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HB 299 IMPROVEMENT SPECIAL ASSESSMENT ACT

Current Location: SJC
Referrals: HLLC/HTRC/SJC

[6] HLLC/HTRC-HLLC [9] DP/a-HTRC [10] DP [12] fl/aa- PASSED/H (42-26) [14] SJC-SJC

HB 299 PDF  |  HB 299 FIR


Scheduled on - Date:  Time:   Location:

3/11/2021 [14]SINT - Sent to location Senate Judiciary (SJC)
3/10/2021 [12]HCAL - Floor twice amended House Calendar (HCAL)
3/10/2021 [12]HCAL - Passed the House of Representatives Senate Introduction (SINT)
3/05/2021 [10]HTRC - Do Pass House Temporary Calendar (HCAT)
3/02/2021 [9]HAFC - Do Pass as Amended House Taxation and Revenue (HTRC)
Synopsis:

 2nd Amended Synopsis March 09, 2021:

Hfla2/HB 299: House Floor amendment 2 for House Bill 299 enacts the Improvement Special Assessment Act. This act authorizes counties to impose, administer, and disburse special assessments to encourage the development of certain property improvements. Definitions are provided.

Original Synopsis February 20, 2021:

House Bill 299 (HB 299) enacts the Improvement Special Assessment Act. HB 299 authorizes counties to impose, administer, and disburse special assessments to encourage the development of certain property improvements. HB 299 repeals the Solar Energy Improvement Special Assessment Act. HB 299 provides definitions.

Analysis:

 House Bill 299 (HB 299) relates to local government and enacts the Improvement Special Assessment Act. Please see the original act for the full list of definitions provided in this act.

Repealed Law:
•	Solar Energy Improvement Special Assessment Act, Sections 4-55C-1 through 4-55C-9 NMSA 1978 (being Laws 2009, Chapter 270, Sections 1 through 8 and Laws 2019, Chapter 110, Section 4, as amended).


New Law:
•	Immunity.

Nothing in the Improvement Special Assessment Act will be interpreted to pledge, offer or encumber the full faith and credit of a county.


New Law:
•	Ordinance Establishing the Program.

HB 299 allows the Board of County Commissioners of a county to, by county ordinance, establish a program. 

HB 299 requires the county ordinance to be substantively in the form set forth in the program guidebook and will:

•	include a statement that the financing of eligible improvements, repaid by special assessments on eligible property benefited by such improvements, is in the interest of the public health, safety, and welfare; 

•	designate the region in which eligible property owners may finance eligible improvements pursuant to the Improvement Special Assessment Act; a county may designate more than one region and if multiple regions are designated, the regions may be separate, overlapping or coterminous; 

•	incorporate by reference the program guidebook, notwithstanding that a county adopting a program pursuant to the Improvement Special Assessment Act may narrow the definition of eligible improvements to be consistent with the county's climate goals; 

•	authorize and direct a county official to enter into special assessment agreements with property owners and capital providers and special assessment assignable certificates on behalf of the county to impose special assessments and assign special assessment liens for assessments approved by the program administrator pursuant to this section; 

•	authorize direct financing between an eligible property owner and a capital provider to finance eligible improvements; 

•	designate a program administrator; 

•	establish allowable dates for the payment of installments of special assessments, including provisions for differing optional time periods over which installments of special assessments may be paid, which time periods will be consistent with the payment dates for property taxes or other assessments due to the county; 

•	require that the interest rate, delinquent interest, penalties, terms of prepayment, and other terms of a special assessment will be established by a capital provider in the related special assessment financing agreement for such assessment; and 

•	direct the county treasurer to bill a special assessment imposed pursuant to a special assessment agreement on the property tax bill or stand-alone bill for the property subject to the special assessment and to collect the special assessment at the times described in the special assessment agreement and as provided for in the county ordinance. 


New Law:
•	Approval of Special Assessment.

Prior to entering into a special assessment agreement, a property owner will submit a project application to the program administrator in a form consistent with the program guidebook. 

The application will include: 

(1) for an existing eligible property: 

•	(a) where energy efficiency improvements, water conservation improvements or renewable energy improvements are proposed, certification by a licensed professional engineer or other professional listed in the program guidebook stating the proposed eligible improvements will either result in more efficient use or conservation of energy or water, the reduction of greenhouse gas emissions or the addition of renewable sources of energy or water; or 

•	(b) where resiliency improvements are proposed, certification by a licensed professional engineer stating the qualified improvements will result in improved resilience; 

(2) for construction of a new eligible property, certification by a licensed professional engineer stating that the proposed eligible improvements will enable the property to exceed the energy efficiency, water conservation, renewable energy, renewable water or resilience requirements of the applicable building code; 

(3) certification that the property owner requesting the proposed eligible improvements is the owner of record of the property on which the special assessment will be imposed and that there are no delinquent taxes or assessments on the property; 

(4) the name of the capital provider providing the special assessment financing and the proposed terms of the special assessment financing agreement, including: 

•	(a) the special assessment financing amount; 
•	(b) the interest rate; 
•	(c) administrative fees paid to the county; 
•	(d) a schedule of the installments of the special assessment; 
•	(e) the number of years the special assessment shall be imposed on the property; 
•	(f) delinquent interest or penalties; and 
•	(g) the conditions by which the property owner may prepay and permanently satisfy the debt owed pursuant to the special assessment financing agreement and remove the special assessment lien from the property; and 

(5) written consent from any holder of a lien, mortgage, or security interest in the real property that the property may participate in the program and that the special assessment lien will have priority coequal with other property tax and assessment liens. 

The county, prior to entering into a special assessment agreement will: 
•	receive from the program administrator certification that the proposed eligible improvements, eligible property, and property owner qualify for financing pursuant to the program. 


New law:
•	Imposition of Special Assessment-Amount-Collection-Special Assessment Lien Created.

HB 299 requires the county to record a special assessment lien on the subject property in the real property records of the county in which the property is located, upon entering into a special assessment agreement.

The recording of the lien pursuant to Subsection A of this section will include: 

•	(1) the legal description of the property; 
•	(2) the county assessor's parcel number of the property; 
•	(3) the grantor's name, which will be the same as the property owner on the special assessment agreement; 
•	(4) the grantee's name, which will be the county in which the property is located; 
•	(5) the date on which the special assessment lien was created; 
•	(6) the principal amount of the special assessment lien; 
•	(7) the terms and length of the special assessment lien; and 
•	(8) a copy of the special assessment agreement. 

A special assessment lien will be effective during the period in which the special assessment is imposed and will have priority coequal with other property tax liens and assessments. 

A special assessment lien runs with the land and:
•	that portion of the special assessment lien that has not yet become due is not accelerated or eliminated by foreclosure of the special assessment lien or any lien for taxes or assessments imposed by the state, a local government or taxing district against the property on which the special assessment lien is imposed. 

HB 299 requires the county to execute and record a special assessment assignable certificate from the county to the appropriate capital provider, upon entering into a special assessment agreement.

The special assessment assignable certificate will contain: 

•	(1) the legal description of the property covered by the special assessment assignable certificate; 
•	(2) the county assessor's parcel number of the property; 
•	(3) the grantor's name, which will be the county in which the property is located; 
•	(4) the grantee's name, which will be the appropriate capital provider and its successors and assigns; 
•	(5) the date on which the special assessment assignable certificate was created; and 
•	(6) the amount and terms of the special assessment lien assigned in the special assessment assignable certificate. 

When the underlying special assessment financing has been satisfied:
•	the special assessment will be removed from the property, and 
•	the county will record a release of the special assessment lien. 

Special assessments will be collected at times allowable pursuant to the applicable county ordinance and as set in a special assessment agreement. 

Money derived from the imposition and collection of a special assessment will be kept separately from other county funds, and: 
•	each special assessment payment received by the county will be promptly remitted to the holder of the special assessment assignable certificate for the related property.


New Law:
•	Delinquent Special Assessment Payments-Enforcement of Special Assessment Liens.

Delinquent payments due on a special assessment incur interest and penalties, as specified in the special assessment financing agreement. 

•	Delinquent payments due on a special assessment will be enforced in the event of a nonpayment of the special assessment or installment thereto. 

•	Delinquent payments due on a special assessment have the effect of a mortgage and will be foreclosed and sold in the manner provided by law for the foreclosure of mortgages on real estate. 

HB 299 requires the county to institute proceedings to: 
•	foreclose the special assessment lien against any property that is delinquent in the payment of the special assessment or installment of a special assessment for a period of more than one year. 

In any action seeking the foreclosure of a special assessment lien against any property after assignable certificates have been issued, if there is no other purchaser for the property having a delinquent special assessment, the county may: 

•	(1) offer the property to the capital provider if all outstanding taxes are paid by the capital provider; 

•	(2) purchase the property sold at the foreclosure sale; or 

•	(3) bid, in lieu of cash, the full amount of the assessment, interest, penalties, attorney fees, and costs found by the court to be due and payable pursuant to the special assessment lien and any costs taxed by the court in the foreclosure proceedings against the property ordered sold. 

If the county fails or refuses to foreclose and sell a property for the delinquent installments due on a special assessment, any holder of a special assessment assignable certificate secured by the special assessment may:
•	foreclose the special assessment lien on such delinquent property in the manner provided by law for the foreclosure of mortgages on real estate. 

Whenever a county is delinquent in the remittance of a special assessment payment received from a property owner to the holder of a special assessment assignable certificate pursuant to Subsection G of Section 5 of the Improvement Special Assessment Act:
•	the holder of the special assessment assignable certificate issued against the related property has the rights and remedies for the collection of the special assessment as are given by law for the collection of judgments against municipalities, counties, and school districts.


New Law:
•	Special Assessment Financing.

Special assessment financing will be provided by capital providers and disbursed directly by capital providers to fund eligible improvements subject to a special assessment financing agreement. 

The special assessment financing agreement will specify that, notwithstanding the obligation of the county treasurer to remit a special assessment payment received from a property owner to the relevant special assessment certificate holder, the county is not liable in any way for the debt of the property owner, is not a third-party obligor and is not pledging or lending its credit to the property owner or the capital provider.


New Law:
•	Eligible Costs-Additional Criteria Prohibited.

Costs capitalized into the special assessment financing principal amount may include: 

•	(1) the cost of materials and labor necessary for installation or modification of an eligible improvement;
•	(2) permit fees; 
•	(3) inspection fees; 
•	(4) capital provider's fees; 
•	(5) program administrative fees; 
•	(6) project development and engineering fees; 
•	(7) third-party review fees, including verification review fees; 
•	(8) capitalized interest; 
•	(9) interest reserves; 
•	(10) escrow for prepaid property taxes and insurance; and 
•	(11) any other fees or costs that may be incurred by the property owner incident to the installation, modification, or improvement on a specific or pro-rata basis. 

A county or a program administrator will not: 
•	require property owners or capital providers to access administrative services from the county or program administrator other than those provided for in the Improvement Special Assessment Act.

Program administrative fees will reflect the reasonable costs of the county or program administrator to provide administrative services for the program but: 
•	will not exceed one percent of the principal amount of the special assessment financing. 


New Law:
•	Program Guidebook-Program Administrator.

HB 299 requires the department to develop and make available on its website, within ninety days of the effective date of the Improvement Special Assessment Act: 
•	the program guidebook governing the terms and conditions under which financing for special assessments may be made available through the program. 

The program guidebook will include: 

•	(1) forms for the uniform assessment documents; 

•	(2) a statement that the term of the special assessment financing agreement will not exceed the useful life of the proposed eligible improvements; 

•	(3) a statement explaining the application process and eligibility requirements for participation in the program, consistent with Section 4 of the Improvement Special Assessment Act; 

•	(4) a statement explaining the consent requirement provided in Section 4 of the Improvement Special Assessment Act; and

•	(5) a statement explaining the engineer certification requirement set forth in Section 4 of the Improvement Special Assessment Act. 

HB 299 allows the department to elect to serve as a program administrator and may contract with a third party to assist with administration. 
•	In the event the department or its contracted third party provides administrative services for the program, counties establishing a program pursuant to the Improvement Special Assessment Act will designate the department or its contracted third party as program administrator, 
•	in addition to any other program administrator designated by the county. 

HB 299 allows the Board of County Commissioners to authorize a department or official of the county as program administrator pursuant to the county ordinance and may contract with a third party to assist with the administration of the program. 

Pursuant to the Joint Powers Agreements Act, any combination of counties may agree to jointly administer the program pursuant to the Improvement Special Assessment Act, but:
•	the secretary of Finance and Administration will not approve more than one joint powers agreement for the administration of a single program.




Amendments:

2nd and 3rd Amended Analysis March 09, 2021:

Hfla1&2/HB 299: House Floor amendments 1 and 2 for House Bill 299 make the following changes:

Hfla2/HB 299 strikes the request for repealing the Solar Energy Improvement Special Assessment Act. This repeal has been removed from the entire act.

Hfla1/HB 299 amends the Program Administrator definition to now mean: 

•	a person designated by a county to administer a program; program administrator may be the department, the county or a third party, provided that the administration procedures used conform to the requirements of the Improvement Special Assessment Act.

Hfla1/HB 299 amends Approval of Special Assessment, created by the original act and now states:

Amended Subsection (A):

Prior to entering into a special assessment agreement, a property owner will submit a project application to the program administrator in a form consistent with the program guidebook. 

The application will include: 
•	(5) written consent from any holder of a lien, mortgage or security interest in the real property that the property may participate in the program and that the special assessment lien will have priority superior to all liens, claims and titles except a lien for general ad valorem property taxes or an improvement district lien that is coequal to property taxes.

Hfla1/HB 299 amends Imposition of Special Assessment-Amount-Collection-Special Assessment Lien Created, created by the original act and now states:

Amended Subsection (C): 
•	A special assessment lien will be effective during the period in which the special assessment is imposed and will have priority superior to all liens, claims and titles except a lien for general ad valorem property taxes or an improvement district lien that is coequal to property taxes.

Hfla1/HB 299 amends Program Guidebook-Program Administrator, created by the original act and now states:

Amended Subsection (D):
•	Any combination of counties may agree to jointly administer a program pursuant to a memorandum of understanding. 
•	Any combination of counties may also agree to jointly administer a program pursuant to an agreement under the Joint Powers Agreements Act; the secretary of Finance and Administration will not approve more than one joint-powers agreement for the administration of a single program.


1st Amended Analysis March 02, 2021:

HLLCa1/HB 299: The House Local Government, Land Grants and Cultural Affairs Committee amendment 1 to House Bill 299 clarifies Section 3, Subsection (D) of the original act by adding a reference to issue, in regards to special assessment assignable certificates. The synopsis section was not impacted by this change.

Section 3: The Board of County Commissioners of a county may by county ordinance establish a program. The county ordinance will be substantively in the form set forth in the program guidebook and will:

•	(D): authorize and direct a county official to enter into special assessment agreements with property owners and capital providers and issue special assessment assignable certificates on behalf of the county to impose special assessments and assign special assessment liens for assessments approved by the program administrator pursuant to this section.

Current Law: