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FL-1. Federal Tax Policy: Impact on Cities (cont'd) r <br />It is estimated that the restrictions and imposition of a lover per capita <br />volume limit on private purpose bond authority will result in the loss of 84 <br />percent of the bond authority available to cities and other units of government <br />in Minnesota in 1986. As a result, cities will face long delays in obtaining <br />appraval of bonds for local projectc. Some needed improvements m2y pimply not <br />be made or when authorized, the projects are likely to have incresa.-_ in cost to <br />the city. <br />Finally, restrictions placed in the bill with respect to real estate <br />investment make it more difficult for cities to meet local housing needs. Such <br />changes are likely to lead to serious problems for cities as the value and <br />financial stability of both commercial property and multi -family housing <br />projects decline. Federal tax reforms also eliminate major tax incentives for <br />the construction of low- and moderate -income housing (and do not seek to <br />compensate for that loss with any increase in federal housing assistance to <br />cities). <br />For all these reasons, as well as for other negative effects of recent <br />federal income tax reforms that have not yet become apparent, the League of <br />Minnesota Cities urges Congress to make necessary changes In the federal income <br />tax provisions to enable cities to meet local needs. <br />-74- <br />