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 now heads to the Senate where more changes will be made, and its fate is far from certain. Senate Majority Leader Chuck Schumer (D-NY) has indicated that he wants a Senate floor vote on the bill before the chamber adjourns for the holidays later in December.

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 bill passed by the House, however, contains 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. 

Other Resources

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. 

 

Original House Bill

Scaled Back Version

Latest House Version

Date and Text Access

 

9/27/2021

10/28/2021

11/3/2021

Restores Advance Refundings?

 

YES
Sec. 135102

NO

NO

Create New Direct Subsidy Bonds?

YES
35% to 28% Credit
Sec. 135101

 

NO

NO

Modernize Bank Qualified Debt?

YES
Sec. 135103

 

NO

NO

Updates to Small Issue Bonds?

YES
Sec. 135104

 

NO

NO

Expands Exceptions for First-Time Farmer PABs?

YES
Sec. 135105

 

NO

NO

Exempt Water PABs from Volume Caps?

YES
Sec. 135106

 

NO

NO

Create PABs for ZEV Infra?

YES
Sec. 135107

 

NO

NO

Applies Davis Bacon…?

YES
-Water PABs
-Highway and Surface Freight PABs
-ZEV PAB
Sec. 135108

 

NO

NO

Reduces PAB Req’t for LIHTC

YES
Sec. 135502

 

NO

YES
Sec. 135102

Treats Tribes as States for Bonds?

YES
Sec. 135601

 

NO

YES
Sec. 135301