Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Rules and Regulations 67685 

instrument approach and departure 

procedures at these airports. Interested 

parties were invited to participate in 

this rulemaking effort by submitting 

written comments on the proposal to the 

FAA. No comments were received. 

Class E airspace designations are 

published in paragraph 6005 of FAA 

Order 7400.11C, dated August 13, 2018, 

and effective September 15, 2018, which 

is incorporated by reference in 14 CFR 

71.1. The Class E airspace designation 

listed in this document will be 

published subsequently in the Order. 

Availability and Summary of 

Documents for Incorporation by 

Reference 

This document amends FAA Order 

7400.11C, Airspace Designations and 

Reporting Points, dated August 13, 

2018, and effective September 15, 2018. 

FAA Order 7400.11C is publicly 

available as listed in the ADDRESSES

section of this document. FAA Order 

7400.11C lists Class A, B, C, D, and E 

airspace areas, air traffic service routes, 

and reporting points. 

The Rule 

The FAA is amending to Title 14 

Code of Federal Regulations (14 CFR) 

part 71 by modifying Class E airspace 

extending upward from 1,200 feet above 

the surface at Wiley Post/Will Rogers 

Memorial Airport, Barrow, AK; Chevak 

Airport, Clarks Point Airport, Elim 

Airport, and Golovin Airport, AK. This 

action adds language to the legal 

descriptions of these airports that reads 

‘‘excluding that airspace that extends 

beyond 12 miles from the shoreline’’. 

An editorial change is also made to the 

Chevak airspace designation removing 

the city from the airport name to comply 

with a change to FAA Order 7400.2L, 

Procedures for Handling Airspace 

Matters. 

Regulatory Notices and Analyses 

The FAA has determined that this 

regulation only involves an established 

body of technical regulations for which 

frequent and routine amendments are 

necessary to keep them operationally 

current, is non-controversial and 

unlikely to result in adverse or negative 

comments. It, therefore: (1) Is not a 

‘‘significant regulatory action’’ under 

Executive Order 12866; (2) is not a 

‘‘significant rule’’ under DOT 

Regulatory Policies and Procedures (44 

FR 11034; February 26, 1979); and (3) 

does not warrant preparation of a 

regulatory evaluation as the anticipated 

impact is so minimal. Since this is a 

routine matter that only affects air traffic 

procedures and air navigation, it is 

certified that this rule, when 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities under the 

criteria of the Regulatory Flexibility Act. 

Environmental Review 

The FAA has determined that this 

action qualifies for categorical exclusion 

under the National Environmental 

Policy Act in accordance with FAA 

Order 1050.1F, ‘‘Environmental 

Impacts: Policies and Procedures,’’ 

paragraph 5–6.5a. This airspace action 

is not expected to cause any potentially 

significant environmental impacts, and 

no extraordinary circumstances exist 

that warrant preparation of an 

environmental assessment. 

Lists of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

Adoption of the Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

amends 14 CFR part 71 as follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for part 71 

continues to read as follows: 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of FAA Order 7400.11C, 

Airspace Designations and Reporting 

Points, dated August 13, 2018, and 

effective September 15, 2018, is 

amended as follows: 

Paragraph 6005 Class E Airspace Areas 

Extending Upward From 700 Feet or More 

Above the Surface of the Earth. 

* * * * * 

AAL AK E5 Barrow, AK [Amended] 

Wiley Post/Will Rogers Memorial Airport, 

AK 

(Lat. 71°17′06′′ N; long. 156°46′ 07′′ W) 

That airspace extending upward from 700 

feet above the surface within a 6.6-mile 

radius of the Wiley Post/Will Rogers 

Memorial Airport; and that airspace 

extending upward from 1,200 feet above the 

surface within a 73-mile radius of the Wiley 

Post/Will Rogers Memorial Airport, 

excluding that airspace extending beyond 12 

miles of the shoreline. 

AAL AK E5 Chevak, AK [Amended] 

Chevak Airport, AK 

(Lat. 61°32′27′′ N, long. 165°36′03′′ W) 

That airspace extending upward from 700 

feet above the surface within a 7.0-mile 

radius of Chevak Airport; and that airspace 

extending upward from 1,200 feet above the 

surface within a 73-mile radius of Chevak 

Airport, excluding that airspace extending 

beyond 12 miles of the shoreline. 

AAL AK E5 Clarks Point, AK [Amended] 

Clarks Point Airport, AK 

(Lat. 58°50′01′′ N, long. 158°31′46′′ W) 

That airspace extending upward from 700 

feet above the surface within a 6.3-mile 

radius of Clarks Point Airport; and that 

airspace extending upward from 1,200 feet 

above the surface within a 73-mile radius of 

the Clarks Point Airport, excluding that 

airspace extending beyond 12 miles of the 

shoreline. 

AAL AK E5 Elim, AK [Amended] 

Elim Airport, AK 

(Lat. 64°36′54′′ N, Long. 162°16′14′′ W) 

That airspace extending upward from 700 

feet above the surface within a 6.8-mile 

radius of Elim Airport, and within 3.7 miles 

either side of the 015° bearing from the Elim 

Airport, extending from the 6.8-mile radius, 

to 12.6 miles north of Elim Airport; and that 

airspace extending upward from 1,200 feet 

above the surface within a 74-mile radius of 

the Elim Airport, excluding that airspace 

extending beyond 12 miles of the shoreline. 

AAL AK E5 Golovin, AK [Amended] 

Golovin Airport, AK 

(Lat. 64°33′02′′ N, long. 163°00′26′′ W) 

That airspace extending upward from 700 

feet above the surface within a 7.4-mile 

radius of Golovin Airport, and that airspace 

extending upward from 1,200 feet above the 

surface within a 30-mile radius of lat. 

64°43′47′′ N, long. 163°15′17′′ W and a 30- 

mile radius of lat. 64°17′57′′ N, long. 

163°01′41′′ W, excluding that airspace 

extending beyond 12 miles of the shoreline. 

Issued in Seattle, Washington, December 

19, 2018. 

Byron Chew, 

Acting Group Manager, Operations Support 

Group, Western Service Center. 

[FR Doc. 2018–28346 Filed 12–28–18; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1 and 5f 

[TD 9845] 

RIN 1545–BG91 

Public Approval of Tax-Exempt Private 

Activity Bonds 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulation. 

SUMMARY: This document contains final 

regulations on the public approval 

requirement applicable to tax-exempt 

private activity bonds issued by State 

and local governments. The final 


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67686 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Rules and Regulations 

regulations update and replace existing 

regulations to address statutory changes, 

streamline the public approval process, 

and reduce administrative burdens. The 

final regulations affect State and local 

governments that issue tax-exempt 

private activity bonds. 

DATES: Effective date: These regulations 

are effective December 31, 2018. 

Applicability date: For dates of 

applicability, see § 1.147(f)–1(h). 

FOR FURTHER INFORMATION CONTACT: 

Spence Hanemann, (202) 317–6980 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in these final regulations has 

been reviewed and approved by the 

Office of Management and Budget in 

accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)) under OMB Control Number 

1545–2185. The collection of 

information in these final regulations is 

the requirement in § 1.147(f)–1 that 

certain information be contained in a 

public notice or public approval and, 

consequently, disclosed to the public. 

This information is required to meet the 

statutory public approval requirement 

provided in section 147(f) of the Internal 

Revenue Code. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by 26 

U.S.C. 6103. 

Background 

This document contains amendments 

to 26 CFR part 1 under section 147(f) of 

the Internal Revenue Code of 1986 

(Code) and 26 CFR part 5f under section 

103(k) of the Internal Revenue Code of 

1954 (1954 Code). In the Tax Equity and 

Fiscal Responsibility Act of 1982 

(TEFRA), Public Law 97–248, 96 Stat. 

324, Congress redesignated subsection 

(k) of section 103 of the 1954 Code as 

subsection (l) and inserted a new 

subsection (k) that imposed a public 

approval requirement on tax-exempt 

industrial development bonds. On May 

11, 1983, the Department of the 

Treasury (Treasury Department) and the 

IRS published in the Federal Register 

(48 FR 21115) temporary regulations 

under section 103(k) of the 1954 Code 

(TD 7892) (Existing Regulations). See 

§ 5f.103–2. A notice of proposed 

rulemaking (LR–221–82) by crossreference to the temporary regulations 

was published in the Federal Register 

(48 FR 21166) on the same day. 

In the Tax Reform Act of 1986 (1986 

Tax Act), Public Law 99–514, 100 Stat. 

2085, Congress reorganized the taxexempt bond provisions and carried 

forward the public approval 

requirement of section 103(k) of the 

1954 Code in expanded form in section 

147(f) of the Code. In section 147(f), 

Congress extended the public approval 

requirement to apply to all types of taxexempt private activity bonds, as 

provided in section 141(e). The 

legislative history of the 1986 Tax Act 

states that ‘‘[t]he conferees intend that, 

to the extent not amended, all principles 

of present law continue to apply under 

the reorganized provisions.’’ H.R. Rep. 

No. 99–841, at II–686 (1986) (Conf. 

Rep.). Thus, the Existing Regulations in 

§ 5f.103–2 remained in effect even after 

the 1986 Tax Act became law. 

On September 9, 2008, the Treasury 

Department and the IRS published a 

notice of proposed rulemaking (REG– 

128841–07) in the Federal Register (73 

FR 52220) that proposed regulations to 

amend and supplement the Existing 

Regulations (2008 Proposed 

Regulations). The Treasury Department 

and the IRS received public comments 

on the 2008 Proposed Regulations and 

held a public hearing on January 26, 

2009. On September 28, 2017, the 

Treasury Department and the IRS 

withdrew the 2008 Proposed 

Regulations and published a second 

notice of proposed rulemaking (REG– 

128841–07) in the Federal Register (82 

FR 45233) (2017 Proposed Regulations). 

The Treasury Department and the IRS 

received comments on the 2017 

Proposed Regulations but did not hold 

a public hearing because none was 

requested. After consideration of all of 

the comments, the 2017 Proposed 

Regulations are adopted as amended by 

this Treasury decision (Final 

Regulations). 

Summary of Comments and 

Explanation of Revisions 

This section discusses the public 

comments received on the 2017 

Proposed Regulations and explains the 

revisions made in the Final Regulations 

in response to those comments. 

1. Section 1.147(f)–1(d): Public Hearing 

and Reasonable Public Notice 

Under the 2017 Proposed Regulations, 

an issue of private activity bonds is 

approved by a governmental unit if a 

qualifying elected representative of that 

governmental unit approves the issue 

following a public hearing for which 

there was reasonable public notice. For 

this purpose, a public hearing is 

generally defined as a forum that 

provides a reasonable opportunity for 

interested individuals to express their 

views, orally or in writing, on the 

proposed issue of bonds and the 

location and nature of the proposed 

project to be financed. Reasonable 

public notice generally means a 

published notice that is reasonably 

designed to inform residents of the 

approving governmental unit, including 

residents of the issuing unit and the 

host governmental unit where a project 

is to be located, of the proposed issue. 

A. Public Hearing 

The 2017 Proposed Regulations 

provided that a governmental unit may 

impose reasonable requirements on 

persons who wish to participate in a 

public hearing, such as a requirement 

that persons desiring to speak at the 

hearing make a written request to speak 

at least 24 hours before the hearing. One 

commenter suggested that the Final 

Regulations allow a governmental unit 

to cancel a scheduled public hearing if 

the governmental unit received no 

timely requests to participate in the 

hearing and published a supplemental 

public notice. However, section 

147(f)(2)(B)(i) specifically requires a 

public hearing before an elected official 

may approve the issue. Furthermore, 

members of the public may not always 

provide timely notice of their intent to 

participate in a public hearing and, in 

such cases, canceling the hearing could 

frustrate the purpose of the public 

hearing requirement. Therefore, the 

Treasury Department and the IRS have 

concluded that the Final Regulations 

should not disregard the express 

requirement of holding a public hearing 

in section 147(f)(2)(B)(i) by permitting a 

governmental unit to cancel a public 

hearing. Accordingly, the Final 

Regulations do not adopt this comment. 


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Other commenters suggested 

alternative means to satisfy the public 

hearing requirement. One commenter 

suggested allowing a public hearing by 

teleconference or webinar. The Treasury 

Department and the IRS have 

determined that, although these 

technologies may be effective for other 

purposes, they cannot replace a 

conventional public hearing conducted 

in-person because they are not 

sufficiently reliable, publicly available, 

susceptible to public response, or 

uniform in their features and operation. 

Another commenter suggested allowing 

a public hearing performed for any other 

federal, state, or local purpose to satisfy 

the public hearing requirement under 

section 147(f), regardless of the 

procedures by which the organizer 

publishes notice or conducts the 

hearing. The Final Regulations defer to 

a certain degree to state and local 

procedures for conducting a public 

hearing and publishing notice of that 

hearing. See § 1.147(f)–1(d)(3) and 

(d)(4)(iv) of the Final Regulations. 

Furthermore, to the extent that a hearing 

conducted for another governmental 

purpose satisfies all of the requirements 

of section 147(f) and the Final 

Regulations, such a hearing may serve 

for both purposes. The Treasury 

Department and the IRS have 

determined, however, that state and 

local procedures may not supersede a 

specific requirement of the Final 

Regulations. Accordingly, the Final 

Regulations do not adopt either of these 

comments. 

B. Reasonable Public Notice 

The Existing Regulations provide that 

public notice is presumed reasonable if 

published no fewer than 14 days before 

the hearing. The 2008 Proposed 

Regulations proposed to shorten this 

minimum notice period from 14 days to 

seven days. The 2017 Proposed 

Regulations proposed to retain the 14- 

day period between notice and hearing, 

citing a statement in the legislative 

history of TEFRA referring to such a 

time period. Several commenters 

recommended shortening this minimum 

notice period to seven days before the 

public hearing, as proposed in 2008. 

These commenters noted that, although 

a portion of the legislative history 

includes a reference to a 14-day notice 

period, the statute does not require it. 

Commenters also reasoned that the 

substantial increases in the speed at 

which information spreads to individual 

members of the public and advances in 

technology since the original enactment 

of this public approval requirement in 

1982 should warrant a shorter public 

notice period. Accordingly, the Final 

Regulations adopt this comment. The 

Final Regulations treat notice as 

presumed to be reasonably designed to 

inform residents of an approving 

governmental unit if, among other 

things, the notice is given no fewer than 

seven days before the public hearing. 

The 2017 Proposed Regulations 

proposed to treat notice as presumed to 

be reasonably designed to inform 

residents of an approving governmental 

unit if, among other things, the notice 

was posted to the approving 

governmental unit’s public website. 

Many commenters supported this 

proposed rule. Some commenters 

suggested modifications to this rule. 

Several commenters noted that issuers 

that issue bonds on behalf of a 

governmental unit may be unable to use 

this rule as proposed. The proposed rule 

would permit publication on the 

website of the approving governmental 

unit, but an on-behalf-of issuer (such as 

a constituted authority that acts on 

behalf of a city or county) may not have 

the authority to post content to the 

approving governmental unit’s website. 

Commenters suggested permitting 

publication of a public notice on the 

website of the on-behalf-of issuer as an 

alternative to the website of the 

approving governmental unit. The Final 

Regulations adopt this comment. The 

Final Regulations provide that, for an 

issuer approval by an issuer that acts on 

behalf of a governmental unit, public 

notice may be posted on the public 

website of either the on-behalf-of issuer 

or the approving governmental unit. 

The 2017 Proposed Regulations 

required that, for public notices by 

website, a governmental unit also offer 

a reasonable alternative notice method 

for residents without access to the 

internet. Commenters presented 

evidence that more people regularly use 

the internet than use a particular 

newspaper, radio station, or television 

station. These commenters 

recommended removing the 

requirement for an alternative notice 

method in the case of publication by 

website. The Final Regulations adopt 

this comment and eliminate the 

requirement for an alternative method of 

obtaining the information in a website 

notice. 

Further, to address concerns that a 

public notice posted on a large, complex 

website may be difficult for the 

intended recipients of that public notice 

to locate, the Final Regulations clarify 

that a public notice must be posted on 

the governmental unit’s primary public 

website in an area of that website that 

is used to inform its residents about 

events affecting the residents. In 

addition, issuers remain responsible for 

maintaining records showing that a 

public notice containing the requisite 

information was timely posted to an 

appropriate website. See § 1.6001–1. 

The 2017 Proposed Regulations 

included a provision in § 1.147(f)– 

1(d)(4)(iv) that presumed notice to be 

reasonable if, among other things, the 

notice was given in a way permitted 

under a general state law for providing 

public notice of a public hearing held by 

the approving governmental unit. The 

2017 Proposed Regulations also 

included a provision in § 1.147(f)– 

1(d)(3) that treated a public hearing 

performed in compliance with state 

procedural requirements as meeting the 

public hearing requirements of section 

147(f) except to the extent in conflict 

with a specific requirement of the 

proposed regulations. One commenter 

expressed a concern that these two 

provisions were inconsistent. The 

Treasury Department and the IRS have 

determined that these two provisions of 

the 2017 Proposed Regulations are not 

inconsistent. In this regard, § 1.147(f)– 

1(d)(3) addresses public hearings and 

§ 1.147(f)–1(d)(4) addresses public 

notices. Upon consideration of this 

comment and in response to concerns 

raised about the accessibility of notices 

given under state laws, the Final 

Regulations clarify that notice given in 

a way a state permits under a general 

law must still be reasonably accessible 

to the residents of the approving 

governmental unit. 

2. Section 1.147(f)–1(e): Applicable 

Elected Representative 

The 2017 Proposed Regulations 

provided that an applicable elected 

representative of the approving 

governmental unit may execute a public 

approval. The 2017 Proposed 

Regulations provided that the applicable 

elected representative of a governmental 

unit consists of any one of the 

following: (1) The governmental unit’s 

elected legislative body; (2) the 

governmental unit’s chief elected 

executive officer; (3) in the case of a 

state, the chief elected legal officer of 

the state’s executive branch of 

government; or (4) any official elected 

by the voters of the governmental unit 

and designated by the governmental 

unit’s chief elected executive officer or 

by state or local law to approve issues 

for the governmental unit. One 

commenter suggested expanding the 

definition of an applicable elected 

representative to include the chairman 

of the governing board of a conduit 

issuer, if that person is appointed by an 

elected official to execute public 

approvals and empowered to approve a 

bond resolution to authorize an issuance 


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67688 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Rules and Regulations 

of private activity bonds. The 2017 

Proposed Regulations reflected the 

statutory definition of an applicable 

elected representative in section 147(f). 

This statutory definition generally 

requires that an applicable elected 

representative be either an elected 

official or a body comprised of elected 

officials. Under section 147(f)(2)(E)(i), 

the statute allows an appointee of an 

elected official to serve as an applicable 

elected representative only in the event 

that the office of an applicable elected 

representative is vacated and only for 

the remaining term of the elected 

official who vacated that office. The 

Treasury Department and the IRS have 

determined that expanding the statutory 

definition of applicable elected 

representative to permit the appointee 

of an elected official to qualify as an 

applicable elected representative on a 

permanent basis would be inconsistent 

with the purpose and content of the 

statute. Accordingly, the Final 

Regulations adopt this provision as 

proposed. 

3. Section 1.147(f)–1(f): Contents of 

Notice and Approval 

The 2017 Proposed Regulations 

provided that a project was within the 

scope of a public approval if the 

requisite public notice and the approval 

contained a general functional 

description of the project, the maximum 

stated principal amount of bonds to be 

issued to finance the project, the name 

of the initial owner or principal user of 

the project, and a general description of 

the project’s location. The 2017 

Proposed Regulations further provided 

that a substantial deviation between the 

information required to be provided in 

the notice and approval and the actual 

use of proceeds of the issue generally 

would cause that issue to fail to meet 

the public approval requirement. 

A. Contents of Notice and Approval: 

Maximum Stated Principal Amount of 

Bonds 

The 2017 Proposed Regulations 

provided that the public notice and 

public approval must include the 

maximum stated principal amount of 

the issue of private activity bonds to be 

issued to finance the project. The 2017 

Proposed Regulations clarified that, if 

an issue financed multiple projects, the 

notice and approval must specify 

separately the maximum stated 

principal amount of bonds to be issued 

to finance each separate project. The 

2017 Proposed Regulations further 

provided that a deviation between the 

maximum stated principal amount of 

bonds to be used to finance a project 

that is specified in the notice and 

approval and the stated principal 

amount of bonds actually used to 

finance that project is an insubstantial 

deviation if that actual stated principal 

amount is no more than ten percent 

(10%) greater than the amount in the 

notice and approval or any amount less 

than the amount in the notice and 

approval. 

One commenter suggested the notice 

and approval should require only the 

aggregate maximum stated principal 

amount of the bonds of the issue to be 

used to finance all of the projects 

financed by the issue. Another 

commenter similarly suggested that a 

deviation between the maximum stated 

principal amount of the bonds to be 

used to finance a project as provided in 

the notice and approval and the actual 

stated principal amount of the bonds so 

used be calculated with respect to the 

issue as a whole rather than 

individually for each project. The 

Treasury Department and the IRS have 

determined that the relative principal 

amounts within an issue to be spent on 

each separate project are relevant 

information for this public approval 

process. The approximate amount of 

money used to fund a particular project 

is evidence of the scope of that project 

and the project’s potential impact on the 

local community. By contrast, the 

aggregate maximum stated principal 

amount of bonds financing all projects 

financed by an issue is essentially the 

stated principal amount of the issue and 

conveys little additional information 

about the relative scopes of the 

particular projects in multiple-project 

financings. Accordingly, the Final 

Regulations do not adopt these 

comments. 

One commenter suggested clarifying 

that the maximum stated principal 

amount of bonds used to finance a 

project may be determined on any 

reasonable basis and may take into 

account contingencies, such as cost 

overruns or failures to receive 

construction approvals, without regard 

to whether the occurrence of any such 

contingency is reasonably expected at 

the time of the notice or approval. Such 

a rule would give issuers the flexibility 

to account for uncertainties that may 

arise after the bonds are issued, and the 

prohibition against a substantial 

deviation would assure the accuracy of 

the public approval information to an 

acceptable degree. The Final 

Regulations adopt this comment. 

One commenter suggested changing 

the term ‘‘maximum stated principal 

amount’’ of bonds to ‘‘maximum stated 

par amount’’ of bonds. The Treasury 

Department and the IRS have 

determined that, for this purpose, these 

two terms have the same meaning. The 

Final Regulations do not adopt this 

comment and retain the term 

‘‘maximum stated principal amount’’ as 

proposed. 

B. Contents of Notice and Approval: 

Initial Owner or Principal User 

The 2017 Proposed Regulations 

provided that a project was within the 

scope of a public approval if the public 

notice and approval included the name 

of the expected initial legal owner or 

principal user of the project or, 

alternatively, the name of the true 

beneficial party of interest for such legal 

owner or user. One commenter 

suggested clarifying that a general 

partner of a partnership that owns a 

project may be treated as a true 

beneficial party of interest for this 

purpose. Recognizing that limited 

partnership ownership structures are 

common among exempt facilities under 

section 142, the Treasury Department 

and the IRS have determined that this 

clarification is warranted. Accordingly, 

the Final Regulations adopt this 

comment and include an example 

clarifying that a public notice and 

approval may name a general partner of 

an owner of a project as a true beneficial 

party of interest. 

C. Contents of Notice and Approval: 

Project Location 

The Existing Regulations provide that 

a facility is within the scope of a public 

approval if the public notice and 

approval contain the prospective 

location of the facility by its street 

address or, if none, by a general 

description designed to inform readers 

of its specific location. The 2017 

Proposed Regulations required that the 

public notice and approval include a 

general description of the prospective 

location of the project by street address, 

reference to boundary streets or other 

geographic boundaries, or other 

description of the specific geographic 

location that is reasonably designed to 

inform readers of the location. One 

commenter raised a concern that the 

phrase ‘‘specific geographic location’’ in 

the 2017 Proposed Regulations would 

be more restrictive than the language in 

the Existing Regulations and would be 

burdensome for projects located at wellknown landmarks, which may be 

widely recognized by their public name 

but may not have a street address or 

identifiable geographic boundaries. The 

Treasury Department and the IRS do not 

agree with the comment because, as 

noted above, the 2017 Proposed 

Regulations and the Existing 

Regulations both call for a general 

description of the specific location. The 


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Final Regulations adopt this provision 

as proposed. 

D. Special Rule for Pooled Financings 

With Qualified 501(c)(3) Bonds 

For qualified 501(c)(3) bonds issued 

to finance pooled loan programs that are 

described in section 147(b)(4)(B), the 

2017 Proposed Regulations provided a 

special, two-stage public approval 

process. At the time that such bonds are 

issued, the issuer may have only limited 

information about the projects to be 

financed. Thus, for the first stage of 

public approvals occurring before the 

qualified 501(c)(3) bonds are issued, the 

2017 Proposed Regulations allowed the 

public notice and approval to include 

limited general information about 

projects to be financed, such as the 

maximum stated principal amount of 

bonds expected to finance loans to 

section 501(c)(3) organizations or 

governmental units and a general 

description of the types of projects to be 

financed with those loans (for example, 

hospital facilities or college facilities). 

For the second stage of public approvals 

for these financings, before the issuer 

originates a loan to a section 501(c)(3) 

organization or governmental unit, the 

2017 Proposed Regulations required a 

supplemental public approval satisfying 

the ordinary requirements of section 

147(f) for the bonds financing that loan. 

One commenter recommended that no 

host approval be required at the time of 

the limited pre-issuance public approval 

before the qualified 501(c)(3) bonds are 

issued because the specific project 

information may be unknown at that 

time. The Final Regulations adopt this 

comment. Under the Final Regulations, 

for this type of financing, an issuer may 

either meet the general rules on the 

public approval requirement or, 

alternatively, at the issuer’s option, may 

meet the special rules for a two-stage 

public approval process that reflects 

adoption of this comment. In particular, 

under this optional two-stage public 

approval process, a pre-issuance issuer 

approval is required and a supplemental 

post-issuance public approval, 

including issuer approval and host 

approval, is required. 

E. Timing of Hearing and Approval 

The 2017 Proposed Regulations 

provided a safe harbor for the minimum 

period of time between a notice of 

public hearing and the public hearing. 

The 2017 Proposed Regulations also 

provided that the approved bonds must 

be issued within a certain period of time 

after the public approval. Neither the 

Existing Regulations nor the 2017 

Proposed Regulations restrict the period 

of time between a public hearing and a 

public approval. One commenter 

suggested that the Final Regulations 

impose a one-year maximum time 

period between a public hearing and a 

valid public approval. The Treasury 

Department and the IRS have 

determined that, although a period of 

one year between a public hearing and 

a public approval is reasonable, a longer 

period may be reasonable in some 

circumstances. Further, no such 

maximum period was proposed. 

Accordingly, the Final Regulations do 

not adopt this comment. 

4. Section 1.147(f)–1(g): Definitions 

The Existing Regulations define a 

facility to mean a tract or adjoining 

tracts of land, the improvements 

thereon, and any personal property used 

in connection with such real property. 

The Existing Regulations further 

provide that non-adjoining tracts of land 

may be treated as one facility only if 

they are used in an ‘‘integrated 

operation.’’ The 2017 Proposed 

Regulations use the term ‘‘project’’ 

rather than ‘‘facility’’ and generally 

define a project as one or more capital 

projects or facilities, including land, 

buildings, equipment, and other 

property, to be financed with an issue, 

that are located on the same site, or 

adjacent or proximate sites used for 

similar purposes. This proposed 

definition of project was intended to 

afford flexibility for a single project to 

extend beyond a single tract or 

adjoining tracts of land, such as the case 

of a college campus on adjacent or 

proximate sites. Because of the potential 

difficulty of determining whether 

facilities are used in an integrated 

operation, the 2017 Proposed 

Regulations proposed to remove the 

provision of the Existing Regulations 

that allowed financed assets on nonadjoining tracts of land to be treated as 

one facility if those assets were used in 

an integrated operation. 

One commenter noted that, under the 

2017 Proposed Regulations, two 

financed properties that are located on 

non-proximate sites could not be part of 

a single project, whereas two such 

financed properties could be part of a 

single facility under the Existing 

Regulations if the properties were part 

of an integrated operation. The 

commenter suggested that this aspect of 

the definition of project in the 2017 

Proposed Regulations was more 

burdensome than the definition of 

facility in the Existing Regulations. In 

general, the 2017 Proposed Regulations 

would provide greater flexibility to 

permit a greater physical distance 

between the sites included in a project 

than would the Existing Regulations, as 

the 2017 Proposed Regulations would 

permit a single project to include 

financed property at sites that are 

proximate but not adjoining. The Final 

Regulations generally adopt this more 

flexible definition of project from the 

2017 Proposed Regulations. In addition, 

to address this commenter’s concern, 

the Final Regulations also retain the 

longstanding ‘‘integrated operations’’ 

standard from the Existing Regulations 

to allow capital projects or facilities that 

are located on non-proximate sites to be 

treated as a one project if those capital 

projects or facilities are used in an 

integrated operation. 

The same commenter also suggested 

adopting the very broad definition of 

project from a different context 

involving mixed-use projects under 

§ 1.141–6(a)(3), which generally 

includes any facilities or capital projects 

financed in whole or in part with 

proceeds of the issue. The commenter 

reasoned that the requirement in the 

2017 Proposed Regulations that the 

public notice and approval include the 

maximum stated principal amount of 

the issue to be used to finance each 

project would lock an issuer into a 

specific allocation of bond proceeds to 

the project as defined in section 147(f), 

whereas § 1.141–6 would permit 

floating allocations of bond proceeds to 

financed property in certain cases. 

These two definitions of project serve 

rules with different purposes, and the 

different definitions reflect those 

purposes. The Treasury Department and 

the IRS have determined that, if the 

public notice and approval presented 

this information as an aggregate of all 

property financed by the issue, members 

of the public and approving officials 

would be unable to extract and evaluate 

the portions of the aggregate relevant to 

their respective roles in the public 

approval process. The Final Regulations 

do not adopt this comment. 

5. Section 1.147(f)–1(h): Applicability of 

the Final Regulations 

The Final Regulations apply to bonds 

issued pursuant to a public approval 

occurring on or after April 1, 2019. In 

addition, in response to public 

comments, an issuer may apply the 

provisions of § 1.147(f)–1(f)(6) of the 

Final Regulations (regarding deviations 

in public approval information) in 

whole, but not in part, to bonds issued 

pursuant to a public approval occurring 

before April 1, 2019. 

Special Analyses 

This regulation is not subject to 

review under section 6(b) of Executive 

Order 12866 pursuant to the 

Memorandum of Agreement (April 11, 


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2018) between the Department of the 

Treasury and the Office of Management 

and Budget regarding review of tax 

regulations. It is hereby certified that 

these regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

The Existing Regulations provide 

guidance on the minimum 

informational content, procedures, and 

timing for the statutorily required public 

notices, public hearings, and public 

approvals. Although the Final 

Regulations are expected to affect a 

significant number of small state or 

local governmental units that issue taxexempt private activity bonds, the Final 

Regulations are not expected to have a 

significant economic effect on those 

governmental units because the Final 

Regulations generally would streamline 

and simplify the Existing Regulations in 

various respects to reduce the 

administrative burdens of meeting the 

statutory public approval requirement. 

For example, the Final Regulations, 

unlike the Existing Regulations, would 

permit publication of public notice by 

website to reduce costs associated with 

print publication or radio or television 

broadcast, reduce the information 

required to be contained in public 

notice and public approval for certain 

types of bonds, liberalize the 

consequences of insubstantial changes 

in project information, and permit 

curative actions to address certain 

circumstances in which finished 

projects differ from descriptions 

provided in the public notice or public 

approval. Accordingly, a regulatory 

flexibility analysis is not required. 

Pursuant to section 7805(f) of the Code, 

the 2017 Proposed Regulations 

preceding the Final Regulations were 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small business. No comments 

were received. 

Drafting Information 

The principal authors of these 

regulations are Spence Hanemann of the 

Office of Associate Chief Counsel 

(Financial Institutions and Products) 

and Vicky Tsilas, formerly of the Office 

of Associate Chief Counsel (Financial 

Institutions and Products). However, 

other personnel from the Treasury 

Department and the IRS participated in 

their development. 

List of Subjects 

26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

26 CFR Part 5f 

Income taxes, Reporting and 

recordkeeping requirements. 

Adoption of Amendments to the 

Regulations 

Accordingly, 26 CFR parts 1 and 5f 

are amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 1.147(f)–1 is added to 

read as follows: 

§ 1.147(f)–1 Public approval of private 

activity bonds. 

(a) In general. Interest on a private 

activity bond is excludable from gross 

income under section 103(a) only if the 

bond meets the requirements for a 

qualified bond as defined in section 

141(e) and other applicable 

requirements provided in section 103. 

In order to be a qualified bond as 

defined in section 141(e), among other 

requirements, a private activity bond 

must meet the requirements of section 

147(f). A private activity bond meets the 

requirements of section 147(f) only if 

the bond is publicly approved pursuant 

to paragraph (b) of this section or the 

bond qualifies for the exception for 

refunding bonds in section 147(f)(2)(D). 

(b) Public approval requirement—(1) 

In general. Except as otherwise 

provided in this section, a bond meets 

the requirements of section 147(f) if, 

before the issue date, the issue of which 

the bond is a part receives issuer 

approval and host approval (each a 

public approval) as defined in 

paragraphs (b)(2) and (3) of this section 

in accordance with the method and 

process set forth in paragraphs (c) 

through (f) of this section. 

(2) Issuer approval. Except as 

otherwise provided in this section, 

issuer approval means an approval that 

meets the requirements of this 

paragraph (b)(2). Either the 

governmental unit that issues the issue 

or the governmental unit on behalf of 

which the issue is issued must approve 

the issue. For this purpose, § 1.103–1 

applies to the determination of whether 

an issuer issues bonds on behalf of 

another governmental unit. If an issuer 

issues bonds on behalf of more than one 

governmental unit (for example, in the 

case of an authority that acts for two 

counties), any one of those 

governmental units may provide the 

issuer approval. 

(3) Host approval. Except as otherwise 

provided in this section, host approval 

means an approval that meets the 

requirements of this paragraph (b)(3). 

Each governmental unit the geographic 

jurisdiction of which contains the site of 

a project to be financed by the issue 

must approve the issue. If, however, the 

entire site of a project to be financed by 

the issue is within the geographic 

jurisdiction of more than one 

governmental unit within a State 

(counting the State as a governmental 

unit within such State), then any one of 

those governmental units may provide 

host approval for the issue for that 

project. For purposes of the host 

approval, if a project to be financed by 

the issue is located within the 

geographic jurisdiction of two or more 

governmental units but not entirely 

within any one of those governmental 

units, each portion of the project that is 

located entirely within the geographic 

jurisdiction of the respective 

governmental units may be treated as a 

separate project. The issuer approval 

provided pursuant to paragraph (b)(2) of 

this section may be treated as a host 

approval if the governmental unit 

providing the issuer approval is also a 

governmental unit eligible to provide 

the host approval pursuant to this 

section. 

(4) Special rule for host approval of 

airports or high-speed intercity rail 

facilities. Pursuant to a special rule in 

section 147(f)(3), if the proceeds of an 

issue are to be used to finance a project 

that consists of either facilities located 

at an airport (within the meaning of 

section 142(a)(1)) or high-speed intercity 

rail facilities (within the meaning of 

section 142(a)(11)) and the issuer of that 

issue is the owner or operator of the 

airport or high-speed intercity rail 

facilities, the issuer is the only 

governmental unit that is required to 

provide the host approval for that 

project. 

(5) Special rule for issuer approval of 

scholarship funding bond issues and 

volunteer fire department bond issues. 

In the case of a qualified scholarship 

funding bond as defined in section 

150(d)(2), the governmental unit that 

made a request described in section 

150(d)(2)(B) with respect to the issuer of 

the bond is the governmental unit on 

behalf of which the bond was issued for 

purposes of the issuer approval. If more 

than one governmental unit within a 

State made a request described in 

section 150(d)(2)(B), the State or any 

such requesting governmental unit may 

be treated as the governmental unit on 

behalf of which the bond was issued for 

purposes of the issuer approval. In the 

case of a bond of a volunteer fire 

department treated as a bond of a 

political subdivision of a State under 


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section 150(e), the political subdivision 

described in section 150(e)(2)(B) with 

respect to that volunteer fire department 

is the governmental unit on behalf of 

which the bond is issued for purposes 

of the issuer approval. 

(6) Special rules for host approval of 

mortgage revenue bonds, student loan 

bonds, and certain qualified 501(c)(3) 

bonds. In the case of a mortgage revenue 

bond (as defined in paragraph (g)(5) of 

this section), a qualified student loan 

bond as defined in section 144(b), and 

the portion of an issue of qualified 

501(c)(3) bonds as defined in section 

145 that finances working capital 

expenditures, the issue or portion of the 

issue must receive an issuer approval 

but no host approval is necessary. See 

also paragraph (f)(5) of this section, 

providing certain optional alternative 

special rules for certain qualified 

501(c)(3) bonds for pooled loan 

financings described in section 

147(b)(4)(B). 

(c) Method of public approval. The 

method of public approval of an issue 

must satisfy either paragraph (c)(1) or 

(2) of this section. An approval may 

satisfy the requirements of this 

paragraph (c) without regard to the 

authority under State or local law for 

the acts constituting that approval. 

(1) Applicable elected representative. 

An applicable elected representative of 

the approving governmental unit 

approves the issue following a public 

hearing for which there was reasonable 

public notice. 

(2) Voter referendum. A voter 

referendum of the approving 

governmental unit approves the issue. 

(d) Public hearing and reasonable 

public notice—(1) Public hearing. Public 

hearing means a forum providing a 

reasonable opportunity for interested 

individuals to express their views, 

orally or in writing, on the proposed 

issue of bonds and the location and 

nature of the proposed project to be 

financed. 

(2) Location of the public hearing. The 

public hearing must be held in a 

location that, based on the facts and 

circumstances, is convenient for 

residents of the approving governmental 

unit. The location of the public hearing 

is presumed convenient for residents of 

the unit if the public hearing is located 

in the approving governmental unit’s 

capital or seat of government. If more 

than one governmental unit is required 

to hold a public hearing, the hearings 

may be combined as long as the 

combined hearing affords the residents 

of all of the participating governmental 

units a reasonable opportunity to be 

heard. The location of any combined 

hearing is presumed convenient for 

residents of each participating 

governmental unit if it is no farther than 

100 miles from the seat of government 

of each participating governmental unit 

beyond whose geographic jurisdiction 

the hearing is conducted. 

(3) Procedures for conducting the 

public hearing. In general, a 

governmental unit may select its own 

procedure for a public hearing, provided 

that interested individuals have a 

reasonable opportunity to express their 

views. Thus, a governmental unit may 

impose reasonable requirements on 

persons who wish to participate in the 

hearing, such as a requirement that 

persons desiring to speak at the hearing 

make a written request to speak at least 

24 hours before the hearing or that they 

limit their oral remarks to a prescribed 

time. For this purpose, it is unnecessary, 

for example, that the applicable elected 

representative of the approving 

governmental unit be present at the 

hearing, that a report on the hearing be 

submitted to that applicable elected 

representative, or that State 

administrative procedural requirements 

for public hearings be observed. Except 

to the extent State procedural 

requirements for public hearings are in 

conflict with a specific requirement of 

this section, a public hearing performed 

in compliance with State procedural 

requirements satisfies the requirements 

for a public hearing in this paragraph 

(d). A public hearing may be conducted 

by an individual appointed or employed 

to perform such function by the 

governmental unit or its agencies, or by 

the issuer. Thus, for example, for bonds 

to be issued by an authority that acts on 

behalf of a county, the hearing may be 

conducted by the authority, the county, 

or an appointee of either. 

(4) Reasonable public notice. 

Reasonable public notice means notice 

that is reasonably designed to inform 

residents of an approving governmental 

unit, including the issuing 

governmental unit and the 

governmental unit in whose geographic 

jurisdiction a project is to be located, of 

the proposed issue. The notice must 

state the time and place for the public 

hearing and contain the information 

required by paragraph (f)(2) of this 

section. Notice is presumed to be 

reasonably designed to inform residents 

of an approving governmental unit if it 

satisfies the requirements of this 

paragraph (d)(4) and is given no fewer 

than seven (7) calendar days before the 

public hearing in one or more of the 

ways set forth in paragraphs (d)(4)(i) 

through (iv) of this section. 

(i) Newspaper publication. Public 

notice may be given by publication in 

one or more newspapers of general 

circulation available to the residents of 

the governmental unit. 

(ii) Radio or television broadcast. 

Public notice may be given by radio or 

television broadcast to the residents of 

the governmental unit. 

(iii) Governmental unit website 

posting. Public notice may be given by 

electronic posting on the approving 

governmental unit’s primary public 

website in an area of that website used 

to inform its residents about events 

affecting the residents (for example, 

notice of public meetings of the 

governmental unit). In the case of an 

issuer approval of an issue issued by an 

on-behalf-of issuer that acts on behalf of 

a governmental unit, such notice may be 

posted on the public website of the onbehalf-of issuer as an alternative to the 

public website of the approving 

governmental unit. 

(iv) Alternative State law public 

notice procedures. Public notice may be 

given in a way that is permitted under 

a general State law for public notices for 

public hearings for the approving 

governmental unit, provided that the 

public notice is reasonably accessible. 

(e) Applicable elected 

representative—(1) In general—(i) 

Definition of applicable elected 

representative. The applicable elected 

representative of a governmental unit 

means— 

(A) The governmental unit’s elected 

legislative body; 

(B) The governmental unit’s chief 

elected executive officer; 

(C) In the case of a State, the chief 

elected legal officer of the State’s 

executive branch of government; or 

(D) Any official elected by the voters 

of the governmental unit and designated 

for purposes of this section by the 

governmental unit’s chief elected 

executive officer or by State or local law 

to approve issues for the governmental 

unit. 

(ii) Elected officials. For purposes of 

paragraphs (e)(1)(i)(B), (C), and (D) of 

this section, an official is considered 

elected only if that official is popularly 

elected at-large by the voters of the 

governmental unit. If an official 

popularly elected at-large by the voters 

of a governmental unit is appointed or 

selected pursuant to State or local law 

to be the chief executive officer of the 

unit, that official is deemed to be an 

elected chief executive officer for 

purposes of this section but for no 

longer than the official’s tenure as an 

official popularly elected at-large. 

(iii) Legislative bodies. In the case of 

a bicameral legislature that is popularly 

elected, both chambers together 

constitute an applicable elected 

representative. Absent designation 


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under paragraph (e)(1)(i)(D) of this 

section, however, neither such chamber 

independently constitutes an applicable 

elected representative. If multiple 

elected legislative bodies of a 

governmental unit have independent 

legislative authority, the body with the 

more specific authority relating to the 

issue is the only legislative body that is 

treated as an elected legislative body 

under paragraph (e)(1)(i)(A) of this 

section. 

(2) Governmental unit with no 

applicable elected representative—(i) In 

general. The applicable elected 

representatives of a governmental unit 

with no applicable elected 

representative (but for this paragraph 

(e)(2) and section 147(f)(2)(E)(ii)) are the 

applicable elected representatives of the 

next higher governmental unit (with an 

applicable elected representative) from 

which the governmental unit derives its 

authority. Except as otherwise provided 

in this section, any governmental unit 

from which the governmental unit with 

no applicable elected representative 

derives its authority may be treated as 

the next higher governmental unit 

without regard to the relative status of 

such higher governmental unit under 

State law. A governmental unit derives 

its authority from another governmental 

unit that— 

(A) Enacts a specific law (for example, 

a provision in a State constitution, 

charter, or statute) by or under which 

the governmental unit is created; 

(B) Otherwise empowers or approves 

the creation of the governmental unit; or 

(C) Appoints members to the 

governing body of the governmental 

unit. 

(ii) Host approval. For purposes of a 

host approval, a governmental unit may 

be treated as the next higher 

governmental unit only if the project is 

located within its geographic 

jurisdiction and eligible residents of the 

unit are entitled to vote for its 

applicable elected representatives. 

(3) On behalf of issuers. In the case of 

an issuer that issues bonds on behalf of 

a governmental unit, the applicable 

elected representative is any applicable 

elected representative of the 

governmental unit on behalf of which 

the bonds are issued. 

(f) Public approval process—(1) In 

general. The public approval process for 

an issue, including scope, content, and 

timing of the public approval, must 

meet the requirements of this paragraph 

(f). A governmental unit must timely 

approve either each project to be 

financed with proceeds of the issue or 

a plan of financing for each project to 

be financed with proceeds of the issue. 

(2) General rule on information 

required for a reasonable public notice 

and public approval. Except as 

otherwise provided in this section, a 

project to be financed with proceeds of 

an issue is within the scope of a public 

approval under section 147(f) if the 

reasonable public notice of the public 

hearing, if applicable, and the public 

approval (together the notice and 

approval) include the information set 

forth in paragraphs (f)(2)(i) through (iv) 

of this section. 

(i) The project. The notice and 

approval must include a general 

functional description of the type and 

use of the project to be financed with 

the issue. For this purpose, a project 

description is sufficient if it identifies 

the project by reference to a particular 

category of exempt facility bond to be 

issued (for example, an exempt facility 

bond for an airport pursuant to section 

142(a)(1)) or by reference to another 

general category of private activity bond 

together with information on the type 

and use of the project to be financed 

with the issue (for example, a qualified 

small issue bond as defined in section 

144(a) for a manufacturing facility or a 

qualified 501(c)(3) bond as defined in 

section 145 for a hospital facility and 

working capital expenditures). 

(ii) The maximum stated principal 

amount of the issue. The notice and 

approval must include the maximum 

stated principal amount of the issue of 

private activity bonds to be issued to 

finance the project or projects. If an 

issue finances multiple projects (for 

example, facilities at different locations 

on non-proximate sites that are not 

treated as part of the same project), the 

notice and approval must specify 

separately the maximum stated 

principal amount of bonds to be issued 

to finance each separate project to be 

financed as part of the issue. The 

maximum stated principal amount of 

bonds to be issued to finance a project 

may be determined on any reasonable 

basis and may take into account 

contingencies, without regard to 

whether the occurrence of any such 

contingency is reasonably expected at 

the time of the notice. 

(iii) The name of the initial legal 

owner or principal user of the project. 

The notice and approval must include 

the name of either the expected initial 

legal owner or principal user (within the 

meaning of section 144(a)) of the project 

or, alternatively, the name of a 

significant true beneficial party of 

interest for such legal owner or user (for 

example, the name of a section 501(c)(3) 

organization that is the sole member of 

a limited liability company that is the 

legal owner or the name of a general 

partner of a partnership that owns the 

project). 

(iv) The location of the project. The 

notice and approval must include a 

general description of the prospective 

location of the project by street address, 

reference to boundary streets or other 

geographic boundaries, or other 

description of the specific geographic 

location that is reasonably designed to 

inform readers of the location. For a 

project involving multiple capital 

projects or facilities located on the same 

site, or on adjacent or reasonably 

proximate sites with similar uses, a 

consolidated description of the location 

of those capital projects or facilities 

provides a sufficient description of the 

location of the project. For example, a 

project for a section 501(c)(3) 

educational entity involving multiple 

buildings on the entity’s main urban 

college campus may describe the 

location of the project by reference to 

the outside street boundaries of that 

campus with a reference to any 

noncontiguous features of that campus. 

(3) Special rule for mortgage revenue 

bonds. Mortgage loans financed by 

mortgage revenue bonds are within the 

scope of a public approval if the notice 

and approval state that the bonds are to 

be issued to finance residential 

mortgages, provide the maximum stated 

principal amount of mortgage revenue 

bonds expected to be issued, and 

provide a general description of the 

geographic jurisdiction in which the 

residences to be financed with the 

proceeds of the mortgage revenue bonds 

are expected to be located (for example, 

residences located throughout a State 

for an issuer with a statewide 

jurisdiction or residences within a 

particular local geographic jurisdiction, 

such as within a city or county, for a 

local issuer). For this purpose, in the 

case of mortgage revenue bonds, no 

information is required on specific 

names of mortgage loan borrowers or 

specific locations of individual 

residences to be financed. 

(4) Special rule for qualified student 

loan bonds. Qualified student loans 

financed by qualified student loan 

bonds as defined in section 144(b) are 

within the scope of a public approval if 

the notice and approval state that the 

bonds will be issued to finance student 

loans and state the maximum stated 

principal amount of qualified student 

loan bonds expected to be issued for 

qualified student loans. For this 

purpose, in the case of qualified student 

loan bonds, no information is required 

with respect to names of specific 

student loan borrowers. 

(5) Special rule for certain qualified 

501(c)(3) bonds. Qualified 501(c)(3) 


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bonds issued pursuant to section 145 for 

pooled loan financings that are 

described in section 147(b)(4)(B) 

(without regard to any election under 

section 147(b)(4)(A)) are within the 

scope of a public approval if the public 

approval either meets the general 

requirements of paragraph (b) of this 

section or, alternatively, at the issuer’s 

option, meets the special requirements 

of paragraphs (f)(5)(i) and (ii) of this 

section. 

(i) Pre-issuance issuer approval. 

Within the time period required by 

paragraph (f)(7) of this section, an issuer 

approval is obtained after reasonable 

public notice of a public hearing is 

provided and a public hearing is held. 

For this purpose, a project is treated as 

described in the notice and approval if 

the notice and approval provide that the 

bonds will be qualified 501(c)(3) bonds 

to be used to finance loans described in 

section 147(b)(4)(B), state the maximum 

stated principal amount of bonds 

expected to be issued to finance loans 

to section 501(c)(3) organizations or 

governmental units as described in 

section 147(b)(4)(B), provide a general 

description of the type of project to be 

financed with such loans (for example, 

loans for hospital facilities or college 

facilities), and state that an additional 

public approval that includes specific 

project information will be obtained 

before any such loans are originated. 

(ii) Post-issuance public approval for 

specific loans. Before a loan described 

in section 147(b)(4)(B) is originated, a 

supplemental public approval, 

including issuer approval and host 

approval, for the bonds to be used to 

finance that loan is obtained that meets 

all the requirements of section 147(f) 

and the requirements for a public 

approval in paragraph (b) of this section. 

This post-issuance supplemental public 

approval requirement applies by 

treating the bonds to be used to finance 

such loan as if they were reissued for 

purposes of section 147(f) (without 

regard to paragraph (f)(5) of this 

section). For this purpose, proceeds to 

be used to finance such loan do not 

include the portion of the issue used to 

finance a common reserve fund or 

common costs of issuance. 

(6) Deviations in public approval 

information—(i) In general. Except as 

otherwise provided in this section, a 

substantial deviation between the stated 

use or amount of proceeds of an issue 

included in the information required to 

be provided in the notice and approval 

(public approval information) and the 

actual use or amount of proceeds of the 

issue causes that issue to fail to meet the 

public approval requirement. 

Conversely, insubstantial deviations 

between the stated use or amount of 

proceeds of an issue included in the 

public approval information and the 

actual use or amount of proceeds of the 

issue do not cause such a failure. In 

general, the determination of whether a 

deviation is substantial is based on all 

the facts and circumstances. In all 

events, however, a change in the 

fundamental nature or type of a project 

is a substantial deviation. 

(ii) Certain insubstantial deviations in 

public approval information. The 

following deviations from the public 

approval information in the notice and 

approval are treated as insubstantial 

deviations: 

(A) Size of bond issue and use of 

proceeds. A deviation between the 

maximum stated principal amount of a 

proposed issuance of bonds to finance a 

project that is specified in public 

approval information and the actual 

stated principal amount of bonds issued 

and used to finance that project is an 

insubstantial deviation if that actual 

stated principal amount is no more than 

ten percent (10%) greater than that 

maximum stated principal amount or is 

any amount less than that maximum 

stated principal amount. In addition, the 

use of proceeds to pay working capital 

expenditures directly associated with 

any project specified in the public 

approval information is an insubstantial 

deviation. 

(B) Initial legal owner or principal 

user. A deviation between the initial 

legal owner or principal user of the 

project named in the notice and 

approval and the actual initial legal 

owner or principal user of the project is 

an insubstantial deviation if such 

parties are related parties on the issue 

date of the issue. 

(iii) Supplemental public approval to 

cure certain substantial deviations in 

public approval information. A 

substantial deviation between the stated 

use or amount of proceeds of an issue 

included in the public approval 

information and the actual use or 

amount of the proceeds of the issue does 

not cause that issue to fail to meet the 

public approval requirement if all of the 

following requirements are met: 

(A) Original public approval and 

reasonable expectations. The issue met 

the requirements for a public approval 

in paragraph (b) of this section. In 

addition, on the issue date of the issue, 

the issuer reasonably expected there 

would be no substantial deviations 

between the stated use or amount of 

proceeds of an issue included in the 

public approval information and the 

actual use or amount of the proceeds of 

the issue. 

(B) Unexpected events or unforeseen 

changes in circumstances. As a result of 

unexpected events or unforeseen 

changes in circumstances that occur 

after the issue date of the issue, the 

issuer determines to use proceeds of the 

issue in a manner or amount not 

provided in a public approval. 

(C) Supplemental public approval. 

Before using proceeds of the bonds in a 

manner or amount not provided in a 

public approval, the issuer obtains a 

supplemental public approval for those 

bonds that meets the public approval 

requirement in paragraph (b) of this 

section. This supplemental public 

approval requirement applies by 

treating those bonds as if they were 

reissued for purposes of section 147(f). 

(7) Certain timing requirements. 

Public approval of an issue is timely 

only if the issuer obtains the public 

approval within one year before the 

issue date of the issue. Public approval 

of a plan of financing is timely only if 

the issuer obtains public approval for 

the plan of financing within one year 

before the issue date of the first issue 

issued under the plan of financing and 

the issuer issues all issues under the 

plan of financing within three years 

after the issue date of such first issue. 

(g) Definitions. The definitions in this 

paragraph (g) apply for purposes of this 

section. In addition, the general 

definitions in § 1.150–1 apply for 

purposes of this section. 

(1) Geographic jurisdiction means the 

area encompassed by the boundaries 

prescribed by State or local law for a 

governmental unit or, if there are no 

such boundaries, the area in which a 

unit may exercise such sovereign 

powers that make that unit a 

governmental unit for purposes of 

§ 1.103–1 and this section. 

(2) Governmental unit has the 

meaning of ‘‘State or local governmental 

unit’’ as defined in § 1.103–1. Thus, a 

governmental unit is a State, territory, a 

possession of the United States, the 

District of Columbia, or any political 

subdivision thereof. 

(3) Host approval is defined in 

paragraph (b)(3) of this section. 

(4) Issuer approval is defined in 

paragraph (b)(2) of this section. 

(5) Mortgage revenue bonds mean 

qualified mortgage bonds as defined in 

section 143(a), qualified veterans’ 

mortgage bonds as defined in section 

143(b), or refunding bonds issued to 

finance mortgages of owner-occupied 

residences pursuant to applicable law in 

effect prior to enactment of section 

143(a) or section 143(b). 

(6) Proceeds means ‘‘proceeds’’ as 

defined in § 1.141–1(b), except that it 

does not include disposition proceeds. 


khammond on DSK30JT082PROD with RULES
67694 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Rules and Regulations 

(7) Project generally means one or 

more capital projects or facilities, 

including land, buildings, equipment, 

and other property, to be financed with 

an issue, that are located on the same 

site, or adjacent or proximate sites used 

for similar purposes, and that are 

subject to the public approval 

requirement of section 147(f). Capital 

projects or facilities that are not located 

on the same site or adjacent or 

proximate sites may be treated as one 

project if those capital projects or 

facilities are used in an integrated 

operation. For an issue of mortgage 

revenue bonds or an issue of qualified 

student loan bonds as defined in section 

144(b), the term project means the 

mortgage loans or qualified student 

loans to be financed with the proceeds 

of the issue. For an issue of qualified 

501(c)(3) bonds as defined in section 

145, the term project means a project as 

defined in the first sentence of this 

definition, and also is deemed to 

include working capital expenditures to 

be financed with proceeds of the issue. 

(8) Public approval information is 

defined in paragraph (f)(6)(i) of this 

section. 

(9) Public hearing is defined in 

paragraph (d)(1) of this section. 

(10) Reasonable public notice is 

defined in paragraph (d)(4) of this 

section. 

(11) Voter referendum means a vote 

by the voters of the affected 

governmental unit conducted in the 

same manner and time as voter 

referenda on matters relating to 

governmental spending or bond 

issuances by the governmental unit 

under applicable State and local law. 

(h) Applicability date. This section 

applies to bonds issued pursuant to a 

public approval occurring on or after 

April 1, 2019. For bonds issued 

pursuant to a public approval occurring 

before April 1, 2019, see § 5f.103–2 as 

contained in 26 CFR part 5f, revised as 

of April 1, 2018. In addition, an issuer 

may apply the provisions of paragraph 

(f)(6) of this section in whole, but not in 

part, to bonds issued pursuant to a 

public approval occurring before April 

1, 2019. 

PART 5f—TEMPORARY INCOME TAX 

REGULATIONS UNDER THE TAX 

EQUITY AND FISCAL RESPONSIBILITY 

ACT OF 1982 

■ Par. 3. The authority citation for part 

5f continues to read in part as follows: 

Authority: 26 U.S.C. 7805 * * * 

§ 5f.103–2 [Removed] 

■ Par. 4. Section 5f.103–2 is removed. 

Kirsten Wielobob, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: November 1, 2018. 

David J. Kautter, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2018–28371 Filed 12–28–18; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket Number USCG–2018–1078] 

RIN 1625–AA00 

Safety Zone; Marina Del Rey Fireworks 

Event; Marina Del Rey, California 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The U.S. Coast Guard is 

establishing a temporary safety zone in 

Marina Del Rey Harbor around the 

fireworks launch site located at the 

south jetty. This temporary safety zone 

is necessary to provide for the safety of 

the waterway users by keeping them 

clear of potentially harmful debris 

within the fall out zone during the 

fireworks displays scheduled to take 

place within Marina Del Rey harbor on 

December 31, 2018 and January 1, 2019. 

Entry of persons or vessels into this 

zone is prohibited unless specifically 

authorized by the Captain of the Port 

(COTP), Los Angeles—Long Beach, or 

her designated representative. 

DATES: This rule is effective from 12:01 

a.m. on December 31, 2018, until 1:01 

a.m. on January 1, 2019. This rule will 

be enforced during the duration of the 

fireworks displays occurring within the 

effective period, which will be 

broadcasted via local Broadcast Notice 

to Mariners. 

ADDRESSES: To view documents 

mentioned in this preamble as being 

available in the docket, go to http://

www.regulations.gov, type USCG–2018– 

1078 in the ‘‘SEARCH’’ box and click 

‘‘SEARCH.’’ Click on Open Docket 

Folder on the line associated with this 

rule. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, call or 

email Waterways Management, U.S. 

Coast Guard Sector Los Angeles—Long 

Beach; telephone (310) 521–3860, email 

D11-SMB-SectorLALB-WWM@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

I. Table of Abbreviations 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

E.O. Executive order 

FR Federal Register 

LLNR Light List Number 

NPRM Notice of proposed rulemaking 

Pub. L. Public Law 

§ Section 

U.S.C. United States Code 

II. Background Information and 

Regulatory History 

The Coast Guard is issuing this 

temporary rule without prior notice and 

opportunity to comment pursuant to 

authority under section 4(a) of the 

Administrative Procedure Act (APA) 

(5 U.S.C. 553(b)). This provision 

authorizes an agency to issue a rule 

without prior notice and opportunity to 

comment when the agency for good 

cause finds that those procedures are 

‘‘impracticable, unnecessary, or contrary 

to the public interest.’’ Under 5 U.S.C. 

553(b)(B), the Coast Guard finds that 

good cause exists for not publishing a 

notice of proposed rulemaking (NPRM) 

with respect to this rule. Publishing an 

NPRM would be impracticable in this 

case due to having received initial 

notice of the event on December 3, 2018. 

We are issuing this rule, and under 5 

U.S.C. 553(d)(3), the Coast Guard finds 

that good cause exists for making it 

effective less than 30 days after 

publication in the Federal Register, the 

Coast Guard finds that good cause exists 

for making it effective less than 30 days 

after publication in the Federal 

Register. Delaying the effective date of 

this rule would be impracticable due to 

the date of the events. 

III. Legal Authority and Need for Rule 

The Coast Guard is issuing this rule 

under the authority of 33 U.S.C. 1231. 

The COTP, Los Angeles—Long Beach, 

has determined that potential hazards 

associated with navigation safety that 

arise because the fireworks display 

creates potential for hazards for any 

person or vessel within a 500-foot 

radius of the fireworks launch site. 

Potential hazards include accidental 

discharge of fireworks, dangerous 

projectiles, and falling hot embers or 

other debris. This temporary safety zone 

is necessary to ensure the safety of, and 

reduce the risk to, the public, and 

mariners, in Marina Del Rey harbor. 

IV. Discussion of the Rule 

This rule establishes a temporary 

safety zone from December 31, 2018 to 

January 1, 2019, encompassing all 

navigable waters from the surface to the 

sea floor within a 500-foot radius 


khammond on DSK30JT082PROD with RULES