WASHINGTON — The chairman of the House Ways and Means Committee has raised the possibility of including a provision to extend the Build America Bonds program in an “extenders” package, which lawmakers hope to approve by Memorial Day weekend.
The House last month approved a jobs bill that would extend BABs, but that legislation is currently stalled in the Senate. The Small Business and Infrastructure Jobs Tax Act of 2010 would extend BABs until April 1, 2013, but would gradually lower the subsidy payment rate to 30% of interest costs from the current 35% rate.
Committee chairman Sander Levin, D-Mich., told reporters this week that a BABs extension could be added to the extenders package, which is further along in the legislative process. Municipal market participants have been clamoring for months for an extension to the popular program, arguing that the sooner it could be extended and the longer the extension, the better.
The House and Senate have both approved extenders bills in recent months, but differences between the two still need to be resolved.
A spokesperson for Levin said yesterday that it is not yet known how the two chambers will reach a final extenders package, how a BAB extension would be included, or how long that extension would be.
While the two bills differ on other provisions, they both contain the same one-year extensions for several muni provisions.
They both would allow New York City issuers to sell Liberty Zone bonds through the end of the year, after authority to issue the debt expired at the end of last year. Liberty bonds are a special type of private-activity bond created to help boost economic development in lower Manhattan following the Sept. 11, 2001, terrorist attacks.
The two bills also would extend for the same time period relaxed mortgage-revenue bond requirements for areas affected by federally declared disasters so issuers could sell tax-exempt bonds to finance the repair or reconstruction of homes and rental units that were damaged or destroyed.
Another provision would extend, through the end of the year, tax incentives for District of Columbia empowerment zones — economically distressed areas where businesses are eligible for tax incentives, including tax-exempt bonds, to spur development. Tax-exempt bonds can be issued in such areas to provide low-cost financing to private businesses, provided that at least 35% of the business’ employees are residents of the zones for the life of the bonds.
An additional provision would extend for the same timeframe the ability of taxpayers to take an itemized deduction for state and local general sales taxes in lieu of the itemized deduction typically permitted for state and local income taxes.
Meanwhile, the Treasury Department has corrected a portion of a notice it issued on Monday that provided interim guidance instructing municipal issuers how to issue four tax-credit bonds as direct-subsidy bonds, as authorized by a jobs law enacted in March. The correction, released on Wednesday, clarifies that issuers will be able to use these direct-subsidy bond proceeds to reimburse eligible expenditures, regardless of when they were incurred.
The original notice stated that the bonds could only be used to reimburse certain expenditures incurred after the enactment of the Hiring Incentives to Restore Employment Act, which authorized the direct-subsidy mode for the tax-credit bonds.