Legal Corner: The Rules of the Game

By Ryan Callender & J. Wes Kerns

On Dec. 22, 2017, H.R. 1 (the “Tax Cuts and Jobs Act”) was signed into law. The Tax Cuts and Jobs Act, among other things, reduced corporate tax rates, modified individual tax rates, eliminated many deductions, repealed the corporate alternative minimum tax, and, notably, eliminated the tax-exempt advance refunding of tax-exempt bonds. Most bonds financing water and wastewater have a “lock out” period of around 10 years before you can refinance them. An advance refunding was a mechanism used to refinance such bonds well in advance of such lock out period. The elimination of this type of refunding has greatly reduced the ability of water and wastewater systems to refinance existing debt.