No CRS summary available for this bill.
This section establishes the short title of the Act as the “Investing in Our Communities Act.”
This section revises the tax treatment of advance refunding bonds under section 149(d) of the Internal Revenue Code of 1986 by generally prohibiting tax-exempt advance refundings except in specified circumstances. It adds new categories for (1) certain private activity bonds, allowing advance refunding only for private activity bonds other than qualified 501(c)(3) bonds, and (2) other bonds, allowing advance refunding only for the first advance refunding of a bond issued after 1985 or the first or second advance refunding of a bond issued before 1986, subject to redemption timing, temporary-period, and investment restrictions. As background, advance refunding bonds are used by state and local governments to refinance outstanding debt before the original bonds are callable, often to reduce borrowing costs. The section also limits these refundings to transactions that produce present value debt service savings, requires that the refunded bond not be redeemed earlier than the 90th day after issuance of the refunding bond, and bars abusive arbitrage transactions that seek a material financial advantage apart from lower interest rates. It further provides special transition rules for bonds issued before enactment, including a rule that a pre-1986 refunding counts as an advance refunding only if the refunding bond was issued more than 180 days before redemption of the refunded bond, and a rule that a bond issued before 1986 may be treated as advance refunded no more than once before March 15, 1986. The section makes a conforming amendment to section 148(f)(4)(C) to clarify that the end of the initial temporary period is determined without regard to the new advance refunding rule in section 149(d)(3)(A)(iv). The amendments apply to advance refunding bonds issued after the date of enactment.