2019 New Mexico Statutes
Chapter 6 - Public Finances
Article 15 - Finances of Counties, Municipalities and School Districts
Section 6-15-5 - Sale of bonds.
A. All of the bonds shall be offered and sold at public sale pursuant to this section or at a negotiated sale on terms determined by the municipal corporation.
B. Bonds maturing in less than thirty days may be sold at private sale to the state at the price and upon such terms and conditions as a municipal corporation and the state may determine.
C. Notwithstanding any law requiring bonds to be sold at a public sale, the following bonds may be sold at a public or private sale:
(1) bonds designated as build America bonds pursuant to Section 1531 of the federal American Recovery and Reinvestment Act of 2009; and
(2) qualified school construction bonds issued pursuant to the Qualified School Construction Bonds Act [22-18B-1 to 22-18B-5 NMSA 1978] and Section 1521 of the federal American Recovery and Reinvestment Act of 2009.
D. Before any bonds issued by a municipal corporation are offered for public sale, the corporate authorities issuing the bonds shall designate the maximum net effective interest rate the bonds shall bear, which shall not exceed the maximum permitted by the Public Securities Act [6-14-1 to 6-14-3 NMSA 1978]. A notice calling for bids for the purchase of the bonds shall be published once at least one week prior to the date of the sale in a newspaper having local circulation. The notice shall specify a place and designate a day and hour subsequent to the date of the publication when bids shall be received and publicly opened for the purchase of the bonds. The notice shall specify the maximum net effective interest rate permitted for the bonds and the maximum discount if a discount is allowed by the governing body and shall require bidders to submit a bid specifying the lowest rate of interest and any premium or discount if allowed by the governing body at, above or below par at which the bidder will purchase the bonds. The bonds shall be sold to the responsible bidder making the best bid determined by the municipal corporation as set forth in the notice, subject to the right of the governing body to reject any and all bids and readvertise. All bids shall be sealed or sent by facsimile or other electronic transmission to the municipal corporation as set forth in the notice. Except for the bid of the state or the United States, if one is received prior to acceptance by the governing body of the best bid, the best bidder shall make a deposit of not less than two percent of the principal amount of the bonds, either in the form of a financial security bond or in cash or by cashier's or treasurer's check of, or by certified check drawn on, a solvent commercial bank or trust company in the United States, which deposit shall be returned if the bid is not accepted. The financial surety bond or the long-term debt obligations of the issuer or person guarantying the obligations of the issuer of the financial surety bond shall be rated in one of the top two rating categories of a nationally recognized rating agency, without regard to any modification of the rating, and the financial surety bond must be issued by an insurance company licensed to issue such a bond in New Mexico. If the successful bidder does not complete the purchase of the bonds within thirty days following the acceptance of the bidder's bid or within ten days after the bonds are made ready and are offered by the municipal corporation for delivery, whichever is later, the amount of the bidder's deposit shall be forfeited to the municipal corporation issuing the bonds, and, in that event, the governing body may accept the bid of the bidder making the next best bid. If all bids are rejected, the governing body may readvertise the bonds for sale in the same manner as for the original advertisement or sell the bonds at private sale to the state or the United States. If there are two or more equal bids and the bids are the best bids received, the governing body shall determine which bid shall be accepted.
E. Except as provided in this section, bonds to be issued by a municipal corporation for various purposes may be sold and issued as a single combined issue even though they may have been authorized by separate votes at an election or elections. Bonds authorized by any incorporated city, town or village for the construction or purchase of a system for supplying water, a sanitary sewer system or a storm sewer system may be combined with each other and sold and issued as a single issue but may not be combined with bonds to be issued for any other purpose that may be subject to the debt limitation of Article 9, Section 13 of the constitution of New Mexico.
F. The bond underwriter representing the municipal corporation in a negotiated bond sale pursuant to this section shall be selected pursuant to a request for proposals in accordance with the provisions of the Procurement Code.
G. When bonds are sold at a negotiated sale, the terms of the bonds and comparable sale results for similar bonds shall be presented at a public meeting of the governing body of the municipal corporation.
H. For purposes of this section, "negotiated sale" means a sale of the bonds to investors by a bond underwriter or a private placement of the bonds with a bank, financial institution, state instrumentality or other person, with interest rates, maturity dates and other terms that are satisfactory to the municipal corporation.
History: Laws 1929, ch. 201, § 3; C.S. 1929, § 16-103; Laws 1937, ch. 125, § 1; 1941 Comp., § 7-618; 1953 Comp., § 11-6-17; Laws 1969, ch. 217, § 1; 1973, ch. 393, § 3; 1983, ch. 265, § 28; 1996, ch. 30, § 1; 1999, ch. 232, § 2; 2005, ch. 158, § 1; 2009, ch. 154, § 5; 2011, ch. 92, § 1; 2013, ch. 158, § 1.
ANNOTATIONSThe 2013 amendment, effective June 14, 2013, provided for the sale of general obligation bonds through negotiated sales; provided for the designation of interest rates; in Subsection A, deleted the former first sentence which required corporate authorities to designate the maximum net effective interest rate before any bonds were offered for sale, and after "sale pursuant to this section", added the remainder of the sentence; in Subsection D, added the first sentence; and added Subsections F through H.
The 2011 amendment, effective June 17, 2011, eliminated the requirement that all bids be accompanied by a deposit and required that the best bidder make a deposit before the governing body accepts the bid.
The 2009 amendment, effective April 7, 2009, added Subsection C.
The 2005 amendment, effective June 17, 2005, in Subsection A, provided that except as provided in Subsection B of this section and in Sections 6-18-6, 6-18-7 and 6-21-9 NMSA 1978, bonds shall be sold at public sale pursuant to this section; and added Subsection B to provide that bonds may be sold at private sale to the state of New Mexico at the price and upon terms and conditions as may be negotiated between the state and the political subdivision.
The 1999 amendment, effective June 18, 1999, in Subsection A, deleted "Except as provided in Subsection B of this section" preceding "Before any bonds", substituted "offered for public sale" for "offered for sale", deleted "rate of interest the bonds shall bear and shall designate the maximum" preceding "net effective interest rate", and inserted "the bonds shall bear"; redesignated the former ending of Subsection A as B, in Subsection B, substituted "published once at least one week prior to the date of the sale" for "published once a week for two consecutive weeks" in the first sentence, deleted "sealed" preceding "bids" in the second sentence, deleted "rate of interest the bonds shall bear, the maximum" preceding "net effective interest rate" in the third sentence, substituted "responsible bidder making the best bid determined by the municipal corporation as set forth in the notice" for "bidder making the best bid" in the fourth sentence, substituted "All bids shall be sealed or sent by facsimile or other electronic transmission to the municipal corporation as set forth in the notice. Except for the bid of the state of New Mexico or the United States, if one is received, all bids shall be" for "All bids shall be sealed and, except the bid of New Mexico, if one is received, shall be" and inserted "in the form of a financial security bond or" in the fifth sentence, inserted the sixth sentence, and inserted "or sell the bonds at private sale to the state of New Mexico or the United States" in the eighth sentence.
The 1996 amendment, effective July 1, 1996, added the subsection designations; in Subsection A, added the proviso at the beginning, deleted the former fourth sentence relating to mailing a copy of the notice, and substituted "does not" for "fails or neglects to" in the seventh sentence; substituted "issued by a municipal corporation" for "or any part thereof" in Subsection B; inserted "by a municipal corporation" in the first sentence in Subsection C; and made stylistic changes throughout the section.
No commission is allowed for sale of bonds, in whatever guise attempted. 1930 Op. Att'y Gen. No. 30-80.
Financial advisors entitled to fee. — A firm acting as financial advisor on the issuance, sale and delivery of general obligation school bonds is entitled to a fee and such fee is a reasonable and legal expense incurred by the municipal school. 1965 Op. Att'y Gen. No. 65-207 (rendered prior to 1973 amendment).
Effect of board of education advertising bonds. — A board of education does not lose its right to sell bonds to the state treasurer by advertising them for sale, nor is such right lost when the state treasurer bids on them at the public offering. 1946 Op. Att'y Gen. No. 46-4929.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 64 Am. Jur. 2d Public Securities and Obligations §§ 193 to 214.
Bond issue in excess of amount permitted by law, estoppel to deny validity of, within authorized debt, tax or voted limit, 175 A.L.R. 823.
20 C.J.S. Counties § 225; 64 C.J.S. Municipal Corporations § 1679; 79 C.J.S. Schools and School Districts § 370; 87 C.J.S. Towns §§ 216, 217.
