(The Bond Buyer) – House Ways and Means Committee chairman Sander Levin Wednesday introduced a new bill that enables Congress to make another attempt at extending several bond provisions slated to expire at the end of the year, including Build America Bonds.

The Investing In American Jobs and Closing Tax Loopholes Act — HR 5893 — would extend BABs for two years, along with other extensions to temporary bond provisions first enacted in the American Recovery and Reinvestment Act of 2009.

The bill “is about moving forward to create opportunities for Americans in America using job-creating programs such as the Build America Bonds,” Levin, a Michigan Democrat, said in a statement. “Experts have deemed these bonds, which helped support nearly two million jobs, to be one of the most successful recovery efforts in place. Republican and Democratic governors alike have praised these programs.”

House Democrats plan to bring the bill straight to the House floor and hope to pass it before Congress breaks for a month-long recess beginning Aug. 9, according to sources. The Senate would then take up the measure after the break.

The House previously passed a bill extending temporary bond provisions, but it ground to a halt in the Senate after Democrats were unable to garner 60 votes on the package to block a filibuster threatened by Republicans. The bond provisions were eventually stripped from that bill, but have found a new home in Levin’s measure.

The legislation would gradually reduce the subsidy rate for BABs from the current 35% level to 32% for bonds sold in 2011, and 30% for those sold in 2012.

“National League of Cities is certainly pleased that the chairman has recognized … that these important provisions need to be extended,” said Lars Etzkorn, program director of the NLC’s center for federal relations.

The NLC was one of six groups that sent a letter earlier this month to senators urging them to pass a BAB extension, saying the program has provided critical assistance to state and local governments during times of extraordinary budgetary pressures. Issuers have sold nearly $120 billion of the securities since passage of the ARRA last year, according to data from Thomson Reuters.

Levin’s bill also includes an extension to another muni provision that encouraged banks to buy more tax-exempt debt from smaller issuers. It would extend by one year, through 2011, the greater small-issuer exemption for bank-qualified bonds.

The ARRA modified the tax law to allow banks to deduct 80% of the costs of buying and carrying tax-exempt debt sold by borrowers whose annual issuance is no greater than $30 million, up from $10 million. It also allowed for the $30 million limit to be applied to individual borrowers participating in conduit deals, rather than at the conduit-issuer level.

“We appreciate and welcome chairman Levin’s leadership in continuing to emphasize the relationship between municipal finance liberalization, stimulus and jobs,” said Charles Samuels, a lawyer with Mintz Levin Cohn Ferris Glovsky & Popeo PC and counsel to the National Association of Health and Educational Facilities Finance Authorities. “Nonprofit education and health continue to need access on reasonable terms to the capital market.”

Susan Gaffney, director of the Government Finance Officers Association’s federal liaison center, also threw her support behind the bank-qualified debt provision, saying it is “vital for smaller local governments to be able to issue debt efficiently and in a cost-effective manner.”

The bill also would extend for one year the programs for recovery zone economic development bonds and recovery zone facility bonds. It would also allocate an additional $10 billion and $15 billion to the programs, respectively. And the bond authority would be allocated using a new formula that would guarantee each locality receives a minimum allocation equal to at least its share of national unemployment as of December 2009.

The bill also would extend for one year, through 2011, the exemption from the alternative minimum tax for all private-activity bonds, including those issued to refund debt sold after 2003. It also would exempt water and sewer exempt-facility bonds from state volume caps for PABs, and allow Federal Home Loan Banks to guarantee tax-exempt bonds through 2011.

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(The Bond Buyer) – A draft bill released by House Ways and Means Committee chairman Sander Levin late Monday would authorize over $5 billion in new bond authority for renewable energy projects and open the door for private-activity bonds to be used by states and localities to finance energy-efficient upgrades to residential homes.

The bill does not include highly sought extensions of several high-profile bond programs that were authorized by the American Recovery and Reinvestment Act — including Build America Bonds.

But that’s no reason to panic, according to sources and market participants, who remain optimistic that lawmakers will take another crack at legislation extending BABs and other expiring tax-law provisions during the coming weeks.

BABs were excluded from the energy bill primarily because they are not energy-related, a congressional source said.

The House had approved a two-year extension for BABs in jobs legislation it passed last month. But the BABs and other bond program and tax law extensions were carved out of the legislation after lawmakers in the Senate failed to garner enough votes to limit debate and avoid a filibuster. President Obama signed the much narrower bill last week.

The draft Domestic Manufacturing and Energy Jobs Act of 2010 unveiled by Levin would authorize an additional $3.5 billion of clean renewable energy bonds, 60% of which would be allocated to public power providers with the remaining 40% going to rural electric cooperatives.

It also would expand the use of CREBs to include energy storage systems and certain biogas equipment. CREBs can be issued as either tax-credit bonds or direct-pay bonds like BABs.

In the direct-pay mode, issuers would receive subsidy payments equal to 70% of interest costs.

The Joint Tax Committee estimated the CREBs provision would cost $1.391 billion over 10 years.

The Levin draft legislation also would authorize $2.4 billion of a new type of tax-credit bond — home energy conservation bonds — that the Treasury Department would allocate to state and local governments.

The bonds could be used to finance residential energy-efficiency assistance programs, provided at least 20% of the proceeds are used to make low-income energy efficiency assistance grants and loans, and at least 10% are used to make “very low-income residential energy efficiency assistance grants,” according to the legislative text.

Like CREBs, issuers would have the option of issuing the bonds as tax-credit or direct-pay bonds.

The provision is estimated to cost $1.252 billion over 10 years.

The legislation also would allow states and localities to issue private-activity bonds to finance homeowner energy-efficiency upgrades and retrofits as part of a property assessed clean-energy program.

The PACE programs have been adopted by 21 states and the District of Columbia. Under the programs, tax-exempt bond proceeds are used to finance the “green” upgrades and are eventually paid back by homeowners via a special assessment on their property taxes.

The provision is estimated to cost $730 million over 10 years by the Joint Tax Ccommittee.

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(The Bond Buyer) – House Ways and Means Committee chairman Sander Levin plans next week to unveil new jobs legislation that would extend Build America Bonds and other muni bond initiatives that are set to expire at the end of the year.

The Michigan Democrat talked to reporters about the jobs bill late last week. A source said the bill will include many of the same bond provisions in earlier jobs legislation the committee approved March 18. It was passed by the House a week later but never gained any traction in the Senate.

The new legislation will be a more streamlined version of the previous bill, with the hope that it will pick up more support and have a better chance of enactment, the source said.

Municipal market participants have been urging lawmakers to extend the BAB program and other bond provisions originally enacted as part of the American Recovery and Reinvestment Act before their year-end expiration dates.

In the earlier House bill, dubbed the Small Business and Infrastructure Jobs Act, the BAB program would have been extended until April 1, 2013, and the current subsidy rate — 35% of interest costs — would have been lowered annually to 33% in 2011, 31% in 2012, and 30% during the first three months of 2013.

That legislation also would have doubled in size the two recovery zone bond programs to $50 billion. It would have authorized an additional $10 billion and $15 billion of economic development bonds and facility bonds, respectively, with the proviso that each municipality receive an allocation equal to at least its share of national unemployment as of December 2009.

The recovery zone economic development and exempt facility bond programs originally were created as part of the ARRA, with issuers authorized to sell an initial $10 billion and $15 billion of the bonds, respectively, for economically distressed areas.

The bill also would have extended through 2011 a stimulus provision exempting all new private-activity bonds from the alternative minimum tax, including bonds refunding debt sold during and after 2003.

In addition, state and local governments would have been able to sell PABs for water and sewer facilities without being limited by state volume caps.

Further, tribal governments would have been permitted to issue private-­activity bonds for sewage and ­water supply facilities without being subject to PAB volume caps or the “essential government function” test that normally limits a tribe’s use of tax-exempt ­financing.

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(The Bond Buyer) – Leaders of the House and Senate tax-writing committees yesterday planned to unveil legislation that would temporarily extend the Build America Bond program as well as several other municipal bond provisions set to expire at the end of the year.

Senate Finance Committee chairman Max Baucus, D-Mont., and House Ways and Means Committee chairman Sander Levin, D-Mich., released a summary of the American Jobs and Closing Tax Loopholes Act that would extend the BAB program to 2012 and gradually reduce its subsidy payment rate to 30% from 35%.

The legislation is to be introduced as an amendment to the so-called extenders package that preserved several expiring or expired tax breaks. The House and Senate each approved extenders bills but had not resolved their differences. The amendment also would include provisions found in a jobs bill that was passed by the House in March but has since stalled in the Senate.

The proposed BAB extension would be three months shorter than the one previously approved by the House in an earlier jobs bill. That bill would have extended BABs until April 1, 2013, and lowered the subsidy payment rate to 30% over the three-year period.

This new legislation would contain the same reduction in the subsidy rate over a shorter period of time. Issuers would receive direct payments equal to 32% of interest costs for BABs they sell in 2011 and 30% for those issued in 2012. President Obama and market participants had been calling for a permanent BAB extension, but congressional leaders warned it would be difficult to find the revenue needed to pay for that under pay-go budget rules where revenue losers must be offset by revenue raisers. The two-year extension would cost an estimated $4 billion over 10 years.

The legislation also would include another provision that has strong advocates in the muni market — a one-year extension for a greater small-issuer exemption for bank-qualified bonds.

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(The Bond Buyer) – Leaders of the House and Senate taxwriting committees are expected today to introduce jobs and extenders legislation that would extend the Build America bonds program for two years, until the end of 2012, and gradually lower the subsidy to 30%.

The American Jobs and Closing Tax Loopholes Act unveiled also would extend a number of expiring tax provisions and includes several muni bond provisions previously approved by the House in separate legislation that stalled in the Senate. While the House had previously signed off on a BAB extension that would last until April 1, 2013, this new bill would shorten the program by three months, most likely to lower the cost of the bill.

Provisions in the soon-to-be introduced legislation would help companies and state and local governments spur job growth while also providing critical tax relief and economic assistance to American families who were hit hard by the recession,” said House Ways and Means Committee Chairman Sander Levin, D-Mich.

The small issuer exemption for bank-qualified debt would remain at $30 million for another year, through 2011, under the bill. That limit was increased from $10 million to $30 million as part of the American Recovery and Reinvestment Act. The bill also would continue allowing that limit to be applied to borrowers in conduit deals.

The measure also would allocate an additional $25 billion of Recovery Zone bonds, modify the allocation formula to ensure each municipality receives a minimum allocation equal to at least its share of national unemployment at the end of 2009, and extend the program by one year through 2011.

The exemption of private activity bonds from the alternative minimum tax also would be extended for another year, through 2011, and Federal Home Loan Banks could guarantee tax-exempt debt until 2012 as well.

Water and sewer exempt-facility bonds would be exempt from state volume caps under the bill.

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(Reuters) – Congressional leaders will introduce a bill on Thursday to extend the stimulus plan’s Build America Bond program while gradually lowering the federal subsidy paid to those who sell the popular debt.

The taxable Build America Bonds were created in the stimulus plan passed last year and pay issuers a federal rebate of 35 percent. The program is set to expire along with the stimulus at the end of the year. Leaders in the House of Representatives and Senate say it should be extended to keep credit flowing to financially struggling states and cities.

The bill, written by Senate Finance Committee Chairman Max Baucus and House Ways and Means Committee Chairman Sander Levin, would extend Build America Bonds by two years but lower the subsidy to 30 percent, according to a summary released early on Thursday.

The legislation also extends unemployment and other benefits for millions of Americans, and faces hurdles in Congress, given its size and controversial provisions.

President Barack Obama had suggested in his proposed budget making the BABs program permanent, but lowering the subsidy to 28 percent. Last month, Levin told Reuters a permanent program would be too expensive.

The legislation is the closest step yet for keeping BABs alive, just as the debt grows more popular with foreign buyers and with issuers. A total of $102 billion of the bonds have been sold so far, financing infrastructure projects across the nation.

BABs represent 20.5 percent of new issues in the municipal bond market and have largely been credited with breaking a freeze that spread through the market at the end of 2008.

According to the summary, the BABs extension would likely cost the federal government $4.042 billion over 10 years.

The legislation would also extend other stimulus provisions related to the municipal bond market that were designed to help states and cities cope with the longest and deepest economic recession since the end of World War Two.

It would extend the Recovery Zone bond program that functions similarly to BABs but offers a steeper rebate of 45 percent.

The bonds were intended to alleviate the stress of unemployment in areas where joblessness is high. The formula for allocating the bond issuance to local governments proved cumbersome and cities and counties have been racing to try to meet the requirements before the stimulus ends.

Under the bill, the formula would change to consider unemployment rates instead of net job losses and the allocations would increase. The program would also continue through 2011.

The legislation would continue to exclude private activity bonds, or those sold for projects that fall outside the bounds of typical civic activities, from calculations of an individual’s alternative minimum tax through 2011.

It would also eliminate bonds for water and sewers from the volume caps imposed on states for private activity bonds.

The stimulus redefined a small bond issuer as one who issues $30 million in tax-exempt debt from one who sells $10 million in bonds annually. That allowed more issuers to qualify for an exception in the tax law that allows financial institutions to buy tax-exempt debt and deduct a portion of the interest. Thursday’s bill would also extend this through 2011.

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(Reuters) – The popular U.S. stimulus debt program known as Build America Bonds, which has revived the municipal bond market and boosted infrastructure spending, will likely not become permanent, the chairman of the House of Representatives Ways and Means committee said on Monday.

“Permanency is expensive, and we have to pay for it,” said Sander Levin, a Michigan Democrat, at the Reuters Global Financial Regulation Summit in Washington, D.C.

President Barack Obama has suggested making Build America Bonds a permanent program and dropping the subsidy it pays issuers to 28 percent of interest costs. The taxable debt was created in the economic stimulus plan passed last year and pays issuers a rebate equal to 35 percent of interest costs.

There is no cap on the program, and its major limit is that it expires at the end of the year.

The House recently passed legislation from Levin’s committee that would extend Build America Bonds through 2013 and gradually lower the subsidy level to 30 percent.

The committee estimated that the extension would cost $7.46 billion over 10 years.

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(Bond Buyer) – Legislation that would extend the Build America Bonds program until April 2013 at gradually reduced subsidy rates was approved by a vote of 246 to 178 in the House yesterday.

The Small Business and Infrastructure Jobs Tax Act of 2010 now advances to the Senate but it is unclear when that chamber will take it up. Senate Finance Committee staff could not be reached for comment.

The bill would extend the BAB program until April 1, 2013, but the current subsidy rate — 35% of interest costs — would be lowered annually to 33% in 2011, 31% in 2012, and 30% in the first three months of 2013.

House Ways and Means Committee chairman Sander Levin, D-Mich., said yesterday during debate on the bill that BABs have been “a vital resource for state and local governments looking to expand infrastructure programs.”

The extension falls short of President Obama’s fiscal 2011 budget request to make the BAB program permanent at a 28% subsidy rate, which the administration contends would be revenue-neutral.

But in a letter sent to Levin on Monday, the National Association of State Treasurers warned that issuers would not continue to use BABs at that rate.

“It was made quite clear by several state treasurers that a precipitous reduction to 28% … would mean that their states would not issue such bonds if current economic circumstances remain,” wrote James B. Lewis, NAST’s president and New Mexico’s treasurer.

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(CNNMoney.com) — Now that it’s taken its first baby step towards creating jobs, Congress is looking at more measures to spur employment.

Don’t expect any blockbuster bills with inventive hiring initiatives. With partisan politics dominating Capitol Hill, lawmakers are concentrating on bite-sized bills that are easier to pass. Most of the measures merely extend or expand existing laws.

In the House, members are expected to take up legislation next week that contains a medley of tax benefits for small businesses, including a provision allowing entrepreneurs to deduct up to $20,000 of startup costs, up from $5,000 currently.

The bill also focuses on making infrastructure projects easier and less costly for states and cities to fund. For instance, the legislation would extend through 2013 the Recovery Act’s popular Build America Bonds program, which has financed more than $78 billion in projects as of March 1.

“Small businesses are an important engine of our economy and this bill combines a number of proposals to help them grow and free up resources to hire new workers,” said Rep. Sander Levin, D-Mich., the bill’s sponsor. “This bill also extends effective financing measures like the Build America and Recovery Zone Bonds so that they can continue creating new jobs while making critical improvements to our communities.”

In the Senate, the chamber will take up a small business measure in mid-April. It is still being crafted, a leadership aide said.

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(Bloomberg) — The House Ways and Means Committee voted 25-15 along party lines to approve a three-year extension of the Build America Bonds program, the fastest-growing part of the $2.8 trillion U.S. municipal debt market.

The measure will be sent to the full House for consideration as early as next week. The federally subsidized Build America program, created last year as part of the government’s economic stimulus, is set to expire Dec. 31.

“By assisting small businesses and continuing effective financing mechanisms for state and local governments, we can spur job growth and make vital improvements to our communities,” said acting Committee Chairman Sander Levin, a Michigan Democrat.

State and local governments from California to New York have cut borrowing costs by selling $86 billion of Build America Bonds for construction projects, according to data compiled by Bloomberg. The U.S. Treasury subsidizes 35 percent of the interest costs on BABs, in contrast to the tax breaks afforded to buyers of conventional municipal securities.

The bill passed today would reduce future subsidies to 33 percent in 2011, 31 percent in 2012, and 30 percent in 2013, according to an analysis prepared for the Ways and Means Committee. President Barack Obama’s fiscal 2011 budget proposed extending and expanding the program while reducing the subsidy to 28 percent.

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