November 19 2019 - October 22 2019 - Minutes

Bernalillo County—Requests Approval of an Extension of Private Activity Bond Volume Cap Allocation for the Commons at Martineztown Apartments until December 31, 2019 6.. Bernalillo C

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

1 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.]

2 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

4 Bernalillo County – Requests Approval of an Extension of Private Activity Bond Volume Cap Allocation for Ceja Vista Apartments until December 31,

5 Bernalillo County—Requests Approval of an Extension of Private Activity Bond Volume Cap Allocation for the Commons at Martineztown

Apartments until December 31, 2019

6 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

7 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

8 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

9 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)

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 $1,200,000.00 $2,000,000.00

Emergency Water Fund $ 62,449.84 $ 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

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

4-0

HIGHER 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 6 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

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 do 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

4-0

21 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 8 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

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

4-0

Presenters: 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

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 do would be to increase outpatient

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,

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) 5 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

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 three-year 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