The Madison, Wis.-based Public Finance Authority (PFA), which was formed last year to issue tax-exempt conduit private-activity bonds for local governments and non-profits, has begun promoting its services nationwide. PFA offers financing for projects, such as affordable housing and community infrastructure, for governments that do not want to or cannot issue conduit debt because of legal hurdles, limited staff or a lack of comfort with the process.

The Washington-based National League of Cities (NLC) and the National Association of Counties (NACo) are national sponsors of PFA, along with its state sponsors, the Wisconsin Counties Association and the League of Wisconsin Municipalities, says Cathy Spain, director of NLC's Center for Enterprise Programs. “We thought of this as really a good way to help cities that want to issue private activity bonds, in which the city is the issuer but the private entity is the obligator,” Spain says. “Cities don't do these transactions that frequently, so we thought this was a good way to provide assistance to the cities.”

On April 4, NLC and NACo issued an open letter supporting the PFA's national outreach. “Basically our role is providing information to cities about the [PFA's] availability,” Spain says.

The Wisconsin legislature created the PFA, but it was always intended to be a nationwide organization, says PFA Program Director Liz Stephens. PFA already has issued bonds for projects outside Wisconsin, including schools in New York and Colorado, as well as affordable housing projects in Florida.

While some states already have designated conduit issuers, Stephens says others do not. Stephens and her fellow PFA Program Manager James Hamill say PFA is trying to offer more public financing choices. “In the economic times that we're in, we need to have all the economic development tools available to any city, county or state across the country, and this is just providing another tool,” Hamill says. “Yes, it's not going to fit everybody, but the choice still needs to be there.”

Not so fast, neighbor

Not everybody wants to see the PFA do more business outside Wisconsin. Illinois Finance Authority (IFA) Executive Director Christopher Meister says the PFA, when issuing bonds in states outside of Wisconsin, will lack the accountability and transparency of conduit issuers formed by those states, such as the IFA. He also worries that private investors helped form the PFA and may influence the agency's decisions.

However, PFA Program Manager Liz Stephens says the PFA board and participating local governments determine whether to issue bonds, not private investors. She also says PFA is subject to the same accountability and transparency procedures of any government entity.

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