Build America Bonds made permanent; Recovery zone economic development bonds for certain cities

(a)

In general

Subparagraph (B) of section 54AA(d)(1) of the Internal Revenue Code of 1986 is amended by inserting or during a period beginning on or after the date of the enactment of the Bringing Urgent Investment to Local Development Act, after January 1, 2011,. (b)

Reduction in credit percentage to bondholders

Subsection (b) of section 54AA of such Code is amended to read as follows:

(b)

Amount of credit

(1)

In general

The amount of the credit determined under this subsection with respect to any interest payment date for a build America bond is the applicable percentage of the amount of interest payable by the issuer with respect to such date. (2)

Applicable percentage

For purposes of paragraph (1), the applicable percentage shall be determined under the following table: In the case of a bond issuedThe applicable during calendar year:percentage is:2014352015322016312017302018292019 and thereafter28.

(c)

Extension of payments to issuers

(1)

In general

Section 6431 of such Code is amended— (A)by inserting or during a period beginning on or after the date of the enactment of the Bringing Urgent Investment to Local Development Act, after January 1, 2011, in subsection (a), and (B)by striking before January 1, 2011 in subsection (f)(1)(B) and inserting during a particular period. (2)

Conforming amendments

Subsection (g) of section 54AA of such Code is amended— (A)by inserting or during a period beginning on or after the date of the enactment of the Bringing Urgent Investment to Local Development Act, after January 1, 2011,, and (B)by striking

qualified bonds issued before 2011

in the heading and inserting

certain qualified bonds

. (d)

Reduction in percentage of payments to issuers

Subsection (b) of section 6431 of such Code is amended— (1)by striking The Secretary and inserting the following:

(1)

In general

The Secretary

(2)by striking 35 percent and inserting the applicable percentage, and (3)by adding at the end the following new paragraph:

(2)

Applicable percentage

For purposes of this subsection, the term applicable percentage means the percentage determined in accordance with the following table: In the case of a qualified bond The applicable issued during calendar year:percentage is:2014352015322016312017302018292019 and thereafter28.

(e)

Recovery zone economic development bonds for certain cities

(1)

In general

Section 54AA of such Code is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following:

(h)

Special rule for recovery zone economic development bonds for certain cities

In the case of an economic development extension bond— (1)

Issuer allowed refundable credit

In lieu of any credit allowed under this section with respect to such bond, the issuer of such bond shall be allowed a credit as provided in section 6431. (2)

Applicable percentage

The applicable percentage under subsection (b) shall be 35 percent. (3)

Economic development extension bond

For purposes of this subsection— (A)

In general

The term economic development extension bond means any build America bond issued as part of an issue if— (i)100 percent of the excess of— (I)the available project proceeds (as defined in section 54A) of such issue, over (II)the amounts in a reasonably required reserve (within the meaning of section 150(a)(3)) with respect to such issue,

are to be used for one or more qualified purposes, and

(ii)the issuer makes an irrevocable election to have this subsection apply and designates such bond for purposes of this section. (B)

Qualified purposes

The term qualified purposes means— (i)any qualified economic development purpose (as defined in section 1400U–2(c), applied by treating specified cities (and only specified cities) as recovery zones), and (ii)any refinancing of indebtedness of a specified city which is outstanding on the date of the enactment of this subsection. (C)

Specified city

The term specified city means any principal city for a metropolitan statistical area (as determined by the Office of Management and Budget) which— (i)has an average unemployment rate of not less than 150 percent of the national average rate for the last calendar year ending before the date of the enactment of this section, (ii)has a poverty rate of not less that 150 percent of the national poverty rate for the last calendar year ending before the date of the enactment of this section, or (iii)has lost at least 20 percent of its population between calendar year 2000 and calendar year 2010. (D)

Limitation on amount of bonds designated

(i)

In general

The maximum aggregate face amount of bonds which may be designated under subparagraph (A) with respect to any specified city shall not exceed the bond limitation allocated to such city under clause (ii). (ii)

Allocation

The Secretary shall allocate bond limitation to each specified city such that the bond limitation allocated to such city bears the same proportion to $1,000,000,000 as the population of such city (as determined for purposes of the 2010 census) bears to the total population of all specified cities (as so determined).

(2)

Payments to issuers

Section 6431 of such Code is amended by adding at the end the following:

(g)

Application of section to certain economic development extension bonds

(1)

In general

An economic development extension bond shall be treated as a qualified bond for purposes of this section. (2)

Applicable percentage

The applicable percentage under subsection (b) shall be 35 percent.

(f)

Current refundings permitted

Subsection (g) of section 54AA of such Code is amended by adding at the end the following new paragraph:

(3)

Treatment of current refunding bonds

(A)

In general

For purposes of this subsection, the term qualified bond includes any bond (or series of bonds) issued to refund a qualified bond if— (i)the average maturity date of the issue of which the refunding bond is a part is not later than the average maturity date of the bonds to be refunded by such issue, (ii)the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and (iii)the refunded bond is redeemed not later than 90 days after the date of the issuance of the refunding bond. (B)

Applicable percentage

In the case of a refunding bond referred to in subparagraph (A), the applicable percentage with respect to such bond under section 6431(b) shall be the lowest percentage specified in paragraph (2) of such section. (C)

Determination of average maturity

For purposes of subparagraph (A)(i), average maturity shall be determined in accordance with section 147(b)(2)(A). (D)

Issuance restriction not applicable

Subsection (d)(1)(B) shall not apply to a refunding bond referred to in subparagraph (A).

(g)

Gross-Up of payment to issuers in case of sequestration

In the case of any payment under section 6431(b) of the Internal Revenue Code of 1986 made after the date of the enactment of this Act to which sequestration applies, the amount of such payment shall be increased to an amount equal to— (1)such payment (determined before such sequestration), multiplied by (2)the quotient obtained by dividing 1 by the amount by which 1 exceeds the percentage reduction in such payment pursuant to such sequestration.

For purposes of this subsection, the term sequestration means any reduction in direct spending ordered in accordance with a sequestration report prepared by the Director of the Office and Management and Budget pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985 or the Statutory Pay-As-You-Go Act of 2010.

(h)

Effective date

The amendments made by this section shall apply to obligations issued on or after the date of the enactment of this Act.