Senate Bill Would Reinstate Taxable Direct Payment Bonds
July 9, 2020
by Paul Ciampoli
APPA News Director
Posted July 9, 2020
Sens. Roger Wicker, R-Miss., and Michael Bennet, D-Colo., on July 8 unveiled the introduction of S. 4303, the American Infrastructure Bonds Act, which would allow the issuance of taxable direct payment bonds, akin to a Build America Bond.
The American Public Power Association, which has included reinstatement of the issuance of direct payments bonds as part of its bond modernization agenda, said that it was pleased to see the bill’s introduction.
The credit rate for bonds would be 35 percent for bonds issued before January 1, 2026, and 28 percent for bonds issued after December 31, 2025.
The legislation, which was introduced on July 2, includes a provision to hold credit payments harmless to budget sequestration.
“American Infrastructure Bonds” could be issued for any purpose that would also qualify for purposes of issuing a tax-exempt municipal bond. The legislation would also allow the issuance of such bonds for qualified facility private activity bonds.
Bipartisan Senate bill would reinstate ability to issue tax-exempt advance refunding bonds
In other recent bond-related news, a bipartisan group of senators on July 1 introduced the Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act, which would reinstate the ability to issue tax-exempt advance refunding bonds.
The lead co-sponsors of the bill are Wicker and Debbie Stabenow, D-Mich.
Additional original cosponsors include Senators John Barrasso, R-Wyoming, Shelly Moore Capito, R-W.Va., Michael Bennet, D-Colo., Tom Carper, D-Del., Bob Menendez, D-N.J., and Jerry Moran, R-Kans.
The bill is a companion to H.R. 2772, the Investing in Our Communities Act, and is identical in effect, but is drafted quite differently.
APPA supports both of these bills.