LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 14, 2025 TO: Honorable Cecil Bell, Chair, House Committee on Intergovernmental Affairs FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB2675 by Cook (Relating to housing finance corporations.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2675, As Introduced: a negative impact of ($675,284) through the biennium ending August 31, 2027. 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 toGeneral Revenue Related Funds2026($357,892)2027($317,392)2028($89,164)2029($89,164)2030($89,164)All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Change in Number of State Employees from FY 20252026($357,892)1.02027($317,392)1.02028($89,164)1.02029($89,164)1.02030($89,164)1.0 Fiscal AnalysisThe bill would define the area, jurisdiction, and requirements under which a housing finance corporation could exercise its power.The bill would establish that an authorized lender, credit union, or other person involved in a transaction could not make a loan to a housing finance corporation (HFC) unless the corporation presents proof of compliance with the applicable jurisdiction requirements as added by the bill.The bill would establish an annual audit requirement for HFCs, performed by an independent auditor or compliance expert, and submitted to the chief appraiser and the Texas Department of Housing and Community Affairs (TDHCA) which is authorized to establish standards, requirements and forms. The bill would direct TDHCA to examine the audit report, publish the report and their findings on their web site and share it with the HFC that owns the development that is the subject of an audit, the Comptroller, and the governing body of the HFC's sponsoring local government or governments. The bill would lay out a procedure if non-compliance is found, including the loss of the tax/fee exemption.The bill would establish that the transfer of residential developments sites by a local government must adhere to the site location requirements addressed in the bill. The bill would exempt the property from taxes and fees only if the property is located in an area in which the HFC is authorized to exercise its powers, or the exemption is approved by each applicable governing body.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 14, 2025
TO: Honorable Cecil Bell, Chair, House Committee on Intergovernmental Affairs FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB2675 by Cook (Relating to housing finance corporations.), As Introduced
TO: Honorable Cecil Bell, Chair, House Committee on Intergovernmental Affairs
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB2675 by Cook (Relating to housing finance corporations.), As Introduced
Honorable Cecil Bell, Chair, House Committee on Intergovernmental Affairs
Honorable Cecil Bell, Chair, House Committee on Intergovernmental Affairs
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB2675 by Cook (Relating to housing finance corporations.), As Introduced
HB2675 by Cook (Relating to housing finance corporations.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2675, As Introduced: a negative impact of ($675,284) through the biennium ending August 31, 2027. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2675, As Introduced: a negative impact of ($675,284) through the biennium ending August 31, 2027. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
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:
2026 ($357,892)
2027 ($317,392)
2028 ($89,164)
2029 ($89,164)
2030 ($89,164)
All Funds, Five-Year Impact:
2026 ($357,892) 1.0
2027 ($317,392) 1.0
2028 ($89,164) 1.0
2029 ($89,164) 1.0
2030 ($89,164) 1.0
Fiscal Analysis
The bill would define the area, jurisdiction, and requirements under which a housing finance corporation could exercise its power.The bill would establish that an authorized lender, credit union, or other person involved in a transaction could not make a loan to a housing finance corporation (HFC) unless the corporation presents proof of compliance with the applicable jurisdiction requirements as added by the bill.The bill would establish an annual audit requirement for HFCs, performed by an independent auditor or compliance expert, and submitted to the chief appraiser and the Texas Department of Housing and Community Affairs (TDHCA) which is authorized to establish standards, requirements and forms. The bill would direct TDHCA to examine the audit report, publish the report and their findings on their web site and share it with the HFC that owns the development that is the subject of an audit, the Comptroller, and the governing body of the HFC's sponsoring local government or governments. The bill would lay out a procedure if non-compliance is found, including the loss of the tax/fee exemption.The bill would establish that the transfer of residential developments sites by a local government must adhere to the site location requirements addressed in the bill. The bill would exempt the property from taxes and fees only if the property is located in an area in which the HFC is authorized to exercise its powers, or the exemption is approved by each applicable governing body.
The bill would establish an annual audit requirement for HFCs, performed by an independent auditor or compliance expert, and submitted to the chief appraiser and the Texas Department of Housing and Community Affairs (TDHCA) which is authorized to establish standards, requirements and forms. The bill would direct TDHCA to examine the audit report, publish the report and their findings on their web site and share it with the HFC that owns the development that is the subject of an audit, the Comptroller, and the governing body of the HFC's sponsoring local government or governments. The bill would lay out a procedure if non-compliance is found, including the loss of the tax/fee exemption.The bill would establish that the transfer of residential developments sites by a local government must adhere to the site location requirements addressed in the bill. The bill would exempt the property from taxes and fees only if the property is located in an area in which the HFC is authorized to exercise its powers, or the exemption is approved by each applicable governing body.
Methodology
The bill would restrict the area of operations of a HFC to the local area as defined in statute. HFC operations outside their jurisdiction would be allowed only when there is a resolution adopted by the governing body of each sponsoring local government and by the related governing body. The bill would make the HFC's eligibility for a loan contingent on the compliance with area of operations limitation and implements an annual audit. The bill does not require any changes to the HFCs currently operating outside their original jurisdictions.The Texas Association of Local Housing Finance Agencies (TALHFA), a non-profit organization assisting local housing finance corporations, has conducted limited research into HFCs that operate outside their immediate local area as defined in the bill. TALHFA has confirmed 88 projects/deals in 27 different jurisdictions that have been closed on since August 2024 (not a comprehensive list). Excluding 5 projects where final value data is not available, these projects had an assessed value of $3.6 billion. The potential taxable value of projects that will be unable to qualify for tax-exempt status under provisions of the bill is unknown.The bill would reduce the number of projects that would receive a property tax exemption and increase school district property value relative to current law. Under provisions of the Education Code, the school district tax revenue gain results in a savings to the state. The amount of the increase in taxable value and savings to the state through the operation of the school finance formulas cannot be estimated. Based on analysis by TDHCA, the agency would require 1.0 additional Auditor II FTE, at a total cost of $89,214 per fiscal year in salary and benefits, plus one-time costs in fiscal year 2026 of $5,500 to implement the provisions of the legislation related to HFC audit reviews.
Based on analysis by TDHCA, the agency would require 1.0 additional Auditor II FTE, at a total cost of $89,214 per fiscal year in salary and benefits, plus one-time costs in fiscal year 2026 of $5,500 to implement the provisions of the legislation related to HFC audit reviews.
Technology
TDHCA would need to add two new modules to its existing Central Database infrastructure and acquire a new database server and a new web server. The agency would utilize the Department of Information Resource's Information Technology Staff Augmentation Contract program to obtain the services of a Programmer Analyst for this purpose. Based on the cost of a recent similar project, the agency estimates a cost of $228,228 in each fiscal year of the biennium. In addition, the agency would utilize third party cybersecurity testing services in fiscal year 2026 at a cost of $35,000.
Local Government Impact
The bill would reduce the number of projects that would receive a property tax exemption and increase taxable property value relative to current law, however, the amount of the increase in taxable property value cannot be determined. The no-new-revenue and voter-approval tax rates as provided by Section 26.04, Tax Code would be lower as a consequence of the increased taxable property value proposed by the bill.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 332 Department of Housing and Community Affairs, 466 Office of Consumer Credit Commissioner
304 Comptroller of Public Accounts, 332 Department of Housing and Community Affairs, 466 Office of Consumer Credit Commissioner
LBB Staff: b > td > JMc, SZ, SD, BRI, GDZ, DPE
JMc, SZ, SD, BRI, GDZ, DPE