Thu, Apr 14, 2005
ACI-NA and the Project Finance
Institute (PFI) of the American Association of State Highway and
Transportation Officials (AASHTO) signed an agreement to improve
and defend the tax treatment of airport bonds. During the ACI-NA
Board of Directors’ meeting in Jacksonville, ACI-NA
identified public policies governing bonds to be among its highest
priorities. The Bond Initiative is funded by members supporting
ACI-NA’s Regulatory and Policy Fund.
In the U.S., revenue bond debt
financing is an essential tool to build a myriad of airport capital
projects. As federal Airport Improvement Program (AIP) grants level
off (or even shrink under the President’s Fiscal Year 2006
budget proposal), and PFC collections at most airports are fully
tapped at the $4.50 ceiling for many years, the cost of interest on
debt becomes a more important factor affecting the capacity of
airport sponsors to self-finance needed projects.
ACI-NA and AASHTO’s PFI are working to defend current bond
financing options (including the one-time advance refunding option
for tax-exempt governmental purpose bonds), and seeking to expand
the use of tax-exempt financing for bonds that are otherwise
currently subject to the Alternative Minimum Tax (AMT). These
so-called AMT bonds, by requiring a higher interest rate to
compensate for their AMT status, drive up the cost of airport
projects for communities, airlines, and airport users. The first
stage of the ACI-NA Bond initiative will be completed in 60-90
days.
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