BILL ANALYSIS H.B. 1718 By: Plesa Pensions, Investments & Financial Services Committee Report (Unamended) BACKGROUND AND PURPOSE Private activity bonds are a critical financing tool for infrastructure, student loans, and rental housing projects. State law defines "closing" with respect to a private activity bond as the issuance and delivery of a bond by an issuer in exchange for the required payment for bond. Under this definition, partial funding of the bond is not permitted. The bill's author has informed the committee that this causes higher rates of interest and increases the accrual of interest on monies that may not be needed immediately. H.B. 1718 seeks to address this issue by revising the definition of "closing" in relation to private activity bonds to allow partial funding to be drawn down as needed so interest will only start accruing on the amount needed and not the total sum of the private activity bond, which may make the loan less costly and more efficient. CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS H.B. 1718 amends the Government Code to revise what constitutes "closing" as it pertains to the issuance of private activity bonds and certain other bonds by the state or a local government. Under current law, that term is defined to mean the issuance and delivery of a bond by an issuer in exchange for the required payment for the bond. The bill makes the following changes to the definition: removes the issuance of the bond from the criteria; and specifies that the term includes, for a qualified residential rental project bond, delivery of a bond in exchange for a partial payment for the incremental funding of the bond in accordance with the terms of the bond, provided that the partial payment is not less than 10 percent of the required payment for the bond. EFFECTIVE DATE On passage, or, if the bill does not receive the necessary vote, September 1, 2025.
BILL ANALYSIS
# BILL ANALYSIS
H.B. 1718
By: Plesa
Pensions, Investments & Financial Services
Committee Report (Unamended)
H.B. 1718
By: Plesa
Pensions, Investments & Financial Services
Committee Report (Unamended)
BACKGROUND AND PURPOSE Private activity bonds are a critical financing tool for infrastructure, student loans, and rental housing projects. State law defines "closing" with respect to a private activity bond as the issuance and delivery of a bond by an issuer in exchange for the required payment for bond. Under this definition, partial funding of the bond is not permitted. The bill's author has informed the committee that this causes higher rates of interest and increases the accrual of interest on monies that may not be needed immediately. H.B. 1718 seeks to address this issue by revising the definition of "closing" in relation to private activity bonds to allow partial funding to be drawn down as needed so interest will only start accruing on the amount needed and not the total sum of the private activity bond, which may make the loan less costly and more efficient.
CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS H.B. 1718 amends the Government Code to revise what constitutes "closing" as it pertains to the issuance of private activity bonds and certain other bonds by the state or a local government. Under current law, that term is defined to mean the issuance and delivery of a bond by an issuer in exchange for the required payment for the bond. The bill makes the following changes to the definition: removes the issuance of the bond from the criteria; and specifies that the term includes, for a qualified residential rental project bond, delivery of a bond in exchange for a partial payment for the incremental funding of the bond in accordance with the terms of the bond, provided that the partial payment is not less than 10 percent of the required payment for the bond.
EFFECTIVE DATE On passage, or, if the bill does not receive the necessary vote, September 1, 2025.
BACKGROUND AND PURPOSE
Private activity bonds are a critical financing tool for infrastructure, student loans, and rental housing projects. State law defines "closing" with respect to a private activity bond as the issuance and delivery of a bond by an issuer in exchange for the required payment for bond. Under this definition, partial funding of the bond is not permitted. The bill's author has informed the committee that this causes higher rates of interest and increases the accrual of interest on monies that may not be needed immediately. H.B. 1718 seeks to address this issue by revising the definition of "closing" in relation to private activity bonds to allow partial funding to be drawn down as needed so interest will only start accruing on the amount needed and not the total sum of the private activity bond, which may make the loan less costly and more efficient.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
H.B. 1718 amends the Government Code to revise what constitutes "closing" as it pertains to the issuance of private activity bonds and certain other bonds by the state or a local government. Under current law, that term is defined to mean the issuance and delivery of a bond by an issuer in exchange for the required payment for the bond. The bill makes the following changes to the definition:
removes the issuance of the bond from the criteria; and
specifies that the term includes, for a qualified residential rental project bond, delivery of a bond in exchange for a partial payment for the incremental funding of the bond in accordance with the terms of the bond, provided that the partial payment is not less than 10 percent of the required payment for the bond.
EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2025.