CDFA Legislative Front
August 2008
Major Victory for CDFA & FHLB
-- Success on Capitol Hill Highlights Productive Legislative Month --
The housing bill has dominated the last month in Washington, D.C. The Senate and House went back and forth several times with different versions of the bill before settling on its final form, which includes CDFA-supported legislation.
Other major news concerning municipal bonds includes the Municipal Bond Fairness Act. The bill, recently passed by the House Financial Services Committee, reforms how municipal bonds are rated and would investigate the role of bond insurance in the municipal market.
Compared to the previous month, August will be considerably quieter with Congress on recess the entire month. However, this is still an important month on Capitol Hill as many key meetings with Congressional staffs will take place to set the agenda for the remainder of a short legislative calendar.
CDFA-Supported FHLB Legislation Signed Into Law
After quickly passing both the House of Representatives and the Senate, President Bush signed the highly anticipated Housing Bill into law on July 30. Included in the bill is a CDFA-supported provision allowing Federal Home Loan Banks to issue letters of credit on tax-exempt industrial development bonds (IDBs).
As part of the Council’s legislative agenda, CDFA’s legislative team had been actively working towards the passage of this legislation for over a year. The grass-roots campaign by CDFA members to their Congressional delegates was a vital part of the coalition supporting the FHLB bill. Support and cosponsorship of this legislation increased dramatically after CDFA began actively working to secure passage.
“This is a measure that will help the economy by strengthening the ability for communities to complete economic development bond transactions, especially IDBs and other revenue bond tools,” CDFA President and CEO Toby Rittner said. “The FHLB has worked extremely hard to build a coalition of supporters for this measure and has been a leader in addressing economic development throughout this country. CDFA is proud to have played a vital role in the passage of this legislation and commends the FHLB for the dedication to our industry.”
Besides the FHLB letter of credit provision, the housing bill has a number of sections that make changes to, or affect, municipal bonds.
Full details concerning the housing bill and its impact on the development finance industry is available on the CDFA website.
>>>READ THE FULL CDFA PRESS RELEASE
CDFA Meets with House Ways & Means Leadership while the Push for Senate Co-Sponsors for S. 2885 Escalates
Last month’s Capitol Hill activity for CDFA was highlighted by meetings with the House Ways and Means Committee staff concerning the Council’s effort to expand the definition of manufacturing for IDBs. Included in those meetings was staff from Rep. Charles Rangel’s office. Rep. Rangel (NY) is chairman of Ways and Means, and the positive reception of CDFA’s legislation is a key step in building support in the House.
With a strong grass-roots campaign, CDFA also expects to continue to add co-sponsors for S. 2885 in the Senate, while legislative efforts continue towards the introduction of a companion bill in the House of Representatives. S. 2885 was introduced in April by a bi-partisan group of Senators.
Sen. Susan Collins (ME) was added as a co-sponsor of S. 2885 in June. >>>READ PRESS RELEASE
S. 2885 would allow for manufacturing companies who produce both tangible and intangible property to access IDBs. The changing U.S. economy is providing new and exciting employment opportunities in the area of software development and biotechnology. Traditional tax-exempt bond finance programs operated by state and local finance agencies do not extend to these important and growing sectors of the manufacturing economy. CDFA’s proposed legislation remedies this challenge.
CDFA members have been active contacting their Congressional offices asking for support of S. 2885. CDFA is requesting its members contact their Senators to ask for support and additional co-sponsorship of this key development finance legislation. Senate Finance Committee members will be specifically targeted in coming weeks for co-sponsorships. The following Senators on the Finance Committee are of particular importance at this time:
· Senator John Rockefeller - WV
· Senator Charles Grassley - IA
· Senator Ken Salazar - CO
· Senator Jon Kyl - AZ
· Senator Blanche Lincoln - AR
· Senator Maria Cantwell - WA
· Senator Ron Wyden - OR
Given the desire for Congress to pursue legislation that encourages economic growth, CDFA’s proposed legislation should receive strong interest. Learn More about CDFA’s legislative agenda and S. 2885. >>>READ MORE
House Committees Approves Bill on Municipal Bond Market Reform
The House Financial Services Committee has unanimously approved the Municipal Bond Fairness Act (H.R. 6308) after several delays. The bill, introduced by Financial Services Committee Chairman Barney Frank (MA) includes reforms on how municipal bonds are rated, requiring municipal bonds to be rated on the same scale as corporate bonds, as well as authorizing the Treasury Secretary to examine the state of the municipal bond insurance industry.
The Government Finance Officers Association is leading the campaign in support of this legislation.
In a separate bill, H.R. 6333, Rep. Frank has also proposed changes to bank deductibility restrictions for tax-exempt small-issue bonds, raising the limit from $10 million to $30 per year. It would also allow borrowers to apply the $30 million yearly limit to themselves, instead of the conduit issuers. That bill is currently in the Ways and Means Committee with no action expected at this time.
CDFA’s legislative team will continue to monitor this legislation moving forward.
Senate AMT and Tax-Extenders Bill Stalls
Senator Max Baucus (MT) has proposed legislation that includes a one-year AMT patch as part of a larger tax-extender bill. The bill would also extend tax incentives for wind, solar and other forms of renewable energy, and would renew a host of expired tax cuts, such as the research tax credit and the state-sales-tax deduction.
It is not clear whether the tax-extenders package will make it to a vote on the Senate floor before the fall recess. Sen. Baucus, Chairman of the Senate Finance Committee, will still need more support from Republicans to get the bill passed. Republicans and Democrats in the Senate continue to spar over whether the tax-extenders, including the AMT patch, should be offset with revenue from other sources. A recent attempt by Democrats to include language making the bill more appealing to Republicans was not successful. Meanwhile, the House has passed a separate AMT patch that does include revenue offsets.
Work Continues on Second Stimulus Package
The Senate and House both continue to work on another stimulus package. The second package will focus mainly on transportation and infrastructure funding. The package is expected to be included in the supplemental appropriations package for fiscal year 2009.
Up to $9 billion in highway provisions are expected to be included. The Senate Appropriations Committee must also decide if they want to include provisions to help the aviation industry. The Federal Aviation Administration has also been operating on stopgap funding for the last year and a long-term solution needs to be addressed. More concrete proposals for this stimulus package are not expected until after the fall recess.