Private activity bonds

A bipartisan group of lawmakers is proposing to boost affordable housing by 2 million units over the next decade by expanding a key tax credit.

The Internal Revenue Service released a revenue procedure Wednesday offering guidance on the use of tax-exempt bonds to provide housing for military veterans, farm workers and other groups.

Tax advantages for bonds funding private hospitals and sports stadiums survived last year’s tax overhaul thanks to an eleventh hour compromise. The securities may be headed for a decline anyway.

The final version of the tax bill struck by Congressional negotiators would continue to subsidize municipal bonds that help businesses to finance infrastructure projects such as airports and toll roads, dropping one provision that threatened to cut sales of tax-exempt debt by tens of billions of dollars starting next year.

In the rush to borrow before the Republican tax bill reshapes the debt market, states and municipalities are paying up. The biggest spree of debt issuance in more than a decade has pushed up borrowing costs and eroded returns in the $3.8 trillion municipal-debt market.