In the aftermath of Hurricanes Harvey, Irma, and Maria, the residents of Texas, Florida, the U.S. Virgin Islands, and Puerto Rico are in dire need of federal recovery assistance. CDFA is calling on Congress to create a permanent, special category of federal tax-exempt bonds, which can be used by states and municipalities to support recovery efforts in the areas affected by disasters, both natural and man-made.

There is ample precedent for Congress to take action. After the devastation of Hurricane Katrina in 2005, Congress responded with the Gulf Opportunity Zone Act of 2005 (the "GO Zone Act") in order to provide Alabama, Louisiana, and Mississippi federal assistance to aid such states in recovery and promote economic development. Given the massive destruction caused by Hurricanes Harvey, Irma, and Maria, and the likelihood that similarly disastrous weather phenomena occur in the future, legislation is needed from Congress for the benefit of the states and territories affected by the hurricanes, and to prepare for future disasters.

Using the GO Zone Act as a guide, as well as the Heartland Disaster Tax Relief Act of 2008 that created Midwestern Disaster Area Bonds, CDFA supports the passage of legislation that would provide the following:

• Create a permanent category of tax-exempt private activity bonds, separate from federal volume cap restrictions, which could be issued by the affected states and territories in the event of a natural or man-made disaster. The bonds, to be tentatively known as "Disaster Recovery Bonds," would become available to the affected areas upon the declaration of a state of emergency by the President. We recommend a maximum federal allocation of $20 billion.


• Authorize the issuance of Disaster Recovery Bonds to finance in the disaster reconstruction zone ("Reconstruction Zone") (i) the acquisition, construction, reconstruction or renovation of non-residential real property (land, buildings, and fixtures - no equipment); (ii) the construction and rehabilitation of multi-family rental property for low and moderate income individuals, and (iii) the repair or reconstruction of damaged public utilities facilities and transportation infrastructure.

For additional information on the CDFA proposal, please review the following materials:

• CDFA Press Release
• CDFA Memorandum on Disaster Recovery Bonds
• Overview from The Bond Buyer

Call to Action

CDFA is asking all interested stakeholders to join the CDFA Legislative effort, and help push this issue forward. For more information, or to get engaged, contact Tim Fisher.

While CDFA continues to advocate for disaster recovery bonds, we are encouraged by recent Congressional action to assist the states and territories affected by the powerful hurricanes.

On September 5, Representatives Tom Reed (R-NY) and Bill Pascrell (D-NJ) introduced the National Disaster Tax Relief Act of 2017. The bill, H.R. 3679, proposes the permanent creation of "qualified disaster area recovery bonds" that could be issued in the event of a federally declared disaster.

On September 22, 17 Congressional Democrats signed a letter to Committee on Ways and Means Chairman Kevin Brady and Ranking Member Richard Neal, asking them to offer legislative "assistance consistent with past disasters," making specific mention of the GO Zone Act of 2005 and the Heartland Disaster Tax Relief Act of 2008. CDFA supports and applauds the efforts the undersigned Congressional officials.

To read more about the current Congressional disaster relief efforts, as well as the past legislative proposals referenced throughout this newsletter, see below:

• National Disaster Tax Relief Act of 2017
• Congressional Democrats' Letter to Ways & Means
• GO Zone Act of 2005
• Heartland Disaster Tax Relief Act of 2008
• Hurricane Ike Bonds