States would enjoy more private activity bond volume flexibility under an affordable housing provision in the Build Back Better bill. The legislation would reduce the so-called financing test for tax-exempt private activity bonds to 25% from 50%. Lowering the threshold would free up states' private activity volume for more affordable housing, or any other projects eligible for PABs financing.

The bipartisan infrastructure bill provides the muni industry with a considerable win, though muni industry advocates are still pushing for their largest priorities to be included in the still unfinalized reconciliation bill. The bipartisan infrastructure bill includes $550 million to reauthorize surface transportation funding programs, and increases the federally-administered private activity bond volume cap to $30 billion from $15 billion. The bill also includes two specific bond provisions.