Findings and purpose

(a)

Findings

Congress finds the following: (1)Our Nation’s water and wastewater systems are among the best in the world, providing safe drinking water and sanitation to our citizens. (2)In addition to protecting the health of our citizens, community water systems are essential to our local economies, enabling industries to achieve growth and productivity that makes America strong and prosperous. (3)Regulated under title XIV of the Public Health Service Act (42 U.S.C. 300f et seq.; commonly known as the “Safe Drinking Water Act”) and the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), community drinking water systems and wastewater collection and treatment facilities are critical elements in the Nation’s infrastructure. (4)Water and wastewater infrastructure is comprised of a mixture of old and new technology. The old infrastructure is deteriorating and is costly to replace. Recent government studies have estimated costs of $500–$800 billion over the next 20 years for maintaining and improving the existing inventory, building new infrastructure, and meeting new water quality standards. (5)Many local communities have neither the resources for water infrastructure rehabilitation, nor post-9/11 security upgrades, and need to find creative solutions to this funding crisis. (6)The historical approach of funding infrastructure is insufficient to meet the investment needs of the future. Federal financial assistance programs have been dramatically reduced since the 1970s, and currently are not sufficient to address the infrastructure funding crisis. (7)The Federal partnership with State and local communities has played a pivotal role in improving the Nation’s water quality and drinking water supplies. Federal assistance under this partnership has been the linchpin of these improvements. (8)In light of constrained Federal budgets, the availability of tax-exempt financing represents an important financing tool to help close the gap between available Federal assistance and water infrastructure needs while preserving the Federal partnership. (9)Providing alternative financing solutions, such as tax-exempt securities, encourages investment in water and wastewater infrastructure that in turn creates local jobs and protects the health of our citizens. (10)Federally mandated State volume cap restrictions in conjunction with other priorities have limited the use of tax-exempt securities on water and wastewater infrastructure investment. (11)Removal of State volume caps for water and wastewater infrastructure will make lower interest capital available and enable municipalities, water districts, investor owned utilities, public-private partnerships, rural water corporations, and river authorities to upgrade the Nation’s critical water and wastewater infrastructure at the lowest possible cost and comply with Federal mandates. (b)

Purpose

The purpose of this Act is to provide alternative financing for long-term infrastructure capital investment that is currently not being met by existing investment programs, and to restore the Nation’s safe drinking water and wastewater infrastructure capability and protect the health of our citizens.

Tax-exempt bonds for sewage and water supply facilities

(a)

Bonds for water and sewage facilities exempt from volume cap on private activity bonds

Paragraph (3) of section 146(g) of the Internal Revenue Code of 1986 (relating to exception for certain bonds) is amended— (1)by inserting (4), (5), after (2),, and (2)by inserting facilities for the furnishing of water, sewage facilities, after docks and wharves,. (b)

Conforming Change

Paragraph (2) and paragraph (3)(B) of section 146(k) of such Code are both amended by striking (4), (5), (6), and inserting (6). (c)

Effective date

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