Massachusetts Pushes $7B; Special Assessments Shelved

Massachusetts lawmakers continue to move forward on bond bills totaling $7 billion to help finance higher education, affordable housing, and public building improvements while committee members shelved an initiative to allow special assessment bonding.

The special assessment bond bill, called 40T, would enable the Massachusetts Development Finance Agency and local governments to issue special assessment debt. That type of borrowing allows issuers to fund infrastructure upgrades by leveraging special assessment fees paid for by the homeowners and private businesses that benefit from the enhancements. As of now, local communities use general obligation debt or tax increment financing, which is known as district-improvement financing, or DIFs, in Massachusetts.

But as drafted, 40T could allow private companies to access the tax-exempt bond market, an issue that the House Committee on Rules will now evaluate.

Sen. Mark Montigny, D-Second Bristol and Plymouth, who co-chairs the Joint Committee on Bonding, Capital Expenditures, and State Assets, which has been working on the bill since late June, said the complex issue of special assessment bonding and the possibility of enabling private entities to sell tax-exempt debt necessitated additional review.

"My sense as the chair, since I've listened to parties on both sides, was it wouldn't hurt to give it more work, more convincing," Montigny said.

The committee chose to send 40T to study as the members had a deadline of April 30 to move all its bills out of committee, or the initiatives would terminate.

Lawmakers have until Dec. 31, the end of Massachusetts' two-year legislative session, to study 40T. Panel members could move to bring the measure back to the committee once lawmakers are ready to act on the bill.

Along with giving 40T further review, the committee filed an extension on three major bond bills in order to give members until June 18 to work on the borrowing plans. Yet Jay Newsome, House director for the Bonding Committee, said the members could move forward shortly with a 10-year, $2 billion higher education bond bill and a five-year, $1.4 billion energy and environment bond measure.

"We did discuss trying to get the higher-ed bond bill out as early as next week," Newsome said. "I can't say for sure that will happen."

If lawmakers enact the $2 billion bond measure, administration officials anticipate selling $150 million in the current fiscal year 2008, part of $750 million the Bay State will issue overall in the next five years for capital needs at public higher educational institutions.

Along with the borrowing for infrastructure projects at colleges and universities, Newsome said the committee will act on the $1.4 billion energy and environment bond bill shortly.

Montigny said the emphasis now is on moving the higher education and environmental bond bills before finishing up on a third borrowing plan, a $2.5 billion, five-year public buildings borrowing initiative.

The Senate approved the June 18 extension request. The issue now sits with the lower chamber, which may not vote on the possible extension until next week as House members are currently working on the $28.16 billion fiscal 2009 budget, for the year that begins July 1. Officials said the House could finish crafting its version of the fiscal plan as early as today, before the Senate begins its budget process.

Other borrowing plans - a $25 million broadband bond measure and a five-year and a $1.1 billion affordable housing bond bill - sit in the House. The housing initiative would give public housing developments $500 million to tackle a backlog of deferred maintenance to keep the state's facilities in good repair.

Lawmakers also anticipate receiving another bond initiative from Gov. Deval Patrick. Last month, he announced a plan to allow the commonwealth to sell up to $3.8 billion of debt over the next eight years for bridge repair. Yet to make room for $3.8 billion of additional general obligation borrowing, Massachusetts would need to push maturities on $366 million of debt to 30 years from 20 years, and also take a portion of bonding capacity from fiscal years 2017 through 2028 to stay under the GO cap in the next eight years.

Massachusetts has $29 billion of outstanding debt, including $18 billion of GOs.

 

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