[Congressional Record Volume 147, Number 64 (Thursday, May 10, 2001)]
[Senate]
[Pages S4845-S4846]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH of New Hampshire (for himself and Mr. Inhofe):
  S. 870. A bill to amend the Internal Revenue Code of 1986 to provide 
additional tax incentives for public-private partnerships in financing 
of highway, mass transit, high speed rail, and intermodal transfer 
facilities projects, and for other purposes; to the Committee on 
Finance.
  Mr. SMITH of New Hampshire. Mr. President, today I rise to introduce 
the Multi Modal Transportation Financing Act. The United States faces a 
significant shortfall in funding for our highway and bridge 
infrastructure needs. It is incumbent upon us to look at new and 
innovative ways to make the most of limited resources to address these 
significant needs. This bill will lift the existing restrictions on 
tax-exempt bond financing for public agencies seeking greater private 
sector participation in a variety of transportation projects. This 
financing tool will serve to manage congestion, build more 
transportation options, and encourage technological innovation.
  This bill will adjust the tax code in order to remove a barrier to 
needed transportation infrastructure investment. Under current Federal 
tax law, highways built by government can be financed through the use 
of tax exempt bonds--but those built by the private sector are not 
eligible to use this valuable financing tool, even though this tool is 
currently available to the private sector for the construction of 
seaports, airports and other public infrastructure facilities. Tax-
exempt bonds can reduce interest rates as much as two percentage points 
below rates on comparable taxable bond issues and can reduce financing 
costs by 20-25 percent. While this has been a huge benefit for other 
infrastructure needs, once the private sector seeks to participate in 
the development or operation of a government-owned highway or intercity 
rail project, tax-exempt financing is no longer available. Yet these 
transportation projects costing from $100 million to over $1 billion 
are rendered financially infeasible when subjected to taxable bond 
financing, forcing the private sector out of transportation project 
development.
  As a result, public/private partnerships in the provision of highway 
facilities are unlikely to materialize, despite the potential 
efficiencies in design, construction, and operation offered by such 
arrangements. By depending solely on public sector tax-exempt 
financing, some projects will not be built at all, while projects that 
still get built are done so much later, at higher cost, 
greater inefficiency and public sector risk.

  Private sector participation in these transportation projects will 
provide access to new expertise, greater operating efficiencies, new 
sources of investment capital, and private sector risk sharing. This 
practice of private sector involvement has already been successfully 
implemented in a number of other countries. U.S. companies are 
currently investing billions of dollars in foreign infrastructure 
projects that are not subject to the United States tax code 
discrimination against similar private investment. Increasing the 
private sector's role in these countries has offered opportunities for 
construction cost savings and more efficient operation.
  The effort to enhance private sector participation began a few years 
ago by my predecessor as chairman of the environment and Public Works 
Committee, Senator John Chafee. While his legislation did pass the 
Senate, it never made it to the President's desk. It is time for this 
long over due private sector encouragement to become law.
  I hope that this bill can be one in a series of new approaches to 
meeting our substantial transportation infrastructure needs and will be 
one of the approaches that will help us find more efficient methods to 
design, build, and operate the nation's transportation infrastructure. 
We should begin by knocking down barriers that discourage the private 
sector from unleashing its full resources to help build this nation's 
transportation network. I urge my colleague to join me in supporting 
this vital legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 870

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Multimodal Transportation 
     Financing Act''.

     SEC. 2. TAX-EXEMPT FINANCING OF QUALIFIED HIGHWAY 
                   INFRASTRUCTURE.

       (a) Treatment as Exempt Facility Bond.--Subsection (a) of 
     section 142 of the Internal Revenue Code of 1986 (relating to 
     exempt facility bond) is amended by striking ``or'' at the 
     end of paragraph (11), by striking the period at the end of 
     paragraph (12) and inserting ``, or'', and by adding at the 
     end the following:
       ``(13) qualified highway infrastructure projects.''.
       (b) Qualified Highway Infrastructure Projects.--Section 142 
     of the Internal Revenue Code of 1986 is amended by adding at 
     the end the following:
       ``(k) Qualified Highway Infrastructure Projects.--
       ``(1) In general.--For purposes of subsection (a)(13), the 
     term `qualified highway infrastructure project' means a 
     project--
       ``(A) for the construction, reconstruction, or maintenance 
     of a highway, including related startup costs, and
       ``(B) meeting the requirements of paragraph (2).
       ``(2) Project requirements.--A project meets the 
     requirements of this paragraph if the project--
       ``(A) serves the general public,
       ``(B) is located on publicly-owned rights-of-way, and
       ``(C) is publicly owned or the ownership of the highway 
     constructed, reconstructed, or maintained under the project 
     reverts to the public.''
       (c) Exemption From General State Volume Caps.--Paragraph 
     (3) of section 146(g) of the Internal Revenue Code of 1986 
     (relating to exception for certain bonds) is amended--
       (1) by striking ``or (12)'' and inserting ``(12), or 
     (13)'', and
       (2) by striking ``and environmental enhancements of 
     hydroelectric generating facilities'' and inserting 
     ``environmental enhancements of hydroelectric generating 
     facilities, and qualified highway infrastructure projects''.
       (d) Exemption From Limitation on Use for Land 
     Acquisition.--Section 147(c)(3) of the Internal Revenue Code 
     of 1986 (relating to exception for certain land acquired for 
     environmental purposes, etc.) is amended by striking ``or 
     wharf'' both places it appears and inserting ``wharf, or 
     qualified highway infrastructure project''.
       (e) Treatment of Certain Refunding Bonds.--
       (1) In general.--Paragraph (2) of section 149(d) of the 
     Internal Revenue Code of 1986 (relating to certain private 
     activity bonds) is amended by inserting ``or any exempt 
     facility bond issued as part of an issue described in 
     paragraph (13) of section 142(a) (relating to qualified 
     highway infrastructure projects)'' after ``other than a 
     qualified 501(c)(3) bond''.
       (2) Special rules.--Paragraph (6) of section 149(d) of such 
     Code is amended to read as follows:
       ``(6) Special rules for purposes of paragraph (3).--For 
     purposes of paragraph (3)--
       ``(A) bonds issued before October 22, 1986, shall be taken 
     into account under subparagraph (A)(i) thereof except--
       ``(i) a refunding which occurred before 1986 shall be 
     treated as an advance refunding only if the refunding bond 
     was issued more than 180 days before the redemption of the 
     refunded bond, and
       ``(ii) a bond issued before 1986, shall be treated as 
     advance refunded no more than once before March 15, 1986, and
       ``(B) a bond issued as part of an issue that is either the 
     1st or 2nd advance refunding of the original bond shall be 
     treated as only the 1st advance refunding of the original 
     bond if--
       ``(i) at least 95 percent or more of the net proceeds of 
     the original bond issue are to be used to finance a highway 
     infrastructure project (regardless of whether the original 
     bond was issued as a private activity bond),
       ``(ii) the original bonds and applicable refunding bonds 
     are or are reasonably expected to be primarily secured by 
     project-based revenues, and
       ``(iii) in any case in which--

       ``(I) the original bonds or applicable refunding bonds are 
     private activity bonds issued as part of an issue at least 95 
     percent or more of the net proceeds of which are to be used 
     to finance a qualified highway infrastructure project 
     described in section 142(a)(13), the refunding bonds of the 
     issue and original bonds of the issue satisfy the 
     requirements of section 147(b), or
       ``(II) the original bonds and applicable refunding bonds 
     are not private activity bonds, the second generation advance 
     refunding

[[Page S4846]]

     bonds of the issue (and any future bonds of the issue 
     refunding such bonds) satisfy the requirements of section 
     147(b).''.

       (3) Special rule relating to maturity limitation.--Section 
     147(b) of such Code (relating to maturity limitations) is 
     amended by adding at the end the following:
       ``(6) Special rule for certain highway infrastructure 
     projects.--
       ``(A) In general.--In the case of bonds of an issue 
     described in section 149(d)(6)(B), the limit described in 
     paragraph (1)(B) shall be reduced--
       ``(i) in any case in which the original bonds or applicable 
     refunding bonds are private activity bonds, by the remaining 
     weighted average maturity of the escrowed bonds with respect 
     to both the first and second generation advance refunding, 
     and
       ``(ii) in any case in which the original bonds and 
     applicable refunding bonds are not private activity bonds, by 
     the remaining weighted average maturity of the escrowed bonds 
     with respect to the second generation advance refunding.
       ``(B) Remaining weighted average maturity of escrowed 
     bonds.--For purposes of subparagraph (A), the remaining 
     weighted average maturity of the escrowed bonds is equal to 
     the weighted average maturity, calculated as of the 
     applicable refunding bond issue date--
       ``(i) with respect to subparagraph (A)(i), of the 
     applicable bonds advance refunded, and
       ``(ii) with respect to subparagraph (A)(ii), of the 
     applicable bonds directly refunded by the second generation 
     advance refunding bonds, and
     treating any date of actual early redemption as a maturity 
     date for this purpose.
       (f) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of enactment of 
     this Act.

     SEC. 3. MASS COMMUTING FACILITIES.

       (a) Exemption From State Volume Cap.--Section 146(g)(3) of 
     the Internal Revenue Code of 1986 (relating to exception for 
     certain bonds), as amended by section 2, is amended--
       (1) by inserting ``(3),'' after ``(2),'', and
       (2) by inserting ``mass commuting facilities,'' after 
     ``wharves,''.
       (b) Inclusion of Rolling Stock.--Section 142(c) of the 
     Internal Revenue Code of 1986 (relating to airports, docks 
     and wharves, mass commuting facilities and high-speed 
     intercity rail facilities) is amended by adding at the end 
     the following new paragraph:
       ``(3) Mass commuting facilities.--The term `mass commuting 
     facilities' includes rolling stock related to such 
     facilities.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of enactment of 
     this Act.

     SEC. 4. MODIFICATION OF DEFINITION OF HIGH-SPEED INTERCITY 
                   RAIL FACILITIES.

       (a) In General.--Section 142(i)(1) of the Internal Revenue 
     Code of 1986 (defining high-speed intercity rail facilities) 
     is amended by striking `` and their baggage'' and all that 
     follows and inserting ``on high speed rail corridors 
     designated under section 104(d)(2) of title 23, United States 
     Code, or on corridors using magnetic levitation 
     technology.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of enactment of 
     this Act.

     SEC. 5. TAX-EXEMPT FINANCING OF INTERMODAL TRANSFER 
                   FACILITIES.

       (a) Treatment as Exempt Facility Bond.--Subsection (a) of 
     section 142 of the Internal Revenue Code of 1986 (relating to 
     exempt facility bond), as amended by section 2(a), is amended 
     by striking ``or'' at the end of paragraph (12), by striking 
     the period at the end of paragraph (13) and inserting ``, 
     or'', and by adding at the end the following:
       ``(14) intermodal transfer facilities.''.
       (b) Intermodal Transfer Facilities.--Section 142 of the 
     Internal Revenue Code of 1986, as amended by section 2(b), is 
     amended by adding at the end the following:
       ``(l) Intermodal Transfer Facilities.--For purposes of 
     subsection (a)(14), the term `intermodal transfer facilities' 
     means any facility for the transfer of people or goods 
     between the same or different transportation modes.''.
       (c) Exemption From General State Volume Caps.--Paragraph 
     (3) of section 146(g) of the Internal Revenue Code of 1986 
     (relating to exception for certain bonds), as amended by 
     section 2(c), is amended--
       (1) by striking ``or (13)'' and inserting ``(13), or 
     (14)'', and
       (2) by striking ``and qualified highway infrastructure 
     projects'' and inserting ``qualified highway infrastructure 
     projects, and intermodal transfer facilities''.
       (d) Exemption From Limitation on Use for Land 
     Acquisition.--Section 147(d)(3) of the Internal Revenue Code 
     of 1986 (relating to exception for certain land acquired for 
     environmental purposes, etc.), as amended by section 2(d), is 
     amended by striking ``or qualified highway infrastructure 
     project'' both places it appears and inserting ``qualified 
     highway infrastructure project, or intermodal transfer 
     facility''.
       (e) Conforming Amendments.--Subsection (c) of section 142 
     of the Internal Revenue Code of 1986 is amended--
       (1) by striking ``or (11)'' both places it appears in 
     paragraphs (1) and (2) and inserting ``, (11), or (14)'', and
       (2) by striking ``and High-Speed Intercity Rail 
     Facilities'' in the heading thereof and inserting ``, High-
     Speed Intercity Rail Facilities, and Intermodal Transfer 
     Facilities''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of enactment of 
     this Act.

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