Joseph Krist

Publisher

UNPREDICTABLE TRUMP

In the month since Election Day, the pundits of the world have been busily trying to predict what the impact of a Trump administration would be on various economic sectors. We see that as a bit of a fool’s errand based on the first Trump administration. That’s especially true for the municipal bond market. In spite of all of his emphasis on the nation’s “third world infrastructure”, significant investment in it never occurred under Trump. The emphasis instead was on things like opportunity zones which tended to have much bigger private sector benefits.

One example of where unpredictability can be a liability is the issue of loans made under the Biden administration for a variety of energy and manufacturing production facilities under the IRA. On the one hand, the loan program is a prime target for Project 2025 proponents to eliminate. On the other, the program will jump start significant manufacturing projects in states like Georgia, Kentucky, Indiana and Tennessee. Those projects alone would reflect some $20 billion of investment.

Federal action generated movement on several large scale transportation projects. The Bret Spence Bridge, new road and bridge facilities in Mobile, AL. In other instances, public private partnerships expanded their footprint with states like Louisiana utilizing them for major projects. The use of P3s continues to expand in the New York metro area as the local airports are brought up to date. These were the types of projects and funding mechanisms that were supposed to be championed under the first Trump administration.

The results of the election which produced the smallest majority in the history of the House of Representatives will make the enactment of significant legislation in areas like energy, taxes, and transportation that much harder. Given the President-elect’s transactional nature, things like private activity bond expansion and the SALT deduction will be in the middle of the negotiating storm over a budget. Given the dynamics of the House, there is no way to predict the fate of those provisions.

NYC – RIKERS ISLAND

Laura Taylor Swain may be one of the busiest federal judges given her stewardship of both the Puerto Rico bankruptcy and the operations of New York City’s main jail, Rikers Island. Litigation over the operations at Rikers have occupied two Mayoralties, stretching over more than ten years. This week the judge issued a 65-page opinion that said the city and its Department of Correction had violated the constitutional rights of prisoners and staff members alike by exposing them to danger, and had intentionally ignored her orders. She ordered the city and lawyers representing prisoners to devise a plan for a receivership by Jan. 14.

The facility has been operating under a consent decree which was reached in 2015 under Mayor Bill de Blasio. It is easy to forget that the City Council has voted to close Rikers Island by August 2027 and replace it with four smaller borough jails. The intent was to reduce abuses and aid visitation. The politics of siting the proposed facilities has effectively blunted that effort.

The judge will appoint a receiver who will report to her. The receiver would have significant powers. One example – judge could grant a receiver the power to dissolve or alter labor contracts like the one that provides officers with protections like unlimited sick leave.

HOSPITAL MERGERS

A proposed merger between Union Health and Terre Haute Regional Hospital, the only acute care hospitals in Vigo County, Indiana has been delayed in the wake of a pending disapproval of the plan by state regulators. The two providers are the only acute care providers in Terre Haute and its surrounding Vigo County. A merger would have given the resulting entity a full monopoly over acute care hospital services in the County.

The hospitals sought the merger under a state provision known as a “Certificate of Public Advantage” law, or COPA. Indiana and 18 other states have such laws that shield hospital mergers from federal enforcement by the Federal Trade Commission. Under COPA laws, states typically agree to monitor hospital performance and quality while limiting price hikes. It is a real concern especially in the light of HCA’s participation in the proposed merger as the owner and operator of Union Health. Recent deals with HCA hospitals under COPA laws are seen as having fallen short in terms of their impact on access and costs.

That legacy has contributed to five states – North Carolina, Maine, Minnesota, Montana, and North Dakota —repealing COPA laws. Maine ended its law last year amid warnings from the FTC regarding such mergers. The situation in Terre Haute is a textbook example of how HCA conducts its business. In 2021, Union Health leaders were instrumental in the passage of Indiana’s COPA law. They supplied draft language for the bill to one of the bill’s authors, according to legislative testimony, and Union Health’s CEO Holman testified before lawmakers that the merger would improve the county’s poor public health rankings.

The effort is not dead. Union faces a July 1, 2026, deadline to refile an application, according to Indiana’s COPA law.

STADIUM UPDATES

The ownership of the Tampa Bay Rays has reaffirmed their existing agreement with the City of St. Petersburg and Pinellas County to finance a new baseball stadium. The reaffirmation was in response to a county demand for one prior to a vote by the County legislature on December 17 to move forward with the project. This followed last month’s statements from the team that the project could not happen without approval by the County in November. The County then gave the team a choice – you’re in or you’re out. They say they’re in.

The other travelling franchise, the Oakland A’s got some bad news on their stadium in Las Vegas. The cost of the Athletics’ planned new ballpark off the Las Vegas Strip has increased by a quarter of a billion dollars. Those costs will be the responsibimove this week.ity of the team. The new estimated cost is $1.75 billion, up from a previous $1.5 billion mark. The Las Vegas Stadium Authority Board gave its final approvals for the Athletics t

GRAIN BELT EXPRESS

The Grain Belt Express, a $7 billion transmission line project that’s been more than a decade in development, has won conditional approval for a $4.9 billion federal loan guarantee. The project plans to use its conditional loan guarantee to finance the first phase of its 5-gigawatt high-voltage direct current (HVDC) transmission line — a 578-mile stretch from southwestern Kansas to Missouri. It looks like the loan for this project may be one of the early casualties of Trump administration plans to significantly cut government spending.

The project has also secured some prospective buyers for its power, including a consortium of 39 municipal utilities represented by the Missouri Public Utility Alliance. It has received regulatory approval from both Kansas and Missouri. The Missouri approval is significant in that it followed changes in the availability of power to Missouri utilities. Unless all of the loan documentation can be completed before January 20, this funding is likely at risk.

You would think that the funding mechanism for these loans was a Biden administration creation. In fact, the Department of Energy’s Loan Programs Office (LPO) was established under the George W. Bush administration in 2005. For what it’s worth, one of the entities to receive funding from the LPO was Tesla.

ELECTION LITIGATION

Last month, Maricopa County voters overwhelmingly approved Prop 479  to keep the half-cent transportation tax residents in Maricopa County have been paying since 1985.  It’s projected to raise nearly $15 billion over the next 20 years for various transportation services and improvements. The Maricopa County Republican Committee recently filed a lawsuit asking the court to overturn what voters approved. The plaintiffs claim that Prop 479 is not a continuation of an old tax but a new tax that funds new projects. It also argues that the ballot measure didn’t pass the 60% voter threshold needed to approve a new tax in Arizona.

LADWP AND EQUITY

The L.A. Department of Water and Power has achieved a settlement with residents around one of its generating facilities over their exposure to unhealthy levels of methane leaking from the plant. Some 1,200 people who lived, worked or went to schools nearby will share in a $59.9-million settlement reached with the city. The litigation was started in December 2020. It alleged that the DWP failed to adequately inspect or repair equipment, or to notify residents of leakages during the 1,085-day period when community members were potentially exposed to methane and other toxic chemicals.

The Valley Generating Station is located in the San Fernando Valley between the communities of Sun Valley and Pacoima and generates electricity using natural gas. According to the complaint, NASA’s Jet Propulsion Laboratory first detected gas being emitted by the station in September 2017 and notified the utility. LADWP did not notify the community for some three years. In January 2021, the South Coast Air Quality Management District gave the utility a notice of violation over equipment identified as the source of the multiyear methane leak. 

CARBON CAPTURE

Wolf Carbon Solutions is withdrawing its petition to build a 95-mile carbon capture pipeline through eastern Iowa. Wolf sought a permit last year to build the hazardous liquid pipeline across Linn, Cedar, Clinton and Scott counties. It noted significant opposition in spite of the fact that Wolf had said it would build its pipeline without the use of eminent domain. This follows the decision this fall by Wolf to withdraw its application for a pipeline approval in Illinois.

The Wolf pipeline in Iowa was projected to connect with pipeline in Illinois to deliver carbon dioxide to a sequestration facility operated near Decatur, Illinois. In September, the U.S. Environmental Protection Agency alleged that ADM had failed to adequately monitor the sequestration site after some carbon fluid moved to an unauthorized zone.

This comes as the Iowa Supreme Court affirmed a lower court’s decision that Summit Carbon Solutions is allowed temporary access to properties for surveying, because it is a pipeline company that would be transporting a hazardous liquid. Summit is the only entity continuing its effort to build its pipelines at present.

FLORIDA HEALTH INSURANCE DELAY

KidCare is a Florida program which provides low-cost health insurance to children whose families make too much money to qualify for Medicaid. In Florida, that has meant families have paid $15 or $20 a month for coverage. In 2023, the Legislature voted unanimously to make more children eligible for KidCare by increasing the income threshold for eligibility to 300% from 210% of the federal poverty level. The change raised the income limit to $90,000 from $64,500 for a family of four.

The State needed federal approval to implement the pln. That approval included a requirement to comply with a federal rule put in place during the COVID-19 pandemic that requires the state to provide eligible children with a full year of continuous coverage. Florida balked at that requirement and challenged the rule in court. The lawsuit resulted in a delay just as Florida began reviewing Medicaid eligibility after the end of the COVID public health emergency. More than a half-million children were disenrolled, and they couldn’t get on KidCare due to the waiver dispute.

The Centers for Medicare & Medicaid Services accepted Florida’s application for a waiver after a yearlong delay, but with the stipulation that the state provides 12 months of continuous coverage. In response, the state’s Agency for Health Care Administration said it planned to request a 30-day delay on the waiver. The State wants to be able to disenroll children in the event that their family misses a premium payment.

We anticipate that efforts will continue to chip away at providing expanded Medicaid eligibility in states with conservative legislatures. Those efforts occurred with some regularity during the first Trump administration. The result was a near constant stream of litigation and failures to obtain court approval for things like work rules and other issues that states opposed to Medicaid expansion under the ACA.

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