House Bill 371 would limit the tax rate for Public Improvement District residents to a maximum of $10 per $1,000 of a property’s value, require property brokers to disclose to prospective buyers the actual amount and potential amount of the PID tax and require state Board of Finance approval for bonds.
In Public Improvement Districts a developer can use bonds backed by tax payments from property owners to pay for infrastructure such as roads and water systems.
Harper, a Republican, was elected in November to represent the newly redrawn House District 57, which covers Mariposa, a community in far north Rio Rancho where the developer, High Desert Investment Corp., used the PID process to sell $16 million in bonds to pay for a water treatment system and other infrastructure.
High Desert sold only a fraction of the more than 1,600 homes it expected to sell at Mariposa and tax revenues weren’t sufficient to cover the bond payments. Last summer, High Desert announced it was pulling out leaving homeowners facing a huge tax increase to cover the debt.
“I think it’s just heartbreaking what’s happened to those folks,” Harper said.
He acknowledged the bill wouldn’t change the situation at Mariposa but hoped the legislation would prevent a similar situation happening in future.
Mayor Tom Swisstack said the board that oversees the Mariposa PID is still trying to find a compromise that will be acceptable to the bondholders and protect homeowners from bearing the full brunt of the bond payments.
Another bill, HB 355 that Rep. Mimi Stewart, D-Albuquerque, introduced, prohibits a PID from imposing an “unreasonably high” financial burden on property owners and requires developers to put down equity a minimum of 20 percent, not including property, of the initial cost of the project.
It also strengthens disclosure requirements, limits tax increases to no more than 2 percent annually, and ensures that tax amounts are set at a capped level rather than based on the assessed value of a home.