WASHINGTON -- Sen. Michael Bennet has introduced legislation authorizing up to $1 billion in private activity bonds to provide financing in 90 Coal Community Zones around the country.
The Coal Community Empowerment Act of 2017 (S. 1743) would allow localities in those zones to use bond proceeds to provide low-interest loans to businesses, according to a fact sheet released by the Democrat from Colorado.
"Colorado's coal communities have been hit hard economically by a long-term decline in coal demand that has accelerated over the last decade," Bennet said in a press announcement Monday.
He estimated that six of the 90 counties qualifying for the Coal Community Zone designation are in Colorado.
The Colorado counties of Delta, Gunnison, Las Animas, Moffat, Rio Blanco, and Routt would qualify because coal mining employment declined by at least 50 people in each of them between calendar years 2011 and 2015 based on records collected by the Federal Mine Safety and Health Administration and at least 5% of their employment was in coal mining on average during those years.
The new bonding authority would be allocated based on the population in each community relative to the total population across all Coal Community Empowerment Zones.
The empowerment zone designation would last for a five year period from Jan. 1, 2018 through Dec. 31, 2022.
“This legislation would help these communities by spurring investment, job creation, and economic growth through tax cuts and support for high-quality worker training,’’ Bennet said. “We have an obligation to provide our coal communities with the support they need to implement the strategies they've developed, so they can thrive again in today's economy."
The PABs would be tax-exempt and would be in addition to the PABs issued under state volume caps, said a staffer from Bennet's office. The bill would apply the framework used for empowerment zone bonds to Coal Community Zones, the staffer said.
States and territories issue most private activity bonds, including those used for water and sewage projects, under volume caps based on population data from the U.S. Census Bureau and a formula set by the Internal Revenue Service. For 2017, the cap is either $305.32 million per state or $100 per capita based on a state’s population, whichever is greater. Bonds are private activity bonds if more than 10% of the proceeds is used by private parties and more than 10% of the debt service is made or secured by private parties. But PABs are not tax-exempt unless the projects they are financing falls within specified categories, none of which include coal facilities.
Nationally the cap for all 50 states, the District of Columbia and Puerto Rico stands $35.69 billion this year. Nine states have individual caps of more than $1 billion each with California topping the list with a $3.93 billion limit.
Under other provisions of the legislation, coal community empowerment zones also would be eligible for $3,000 hiring credit for employers that hire individuals who live or work in a coal community; $300 million in additional New Markets Tax Credits; and tax incentives for building or revitalizing commercial buildings in a Coal Community. Small businesses would be eligible to claim up to $1 million annually for equipment expenses, which is double to the current limit. In addition, capital gains taxes would be eliminated on the sale of stock in a business in the zone if the investment is held for five years.