Matthias Edrich Quoted in Tax NotesNews | August 9, 2021
Matthias Edrich, a tax partner in Kutak Rock’s Denver office, was quoted in the August 6 Tax Notes article “Exempt Bond Provisions in Infrastructure Bill Called Insufficient.”
According to Mr. Edrich, a handful of tax-exempt bond provisions pertaining to private activity bonds (PABs) in the Infrastructure and Jobs Act (H.R. 3684), under consideration in the Senate, may not go far enough. He remarked, “The three bond-related provisions in the Senate bill promise to be useful to certain issuers and certain infrastructure projects. However, they fall short of addressing important infrastructure tools municipalities have been clamoring for.”
Under the bill, states could issue PABs to pay for qualified broadband projects in areas where most homes lack broadband access and legislation would permit financing for carbon capture and direct air capture technologies.
Mr. Edrich expressed his concerns, stating “The provisions on broadband projects and carbon dioxide capture facilities, though potentially useful, lack rules to address post-issuance noncompliance. The legislation is unclear on how to address temporary reductions in broadband speed of a bond-financed project. Similarly, for carbon dioxide capture facilities, it’s unclear how issuers should address post-issuance changes that affect the facilities’ capture and storage rates.”
Mr. Edrich pointed out that both types of bonds—for broadband and carbon dioxide capture facilities—have a volume cap requirement, albeit with a partial exception. Unless Congress increases the volume cap for PABs generally, existing infrastructure projects will use up the volume cap in many states, leaving little opportunity for additional projects.
Matthias Edrich is a member of Kutak Rock’s national federal tax and public finance practice. His work focuses on U.S. tax aspects of financial instruments, with an emphasis on tax-exempt bonds.