An article in Next City looks at how the machinery of government, at all levels, will need to be re-aligned under the new Administration, in order to serve all Americans and promote racial and economic equity. LISC CEO Maurice A. Jones weighs in on how HUD can be reinvigorated and poise itself to address critical housing needs in 2021 and beyond.
The excerpt below was originally published on:
Under-the-Radar Changes for Cities to Look for in the First 100 Days
By Oscar Perry Abello, Next City
The carnage that the Trump Administration leaves behind extends deep into the machinery of government, and not just at the federal level.
Like millions of homeowners have done over the past few years, state and local governments and agencies have also been refinancing their debts, locking in lower interest payments on previously-owed borrowings. Interest rates are at historic lows, so it makes financial sense. But the interest rate on refinanced state or local public debt would be even lower, if not for an obscure change to the federal tax code that was part of the 2017 Tax Cuts and Jobs Act.
In the second half of 2019 alone, state and local governments and agencies refinanced $40 billion in debt. The interest they’re paying now is lower than it was before refinancing, but not as low as it would have been without the 2017 tax code changes, which took away the federal tax exemption on interest earned from municipal bonds issued to refinance existing debt — known as advance refunding bonds. For a government’s advance refunding bonds to attract investors — who are no longer getting tax-free interest — it must pay a little more than it did, prior to 2017.
Shaving a few decimals off an interest rate may not seem like much. But the cash flow it frees up can ultimately help a school district in a small midwestern city avoid layoffs, or prevent further cuts to public transit service, or make repairs to keep the water flowing during a pandemic when washing hands regularly is essential for public health, according to Emily Swenson Brock, at the Government Finance Officers Association.
Brock is confident that in the first 100 days of Democrats in control of the White House and The Hill, the change can be reversed. But of course it’s just one of countless other priorities churning through the minds of her members — chief financial officers from the 79,000 units of state and local government, housing agencies, transportation agencies, school systems, universities, economic development agencies and other “sub-federal government bodies across the country.
On the immediate front, Brock has determined that 70,000 of those bodies are already eligible for some slice of federal aid that has already been authorized under the two COVID-19 relief packages passed so far. While she and many others are fighting for more, it’s a whole other battle just to get out what’s already supposed to be out there.
“It is absolutely crazy right now in terms of cities and water and transit systems and airports…to try to figure out number one, is there money available for them, and two, how to get it,” Brock says. “We’ve been having lots of conversations with transition teams just trying to make sure that they give us just administrative details that we can pass onto communities. That’s got to be one of the first objectives to just make sure implementation works.”
Part of the challenge is turnover. Every transition period faces this challenge, but this transition period has been especially challenging as cabinet secretaries started leaving almost as soon as the election results became clear in November.
But the exodus has long been in motion at lower levels, particularly at the Department of Housing and Urban Development.
“HUD has lost a lot of talented people the last four years,” says Maurice Jones, CEO at the Local Initiatives Support Corporation, the national nonprofit and lender for affordable housing and community development across the country. Jones also spent time as a Deputy Undersecretary at HUD under the Obama Administration.