Private Activity Bonds
New Mexico Private Activity Bond Program Overview
The Federal Tax Code allows privately-owned public purpose projects to take advantage of tax-exempt financing through Private Activity Bonds (PAB's). The types of PAB issuances authorized by the Tax Code include mortgage revenue bonds, qualified residential rental projects (multifamily housing), small issue industrial development bonds, and a variety of "exempt facilities" including sewage facilities and solid waste and hazardous waste disposal facilities.
The Tax Code imposes a volume ceiling on the aggregate principal amount of tax-exempt PAB's that may be issued within each state during any calendar year. The Laws of New Mexico mandates the PAB allocation process for the State of New Mexico (Sections 6-20-1 through 6-20-11 NMSA 1978). The State Board of Finance (SBOF) has been charged with the administration of the program and is responsible for allocating the volume cap, monitoring requests, and recording the use of PAB cap each year.
In New Mexico, state law dictates that from January 1 to July 1 each year, up to 40% of the cap is reserved for state agencies (including Housing New Mexico, the New Mexico Educational Assistance Foundation, and the New Mexico Finance Authority), with no more than 50% to any single one. The remaining 60% is available for non state issuers—municipalities, housing authorities, nonprofits—with no more than 20% allocated to any single entity. After July 1, allocation restrictions (e.g. the 40/60 split) are relaxed, giving the Board discretionary power to satisfy unmet demand across issuing authorities.
PAB allocation percentages by purpose, for each calendar year, are determined by the State Board of Finance at the December meeting preceding the calendar year. PAB allocation percentages for each purpose are proposed by the PAB committee and then recommended to the full Board. The Board then votes on the proposed allocation percentages for approval. Calendar year allocation percentages are based on past use and current demand. PAB cap is generally allocated by two main purposes—Housing (single and multifamily) and Other (small issue, exempt facility). Economic development projects, primarily small manufacturing, are included in the small issue category. The maximum amount of PAB volume cap that can be requested for a small issue project is $10 million.
CY 2026 Volume Cap & Allocation Percentages
2026 Total Volume Cap: $397,625,000
2026 Allocation Percentages: 40% Single-Family Housing, 60% Multifamily Housing