Bonds

New Mexico would authorize public-private partnerships on the state and local level under a bill unanimously approved by the state House Thursday and now headed to the Senate.

The bill, House Bill 213, would allow P3s for transportation and broadband projects.

“Those are two of the most pressing needs in the state,” said Rep. Cathrynn Brown, a Republican who joined with a handful of Democratic co-sponsors in the House. “I’m sure every legislator would have a to-do list,” Brown said.

The bill would allow for the issuance of revenue bonds, as well as loans and grants, through a P3 project fund set up within the New Mexico Finance Authority.

New Mexico is among a handful of states that do not authorize P3s as an alternative delivery structure for infrastructure projects. As of 2021, 36 states allow P3s for at least some types of projects, like transportation or education, with roughly half of those states having broad enabling legislation and the rest having limited enabling statutes, according to Bracewell LLP.

New Mexico has tried repeatedly to pass P3 legislation but it’s usually died in the Senate, Brown said, adding that she’s optimistic this year.

“I think legislators are more knowledgeable about the P3 structure and are more open to it,” she said. Narrowing the legislation to include only broadband and transportation projects should help, as should the fact that it passed unanimously in the House, Brown said.

The bill has not yet been assigned to a Senate committee. The Legislature has 14 days left in its session.

The bill would allow the state, its political subdivisions and other public bodies to enter into P3s, and sets up a structure for future legislation to broaden outside of the areas of transportation and broadband.

It would create an 11-member oversight board, and a P3 project fund within the NMFA, which would be allowed to float revenue bonds and make loans or grants to the public partners, including Native American tribes, for projects. The bill would also allow unsolicited offers from private parties for projects. If enacted, the legislation would take effect on July 1 and sunset in 2033.

In a fiscal impact report, the NMFA said “New Mexico lags and is overlooked by private sector investors in public infrastructure due to the lack of an effective framework allowing for public-private partnership agreements, and not enacting this bill may cause potential private partners to bypass New Mexico with otherwise viable P3 projects.”

The state’s transportation department recommended that the bill allow P3s for public projects that generate user fees “or other operational revenue.”

It’s not clear whether Gov. Michelle Lujan Grisham, a Democrat, supports the bill. Her office did not return requests for comment by press time.

Lead sponsor Rep. Joy Garratt, a Democrat from Albuquerque, said in a statement that the legislation has been in the works for more than a decade and “is something that local governments are directly asking for to open the possibilities of investment in their infrastructure projects.”

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