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F I S C A L I M P A C T R E P O R T

SPONSOR:	Varela		DATE TYPED:	02/24/03		HB	222/aHCPAC
SHORT TITLE:		Statewide Housing Rehabilitation Loans				SB
					ANALYST:		Gilbert

APPROPRIATION

Appropriation Contained		Estimated Additional Impact		Recurring or Non-Rec	Fund Affected
FY03	FY04	FY03	FY04
	$2,500.0			Recurring	General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Response Received From

New Mexico Mortgage Finance Authority (NMMFA)

SUMMARY

Synopsis of HCPAC Amendment

The House Consumer and Public Affairs Committee amendment to House Bill 222 makes a technical correction to clarify that the appropriation in this bill is to be used to contract with the New Mexico Mortgage Finance Authority for a housing rehabilitation loan program.

Synopsis of Original Bill

House Bill 222 appropriates $2.5 million to the Department of Finance and Administration to implement a housing rehabilitation loan program for persons of low or moderate income. The New Mexico Mortgage Finance Authority (NMMFA) will administer this program on a contractual basis.

Significant Issues

According to this bill, the NMMFA is responsible for establishing a housing rehabilitation loan program to rehabilitate substandard housing, creating of a revolving loan fund to make loans to eligible persons, and to receiving repayment of those loans. The NMMFA shall also promulgate rules for the implementation and administration of this program.

FISCAL IMPLICATIONS

The appropriation of $2,500.0 contained in this bill is a recurring expense to the general fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2004 shall revert to the general fund.

According to the NMMFA, a substantial amount of the loan fund (excluding allocations for administrative costs and estimated loan defaults of 10%) would be permanent.

ADMINISTRATIVE IMPLICATIONS

The NMMFA will combine the administrative details of this program with current rehabilitation loan programs to minimize the administrative overhead associated with implementing HB 222.

OTHER SUBSTANTIVE ISSUES

The NMMFA states that there is a great need for assistance to eligible persons in need of housing rehabilitation funds. A grant program would be inefficient, as it would not assign responsibility to the recipients and would cause a permanent financial burden to the state.

According to the NMMFA, the housing stock available to many low and moderate-income persons is continuing to deteriorate. This development will devalue the affected properties, thus causing a negative effect on property taxes and, in certain cases, cause property to become un-repairable.

RLG/njw:yr