February 08, 2012
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On February 7, the Senate Finance Committee approved legislation that would expand the small issuers’ ability to sell bank-qualified bonds from $10 million to $30 million for bonds issued after the date of enactment and before January 1, 2013. The bill would also provide alternative minimum tax (AMT) relief to investors in private activity bonds that are issued after the date of enactment and before January 1, 2013. The latter provision would have no impact on housing bonds, however, since they were permanently exempted from the AMT in the Housing and Economic Recovery Act of 2008.

Senate Finance Committee Chairman Max Baucus, (D-MT) added the provisions during a markup of The Highway Investment, Job Creation and Economic Growth Act of 2012 (the Act).

Expansion of the bank qualified bonds limit was initially sponsored as an amendment to the Act by Senator Jeff Bingaman (D-NM) after a coalition of municipal bond advocates, including NCSHA, voiced strong support for the provision. In a letter to Bingaman, NCSHA, the Government Finance Officers Association, and other groups pointed out that, “the $10 million limit was set in The Tax Reform Act of 1986 and is an amount, if indexed to inflation, that is worth only $5.4 million today.” The letter further noted that increasing the limit will directly lower borrowing costs by as much as 50 basis points, “and would have a significant and direct stimulative effect on jobs and needed infrastructure improvements for thousands of communities across the country.”

The AMT relief provision was initially sponsored as an amendment to the Act by Senators John Kerry (D-MA) and Robert Menendez (D-NJ) before being adopted by Chairman Baucus.

The Committee-passed bill is likely to be combined with the Moving Ahead for Progress for the 21st Century Act (MAP-21) transportation bill during Senate consideration soon.

Last week, Congressman Richard Neal (D-MA) attempted unsuccessfully to include the Senate Finance Committee-passed provisions in the House Ways and Means Committee’s markup of The American Energy and Infrastructure Jobs Financing Act of 2012, H.R. 3864. Neal’s amendment was defeated 22-15 in a party line vote.