Investing in Our Communities Act

The Investing in Our Communities Act would reinstate advance refunding bonds by amending the Internal Revenue Code. Advance refunding bonds are bonds issued to refinance outstanding municipal bonds before the original bonds mature, using the proceeds of a new bond issue. The bill changes how these refundings can be issued and imposes specific restrictions to govern when and how they may be used, with separate rules for private activity bonds (bonds used to finance projects with some private benefit) and for other bonds. The intent is to allow municipalities to refinance debt again, but only under conditions designed to preserve debt-service savings, limit arbitrage opportunities, and curb abusive transactions. Key provisions include: broadening the categories of bonds that can be part of an advance refunding issue, setting timing and redemption rules (e.g., limits based on when the original bond was issued, and a minimum 90-day window before redemption), establishing investment rules for the proceeds during an initial temporary period, and creating anti-abuse provisions to prevent gaming the system for arbitrage gains. The bill also makes transitional rules for bonds issued before enactment and adds a conforming amendment to related tax rules. The effective date applies to advance refunding bonds issued after enactment.