A. After the annual estimate of severance tax bonding capacity is made pursuant to Subsection B of Section 7-27-10.1 N.M. Stat. Ann., the board of finance division of the department of finance and administration shall allocate two and one-half percent of the estimated bonding capacity for the New Mexico housing trust fund for the purposes of carrying out the provisions of the New Mexico Housing Trust Fund Act [58-18C-1 to 58- 18C-9 NMSA 1978].

B. The legislature authorizes the state board of finance to issue severance tax bonds in the amount allocated pursuant to this section for use by the New Mexico mortgage finance authority to fund the New Mexico housing trust fund for the purposes of carrying out the provisions of the New Mexico Housing Trust Fund Act. The New Mexico mortgage finance authority shall certify to the state board of finance the need for issuance of bonds. The state board of finance may issue and sell the bonds in the same manner as other severance tax bonds in an amount not to exceed the authorized amount provided for in this section. If necessary, the state board of finance shall take the appropriate steps to comply with the federal Internal Revenue Code of 1986, as that code may be amended or renumbered. Proceeds from the sale of the bonds are appropriated to the New Mexico housing trust fund for the purposes certified by the New Mexico mortgage finance authority to the state board of finance.

C. Money from the severance tax bonds provided for in this section shall not be used to pay indirect project costs. Any unexpended balance from proceeds of severance tax bonds issued for projects pursuant to the New Mexico Housing Trust Fund Act shall revert to the severance tax bonding fund within one year of completion of the project. Any unencumbered balance from the proceeds of severance tax bonds issued pursuant to this section after three years from the issuance of those bonds shall revert to the severance tax bonding fund. The New Mexico mortgage finance authority shall monitor and ensure proper reversions of the bond proceeds appropriated for the projects.