II

106TH CONGRESS

1ST SESSION S. 224

To amend the Internal Revenue Code of 1986 to correct the treatment

of tax-exempt financing of professional sports facilities.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. MOYNIHAN 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 correct

the treatment of tax-exempt financing of professional

sports facilities.

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 ‘‘Stop Tax-Exempt

5 Arena Debt Issuance Act’’.

6 SEC. 2. TREATMENT OF TAX-EXEMPT FINANCING OF PRO7 FESSIONAL SPORTS FACILITIES.

8 (a) IN GENERAL.—Section 141 of the Internal Reve9 nue Code of 1986 (defining private activity bond and

10 qualified bond) is amended by redesignating subsection (e)
2

•S 224 IS

1 as subsection (f) and by inserting after subsection (d) the

2 following new subsection:

3 ‘‘(e) CERTAIN ISSUES USED FOR PROFESSIONAL

4 SPORTS FACILITIES TREATED AS PRIVATE ACTIVITY

5 BONDS.—

6 ‘‘(1) IN GENERAL.—For purposes of this title,

7 the term ‘private activity bond’ includes any bond

8 issued as part of an issue if the amount of the pro9 ceeds of the issue which are to be used (directly or

10 indirectly) to provide professional sports facilities ex11 ceeds the lesser of—

12 ‘‘(A) 5 percent of such proceeds, or

13 ‘‘(B) $5,000,000.

14 ‘‘(2) BOND NOT TREATED AS A QUALIFIED

15 BOND.—For purposes of this title, any bond de16 scribed in paragraph (1) shall not be a qualified

17 bond.

18 ‘‘(3) PROFESSIONAL SPORTS FACILITIES.—For

19 purposes of this subsection—

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

21 sports facilities’ means real property or related

22 improvements used for professional sports exhi23 bitions, games, or training, regardless if the ad24 mission of the public or press is allowed or

25 paid.
3

•S 224 IS

1 ‘‘(B) USE FOR PROFESSIONAL SPORTS.—

2 Any use of facilities which generates a direct or

3 indirect monetary benefit (other than reim4 bursement for out-of pocket expenses) for a

5 person who uses such facilities for professional

6 sports exhibitions, games, or training shall be

7 treated as a use described in subparagraph (A).

8 ‘‘(4) ANTI-ABUSE REGULATIONS.—The Sec9 retary shall prescribe such regulations as may be ap10 propriate to carry out the purposes of this sub11 section, including such regulations as may be appro12 priate to prevent avoidance of such purposes through

13 related persons, use of related facilities or multiuse

14 complexes, or otherwise.’’

15 (b) EFFECTIVE DATE.—

16 (1) IN GENERAL.—Except as provided in para17 graphs (2), (3), and (5), the amendments made by

18 this section shall apply to bonds issued on or after

19 the date of enactment of this Act.

20 (2) EXCEPTION FOR CONSTRUCTION, BINDING

21 AGREEMENTS, OR APPROVED PROJECTS.—The

22 amendments made by this section shall not apply to

23 bonds—

24 (A) the proceeds of which are used for—
4

•S 224 IS

1 (i) the construction or rehabilitation

2 of a facility—

3 (I) if such construction or reha4 bilitation began before June 14, 1996,

5 and was completed on or after such

6 date, or

7 (II) if a State or political subdivi8 sion thereof has entered into a bind9 ing contract before June 14, 1996,

10 that requires the incurrence of signifi11 cant expenditures for such construc12 tion or rehabilitation, and some of

13 such expenditures are incurred on or

14 after such date; or

15 (ii) the acquisition of a facility pursu16 ant to a binding contract entered into by

17 a State or political subdivision thereof be18 fore June 14, 1996, and

19 (B) which are the subject of an official ac20 tion taken by relevant government officials be21 fore June 14, 1996—

22 (i) approving the issuance of such

23 bonds, or
5

•S 224 IS

1 (ii) approving the submission of the

2 approval of such issuance to a voter ref3 erendum.

4 (3) EXCEPTION FOR FINAL BOND RESOLU5 TIONS.—The amendments made by this section shall

6 not apply to bonds the proceeds of which are used

7 for the construction or rehabilitation of a facility if

8 a State or political subdivision thereof has completed

9 all necessary governmental approvals for the

10 issuance of such bonds before June 14, 1996.

11 (4) SIGNIFICANT EXPENDITURES.—For pur12 poses of paragraph (2)(A)(i)(II), the term ‘‘signifi13 cant expenditures’’ means expenditures equal to or

14 exceeding 10 percent of the reasonably anticipated

15 cost of the construction or rehabilitation of the facil16 ity involved.

17 (5) EXCEPTION FOR CERTAIN CURRENT

18 REFUNDINGS.—

19 (A) IN GENERAL.—The amendments made

20 by this section shall not apply to any bond the

21 proceeds of which are used exclusively to refund

22 a qualified bond (or a bond which is a part of

23 a series of refundings of a qualified bond) if—
6

•S 224 IS

1 (i) the amount of the refunding bond

2 does not exceed the outstanding principal

3 amount of the refunded bond,

4 (ii) the average maturity date of the

5 issue of which the refunding bond is a part

6 is not later than the average maturity date

7 of the bonds to be refunded by such issue,

8 and

9 (iii) the net proceeds of the refunding

10 bond are used to redeem the refunded

11 bond not later than 90 days after the date

12 of the issuance of the refunding bond.

13 For purposes of clause (ii), average maturity

14 shall be determined in accordance with section

15 147(b)(2)(A) of the Internal Revenue Code of

16 1986.

17 (B) QUALIFIED BOND.—For purposes of

18 subparagraph (A), the term ‘‘qualified bond’’

19 means any tax-exempt bond to finance a profes20 sional sports facility (as defined in section

21 141(e)(3) of such Code, as added by subsection

22 (a)) issued before the date of enactment of this

23 Act.

Æ