Capital gainsPublished 11:54am Friday, June 21, 2013
New bill improves fundraising process for housing authority
Gov. Robert Bentley recently signed into law a bill that aims to cut expenses for housing authorities across the state of Alabama.
Bentley signed HB144 into law on June 10.
Sponsored by Rep. Mark Tuggle of Alexander City, the law updates Alabama Housing Authority laws formed the early 1930s and enables housing authorities to raise capital in public and private markets.
With authorities being forced to draw from their reserves or borrow money if there is not enough in their reserves, Tuggle said the law will help cut expenses when authorities look to borrow funds.
“This was our second year working on the bill, and we got it through the House last year. Then it got tied up in the Senate on the last day of the 2012 session,” Tuggle said. “It will allow them to negotiate with multiple lenders. The competition will be enhanced for their business, so hopefully they will be able to reduce their expenses of borrowing money.”
Tuggle said housing authorities now can seek lenders in multiple markets, which could help reduce the expense of issuing debt, help them be more competitive and get a better interest rate on the debt that they do make.
The bill also changed some of the advertising requirements for housing authorities.
“Some of the law goes back to the late 1930s, and for an authority to advertise itself and raise capital, they had to advertise in a financial newspaper in New York City and New Orleans,” Tuggle said. “We kind of cleaned up those laws from the late thirties and simplified things for the housing authorities. Hopefully it will help them saving money on the expense of raising capital.”
Tuggle, who also serves as chairman of the Alexander City Housing Authority, said the bill does not immediately impact the Alexander City authority because it has significant reserves, but it helps authorities around the sate.
“We did this for efforts statewide. There were about 30 different authorities that were about to be in the process of trying to raise capital as the bill was being passed. Alexander City was not one of them,” Tuggle said. “It will have an immediate impact on those 30 authorities across Alabama. The Alexander City Authority is not really in that position. We have reserves that we are drawing on.”