I

106TH CONGRESS

1ST SESSION H. R. 1660

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

for the construction and renovation of public schools and to provide

tax incentives for corporations to participate in cooperative agreements

with public schools in distressed areas.

IN THE HOUSE OF REPRESENTATIVES

MAY 4, 1999

Mr. RANGEL (for himself, Mr. GEPHARDT, Mr. BONIOR, Mr. STARK, Mr.

MATSUI, Mr. COYNE, Mr. LEVIN, Mr. CARDIN, Mr. MCDERMOTT, Mr.

LEWIS of Georgia, Mr. NEAL of Massachusetts, Mr. MCNULTY, Mr. JEFFERSON, Mr. BECERRA, Mrs. THURMAN, Mr. ABERCROMBIE, Mr. ACKERMAN, Mr. ALLEN, Mr. BALDACCI, Mr. BARRETT of Wisconsin, Ms. BERKLEY, Mr. BLAGOJEVICH, Mr. BLUMENAUER, Mr. BORSKI, Ms. BROWN of

Florida, Mr. BROWN of California, Mr. CAPUANO, Ms. CARSON, Mrs.

CHRISTENSEN, Mrs. CLAYTON, Mr. CONYERS, Mr. CROWLEY, Mr. DAVIS

of Virginia, Ms. DEGETTE, Mr. DELAHUNT, Ms. DELAURO, Mr.

DEUTSCH, Mr. DINGELL, Mr. DIXON, Mr. ETHERIDGE, Mr. FARR of

California, Mr. FATTAH, Mr. FILNER, Mr. FRANK of Massachusetts, Mr.

FROST, Mr. GEJDENSON, Mr. GORDON, Mr. HINCHEY, Mr. HINOJOSA,

Ms. NORTON, Mr. INSLEE, Mr. KENNEDY of Rhode Island, Ms. KILPATRICK, Mr. KUCINICH, Mr. LAFALCE, Mr. LAMPSON, Mr.

LATOURETTE, Mrs. LOWEY, Mrs. MALONEY of New York, Mr. MALONEY

of Connecticut, Mr. MARTINEZ, Mr. MASCARA, Mr. MCGOVERN, Ms.

MILLENDER-MCDONALD, Mr. MOAKLEY, Mr. OLVER, Mr. PAYNE, Ms.

PELOSI, Mr. POMEROY, Mr. QUINN, Ms. RIVERS, Mr. ROTHMAN, Mr.

RUSH, Ms. SANCHEZ, Mr. SANDERS, Mr. SANDLIN, Mr. SAWYER, Ms.

SCHAKOWSKY, Mr. SHOWS, Ms. SLAUGHTER, Mr. STRICKLAND, Mr.

TIERNEY, Mrs. JONES of Ohio, Mr. WAXMAN, Mr. WEINER, Mr.

WEXLER, Mr. WEYGAND, Ms. WOOLSEY, 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 the Workforce, 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
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A BILL

To amend the Internal Revenue Code of 1986 to expand

the incentives for the construction and renovation of

public schools and to provide tax incentives for corporations to participate in cooperative agreements with public

schools in distressed areas.

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 ‘‘Public School Mod5 ernization Act of 1999’’.

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

7 (a) IN GENERAL.—Chapter 1 of the Internal Rev8 enue Code of 1986 is amended by adding at the end the

9 following new subchapter:

10 ‘‘Subchapter X—Public School Modernization

11 Provisions

‘‘Part I. Credit to holders of qualified public school modernization

bonds.

‘‘Part II. Qualified school construction bonds.

‘‘Part III. Incentives for education zones.

12 ‘‘PART I—CREDIT TO HOLDERS OF QUALIFIED

13 PUBLIC SCHOOL MODERNIZATION BONDS

‘‘Sec. 1400F. Credit to holders of qualified public school modernization bonds.
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1 ‘‘SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED PUBLIC

2 SCHOOL MODERNIZATION BONDS.

3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax4 payer who holds a qualified public school modernization

5 bond on a credit allowance date of such bond which occurs

6 during the taxable year, there shall be allowed as a credit

7 against the tax imposed by this chapter for such taxable

8 year an amount equal to the sum of the credits determined

9 under subsection (b) with respect to credit allowance dates

10 during such year on which the taxpayer holds such bond.

11 ‘‘(b) AMOUNT OF CREDIT.—

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

13 determined under this subsection with respect to any

14 credit allowance date for a qualified public school

15 modernization bond is 25 percent of the annual

16 credit determined with respect to such bond.

17 ‘‘(2) ANNUAL CREDIT.—The annual credit de18 termined with respect to any qualified public school

19 modernization bond is the product of—

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

21 by

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

23 bond.

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

25 of paragraph (1), the applicable credit rate with re26 spect to an issue is the rate equal to an average
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1 market yield (as of the day before the date of

2 issuance of the issue) on outstanding long-term cor3 porate debt obligations (determined under regula4 tions prescribed by the Secretary).

5 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE6 DEMPTION.—In the case of a bond which is issued

7 during the 3-month period ending on a credit allow8 ance date, the amount of the credit determined

9 under this subsection with respect to such credit al10 lowance date shall be a ratable portion of the credit

11 otherwise determined based on the portion of the 3-

12 month period during which the bond is outstanding.

13 A similar rule shall apply when the bond is re14 deemed.

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

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

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

18 the excess of—

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

20 (as defined in section 26(b)) plus the tax im21 posed by section 55, over

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

23 under part IV of subchapter A (other than sub24 part C thereof, relating to refundable credits).
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1 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the

2 credit allowable under subsection (a) exceeds the

3 limitation imposed by paragraph (1) for such taxable

4 year, such excess shall be carried to the succeeding

5 taxable year and added to the credit allowable under

6 subsection (a) for such taxable year.

7 ‘‘(d) QUALIFIED PUBLIC SCHOOL MODERNIZATION

8 BOND; CREDIT ALLOWANCE DATE.—For purposes of this

9 section—

10 ‘‘(1) QUALIFIED PUBLIC SCHOOL MODERNIZA11 TION BOND.—The term ‘qualified public school mod12 ernization bond’ means—

13 ‘‘(A) a qualified zone academy bond, and

14 ‘‘(B) a qualified school construction bond.

15 ‘‘(2) CREDIT ALLOWANCE DATE.—The term

16 ‘credit allowance date’ means—

17 ‘‘(A) March 15,

18 ‘‘(B) June 15,

19 ‘‘(C) September 15, and

20 ‘‘(D) December 15.

21 Such term includes the last day on which the bond

22 is outstanding.

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

24 subchapter—
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1 ‘‘(1) LOCAL EDUCATIONAL AGENCY.—The term

2 ‘local educational agency’ has the meaning given to

3 such term by section 14101 of the Elementary and

4 Secondary Education Act of 1965. Such term in5 cludes the local educational agency that serves the

6 District of Columbia but does not include any other

7 State agency.

8 ‘‘(2) BOND.—The term ‘bond’ includes any ob9 ligation.

10 ‘‘(3) STATE.—The term ‘State’ includes the

11 District of Columbia and any possession of the

12 United States.

13 ‘‘(4) PUBLIC SCHOOL FACILITY.—The term

14 ‘public school facility’ shall not include—

15 ‘‘(A) any stadium or other facility pri16 marily used for athletic contests or exhibitions

17 or other events for which admission is charged

18 to the general public, or

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

20 State or local government or any agency or in21 strumentality of a State or local government.

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

23 income includes the amount of the credit allowed to the

24 taxpayer under this section (determined without regard to
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1 subsection (c)) and the amount so included shall be treat2 ed as interest income.

3 ‘‘(g) BONDS HELD BY REGULATED INVESTMENT

4 COMPANIES.—If any qualified public school modernization

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

6 determined under subsection (a) shall be allowed to share7 holders of such company under procedures prescribed by

8 the Secretary.

9 ‘‘(h) CREDITS MAY BE STRIPPED.—Under regula10 tions prescribed by the Secretary—

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

12 (including at issuance) of the ownership of a quali13 fied public school modernization bond and the enti14 tlement to the credit under this section with respect

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

16 credit under this section shall be allowed to the per17 son who on the credit allowance date holds the in18 strument evidencing the entitlement to the credit

19 and not to the holder of the bond.

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

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

22 of section 1286 shall apply to the qualified public

23 school modernization bond as if it were a stripped

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

25 were a stripped coupon.
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1 ‘‘(i) TREATMENT FOR ESTIMATED TAX PURPOSES.—

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

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

4 a qualified public school modernization bonds on a credit

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

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

7 ‘‘(j) CREDIT MAY BE TRANSFERRED.—Nothing in

8 any law or rule of law shall be construed to limit the trans9 ferability of the credit allowed by this section through sale

10 and repurchase agreements.

11 ‘‘(k) REPORTING.—Issuers of qualified public school

12 modernization bonds shall submit reports similar to the

13 reports required under section 149(e).

14 ‘‘(l) TERMINATION.—This section shall not apply to

15 any bond issued after September 30, 2004.

16 ‘‘PART II—QUALIFIED SCHOOL CONSTRUCTION

17 BONDS

‘‘Sec. 1400G. Qualified school construction bonds.

18 ‘‘SEC. 1400G. QUALIFIED SCHOOL CONSTRUCTION BONDS.

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

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

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

22 issue if—

23 ‘‘(1) 95 percent or more of the proceeds of such

24 issue are to be used for the construction, rehabilita-
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1 tion, or repair of a public school facility or for the

2 acquisition of land on which such a facility is to be

3 constructed with part of the proceeds of such issue,

4 ‘‘(2) the bond is issued by a State or local gov5 ernment within the jurisdiction of which such school

6 is located,

7 ‘‘(3) the issuer designates such bond for pur8 poses of this section, and

9 ‘‘(4) the term of each bond which is part of

10 such issue does not exceed 15 years.

11 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES12 IGNATED.—The maximum aggregate face amount of

13 bonds issued during any calendar year which may be des14 ignated under subsection (a) by any issuer shall not exceed

15 the sum of—

16 ‘‘(1) the limitation amount allocated under sub17 section (d) for such calendar year to such issuer,

18 and

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

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

21 on behalf of such an agency, the limitation amount

22 allocated under subsection (e) for such calendar year

23 to such agency.

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

25 DESIGNATED.—There is a national qualified school con-
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1 struction bond limitation for each calendar year. Such lim2 itation is—

3 ‘‘(1) $11,000,000,000 for 2000,

4 ‘‘(2) $11,000,000,000 for 2001, and

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

6 after 2001.

7 ‘‘(d) HALF OF LIMITATION ALLOCATED AMONG

8 STATES.—

9 ‘‘(1) IN GENERAL.—One-half of the limitation

10 applicable under subsection (c) for any calendar year

11 shall be allocated among the States under paragraph

12 (2) by the Secretary. The limitation amount allo13 cated to a State under the preceding sentence shall

14 be allocated by the State to issuers within such

15 State and such allocations may be made only if there

16 is an approved State application.

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

18 be allocated under paragraph (1) for any calendar

19 year shall be allocated among the States in propor20 tion to the respective amounts each such State re21 ceived for Basic Grants under subpart 2 of part A

22 of title I of the Elementary and Secondary Edu23 cation Act of 1965 (20 U.S.C. 6331 et seq.) for the

24 most recent fiscal year ending before such calendar

25 year. For purposes of the preceding sentence, Basic
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1 Grants attributable to large local educational agen2 cies (as defined in subsection (e)) shall be dis3 regarded.

4 ‘‘(3) MINIMUM ALLOCATIONS TO STATES.—

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

6 adjust the allocations under this subsection for

7 any calendar year for each State to the extent

8 necessary to ensure that the sum of—

9 ‘‘(i) the amount allocated to such

10 State under this subsection for such year,

11 and

12 ‘‘(ii) the aggregate amounts allocated

13 under subsection (e) to large local edu14 cational agencies in such State for such

15 year,

16 is not less than an amount equal to such

17 State’s minimum percentage of the amount to

18 be allocated under paragraph (1) for the cal19 endar year.

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

21 minimum percentage for any calendar year is

22 the minimum percentage described in section

23 1124(d) of the Elementary and Secondary Edu24 cation Act of 1965 (20 U.S.C. 6334(d)) for
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1 such State for the most recent fiscal year end2 ing before such calendar year.

3 ‘‘(4) ALLOCATIONS TO CERTAIN POSSES4 SIONS.—The amount to be allocated under para5 graph (1) to any possession of the United States

6 other than Puerto Rico shall be the amount which

7 would have been allocated if all allocations under

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

9 populations of individuals below the poverty line (as

10 defined by the Office of Management and Budget).

11 In making other allocations, the amount to be allo12 cated under paragraph (1) shall be reduced by the

13 aggregate amount allocated under this paragraph to

14 possessions of the United States.

15 ‘‘(5) ALLOCATIONS FOR INDIAN SCHOOLS.—In

16 addition to the amounts otherwise allocated under

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

18 2000, and $200,000,000 for calendar year 2001,

19 shall be allocated by the Secretary of the Interior for

20 purposes of the construction, rehabilitation, and re21 pair of schools funded by the Bureau of Indian Af22 fairs. In the case of amounts allocated under the

23 preceding sentence, Indian tribal governments (as

24 defined in section 7871) shall be treated as qualified

25 issuers for purposes of this subchapter.
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1 ‘‘(6) APPROVED STATE APPLICATION.—For

2 purposes of paragraph (1), the term ‘approved State

3 application’ means an application which is approved

4 by the Secretary of Education and which includes—

5 ‘‘(A) the results of a recent publicly-avail6 able survey (undertaken by the State with the

7 involvement of local education officials, mem8 bers of the public, and experts in school con9 struction and management) of such State’s

10 needs for public school facilities, including de11 scriptions of—

12 ‘‘(i) health and safety problems at

13 such facilities,

14 ‘‘(ii) the capacity of public schools in

15 the State to house projected enrollments,

16 and

17 ‘‘(iii) the extent to which the public

18 schools in the State offer the physical in19 frastructure needed to provide a high-qual20 ity education to all students, and

21 ‘‘(B) a description of how the State will al22 locate to local educational agencies, or other23 wise use, its allocation under this subsection to

24 address the needs identified under subpara-
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1 graph (A), including a description of how it

2 will—

3 ‘‘(i) give highest priority to localities

4 with the greatest needs, as demonstrated

5 by inadequate school facilities coupled with

6 a low level of resources to meet those

7 needs,

8 ‘‘(ii) use its allocation under this sub9 section to assist localities that lack the fis10 cal capacity to issue bonds on their own,

11 and

12 ‘‘(iii) ensure that its allocation under

13 this subsection is used only to supplement,

14 and not supplant, the amount of school

15 construction, rehabilitation, and repair in

16 the State that would have occurred in the

17 absence of such allocation.

18 Any allocation under paragraph (1) by a State shall

19 be binding if such State reasonably determined that

20 the allocation was in accordance with the plan ap21 proved under this paragraph.

22 ‘‘(e) HALF OF LIMITATION ALLOCATED AMONG

23 LARGEST SCHOOL DISTRICTS.—

24 ‘‘(1) IN GENERAL.—One-half of the limitation

25 applicable under subsection (c) for any calendar year
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1 shall be allocated under paragraph (2) by the Sec2 retary among local educational agencies which are

3 large local educational agencies for such year. No

4 qualified school construction bond may be issued by

5 reason of an allocation to a large local educational

6 agency under the preceding sentence unless such

7 agency has an approved local application.

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

9 be allocated under paragraph (1) for any calendar

10 year shall be allocated among large local educational

11 agencies in proportion to the respective amounts

12 each such agency received for Basic Grants under

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

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

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

16 such calendar year.

17 ‘‘(3) ALLOCATION OF UNUSED LIMITATION TO

18 STATE.—The amount allocated under this subsection

19 to a large local educational agency for any calendar

20 year may be reallocated by such agency to the State

21 in which such agency is located for such calendar

22 year. Any amount reallocated to a State under the

23 preceding sentence may be allocated as provided in

24 subsection (d)(1).
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1 ‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.—

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

3 educational agency’ means, with respect to a cal4 endar year, any local educational agency if such

5 agency is—

6 ‘‘(A) among the 100 local educational

7 agencies with the largest numbers of children

8 aged 5 through 17 from families living below

9 the poverty level, as determined by the Sec10 retary using the most recent data available

11 from the Department of Commerce that are

12 satisfactory to the Secretary, or

13 ‘‘(B) 1 of not more than 25 local edu14 cational agencies (other than those described in

15 subparagraph (A)) that the Secretary of Edu16 cation determines (based on the most recent

17 data available satisfactory to the Secretary) are

18 in particular need of assistance, based on a low

19 level of resources for school construction, a high

20 level of enrollment growth, or such other factors

21 as the Secretary deems appropriate.

22 ‘‘(5) APPROVED LOCAL APPLICATION.—For

23 purposes of paragraph (1), the term ‘approved local

24 application’ means an application which is approved

25 by the Secretary of Education and which includes—
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1 ‘‘(A) the results of a recent publicly-avail2 able survey (undertaken by the local educational

3 agency or the State with the involvement of

4 school officials, members of the public, and ex5 perts in school construction and management)

6 of such agency’s needs for public school facili7 ties, including descriptions of—

8 ‘‘(i) the overall condition of the local

9 educational agency’s school facilities, in10 cluding health and safety problems,

11 ‘‘(ii) the capacity of the agency’s

12 schools to house projected enrollments, and

13 ‘‘(iii) the extent to which the agency’s

14 schools offer the physical infrastructure

15 needed to provide a high-quality education

16 to all students,

17 ‘‘(B) a description of how the local edu18 cational agency will use its allocation under this

19 subsection to address the needs identified under

20 subparagraph (A), and

21 ‘‘(C) a description of how the local edu22 cational agency will ensure that its allocation

23 under this subsection is used only to supple24 ment, and not supplant, the amount of school

25 construction, rehabilitation, or repair in the lo-
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1 cality that would have occurred in the absence

2 of such allocation.

3 A rule similar to the rule of the last sentence of sub4 section (d)(6) shall apply for purposes of this para5 graph.

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

7 any calendar year—

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

9 to any State, exceeds

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

11 year which are designated under subsection (a) pur12 suant to such allocation,

13 the limitation amount under such subsection for such

14 State for the following calendar year shall be increased

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

16 to the amounts allocated under subsection (d)(5) or (e).

17 ‘‘(g) SPECIAL RULES RELATING TO ARBITRAGE.—

18 ‘‘(1) IN GENERAL.—A bond shall not be treated

19 as failing to meet the requirement of subsection

20 (a)(1) solely by reason of the fact that the proceeds

21 of the issue of which such bond is a part are in22 vested for a temporary period (but not more than 36

23 months) until such proceeds are needed for the pur24 pose for which such issue was issued.
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1 ‘‘(2) BINDING COMMITMENT REQUIREMENT.—

2 Paragraph (1) shall apply to an issue only if, as of

3 the date of issuance, there is a reasonable expecta4 tion that—

5 ‘‘(A) at least 10 percent of the proceeds of

6 the issue will be spent within the 6-month pe7 riod beginning on such date for the purpose for

8 which such issue was issued, and

9 ‘‘(B) the remaining proceeds of the issue

10 will be spent with due diligence for such pur11 pose.

12 ‘‘(3) EARNINGS ON PROCEEDS.—Any earnings

13 on proceeds during the temporary period shall be

14 treated as proceeds of the issue for purposes of ap15 plying subsection (a)(1) and paragraph (1) of this

16 subsection.

17 ‘‘PART III—INCENTIVES FOR EDUCATION ZONES

‘‘Sec. 1400H. Qualified zone academy bonds.

‘‘Sec. 1400I. Corporate contributions to specialized training centers.

18 ‘‘SEC. 1400H. QUALIFIED ZONE ACADEMY BONDS.

19 ‘‘(a) QUALIFIED ZONE ACADEMY BOND.—For pur20 poses of this subchapter—

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

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

23 issue if—
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1 ‘‘(A) 95 percent or more of the proceeds of

2 such issue are to be used for a qualified pur3 pose with respect to a qualified zone academy

4 established by a local educational agency,

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

6 government within the jurisdiction of which

7 such academy is located,

8 ‘‘(C) the issuer—

9 ‘‘(i) designates such bond for purposes

10 of this section,

11 ‘‘(ii) certifies that it has written as12 surances that the private business con13 tribution requirement of paragraph (2) will

14 be met with respect to such academy, and

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

16 approval of the local educational agency

17 for such bond issuance, and

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

19 of such issue does not exceed 15 years.

20 Rules similar to the rules of section 1400G(g) shall

21 apply for purposes of paragraph (1).

22 ‘‘(2) PRIVATE BUSINESS CONTRIBUTION RE23 QUIREMENT.—

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1), the private business contribution re-
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1 quirement of this paragraph is met with respect

2 to any issue if the local educational agency that

3 established the qualified zone academy has writ4 ten commitments from private entities to make

5 qualified contributions having a present value

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

7 less than 10 percent of the proceeds of the

8 issue.

9 ‘‘(B) QUALIFIED CONTRIBUTIONS.—For

10 purposes of subparagraph (A), the term ‘quali11 fied contribution’ means any contribution (of a

12 type and quality acceptable to the local edu13 cational agency) of—

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

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

16 technology and vocational equipment),

17 ‘‘(ii) technical assistance in developing

18 curriculum or in training teachers in order

19 to promote appropriate market driven tech20 nology in the classroom,

21 ‘‘(iii) services of employees as volun22 teer mentors,

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

24 educational opportunities outside the acad25 emy for students, or
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1 ‘‘(v) any other property or service

2 specified by the local educational agency.

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

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

5 academic program within a public school) which is

6 established by and operated under the supervision of

7 a local educational agency to provide education or

8 training below the postsecondary level if—

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

10 case may be) is designed in cooperation with

11 business to enhance the academic curriculum,

12 increase graduation and employment rates, and

13 better prepare students for the rigors of college

14 and the increasingly complex workforce,

15 ‘‘(B) students in such public school or pro16 gram (as the case may be) will be subject to the

17 same academic standards and assessments as

18 other students educated by the local educational

19 agency,

20 ‘‘(C) the comprehensive education plan of

21 such public school or program is approved by

22 the local educational agency, and

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

24 empowerment zone or enterprise community

25 (including any such zone or community des-
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1 ignated after the date of the enactment of this

2 section), or

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

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

5 least 35 percent of the students attending such

6 school or participating in such program (as the

7 case may be) will be eligible for free or reduced8 cost lunches under the school lunch program es9 tablished under the National School Lunch Act.

10 ‘‘(4) QUALIFIED PURPOSE.—The term ‘quali11 fied purpose’ means, with respect to any qualified

12 zone academy—

13 ‘‘(A) constructing, rehabilitating, or repair14 ing the public school facility in which the acad15 emy is established,

16 ‘‘(B) acquiring the land on which such fa17 cility is to be constructed with part of the pro18 ceeds of such issue,

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

20 academy,

21 ‘‘(D) developing course materials for edu22 cation to be provided at such academy, and

23 ‘‘(E) training teachers and other school

24 personnel in such academy.
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1 ‘‘(b) LIMITATIONS ON AMOUNT OF BONDS DES2 IGNATED.—

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

4 academy bond limitation for each calendar year.

5 Such limitation is—

6 ‘‘(A) $400,000,000 for 1998,

7 ‘‘(B) $400,000,000 for 1999,

8 ‘‘(C) $1,000,000,000 for 2000,

9 ‘‘(D) $1,400,000,000 for 2001, and

10 ‘‘(E) except as provided in paragraph (3),

11 zero after 2001.

12 ‘‘(2) ALLOCATION OF LIMITATION.—

13 ‘‘(A) ALLOCATION AMONG STATES.—

14 ‘‘(i) 1998 and 1999 LIMITATIONS.—

15 The national zone academy bond limita16 tions for calendar years 1998 and 1999

17 shall be allocated by the Secretary among

18 the States on the basis of their respective

19 populations of individuals below the pov20 erty line (as defined by the Office of Man21 agement and Budget).

22 ‘‘(ii) LIMITATION AFTER 1999.—The

23 national zone academy bond limitation for

24 any calendar year after 1999 shall be allo25 cated by the Secretary among the States in
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1 the manner prescribed by section

2 1400G(d); except that in making the allo3 cation under this clause, the Secretary

4 shall take into account—

5 ‘‘(I) Basic Grants attributable to

6 large local educational agencies (as

7 defined in section 1400G(e)).

8 ‘‘(II) the national zone academy

9 bond limitation.

10 ‘‘(B) ALLOCATION TO LOCAL EDU11 CATIONAL AGENCIES.—The limitation amount

12 allocated to a State under subparagraph (A)

13 shall be allocated by the State education agency

14 to qualified zone academies within such State.

15 ‘‘(C) DESIGNATION SUBJECT TO LIMITA16 TION AMOUNT.—The maximum aggregate face

17 amount of bonds issued during any calendar

18 year which may be designated under subsection

19 (a) with respect to any qualified zone academy

20 shall not exceed the limitation amount allocated

21 to such academy under subparagraph (B) for

22 such calendar year.

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

24 for any calendar year—
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1 ‘‘(A) the limitation amount under this sub2 section for any State, exceeds

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

4 such year which are designated under sub5 section (a) (or the corresponding provisions of

6 prior law) with respect to qualified zone acad7 emies within such State,

8 the limitation amount under this subsection for such

9 State for the following calendar year shall be in10 creased by the amount of such excess.

11 ‘‘SEC. 1400I. CORPORATE CONTRIBUTIONS TO SPECIALIZED

12 TRAINING CENTERS.

13 ‘‘(a) GENERAL RULE.—For purposes of section 38,

14 in the case of a corporation, the specialized training center

15 credit determined under this section is an amount equal

16 to 50 percent of the amount of the designated qualified

17 contributions made by the taxpayer during the taxable

18 year to a specialized training center.

19 ‘‘(b) DEFINITIONS.—For purposes of this section—

20 ‘‘(1) SPECIALIZED TRAINING CENTER.—The

21 term ‘specialized training center’ means any quali22 fied zone academy (as defined in section

23 1400H(a)(3))—

24 ‘‘(A) which is located in an empowerment

25 zone or enterprise community, or
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1 ‘‘(B) which is located in proximity to such

2 a zone or community and a significant number

3 of the students attending such academy have

4 their principal place of abode in such zone or

5 community.

6 ‘‘(2) DESIGNATED QUALIFIED CONTRIBU7 TIONS.—The term ‘designated qualified contribution’

8 means any contribution—

9 ‘‘(A) which is made pursuant to an agree10 ment under which the taxpayer participates in

11 the design of the academic program of the spe12 cialized training center, and

13 ‘‘(B) which is designated under subsection

14 (c).

15 ‘‘(c) DESIGNATION OF CONTRIBUTIONS.—

16 ‘‘(1) LIMITATION ON AMOUNT DESIGNATED.—

17 The maximum amount of contributions made which

18 may be designated under this subsection with re19 spect to all specialized training centers located an

20 empowerment zone or enterprise community shall

21 not exceed—

22 ‘‘(A) $8,000,000 in the case of an em23 powerment zone, and

24 ‘‘(B) $2,000,000 in the case of an enter25 prise community.
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1 ‘‘(2) DESIGNATIONS.—Designations under this

2 subsection shall be made (in consultation with the

3 local educational agency) by the local government

4 agency responsible for implementing the strategic

5 plan described in section 1391(f)(2) for the em6 powerment zone or enterprise community.

7 ‘‘(d) VALUE OF CONTRIBUTIONS.—The amount of

8 any designated qualified contribution which may be taken

9 into account under this section shall be—

10 ‘‘(1) the amount of such contribution which

11 would be allowed as a deduction under section 170

12 without regard to section 280C(d), or

13 ‘‘(2) in the case of a contribution of services

14 performed on the premises of a specialized training

15 center by an employee of the taxpayer, the amount

16 of wages (as defined in section 3306(b) but without

17 regard to any dollar limitation contained in such sec18 tion) paid by the taxpayer for such services.’’

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

20 such Code (relating to returns regarding payments of in21 terest) is amended by adding at the end the following new

22 paragraph:

23 ‘‘(8) REPORTING OF CREDIT ON QUALIFIED

24 PUBLIC SCHOOL MODERNIZATION BONDS.—
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1 ‘‘(A) IN GENERAL.—For purposes of sub2 section (a), the term ‘interest’ includes amounts

3 includible in gross income under section

4 1400F(f) and such amounts shall be treated as

5 paid on the credit allowance date (as defined in

6 section 1400F(d)(2)).

7 ‘‘(B) REPORTING TO CORPORATIONS,

8 ETC.—Except as otherwise provided in regula9 tions, in the case of any interest described in

10 subparagraph (A) of this paragraph, subsection

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

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

13 and (L)(i).

14 ‘‘(C) REGULATORY AUTHORITY.—The Sec15 retary may prescribe such regulations as are

16 necessary or appropriate to carry out the pur17 poses of this paragraph, including regulations

18 which require more frequent or more detailed

19 reporting.’’

20 (c) CONFORMING AMENDMENTS RELATED TO CRED21 IT FOR CORPORATE CONTRIBUTIONS TO SPECIALIZED

22 TRAINING CENTERS.—

23 (1) DENIAL OF DOUBLE BENEFIT.—Section

24 280C of such Code is amended by adding at the end

25 the following new subsection:
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1 ‘‘(d) CREDIT FOR CORPORATE CONTRIBUTIONS TO

2 SPECIALIZED TRAINING CENTERS.—No deduction shall

3 be allowed for that portion of the designated qualified con4 tributions (as defined in section 1400I(b)) made during

5 the taxable year which is equal to the credit determined

6 for the taxable year under section 1400I(a). Paragraph

7 (3) of subsection (b) shall apply for purposes of this sub8 section.’’

9 (2) CREDIT TO BE PART OF GENERAL BUSI10 NESS CREDIT.—

11 (A) Section 38(b) of such Code is

12 amended—

13 (i) by striking ‘‘plus’’ at the end of

14 paragraph (11),

15 (ii) by striking the period at the end

16 of paragraph (12) and inserting ‘‘, plus’’,

17 and

18 (iii) by adding at the end the fol19 lowing new paragraph:

20 ‘‘(13) in the case of a corporation, the special21 ized training center credit determined under section

22 1400I(a).’’

23 (B) Subsection (d) of section 39 of such

24 Code (relating to carryback and carryforward of
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1 unused credits) is amended by adding at the

2 end the following new paragraph:

3 ‘‘(9) NO CARRYBACK OF SECTION 1400I CREDIT

4 BEFORE JANUARY 1, 2000.—No portion of the un5 used business credit for any taxable year which is

6 attributable to the credit determined under section

7 1400I may be carried back to a taxable year begin8 ning before January 1, 2000.’’.

9 (d) OTHER CONFORMING AMENDMENTS.—

10 (1) Subchapter U of chapter 1 of such Code is

11 amended by striking part IV, by redesignating part

12 V as part IV, and by redesignating section 1397F

13 as section 1397E.

14 (2) The table of subchapters for chapter 1 of

15 such Code is amended by adding at the end the fol16 lowing new item:

‘‘Subchapter X. Public school modernization provisions.’’

17 (3) The table of parts of subchapter U of chap18 ter 1 of such Code is amended by striking the last

19 2 items and inserting the following item:

‘‘Part IV. Regulations.’’

20 (e) EFFECTIVE DATES.—

21 (1) IN GENERAL.—Except as otherwise pro22 vided in this subsection, the amendments made by

23 this section shall apply to obligations issued after

24 December 31, 1999.
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1 (2) CREDIT FOR CORPORATE CONTRIBUTIONS

2 TO SPECIALIZED TRAINING CENTERS.—Section

3 1400I of the Internal Revenue Code of 1986 (as

4 added by this section) shall apply to taxable years

5 beginning after December 31, 1999.

6 (3) REPEAL OF RESTRICTION ON ZONE ACAD7 EMY BOND HOLDERS.—In the case of bonds to

8 which section 1397E of the Internal Revenue Code

9 of 1986 (as in effect before the date of the enact10 ment of this Act) applies, the limitation of such sec11 tion to eligible taxpayers (as defined in subsection

12 (d)(6) of such section) shall not apply after the date

13 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 Public School Modernization Act of 1999.

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 is designed to provide

19 trained workers for projects for the construction

20 or reconstruction of public school facilities re21 ceiving funding assistance under an applicable

22 program.

23 ‘‘(C) The program is designed to ensure

24 that skilled workers (residing in the area to be

25 served by the school facilities) will be available

26 for the 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