This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0656 - Establishes a rural housing development program
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 3065-01
BILL NO. SB 656
SUBJECT: Rural Housing Development Program
TYPE: Original
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS ($1,045,000) ($1,045,000) ($1,045,000) ($15,000) ($15,000) ($15,000) ($1,875) ($1,875) ($1,875) ($1,500) ($1,500) ($1,500) Net Effect on All State Funds to ($1,063,375) to ($1,063,375) to ($1,063,375)
FUND AFFECTED
FY 1999
FY 2000
FY 2001 General Revenue Fund
$0 to
$0 to
$0 to
School District Trust
Fund
$0 to
$0 to
$0 to
Conservation Sales Tax
Fund
$0 to
$0 to
$0 to
Parks and Soils Sales
Tax Fund
$0 to
$0 to
$0 to
Total Estimated
$0
$0
$0
|
ESTIMATED NET EFFECT ON FEDERAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| None | $0 | $0 | $0 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 5 pages.
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Local Government | $0 to
($22,500) |
$0 to
($22,500) |
$0 to
($22,500) |
FISCAL ANALYSIS
ASSUMPTION
The Department of Agriculture assumes they would not be fiscally impacted by this proposal.
The Department of Economic Development - Missouri Housing Development Commission (MHDC) assumes this legislation would create a revolving loan fund of $1 million per year for a rural single-family construction program in rural areas. Funds from the repayment of the loans would be placed back into the revolving loan fund.
The MHDC assumes this legislation would require MHDC to partner with non-profit housing agencies new single family housing in rural areas. MHDC assumes a $1 million loan fund would allow for the construction of approximately 10 to 15 houses annually. Accordingly, MHDC assumes they would be able to carry out the requirements of the proposal with existing resources.
The Department of Revenue (DOR) assumes there would be no administrative impact to the DOR as a result of this proposal.
The DOR assumes this proposal would exempt from sales and use taxes the purchase of materials and supplies used in the construction of single family homes under the Rural Housing Development Program which is established in this bill. The DOR assumes the fiscal impact of this proposal is unknown as the number of homes that would be constructed under the program is unknown. The DOR assumes the cost of supplies and materials that would be used is also unknown. DOR assumes the sales tax exemption could extend to motor vehicles, tools and other equipment used by the MHDC in construction of the home. DOR expects the loss of sales tax revenue to be in excess of $100,000.
Oversight assumes the sales tax exemption related to materials and supplies will be strictly interpreted. Therefore, motor vehicle, tools and other equipment used in the construction of the homes would not be included.
ASSUMPTION (continued)
Oversight assumes the loss of sales tax revenue could be zero in the event no funds are appropriated for the construction loans. The upper limit of the range depends on the number of homes built each year and the amount of materials and supplies used in the construction of the homes which is unknown. For purposes of this fiscal note, Oversight assumes approximately 75% of the total construction costs would be used to purchase materials and supplies. Because this program is set up as a revolving loan fund, Oversight assumes the money would turn over no more than twice in the initial years of the program. Therefore, the total estimated loss of sales tax revenue to the state would be $63,375. Accordingly, the local governments could lose sales tax revenues up to $22,500.
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| GENERAL REVENUE FUND | |||
| Cost - (subject to appropriation) | $0 | $0 | $0 |
| Rural Housing Development Loans | to | to | to |
| ($1,000,000) | ($1,000,000) | ($1,000,000) | |
| Loss - due to sales tax exemption | $0 to | $0 to | $0 to |
| ($45,000) | ($45,000) | ($45,000) | |
| Estimate Net Effect on | $0 to | $0 to | $0 to |
| GENERAL REVENUE FUND | ($1,045,000) | ($1,045,000) | ($1,045,000) |
| SCHOOL DISTRICT TRUST FUND | $0 to | $0 to | $0 to |
| Loss - due to sales tax exemption | ($15,000) | ($15,000) | ($15,000) |
| CONSERVATION SALES TAX FUND | $0 to | $0 to | $0 to |
| Loss - due to sales tax exemption | ($1,875) | ($1,875) | ($1,875) |
| PARKS AND SOILS SALES TAX FUND | $0 | $0 | $0 |
| Loss - due to sales tax exemption | ($1,500) | ($1,500) | ($1,500) |
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| Cities and Counties | |||
| Loss - due to sales and use | $0 to | $0 to | $0 to |
| tax exemption | ($22,500) | ($22,500) | ($22,500) |
| FISCAL IMPACT - Small Business | |||
This proposal may have positive fiscal impact on small businesses that sell building material, if this proposal increases the purchase of building materials and supplies.
DESCRIPTION
This act establishes a rural housing development program to be administered by the Missouri Housing Development Commission (MHDC). The program will be subject to appropriation, authorize no-interest loans for the construction of single family homes. The maximum loan shall be $70,000.
APPLICATIONS - Non-profit organizations may apply and must give the required information. Loans are made according to need. The MHDC may require an expiration date, reports and inspections.
REVOLVING FUND - Loans are to be put in a revolving fund to build homes one at a time, as they are sold.
CONSTRUCTION - Homes shall be constructed on site only where water and sewage services are available. USDA standards shall apply to construction.
SALE - Homes shall be sold at cost plus a $2,500 fee for any construction supervisor hired. Priority shall be given to low and moderate income families. An anti-speculation clause shall be added to deter buyers from reselling to make a profit.
SALES TAX - An exemption from sales taxes is added for materials and supplies used in constructing the homes.
DESCRIPTION (continued)
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. This proposal is expected to decrease Total State Revenue in the amount of the tax credits taken.
SOURCES OF INFORMATION
Department of Revenue
Department of Economic Development
Department of Agriculture
Jeanne Jarrett, CPA
Director
January 26, 1998