Tax Cuts and Jobs Act Introduced in the U.S. Senate

Yesterday the U.S. Senate introduced its version of the Tax Cuts and Jobs Act, which features several notable departures from the House bill. The Senate bill would both preserve private activity bonds and enhance them through the elimination of the Alternative Minimum Tax.

The Senate's decision to preserve private activity bonds constitutes a major victory for CDFA and the development finance industry. CDFA would like to thank everyone who assisted in outreach and advocacy efforts over the past week. We would also like to state that while the Senate bill provides a bit of good news to all private activity bond stakeholders, the industry still has work to do in the way of preserving advance refunding bonds. The Senate bill proposes the elimination of advance refunding bonds - a move that would be devastating to state and local issuers. CDFA will continue to advocate over the coming weeks for the preservation of ALL tax-exempt bonds, including private activity and advance refunding bonds.

• The Bond Buyer: Senate Bill Saves, Enhances PABs, but Eliminates Advance Refundings


• Novogradac: Senate Tax Reform Legislation Retains LIHTC and Private Activity Bonds


• Squire Patton Boggs: The Senate Retains Tax-Exempt Private Activity Bonds

House Ways and Means Passes Tax Cuts and Jobs Act

Yesterday the House Ways and Means Committee passed its version of the Tax Cuts and Jobs Act. The future of private activity bonds was hotly debated during the weeklong markup session. Unfortunately, they were unable to be preserved through a committee amendment.

The bill will now move to the House floor for debate, and potentially a vote next week. CDFA will continue to work with legislative partners to strike the bill's provision that eliminates private activity bonds.

• The Bond Buyer: Democrats Fail to Save PABs, Advance Refundings in House Committee


• The Hill: Lawmakers Fight to Save Infrastructure Financing Tool in GOP Tax Bill


• Ballard Spahr: Federal Tax Reform: House Bill Rewrites Municipal Bond Rules

Get Engaged and #PreservePABs

CDFA is asking all interested stakeholders to join the CDFA Legislative effort, and sign our letter asking Congress to preserve PABs. Please follow the link below to view and sign our letter.

>>>Sign the CDFA National Tax Reform Letter

Investment in US infrastructure could be one of the losers from the Republican tax plan, undercutting the Trump administration's aim of stimulating a new wave of construction led by the private sector.

The U.S. Senate has introduced the Chairman's Mark of the Tax Cuts and Jobs Act. Unlike the House version of the Act, the Senate version maintains the current tax as it relates to private activity bonds.

Rep. Randy Hultgren (R-IL) and Dutch Ruppersberger (D-MD), co-chairs of the Municipal Finance Caucus, ask their colleagues in Congress to maintain the tax-exemption for private activity bonds.

CDFA has sent a national sign-on letter with over 400 signatures to Congressional officials, urging them to preserve Private Activity Bonds.

House Ways and Means Committee Republicans on Wednesday voted 24 to 16 along party lines against amendments by two Democrats to save advance refundings and private activity bonds from being terminated after this year.

Crain's Chicago Business cites higher future borrowing costs hampering Chicago's nonprofit building boom as reasons to maintain PABs. Chris Meister, Executive Director of IFA, states in the article that "it's irresponsible to abandon a tool that so effectively uses the discipline of the capital markets."

Reps. Jackie Walorski (R-IN) and Jim Renacci (R-OH) acknowledge the benefits of PABs, suggesting future amendments to H.R. 1. Jim Renacci is an original cosponsor of the Modernizing American Manufacturing Bonds Act.

Municipal market groups including CDFA, the Public Finance Network, MBFA, and NABL have sent extensive sign-on letters to House and Senate leaders, urging them to spare advance refundings and private activity bonds.

Municipal Bonds for America has published a simple two page overview on the Do's and Don'ts of what Private Activity Bonds finance.

Of the $301 billion in long-term, fixed-rate municipal bonds sold so far this year, Bloomberg estimates that at least one-third would no longer be allowed, between advanced refundings, stadium bonds, private-activity bonds and tax-credit bonds.

Bloomberg outlines the recent provisions included in the Tax Cuts and Jobs Act, including the elimination of private activity bonds, and advance refundings.

The tax bill Republicans in the U.S. House are moving swiftly ahead with this week threatens to raise borrowing costs for health care facilities, affordable housing and other infrastructure projects involving states, local governments and nonprofit organizations.

Eliminating private-activity bonds would devastate affordable housing across the country, as roughly half of all LIHTC developments utilize tax-exempt bonds and 4% credits.

While W&M Republicans rejected an amendment that would have maintained the current federal deduction for state and local taxes, they continued an internal debate on keeping tax-exempt private activity bonds.

George Friedlander of Court Street Group Research provides an in-depth analysis of both the direct and indirect effects of the Tax Cuts and Jobs Act.

Supporters of tax-exempt private activity bonds have been working overtime since the Tax Cuts and Jobs Act was introduced in an effort to save PABs. CDFA's Tim Fisher is quoted in the article.

Republican leaders in the House of Representatives recently unveiled a bill that would overhaul U.S. tax policy, including cuts into several existing energy tax incentives, particularly for renewable energy.

Squire Patton Boggs provides an overview of how the Tax Cuts and Jobs Act would affect private activity bonds, advance refunding bonds, tax credit bonds, and governmental bonds for sports venues.

Under the bill, income from private activity bonds, a tool that state and local governments offer to help private entities raise money for projects that are deemed to have public benefit, would no longer be tax exempt. The provision would increase revenue by $38.9 billion over 10 years, according to the Joint Committee on Taxation.

The Tax Cuts and Jobs Act, if enacted, would mean shrinking the tax-exempt municipal market by between 25% and a third. The bill proposes terminating PABs, repealing the use of advance refunding bonds and tax-credit bonds, and prohibiting the sale of tax-exempts for professional sports stadiums.

In a surprise move, the Republican tax plan released on Thursday contains a proposal that finance experts say would be devastating for governments trying to find money for economic development projects.

Municipal bond market participants and infrastructure advocates were stunned and unhappy on Wednesday when House Republicans released a tax bill that would terminate private activity bonds and advance refunding bonds after this year.