Blog Posts - National Association of Health and Educational Facilities Finance Authorities

Brady Releases Tax Reform 2.0 Listening Session Framework

7/24/2018

oday, Ways and Means Chairman Brady released a two-page statement on the essential elements of the developing House Republican “2.0” tax plan. As you will see, it is a high-level document, focusing on making permanent the individual and corporate tax cuts and liberalizing some incentives such as retirement and education savings and undefined incentives for small businesses.

Obviously, this document doesn't contain any proposed restrictions, such as for tax exempt bonds, but as we saw previously when these documents continue to go through iterations, details could emerge that will be troubling.

We'll stay on top of it. We have met with most of the Republicans on the Ways and Means committee and obviously will ask you to get active as necessary. Of course, if there are opportunities to freshen up your ties to House Republican members that you made last year, please consider it. And, let me know if I can help.

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Update on Senate Banking Committee and MSRB

6/26/2018

Senate Banking Committee Hearing - NAHEFFA has submitted here the testimony to the Senate Banking Committee in support of legislation which would liberalize rules restricting muni purchases by mutual funds. This has resulted in a significant decline in MMF municipal bond purchases. Today, GFOA is testifying in support of the legislation and also will note the benefits of liberalizing the bank qualified rules.

MSRB Guidance on Financial Advisors in Conduit Financings - In response to our criticism of the lack of clarity in the guidance MSRB issued last year on conduit financing and the role of municipal advisors, the MSRB has designated new Chief Regulatory Officer Lanny Schwartz with the task of working with us to revisit the guidance. Recently the Board finalized FAQs regarding rule G- 42 relating to municipal financial advisors and footnoted the existence of our previous guidance, indicating it remains applicable. It will be useful to learn from members how if at all they have revised the use of financial advisors for themselves or their borrowers.

MSRB Notice - MSRB Answers Frequently Asked Questions Regarding MSRB Rule G-42 and Making Recommendations

House Passes Senate's Economic Growth Act

5/22/2018

Comments on Notice 2018-03

4/16/2018

Comments have been submitted to the MSRB Notice 2018-03 regarding Request for Input on Draft Frequently Asked Questions Regarding Rule G-42 and the Making of Recommendations. Please find submitted comments here.

Tax-Advantaged Bonds: IRS Expands Remedial Action for Nonqualified Use

4/16/2018

By Christie Martin and Len Weiser-VaronOn April 11, 2018, the IRS released Revenue Procedure 2018-26. This alert examines the Revenue Procedure and its provisions, which include the expansion of remedial action options in connection with certain post-issuance leases to private parties of facilities financed with tax-exempt bonds. Whereas previously the bond issue(s) that financed the leased facility would have to be redeemed or defeased to preserve the tax-exemption of the applicable bonds, the new remedial action option permits the bonds to remain outstanding if the present value of the lease payments is applied to other bondable expenses. The new Revenue Procedure also introduces remedial action for certain types of tax credit bonds and direct pay bonds that did not previously have access to remedial action options.
» Read the full alert …<https://www.mintz.com/legal-insights/alerts/articletype/articleview/articleid/4404>

Senate Democrats' Infrastructure Proposal and Path Ahead

3/8/2018

Here is the detailed explanation of the Senate Democrats’ infrastructure proposal. It changes some of last year's tax bill provisions, such as modifying the individual corporate and income tax rates, in order to finance a variety of infrastructure projects.

Note on page 28 the proposal states that “it will ensure that state and local governments have flexibility to fund finance infrastructure projects as efficiently as possible, by eliminating arbitrary tax barriers for infrastructure projects that benefit the public. In addition, we will create a new direct – pay bond program for qualified infrastructure projects, deepening the lending market and allowing large investors, like pension funds, to more easily invest in building America's infrastructure.” With this level of detail it's pretty unclear what, if anything, there is here for nonprofit bond financing and more fundamentally this is more of political not practical legislation.

I believe that we will see some hearings on the president's and the Democrats’ proposals and other proposals but there probably will not be significant legislative action until possibly after the mid-term election. At that time, depending on who is in charge in the Congress, perhaps we will see legislative action which incorporates elements from various proposals. Most observers do not give infrastructure legislation much of a chance but that was said of tax legislation as well.

From our point of view, we are using this as an opportunity to pursue bank deductibility liberalization and we are supportive of attempting to reverse or modify the advance refunding ban. Legislation to that effect has been introduced although it has little chance of success. But, as with BQ, keep hope alive,right?

On the defensive side, we are concerned that in tax hearings on infrastructure Ways and Means Chairman Brady’s concept will surface that nonprofit and low income housing finance are not properly part of the private activity bond category and should not be subsidized. Although we built a strong case for our type of bonds last year we must continue to new renew and strengthen the case.

NABLNET Alternatives to Tax-Exempt Advance Refunding Bonds

2/6/2018

The tax reform bill recently passed by Congress prohibits the issuance of tax-exempt advance refunding bonds after December 31, 2017. The NABL General Law and Practice Committee has produced a paper that briefly (1) describes known alternatives to tax-exempt advance refunding bonds and (2) identifies issues for consideration when structuring new transactions in light of the advance refunding ban. Of course, the viability of any of these approaches will depend on factors including market interest rates, demand for bonds, federal tax issues, and state law considerations.

NAHEFFA Comments to MSRB

1/30/2018

Recently, NAHEFFA submitted comments to the MSRB Notice 2017-22 regarding Input on Compliance Support. You can find the submitted comments here.

Infrastructure And Technical Correction Bruitings

1/24/2018

We will address this on an Advocacy Committee call, but since there is so much email traffic from authorities and media on the president’s infrastructure proposal, I want to provide some perspective. Circulating all over is a document here of unknown origin and vintage purporting to be the Administration infrastructure proposal. It is chockful of liberalized bond rules—advance refundings for infrastructure related bonds(?), liberalized private use rules, new “reconstruction” bonds, and incentives for public private partnership bondings, among other things.

Some of you are excited because your statutes might allow you to do some of these projects or you could change your statutes. Understandable. We will determine what NAHEFFA’s role is in this effort. We already are engaged with several coalitional efforts. We would want to promote adding bank qualified liberalization and permanency and would want health care and education to be considered as part of the newly minted concept of “vertical” infrastructure.

But, a bit of caution here. The distance between cup and lip may be wide. There isn’t much enthusiasm for this among Congressional majority leadership (although there is on a bipartisan basis by rank and file.) House leadership at least will want to pay for some of this largess and friends we will likely be back in the firing line.

Perhaps ultimately related, there is talk about technical corrections to a bill considered and enacted in 50 days (did it seem like 500 to you?) Will that happen, will it really be technical, what’s technical anyways, and will it be married up with infrastructure?

Meanwhile, Muni Caucus Chair Ill. Rep Hultgren is introducing a bill to bring back advance refundings, keeping hope alive. On the other hand, legislation has been introduced(H.R. 4131,perhaps tied to the Right to Life march this last weekend) by over 100 House Republicans, including friends , to ban tax exempt bonds for abortion clinics, as defined and excluding hospitals. GAO has been asked to study this and two of our authorities’ financing were highlighted.

As you will see in Bond Buyer, I tried to deal sensitively with this issue and make the neutral policy point that limitations on non profit status and activities should be dealt with in the definitions in the Code(and state codes) for charities and nonprofits and not through rifle shot provisions in the TEB section. Whatever is a nonprofit should have access to bonding, in other words. Nice style point but probably won’t stop this from being offered this year in the above legislations and other bills that move. Here’s the bill: https://www.congress.gov/bill/115th-congress/house-bill/4131/text? The GAO report request is here.

If you have any questions or comments please let Advocacy Chair Martin Walke and me know.

Private Activity Bond Financing News Advisories

1/9/2018

I encourage everyone to look at the Financing New Advisories here and herethat the Wisconsin Health and Educational Facilities Authority (WHEFA) released on two recent financings. WHEFA sends releases on all completed financings to various interested parties, including both their Wisconsin and D.C. legislators. The format emphasizes that these are private activity bonds, they quantify savings when applicable and they relate to jobs and the nonprofit mission. A number of authorities, such as the South Carolina Jobs-Economic Development Authority (SCJEDA), do similar releases. If your authority currently does not, it is important to think about something similar as we may well face another attack on PAB’s as part of infrastructure/tax corrections debate/payfors.