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Bond Groups Push Bills to Help States, Localities Raise Capital

Posted on July 21, 2020

Organizations representing public finance are stepping up their efforts on behalf of municipal bond legislation to help state and local governments during the economic downturn caused by the COVID-19 pandemic.

The Bond Dealers of America and the National Association of Bond Lawyers (NABL) are asking lawmakers to pass several bond-related proposals as part of their pandemic economic relief efforts, and the advocacy organizations have requested their members to do the same.

The Lifting Our Communities Through Advance Liquidity for Infrastructure Act (S. 4129) would bring back advance refunding bonds, which were eliminated by the Tax Cuts and Jobs Act. The American Infrastructure Bonds Act (S. 4203) would establish a new category of direct-pay taxable municipal bonds.

The Bond Dealers of America on July 17 encouraged its members to ask their senators to support the bills.

S. 4129 “will reinstate advance refunding bonds to free up much needed capital for state and local governments and assist in the long-term economic recovery following the COVID-19 crisis,” the NABL said to its members in an advocacy request.

“Restoring advance refunding is a proven way to give our local leaders the ability to manage existing debts, reduce costs, and free up additional money for much-needed local infrastructure projects,” Sen. Roger F. Wicker, R-Miss., who introduced the bill July 1, said in a release.

S. 4203, introduced July 2 by Wicker and cosponsored by Senate Finance Committee member Michael F. Bennet, D-Colo., would permit state and local governments to issue taxable bonds for any public expenditure that could be financed by tax-exempt bonds, according to a release from the senators. The bonds could be used to support infrastructure projects and would be modeled as a direct-pay taxable bond.

“American Infrastructure Bonds are a proven, successful model for drawing much-needed investments that are critically important for creating stronger and more resilient communities — from improving roads, bridges, public transit, and tunnels to renovating hospitals and school buildings,” Bennet said in a release.

Another bill, the Municipal Bond Market Support Act (H.R. 3967), would help small bond issuers by raising the bank qualified debt limit from $10 million to $30 million and automatically adjusting the limit for inflation. The NABL is requesting that its members ask their senators to introduce a Senate version of the proposal. 

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