HB 314 and SB 279 Talking Points

The NM Colonias Trust Fund

Ccreated by SB279 during the 2010 NM Legislative Session

New Mexico is one of four states along the U.S.-Mexico border with communities recognized as colonias. Eleven of the most southern counties within 150-miles from the border line house over 150 designated colonias communities. The combined population in this area represents 24.97% of the entire state’s population with an average poverty rate higher than the state average of 18%.

In 2005 in an effort to help improve 3rd world country living conditions to the colonia residents, Governor Richardson together with the New Mexico State Legislators created the Colonias Initiative that provided approximately $5 million per year for critical colonias infrastructure improvements administered by the Department of Finance and Administration. To date, the Initiative has provided approx. $20 million of funds over the last 5 years to local governments and political subdivisions. The Initiative’s funds have leveraged approximately $130 million in federal and private funds.

The approximate funding leverage is as follows:
Approx. $64 million in USDA Rural Utility Services (RUS) Grants
Approx. $4.2 million in USDA loans
$3.35 million in Legislative funding
Approx. $41 million in ARRA, NMFA loans and grants, MFA loans and grants and private investment funds.
The selection criterion for Colonias Initiative grants is based on the following: Fund/Source leverage, technical readiness, long term economic impact, population impact, long term regional infrastructure impact, project urgency and previous Colonias Initiative monies received and their usage.
Currently, the notice of funding availability is made in May/June of each year and is completely dependent on whether the Governor chooses to set aside funds for Initiative. Thankfully, he has consistently provided funds over the last 5 years.
Technical assistance is provided to all applicants. This not only allow them to apply and/or acquire Colonias Funds but also other federal, state and private funds. Assistance is also provided to grantees in the project implementation phases of the project. This is why the Initiative has achieved tremendous leverage and success.
Because the Colonias Initiative Fund has provided a consistent source over the last 5 years, it has been used by local governments and political subdivisions to leverage federal colonias set asides, stimulus funds and, most importantly, private sector investment that provides jobs in our rural southern communities.
The leveraged funds have created economic development opportunities. Examples include:
NM Tech Playas Research and 1st Responders training facility now can attract large clients that bring tens of millions of $$’s to Hidalgo County to conduct research and training at the site as well as at the planned industrial park in Lordsburg, NM;
Columbus, NM now has a new school for the children of Luna County that brings jobs to the area. The children now do not need to travel to Deming to attend school. A trip that takes over an hour to and from school;.
New roads and infrastructure in Organ, NM that now attract business and housing to a community supporting White Sands Missile Range and the NASA Test Facility site;.
Regionalization of 5 mutual domestic water associations to form one regional water authority. The Colonias funds have allowed the Lower Rio Grande to attract millions of loan and grant funds to interconnect its systems. The region has now attracted housing developments, schools, and businesses that it could not have done without Colonias funds;.
Wastewater, drainage, water and road funds in Chaparral that has provided the necessary infrastructure to construct a new high school and housing in the community;
Solid waste facilities that will protect the environment in Catron, Grant and Hidalgo Counties that now provide safe solid waste dump sites for community residents and business that also provide a revenue source for self sustainability for the local governments and political subdivisions;.
Necessary water infrastructure in the northern part of Dona Ana County that supports the necessary services and housing that will enhance the success of the Spaceport;.
Water and wastewater infrastructure outside of Artesia and Malaga in Morningside that support the housing and services needs of Federal Law Enforcement Training Center (FLETC) in Artesia and the oil, gas and nuclear industry in Artesia and Carlsbad.
Additionally, the Initiative has enabled colonias to:

Raise quality of infrastructure that improves health and safety for the residents of the communities;
Achieve regulatory compliance with the water, wastewater federal and state standards;
attract private sector development—housing, commercial and industrial; and
leverage additional funds for “shovel ready projects”.

The Colonias Infrastructure Trust Fund proposes to institute the Colonias Initiative into a permanent source of funding program and to establish a fair and equitable mechanism through which colonias designated communities will have access to state funds. The Trust fund has several purposes:

Allocates Severance Tax bonding capacity authorizing 5% of the Senior Severance Tax Bonds to fund the Trust;
Implementing a funding structure that will provide funding availability to disadvantaged communities;
Establish an oversight system composed of a voting board and advisory board whose role will be to establish rules and regulation to ensure proper administration of the fund; and.
Establish a revolving fund mechanism through a loan component which will allow the Trust to fund itself.
In addition to helping bridge the funding gap, the Trust Fund will also provide a matching fund opportunity and a source of state leverage funding source to continue to attract federal funds to colonias designated areas.
The board, as the implementation body is responsible for establishing rules for funding of eligible projects. The local governments and political subdivisions are responsible for implementing the funds.
The board of a 12 members is made up of two groups: a 7- member voting board includes: NMFA chief executive officer or designee, DFA Secretary or designee, NMED Secretary or designee, 2 members each from House & Senate representing both parties and representing colonias communities. The second group is composed of a 5 - member non-voting advisory members representing - 3 Council of Governments Directors representing the 11 Southern Counties where colonias exist, one member from MFA and one member from the NM Association of Counties;
In an effort to help New Mexico communities create sustainability, the Fund would include a majority grant component as well as a loan component that provides continued fund replenishment and it will provide a streamlined infrastructure investment approach rather than a “band aid” approach to infrastructure investment that has been done in the past;
The fund will now be available for all rural communities in the 11 Southernmost Counties of NM to leverage additional federal set asides specifically targeted to colonias.