II

106TH CONGRESS

2D SESSION S. 2580

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, and Mr. INOUYE)

introduced the following bill; which was read twice and referred to the

Committee on Indian Affairs

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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Indian School Con5 struction Act’’.

6 SEC. 2. DEFINITIONS.

7 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

3 Interior.

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

10 dormitory that is operated by a tribal organization

11 for the education of Indian children and that re12 ceives financial assistance for its operation under a

13 contract, grant, or agreement with the Bureau under

14 section 102, 103(a), or 208 of the Indian Self-Deter15 mination and Education Assistance Act (25 U.S.C.

16 450f, 450h(a), and 458d).

17 (5) TRIBE.—The term ‘‘tribe’’ means any In18 dian tribe, band, nation, or other organized group or

19 community, including a Native village, Regional Cor20 poration, or Village Corporation (as defined in or es21 tablished pursuant to the Alaska Native Claims Set22 tlement Act), that is recognized as eligible for the

23 special programs and services provided by the

24 United States to Indians because of their status as

25 Indians.
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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 author4 ity to issue tribal school modernization bonds to provide

5 funding for the improvement, repair, and new construction

6 of tribal schools.

7 (b) ELIGIBILITY.—

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

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

10 shall prepare and submit to the Secretary a plan of

11 construction that meets the requirements of para12 graph (2).

13 (2) PLAN OF CONSTRUCTION.—A plan of con14 struction meets the requirements of this paragraph

15 if such plan—

16 (A) contains a description of the improve17 ments, repairs, or new construction to be un18 dertaken with funding provided under the bond;

19 (B) demonstrates that a comprehensive

20 survey has been undertaken concerning the con21 struction or renovation needs of the tribal

22 school involved;

23 (C) contains assurances that funding

24 under the bond will be used only for the activi25 ties described in the plan; and
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1 (D) contains any other reasonable and re2 lated information determined appropriate by the

3 Secretary.

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

5 is eligible to participate in the program under this

6 section, the Secretary shall give priority to tribes

7 that, as demonstrated by the relevant plans of con8 struction, will fund projects described in the Re9 placement School Construction priority list of the

10 Bureau of Indian Affairs, as maintained under the

11 Indian Self-Determination and Education Assistance

12 Act.

13 (4) APPROVAL.—Except as provided in para14 graph (3), the Secretary shall approve the issuance

15 of qualified tribal school modernization bonds by

16 tribes with approved plans of construction on the

17 basis of the order in which such plans were received

18 by the Secretary. Such approval shall not be unrea19 sonably withheld.

20 (c) PERMISSIBLE ACTIVITIES.—In addition to the

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

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

23 (1) enter into contracts with architects, engi24 neers, and construction firms in order to determine
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1 the needs of the tribal school and for the design and

2 engineering of the school;

3 (2) enter into contracts with financial advisors,

4 underwriters, attorneys, trustees, and other profes5 sionals who would be able to provide assistance to

6 the tribe in issuing bonds; and

7 (3) carry out other activities determined appro8 priate by the Secretary.

9 (d) BOND TRUSTEE.—

10 (1) IN GENERAL.—Notwithstanding any other

11 provision of law, any tribal school construction bond

12 issued by a tribe under this section shall be subject

13 to a trust agreement between the tribe and a trust14 ee.

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

16 that meets requirements established by the Secretary

17 by regulation may be designated as a trustee under

18 paragraph (1).

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

20 agreement entered into by a tribe under this sub21 section shall specify that the trustee, with respect to

22 bonds issued under this section shall—

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

24 the bond;

25 (B) make payments to bondholders;
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1 (C) from any amounts in excess of the

2 amounts necessary to make payments to bond3 holders, in accordance with the requirements of

4 paragraph (4), make direct payments to con5 tractors with the governing body of the tribe for

6 facility improvement, repair, or new construc7 tion pursuant to this section; and

8 (D) invest in the tribal school moderniza9 tion escrow account established under sub10 section (f)(2) such amounts of the proceeds as

11 the trustee determines not to be necessary to

12 make payments under subparagraphs (B) and

13 (C).

14 (4) REQUIREMENTS FOR MAKING DIRECT PAY15 MENTS.—

16 (A) IN GENERAL.—Notwithstanding any

17 other provision of law, only the trustee shall

18 make the direct payments referred to in para19 graph (3)(C) in accordance with requirements

20 that the tribe shall prescribe in the agreement

21 entered into under paragraph (3). The tribe

22 shall require the trustee, prior to making a pay23 ment to a contractor under paragraph (3)(C),

24 to inspect the project that is the subject of the

25 contract, or provide for an inspection of that
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1 project by a local financial institution, to ensure

2 the completion of the project.

3 (B) CONTRACTS.—Each contract referred

4 to in paragraph (3)(C) shall specify, or be re5 negotiated to specify, that payments under the

6 contract shall be made in accordance with this

7 subsection.

8 (e) PAYMENTS OF PRINCIPAL AND INTEREST.—

9 (1) PRINCIPAL.—Qualified tribal school mod10 ernization bonds shall be issued under this section as

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

12 of issuance. Upon the expiration of such 15-year pe13 riod, the entire outstanding principal under the bond

14 shall become due and payable.

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

16 school modernization bond shall be in the form of a

17 tax credit under section 1400F of the Internal Rev18 enue Code of 1986.

19 (f) BOND GUARANTEES.—

20 (1) IN GENERAL.—Payment of the principal

21 portion of a qualified tribal school modernization

22 bond issued under this section shall be guaranteed

23 by amounts deposited in the tribal school moderniza24 tion escrow account established under paragraph

25 (2).
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1 (2) ESTABLISHMENT OF ACCOUNT.—

2 (A) IN GENERAL.—Notwithstanding any

3 other provision of law, subject to the availability

4 of amounts made available under an appropria5 tions Act, beginning in fiscal year 2001, the

6 Secretary may deposit not more than

7 $30,000,000 of unobligated funds into a tribal

8 school modernization escrow account.

9 (B) PAYMENTS.—The Secretary shall use

10 any amounts deposited in the escrow account

11 under subparagraph (A) and subsection

12 (d)(3)(D) to make payments to holders of quali13 fied tribal school modernization bonds issued

14 under this section.

15 (g) LIMITATIONS.—

16 (1) OBLIGATION OF TRIBES.—Notwithstanding

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

18 qualified tribal school modernization bond under this

19 section shall not be obligated to repay the principal

20 on the bond.

21 (2) LAND AND FACILITIES.—Any land or facili22 ties purchased or improved with amounts derived

23 from qualified tribal school modernization bonds

24 issued under this section shall not be mortgaged or

25 used as collateral for such bonds.
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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 sub4 chapter:

5 ‘‘Subchapter X—Tribal School Modernization

6 Provisions

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

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

8 SCHOOL MODERNIZATION BONDS.

9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax10 payer who holds a qualified tribal school modernization

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

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

13 against the tax imposed by this chapter for such taxable

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

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

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

17 ‘‘(b) AMOUNT OF CREDIT.—

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

19 determined under this subsection with respect to any

20 credit allowance date for a qualified tribal school

21 modernization bond is 25 percent of the annual

22 credit determined with respect to such bond.

23 ‘‘(2) ANNUAL CREDIT.—The annual credit de24 termined with respect to any qualified tribal school

25 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

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

9 issuance of the issue) on outstanding long-term cor10 porate debt obligations (determined under regula11 tions prescribed by the Secretary).

12 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE13 DEMPTION.—In the case of a bond which is issued

14 during the 3-month period ending on a credit allow15 ance date, the amount of the credit determined

16 under this subsection with respect to such credit al17 lowance date shall be a ratable portion of the credit

18 otherwise determined based on the portion of the 3-

19 month period during which the bond is outstanding.

20 A similar rule shall apply when the bond is re21 deemed.

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

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

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

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

2 (as defined in section 26(b)) plus the tax im3 posed by section 55, over

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

5 under part IV of subchapter A (other than sub6 part C thereof, relating to refundable credits).

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

8 credit allowable under subsection (a) exceeds the

9 limitation 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 school modernization bond’ means, subject to

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

21 an issue under section 3 of the Indian School

22 Construction Act if—

23 ‘‘(i) 95 percent or more of the pro24 ceeds of such issue are to be used for the

25 construction, rehabilitation, or repair of a
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1 tribal school facility or for the acquisition

2 of land on which such a facility is to be

3 constructed with part of the proceeds of

4 such issue,

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

6 tribe,

7 ‘‘(iii) the issuer designates such bond

8 for purposes of this section, and

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

10 part of such issue does not exceed 15

11 years.

12 ‘‘(B) NATIONAL LIMITATION ON AMOUNT

13 OF BONDS DESIGNATED.—There is a national

14 qualified tribal school modernization bond limi15 tation for each calendar year. Such limitation

16 is—

17 ‘‘(i) $200,000,000 for 2001,

18 ‘‘(ii) $200,000,000 for 2002, and

19 ‘‘(iii) zero after 2002.

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

21 ‘credit allowance date’ means—

22 ‘‘(A) March 15,

23 ‘‘(B) June 15,

24 ‘‘(C) September 15, and

25 ‘‘(D) December 15.
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1 Such term includes the last day on which the bond

2 is outstanding.

3 ‘‘(3) BOND.—The term ‘bond’ includes any ob4 ligation.

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

6 given such term by section 2 of the Indian School

7 Construction Act.

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

9 income includes the amount of the credit allowed to the

10 taxpayer under this section (determined without regard to

11 subsection (c)) and the amount so included shall be treat12 ed as interest income.

13 ‘‘(f) BONDS HELD BY REGULATED INVESTMENT

14 COMPANIES.—If any qualified tribal school modernization

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

16 determined under subsection (a) shall be allowed to share17 holders of such company under procedures prescribed by

18 the Secretary.

19 ‘‘(g) CREDITS MAY BE STRIPPED.—Under regula20 tions prescribed by the Secretary—

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

22 (including at issuance) of the ownership of a quali23 fied tribal school modernization bond and the entitle24 ment to the credit under this section with respect to

25 such bond. In case of any such separation, the credit
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1 under this section shall be allowed to the person who

2 on the credit allowance date holds the instrument ev3 idencing the entitlement to the credit and not to the

4 holder of the bond.

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

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

7 of section 1286 shall apply to the qualified tribal

8 school modernization bond as if it were a stripped

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

10 were a stripped coupon.

11 ‘‘(h) TREATMENT FOR ESTIMATED TAX PUR12 POSES.—Solely for purposes of sections 6654 and 6655,

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

14 of holding a qualified tribal school modernization bonds

15 on a credit allowance date shall be treated as if it were

16 a payment of estimated tax made by the taxpayer on such

17 date.

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

19 any law or rule of law shall be construed to limit the trans20 ferability of the credit allowed by this section through sale

21 and repurchase agreements.

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

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

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

25 allowable under part IV of subchapter A of this chapter.
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1 ‘‘(k) REPORTING.—Issuers of qualified tribal school

2 modernization bonds shall submit reports similar to the

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

4 SEC. 5. SOVEREIGN IMMUNITY.

5 This Act and the amendments made by this Act shall

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

7 immunity of the Federal Government or any State or trib8 al government.

Æ