Trump Infrastructure Plan Leaked Draft Emerges

Tuesday, a leaked draft outline of the Trump Administration’s infrastructure plan began circulating in Washington and beyond. One of the key planks of the plan includes enhancing private activity bonds (PABs), including removing the state PAB volume cap.

It is uncertain whether the leaked draft reflects the Administration’s final infrastructure proposal. The Administration is expected to release its official proposal sometime next week to coincide with the President’s State of the Union Address on January 30.

In addition to calling for the elimination of the state volume cap on PAB issuance, the draft plan proposes to exempt interest earned on all PABs from the Alternative Minimum Tax (AMT). While all newly issued Housing Bonds have been AMT-exempt since 2008, expanding the exemption could lower the costs of refunding Housing Bonds that were originally issued before July 2008, which NCSHA has sought for several years.

The draft plan would also eliminate the long-time prohibition on PAB advanced refundings. Historically, while advanced refundings were not allowed for most PABs, they were allowed for general obligation municipal bonds and 501(c)3 bonds. However, the recent tax reform legislation that the President signed into law last month eliminated advanced refunding for all municipal bonds.

The plan also proposes to adjust the "change-of-use" provisions in the tax code to allow more PABs to preserve their tax-emption and to, "[R]equire public attributes for core public infrastructure projects." No further details are provided for these proposals.

The outline also includes several grant and lending programs to help state and local governments finance infrastructure investments, but does not appear to include housing as an eligible activity for any of them.

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