Doing Business in Rio Rancho

Economic Development Incentives and Finance

Industrial Revenue Bond Financing

The City of Rio Rancho will selectively offer Industrial Revenue Bonds (IRB’s) for conduit financing, and possible property tax abatement, in keeping with New Mexico State Statute and Federal Tax Law, when the issuance of same is determined essential to the successful location or expansion of an eligible job-producing investment.  Specifically, the City will utilize the following criteria to evaluate the possible issuance and structuring of Industrial Revenue Bonds and associated property tax abatements:

The City will not, as a matter of policy, issue IRB’s for any proposed project or project investment which represents or encompasses any of the following:

  • The demand for and use of land in a disproportionate ratio to the number of base jobs produced as a result.
  • The development or expansion of an otherwise-eligible project wherein seventy-five percent or more of the base jobs to be created or retained have starting annual wages, or existing annual wages which equal to or are below 150% of the then-existing Federal Minimum Wage annualized.
  • The development or expansion of an otherwise-eligible project which, can be determined with certainty, would occur in the absence of the issuance of an Industrial Revenue Bond and any of the associated benefits accruing therefrom.

The City will, as a matter of policy, issue IRB’s consistent with the following criteria:

  • The minimum amount financed shall be $3 million dollars.
  • Eligible IRB financings shall be negotiated as to duration, up to a maximum of 30 years.
  • Applicants for IRB’s shall pay to the City a one-time, application, processing and issuance fee totaling one-tenth of one percent (.001) of the amount financed to a maximum amount of $100,000.  One-third of the fee shall constitute the application portion of same and shall be non-refundable.
  • IRB’s will be issued pursuant to an agreement between the City and the applicant/recipient which shall require certain “claw-back provisions” requiring the recipient of any and all property tax abatements granted with the IRB to fully reimburse the City for 100% of same in the event the recipient permanently ceases operations within the City of Rio Rancho at the facility for which the IRB was granted at any time within five years following formal approval and issuance of the IRB
  • Each application for an IRB shall be evaluated in keeping with approved Administrative policies for accepting, processing, and approving same.  Such policy shall describe fees and establish proper forms, format, and documentation; set forth timelines for application, review, recommendation, and ultimate action; detail specifically any cost-benefit analysis and/or econometric modeling required to evaluate and recommend IRB’s; and set forth staff responsibilities for processing applications from the initial application acceptance through Governing Body action and potential ongoing monitoring.  At minimum, IRB applications should be fully evaluated by a committee comprised of the City Administrator, City Attorney, Chief Financial Officer, and Chief Development Officer of the City prior to any final recommendation for action before the Governing Body.
  • IRB’s which are approved and issued by the City in an aggregate investment amount less than $100 million, shall at minimum, require the applicant/investor to remit to the City, for the complete duration of the bond, a yearly payment in lieu of taxes (PILOT) equal to the total real and personal property taxes that would otherwise have been levied on behalf of, and paid to, the Rio Rancho Public School District for the tax period in question.  Such, PILOT payments to, in turn, be transferred from the City to the Schools for any lawful use thereby.   IRB’s approved and issued by the City in an aggregate investment amount which exceeds $100 million shall consider PILOT’s commensurate with the nature of the business, length of the bond, and amount of the bond.  Such PILOT’s shall not be deemed mandatory for investment amounts exceeding $100 million, and are to be considered on a case-by-case basis.
  • The City may, based upon the results of cost-benefit analysis and/or econometric modeling choose to issue and approve IRB’s for durations less than twenty (20) years; and/or to include required yearly payments in lieu of taxes exceeding the amount determined equal to school property taxes foregone.  In no event, however, shall payments in lieu of taxes exceed fifty percent (50%) of the total real and personal property taxes which would otherwise have been due and payable in the absence of the IRB and its associated tax abatement.  Of this total, all PILOT payments in excess of school taxes foregone shall be maintained by the City and shall be utilized exclusively to promote and facilitate further economic development within Rio Rancho.

For more information, please see the City of Rio Rancho’s Comprehensive Economic Development Policy.