Investing in Our Communities Act

I 116TH CONGRESS 1ST SESSION H. R. 2772 To amend the Internal Revenue Code of 1986 to reinstate advance refunding bonds. IN THE HOUSE OF REPRESENTATIVES MAY 15, 2019 Mr. RUPPERSBERGER (for himself, Mr. STIVERS, Ms. SEWELL of Alabama, Mr. ZELDIN, Ms. NORTON, Mr. KRISHNAMOORTHI, Mr. GARAMENDI, Mr. KILMER, Mr. CUELLAR, and Mr. BARR) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to reinstate advance refunding bonds. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Investing in Our Com- 4 munities Act’’. 5 SEC. 2. TREATMENT OF ADVANCE REFUNDING BONDS. 6 (a) IN GENERAL.—Section 149(d) of the Internal 7 Revenue Code of 1986 is amended— 8 VerDate Sep 11 2014 01:25 May 29, 2019 Jkt 034408 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2772.IH H2772 pbinns on DSK79D2C42PROD with BILLS 2 •HR 2772 IH (1) in paragraph (1), by striking ‘‘to advance 1 refund another bond’’ and inserting ‘‘as part of an 2 issue described in paragraph (2), (3), or (4)’’; 3 (2) by redesignating paragraphs (2) and (3) as 4 paragraphs (6) and (7), respectively; and 5 (3) by inserting after paragraph (1) the fol- 6 lowing new paragraphs: 7 ‘‘(2) CERTAIN PRIVATE ACTIVITY BONDS.—An 8 issue is described in this paragraph if any bond 9 (issued as part of such issue) is issued to advance 10 refund a private activity bond (other than a qualified 11 501(c)(3) bond). 12 ‘‘(3) OTHER BONDS.— 13 ‘‘(A) IN GENERAL.—An issue is described 14 in this paragraph if any bond (issued as part of 15 such issue), hereinafter in this paragraph re- 16 ferred to as the ‘refunding bond’, is issued to 17 advance refund a bond unless— 18 ‘‘(i) the refunding bond is only— 19 ‘‘(I) the 1st advance refunding of 20 the original bond if the original bond 21 is issued after 1985, or 22 ‘‘(II) the 1st or 2nd advance re- 23 funding of the original bond if the 24 original bond was issued before 1986, 25 VerDate Sep 11 2014 01:25 May 29, 2019 Jkt 034408 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2772.IH H2772 pbinns on DSK79D2C42PROD with BILLS 3 •HR 2772 IH ‘‘(ii) in the case of refunded bonds 1 issued before 1986, the refunded bond is 2 redeemed not later than the earliest date 3 on which such bond may be redeemed at 4 par or at a premium of 3 percent or less, 5 ‘‘(iii) in the case of refunded bonds 6 issued after 1985, the refunded bond is re- 7 deemed not later than the earliest date on 8 which such bond may be redeemed, 9 ‘‘(iv) the initial temporary period 10 under section 148(c) ends— 11 ‘‘(I) with respect to the proceeds 12 of the refunding bond not later than 13 30 days after the date of issue of such 14 bond, and 15 ‘‘(II) with respect to the proceeds 16 of the refunded bond on the date of 17 issue of the refunding bond, and 18 ‘‘(v) in the case of refunded bonds to 19 which section 148(e) did not apply, on and 20 after the date of issue of the refunding 21 bond, the amount of proceeds of the re- 22 funded bond invested in higher yielding in- 23 vestments (as defined in section 148(b)) 24 which are nonpurpose investments (as de- 25 VerDate Sep 11 2014 01:25 May 29, 2019 Jkt 034408 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2772.IH H2772 pbinns on DSK79D2C42PROD with BILLS 4 •HR 2772 IH fined in section 148(f)(6)(A)) does not ex- 1 ceed— 2 ‘‘(I) the amount so invested as 3 part of a reasonably required reserve 4 or replacement fund or during an al- 5 lowable temporary period, and 6 ‘‘(II) the amount which is equal 7 to the lesser of 5 percent of the pro- 8 ceeds of the issue of which the re- 9 funded bond is a part or $100,000 (to 10 the extent such amount is allocable to 11 the refunded bond). 12 ‘‘(B) SPECIAL RULES FOR REDEMP- 13 TIONS.— 14 ‘‘(i) ISSUER MUST REDEEM ONLY IF 15 DEBT SERVICE SAVINGS.—Clause (ii) and 16 (iii) of subparagraph (A) shall apply only 17 if the issuer may realize present value debt 18 service savings (determined without regard 19 to administrative expenses) in connection 20 with the issue of which the refunding bond 21 is a part. 22 ‘‘(ii) REDEMPTIONS NOT REQUIRED 23 BEFORE 90TH DAY.—For purposes of 24 clauses (ii) and (iii) of subparagraph (A), 25 VerDate Sep 11 2014 01:25 May 29, 2019 Jkt 034408 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2772.IH H2772 pbinns on DSK79D2C42PROD with BILLS 5 •HR 2772 IH the earliest date referred to in such clauses 1 shall not be earlier than the 90th day after 2 the date of issuance of the refunding bond. 3 ‘‘(4) ABUSIVE TRANSACTIONS PROHIBITED.— 4 An issue is described in this paragraph if any bond 5 (issued as part of such issue) is issued to advance 6 refund another bond and a device is employed in 7 connection with the issuance of such issue to obtain 8 a material financial advantage (based on arbitrage) 9 apart from savings attributable to lower interest 10 rates. 11 ‘‘(5) SPECIAL RULES FOR PURPOSES OF PARA- 12 GRAPH (3).—For purposes of paragraph (3), bonds 13 issued before the date of the enactment of this sub- 14 section shall be taken into account under subpara- 15 graph (A)(i) thereof except— 16 ‘‘(A) a refunding which occurred before 17 1986 shall be treated as an advance refunding 18 only if the refunding bond was issued more 19 than 180 days before the redemption of the re- 20 funded bond, and 21 ‘‘(B) a bond issued before 1986, shall be 22 treated as advance refunded no more than once 23 before March 15, 1986.’’. 24 VerDate Sep 11 2014 01:25 May 29, 2019 Jkt 034408 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2772.IH H2772 pbinns on DSK79D2C42PROD with BILLS 6 •HR 2772 IH (b) CONFORMING AMENDMENT.—Section 1 148(f)(4)(C) of such Code is amended by redesignating 2 clauses (xiv) through (xvi) as clauses (xv) through (xvii) 3 and by inserting after clause (xiii) the following new 4 clause: 5 ‘‘(xiv) DETERMINATION OF INITIAL 6 TEMPORARY PERIOD.—For purposes of 7 this subparagraph, the end of the initial 8 temporary period shall be determined with- 9 out regard to section 149(d)(3)(A)(iv).’’. 10 (c) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to advance refunding bonds issued 12 after the date of the enactment of this Act. 13 Æ VerDate Sep 11 2014 01:25 May 29, 2019 Jkt 034408 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H2772.IH H2772 pbinns on DSK79D2C42PROD with BILLS