The Public Project Revolving Fund (PPRF) is NMFA’s flagship program. The PPRF is used to finance public projects such as water system upgrades and other infrastructure improvements, fire and law enforcement equipment, and public buildings. Both market rate based loans and loans to disadvantaged communities at subsidized rates are made from PPRF funds.
Created in 1994, the PPRF is used to assist a wide range of governmental entities in accessing the capital markets at an all-in cost that is highly competitive and usually more competitive than other financing alternatives available to public entities.
NMFA is an AAA / Aa1 senior lien credit and AAA / Aa2 subordinate line credit (Agency Reports) whose bonds are highly sought by investors allowing NMFA to issue bonds in the capital markets at very attractive rates. NMFA passes the pricing benefits it receives in the public capital markets on to New Mexico communities in the form of loans.
The PPRF is funded primarily through NMFA’s share of Government Gross Receipts Tax (GGRT) which provides NMFA approximately $31 million per year in new capital. The NMFA uses this capital base to make loans to qualified borrowers and then replenishes the fund by issuing tax-exempt, tax-subsidized, and taxable bonds that are secured by the loans. Through December 31, 2018, loans from PPRF totaled 1,601 in number and $3.58 billion in amount. As of December 2018, 837 loans were active with $1.54 billion outstanding. A detailed list of all PPRF loans outstanding (PPRF Loan Portfolio) and information about PPRF loans and bonds is available within the NMFA Investor Resources to the left as is information about PPRF loan attributes (Attributes and ReCap Attributes). This information is updated on a monthly basis.
As provided under the Rules and Regulations of the Public Project Revolving Fund, the NMFA may provide certain “Disadvantage Qualified Entities” with up to $500,000 per fiscal year in below-market interest rate loans. To maximize the benefit provided by this “Disadvantaged Entity” interest rate benefit, the NMFA may limit these reduced interest rates to loans of $5 million or less. “Disadvantaged Qualified Entity” Assistance will be determined as follows:
1. Equal to 10% per infrastructure loan not to exceed $500.000 in aggregate per fiscal year or 100% per equipment loan not to exceed $150,000 may be provided at a fixed 2% interest rate if the applicant’s Median Household Income, as determined by the NMFA, is greater than 80% but less than 100% of the State’s Median Household Income, based on the most recent 5-year average of the Median Household Income from census data or through a survey acceptable to the Authority.
2. Equal to 10% per infrastructure loan not to exceed $500,000 in aggregate per fiscal year or 100% per equipment loan not to exceed $150,000 may be provided at a fixed 0% interest rate if the applicant’s Median Household Income, as determined by the NMFA, is 80% or less of the State’s Median Household Income, based on the most recent 5-year average of Median Household Income from census data or through a survey acceptable to the Authority.
Median Household Income data can be found at: MHI Information
NMFA’s Lending Officers assist communities in structuring loans to ensure the lowest possible all-in cost of debt consistent with good credit management policies (PPRF Current Pricing). Given that NMFA subsidizes the cost of issuance, is able to provide below-market loans to disadvantaged communities, is able to issue bonds into the capital markets at highly competitive rates, and has always had the capacity to make new loans, the Public Projects Revolving Fund has evolved into an important economic development resource for New Mexico communities.
PPRF Policies, Rules and Regulations can be found at: Policies