SWIC applauds the introduction of the Sustainable Water Infrastructure Investment Act of 2014 (H.R. 4237) in the U.S. House of Representatives on March 13. The bipartisan legislation would amend the Internal Revenue Code to provide that the volume cap for private activity bonds (PABs) shall not apply to bonds for facilities for furnishing of water and sewage facilities. PABs allow state governments and municipalities to issue tax-exempt bonds to private investors in order to fund water and wastewater infrastructure projects. The water PAB volume cap is the last major federal impediment of allowing the public sector to satisfy demand in partnership with private service providers.
Lifting the cap would allow local communities to leverage private capital markets in combination with other finance mechanisms and provide an influx of low cost private capital to finance water and wastewater infrastructure projects. Similar policy changes related to PABs have a proven track record in generating significant private capital resources to fund important projects on other governmentally owned facilities such as airports, ports, high-speed intercity rail and solid waste disposal sites.
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