New Mexico Register / Volume XXXV, Issue 24 /
December 23, 2024
TITLE 2 PUBLIC FINANCE
CHAPTER 70 CAPITAL EXPENDITURES
PART 4 POLICY ON CAPITAL EXPENDITURES BY STATE EDUCATIONAL
INSTITUTIONS
2.70.4.1 ISSUING AGENCY: State Board of Finance.
[2.70.4.1 NMAC - Rp,
2.70.4.1 NMAC 12/23/2024]
2.70.4.2 SCOPE: All institutions of higher
education confirmed by Article 12, Section 11 of the New Mexico Constitution.
[2.70.4.2 NMAC - Rp, 2.70.4.2 NMAC 12/23/2024]
2.70.4.3 STATUTORY AUTHORITY: Section 21-1-21, NMSA 1978, as
amended, which requires prior approval by the higher education department and
state board of finance of any expenditure by any state educational institution
confirmed by Article 12, Section 11 of the state constitution for the purchase
of real property or construction of buildings or other major
structures or major remodeling projects.
Section 21-1-21.1, NMSA
1978, as amended, which requires evidence of adequate
parking. Executive Order 2006-001, which
establishes energy efficiency green building standards for state of New Mexico
executive buildings, including the higher education department.
[2.70.4.3 NMAC - Rp, 2.70.4.3 NMAC 12/23/2024]
2.70.4.4 DURATION: Permanent.
[2.70.4.4 NMAC - Rp, 2.70.4.4 NMAC 12/23/2024]
2.70.4.5 EFFECTIVE DATE: December 23, 2024, unless a
later date is cited at the end of a section.
[2.70.4.5 NMAC - Rp, 2.70.4.5 NMAC 12/23/2024]
2.70.4.6 OBJECTIVE:
A. Section 21-1-21 NMSA
1978 states: "No expenditure shall
be made by any state educational institution confirmed by Article 12, Section
11 of the state constitution for the purchase of real property or the
construction of buildings or other major structures or for major remodeling
projects without prior approval of the proposed purchase or construction or
remodeling by the board of educational finance and the state board of
finance".
B. Involvement of the
state board of finance in the approval of capital outlay projects and capital
expenditures at New Mexico colleges and universities is specified by this
statute. This involvement is
substantially different from the involvement with state building projects,
where the state board of finance is the final authority for accepting bids and
determining whether the project will be constructed. In the case of educational institutions, the
authority for the actual construction of the project resides with the board of
regents of the institution. However, New
Mexico statute requires the higher education department and the state board of
finance to provide prior approval to the board of regents before they are
allowed to proceed with the project.
C. Since the statute
requires the higher education department and the state board of finance to
provide "prior" approval of the project, these two bodies should
review all major capital projects to determine that the proposed project is in
keeping with the overall statewide plan for higher education. The source of funding for the project should
also be carefully reviewed to determine that sufficient funds are available for
the project and the use of the funds will not have an adverse effect on other
portions of the institution's budget. The
sufficiency of planning for the project, and the completeness of the review of
the project by the board of regents should also be determined.
[2.70.4.6 NMAC - Rp, 2.70.4.6 NMAC 12/23/2024]
2.70.4.7 DEFINITIONS: For these purposes,
"major" is defined as:
A. "Appraisal report" for the purpose of real property purchases means a report of an
opinion of value conducted by a general certified appraiser and that meets all
requirements under the Uniform Standards of Professional Appraisal Practice
(USPAP).
B. “Board” means the state board of finance.
C. “Current” means:
(1) in the context of a
title binder dated within six months of the proposed closing date;
(2) in the context of an
appraisal an appraisal report with an effective date within one year of the
date of submission of the proposed transaction to the board for approval.
D. “Equipment costs” for the purpose of construction or remodeling are defined as costs for
equipment, machinery, apparatus, appliances, furniture, and fixtures, either
moveable or non-moveable.
E. “Major” for the purpose of remodeling projects is defined as any project
meeting the cost thresholds established in this subparagraph E so long as
equipment costs do not exceed fifty percent of the total project cost.
(1) any project funded, in whole or in part, by capital outlay
legislation signed into law for which costs exceed $1,600,000.00, at
institutions with FTE enrollments under 1,500;
(2) any project funded, in
whole or in part, by capital outlay legislation signed into law for which costs
exceed $2,400,000.00, at institutions with FTE enrollments of 1,500 or more;
(3) any project funded
exclusively by sources other than legislative appropriations for which costs exceed
$160,000.00, at institutions with enrollments of 1,500 FTE or less; or
(4) any project funded
exclusively by sources other than legislative appropriations for which costs exceed
$950,000.00, at institutions with enrollments exceeding 1,500 FTE.
F. “Public entity” means a local public body, a state agency, a school district, a state
educational institution, or other governmental instrumentality created by
statute.
G. “Remodel” means to change, modify, or transform a space in a way that alters its
use, design, or function, including the reconfiguration of spaces. Remodel encompasses renovation and repair when
the use, design, or function of a space is altered.
H. “Renovation” means the change, strengthening, or addition of load-bearing elements;
or the refinishing, replacement, bracing, strengthening, upgrading, or
extensive repair of existing materials, elements, components, equipment or
fixtures. To revive, restore, or repair
an existing space.
I. “Repair” means the reconstruction, replacement, or renewal of any part of an
existing building for the purpose of its maintenance or to correct damage. Repair may include infrastructure systems
replacements (e.g., elevators, roofs, HVAC, signage, stucco, windows, lighting,
electrical, plumbing, flooring).
[2.70.4.7 NMAC - Rp, 2.70.4.7 NMAC 12/23/2024]
2.70.4.8 PROJECTS REQUIRING REVIEW:
A. All projects that fall
under the following categories must be submitted for review by the state board
of finance:
(1) any purchase of real
property;
(2) any construction of a
new building;
(3) any project involving a
bond issue which requires state board of finance approval;
(4) any other major project,
including construction of facilities such as parking lots or radio towers; site
improvements or landscaping; and remodeling of an existing building, but not
demolition unless part of a larger project that requires approval.
B. In-house labor applied
to a project must be included as part of the cost of the project. Projects may not be artificially segmented or
phased in a manner designed to avoid review by the state board of finance.
[2.70.4.8 NMAC - Rp,
2.70.4.8 NMAC 12/23/2024]
2.70.4.9 INFORMATION REQUIRED FOR
SUBMISSION FOR PURCHASE OF REAL PROPERTY:
A. To ensure that the
state board of finance will have sufficient information to review capital expenditures
at New Mexico's educational institutions, the following information must be
submitted to the board after the higher education department has approved the
request:
(1) legal description of the
property;
(2) a copy of a current
appraisal report completed by a general certified appraiser for commercial
property or a general certified appraiser or a residential certified appraiser
for residential property and report of review from the property tax division of
the taxation and revenue department if the appraisal was not done by the
property tax division; the educational institution seeking property tax
division review must submit necessary information to the property tax division
within the time frame specified by the property tax division; when the seller
is another governmental entity, neither an appraisal nor property tax division
review is required;
(3) a site improvement
survey to verify the legal description and to uncover the existence of recorded
and unrecorded easements and encroachments;
(4) a description of the use
to which the property will be placed;
(5) the source of funds for
the purchase to include citation of the relevant section of the law when source
of funds is legislative appropriation and in the case of bond funding,
representation that bond proceeds are available;
(6) current title binder in
the form required by 13.14.5 NMAC evidencing clear title, including all
required statements. For any special exceptions listed in Schedule B, the
public body shall provide an explanation of each exception and measures it is
taking to mitigate any risks associated with the exception;
(7) the form of general
warranty deed by which the educational institution will take title in fee
simple absolute containing a legal description of the property and warranty
covenants; when the seller is another governmental entity, transfer of title
shall be by quitclaim deed;
(8) phase I of an
environmental assessment to verify prior use of the land with
regard to possible environmental hazards;
(9) a copy of the purchase
agreement containing a provision making the purchase subject to the approval of
higher education department and the state board of
finance; and
(10) evidence of approval of the
purchase by the applicable state educational institution’s governing board and the
higher education department.
B. Waivers of certain
provisions may be granted at the discretion of the board of finance, on a case
by case basis,
C. Requirements affecting
bond approvals are set forth in 2.61.5 NMAC.
[2.70.4.9 NMAC - Rp, 2.70.4.9 NMAC 12/23/2024]
2.70.4.10 INFORMATION REQUIRED FOR
SUBMISSION FOR CONSTRUCTION OF BUILDINGS OR OTHER FACILITIES; MAJOR REMODELING:
A. To ensure that the state board of finance will have
sufficient information to review capital expenditures at New Mexico's
educational institutions, the following must be submitted to the board after
the higher education department has approved the request:
(1) a description of the
facility to be constructed or remodeled, including the types of space to be
included, the function of the facility, and the relationship of the project to
the institution's five-year master plan;
(2) the total square footage
of the facility, both net assignable square feet and gross square feet;
(3) the cost per square foot
for the construction or remodel of the facility and the cost per square foot
for the total project;
(4) a budget for the
project, including equipment costs, architect and engineering fees and
contingencies;
(5) source of funds to
include citation of the relevant section of the law when source of funds is
legislative appropriation and in the case of bond funding, representation that
bond proceeds are available;
(6) certificate of adequate
parking as required in Section 21-1-21.1, NMSA 1978, as amended;
(7) evidence of approval of
expenditure by applicable board of regents and higher education department;
(8) evidence of approval by higher education
department and the energy, minerals, and natural resources department of the
following criteria as it may be amended from time to time:
(a) certification
and demonstration of compliance with all commercial energy conservation
requirements as set forth in 14.7.9 NMAC. Certification and demonstration means showing of qualifications or
attributes that comply with or meet the specified requirements or standards set
forth in 14.7.9 NMAC by either officially attesting to or authoritatively
confirming through review by the energy, minerals, and natural resources department
or the higher education department; and
(b) if
the facility is less than or equal to 5,000 square feet, evidence of energy
efficient measures;
(c) if
the facility is greater than 5,000 square feet and less than or equal to 15,000
square feet, evidence of fifty percent reduction in energy use compared to
existing facilities of similar type as defined by the United States department
of energy; or
(d) if
the facility is greater than 15,000 square feet, evidence of fifty percent
reduction in energy use compared to existing facilities of similar type as
defined by the United States department of energy and the achievement of a LEED
silver rating or better.
B. Waivers of certain
provisions may be granted at the discretion of the board of finance, on a case
by case basis.
C. Requirements
affecting bond approvals are set forth in 2.61.5 NMAC.
[2.70.4.10 NMAC - Rp, 2.70.4.10 NMAC 12/23/2024]
2.70.4.11 REVISED PROJECTS: To ensure that the project actually constructed will be substantially the same as that
approved by the higher education department and the state board of finance, any
change in the project resulting in a change in the budget of more than ten
percent will require separate review and approval by the state board of
finance. The same information will be
required for such changes as is required for the original submission of the
project. Any additional information
which can help in evaluating a proposed project can be requested by the state
board of finance prior to approval.
[2.70.4.11 NMAC - Rp, 2.70.4.11 NMAC 12/23/2024]
HISTORY OF NMAC 2.70.4
NMAC:
Pre-NMAC History: The material in this part was derived from
that previously filed with the State Records Center and Archives:
Directive 89-4, Policy on Capital
Expenditures by State Educational Institutions, 8/30/1989.
History of Repealed Material: 2.70.4 NMAC, Policy on Capital Expenditures
by State Educational Institutions filed 1/17/2007 Repealed effective 12/23/2024.
Other: 2.70.4 NMAC, Policy
on Capital Expenditures by State Educational Institutions filed 1/17/2007 Replaced by 2.70.4 NMAC, Policy on Capital Expenditures
by State Educational Institutions effective 12/23/2024.