Let’s Talk About Capital Department of Finance & Administration State Budget Division, Capital Outlay Bureau Deborah Romero, Bureau Chief http://nmdfa.state.nm.us/Capital_Outlay_Bureau.aspx

Process State Infrastructure Capital Improvement Plan—Mandated by Statute GSD and DFA review plans Local Infrastructure Capital Improvement Plan—Voluntary

Infrastructure Capital Improvement Plan (ICIP) State statute §6-4-1 NMSA 1978 all state agencies and higher education institutions must submit their Infrastructure Capital Improvement Plans by July 1st Executive Order 2012-023 requires agencies to submit a five-year ICIP to provide critical and comprehensive information to the executive and legislature so they can make informed decisions regarding assistance and funding for capital projects Local Infrastructure Capital Improvement Plans are not mandatory but used to make funding decisions. (Local governments include municipalities, counties, special districts and tribal entities.)

Definition of Capital Project Alterations, replacements, repairs, remodeling of buildings and systems New construction Non-structural improvements to land (grading, drainage, landscaping) Land or water rights acquisition Equipment having a useful life of 10 years or more

What we should focus on: Public Health & Safety Does the project fund a project mandated by federal, state or agency mandates that cannot be delayed? Will the funds complete the project or a functional phase of the project? Does the project support a necessary function of governance (education, public safety, health care)? Economic Development—maintain or advance the state’s economy? Leverage other funds, resources or partnering? Does the project lower out-year operating costs? Are the operating costs including in the operating budget request?

Why wasn’t my project included in the bonds? Bonds will not be issued for a project if: the project recipient does not return a questionnaire to the SBOF the project recipient cannot encumber 5% of the funds within 6 months of bond issuance or expend 85% of the funds within 3 years of bond issuance the funding is not sufficient to complete the project or a usable phase of the project the project has unresolved anti-donation issues resulting from a private operator not paying fair market value for the capital asset the public body receiving the appropriation will not own the site or the asset to be funded the project recipient is not compliant with the State Audit Act and Executive Order 2013-006

Executive Order 2013-006 Executive Order 2013-006 was established on May 2, 2013 to address the following: Lack of audits or findings raise concerns about a grantee’s ability to be a good steward of capital outlay funds thereby increasing the risk of fraud, waste and abuse Independent audits provide the best assessment of grantees’ accounting methods Oversight of grantees’ accounting methods is needed to safeguard appropriations and assets

Applying the Antidonation Clause to Capital Outlay The NM Constitution prohibits public entities from donating to private entities Private entity own a publicly-financed capital asset, but they can operate them if certain conditions are met When there is a private operator, the market rental value of the public asset must be appraised to determine the fair market value of the asset Private operators can pay fair market rent in cash or in services If payment is made in services, the tenant has to be selected in compliance with the Procurement Code and the lease term has to be limited to the Procurement Code contract term limit The lease/operating agreement must have a “menu” of services to be provided and the value that each service will count towards rent. The value of each service must be demonstrated to be at fair market value

Administrative Reforms Underway SBOF moved to a paperless questionnaire system in 2013 to streamline local submission and state review prior to bond issuance Executive Order 2013-006 imposed requirements related to local audits as a precursor to receiving State capital funding has improved statewide compliance with the Audit Act Authorized but unissued list of projects is now published on SBOF website Antidonation problems need to be resolved prior to bond issuance so that the State doesn’t pay interest on bonds that can’t be expended Starting in 2017, bond questionnaires will be distributed and due within the Governor’s bill signing period, allowing bonds to be sold more quickly and providing the Governor more information Agencies are generating grant agreements more quickly than ever

Help us help you! CPMS is a web-based system used for reporting and monitoring of capital outlay appropriations Used by the Executive and Legislative Branches to track capital projects progress and expenditures Agency report quarterly Local entities report monthly CPMS can be accessed from the DFA-COB website or through the following link: http://cpms.dfa.state.nm.us

Questions? Contact Information Deborah (Debbie) Romero, Bureau Chief DFA, State Budget Division, Capital Outlay Bureau 414 Don Gaspar Santa Fe, NM 87501 debbie.romero@state.nm.us 505-827-3651 Rick Lopez, Director DFA, Local Government Division 180 Bataan Memorial Building rick.lopez@state.nm.us 505-827-8053