LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 8, 1997 TO: Honorable Teel Bivins, Chair IN RE: Senate Bill No. 1811 Committee on Education By: Nelson Senate 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 Introduced 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 be dependent upon the number and size of projects that would be financed through the MLPP program. For illustration of 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 ,LP ,LD