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
The Public Buildings Renewal Act of 2017
On February 7, the Public Building Renewal Act of 2017 (PBRA) was reintroduced by Congressmen Mike Kelly (R-PA) & Earl Blumenauer (D-OR) and Senators Dean Heller (R-NV) & Bill Nelson (D-FL) as H.R. 960/S. 326.
The PRBA would create a new class of projects eligible for financing through private activity bonds (PABs) including public buildings such as schools, post offices, libraries, and courthouses. In short, the bill would create $5 billion allocation for public buildings for states to access through the Treasury Department.
- Score: The legislation is estimated by JCT to cost $18M over 5 years or $48M over 10 years.
- Senate Cosponsors: Sen. Heller (R-NV) and Sen. Nelson (D-FL) and the following are cosponsors: Sen. Bennet (D-CO); Sen. Gardner (R-CO); Sen. Young (R-IN); Sen. Cassidy (R-LA); Sen. Perdue (R-GA); Sen. Cotton (R-AR); Sen. Cardin (D-MD), Sen. Rounds (R-SD), Sen. Graham (R-SC)
- House Cosponsors: Rep. Kelly (R-PA) and Rep. Blumenauer (D-OR) and the following are cosponsors: Rep. Zeldin (R-NY); Rep. Curbelo (R-FL); Rep. Hurd (R-TX); Rep. Jenkins (R-KS); Rep. Perry (R-PA); Rep. Renacci (R-OH); Rep. Kind (D-WI); Rep. Thompson (D-CA); Rep. Marchant (R-TX); Rep. Perlmutter (D-CO); Rep. Rosen (D-NV); Rep. Suozzi (D-NY); Rep. Barletta (R-PA); Rep. Hudson (R-NC); Rep. Blunt (D-DE); Rep. Paulsen (R-MN); Rep. Smucker (R-PA); Rep. Meehan (R-PA); Rep. Walz (D-MN); Rep. Larson (D-CT); Rep. Pascrell (D-NJ); Rep. Tonko (D-NY); Rep. Sarbanes (D-MD); Rep. Raskin (D-MD), Rep. Tiberi (R-OH), Rep. Brooks (R-IN); Rep. Rooney (R-FL) , Rep. Smith (R-NJ)
State & Municipal Level Support
Ten Governors have signed onto a letter supporting this legislation including: John Hickenlooper (D-CO), Sam Brownback (R-KS), Paul LePage (R-ME), Rick Snyder (R-MI), Brian Sandoval (R-NV), Kate Brown (D-OR), Gina Raimondo (D-RI), Gary Herbert (R-UT), Tom Wolf (D-PA), and Doug Burgum (R-ND). In addition, Denver Mayor Michael Hancock is leading a support letter with Los Angeles Mayor Eric Garcetti that includes numerous Mayors. Click here to see these letters.