Earlier this week, several news agencies reported on a leaked infrastructure plan from the White House. One of President Trump’s campaign promises was to create a program to invest $1 trillion in infrastructure over ten years. Housing advocates may be disappointed to learn that affordable housing is not specifically mentioned in the leaked document. However, the document does propose changes to Private Activity Bonds (PABs), which could prove meaningful in the world of tax exempt bond financed affordable housing.
One proposed amendment is to remove state volume caps which would prove fruitful for the several states which hit their cap every year. Another amendment would eliminate the Advance Refunding prohibition on PABs. This allows not only for the issuance of new bonds to buy back outstanding bonds (thereby “locking in” lower interest rates), but further allows the new bonds to be outstanding for up to 90 days – essentially allowing two sets of tax exempt bond issues to be outstanding at the same time for one project. If this sounds familiar, this was implemented for Gulf States following Hurricane Katrina through the Gulf Opportunity Zone Act.
The White House has refused to comment on the leaked draft document, saying an official plan will be released in the near future. Whether these changes and others are included in the final plan is unclear. It is also impossible to say at this moment whether Congress will have an appetite for passing legislation similar to the President’s proposal.
