[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9668 Introduced in House (IH)]
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117th CONGRESS
2d Session
H. R. 9668
To amend the Internal Revenue Code of 1986 to provide for school
infrastructure finance and innovation tax credit bonds.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 21, 2022
Ms. Sewell (for herself and Ms. Plaskett) introduced the following
bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for school
infrastructure finance and innovation tax credit bonds.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``School Infrastructure Finance and
Innovation Act'' or the ``SIFIA Act''.
SEC. 2. SIFIA BONDS.
(a) In General.--Part IV of subchapter A of chapter 1 is amended by
adding at the end the following new subpart:
``Subpart K--SIFIA Bonds
``Sec. 54BB. SIFIA bonds.
``SEC. 54BB. SIFIA BONDS.
``(a) In General.--If a taxpayer holds a SIFIA 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 SIFIA
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) Interest Payment Date.--For purposes of this section, the
term `interest payment date' means any date on which the holder of
record of the SIFIA bond is entitled to a payment of interest under
such bond.
``(e) Sifia Bonds.--
``(1) In general.--For purposes of this section, the term
`SIFIA 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 design,
construction, expansion, renovation, furnishing, or
equipping of qualified school facilities (as defined in
paragraph (5) of this subsection) pursuant to an
agreement under which a private, for-profit entity
agrees with a State or local educational agency--
``(i) to construct, expand, or renovate one
or more buildings constituting the qualified
school facilities (together with any related
design, furnishing, and equipping of such
buildings),
``(ii) to operate the facilities at least
until the date the facilities are first placed
in service and operating substantially at their
design level, and
``(iii) at or before the end of the
agreement, to transfer the facilities to such
agency for no additional consideration,
``(B) all buildings whose construction, expansion,
or renovations is included in the qualified school
facilities being financed with proceeds of a SIFIA bond
are reasonably expected to be net-zero energy buildings
as defined in section 410(20) of the Energy
Independence and Security Act of 2007 (42 U.S.C.
17061(20), treating school buildings as `commercial
buildings' for purposes of that section),
``(C) the interest on such bond would (but for this
section and section 141) be excludable from gross
income under section 103,
``(D) the issuer designates such bond as a SIFIA
bond for purposes of this subsection,
``(E) the bond is not issued with more than a de
minimis amount of premium (determined under rules
similar to the rules of section 1273(a)(3)) over the
stated principal amount of the bond,
``(F) the issue of which such bond is a part
satisfies the expenditure period requirements of
paragraph (2), and
``(G) the bond is issued before January 1, 2027.
``(2) 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 subparagraphs (1)(A) and
(1)(B) 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 141.
``(3) Limitation on amount of sifia bonds designated.--
``(A) Overall limitation.--The maximum aggregate
face amount of SIFIA bonds issued under this subsection
that may be designated under subparagraph (2)(D) is
$200,000,000,000.
``(B) Set-aside for rural areas.--Subject to the
provisions of this subparagraph, $45,000,000,000 of the
overall limitation described in subparagraph (A) shall
be set aside for projects located in rural areas. As
used in this section, the term `rural area' means any
area which is--
``(i) outside of a metropolitan statistical
area (as such area is defined by the Secretary
of Commerce), or
``(ii) determined by the Secretary of
Agriculture, after consultation with the
Secretary of Commerce, to be a rural area.
``(4) Allocation of limitation.--The authority to issue
SIFIA bonds within the limitations set forth in paragraph (3)
shall be allocated by the Secretary to prospective issuers on a
first come-first served basis, under rules to be prescribed by
the Secretary, provided that--
``(A) no issuer (together with any entities that
would be aggregated with such issuer under section
265(b)(3)(E)) shall be allocated the authority to issue
more than $15,000,000,000 in aggregate face amount of
SIFIA bonds under this subsection,
``(B) an issuer applying for an allocation shall
certify (based on the certifications of any conduit
borrower of bond proceeds where applicable) that it
reasonably expects to commence the project to be
financed with proceeds of the bonds within 6 months of
the issue date of the bonds, and to expend all of the
available project proceeds within 6 years of the issue
date of the bonds,
``(C) in making such allocations, the Secretary
shall give preference to the financing of projects that
are reasonably expected to be commenced and completed
as early as possible, based on definite, non-contingent
plans and arrangements to proceed as expeditiously as
possible with the construction, expansion, or
renovation of the project facilities upon the receipt
of financing, and
``(D) in making such allocations, the Secretary
shall also give preference to the financing of projects
for which either (i) at least 10 percent of the equity
investment is provided by one or more preferred
concerns, (ii) the general contractor is a preferred
concern, or (iii) at least 30 percent of the amounts
paid to building trade subcontractors will be paid to
subcontractors that are preferred concerns.
``(5) Qualified school facilities.--For purposes of this
subsection, the term `qualified school facilities' means one or
more school buildings for a public elementary school or public
secondary school (as such terms are defined in section 14101 of
the Elementary and Secondary Education Act of 1965 (20 U.S.C.
8801)), or for administrative or support facilities relating to
such school facilities, together with related furnishings and
equipment.
``(6) Preferred concern.--For purposes of this subsection,
the term `preferred concern' means either a small business
concern, a minority owned concern, or a woman owned concern.
``(7) Small business concern.--For purposes of this
subsection, the term `small business concern' means an entity
determined to be a small business concern under 15 U.S.C.
632(a).
``(8) Minority owned.--For purposes of this subsection, the
term `minority owned' with respect to an entity means an entity
not less than 51 percent of which is owned by 1 or more
individuals who are citizens of the United States and who are
Asian American, Native Hawaiian, Pacific Islander, African
American, Hispanic, Puerto Rican, Native American, or Alaska
Native.
``(9) Woman owned.--For purposes of this subsection, the
term `woman owned' with respect to an entity means an entity
not less than 51 percent of which is owned by 1 or more women.
``(f) Other Applicable Rules.--
``(1) Interest includible in gross income.--For purposes of
this title, interest on any SIFIA bond shall be includible in
gross income.
``(2) Credit treated as interest.--For purposes of this
subtitle, the credit determined under subsection (a) shall be
treated as interest which is includible in gross income.
``(3) S corporations and partnerships.--In the case of a
tax credit bond held by an S corporation or partnership, the
allocation of credit allowed by this section to the
shareholders of such corporation or partners of such
partnership shall be treated as a distribution.
``(4) Bonds held by real estate investment trusts.--If any
qualified tax credit bond is held by a real estate investment
trust the credit determined under subsection (a) shall be
allowed to beneficiaries of such trust (and any gross income
included under paragraph (2) with respect to such credit shall
be distributed to such beneficiaries) under procedures
prescribed by the Secretary (similar to the procedures
prescribed by the Secretary under section 54A(h) (as in effect
before its repeal by Public Law 115-97)).
``(5) Credits may be stripped.--Under regulations
prescribed by the Secretary (similar to regulations prescribed
under section 54A(i) (as in effect before its repeal by Public
Law 115-97))--
``(A) In general.--There may be a separation
(including at issuance) of the ownership of a qualified
tax credit bond and the entitlement to the credit under
this section with respect to such bond. In case of any
such separation, the credit under this section shall be
allowed to the person who on the credit allowance date
holds the instrument evidencing the entitlement to the
credit and not to the holder of the bond.
``(B) Certain rules to apply.--In the case of a
separation described in subparagraph (A), the rules of
section 1286 shall apply to the qualified tax credit
bond as if it were a stripped bond and to the credit
under this section as if it were a stripped coupon.
``(6) Not treated as federally guaranteed.--For purposes of
section 149(b), a SIFIA bond shall not be treated as federally
guaranteed by reason of the credit allowed under subsection
(g).
``(7) Yield determination.--For purposes of section 148,
the yield on a SIFIA bond shall be determined without regard to
the credit allowed under subsection (a).
``(8) Maximum interest rate.--An issue shall be treated as
meeting the requirements of this section if the rate of
interest payable on any bond which is part of such issue is no
greater than the rate which the Secretary estimates will permit
the issuance of each such bond with a specified maturity or
redemption date without discount and without interest cost to
the issuer. The applicable interest rate with respect to any
such bond shall be determined as of the first day on which
there is a binding, written contract for the sale or exchange
of the bond.
``(9) Maturity limitation.--
``(A) In general.--An issue shall be treated as
meeting the requirements of this section if the
maturity of any bond which is part of such issue does
not exceed the maximum term determined by the Secretary
under subparagraph (B).
``(B) Maximum term.--During each calendar month,
the Secretary shall determine the maximum term
permitted under this paragraph for bonds issued during
the following calendar month. Such maximum term shall
be the term which the Secretary estimates will result
in the present value of the obligation to repay the
principal on the bond being equal to 20 percent of the
face amount of such bond. Such present value shall be
determined using as a discount rate the average annual
interest rate of tax-exempt obligations having a term
of 10 years or more which are issued during the month.
If the term as so determined is not a multiple of a
whole year, such term shall be rounded to the next
highest whole year.
``(10) Depreciation.--If the school facilities financed
with proceeds of SIFIA bonds are owned by a person otherwise
entitled to allowance for depreciation with respect to such
facility, that person may make an irrevocable election (binding
on any successors in interest) not to claim depreciation with
respect to the property financed with proceeds of the SIFIA
bonds for so long as the issue of which such bonds are a part
is outstanding. Such election shall be deemed to have been made
if the person fails to claim depreciation with respect to the
property in the first tax return filed by the person in which
such depreciation could have been claimed. To the extent the
person elects not to claim depreciation under this paragraph,
the basis of the financed property shall not be reduced under
section 1016 or otherwise for the depreciation that could have
been claimed.
``(g) Direct-Pay Credit Payments.--
``(1) Election.--In lieu of the tax credits otherwise
provided for under this section, the issuer of a SIFIA bond may
elect to be allowed a credit with respect to each interest
payment under such bond, which shall be payable by the
Secretary in the amounts and at the times set forth in
paragraph (2).
``(2) Amount and timing of credit payments.--The Secretary
shall pay (contemporaneously with each interest payment date
under such bond) to the issuer of such bond (or to any person
who makes interest payments on behalf of the issuer) 100
percent of the interest payable under such bond on such date.
``(3) Election.--The election under paragraph (1) shall be
made in writing before the first interest payment date with
respect to the bond in such form and manner as the Secretary
shall prescribe. Such election, once made, shall be
irrevocable.
``(4) Other applicable rules.--In the case of a SIFIA bond
with respect to which an election is made under this
subsection, the following rules shall apply:
``(A) Interest on any such bond shall be includible
in gross income for purposes of this title.
``(B) Any payments made under this subsection shall
not be includible as income for purposes of this title.
``(C) The deduction otherwise allowable under this
title with respect to interest paid under such bond
shall be reduced by the amount of the payment made
under this subsection with respect to that interest.
``(D) For purposes of section 148, the yield on a
SIFIA bond for which credit payments have been elected
under this subsection shall be reduced by the amount of
such credit payments.''.
(b) Clerical Amendments.--The table of subparts for part IV of
subchapter A of chapter 1 is amended by adding at the end the
following:
``subpart k--sifia bonds''.
(c) Direct Purchases of SIFIA Bonds.--The Secretary shall purchase
SIFIA bonds that the issuer is otherwise unable to sell, subject to
procedures and credit standards to be established by the Secretary,
which standards and procedures shall be similar to those applicable to
loans made under lines of credit under section 1503 of the
Transportation Infrastructure Finance and Innovation Act of 1998 (23
U.S.C. 184).
(d) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 2021.
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