Alaska Congressional Delegation Introduces Legislation to Support Economic Development for Alaska Native Communities

The Alaska Congressional Delegation introduced landmark legislation to make tax-exempt financing more accessible for the economic development projects of American Indians and Alaska Natives. Such financing, known as Tribal Economic Development, or TED Bonds, is currently available only on a limited basis that benefits only a limited number of tribal entities. The legislation evens the playing field by changing the rules for TED Bonds in several critical ways to make this tax-exempt financing much more widely available to all Native Americans.

The Tribal Economic Development Act of 2020 is led by U.S. Senators Lisa Murkowski and Dan Sullivan (R-AK) in the U.S. Senate. Representative Don Young (R-AK) introduced companion legislation in the U.S. House of Representatives.

“The original intent of TED Bonds was to allow Indian Tribal Governments to finance projects critical to community development. This includes projects such as solid-waste treatment facilities, water treatment facilities, certain residential projects and more – activities that would typically be performed by the local and State government. Unfortunately, the limitations currently in place regarding the use of TED bonds hinder a number of opportunities for development in Alaska and across the nation. This must change,” said Senator Murkowski. “Our legislation will adjust the existing tax code and increase the national volume cap, which will make more economic development opportunities possible, allowing more communities to prosper. As we continue to work to overcome the implications of COVID-19, we must be willing to adjust rules and requirements that limit growth or stunt economic opportunity.”

“TED bonds could be another tool at our disposal in cultivating a robust economic recovery from the pandemic, but existing rules and funding caps prevent these bonds from having the impact we need, especially for Alaska Native communities,” said Senator Sullivan. “Senator Murkowski’s bill, which I’m glad to cosponsor, will double the $2 billion bond cap and offer Native organizations the flexibility this crisis warrants, ultimately increasing access to new capital and leading to more economic opportunities for Alaskans.” 

"TED Bonds have the potential to be a critical resource for Alaska Natives working to finance projects critical to their communities. But for too long, burdensome rules within the program have prevented these bonds from having the positive impact that Congress originally intended. From safeguarding clean water, strengthening sewage systems, and supporting transportation infrastructure, these bonds can empower Alaska Natives to unleash economic opportunities. The COVID-19 pandemic has deeply impacted our economy, and ensuring that TED bonds are able to help sustain Alaska Natives through these uncertain times is crucially important,” said Congressman Young. “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 weather this pandemic. 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, and entity that is majority-owned and controlled by an Indian tribe or Alaska Native Corporation, 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 legislative 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. 

Related Issues: Alaska Natives & Rural Alaska