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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9698 Introduced in House (IH)]

<DOC>

118th CONGRESS
  2d Session
                                H. R. 9698

   To amend the Internal Revenue Code of 1986 to provide for school 
        infrastructure finance and innovation tax credit bonds.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 19, 2024

Mr. Hudson (for himself and Ms. Sewell) 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 
credit allowance 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.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a SIFIA bond is 25 percent of the annual credit determined 
        for such bond.
            ``(2) Annual credit.--For purposes of this subsection, the 
        term `annual credit' means an amount equal to the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (2), the term `applicable credit rate' means 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 credit 
        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.
    ``(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) Credit Allowance Date.--For purposes of this section, the 
term `credit allowance date' means, with respect to a bond during the 
taxable year, any of the following dates:
            ``(1) March 15.
            ``(2) June 15.
            ``(3) September 15.
            ``(4) December 15.
Such term includes the last day on which the bond is outstanding.
    ``(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 (7)(A) 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,
                    ``(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),
                    ``(G) the private, for-profit entity described in 
                subparagraph (A) meets the allocation requirements of 
                paragraph (5) and the reporting requirements of 
                paragraph (6), and
                    ``(H) the bond is issued before January 1, 2030.
            ``(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 (1)(D) is 
                $10,000,000,000.
                    ``(B) Annual limitation.--The maximum aggregate 
                face amount of SIFIA bonds issued under this subsection 
                that may be designated under subparagraph (1)(D) in any 
                calendar year is $2,500,000,000.
                    ``(C) Set-aside for rural areas.--
                            ``(i) $1,000,000,000 of the overall 
                        limitation described in subparagraph (A) shall 
                        be set aside for projects located in rural 
                        areas.
                            ``(ii) For purposes of 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 school district shall be allocated more 
                than $1,500,000,000 in aggregate face amount of SIFIA 
                bonds under this subsection,
                    ``(B) no more than $500,000,000 in aggregate face 
                amount of SIFIA bonds shall be allocated under this 
                subsection for the construction, expansion, renovation, 
                furnishing, or equipping of qualified school facilities 
                that are operated by a nonprofit organization under a 
                charter or other agreement between the applicable 
                school district and such nonprofit organization,
                    ``(C) 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, and
                    ``(D) in making such allocations, the Secretary 
                shall give preference to the financing of projects for 
                which the private for-profit developer is a preferred 
                concern.
            ``(5) Requirements relating to private, for-profit 
        entities.--A private, for-profit entity meets the requirements 
        of this paragraph if such entity--
                    ``(A) has experience developing, owning, and 
                operating public schools leased to public school 
                districts that are net-zero buildings, and
                    ``(B) demonstrates to the Secretary (in such manner 
                as the Secretary may provide) that such entity has 
                experience leasing public school buildings to a local 
                education agency, including at least two projects with 
                respect to which--
                            ``(i) such entity (or a related person) 
                        developed, owned, and was responsible for--
                                    ``(I) maintenance of--
                                            ``(aa) the heating, 
                                        ventilation, and air 
                                        conditioning system, or
                                            ``(bb) the solar 
                                        photovoltaic system, and
                            ``(ii) the electrical service was in the 
                        name of such entity for a minimum of four 
                        years.
            ``(6) Reporting requirements.--A private entity meets the 
        requirements of this paragraph if such entity, in cooperation 
        with the applicable school district, periodically submits such 
        reports as the Secretary shall prescribe relating to the costs 
        and benefits of the financing, including--
                    ``(A) tax benefits to the Federal Government and 
                cost savings to the school district, and
                    ``(B) information related to any improvements in 
                student performance or teacher retention.
            ``(7) Definitions.--For purposes of this subsection--
                    ``(A) Qualified school facilities.--The term 
                `qualified school facilities' means one or more school 
                buildings for a public elementary school or public 
                secondary school or for administrative or support 
                facilities relating to such school facilities, together 
                with related furnishings and equipment.
                    ``(B) School district.--The term `school district' 
                means a public board of education or other public 
                authority legally constituted within a State for 
                administrative control or direction of public 
                elementary or secondary schools in the State or 
                political subdivision of a State.
                    ``(C) Preferred concern.--The term `preferred 
                concern' means either a small business concern, a 
                minority owned concern, or a woman owned concern.
                    ``(D) Small business concern.--
                            ``(i) In general.--Subject to the 
                        provisions of clause (ii), the term `small 
                        business concern' means an entity which, 
                        together with any related person, has fewer 
                        than 500 employees.
                            ``(ii) Small business size standards.--For 
                        purposes of clause (i), the determination of 
                        number of employees shall be made in a manner 
                        consistent with--
                                    ``(I) section 3 of the Small 
                                Business Act (15 U.S.C. 632), and
                                    ``(II) part 121 of title 13, Code 
                                of Federal Regulations.
                    ``(E) Minority owned.--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.
                    ``(F) Woman owned.--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.
                    ``(G) Nonprofit organization.--The term `nonprofit 
                organization' means an organization described in 
                section 501(c) and exempt from tax under section 
                501(a).
                    ``(H) Net-zero energy building.--The term `net-zero 
                building' has the meaning given such term under section 
                410(20) of the Energy Independence and Security Act of 
                2007 (42 U.S.C. 17061(20)), applied by substituting 
                `school building' for `commercial building'.
                    ``(I) Related person.--The term `related person' 
                has the meaning given such term in section 144(a)(3).
    ``(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) 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.
            ``(9) 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.''.
    (b) Treatment of Interest as Unrelated Business Taxable Income.--
Section 512(b)(1) of such Code is amended by inserting ``(other than 
interest of SIFIA bonds issued under section 54BB)'' after 
``interest''.
    (c) 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''.

    (d) 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).
    (e) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2024.
                                 <all>
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