SENATE BILL REPORT
SB 6535
BYSenators Lee and Smitherman
Revising provisions for private activity bond allocation ceilings.
Senate Committee on Economic Development & Labor
Senate Hearing Date(s):January 31, 1990; February 1, 1990
Majority Report: Do pass.
Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McDonald, McMullen, Matson, Murray, Saling, Smitherman, West, Williams.
Senate Staff:Patrick Woods (786-7430)
February 10, 1990
AS PASSED SENATE, FEBRUARY 9, 1990
BACKGROUND:
Debt financing for projects which combine public and private resources is subject to special federal tax rules. Among these is a limit or cap on the amount of certain types of municipal bonds that can be issued in each state. In Washington the Bond Cap Allocation Program operates to allocate this cap among the eligible issuers statewide who apply for tax exempt financing.
Currently the eligible bond use category and its respective share of the bond cap include: housing (25 percent); student loans (15 percent); exempt facilities (20 percent); public utility (10 percent); small issues (25 percent); and remainder and redevelopment (5 percent).
Industrial revenue bonds are small issue bonds with a maximum of $10 million per any one project, issued on behalf of private corporations to develop manufacturing facilities. As a result of the federal government's Budget Reconciliation Act of 1989, the sunset of tax exempt industrial development financing was extended through September 30, 1990. Further extensions are uncertain.
SUMMARY:
The bond reserve amounts for 1989 are extended indefinitely as long as federal law permits tax exempt industrial development financing. If federal law does not permit tax exempt industrial development financing, then the small issue reserve is reduced to zero and the reserve from this category is redistributed to housing and exempt facility reserves.
Appropriation: none
Revenue: none
Fiscal Note: requested
Senate Committee - Testified: Mike McCormick, DCD (pro)