County bond attorney explains IRBs, pilot payments and enforcement options
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Summary
Doña Ana County's bond attorney told commissioners industrial revenue bonds (IRBs) provide tax abatements and that pilot payments to taxing entities are negotiated, described the school apportionment formula and said the county is not liable for IRB debt; staff committed to publishing IRB documents and community benefit materials online to address public questions.
A county bond attorney provided Doña Ana County commissioners an overview of industrial revenue bonds (IRBs), telling the board that IRBs are an economic-development tool counties and municipalities use to provide property-tax and, in some cases, gross-receipts-tax abatements on eligible equipment.
The attorney said IRB authority differs by jurisdiction — counties can include retail projects and municipalities have limited extraterritorial jurisdiction — and that construction-related GRT often remains taxable even when equipment is abated.
"With the abatement, there is then the effort to recapture some portion of what would otherwise be coming to the county and some other taxing entities," the attorney said, summarizing pilot payments (PILOTs) as negotiated compensation intended to offset revenue losses to taxing entities.
She outlined the statutory school-district apportionment formula now used for energy-transmission projects: 50% based on project location, 40% on geographic area, and 10% on enrollment (measured on two reporting dates), with a statutory floor so a school district's pilot cannot be less than the year prior to construction. She also cited HB 33 and SB 9 as recent legislative changes that increased the portion directed to schools.
The attorney emphasized the county is not responsible for repaying IRB debt. "This is not a debt of the county," she said. Lease payments made by the project company to the bond purchaser repay principal and interest; county revenues and assets are not pledged under the IRB structure.
On enforcement, the attorney said the county retains options if a project company fails to make pilot payments: the county can declare a default under the lease and terminate the lease; the project would then revert to the project company and go back on the tax rolls.
Commissioners raised concerns about public misinformation and asked staff whether key documents could be made more accessible. Denise (county staff) said the county will upload IRB paperwork and highlight clawback mechanisms and the community benefits agreement — including water and electric commitments — on the county website so the public can find the details more easily.
No formal board action was taken; the presentation was intended to clarify statutory framework, pilot apportionment and enforcement mechanisms.
