Sustainable Development – Goodwin Procter
In recent fiscal cliff discussions, President Obama has floated the idea of a retroactive 28% cap on municipal bonds. A recent research report from Citi estimated that up to $150 billion bonds might be subject to mandatory calls at par if the proposed 28% cap were enacted on a retroactive basis. Although the cap did not make it’s way into the final fiscal cliff agreement, market experts believe the threat persists as lawmakers and the administration squabble over whether to: raise the debt ceiling; allow sequestration to take place; and adopt another continuing resolution to keep the federal government funded. There is a looming March 27, 2013 date for these decisions. See the full article on this topic in the Bond Buyer here.
It is no consolation prize for the City of Sacramento, but on the eve of the City losing the Sacramento Kings to the City of Seattle, the U.S. Department of Transportation announced that it will provide $135 million in federal matching money for the Sacramento Regional Transit District’s light rail system. According to Transportation Secretary Ray LaHood: “The $4.3 mile Blue Line extension will link downtown Sacramento with the growing South County corridor offering commuters an alternative to driving and connecting the faculty, staff, and students at Cosumnes River College with the shops, restaurants and other businesses in the heart of the city.”
Yesterday, the Supreme Court of the United States, in Los Angeles County Flood Control District v. Natural Resources Defense Council, Inc., ruled that the flow of water from an improved portion of a navigable waterway into an unimproved portion of the same waterway does not qualify as a “discharge of a pollutant” under the Clean Water Act. More information on the SCOTUS decision can be found here.
The Federal Transit Administration late last month released new evaluation criteria for transit projects vying for funds from the New Starts and Small Starts programs. These two programs dispensed a total of $2 billion last year, providing roughly half the funding for transit expansions in the U.S. The new criteria will move away from evaluating projects on how much travel time they save and focus more on economic development and number of passengers served.
The American Tax Relief Act of 2012 included a number of real estate/sustainability provisions. They are as follows:
- New markets tax credit. The Act extends through 2013 the new markets tax credit, permitting a maximum annual amount of qualified equity investments for 2012 and 2013 of $3.5 billion each year.
- Extension of tax incentives for the New York Liberty Zone. The Act extends through December 31, 2013, the time for issuing New York Liberty Zone bonds.
- Low-income housing tax credit program. The Act extends the minimum low income housing credit rate of 9% by changing the deadline to projects that have received an allocation before January 1, 2014.
- Depreciation of certain real property improvements. The Act extends retroactively from January 1, 2012, through December 31, 2013, the 15-year cost recovery period for certain leasehold improvements, restaurant buildings and improvements, and retail store improvements that are placed in service before January 1, 2014.
- Empowerment zones. The Act extends for two years, through December 31, 2013, the designation of certain economically depressed census tracts as “empowerment zones.” Businesses and individual residents within “empowerment zones” are eligible for special tax incentives.
- Extension and increase in authorization for Qualified Zone Academy Bonds. The Act extends the Qualified Zone Academy Bonds (QZABs) program, for calendar years 2012 and 2013, providing $400 million in bond volume per year. QZABs are a form of tax credit bond that offers the holder a federal tax credit instead of interest.
- Treatment of RIC investments as “qualified investment entities” under FIRPTA. The Act extends retroactively from January 1, 2012, through December 31, 2013, the inclusion of a RIC within the definition of a “qualified investment entity” under the Foreign Investment in Real Property Act (FIRPTA) rules.
Later this week, we will cover the Energy Provisions of the Act.
The San Diego County Water Authority released a proposed Water Purchase Agreement Thursday with Poseidon Resources, the private developer of the planned seawater desalination plant in Carlsbad. The release opens a public review period that includes two special evening public meetings to share information on the agreement and to receive public comment. To read more about the transaction, see the Carlsbad Patch article here.
Goodwin Procter launched the MuniBK blog to provide content, analysis and commentary on the intersecting issues of public finance, restructurings and Chapter 9 of the United States Bankruptcy Code. The goal is to both aggregate information and developments from around the country, and to share Goodwin’s analysis of legal and business developments as they occur.
Major cuts in federal payments to issuers of Build America Bonds and other direct-pay bonds will have to be made if Congress is forced to make $1.2 trillion of across-the-board cuts to the fiscal 2013 budget under the congressionally-mandated sequestration process, according to a report the Office of Management and Budget sent the lawmakers on Friday. Read here for more.
Yesterday, Congress voted to extend the EB-5 legislation for another 3 years. For an investment of $500,000, or $1,000,000 in certain areas, in a U.S. enterprise that creates at least 10 jobs, an investor is eligible for a U.S. visa. The federal program, which is capped at 10,000 visas annually, was set to expire at the end of September. Senate Bill 3245 extends the legislation to September 30, 2015. The cap on visas was not increased, but at least the program continues on. It is an important tool for economic development and job creation.
SB 317 (sponsored by Senator Rubio) proposes significant revisions to CEQA. The germane portions of the bill, which are tacked onto a bill that formerly dealt with fisheries management on the Kings River, creates an entirely new statutory scheme – The Sustainable Environmental Protection Act. The new act aims to:
1. Integrate environmental and planning laws
2. Eliminate CEQA duplication
3. Focus CEQA litigation on compliance with environmental and planning laws
4. Enhance public disclosure and accountability
Among the benefits of the Act is that SB 317 would avoid duplicative litigation by limiting the ability to challenge the environmental document prepared for a project that complies with an approved plan (such as a General Plan) and incorporates all applicable mitigation measures from the environmental impact report (EIR) prepared for the approved plan. A fact sheet with this fact and other useful facts about SB 317 can be found here.