A bill pending in two House committees would allow state and local governments and other municipal bond issuers to sell up to $11 billion of tax-credit bonds over a three-year period to finance new broadband infrastructure projects.

The bill, introduced on Jan. 28 by Rep. Anna G. Eshoo, D-Calif., would amend the Internal Revenue Code of 1986 to provide income tax credits for the broadband bondholders, and would require the proceeds to be used entirely for certain broadband projects that would provide residents or small businesses with high-speed Internet access.

State and local governments would be eligible to issue up to $1 billion for each calendar year between 2009 and 2011. Other issuers - including entities that receive certificates of public convenience and necessity from a local government - could issue $10 billion during each of those calendar years. Any unused amount could be carried over for three years, according to the legislation.

The authorized amounts would be allocated equitably among the states by the secretary of commerce with some consideration of the projects' ability to maximize jobs and economic benefits. The bill also would require the National Telecommunications and Information Administration within the Department of Commerce to approve the projects, monitor their implementation, and determine the transmission speed increases that would be required for the bond program.

State and local governments would be able to nominate their projects for the bond program only after giving private sector entities a 30-day bidding period to provide the same services.

Numerous state broadband initiatives already exist, such as a $40 million effort in Massachusetts that was established in August and authorized to be funded by general obligation bonds.

In addition to Eshoo's bond bill, the stimulus act authorized $6 billion in incentives to expand broadband, including a $350 million grant program for states.

"The inclusion of broadband investment in the recovery package is a good first step, but we can do better," Eshoo argued in a statement about the bond legislation. She said the amount of issuance that would be authorized in the proposal would generate "more than $30 billion in new investment in next-generation broadband infrastructure and more than $100 billion in additional GDP over the next three years," and create about one million new jobs over three years.

The bill was pending in the House Ways and Means and Energy and Commerce committees yesterday. American Public Power Association officials could not be reached for comment by press time.

Meanwhile, another bill pending in Ways and Means would increase private-sector investment in water and sewer facilities.

The bill, introduced Jan. 14 by Rep. Bill Pascrell Jr., D-N.J., would amend the tax code to remove the cap on private-activity bonds issued for water and sewer facilities. The legislation would make it easier for states to "accelerate and increase" water infrastructure investment and the use of public-private partnerships "in light of constrained federal budgets."

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.