Section 75-1-4 - Conditions for grants and loans. - New Mexico Statutes

75-1-4. Conditions for grants and loans.

A.     Grants and loans shall be made only to local authorities that: 

(1)     agree to operate and maintain the water supply, wastewater or solid waste facilities so that the facilities will function properly over the structural and material design life, which shall not be less than twenty years; 

(2)     require the contractor of the construction project to post a performance and payment bond in accordance with the requirements of Section 13-4-18 NMSA 1978;

(3)     provide a written assurance, signed by an attorney, that the local authority has proper title, easements and rights of way to the property upon or through which the water supply, wastewater or solid waste facility proposed for funding is to be constructed or extended;

(4)     meet the requirements of the financial capability set by the department to assure sufficient revenues to operate and maintain the facility for its useful life and to repay the loan;

(5)     pledge sufficient revenues for repayment of the loan, provided that such revenues may by law be pledged for that purpose; and

(6)     agree to properly maintain financial records and to conduct an audit of the project's financial records.

B.     Except as otherwise provided in the Rural Infrastructure Act [75-1-1 NMSA 1978], a loan shall be for a period of time not to exceed twenty years.  Loans may be interest free or bear an annual interest rate set by the secretary that is at or below market interest rates.  The repayment of loans shall be in annual, quarterly or monthly installments, as approved by the department, beginning one year after completion of the project.  The repayment of the interest on the loan accumulated during the design and construction of a project may be included in the final loan amount, but it shall not be counted in determining the maximum loan amount.

C.     No loan recipient eligible to receive a grant under the Rural Infrastructure Act shall receive grants in any one year totaling more than five hundred thousand dollars ($500,000).

D.     The maximum assistance, including both loans and grants, that a local authority may receive under the Rural Infrastructure Act in any one year is two million dollars ($2,000,000).

E.     Plans and specifications for a water supply, wastewater or solid waste facility construction project shall be approved by the department before grant or loan disbursements to pay for construction costs are made to a local authority.  Interim loan disbursements to pay for engineering and other professional services may be made by the department prior to the approval of the plans and specifications.

F.     Privately owned water supply, wastewater or solid waste facilities are not eligible for assistance under the Rural Infrastructure Act.

G.     Grants and loans shall be made only for eligible items.  Eligible items include but are not limited to the costs of engineering feasibility reports, contracted engineering design, inspection of construction, special engineering services, archaeological surveys and contracted construction.  The costs of water rights, land, system acquisition, easements and rights of way, refinancing of program loans, legal costs and fiscal agents' fees are eligible items only for loan funds.  Local authority administrative costs shall not be included as eligible items.

H.     The department may:

(1)     conduct periodic reviews of the operation of a local authority that has received funding from the department;

(2)     require the local authority to submit information relevant to the loan to the department;

(3)     require the submission of financial reports relevant to the ability of the local authority to repay the loan; and

(4)     review and require changes to the rate-setting analysis that supports the loan payments.

I.     In the event the local authority fails to make the prescribed loan repayment, the department is authorized to set solid waste, water or wastewater user rates in the area of the local authority's jurisdiction in order to provide sufficient money for repayment of the loan and proper operation and maintenance.  Funds sufficient to provide for repayment of the loan and proper operation and maintenance shall be identified through a rate-setting analysis that will ensure enough revenue to cover yearly expenses and emergencies, a reserve fund for nonmajor capital items and equitable pay for staff.  The rate-setting analysis may be reviewed and changed on a yearly basis if necessary.

J.     The department may enforce its rights as provided by law.