The New Mexico Finance Authority (NMFA) was created by the New Mexico State Legislature in 1992 to finance infrastructure projects for the state’s counties and cities and certain departments of state government. The objective was to provide low-cost financing for borrowers who might not otherwise be able to access the tax-exempt bond market on a cost-effective basis. The 1992 statute created the Public Projects Revolving Fund (“PPRF”) as the vehicle to accomplish this financing objective. As authorized by the statute, the NMFA issues tax-exempt PPRF bonds to obtain the funds it loans to New Mexico governmental entities. The statute created the Governmental Gross Receipts Tax to serve as a credit enhancement for the NMFA’s bonds. Although the legislature has created additional program responsibilities for the NMFA, the PPRF remains the core of its activities.
The NMFA is governed by an eleven member Board of Directors. The NMFA is not subject to the supervision or control of any other board, bureau, department or agency of the state. The Legislative Oversight Committee of the New Mexico State Legislature is empowered to monitor and oversee its operations.
The Authority’s primary programs include:
The Public Project Revolving Fund (“PPRF”) is the NMFA’s flagship program and was created in 1994 to assist a wide range of public entities in accessing the capital markets. The fund has grown to become a broad-based financier of state and local government agencies that provides funding for a diversity of projects each year. This diversity has helped the PPRF attain higher bond ratings, lower costs of issuance to all borrowers, and give below-market interest rate loans to disadvantaged entities. It has also allowed the NMFA to continue to offer a variety of program enhancements to borrowers.
The Drinking Water State Revolving Loan Fund (“DWSRLF”) is operated in partnership with the New Mexico Environment Department (“NMED”) to provide low-cost financing for the construction of and improvements to drinking water facilities throughout New Mexico in order to protect drinking water quality and the public health. This federal program, managed by the NMFA on behalf of the State of New Mexico, is funded through a federal capitalization grant of approximately $8 million annually.
Water Project Fund – Pursuant to the Water Project Finance Act, the NMFA administers the Water Project Fund and provides administrative support to the 16-member Water Trust Board, which recommends to the Legislature projects to be funded from annual distributions from the Water Trust Fund and 10% of the State’s annual senior lien severance tax bonds.
The Local Government Planning Fund was created by the New Mexico Legislature to provide up-front capital necessary to study the feasibility of water and wastewater public projects, long term water plans, water conservation plans and economic development plans.
New Markets Tax Credits – The US Department of Treasury has awarded the NMFA a total of $156 million in New Markets Tax Credit allocation — $110 million in 2008 and $46 million in 2011. Under this program, the NMFA leverages private capital with funds derived from the sale of tax credits to investors. The incentive to investors is a 39 percent federal income tax credit earned over seven years for every dollar invested in qualified low income and rural community enterprises.