Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Hernandez, J.
LAST UPDATED
ORIGINAL DATE 2/17/25
SHORT TITLE Development Fees Act Changes
BILL
NUMBER House Bill 302
ANALYST Hilla
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
Impact
fees
No fiscal
impact
No fiscal
impact
No fiscal
impact
No fiscal
impact
No fiscal
impact
Recurring
Muni/counties
operational
budgets
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Municipal League (NMML) Agency Analysis was Solicited but Not Received From
Department of Finance and Administration (DFA)
New Mexico Counties (NMCA)
SUMMARY
Synopsis of House Bill 302
House Bill 302 (HB302) amends the Land Development Fees and Rights Act (Section 5-8-10
NMSA 1978) to ensure developers who pay impact fees to local governments to offset the costs
of infrastructure improvements receive full credit for their contributions, without reductions
based on calculations of proportional benefit to their development. The bill prevents
municipalities and counties from requiring developers to waive any provisions of the
Development Fees Act as a condition of development approval and ensures that local
governments cannot impose restrictions, limitations, or additional requirements on impact fee
credits beyond what is authorized by law.
HB302 specifies that 100 percent of the value of contributions, such as land dedication for parks,
rights-of-way, and infrastructure improvements, must be credited against impact fees without
any deductions.
HB302 eliminates any pre-existing agreements that impose limitations on credit usages are House Bill 302 – Page 2
deemed void and unenforceable, unless specifically authorized by the Development Fees Act.
The effective date of this bill is July 1, 2025.
FISCAL IMPLICATIONS
This bill does not have a fiscal impact on the state. The Municipal League (NMML) states that
impact fee revenues, or actual revenue collected, represent an estimated 5 to 25 percent of
infrastructure capital improvement plan projects funded by local governments.
SIGNIFICANT ISSUES
NMML states HB302 would limit local governments’ ability to structure development
agreements and impact fees in the ways best suited to address local needs. NMML states that
development fees should remain at the local level, given the significant differences in needs and
local approaches across the state regarding new development and associated public infrastructure
needs.
Following analysis from NMML, development agreements are commonly negotiated between
municipalities and developers based on the specifics of the development project and public
infrastructure needs by the municipality, which HB302 would remove the ability to negotiate.
The elimination of proportionate share calculations in determining impact fee credits will likely
create less predictability and more uncertainty in the development process. This could result in
local governments designating fewer capital improvements as impact-fee eligible. NMML states
that HB302 could be increased utilization of public improvement districts (PID) and tax
increment district (TIDD) to fund the public infrastructure, which can reduce local government
revenue and can increase the cost of homeownership.
EH/rl/hg