Rep. Sewell Introduces Legislation to Boost Investment in Local Infrastructure in Alabama
Washington, D.C. - Today, U.S. Rep. Terri Sewell (D-AL) introduced the Local Infrastructure Financing Tools (LIFT) Act, a bill that would expand commonsense bond financing opportunities for local governments and nonprofits. This legislation would provide a number of flexible financing tools that meet the unique needs of communities across the country, including transportation, public health facilities, schools, and other infrastructure and economic development projects.
“As we work to revitalize our crumbling infrastructure in Alabama and across this Nation, it remains critically important to find ways to sustainably invest in our local governments and nonprofits,” said Rep. Terri Sewell. “That is why I am proud to introduce the LIFT Act today to provide our communities with tools to invest in a wide range of infrastructure projects. By restoring and expanding these proven tools, we can lower borrowing costs, bring additional investors to the table, and provide long-term, efficient financing for these critical investments in our districts.”
Specifically, the LIFT Act would:
- Authorize the Use of American Infrastructure Bonds: Based on the success of the Build America Bonds program, the LIFT Act would restore the use of taxable direct pay bonds called ‘American Infrastructure Bonds.’ Under this program, the bond issuer would receive a direct payment from the federal government to cover a percentage of the interest costs associated with the issuance. American Investment Bonds would lower the cost of borrowing for local governments and nonprofits and attracts additional investors who may not invest in tax-exempt municipal bonds.
- Restore Advance Refundings of Municipal Bonds: The LIFT Act would restore the ability of states and localities to refinance existing debt through advance refundings. This critical cost-saving tool would reduce the cost of borrowing for critical infrastructure projects and allow our local governments to take advantage of the low interest rate environment.
- Expand Bank-Qualified Debt for our Small Municipalities and Nonprofits: The LIFT Act would reduce costs for our small municipal and nonprofit issuers through increased limits on bank-qualified debt. Currently, governments and nonprofits issuing less than $10 million in bonds per year can designate their debt as bank-qualified, which allows them to bypass the traditional underwriting process and achieve cost savings by selling debt directly to local banks. The LIFT Act expands this cap to $30 million per year and applies the limit at the borrower level rather than aggregating the bonds of certain conduit issuers.
The LIFT Act is supported by the following organizations: Government Finance Officers Association (GFOA), National Association of Bond Lawyers (NABL), Securities Industry and Financial Markets Association (SIFMA), and the National Association of Counties (NACo).
The Local Infrastructure Financing Tools Act is available here.