I 

110TH CONGRESS 

1ST SESSION H. R. 1862 

To amend the Internal Revenue Code of 1986 to encourage new school 

construction through the creation of a new class of bond. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 16, 2007 

Ms. LORETTA SANCHEZ of California 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 encourage 

new school construction through the creation of a new 

class of bond. 

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 ‘‘Expand and Rebuild 

5 America’s Schools Act of 2007’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 

8 (1) The National Center for Education Statis9 tics projects that public school enrollment will reach 

10 53,000,000 in 2010, an increase of 3,500,000 from 

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1 the 2003 enrollment level. Many States and school 

2 districts will need to build new schools in order to 

3 accommodate this increase in student enrollments. 

4 (2) In response to reduced class mandates en5 forced by State governments and increased enroll6 ment, many school districts have been forced to uti7 lize temporary classrooms and other structures to 

8 accommodate increased school populations, along 

9 with resorting to year-round schedules for students. 

10 (3) Research has proven a direct correlation be11 tween the condition of school facilities and student 

12 achievement. Research has shown that students as13 signed to schools in poor condition can be expected 

14 to fall 10.9 percentage points behind those in build15 ings in excellent condition. Similar studies have dem16 onstrated up to a 20 percent improvement in test 

17 scores when students were moved from a school with 

18 poor facilities to a new facility. 

19 (4) While school construction and maintenance 

20 are primarily a State and local concern, States and 

21 communities have not, on their own, met the in22 creasing burden of providing acceptable school facili23 ties, and the poorest communities have had the 

24 greatest difficulty meeting this need. 

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1 (5) Many local educational agencies have dif2 ficulties securing financing for school facility con3 struction and renovation, especially in States that 

require a 2 4 ⁄3 majority of voter approval for the pas5 sage of local bond initiatives. 

6 (6) The Federal Government, by providing in7 terest subsidies and similar types of support, can 

8 lower the costs of State and local school infrastruc9 ture investment, creating an incentive for businesses 

10 to support local school infrastructure improvement 

11 efforts. 

12 (7) The United States competitive position 

13 within the world economy is vulnerable if America’s 

14 future workforce continues to be educated in schools 

15 not equipped for the 21st century. America must do 

16 everything in its power to properly educate its people 

17 to compete in the global marketplace. 

18 SEC. 3. PURPOSES. 

19 The purposes of this Act are— 

20 (1) to encourage public-private partnerships for 

21 the financing of school construction and expansion, 

22 and 

23 (2) to help local educational agencies bring all 

24 public school facilities up to an acceptable standard 

25 and build the additional classrooms needed to edumstockstill on PROD1PC66 with BILLS

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1 cate the growing number of students who will enroll 

2 in the next decade. 

3 SEC. 4. CREDIT TO HOLDERS OF SCHOOL CONSTRUCTION 

4 BONDS. 

5 (a) IN GENERAL.—Subpart B of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 (relating to business-related credits) is amended by 

8 adding at the end the following new section: 

9 ‘‘SEC. 30D. CREDIT TO HOLDERS OF SCHOOL CONSTRUC10 TION BONDS. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli12 gible taxpayer who holds a school construction bond on 

13 the credit allowance date of such bond which occurs during 

14 the taxable year, there shall be allowed as a credit against 

15 the tax imposed by this chapter for such taxable year the 

16 amount determined under subsection (b). 

17 ‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 

18 determined under this subsection with respect to any 

19 school construction bond is the amount equal to the prod20 uct of— 

21 ‘‘(1) the credit rate determined by the Sec22 retary under section 1397E(b)(2) for the month in 

23 which such bond was issued, multiplied by 

24 ‘‘(2) the face amount of the bond held by the 

25 taxpayer on the credit allowance date. 

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1 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 

2 credit allowed under subsection (a) for any taxable year 

3 shall not exceed the excess of— 

4 ‘‘(1) the sum of the regular tax liability (as de5 fined in section 26(b)) plus the tax imposed by sec6 tion 55, over 

7 ‘‘(2) the sum of the credits allowable under this 

8 part (other than under this section and subpart C 

9 thereof, relating to refundable credits) and section 

10 1397E. 

11 ‘‘(d) SCHOOL CONSTRUCTION BOND.—For purposes 

12 of this section— 

13 ‘‘(1) IN GENERAL.—The term ‘school construc14 tion bond’ means any bond issued as part of an 

15 issue if— 

16 ‘‘(A) 95 percent or more of the proceeds of 

17 such issue are to be used for a qualified pur18 pose with respect to a new qualified school es19 tablished by an eligible local education agency, 

20 ‘‘(B) the bond is issued by a State or local 

21 government within the jurisdiction of which 

22 such school is located, 

23 ‘‘(C) the issuer— 

24 ‘‘(i) designates such bond for purposes 

25 of this section, 

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1 ‘‘(ii) certifies that it has written as2 surances that the private business con3 tribution requirement of paragraph (2) will 

4 be met with respect to such school, and 

5 ‘‘(iii) certifies that it has the written 

6 approval of the eligible local education 

7 agency for such bond issuance, 

8 ‘‘(D) the term of each bond which is part 

9 of such issue does not exceed the maximum 

10 term permitted under section 1397E(d)(3), and 

11 ‘‘(E) the issue meets requirements similar 

12 to the requirements of subsections (f), (g), and 

13 (h) of section 1397E. 

14 ‘‘(2) PRIVATE BUSINESS CONTRIBUTION RE15 QUIREMENT.— 

16 ‘‘(A) IN GENERAL.—For purposes of para17 graph (1), the private business contribution re18 quirement of this paragraph is met with respect 

19 to any issue if the eligible local education agen20 cy that established the qualified school has writ21 ten commitments from private entities to make 

22 qualified contributions having a present value 

23 (as of the date of issuance of the issue) of not 

24 less than 10 percent of the proceeds of the 

25 issue. 

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1 ‘‘(B) QUALIFIED CONTRIBUTIONS.—For 

2 purposes of subparagraph (A), the term ‘quali3 fied contribution’ means any contribution (of a 

4 type and quality acceptable to the eligible local 

5 education agency) of— 

6 ‘‘(i) equipment for use in the qualified 

7 school (including state-of-the-art tech8 nology and vocational equipment), 

9 ‘‘(ii) technical assistance in developing 

10 curriculum or in training teachers in order 

11 to promote appropriate market driven tech12 nology in the classroom, 

13 ‘‘(iii) services of employees as volun14 teer mentors, 

15 ‘‘(iv) internships, field trips, or other 

16 educational opportunities outside the 

17 school for students, or 

18 ‘‘(v) any other property or service 

19 specified by the eligible local education 

20 agency. 

21 ‘‘(3) QUALIFIED SCHOOL.— 

22 ‘‘(A) IN GENERAL.—The term ‘qualified 

23 school’ means any public school which is estab24 lished by and operated under the supervision of 

25 an eligible local education agency to provide 

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1 education or training below the postsecondary 

2 level if— 

3 ‘‘(i) such public school is designed in 

4 cooperation with business to enhance the 

5 academic curriculum, increase graduation 

6 and employment rates, and better prepare 

7 students for the rigors of college and the 

8 increasingly complex workforce, 

9 ‘‘(ii) students in such public school 

10 will be subject to the same academic stand11 ards and assessments as other students 

12 educated by the local education agency, 

13 ‘‘(iii) a well-structured program to al14 leviate overcrowding and to improve stu15 dents’ education has been constructed and 

16 implemented in the opinion of the Sec17 retary of Education, and 

18 ‘‘(iv) at least 2 of the following re19 quirements are met: 

20 ‘‘(I) There is a reasonable expec21 tation (as of the date of issuance of 

22 the bonds) that at least 35 percent of 

23 the population attending such public 

24 school will be eligible for free or re25 duced-cost lunches under the school 

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1 lunch program established under the 

2 National School Lunch Act. 

3 ‘‘(II) There is a reasonable ex4 pectation (as of the date of issuance 

5 of the bonds) that the student growth 

6 rate over the next 5 years for the 

7 school district in which such public 

8 school is to be located will be at least 

9 10 percent. 

10 ‘‘(III) The average student-teach11 er ratio for such district as of the 

12 date of issuance of the bonds is at 

13 least 28 to 1. 

14 ‘‘(B) ELIGIBLE LOCAL EDUCATION AGEN15 CY.—The term ‘eligible local education agency’ 

16 means any local educational agency as defined 

17 in section 14101 of the Elementary and Sec18 ondary Education Act of 1965. 

19 ‘‘(4) QUALIFIED PURPOSE.— 

20 ‘‘(A) IN GENERAL.—The term ‘qualified 

21 purpose’ means, with respect to any qualified 

22 school— 

23 ‘‘(i) constructing a new school facility, 

24 and 

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1 ‘‘(ii) providing equipment for use at 

2 such facility. 

3 ‘‘(B) SCHOOL FACILITY.—The term ‘school 

4 facility’ means a new public structure suitable 

5 for use as a classroom, laboratory, library, 

6 media center, or related facility whose primary 

7 purpose is the instruction of public elementary 

8 or secondary students. Such term does not in9 clude an athletic stadium, or any other struc10 ture or facility intended primarily for athletic 

11 exhibitions, contests, games, or events for which 

12 admission is charged to the general public. 

13 ‘‘(e) LIMITATION ON AMOUNT OF BONDS DES14 IGNATED.— 

15 ‘‘(1) NATIONAL LIMITATION.—There is a na16 tional school construction bond limitation for each 

17 calendar year. Such limitation is $400,000,000 for 

18 2008 and 2009, and, except for carryovers as pro19 vided under the rules applicable under paragraph 

20 (4), zero thereafter. 

21 ‘‘(2) ALLOCATION OF LIMITATION.—The na22 tional school construction bond limitation for a cal23 endar year shall be allocated by the Secretary among 

24 the States on the basis of their respective popu25 lations of individuals below the poverty line (as demstockstill on PROD1PC66 with BILLS

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1 fined by the Office of Management and Budget). 

2 The limitation amount allocated to a State under the 

3 preceding sentence shall be allocated by the Sec4 retary of Education to qualified schools within such 

5 State. 

6 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

7 AMOUNT.—The maximum aggregate face amount of 

8 bonds issued during any calendar year which may be 

9 designated under subsection (d)(1) with respect to 

10 any qualified school shall not exceed the limitation 

11 amount allocated to such school under paragraph (2) 

12 for such calendar year. 

13 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 

14 for any calendar year— 

15 ‘‘(A) the limitation amount for any State, 

16 exceeds 

17 ‘‘(B) the amount of bonds issued during 

18 such year which are designated under sub19 section (d)(1) with respect to qualified schools 

20 within such State, the limitation amount for 

21 such State for the following calendar year shall 

22 be increased by the amount of such excess. 

23 ‘‘(f) OTHER DEFINITIONS.—The definitions in sub24 sections (d)(6) and (i) of section 1397E shall apply for 

25 purposes of this section. 

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1 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

2 income includes the amount of the credit allowed to the 

3 taxpayer under this section.’’. 

4 (b) CONFORMING AMENDMENT.—The table of sec5 tions for subpart B of part IV of subchapter A of chapter 

6 1 of such Code is amended by adding at the end the fol7 lowing new item: 

‘‘Sec. 30D. Credit to holders of school construction bonds.’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to obligations issued after Decem10 ber 31, 2007. 

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