Committee Reviews Private Activity Bonds Issues
AUSTIN - The Joint Interim Committee on Private Activity Bonds had its first hearing today, January 15, 2002, at the State Capitol. The committee is charged with examining the private activity bond allocation program, including available uses, the allocation among those uses, and the procedures by which the bonds are allocated. The group should determine the effectiveness of the current program in meeting public policy objectives.
Senator Jon Lindsay and Representative Kip Averitt co-chair the committee. Members include Senators David Bernsen and Carlos Truan, and Representatives Bill Carter and Chuck Hopson.
In today's meeting, the members were briefed by Monica Kasparek, Administrator of the Private Activity Bond Program at the Texas Bond Review Board. The board was created in 1987 and is composed of the Governor, Lieutenant Governor, Speaker of the House of Representatives and Comptroller of Public Accounts. One of the goals of the agency is to ensure that the authorization given to Texas state and local entities to issue private activity bonds is imparted in a manner consistent with legislative mandates in the most equitable way possible and in the best interest of the people of Texas.
Private activity bonds are those which have met any or all of the following tests: more than 10% of the proceeds are used for private business projects; payment on principal or interest of more than 10% of the proceeds is directly or indirectly secured by, or payments are derived from, a private business use; and the proceeds will be used to make or finance loans to persons other than governmental units. The Tax Reform Act of 1986 created a ceiling on the amount of the bonds issued, which for year 2002 is the greater of either $75 per capita or $225 million dollars.
A source of tax-exempt financing of private activities, the bonds finance student loans, affordable housing programs for first-time buyers and down-payment assistance for lower income buyers. Private activity bonds also finance small rural industrial developments, multi-family housing, and sewage, solid waste and hazardous waste disposal facilities.
The committee plans three future meeting during the 77th Interim, all of them in Austin. The next one is schedule for March 26, 2002. The committee recessed subject to the call of the chair.