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Build America Transportation Investment Center (BATIC) Institute: An AASHTO Center for Excellence
Build America Transportation Investment Center (BATIC) Institute: An AASHTO Center for Excellence

Financing

Bonding and Debt Instruments

Municipal/Public Bond Issues

Private Activity Bonds

SAFETEA-LU amended Section 142 of the Internal Revenue Code to add highway and freight transfer facilities to the types of privately developed and operated projects for which private activity bonds (PAB) may be issued. This change allows private activity on these types of projects, including development, design, finance, construction, operation, and maintenance, while maintaining the tax-exempt status of the bonds. PABs are issued by a public, conduit issuer on behalf of a private entity. The private entity is the obligor on the PABs. No substantive changes have been made to the PAB program by MAP-21 or any other legislation.

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. The $15 billion in exempt facility bonds is not subject to state volume caps, the maximum amount of tax-exempt PABs that may be used in a state in a given year.

Additional Information

PAB allocation is managed by the U.S. Department of Transportation Office of the Secretary. Further information is available from the FHWA Office of Innovative Program Delivery. View additional information on: