, which is a benefit available primarily for certain "small issue" manufacturing projects.
Only "projects" can be financed with industrial revenue bonds.
Projects can include:
Certain nonprofit facilities [501(c)(3)];
Facilities that manufacture, process, and/or assemble products such as: biotechnology manufacturing and research; precision metal fabrication of components for the automotive or aerospace industry; food processing and packaging; plastics and paper products;
Commercial enterprise in storing, warehousing, distributing and logistics;
Pollution control facilities for industry, commercial enterprises, or utility companies;
Financial services institutions; and
Other uses as allowed by state law.
Projects can include land, buildings, furniture, fixtures and equipment. Projects do not need to include land or even buildings; they can be for equipment only. Also, any land included in a project need not be owned in fee. The costs of projects that can be financed are limited to capital costs. Working capital generally cannot be financed with industrial revenue bonds.
The New Mexico State Board of Finance is the governing body that determines the allocations of the volume cap which is required for an industrial revenue bond [except those for 501(c)(3) entities] to be tax-exempt. For further information on this subject and its procedures, contact the Director of the State Board of Finance at (505) 827-3930 or visit the state website at www.state.nm.us.
Doña Ana County (the "County") offers conduit financing for industrial and nonindustrial projects through the issuance of tax-exempt industrial revenue bonds or taxable industrial revenue bonds. Both types can exempt up to 100% of property taxes, subject to the County's PILT policy as hereinafter set forth.
The County supports the use of this financing tool as a mechanism to attract industrial or commercial operations to locate in the County or expand existing operation in the County, provided that the policy and procedural requirements of this application packet are satisfied.
Real and personal property included in a project financed with industrial revenue bonds is exempt from property tax for as long as the bonds are outstanding, up to a maximum of 30 years. The property tax exemption results from the fact that title to the project property is held by the County, and the property of a County is exempt from taxation under the New Mexico Constitution. The County may require "payment in lieu of taxes" (PILT) or may shorten the lease term, thereby decreasing the benefit of the property tax exemption.
Furniture, fixtures and equipment purchased with industrial revenue bond proceeds for a project is exempt from gross receipts if purchased in the state and compensating taxes if purchased out of state. Once again, the exemption results from title being held by the County as the issuer. A special nontaxable transaction certificate is required for the gross receipt tax exemption. Building materials incorporated in a project are not exempt from gross receipts and compensating taxes. An additional investment tax credit may be available for manufacturing equipment, depending on the number of new employees related to the project. Construction is considered services and is therefore not exempt from gross receipts tax.
From start to finish, the issuance of industrial revenue bonds by a county generally takes approximately 120 days. Ordinances do not go into effect until 30 days after adoption. In addition, public notice of the intent to adopt an industrial revenue bonds ordinance must be published at least 14 days prior to consideration. This process takes at least 60 days. These minimum times apply to "self purchases." If a third-party lender is involved, several more weeks should be added; if a credit enhancer is involved, even more time.
It is in the public interest that the issuance of industrial revenue bonds be made only after the County has been fully informed concerning the applicant and its current status and future plans; the protection of the County's interests requires thorough investigation of any request for industrial revenue bonds.
Any person or firm desiring to request that Doña Ana County issue industrial revenue bonds shall first secure from the County's Finance Director an application and a copy of the County's Industrial Revenue Bond Policy and Procedures.
The County will use the information provided by the applicant in the industrial revenue bonds application form to evaluate the proposed project in terms of fulfillment of all goals and objectives contained in the County's Industrial Revenue Bonds Policy.
The County will consider and evaluate applications for industrial revenue bonds on the basis of the following criteria:
The extent to which the proposed project will create new or preserve existing employment opportunities within the community;
The extent to which the proposed project with industrial revenue bonds will increase the County's tax base compared to the extent to which the proposed project without industrial revenue bonds will increase the County's tax base;
The extent to which the proposed project will enhance and strengthen the County as a center of commerce, including, but not limited to, research, food processing, and manufacturing or distribution point location; and
The extent to which the proposed project will upgrade and improve structures, improve site accessibility and usefulness, and otherwise provide for the public health, safety and welfare.
The Board of County Commissioners (hereinafter "the Board") reserves the right to deny any application for financing at any stage of the proceedings prior to the issuance of the bonds.
All applications and supporting materials and documents shall remain the property of Doña Ana County.
Matters of confidentiality for public disclosure, relating to the applicant or his business, shall be honored to the extent that such information withheld is not required to be produced as a public record under the New Mexico Inspection of Public Records Act, as determined by the County's legal counsel.
Editor's Note: See NMSA § 14-2-1 et seq.
The applicant shall make a request to issue bonds for a project by filing with the County Manager an inducement resolution or notice of intent, seven copies of the project plan and the fees and deposit required by this policy. The County Manager shall review all bond projects to determine that proposed project plans are complete. Within 15 days of receiving the project plan, the County Manager, or his designee, may, in accordance with applicable procurement requirements, contract with an independent consultant to prepare an economic and fiscal analysis of the proposed project. This analysis shall evaluate the proposed project according to the revenue bond project criteria promulgated by the County Manager.
Upon receipt of the completed analysis, the County Manager shall submit to the Board for discussion during a regularly scheduled meeting of the Board:
Any person wishing to comment on the proposed plan or the County Manager's recommendation may do so by submitting written comments to the Board with a copy to the County Manager at least eight days before the regular meeting during which the Board is scheduled to consider the bond ordinance which is the final action on the proposed plan. Public input can also be had at the Board's hearing to consider approval of the inducement resolution.
The Manager's recommendation and the Board's final action to approve, conditionally approve, or disapprove a project plan and inducement resolution or revenue bond ordinance shall take into consideration the bond ordinance, the County's development plans and policies and the promotion of the health, safety, security and general welfare of the citizens of the County and the State of New Mexico.
As a condition of County approval of an industrial revenue bond, the company may be required to make a payment to the County in an amount to be negotiated by and between the County and the applicant based upon the amount the applicant would otherwise pay to the County for property taxes for disbursements to the County and for the benefit of the local school district in which the project is situated.
Based upon the information submitted by the company, County staff shall determine the amount of property, if any, constituting the project which will be exempt from property taxation, as a result of the financing, and the estimated amount of taxes to the County and the local school district that would be otherwise collected with respect to such property in the first full year after completion of the project, if the project were not exempt. Unless waived by the Board, the company shall be required to pay, as a condition of obtaining the bond financing, PILT, commencing in the first full year after completion of the project, an amount as negotiated, based upon the taxes that would otherwise have been paid to the County and the local school district in such year. In addition, if there is an expansion of the buildings and improvements, which are exempt from taxation, the amount of the PILT allocable to the buildings and improvements shall automatically increase by a percentage equal to the percentage increase in the square footage of the building and improvements. The County staff will notify the company, at least one week prior to the date of consideration of the inducement resolution, of the amount of the PILT.
[Amended 9-27-2011 by Ord. No. 235-2011]
With the submission of the application and in addition to any other fees imposed pursuant to applicable ordinances or resolutions, the applicant shall pay to the County a nonrefundable fee as set forth in Chapter 179, Fees and Permits, for its internal administrative and other professional consulting services costs associated with obtaining and completing the analysis and processing required by this policy. These fees include, but are not limited to, County staff time, attorney's fees and financial analyst fees. If the cost of this analysis exceeds the amount set forth in Chapter 179, Fees and Permits, the applicant shall be billed by the County in intervals or in one lump sum for those additional costs which shall be paid by the applicant upon receipt of billing and at the closing on the bond sale. The billed fees charged are intended to cover the County's internal and external expenses incurred through the bond closing and are to be paid whether or not bonds are issued.
If the project is approved and bonds are issued and a project agreement lease is entered into by and between the County and the applicant, there shall be charged to the applicant and the applicant shall pay an annual administrative fee to the County for its duties and functions associated with administration of the project lease agreement and the bond obligations. That annual administrative fee shall be negotiated by and between the County and the applicant and shall be based upon the estimated number of hours of County staff time to be devoted to such administrative tasks. The amount, at a minimum, will be as set forth in Chapter 179, Fees and Permits. However, that annual administrative fee, once established, is subject to being increased in the event that it is necessary to spend additional County staff time or it is necessary to employ outside professionals because of extraordinary requests or requirements of the applicant or of the bond trustee or government regulatory agencies or because of involvement in litigation concerning the lease or the bonds. Payment by the applicant shall be made upon its receipt of billings from the County for such annual fees and additional costs.
Projects requesting industrial revenue bonds must be located within the legal boundaries of Doña Ana County.
All procedures leading to the issuance of an industrial revenue bonds, as well as the applicant's utilization of the proceeds from any industrial revenue bonds issue, shall be in compliance with applicable federal, state, and local laws, and the policies and requirements as are contained herein. The responsibility for compliance shall in all cases rest with the applicant. The only covenant or warranty which the County shall be required to make in connection with the proposed industrial revenue bond issuance, either to the applicant or to any other interested party, is that said County is a corporation or political subdivision of the State of New Mexico, organized and existing under the laws of said state and has the lawful authority to execute the transaction documents and perform its obligations thereunder.
For a tax-exempt transaction, the applicant must not incur any project costs, other than those authorized by the Internal Revenue Code, prior to the preliminary approval being authorized by the Board.
Bond counsel, who shall be the applicant's bond counsel, shall submit to the County and its reviewing bond counsel and the County Manager all bond documentation relating to the bonds at least 30 days prior to the date that the County is to submit for publication its consideration of the bond ordinance and agreement and the notice of intent to adopt the bond ordinance.
Any bonds issued by the County under the Act will be payable solely from the revenues generated by the project, revenues from the lease and/or sale of the project to the private party that will operate the project (the "company"), and/or revenues from any credit enhancement or security pledged by the company.
The County will require that it be indemnified for all costs and expenses (including attorney's fees) which it may incur as a result of participating in the financing, including those incurred with respect to any investigation, inquiry or litigation concerning the bonds, any offering document relating to the bonds, or project. The County will require that such indemnification come from an entity with the financial ability to meet the financial burden of such an indemnification.
The bond documents, including but not limited to the lease, will also be required to reflect the PILT and any other requirements as determined by the County.
The applicant's bond counsel, at the sole expense of the company, is responsible for making sure that all notices (notice of intent to adopt ordinance, notice of adoption of ordinance, TEFRA, etc.) are properly published in a newspaper of general circulation in Doña Ana County.
If the County is requested to adopt a bond sale resolution, applicant's bond counsel shall submit the form of the resolution to the County, its bond counsel and the County Attorney and the attorneys retained by the County, if any, at least two weeks prior to the date the sale resolution is to be adopted (although pricing information may be left blank until the bonds are priced).
Applicant's bond counsel shall submit all closing documents to the County Attorney and the County's bond counsel at least 10 business days prior to the scheduled closing date. Closings by mail, facsimile, or electronic means are acceptable to the County.
The Board reserves the right to modify any term or condition of this policy for a given project where unusual circumstances warrant a modification and the integrity of the policy remains intact.
This newly enacted industrial revenue bond policy applies to industrial revenue bond applications submitted on or after July 1, 2009.