The future of PABs had been far from guaranteed after they had been dropped from the House version of the bill. However, when Congress merged the House and Senate proposals, the final version retained PABs, meaning that the financing tool will still be available for new infrastructure projects.
“It’s a great relief they are still there,” said Roddy Devlin, P3 attorney at Squire Patton Boggs. “It has been a rollercoaster over the last six weeks and people are now ruing that there was a proposal to get rid of PABs in the first place.”
“It’s a tribute to the influence of the infrastructure community that among scores of 11th hour changes to the tax bill, the Conference Committee eliminated several onerous provisions initially in the bill that would have made funding and financing infrastructure projects more difficult – whether or not such projects were to be delivered traditionally or utilizing a P3 model,” added Mike Schneider, senior vice president at HDR.
“In particular, the retention of PABs as a financing tool was a positive outcome for infrastructure project delivery.”
Experts suggested that the inclusion of PABs, and the tax bill as a whole, was significant in the context of the Trump administration’s wider infrastructure plans.
“Private activity bonds are an important aspect of President Trump's infrastructure plan,” said Michael Likosky, infrastructure head at 32 Advisors. “Notably, this plan – as it stands – incorporates common sense bipartisan values.
“We should see much more infrastructure in the New Year with the tax bill,” he concluded.
Schneider, however, was more cautious: “Of course, we’re still waiting to see the administration move forward with its proposed infrastructure initiative, which at this point appears to rely heavily on state and local governments to provide the lion’s share of underlying funding, with federal funding actually decreasing from current levels.”
Devlin also suggested it was time to look towards the infrastructure bill, saying that getting the tax bill through was an important first step, even if the number of provisions for infrastructure in the tax bill was disappointing.
Industry celebrates fed tax bill
The P3 industry has welcomed the new federal tax bill, which saw Congress keep private activity bonds (PABs) after some strong lobbying on the issue.
