On May 4, 2015, U.S. Senate Finance Committee Ranking minority member Ron Wyden, an Oregon Democrat, and Senator John Hoeven, a Republican from North Dakota, introduced legislation entitled the "Move America Act of 2015," which creates a new category of qualified private activity tax-exempt bonds and a new infrastructure tax credit. The new type of exempt facility tax-exempt bond is intended to encourage further investment by private parties in financing infrastructure projects by relaxing some existing restrictions imposed on tax-exempt bonds. The proposal for a new tax credit is a new tool for encouraging additional financings of projects.
The bill provides for creation of "Move America Bonds" that could be issued to finance airports, docks, wharves, mass commuting facilities, freight and passenger rail, highways, freight transfer facilities, flood diversion projects, and inland and coastal waterway improvements. The qualifying projects for docks and wharves are expanded to include waterborne mooring infrastructure, dredging in connection with a dock and wharf, and any associated road and rail improvements that integrate modes of transportation. Under current law, airports, docks, wharves, and mass commuting facilities that are financed with exempt facility tax-exempt bonds must be owned by the government. In contrast, under the bill, as long as the facilities are available for general public use, the governmental ownership requirement does not apply to Move America Bonds.
Another benefit is that interest income on Move America Bonds is excluded from the alternative minimum tax. Up to 50 percent of proceeds of Move America Bonds could be spent on land acquisition in connection with a qualified project (as contrasted with the existing 25 percent limitation on land acquisition for qualified private activity bonds). The bill provides that Move America Bonds would be subject to a uniform volume cap—50 percent of a state's current private activity bond volume cap—and allows states to carry forward unused volume cap for up to three years.
The bill also creates a new form of tax credits called “Move America Credits” that could be used on any project that qualifies for Move America Bonds. To use Move America Credits, a state must exchange all or a portion of its Move America Bonds volume cap for the ability to sell Move America credit certificates. For every dollar of bond volume cap a state trades, it receives $0.25 of credit allocation. For example, a state receiving $100 of Move America Bond volume could alternatively trade in that $100 for $25 of Move America Credits. One limitation: the aggregate value of the Move America Credit certificates sold or allocated by a state and designed by the state as relating to any qualified project cannot exceed the lesser of 20 percent of the project's estimated cost or 50 percent of the total private investment in a project.
Move America Credit certificates would be sold to a taxpayer under a qualified Move America Credit program, which would be established by a state or a state-designated project sponsor. Move America Credit certificates would be available to taxpayers once the project has been placed in service. The taxpayer could claim the credit at 10 percent per year for 10 years. If during the 10-year period the project ceases to be a qualified project, the credits would be recaptured at a rate of 10 percent for each year remaining in the 10-year credit period.
The proposal for Move America Bonds in the bill resembles Qualified Public Infrastructure Bonds, a new type of bond proposed in the Obama Administration's 2016 Budget. A detailed discussion of the 2016 Budget Proposals can be found in our previous alert, Obama's Proposed 2016 Budget Seeks to Address Infrastructure Needs.
