Elimination of the bonds could have added millions of dollars to the financing costs of public projects, according to LaGarce.

When the tax reform bill was approved by Congress, local city officials heaved a sigh of relief that the legislation did not eliminate the availability of tax-exempt municipal bonds, which are referred to as private activity bonds (PAB) in Washington, D.C.

“We have been watching this closely,” said Hannibal City Manager Jeff LaGarce.

Why are those bonds so important?

“Since tax-exempt bonds have lower interest rates, they are cheaper to repay, and thus cheaper for taxpayers,” said LaGarce. “Eliminating those bonds would hit the pocketbook of Americans in every city, county and school district in the nation.”

Elimination of the bonds could have added millions of dollars to the financing costs of public projects, according to LaGarce.

“In many of America’s poor communities, it could result in the new school they need not being built, because they can no longer afford to do so,” he said. “This applies to roads, bridges, schools, hospitals, ambulance and utility districts, park districts. Basically local infrastructure improvements would be depressed across the entire spectrum in the U.S., and the financial impact - higher costs - would all be local, meaning to the taxpayers in each individual community within the U.S.”

Had the bonds been axed the impact would have been felt in America’s Hometown.

“Elimination of tax-exempt municipal bonds would have created a large impact in our community,” said LaGarce. “The city will renovate the Hannibal riverfront in 2018, and the Board of Public Works will upgrade Hannibal’s water treatment system. Both projects will employ bond financing. If tax-exempt municipal bonds had been eliminated by Congress, these projects would become noticeably more expensive to Hannibal citizens. In the case of the riverfront, they city may have been faced with scaling-back the project. In the case of the water treatment system, the monthly bill of each ratepayer would be heavily impacted.”

“We were potentially going to be impacted by the loss of tax exempt status. But now there will be no impact since it will apparently stay the same,” said Bob Stevenson, general manager of the Board of Public Works, who reportedly reached out to Congressman Sam Graves regarding the tax-exempt PAB provision of the tax bill.

Graves, chairman of the House Sub-Committee on Highways and Transit, sent a letter to House and Senate leadership emphasizing the importance of tax-exempt PABs. He requested that they be included in the final tax reform package.

“Private activity bonds are important financing tools in a wide range of projects from hospitals and schools to airports and local water facilities. There are currently well over $10 billion in PABs issued for a variety of projects across the country. The demand for them is there,” Graves stated in his letter, which was co-signed by 38 other U.S. Representatives.

In a media release, Graves indicated he was “glad that they (tax-exempt municipal bonds) were included in the final tax reform package.”

Reach reporter Danny Henley at danny.henley@courierpost.com