During its 2015 Regular Session, the New Mexico Legislature passed Senate Bill 319, which amended the County Industrial Revenue Bond Act in order to add mines and energy refineries, treatment or processing plants to the list of “projects” qualifying for issuance of county industrial revenue bonds (IRBs). Gallagher & Kennedy (G&K) provides this alert to the mining industry, energy companies, and local governments to inform them of this expanded economic development tool.
What are the benefits of IRBs?
IRBs have three principal benefits for companies that engage in qualifying projects: (1) a total property tax exemption for project property for up to 30 years; (2) gross receipts or compensating tax deductions or exemptions for the purchase of equipment and other tangible personal property; and (3) in very limited circumstances, an exemption from federal income taxation on the interest paid to
bondholders, resulting in lower interest rates for a borrower than other types of commercial borrowings. Property and gross receipts or compensating tax benefits are available for most New Mexico projects with significant capital development. The third benefit depends on the lRBs being deemed "tax exempt" under the federal Internal Revenue Code.
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