Build Back Better Act
The Build Back Better (BBB) Act (H.R. 5376) is a massive proposed social and climate resilience spending package currently being debated in Congress. While its original draft would have introduced $3.5 trillion in new federal spending, negotiators have substantially scaled back the package to around $1.5 – 2.2 trillion. Early proposals also contained a host of pro-municipal market provisions that, if enacted, would substantially expanding the infrastructure financing options available to states, local governments, and nonprofits. Details remain rapidly changing, but we will continue to keep members updated on the status of the pending legislation.
Where Things Currently Stand
On November 19, 2021, the U.S. House of Representatives passed its $1.85 trillion version of BBB. The large social spending package had long been tied to the Bipartisan Infrastructure Framework (BIF), but the passage of the infrastructure bill earlier in November separated the two bills' fates. BBB is now with the Senate where more changes continue to be made, and its fate is far from certain. Hopes of passing the bill prior to the end of the year were dashed and the bill has been punted into early 2022. President Biden and congressional leadership have expressed their intent to work to finalize the bill early in the near year.
Key Bond Provisions
While earlier drafts of the bill included numerous pro-municipal market provisions, negotiators were forced to strip all of them in discussions. The latest version of the House-passed version of the bill and a tax title released by the Senate Finance Committee in December both contain two provisions of interest to public finance attorneys:
Reducing PAB Requirement for LIHTC
This provision temporarily reduces the 50% requirement to 25%, to enable housing credit deals to unlock more 4% credits. The provision is effective for buildings financed by the proceeds of certain tax-exempt bonds issued in calendar years 2022 through 2026. View Sec. 135102. Tax-Exempt Bond Financing Requirement.
Tribal Bonding Fix
This provision amends rules related to the issuance of tax-exempt debt by Indian tribal governments. There is no volume cap for governmental bonds issued by an Indian tribal government. For private activity bonds, it instructs the Secretary to establish and allocate a national bond volume cap for such governments. Indian tribal governments are defined to include governing bodies of tribes, including agencies, subdivisions, instrumentalities, and certain intertribal consortiums or other organizations that are authorized by Indian tribal governments. View Sec. 135301. Treatment of Indian Tribes as States with Respect to Bond Issuance.
What's Included in Earlier Drafts?
As mentioned, the package has gone through a number of iterations, but we have broken down the various bond provisions based on which iteration of BBB they appeared. The latest House version, far right column, was released on November 3 and will likely be most similar to whatever the House eventually passes.