WASHINGTON, D.C. - H.R. 1, The American Recovery and Reinvestment Act of 2009, provides critical assistance to State and local governments to start rebuilding America’s infrastructure and create jobs through a variety of investment tools, including subsidized tax-exempt and tax-credit bonds.
“In order to restore our economic health, we must start at the local level, investing directly in our communities to improve our infrastructure - our roads, schools, and bridges. These are projects that will create new jobs immediately and help maintain America’s competitive edge in the global marketplace," said Rep. Charles B. Rangel (D-NY), Chairman of the Ways and Means Committee. “I am confident that the projects created by this recovery package will help our nation emerge from this period stronger than ever."
H.R. 1 will help State and local governments:
Jumpstart Projects with “Build America Bonds." The recovery package provides a tax credit bond option for State and local governments to elect to receive a direct payment from the Federal government equal to the subsidy that would have otherwise been delivered through the Federal tax credit for bonds issued in 2009 and 2010.
Target Assistance to “Recovery Zones." The package targets assistance to areas suffering the most from the recession by providing tax-exempt bonds and tax credit bonds, the proceeds of which can be used to invest in to establish “Recovery Zones." Recovery Zones are areas within a State, city or county that have exhibited high unemployment, foreclosures, poverty or general economic distress. These bonds would be allocated directly to States and large municipal governments based on the number of jobs lost within that area.
Modernize Schools, Spur Construction Projects. The recovery package includes bond-financing programs for school construction, repair, and rehabilitation to make critical improvements to school facilities and promote a safe, clean and modern learning environment for our kids.
Summary of Provisions included in H.R. 1:
Assistance to State and Local Governments: The recovery package provides direct assistance to governments to help them free up funding for local infrastructure projects to improve our roads, schools and bridges while also creating good-paying jobs.
· “Build America Bonds" Tax credit bond option for State and local governments. The package provides financial support to State and local governments by giving them the option of issuing a tax credit bond instead of a tax-exempt governmental obligation bond. Because the market for tax credits is currently small given current economic conditions, the package would allow the State or local government to elect to receive a direct payment from the Federal government equal to the subsidy that would have otherwise been delivered through the Federal tax credit for bonds issued in 2009 and 2010. This proposal is estimated to cost $4.348 billion over 10 years.
Improving America’s Aging Schools: The recovery package includes bond-financing programs for school construction, repair, and rehabilitation to make critical improvements to school facilities and promote a safe, clean and modern learning environment for our kids.
· Qualified school construction bonds. The package creates a new category of tax credit bonds for the construction, rehabilitation, or repair of public school facilities or for the acquisition of land on which a public school facility will be constructed. This proposal is estimated to cost $9.877 billion over 10 years.
· Extension and increase in authorization for qualified zone academy bonds (QZABs). The
recovery package would allow an additional QZABs (form of tax credit bond) for State and local governments in 2009 and 2010, which can be used to finance renovations, equipment purchases, developing course material, and training teachers and personnel at a qualified zone academy. This proposal is estimated to cost $1.045 billion over 10 years.
Assistance to Distressed Areas: The recovery package targets assistance to areas suffering the most from the recession by providing tax-exempt bonds and tax credit bonds, the proceeds of which can be used to invest in to establish “Recovery Zones." “Recovery Zones" are areas within a State, city or county that have exhibited high unemployment, foreclosures, poverty or general economic distress. These bonds would be allocated directly to States and large municipal governments based on the number of jobs lost within that area. This proposal is estimated to cost $ 5.371 billion over 10 years.
