1. A. General authority:

   1. (1) Capital improvements made on licensed racing premises with state funds offset from the amount of taxes due pursuant to Section 60-1A-20 NMSA 1978, shall be utilized only for the improvement of horse racing facilities for the benefit of the public, breeders and horse owners and shall be intended to increase the revenue to the state from the increases in pari mutuel wagering and tourism which result from the improvements.
   2. (2) No capital improvement for which an offset from state taxes is requested shall be made unless it is a capital investment subject to depreciation under the United States Internal Revenue Code and is approved in advance by the commission.
   3. (3) It is the responsibility of the licensee requesting the offset of state taxes to establish that the proposed capital improvement qualifies as a capital investment subject to depreciation under the United States Internal Revenue Code.

2. B. Commission requirements:

   1. (1) Each commission member and the agency director shall inspect all facilities, grounds and areas of each licensed racetrack in New Mexico annually for the purpose of identifying the need for capital improvements for those areas.
   2. (2) The commission shall annually adopt or revise a schedule of priorities of areas in need of immediate capital improvements for each licensed racetrack. Licensees and any other individuals or organizations may submit to the commission recommendations for the schedule of priorities. The commission chairman may appoint committees as are necessary to prepare the schedule of priorities. All committee meetings shall be open meetings.
   3. (3) In adoption of the schedule of priorities, the commission shall give due consideration to the needs of the public, breeders and horse owners and shall balance those needs in the allocation of priorities.
   4. (4) The commission shall adhere to the schedule of priorities in the approval of capital improvement projects applied for by the licensees.

3. C. Procedures:

   1. (1) A licensee shall submit to the commission, on application forms provided by the commission, proposals for capital improvement projects for which an offset of state taxes will be requested. Applications shall contain, but are not limited to, the following information:

      1. (a) licensed racetrack at which project is proposed;
      2. (b) person(s) supervising the proposal and project;
      3. (c) total cost of project;
      4. (d) amount of total cost to be offset by state tax revenues;
      5. (e) amount of total cost to be paid by other funds and sources of those funds;
      6. (f) complete description of project and timetable for construction;
      7. (g) estimated timetable of requests for offsets by state tax revenues; and
      8. (h) proof of compliance with Section 60-1A-20 NMSA 1978 that the project qualifies under the Internal Revenue Code as a capital investment subject to depreciation.
   2. (2) For any capital improvement project in which the requested offset from state taxes equals or exceeds fifty percent of the total purchase or construction price, the licensee shall obtain and submit to the commission at least three written bids from suppliers or licensed contractors, where applicable.
   3. (3) At the next regularly scheduled commission meeting, the commission shall review, reject, modify or condition each proposal, or return the application for additional information. Then, at the subsequent scheduled commission meeting, the commission shall approve each capital improvement proposal reviewed.
   4. (4) The commission shall approve only the bid of the lowest bidder, unless the licensee requests in writing that a particular bid be accepted, in which case the commission may approve the licensees recommended bidder if it finds extraordinary circumstances which call for the acceptance of that bidder and additionally finds that acceptance of that bidder would be in the best interests of racing in New Mexico. The commission shall give preference to New Mexico contractors and suppliers, as defined in Section 13-4-2 NMSA 1978, in selecting bids, provided that the bid for a project of the New Mexico contractor or supplier does not exceed ten percent over the amount of the lowest bid.
   5. (5) When special circumstances warrant, or when unexpected cost overruns are incurred, the commission may consider a capital improvement retroactively.
   6. (6) When the licensee’s in-house maintenance work force is accepted as the low bidder in a capital improvement project, any cost overrun beyond the highest bid price may not be allowed as an offset and must be paid by the licensee. A cost overrun performed by in-house maintenance above the original bid price and below the highest bidder price must be approved by the commission before the work is accomplished.
   7. (7) Following the completion of any capital improvement project for which an offset of state taxes was requested and approved, the commission, or designee, shall inspect the project and any recommended future projects.

4. D. Tax liabilities: All taxes assessed pursuant to the provisions of Section 60-1A-20 NMSA 1978, shall be paid to the racing commission at the time set by law, unless a capital expenditure project or the financing of term investment in capital improvements has been previously approved by the commission and the licensee is entitled by such previous approval to offset the amount of the taxes then due. If no previous approval for a project or financing has been made, the full amount of taxes due shall be paid. If previous approval for a project or financing has been made and the licensee is entitled to offset the amount of the taxes then due, the licensee may offset such taxes due and shall account to the commission for such offset from taxes due.

   History of 15.2.2 NMAC:

   Pre-NMAC History:

   Material in this part was derived from that previously filed with the commission of public records - state records center and archives as:

   NMSRC 67-1, Amendment No. 1., Rule Revisions Adopted by the New Mexico State Racing Commission April 21, 1967 Rules 352 and 380, filed 4/26/1967;

   NMSRC 69-1, New Mexico Laws and Rules and Regulations Governing Horse Racing, filed 6/9/1969;

   NMSRC 81-1, Rules Governing Horse Racing in New Mexico, filed 12/4/1981;

   History of Repealed Material: 15 NMAC 2.2, Horse Racing - Associations, filed 9/15/1995 repealed in its entirety; renumbered, reformatted and replaced with the new part 15.2.2 NMAC, Horse Racing - Associations, to conform to the new NMAC requirements effective 3/15/2001.

   Other History:

   NMSRC 81-1, Rules Governing Horse Racing in new Mexico, filed 12/4/1981 - that applicable portion renumbered, reformatted and amended to 15 NMAC 2.2, Horse Racing - Associations, filed 9/15/1995.

[15.2.2.10 NMAC; N, 8/30/2001; A, 12/1/2010]