[Extensions of Remarks]
[Pages E1217-E1218]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

THE NEED FOR TAX-EXEMPT FINANCING FOR AMERICA'S MAJOR INTERMODAL
PROJECT: THE ALAMEDA CORRIDOR

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HON. STEPHEN HORN

of california

in the house of representatives

Thursday, June 8, 1995
Mr. HORN. Mr. Speaker, on behalf of myself and Representatives
Tucker, Royce, Becerra, Harman, Roybal-Allard, Torres, and Waters, I am
introducing legislation [H.R. 1790] to permit tax-exempt financing of
transportation facilities that are directly connected to the activities
at a port. This a critical step in making a reality of our vision of a
true national intermodal system. [[Page E1218]]
As the largest port complex in the Nation, the Port of Long Beach and
the Port of Los Angeles play an indispensable role in our Nation's
economy. The continued growth and success of the operations at the
ports is important to Americans from North Dakota to North Carolina and
Maine to California, not just to those of us in southern California. We
are the ``Gateway to the Pacific'' which includes Asia and Latin
America. The Federal Government has an important stake in seeing this
gateway thrive.
The linchpin of continued growth--to meeting the demands of the 21st
century--is the Alameda corridor. Annually, the ports have returned
billions of dollars in customs revenues to the national treasury and--
with their expension plans--promise to double cargo volume, and customs
revenues.
If landside access to these ports is not opened up, growth will be
effectively capped. Lost customs and economic development revenue to
the Federal Government will also be in the billions of dollars. The two
ports have pooled their resources to purchase the existing Santa Fe,
Southern Pacific, and Union Pacific Railroad Lines which come from
central Los Angeles 20 miles to the harbor area. The integrated
railroad corridor will generally follow the Alameda Street north-south
route to the ports and enable container and other cargo to move
directly from the ship to dockside rail for transit to points west,
east, north, and south. The completed corridor will enable civilian and
military cargo to come in various directions much more efficiently.
If expansion is stalled, there will be freight diversions to
alternative sites--with much talk from the Government of Mexico about
constructing a new port in Ensenada. The current administration
recognizes this fact. Secretary of Transportation Federico Pena has
stated, ``The Corridor is not only a California issue, it's a national
priority.''
In order to build on that support, those of us in the Los Angeles/
Orange County delegation are working as a bipartisan coalition to
ensure that the Federal Government plays an active role as a financial
partner not only in the overall construction costs, but also in helping
to see that early planning needs and already authorized grade crossings
are started at the earliest opportunity.
An integral part of this Federal role is the extension of tax-exempt
bond financing authority to the Alameda corridor. Tax-exempt bond
financing is critical to keeping debt service to a point where the
Alameda corridor can be a successful operation. The bill we are
introducing today is carefully crafted to limit the financial impact to
the Federal Treasury. Its reach is limited. Currently, tax-exempt
financing is available to construction activities which are immediately
connected to a wharf. This bill is merely an extension of that logic,
whereby transportation facilities that allow cargo to flow to and from
that wharf are also given tax-exempt status. Again, it is important to
remember that the long-term financial gains to the Federal Government
through increased customs revenues far outweigh any short-term economic
loss which may result from that legislation.
The Federal funding requirements to make the Alameda corridor a
reality are tremendous. The corridor will be the largest intermodal
project in the Nation. Securing the requisite Federal assistance--
estimated to be less than 40 percent of the total costs--will demand
working as a unified coalition not only at every level of government,
but as a unified coalition of the private and public sectors. The
Alameda corridor has tremendous support from our business and political
leaders. The task is to translate that support into a constructed
reality. This legislation is a critical step toward that goal.
Mr. Speaker, below is the text of H.R. 1790:

H.R. 1790
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. TAX-EXEMPT FINANCING OF CERTAIN TRANSPORTATION
FACILITIES.

(a) In General.--Subsection (c) of section 142 of the
Internal Revenue Code of 1986 (relating to exempt facility
bonds) is amended--
(1) by redesignating paragraph (2) as paragraph (3), and
(2) by inserting after paragraph (1) the following new
paragraph:
``(2) Related transportation facilities.--
``(A) In general.--Transportation facilities (including
trackage and related rail facilities, but not rolling stock)
shall be treated as facilities described in paragraph (2) of
subsection (a) if at least 80 percent of the use of the
facilities (determined on an annual basis) is to be in
connection with the transport of cargo to or from a facility
described in such paragraph (without regard to this
paragraph).
``(B) Governmental ownership requirement.--In the case of
transportation facilities described in subparagraph (A),
subsection (b)(1) shall apply without regard to subparagraph
(B)(ii) thereof.''
(b) Change in Use.--Section 150(b) of the Internal Revenue
Code of 1986 (relating to change in use of facilities
financed with tax-exempt private activity bonds) is amended
by adding at the end the following new paragraph:
``(7) Certain transportation facilities.--
In the case of any transportation facility--
``(A) with respect to which financing is provided from the
proceeds of any private activity bond which, when issued,
purported to be a tax-exempt bond described in paragraph (2)
of section 142(a) by reason of section 142(c)(2), and
``(B) with respect to which the requirements of section
142(c)(2) are not met,

no deduction shall be allowed under this chapter for interest
on such financing which accrues during the period beginning
on the 1st day of the taxable year in which such facility
fails to meet such requirements and ending on the date such
facility meets such requirements.''
(c) Effective Date.--The amendments made by this section
shall apply to obligations issued after the date of the
enactment of this Act.

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