Lawmakers debate HB295 to clarify RETA property-tax exemption; committee requests updated TRD analysis

The House Taxation & Revenue Committee on Thursday heard extensive testimony on House Bill 295, which would clarify that real property and improvements owned by the Renewable Energy Transmission Authority (RETA) are covered by the state property-tax exemption in Section 7-36-4 and that limited leaseback interests negotiated under RETA's acquisition/leaseback approach are consistent with that exemption.

Supporters — including RETA's executive director and representatives of transmission developers — told the committee the measure is a technical fix intended to align the statute with long-standing practice and preserve a financing tool used to build transmission needed to unlock large wind projects. Opponents and several committee members said the statutory language is confusing, flagged constitutional questions, and urged staff to obtain an updated written analysis from the Taxation & Revenue Department (TRD) before the committee takes further action.

RETA executive director Lynn (RETA) told the committee the authority and its enabling act were intended as an economic development tool to attract private investment in transmission. She said RETA acquires rights of way and improvements during development, then leases the operational rights back to private operators. That acquisition/leaseback structure, she said, has been interpreted in practice to exempt RETA-owned transmission improvements from property tax under the state constitution; HB295 would remove statutory ambiguity in the relevant code section to reflect that interpretation.

Private developers and industry witnesses described the economic stakes. Jeremy Turner of Pattern Energy said SunZia and related projects represent multibillion-dollar financing and that the package of incentives and RETA's lease structure enabled projects that he said will deliver thousands of construction jobs, roughly $303 million in payments in lieu of taxes (PILT) over 30 years for one project, and additional gross-receipts tax during construction. County and industry speakers, including Torrance County Manager Jordan Barela and Pattern Energy representatives, urged passage to avoid chilling future investment.

Several committee members — including Representatives Montoya, Terrazas, Lindstrom and others — pressed witnesses on three recurring concerns: whether clarifying the statute would effectively create a new exemption for private lessees, whether the provision is consistent with constitutional limits on tax exemptions, and whether the change would impede local governments' ability to negotiate industrial revenue bonds (IRBs) and payment-in-lieu-of-tax agreements for generation projects. Counsel and witnesses cited a recent New Mexico Supreme Court case concerning a charitable exemption (El Castillo, 2017) and said that case examines a different constitutional exemption than the ownership-based exemption RETA invokes; others on the committee said TRD's written analysis raises legitimate constitutional questions that must be resolved on the record.

The committee did not take a final vote. Members recommended follow-up: staff and proponents should confer with TRD and provide an updated agency analysis for the committee to review when the bill is taken up again. Several members specifically asked to reconvene on Monday or to return the bill with clarifying agency input.

Next steps: HB295 will not advance until the committee receives an updated TRD analysis and the sponsors and agency counsel can address the constitutional concerns and local-tax implications raised during the hearing.