WATER PROJECT FUND CHANGES, the official text

HOUSE BILL 109

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Joy Garratt and Susan K. Herrera and Micaelita Debbie O’Malley

AN ACT

RELATING TO FINANCE; PROVIDING CRITERIA FOR PRIORITIZING WATER
PROJECTS PURSUANT TO THE WATER PROJECT FINANCE ACT; ALLOWING
THE NEW MEXICO FINANCE AUTHORITY TO FUND WATER PROJECTS FROM
THE WATER PROJECT FUND WITHOUT RECEIVING THE APPROVAL OF THE
LEGISLATURE UNTIL DECEMBER 31, 2028; REQUIRING A TWO-THIRDS
MAJORITY OF BOTH HOUSES OF THE LEGISLATURE TO EXTEND THIS DATE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. A new section of the Water Project Finance Act
is enacted to read:

"[NEW MATERIAL] PROJECT PRIORITIZATION.--

A. The board shall prioritize projects based on the
following criteria:

(1) urgency of need, as identified in a
regional water planning area with a completed regional water
plan accepted by the interstate stream commission;

(2) availability of federal or local matching
contributions;

(3) project readiness, including the
acquisition of required state and federal permits and
authorizations;

(4) regional impacts;

(5) efforts to mitigate or alleviate a
project's potential human health and safety concerns;

(6) level of planning and design;

(7) improvement of water quality or quantity;
and

(8) other goals established for each project
type pursuant to the Water Project Finance Act and rules
adopted under that act.

B. Pursuant to Subsection A of this section, the
board shall give higher priority to projects that:

(1) have completed planning and design;

(2) provide regional impacts;

(3) mitigate or alleviate human health and
safety concerns; and

(4) improve water quality or quantity and
advance project-type specific goals established pursuant to the
Water Project Finance Act.

C. The board shall develop and use a weighted
scoring system that incorporates the criteria provided pursuant
to Subsection A of this section to evaluate and rank all
applications for loans and grants pursuant to the Water Project
Finance Act. A ten-point score increase shall be granted in
the event of an emergency situation. Recommendations for
expenditure of money from the water project fund shall be based
on the scoring and ranking of applications in accordance with
this section."

SECTION 2. Section 72-4A-5 NMSA 1978 (being Laws 2001,
Chapter 164, Section 5, as amended) is amended to read:

"72-4A-5. BOARD--DUTIES.--The board shall:

A. adopt rules governing terms and conditions of
grants or loans recommended by the board for appropriation by
the legislature from the water project fund, giving priority to
projects [that have been identified by the board as being
urgent to address public health and safety issues; that have
matching contributions from federal or local funding sources
available; and that have obtained all requisite state and
federal permits and authorizations necessary to initiate the
project] pursuant to Section 1 of this 2026 act;

B. authorize qualifying water projects to the
authority that are for:

(1) storage, conveyance or delivery of water
to end users;

(2) implementation of federal Endangered
Species Act of 1973 collaborative programs;

(3) wastewater conveyance and treatment;

(4) restoration and management of watersheds;

(5) flood prevention; or

(6) water conservation or recycling, treatment
or reuse of water as provided by law; and

C. evaluate projects, including their environmental
impacts, and recommend projects to the interstate stream
commission pursuant to the provisions of Section 72-14-45 NMSA
1978."

SECTION 3. Section 72-4A-6 NMSA 1978 (being Laws 2001,
Chapter 164, Section 6, as amended) is amended to read:

"72-4A-6. AUTHORITY--DUTIES.--

A. The authority shall:

[A.] (1) provide staff support for the board;

[B.] (2) develop application procedures and
forms for qualifying entities to apply for grants and loans
from the water project fund; and

[C.] (3) make loans or grants to qualifying
entities for qualifying water projects [authorized by the
legislature] pursuant to the Water Project Finance Act;
provided that the service area for the project is wholly within
the boundaries of the state or the project is an interstate
project that directly benefits New Mexico.

B. The loans and grants made pursuant to Paragraph
(3) of Subsection A of this section shall require legislative
authorization on and after December 31, 2028.

C. Any amendment to extend the date upon which
legislative authorization shall be required pursuant to
Subsection B of this section shall require a two-thirds'
majority of both houses of the legislature."

SECTION 4. Section 72-4A-9 NMSA 1978 (being Laws 2001,
Chapter 164, Section 9, as amended) is amended to read:

"72-4A-9. WATER PROJECT FUND--CREATED--PURPOSE.--

A. The "water project fund" is created in the
authority and shall consist of distributions made to the fund
from the water trust fund and payments of principal of and
interest on loans for approved water projects. The fund shall
also consist of any other money appropriated, distributed or
otherwise allocated to the fund for the purpose of supporting
water projects pursuant to provisions of the Water Project
Finance Act. The fund shall be administered by the authority.
Income from investment of the water project fund shall be
credited to the fund. Balances in the fund at the end of any
fiscal year shall not revert to the general fund. The water
project fund may consist of such subaccounts as the authority
deems necessary to carry out the purposes of the fund. The
authority may establish procedures and adopt rules as required
to administer the fund and to recover from the fund costs of
administering the fund and originating grants and loans. Ten
percent of all water project funds shall be dedicated to the
state engineer for water rights adjudications, and twenty
percent of the money dedicated for water rights adjudications
shall be allocated to the administrative office of the courts
for the courts' costs associated with water rights
adjudications; provided that from July 1, 2024 through June 30,
2029, the lesser of four million dollars ($4,000,000) or eight
percent of all water project funds shall be dedicated to the
state engineer for water rights adjudications and two percent
of all water project funds shall be dedicated to the
administrative office of the courts for the courts' costs
associated with water rights adjudications.

B. Money in the water project fund may be used by
the authority to:

(1) make loans or grants to qualified entities
for projects and water rights adjudications [provided that
projects shall require legislative approval] pursuant to the
requirements of the Water Project Finance Act; and

(2) hire contractors to provide financial and
administrative capacity development and direct technical
assistance on water projects.

C. The authority is authorized to issue revenue
bonds payable from the proceeds of loan repayments made into
the water project fund upon a determination by the authority
that issuance of the bonds is necessary to replenish the
principal balance of the fund. The net proceeds from the sale
of the bonds shall be deposited in the water project fund. The
bonds shall be authorized and issued by the authority in
accordance with the provisions of the New Mexico Finance
Authority Act."

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