The American Association of Port Authorities (AAPA) has criticized aspects of new legislation being proposed by the US authorities.
In a statement, the AAPA said that infrastructure funding would be made more difficult by provisions in two separate ‘Tax Cuts and Jobs Act’ bills which have been approved by the House of Representatives and the Senate.
Both bills would repeal the tax exemption for advanced refunding of bonds, which the AAPA claims would affect the ability of issuers to refinance those bonds at lower rates.
Additionally, the bill passed by the House of Representatives would eliminate tax-exempt status for Private Activity Bonds (PABs),
According to the AAPA, approximately 27% of the US$451bn in long-term, tax-exempt U.S. municipal bonds were advance refunded in 2016 to take advantage of lower rates.
According to AAPA, its US member ports and their private sector partners are in a building boom, planning to invest $155bn into capital projects between 2016 and 2021. Many of these improvements will be financed through municipal and private activity bonds.
AAPA said that one of the many examples of the predicted impacts of the changes, the ports of Los Angeles and Long Beach – which comprise the largest port complex in the United States – have each estimated the loss of tax exemptions on PABs and advance refundings would increase the cost of financing their port infrastructure.
