BONDS Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bolstering Our Nation's Deficient 
Structures Act of 2014'' or the ``BONDS Act''.

SEC. 2. BUILD AMERICA BONDS MADE PERMANENT.

    (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 
Bolstering Our Nation's Deficient Structures Act of 2014,'' 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:
        2009 or 2010...........................................     35 
        2014...................................................     31 
        2015...................................................     30 
        2016...................................................     29 
        2017 and thereafter....................................  28.''.
    (c) Special Rules.--Subsection (f) of section 54AA of such Code is 
amended by adding at the end the following new paragraph:
            ``(3) Application of other rules.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, a build America bond shall be 
                considered a recovery zone economic development bond 
                (as defined in section 1400U-2) for purposes of 
                application of section 1601 of title I of division B of 
                Public Law 111-5 (26 U.S.C. 54C note).
                    ``(B) Public transportation projects.--Recipients 
                of any financial assistance authorized under this 
                section that funds public transportation projects, as 
                defined in Title 49, United States Code, must comply 
                with the grant requirements described under section 
                5309 of such title.''.
    (d) 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 Bolstering 
                Our Nation's Deficient Structures Act of 2014,'' 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 Bolstering 
                Our Nation's Deficient Structures Act of 2014,'' after 
                ``January 1, 2011,'', and
                    (B) by striking ``Qualified Bonds Issued Before 
                2011'' in the heading and inserting ``Certain Qualified 
                Bonds''.
    (e) 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:
        2009 or 2010...........................................     35 
        2014...................................................     31 
        2015...................................................     30 
        2016...................................................     29 
        2017 and thereafter....................................  28.''.
    (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) Clarification Related to Levees and Flood Control Projects.--
Subparagraph (A) of section 54AA(g)(2) of such Code is amended by 
inserting ``(including capital expenditures for levees and other flood 
control projects)'' after ``capital expenditures''.
    (h) 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.
    (i) Effective Date.--The amendments made by this section shall 
apply to obligations issued on or after the date of the enactment of 
this Act.

Summary: Bolstering Our Nation's Deficient Structures Act of 2014 or the BONDS Act - Amends the Internal Revenue Code, with respect to build America bonds,&nbsp;to: (1) make permanent the issuance authority for such bonds&nbsp;and the authority for payments to bond issuers, (2) make phased reductions in the credit percentage to bondholders and the&nbsp;percentage of payments to issuers of such bonds, (3) make federal wage rate and other grant requirements applicable to such bonds, (4) allow refundings of currently-issued bonds, and (5) allow the use of such bonds to fund capital expenditures for levees and flood control projects.Provides for an increase in payments to issuers of build America bonds to compensate for reductions in the amount of such payments due to sequestration.