Private Activity Bonds (PABs) used to finance water and wastewater infrastructure projects would be made exempt from the overall state volume caps on PABs under legislation introduced this month by Sen. Bob Menendez (D-N.J.).
Though the complete text of the legislation (S. 2345) has yet to be made available, the bill is thought to be similar to legislation Sen. Menendez has offered in previous sessions of Congress. According to supporters, lifting the cap on PABs used to fund water and wastewater projects could make more financing available for water infrastructure rebuilding efforts that create local jobs and help close the multi-billion dollar water infrastructure funding gap.
Today, private entities (with state government approval) may issue PABs to fund infrastructure projects that deliver a public benefit, but federal law limits the total amount of PABs that may be issued in a single state in a single year. This means that water projects must compete for limited PAB financing opportunities with a variety of other infrastructure sectors.
Sen. Menendez last introduced his version of the PAB legislation in 2011, but it did not advance through the Senate. Rep. John Duncan (R-Tenn.) introduced a similar bill in the House of Representatives this past March as H.R. 4237, and that measure remains in committee.