Los Angeles recently embarked on a series of ambitious transportation projects, including a new light rail line, road work, and a multibillion dollar airport expansion which have been or will be financed with private activity bonds (PABs). PABs are issued by public sector authorities to raise tax-exempt financing for private entities engaging in projects with a public benefit. Because buyers of the bonds do not pay tax on the interest income, issuers are often able to borrow at lower rates.

Recent proposals from GOP lawmakers to eliminate the tax exemption in versions of the tax overhaul bill have caused concern among the groups who rely on PABs. According to Adam S. Wallwork, an associate in Ballard Spahr's Public Finance Group, PABs are a $102-billion-a-year business, representing 20 percent of the tax-exempt bond market.

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