LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 11, 2025 TO: Honorable Paul Bettencourt, Chair, Senate Committee on Local Government FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB867 by Bettencourt (Relating to housing finance corporations; authorizing a fee.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB867, As Introduced: a negative impact of ($188,884) through the biennium ending August 31, 2027.Additionally, passage of the bill would reduce the number of properties that would receive a property tax exemption relative to current law. As a result property value would be increased and the costs to the Foundation School Fund decreased through the operation of the school finance formulas. 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($114,692)2027($74,192)2028$154,0362029$154,0362030$154,036All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Revenue Gain fromGeneral Revenue Fund1 Change in Number of State Employees from FY 20252026($357,892)$243,2001.02027($317,392)$243,2001.02028($89,164)$243,2001.02029($89,164)$243,2001.02030($89,164)$243,2001.0 Fiscal AnalysisThe bill would amend Chapter 394 of the Local Government Code to require housing finance corporations (HFCs) seeking a property-based exemption to file audits annually with the Texas Department of Housing and Community Affairs (TDHCA) and the chief appraiser of the appraisal district in which the HFC development is located. TDHCA would be required to review HFC audits to determine compliance with the bill's provisions. Section 9 of the bill would authorize TDHCA to charge a fee to cover reasonable costs for reviewing audits. The bill would restrict a HFC's ability to exercise its powers outside of it's prescribed area. The bill would add criteria a new HFC residential development would be required to meet in order to receive a property tax exemption. The bill would take effect immediately if it receives a vote of two-thirds of all the members elected to each house. Otherwise, the bill would take effect on September 1, 2025.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 11, 2025
TO: Honorable Paul Bettencourt, Chair, Senate Committee on Local Government FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB867 by Bettencourt (Relating to housing finance corporations; authorizing a fee.), As Introduced
TO: Honorable Paul Bettencourt, Chair, Senate Committee on Local Government
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB867 by Bettencourt (Relating to housing finance corporations; authorizing a fee.), As Introduced
Honorable Paul Bettencourt, Chair, Senate Committee on Local Government
Honorable Paul Bettencourt, Chair, Senate Committee on Local Government
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB867 by Bettencourt (Relating to housing finance corporations; authorizing a fee.), As Introduced
SB867 by Bettencourt (Relating to housing finance corporations; authorizing a fee.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB867, As Introduced: a negative impact of ($188,884) through the biennium ending August 31, 2027.Additionally, passage of the bill would reduce the number of properties that would receive a property tax exemption relative to current law. As a result property value would be increased and the costs to the Foundation School Fund decreased through the operation of the school finance formulas. 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 SB867, As Introduced: a negative impact of ($188,884) through the biennium ending August 31, 2027.Additionally, passage of the bill would reduce the number of properties that would receive a property tax exemption relative to current law. As a result property value would be increased and the costs to the Foundation School Fund decreased through the operation of the school finance formulas. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Additionally, passage of the bill would reduce the number of properties that would receive a property tax exemption relative to current law. As a result property value would be increased and the costs to the Foundation School Fund decreased through the operation of the school finance formulas.
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 ($114,692)
2027 ($74,192)
2028 $154,036
2029 $154,036
2030 $154,036
All Funds, Five-Year Impact:
2026 ($357,892) $243,200 1.0
2027 ($317,392) $243,200 1.0
2028 ($89,164) $243,200 1.0
2029 ($89,164) $243,200 1.0
2030 ($89,164) $243,200 1.0
Fiscal Analysis
The bill would amend Chapter 394 of the Local Government Code to require housing finance corporations (HFCs) seeking a property-based exemption to file audits annually with the Texas Department of Housing and Community Affairs (TDHCA) and the chief appraiser of the appraisal district in which the HFC development is located. TDHCA would be required to review HFC audits to determine compliance with the bill's provisions. Section 9 of the bill would authorize TDHCA to charge a fee to cover reasonable costs for reviewing audits. The bill would restrict a HFC's ability to exercise its powers outside of it's prescribed area. The bill would add criteria a new HFC residential development would be required to meet in order to receive a property tax exemption. The bill would take effect immediately if it receives a vote of two-thirds of all the members elected to each house. Otherwise, the bill would take effect on September 1, 2025.
The bill would restrict a HFC's ability to exercise its powers outside of it's prescribed area. The bill would add criteria a new HFC residential development would be required to meet in order to receive a property tax exemption.
The bill would take effect immediately if it receives a vote of two-thirds of all the members elected to each house. Otherwise, the bill would take effect on September 1, 2025.
Methodology
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 TDHCA's experience with recently adopted compliance requirements for public facility corporations, a $20 fee per restricted unit at each development would result in annual fee revenue deposited to the credit of the General Revenue Fund of approximately $243,200 each year. 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.
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.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 332 Department of Housing and Community Affairs
304 Comptroller of Public Accounts, 332 Department of Housing and Community Affairs
LBB Staff: b > td > JMc, SZ, SD, BRI, GDZ, DPE
JMc, SZ, SD, BRI, GDZ, DPE