I 

110TH CONGRESS 

1ST SESSION H. R. 2470 

To amend the Internal Revenue Code of 1986 to expand the incentives 

for the construction and renovation of public schools. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 24, 2007 

Mr. RANGEL (for himself, Mr. RAMSTAD, Mr. ETHERIDGE, Mr. ABERCROMBIE, Mr. ANDREWS, Mr. ARCURI, Mr. BACA, Mr. BARROW, Mr. 

BECERRA, Ms. BERKLEY, Mr. BERMAN, Mr. BERRY, Mr. BISHOP of 

Georgia, Mr. BISHOP of New York, Mr. BLUMENAUER, Mr. BOSWELL, 

Mr. BOUCHER, Mrs. BOYDA of Kansas, Mr. BRALEY of Iowa, Ms. 

CORRINE BROWN of Florida, Mr. BUTTERFIELD, Mrs. CAPITO, Mrs. 

CAPPS, Mr. CARDOZA, Ms. CASTOR, Mr. CHANDLER, Ms. CLARKE, Mr. 

CLAY, Mr. CLEAVER, Mr. CONYERS, Mr. CROWLEY, Mr. CUELLAR, Mr. 

CUMMINGS, Mr. DAVIS of Alabama, Mr. DAVIS of Illinois, Mr. LINCOLN

DAVIS of Tennessee, Mrs. DAVIS of California, Mr. DEFAZIO, Ms. 

DELAURO, Mr. DICKS, Mr. DOYLE, Mr. EDWARDS, Mr. ELLISON, Mr. 

EMANUEL, Mr. ENGEL, Mr. ENGLISH of Pennsylvania, Ms. ESHOO, Mr. 

FARR, Mr. FERGUSON, Mr. FILNER, Mrs. GILLIBRAND, Mr. GONZALEZ, 

Mr. GORDON of Tennessee, Mr. AL GREEN of Texas, Mr. GENE GREEN

of Texas, Mr. GRIJALVA, Mr. HARE, Mr. HASTINGS of Florida, Ms. 

HERSETH SANDLIN, Mr. HIGGINS, Mr. HINOJOSA, Ms. HIRONO, Mr. 

HOLDEN, Mr. HOLT, Mr. HONDA, Ms. HOOLEY, Mr. INSLEE, Mr. 

ISRAEL, Ms. JACKSON-LEE of Texas, Mr. JEFFERSON, Ms. EDDIE BERNICE JOHNSON of Texas, Mr. KAGEN, Mr. KILDEE, Ms. KILPATRICK, Mr. 

KIND, Mr. KUCINICH, Mr. LAHOOD, Mr. LAMPSON, Mr. LARSON of Connecticut, Mr. LEVIN, Mr. LEWIS of Georgia, Mr. LOBIONDO, Mr. 

LOEBSACK, Mrs. LOWEY, Mr. LYNCH, Mrs. MALONEY of New York, Mr. 

MATHESON, Ms. MATSUI, Mrs. MCCARTHY of New York, Ms. MCCOLLUM

of Minnesota, Mr. MCDERMOTT, Mr. MCGOVERN, Mr. MCHUGH, Mr. 

MCINTYRE, Mr. MCNULTY, Mr. MEEHAN, Mr. MEEK of Florida, Mr. 

MICHAUD, Mr. MILLER of North Carolina, Mr. GEORGE MILLER of California, Mr. MOORE of Kansas, Mr. MORAN of Virginia, Mr. NADLER, 

Mrs. NAPOLITANO, Mr. NEAL of Massachusetts, Ms. NORTON, Mr. 

OLVER, Mr. ORTIZ, Mr. PALLONE, Mr. PASCRELL, Mr. PASTOR, Mr. 

PAYNE, Mr. PERLMUTTER, Mr. POMEROY, Mr. PRICE of North Carolina, 

Mr. RAHALL, Mr. REYES, Mr. RODRIGUEZ, Mr. ROSS, Mr. ROTHMAN, 

Mr. RUPPERSBERGER, Mr. RUSH, Mr. SALAZAR, Ms. LINDA T. SA ́NCHEZ

of California, Ms. LORETTA SANCHEZ of California, Mr. SAXTON, Ms. 


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SCHAKOWSKY, Ms. SCHWARTZ, Mr. SCOTT of Virginia, Mr. SCOTT of 

Georgia, Ms. SHEA-PORTER, Mr. SHERMAN, Mr. SHULER, Mr. SIMPSON, 

Ms. SLAUGHTER, Mr. SMITH of Washington, Mr. SPRATT, Mr. STARK, 

Ms. SUTTON, Mrs. TAUSCHER, Mr. TERRY, Mr. THOMPSON of Mississippi, Mr. THOMPSON of California, Mr. TIERNEY, Mrs. JONES of 

Ohio, Mr. UDALL of New Mexico, Mr. VAN HOLLEN, Ms. WASSERMAN

SCHULTZ, Ms. WATSON, Mr. WATT, Mr. WAXMAN, Mr. WELLER of Illinois, Mr. WEXLER, Ms. WOOLSEY, Mr. WU, and Mr. WYNN) introduced 

the following bill; which was referred to the Committee on Ways and 

Means, and in addition to the Committee on Education and Labor, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to expand 

the incentives for the construction and renovation of 

public schools. 

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 ‘‘America’s Better 

5 Classrooms Act of 2007’’. 

6 SEC. 2. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS. 

7 (a) IN GENERAL.—Part IV of subchapter A of chap8 ter 1 of the Internal Revenue Code of 1986 (relating to 

9 credits against tax) is amended by adding at the end the 

10 following new subpart: 

11 ‘‘Subpart I—Public School Modernization Bonds 

‘‘Sec. 54A. Credit to holders of qualified public school modernization bonds. 

‘‘Sec. 54B. Qualified school construction bonds. 

‘‘Sec. 54C. Qualified zone academy bonds. 


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1 ‘‘SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED PUBLIC 

2 SCHOOL MODERNIZATION BONDS. 

3 ‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 

4 a qualified public school modernization bond on one or 

5 more credit allowance dates of the bond during any tax6 able year, there shall be allowed as a credit against the 

7 tax imposed by this chapter for the taxable year an 

8 amount equal to the sum of the credits determined under 

9 subsection (b) with respect to such dates. 

10 ‘‘(b) AMOUNT OF CREDIT.— 

11 ‘‘(1) IN GENERAL.—The amount of the credit 

12 determined under this subsection with respect to any 

13 credit allowance date for a qualified public school 

14 modernization bond is 25 percent of the annual 

15 credit determined with respect to such bond. 

16 ‘‘(2) ANNUAL CREDIT.—The annual credit de17 termined with respect to any qualified public school 

18 modernization bond is the product of— 

19 ‘‘(A) the applicable credit rate, multiplied 

20 by 

21 ‘‘(B) the outstanding face amount of the 

22 bond. 

23 ‘‘(3) APPLICABLE CREDIT RATE.—For purposes 

24 of paragraph (2), the applicable credit rate is the 

25 rate which the Secretary or the Secretary’s designee 

26 estimates will permit the issuance of qualified public 


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1 school modernization bonds with a specified maturity 

2 or redemption date without discount and without in3 terest cost to the qualified issuer. The applicable 

4 credit rate with respect to any qualified public school 

5 modernization bond shall be determined as of the 

6 first day on which there is a binding, written con7 tract for the sale or exchange of the bond. 

8 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE9 DEMPTION.—In the case of a bond which is issued 

10 during the 3-month period ending on a credit allow11 ance date, the amount of the credit determined 

12 under this subsection with respect to such credit al13 lowance date shall be a ratable portion of the credit 

14 otherwise determined based on the portion of the 3- 

15 month period during which the bond is outstanding. 

16 A similar rule shall apply when the bond is redeemed 

17 or matures. 

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

19 ‘‘(1) IN GENERAL.—The credit allowed under 

20 subsection (a) for any taxable year shall not exceed 

21 the excess of— 

22 ‘‘(A) the sum of the regular tax liability 

23 (as defined in section 26(b)) plus the tax im24 posed by section 55, over 


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1 ‘‘(B) the sum of the credits allowable 

2 under this part (other than subpart C and this 

3 subpart). 

4 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 

5 credit allowable under subsection (a) exceeds the 

6 limitation imposed by paragraph (1) for such taxable 

7 year, such excess shall be carried to the succeeding 

8 taxable year and added to the credit allowable under 

9 subsection (a) for such taxable year. 

10 ‘‘(d) QUALIFIED PUBLIC SCHOOL MODERNIZATION

11 BOND.—For purposes of this section— 

12 ‘‘(1) QUALIFIED PUBLIC SCHOOL MODERNIZA13 TION BOND.—The term ‘qualified public school mod14 ernization bond’ means— 

15 ‘‘(A) a qualified school construction bond, 

16 and 

17 ‘‘(B) a qualified zone academy bond, 

18 which is part of an issue that meets requirements of 

19 paragraphs (2), (3), (4), and (5). 

20 ‘‘(2) SPECIAL RULES RELATING TO EXPENDI21 TURES.— 

22 ‘‘(A) IN GENERAL.—An issue shall be 

23 treated as meeting the requirements of this 

24 paragraph if, as of the date of issuance, the 

25 issuer reasonably expects— 


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1 ‘‘(i) at least 95 percent of the gross 

2 proceeds are to be spent for 1 or more 

3 qualified purposes within the 3-year period 

4 beginning on such date of issuance, 

5 ‘‘(ii) a binding commitment with a 

6 third party to spend at least 10 percent of 

7 such gross proceeds will be incurred within 

8 the 6-month period beginning on such date 

9 of issuance, and 

10 ‘‘(iii) such purposes will be completed 

11 with due diligence and such gross proceeds 

12 from the sale of the issue will be spent 

13 with due diligence. 

14 ‘‘(B) EXTENSION OF PERIOD.—Upon sub15 mission of a request prior to the expiration of 

16 the period described in subparagraph (A)(i), the 

17 Secretary may extend such period if the issuer 

18 establishes that the failure to satisfy the 3-year 

19 requirement is due to reasonable cause and the 

20 related purposes will continue to proceed with 

21 due diligence. 

22 ‘‘(C) FAILURE TO SPEND REQUIRED

23 AMOUNT OF BOND PROCEEDS WITHIN 3

24 YEARS.—To the extent that less than 95 per25 cent of the gross proceeds of the issue are exVerDate Aug 31 2005 23:07 May 27, 2007 Jkt 059196 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2470.IH H2470

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1 pended by the close of the 3-year period begin2 ning on the date of issuance (or if an extension 

3 has been obtained under subparagraph (B), by 

4 the close of the extended period), the issuer 

5 shall redeem all of the nonqualified bonds with6 in 90 days after the end of such period. For 

7 purposes of this paragraph, the amount of the 

8 nonqualified bonds required to be redeemed 

9 shall be determined in the same manner as 

10 under section 142. 

11 ‘‘(D) QUALIFIED PURPOSE.—For purposes 

12 of this paragraph, the term ‘qualified purpose’ 

13 means— 

14 ‘‘(i) in the case of a qualified school 

15 construction bond, a purpose specified in 

16 section 54B(a)(1), and 

17 ‘‘(ii) in the case of a qualified zone 

18 academy bond, a purpose specified in sec19 tion 54C(a)(4). 

20 ‘‘(3) REPORTING.—An issue shall be treated as 

21 meeting the requirements of this paragraph if the 

22 issuer of qualified public school modernization bonds 

23 submits reports similar to the reports required under 

24 section 149(e). 


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1 ‘‘(4) SPECIAL RULES RELATING TO ARBI2 TRAGE.—An issue shall be treated as meeting the 

3 requirements of this paragraph if the issue meets 

4 the requirements of section 148, except that such re5 quirements shall not apply if the issuer elects— 

6 ‘‘(A) to treat any earnings on proceeds in7 vested before use for a qualified purpose as part 

8 of gross proceeds for purposes of paragraph 

9 (2), and 

10 ‘‘(B) to apply paragraph (2)(C) by sub11 stituting ‘100 percent’ for ‘95 percent’. 

12 ‘‘(5) MATURITY LIMITATION.—An issue shall 

13 not be treated as meeting the requirements of this 

14 paragraph if the maturity of any bond which is part 

15 of such issue exceeds the maximum term determined 

16 by the Secretary under rules similar to the rules of 

17 section 54(e)(2). 

18 ‘‘(e) OTHER DEFINITIONS.—For purposes of this 

19 subchapter— 

20 ‘‘(1) CREDIT ALLOWANCE DATE.—The term 

21 ‘credit allowance date’ means— 

22 ‘‘(A) March 15, 

23 ‘‘(B) June 15, 

24 ‘‘(C) September 15, and 

25 ‘‘(D) December 15. 


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1 Such term includes the last day on which the bond 

2 is outstanding. 

3 ‘‘(2) LOCAL EDUCATIONAL AGENCY.—The term 

4 ‘local educational agency’ has the meaning given to 

5 such term by section 14101 of the Elementary and 

6 Secondary Education Act of 1965. Such term in7 cludes the local educational agency that serves the 

8 District of Columbia but does not include any other 

9 State agency. 

10 ‘‘(3) BOND.—The term ‘bond’ includes any ob11 ligation. 

12 ‘‘(4) STATE.—The term ‘State’ includes the 

13 District of Columbia and any possession of the 

14 United States. 

15 ‘‘(5) PUBLIC SCHOOL FACILITY.—The term 

16 ‘public school facility’ shall not include— 

17 ‘‘(A) any stadium or other facility pri18 marily used for athletic contests or exhibitions 

19 or other events for which admission is charged 

20 to the general public, or 

21 ‘‘(B) any facility which is not owned by a 

22 State or local government or any agency or in23 strumentality of a State or local government. 


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1 ‘‘(6) GROSS PROCEEDS.—The term ‘gross pro2 ceeds’ means proceeds from the sale of an issue re3 duced by reasonable issuance costs. 

4 ‘‘(f) CREDIT INCLUDED IN GROSS INCOME.—Gross 

5 income includes the amount of the credit allowed to the 

6 taxpayer under this section (determined without regard to 

7 subsection (c)) and the amount so included shall be treat8 ed as interest income. 

9 ‘‘(g) BONDS HELD BY REGULATED INVESTMENT

10 COMPANIES.—If any qualified public school modernization 

11 bond is held by a regulated investment company, the credit 

12 determined under subsection (a) shall be allowed to share13 holders of such company under procedures prescribed by 

14 the Secretary. 

15 ‘‘(h) CREDITS MAY BE STRIPPED.—Under regula16 tions prescribed by the Secretary— 

17 ‘‘(1) IN GENERAL.—There may be a separation 

18 (including at issuance) of the ownership of a quali19 fied public school modernization bond and the enti20 tlement to the credit under this section with respect 

21 to such bond. In case of any such separation, the 

22 credit under this section shall be allowed to the per23 son who on the credit allowance date holds the in24 strument evidencing the entitlement to the credit 

25 and not to the holder of the bond. 


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1 ‘‘(2) CERTAIN RULES TO APPLY.—In the case 

2 of a separation described in paragraph (1), the rules 

3 of section 1286 shall apply to the qualified public 

4 school modernization bond as if it were a stripped 

5 bond and to the credit under this section as if it 

6 were a stripped coupon. 

7 ‘‘(i) TREATMENT FOR ESTIMATED TAX PURPOSES.— 

8 Solely for purposes of sections 6654 and 6655, the credit 

9 allowed by this section to a taxpayer by reason of holding 

10 a qualified public school modernization bond on a credit 

11 allowance date shall be treated as if it were a payment 

12 of estimated tax made by the taxpayer on such date. 

13 ‘‘SEC. 54B. QUALIFIED SCHOOL CONSTRUCTION BONDS. 

14 ‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.— 

15 For purposes of this subchapter, the term ‘qualified school 

16 construction bond’ means any bond issued as part of an 

17 issue if— 

18 ‘‘(1) 95 percent or more of the gross proceeds 

19 of such issue are to be used for the construction, re20 habilitation, or repair of a public school facility or 

21 for the acquisition of land on which such a facility 

22 is to be constructed with part of the proceeds of 

23 such issue, 


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1 ‘‘(2) the bond is issued by a State or local gov2 ernment within the jurisdiction of which such school 

3 is located, and 

4 ‘‘(3) the issuer designates such bond for pur5 poses of this section. 

6 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES7 IGNATED.—The maximum aggregate face amount of 

8 bonds issued during any calendar year which may be des9 ignated under subsection (a) by any issuer shall not exceed 

10 the sum of— 

11 ‘‘(1) the limitation amount allocated under sub12 section (d) for such calendar year to such issuer, 

13 and 

14 ‘‘(2) if such issuer is a large local educational 

15 agency (as defined in subsection (e)(4)) or is issuing 

16 on behalf of such an agency, the limitation amount 

17 allocated under subsection (e) for such calendar year 

18 to such agency. 

19 ‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS

20 DESIGNATED.—There is a national qualified school con21 struction bond limitation for each calendar year. Such lim22 itation is— 

23 ‘‘(1) $11,000,000,000 for 2008 

24 ‘‘(2) $11,000,000,000 for 2009, and 


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1 ‘‘(3) except as provided in subsection (f), zero 

2 after 2009. 

3 ‘‘(d) 60 PERCENT OF LIMITATION ALLOCATED

4 AMONG STATES.— 

5 ‘‘(1) IN GENERAL.—60 percent of the limitation 

6 applicable under subsection (c) for any calendar year 

7 shall be allocated by the Secretary among the States 

8 in proportion to the respective numbers of children 

9 in each State who have attained age 5 but not age 

10 18 for the most recent fiscal year ending before such 

11 calendar year. The limitation amount allocated to a 

12 State under the preceding sentence shall be allocated 

13 by the State to issuers within such State. 

14 ‘‘(2) MINIMUM ALLOCATIONS TO STATES.— 

15 ‘‘(A) IN GENERAL.—The Secretary shall 

16 adjust the allocations under this subsection for 

17 any calendar year for each State to the extent 

18 necessary to ensure that the sum of— 

19 ‘‘(i) the amount allocated to such 

20 State under this subsection for such year, 

21 and 

22 ‘‘(ii) the aggregate amounts allocated 

23 under subsection (e) to large local edu24 cational agencies in such State for such 

25 year, 


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1 is not less than an amount equal to such 

2 State’s minimum percentage of the amount to 

3 be allocated under paragraph (1) for the cal4 endar year. 

5 ‘‘(B) MINIMUM PERCENTAGE.—A State’s 

6 minimum percentage for any calendar year is 

7 the minimum percentage described in section 

8 1124(d) of the Elementary and Secondary Edu9 cation Act of 1965 (20 U.S.C. 6334(d)) for 

10 such State for the most recent fiscal year end11 ing before such calendar year. 

12 ‘‘(3) ALLOCATIONS TO CERTAIN POSSES13 SIONS.—The amount to be allocated under para14 graph (1) to any possession of the United States 

15 other than Puerto Rico shall be the amount which 

16 would have been allocated if all allocations under 

17 paragraph (1) were made on the basis of respective 

18 populations of individuals below the poverty line (as 

19 defined by the Office of Management and Budget). 

20 In making other allocations, the amount to be allo21 cated under paragraph (1) shall be reduced by the 

22 aggregate amount allocated under this paragraph to 

23 possessions of the United States. 

24 ‘‘(4) ALLOCATIONS FOR INDIAN SCHOOLS.—In 

25 addition to the amounts otherwise allocated under 


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1 this subsection, $200,000,000 for calendar year 

2 2008, and $200,000,000 for calendar year 2009, 

3 shall be allocated by the Secretary of the Interior for 

4 purposes of the construction, rehabilitation, and re5 pair of schools funded by the Bureau of Indian Af6 fairs. In the case of amounts allocated under the 

7 preceding sentence, Indian tribal governments (as 

8 defined in section 7871) shall be treated as qualified 

9 issuers for purposes of this subchapter. 

10 ‘‘(e) 40 PERCENT OF LIMITATION ALLOCATED

11 AMONG LARGEST SCHOOL DISTRICTS.— 

12 ‘‘(1) IN GENERAL.—40 percent of the limitation 

13 applicable under subsection (c) for any calendar year 

14 shall be allocated under paragraph (2) by the Sec15 retary among local educational agencies which are 

16 large local educational agencies for such year. 

17 ‘‘(2) ALLOCATION FORMULA.—The amount to 

18 be allocated under paragraph (1) for any calendar 

19 year shall be allocated among large local educational 

20 agencies in proportion to the respective amounts 

21 each such agency received for Basic Grants under 

22 subpart 2 of part A of title I of the Elementary and 

23 Secondary Education Act of 1965 (20 U.S.C. 6331 

24 et seq.) for the most recent fiscal year ending before 

25 such calendar year. 


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1 ‘‘(3) ALLOCATION OF UNUSED LIMITATION TO

2 STATE.—The amount allocated under this subsection 

3 to a large local educational agency for any calendar 

4 year may be reallocated by such agency to the State 

5 in which such agency is located for such calendar 

6 year. Any amount reallocated to a State under the 

7 preceding sentence may be allocated as provided in 

8 subsection (d)(1). 

9 ‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.— 

10 For purposes of this section, the term ‘large local 

11 educational agency’ means, with respect to a cal12 endar year, any local educational agency if such 

13 agency is— 

14 ‘‘(A) among the 100 local educational 

15 agencies with the largest numbers of children 

16 aged 5 through 17 from families living below 

17 the poverty level, as determined by the Sec18 retary using the most recent data available 

19 from the Department of Commerce that are 

20 satisfactory to the Secretary, or 

21 ‘‘(B) 1 of not more than 25 local edu22 cational agencies (other than those described in 

23 subparagraph (A)) that the Secretary of Edu24 cation determines (based on the most recent 

25 data available satisfactory to the Secretary) are 


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1 in particular need of assistance, based on a low 

2 level of resources for school construction, a high 

3 level of enrollment growth, or such other factors 

4 as the Secretary deems appropriate. 

5 ‘‘(f) CARRYOVER OF UNUSED LIMITATION.—If for 

6 any calendar year— 

7 ‘‘(1) the amount allocated under subsection (d) 

8 to any State, exceeds 

9 ‘‘(2) the amount of bonds issued during such 

10 year which are designated under subsection (a) pur11 suant to such allocation, 

12 the limitation amount under such subsection for such 

13 State for the following calendar year shall be increased 

14 by the amount of such excess. A similar rule shall apply 

15 to the amounts allocated under subsection (d)(4) or (e). 

16 ‘‘SEC. 54C. QUALIFIED ZONE ACADEMY BONDS. 

17 ‘‘(a) QUALIFIED ZONE ACADEMY BOND.—For pur18 poses of this subchapter— 

19 ‘‘(1) IN GENERAL.—The term ‘qualified zone 

20 academy bond’ means any bond issued as part of an 

21 issue if— 

22 ‘‘(A) 95 percent or more of the gross pro23 ceeds of such issue are to be used for a quali24 fied purpose with respect to a qualified zone 


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1 academy established by a local educational 

2 agency, 

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

4 government within the jurisdiction of which 

5 such academy is located, and 

6 ‘‘(C) the issuer— 

7 ‘‘(i) designates such bond for purposes 

8 of this section, 

9 ‘‘(ii) certifies that it has written as10 surances that the private business con11 tribution requirement of paragraph (2) will 

12 be met with respect to such academy, and 

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

14 approval of the local educational agency 

15 for such bond issuance. 

16 ‘‘(2) PRIVATE BUSINESS CONTRIBUTION RE17 QUIREMENT.— 

18 ‘‘(A) IN GENERAL.—For purposes of para19 graph (1), the private business contribution re20 quirement of this paragraph is met with respect 

21 to any issue if the local educational agency that 

22 established the qualified zone academy has writ23 ten commitments from private entities to make 

24 qualified contributions having a present value 

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


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1 less than 10 percent of the gross proceeds of 

2 the issue. 

3 ‘‘(B) QUALIFIED CONTRIBUTIONS.—For 

4 purposes of subparagraph (A), the term ‘quali5 fied contribution’ means any contribution (of a 

6 type and quality acceptable to the local edu7 cational agency) of— 

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

9 zone academy (including state-of-the-art 

10 technology and vocational equipment), 

11 ‘‘(ii) technical assistance in developing 

12 curriculum or in training teachers in order 

13 to promote appropriate market driven tech14 nology in the classroom, 

15 ‘‘(iii) services of employees as volun16 teer mentors, 

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

18 educational opportunities outside the acad19 emy for students, or 

20 ‘‘(v) any other property or service 

21 specified by the local educational agency. 

22 ‘‘(3) QUALIFIED ZONE ACADEMY.—The term 

23 ‘qualified zone academy’ means any public school (or 

24 academic program within a public school) which is 

25 established by and operated under the supervision of 


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1 a local educational agency to provide education or 

2 training below the postsecondary level if— 

3 ‘‘(A) such public school or program (as the 

4 case may be) is designed in cooperation with 

5 business to enhance the academic curriculum, 

6 increase graduation and employment rates, and 

7 better prepare students for the rigors of college 

8 and the increasingly complex workforce, 

9 ‘‘(B) students in such public school or pro10 gram (as the case may be) will be subject to the 

11 same academic standards and assessments as 

12 other students educated by the local educational 

13 agency, 

14 ‘‘(C) the comprehensive education plan of 

15 such public school or program is approved by 

16 the local educational agency, and 

17 ‘‘(D)(i) such public school is located in an 

18 empowerment zone or enterprise community 

19 (including any such zone or community des20 ignated after the date of the enactment of this 

21 section), or 

22 ‘‘(ii) there is a reasonable expectation (as 

23 of the date of issuance of the bonds) that at 

24 least 35 percent of the students attending such 

25 school or participating in such program (as the 


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1 case may be) will be eligible for free or reduced2 cost lunches under the school lunch program es3 tablished under the National School Lunch Act. 

4 ‘‘(4) QUALIFIED PURPOSE.—The term ‘quali5 fied purpose’ means, with respect to any qualified 

6 zone academy— 

7 ‘‘(A) constructing, rehabilitating, or repair8 ing the public school facility in which the acad9 emy is established, 

10 ‘‘(B) acquiring the land on which such fa11 cility is to be constructed with part of the pro12 ceeds of such issue, 

13 ‘‘(C) providing equipment for use at such 

14 academy, 

15 ‘‘(D) developing course materials for edu16 cation to be provided at such academy, and 

17 ‘‘(E) training teachers and other school 

18 personnel in such academy. 

19 ‘‘(b) LIMITATIONS ON AMOUNT OF BONDS DES20 IGNATED.— 

21 ‘‘(1) IN GENERAL.—There is a national zone 

22 academy bond limitation for each calendar year. 

23 Such limitation is— 

24 ‘‘(A) $1,400,000,000, for 2008, 

25 ‘‘(B) $1,400,000,000 for 2009, and 


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1 ‘‘(C) except as provided in paragraph (3), 

2 zero after 2009. 

3 ‘‘(2) ALLOCATION OF LIMITATION.— 

4 ‘‘(A) ALLOCATION AMONG STATES.—The 

5 national zone academy bond limitation for any 

6 calendar year shall be allocated by the Sec7 retary among the States in proportion to the re8 spective amounts each such State received for 

9 Basic Grants under subpart 2 of part A of title 

10 I of the Elementary and Secondary Education 

11 Act of 1965 (20 U.S.C. 6331 et seq.) for the 

12 most recent fiscal year ending before such cal13 endar year. 

14 ‘‘(B) ALLOCATION TO LOCAL EDU15 CATIONAL AGENCIES.—The limitation amount 

16 allocated to a State under subparagraph (A) 

17 shall be allocated by the State to qualified zone 

18 academies within such State. 

19 ‘‘(C) DESIGNATION SUBJECT TO LIMITA20 TION AMOUNT.—The maximum aggregate face 

21 amount of bonds issued during any calendar 

22 year which may be designated under subsection 

23 (a) with respect to any qualified zone academy 

24 shall not exceed the limitation amount allocated 


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1 to such academy under subparagraph (B) for 

2 such calendar year. 

3 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 

4 for any calendar year— 

5 ‘‘(A) the limitation amount under this sub6 section for any State, exceeds 

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

8 such year which are designated under sub9 section (a) (or the corresponding provisions of 

10 prior law) with respect to qualified zone acad11 emies within such State, 

12 the limitation amount under this subsection for such 

13 State for the following calendar year shall be in14 creased by the amount of such excess.’’. 

15 (b) REPORTING.—Subsection (d) of section 6049 of 

16 such Code (relating to returns regarding payments of in17 terest) is amended by adding at the end the following new 

18 paragraph: 

19 ‘‘(8) REPORTING OF CREDIT ON QUALIFIED

20 PUBLIC SCHOOL MODERNIZATION BONDS.— 

21 ‘‘(A) IN GENERAL.—For purposes of sub22 section (a), the term ‘interest’ includes amounts 

23 includible in gross income under section 54A 

24 and such amounts shall be treated as paid on 


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1 the credit allowance date (as defined in section 

2 54A(e)(1)). 

3 ‘‘(B) REPORTING TO CORPORATIONS, 

4 ETC.—Except as otherwise provided in regula5 tions, in the case of any interest described in 

6 subparagraph (A) of this paragraph, subsection 

7 (b)(4) of this section shall be applied without 

8 regard to subparagraphs (A), (H), (I), (J), (K), 

9 and (L)(i). 

10 ‘‘(C) REGULATORY AUTHORITY.—The Sec11 retary may prescribe such regulations as are 

12 necessary or appropriate to carry out the pur13 poses of this paragraph, including regulations 

14 which require more frequent or more detailed 

15 reporting.’’. 

16 (c) MODIFICATION OF SECTION 1397E.— 

17 (1) REPEAL OF RESTRICTION ON ZONE ACAD18 EMY BOND HOLDERS.— 

19 (A) Section 1397E(a) is amended by strik20 ing ‘‘eligible taxpayer’’ and inserting ‘‘tax21 payer’’. 

22 (B) Section 1397E(d) is amended by strik23 ing paragraph (6). 

24 (C) Section 1397E(i) is amended by strik25 ing ‘‘which is an eligible taxpayer’’. 


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1 (2) CARRYOVER OF UNUSED LIMITATION TO

2 SECTION 54C.— 

3 (A) Section 1397E(e) of such Code is 

4 amended by adding at the end the following 

5 new paragraph: 

6 ‘‘(5) CARRYOVER OF UNUSED LIMITATION TO

7 SECTION 54C AFTER 2007.—If for calendar year 

8 2007— 

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

10 exceeds 

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

12 such year which are designated under sub13 section (d)(1) with respect to qualified zone 

14 academies within such State, 

15 the limitation amount for such State under section 

16 54C for calendar year 2008 shall be increased by the 

17 amount of such excess and such excess shall not oth18 erwise be taken into account under this section.’’. 

19 (B) The heading of section 1397E(e)(4) of 

20 such Code is amended by inserting before the 

21 period ‘‘FROM YEARS BEFORE 2008’’. 

22 (d) CLERICAL AMENDMENT.—The table of subparts 

23 for part IV of subchapter A of chapter 1 of such Code 

24 is amended by adding at the end the following new item: 

‘‘SUBPART I. PUBLIC SCHOOL MODERNIZATION BONDS.’’. 

25 (e) EFFECTIVE DATES.— 


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1 (1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, the amendments made by 

3 this section shall apply to obligations issued after 

4 December 31, 2007. 

5 (2) REPEAL OF RESTRICTION ON ZONE ACAD6 EMY BOND HOLDERS.—The amendments made by 

7 subsection (c)(1) shall apply to qualified zone acad8 emy bonds held on credit allowance dates after De9 cember 31, 2007, during taxable years ending after 

10 such date. 

11 (3) CARRYOVER OF LIMITATION.—The amend12 ments made by subsection (c)(2) shall take effect on 

13 the date of the enactment of this Act. 

14 SEC. 3. APPLICATION OF CERTAIN LABOR STANDARDS ON 

15 CONSTRUCTION PROJECTS FINANCED 

16 UNDER PUBLIC SCHOOL MODERNIZATION 

17 PROGRAM. 

18 Section 439 of the General Education Provisions Act 

19 (relating to labor standards) is amended— 

20 (1) by inserting ‘‘(a)’’ before ‘‘All laborers and 

21 mechanics’’, and 

22 (2) by adding at the end the following: 

23 ‘‘(b)(1) For purposes of this section, the term ‘appli24 cable program’ also includes the qualified zone academy 

25 bond provisions enacted by section 226 of the Taxpayer 


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1 Relief Act of 1997 and the program established by section 

2 2 of the America’s Better Classrooms Act of 2007. 

3 ‘‘(2) A State or local government participating in a 

4 program described in paragraph (1) shall— 

5 ‘‘(A) in the awarding of contracts, give priority 

6 to contractors with substantial numbers of employ7 ees residing in the local education area to be served 

8 by the school being constructed; and 

9 ‘‘(B) include in the construction contract for 

10 such school a requirement that the contractor give 

11 priority in hiring new workers to individuals residing 

12 in such local education area. 

13 ‘‘(3) In the case of a program described in paragraph 

14 (1), nothing in this subsection or subsection (a) shall be 

15 construed to deny any tax credit allowed under such pro16 gram. If amounts are required to be withheld from con17 tractors to pay wages to which workers are entitled, such 

18 amounts shall be treated as expended for construction pur19 poses in determining whether the requirements of such 

20 program are met.’’. 


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1 SEC. 4. EMPLOYMENT AND TRAINING ACTIVITIES RELAT2 ING TO CONSTRUCTION OR RECONSTRUC3 TION OF PUBLIC SCHOOL FACILITIES. 

4 (a) IN GENERAL.—Section 134 of the Workforce In5 vestment Act of 1998 (29 U.S.C. 2864) is amended by 

6 adding at the end the following: 

7 ‘‘(f) LOCAL EMPLOYMENT AND TRAINING ACTIVI8 TIES RELATING TO CONSTRUCTION OR RECONSTRUCTION

9 OF PUBLIC SCHOOL FACILITIES.— 

10 ‘‘(1) IN GENERAL.—In order to provide training 

11 services related to construction or reconstruction of 

12 public school facilities receiving funding assistance 

13 under an applicable program, each State shall estab14 lish a specialized program of training meeting the 

15 following requirements: 

16 ‘‘(A) The specialized program provides 

17 training for jobs in the construction industry. 

18 ‘‘(B) The program provides trained work19 ers for projects for the construction or recon20 struction of public school facilities receiving 

21 funding assistance under an applicable pro22 gram. 

23 ‘‘(C) The program ensures that skilled 

24 workers (residing in the area to be served by 

25 the school facilities) will be available for the 

26 construction or reconstruction work. 


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1 ‘‘(2) COORDINATION.—The specialized program 

2 established under paragraph (1) shall be integrated 

3 with other activities under this Act, with the activi4 ties carried out under the National Apprenticeship 

5 Act of 1937 by the State Apprenticeship Council or 

6 through the Bureau of Apprenticeship and Training 

7 in the Department of Labor, as appropriate, and 

8 with activities carried out under the Carl D. Perkins 

9 Vocational and Technical Education Act of 1998. 

10 Nothing in this subsection shall be construed to re11 quire services duplicative of those referred to in the 

12 preceding sentence. 

13 ‘‘(3) APPLICABLE PROGRAM.—In this sub14 section, the term ‘applicable program’ has the mean15 ing given the term in section 439(b) of the General 

16 Education Provisions Act (relating to labor stand17 ards).’’. 

18 (b) STATE PLAN.—Section 112(b)(17)(A) of the 

19 Workforce Investment Act of 1998 (29 U.S.C. 

20 2822(b)(17)(A)) is amended— 

21 (1) in clause (iii), by striking ‘‘and’’ at the end; 

22 (2) by redesignating clause (iv) as clause (v); 

23 and 

24 (3) by inserting after clause (iii) the following: 


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1 ‘‘(iv) how the State will establish and 

2 carry out a specialized program of training 

3 under section 134(f); and’’. 

Æ 


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