November 19 2019 - October 22 2019 - Minutes

NEW MEXICO STATE BOARD OF FINANCE REGULAR MEETING Santa Fe, New Mexico November 19, 2019 A regular meeting of the New Mexico State Board of Finance was called to order on this date at 9:10 a.m in the Governor’s Cabinet Room, Fourth Floor, State Capitol Building, Santa Fe, New Mexico ROLL CALL QUORUM PRESENT Members Present: The Hon Howie Morales, Lt Governor Mr Joseph Badal, Public Member Mr Paul Cassidy, Public Member Mr Michael S Sanchez, Public Member, Secretary Members Excused: The Hon Michelle Lujan Grisham, President The Hon Tim Eichenberg, State Treasurer Ms Wendy Trevisani, Public Member Staff Present: Ms Ashley Leach, Director Mr Marcos B Trujillo, Deputy Director Ms Olivia Padilla-Jackson, Secretary of Finance and Administration Legal Counsel Present: Ms Sally Malavé, Attorney General’s Office Others Present: [See sign-in sheets.] APPROVAL OF AGENDA – ANNOUNCEMENT: NEXT REGULAR MEETING -TUESDAY, DECEMBER 17, 2019 Ms Leach requested minor changes to three agenda items Mr Cassidy moved for approval of the agenda, as amended Mr Badal seconded the motion, which passed 4-0 3 APPROVAL OF MINUTES: OCTOBER 15, 2019 (REGULAR MEETING) Mr Badal moved approval of the minutes of the October 15, 2019, meeting, as submitted Mr Cassidy seconded the motion, which passed 4-0 CONSENT AGENDA Presenter: Ashley Leach, Director, Board of Finance Submitted by: Julie Morgas Baca, County Manager, Bernalillo County Bernalillo County – Requests Approval of an Extension of Private Activity Bond Volume Cap Allocation for Ceja Vista Apartments until December 31, 2019 Bernalillo County—Requests Approval of an Extension of Private Activity Bond Volume Cap Allocation for the Commons at Martineztown Apartments until December 31, 2019 Bernalillo County—Requests Approval of an Extension of Private Activity Bond Volume Cap Allocation for Sandia Vista David Chavez Apartments until December 31, 2019 Submitted by: Silvia Tillbrook, Executive Assistant, Otero County Otero County—Requests Approval of the Lease of Real Property Located at 1110 New York Avenue in Alamogordo with Flickinger Center for Performing Arts ($51,000 per year, services in lieu of cash rent) * Contingent upon Director’s receipt and Counsel review of fully executed revised lease agreement Otero County—Requests Approval of the Lease of Real Property Located at 1118 Indiana Avenue in Alamogordo with Otero Arts Inc ($14,760 per year, services in lieu of cash rent) * Contingent upon Director’s receipt and Counsel review of fully executed revised lease agreement Submitted by: Gerald Hoehne, Capital Projects Director, NMHED New Mexico School for the Deaf—Requests Approval of Capital Expenditures for Campus-wide Infrastructure Improvements ($1,798,438) 10 New Mexico State University Alamogordo—Requests Approval of Capital Expenditures to Renovate the First Floor of the Student Services Building ($1,100,000) New Mexico State Board of Finance: November 19, 2019 11 New Mexico State University, Doña Ana Community College—Requests Approval of Capital Expenditures for a Roof Replacement and Parking Lot Repairs at its Workforce Development Center and the Installation of Programmable Electronic Locks at its East Mesa Campus ($1,900,000) 12 University of New Mexico Health Science Center/Hospital—Requests Approval of Capital Expenditures to Replace Emergency Generator #2 at the Main Hospital ($908,800) 13 University of New Mexico Health Science Center/Hospital—Requests Approval of Capital Expenditures to Replace the Air Handling Unit and Renovate the University Hospital Main Adult Oncology Positive Pressure Rooms ($603,500) 14 University of New Mexico—Requests Approval of Capital Expenditures for the University Libraries South Campus Repository Project ($1,140,000) Presenter: Deanne Miglio, Real Estate Manager, Bernalillo County 15 Bernalillo County—Requests Approval of the Lease of Real Property Located at 3701 Condershire Drive SW in Albuquerque to Healing Addiction in Our Community ($60,000 per year) * Contingent upon Director’s receipt and counsel review of fully executed revised lease agreement Submitted by Ashley Leach, Director, Board of Finance 16 Emergency Fund Balances – November 19, 2019 Operating Reserve Fund Emergency Water Fund Balance $1,200,000.00 $ 62,449.84 Appropriation $2,000,000.00 $ 104,800.00 17 Fiscal Agent and Custodial Bank Fees Report 18 Joint Powers Agreements for Month-Ended October 31, 2019 Mr Cassidy moved approval of the Consent Agenda, as presented Mr Badal seconded the motion, which passed 4-0 SEVERANCE TAX BONDS AND NOTES Presenters: Luis G Carrasco, Dickason, Sloan, Akin & Robb, P.A., Director, Co-Bond Counsel; Jill K Sweeney, Sherman & Howard, L.L.C, Member, Co-Bond Counsel 19 Consideration of Authorizing Resolution for State of New Mexico New Mexico State Board of Finance: November 19, 2019 Supplemental Severance Tax Note Series 2019S-D Mr Carrasco stated that this note is in the maximum principal amount of $206,944,405 and will fund school projects authorized and approved by the Public Schools Capital Outlay Council, as well as the funding of appropriations for the Instructional Materials Fund and transportation distributions to the school districts Exhibit A provides a description of the projects to be funded, and Exhibit B provides the form of the bond purchase agreement Mr Cassidy moved for approval Mr Sanchez seconded the motion, which passed 4HIGHER EDUCATION DEPARTMENT Presenters: Gerald Hoehne, Capital Projects Director, NMHED; Tony Major, Business Affairs VP, ENMU; Dr Shawn Powell, President, ENMU; Juan Dorado, Dekker/Perich/ Sabatini, Project Architects 20 Eastern New Mexico University Roswell—Requests Approval of Capital Expenditures to Renovate its Automotive and Welding Technology Spaces ($5,848,522) Mr Hoehne stated that the State Board of Finance originally approved this project on May 8, 2019 and June 18, 2019 The original project amount, which was developed by Dekker/Perich/Sabatini, was approved at $3,729,575 The Construction Manager at Risk, Bradbury Stamm, developed the revised project costs of $5,848,222 This project revision does not change the initial scope of the project, which includes mechanical, electrical and plumbing system upgrades, the addition of new vehicle lifts, reorganization of space to allow for larger class sizes, and renovations to the ventilation system The funding sources for this project remain unchanged, with an increase in ENMU Roswell Institutional Reserve funds to cover the increase in project costs Mr Dorado stated that, upon beginning the project, they were given the budget allotment amounts and the design team did their best to work within those amounts In meeting with the ENMU Roswell design committee, they found that the scope decrease of each project wasn’t meeting the needs and promises of the original bond election They then decided to go back to the design committee and discuss options Mr Cassidy asked what part of the cost is being impacted by oil field activity in southeastern New Mexico Mr Dorado responded that they were seeing escalation at the rate of about percent every six months, which has now dropped to 5.5 percent, so it is definitely having an impact He said it is difficult to acquire subcontractors for each job, according to Bradbury Stamm New Mexico State Board of Finance: November 19, 2019 Dr Powell added that there are about 150 houses for sale in Roswell right now, which is a low market based on what he is told by real estate agents Housing is very difficult to find for construction workers, and people who are working in Artesia and Carlsbad are living in Roswell because they can’t find housing in the other two communities Responding to Mr Cassidy, Mr Major said the institution has a very healthy reserve balance, as they have been good stewards of taxpayer dollars A facilities master plan completed this fall identified a number of capital projects and deferred maintenance that hadn’t been done over the years He said there are sufficient reserves to cover the increase for both of the projects as well as many of the items on the master plan He said ENMU does not anticipate future bond issues or raising the mil levy to cover additional costs Mr Badal asked Dr Powell to elaborate on the program and whether ENMU is able to place the graduates in New Mexico Dr Powell responded that the automotive and welding programs are highly sought after One of the auto dealers in Roswell has a terrible time recruiting mechanics to the point where he has spent $20,000 for headhunters and bonus pay to bring them into the area They will stay for a couple of years but then leave after their term is up As a result, there is a lot of support for ENMU’s automotive program He said they have a terrible time to get students graduated from their welding program because a company will hire them after they take one class, and then they will the rest of the training on the job He commented that their graduation numbers in welding are consequently very low Mr Sanchez moved for approval Mr Cassidy seconded the motion, which passed 421 Eastern New Mexico University Roswell—Requests Approval of Capital Expenditures to Construct a New Physical Plant Department Facility (4,676,884) Mr Hoehne said the State Board of Finance originally approved this project on May and June 18 The original project amount, which was developed by project architects Dekker/Perich/Sabatini, was approved at $3,362,790 The revised project cost of $4,676,884 was developed in the same fashion by the CMAR As with the previous project, the scope of the project remains unchanged and will include construction of a new physical plant department facility The new facility will house skilled trades, custodial, HVAC, and grounds departments The funding sources for this project remain unchanged, with an increase in ENMU Roswell Institutional Reserve funds to cover the increase in project costs Dr Powell said the existing physical plant is located in Quonset huts that were built for World War II needs and will be demolished after the new building is constructed New Mexico State Board of Finance: November 19, 2019 Mr Badal moved for approval Mr Cassidy seconded the motion, which passed 4-0 Presenters: Gerald Hoehne, Capital Projects Director, NMHED; Harold Moya, Facilities Manager, NMSD; Julie Walleisa, Architect, DPS Design 22 New Mexico School for the Deaf—Requests Approval of Capital Expenditures to Renovate Larson/Roadrunner Activity Center ($2,848,545) Mr Hoehne said this request is for a major renovation of the Larson/Roadrunner Activity Center, which is used by all students for PE classes, athletic practices, competitions, and recreational activities for residential students The renovation will include replacing mechanical equipment, renovating locker rooms, replacing windows, doing stucco repairs, replacing flooring, replacing lighting with LED, and replacing damaged gym components The project is on NMSD’s 5-year capital outlay plan, and the funding sources include $1.8 million from 2018 General Obligation Bond proceeds and $1,048,545 from NMSD’s Building Renewal and Replacement Fund Mr Moya said this building will be tied into the central plant, a consolidated system for heating buildings on campus This system was created two years ago, and they are adding buildings gradually to the plant Responding to Mr Cassidy, Mr Moya said they had intended to use the CMAR process but were unable to “get it tied up in time.” He said one advantage, however, is that they are working with an architect who has worked with NMSD on the last three or four projects NMSD will be going out to bid, and it is possible they may end up using the same contractor as before, as they are familiar with this 100 year old campus Responding to Lt Governor Morales, Mr Moya said 500 square feet will be added, but it will be for storage and mechanical equipment only Mr Hoehne clarified that a certificate of adequate parking is not needed in this case because the additional space will not house students Mr Sanchez moved for approval Mr Cassidy seconded the motion, which passed 4Presenters: Gerald Hoehne, Capital Projects Director, NMHED; Heather Zack Watenpaugh, University Architect, NMSU; Robert Herrera, PDE Assistant Director, NMSU 23 New Mexico State University—Requests Approval of Capital Expenditures for Repairs to the Campus Tunnel System ($3,357,000) Mr Hoehne said this request is for repairs that were called out for in a 2013 structural integrity study and 2016 update of the NMSU utility tunnel system The upgrades, which are the sixth phase of the tunnel system repair project, were prioritized by NMSU utilizing the study NMSU will replace sections of the system and repair cracks, shifted New Mexico State Board of Finance: November 19, 2019 wall panels, and spalling across 800 linear feet of the tunnel Portions of the tunnel are deteriorated and structurally unstable The current request is being funded by a 2020 general fund appropriation of $3 million and BR&R funds of $357,000 Ms Watenpaugh stated that the utility tunnel system houses their steam or chilled water, domestic water, gas and electricity, so it is crucial that they keep their buildings up and functioning Responding to questions from Lt Governor Morales, Ms Watenpaugh said the $4 million they have expended so far on the tunnel system came from their BR&R fund that they had set aside on an annual basis She said they will be about $3 million short if they maintain the existing schedule of repairs, however, and would be seeking a legislative appropriation in the next session She said she believed the amount was about $1.3 million but did not have the documentation available Mr Badal moved for approval Mr Cassidy seconded the motion, which passed 4-0 Presenters: Gerald Hoehne, Capital Projects Director, NMHED; Paul Roth, CEO, Chancellor, UNM Health System; Kate Becker, Chief Executive Officer, UNM Hospitals 24 University of New Mexico Hospital—Presentation on the Planned New Hospital Tower Dr Roth stated that this will be the start of a new era for healthcare in New Mexico He said the Health Sciences Center has been failing the state As the only referral center for very complex and serious injuries and illnesses in New Mexico, they are unable to meet that demand and turn away about 1,000 people a year Dr Becker made a presentation describing the purpose and scope of the project [Page 830 of electronic agenda.] Mr Badal asked how many patients are being diverted out of state right now Dr Becker responded that it fluctuates year to year, but right now it is 900 to 1,000 patients that they know of, and these would be calls requesting to transfer patients to the UNM facility Mr Badal asked Dr Becker if she has some idea of how much capacity they will have built into the future with this project before having to continue to another phase Dr Becker said several people have asked her if it would make more sense to simply build another hospital to replace the existing one She said she believes this project, however, is the right one to move forward because healthcare generally is moving from inpatient to outpatient services The services that UNM Hospital provides will always require inpatient beds for trauma cases, burn cases, severe illnesses, and so forth, and she feels it will be necessary to increase inpatient capacity to at least cover those needs for the next 10-20 years The next project she would like to would be to increase outpatient New Mexico State Board of Finance: November 19, 2019 capacity so they have the right balance She said she believes this incremental decision is the right decision, and this particular project will cover needs for a period of between 10 and 20 years Mr Badal commented on the difficulties of recruiting medical professionals in New Mexico and asked Dr Becker how they would deal with staffing Dr Becker responded that the attraction of having an efficient and modern facility with state-of-the-art technology brings people to the facility compared to other people’s facilities She added that they are starting the staffing plan now, however, in anticipation of opening the tower in October 2024 Mr Badal asked if this will have an impact on the medical school or nursing school such that it would require changing the curriculum to allow for more students to help staff the facility Dr Roth responded said their class size for the medical school is at its maximum, so he does not anticipate any increase there, but he plans to approach the legislature with other ideas about addressing the physician shortage by having free medical school tuition He said the College of Nursing class sizes will have to increase, however, and could be a great pipeline into UNM Hospital Mr Cassidy asked if there are any issues with regard to receiving a HUD mortgage and servicing the debt He said he assumed this project would increase their revenue stream Dr Becker responded that the additional anticipated increased revenue from having the additional operating suites and additional capacity for patients will be able fund the debt service Responding to Mr Sanchez, Dr Roth said they are requesting to increase the size of their PA program as well as their nurse practitioner programs In the College of Nursing, there are specialized programs for geriatric nurse practitioners, psychiatric nurse practitioners and family nurse practitioners The state is in critical need of all of those, and that will be their strategy in approaching the legislature Mr Badal commented that he was excited about this project not just in terms of improved patient outcomes, but also as an economic development project He said the City of Albuquerque and the State of New Mexico’s reputationwill benefit from this kind of first class facility PROPERTY DISPOSITIONS Presenter: Deanna Miglio, Real Estate Manager, Bernalillo County 25 Bernalillo County—Requests Approval of the Sale of Real Property Located at 415 Tijeras Avenue NW in Albuquerque to Townsite QO21, LLC ($647,500) Ms Miglio requested approval of the sale of this real property to Townsite QO21, LLC, for $647,500 She said Bernalillo County has obtained another appraisal of the property, New Mexico State Board of Finance: November 19, 2019 which was requested by the Board of Finance at its June meeting and approved by TRD, for $170,000 She said Bernalillo County plans to stay with the original selling price Responding to Mr Badal, Ms Miglio said she did not know what purpose the buyer had in mind for the property Mr Cassidy commented that this is a key component of the county’s plan to reduce square footage of its buildings, which has been a long time coming He said nothing is surprising to him about the cost, and a lot of people seem to believe it’s worth a lot more than that, although it is not Ms Leach requested that approval be contingent upon Director’s receipt and counsel review of a fully executed purchase agreement Mr Badal moved for approval Mr Cassidy seconded the motion, which passed 4-0 PRIVATE ACTIVITY BONDS Presenter: Marcos B Trujillo, Deputy Director, Board of Finance 26 Private Activity Bond Cap Allocation Expiration Date Mr Trujillo stated that Section 6-20-2(A) NMSA states that the board must annually select a date on or before December 26, the date that all unexpired PAB allocations issued for the calendar year expire, and that the board shall set the expiration date on or before its regular November meeting He said board staff recommends setting the PAB issuance expiration date for calendar 2019 allocations on December 26, 2019 Mr Cassidy so moved Mr Sanchez seconded the motion, which passed 4-0 Presenters: Jay Czar, Executive Director, MFA; Gina Hickman, Deputy Director of Finance, MFA 27 New Mexico Mortgage Finance Authority—Report of Projected Need for Private Activity Bond Volume Capacity Mr Czar presented the MFA’s list of projected needs for available Private Activity Bond Volume Cap for 2020, 2021, 2022 and 2019 carry forward He said 2019 would be the third record year of production for the MFA, which is the result of the PAB bond cap 1) Single Family—$75,000,000 of new PAB bond cap for 2020 MFA expects a need of $75,000,000 for new PAB bond cap for 2021 and 2022 respectively 2) Multifamily—$100,000,000 for 2020 for all affordable multifamily rental projects around the state Looking forward, they anticipate the need for $100,000,000 allocations for 2021 and 2022, respectively New Mexico State Board of Finance: November 19, 2019 3) 2019 Carry Forward—Request as much as possible for 2020 of any remaining original 2019 PAB cap for the single-family mortgage program MFA anticipates sustained production at a minimum of $350,000,000 Carry forward PAB cap allocations provide significant flexibility to their programs due to the threeyear life and also eliminate costs associated with preservation of PAB cap that may be required Ms Hickman stated that MFA issued $380 million of tax-exempt bonds to support their first-time homebuyer mortgage program in 2019, which was the first time in many years that they have been able to use the tax-exempt bond execution to support their programs STATE TREASURER’S OFFICE MONTHLY REPORTING Presenter: Vikki Hanges, Chief Investment Officer and General Fund Portfolio Manager, State Treasurer’s Office 28 Monthly Investment Report for Month-Ended September 30, 2019 29 Quarterly Investment Report for Quarter-Ended September 30, 2019 Ms Hanges reported that, at the end of September, STO managed $6 billion in assets and earned more than $10 million on its investment positions For the quarter, income earned was over $32 million For the month for mark-to-market, there was an unrealized loss of $9.6 million as interest rates rose For the quarter mark-to-market, unrealized gains were $5.5 million Total earnings for the quarter, including mark-to-market, were $38 million GENERAL SERVICES DEPARTMENT MONTHLY REPORTING Presenter: Anna Silva, Facilities Management Division Director, GSD 30 Capital Buildings Repair Fund Financial Status Report for Month-Ended October 31, 2019 31 Legislative Capital Projects Financial Status Report for Month-Ended October 31, 2019 [Ms Silva was in a legislative hearing at this time and not available The reports for agenda items 30 and 31 are available for review in the board packet.] TAX INCREMENT DEVELOPMENT DISTRICTS New Mexico State Board of Finance: November 19, 2019 10  ... and 2 022, respectively New Mexico State Board of Finance: November 19, 2 019 3) 2 019 Carry Forward—Request as much as possible for 2020 of any remaining original 2 019 PAB cap for the single-family... APPROVAL OF MINUTES: OCTOBER 15, 2 019 (REGULAR MEETING) Mr Badal moved approval of the minutes of the October 15, 2 019, meeting, as submitted Mr Cassidy seconded the motion, which passed 4-0 CONSENT... Repair Fund Financial Status Report for Month-Ended October 31, 2 019 31 Legislative Capital Projects Financial Status Report for Month-Ended October 31, 2 019 [Ms Silva was in a legislative hearing