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Legislative and Federal Affairs Update - November 6, 2018

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Legislative and Federal Affairs Update
November 6, 2018
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Legislative and Federal Affairs Update


CDFA Advocates for Permanent Category of Disaster-area Recovery Bonds
American communities are in need of a permanent financing tool that they can access immediately after disaster strikes, and CDFA is actively working with members of Congress to pass legislation that will create a permanent tax-exempt bond program for disaster recovery. As part of our efforts to find a permanent financing solution for disaster recovery, CDFA will host a webinar on November 14th at 2:00 PM Eastern that highlights the available economic recovery tools for regions impacted by natural disasters. Register for the webinar here.

CDFA Hosts Quarterly Legislative Update
In this third quarter installment of the Quarterly Legislative Update, CDFA's Legislative Team provides a progress report on pending CDFA legislation, an update on Tax Reform 2.0 and other major Congressional initiatives, as well as what to expect from Congress in both the lead up and aftermath of the midterm elections. 

Legislative Features

Democrats Eye Push for Infrastructure Plan If They Retake House
Democrats are planning to pursue a major U.S. transportation and infrastructure measure if they retake control of the U.S. House in the midterm elections. House Democrats could start hearings in late January if they take power, with the aim of crafting a bill that could pass by May.

House Joins Senate in Effort to Improve U.S. Flood Readiness
H.R. 7037, introduced Oct. 5, would create a revolving loan fund program for states, to be run jointly by the Federal Emergency Management Administration (FEMA) and state governments. The program would provide the nation's first sustainable source of money for flood mitigation projects.

How a Blue Wave May Help the Muni Market in 2019
The federal policy making environment for bonds will be more favorable if Democrats win control of the U.S. House in the November election. With a Democratic majority, the new W&M Committee chair would be Rep. Richard Neal, who has historically supported bond issues like CDFA's Modernizing American Manufacturing Bonds Act.

Water Resources Development Act Passes Senate, Ready for President's Signature
The U.S. Senate passed the Water Resources Development Act by a vote of 99-1. The bill reauthorizes WIFIA, the Drinking Water State Revolving Fund, the Clean Water Act, and authorizes $6.1 billion for Army Corps of Engineers studies.

Congress Reauthorizes FAA, Approves Disaster Aid
Congress passed a bill with disaster aid and a five-year reauthorization of the FAA that would provide airport authorities with new flexibility without increasing their funding. The legislation also includes disaster recovery reform measures that gives local governments more leeway to spend federal disaster aid on pre-disaster planning and mitigation.

Tax Reform May Chill Affordable Apartment Projects
The TCJA significantly lowered the corporate tax rate, which may have the unintended consequence of reducing the number of affordable apartments being built each year. Theoretically, investors will have less incentive to make equity investments in below-market-rate apartment complexes in return for credits that lower their federal tax bills.

Upcoming Events
CDFA National Development Finance Summit

Financing Economic Recovery in the Wake of Disaster
November 14, 2018 - 2:00 - 4:00 PM Eastern
In this CDFA webinar, you'll learn from experienced development finance practitioners on how to finance the recovery and redevelopment of communities following a disaster, as well as the types of finance tools available to communities on the federal, state, and local level.

Federal Features

CDFA Reports Record Multifamily Housing Bond Issuance in 2017
Novogradac & Company highlights the 2018 CDFA Volume Cap Report with a post focused on 2017 multifamily housing bond issuance numbers. In 2017, the 50 states and the District of Columbia reported issuing a record $15.3 billion in multifamily rental housing bonds, representing a 9.3 percent increase from the previous record. 

FY 2019 CDFI Bond Guarantee Program Application Open
The U.S. Department of the Treasury's CDFI Fund has opened the fiscal year 2019 application period for the CDFI Bond Guarantee Program. The CDFI Bond Guarantee Program responds to the critical market demand for long-term, low-cost capital that can be used to spur economic growth in low-income communities.

IRS Says Some Advance Refundings OK
The Internal Revenue Service is publicly affirming that last year's tax law changes do not preclude the issuance of tax-exempt bonds to advance refund non-tax-advantaged, taxable bonds. The assurances were made in an IRS Chief Counsel Memorandum released on October 26.

EPA Selects 39 Projects to Apply for Water Infrastructure Loans
The U.S. Environmental Protection Agency (EPA) is inviting 39 projects in 16 states and D.C. to apply for Water Infrastructure Finance and Innovation Act (WIFIA) loans. Together, the selected borrowers will receive WIFIA loans totaling up to $5 billion to help finance over $10 billion in water infrastructure investments and create up to 155,000 jobs.

VCs Hit Snag in Proposed OZ Regulations
The recently proposed Opportunity Zones guidelines require that businesses generate at least half their gross income within an Opportunity Zone. According to various investors and venture capitalists, the 50 percent requirement will hurt high-growth startups.

IRS Proposes Regulations for OZ Tax Incentives
Clark Schaefer Hackett has released an overview of the IRS proposed regulations for Opportunity Zones. The Opportunity Zones provision allows taxpayers to defer tax on capital gains by investing their gains in qualified Opportunity Funds.

Why the Muni-Bond Market Cares About the Midterms
With Democrats hoping for a wave election that would roll back Republicans' power in Congress, analysts are gauging how the return of a divided government -- or a narrower Republican margin -- could ripple through various corners of Wall Street. Among them is the $3.9 trillion state and local government bond market.

IRS Report Indicates Falling PAB Issuances
Projects financed by private activity bonds are projected to fall by more than 27 percent over the next eight years, according to recent data from the Internal Revenue Service. There were 3,043 bond issues in 2017, a figure that is expected to decrease to 2,200 by 2025.

GASB Wants Uniformity in Reporting Conduit Debt
GASB is accepting comments through Nov. 2 on a proposal to clarify the definition of a conduit debt obligation and eliminate the option for government issuers rather than borrowers to recognize conduit debt obligations, thereby providing a single method of reporting. CDFA's Tim Fisher is quoted in the article.

Federal Financing Clearinghouse Spotlight

CDFA's Federal Financing Clearinghouse is the only online resource cataloging the development finance programs offered by the federal government. Check out our featured agencies and programs below. >>> Learn More

Agency Seal Export-Import Bank of the United States (EXIM Bank)

Finance Lease Guarantees
The U.S. Export-Import Bank (EXIM Bank) supports competitive, medium-term financing structured as finance leases in addition to financing structured as installment loans. Support of lease financing...

Agency Seal Internal Revenue Service (IRS)

Business Energy Investment Tax Credit (ITC)
The federal Business Energy Investment Tax Credit (ITC) allows eligable users to claim up to 30% of expenditures for energy projects.

Agency Seal U.S. Citizenship and Immigration Services (USCIS)

EB-5 Immigrant Investor Program
Congress created the EB-5 Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. In 1992, Congress created the Immigrant Investor Program,...

The Council of Development Finance Agencies is a national association dedicated to the advancement of development finance concerns and interests. CDFA is comprised of the nation's leading and most knowledgeable members of the development finance community representing public, private and non-profit entities alike. For more information visit CDFA.net or email info@cdfa.net

Council of Development Finance Agencies
100 E. Broad Street, Suite 1200
Columbus, OH 43215
(614) 705-1300

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CDFA National Sponsors

  • Baker Tilly Virchow Krause
  • BNY Mellon
  • Bricker & Eckler LLP
  • Bryan Cave Leighton Paisner LLP
  • Business Oregon
  • CohnReznick
  • FBT Project Finance Advisors LLC
  • Fifth Third Bank
  • Frost Brown Todd, LLC
  • Hawkins Delafield & Wood LLP
  • Ice Miller LLP
  • KeyBanc Capital Markets
  • Kutak Rock LLP
  • McGuireWoods
  • MuniCap, Inc.
  • NW Financial Group, LLC
  • SB Friedman Development Advisors
  • Stern Brothers
  • Stifel Nicolaus
  • U.S. Bank
  • Wells Fargo Securities
  • Z. The Bond Buyer
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