ACTION CALL ON TRANSIT LEASING
January 8, 2004
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Actions by the Senate Finance Committee and the Administration
have effectively put a stop to tax-advantaged leasing transactions that transit
agencies have used for years to raise badly needed funds. In recent years,
public transit agencies have received net benefits of approximately $848 million
from tax-advantaged lease transactions. These revenues support and create
jobs, help agencies address capital investment needs that benefit transit
riders, and deliver real economic benefits.
Senate Action
In the Senate, certain provisions of S.1637, the "Jumpstart
Our Business Strength Act," which has been approved by the Senate Finance
Committee, would prohibit transit agencies from entering into tax-advantaged
lease transactions. An aide to Finance Committee Chairman Grassley announced
on January 6 that the Chairman will try to bring the bill to the Senate Floor
in February.
Administration Action
Additionally, in response to a letter from the Treasury Department
to Transportation Secretary Mineta, the Federal Transit Administration recently
informed transit agencies with pending lease transactions under its review
that it was suspending review of such transactions. FTA and DOT for two decades
have urged public transit agencies to use innovative financing mechanisms
such as leasing transactions to generate additional revenue. The fifteen transactions
now pending are no different from the forty or so other lease transactions
the FTA has approved in past years and are permissible under the tax code.
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Action Call
We need your help!
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Contact your congressional delegation - both in
the U.S. Senate and House of Representatives - and ask them to oppose
provisions in Senate bill (S.1637) that would prevent transit agencies
from using leasing transactions to help meet transit funding needs.
Attached is a sample letter than can be sent to Members of the House
and Senate. You can also view letters that APTA has sent to Members
of Congress and the Administration on the Government Affairs part
of APTA's website at www.apta.com.
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Contact Administrator Dorn and urge her to approve
the leasing transactions now pending at the FTA. Refer to the letter
APTA sent to Secretary Mineta on December 22 available at www.apta.com
for guidance. We ask that you send copies of your letters to APTA's
Demaune Millard at dmillard@apta.com
so that we know who has been contacted by APTA member transit systems
and businesses on this issue.
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Sample Letter to Members of Congress Opposing Efforts to Terminate Tax-Advantaged
Leases that Benefit Public Transportation
Dear Senator/Representative
We write to express our opposition to certain provisions
in S. 1637, the "Jumpstart Our Business Strength Act." Of concern
are provisions in the bill that would eliminate the ability of transit agencies
to enter into tax-advantaged lease transactions, and impede transit systems
from utilizing innovative financing tools that produce economic benefits at
the state and local level.
Such lease transactions have delivered real economic gains
at a time when state and local resources are extremely limited. Revenues generated
through such leases provide for important investments in our public transportation
systems, support job creation, and deliver real economic benefits around the
country. In recent years, public transit agencies have received net benefits
of approximately $848 million from taxed-advantaged leases.
Further, on November 26, 2003, the U.S. Department of Transportation's
Federal Transit Administration (FTA) notified transit agencies that it was
suspending the processing of such transactions. FTA subsequently suspended
fifteen pending transactions, both domestic leases as well as cross border
leases, the latter of which have no U.S. tax implications.
Over the past 20 years FTA has urged public transit systems
to use innovative financing mechanisms such as tax-advantaged leasing to generate
additional revenue. The transactions have created an effective and legitimate
public/private partnership providing transit agencies and municipalities with
an important source of infrastructure finance.
{Please cite revenue that your agency has realized from
lease transactions and how you used such revenue to meet funding needs or
benefit your customers.}
I respectfully request you to oppose these provisions in
S.1637, that would eliminate tax-advantaged leasing transactions for transit
agencies. I also urge you to ask U.S. DOT to reconsider the decision to suspend
review of transit lease transactions that are currently pending.
Thank you for your support of public transportation.
Sincerely yours,
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