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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2580 Reported in Senate (RS)]

                                                       Calendar No. 947
106th CONGRESS
  2d Session
                                S. 2580

                          [Report No. 106-497]

    To provide for the issuance of bonds to provide funding for the 
    construction of schools of the Bureau of Indian Affairs of the 
          Department of the Interior, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 17, 2000

 Mr. Johnson (for himself, Mr. Bingaman, Mr. Daschle, Mr. Inouye, Mr. 
Cochran, Mr. Campbell, Mr. Baucus, Mr. Reid, and Mr. Akaka) introduced 
the following bill; which was read twice and referred to the Committee 
                           on Indian Affairs

            October 11 (legislative day, September 22), 2000

              Reported by Mr. Campbell, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL

 
    To provide for the issuance of bonds to provide funding for the 
    construction of schools of the Bureau of Indian Affairs of the 
          Department of the Interior, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Indian School Construction 
Act''.</DELETED>

<DELETED>SEC. 2. DEFINITIONS.</DELETED>

<DELETED>    In this Act:</DELETED>
        <DELETED>    (1) Bureau.--The term ``Bureau'' means the Bureau 
        of Indian Affairs of the Department of the Interior.</DELETED>
        <DELETED>    (2) Indian.--The term ``Indian'' means any 
        individual who is a member of a tribe.</DELETED>
        <DELETED>    (3) Secretary.--The term ``Secretary'' means the 
        Secretary of the Interior.</DELETED>
        <DELETED>    (4) Tribal school.--The term ``tribal school'' 
        means an elementary school, secondary school, or dormitory that 
        is operated by a tribal organization for the education of 
        Indian children and that receives financial assistance for its 
        operation under a contract, grant, or agreement with the Bureau 
        under section 102, 103(a), or 208 of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450f, 
        450h(a), and 458d).</DELETED>
        <DELETED>    (5) Tribe.--The term ``tribe'' means any Indian 
        tribe, band, nation, or other organized group or community, 
        including a Native village, Regional Corporation, or Village 
        Corporation (as defined in or established pursuant to the 
        Alaska Native Claims Settlement Act), that is recognized as 
        eligible for the special programs and services provided by the 
        United States to Indians because of their status as 
        Indians.</DELETED>

<DELETED>SEC. 3. ISSUANCE OF BONDS.</DELETED>

<DELETED>    (a) In General.--The Secretary shall establish a pilot 
program under which eligible tribes have the authority to issue tribal 
school modernization bonds to provide funding for the improvement, 
repair, and new construction of tribal schools.</DELETED>
<DELETED>    (b) Eligibility.--</DELETED>
        <DELETED>    (1) In general.--To be eligible to issue bonds 
        under the program under subsection (a), a tribe shall prepare 
        and submit to the Secretary a plan of construction that meets 
        the requirements of paragraph (2).</DELETED>
        <DELETED>    (2) Plan of construction.--A plan of construction 
        meets the requirements of this paragraph if such plan--
        </DELETED>
                <DELETED>    (A) contains a description of the 
                improvements, repairs, or new construction to be 
                undertaken with funding provided under the 
                bond;</DELETED>
                <DELETED>    (B) demonstrates that a comprehensive 
                survey has been undertaken concerning the construction 
                or renovation needs of the tribal school 
                involved;</DELETED>
                <DELETED>    (C) contains assurances that funding under 
                the bond will be used only for the activities described 
                in the plan; and</DELETED>
                <DELETED>    (D) contains any other reasonable and 
                related information determined appropriate by the 
                Secretary.</DELETED>
        <DELETED>    (3) Priority.--In determining whether a tribe is 
        eligible to participate in the program under this section, the 
        Secretary shall give priority to tribes that, as demonstrated 
        by the relevant plans of construction, will fund projects 
        described in the Replacement School Construction priority list 
        of the Bureau of Indian Affairs, as maintained under the Indian 
        Self-Determination and Education Assistance Act.</DELETED>
        <DELETED>    (4) Approval.--Except as provided in paragraph 
        (3), the Secretary shall approve the issuance of qualified 
        tribal school modernization bonds by tribes with approved plans 
        of construction on the basis of the order in which such plans 
        were received by the Secretary. Such approval shall not be 
        unreasonably withheld.</DELETED>
<DELETED>    (c) Permissible Activities.--In addition to the use of 
funds permitted under subsection (a), a tribe may use amounts received 
through the issuance of a bond to--</DELETED>
        <DELETED>    (1) enter into contracts with architects, 
        engineers, and construction firms in order to determine the 
        needs of the tribal school and for the design and engineering 
        of the school;</DELETED>
        <DELETED>    (2) enter into contracts with financial advisors, 
        underwriters, attorneys, trustees, and other professionals who 
        would be able to provide assistance to the tribe in issuing 
        bonds; and</DELETED>
        <DELETED>    (3) carry out other activities determined 
        appropriate by the Secretary.</DELETED>
<DELETED>    (d) Bond Trustee.--</DELETED>
        <DELETED>    (1) In general.--Notwithstanding any other 
        provision of law, any tribal school construction bond issued by 
        a tribe under this section shall be subject to a trust 
        agreement between the tribe and a trustee.</DELETED>
        <DELETED>    (2) Trustee.--Any bank or trust company that meets 
        requirements established by the Secretary by regulation may be 
        designated as a trustee under paragraph (1).</DELETED>
        <DELETED>    (3) Content of trust agreement.--A trust agreement 
        entered into by a tribe under this subsection shall specify 
        that the trustee, with respect to bonds issued under this 
        section shall--</DELETED>
                <DELETED>    (A) act as a repository for the proceeds 
                of the bond;</DELETED>
                <DELETED>    (B) make payments to 
                bondholders;</DELETED>
                <DELETED>    (C) from any amounts in excess of the 
                amounts necessary to make payments to bondholders, in 
                accordance with the requirements of paragraph (4), make 
                direct payments to contractors with the governing body 
                of the tribe for facility improvement, repair, or new 
                construction pursuant to this section; and</DELETED>
                <DELETED>    (D) invest in the tribal school 
                modernization escrow account established under 
                subsection (f)(2) such amounts of the proceeds as the 
                trustee determines not to be necessary to make payments 
                under subparagraphs (B) and (C).</DELETED>
        <DELETED>    (4) Requirements for making direct payments.--
        </DELETED>
                <DELETED>    (A) In general.--Notwithstanding any other 
                provision of law, only the trustee shall make the 
                direct payments referred to in paragraph (3)(C) in 
                accordance with requirements that the tribe shall 
                prescribe in the agreement entered into under paragraph 
                (3). The tribe shall require the trustee, prior to 
                making a payment to a contractor under paragraph 
                (3)(C), to inspect the project that is the subject of 
                the contract, or provide for an inspection of that 
                project by a local financial institution, to ensure the 
                completion of the project.</DELETED>
                <DELETED>    (B) Contracts.--Each contract referred to 
                in paragraph (3)(C) shall specify, or be renegotiated 
                to specify, that payments under the contract shall be 
                made in accordance with this subsection.</DELETED>
<DELETED>    (e) Payments of Principal and Interest.--</DELETED>
        <DELETED>    (1) Principal.--Qualified tribal school 
        modernization bonds shall be issued under this section as 
        interest only for a period of 15 years from the date of 
        issuance. Upon the expiration of such 15-year period, the 
        entire outstanding principal under the bond shall become due 
        and payable.</DELETED>
        <DELETED>    (2) Interest.--Interest on a qualified tribal 
        school modernization bond shall be in the form of a tax credit 
        under section 1400F of the Internal Revenue Code of 
        1986.</DELETED>
<DELETED>    (f) Bond Guarantees.--</DELETED>
        <DELETED>    (1) In general.--Payment of the principal portion 
        of a qualified tribal school modernization bond issued under 
        this section shall be guaranteed by amounts deposited in the 
        tribal school modernization escrow account established under 
        paragraph (2).</DELETED>
        <DELETED>    (2) Establishment of account.--</DELETED>
                <DELETED>    (A) In general.--Notwithstanding any other 
                provision of law, subject to the availability of 
                amounts made available under an appropriations Act, 
                beginning in fiscal year 2001, the Secretary may 
                deposit not more than $30,000,000 of unobligated funds 
                into a tribal school modernization escrow 
                account.</DELETED>
                <DELETED>    (B) Payments.--The Secretary shall use any 
                amounts deposited in the escrow account under 
                subparagraph (A) and subsection (d)(3)(D) to make 
                payments to holders of qualified tribal school 
                modernization bonds issued under this 
                section.</DELETED>
<DELETED>    (g) Limitations.--</DELETED>
        <DELETED>    (1) Obligation of tribes.--Notwithstanding any 
        other provision of law, a tribe that issues a qualified tribal 
        school modernization bond under this section shall not be 
        obligated to repay the principal on the bond.</DELETED>
        <DELETED>    (2) Land and facilities.--Any land or facilities 
        purchased or improved with amounts derived from qualified 
        tribal school modernization bonds issued under this section 
        shall not be mortgaged or used as collateral for such 
        bonds.</DELETED>

<DELETED>SEC. 4. EXPANSION OF INCENTIVES FOR TRIBAL SCHOOLS.</DELETED>

<DELETED>    Chapter 1 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new subchapter:</DELETED>

         <DELETED>``Subchapter X--Tribal School Modernization 
                          Provisions</DELETED>

<DELETED>``Sec. 1400F. Credit to holders of qualified tribal school 
                            modernization bonds.

<DELETED>``SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED TRIBAL SCHOOL 
              MODERNIZATION BONDS.</DELETED>

<DELETED>    ``(a) Allowance of Credit.--In the case of a taxpayer who 
holds a qualified tribal school modernization bond on a credit 
allowance date of such bond which occurs during the taxable year, there 
shall be allowed as a credit against the tax imposed by this chapter 
for such taxable year an amount equal to the sum of the credits 
determined under subsection (b) with respect to credit allowance dates 
during such year on which the taxpayer holds such bond.</DELETED>
<DELETED>    ``(b) Amount of Credit.--</DELETED>
        <DELETED>    ``(1) In general.--The amount of the credit 
        determined under this subsection with respect to any credit 
        allowance date for a qualified tribal school modernization bond 
        is 25 percent of the annual credit determined with respect to 
        such bond.</DELETED>
        <DELETED>    ``(2) Annual credit.--The annual credit determined 
        with respect to any qualified tribal school modernization bond 
        is the product of--</DELETED>
                <DELETED>    ``(A) the applicable credit rate, 
                multiplied by</DELETED>
                <DELETED>    ``(B) the outstanding face amount of the 
                bond.</DELETED>
        <DELETED>    ``(3) Applicable credit rate.--For purposes of 
        paragraph (1), the applicable credit rate with respect to an 
        issue is the rate equal to an average market yield (as of the 
        day before the date of issuance of the issue) on outstanding 
        long-term corporate debt obligations (determined under 
        regulations prescribed by the Secretary).</DELETED>
        <DELETED>    ``(4) Special rule for issuance and redemption.--
        In the case of a bond which is issued during the 3-month period 
        ending on a credit allowance date, the amount of the credit 
        determined under this subsection with respect to such credit 
        allowance date shall be a ratable portion of the credit 
        otherwise determined based on the portion of the 3-month period 
        during which the bond is outstanding. A similar rule shall 
        apply when the bond is redeemed.</DELETED>
<DELETED>    ``(c) Limitation Based on Amount of Tax.--</DELETED>
        <DELETED>    ``(1) In general.--The credit allowed under 
        subsection (a) for any taxable year shall not exceed the excess 
        of--</DELETED>
                <DELETED>    ``(A) the sum of the regular tax liability 
                (as defined in section 26(b)) plus the tax imposed by 
                section 55, over</DELETED>
                <DELETED>    ``(B) the sum of the credits allowable 
                under part IV of subchapter A (other than subpart C 
                thereof, relating to refundable credits).</DELETED>
        <DELETED>    ``(2) Carryover of unused credit.--If the credit 
        allowable under subsection (a) exceeds the limitation imposed 
        by paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.</DELETED>
<DELETED>    ``(d) Qualified Tribal School Modernization Bond; Other 
Definitions.--For purposes of this section--</DELETED>
        <DELETED>    ``(1) Qualified tribal school modernization 
        bond.--</DELETED>
                <DELETED>    ``(A) In general.--The term `qualified 
                school modernization bond' means, subject to 
                subparagraph (B), any bond issued as part of an issue 
                under section 3 of the Indian School Construction Act 
                if--</DELETED>
                        <DELETED>    ``(i) 95 percent or more of the 
                        proceeds of such issue are to be used for the 
                        construction, rehabilitation, or repair of a 
                        tribal school facility or for the acquisition 
                        of land on which such a facility is to be 
                        constructed with part of the proceeds of such 
                        issue,</DELETED>
                        <DELETED>    ``(ii) the bond is issued by an 
                        Indian tribe,</DELETED>
                        <DELETED>    ``(iii) the issuer designates such 
                        bond for purposes of this section, 
                        and</DELETED>
                        <DELETED>    ``(iv) the term of each bond which 
                        is part of such issue does not exceed 15 
                        years.</DELETED>
                <DELETED>    ``(B) National limitation on amount of 
                bonds designated.--There is a national qualified tribal 
                school modernization bond limitation for each calendar 
                year. Such limitation is--</DELETED>
                        <DELETED>    ``(i) $200,000,000 for 
                        2001,</DELETED>
                        <DELETED>    ``(ii) $200,000,000 for 2002, 
                        and</DELETED>
                        <DELETED>    ``(iii) zero after 2002.</DELETED>
        <DELETED>    ``(2) Credit allowance date.--The term `credit 
        allowance date' means--</DELETED>
                <DELETED>    ``(A) March 15,</DELETED>
                <DELETED>    ``(B) June 15,</DELETED>
                <DELETED>    ``(C) September 15, and</DELETED>
                <DELETED>    ``(D) December 15.</DELETED>
        <DELETED>Such term includes the last day on which the bond is 
        outstanding.</DELETED>
        <DELETED>    ``(3) Bond.--The term `bond' includes any 
        obligation.</DELETED>
        <DELETED>    ``(4) Tribe.--The term `tribe' has the meaning 
        given such term by section 2 of the Indian School Construction 
        Act.</DELETED>
<DELETED>    ``(e) Credit Included in Gross Income.--Gross income 
includes the amount of the credit allowed to the taxpayer under this 
section (determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.</DELETED>
<DELETED>    ``(f) Bonds Held by Regulated Investment Companies.--If 
any qualified tribal school modernization bond is held by a regulated 
investment company, the credit determined under subsection (a) shall be 
allowed to shareholders of such company under procedures prescribed by 
the Secretary.</DELETED>
<DELETED>    ``(g) Credits May Be Stripped.--Under regulations 
prescribed by the Secretary--</DELETED>
        <DELETED>    ``(1) In general.--There may be a separation 
        (including at issuance) of the ownership of a qualified tribal 
        school modernization bond and the entitlement to the credit 
        under this section with respect to such bond. In case of any 
        such separation, the credit under this section shall be allowed 
        to the person who on the credit allowance date holds the 
        instrument evidencing the entitlement to the credit and not to 
        the holder of the bond.</DELETED>
        <DELETED>    ``(2) Certain rules to apply.--In the case of a 
        separation described in paragraph (1), the rules of section 
        1286 shall apply to the qualified tribal school modernization 
        bond as if it were a stripped bond and to the credit under this 
        section as if it were a stripped coupon.</DELETED>
<DELETED>    ``(h) Treatment for Estimated Tax Purposes.--Solely for 
purposes of sections 6654 and 6655, the credit allowed by this section 
to a taxpayer by reason of holding a qualified tribal school 
modernization bonds on a credit allowance date shall be treated as if 
it were a payment of estimated tax made by the taxpayer on such 
date.</DELETED>
<DELETED>    ``(i) Credit May Be Transferred.--Nothing in any law or 
rule of law shall be construed to limit the transferability of the 
credit allowed by this section through sale and repurchase 
agreements.</DELETED>
<DELETED>    ``(j) Credit Treated as Allowed Under Part IV of 
Subchapter A.--For purposes of subtitle F, the credit allowed by this 
section shall be treated as a credit allowable under part IV of 
subchapter A of this chapter.</DELETED>
<DELETED>    ``(k) Reporting.--Issuers of qualified tribal school 
modernization bonds shall submit reports similar to the reports 
required under section 149(e).''.</DELETED>

<DELETED>SEC. 5. SOVEREIGN IMMUNITY.</DELETED>

<DELETED>    This Act and the amendments made by this Act shall not be 
construed to impact, limit, or affect the sovereign immunity of the 
Federal Government or any State or tribal government.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Indian School Construction Act''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Bureau.--The term ``Bureau'' means the Bureau of Indian 
        Affairs of the Department of the Interior.
            (2) Indian.--The term ``Indian'' means any individual who 
        is a member of a tribe.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.
            (4) Tribal school.--The term ``tribal school'' means an 
        elementary school, secondary school, or dormitory that is 
        operated by a tribal organization or the Bureau for the 
        education of Indian children and that receives financial 
        assistance for its operation under a contract, grant, or 
        agreement with the Bureau under section 102, 103(a), or 208 of 
        the Indian Self-Determination and Education Assistance Act (25 
        U.S.C. 450f, 450h(a), and 458d) or under the Tribally 
        Controlled Schools Act of 1988 (25 U.S.C. 2501 et seq.).
            (5) Tribe.--The term ``tribe'' has the meaning given the 
        term ``Indian tribal government'' by section 7701(a)(40) of the 
        Internal Revenue Code of 1986, including the application of 
        section 7871(d) of such Code.

SEC. 3. ISSUANCE OF BONDS.

    (a) In General.--The Secretary shall establish a pilot program 
under which eligible tribes have the authority to issue qualified 
tribal school modernization bonds to provide funding for the advance 
planning, design, and construction for the replacement of tribal 
schools.
    (b) Eligibility.--
            (1) In general.--To be eligible to issue any qualified 
        tribal school modernization bond under the program under 
        subsection (a), a tribe shall--
                    (A) prepare and submit to the Secretary a plan of 
                construction that meets the requirements of paragraph 
                (2);
                    (B) provide for quarterly and final inspection of 
                the project by the Bureau; and
                    (C) pledge that the facilities financed by such 
                bond will be used primarily for elementary and 
                secondary educational purposes for not less than the 
                period such bond remains outstanding.
            (2) Plan of construction.--A plan of construction meets the 
        requirements of this paragraph if such plan--
                    (A) contains a description of the construction to 
                be undertaken with funding provided under a qualified 
                tribal school modernization bond;
                    (B) demonstrates that a comprehensive survey has 
                been undertaken concerning the construction needs of 
                the tribal school involved;
                    (C) contains assurances that funding under the bond 
                will be used only for the activities described in the 
                plan;
                    (D) contains response to the evaluation criteria 
                contained in Instructions and Application for 
                Replacement School Construction, Revision 6, dated 
                February 6, 1999; and
                    (E) contains any other reasonable and related 
                information determined appropriate by the Secretary.
            (3) Priority.--In determining whether a tribe is eligible 
        to participate in the program under this section, the Secretary 
        shall give priority to tribes that, as demonstrated by the 
        relevant plans of construction, will fund projects--
                    (A) described in the Education Facilities 
                Replacement Construction Priorities List as of FY 2000 
                of the Bureau of Indian Affairs (65 Fed. Reg. 4623-
                4624);
                    (B) described in any subsequent priorities list 
                published in the Federal Register; or
                    (C) which meet the criteria for ranking schools as 
                described in Instructions and Application for 
                Replacement School Construction, Revision 6, dated 
                February 6, 1999.
            (4) Advance planning and design funding.--A tribe may 
        propose in its plan of construction to receive advance planning 
        and design funding from the tribal school modernization escrow 
        account established under subsection (f)(2), if, once a 
        qualified tribal school modernization bond has been issued by 
        the tribe, the tribe agrees as a condition of approval of its 
        plan that it will reimburse such escrow account an amount equal 
        to the amount of such funding received from such escrow 
        account.
    (c) Permissible Activities.--In addition to the use of funds 
permitted under subsection (a), a tribe may use amounts received 
through the issuance of a qualified tribal school modernization bond 
to--
            (1) enter into and make payments under contracts with 
        licensed and bonded architects, engineers, and construction 
        firms in order to determine the needs of the tribal school and 
        for the design and engineering of the school;
            (2) enter into and make payments under contracts with 
        financial advisors, underwriters, attorneys, trustees, and 
        other professionals who would be able to provide assistance to 
        the tribe in issuing bonds; and
            (3) carry out other activities determined appropriate by 
        the Secretary.
    (d) Bond Trustee.--
            (1) In general.--Notwithstanding any other provision of 
        law, any qualified tribal school modernization bond issued by a 
        tribe under this section shall be subject to a trust agreement 
        between the tribe and a trustee.
            (2) Trustee.--Any bank or trust company that meets 
        requirements established by the Secretary may be designated as 
        a trustee under paragraph (1).
            (3) Content of trust agreement.--A trust agreement entered 
        into by a tribe under this subsection shall specify that the 
        trustee, with respect to any bond issued under this section 
        shall--
                    (A) act as a repository for the proceeds of the 
                bond;
                    (B) make payments to bondholders;
                    (C) receive, as a condition to the issuance of such 
                bond, a transfer of funds from the tribal school 
                modernization escrow account established under 
                subsection (f)(2) or from other funds furnished by or 
                on behalf of the tribe in an amount, which together 
                with interest earnings from the investment of such 
                funds in obligations of or fully guaranteed by the 
                United States or from other investments authorized by 
                subsection (j), will produce moneys sufficient to 
                timely pay in full the entire principal amount of such 
                bond on the stated maturity date therefor;
                    (D) invest the funds received pursuant to 
                subparagraph (C) as provided by such subparagraph; and
                    (E) hold and invest the funds in a segregated fund 
                or account under the agreement, which fund or account 
                shall be applied solely to the payment of the costs of 
                items described in subsection (c).
            (4) Requirements for making direct payments.--
                    (A) In general.--Notwithstanding any other 
                provision of law, the trustee shall make any payment 
                referred to in paragraph (3)(E) in accordance with 
                requirements that the tribe shall prescribe in the 
                trust agreement entered into under paragraph (3). 
                Before making a payment to a contractor under paragraph 
                (3)(E), the trustee shall require an inspection of the 
                project by a local financial institution or an 
                independent inspecting architect or engineer, to ensure 
                the completion of the project.
                    (B) Contracts.--Each contract referred to in 
                subsection (c) shall specify, or be renegotiated to 
                specify, that payments under the contract shall be made 
                in accordance with this subsection.
    (e) Payments of Principal and Interest.--
            (1) Principal.--No principal payments on any qualified 
        tribal school modernization bond shall be required until the 
        final, stated maturity of such bond, which stated maturity 
        shall be within 15 years from the date of issuance. Upon the 
        expiration of such period, the entire outstanding principal 
        under the bond shall become due and payable.
            (2) Interest.--In lieu of interest on a qualified tribal 
        school modernization bond there shall be awarded a tax credit 
        under section 1400F of the Internal Revenue Code of 1986.
    (f) Bond Guarantees.--
            (1) In general.--Payment of the principal portion of a 
        qualified tribal school modernization bond issued under this 
        section shall be guaranteed solely by amounts deposited with 
        each respective bond trustee as described in subsection 
        (d)(3)(C).
            (2) Establishment of account.--
                    (A) In general.--Notwithstanding any other 
                provision of law, subject to the availability of 
                amounts made available under any appropriations Act, 
                beginning in fiscal year 2001, the Secretary may 
                deposit not more than $30,000,000 into a tribal school 
                modernization escrow account.
                    (B) Payments.--The Secretary shall use any amounts 
                deposited in the escrow account under subparagraphs (A) 
                and (C) to make payments to trustees appointed and 
                acting pursuant to subsection (d) or to make payments 
                described in subsection (b)(4).
                    (C) Transfers of excess proceeds.--Excess proceeds 
                held under any trust agreement that are not needed for 
                any of the purposes described in subparagraphs (C) and 
                (E) of subsection (d)(3) shall be transferred, from 
                time to time, by the trustee for deposit into the 
                tribal school modernization escrow account.
    (g) Limitations.--
            (1) Obligation of tribes.--Notwithstanding any other 
        provision of law, a tribe that issues a qualified tribal school 
        modernization bond under this section shall not be obligated to 
        repay the principal on the bond, except to the extent of any 
        escrowed funds furnished by the tribe under subsection 
        (d)(3)(C).
            (2) Land and facilities.--Any land or facilities purchased 
        or improved with amounts derived from qualified tribal school 
        modernization bonds issued under this section shall not be 
        mortgaged or used as collateral for such bonds.
    (h) Sale of Bonds.--Qualified tribal school modernization bonds may 
be sold at a purchase price equal to, in excess of, or at a discount 
from the par amount thereof.
    (i) Treatment of Trust Agreement Earnings.--Any amounts earned 
through the investment of funds under the control of a trustee under 
any trust agreement described in subsection (d) shall not be subject to 
Federal income tax.
    (j) Investment of Sinking Funds.--Any sinking fund established for 
the purpose of the payment of principal on a qualified tribal school 
modernization bond shall be invested in obligations issued by or 
guaranteed by the United States or in such other assets as the 
Secretary of the Treasury may by regulation allow.

SEC. 4. EXPANSION OF INCENTIVES FOR TRIBAL SCHOOLS.

    Chapter 1 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subchapter:

         ``Subchapter X--Tribal School Modernization Provisions

``Sec. 1400F. Credit to holders of qualified tribal school 
                            modernization bonds.

``SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED TRIBAL SCHOOL 
              MODERNIZATION BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified tribal school modernization bond on a credit allowance date 
of such bond which occurs during the taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter for such 
taxable year an amount equal to the sum of the credits determined under 
subsection (b) with respect to credit allowance dates during such year 
on which the taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified tribal school modernization bond is 25 percent 
        of the annual credit determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified tribal school modernization bond is 
        the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (1), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        date of issuance of the issue) on outstanding long-term 
        corporate debt obligations (determined monthly by the 
        Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part 
                IV of subchapter A (other than subpart C thereof, 
                relating to refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Qualified Tribal School Modernization Bond; Other 
Definitions.--For purposes of this section--
            ``(1) Qualified tribal school modernization bond.--
                    ``(A) In general.--The term `qualified tribal 
                school modernization bond' means, subject to 
                subparagraph (B), any bond issued as part of an issue 
                under section 3 of the Indian School Construction Act, 
                as in effect on the date of the enactment of this 
                section, if--
                            ``(i) 95 percent or more of the proceeds of 
                        such issue are to be used for the construction, 
                        rehabilitation, or repair of a school facility 
                        funded by the Bureau of Indian Affairs of the 
                        Department of the Interior or for the 
                        acquisition of land on which such a facility is 
                        to be constructed with part of the proceeds of 
                        such issue,
                            ``(ii) the bond is issued by a tribe,
                            ``(iii) the issuer designates such bond for 
                        purposes of this section, and
                            ``(iv) the term of each bond which is part 
                        of such issue does not exceed 15 years.
                    ``(B) National limitation on amount of bonds 
                designated.--
                            ``(i) National limitation.--There is a 
                        national qualified tribal school modernization 
                        bond limitation for each calendar year. Such 
                        limitation is--
                                    ``(I) $200,000,000 for 2001,
                                    ``(II) $200,000,000 for 2002, and
                                    ``(III) zero after 2002.
                            ``(ii) Allocation of limitation.--The 
                        national qualified tribal school modernization 
                        bond limitation shall be allocated to tribes by 
                        the Secretary of the Interior subject to the 
                        provisions of the Indian  School Construction 
Act, as in effect on the date of the enactment of this section.
                            ``(iii) Designation subject to limitation 
                        amount.--The maximum aggregate face amount of 
                        bonds issued during any calendar year which may 
                        be designated under subsection (d)(1) with 
                        respect to any tribe shall not exceed the 
                        limitation amount allocated to such government 
                        under clause (ii) for such calendar year.
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(3) Bond.--The term `bond' includes any obligation.
            ``(4) Tribe.--The term ``tribe'' has the meaning given the 
        term ``Indian tribal government'' by section 7701(a)(40), 
        including the application of section 7871(d).
    ``(e) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(f) Bonds Held by Regulated Investment Companies.--If any 
qualified tribal school modernization bond is held by a regulated 
investment company, the credit determined under subsection (a) shall be 
allowed to shareholders of such company under procedures prescribed by 
the Secretary.
    ``(g) Credits May Be Stripped.--Under regulations prescribed by the 
Secretary--
            ``(1) In general.--There may be a separation (including at 
        issuance) of the ownership of a qualified tribal school 
        modernization bond and the entitlement to the credit under this 
        section with respect to such bond. In case of any such 
        separation, the credit under this section shall be allowed to 
        the person who on the credit allowance date holds the 
        instrument evidencing the entitlement to the credit and not to 
        the holder of the bond.
            ``(2) Certain rules to apply.--In the case of a separation 
        described in paragraph (1), the rules of section 1286 shall 
        apply to the qualified tribal school modernization bond as if 
        it were a stripped bond and to the credit under this section as 
        if it were a stripped coupon.
    ``(h) Treatment for Estimated Tax Purposes.--Solely for purposes of 
sections 6654 and 6655, the credit allowed by this section to a 
taxpayer by reason of holding a qualified tribal school modernization 
bonds on a credit allowance date shall be treated as if it were a 
payment of estimated tax made by the taxpayer on such date.
    ``(i) Credit May Be Transferred.--Nothing in any law or rule of law 
shall be construed to limit the transferability of the credit allowed 
by this section through sale and repurchase agreements.
    ``(j) Credit Treated as Allowed Under Part IV of Subchapter A.--For 
purposes of subtitle F, the credit allowed by this section shall be 
treated as a credit allowable under part IV of subchapter A of this 
chapter.
    ``(k) Reporting.--Issuers of qualified tribal school modernization 
bonds shall submit reports similar to the reports required under 
section 149(e).''.

SEC. 5. ADDITIONAL PROVISIONS.

    (a) Sovereign Immunity.--This Act and the amendments made by this 
Act shall not be construed to impact, limit, or affect the sovereign 
immunity of the Federal Government or any State or tribal government.
    (b) Application.--This Act and the amendments made by this Act 
shall take effect on the date of the enactment of this Act with respect 
to bonds issued after December 31, 2000, regardless of the status of 
regulations promulgated thereunder.

                                                       Calendar No. 947

106th CONGRESS

  2d Session

                                S. 2580

                          [Report No. 106-497]

_______________________________________________________________________

                                 A BILL

    To provide for the issuance of bonds to provide funding for the 
    construction of schools of the Bureau of Indian Affairs of the 
          Department of the Interior, and for other purposes.

_______________________________________________________________________

            October 11 (legislative day, September 22), 2000

                       Reported with an amendment
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