TITLE 2 PUBLIC
FINANCE
CHAPTER 94 LOCAL
ECONOMIC DEVELOPMENT ACT (LEDA)
PART 1 GENERAL PROVISIONS
2.94.1.1 ISSUING AGENCY: Economic Development Department.
[2.94.1.1 NMAC – N, 6/27/2023]
2.94.1.2 SCOPE: All persons or entities applying for Local
Economic Development Act funds through the Economic Development Department.
[2.94.1.2 NMAC -
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2.94.1.3 STATUTORY AUTHORITY: The general management of the Local Economic
Development Act (LEDA) program shall be the responsibility of the economic
development department as prescribed by governing legislation, Section 5-10-1
NMSA 1978.
[2.94.1.3 NMAC - N, 6/27/2023]
2.94.1.4 DURATION: Permanent.
[2.94.1.4 NMAC -
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2.94.1.5 EFFECTIVE DATE: June 27, 2023, unless a later date is cited
at the end of the section.
[2.94.1.5 NMAC -
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2.94.1.6 OBJECTIVE: Under the Local Economic Development Act,
Section 5-10-1 NMSA 1978, the New Mexico economic development department is
granted authority to administer grants to local governments (municipality or
county) to assist expanding or relocating companies that are qualified entities
that will stimulate economic development and produce public benefits pursuant
to LEDA.
[2.94.1.6 NMAC -
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2.94.1.7 DEFINITIONS:
A. “Qualifying entity” is a corporation, limited
liability company, partnership, joint venture, syndicate, or association that
is an economic-base employer, also referred to as “company” as defined in
Subsection L of Section 5-10-3 NMSA 1978.
B. “Economic-base employer” is an employer who is a
manufacturer of a product, or a non-retail service provide who derives over
fifty percent of their revenue outside of the borders of New Mexico.
C. “Fiscal agent” is a local or regional
government entity who serves as the agent for receipt of initial investment and
subsequent disbursement/reimbursement of funds based on the approval of the
economic development department.
D. “Security” is a tradable financial asset, or
collateral, pledged by the qualifying entity to guarantee the LEDA investment,
and may be, but is not limited to, in the form of letter of credit, surety
bond, mortgage security, security agreement-escrow or lien, security
interest-equipment or lien, or uniform commercial code filing.
E. “Project participation agreement (PPA)” is the
agreed upon scope of work between the fiscal agent and the qualifying entity.
F. “Intergovernmental agreement (IGA)” is the agreed
upon scope of work between the fiscal agent and the economic development
department.
G. “Economic impact analysis (EIA)” is an analysis
that addresses the economic impact to the local and state tax base using the
project information provided by the qualifying entity.
H. “Project term sheet” is a document which
identifies security interest that is equal to the approved amount of LEDA
investment, performance metrics, claw back provisions, expected project
leverage (private investment versus public funds requested), a job creation
timeline and a project starting head count.
I. “LEDA summary” is a document outlining the
overall scope and terms of the LEDA project.
J. “Project ordinance” is legislation enacted by a
local or regional government authority that outlines the project scope and
includes a PPA and IGA.
[2.94.1.7 NMAC -
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2.94.1.8 QUALIFICATIONS AND REQUIREMENTS:
A. Company eligibility: Companies
that increase the economic base of New Mexico are eligible to be considered for
LEDA funds. The company must manufacture a product in New Mexico or provide a
non-retail service with at least fifty percent of total revenues generated from
a client base outside of New Mexico.
Eligible companies must also reside in New Mexico either through
ownership or lease of a facility and be in good standing with the economic
development department and all other state entities. The intent is to support companies expanding
in or relocating to New Mexico.
B. Project eligibility:
The project must have significant investment into permanent capital
infrastructure (buildings, roads, utilities) and be an expansion or relocation
that results in the creation of permanent full-time direct employment. The project must be sufficiently funded and
ready to proceed. All projects funded are statutorily required to provide
security equal to the LEDA public investment.
C. Reimbursable costs: Eligible costs may include, but are not
limited to, the purchase, lease, grant, construction, reconstruction,
improvement or other acquisition or conveyance of land, buildings or other
infrastructure and public works improvements essential to the location or
expansion of a company.
D. LEDA investment/funding: The level of public investment into any LEDA
project is at the discretion of the executive branch and varies based on
project quality and location. The main
criterion of the evaluation includes total significant capital investment,
total number of new job creation, and quality of new job wages. Additional consideration is given to projects
that demonstrate location in rural and underserved areas of New Mexico,
significant community impact and support, and environmentally sustainable
outcomes. All funding decisions are made
by the executive branch based upon recommendations by the secretary of the
economic development department and are a formal offer to apply, go through due
diligence and formal public process. All
LEDA investments are funded on a strictly reimbursable basis after the company
has incurred LEDA eligible expenses and met benchmarks provided in the PPA.
[2.94.1.8 NMAC -
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2.94.1.9 PROCEDURAL OVERVIEW:
A. Economic development department role: The economic development department determines company
and project eligibility through initial project data intake and vetting prior
to invitation to formally apply for LEDA investment funds. Due diligence is
conducted throughout the application process. The economic development
department works with the executive branch to determine an appropriate LEDA
project investment based on capital expenditures, job creation, location of
relocating or expanding company and other factors related to the public good.
(1) It is the responsibility of the
economic development department to conduct due diligence, including a
commercial credit check and fiscal analysis to determine the benefit of the
LEDA project and potential investment of state funds to the local government
and state.
(a) The Economic Development
Department will collect qualifying entity and project information necessary
to complete the Economic Impact Analysis (EIA) and an incentive analysis of all
applicable incentives within New Mexico.
(b) The economic
development department will confirm local government support for the
project and identify any additional local incentives.
(c) The economic development department
will prepare a LEDA summary which is provided to the executive branch for its
consideration of LEDA investment funds.
(2) Upon the executive branch’s
provisional determination of the level of LEDA investment funding, the economic
development department will issue an offer of LEDA investment and an invitation
to formally apply for a LEDA grant to the qualifying entity. The provisional
offer is subject to the formal application, additional due diligence, and local
approval.
(3) The economic development
department will provide access to the online application to the company
representative designated to complete the LEDA application. Information collected in a LEDA application
includes, but is not limited to, the following elements: company information
and structure, project description, total capital investment, land, building,
equipment, infrastructure, total number, and types of jobs to be created as
well as projected job ramp, wages and benefits, up to three years of financial
statements, proformas, and sources and uses of all funding. The economic development department reviews
all LEDA applications and approves when deemed complete and ready for the
public process.
B. Community role: The local
government acts as the fiscal agent for the receipt of initial LEDA investment
funds and subsequent disbursements/reimbursement of funds to the qualifying
entity based on the economic development department’s approval. The fiscal agent will keep all project funds
in a separate account and obtain prior approval from the economic development
department for all disbursements to the qualifying entity to ensure that all
reimbursable expenses are eligible. The
economic development department will work with the fiscal agent and the
qualifying entity to ensure the qualifying entity maintains the performance
benchmarks for the term of the PPA. The
fiscal agent is responsible for tracking any outstanding LEDA project
balances. Any unused LEDA funds revert
to the economic development department at the close of a project.
C. Public process: All
LEDA projects are required to have a public hearing and the adoption of an
ordinance by the fiscal agent’s governing body.
The project ordinance passed by the local community includes a PPA
outlining the agreed upon scope of work between the fiscal agent and the
qualifying entity, an IGA between the fiscal agent and the economic development
department for the transfer and disbursement of public funds. The PPA will include job creation
requirements, public investment distribution milestones (determined by
established performance benchmarks) and claw back requirements.
(1) Upon adoption of the ordinance the
economic development department will work with the qualifying entity and the
fiscal agent to execute the PPA, IGA and security agreement.
(2) Once all LEDA project documents
have been fully executed the economic development department will work with the
fiscal agent to transfer LEDA investment money to the fiscal agent.
D. Reporting: All
LEDA projects are required to submit quarterly job reports and annual economic
impact data per the terms outlined in the PPA.
(1) The economic development department
will work with the fiscal agent and the qualifying entity to ensure all reports
are accurate and timely.
(2) The economic development
department will provide the qualifying entity access to the online reporting
system to create and submit quarterly job reports and actual annual economic
impact data.
(3) The economic development department
will create an annual EIA using the actual economic impact data provided by the
qualifying entity to demonstrate return on investment.
E. LEDA project closeout:
A LEDA project shall be closed out by passage by the fiscal agent
governing body of a repealing ordinance unless the enabling ordinance includes
a sunset provision.
(1) The economic development department
will collect actual economic impact data from the qualifying entity to prepare
a final EIA and demonstrate return on investment.
(2) The economic development
department will assist the fiscal agent in closing out the LEDA project fund,
returning any unexpended funds to the economic development department, and the
release of any instrument of security for the LEDA project to the company.
(3) The fiscal agent is responsible for
enacting an ordinance to repeal the enabling ordinance when the project is
complete or all clawbacks have been received unless
the enabling ordinance includes a sunset provision.
[2.94.1.9 NMAC -
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HISTORY OF 2.94.1
NMAC: [RESERVED]