The Senate Finance Committee has approved lifting the cap on the amount that cities may raise through private activity bonds for water and wastewater projects. The Senate is set to vote on the measure soon.

Van L. Richey, president and CEO of AMERICAN Cast Iron Pipe Company, headquartered in Birmingham, Ala., testified before a Senate subcommittee on this issue in December urging that the cap on private activity bonds be lifted to improve water systems, foster economic growth and preserve and create jobs.

“We’re very pleased to see this measure move forward,” said Richey. “It’s desperately needed to help our cash-strapped state and local governments make needed repairs to our water infrastructure.”

Private activity bonds are tax-exempt bonds that allow the private sector to participate in financing public projects. The proposed legislation, called the Sustainable Water Infrastructure Investment Act of 2011, would eliminate the cap on these bonds for the next six years, injecting billions of low-cost, private capital into infrastructure repairs.

The proposed bill estimates the cost to maintain and improve water infrastructure over the next 20 years to be about $500 billion. The use of private capital instead of tax dollars would mean less impact on the federal budget and less risk and long-term debt for local communities.

It’s estimated this measure would provide some $25 billion in infrastructure investment and create some 700,000 jobs, while restoring the nation’s safe drinking water and wastewater systems to protect the public’s health.

To read the full text of the Sustainable Water Infrastructure Investment Act of 2011 online, click here.