LAND GRANT-MERCED ACEQUIA INFRASTRUCTURE ACT

HB0021

HOUSE BILL 21

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

INTRODUCED BY

Miguel P.
Garc
í
a
and
Leo Jaramillo
and
Linda Serrato

and
Pete Campos

FOR THE LAND GRANT COMMITTEE

AN ACT

RELATING TO INFRASTRUCTURE; ENACTING THE LAND GRANT-MERCED AND
ACEQUIA INFRASTRUCTURE ACT; CREATING THE LAND GRANT-MERCED AND
ACEQUIA INFRASTRUCTURE TRUST FUND; CREATING THE LAND GRANT-MERCED INFRASTRUCTURE PROJECT FUND AND THE ACEQUIA
INFRASTRUCTURE PROJECT FUND; PROVIDING FOR A DELAYED REPEAL FOR
CERTAIN PROVISIONS OF THIS ACT; MAKING APPROPRIATIONS.

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

SECTION 1.
[
NEW MATERIAL
] SHORT TITLE.--Sections 1
through 8 of this act may be cited as the "Land Grant-Merced
and Acequia Infrastructure Act".

SECTION 2.
[
NEW MATERIAL
] DEFINITIONS.--As used in the
Land Grant-Merced and Acequia Infrastructure Act:

A. "acequia" means an acequia or community ditch
organized as a political subdivision pursuant to Chapter 73,
Article 2 or 3 NMSA 1978;

B. "commission" means the interstate stream
commission;

C. "council" means the land grant council;

D. "department" means the department of finance and
administration;

E. "infrastructure assistance" means the provision
of grants to land grants-mercedes on terms and conditions
approved by the council or to acequias on terms and conditions
approved by the commission;

F. "land grant-merced" means a land grant that is
designated as a political subdivision pursuant to Section
49-1-2 NMSA 1978 or Chapter 49, Article 4 NMSA 1978;

G. "qualified project" means an infrastructure
assistance project selected for infrastructure assistance
pursuant to the Land Grant-Merced and Acequia Infrastructure
Act; and

H. "trust fund" means the land grant-merced and
acequia infrastructure trust fund.

SECTION 3.
[
NEW MATERIAL
] COUNCIL--POWERS--DUTIES.--The
council shall:

A. in consultation with the department, promulgate
rules governing terms, conditions and priorities for providing
infrastructure assistance to land grants-mercedes, including
developing application and evaluation procedures and forms and
qualifications for applicants and for qualified projects;

B. provide infrastructure assistance to land
grants-mercedes for qualified projects on terms and conditions
established by the council; and

C. authorize funding for qualified projects,
including:

(1) planning, designing, constructing,
improving, expanding or equipping water and wastewater
facilities, major water systems, electrical power lines,
communications infrastructure, roads, health infrastructure,
emergency response facilities and infrastructure needed to
encourage economic development;

(2) developing engineering feasibility reports
for infrastructure projects;

(3) providing special engineering services;

(4) completing environmental assessments or
archaeological clearances and other surveys for infrastructure
projects;

(5) acquiring land, easements or rights of
way; and

(6) purchasing durable equipment.

SECTION 4.
[
NEW MATERIAL
] COMMISSION--POWERS--DUTIES.--The commission shall:

A. in consultation with the department, promulgate
rules governing terms, conditions and priorities for providing
infrastructure assistance to acequias, including application
and evaluation procedures and forms and qualifications for
applicants and for qualified projects;

B. provide infrastructure assistance to acequias
for qualified projects on terms and conditions established by
the commission; and

C. authorize funding for qualified projects,
including for planning, engineering design or construction of
irrigation works and infrastructure projects, including dams,
reservoirs, diversions, ditches, flumes or other appurtenances
for the purposes of restoration, repair, improvement of
irrigation efficiency and protection from floods.

SECTION 5.
[
NEW MATERIAL
] LAND GRANT-MERCED AND ACEQUIA
INFRASTRUCTURE TRUST FUND--CREATED--INVESTMENT--DISTRIBUTION.--

A. The "land grant-merced and acequia
infrastructure trust fund" is created as a nonreverting fund in
the state treasury. The trust fund consists of distributions,
appropriations, gifts, grants and donations. Income from
investment of the trust fund shall be credited to the trust
fund. Money in the trust fund shall be expended only as
provided in this section.

B. The state investment officer, subject to the
approval of the state investment council, shall invest money in
the trust fund:

(1) in accordance with the prudent investor
rule set forth in the Uniform Prudent Investor Act; and

(2) in consultation with the commission and
the council.

C. Income from investment of the trust fund shall
be credited to the trust fund. Money in the trust fund shall
not be expended for any purpose, but annual distributions from
the trust fund shall be made to the land grant-merced
infrastructure project fund and the acequia infrastructure
project fund pursuant to this section.

D. Except as provided in Subsection E of this
section, if, as of the end of a fiscal year, the balance in the
trust fund is over five million dollars ($5,000,000), three
percent of the balance in the trust fund shall be divided into
equal distributions to the land grant-merced infrastructure
project fund and the acequia infrastructure project fund.

E. If, on July 1 of any year, four and seven-tenths
percent of the average of the year-end market value of the
balance in the trust fund for the immediately preceding five
calendar years exceeds five million dollars ($5,000,000), four
and seven-tenths percent of the balance in the trust fund shall
be divided into equal distributions to the land grant-merced
infrastructure project fund and the acequia infrastructure
project fund.

SECTION 6.
[
NEW MATERIAL
] LAND GRANT-MERCED
INFRASTRUCTURE PROJECT FUND--CREATED--PURPOSE--APPROPRIATIONS.--

A. The "land grant-merced infrastructure project
fund" is created in the state treasury and shall be
administered by the department in consultation with the
council.

B. The land grant-merced infrastructure project
fund consists of:

(1) distributions from the trust fund;

(2) payments of principal and interest on
loans for qualified projects; and

(3) other money appropriated by the
legislature or distributed or otherwise allocated to the land
grant-merced infrastructure project fund for the purpose of
supporting qualified projects.

C. Except for severance tax bond proceeds required
to revert to the severance tax bonding fund, balances in the
land grant-merced infrastructure project fund at the end of a
fiscal year shall revert to the trust fund.

D. The department, in consultation with the
council, may establish procedures and promulgate rules as
required to:

(1) administer the land grant-merced
infrastructure project fund;

(2) originate grants or loans for qualified
projects recommended by the council; and

(3) govern the process through which qualified
entities may apply for financial assistance from the land
grant-merced infrastructure project fund.

E. Disbursements from the land grant-merced
infrastructure project fund shall be made by warrant of the
secretary of finance and administration pursuant to vouchers
signed by the chair of the council.

F. A land grant-merced shall apply to the
department for funding from the land grant-merced
infrastructure project fund for an infrastructure project prior
to submitting a request for a legislative capital outlay
appropriation for that project. When requesting legislative
appropriations for a qualified project, a land grant-merced
shall provide evidence of a funding need, including proof that
an application for funding for the qualified project was
submitted to the department.

SECTION 7
. [
NEW MATERIAL
] ACEQUIA INFRASTRUCTURE PROJECT
FUND--CREATED--PURPOSE--APPROPRIATIONS.--

A. The "acequia infrastructure project fund" is
created in the state treasury and shall be administered by the
department in consultation with the commission.

B. The acequia infrastructure project fund consists
of:

(1) distributions from the trust fund;

(2) payments of principal and interest on
loans for qualified projects; and

(3) other money appropriated by the
legislature or distributed or otherwise allocated to the
acequia infrastructure project fund for the purpose of
supporting qualified projects.

C. Except for severance tax bond proceeds required
to revert to the severance tax bonding fund, balances in the
acequia infrastructure project fund at the end of a fiscal year
shall revert to the trust fund.

D. The department, in consultation with the
commission, may establish procedures and promulgate rules as
required to:

(1) administer the acequia infrastructure
project fund;

(2) originate grants or loans for qualified
projects recommended by the commission; and

(3) govern the process through which qualified
entities may apply for financial assistance from the acequia
infrastructure project fund.

E. Disbursements from the acequia infrastructure
project fund shall be made by warrant of the secretary of
finance and administration pursuant to vouchers signed by the
chair of the commission.

F. An acequia shall apply to the commission for
funding from the acequia infrastructure project fund for an
infrastructure project prior to submitting a request for a
legislative capital outlay appropriation for that project.
When requesting legislative appropriations for a qualified
project, an acequia shall provide evidence of a funding need,
including proof that an application for funding for the
qualified project was submitted to the commission.

SECTION 8.
[
NEW MATERIAL
] REPORTS.--

A. The council shall provide a report to the
appropriate legislative interim committee tasked with examining
land grant-merced issues no later than November 1 of each year
regarding the total expenditures from the land grant-merced
infrastructure project fund for the previous fiscal year, the
purposes for which expenditures were made, an analysis of the
progress of the projects funded and recommendations for
improvement of the Land Grant-Merced and Acequia Infrastructure
Act.

B. The commission shall provide a report to the
appropriate legislative interim committee tasked with examining
acequia issues no later than October 1 of each year regarding
the total expenditures from the acequia infrastructure project
fund for the previous fiscal year, the purposes for which
expenditures were made, an analysis of the progress of the
projects funded and proposals for improvement of the Land
Grant-Merced and Acequia Infrastructure Act.

SECTION 9.
Section 7-27-10.1 NMSA 1978 (being Laws 2003,
Chapter 134, Section 1, as amended) is amended to read:

"7-27-10.1. TRANSFER TO SEVERANCE TAX PERMANENT FUND
BEFORE DETERMINING BONDING CAPACITY--AUTHORIZATION FOR
SEVERANCE TAX BONDS--PRIORITY FOR WATER [
PROJECTS
] AND TRIBAL

INFRASTRUCTURE AND LAND GRANT-MERCED AND ACEQUIA
INFRASTRUCTURE
PROJECTS.--

A. On December 31 of each year from 2019 through
2028, the division shall transfer twenty-three million six
hundred ninety thousand dollars ($23,690,000) from the
severance tax bonding fund to the severance tax permanent fund,
unless the state board of finance determines that a lesser
transfer amount is necessary pursuant to Section 7-27-8 NMSA
1978 to avoid a potential shortfall in debt service
obligations.

B. By January 15 of each year, the division shall
estimate the amount of bonding capacity available for severance
tax bonds to be authorized by the legislature based on the
lesser of the following estimates:

(1) an estimate that provides for equal annual
issuances over the expected term of bonds with terms greater
than one year anticipated to be issued by the state board of
finance in the fiscal year in compliance with the requirements
of Section 7-27-14 NMSA 1978; and

(2) an estimate that provides that issuances
for each year of that term shall be projected to result in
stable levels of state tax supported debt relative to the
median state debt ratios published by the national municipal
bond rating agencies.

C. The division shall allocate nine percent of the
estimated bonding capacity each year for water projects, and
the legislature authorizes the state board of finance to issue
severance tax bonds in the annually allocated amount for use by
the water trust board to fund water projects statewide. The
water trust board shall certify to the state board of finance
the need for issuance of bonds for water projects. The state
board of finance may issue and sell the bonds in the same
manner as other severance tax bonds in an amount not to exceed
the authorized amount provided for in this subsection. If
necessary, the state board of finance shall take the
appropriate steps to comply with the federal Internal Revenue
Code of 1986, as amended. Proceeds from the sale of the bonds
are appropriated to the water project fund in the New Mexico
finance authority for the purposes certified by the water trust
board to the state board of finance.

D. The division shall allocate four and one-half
percent of the estimated bonding capacity for tribal
infrastructure projects.

E. The legislature authorizes the state board of
finance to issue severance tax bonds in the amount provided for
in this section for use by the tribal infrastructure board to
fund tribal infrastructure projects. The tribal infrastructure
board shall certify to the state board of finance the need for
issuance of bonds for tribal infrastructure projects. The
state board of finance may issue and sell the bonds in the same
manner as other severance tax bonds in an amount not to exceed
the authorized amount provided for in this section. If
necessary, the state board of finance shall take the
appropriate steps to comply with the federal Internal Revenue
Code of 1986, as amended. Proceeds from the sale of the bonds
are appropriated to the tribal infrastructure project fund for
the purposes certified by the tribal infrastructure board to
the state board of finance.

F. The legislature authorizes the state board of
finance to issue severance tax bonds in the amount provided for
in this section for use by the land grant council to fund land
grant-merced infrastructure projects. The land grant council
shall certify to the state board of finance the need for
issuance of bonds for land grant-merced infrastructure
projects. The state board of finance may issue and sell the
bonds in the same manner as other severance tax bonds in an
amount not to exceed the authorized amount provided for in this
section. If necessary, the state board of finance shall take
the appropriate steps to comply with the federal Internal
Revenue Code of 1986, as amended. Proceeds from the sale of
the bonds are appropriated to the land grant-merced
infrastructure project fund for the purposes certified by the
land grant council for land grant-merced infrastructure
projects to the state board of finance.

G. The legislature authorizes the state board of
finance to issue severance tax bonds in the amount provided for
in this section for use by the interstate stream commission to
fund acequia infrastructure projects. The interstate stream
commission shall certify to the state board of finance the need
for issuance of bonds for acequia infrastructure projects. The
state board of finance may issue and sell the bonds in the same
manner as other severance tax bonds in an amount not to exceed
the authorized amount provided for in this section. If
necessary, the state board of finance shall take the
appropriate steps to comply with the federal Internal Revenue
Code of 1986, as amended. Proceeds from the sale of the bonds
are appropriated to the acequia infrastructure project fund for
the purposes certified by the interstate stream commission for
acequia infrastructure projects to the state board of finance.

[
F.
]
H.
Money from the severance tax bonds provided
for in this section shall not be used to pay indirect project
costs. Any unexpended balance from proceeds of severance tax
bonds issued for a water, [
project or a
] tribal infrastructure,

acequia infrastructure or land grant-merced infrastructure

project shall revert to the severance tax bonding fund within
six months of completion of the project. The New Mexico
finance authority shall monitor and ensure proper reversions of
the bond proceeds appropriated for water projects, and the
department of finance and administration shall monitor and
ensure proper reversions of the bond proceeds appropriated for

acequia infrastructure
, tribal
infrastructure and land grant-merced
infrastructure projects.

[
G.
]
I.
As used in this section:

(1) "acequia infrastructure project" means a
qualified project approved by the interstate stream commission
pursuant to the Land Grant-Merced and Acequia Infrastructure
Act;

[
(1)
]
(2)
"division" means the board of
finance division of the department of finance and
administration;

(3) "land grant-merced infrastructure project"
means a qualified project approved by the land grant council
pursuant to the Land Grant-Merced and Acequia Infrastructure
Act;

[
(2)
]
(4)
"tribal infrastructure project"
means a qualified project under the Tribal Infrastructure Act;
and

[
(3)
]
(5)
"water project" means a capital
outlay project for:

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

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

(c) the restoration and management of
watersheds;

(d) flood prevention; or

(e) conservation, recycling, treatment
or reuse of water."

SECTION 10.
A new section of the Severance Tax Bonding
Act, Section 7-27-10.3 NMSA 1978, is enacted to read:

"7-27-10.3. [
NEW MATERIAL
] ALLOCATION OF BONDING CAPACITY
FOR LAND GRANT-MERCED AND ACEQUIA INFRASTRUCTURE PROJECTS.--

A. The division shall allocate one and one-tenth
percent of the estimated bonding capacity for land grant-merced
infrastructure projects.

B. The division shall allocate one and one-tenth
percent of the estimated bonding capacity for acequia
infrastructure projects.

C. As used in this section, "division" means the
board of finance division of the department of finance and
administration."

SECTION 11.
DELAYED REPEAL.--Section 10 of this act is
repealed effective July 1, 2032.

SECTION 12
. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2026.

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