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12.

LEGISLATION COMMITTEE

Meeting Date:	05/14/2018
Subject: Support for HR 5003, a Bill to Restore Advance Refundings of Tax-Exempt Bonds
Submitted For:	LEGISLATION COMMITTEE
Department:	County Administrator
Referral No.:	2018-13
Referral Name:	Support for HR 5003
Presenter:	Timothy Ewell	Contact:	Timothy Ewell, (925) 335-1036

Information

Referral History:

The Board of Supervisors’ Federal Legislative Platform currently includes several items concerning tax-exempt municipal bonds. Most notably, the Board has taken a position supporting generally the preservation of municipal bonds.

Recently, the Tax Cuts and Jobs Act of 2017 (the “Tax Bill”) discontinued authorization for state and local governments to issue “advance refunding” bonds, which previously allows jurisdictions to refinance current debt at reduced interest rates. This was, in part, due to the belief that such authorization essentially allowed for “double dipping” by state and local entities. This was bolstered by reports from the Joint Committee on Taxation (the “JCT”) that advance refundings are projected to by a tax expenditure to the federal government of $17.3 billion over the ten-year period 2018-2027.

In Contra Costa County, advance and current refunding bonds have been used to refund existing bonds resulting in significant cost savings locally. As noted in the chart below, over the past 15 years, the County has realized $23.3 million in net present value (NPV) savings amounting to approximately $2.1 million per year. This would not have been possible, in part, but for advance refunding bonds. Therefore, the Chief Assistant County Administrator, Tim Ewell, referred this item to the Committee for its consideration of a position of "Support" to the Board of Supervisors.

Referral Update:

On February 13, 2018, members of the bi-partisan House Municipal Finance Caucus, Co-Chaired by Representatives Hultgren and Ruppersberger introduced H.R. 5003 (Attachment A) with the goal of reinstating advance refunding bonds. Currently, the bill has bipartisan support of ten (10) co-sponsors and has been referral to the House Ways and Means Committee.

On Monday, May 7, 2018, several national organizations representing public-sector entities that issue tax-exempt debt to finance infrastructure projects, including the National Association of Counties (NACo), the National League of Cities and the U.S. Conference of Mayors, joined in a letter (Attachment B) to members of Congress offering support for H.R. 5003. The letter outlines the importance of advance refunding bonds as a tool in the municipal bond market and calls on members of Congress to sign on as co-sponsors to the bill.

Recommendation(s)/Next Step(s):

CONSIDER recommending a position of “Support” to the Board of Supervisors for H.R. 5003 to amend the Internal Revenue Code of 1986 to reinstate advance refunding bonds; authorize the Chair of the Board to send a letter to members of the House of Representatives representing Contra Costa County requesting co-sponsorship of the bill; direct staff to amend the County's adopted federal legislative platform to make conforming changes.

Attachments
Attachment A: HR 5003
Attachment B: Support Letter