SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Highway Innovation and Cost Savings 
Act''.

SEC. 2. TAX-EXEMPT FINANCING OF QUALIFIED HIGHWAY INFRASTRUCTURE 
              CONSTRUCTION.

    (a) Treatment as Exempt Facility Bond.--A bond described in 
subsection (b) shall be treated as described in section 141(e)(1)(A) of 
the Internal Revenue Code of 1986, except that section 146 of such Code 
shall not apply to such bond.
    (b) Bond Described.--
            (1) In general.--A bond is described in this subsection if 
        such bond is issued after the date of enactment of this Act as 
        part of an issue--
                    (A) 95 percent or more of the net proceeds of which 
                are to be used to provide a qualified highway 
                infrastructure project, and
                    (B) to which there has been allocated a portion of 
                the allocation to the project under paragraph 
                (2)(C)(ii) which is equal to the aggregate face amount 
                of bonds to be issued as part of such issue.
            (2) Qualified highway infrastructure projects.--
                    (A) In general.--For purposes of paragraph (1), the 
                term ``qualified highway infrastructure project'' means 
                a project--
                            (i) for the construction or reconstruction 
                        of a highway, and
                            (ii) designated under subparagraph (B) as 
                        an eligible pilot project.
                    (B) Eligible pilot project.--
                            (i) In general.--The Secretary of 
                        Transportation, in consultation with the 
                        Secretary of the Treasury, shall select not 
                        more than 15 highway infrastructure projects to 
                        be pilot projects eligible for tax-exempt 
                        financing.
                            (ii) Eligibility criteria.--In determining 
                        the criteria necessary for the eligibility of 
                        pilot projects, the Secretary of Transportation 
                        shall include the following:
                                    (I) The project must serve the 
                                general public.
                                    (II) The project is necessary to 
                                evaluate the potential of the private 
                                sector's participation in the 
                                provision, maintenance, and operation 
                                of the highway infrastructure of the 
                                United States.
                                    (III) The project must be located 
                                on publicly-owned rights-of-way.
                                    (IV) The project must be publicly 
                                owned or the ownership of the highway 
                                constructed or reconstructed under the 
                                project must revert to the public.
                                    (V) The project must be consistent 
                                with a transportation plan developed 
                                pursuant to section 134(g) or 135(e) of 
                                title 23, United States Code.
                    (C) Aggregate face amount of tax-exempt 
                financing.--
                            (i) In general.--The aggregate face amount 
                        of bonds issued pursuant to this section shall 
                        not exceed $15,000,000,000, determined without 
                        regard to any bond the proceeds of which are 
                        used exclusively to refund (other than to 
                        advance refund) a bond issued pursuant to this 
                        section (or a bond which is a part of a series 
                        of refundings of a bond so issued) if the 
                        amount of the refunding bond does not exceed 
                        the outstanding amount of the refunded bond.
                            (ii) Allocation.--The Secretary of 
                        Transportation, in consultation with the 
                        Secretary of the Treasury, shall allocate the 
                        amount described in clause (i) among the 
                        eligible pilot projects designated under 
                        subparagraph (B), based on the extent to 
                        which--
                                    (I) the projects use new 
                                technologies, construction techniques, 
                                or innovative cost controls that result 
                                in savings in building or operating the 
                                projects, and
                                    (II) the projects address local, 
                                regional, or national transportation 
                                needs.
                            (iii) Reallocation.--If any portion of an 
                        allocation under clause (ii) is unused on the 
                        date which is 3 years after such allocation, 
                        the Secretary of Transportation, in 
                        consultation with the Secretary of the 
                        Treasury, may reallocate such portion among the 
                        remaining eligible pilot projects.
Highway Innovation and Cost Savings Act - Amends the Internal Revenue Code to provide for the treatment of a qualified highway infrastructure project bond as an exempt private activity bond.
Highway Innovation and Cost Savings Act