Florida bills urge Congress to expand PABs for spaceports

Bonds

Florida lawmakers are asking Congress to expand the use of tax-exempt private activity bonds to include commercial spaceports.

“The push for Congress to grant spaceport bonds tax-exempt status has been a conversation for many years,” said a spokesperson for Space Florida, the state’s aerospace finance and development authority, which oversees the development of the Florida’s private space industry. “However, today it has become imperative to fuel the growth and innovation of the industry, while also reducing the burden on taxpayers.”

Space Florida has named the pair of bills winding through the Legislature as a top 2024 priority.

The Rocket Garden and Gateway Deep Space Launch Complex” at Florida’s Kennedy Space Center.

Kennedy Space Center

The U.S. saw a record 105 rocket launches last year, with an unprecedented 74 from Florida’s space coast, according to the Federal Aviation Administration’s Office of Commercial Space Transportation, which regulates all private launch and reentry activities and the operations of launch and reentry sites. The U.S. has 14 licensed spaceports across the country, six of which are located in Florida.

The aerospace industry is funded through a combination of federal, state and local sources, with federal funds playing a “significant” role and state and local funding coming from a mix of appropriations, grants, and partnerships with private entities, according to Space Florida. Current funding in Florida calls for 20% allocated to the industry from public transportation funds, and the discretionary Strategic Intermodal System funds.

Florida has formally designated space as a mode of transportation to support the industry, and wants access to tax-exempt financing on par with airports and seaports, according to the Florida bills. The legislation would establish that the “aggressive development of infrastructure” for the commercial space industry is key to “maintaining the United States’ leadership in space,” and that being able to tap tax-exempt PABs would “encourage more investment in aerospace infrastructure.”

House Bill 143 has passed several committees and is now awaiting vote by the full House. Senate Bill 370 has passed the committee on Commerce and Tourism and the Rules Committee is set to vote on the measure Tuesday.

Separately, Space Florida wrote a letter to the IRS Commissioner urging the agency to add spaceports as a qualified category for PABs.

“Today it is well understood the historic and current imperative of assuring airports and seaports qualify for tax-exempt financing, but in stark contrast, spaceports are absent from this exemption,” the group said. “This is an oversight for which the contemporary economic landscape demands remedy.”

In 2020, the Government Accountability Office released a report to Congress outlining a range of options to support U.S. launch infrastructure, and included private activity bonds as a type of tax incentive.

Commercial space launch activity has been steadily growing over the past five years, according to the Office of Commercial Space Transportation, which forecasts launch and re-entry activity to increase to a range of 123 to 288 by 2027.

Last November, U.S. Sens. Mark Warner, D-Va. and Dan Sullivan R-Alaska, introduced the Alleviating Spaceport Traffic by Rewarding Operators (ASTRO) Act, to award funding to spaceports with proven track records of launches and supporting local economies.

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