P.L. 109-59 – The Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU), 11 Stat, 1144
On August 10, 2005, the President signed into law the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)
Section 11143 of the Act added sections 142(a)(15) and 142(m) to the Code thereby creating a new type of exempt facility eligible to be financed with tax-exempt bonds, the qualified highway or surface freight transfer facility. The new type of exempt facility bonds finance certain projects for surface transportation, projects for certain international bridges or tunnels, or facilities to transfer freight from truck to rail or rail to truck, provided the project or facility receives federal assistance. In general, 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.
New section 142(m) defines the new class of exempt facility bonds for qualified highway or surfact 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 (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 lodgings, retail, industrial or manufacturing facilities, except to the extent that such facilites also include freignt transfer facilities.
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.
Department of Transportation, Notice of Solicitation for Allocations of Tax-Exempt Financing and Requests for Comments (71 FR 642) (1/05/06)
On January 5, 2006, the Department of Transportation published a Notice in the federal register (71 FR 642) soliciting requests for the allocation of the $15 billion limitation.from interested entities that meet the statutory requirements and requests comments from the public that it may consider in its application of the authority provided by Section 11143.
The Office of Chief Counsel intends to publish a notice which will provide guidance relating to exempt facility bonds for qualified highway or surface freight transfer facilities.
Chief Counsel Implementing Guidance
Notice 2006-45, I.R.B. 2006-20 (0515/2006) (Exempt Facility Bonds for Qualified Highway or Surface Freight Transfer Facilities)
This notice provides guidance to the issuers of State and local bonds on qualified highway or surface freight transfer facilities under sections 142(a)(15) and 142(m) of the Internal Revenue Code. This Notice also provides guidance to issuers regarding the information reporting requirements.