BILL ANALYSIS



H.B. 2726
By: Romo
04-10-95
Committee Report (Unamended)


BACKGROUND

The Tax Reform Act of 1986 imposed a limit on the amount of
"private-activity" tax-exempt debt that could be issued each
calendar year in any one state.  The volume cap or state ceiling is
calculated for each state at $50 per capita, with a minimum of
$150,000,000.  For 1995, Texas has a cap of $918,900,000.  Each
state has the authority to administer the allocation of the volume
cap.

VATCS 5190.9a requires that the Texas Bond Review Board administer
the program in Texas.  The statute mandates that for the first
eight months of the year the volume cap is divided by purpose into
five subceilings as follows:

     #1)Single Family Housing                          28.0%
     #2)State Voted Issues                             17.5%
     #3)Qualified Small Issues(IRBs)                         7.5%
     #4)Residential Rental Projects(multi-family housing)         5.0%
     #5)All other issues requiring allocation                    42.0%

With the exception of single family housing, which has a priority
system established by Art. 5190.9a Section 3(c), applications are
placed in line according to a number selected by lot.  Following
the lottery, applications are in line according to their
application date.  After September 1, all subceilings are combined
and the remaining volume cap is allocated.

PURPOSE

If passed, House Bill 2726 will clarify and simplify the allocation
process, thereby allowing the program to operate more efficiently. 
It will also make policy changes anticipated to achieve broader
distribution of the volume cap by lowering the maximum application
amounts and the number of eligible projects per site for each
calendar year.  Historically, the allocation program has been
critically oversubscribed.  Although each project would receive a
smaller amount of volume cap, a greater number of projects would
receive a reservation.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 1, Chapter 1092, Article 5190.9a,
           Vernon's Texas Civil Statutes by amending Subdivision
           14 and adding Subdivision 20. Defines tax-exempt
           enterprise zone facility bonds (EZ Bonds) to be
           consistent with tax code.

SECTION 2. Amends Sections 2(b) and (e) which allows the program
           to continue even if some types of bonds become
           ineligible at the federal level.  The set-asides for
           those purposes would be reallocated to other
           subceilings.

SECTION 3. Amends Section 3(d) which would move the deadline from
           December 14 to December 1 to be consistent with filing
           deadlines required by the Attorney General's office if
           a project is to close by December 24.  Amends Subsection
           (f) which would allow an issuer to refuse a reservation
           without penalty if they have been given less than 90
           days to close their transaction.

SECTION 4. Amends subsection (d) which would allow five business
           days rather than calendar days to submit closing
           documents.  This allows enough time for compliance, even
           if there is a holiday or long weekend following the
           closing.

SECTION 5. Amends Section 12, by deleting language to make it
           consistent with the funds consolidation language.

SECTION 6. Amends Chapter 1092, Article 5190.9a by amending
           subsection (a), (b) and (c), which would lower the
           maximum application amounts in three areas.  Lowers
           Subceiling 1 from $30 million to $25 million, except for
           the Texas Department of Housing and Community Affairs,
           which remains at one third of the twenty eight percent
           dedicated to this subceiling.  Lowers Subceiling 4 from
           $50 million to $15 million.   Lowers Subceiling 5 from
           $50 million to $25 million.  Subsection (c) allows for
           there to be no penalty for a multi-jurisdictional
           housing issuer if a sponsoring governmental unit
           withdraws from the issuer, and thus changes the issuer's
           population base.

SECTION 7. Amends Section 4, Article 5190.9a by adding subsection
           (c) which limits the number of project applications at
           any one site to one each year.

SECTION 8. Emergency Clause.


SUMMARY OF COMMITTEE ACTION

The committee considered HB 2726 in a public hearing on April 10,
1995.

The following person testified neutrally on the bill:
Jeanne Talerico.

The bill was reported favorably without amendments, with the
recommendation that it do pass and be printed and be sent to the
Committee on Local and Consent Calendars, by a record vote of:  6
Ayes, 0 Nays, 0 PNV, 3 Absent.