In late February Sen. Robert Menendez (D-N.J.) reintroduced legislation that would eliminate state-based volume caps that limit the amount of tax-exempt private activity bonds (PABs) that can be used to finance water and wastewater infrastructure.
Current law allows private entities (with state approval) to issue PABs to fund a variety of infrastructure projects that deliver a public benefit, but limits the total amount of tax-exempt PABs that may be issued in each state. This means that water projects must compete for each state’s share of limited PAB financing with projects in other infrastructure sectors.
The “Sustainable Water Infrastructure Act” (S. 2606) would exempt water and wastewater projects from state volume caps for PABs, potentially unleashing additional private capital to fund water infrastructure.
Sen. Menendez has introduced a similar proposal in each session of Congress since 2010, but it has yet to gain traction and advance through both chambers. Rep. John Duncan (R-Tenn.) introduced a similar bill in the House of Representatives last year as H.R. 499, but it is still awaiting a hearing before the Ways and Means Committee.