LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 5, 1997 TO: Honorable Fred Hill, Chair IN RE: Senate Bill No. 1502, Committee Report 2nd House, Substituted Committee on Urban Affairs By: Ellis House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB1502 ( Relating to the transfer of certain money into the housing trust fund.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB1502-Committee Report 2nd House, Substituted Implementing the provisions of the bill would result in a net impact of $0 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis This bill amends Section 2306.205 of the Government Code by requiring the transfer of any certain fees the Department of Housing and Community Affairs receives which are in excess of the amount needed to pay administrative costs of the 501(c)(3) bond program to the Housing Trust Fund in the Texas Treasury Safekeeping Trust Company. The bill also provides guidelines for the use of the 501(c)(3) bonds for the department and the Texas State Affordable Housing Corporation (TSAHC), the department's non-profit corporation. Methodolgy The department assumes a cumulative amount of $1.14 billion in issued bonds over a five-year period. Property developers pay origination fees for loans from the bond proceeds at an approximate rate of 0.5 percent of the bond amount. These fees are paid at the time of bond issuance. The origination fees would be the basis for gains to the Housing Trust Fund in the Texas Treasury Safekeeping Trust Company. Although the department has not previously had earnings remaining after payment of expenses and reserves, the department anticipates initiating an increased number of multi-family projects, resulting in increased excess earnings related to origination fees. These earnings assume that the department is authorized to collect asset oversight fees for the developed projects. The department may eventually require additional staff support to handle an increased workload resulting from a higher level of bond issuances. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Savings/(Cost) from Other - Texas Treasury Safekeeping Trust Company OTHER-OTH 1998 $599,516 1998 849,164 2000 1,113,332 2001 1,275,616 2002 1,439,266 Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $0 1999 0 2000 0 2001 0 2002 0 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Agencies: 332 Department of Housing and Community Affairs LBB Staff: JK ,TL ,RA