Bipartisan Bill to Restore Advanced Refunding of Municipal Bonds Introduced in Senate
(July 10, 2020) – Last week, Senators Roger Wicker (R-MS) and Debbie Stabenow (D-MI), along with a strong bipartisan group of Senators, introduced legislation, S. 4129, the Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act, that would restore state and local governments’ ability to advance refund tax exempt municipal bonds.
Prior to its prohibition under the 2017 Tax Cuts and Jobs Act, the ability to advance refund municipal bonds was a key financial tool clean water utilities could leverage to help reduce the costs of clean water infrastructure projects. The Senate bill introduced this week would effectively repeal the 2017 prohibition.
NACWA has been working with a large network of organizations and stakeholders to build strong support for providing communities with this important tool once again.
Advance refunding was one of several financial tools NACWA highlighted recently in a White Paper outlining strategies to help utilities address COVID-19 economic impacts. Another tool highlighted in that document, direct-pay infrastructure bonds, was proposed in a second bipartisan Senate bill introduced in recent days. This legislation, the American Infrastructure Bonds Act, was led by Sens. Wicker (R-MS) and Bennet (D-CO). The bill would build upon the “Build America Bonds (BABs)” that were issued following the 2008 financial crises—but incorporates important updates including exempting the bonds from sequestration, a core concern that arose with the BABs.
With strong bipartisan legislation now introduced in the Senate and House, as well as included as a provision in the recently passed House infrastructure package H.R. 2, NACWA and our partners will use this momentum to continue working to help advance this legislation.