To remove obstacles impeding the use of private investment in the construction, renovation, and replacement of our nation’s aging and dilapidated public buildings, including hospitals, schools, and correctional facilities; thereby improving the quality of life for building occupants and providing fiscal responsibility to taxpayers.
Level the playing field by creating a new category of low cost “Exempt Facility Bonds” suitable for Public Private Partnerships.
Public Private Partnerships have a proven track record for improving both construction execution and operational performance over the life of the facility term. However, the current tax code discourages the use of private finance for public buildings, since private PPP sponsors must raise taxable debt and equity rather than low-cost tax-exempt bonds available to the public sector, effectively negating the opportunity to take advantage of a more robust procurement model.
Over the past 10 years, 19 US transportation projects have taken advantage of Exempt Facility Bonds to spur over $16 billion of investment, thereby creating thousands of jobs, accelerating project completion and generating billions in cost savings for states and localities. However, unlike transportation PPP’s, no federal financing vehicle exists to facilitate private investment in the replacement and renovation of public buildings.
PPP projects are publicly owned and serve a qualified public purpose, although current IRS rules restricting access to tax-exempt finance puts these projects at a financial disadvantage. A new category of Exempt Facility Bonds available to project sponsors would level the playing field and allow PPPs to be evaluated on the merits of performance improvement rather than cost of capital.
PBBC Congressional Action
Our Bill – HR 5361 — was introduced in the House of Representatives in May 2016 and currently has 11 House sponsors – 6 Republicans and 5 Democrats – 7 Members of the Ways and Means Committee. Cosponsors include: Rep. Kelly (R-PA), Rep. Jenkins (R-KS), Rep. Roskam (R-IL), Rep. Curbelo (R-FL), Rep. Zeldin (R-NY), Rep. Renacci (R-OH), Rep. Marchant (R-TX), Rep. Nolan (D-MN), Rep. Blumenauer (D-OR), Rep. Kind (D-WI), Neal (D-MA), Hastings (D-FL)
The Companion Bill — S3117 — was introduced in the Senate in July 2016 by Sen. Dean Heller (R-NV) and Sen. Bill Nelson (D-FL).
Next Steps: The PBBC is looking to get this bill included in a larger legislative vehicle by the end of 2016, but we need your help! Be part of our national effort to rebuild crumblings public buildings! For information on how you can get involved, click here.