II 

109TH CONGRESS 

2D SESSION S. 3719 

To amend the Internal Revenue Code of 1986 to allow public school districts 

to receive no interest loans for the purchase of renewable energy systems, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 24, 2006 

Mr. REID (for himself, Mr. ENSIGN, Mr. SALAZAR, Mr. ALLARD, and Mr. 

CRAIG) introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to allow public 

school districts to receive no interest loans for the purchase of renewable energy systems, 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 ‘‘Renewable Schools En5 ergy Act of 2006’’. 

6 SEC. 2. QUALIFIED RENEWABLE SCHOOL ENERGY BONDS. 

7 (a) IN GENERAL.—Subchapter U of chapter 1 of the 

8 Internal Revenue Code of 1986 (relating to incentives for 


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1 education zones) is amended by redesignating section 

2 1397F as section 1397G and by adding at the end of part 

3 IV of such subchapter the following new section: 

4 ‘‘SEC. 1397F. QUALIFIED RENEWABLE SCHOOL ENERGY 

5 BONDS. 

6 ‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 

7 a qualified renewable school energy bond on 1 or more 

8 credit allowance dates of the bond occurring during any 

9 taxable year, there shall be allowed as a credit against the 

10 tax imposed by this chapter for the taxable year an 

11 amount equal to the sum of the credits determined under 

12 subsection (b) with respect to such dates. 

13 ‘‘(b) AMOUNT OF CREDIT.— 

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

15 determined under this subsection with respect to any 

16 credit allowance date for a qualified renewable 

17 school energy bond is 25 percent of the annual cred18 it determined with respect to such bond. 

19 ‘‘(2) ANNUAL CREDIT.—The annual credit de20 termined with respect to any qualified renewable 

21 school energy bond is the product of— 

22 ‘‘(A) the credit rate determined by the Sec23 retary under paragraph (3) for the day on 

24 which such bond was sold, multiplied by 


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

2 bond. 

3 ‘‘(3) DETERMINATION.—For purposes of para4 graph (2), with respect to any qualified renewable 

5 school energy bond, the Secretary shall determine 

6 daily or cause to be determined daily a credit rate 

7 which shall apply to the first day on which there is 

8 a binding, written contract for the sale or exchange 

9 of the bond. The credit rate for any day is the credit 

10 rate which the Secretary or the Secretary’s designee 

11 estimates will permit the issuance of qualified renew12 able school energy bonds with a specified maturity 

13 or redemption date without discount and without in14 terest cost to the qualified issuer. 

15 ‘‘(4) CREDIT ALLOWANCE DATE.—For purposes 

16 of this section, the term ‘credit allowance date’ 

17 means— 

18 ‘‘(A) March 15, 

19 ‘‘(B) June 15, 

20 ‘‘(C) September 15, and 

21 ‘‘(D) December 15. 

22 Such term also includes the last day on which the 

23 bond is outstanding. 

24 ‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE25 DEMPTION.—In the case of a bond which is issued 


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1 during the 3-month period ending on a credit allow2 ance date, the amount of the credit determined 

3 under this subsection with respect to such credit al4 lowance date shall be a ratable portion of the credit 

5 otherwise determined based on the portion of the 3- 

6 month period during which the bond is outstanding. 

7 A similar rule shall apply when the bond is redeemed 

8 or matures. 

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

10 credit allowed under subsection (a) for any taxable year 

11 shall not exceed the excess of— 

12 ‘‘(1) the sum of the regular tax liability (as de13 fined in section 26(b)) plus the tax imposed by sec14 tion 55, over 

15 ‘‘(2) the sum of the credits allowable under part 

16 IV of subchapter A (other than subpart C thereof, 

17 relating to refundable credits, subpart H thereof, 

18 section 1400N(l), and this section). 

19 ‘‘(d) QUALIFIED RENEWABLE SCHOOL ENERGY

20 BOND.—For purposes of this section— 

21 ‘‘(1) IN GENERAL.—The term ‘renewable school 

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

23 issue if— 

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

25 such issue are to be used for a qualified purVerDate Aug 31 2005 21:05 Jul 29, 2006 Jkt 049196 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3719.IS S3719

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1 pose with respect to a qualified school operated 

2 by an eligible local education agency, 

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

4 government of an eligible State within the juris5 diction of which such school is located, 

6 ‘‘(C) the issuer— 

7 ‘‘(i) designates such bond for purposes 

8 of this section, and 

9 ‘‘(ii) certifies that it has the written 

10 approval of the eligible local education 

11 agency for such bond issuance, and 

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

13 of such issue is 20 years. 

14 ‘‘(2) QUALIFIED SCHOOL.—The term ‘qualified 

15 school’ means any public school or public school sys16 tem administrative building which is owned by or op17 erated by an eligible local education agency. 

18 ‘‘(3) ELIGIBLE LOCAL EDUCATION AGENCY.— 

19 The term ‘eligible local education agency’ means any 

20 local educational agency as defined in section 9101 

21 of the Elementary and Secondary Education Act of 

22 1965. 

23 ‘‘(4) ELIGIBLE STATE.—The term ‘eligible 

24 State’ means, with respect to any calendar year— 


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1 ‘‘(A) one of the five States with the great2 est percentage population growth for the most 

3 recent preceding year for which data is avail4 able as determined by the Bureau of the Cen5 sus, and 

6 ‘‘(B) the State with a total percentage 

7 population growth greater than 9 percent but 

8 less than 13.9 percent and a total population 

9 under the age of 19 of less than 300,000 as de10 termined under the 2000 Census. 

11 ‘‘(5) QUALIFIED PURPOSE.—The term ‘quali12 fied purpose’ means, with respect to any qualified 

13 school, the purchase and installation of renewable 

14 energy products. 

15 ‘‘(e) LIMITATION ON AMOUNT OF BONDS DES16 IGNATED.— 

17 ‘‘(1) NATIONAL LIMITATION.—There is a na18 tional renewable school energy bond limitation for 

19 each calendar year. Such limitation is $50,000,000 

20 for 2007, $100,000,000 for 2008, $150,000,000 for 

21 2009, and, except as provided in paragraph (4), zero 

22 thereafter. 

23 ‘‘(2) ALLOCATION OF LIMITATION.—The na24 tional renewable school energy bond limitation for a 

25 calendar year shall be allocated by the Secretary— 


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1 ‘‘(A) among the eligible States described in 

2 subsection (d)(4)(A), 30 percent to the State 

3 with the greatest percentage population growth, 

4 20 percent to each of second and third ranked 

5 States, and 10 percent to each of the fourth 

6 and fifth ranked States, and 

7 ‘‘(B) to the State described in subsection 

8 (d)(4)(B), 10 percent. 

9 The limitation amount allocated to an eligible State 

10 under the preceding sentence shall be allocated by 

11 the State education agency to qualified schools with12 in such State. 

13 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

14 AMOUNT.—The maximum aggregate face amount of 

15 bonds issued during any calendar year which may be 

16 designated under subsection (d)(1) with respect to 

17 any qualified school shall not exceed the limitation 

18 amount allocated to such school under paragraph (2) 

19 for such calendar year. 

20 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 

21 for any calendar year— 

22 ‘‘(A) the limitation amount for any eligible 

23 State, exceeds 

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

25 such year which are designated under subVerDate Aug 31 2005 21:05 Jul 29, 2006 Jkt 049196 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3719.IS S3719

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1 section (d)(1) with respect to qualified schools 

2 within such State, 

3 the limitation amount for such State for the fol4 lowing calendar year shall be increased by the 

5 amount of such excess. Any carryforward of a limi6 tation amount may be carried only to the first 2 

7 years following the unused limitation year. For pur8 poses of the preceding sentence, a limitation amount 

9 shall be treated as used on a first-in first-out basis. 

10 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec11 tion— 

12 ‘‘(1) BOND.—The term ‘bond’ includes any ob13 ligation. 

14 ‘‘(2) STATE.—The term ‘State’ includes the 

15 District of Columbia and any possession of the 

16 United States. 

17 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

18 income includes the amount of the credit allowed to the 

19 taxpayer under this section (determined without regard to 

20 subsection (c)). 

21 ‘‘(h) CREDITS MAY BE STRIPPED.—Under regula22 tions prescribed by the Secretary— 

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

24 (including at issuance) of the ownership of a quali25 fied renewable school energy bond and the entitleVerDate Aug 31 2005 21:05 Jul 29, 2006 Jkt 049196 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3719.IS S3719

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1 ment to the credit under this section with respect to 

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

3 under this section shall be allowed to the person 

4 which, on the credit allowance date, holds the instru5 ment evidencing the entitlement to the credit and 

6 not to the holder of the bond. 

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

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

9 of section 1286 shall apply to the qualified renew10 able school energy bond as if it were a stripped bond 

11 and to the credit under this section as if it were a 

12 stripped coupon. 

13 ‘‘(i) CREDIT TREATED AS NONREFUNDABLE BOND14 HOLDER CREDIT.—For purposes of this title, the credit 

15 allowed by this section shall be treated as a credit allow16 able under subpart H of part IV of subchapter A of this 

17 chapter. 

18 ‘‘(j) SPECIAL RULES.—For purposes of this section, 

19 rules similar to the rules under paragraphs (3) and (4) 

20 of section 54(l) shall apply.’’. 

21 (b) CONFORMING AMENDMENTS.—The table of sec22 tions for part V of such subchapter is amended by redesig23 nating section 1397F as section 1397G and by adding at 

24 the end of the table of sections for part IV of such sub25 chapter the following new item: 

‘‘Sec. 1397F. Credit for holders of qualified renewable school energy bonds.’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to bonds issued after December 

3 31, 2006. 

Æ 


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