LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session March 1, 1999 TO: Honorable Jim Solis, Chair, House Committee on Economic Development FROM: John Keel, Director, Legislative Budget Board IN RE: HB64 by Greenberg (Relating to a Texas community investment program to assist certain businesses in distressed areas of the state), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB64, As Introduced: negative impact of $(5,000,000) through the * * biennium ending August 31, 2001. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $(2,500,000) * * 2001 (2,500,000) * * 2002 (2,500,000) * * 2003 (2,500,000) * * 2004 (2,500,000) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * General Revenue Fund * * 0001 * * 2000 $(2,500,000) * * 2001 (2,500,000) * * 2002 (2,500,000) * * 2003 (2,500,000) * * 2004 (2,500,000) * ***************************************************** Fiscal Analysis The bill amends Chapter 2306 of the Government Code by adding Subchapter EE which would require the Department of Housing and Community Affairs to establish a community investment program in which the department makes grants or interest-free loans to or purchases stock of community development investors. These community development investors would make loans to or invest in businesses located in distressed areas of the state that could not otherwise qualify for conventional bank loans. The bill establishes guidelines for the program and rule-making authority for the department. The bill also requires community development investors 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 investors. The bill would take effect September 1, 1999. Methodology 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 investments in community development investors in distressed areas of the state. Local Government Impact No significant fiscal implication to units of local government is anticipated. As businesses in distressed areas become established and multiply, local governments may experience increased property and sales tax revenue related to the corresponding growth. Source Agencies: LBB Staff: JK, TH, RT, MW