Sending Office: Honorable Dwight Evans
Sent By:
Steeve.Simbert@mail.house.gov

Stand In The Gap on H.R. 1:

Protect the Ability to Save Taxpayer’s Money via Advance Refunding and; Infrastructure, Housing, and Educational Financing
Uses of Private Activity Bonds

December 18, 2017

Dear Colleague:

I write to draw your attention to a relatively obscure provision in the tax code with enormous implications for infrastructure and public finance.  Tax reform season
is upon us, and many of us would like to see a comprehensive bipartisan bill put forth that addresses the wrenching complexity, unfairness, and inefficiency of the current tax code.  Yet we face the prospect of changes that would prohibit some types of tax-exempt
state and local government bonds and needlessly hamstring others. This could have unintended consequences for infrastructure repair and development for broad swaths of the nonprofit community and municipal finance world. 

A large group of public sector organizations urges Members of Congress to be cognizant of the important uses for these bonds, and the possibility of steep cost increases
should H.R. 1 pass in its current form.  A repeal of Private Activity Bonds, especially 501(c) (3) Bonds, would be devastating for hospitals, universities, nonprofit institutions, and state and local governments who depend on these bonds and rely on public-private
partnerships to address critical infrastructure needs, finance valued projects, and ensure affordable housing. Also, a repeal of the ability to advance refund outstanding paper would limit the ability of state and local governments to refinance their own tax-exempt
municipal bonds at the most favorable rates – driving up the cost of financing schools, roads, bridges, and other projects that make our communities livable and commerce possible.  Last year, $120B (about a third of the municipal market) were advanced refunded,
saving taxpayers in Pennsylvania and around the country on their debt servicing costs.

Please see the letter below which explains these tax exempt bonds and the potential deleterious impact of the House and Senate provisions.  I urge you to bear this
in mind as the tax reform process moves forward.  For questions, or more information please contact Darrell Rico Doss in my office at
darrell.doss@mail.house.gov  or at 202-225-5362.

 

Sincerely,

/s

Dwight Evans

 

 

 

Government Finance Officers Association

National Governors Association

National Association of State Treasurers

United States Conference of Mayors

National Association of Counties

National League of Cities

International City/County Management Association

National Association of State Auditors, Comptrollers and Treasurers

American Hospital Association

Airports Council International – North America

National Community Development Association

American Public Power Association

International Public Management Association for Human Resources

National Association of College and University Business Officers

American Society of Civil Engineers

National Association of Health and Educational Facilities Finance Authorities

Large Public Power Council

National Association for County Community and Economic Development

National Association of Local Housing Finance Agencies

National Association of Bond Lawyers

National Association of Municipal Advisors

National Council of State Housing Agencies

National School Boards Association

Association of American Medical Colleges

International Municipal Lawyers Association

American Public Works Association

American Water Works Association

National Association of Towns and Townships

National Association of Regional Councils

Council of Development Finance Agencies

Council of Infrastructure Financing Authorities

Transmission Access Policy Group

American Association of Port Authorities

American Planning Association

American Public Transportation Association

 

November 10, 2017

Dear Senators and Members of Congress:

On behalf of the national organizations listed above, which represent hundreds of thousands of members of the municipal bond issuer and user community and professionals
who work for issuers, we write to express our opposition to provisions included in H.R. 1 and the Senate Finance Committee Chairman’s Mark of the “Tax Cuts and Jobs Act” that eliminate financing tools utilized by State and local governments, schools, hospitals,
airports, seaports and special districts and other public sector entities to provide critical investments in infrastructure and save taxpayer money.

Municipal bonds are a means to finance vital infrastructure used by state and local governments. As public issuers, we have grave concern over the bond provisions
in H.R. 1 and the Senate Finance Committee Chairman’s Mark, more specifically: (1) the repeal of the ability to advance refund municipal bonds; and (2) the termination of the ability to use private activity bonds (PABs).  

The ability to advance refund outstanding bonds provides substantial savings to taxpayers throughout the country. Under current law, governmental bonds and 501(c)(3)
bonds are permitted one opportunity to refinance at lower rates outside the 90-day period before the bonds come due. This allows public issuers to take advantage of fluctuations in interest rates to realize considerable savings on debt service, which ultimately
benefits taxpayers. In 2016, the advance refunding of more than $120 billion of municipal securities saved taxpayers at least $3 billion. GFOA best practices recommend minimum savings thresholds on a present value basis of 3-5 percent when advance refunding
municipal securities.

PABs are widely used for infrastructure projects with a distinct public purpose such as airport and seaport projects, affordable housing, nonprofit health, and education
facilities, all of which contribute to vibrant local communities. In 2016, over $72 billion in PABs used largely by nonprofit hospitals and universities were issued, and in the same year over $12 billion were issued to support airports, housing, and rural
public cooperatives. By eliminating PABs, the federal government limits flexibility for states and local governments to use their best combination of public financing methods available to deliver vital projects that provide essential public services.

For these reasons, we urge you to oppose provisions in any final tax reform package that would repeal the ability to advance refund municipal bonds or repeal issuers’
ability to use private activity bonds.

Sincerely,

 

Government Finance Officers Association, Emily Swenson Brock, 202-393-8467

Airports Council International – North America, Annie Russo, 202-293-8500

American Association of Port Authorities, Susan Monteverde

American Hospital Association, Mike Rock, 202-638-1100

American Planning Association, Jason Jordan, 202-349-1005

American Public Power Association, John Godfrey, 202-467-2929

American Public Transportation Association, Mark Hybner, 202-496-4897

American Public Works Association, Andrea Eales, 202-408-9541

American Society of Civil Engineers, Brian Pallasch, 202-789-7852

American Water Works Association, Tommy Holmes, 202-326-3128

Association of American Medical Colleges, Karen Fisher, 202-828-0525

Council of Infrastructure Financing Authorities, Rick Farrell, 202-547-1866

Council of Development Finance, Tim Fisher, 614-705-1309

International City/County Management Association, Elizabeth Kellar, 202-962-5328

International Municipal Lawyers Association, Charles W. Thompson, Jr., 202-466-5424

International Public Management Association for Human Resources, Neil Reichenberg, 703-549-7100

Large Public Power Council, Noreen Roche-Carter, 916-732-6509

National Assoc. for County Community and Economic Development, Heather Voorman, 202-367-2405

National Assoc. of Health and Educational Facilities Finance Authorities, Chuck Samuels, 202-434-7311

National Association of Bond Lawyers, Jessica Giroux, 202-503-3303

National Association of College and University Business Officers, Elizabeth Clark, 202-861-2553

National Association of Counties, Jack Peterson, 202-661-8805

National Association of Local Housing Finance Agencies, Heather Voorman, 202-367-2405

National Association of Municipal Advisors, Susan Gaffney, 703-395-4896

National Association of Regional Councils, Leslie Wollack, 202-618-6363

National Association of State Auditors, Comptrollers and Treasurers, Cornelia Chebinou, 202-624-5451

National Association of State Treasurers, Preston Weyland, 202-347-3863

National Association of Towns and Townships, Jennifer Imo, 202-454-3947

National Community Development Association, Vicki Watson 202656-9552

National Council of State Housing Agencies, Garth Rieman, 202624-7710

National Governors Association, David Parkhurst, 202-624-5328

National League of Cities, Mike Wallace, 202-626-3023

National School Boards Association, Deborah Rigsby, 703-838-6208

The United States Conference of Mayors, Larry Jones, 202-861-6709

Transmission Access Policy Group, Rob Talley, 202-460-9114

Related Legislative Issues
Selected legislative information: Budget, Education, Finance, Government, HealthCare, Taxes
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