Economic Development Initiatives – Industrial Revenue Bonds
Industrial revenue bonds (IRBs) can be used for a wide variety of commercial projects, and can be structured in several different ways: as taxable or tax-exempt financings, or solely for the purpose of providing state and local tax exemptions, independent of the actual project financing.
We have extensive experience with all types of IRBs, including those issued as qualified private activity bonds on behalf of 501(c)(3) health care providers. We offer clients comprehensive legal services concerning IRB transactions, including due diligence analysis, drafting of necessary documentation, preparation of disclosure documents, application for private activity bond allocations, consultation with investment advisers and underwriters, advice on controlling costs, strategies for avoiding or limiting political difficulties, and issuance of legal opinions required to close such transactions.
Public Improvement District Bonds and Tax Increment for Development Bonds
The firm frequently represents developers in the formation of Public Improvement Districts (“PID”) and Tax Increment Development Districts (“TIDD”), which are used primarily in connection with the financing of infrastructure for development of residential projects, master planned communities or substantial commercial development and redevelopment. Each PID and TIDD, once formed, constitutes political subdivisions of the State of New Mexico, separate and apart from the County, the City, or any other governmental subdivision of the State.
A PID is typically organized through a streamlined petition and hearing process, in conjunction with an unanimous consent procedure or approval through an election of property owners and qualified resident electors. Once formed, PIDs are utilized to finance, in part, various on-site and off-site infrastructure and improvements, including water and sewer systems, streets and trails, parks, electrical, gas and telecommunications systems, public buildings, libraries and cultural facilities, school facilities, equipment and related costs of operation and administration. Most frequently, a PID financing is based on imposing special levies on real property and pledging those revenues to pay debt service on bonds issued by a PID.
A TIDD is used primarily in connection with the financing, construction, operation, maintenance of public infrastructure (both on-site and off-site), including water and sewer systems, streets, drainage and flood control systems, roads, bridges, parking facilities, trails, public buildings, electrical generation and distribution facilities, school sites and facilities and other facilities. Like the PID, state law provides that a TIDD may be formed on a streamlined basis without an election, where the developer can show the unanimous consent of the owners of the real property with the proposed boundaries of the TIDD. Financing for a TIDD may based on (i) the gross receipts tax increment collected in the TIDD in excess of the gross receipts taxes collected in a district in the calendar year preceding the formation of the TIDD; or (ii) the property tax increment collected on the real property within the district in excess of the property tax levied at the rate fixed each year on the assessed value of taxable property within the district for the year ending immediately prior to the year in which the tax increment development plan is approved for the district. The increment is created from and out of increased tax revenues resulting from the gross receipts tax on all services and tangible personal property in the district (“GRT”), or the property tax (“Property Tax”), due to new investment in infrastructure and related improvements within the TIDD that increases the overall economic activity and assessed values for the district. The TIDD revenues attributable to the GRT and/ or Property Tax increments may be pledged to pay debt service on bonds issued by a TIDD to finance the infrastructure improvements.
Local Economic Development Act
New Mexico law permits counties and municipalities to contribute land, buildings, infrastructure for facilities, and other incentives to developers of qualifying economic development projects in accordance with the Local Economic Development Act (“LEDA”). In order to take advantage of LEDA, a local public body must first take certain legislative actions, including the adoption by ordinance of an economic development plan, or a comprehensive plan which includes an economic development component. These plans may be specific to a single economic development goal or strategy or may include several goals or strategies.
We regularly represent developers and local public bodies with respect to development projects involving a LEDA component. Recent LEDA engagements include the representation of a subsidiary of a public company utilizing LEDA to receive, by way of contribution from a local public body, the underlying real property and certain infrastructure improvements for an $80,000,000 cabinet manufacturing and distribution facility. We also advise local public bodies in the preparation of economic development plans and related requirements under LEDA. Additionally, we have experience utilizing economic development gross receipts tax revenue bonds to fund the development of qualifying projects under LEDA.
The Rodey Law Firm has extensive experience regarding the issuance of tax-exempt governmental obligations including general obligation bonds and tax-backed revenue bonds, project revenue bonds that are limited obligations of a governmental entity, and special assessment district public, public improvement district, and tax increment for development district bonds payable from special levies assessed against property owners or revenues derived from excise taxes imposed on sales transactions within the district.
We provide advice and assistance in all aspects of governmental bond issuance, such as:
Preparing appropriate election resolutions and other materials
Preparation of bond ordinances and other documentation evidencing official action
Drafting or assisting in the drafting of offering circulars in connection with private placements or the public sale of governmental obligations
Advice to municipalities and counties, and coordination with financial advisers and underwriters as to the legal structure of such transactions
Issuance of approving opinions
We are listed as recognized bond counsel in the current edition of The Bond Buyer’s Municipal Marketplace Directory.
Technology companies, commercial enterprises, developers of renewable energy projects and industrial businesses have come to Rodey for help in the issuance of securities to provide working capital for developmental stage activities as well as established companies looking for capital to meet expansion goals. Our lawyers have substantial experience preparing disclosure documents; assisting clients with transactions that are structured to qualify for exemptions from registration under federal securities laws and regulations including the Regulation D safe-harbor for issuers and non-issuer resale transactions under Rules 144 and 144A; and transactions under New Mexico and other state securities laws, working with exemptions from registration provided under these statutes. We have assisted 1934 Act reporting and non-reporting companies with proxy solicitations and disputes. We also have experience establishing qualified and non-qualified stock option plans and have worked closely with broker-dealers and registered investment advisors on compliance matters arising under New Mexico and federal securities law.
Renewable Energy Projects
We have extensive experience working with clients in the development of renewable energy projects, including wind energy installations, thermal biomass facilities, organic biomass involving biodigester installations, and have negotiated and drafted power purchase and methane gas purchase contracts with public utilities and have represented clients in negotiating and drafting contracts for the sale of renewable energy certificates (RECs) and the registration of carbon credits with recognized regional registries.
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