07.30.21

Alaska Congressional Delegation Introduces Legislation to Bring Economic Development and Growth to Alaska Native Communities

Will increase accessibility for tax-exempt financing on economic development efforts in Alaska Native and American Indian projects

WASHINGTON—The Alaska congressional delegation introduced landmark legislation to increase accessibility for tax-exempt financing on economic development efforts for Alaska Native and American Indian projects. Such financing, known as Tribal Economic Development (TED)bonds, is an important tool for tribal governments to finance economic development opportunities and diversify resources that benefit their communities. The purpose of this legislation is to even the playing field by updating the rules for TED bonds in a range of ways to increase access to this tax-exempt financing, making it more widely available to Native Americans.

The Tribal Economic Development Act is led by U.S. Senators Lisa Murkowski and Dan Sullivan (both R-Alaska) in the U.S. Senate. CongressmanDon Young (R-Alaska) introduced companion legislation in the House of Representatives.

“Rules that limit growth or stunt economic opportunities must be addressed and changed – especially for communities with the greatest needs. TED Bonds were originally meant to allow Tribal Governments to finance projects critical to community development that would typically be performed by local and state governments, including solid-waste treatment facilities, water treatment facilities, certain residential projects and more. Unfortunately, the limitations currently in place regarding the use of TED Bonds interfere with many opportunities for development in Alaska and across the nation,” said Senator Murkowski. “Our legislation will adjust the existing tax code and increase the national volume cap, making more economic development opportunities possible and allowing more Alaskan communities to prosper.”

“The original intent of TED bonds was to benefit tribal governments and indigenous Americans, but they have clearly missed the mark with unfair rules that, by definition, exclude Alaska Native people, who, unlike Lower 48 American Indians, are largely not reservation-based,” said Senator Sullivan. “TED bonds could help cultivate a more robust economic recovery from the pandemic, especially in rural areas with limited opportunities, but the restrictive regulations and existing funding caps prevent these bonds from having the impact we need. I’m glad to cosponsor Senator Murkowski’s bill to double that $2 billion cap, make sure Alaska Natives are eligible, provide flexibility to Native organizations to use this funding mechanism, and ultimately unleash new capital and economic opportunities for Alaskans.”

"TED bonds have the potential to be a critical resource for Alaska Natives working to finance projects and services vital to their communities. For too long, burdensome rules within the program have prevented these bonds from having the full impact Congress intended. From safeguarding clean water, strengthening sewage systems, and supporting transportation infrastructure, these bonds can empower our Native communities to unleash economic opportunity. This pandemic impacted our economy, and some of our Alaska Native communities were hardest hit. Through the use of TED bonds, we can help Alaska Natives come back from this pandemic stronger than ever before," said Congressman Don Young. "Today, I am proud to introduce the Tribal Economic Development Act in the House to lift the cap on available TED bonds so that our Alaska Native villages and communities can access the capital necessary to secure a bright and prosperous future. I am grateful to Senators Murkowski and Sullivan for leading the effort in the Senate, and I will continue working on getting this important bill across the finish line."

Additional Bill Details:

  • Because the existing national limit for TED bonds of $2 billion has been fully allocated for several years and is therefore not available for new projects, the legislation doubles the national limit volume cap to $4 billion, which means that a further $2 billion of TED bonds will become available for new Native American economic projects.
  • As previously recommended by the Treasury Department, the proposed legislation removes the requirement that TED bond proceeds be used solely on an Indian reservation.
  • The legislation will permit TED bond proceeds to be used for economic development by any “qualified Native user,” which includes any tribal entity, Alaska Native Corporation (ANC), or entity that is majority-owned and controlled by an Indian tribe or (ANC), regardless of whether such use would normally be considered “private use.”  This will greatly broaden the opportunities for American Indians and Alaska Natives to partner with those who are non-Native for mutual benefit.
  • The legislation permits third parties to guarantee the repayment of TED bonds, which will enhance the creditworthiness of the bonds and should allow the TED bonds to be issued at a lower effective interest rate.

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