FROM: Mark D. O’Connell, Executive
Director
Wisconsin Counties Association
DATE: March 4, 2010
SUBJECT: Support for Senate Bill 399
In the midst of one of the country’s deepest
economic recessions, local governments and private businesses across the country
are looking for financial resources and solutions to keep their communities
growing. The Wisconsin Counties Association supports Senate Bill 399 and
believes it will provide communities with another economic development tool by
expanding access to capital in both the public and private sectors.
Under current law, Wisconsin local governments may
issue federally tax-exempt municipal bonds for public purposes and conduit bonds
for private projects that serve a public benefit. Additionally, unique
financing opportunities have recently been made available for the use of these
development tools through $3.8 billion in Midwest Disaster Assistance Bonds and
$238 million in Recovery Zone Facility Bonds. However, these financing
opportunities have a time limit that requires local governments to act quickly
in order to promote needed development in their communities.
Only governmental entities may issue tax-exempt
bonds. The process is complex, expensive, time-consuming, and requires a host of
professional service providers. The process becomes even more complex when
a governmental entity acts as a conduit issuer on behalf of a private
borrower. For many local governments that are under increasing pressure to
provide additional services with fewer resources, devoting staff and financial
resources to complex bond issuances and the required post-issuance compliance is
not feasible.
Senate Bill 399 authorizes the creation of a joint
powers authority, or commission, which can act at the request of Wisconsin local
governments to issue conduit bonds for private entities engaged in public
benefit projects; issue municipal revenue bonds for public purposes; and, create
market leverage through cooperative institutional
relationships.
The creation of such a commission will provide local
governments with a turn-key resource to evaluate public and private construction
and infrastructure projects at the conceptual stage and shepherd eligible
projects through the financing process - or refer them to WHEDA, WHEFA or the
state Department of Commerce - saving individual local governments the financial
burden of directly employing the necessary experts.
The commission would be patterned after the
National Association of Counties joint purchasing program, which allows counties
and other local governments to buy many goods and services at the lowest
possible cost without having to bid or negotiate prices with vendors
individually.
By streamlining issuance processes, creating
efficiencies for local governmental issuers and reducing local governments’
liability in conduit issuances, the commission will save local entities and
eligible private borrowers millions of dollars and other valuable staff
resources by providing a one-stop resource that coordinates complicated issuance
and post-issuance activities. The commission would also:
- Offer local governments in Wisconsin another tool
to promote economic development in their communities by growing existing
businesses and offering new businesses access to the lower-cost
municipal bond market.
- Create additional opportunities for private
businesses to access low-cost, tax-exempt capital and increase the number of
viable public benefit and public infrastructure projects.
- Create investment economies of scale for small
public or private projects that may not otherwise have access to low-cost,
tax-exempt bond markets due to their small size.
- Create construction jobs and permanent jobs
associated with private expansions and relocations financed through municipal
and conduit bonds.
- Generate savings for Wisconsin taxpayers by
reducing the cost to local governments for necessary investments in public
infrastructure projects.
- Enhance opportunities for Wisconsin’s financial
services industry by financing projects in Wisconsin and in other
states.
The Wisconsin Counties Association, the League of
Wisconsin Municipalities, the National Association of Counties, the National
League of Cities, the Wisconsin Realtors Association, the Wisconsin
Transportation Builders Association, the Wisconsin Business Council, small
businesses and local governments support this legislation and believe it
represents an important economic development tool for local governments around
Wisconsin.
The Wisconsin Counties Association respectfully
requests the Legislature's support for SB 399, including Senate Amendment 2,
which conforms bonds issued by the commission to the same tax-exempt status as
similar bonds issued by WHEDA, WHEFA, and other local governmental entities by
removing its state tax-exempt status and gives WHEDA and WHEFA the first
“right-of-refusal” for every project brought to the commission that might fall
within their respective purviews.
Please contact Liz Stephens with questions at (608)
663-7123.
_________________________
Liz Stephens
Wisconsin Counties Association
22 East Mifflin Street, Suite 900
PH: (608) 663-7188
FX: (608) 663-7189