[Congressional Record Volume 145, Number 29 (Wednesday, February 24, 1999)]
[Senate]
[Pages S1938-S1939]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BREAUX (for himself and Mr. Hatch):
  S. 459. A bill to amend the Internal Revenue Code of 1986 to increase 
the State ceiling on private activity bonds; to the Committee on 
Finance.


         THE STATE AND LOCAL INVESTMENT OPPORTUNITY ACT OF 1999

 Mr. BREAUX. Mr. President, I am pleased to introduce today 
with my colleague, Senator Hatch, an important bill that will assist 
states and localities in working with private industry to foster 
economic development and provide home ownership opportunities to low-
income Americans. Specifically, our bill will increase the private 
activity tax-exempt bond cap to $75 per capita or $250 million, if 
greater, and index the cap to inflation.
  Congress created the private activity tax-exempt bond decades ago to 
apply to mortgage revenue bonds and other bonds for multifamily 
housing, redevelopment of blighted areas, student loans, manufacturing, 
and hazardous waste disposal facilities. However, Congress 
unintentionally restricted the growth of this program by imposing a cap 
on the bond volume of $50 per capita or $150 million that was not 
indexed to inflation. The resulting erosion in purchasing power has 
crippled the ability of states to meet the growing demand for these 
bonds.
  Congress took an important step to correct this problem in the Fiscal 
Year 1999 Omnibus Appropriations bill by approving a partial, phased-in 
increase in each state's bond cap. The bond cap will be increased by $5 
per capita beginning in 2003. The volume limit will reach $70 per 
capita, or $210 million if greater, in 2006. Unfortunately, inflation 
will have reduced the purchasing power of these bonds by nearly thirty-
three percent by the time the volume cap increase is fully phased in.
  Tax-exempt bonds are issued by state and local governments to provide 
below market interest rates to fund authorized programs and projects. 
Revenue bond investors accept lower interest from these bonds because 
the interest income is tax-exempt. For example, mortgage revenue bonds 
are issued to help lower income working families buy their first homes. 
These low interest loans significantly lower the cost of owning a home.
  In my own state, the Louisiana Housing Finance Agency has issued over 
$1.1 billion in mortgage revenue bonds for almost 16,000 affordable 
home mortgages since the program began. In 1996 alone, the agency 
issued over $112 million in mortgage revenue bonds for nearly 1,200 
home loans. That's 1,200 Louisiana families who now know the pride of 
owning their own home--Louisiana families that earned, on average, less 
than $28,000 last year. The Louisiana Housing Finance Agency estimates 
that it could have put another $50 million in bond authority to good 
use. Nationwide, states could have used an additional $7 billion in 
bond cap for mortgage revenue bonds, student loan bonds, industrial 
revenue bonds, pollution control bonds and other worthy investments.
  Student loan bonds are also issued to raise a pool of money at tax-
exempt interest rates resulting in lower interest rate college loans. 
In my state, the Louisiana Public Facilities Authority has issued $745 
million in student loan bonds since 1984. These bonds have funded over 
80,000 college loans for deserving Louisiana students--students who 
otherwise might not have been able to afford to attend college.
  In Louisiana, the roughly $40 million of remaining 1997 volume cap 
will not come close to fulfilling the $330 million of demand for these 
bonds. The total 1997 volume cap for Louisiana was $217,500,000. After 
funding minimal housing and student loan needs, little volume cap 
remains available for industrial development bonds for manufacturing 
purposes. Many of the industrial and manufacturing facilities create 
substantial employment opportunities. Unfortunately, a deficiency in 
volume cap limits these opportunities.
  Our bill will correct this woeful situation and improve the ability 
of states and localities to provide home ownership opportunities to 
low-income families throughout the United States, to help fund student 
loans for college students and to help finance industrial and 
manufacturing facilities. These facilities will, in turn, increase 
employment and the tax base of local governments. I urge my colleagues 
to join me and Senator Hatch in this effort.

[[Page S1939]]

  Mr. HATCH. Mr. President, I am pleased to introduce with my good 
friend Senator Breaux the ``State and Local Investment Opportunity Act 
of 1999.'' This legislation would first, raise the annual limit on 
States' authority to issue their own tax-exempt ``Private Activity'' 
Bonds to the greater of $75 times population or $225 million and, 
second, index the limit to inflation.
  Tax-exempt Private Activity Bonds finance much needed municipal 
services, student loans, affordable housing, and economic development.
  In my home State, the Utah Housing Finance Agency has financed first-
time homes for nearly 41,000 working families with Mortgage Revenue 
Bonds. In addition, multifamily housing bonds have financed almost 
3,300 affordable apartments. Both of these bonds are subject to the 
cap.
  However, many more Utah families still need the housing help that 
these bonds provide. According to the National Council of State Housing 
Agencies, demand in Utah for these bonds and other Private Activity 
Bonds more than doubled supply. Nationwide, demand for bond authority 
exceeded supply by almost 50 percent in 1997.
  The current bond limit is the greater of $50 times population or $150 
million. Cap growth is restricted by State population growth, which has 
been less than 5 percent nationwide over the past decade. During the 
same period, inflation has sliced bond purchasing power nearly in half, 
as measured by the Consumer Price Index.
  Last year's Omnibus Appropriations Act included a partial, phased-in 
bond restoration among its limited tax provisions. However, the 
increase will not become effective until 2007. By then, nearly one-
third of the purchasing power of Private Activity Bonds will have been 
lost even with the phase-in.
  Bond restoration has strong bipartisan support. A majority of the 
Senate, and nearly three quarters of the House, cosponsored full 
restoration and indexation in the 105th Congress. Furthermore, three-
quarters of the House, including nearly three-quarters of the Ways and 
Means Committee, cosponsored identical House legislation.
  The Nation's governors and mayors, along with other State and local 
groups, and the public finance community strongly support full bond cap 
restoration.
  I encourage my colleagues to cosponsor the ``State and Local 
Investment Opportunity Act of 1999,'' so that their States can continue 
to make vital investments in their citizens and communities.

                                 S. 460

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DESIGNATION OF ROBERT K. RODIBAUGH UNITED STATES 
                   BANKRUPTCY COURTHOUSE.

       The United States courthouse located at 401 South Michigan 
     Street in South Bend, Indiana, shall be known and designated 
     as the ``Robert K. Rodibaugh United States Bankruptcy 
     Courthouse''.

     SEC. 2. REFERENCES.

       Any reference in a law, map, regulation, document, paper, 
     or other record of the United States to the United States 
     courthouse referred to in section 1 shall be deemed to be a 
     reference to the ``Robert K. Rodibaugh United States 
     Bankruptcy Courthouse''.
                                 ______