WASHINGTON – Ten governors and 14 mayors have sent separate letters to Congress supporting legislation that would authorize $5 billion of private activity bonds for government-owned buildings.

The bipartisan Public Building Renewal Acts pending in both the House and Senate would expand the definition of the PAB category of "exempt facility bonds" to include elementary and secondary schools, academic buildings used by state colleges, public libraries, courthouses, public safety facilities, government employee offices and public hospitals, and health care facilities.

Rep. Mike Kelly, R-Pa., is the lead House sponsor of the Public Building Renewal Act which would  expand the definition of "exempt facility bond" to include public buildings.
Rep. Mike Kelly, R-Pa., is the lead House sponsor of the Public Building Renewal Act which would expand the definition of "exempt facility bond" to include public buildings. Brian Tumulty, The Bond Buyer

Exempt facility bonds already are used for airports, highways, mass commuting facilities, sewage plants and other public purposes.

A study last year by the Beacon Hill Institute estimated the legislation would provide an economic boost of more than $8 billion in the first year.

The bills are in line with President Trump's infrastructure plan, which would expand or create a new category of PABs to finance public purpose infrastructure.

“We take our responsibility to be good stewards of every tax dollar collected seriously and have been at the forefront of championing public-private partnerships (PPP or P3) as a means to deliver projects on time, on budget, and with greater value to taxpayers over the long-term,” said the letter from the governors.

Nevada Gov. Brian Sandoval, a Republican who chairs the National Governors Association, and New Orleans Mayor Mitch Landrieu, president of the U.S. Conference of Mayors, were among the officials who signed the letters to Senate and House leaders asking for passage of the bill.

“Given the success of PPPs in the U.S. transportation sector and in delivering public buildings globally, the accessibility of PPPs should be improved to allow our nation’s schools, justice facilities, hospitals, labs and government offices to benefit from these valuable partnerships,” the mayors said in their letter.

The governors’ letter said “the average public school building is at least 40 years old, and the current backlog of maintenance and repair projects adds up to more than $45 billion annually in unmet funding needs.”

In addition, courthouses “often do not comply with current codes, disability requirements, and often have inadequate security,” the governors’ wrote.

Last year the sponsors of the bill considered inserting it into tax reform legislation, but it was superseded by the larger fight over preserving the tax exemption for PABs.

The tax bill passed by the House would have terminated PABs. Fortunately, the Senate version preserved PABs and negotiators were able to preserve PABs in the final bill.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, opposes any expansion of PABs so any chance of passage of the Public Building Renewal Act as a stand-alone measure in the House is slim.

However, the Public Building Renewal Act could be attached to infrastructure legislation that could move through the Senate and House later this year.

The letter was sent to Brady, his committee’s ranking Democrat, Rep. Richard Neal of Massachusetts, Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Sen. Ron Wyden of Oregon, the committee’s ranking Democrat.

The Senate bill (S. 326) is bipartisan with seven Republicans and three Democratic cosponsors led by Sen. Dean Heller, R-Nev.

The House bill (H.R. 960) sponsored by Rep. Mike Kelly, R-Pa., has 28 cosponsors, including 17 Republicans and 11 Democrats.

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