Austin, Texas
                                   FISCAL NOTE
                               75th Regular Session
                                  April 9, 1997
      TO: Honorable Eddie Lucio, Jr., Chair            IN RE:  Senate Bill No. 1877
          Committee on Intergovernmental Relations                              By: Wentworth
          Austin, Texas
         FROM:  John Keel, Director    
In response to your request for a Fiscal Note on SB1877 ( Relating 
to creating a Texas community investment program to assist certain 
businesses in distressed areas of the state.) this office has 
detemined the following:
         Biennial Net Impact to General Revenue Funds by SB1877-As Introduced
Implementing the provisions of the bill would result in a net 
negative impact of $(5,000,000) 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 Chapter 2306 of the Government Code by adding 
Subchapter AA which would require the Department of Housing 
and Community Affairs to establish a community investment program 
in which the department awards grants to or makes stock purchases 
in community development corporations.  These community development 
corporations would make loans to or invest in businesses located 
in distressed areas and which would not otherwise qualify for 
a conventional bank loan.  The bill establishes guidelines for 
the program and rule-making authority for the department.  The 
bill also requires the community development corporation to 
submit a report to the director which details the status of 
each investment or loan made under the program.  In addition, 
the bill provides for an annual audit of all amounts awarded 
to the community development corporation.
This analysis assumes that administrative costs relating to 
the development, implementation, and monitoring of this program 
would be absorbed by the department.  In order to implement 
the program on a statewide basis, the department estimates that 
$2.5 million per year in general revenue would be required to 
make loans to and investment in community development corporations 
in distressed areas of the state.  
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           
            from General                                                                                  
            Revenue Fund                                                                                  
       1998      ($2,500,000)                                                                        
       1998       (2,500,000)                                                                        
       2000       (2,500,000)                                                                        
       2001       (2,500,000)                                                                        
       2002       (2,500,000)                                                                        
         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
               1998         ($2,500,000)
               1999          (2,500,000)
               2000          (2,500,000)
               2001          (2,500,000)
               2002          (2,500,000)
Similar annual fiscal implications would continue as long as 
the provisions of the bill are in effect.
No significant fiscal implication to units of local government 
is anticipated.  As businesses in distressed areas become established 
and multiply, local governments would experience increased property 
and sales tax revenue related to the economic growth. 
   Source:            Agencies:   332   Department of Housing and Community Affairs
                      LBB Staff:   JK ,TL ,RA