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106TH CONGRESS

1ST SESSION S. 1085

To amend the Internal Revenue Code of 1986 to modify the treatment

of bonds issued to acquire renewable resources on land subject to conservation easement.

IN THE SENATE OF THE UNITED STATES

MAY 19, 1999

Mrs. MURRAY introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to modify

the treatment of bonds issued to acquire renewable resources on land subject to conservation easement.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Community Forestry

5 and Agriculture Conservation Act of 1999’’.
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1 SEC. 2. TREATMENT OF BONDS ISSUED TO ACQUIRE RE2 NEWABLE RESOURCES ON LAND SUBJECT TO

3 CONSERVATION EASEMENT.

4 (a) IN GENERAL.—Section 145 of the Internal Rev5 enue Code of 1986 (defining qualified 501(c)(3) bond) is

6 amended by redesignating subsection (e) as subsection (f)

7 and by inserting after subsection (d) the following new

8 subsection:

9 ‘‘(e) BONDS ISSUED TO ACQUIRE RENEWABLE RE10 SOURCES ON LAND SUBJECT TO CONSERVATION EASE11 MENT.—

12 ‘‘(1) IN GENERAL.—If—

13 ‘‘(A) the proceeds of any bond are used to

14 acquire land (or a long-term lease thereof) to15 gether with any renewable resource associated

16 with the land (including standing timber, agri17 cultural crops, or water rights) from an unaffili18 ated person,

19 ‘‘(B) the land is subject to a conservation

20 restriction—

21 ‘‘(i) which is granted in perpetuity to

22 an unaffiliated person that is—

23 ‘‘(I) a 501(c)(3) organization, or

24 ‘‘(II) a Federal, State, or local

25 government conservation organization,
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1 ‘‘(ii) which meets the requirements of

2 clauses (ii) and (iii)(II) of section

3 170(h)(4)(A),

4 ‘‘(iii) which exceeds the requirements

5 of relevant environmental and land use

6 statutes and regulations, and

7 ‘‘(iv) which obligates the owner of the

8 land to pay the costs incurred by the hold9 er of the conservation restriction in moni10 toring compliance with such restriction,

11 ‘‘(C) a management plan which meets the

12 requirements of the statutes and regulations re13 ferred to in subparagraph (B)(iii) is developed

14 for the conservation of the renewable resources,

15 and

16 ‘‘(D) such bond would be a qualified

17 501(c)(3) bond (after the application of para18 graph (2)) but for the failure to use revenues

19 derived by the 501(c)(3) organization from the

20 sale, lease, or other use of such resource as oth21 erwise required by this part,

22 such bond shall not fail to be a qualified 501(c)(3)

23 bond by reason of the failure to so use such revenues

24 if the revenues which are not used as otherwise re25 quired by this part are used in a manner consistent
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1 with the stated charitable purposes of the 501(c)(3)

2 organization.

3 ‘‘(2) TREATMENT OF TIMBER, ETC.—

4 ‘‘(A) IN GENERAL.—For purposes of sub5 section (a), the cost of any renewable resource

6 acquired with proceeds of any bond described in

7 paragraph (1) shall be treated as a cost of ac8 quiring the land associated with the renewable

9 resource and such land shall not be treated as

10 used for a private business use because of the

11 sale or leasing of the renewable resource to, or

12 other use of the renewable resource by, an unaf13 filiated person to the extent that such sale, leas14 ing, or other use does not constitute an unre15 lated trade or business, determined by applying

16 section 513(a).

17 ‘‘(B) APPLICATION OF BOND MATURITY

18 LIMITATION.—For purposes of section 147(b),

19 the cost of any land or renewable resource ac20 quired with proceeds of any bond described in

21 paragraph (1) shall have an economic life com22 mensurate with the economic and ecological fea23 sibility of the financing of such land or renew24 able resource.
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1 ‘‘(C) UNAFFILIATED PERSON.—For pur2 poses of this subsection, the term ‘unaffiliated

3 person’ means any person who controls not

4 more than 20 percent of the governing body of

5 another person.’’

6 (b) EFFECTIVE DATE.—The amendment made by

7 subsection (a) shall apply to obligations issued after the

8 date of the enactment of this Act.

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