[Federal Register Volume 71, Number 3 (Thursday, January 5, 2006)]
[Notices]
[Pages 642-644]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-8306]



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DEPARTMENT OF TRANSPORTATION

Office of the Secretary of Transportation

[Docket No. OST-2005-23418]


Applications for Authority for Tax-Exempt Financing of Highway 
Projects and Rail-Truck Transfer Facilities

AGENCIES: Office of the Secretary of Transportation (OST), DOT.

ACTION: Notice of solicitation for requests for allocations of tax-
exempt financing and request for comments.

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SUMMARY: Section 11143 of Title XI of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users amends the 
Internal Revenue Code by creating a new class of tax-exempt facility 
bonds for qualified highway and surface freight transfer facilities. 
The law limits the total amount of such bonds to $15 billion and 
directs the Secretary of Transportation to allocate this amount among 
qualified facilities. This notice solicits requests for such 
allocations from interested entities that meet the statutory 
requirements. The Department also requests comments from the public 
that it may consider in its application of the authority provided by 
Section 11143.

DATES: Comments may be submitted at any time and will be considered as 
appropriate whenever they are submitted.

ADDRESSES: Comments: To make sure your comments and related material 
are not entered more than once in the docket, please submit them 
identified by docket number OST-2005-23418 by only one of the following 
means:
    (1) Web Site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the electronic docket site.
    (2) Fax: 202-493-2251.
    (3) Mail: Dockets Management Facility, U.S. Department of 
Transportation, M-30, Room PL-401, 400 Seventh Street SW., Washington, 
DC 20590.
    (4) Hand Delivery: Room PL-401 on the plaza level of the Nassif 
Building, 400 Seventh Street SW., Washington, DC, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.
    Instructions: All submissions must include the agency name and 
docket number of this notice. Due to security procedures in effect 
since October 2001 on mail deliveries, mail received through the Postal 
Service may be subject to delays. Commenters should consider using an 
express mail firm to ensure the prompt filing of any comments not 
submitted electronically or by hand. Note that all comments received 
will be posted without change to http://dms.dot.gov, including any 
personal information provided. Please see the Privacy Act heading under 
Regulatory Analysis and Notices.
    Docket: For access to the docket to read background documents or 
comments received, go to http://dms.dot.gov at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., 
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays.
    Applications: Mr. Jack Bennett, Office of the Assistant Secretary 
for Transportation Policy, Office of Economic and Strategic Analysis 
(P-20), Room 10305-E, 400 Seventh Street SW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Jack Bennett, U.S. Department of 
Transportation, Office of the Assistant Secretary for Transportation 
Policy, Office of Economic and Strategic Analysis (P-20), 400 Seventh 
Street SW., Washington, DC 20590; (202) 366-6222.

SUPPLEMENTARY INFORMATION:

A. Statutory Background

    Section 11143 of Title XI of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), 
Public Law Number 109-59, 119 Stat. 1144 (Aug. 10, 2005) (the Act), 
amends Sec.  142 of title 26, United States Code (hereinafter referred 
to as the Internal Revenue Code or the Code) by adding sections 
142(a)(15) and 142(m). These amendments create a new class of tax-
exempt financing for qualified highway or surface freight transfer 
facilities. The law limits the amount of tax-exempt financing available 
under this provision to $15 billion nationally and charges the 
Secretary of Transportation with allocating this $15 billion among 
qualified facilities. The relevant statutory provisions of the Code 
include:
     Section 103(a) of the Code provides that, except as 
provided in section 103(b), gross income does not include interest on 
any State or local bond.
     Section 103(b)(1) provides that the exclusion under 
section 103(a) does not apply to any private activity bond that is not 
a qualified bond (within the meaning of section 141).
     Section 141(e) provides that the term ``qualified bond'' 
includes an exempt facility bond that meets certain requirements.
     New section 142(a)(15) provides that the term ``exempt 
facility bond'' includes qualified highway or surface freight transfer 
facilities.
     New section 142(m) defines the new class of exempt 
facility bonds for qualified highway or surface freight transfer 
facilities.
     Section 142(m)(1) defines ``qualified highway or surface 
freight transfer facilities'' as:
    (A) Any surface transportation project which receives Federal 
assistance under title 23, United States Code (as in effect on August 
10, 2005, the date of the enactment of section 142(m)),
    (B) Any project for an international bridge or tunnel for which an 
international entity authorized under Federal or State law is 
responsible and which receives Federal assistance under title 23, 
United States Code (as so in effect), or
    (C) Any facility for the transfer of freight from truck to rail or 
rail to truck (including any temporary storage facilities directly 
related to such transfers) which receives Federal assistance under 
title 23 or title 49, United States Code (as so in effect).
    Examples of intermodal freight transfer facilities for the transfer 
of freight from truck to rail or rail to truck include cranes, loading 
docks, and computer-controlled equipment that are integral to such 
freight transfers. Examples of facilities that are not freight transfer 
facilities include lodging, retail, industrial, or manufacturing 
facilities, except to the extent that such facilities also include 
freight transfer activities.
     Section 142(m)(2)(A) provides a $15,000,000,000 national 
limitation on the aggregate amount of tax-exempt financing for 
qualified highway or surface freight transfer facilities allocated by 
the Secretary.
     Section 142(m)(2)(B) provides that an issue shall not be 
treated as an issue described in section 142(a)(15) for a qualified 
highway or surface freight transfer facility if the aggregate face 
amount of bonds issued pursuant to such issue for any qualified highway 
or surface freight transfer facility (when added to the aggregate face 
amount of bonds previously so issued for such facility) exceeds the 
amount allocated to such facility by the Secretary of Transportation 
under section 142(m)(2)(C).
     Section 142(m)(2)(C) provides that the Secretary of 
Transportation shall allocate the $15,000,000,000 national limitation 
among qualified highway or surface freight transfer facilities in such 
manner as the Secretary determines appropriate.
     Section 142(m)(3) provides that an issue shall not be 
treated as an issue described in section 142(a)(15) for a

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qualified highway or surface freight transfer facility unless at least 
95 percent of the net proceeds of the issue is expended for qualified 
highway or surface freight transfer facilities within the 5-year period 
beginning on the date of issuance. If at least 95 percent of such net 
proceeds is not expended within such 5-year period, an issue shall be 
treated as continuing to meet the 5-year spending requirements of 
section 142(m)(3) if the issuer uses all unspent proceeds of the issue 
to redeem bonds of the issue within 90 days after the end of such 5-
year period. The Secretary of the Treasury, at the request of the 
issuer, may extend such 5-year period if the issuer establishes that 
any failure to meet such period is due to circumstances beyond the 
control of the issuer.
     Section 142(m)(4) provides an exception to the volume 
limit in section 142(m)(2) for any bond (or series of bonds) issued to 
refund a bond issued under section 142(a)(15) if:
    (A) 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 (for this purpose, ``average maturity'' is 
determined in accordance with section 147(b)(2)(A)),
    (B) The amount of the refunding bond does not exceed the 
outstanding amount of the refunded bond, and
    (C) The refunded bond is redeemed not later than 90 days after the 
date of the issuance of the refunding bond.
     Section 11143(c) of SAFETEA-LU provides that exempt 
facility bonds described in section 142(a)(15) for qualified highway 
and surface freight transfer facilities are exempt from general state 
volume caps on private activity bonds in section 146.

B. Applications for Allocations

    Parties who wish to take advantage of the tax-exempt financing 
provided by Section 11143 of SAFETEA-LU are invited to apply to DOT for 
an allocation of this authority. Upon receipt of such an application, 
the Department will, after due consideration, either accept or reject 
the application, or communicate further with the applicant if 
additional information is needed to fully consider the application. The 
Department is not specifying any form for an application, nor is it 
requiring all or any of the information listed below to be included in 
the initial application. Nevertheless, applicants may wish to include 
the following information to facilitate the Department's consideration 
of the application:
    1. Amount of Allocation Requested.
    2. Proposed Date of Bond Issuance. Provide the approximate date 
when it is anticipated that the tax-exempt bonds would be issued should 
authority to do so be allocated by the Department.
    3. Date of Inducement by the Bond Issuer. Provide a copy of a 
resolution adopted in accordance with state or local law authorizing 
the issuance of a specific issue of obligations. The resolution may 
state that issuance of obligations is contingent upon receipt of an 
allocation from the Secretary of Transportation of a portion of the 
$15,000,000,000 national limitation.
    4. Draft Bond Counsel Opinion Letter. Provide Form of Bond Counsel 
Opinion or date by which a draft letter will be provided.
    5. Financing/Development Team Information. Provide the names of the 
issuer of the bonds, the borrower, and any other key participants in 
the financing, with complete contact information, including Federal 
taxpayer identification numbers.
    6. Borrower Information: For each borrower, provide the official 
business name, ownership and legal structure (corporation, partnership, 
or sole proprietorship), Federal taxpayer identification number, and 
prior experience as it relates to carrying out projects similar to that 
proposed. For the purposes of this Notice, the term ``borrower'' 
includes any borrower of the bond proceeds or any other entity 
responsible for re-paying the bonds.
    7. Project Description. Describe the project as a whole and the 
proposed organizational and legal structure of the project (ownership, 
franchise or lease arrangements, etc.). Describe the portion of the 
project and all capital assets to be funded with the proceeds of the 
exempt facility bonds. If the application is for an international 
bridge or tunnel under section 142(m)(1)(B), the project description 
should include a representation that the international entity that has 
responsibility for the project is authorized under Federal or state 
law.
    8. Project Schedule. Provide a timeline showing the estimated start 
and completion dates for each major phase or milestone of project 
development. Indicate the current status of milestones on this 
timeline, including all necessary permits and environmental approvals.
    9. Financial Structure. Provide a statement of anticipated sources 
and uses of funds for the project, including separate line items, as 
applicable, for proceeds of exempt facility bonds or other borrowing, 
federal grants, state and local grants, other credit assistance, and 
private investment. Provide a projected drawdown schedule for the use 
of funds, project revenue and expenses, and sources of security and 
repayment for the bonds.
    10. Description of Title 23/49 U.S.C. funding received by the 
project. Provide the date (or anticipated date) of receipt and types 
and amount of financial assistance.
    11. Project Readiness. Describe the financing/development team's 
capacity to undertake this project. Discuss readiness to begin the 
project. List all major permits and approvals necessary for 
construction of the project and the date, or projected date, of the 
receipt of such permits or approvals. Include information on 
engineering work, and procurement of construction.
    12. Signatures. Applications should be signed by a duly authorized 
representative of the proposed issuer and a duly authorized 
representative of each proposed borrower. Applications may be submitted 
by the proposed issuer or the proposed borrower.
    13. Declarations. Each application, including any supporting 
reports or other document, should include the following declaration 
signed by an individual who has personal knowledge of the relevant 
facts and circumstances: ``Under penalties of perjury, I declare that I 
have examined this document and, to the best of my knowledge and 
belief, the document contains all the relevant facts relating to the 
document, and such facts are true, correct, and complete.''
    14. Addresses. Applications should be submitted (with 10 copies) 
to: Mr. Jack Bennett, U.S. Department of Transportation, Office of the 
Assistant Secretary for Transportation Policy, P-20, Room 10305 E, 400 
7th Street SW., Washington, DC 20590.

C. Consideration of Applications

    Upon receipt, the Department will consider the application in light 
of applicable statutory requirements and the availability of tax-exempt 
authority for the type and location of the project for which the 
allocation is requested. If the Department needs additional information 
from the applicant, the Department will contact the applicant to 
arrange for the submission the required information.
    In making application to the Department, applicants should note 
that there are no specific standards, beyond those set forth in 
applicable laws or regulation, that apply to the consideration of the 
applications.
    The Department is particularly concerned that once it makes an 
allocation, tax-exempt facility bonds are

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issued in timely fashion. Hence, if the schedules agreed upon in the 
final allocation action are not met, the allocation may be withdrawn.

D. Compliance With Rules Governing Qualified Private Activity Bonds

    The application process described in this Notice only goes to 
allocation of tax-exempt financing by the Department of Transportation. 
All representations made as part of this application process are 
subject to verification on examination. In addition, except as 
otherwise provided in this Notice, nothing in this Notice shall be 
construed as overriding any requirements or limitations applicable to 
exempt facility bonds found in sections 103 and 141 through 150 of the 
Code and the applicable regulations thereunder, or affecting the 
ability of the IRS to examine the bond issue for compliance with those 
requirements or limitations.

E. Request for Comments

    Interested parties are invited to provide comment on how the 
Department should exercise the allocation authority provided by Section 
11143 of SAFETEA-LU. Comments may address both the process described in 
this notice and any other matters that the commenter believes would be 
useful for the Department to consider in its administration of this 
provision of SAFETEA-LU. This is new authority for the DOT, and the 
Department will be continually examining its implementation of this 
provision to ensure that allocations are occurring in a fair and 
reasonable manner, that this tax-exempt bonding authority is fully 
utilized, and that this financing opportunity adds to the vitality of 
the Nation's transportation system.

Jeffrey N. Shane,
Under Secretary of Transportation for Policy.
 [FR Doc. E5-8306 Filed 1-4-06; 8:45 am]
BILLING CODE 4910-62-P