Roadrunner Capitol Reports
Legislation Detail

H 55 PUBLIC-PRIVATE PARTNERSHIP ACT

Rep Joy Garratt

Actions: HPREF [2] HCEDC/HJC-HCEDC- w/drn - ref HTPWC/HJC-HTPWC [3] DP-HJC [5] DNP-CS/DP [7] fl/a- PASSED/H (63-2) [9] SJC/SFC-SJC API.

Scheduled: Not Scheduled

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Summary:
 House Bill 55 (HB 55) enacts the Public-Private Partnership Act that allows public partners to enter into public-private partnership agreements to facilitate public projects, including public transportation and broadband facilities. It creates the Public-Private Partnership Board and the Public-Private Partnership Project Fund and provides that the Procurement Code does not apply to PPP agreements.     
Legislation Overview:
 HB 55 enacts the Public-Private Partnership Act (PPP Act) whose purpose is to provide economic and administrative efficiencies in connection with the development of public projects partners.

Public projects are limited to projects concerning a public transportation facility or infrastructure or improvement to a public transportation facility, other than a toll road, and public construction or improvement of broadband telecommunications network facilities.  The bill defines “broadband telecommunications network facilities” as including the electronics, equipment, transmission facilities, and fiber-optic cables that transmit data at the federal minimum speed standard, and is owned and used by a provider of internet access services. 

The bill requires the public partner to undertake certain publication of interest, analyses, determinations, demonstrations, and a public hearing before entering into a public-private partnership project (PPP project). The public partner must publish a notice of interest three times in a newspaper in the county where the public partner is located, and it must also be published on the public partner’s website, if they have one.  

The bill requires a PPP agreement to include at least fifteen elements such as clawback or recapture provisions; definition of roles and responsibilities among the partners; a financial plan; and performance and payment bonds and other guarantees from the private partner.  A private partner must provide performance and payment bonds as required under Section 13-4-18 of the Public Works Contract Act, and also provide a form of security which may be for less than 100% of the contract value. The operations and maintenance of a public project – except for a project involving broadband infrastructure – must be performed by the public partner.  
 
The bill provides options that a public partner may take in the event of an uncured default.  It requires the PPP board to approve any PPP project in excess of ten million dollars ($10,000,000). If the value of the PPP project is less than ten million dollars, then the PPP Board will report the fully executed PPP agreement within thirty days of its execution.

The bill creates the Public-Private Partnership Board (PPP Board) consisting of nine members including the secretaries of economic development; finance and administration; general services; transportation; the chief executive officer of the authority; and four public members, the latter of whom must have certain relevant professional experience. It creates staggered terms for the public members. After the initial public-member appointees’ terms, the public members will have a six-year term. The public members will receive per diem and mileage.

HB 55 provides the PPP Board with certain powers including meeting quarterly; developing forms of application of a PPP; promulgating relevant rules; reviewing and considering certain PPP projects; making recommendations on proposed PPP projects seeking funding; and certifying the need for issuance of revenue and refunding bonds.

It establishes duties of the NM Finance Authority under the PPP Act including staffing the PPP Board; administer the Public-Private Partnership Project Fund (PPPP Fund); developing grant and loan applications; making loans and grants from the PPPP Fund; being compensated from the PPPP Fund for administrative and reimbursable costs; and issuing revenue and refunding bonds in accordance with the act, the latter upon certification by the PPP Board.

HB 55 creates the non-reverting Public-Private Partnership Project Fund whose funds will be used to make grants of up to $75,000 to a public partner for the purposes of studying the costs and benefits of entering into a public-private partnership for a proposed public project. A private partner will provide matching funds. It allows loans under certain conditions. The bill specifies that the fund will be used for grants or loans to a public partner; and a public project for which the cost is in excess of $10,000,000. Money in the PPPP Fund may be used for the board’s and the authority’s administrative and reimbursable costs. It allows for grants and loans to an Indian nation, tribe or pueblo who has entered into a PPP agreement.

HB 55 directs that construction of a public project under a PPP agreement is subject to Public Works Minimum Wage Act, the Subcontractors Fair Practices Act and the Public Works Apprentice and Training Act.

HB 55 creates the revenue bonding capacity of the authority upon certification by the board. It allows for mortgages and debt service reserve accounts in certain circumstances. It limits these bonds to a thirty-year maturity or less. It allows for redemption of these bonds and sale at a public or negotiated sale. Upon certification by the board, the authority may issue a resolution declaring the necessity for issuing the bonds, authorizing their issuance, and designating the revenue sources for the repayment of the bonds. It establishes similar powers and responsibilities for refunding bonds.

HB 55 specifies that the PPP bonds do not create an obligation, debt or liability of the state or any other of its political subdivisions, not even for breach or default of the agreement. 

It requires the board by December 1, 2022 and every December 1 thereafter to provide the governor and the NMFA Oversight Committee with a report regarding the grant and loam applications and the PPP agreements approved by or reported to the board; the status of the PPPP Fund; any certifications for the issuance of revenue or refunding bonds made by the board to the authority; and any recommended changes to the PPP Act. 

HB 55 specifies that the powers under this act are supplemental and additional to powers conferred by other laws and are not subject to the requirements for the issuance of bonds except for the Public Securities Act, the Public Securities Short-Term Interest Rate Act and the Public Securities Limitation of Action Act. It directs the provisions of the PPP Act be liberally construed.

HB 55 modifies Section 13-1-98 NMSA 1978 (Exemptions from Procurement Code) to include agreements and contracts entered into pursuant to the PPP Act as exempt from procurement-code requirements.
HB 55 is effective July 1, 2022. 
 
Status Quo:
 Current law does not provide for such a public-private contractual process.  Current law provides that such projects would need to comply with the Procurement Code.    
Committee Substitute:
 The House Judiciary Committee Substitute to HB 55 incorporates the majority of the original bill and makes the following changes:
•	Amends the notice requirement by adding that notice must also be published in a newspaper in the county where the proposed public project will occur, if different from where the public partner is located.  
•	Increases the size of the Public-Private Partnership Board from nine to eleven members (one additional public member and the director of the office of broadband access or expansion).  
•	Adds that the Board can enter into joint powers agreements with any other public sector partner or Indian nation, tribe or pueblo.  
•	Amends Section 6-21-6 by allowing money in the Public Project Revolving Fund to be used to purchase bonds issued pursuant to the Public-Private Partnership Act. 
•	Adds a delayed repeal, so that Public-Private Partnership Act is repealed July 1, 2032.