LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  May 6, 1997
         
         
      TO: Honorable Steve Holzheauser, Chair            IN RE:  Senate Bill No. 1811, As Engrossed
          Committee on Energy Resources                              By: Nelson
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB1811 ( Relating 
to energy conservation measures by institutions of higher education, 
including the financing of such measures.) this office has detemined 
the following:
         
         Biennial Net Impact to General Revenue Funds by SB1811-As Engrossed
         

No fiscal implication to the State is anticipated.
         

         
 
Fiscal Analysis

The bill would specifically authorize the 
state's institutions of higher education to utilize the Master 
Lease Purchase Program (MLPP) operated by the Texas Public Finance 
Authority  to fund contracts for energy conservation measures, 
so long as the costs of the energy conservation measures, including 
costs of design, engineering, installation, maintenance, repairs, 
and anticipated debt service requirements of the MLPP do not 
exceed the total energy and operating cost savings over a 10 
year period  beginning after the final date of energy saving 
project installation.
          
Methodology

Savings would be realized by institutions of 
higher education.  The amount of the savings would depend upon 
the number and size of projects that would be financed through 
the MLPP program.   To illustrate the potential savings to the 
state:  if an institution of higher education were to finance 
a $10,000,000 project for ten years through the MLPP at an all-in-financing, 
at the state's tax-exempt cost of 4.5% versus a vendor lease-purchase 
at a rate of 7.5%, the institution would save $1,836,882 in 
interest costs over the financing period.  If spread between 
tax-exempt (MLPP) and commercial financing rates were greater 
than 3.0%, the savings would be greater than illustrated above; 
if the spread were less than 3.0% then the savings would be 
less.

Administrative costs to the Texas Public Finance Authority 
for administering the MLPP program would be absorbed in TPFA's 
operating budget.

No fiscal implication to units of local 
government is anticipated.
          
   Source:            Agencies:   347   Texas Public Finance Authority
                                         
                      LBB Staff:   JK ,BB ,LP ,LD