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Tax-Exempt Bond Legislative Update

New Senate Tax Bill Eliminates Advance Refundings

Contains Differences From House Tax Bill

The Tax Bill proposed by the Senate Finance Committee yesterday differs substantially from the bill introduced last week in the House. The Senate Tax Bill retains the ability to issue tax-exempt private activity bonds (such as 501(c)(3), housing, certain airport and utilities, student loans, and many public-private partnerships); however, it does track the House Tax Bill in eliminating the ability to issue tax-exempt advance refunding bonds. As drafted both tax bills prohibit advance refundings after December 31, 2017. If you are considering an advance refunding, you will need to complete the bond issuance by December 31, 2017 provided the current legislation passes as is. We encourage issuers and borrowers to contact their municipal advisor or underwriter to discuss whether an advance refunding would benefit them.

Below are some of the key bond provisions in each bill:

House Tax Bill Senate Tax Bill
Eliminates ability to issue tax-exempt advance refunding bonds. Same.
Eliminates ability to issue tax-exempt private activity bonds (such as 501(c)(3), housing, certain airport and utilities, student loans, and many public-private partnerships). No similar provision included. Ability to issue tax-exempt private activity bonds retained.
Eliminates ability to issue tax-exempt bonds for professional stadiums. No similar provision included.
Eliminates ability to issue tax credit bonds (such as Qualified Zone Academy Bonds). No similar provision included.

At this point in the legislative process there can be no certainty of what will be included in the final tax bill, including any provisions that would eliminate private activity bonds. We continue to urge you to immediately contact your Congressional Representatives and Senators to let them know your concerns. A copy of a letter that can be used for this purpose is available here.

The description of the Senate Tax Bill can be found here.

The description of the House Tax Bill can be found here.

Posted: Nov 10, 2017

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