WASHINGTON — The Council of Development Finance Agencies is urging Congress to create special Hurricane Sandy Recovery Bonds to help assist states, municipalities and private businesses repair storm-related damage.
“Tax-exempt bonds enable public infrastructure, such as transportation and energy [projects], and private businesses to access affordable capital,” said CDFA president Toby Rittner. “Bonds are particularly important to the rebuilding process after a disaster.”
Congress will return to session on Nov. 13 after a six-week recess and the elections.
CDFA is recommending that lawmakers model the bonds after the Gulf Opportunity Zone bonds that were created after Hurricane Katrina in 2005.
Congress intended for the GO Zone bonds to stimulate economic recovery in Louisiana, Mississippi, and Alabama. Congress authorized the three Gulf states to issue $15 billion in GO Zone bonds over six years.
CDFA is not recommending a fixed amount for the HSRB allocation but it thinks an appropriate number would be between $18 and $20 billion, Rittner said in an email.
“By the time Congress returns to session on the 13th, we expect that more accurate damage estimates will be in place and we will be able to arrive at a more solid number,” Rittner said.
Economists have estimated that the total damage from Superstorm Sandy, which has left New York City in the dark and without subway service for days, could reach up to $50 billion.
More than 8.1 million homes and businesses were without power earlier this week, as Sandy tore through the eastern seaboard flooding entire cities and destroying livelihoods.
CDFA said that the HSRBs could be implemented quickly by Congress as additional authority for state and local issuers to issue private-activity bonds.
The bonds would provide lower-cost financing to replace damaged transportation infrastructure, to repair and improve energy generation, transmission and back-up facilities, and to assist businesses with construction and equipment replacement costs, the group said.
PABs are issued in conduit deals by a state or local government on behalf of a private borrower. They are qualified if they fall within certain categories, such as airports, housing, wharves, docks and small manufacturing projects.
Similar allocations have been made by Congress including Hurricane Ike bonds, Midwestern Disaster Area bonds and Liberty bonds in recent years.