LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 80TH LEGISLATIVE REGULAR SESSION

March 19, 2007

TO:	Honorable David Swinford, Chair, House Committee on State Affairs
FROM:	John S. O'Brien, Director, Legislative Budget Board
IN RE:	HB1039 by Ritter (Relating to inspection of residential construction in unincorporated areas; providing penalties.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB1039, As Introduced: an impact of $0 through the biennium ending August 31, 2009.

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
2008	$0
2009	$0
2010	$0
2011	$0
2012	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable (Cost) from GENERAL REVENUE FUND 1	Probable Revenue Gain from GENERAL REVENUE FUND 1
2008	($424,959)	$424,959
2009	($424,959)	$424,959
2010	($424,959)	$424,959
2011	($424,959)	$424,959
2012	($424,959)	$424,959

Fiscal Year	Change in Number of State Employees from FY 2007
2008	6.0
2009	6.0
2010	6.0
2011	6.0
2012	6.0

Fiscal Analysis

The bill would amend the Property Code to require builders in unincorporated areas of the state to have all new home projects to be inspected at the time and in the manner precribed by a rule of the Texas Residential Construction Commission (TRCC) and to submit the reports to TRCC. The bill would add disciplinary action and administrative penalties for builders who violate the requirements of the bill. The provisions of the bill would apply to construction commenced on or after January 1, 2008.

The bill would take effect on September 1, 2007. 

Methodology

Based on the analysis of TRCC, it is assumed the implementation of the bill would require one Inspector VI (1.0 FTE; $47,382/year) to review inspection reports received from builders and one Attorney II (1.0 FTE; $53,596/year) for penalty enforcement. TRCC indicates that the new inspection report requirement would eliminate the ability of the applicable builders to register new home projects online, which would increase the number of registrations processed in-house. It is assumed TRCC would require a Customer Service Representative II (1.0 FTE; $29,779/year) to accomodate the registrations and three Administrative Assistant II positions (3.0 FTEs; $29,779/year, each) for increased mail, filing, and deposits of payments received. Based on information provided by TRCC, it is assumed the commision would incur additional operating costs of $100,000 per year, recurring annual costs of $3,600 for increased record storage costs, and $39,000 per year for leasing computer equipment, software and support, and enhancements to the commission's database. Employee benefit costs associated with the six new positions is estimated to be $62,265 per year (28.29 percent of salaries).

It is assumed TRCC would assess or increase fees sufficient to recover any costs associated with implementing the provisions of the bill.

Technology

Technology costs associated with the implementation of the bill are estimated to be $39,000 each year for leasing computer equipment, software and support, and enhancements to the commission's database.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

370 Residential Construction Commission, 454 Department of Insurance

LBB Staff:

JOB, KJG, MW, TG