Case made on Hill for use of munis to finance project for California ports.

WASHINGTON - Southern California lawmakers urged Congress yesterday to approve legislation to allow tax-exempt financing for the Alameda Corridor, a planned $1.8 billion rail and truck line that would speed cargo transport through a congested area near the Port of Los Angeles.

The Alameda Corridor Transportation Authority has been able to raise only $1.2 billion of the funds needed for the project and "desperately needs authority to issue tax-exempt bonds," said Rep. Walter R. Tucker, D-Calif., in testimony before a House Ways and Means subcommittee.

But the authority has been blocked by its general counsel's opinion that the tax code does not permit such an issue, Tucker said in a written statement submitted to the subcommittee on select revenue measures.

The authority believes it should have the ability to issue bonds under the tax law provision that permits tax-exempt financing for dock and wharf facilities, Tucker said.

The Alameda Corridor should be considered a facility that is "functionally related and subordinate to" the Port of Los Angeles and the Port of Long Beach, Tucker said.

"Nevertheless, the authority has been advised by legal counsel that rail facilities to transport cargo into and out of a port, even though dedicated to handling public port cargo, are not a dock or wharf or functionally related and subordinate to it," Tucker said.

Permitting tax-exempt financing for the 20-mile transportation corridor "is entirely consistent with the public policy underlying the ability to issue tax-exempt bonds to finance ports because it covers only facilities that are integral to the operations of the ports and dedicated to the [ports'] operations," Tucker said.

Tucker said in his written statement that the corridor project is needed to improve the competitive position of the United States in trade. "The additional cost to shippers who must put up with delay in the transshipment of cargo destined for the East Coast and other points is becoming increasingly difficult to justify.

The proposal received a warm response from several subcommittee members.

"I think what you're proposing has some important positive public policy implications, [and is] one that deserves very serious consideration," said Rep. Lewis F. Payne, D-Va.

"This certainly sounds like an exciting project, and one that would have impact on our trade policy," said Rep. Charles Rangel, D-N.Y., the chairman of the subcommittee.

"It sounds like a national project with international implications, and it should be raised to that level."

Appearing with Tucker at the hearing were five other House members from California: Republican Steve Horn and Democrats Xavier Becerra, Jane Harman, Lucille Roybal-Allard, and Maxine Waters.

The subcommittee hearing was the latest in a series on miscellaneous tax proposals that House Ways and Means Chairman Dan Rostenkowski, D-Ill., has said could form the basis of a second tax bill this year.

Tucker and the other California lawmakers stressed that the 9[FQAlameda Corridor proposal was not a rifle shot, but could be used to benefit other areas near U.S. ports.

"Other ports are learning from this concept of a transportation corridor," Harman said. She added that the Joint Tax Committee has estimated that the proposal would cost the federal government $115 million over five years.

The idea behind the corridor's railway component is to consolidate the tracks of three railroads in the area: the Union Pacific, Santa Fe, and Southern Pacific. The corridor's highway component includes local street improvements to reduce truck traffic on freeways and improve road safety.

In response to a question by Rangel, Tucker said the proposal has the support of the Clinton administration, in the form of endorsements from Transportation Secretary Federico Pena and Commerce Secretary Ron Brown.

Rangel suggested that the proposal's supporters should try to get the administration to include it in any trade package it might offer. "It would be much easier" to pass Congress "if the administration presents it as part of a trade package," Rangel said.

Meanwhile, at the local level, the Alameda Corridor project recently encountered problems with an important right-of-way purchase.

Officials at the ports of Los Angeles and Long Beach had reached tentative agreement last April for a key land purchase from Southern Pacific.

But port officials ended negotiations in recent weeks, citing concern over such issues as getting clear title to the property, environmental cleanup needs, and formalizing an operating agreement with the three railroads that would use the right-of-way.

Local officials still hope to resuscitate the deal, but acknowledge that a delay is possible while the right-of-way issue is addressed.

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