Estimated Two-year Net Impact to General Revenue Related Funds for HB3568, Committee Report 1st House, Substituted : a negative impact of ($288,000) through the biennium ending August 31, 2025.

According to the CPA, the bill could limit the amount of property qualifying for future property tax exemptions, which could create an indeterminate revenue gain to the state through the school funding formula.

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 Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2024	($288,000)
2025	$0
2026	$0
2027	$0
2028	$0

Fiscal Year	Probable Savings/(Cost) from General Revenue Fund 1	Probable Revenue Gain/(Loss) from General Revenue Fund 1	Probable Savings/(Cost) from Appropriated Receipts 666	Probable Revenue Gain/(Loss) from Appropriated Receipts 666
2024	($441,000)	$153,000	$0	$0
2025	($153,000)	$153,000	$0	$0
2026	($153,000)	$153,000	($83,098)	$720,000
2027	($153,000)	$153,000	($80,598)	$960,000
2028	($153,000)	$153,000	($163,696)	$1,200,000

Fiscal Year	Change in Number of State Employees from FY 2023
2024	2.0
2025	2.0
2026	3.0
2027	3.0
2028	4.0

The bill would specify that the current property tax exemption for leaseholds or other possessory interest in a public facility would apply to a public facility used to provide multifamily housing only if the public facility user meets specified low-income housing occupancy requirements.

The bill would require the Texas Department of Housing and Community Affairs (TDHCA) to conduct audits of certain public facility corporations' (PFC) multifamily residential developments approved or acquired after the enactment of the bill. The bill would require annual audits for the first three years after acquisition or following the date of the issuance of the certificate of occupancy for each development, and then one audit each third year for each development.

The bill would require the Comptroller of Public Accounts (CPA) to receive and post on its website an annual report from certain PFCs and to collect from each reporting PFC a fee not to exceed the amount necessary to offset CPA's related costs.

The CPA anticipates administrative costs of $153,000 per fiscal year for two Program Specialist III positions to develop and report on a new registry of low-income multifamily housing units in the state. This analysis assumes that the CPA will collect fees from reporting PFCs in amounts necessary to offset these costs.

TDHCA anticipates it would begin audits of any acquired PFC multifamily residential developments on January 1, 2025. The number of acquired developments that may be monitored in fiscal year 2025 is unknown and cannot be estimated; therefore, the amount of associated fee revenue in fiscal year 2025 is unknown. TDHCA anticipates that any audits in fiscal year 2025 could be completed at current staffing levels and with costs that can be absorbed by existing resources.

TDHCA anticipates that audits of newly constructed developments would commence on January 1, 2026, allowing two years for approved PFC projects to become operational with occupancy. TDHCA anticipates related costs of $80,598 per fiscal year, beginning in fiscal year 2026, for one FTE to conduct compliance monitoring activities. Due to anticipated growth in the number of housing units requiring monitoring, TDHCA anticipates the need for an additional FTE beginning in fiscal year 2028 and every two fiscal years thereafter, with related costs of $80,598 per FTE per fiscal year.

TDHCA estimates that 9,000 housing units would require monitoring beginning in fiscal year 2026 and that the units requiring monitoring make up approximately half of the total units in these developments, for a total of 18,000 units. With TDHCA collecting a $40 fee per unit, the agency anticipates a revenue gain of $720,000 to Appropriated Receipts in fiscal year 2026 and, with assumed annual growth of monitored units and associated fees, the revenue gain to increase to $960,000 in fiscal year 2027 and $1,200,000 in fiscal year 2028.

According to the CPA, the bill could limit the amount of property qualifying for future property tax exemptions, which could create a revenue gain to the state through the school funding formula. Because the number and values of properties that could be affected is unknown, the amount of revenue potentially gained cannot be estimated.

Technology costs for fiscal year 2024 consist of a one-time cost of $288,000, per the CPA, for 1,920 programming hours to modify the tax systems that would be impacted by the bill.

Technology costs to Appropriated Receipts for fiscal year 2026 consist a one-time technology cost of $2,500, per TDHCA, for a computer and software for one anticipated FTE, and an additional one-time cost of $2,500 in fiscal year 2028 for the same purpose for the anticipated FTE that would be added that year.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION


April 18, 2023

TO:	Honorable J. M. Lozano, Chair, House Committee on Urban Affairs

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB3568 by Gates (relating to certain public facilities used to provide affordable housing; authorizing a fee; authorizing a penalty.), Committee Report 1st House, Substituted