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Home News Build America Bonds and Section 106
Recently, the Office of Federal Agency Programs has received inquiries from SHPOs about whether projects financed by bonds under the Recovery Act's Build America Bond program would be considered undertakings (36 CFR 800.16(y)) subject to Section 106. We'd like to provide background information and our analysis for the reference of SHPOs and other stakeholders.
Our understanding of the Build America Bond program (which includes the Recovery Zone Economic Development Bonds), is that it does not involve expenditure or licensing decisions by either the U.S. Treasury (Treasury) or the Internal Revenue Service (IRS) that would be subject to Section 106 review.
Under the Build America Bond program, state or local governments issue bonds within parameters established under the Recovery Act. The state or local government entities that issue such bonds, or the persons who invest in those bonds, are then eligible for federal income tax credits.
You will see the state or local government entities receiving actual payments from the Treasury. The reason for that is that their tax credits under this program are “refundable,” meaning that the tax credit in excess of their tax liability is refunded. The government entities file a form with the IRS certifying that they are eligible for the tax credits and, once that form is processed, the Treasury issues payments for the tax credit amount. The tax credit for the investors works similar to most tax credits. The investors may claim their tax credits when they file their federal income tax forms.
We do not find a discretionary or decision making act on the part of the Treasury or IRS in this program. They are merely conducting the ministerial act of receiving forms and releasing tax credits as mandated by Congress under the Recovery Act. Such ministerial acts are not subject to Section 106 review.
Of course, other federal involvement in the projects funded by the bonds (e.g., Clean Water Act permits) may trigger Section 106 review. But the Build America Bond program, by itself without further federal involvement, does not trigger Section 106 responsibilities with regard to the projects funded by those bonds.
Posted October 9, 2009