SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bringing Urgent Investment to Local 
Development Act'' or the ``BUILD Act''.

SEC. 2. BUILD AMERICA BONDS MADE PERMANENT; RECOVERY ZONE ECONOMIC 
              DEVELOPMENT BONDS FOR CERTAIN CITIES.

    (a) In General.--Subparagraph (B) of section 54AA(d)(1) of the 
Internal Revenue Code of 1986 is amended by inserting ``or during a 
period beginning on or after the date of the enactment of the Bringing 
Urgent Investment to Local Development Act,'' after ``January 1, 
2011,''.
    (b) Reduction in Credit Percentage to Bondholders.--Subsection (b) 
of section 54AA of such Code is amended to read as follows:
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any interest payment date 
        for a build America bond is the applicable percentage of the 
        amount of interest payable by the issuer with respect to such 
        date.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be determined under the 
        following table:

``In the case of a bond issued                           The applicable
  during calendar year:                                  percentage is:
        2014...................................................     35 
        2015...................................................     32 
        2016...................................................     31 
        2017...................................................     30 
        2018...................................................     29 
        2019 and thereafter....................................  28.''.
    (c) Extension of Payments to Issuers.--
            (1) In general.--Section 6431 of such Code is amended--
                    (A) by inserting ``or during a period beginning on 
                or after the date of the enactment of the Bringing 
                Urgent Investment to Local Development Act,'' after 
                ``January 1, 2011,'' in subsection (a), and
                    (B) by striking ``before January 1, 2011'' in 
                subsection (f)(1)(B) and inserting ``during a 
                particular period''.
            (2) Conforming amendments.--Subsection (g) of section 54AA 
        of such Code is amended--
                    (A) by inserting ``or during a period beginning on 
                or after the date of the enactment of the Bringing 
                Urgent Investment to Local Development Act,'' after 
                ``January 1, 2011,'', and
                    (B) by striking ``Qualified Bonds Issued Before 
                2011'' in the heading and inserting ``Certain Qualified 
                Bonds''.
    (d) Reduction in Percentage of Payments to Issuers.--Subsection (b) 
of section 6431 of such Code is amended--
            (1) by striking ``The Secretary'' and inserting the 
        following:
            ``(1) In general.--The Secretary'',
            (2) by striking ``35 percent'' and inserting ``the 
        applicable percentage'', and
            (3) by adding at the end the following new paragraph:
            ``(2) Applicable percentage.--For purposes of this 
        subsection, the term `applicable percentage' means the 
        percentage determined in accordance with the following table:

``In the case of a qualified bond                        The applicable
  issued during calendar year:                           percentage is:
        2014...................................................     35 
        2015...................................................     32 
        2016...................................................     31 
        2017...................................................     30 
        2018...................................................     29 
        2019 and thereafter....................................  28.''.
    (e) Recovery Zone Economic Development Bonds for Certain Cities.--
            (1) In general.--Section 54AA of such Code is amended by 
        redesignating subsection (h) as subsection (i) and by inserting 
        after subsection (g) the following:
    ``(h) Special Rule for Recovery Zone Economic Development Bonds for 
Certain Cities.--In the case of an economic development extension 
bond--
            ``(1) Issuer allowed refundable credit.--In lieu of any 
        credit allowed under this section with respect to such bond, 
        the issuer of such bond shall be allowed a credit as provided 
        in section 6431.
            ``(2) Applicable percentage.--The applicable percentage 
        under subsection (b) shall be 35 percent.
            ``(3) Economic development extension bond.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `economic development 
                extension bond' means any build America bond issued as 
                part of an issue if--
                            ``(i) 100 percent of the excess of--
                                    ``(I) the available project 
                                proceeds (as defined in section 54A) of 
                                such issue, over
                                    ``(II) the amounts in a reasonably 
                                required reserve (within the meaning of 
                                section 150(a)(3)) with respect to such 
                                issue,
                        are to be used for one or more qualified 
                        purposes, and
                            ``(ii) the issuer makes an irrevocable 
                        election to have this subsection apply and 
                        designates such bond for purposes of this 
                        section.
                    ``(B) Qualified purposes.--The term `qualified 
                purposes' means--
                            ``(i) any qualified economic development 
                        purpose (as defined in section 1400U-2(c), 
                        applied by treating specified cities (and only 
                        specified cities) as recovery zones), and
                            ``(ii) any refinancing of indebtedness of a 
                        specified city which is outstanding on the date 
                        of the enactment of this subsection.
                    ``(C) Specified city.--The term `specified city' 
                means any principal city for a metropolitan statistical 
                area (as determined by the Office of Management and 
                Budget) which--
                            ``(i) has an average unemployment rate of 
                        not less than 150 percent of the national 
                        average rate for the last calendar year ending 
                        before the date of the enactment of this 
                        section,
                            ``(ii) has a poverty rate of not less that 
                        150 percent of the national poverty rate for 
                        the last calendar year ending before the date 
                        of the enactment of this section, or
                            ``(iii) has lost at least 20 percent of its 
                        population between calendar year 2000 and 
                        calendar year 2010.
                    ``(D) Limitation on amount of bonds designated.--
                            ``(i) In general.--The maximum aggregate 
                        face amount of bonds which may be designated 
                        under subparagraph (A) with respect to any 
                        specified city shall not exceed the bond 
                        limitation allocated to such city under clause 
                        (ii).
                            ``(ii) Allocation.--The Secretary shall 
                        allocate bond limitation to each specified city 
                        such that the bond limitation allocated to such 
                        city bears the same proportion to 
                        $1,000,000,000 as the population of such city 
                        (as determined for purposes of the 2010 census) 
                        bears to the total population of all specified 
                        cities (as so determined).''.
            (2) Payments to issuers.--Section 6431 of such Code is 
        amended by adding at the end the following:
    ``(g) Application of Section to Certain Economic Development 
Extension Bonds.--
            ``(1) In general.--An economic development extension bond 
        shall be treated as a qualified bond for purposes of this 
        section.
            ``(2) Applicable percentage.--The applicable percentage 
        under subsection (b) shall be 35 percent.''.
    (f) Current Refundings Permitted.--Subsection (g) of section 54AA 
of such Code is amended by adding at the end the following new 
paragraph:
            ``(3) Treatment of current refunding bonds.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified bond' includes any bond (or series 
                of bonds) issued to refund a qualified bond if--
                            ``(i) the average maturity date of the 
                        issue of which the refunding bond is a part is 
                        not later than the average maturity date of the 
                        bonds to be refunded by such issue,
                            ``(ii) the amount of the refunding bond 
                        does not exceed the outstanding amount of the 
                        refunded bond, and
                            ``(iii) the refunded bond is redeemed not 
                        later than 90 days after the date of the 
                        issuance of the refunding bond.
                    ``(B) Applicable percentage.--In the case of a 
                refunding bond referred to in subparagraph (A), the 
                applicable percentage with respect to such bond under 
                section 6431(b) shall be the lowest percentage 
                specified in paragraph (2) of such section.
                    ``(C) Determination of average maturity.--For 
                purposes of subparagraph (A)(i), average maturity shall 
                be determined in accordance with section 147(b)(2)(A).
                    ``(D) Issuance restriction not applicable.--
                Subsection (d)(1)(B) shall not apply to a refunding 
                bond referred to in subparagraph (A).''.
    (g) Gross-Up of Payment to Issuers in Case of Sequestration.--In 
the case of any payment under section 6431(b) of the Internal Revenue 
Code of 1986 made after the date of the enactment of this Act to which 
sequestration applies, the amount of such payment shall be increased to 
an amount equal to--
            (1) such payment (determined before such sequestration), 
        multiplied by
            (2) the quotient obtained by dividing 1 by the amount by 
        which 1 exceeds the percentage reduction in such payment 
        pursuant to such sequestration.
For purposes of this subsection, the term ``sequestration'' means any 
reduction in direct spending ordered in accordance with a sequestration 
report prepared by the Director of the Office and Management and Budget 
pursuant to the Balanced Budget and Emergency Deficit Control Act of 
1985 or the Statutory Pay-As-You-Go Act of 2010.
    (h) Effective Date.--The amendments made by this section shall 
apply to obligations issued on or after the date of the enactment of 
this Act.
Bringing Urgent Investment to Local Development Act or the BUILD Act - Amends the Internal Revenue Code, with respect to the tax credit for investment in Build America bonds, to: (1) make permanent the authority for issuance of such bonds, (2) phase in an annual reduction in the credit rate for&nbsp;bondholders and issuers&nbsp;between 2014 and 2019, and (3) allow an issuer a refundable credit amount&nbsp;for investment in economic development&nbsp;bonds in cities with&nbsp;specified unemployment and poverty rates and population loss. 
BUILD Act