LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 25, 2001
  
  
          TO:  Honorable Bob Hunter, Chair, House Committee on State,
               Federal & International Relations
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB2040  by Hawley (Relating to defense base development
               authorities created by certain municipalities.), As
               Introduced
  
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*  No fiscal implication to the State is anticipated.                    *
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The bill would allow a defense based development authority located in a
municipality with a population of 50,000 or more to own a utility
conveyed by the United States, but would prohibit the authority from
operating the utility.  The authority would be required to convey for
fair market value a utility received to the municipality that established
the authority.

Provisions of the bill would allow an authority located in a municipality
with a population of less than 50,000 to own and operate utility
services conveyed by the United States. Composition of the board of
directors of the authority in a municipality with a population of less
than 50,000 would be nine members, instead of the 11 required for a board
of an authority in a municipality with a population of 50,000 or more.

The bill would also allow an authority in a municipality with a
population of 50,000 or more to issue bonds or certificates of
obligation.
  
Local Government Impact
  
Under current law, no defense base development authority is allowed to
own or operate a utility conveyed by the United States; each authority is
required to have a board consisting of 11 members; and each authority
may issue bonds under certain circumstances, but not certificates of
obligation.

If the proposed changes were to be implemented, an authority in a
municipality with a population of less than 50,000 could experience a
positive fiscal impact if the authority were to own and operate a utility
and sell those services to a person who leases real property from the
authority. The positive fiscal impact could offset a potential negative
impact resulting from not being able to issue bonds.

If the proposed changes were to be implemented, an authority in a
municipality with a population of 50,000 or more could experience a
positive fiscal impact through issuing bonds or certificates of
obligation.

Fiscal impact would vary by defense based development authority.
  
  
Source Agencies:   475   Office of Public Utility Counsel, 582   Texas
                   Natural Resource Conservation Commission, 473
                   Public Utility Commission of Texas, 580   Texas
                   Water Development Board
LBB Staff:         JK, JO, DB