SECTION 6. FINAL APPLICATION

Each Final Application for an allocation of the QFCB National Limitation must comply with this Section 6.

(1) Applicant(s) . An application may be filed either by a single applicant or by more than one applicant. (For additional requirements governing applications jointly filed by multiple applicants, see Section 6(4) of this notice.) Each applicant for an allocation of the QFCB National Limitation must be—

(a) A State or any political subdivision or instrumentality thereof; or

(b) A 501(c)(3) organization (as defined in section 150(a)(4)).

The application must demonstrate clearly that each applicant meets this requirement. For this purpose, standards under section 103 of the Code determine whether an entity is a political subdivision or instrumentality. The applicant must have timely filed the Expression of Interest described in Sections 4 and 5 of this notice.

(2) Dedication of bond proceeds, or of refund of deemed payment, to qualified forestry conservation purposes . The applicant must certify that, for each issue of its bonds that may be designated pursuant to an allocation of any portion of the QFCB National Limitation and for any amount of the allocation for which an election under section 54B(h) is being made, 100 percent of the available project proceeds of the issue (including any investment return), or 100 percent of the refund of the deemed payment (including any investment return), will be used for one or more qualified forestry conservation purposes. (The expenditure requirement in the preceding sentence is not violated by use of some or all of the investment re

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tation that the USFS may require pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 9601, et seq. ) or that a transferee State may require pursuant to its requirements for land to be transferred to it;

ment by the applicant between the time it transfers equitable title to the ultimate recipient and the time it completely transfers the land to the ultimate recipient; and

tions as the USFS or State, as appropriate, may require.

(v) Each of the following constitutes a failure to use the corresponding amount of available project proceeds (or the corresponding amount of the refund of the deemed payment) for a qualifying forestry conservation purpose within the meaning of section 54B(e). As such, each produces the consequences, as appropriate, that are described in section 54A(d)(2)(B) of the Code, section 54B(h)(3)(A) of the Code, and Section 3(2) of this notice.

(A) Failure to satisfy Section 6(3)(e)(iii)(A) or (B) before the expiration of the six-month deadline (taking any extensions into account); or

(B) Failure of a qualified issuer to consummate timely all land transfers that were promised in one or more contracts that were intended to satisfy Section 6(3) and Section 6(3)(e)(iv) of this notice. (Whether a transfer is timely is determined taking into account any extensions obtained pursuant to Section 13(3) of this notice.)

USFS or to a State is not excused on the grounds that the intended recipient refuses to accept the proposed transfer because, in the intended recipient’s sole discretion, the proposed transfer for any reason does not satisfy the criteria that apply to the intended recipient at the time of the proposed transfer for accepting a transfer of land.

procedure to request an extension of time for consummating a transfer that

(c) Current owner (or owners) of the land . The application must state from whom the land is to be acquired and must certify that no such current owner is related, directly or indirectly, to the applicant that will purchase the land.

(d) Acquisition cost and other financial arrangements . The application must disclose the acquisition cost of the land to be acquired with the QFCB proceeds (or, if applicable, the refund of the deemed payment).

(e) Land transfer . The application must contain a commitment by the applicant that at least one-half of the land to be acquired will be transferred to the USFS by general warranty deed, or the functional equivalent under applicable State law, at no net cost to the United States, and that the entire remainder either will be conveyed to one or more States or, if the applicant is a State, will remain with the applicant.

(i) The application must certify the applicant’s intent to transfer the land to the USFS and, if applicable, to the affected State or States.

(ii) With respect to each transferee, the application must contain—

transferred in at least the level of detail set forth in Section 6(3)(b) of this notice;

to be transferred is, or after transfer will be, subject to liens, easements, or other encumbrances and, if so, both a detailed description (including thorough documentation) of all such burdens and a disclosure whether any of those burdens is expected to remain after the land is transferred (in particular, the application must disclose any rights or reservations, including without limitation any contractual rights to be retained with respect to the land by the applicant or any third party);

contains toxic, hazardous, or other noxious materials that have the potential to impair enjoyment of the land to

be transferred or to subject the transferee to liability; and

tion requested by that transferee.

(iii) The application must describe in detail the applicant’s commitment to satisfying the Disposition Requirement, described above in Section 3(2), and to meeting the deadlines in this Section 6(3)(e)(iii), including the following: With respect to each portion of the land acquired (except for portions that are going to be retained by the applicant if the applicant is a State), either paragraph (A) or paragraph (B) of this Section 6(3)(e)(iii) must be satisfied not later than six months after the completion of the acquisition of the land.

(A) That portion of the acquired land has been transferred to the ultimate recipient of that portion (the USFS or a State); ¹ or

(B) The following two events have occurred—

cipient of that portion of the land (the USFS or a State) have entered into a contract that satisfies Section 6(3)(e)(iv) and is effective under State or Federal law immediately to vest in the ultimate recipient equitable title to that portion of the land; and

recorded or referenced in all land records for that portion of the land.

See Section 13(2) of this notice regarding the procedure for requesting an extension of this six-month deadline.

(iv) At a minimum, the contract described in Section 6(3)(e)(iii)(B) must—

of the acquired land to which the contract refers will be completely transferred to the ultimate recipient;

land to be transferred, including requirements for abstracts of title or title reports by a title insurance company;

tion of the land at the time of that transfer to the ultimate recipient including any environmental documen

1 As is stated elsewhere in this notice, transfers to the USFS must be by a general warranty deed, or the functional equivalent under applicable State law, with title otherwise acceptable to the Department of Agriculture, Office of the General Counsel, and in conformity with the title standards of the U.S. Attorney General. Any transfer to a State must meet the analogous requirements under State law.

2008–36 I.R.B. 579 September 8, 2008

was promised in a contract that was intended to satisfy Section 6(3)(e)(iii)(B) and Section 6(3)(e)(iv) of this notice.

cedure for transferring Replacement Land to the USFS or to a State in partial satisfaction of the requirement in section 54B(e)(2).

(vi) If any of the land covered by a contract described in Section 6(3)(e)(iii)(B) of this notice is scheduled to be transferred to the USFS (or, if applicable, to a State), more than three years after the execution of the contract, then the qualified issuer must obtain a surety bond acceptable to the Treasury Department to cover satisfaction of any possible liability from a failure by that qualified issuer to transfer the promised land. (The qualified issuer may also satisfy this bonding requirement by providing a bond that is secured with Government obligations. See 31 CFR Part 225.) The amount of the qualified issuer’s bond must be at least five percent of the portion of the available bond proceeds (or, if applicable, of the refund of the deemed overpayment) that is allocable to the qualified issuer’s acquisition of the land the transfer of which under the contract is scheduled for more than three years after the execution of the contract. The amount of bond may be reduced from time to time as the qualified issuer’s conveyances of land to the USFS (or a State) reduce the portion of the available bond proceeds (or, if applicable, of the refund of the deemed overpayment) that is allocable to the qualified issuer’s acquisition of the land the transfer of which under the contract has not yet occurred.

Alternatively, the qualified issuer may reduce or eliminate the amount of this required surety bond if the qualified issuer posts sufficient appropriate land as collateral by deed of trust or by conveyance in escrow in favor of the United States. The USFS must determine, taking into account all of the land’s attributes, that the land proposed to be used as collateral will provide effective protection for the interests of the United States. If the IRS and the USFS approve the use of that land as collateral for this purpose, the amount of the required bond shall be reduced by one half of the estimate of value by the USFS for the land that is proposed to be used as collateral.

(Thus, if the value of the land used as collateral is at least twice the amount of the required bond, the need for a surety bond is eliminated.) The USFS need not conduct a formal appraisal of any property for any determination under this provision. The collateral may be partially released from time to time as conveyances of land to the USFS (or a State) reduce the amount of the surety bond required.

(f) Certification by the United States Forest Service . The application must be accompanied by a signed statement from the USFS—

(i) Certifying that the land to be acquired satisfies the requirements in Section 6(3)(a)(i) through (iv) of this notice; (ii) Confirming that the USFS is willing to accept the land proposed for transfer in the application; and

(iii) Containing any other comments the USFS has with respect to the information provided by the applicant.

USFS confirmation of a willingness to accept the offered land does not waive any requirement for conveyance of acceptable title or remediation of hazardous substances, or any other requirement of federal land acquisition.

(g) Certification of Affected State or States . With respect to any State to which a portion of the acquired property is to be transferred, a statement signed by an authorized State official confirming that the State is willing to accept the land described in the application proposed to be transferred to the State must accompany the application. Any such confirmation by a State of its willingness to accept the offered land does not waive any requirement for conveyance of acceptable title or remediation of hazardous substances, or any other requirement of land acquisition under the law or policies of the State.

(4) Applications filed jointly by more than one applicant . If an application is filed jointly by more than one applicant—

quirements set forth in Section 6(1) of this notice;

cation described in Section 6(2) of this notice;

ceeds, or of the refund of the deemed payment, separately must satisfy the

criteria to be a qualified forestry conservation purpose;

vation purposes for which the application requests allocations must be consistent and complementary with each other; and

plication requests for all joint applicants must be no more than the QFCB National Limitation.

(5) Election under section 54B(h) . Any election under section 54B(h) must be included with the Final Application. See Section 11 of this notice.

(6) Declaration and signatures . The declaration described in Section 16 of this notice must be included in the Final Application, and an authorized official or officer of each applicant must sign the application.