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

SPONSOR Ruiz

DATE TYPED 01/25/05 HB 154

SHORT TITLE Allow Selling of Bonds at Negotiated Sales

SB

ANALYST Kehoe

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

NFI (See narra-

tive)

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Mortgage Finance Authority (MFA)

Office of the Attorney General (AG)

SUMMARY

Synopsis of Bill

House Bill 154 amends the Regional Housing Law to change the definition of a “low-income

person”; allows bonds to be sold at negotiated sales; changes publication requirements; and

makes technical changes.

Significant Issues

House Bill 154 defines a “low-income person” as an individual, couple or family who lacks the

amount of income that is necessary, as determined by rule of the a regional housing authority, to

enable that individual, couple or family, without financial assistance, to live in a decent, safe and

sanitary dwelling without overcrowding; or a low-income person as defined by the federal

government.” Current law defines a low-income person as any individual, couple or family

whose gross income does not exceed eighty percent of the resident’s particular county median

income and who cannot afford to pay more than thirty percent of his or her gross income for

housing rent or mortgage payments.

House Bill 154 -- Page 2

The bill authorizes the sale of bonds at no less than par at negotiated or public sale. Currently,

bonds may be sold at public sale only, at no less than par. The proposed change to allow for ne-

gotiated sales for the sale of bonds would give the regional housing authorities an opportunity to

secure better rates. Although not specified within the bill, it should be noted that tax-exempt

bonds, unlike other publicly funded affordable housing resources, are subject to strict guidelines

with regard to income eligibility and use.

The bill further eliminates advertising the sale of bonds in a financial newspaper published in the

City of New York, New York for public sales. It should be noted that the advertising may be

required in the bond indenture or by the State Board of Finance.

The technical changes within the bill are grammatical and do not change the meaning of the law.

FISCAL IMPLICATIONS

Fiscal implications resulting from House Bill 154 to sell bonds at no less than par at negotiated

or public sale would have to be determined over a period of time because markets and interest

rates are very fluid through time.

OTHER SUBSTANTIVE ISSUES

According to MFA, the current definition for “low-income person” complies with the definition

accepted by Housing and Urban Development (HUD) for eligibility of HUD funded programs,

including Section 8 and other rental assistance and housing development programs in which re-

gional housing authorities participate. State funds provided to regional housing authorities are

usually subjected to the same HUD definitions, since the state funds are used to match or lever-

age HUD funds. Currently, funding sources used to fund affordable housing programs always

prescribe an income eligibility limit for households benefiting from the program. Therefore, the

proposed changes in this bill may have no affect on most programs available to regional housing

authorities and may have a minor impact in the number of additional persons that may be eligible

for programs provided by the regional housing authorities.

POSSIBLE QUESTIONS

1.

Why would regional housing authorities want to depart from commonly accepted defini-

tions that describe income eligibility.

2.

Will giving the regional housing authorities discretion of income eligibility impact af-

fordable housing financing sources.

LMK/rs:lg