Congressman Randy Hultgren (R-IL) and Congressman C.A. Dutch Ruppersberger (D-MD) introduced H.R. 5003, a bill to reinstate advance refunding bonds, which were replead in H.R. 1, the Tax Cuts and Jobs Act. During the tax bill debate the American Society of Civil Engineers (ASCE) opposed provisions that eliminated financing tools, including advance refunding bonds and Private Activity Bonds (PABs), which are used to help invest in infrastructure projects.
Advance refunding bonds are a financing technique that provides an issuer the ability to obtain lower interest rates when the outstanding bonds are not presently callable. Eventually, the proceeds from the sale of the refunding bond is used to purchase taxable government securities, which are deposited in an escrow account. In 2017, advance refunding bond issuance was $91 billion, or over 20% of supply, and comprising a market of over $3 trillion. Ultimately, this financing tool helps state and local governments take advantage of low interest rates to build infrastructure projects.
This has saved taxpayers money and provided our communities the needed flexibility for managing their finances so that they have the added freedom to invest in infrastructure like roads, bridges, and schools.
Congressman Luke Messer (R-IN), Congressman Ed Royce (R-CA), Congressman Dan Kildee (D-MI), and Congressman Michael Capuano (D-MA) are original cosponsors.
In an endorsement letter of the bill, ASCE’s President Kristina L. Swallow, P.E., ENV SP, F.ASCE wrote:
“By reinstating the tax exemption of advanced refunding bonds, state and local governments will be able to take advantage of favorable interest rates to help build essential infrastructure projects.”
By passing this legislation, Congress would be supporting financing mechanisms that strengthen our infrastructure. Watch here for updates as the bill progresses.