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.

FMI: www.aci-na.org