SB 309 was presented to the State and Local Government Operations Committee on Tuesday by Senator Jesse Stone (R), Waynesboro. This bill establishes the Georgia Municipal and Local Government Infrastructure Finance Authority Act. The bill provides a mechanism through which local governments may finance infrastructure at lower prevailing costs to make such mechanism available to the largest number of local governments feasible.
Prior to the meeting, CBA discussed this bill with our Board of Directors and CBA’s general counsel to determine if there were any major objections to this bill or if any aspects of the bill would have a material impact to community banks. Board members indicated that while this may change the municipal bond market somewhat there were no objections to the bill unless this bill changes anything relating to Tax Anticipation Notes (TAN) that community banks make.
During the hearing, Senator Stone stated that there was no intention of changing the current practices for community banks. If a bank wants to move forward, then they can with existing bond counsel. The bill only relates to revenue bonds not general obligations for municipalities or cities/counties. Bank can continue to use the relationships that they have built over the years to meet the financing needs of the municipalities and cities/counties. While Georgia Bankers Association testified during the hearing that they opposed the bill from a competition standpoint, CBA remained neutral on this bill as we do not believe this bill has a significant impact on the community banking industry. After reviewing research provided by the Georgia Municipal Association, most of the lending that is done on capital expenditures for municipalities is done by big banks. Community banks do not engage in this type of specialized lending on a routine basis. Should your bank have objections to this legislation, then please contact CBA to discuss your concerns. The bill was passed unanimously by the Committee.