II

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Indian School Con3 struction Act’’.

4 SEC. 2. DEFINITIONS.

5 In this Act:

6 (1) BUREAU.—The term ‘‘Bureau’’ means the

7 Bureau of Indian Affairs of the Department of the

8 Interior.

9 (2) INDIAN.—The term ‘‘Indian’’ means any in10 dividual who is a member of a tribe.

11 (3) SECRETARY.—The term ‘‘Secretary’’ means

12 the Secretary of the Interior.

13 (4) TRIBAL SCHOOL.—The term ‘‘tribal school’’

14 means an elementary school, secondary school, or

15 dormitory that is operated by a tribal organization

16 for the education of Indian children and that re17 ceives financial assistance for its operation under a

18 contract, grant, or agreement with the Bureau under

19 section 102, 103(a), or 208 of the Indian Self-Deter20 mination and Education Assistance Act (25 U.S.C.

21 450f, 450h(a), and 458d).

22 (5) TRIBE.—The term ‘‘tribe’’ means any In23 dian tribe, band, nation, or other organized group or

24 community, including a Native village, Regional Cor25 poration, or Village Corporation (as defined in or es26 tablished pursuant to the Alaska Native Claims Set-
3

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1 tlement Act), that is recognized as eligible for the

2 special programs and services provided by the

3 United States to Indians because of their status as

4 Indians.

5 SEC. 3. ISSUANCE OF BONDS.

6 (a) IN GENERAL.—The Secretary shall establish a

7 pilot program under which eligible tribes have the author8 ity to issue tribal school modernization bonds to provide

9 funding for the improvement, repair, and new construction

10 of tribal schools.

11 (b) ELIGIBILITY.—

12 (1) IN GENERAL.—To be eligible to issue bonds

13 under the program under subsection (a), a tribe

14 shall prepare and submit to the Secretary a plan of

15 construction that meets the requirements of para16 graph (2).

17 (2) PLAN OF CONSTRUCTION.—A plan of con18 struction meets the requirements of this paragraph

19 if such plan—

20 (A) contains a description of the improve21 ments, repairs, or new construction to be un22 dertaken with funding provided under the bond;

23 (B) demonstrates that a comprehensive

24 survey has been undertaken concerning the con-
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1 struction or renovation needs of the tribal

2 school involved;

3 (C) contains assurances that funding

4 under the bond will be used only for the activi5 ties described in the plan; and

6 (D) contains any other reasonable and re7 lated information determined appropriate by the

8 Secretary.

9 (3) PRIORITY.—In determining whether a tribe

10 is eligible to participate in the program under this

11 section, the Secretary shall give priority to tribes

12 that, as demonstrated by the relevant plans of con13 struction, will fund projects described in the Re14 placement School Construction priority list of the

15 Bureau of Indian Affairs, as maintained under the

16 Indian Self-Determination and Education Assistance

17 Act.

18 (4) APPROVAL.—Except as provided in para19 graph (3), the Secretary shall approve the issuance

20 of qualified tribal school modernization bonds by

21 tribes with approved plans of construction on the

22 basis of the order in which such plans were received

23 by the Secretary. Such approval shall not be unrea24 sonably withheld.
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1 (c) PERMISSIBLE ACTIVITIES.—In addition to the

2 use of funds permitted under subsection (a), a tribe may

3 use amounts received through the issuance of a bond to—

4 (1) enter into contracts with architects, engi5 neers, and construction firms in order to determine

6 the needs of the tribal school and for the design and

7 engineering of the school;

8 (2) enter into contracts with financial advisors,

9 underwriters, attorneys, trustees, and other profes10 sionals who would be able to provide assistance to

11 the tribe in issuing bonds; and

12 (3) carry out other activities determined appro13 priate by the Secretary.

14 (d) BOND TRUSTEE.—

15 (1) IN GENERAL.—Notwithstanding any other

16 provision of law, any tribal school construction bond

17 issued by a tribe under this section shall be subject

18 to a trust agreement between the tribe and a trust19 ee.

20 (2) TRUSTEE.—Any bank or trust company

21 that meets requirements established by the Secretary

22 by regulation may be designated as a trustee under

23 paragraph (1).

24 (3) CONTENT OF TRUST AGREEMENT.—A trust

25 agreement entered into by a tribe under this sub-
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1 section shall specify that the trustee, with respect to

2 bonds issued under this section shall—

3 (A) act as a repository for the proceeds of

4 the bond;

5 (B) make payments to bondholders;

6 (C) from any amounts in excess of the

7 amounts necessary to make payments to bond8 holders, in accordance with the requirements of

9 paragraph (4), make direct payments to con10 tractors with the governing body of the tribe for

11 facility improvement, repair, or new construc12 tion pursuant to this section; and

13 (D) invest in the tribal school moderniza14 tion escrow account established under sub15 section (f)(2) such amounts of the proceeds as

16 the trustee determines not to be necessary to

17 make payments under subparagraphs (B) and

18 (C).

19 (4) REQUIREMENTS FOR MAKING DIRECT PAY20 MENTS.—

21 (A) IN GENERAL.—Notwithstanding any

22 other provision of law, only the trustee shall

23 make the direct payments referred to in para24 graph (3)(C) in accordance with requirements

25 that the tribe shall prescribe in the agreement
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1 entered into under paragraph (3). The tribe

2 shall require the trustee, prior to making a pay3 ment to a contractor under paragraph (3)(C),

4 to inspect the project that is the subject of the

5 contract, or provide for an inspection of that

6 project by a local financial institution, to ensure

7 the completion of the project.

8 (B) CONTRACTS.—Each contract referred

9 to in paragraph (3)(C) shall specify, or be re10 negotiated to specify, that payments under the

11 contract shall be made in accordance with this

12 subsection.

13 (e) PAYMENTS OF PRINCIPAL AND INTEREST.—

14 (1) PRINCIPAL.—Qualified tribal school mod15 ernization bonds shall be issued under this section as

16 interest only for a period of 15 years from the date

17 of issuance. Upon the expiration of such 15-year pe18 riod, the entire outstanding principal under the bond

19 shall become due and payable.

20 (2) INTEREST.—Interest on a qualified tribal

21 school modernization bond shall be in the form of a

22 tax credit under section 1400F of the Internal Rev23 enue Code of 1986.

24 (f) BOND GUARANTEES.—
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1 (1) IN GENERAL.—Payment of the principal

2 portion of a qualified tribal school modernization

3 bond issued under this section shall be guaranteed

4 by amounts deposited in the tribal school moderniza5 tion escrow account established under paragraph

6 (2).

7 (2) ESTABLISHMENT OF ACCOUNT.—

8 (A) IN GENERAL.—Notwithstanding any

9 other provision of law, subject to the availability

10 of amounts made available under an appropria11 tions Act, beginning in fiscal year 2001, the

12 Secretary may deposit not more than

13 $30,000,000 of unobligated funds into a tribal

14 school modernization escrow account.

15 (B) PAYMENTS.—The Secretary shall use

16 any amounts deposited in the escrow account

17 under subparagraph (A) and subsection

18 (d)(3)(D) to make payments to holders of quali19 fied tribal school modernization bonds issued

20 under this section.

21 (g) LIMITATIONS.—

22 (1) OBLIGATION OF TRIBES.—Notwithstanding

23 any other provision of law, a tribe that issues a

24 qualified tribal school modernization bond under this
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1 section shall not be obligated to repay the principal

2 on the bond.

3 (2) LAND AND FACILITIES.—Any land or facili4 ties purchased or improved with amounts derived

5 from qualified tribal school modernization bonds

6 issued under this section shall not be mortgaged or

7 used as collateral for such bonds.

8 SEC. 4. EXPANSION OF INCENTIVES FOR TRIBAL SCHOOLS.

9 Chapter 1 of the Internal Revenue Code of 1986 is

10 amended by adding at the end the following new sub11 chapter:

12 ‘‘Subchapter X—Tribal School Modernization

13 Provisions

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

14 ‘‘SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED TRIBAL

15 SCHOOL MODERNIZATION BONDS.

16 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax17 payer who holds a qualified tribal school modernization

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

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

20 against the tax imposed by this chapter for such taxable

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

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

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

24 ‘‘(b) AMOUNT OF CREDIT.—
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1 ‘‘(1) IN GENERAL.—The amount of the credit

2 determined under this subsection with respect to any

3 credit allowance date for a qualified tribal school

4 modernization bond is 25 percent of the annual

5 credit determined with respect to such bond.

6 ‘‘(2) ANNUAL CREDIT.—The annual credit de7 termined with respect to any qualified tribal school

8 modernization bond is the product of—

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

10 by

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

12 bond.

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

14 of paragraph (1), the applicable credit rate with re15 spect to an issue is the rate equal to an average

16 market yield (as of the day before the date of

17 issuance of the issue) on outstanding long-term cor18 porate debt obligations (determined under regula19 tions prescribed by the Secretary).

20 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE21 DEMPTION.—In the case of a bond which is issued

22 during the 3-month period ending on a credit allow23 ance date, the amount of the credit determined

24 under this subsection with respect to such credit al25 lowance date shall be a ratable portion of the credit
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1 otherwise determined based on the portion of the 3-

2 month period during which the bond is outstanding.

3 A similar rule shall apply when the bond is re4 deemed.

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

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

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

8 the excess of—

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

10 (as defined in section 26(b)) plus the tax im11 posed by section 55, over

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

13 under part IV of subchapter A (other than sub14 part C thereof, relating to refundable credits).

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

16 credit allowable under subsection (a) exceeds the

17 limitation imposed by paragraph (1) for such taxable

18 year, such excess shall be carried to the succeeding

19 taxable year and added to the credit allowable under

20 subsection (a) for such taxable year.

21 ‘‘(d) QUALIFIED TRIBAL SCHOOL MODERNIZATION

22 BOND; OTHER DEFINITIONS.—For purposes of this

23 section—

24 ‘‘(1) QUALIFIED TRIBAL SCHOOL MODERNIZA25 TION BOND.—
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1 ‘‘(A) IN GENERAL.—The term ‘qualified

2 school modernization bond’ means, subject to

3 subparagraph (B), any bond issued as part of

4 an issue under section 3 of the Indian School

5 Construction Act if—

6 ‘‘(i) 95 percent or more of the pro7 ceeds of such issue are to be used for the

8 construction, rehabilitation, or repair of a

9 tribal school facility or for the acquisition

10 of land on which such a facility is to be

11 constructed with part of the proceeds of

12 such issue,

13 ‘‘(ii) the bond is issued by an Indian

14 tribe,

15 ‘‘(iii) the issuer designates such bond

16 for purposes of this section, and

17 ‘‘(iv) the term of each bond which is

18 part of such issue does not exceed 15

19 years.

20 ‘‘(B) NATIONAL LIMITATION ON AMOUNT

21 OF BONDS DESIGNATED.—There is a national

22 qualified tribal school modernization bond limi23 tation for each calendar year. Such limitation

24 is—

25 ‘‘(i) $200,000,000 for 2001,
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1 ‘‘(ii) $200,000,000 for 2002, and

2 ‘‘(iii) zero after 2002.

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

4 ‘credit allowance date’ means—

5 ‘‘(A) March 15,

6 ‘‘(B) June 15,

7 ‘‘(C) September 15, and

8 ‘‘(D) December 15.

9 Such term includes the last day on which the bond

10 is outstanding.

11 ‘‘(3) BOND.—The term ‘bond’ includes any ob12 ligation.

13 ‘‘(4) TRIBE.—The term ‘tribe’ has the meaning

14 given such term by section 2 of the Indian School

15 Construction Act.

16 ‘‘(e) CREDIT INCLUDED IN GROSS INCOME.—Gross

17 income includes the amount of the credit allowed to the

18 taxpayer under this section (determined without regard to

19 subsection (c)) and the amount so included shall be treat20 ed as interest income.

21 ‘‘(f) BONDS HELD BY REGULATED INVESTMENT

22 COMPANIES.—If any qualified tribal school modernization

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

24 determined under subsection (a) shall be allowed to share-
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1 holders of such company under procedures prescribed by

2 the Secretary.

3 ‘‘(g) CREDITS MAY BE STRIPPED.—Under regula4 tions prescribed by the Secretary—

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

6 (including at issuance) of the ownership of a quali7 fied tribal school modernization bond and the entitle8 ment to the credit under this section with respect to

9 such bond. In case of any such separation, the credit

10 under this section shall be allowed to the person who

11 on the credit allowance date holds the instrument ev12 idencing the entitlement to the credit and not to the

13 holder of the bond.

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

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

16 of section 1286 shall apply to the qualified tribal

17 school modernization bond as if it were a stripped

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

19 were a stripped coupon.

20 ‘‘(h) TREATMENT FOR ESTIMATED TAX PUR21 POSES.—Solely for purposes of sections 6654 and 6655,

22 the credit allowed by this section to a taxpayer by reason

23 of holding a qualified tribal school modernization bonds

24 on a credit allowance date shall be treated as if it were
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1 a payment of estimated tax made by the taxpayer on such

2 date.

3 ‘‘(i) CREDIT MAY BE TRANSFERRED.—Nothing in

4 any law or rule of law shall be construed to limit the trans5 ferability of the credit allowed by this section through sale

6 and repurchase agreements.

7 ‘‘(j) CREDIT TREATED AS ALLOWED UNDER PART

8 IV OF SUBCHAPTER A.—For purposes of subtitle F, the

9 credit allowed by this section shall be treated as a credit

10 allowable under part IV of subchapter A of this chapter.

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

12 modernization bonds shall submit reports similar to the

13 reports required under section 149(e).’’.

14 SEC. 5. SOVEREIGN IMMUNITY.

15 This Act and the amendments made by this Act shall

16 not be construed to impact, limit, or affect the sovereign

17 immunity of the Federal Government or any State or trib18 al government.

19 SECTION 1. SHORT TITLE.

20 This Act may be cited as the ‘‘Indian School Construc21 tion Act’’.

22 SEC. 2. DEFINITIONS.

23 In this Act:
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1 (1) BUREAU.—The term ‘‘Bureau’’ means the

2 Bureau of Indian Affairs of the Department of the In3 terior.

4 (2) INDIAN.—The term ‘‘Indian’’ means any in5 dividual who is a member of a tribe.

6 (3) SECRETARY.—The term ‘‘Secretary’’ means

7 the Secretary of the Interior.

8 (4) TRIBAL SCHOOL.—The term ‘‘tribal school’’

9 means an elementary school, secondary school, or dor10 mitory that is operated by a tribal organization or

11 the Bureau for the education of Indian children and

12 that receives financial assistance for its operation

13 under a contract, grant, or agreement with the Bu14 reau under section 102, 103(a), or 208 of the Indian

15 Self-Determination and Education Assistance Act (25

16 U.S.C. 450f, 450h(a), and 458d) or under the Trib17 ally Controlled Schools Act of 1988 (25 U.S.C. 2501

18 et seq.).

19 (5) TRIBE.—The term ‘‘tribe’’ has the meaning

20 given the term ‘‘Indian tribal government’’ by section

21 7701(a)(40) of the Internal Revenue Code of 1986, in22 cluding the application of section 7871(d) of such

23 Code.
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1 SEC. 3. ISSUANCE OF BONDS.

2 (a) IN GENERAL.—The Secretary shall establish a

3 pilot program under which eligible tribes have the authority

4 to issue qualified tribal school modernization bonds to pro5 vide funding for the advance planning, design, and con6 struction for the replacement of tribal schools.

7 (b) ELIGIBILITY.—

8 (1) IN GENERAL.—To be eligible to issue any

9 qualified tribal school modernization bond under the

10 program under subsection (a), a tribe shall—

11 (A) prepare and submit to the Secretary a

12 plan of construction that meets the requirements

13 of paragraph (2);

14 (B) provide for quarterly and final inspec15 tion of the project by the Bureau; and

16 (C) pledge that the facilities financed by

17 such bond will be used primarily for elementary

18 and secondary educational purposes for not less

19 than the period such bond remains outstanding.

20 (2) PLAN OF CONSTRUCTION.—A plan of con21 struction meets the requirements of this paragraph if

22 such plan—

23 (A) contains a description of the construc24 tion to be undertaken with funding provided

25 under a qualified tribal school modernization

26 bond;
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1 (B) demonstrates that a comprehensive sur2 vey has been undertaken concerning the construc3 tion needs of the tribal school involved;

4 (C) contains assurances that funding under

5 the bond will be used only for the activities de6 scribed in the plan;

7 (D) contains response to the evaluation cri8 teria contained in Instructions and Application

9 for Replacement School Construction, Revision 6,

10 dated February 6, 1999; and

11 (E) contains any other reasonable and re12 lated information determined appropriate by the

13 Secretary.

14 (3) PRIORITY.—In determining whether a tribe

15 is eligible to participate in the program under this

16 section, the Secretary shall give priority to tribes

17 that, as demonstrated by the relevant plans of con18 struction, will fund projects—

19 (A) described in the Education Facilities

20 Replacement Construction Priorities List as of

21 FY 2000 of the Bureau of Indian Affairs (65

22 Fed. Reg. 4623–4624);

23 (B) described in any subsequent priorities

24 list published in the Federal Register; or
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1 (C) which meet the criteria for ranking

2 schools as described in Instructions and Applica3 tion for Replacement School Construction, Revi4 sion 6, dated February 6, 1999.

5 (4) ADVANCE PLANNING AND DESIGN FUNDING.—

6 A tribe may propose in its plan of construction to re7 ceive advance planning and design funding from the

8 tribal school modernization escrow account established

9 under subsection (f)(2), if, once a qualified tribal

10 school modernization bond has been issued by the

11 tribe, the tribe agrees as a condition of approval of

12 its plan that it will reimburse such escrow account an

13 amount equal to the amount of such funding received

14 from such escrow account.

15 (c) PERMISSIBLE ACTIVITIES.—In addition to the use

16 of funds permitted under subsection (a), a tribe may use

17 amounts received through the issuance of a qualified tribal

18 school modernization bond to—

19 (1) enter into and make payments under con20 tracts with licensed and bonded architects, engineers,

21 and construction firms in order to determine the

22 needs of the tribal school and for the design and engi23 neering of the school;

24 (2) enter into and make payments under con25 tracts with financial advisors, underwriters, attor-
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1 neys, trustees, and other professionals who would be

2 able to provide assistance to the tribe in issuing

3 bonds; and

4 (3) carry out other activities determined appro5 priate by the Secretary.

6 (d) BOND TRUSTEE.—

7 (1) IN GENERAL.—Notwithstanding any other

8 provision of law, any qualified tribal school mod9 ernization bond issued by a tribe under this section

10 shall be subject to a trust agreement between the tribe

11 and a trustee.

12 (2) TRUSTEE.—Any bank or trust company that

13 meets requirements established by the Secretary may

14 be designated as a trustee under paragraph (1).

15 (3) CONTENT OF TRUST AGREEMENT.—A trust

16 agreement entered into by a tribe under this sub17 section shall specify that the trustee, with respect to

18 any bond issued under this section shall—

19 (A) act as a repository for the proceeds of

20 the bond;

21 (B) make payments to bondholders;

22 (C) receive, as a condition to the issuance

23 of such bond, a transfer of funds from the tribal

24 school modernization escrow account established

25 under subsection (f)(2) or from other funds fur-
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1 nished by or on behalf of the tribe in an amount,

2 which together with interest earnings from the

3 investment of such funds in obligations of or

4 fully guaranteed by the United States or from

5 other investments authorized by subsection (j),

6 will produce moneys sufficient to timely pay in

7 full the entire principal amount of such bond on

8 the stated maturity date therefor;

9 (D) invest the funds received pursuant to

10 subparagraph (C) as provided by such subpara11 graph; and

12 (E) hold and invest the funds in a seg13 regated fund or account under the agreement,

14 which fund or account shall be applied solely to

15 the payment of the costs of items described in

16 subsection (c).

17 (4) REQUIREMENTS FOR MAKING DIRECT PAY18 MENTS.—

19 (A) IN GENERAL.—Notwithstanding any

20 other provision of law, the trustee shall make

21 any payment referred to in paragraph (3)(E) in

22 accordance with requirements that the tribe shall

23 prescribe in the trust agreement entered into

24 under paragraph (3). Before making a payment

25 to a contractor under paragraph (3)(E), the
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1 trustee shall require an inspection of the project

2 by a local financial institution or an inde3 pendent inspecting architect or engineer, to en4 sure the completion of the project.

5 (B) CONTRACTS.—Each contract referred to

6 in subsection (c) shall specify, or be renegotiated

7 to specify, that payments under the contract

8 shall be made in accordance with this subsection.

9 (e) PAYMENTS OF PRINCIPAL AND INTEREST.—

10 (1) PRINCIPAL.—No principal payments on any

11 qualified tribal school modernization bond shall be re12 quired until the final, stated maturity of such bond,

13 which stated maturity shall be within 15 years from

14 the date of issuance. Upon the expiration of such pe15 riod, the entire outstanding principal under the bond

16 shall become due and payable.

17 (2) INTEREST.—In lieu of interest on a qualified

18 tribal school modernization bond there shall be

19 awarded a tax credit under section 1400F of the In20 ternal Revenue Code of 1986.

21 (f) BOND GUARANTEES.—

22 (1) IN GENERAL.—Payment of the principal por23 tion of a qualified tribal school modernization bond

24 issued under this section shall be guaranteed solely by
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1 amounts deposited with each respective bond trustee

2 as described in subsection (d)(3)(C).

3 (2) ESTABLISHMENT OF ACCOUNT.—

4 (A) IN GENERAL.—Notwithstanding any

5 other provision of law, subject to the availability

6 of amounts made available under any appro7 priations Act, beginning in fiscal year 2001, the

8 Secretary may deposit not more than

9 $30,000,000 into a tribal school modernization

10 escrow account.

11 (B) PAYMENTS.—The Secretary shall use

12 any amounts deposited in the escrow account

13 under subparagraphs (A) and (C) to make pay14 ments to trustees appointed and acting pursuant

15 to subsection (d) or to make payments described

16 in subsection (b)(4).

17 (C) TRANSFERS OF EXCESS PROCEEDS.—

18 Excess proceeds held under any trust agreement

19 that are not needed for any of the purposes de20 scribed in subparagraphs (C) and (E) of sub21 section (d)(3) shall be transferred, from time to

22 time, by the trustee for deposit into the tribal

23 school modernization escrow account.

24 (g) LIMITATIONS.—
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1 (1) OBLIGATION OF TRIBES.—Notwithstanding

2 any other provision of law, a tribe that issues a

3 qualified tribal school modernization bond under this

4 section shall not be obligated to repay the principal

5 on the bond, except to the extent of any escrowed

6 funds furnished by the tribe under subsection

7 (d)(3)(C).

8 (2) LAND AND FACILITIES.—Any land or facili9 ties purchased or improved with amounts derived

10 from qualified tribal school modernization bonds

11 issued under this section shall not be mortgaged or

12 used as collateral for such bonds.

13 (h) SALE OF BONDS.—Qualified tribal school mod14 ernization bonds may be sold at a purchase price equal to,

15 in excess of, or at a discount from the par amount thereof.

16 (i) TREATMENT OF TRUST AGREEMENT EARNINGS.—

17 Any amounts earned through the investment of funds under

18 the control of a trustee under any trust agreement described

19 in subsection (d) shall not be subject to Federal income tax.

20 (j) INVESTMENT OF SINKING FUNDS.—Any sinking

21 fund established for the purpose of the payment of principal

22 on a qualified tribal school modernization bond shall be in23 vested in obligations issued by or guaranteed by the United

24 States or in such other assets as the Secretary of the Treas25 ury may by regulation allow.
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1 SEC. 4. EXPANSION OF INCENTIVES FOR TRIBAL SCHOOLS.

2 Chapter 1 of the Internal Revenue Code of 1986 is

3 amended by adding at the end the following new subchapter:

4 ‘‘Subchapter X—Tribal School Modernization

5 Provisions

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

6 ‘‘SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED TRIBAL

7 SCHOOL MODERNIZATION BONDS.

8 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax9 payer who holds a qualified tribal school modernization

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

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

12 against the tax imposed by this chapter for such taxable

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

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

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

16 ‘‘(b) AMOUNT OF CREDIT.—

17 ‘‘(1) IN GENERAL.—The amount of the credit de18 termined under this subsection with respect to any

19 credit allowance date for a qualified tribal school

20 modernization bond is 25 percent of the annual credit

21 determined with respect to such bond.

22 ‘‘(2) ANNUAL CREDIT.—The annual credit deter23 mined with respect to any qualified tribal school

24 modernization bond is the product of—
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1 ‘‘(A) the applicable credit rate, multiplied

2 by

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

4 bond.

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

6 of paragraph (1), the applicable credit rate with re7 spect to an issue is the rate equal to an average mar8 ket yield (as of the day before the date of issuance of

9 the issue) on outstanding long-term corporate debt ob10 ligations (determined monthly by the Secretary).

11 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND REDEMP12 TION.—In the case of a bond which is issued during

13 the 3-month period ending on a credit allowance date,

14 the amount of the credit determined under this sub15 section with respect to such credit allowance date

16 shall be a ratable portion of the credit otherwise deter17 mined based on the portion of the 3-month period

18 during which the bond is outstanding. A similar rule

19 shall apply when the bond is redeemed.

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

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

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

23 the excess of—
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1 ‘‘(A) the sum of the regular tax liability (as

2 defined in section 26(b)) plus the tax imposed by

3 section 55, over

4 ‘‘(B) the sum of the credits allowable under

5 part IV of subchapter A (other than subpart C

6 thereof, relating to refundable credits).

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

8 credit allowable under subsection (a) exceeds the limi9 tation imposed by paragraph (1) for such taxable

10 year, such excess shall be carried to the succeeding

11 taxable year and added to the credit allowable under

12 subsection (a) for such taxable year.

13 ‘‘(d) QUALIFIED TRIBAL SCHOOL MODERNIZATION

14 BOND; OTHER DEFINITIONS.—For purposes of this

15 section—

16 ‘‘(1) QUALIFIED TRIBAL SCHOOL MODERNIZA17 TION BOND.—

18 ‘‘(A) IN GENERAL.—The term ‘qualified

19 tribal school modernization bond’ means, subject

20 to subparagraph (B), any bond issued as part of

21 an issue under section 3 of the Indian School

22 Construction Act, as in effect on the date of the

23 enactment of this section, if—

24 ‘‘(i) 95 percent or more of the proceeds

25 of such issue are to be used for the construc-
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1 tion, rehabilitation, or repair of a school fa2 cility funded by the Bureau of Indian Af3 fairs of the Department of the Interior or

4 for the acquisition of land on which such a

5 facility is to be constructed with part of the

6 proceeds of such issue,

7 ‘‘(ii) the bond is issued by a tribe,

8 ‘‘(iii) the issuer designates such bond

9 for purposes of this section, and

10 ‘‘(iv) the term of each bond which is

11 part of such issue does not exceed 15 years.

12 ‘‘(B) NATIONAL LIMITATION ON AMOUNT OF

13 BONDS DESIGNATED.—

14 ‘‘(i) NATIONAL LIMITATION.—There is

15 a national qualified tribal school mod16 ernization bond limitation for each cal17 endar year. Such limitation is—

18 ‘‘(I) $200,000,000 for 2001,

19 ‘‘(II) $200,000,000 for 2002, and

20 ‘‘(III) zero after 2002.

21 ‘‘(ii) ALLOCATION OF LIMITATION.—

22 The national qualified tribal school mod23 ernization bond limitation shall be allocated

24 to tribes by the Secretary of the Interior

25 subject to the provisions of the Indian
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1 School Construction Act, as in effect on the

2 date of the enactment of this section.

3 ‘‘(iii) DESIGNATION SUBJECT TO LIMI4 TATION AMOUNT.—The maximum aggregate

5 face amount of bonds issued during any cal6 endar year which may be designated under

7 subsection (d)(1) with respect to any tribe

8 shall not exceed the limitation amount allo9 cated to such government under clause (ii)

10 for such calendar year.

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

12 ‘credit allowance date’ means—

13 ‘‘(A) March 15,

14 ‘‘(B) June 15,

15 ‘‘(C) September 15, and

16 ‘‘(D) December 15.

17 Such term includes the last day on which the bond is

18 outstanding.

19 ‘‘(3) BOND.—The term ‘bond’ includes any obli20 gation.

21 ‘‘(4) TRIBE.—The term ‘‘tribe’’ has the meaning

22 given the term ‘‘Indian tribal government’’ by section

23 7701(a)(40), including the application of section

24 7871(d).
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1 ‘‘(e) CREDIT INCLUDED IN GROSS INCOME.—Gross in2 come includes the amount of the credit allowed to the tax3 payer under this section (determined without regard to sub4 section (c)) and the amount so included shall be treated as

5 interest income.

6 ‘‘(f) BONDS HELD BY REGULATED INVESTMENT COM7 PANIES.—If any qualified tribal school modernization bond

8 is held by a regulated investment company, the credit deter9 mined under subsection (a) shall be allowed to shareholders

10 of such company under procedures prescribed by the Sec11 retary.

12 ‘‘(g) CREDITS MAY BE STRIPPED.—Under regulations

13 prescribed by the Secretary—

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

15 (including at issuance) of the ownership of a qualified

16 tribal school modernization bond and the entitlement

17 to the credit under this section with respect to such

18 bond. In case of any such separation, the credit under

19 this section shall be allowed to the person who on the

20 credit allowance date holds the instrument evidencing

21 the entitlement to the credit and not to the holder of

22 the bond.

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

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

25 section 1286 shall apply to the qualified tribal school
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1 modernization bond as if it were a stripped bond and

2 to the credit under this section as if it were a

3 stripped coupon.

4 ‘‘(h) TREATMENT FOR ESTIMATED TAX PURPOSES.—

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

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

7 a qualified tribal school modernization bonds on a credit

8 allowance date shall be treated as if it were a payment of

9 estimated tax made by the taxpayer on such date.

10 ‘‘(i) CREDIT MAY BE TRANSFERRED.—Nothing in any

11 law or rule of law shall be construed to limit the transfer12 ability of the credit allowed by this section through sale and

13 repurchase agreements.

14 ‘‘(j) CREDIT TREATED AS ALLOWED UNDER PART IV

15 OF SUBCHAPTER A.—For purposes of subtitle F, the credit

16 allowed by this section shall be treated as a credit allowable

17 under part IV of subchapter A of this chapter.

18 ‘‘(k) REPORTING.—Issuers of qualified tribal school

19 modernization bonds shall submit reports similar to the re20 ports required under section 149(e).’’.

21 SEC. 5. ADDITIONAL PROVISIONS.

22 (a) SOVEREIGN IMMUNITY.—This Act and the amend23 ments made by this Act shall not be construed to impact,

24 limit, or affect the sovereign immunity of the Federal Gov25 ernment or any State or tribal government.
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1 (b) APPLICATION.—This Act and the amendments

2 made by this Act shall take effect on the date of the enact3 ment of this Act with respect to bonds issued after December

4 31, 2000, regardless of the status of regulations promulgated

5 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 theInterior, and for other purposes.

OCTOBER 11 (legislative day, SEPTEMBER 22), 2000

Reported with an amendment