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Title II — School infrastructure bonds

S. 266 · 116th Congress · Jan 29, 2019 · Lineage

II School infrastructure bonds

Sec. 201 Restoration of certain qualified tax credit bonds

(a)
Allowance of credit—
(1)
In general— Section 54A of the Internal Revenue Code of 1986, as in effect before repeal by Public Law 115–97, is restored as if such repeal had not taken effect.
(2)
Credit limited to certain bonds— Section 54A(d)(1) of such Code, as restored by paragraph (1), is amended by striking subparagraphs (A), (B), and (C).
(b)
Credit allowed to issuer—
(1)
In general— Section 6431 of the Internal Revenue Code of 1986, as in effect before repeal by Public Law 115–97, is restored as if such repeal had not taken effect.
(2)
School infrastructure bonds— Section 6431(f)(3) of such Code, as restored by paragraph (1), is amended by inserting “any school infrastructure bond (as defined in section 54BB) or” before “any qualified tax credit bond”.
(c)
Qualified zone academy bonds—
(1)
In general— Section 54E of the Internal Revenue Code of 1986, as in effect before repeal by Public Law 115–97, is restored as if such repeal had not taken effect.
(2)
Removal of private business contribution requirement— Section 54E of the Internal Revenue Code of 1986, as restored by paragraph (1), is amended—
(A)
in subsection (a)(3), by inserting “and” at the end of subparagraph (A), by striking subparagraph (B), and by redesignating subparagraph (C) as subparagraph (B);
(B)
by striking subsection (b); and
(C)
in subsection (c)(1)—
(i)
by striking “and $400,000,0000” and inserting “$400,000,000”; and
(ii)
by striking “and, except as provided” and all that follows through the period at the end and inserting “, and $1,400,000,000 for 2020 and each year thereafter.”.
(3)
Construction of a public school facility— Section 54E(d)(3)(A) of the Internal Revenue Code of 1986, as restored by paragraph (1), is amended by striking “rehabilitating or repairing” and inserting “constructing, rehabilitating, retrofitting, or repairing”.
(d)
Effective date— The amendments made by this section shall apply to obligations issued after December 31, 2019.

Sec. 202 School infrastructure bonds

(a)
In general— The Internal Revenue Code of 1986 is amended by inserting after subpart I (as restored by section 201) of part IV of subchapter A of chapter 1 the following new subpart:

“J School infrastructure bonds

“54BB. School infrastructure bonds

“(a) In general—If a taxpayer holds a school infrastructure bond on one or more interest payment dates of the bond during any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to such dates.

“(b) Amount of credit—The amount of the credit determined under this subsection with respect to any interest payment date for a school infrastructure bond is 100 percent of the amount of interest payable by the issuer with respect to such date.

“(c) Limitation Based on Amount of Tax

“(1) In general—The credit allowed under subsection (a) for any taxable year shall not exceed the excess of—

“(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

“(B) the sum of the credits allowable under this part (other than subpart C and this subpart).

“(2) Carryover of unused credit—If the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year (determined before the application of paragraph (1) for such succeeding taxable year).

“(d) School infrastructure bond

“(1) In general—For purposes of this section, the term school infrastructure bond means any bond issued as part of an issue if—

“(A) 100 percent of the available project proceeds of such issue are to be used for the purposes described in section 301 of the Rebuild America’s Schools Act of 2019,

“(B) the interest on such obligation would (but for this section) be excludable from gross income under section 103,

“(C) the issue meets the requirements of paragraph (3), and

“(D) the issuer designates such bond for purposes of this section.

“(2) Applicable rules—For purposes of applying paragraph (1)—

“(A) for purposes of section 149(b), a school infrastructure bond shall not be treated as federally guaranteed by reason of the credit allowed under section 6431(a),

“(B) for purposes of section 148, the yield on a school infrastructure bond shall be determined without regard to the credit allowed under subsection (a), and

“(C) a bond shall not be treated as a school infrastructure bond if the issue price has more than a de minimis amount (determined under rules similar to the rules of section 1273(a)(3)) of premium over the stated principal amount of the bond.

“(3) 6-year expenditure period

“(A) In general—An issue shall be treated as meeting the requirements of this paragraph if, as of the date of issuance, the issuer reasonably expects 100 percent of the available project proceeds to be spent for purposes described in section 301 of the Rebuild America’s Schools Act of 2019 within the 6-year period beginning on such date of issuance.

“(B) Failure to spend required amount of bond proceeds within 6 years—To the extent that less than 100 percent of the available project proceeds of the issue are expended at the close of the period described in subparagraph (A) with respect to such issue, the issuer shall redeem all of the nonqualified bonds within 90 days after the end of such period. For purposes of this paragraph, the amount of the nonqualified bonds required to be redeemed shall be determined in the same manner as under section 142.

“(e) Limitation on amount of bonds designated—The maximum aggregate face amount of bonds issued during any calendar year which may be designated under subsection (d) by any issuer shall not exceed the limitation amount allocated under subsection (g) for such calendar year to such issuer.

“(f) National limitation on amount of bonds designated—The national qualified school infrastructure bond limitation for each calendar year is—

“(1) $10,000,000,000 for 2020,

“(2) $10,000,000,000 for 2021, and

“(3) $10,000,000,000 for 2022.

“(g) Allocation of limitation

“(1) Allocations

“(A) States—After application of subparagraph (B) and paragraph (3)(A), the limitation applicable under subsection (f) for any calendar year shall be allocated by the Secretary among the States in proportion to the respective amounts received by all local educational agencies in each State under part A of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) for the previous fiscal year relative to the total such amount received by all local educational agencies in for the most recent fiscal year ending before such calendar year.

“(B) Certain possessions—One-half of 1 percent of the amount of the limitation applicable under subsection (f) for any calendar year shall be allocated by the Secretary to possessions of the United States other than Puerto Rico for such calendar year shall be one-half of 1 percent.

“(2) Allocations to schools—The limitation amount allocated to a State or possession under paragraph (1) shall be allocated by the State educational agency (or such other agency as is authorized under State law to make such allocation) to issuers within such State or possession in accordance with the priorities described in section 103(c) the of the Rebuild America’s Schools Act of 2019 and the eligibility requirements described in section 103(b) of such Act, except that paragraph (1)(C) of such section shall not apply to the determination of eligibility for such allocation.

“(3) Allocations for Indian schools

“(A) In general—One-half of 1 percent of the amount of the limitation applicable under subsection (f) for any calendar year shall be allocated by the Secretary to the Secretary of the Interior for schools funded by the Bureau of Indian Affairs for such calendar year.

“(B) Allocation to schools—The limitation amount allocated to the Secretary of the Interior under paragraph (1) shall be allocated by such Secretary to issuers or schools funded as described in paragraph (2). In the case of amounts allocated under the preceding sentence, Indian tribal governments (as defined in section 7701(a)(40)) shall be treated as qualified issuers for purposes of this subchapter.

“(4) Digital learning—Up to 10 percent of the limitation amount allocated under paragraph (1) or (3)(A) may be allocated by the State to issuers within such State to carry out activities to improve digital learning in accordance with section 301(b) of the Rebuild America’s Schools Act of 2019.

“(h) Interest Payment Date—For purposes of this section, the term interest payment date means any date on which the holder of record of the school infrastructure bond is entitled to a payment of interest under such bond.

“(i) Special Rules

“(1) Interest on school infrastructure bonds includible in gross income for federal income tax purposes—For purposes of this title, interest on any school infrastructure bond shall be includible in gross income.

“(2) Application of certain rules—Rules similar to the rules of subsections (f), (g), (h), and (i) of section 54A shall apply for purposes of the credit allowed under subsection (a).”

(b)
Transitional Coordination With State Law— Except as otherwise provided by a State after the date of the enactment of this Act, the interest on any school infrastructure bond (as defined in section 54BB of the Internal Revenue Code of 1986, as added by this section) and the amount of any credit determined under such section with respect to such bond shall be treated for purposes of the income tax laws of such State as being exempt from Federal income tax.
(c)
Application of certain labor standards to projects financed with certain tax-Favored bonds—
(1)
In general— Subchapter IV of chapter 31 of the title 40, United States Code, shall apply to projects financed with the proceeds of—
(A)
any school infrastructure bond (as defined in section 54BB of the Internal Revenue Code of 1986); and
(B)
any qualified zone academy bond (as defined in section 54E of the Internal Revenue Code of 1986) issued after the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009.
(2)
Conforming amendment— Section 1601 of the American Recovery and Reinvestment Tax Act of 2009 is amended by striking paragraph (3) and redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively.
(d)
Clerical amendments— The table of subparts for part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following:
(e)
Effective Date— The amendments made by this section shall apply to obligations issued after December 31, 2019.

Sec. 203 Annual report on bond program

(a)
In general— Not later than September 30 of each fiscal year beginning after the date of the enactment of this Act, the Secretary of the Treasury shall submit to the appropriate congressional committees a report on the school infrastructure bond program.
(b)
Elements— The report under paragraph (1) shall include, with respect to the fiscal year preceding the year in which the report is submitted, the following:
(1)
An identification of—
(A)
each local educational agency that received funds from a school infrastructure bond; and
(B)
each local educational agency that was eligible to receive such funds—
(i)
but did not receive such funds; or
(ii)
received less than the maximum amount of funds for which the agency was eligible.
(2)
With respect to each local educational agency described in paragraph (1)—
(A)
an assessment of the capacity of the agency to raise funds for the long-term improvement of public school facilities, as determined by an assessment of—
(i)
the current and historic ability of the agency to raise funds for construction, renovation, modernization, and major repair projects for schools, including the ability of the agency to raise funds through imposition of property taxes;
(ii)
whether the agency has been able to issue bonds to fund construction projects, including—
(I)
qualified zone academy bonds under section 54E of the Internal Revenue Code of 1986; and
(II)
school infrastructure bonds under section 54BB of the Internal Revenue Code of 1986; and
(iii)
the bond rating of the agency;
(B)
the demographic composition of the student population served by the agency, disaggregated by—
(i)
race;
(ii)
the number and percentage of students counted under section 1124(c) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6333(c)); and
(iii)
the number and percentage of students who are eligible for a free or reduced price lunch under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.);
(C)
the population density of the geographic area served by the agency;
(D)
a description of the projects carried out with funds received from school infrastructure bonds;
(E)
a description of the demonstrable or expected benefits of the projects; and
(F)
the estimated number of jobs created by the projects.
(3)
The total dollar amount of all funds received by local educational agencies from school infrastructure bonds.
(4)
Any other factors that the Secretary of the Treasury determines to be appropriate.
(c)
Information collection— A State or local educational agency that receives funds from a school infrastructure bond shall—
(1)
annually compile the information necessary for the Secretary of the Treasury to determine the elements described in subsection (b); and
(2)
report the information to the Secretary of the Treasury at such time and in such manner as the Secretary of the Treasury may require.