Bond Cap Abandonment, Carryforward Loss Trends Track with Recession, Recovery

Published by Peter Lawrence on Friday, October 14, 2016 - 12:00am

The Council of Development Finance Agencies (CDFA) bond data from 2000-2015 and the recent trends in PAB markets provides useful insight into bond issuance and use trends.

In 2000, few states had accumulated significant carryover, and as such, 45 states had no carry-forward abandoned. Prior to the passage of the Community Renewal Tax Relief Act of 2000, which enacted a one-time 40 percent increase in per-capita allocations and established inflation adjustments, PAB volume cap was not adjusted for inflation, and thus as the cost of PAB projects grew, less and less cap went unused. The financial crisis and the collapse of the housing market in 2008 significantly reduced states’ abilities to issue PABs. The number of states with no carry-forward abandoned in 2008 was 33; in 2009 it was 23. The trend bottomed out in 2011 with only 11 states reporting no carry-forward abandoned. Since then the number of states reporting no abandoned carry-forward has slowly increased to 16 in 2015.

Blog Graph Number of States With No Carryforward Abandoned Has Dropped Since 2000
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And not only did the number of states with no carry-forward abandoned drop considerably, the amount of PAB volume abandoned grew significantly, from $107 million in 2000 to nearly $12 billion in 2014. In 2015, PAB cap abandoned shrunk slightly to $10.5 billion.

 

Blog Graph Private Activity Bond Carryforward Abandoned Grew
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