WEBVTT - Broadcasting Live From Build America Mutual 0:00:02.800 --> 0:00:05.080 This is Coast to Coast. I'm Carol Masser and I'm 0:00:05.120 --> 0:00:07.680 Corey Johnson. We're here every day bringing the latest news 0:00:07.680 --> 0:00:09.719 in the world of business and finance and the most 0:00:09.760 --> 0:00:13.480 interesting stories in global technology from Silicon Valley and beyond, 0:00:13.600 --> 0:00:16.119 powered by our more than twenty seven hundred journalists and 0:00:16.200 --> 0:00:18.880 alice in more than one d twenty countries. You can 0:00:18.880 --> 0:00:21.920 download Coast to Coast on iTunes, soundclud and Bloomberg dot Com. 0:00:22.000 --> 0:00:23.880 You can also listen to our radio show weekdays at 0:00:23.880 --> 0:00:34.720 two o'clock Eastern only from Bloomberg Radio with MUNI. Market 0:00:34.880 --> 0:00:36.680 has been pretty solid here with lots of issues in 0:00:36.760 --> 0:00:39.440 all sorts. But what's going forward? We are broadcasting live 0:00:39.479 --> 0:00:41.640 in the Build America Mutual here in New York City. 0:00:41.760 --> 0:00:43.480 Well what could be joined as CEO of Build American 0:00:43.560 --> 0:00:45.920 Mutual Sean McCarthy as well as the Chairman of Build 0:00:45.920 --> 0:00:49.320 America Bob Cochran joining us right now and uh shan, 0:00:49.400 --> 0:00:51.920 let me start with you. Um, where do we see 0:00:52.240 --> 0:00:55.240 uh investors and muties and how is that changing from 0:00:55.280 --> 0:00:57.920 what we've seen maybe previous years. Well, you know, I 0:00:57.920 --> 0:01:00.720 think the investors are still and been the same for 0:01:00.800 --> 0:01:03.440 quite a while, and that is a retail investor, UM, 0:01:03.480 --> 0:01:08.000 and we see uh, the marriage between what municipal issuers 0:01:08.040 --> 0:01:10.840 are doing. Cities and towns are raising funds to build 0:01:10.840 --> 0:01:15.520 fundamental infrastructure, and those bonds are being bought by retail 0:01:15.640 --> 0:01:20.000 mom and pop people in states New York, New Jersey, California, UM, 0:01:20.120 --> 0:01:23.720 in order to support the construction of bridges, tunnels, roads 0:01:23.760 --> 0:01:26.000 and hospitals. I'm curious about the rate of activity that 0:01:26.040 --> 0:01:28.119 you're seeing, Bob, come on in on the conversation. I mean, 0:01:28.400 --> 0:01:30.080 I am curious. I drive around the roads here in 0:01:30.080 --> 0:01:31.880 the New York metro area. Man, there's a lot of 0:01:31.920 --> 0:01:34.360 infrastructure spending that could be done, and we're starting to 0:01:34.400 --> 0:01:37.840 see it on the on the airports. I am being nice, um, 0:01:37.880 --> 0:01:42.760 but are we seeing more investment in infrastructure, UM, because 0:01:42.760 --> 0:01:45.119 we're not seeing a ton coming out of the federal 0:01:45.160 --> 0:01:48.880 government right. Well, there's a tremendous amount of investment going 0:01:48.920 --> 0:01:52.000 on in infrastructure around the country. It's just not as 0:01:52.080 --> 0:01:55.880 much as we need, uh, the but it's growing. That's 0:01:55.920 --> 0:01:58.160 a year over year Association of Engineers have said we 0:01:58.200 --> 0:02:01.120 need what two trillion, We're two trillion behind or need 0:02:01.200 --> 0:02:04.480 to raise another two trillion, and infrastructure funding over the 0:02:04.480 --> 0:02:07.720 next ten years. We're doing about two hundred and fifty 0:02:07.800 --> 0:02:10.280 billion of that a year, and new money financing in 0:02:10.280 --> 0:02:15.120 the US municipal market, I think most people involved in 0:02:15.120 --> 0:02:17.639 the market would say it's got a lot more capacity 0:02:17.720 --> 0:02:20.720 than that. But the issue is really the ability to 0:02:20.800 --> 0:02:25.000 afford the infrastructure that we need and that how do 0:02:25.040 --> 0:02:28.800 we do that, because it seems to be, um, whether 0:02:28.800 --> 0:02:31.920 it's Republicans Democrats, most most people agree that we need 0:02:32.000 --> 0:02:33.920 to do the spending, and yet when it comes to 0:02:33.960 --> 0:02:36.200 actually putting some kind of formal plan in place, we 0:02:36.320 --> 0:02:39.640 never get the dollars that we really need. Well, you 0:02:39.680 --> 0:02:42.200 make you make a good point, Um, I'll say that 0:02:42.240 --> 0:02:44.280 over a long period of time, state and local governments 0:02:44.320 --> 0:02:48.600 have always, through sales tax and other local taxes, have 0:02:48.720 --> 0:02:51.120 been raising money to build infrastructure for a long time. 0:02:51.360 --> 0:02:53.680 And it's not just new money is the issue. It's 0:02:53.720 --> 0:02:57.680 really also making sure you continue to repair the infrastructure 0:02:57.680 --> 0:03:00.480 that you've got, whether it's bridges or tunnels or roads maintenance. 0:03:00.520 --> 0:03:03.079 It's maintenance as much as anything else. And so I'm 0:03:03.080 --> 0:03:07.160 from New Jersey, the state of Roads, so so you're 0:03:07.160 --> 0:03:10.400 helping to pay keep those roads. So but the real issue, 0:03:10.440 --> 0:03:12.760 if you think about it is what are you going 0:03:12.840 --> 0:03:16.040 to do to finance going forward? Now, the municipal market 0:03:16.480 --> 0:03:21.919 has been able to finance long term infrastructure, whether it's 0:03:21.960 --> 0:03:25.320 really really small transactions or enormous transactions like life in 0:03:26.040 --> 0:03:29.040 the in the Greater New York area. So it's a 0:03:29.080 --> 0:03:31.640 revenue stream that we need to look for, which is 0:03:31.760 --> 0:03:34.720 how do you either raise taxes or get support from 0:03:34.800 --> 0:03:39.240 somewhere else in order to finance these essential infrastructure projects. 0:03:39.760 --> 0:03:41.600 In December of nineteen eighty five, as a building we're 0:03:41.600 --> 0:03:44.840 in here, Better Park City was being completed, there was 0:03:44.880 --> 0:03:47.560 a billion dollars in musical bonds issue. It was the 0:03:47.560 --> 0:03:50.040 biggest month in the history of muni bonds that might 0:03:50.040 --> 0:03:53.520 be surpassed this month. That's correct. That's an amazing time 0:03:53.560 --> 0:03:55.520 for you guys. It was a previous tax bill, right 0:03:55.560 --> 0:03:57.240 and we'll talk to me about the impact of this 0:03:57.280 --> 0:04:00.120 tax bill. And so we see a lot of activity 0:04:00.200 --> 0:04:01.800 out of fear of what the tax will might have 0:04:02.000 --> 0:04:03.520 right where they want to get these deals out now 0:04:03.520 --> 0:04:05.480 because they might not be around to do that in 0:04:05.640 --> 0:04:07.560 in four or five weeks there. Right. Well, there are 0:04:07.600 --> 0:04:11.000 two major elements that are in doubt in the current 0:04:11.040 --> 0:04:16.760 tax bill. One is current refundings of existing financings excuse 0:04:16.760 --> 0:04:21.280 me m advance refundings of existing financings, and the second 0:04:21.400 --> 0:04:27.240 is private activity bonds. Perhaps so, the first advance refundings 0:04:27.279 --> 0:04:32.120 are an important source of efficiency and cost savings for municipalities. 0:04:32.400 --> 0:04:35.200 But if those deals don't get refunded between now and 0:04:35.240 --> 0:04:36.640 the end of the year, and that part of the 0:04:36.640 --> 0:04:41.240 bill remains, they'll get refunded at some future point. Uh 0:04:41.400 --> 0:04:44.760 the uh if we lose private activity bonds, although that's 0:04:44.800 --> 0:04:47.120 not a part of the activity of BAM, it's not 0:04:47.200 --> 0:04:50.400 what we ensure, but nonetheless it's a very important part 0:04:50.400 --> 0:04:52.920 of the market. It's the equivalent of what people call 0:04:53.000 --> 0:04:58.200 P three public private partnerships financed by tax exam bonds, 0:04:58.360 --> 0:05:00.800 and it would be a shame to lose that when 0:05:00.800 --> 0:05:03.600 we're trying to go positively in the direction of more 0:05:03.680 --> 0:05:08.480 infrastructure finance. To lose an efficient element of the market 0:05:08.560 --> 0:05:14.120 would be Unfortunately, why isn't why isn't infrastructure included more 0:05:14.120 --> 0:05:17.160 aggressively in this tax bill? Well, you know, it's it's 0:05:17.200 --> 0:05:20.520 a it's a twofold issue one or or which projects 0:05:20.520 --> 0:05:23.640 are federal issues, in which projects are state and local issues? 0:05:23.680 --> 0:05:24.919 And you're going to speak to a number of other 0:05:25.000 --> 0:05:28.000 people today that focus on the state and local part, 0:05:28.080 --> 0:05:31.520 which is where the vast majority of infrastructure, as you 0:05:31.560 --> 0:05:35.360 know it other than gets done. So if you think 0:05:35.400 --> 0:05:37.560 about it at them, what we do is we ensure 0:05:37.680 --> 0:05:42.560 municipal bonds to lower the cost of borrowing for these municipalities. 0:05:42.960 --> 0:05:47.000 But each local government decides which projects they want to do, 0:05:47.160 --> 0:05:49.760 they put them on the ballot. The voters usually approve 0:05:50.360 --> 0:05:52.640 the revenue stream, whether it's an increase in taxes or 0:05:52.680 --> 0:05:57.000 another revenue stream in order to pay that infrastructure project 0:05:57.040 --> 0:05:59.239 off of our long period of time, that's a long 0:05:59.360 --> 0:06:04.000 history of doing that and that works very well. The 0:06:04.080 --> 0:06:07.159 issue right now is that major infrastructure has to be 0:06:07.160 --> 0:06:09.920 done at the federal level. And you know when when 0:06:09.920 --> 0:06:13.520 the current administration got in, they identified a hundred big 0:06:13.560 --> 0:06:16.159 projects that needed to be done. And let's hope they 0:06:16.240 --> 0:06:19.760 get those projects a revenue stream so that they can 0:06:19.800 --> 0:06:23.679 come to market and get financed. But that's the big issue. 0:06:23.720 --> 0:06:27.520 It's not market access, it's a revenue stream in order 0:06:27.520 --> 0:06:30.240 to pay for them. You know. The unfortunate thing is 0:06:30.240 --> 0:06:33.039 that no one has figured out how to finance infrastructure 0:06:33.080 --> 0:06:35.680 for free. Yeah, well we are, we are going to 0:06:35.720 --> 0:06:37.880 have to pay for it, And the issue is whether 0:06:37.960 --> 0:06:42.039 you impose taxes today to pay for it now or 0:06:42.080 --> 0:06:47.920 whether you well you can you can essentially build infrastructure 0:06:48.440 --> 0:06:51.359 and pay for it off, pay for it over the 0:06:51.360 --> 0:06:54.200 twenty or thirty year useful life of that infrastructure where 0:06:54.240 --> 0:06:58.359 it actually contributes to positively to the economy and to growth, 0:06:58.760 --> 0:07:02.960 and pay for it with user ease or identified revenue. Strange, 0:07:03.040 --> 0:07:05.840 but it does have to be paid back. Finally, ask 0:07:06.120 --> 0:07:09.120 is there more of a piecemeal approach to the way 0:07:09.200 --> 0:07:12.880 because of the way that the borrowing is happening, that 0:07:13.480 --> 0:07:16.040 master planning isn't happening in a big way. Communities aren't 0:07:16.040 --> 0:07:19.000 being planned in a very large way, but small problems 0:07:19.000 --> 0:07:21.520 are being dealt with instead of big ones. Well, you know, 0:07:22.040 --> 0:07:24.440 everything starts at a small level. So if you think 0:07:24.440 --> 0:07:27.680 about certain projects that are done within a state, at 0:07:27.720 --> 0:07:30.240 the state level, they focus on some of the larger 0:07:30.440 --> 0:07:33.400 projects and then they work their way down all the 0:07:33.400 --> 0:07:37.680 way to schools. So what the issue is is making 0:07:37.720 --> 0:07:40.520 sure that the people in the community are focused on 0:07:40.600 --> 0:07:44.920 which projects they feel they need to finance, which ones 0:07:44.960 --> 0:07:47.360 do they need because essentially, so we don't have to 0:07:47.360 --> 0:07:49.200 go back to the days of Robert Moses and and 0:07:49.480 --> 0:07:51.440 bulldozing whole cities because of one person thought it was 0:07:51.440 --> 0:07:54.160 a good idea. I don't think so. I don't think so. 0:07:54.280 --> 0:07:58.080 I think that you know, what we do is serve 0:07:58.440 --> 0:08:01.920 building that really the sent projects that you live with 0:08:02.000 --> 0:08:04.120 day to day. When you get into the subway that 0:08:04.200 --> 0:08:07.760 was funded with municipal bonds, when you go to the 0:08:07.840 --> 0:08:11.240 US Tennis Center that was funded with municipal bonds, the 0:08:11.280 --> 0:08:14.160 hospitals should go to their funded with municipal bonds, and 0:08:14.200 --> 0:08:19.240 these are all essential municipal services that are fundamental to 0:08:19.280 --> 0:08:21.720 the way we live. And so at BAND what we 0:08:21.800 --> 0:08:24.640 do is two things. One, we're really focused on helping 0:08:24.640 --> 0:08:28.480 the small and medium sized issuers, cities and towns come 0:08:28.520 --> 0:08:31.200 to market and lower their cost of funding. And second, 0:08:31.720 --> 0:08:34.240 we provide financial transparency. So if you come to our 0:08:34.280 --> 0:08:37.640 website at build America dot com, we write a summary 0:08:37.679 --> 0:08:41.000 for every credit that we do, available for free. So 0:08:41.040 --> 0:08:43.160 if you are on a municipal bond investor and you say, boy, 0:08:43.440 --> 0:08:45.760 I want to look at a bond and figure out 0:08:45.960 --> 0:08:48.240 really what's going on in that city or town or 0:08:48.280 --> 0:08:51.800 that school district, we make that available for you. Interesting 0:08:52.000 --> 0:08:54.480 lots of transparency there to see you know exactly what 0:08:54.480 --> 0:08:58.439 you're investing into precisely. That's I love interesting instructure. I 0:08:58.480 --> 0:09:00.600 wish we had more time. We've got to but hopefully 0:09:00.640 --> 0:09:03.120 we can continue this conversation another time. Thank you very 0:09:03.200 --> 0:09:05.640 much for coming here. Thank you Sean McCarthy, chief executive 0:09:05.640 --> 0:09:08.960 officer at Bild America Mutual BAM, and also Bob cochrane, 0:09:09.040 --> 0:09:11.400 chairman of BAM, and we are here at BAM headquarters 0:09:11.440 --> 0:09:18.960 in New York City. We do want to talk about 0:09:19.000 --> 0:09:21.480 the city's Keep in mind that the municipal bond market 0:09:21.559 --> 0:09:24.080 preparing for a potential onslaught of bond deals. Corey talked 0:09:24.080 --> 0:09:26.320 about this earlier before the end of the year as 0:09:26.320 --> 0:09:29.280 a U S lawmakers consider pulling the tax break from 0:09:29.320 --> 0:09:31.560 tens of billions of dollars of debt issued each year. 0:09:31.720 --> 0:09:34.200 Let's get some thoughts on that and why the muni 0:09:34.240 --> 0:09:37.240 bottom market is crucial to US infrastructure investment. Kind of 0:09:37.240 --> 0:09:41.080 continue that conversation we just started. Clarence Anthony is CEO 0:09:41.200 --> 0:09:43.679 at the advocacy and lobby group National League of Cities, 0:09:43.720 --> 0:09:47.000 based in Washington, Right, Yes, that's correct, and the group 0:09:47.000 --> 0:09:49.440 represents thousands of cities, towns, and villages. But he joins 0:09:49.480 --> 0:09:51.640 us at BAM headquarters in New York City. Welcome blo 0:09:51.760 --> 0:09:54.200 A Radio. Thank you very much for having me year today. 0:09:54.240 --> 0:09:57.040 Tell us a little bit about who you guys represent 0:09:57.160 --> 0:09:59.680 and what you do. Yeah, we have a National League 0:09:59.679 --> 0:10:03.959 of City. We are the voice for cities all over America. UM, Cities, 0:10:04.000 --> 0:10:09.280 towns and villages, nineteen thousand of them, all kinds from 0:10:09.320 --> 0:10:13.520 New York City down to sop Choppi, Florida where I'm 0:10:13.559 --> 0:10:17.560 I didn't grow up there, but I'm from Florida and Ulida. Yeah, 0:10:17.559 --> 0:10:22.480 there's a city called Choppy Florida. UM. And and we 0:10:22.559 --> 0:10:25.920 make sure that the voice with the administration as well 0:10:25.920 --> 0:10:28.120 as with Congress, we make sure they hear the voice 0:10:28.160 --> 0:10:31.640 of city leaders. UM. And it's a big job. Right now. 0:10:32.360 --> 0:10:35.040 What's going in Washington? Yeah, let's talk Washington right now. 0:10:35.040 --> 0:10:37.920 And what does Washington want to hear from small communities 0:10:37.920 --> 0:10:40.920 and cities? Uh? You know, this administration has been unique 0:10:40.920 --> 0:10:42.920 in many forms, and I wonder what the reaction is 0:10:42.920 --> 0:10:45.280 to what small towns and and and big cities need. 0:10:45.760 --> 0:10:48.400 I think that what we have been focused on, it's 0:10:48.480 --> 0:10:52.680 trying to get the attention on the infrastructure plan for cities, 0:10:53.240 --> 0:10:57.240 um as Sean and Bob indicated. Um, you know where 0:10:57.280 --> 0:11:00.400 the rubber meets the road is in local governments where 0:11:00.400 --> 0:11:05.040 we control the road systems, the bridges, half a million bridges, 0:11:05.600 --> 0:11:08.360 you know, six airports. I mean, you can go on 0:11:08.400 --> 0:11:11.400 and on and on. And what we'd like to see 0:11:11.640 --> 0:11:15.920 is for Congress as well as the administration to focus 0:11:16.040 --> 0:11:19.839 on an infrastructure plan and allow us UM will give 0:11:19.920 --> 0:11:23.760 us a partner to deal with the cramble crumbling infrastructure 0:11:23.800 --> 0:11:25.839 in America. Clarence, I want to ask you something that 0:11:25.880 --> 0:11:29.040 I asked Um, Sean and Bob, and that is again, 0:11:29.440 --> 0:11:32.959 most people will say infrastructure spending, it's a good thing. 0:11:33.080 --> 0:11:34.760 It's a good thing for the country. It's probably a 0:11:34.760 --> 0:11:37.600 good thing for our economy. Uh. And yet when it 0:11:37.640 --> 0:11:39.320 comes down to it, we can't seem to get a 0:11:39.360 --> 0:11:44.520 massive project, certainly with some federal direction, federal support underway. 0:11:44.800 --> 0:11:47.280 You the group is in Washington. What are you hearing 0:11:47.360 --> 0:11:49.480 right now? Well, so we thought this was going to 0:11:49.559 --> 0:11:51.480 be an easy thing out of out of the gate 0:11:51.800 --> 0:11:53.920 when President Trump came in with his team, and yet 0:11:54.040 --> 0:11:56.600 here we are. There's no question we thought that we 0:11:56.640 --> 0:12:00.160 would have a partner in in trying to get infrastructure 0:12:00.160 --> 0:12:04.080 funded in America. UM. You know, UM, it's already been said. 0:12:04.240 --> 0:12:06.840 You know, we have a D plus in America infrastructure. 0:12:07.240 --> 0:12:10.839 I think that if if we really want to see 0:12:10.880 --> 0:12:15.480 our economy grow, we want to see communities grow and jobs, 0:12:16.000 --> 0:12:21.320 it's about the infrastructure, UH that creates those opportunities. We've 0:12:21.360 --> 0:12:25.240 not been able to at this point get that focus 0:12:25.280 --> 0:12:29.840 on infrastructure. Well, we're faxing fighting now with tax reform. 0:12:30.200 --> 0:12:34.520 Bill is trying to save the tax exemption on immuni bonds. 0:12:34.600 --> 0:12:38.680 We're trying to save the private activity bonds, or the 0:12:38.720 --> 0:12:41.000 new markets tax credits. You can go on and on 0:12:41.360 --> 0:12:45.640 those things that help local leaders invest and reinvest in 0:12:45.679 --> 0:12:49.320 their communities. We just want a tool box of things, 0:12:49.760 --> 0:12:53.760 money and funds to be able to UH deal with 0:12:53.800 --> 0:12:57.760 this deficit that we have in UM infrastructure. So we're 0:12:57.880 --> 0:13:00.760 we're a willing partner. We don't want to focused on 0:13:00.800 --> 0:13:04.040 all those other things that are happening in Washington. We're 0:13:04.080 --> 0:13:10.200 focused on what is important to cities. Well, are the 0:13:10.320 --> 0:13:12.440 needs of cities when it comes to lending right now 0:13:12.760 --> 0:13:17.839 substantially different than UH smaller municipalities you mentioned villages and 0:13:17.880 --> 0:13:20.360 sub choppy and the like. Are the needs of big 0:13:20.400 --> 0:13:23.240 cities very different or they're just bigger. They're just bigger. 0:13:23.400 --> 0:13:25.839 I meant to you, you need a tool box that 0:13:25.920 --> 0:13:31.040 would include muni bonds, private activity bonds, no matter the 0:13:31.160 --> 0:13:33.959 size of your city, because I'm because so one of 0:13:34.000 --> 0:13:35.840 the things I travel around the few cities I travel around, 0:13:35.840 --> 0:13:36.920 and they tend to be the same cities. But I 0:13:36.920 --> 0:13:38.360 spent a lot of time in San Francisco, has spent 0:13:38.360 --> 0:13:39.400 a lot of time in New York, has spent a 0:13:39.400 --> 0:13:41.000 lot of time in Los Angeles. Just got it back 0:13:41.000 --> 0:13:43.720 from Chicago last week, and I see a problem of 0:13:43.720 --> 0:13:46.240 homelessness that I haven't seen in my lifetime, including you know, 0:13:46.280 --> 0:13:48.760 in this city in the eighties. Uh. And it seems 0:13:48.760 --> 0:13:51.360 to be universal across all those cities, and I don't 0:13:51.360 --> 0:13:53.360 see it. You know, I was in Grand Rapids last week. 0:13:53.400 --> 0:13:55.000 I didn't see it. I've I've been an other smaller 0:13:55.040 --> 0:13:56.960 places I haven't seen it. And and it seems like 0:13:56.960 --> 0:13:59.280 that's a unique problem. Yeah, it is one of the 0:13:59.400 --> 0:14:02.720 issues that we're dealing with, and and it's very complex. 0:14:02.760 --> 0:14:06.880 I mean, maybe because you're veteran. Veterans homelessness is something 0:14:06.960 --> 0:14:09.760 that is a priority for the national Legal Cities and 0:14:09.800 --> 0:14:14.400 we've gotten mayors all over America competing to make sure 0:14:14.440 --> 0:14:18.360 that they get rid of veterans homelessness in their communities. 0:14:18.679 --> 0:14:21.960 But we also have the opioid problem that is causing 0:14:22.320 --> 0:14:27.160 many of the homeless issues that we're seeing, especially um, 0:14:27.360 --> 0:14:30.760 you know Corey in the rural communities of America, and 0:14:30.760 --> 0:14:33.800 and now that is becoming a major issue in the 0:14:33.920 --> 0:14:37.800 urban communities as well. So um, you also look at 0:14:37.880 --> 0:14:40.640 just the affordability for the millennials and the and the 0:14:40.720 --> 0:14:43.880 young folks that are coming out of college UH to 0:14:43.960 --> 0:14:47.320 be able to afford homes. So it's a very complex 0:14:47.360 --> 0:14:50.640 issue it but it exists in every city. You may 0:14:50.680 --> 0:14:54.600 not have seen it, but that issue because of the 0:14:55.440 --> 0:14:59.120 but there's opioids, whether it's UH inability to afford homes, 0:14:59.400 --> 0:15:01.920 affordability the captain originally course starts to play itself out 0:15:01.960 --> 0:15:03.720 with those people on the street in a major way. 0:15:04.440 --> 0:15:07.080 We'll talking with Clarence Anthony CEO of National League of 0:15:07.080 --> 0:15:11.760 Cities at headquarters in downtown New York. So you mentioned 0:15:11.800 --> 0:15:15.320 some of the provisions, if you will, in the tax 0:15:15.440 --> 0:15:20.440 overhaul legislation that's working its way through Congress. If indeed 0:15:20.920 --> 0:15:23.480 some of the benefits to the MUNI market are taken out. 0:15:23.680 --> 0:15:26.360 What do you think that would mean for cities and 0:15:26.480 --> 0:15:30.760 infrastructure spending. Well, first of all, it's the cost of borrowing. 0:15:31.120 --> 0:15:33.680 That's the first thing that would go up. And UM 0:15:33.720 --> 0:15:38.240 the cost of barring means that less investments and parks. Uh, 0:15:38.280 --> 0:15:40.440 they're going to have to look at their investment and 0:15:40.560 --> 0:15:43.920 police and fire protection because you're going to have to 0:15:44.000 --> 0:15:47.000 pay more money to build the infrastructure that we don't 0:15:47.040 --> 0:15:50.000 have a partner with at the federal level. So that's 0:15:50.040 --> 0:15:52.760 the first piece that we would have. UM. The other 0:15:52.840 --> 0:15:58.720 thing that UM it does, if it's strips UM the 0:15:58.720 --> 0:16:03.200 deduction or the pre empt from UNI bonds, what we're 0:16:03.200 --> 0:16:08.920 gonna have is um less investment in infrastructure periods, the 0:16:09.000 --> 0:16:13.720 community centers, UM, the airports. I mean, you go on 0:16:13.760 --> 0:16:16.120 and on. We use all of that in the water 0:16:16.240 --> 0:16:20.560 waste water systems in our cities. So UM just quickly 0:16:20.560 --> 0:16:23.640 just get twenty seconds. If if the economy grows faster, though, 0:16:24.040 --> 0:16:26.040 then might we see the spending is some of that 0:16:26.240 --> 0:16:27.920 kind of part of the equation what we see with 0:16:27.920 --> 0:16:30.320 the economy. Yeah, I don't. I don't think the economy 0:16:30.360 --> 0:16:33.320 will be able to make up for the difference that 0:16:33.360 --> 0:16:35.840 we will see for the cost in local governments to 0:16:36.840 --> 0:16:40.440 provide those services. So, um, it's a it's a difficult 0:16:40.480 --> 0:16:42.880 time now, but the National Legal Cities and Build American 0:16:42.960 --> 0:16:46.120 Mutual is partnering to make sure that we are getting 0:16:46.160 --> 0:16:50.400 the best solutions to leaders all over America. Let's hopefully 0:16:50.440 --> 0:17:00.200 listen Clarence Anthony, Thank you, Carol, thank you. Court So 0:17:00.320 --> 0:17:02.760 next case knows an awful lot about the sun. He's 0:17:02.800 --> 0:17:05.600 got a state perspective on muni bonds and infrastructure. Ben 0:17:05.640 --> 0:17:08.159 Watkins is Director of Bond Finance at the State of 0:17:08.160 --> 0:17:11.879 Florida Sunshine State. It is indeed here at BAM headquarters 0:17:12.240 --> 0:17:14.520 in Lower Manhattan. Been good to have you here with us. 0:17:15.080 --> 0:17:16.320 Thank you, good to be here. So what do you 0:17:16.359 --> 0:17:18.920 spend most of your day doing? Oh, thinking about the 0:17:18.960 --> 0:17:22.240 market and paying attention to themuni bonds and what does 0:17:22.280 --> 0:17:24.000 the market tell you right now and how it relates 0:17:24.040 --> 0:17:27.439 to Florida. Oh, so, interest rates are really great. They've 0:17:27.480 --> 0:17:29.680 been great for a decade. I've been I've been wrong 0:17:29.760 --> 0:17:33.280 for ten years waiting for rates to go Well, all happen, yeah, okay, 0:17:33.520 --> 0:17:36.639 And so we've been taking advantage of that by doing 0:17:37.160 --> 0:17:41.399 refundings to save save to lower our interest rate and 0:17:41.480 --> 0:17:44.199 save money for our citizens and tax How significant are 0:17:44.240 --> 0:17:47.800 those savings over the last ten years from my perspective, extraordinary. 0:17:47.880 --> 0:17:51.959 So we've executed about twelve billion dollars worth of refinancing. 0:17:52.040 --> 0:17:54.399 So we've refinanced over half of the debt that we 0:17:54.480 --> 0:17:58.880 have outstanding the last state. So that's extraordinary. And UM 0:17:58.920 --> 0:18:02.600 so savings level three billion dollars and so three billion 0:18:02.720 --> 0:18:06.080 is significant. Um And so we've been able to take 0:18:06.160 --> 0:18:10.199 advantage of historically low interest rates by refinancing all of 0:18:10.200 --> 0:18:16.359 our debt. Uh, are you done? We wouldn't be but 0:18:16.480 --> 0:18:20.000 for congresses proposal to out of the business. Do you 0:18:20.000 --> 0:18:21.480 want to squeeze stuff in before the end. You're going 0:18:21.520 --> 0:18:24.879 to try to accelerate things. That's inconsistent with our normal discipline, 0:18:24.920 --> 0:18:26.640 which is just take them as they come and take 0:18:26.640 --> 0:18:30.400 them in bite sized pieces. But given the extraordinary circumstances, 0:18:30.400 --> 0:18:33.240 we're gonna move a little up. So and I'm sorry 0:18:33.920 --> 0:18:35.639 you were saying about the what Congress is trying to do? 0:18:35.640 --> 0:18:37.639 What what's Congress is? What's the worst? Whats Congress is 0:18:37.640 --> 0:18:40.119 trying to do? Right now? So one of the proposals 0:18:40.119 --> 0:18:42.119 and tax reform that's both in the House and the 0:18:42.119 --> 0:18:46.879 Senate proposal is to eliminate our ability to do advance refundings. 0:18:47.320 --> 0:18:49.800 So what does that mean? That eliminates our ability to 0:18:49.880 --> 0:18:53.160 be able to refinance that a lower interest rates, and 0:18:53.480 --> 0:18:58.080 it impairs our ability to provide real economic savings to 0:18:58.119 --> 0:19:00.919 our citizens and taxpayers. That's what it does to us. 0:19:00.960 --> 0:19:04.240 So that three billion dollars, well, that's three billion dollars 0:19:04.359 --> 0:19:07.040 less we have available for investment in infrastructure. Why do 0:19:07.040 --> 0:19:09.199 you think Congress is doing this? I mean that much 0:19:09.200 --> 0:19:12.600 you come from that. They're misguided, that's my best answer. 0:19:12.640 --> 0:19:15.120 They don't understand and they don't necessarily want to understand. 0:19:15.160 --> 0:19:17.560 So you stop and think about it. So you know, 0:19:17.600 --> 0:19:20.680 it's all about the scoring thing, which is so think 0:19:20.720 --> 0:19:23.640 about this for a second. One point for trillion dollars, 0:19:23.680 --> 0:19:25.520 I mean, that has so many zeros I can't even 0:19:25.560 --> 0:19:28.320 count it. The impact of the amounts for funding. Yeah, 0:19:28.359 --> 0:19:30.399 well would you write that up on the board between 0:19:30.520 --> 0:19:32.879 between all of his fingers and toes, we can get there. Yeah, okay, 0:19:33.359 --> 0:19:36.600 So seventeen billion dollars is what this cost over ten 0:19:36.680 --> 0:19:39.360 years the federal government. That's what they say. That's how 0:19:39.440 --> 0:19:42.320 j c T and CBO scored it. So the new 0:19:42.400 --> 0:19:45.280 Joint Many Taxation score just came out, like literally just 0:19:45.320 --> 0:19:48.080 came out, and it says that the budget deficit that 0:19:48.119 --> 0:19:50.040 they've got the highest estimate for growth of any of 0:19:50.040 --> 0:19:54.159 the estimates out there, averaging point eight percent increase in GDP, 0:19:54.600 --> 0:19:56.400 and still they think the deficit is going to increase 0:19:56.440 --> 0:19:59.400 by more than a trillion dollars. Right, So here's my point, Charlie. 0:20:00.240 --> 0:20:02.480 So all that is is a game, that's a scoring 0:20:02.560 --> 0:20:04.800 game that's about the deficit. How big do we want 0:20:04.800 --> 0:20:07.960 the deficit to be? State and local governments. We're talking 0:20:07.960 --> 0:20:11.480 about true economic savings. We're talking about dollars that have 0:20:11.600 --> 0:20:14.399 to be charged our citizens and taxpayers to pay the 0:20:14.440 --> 0:20:17.720 debt service on our bonds to build infrastructure, and they're 0:20:17.720 --> 0:20:20.840 impairing our ability to do that. So this is real dollars. 0:20:21.160 --> 0:20:23.920 This is not just made up stuff inside the Beltway 0:20:24.000 --> 0:20:27.640 kind of gaming on scoring deficits. And that's how they're 0:20:27.680 --> 0:20:29.520 impacting us. Well, you know, Queer and I spend a 0:20:29.840 --> 0:20:32.879 lot of time talking with various guests about trying to 0:20:32.960 --> 0:20:36.359 understand why, you know, infrastructure spending hasn't really kind of 0:20:36.359 --> 0:20:39.960 gotten through, um Washington, especially when that was certainly a 0:20:39.960 --> 0:20:43.399 big push by President Trump. That is a big push 0:20:43.400 --> 0:20:46.200 of his And yet this provision maybe in this GOP 0:20:46.600 --> 0:20:49.480 tax overhaul bill, how do we reconcile that if he's 0:20:49.520 --> 0:20:53.280 for infrastructure, and yet you're saying that by this provision 0:20:53.960 --> 0:20:57.240 um in the tax bill, it's going to prevent maybe 0:20:57.240 --> 0:21:01.320 some infrastructure from happening, perhaps in Florida, cost you guys 0:21:01.359 --> 0:21:03.199 a lot more if you want to pursue this project, right, 0:21:03.240 --> 0:21:05.640 So think about it like this. First off, I think 0:21:05.680 --> 0:21:09.480 they're irreconcilable. I think they're diametrically opposed. I think you 0:21:09.480 --> 0:21:11.880 can say one thing and saying one thing and doing 0:21:11.920 --> 0:21:15.960 another thing to me is not being genuine and sincere 0:21:16.040 --> 0:21:21.440 about what you really what your priorities really find everybody, 0:21:21.560 --> 0:21:23.960 I would think. So, I think are you being heard 0:21:24.040 --> 0:21:27.760 in Washington? Absolutely with the with the proposal that we 0:21:27.840 --> 0:21:30.439 have today that's on the table today, that's gonna impair 0:21:30.520 --> 0:21:33.080 our ability to be able to lower our interest rate 0:21:33.560 --> 0:21:36.399 and save dollars. We have to balance our budget. This 0:21:36.480 --> 0:21:39.040 is not a game. It's dollars in equal dollars out. 0:21:39.040 --> 0:21:41.520 We're not inside the belt Way. We can't play foot 0:21:41.560 --> 0:21:43.879