January 2009
Legislative Front
Stimulus Package Starting to Take Shape
-CDFA Presents to Transition Team-
The end of 2008 saw a lot of looking ahead to 2009 as the new Administration, Congress, states, municipalities and industry groups all began discussion and work on the economic stimulus package that President-Elect Barack Obama has promised as his top priority on day one of his presidency. As part of this process, CDFA was able to meet with the Treasury Review Team as part of a team of economic development leaders.
CDFA Presents to Transition Team
CDFA President and CEO Toby Rittner was invited to participate in a briefing of the Obama Administration's Treasury Review Team by the California Association for Local Economic Development. Nine different development groups participated in the briefing, which was coordinated by the International Economic Development Council.
CDFA’s recommendations included revisions to the tax code to make the use of IDBs more accessible to more manufacturers, including expanding the definition of manufacturing to include more high-tech companies, increasing the maximum IDB size to $20 million, and allowing IDBs under $3 million to be “bank qualified.” CDFA feels that these simple changes could have an immediate impact on the ability of manufacturers to get financing for expansion and create jobs, making CDFA’s legislative changes a perfect fit for the developing stimulus.
The most significant macro-level recommendation provided by CDFA was the immediate financing of hundreds of “shovel ready” projects of over $10 million for infrastructure, energy and green projects that will create jobs and investment now.
Other macro-level recommendations include making permanent the federal Green Bonds Demonstration Program, expanding and permanently authorizing the Clean Renewable Energy Bonds (CREBs) Program, and authorizing the New Markets Tax Credit Program through 2014. In addition, CDFA encouraged the reauthorization of the Empowerment Zone, Renewal Community and Enterprise Community Programs. Many of these zones, key components of development in both urban and rural areas, are set to expire, along with the incentives the designations allowed.
>>>Read the Press Release
>>>Read the Policy Paper
>>>Read the Recommendations from Participants
Support for Expanded NMTC Program
Bipartisan support is growing for a beefed-up federal tax credit to leverage more private investment in distressed communities as part of the economic stimulus package next month. Influential groups in both chambers, including key members of the House Ways and Means and Senate Finance committees, are backing a proposal to expand the $3.5 billion cap on New Markets Tax Credit allocations by $1.5 billion in 2009.
The letter of support was spearheaded by Ways and Means Select Revenue Measures Subcommittee Chairman Richard Neal, MA, and signed by 14 other Representatives, including six from Ways and Means. Senior Senate Finance members Olympia Snowe, ME, and John Rockefeller, WV, sent a similar letter signed by 10 senators to Senate leaders last month.
Congress Looking at Elimination of AMT on Some PABs, EZ Renewal
Senator Max Baucus, Chairman of the Finance Committee, and others have been promoting making certain PABs exempt from the AMT to aid in financing infrastructure and other public works projects. Last year’s housing bill, exempts housing bonds from the AMT, but Congress and municipal market groups are pushing for more types of bonds to be exempted, including IDBs.
Work also continues on reauthorizing Enterprise Zone (EZ) incentives. With EZ legislation set to sunset in 2009, development has slowed in many established EZs. S. 1627 was introduced in the last Congress and is expected to be reintroduced as part of the 111th Congress. Supporters of the legislation hope to have it included in the stimulus package as a means to promote opportunities and employment in historically challenged areas.
Changes for 111th Congress
The most obvious change in Washington, D.C. is the new Administration, but the recent elections also mean new Senators and Representatives and new committee assignments.
Changes in the Senate include Senator Daniel Inouye, HI, replacing Senator Robert Byrd, WV, as chairman of the Appropriations Committee.
While Senator Baucus remains as Senate Finance Chairman, it is still unclear what will happen to his counterpart on House Ways and Means. There is speculation that Rep. Charles Rangel will step down from his chairman. It is expected that Rep. Neal would take his place in that event.
Also in the House, Rep. Harry Waxman, CA, assumes the chairman position on Energy and Commerce from Rep. John Dingell, MI.
Senator Christopher Dodd, CT, returns as chair of the Banking Committee. Rep. Barney Frank, MA, remains Dodd’s counterpart in the House as chairman of Financial Services.
States Looking for Help from Stimulus
As more and more states begin dealing with billion dollar projected deficits in 2009, many governors are asking the federal government for help. Currently 32 states are looking at deficits for next year, including California and New York. A team of governors and state officials have taken their case to Capitol Hill to ask for assistance from the new Congress and Administration. States and municipalities have been hit with declining tax revenues and higher borrowing costs in the capital markets.