II

105TH CONGRESS

1ST SESSION S. 1472

To amend the Internal Revenue Code of 1986 to provide a tax credit for

public elementary and secondary school construction, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 8, 1997

Ms. MOSELEY-BRAUN (for herself and Mr. KENNEDY) 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 provide

a tax credit for public elementary and secondary school

construction, and for other purposes.

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 ‘‘School Repair and

5 Construction Act of 1997’’.

6 SEC. 2. PURPOSE.

7 It is the purpose of this Act to help school districts

8 to improve their crumbling and overcrowded school facili9 ties through the use of Federal tax credits.
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1 SEC. 3. TAX CREDIT FOR PUBLIC ELEMENTARY AND

2 SECONDARY SCHOOL CONSTRUCTION.

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to general business credits) is amended by

6 adding at the end the following new section:

7 ‘‘SEC. 45D. CREDIT FOR PUBLIC ELEMENTARY AND

8 SECONDARY SCHOOL CONSTRUCTION.

9 ‘‘(a) IN GENERAL.—For purposes of section 38, the

10 amount of the school construction credit determined under

11 this section for an eligible taxpayer for any taxable year

12 with respect to an eligible school construction project shall

13 be an amount equal to the lesser of—

14 ‘‘(1) the applicable percentage of the qualified

15 school construction costs, or

16 ‘‘(2) the excess (if any) of—

17 ‘‘(A) the taxpayer’s allocable school con18 struction amount with respect to such project

19 under subsection (d), over

20 ‘‘(B) any portion of such allocable amount

21 used under this section for preceding taxable

22 years.

23 ‘‘(b) ELIGIBLE TAXPAYER; ELIGIBLE SCHOOL CON24 STRUCTION PROJECT.—For purposes of this section—

25 ‘‘(1) ELIGIBLE TAXPAYER.—The term ‘eligible

26 taxpayer’ means any person which—
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1 ‘‘(A) has entered into a contract with a

2 local educational agency for the performance of

3 construction or related activities in connection

4 with an eligible school construction project, and

5 ‘‘(B) has received an allocable school con6 struction amount with respect to such contract

7 under subsection (d).

8 ‘‘(2) ELIGIBLE SCHOOL CONSTRUCTION

9 PROJECT.—

10 ‘‘(A) IN GENERAL.—The term ‘eligible

11 school construction project’ means any project

12 related to a public elementary school or second13 ary school that is conducted for 1 or more of

14 the following purposes:

15 ‘‘(i) Construction of school facilities in

16 order to ensure the health and safety of all

17 students, which may include—

18 ‘‘(I) the removal of environ19 mental hazards,

20 ‘‘(II) improvements in air qual21 ity, plumbing, lighting, heating and

22 air conditioning, electrical systems, or

23 basic school infrastructure, and

24 ‘‘(III) building improvements

25 that increase school safety.
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1 ‘‘(ii) Construction activities needed to

2 meet the requirements of section 504 of

3 the Rehabilitation Act of 1973 (29 U.S.C.

4 794) or of the Americans with Disabilities

5 Act of 1990 (42 U.S.C. 12101 et seq.).

6 ‘‘(iii) Construction activities that in7 crease the energy efficiency of school

8 facilities.

9 ‘‘(iv) Construction that facilitates the

10 use of modern educational technologies.

11 ‘‘(v) Construction of new school facili12 ties that are needed to accommodate

13 growth in school enrollments.

14 ‘‘(vi) Such other construction as the

15 Secretary of Education determines

16 appropriate.

17 ‘‘(B) SPECIAL RULES.—For purposes of

18 this paragraph—

19 ‘‘(i) the term ‘construction’ includes

20 reconstruction, renovation, or other sub21 stantial rehabilitation, and

22 ‘‘(ii) an eligible school construction

23 project shall not include the costs of ac24 quiring land (or any costs related to such

25 acquisition).
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1 ‘‘(c) QUALIFIED SCHOOL CONSTRUCTION COSTS; AP2 PLICABLE PERCENTAGE.—For purposes of this section—

3 ‘‘(1) IN GENERAL.—The term ‘qualified school

4 construction costs’ means the aggregate amounts

5 paid to an eligible taxpayer during the taxable year

6 under the contract described in subsection (b)(1).

7 ‘‘(2) APPLICABLE PERCENTAGE.—The term

8 ‘applicable percentage’ means, in the case of an eli9 gible school construction project related to a local

10 educational agency, the higher of the following

11 percentages:

12 ‘‘(A) If the local educational agency has a

13 percentage or number of children described in

14 clause (i)(I) or (ii)(I) of section 1125(c)(2)(A)

15 of the Elementary and Secondary Education

16 Act of 1965 (20 U.S.C. 6335(c)(2)(A)), the ap17 plicable percentage is 10 percent.

18 ‘‘(B) If the local educational agency has a

19 percentage or number of children described in

20 clause (i)(II) or (ii)(II) of such section, the ap21 plicable percentage is 15 percent.

22 ‘‘(C) If the local educational agency has a

23 percentage or number of children described in

24 clause (i)(III) or (ii)(III) of such section, the

25 applicable percentage is 20 percent.
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1 ‘‘(D) If the local educational agency has a

2 percentage or number of children described in

3 clause (i)(IV) or (ii)(IV) of such section, the ap4 plicable percentage is 25 percent.

5 ‘‘(E) If the local educational agency has a

6 percentage or number of children described in

7 clause (i)(V) or (ii)(V) of such section, the ap8 plicable percentage is 30 percent.

9 ‘‘(d) ALLOCABLE AMOUNT.—For purposes of this

10 section—

11 ‘‘(1) IN GENERAL.—Subject to paragraph (3), a

12 local educational agency may allocate to any person

13 a school construction amount with respect to any eli14 gible school construction project.

15 ‘‘(2) TIME FOR MAKING ALLOCATION.—An allo16 cation shall be taken into account under paragraph

17 (1) only if the allocation is made at the time the

18 contract described in subsection (b)(1) is entered

19 into (or such later time as the Secretary may by reg20 ulation allow).

21 ‘‘(3) COORDINATION WITH STATE PROGRAM.—

22 A local educational agency may not allocate school

23 construction amounts for any calendar year—

24 ‘‘(A) which in the aggregate exceed the

25 amount of the State school construction ceiling
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1 allocated to such agency for such calendar year

2 under subsection (e), or

3 ‘‘(B) if such allocation is inconsistent with

4 any specific allocation required by the State or

5 this section.

6 ‘‘(e) STATE CEILINGS AND ALLOCATION.—

7 ‘‘(1) IN GENERAL.—A State educational agency

8 shall allocate to local educational agencies within the

9 State for any calendar year a portion of the State

10 school construction ceiling for such year. Such allo11 cations shall be consistent with the State application

12 which has been approved under subsection (f) and

13 with any requirement of this section.

14 ‘‘(2) STATE SCHOOL CONSTRUCTION CEILING.—

15 ‘‘(A) IN GENERAL.—The State school con16 struction ceiling for any State for any calendar

17 year shall be an amount equal to the State’s al18 locable share of the national school construction

19 amount.

20 ‘‘(B) STATE’S ALLOCABLE SHARE.—The

21 State’s allocable share of the national school

22 construction amount for a fiscal year shall bear

23 the same relation to the national school con24 struction amount for the fiscal year as the

25 amount the State received under section 1124
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1 of the Elementary and Secondary Education

2 Act of 1965 (20 U.S.C. 6333) for the preceding

3 fiscal year bears to the total amount received by

4 all States under such section for such preceding

5 fiscal year.

6 ‘‘(C) NATIONAL SCHOOL CONSTRUCTION

7 AMOUNT.—The national school construction

8 amount for any calendar year is the lesser of—

9 ‘‘(i) $1,000,000,000, or

10 ‘‘(ii) the amount made available for

11 such year under the School Infrastructure

12 Improvement Trust Fund established

13 under section 9512,

14 reduced by any amount described in paragraph

15 (3).

16 ‘‘(3) SPECIAL ALLOCATIONS FOR INDIAN

17 TRIBES AND TERRITORIES.—

18 ‘‘(A) ALLOCATION TO INDIAN TRIBES.—

19 The national school construction amount under

20 paragraph (2)(C) shall be reduced by 1.5 per21 cent for each calendar year and the Secretary

22 of Interior shall allocate such amount among

23 Indian tribes according to their respective need

24 for assistance under this section.
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1 ‘‘(B) ALLOCATION TO TERRITORIES.—The

2 national school construction amount under

3 paragraph (2)(C) shall be reduced by 0.5 per4 cent for each calendar year and the Secretary

5 of Education shall allocate such amount among

6 the territories according to their respective need

7 for assistance under this section.

8 ‘‘(4) REALLOCATION.—If the Secretary of Edu9 cation determines that a State is not making satis10 factory progress in carrying out the State’s plan for

11 the use of funds allocated to the State under this

12 section, the Secretary may reallocate all or part of

13 the State school construction ceiling to 1 or more

14 other States that are making satisfactory progress.

15 ‘‘(e) STATE APPLICATION.—

16 ‘‘(1) IN GENERAL.—A State educational agency

17 shall not be eligible to allocate any amount to a local

18 educational agency for any calendar year unless the

19 agency submits to the Secretary of Education (and

20 the Secretary approves) an application containing

21 such information as the Secretary may require,

22 including—

23 ‘‘(A) an estimate of the overall condition of

24 school facilities in the State, including the pro-
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1 jected cost of upgrading schools to adequate

2 condition;

3 ‘‘(B) an estimate of the capacity of the

4 schools in the State to house projected student

5 enrollments, including the projected cost of ex6 panding school capacity to meet rising student

7 enrollment;

8 ‘‘(C) the extent to which the schools in the

9 State have the basic infrastructure elements

10 necessary to incorporate modern technology into

11 their classrooms, including the projected cost of

12 upgrading school infrastructure to enable the

13 use of modern technology in classrooms;

14 ‘‘(D) the extent to which the schools in the

15 State offer the physical infrastructure needed to

16 provide a high-quality education to all students;

17 and

18 ‘‘(E) an identification of the State agency

19 that will allocate credit amounts to local edu20 cational agencies within the State.

21 ‘‘(2) SPECIFIC ITEMS IN ALLOCATION.—The

22 State shall include in the State’s application the

23 process by which the State will allocate the credits

24 to local educational agencies within the State. The
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1 State shall consider in its allocation process the ex2 tent to which—

3 ‘‘(A) the school district served by the local

4 educational agency has—

5 ‘‘(i) a high number or percentage of

6 the total number of children aged 5 to 17,

7 inclusive, in the State who are counted

8 under section 1124(c) of the Elementary

9 and Secondary Education Act of 1965 (20

10 U.S.C. 6333(c)); or

11 ‘‘(ii) a high percentage of the total

12 number of low-income residents in the

13 State;

14 ‘‘(B) the local educational agency lacks the

15 fiscal capacity, including the ability to raise

16 funds through the full use of such agency’s

17 bonding capacity and otherwise, to undertake

18 the eligible school construction project without

19 assistance;

20 ‘‘(C) the local area makes an unusually

21 high local tax effort, or has a history of failed

22 attempts to pass bond referenda;

23 ‘‘(D) the local area contains a significant

24 percentage of federally owned land that is not

25 subject to local taxation;
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1 ‘‘(E) the threat the condition of the phys2 ical facility poses to the safety and well-being of

3 students;

4 ‘‘(F) there is a demonstrated need for the

5 construction, reconstruction, renovation, or re6 habilitation based on the condition of the

7 facility;

8 ‘‘(G) the extent to which the facility is

9 overcrowded; and

10 ‘‘(H) the extent to which assistance pro11 vided will be used to support eligible school con12 struction projects that would not otherwise be

13 possible to undertake.

14 ‘‘(3) IDENTIFICATION OF AREAS.—The State

15 shall include in the State’s application the process

16 by which the State will identify the areas of greatest

17 needs (whether those areas are in large urban cen18 ters, pockets of rural poverty, fast-growing suburbs,

19 or elsewhere) and how the State intends to meet the

20 needs of those areas.

21 ‘‘(4) ALLOCATIONS ON BASIS OF APPLICA22 TION.—The Secretary of Education shall evaluate

23 applications submitted under this subsection and

24 shall approve any such application which meets the

25 requirements of this section.
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1 ‘‘(g) REQUIRED ALLOCATIONS.—Notwithstanding

2 any process for allocation under a State application under

3 subsection (f), in the case of a State which contains 1 or

4 more of the 100 school districts within the United States

5 which contains the largest number of poor children (as de6 termined by the Secretary of Education), the State shall

7 allocate each calendar year to the local educational agency

8 serving such districts that portion of the State school con9 struction ceiling which bears the same ratio to such ceiling

10 as the number of children in such district for the preced11 ing calendar year who are counted for purposes of section

12 1124(c) of the Elementary and Secondary Education Act

13 of 1965 (20 U.S.C. 6333(c)) bears to the total number

14 of children in such State who are so counted.

15 ‘‘(h) DEFINITIONS.—For purposes of this section—

16 ‘‘(1) ELEMENTARY SCHOOL; LOCAL EDU17 CATIONAL AGENCY; SECONDARY SCHOOL; STATE

18 EDUCATIONAL AGENCY.—The terms ‘elementary

19 school’, ‘local educational agency’, ‘secondary

20 school’, and ‘State educational agency’ have the

21 meanings given the terms in section 14101 of the

22 Elementary and Secondary Education Act of 1965

23 (20 U.S.C. 8801).

24 ‘‘(2) TERRITORIES.—The term ‘territories’

25 means the United States Virgin Islands, Guam,
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1 American Samoa, the Commonwealth of the North2 ern Mariana Islands, the Republic of the Marshall

3 Islands, the Federated States of Micronesia, and the

4 Republic of Palau.

5 ‘‘(3) STATE.—The term ‘State’ means each of

6 the several States of the United States, the District

7 of Columbia, and the Commonwealth of Puerto

8 Rico.’’

9 (b) INCLUSION IN GENERAL BUSINESS CREDIT.—

10 (1) IN GENERAL.—Section 38(b) of the Internal

11 Revenue Code of 1986 is amended by striking

12 ‘‘plus’’ at the end of paragraph (11), by striking the

13 period at the end of paragraph (12) and inserting ‘‘,

14 plus’’, and by adding at the end the following new

15 paragraph:

16 ‘‘(13) the school construction credit determined

17 under section 45D(a).’’

18 (2) TRANSITION RULE.—Section 39(d) of such

19 Code is amended by adding at the end the following

20 new paragraph:

21 ‘‘(8) NO CARRYBACK OF SECTION 45D CREDIT

22 BEFORE ENACTMENT.—No portion of the unused

23 business credit for any taxable year which is attrib24 utable to the school construction credit determined

25 under section 45D may be carried back to a taxable
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1 year ending before the date of the enactment of sec2 tion 45D.’’

3 (c) ESTABLISHMENT OF SCHOOL INFRASTRUCTURE

4 IMPROVEMENT TRUST FUND.—

5 (1) IN GENERAL.—Subchapter A of chapter 98

6 of the Internal Revenue Code of 1986 is amended by

7 adding at the end the following new section:

8 ‘‘SEC. 9512. SCHOOL INFRASTRUCTURE IMPROVEMENT

9 TRUST FUND.

10 ‘‘(a) CREATION OF TRUST FUND.—There is estab11 lished in the Treasury of the United States a trust fund

12 to be known as the ‘School Infrastructure Improvement

13 Trust Fund’, consisting of such amounts as may be cred14 ited or paid to such Trust Fund as provided in this section

15 or section 9602(b).

16 ‘‘(b) TRANSFERS TO TRUST FUND.—

17 ‘‘(1) IN GENERAL.—There are hereby appro18 priated to the Trust Fund for any calendar year an

19 amount equal to the lesser of—

20 ‘‘(A) the revenue surplus determined under

21 paragraph (2) for the preceding calendar year,

22 or

23 ‘‘(B) $1,000,000,000.
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1 ‘‘(2) REVENUE SURPLUS.—The revenue surplus

2 determined under this paragraph for any calendar

3 year is an amount equal to the excess (if any) of—

4 ‘‘(A) the Secretary’s estimate of revenues

5 received in the Treasury of the United States

6 for the calendar year, over

7 ‘‘(B) the amount the Director of the Con8 gressional Budget Office estimated would be so

9 received in the report provided to the Commit10 tees on the Budget of the House and the Sen11 ate pursuant to section 202(f)(1) of the Con12 gressional Budget Act of 1974.

13 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

14 in the Trust Fund shall be transferred to the general fund

15 of the Treasury at such times as the Secretary determines

16 appropriate to offset any decrease in Federal revenues by

17 reason of credits allowed under section 38 which are at18 tributable to the school construction credit determined

19 under section 45D.’’

20 (2) CONFORMING AMENDMENT.—The table of

21 section for subchapter A of chapter 98 of such Code

22 is amended by adding at the end the following new

23 item:

‘‘Sec. 9512. School Infrastructure Improvement Trust Fund.

24 (d) CONFORMING AMENDMENT.—The table of sec25 tions for subpart D of part IV of subchapter A of chapter
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1 1 of the Internal Revenue Code of 1986 is amended by

2 adding at the end the following new item:

‘‘Sec. 45D. Credit for public elementary and secondary school

construction.’’

3 (e) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after

5 December 31, 1997.

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