II 

★(Star Print)

109TH CONGRESS 

1ST SESSION S. 428 

To provide $30,000,000,000 in new transportation infrastructure funding 

in addition to TEA–21 levels through bonding to empower States and 

local governments to complete significant long-term capital improvement 

projects for highways, public transportation systems, and rail systems, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 17, 2005 

Mr. TALENT (for himself, Mr. WYDEN, Mr. ALLEN, Mr. COLEMAN, Ms. COLLINS, Mr. CORZINE, Mr. DAYTON, Mrs. DOLE, Mr. GRAHAM, and Mr. 

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

to the Committee on Finance 

A BILL 

To provide $30,000,000,000 in new transportation infrastructure funding in addition to TEA–21 levels through 

bonding to empower States and local governments to 

complete significant long-term capital improvement 

projects for highways, public transportation systems, and 

rail 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; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Build America Bonds Act of 2005’’. 
2 

•S 428 IS1S 

1 (b) REFERENCES TO INTERNAL REVENUE CODE OF

2 1986.—Except as otherwise expressly provided, whenever 

3 in this Act an amendment or repeal is expressed in terms 

4 of an amendment to, or repeal of, a section or other provi5 sion, the reference shall be considered to be made to a 

6 section or other provision of the Internal Revenue Code 

7 of 1986. 

8 SEC. 2. FINDINGS AND PURPOSE. 

9 (a) FINDINGS.—Congress finds the following: 

10 (1) Our Nation’s highways, public transpor11 tation systems, and rail systems drive our economy, 

12 enabling all industries to achieve growth and produc13 tivity that makes America strong and prosperous. 

14 (2) The establishment, maintenance, and im15 provement of the national transportation network is 

16 a national priority, for economic, environmental, en17 ergy, security, and other reasons. 

18 (3) The ability to move people and goods is crit19 ical to maintaining State, metropolitan, rural, and 

20 local economies. 

21 (4) The construction of infrastructure requires 

22 the skills of numerous occupations, including those 

23 in the contracting, engineering, planning and design, 

24 materials supply, manufacturing, distribution, and 

25 safety industries. 
3 

•S 428 IS1S 

1 (5) Investing in transportation infrastructure 

2 creates long-term capital assets for the Nation that 

3 will help the United States address its enormous in4 frastructure needs and improve its economic produc5 tivity. 

6 (6) Investment in transportation infrastructure 

7 creates jobs and spurs economic activity to put peo8 ple back to work and stimulate the economy. 

9 (7) Every billion dollars in transportation in10 vestment has the potential to create up to 47,500 

11 jobs. 

12 (8) Every dollar invested in the Nation’s trans13 portation infrastructure yields at least $5.70 in eco14 nomic benefits because of reduced delays, improved 

15 safety, and reduced vehicle operating costs. 

16 (9) The proposed increases to the Transpor17 tation Equity Act for the 21st Century (TEA–21) 

18 will not be sufficient to compensate for the Nation’s 

19 transportation infrastructure deficit. 

20 (b) PURPOSE.—The purpose of this Act is to provide 

21 financing for long-term infrastructure capital investments 

22 that are not currently being met by existing transportation 

23 and infrastructure investment programs, including mega24 projects, projects of national significance, multistate 

25 transportation corridors, intermodal transportation facili-
4 

•S 428 IS1S 

1 ties, and transportation and security improvements to 

2 highways, public transportation systems, and rail systems. 

3 SEC. 3. CREDIT TO HOLDERS OF BUILD AMERICA BONDS. 

4 (a) IN GENERAL.—Part IV of subchapter A of chap5 ter 1 (relating to credits against tax) is amended by add6 ing at the end the following new subpart: 

7 ‘‘Subpart H—Nonrefundable Credit for Holders of 

8 Build America Bonds 

‘‘Sec. 54. Credit to holders of Build America bonds. 

9 ‘‘SEC. 54. CREDIT TO HOLDERS OF BUILD AMERICA BONDS. 

10 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax11 payer who holds a Build America bond on a credit allow12 ance date of such bond which occurs during the taxable 

13 year, there shall be allowed as a credit against the tax 

14 imposed by this chapter for such taxable year an amount 

15 equal to the sum of the credits determined under sub16 section (b) with respect to credit allowance dates during 

17 such year on which the taxpayer holds such bond. 

18 ‘‘(b) AMOUNT OF CREDIT.— 

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

20 determined under this subsection with respect to any 

21 credit allowance date for a Build America bond is 25 

22 percent of the annual credit determined with respect 

23 to such bond. 
5 

•S 428 IS1S 

1 ‘‘(2) ANNUAL CREDIT.—The annual credit de2 termined with respect to any Build America bond is 

3 the product of— 

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

5 by 

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

7 bond. 

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

9 of paragraph (2), the applicable credit rate with re10 spect to an issue is the rate equal to an average 

11 market yield (as of the day before the date of sale 

12 of the issue) on outstanding long-term corporate 

13 debt obligations (determined in such manner as the 

14 Secretary prescribes). 

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 includes the last day on which the bond 

23 is outstanding. 

24 ‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE25 DEMPTION.—In the case of a bond which is issued 
6 

•S 428 IS1S 

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 re8 deemed. 

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

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

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

12 the excess of— 

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

14 (as defined in section 26(b)) plus the tax im15 posed by section 55, over 

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

17 under this part (other than this subpart and 

18 subpart C). 

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

20 credit allowable under subsection (a) exceeds the 

21 limitation imposed by paragraph (1) for such taxable 

22 year, such excess shall be carried to the succeeding 

23 taxable year and added to the credit allowable under 

24 subsection (a) for such taxable year. 
7 

•S 428 IS1S 

1 ‘‘(d) CREDIT INCLUDED IN GROSS INCOME.—Gross 

2 income includes the amount of the credit allowed to the 

3 taxpayer under this section (determined without regard to 

4 subsection (c)) and the amount so included shall be treat5 ed as interest income. 

6 ‘‘(e) BUILD AMERICA BOND.—For purposes of this 

7 part, the term ‘Build America bond’ means any bond 

8 issued as part of an issue if— 

9 ‘‘(1) the net spendable proceeds from the sale 

10 of such issue are to be used— 

11 ‘‘(A) for expenditures incurred after the 

12 date of the enactment of this section for any 

13 qualified project, or 

14 ‘‘(B) for deposit in the Build America 

15 Trust Account for repayment of Build America 

16 bonds at maturity, 

17 ‘‘(2) the bond is issued by the Transportation 

18 Finance Corporation, is in registered form, and 

19 meets the Build America bond limitation require20 ments under subsection (g), 

21 ‘‘(3) the Transportation Finance Corporation 

22 certifies that it meets the State contribution require23 ment of subsection (k) with respect to such project, 

24 as in effect on the date of issuance, 
8 

•S 428 IS1S 

1 ‘‘(4) the Transportation Finance Corporation 

2 certifies that the State in which an approved quali3 fied project is located meets the requirement de4 scribed in subsection (l), 

5 ‘‘(5) except for bonds issued in accordance with 

6 subsection (g)(6), the term of each bond which is 

7 part of such issue does not exceed 30 years, 

8 ‘‘(6) the payment of principal with respect to 

9 such bond is the obligation of the Transportation Fi10 nance Corporation, and 

11 ‘‘(7) with respect to bonds described in para12 graph (1)(A), the issue meets the requirements of 

13 subsection (h) (relating to arbitrage). 

14 ‘‘(f) QUALIFIED PROJECT.—For purposes of this sec15 tion— 

16 ‘‘(1) IN GENERAL.—The term ‘qualified project’ 

17 means any— 

18 ‘‘(A) qualified highway project, and 

19 ‘‘(B) qualified public transportation 

20 project, 

21 proposed by 1 or more States and approved by the 

22 Transportation Finance Corporation. 

23 ‘‘(2) QUALIFIED HIGHWAY PROJECT.— 

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

25 highway project’ means any— 
9 

•S 428 IS1S 

1 ‘‘(i) project of regional or national sig2 nificance, 

3 ‘‘(ii) multistate corridor program, 

4 ‘‘(iii) border planning, operations, 

5 technology, and capacity improvement pro6 gram, and 

7 ‘‘(iv) freight intermodal connector 

8 project. 

9 ‘‘(B) PROJECTS OF REGIONAL AND NA10 TIONAL SIGNIFICANCE.— 

11 ‘‘(i) IN GENERAL.—The term ‘project 

12 of regional or national significance’ means 

13 the eligible project costs of any surface 

14 transportation project which is eligible for 

15 Federal assistance under title 23, United 

16 States Code, including any freight rail 

17 project and activity eligible under such 

18 title, if such eligible project costs are rea19 sonably anticipated to equal or exceed the 

20 lesser of— 

21 ‘‘(I) $100,000,000, or 

22 ‘‘(II) 50 percent of the amount of 

23 Federal highway assistance funds ap24 portioned for the most recently com-
10 

•S 428 IS1S 

1 pleted fiscal year to the State in 

2 which the project is located. 

3 ‘‘(ii) ELIGIBLE PROJECT COSTS.—The 

4 term ‘eligible project costs’ means the costs 

5 of— 

6 ‘‘(I) development phase activities, 

7 including planning, feasibility anal8 ysis, revenue forecasting, environ9 mental review, preliminary engineer10 ing and design work, and other 

11 preconstruction activities, and 

12 ‘‘(II) construction, reconstruc13 tion, rehabilitation, and acquisition of 

14 real property (including land related 

15 to the project and improvements to 

16 land), environmental mitigation, con17 struction contingencies, acquisition of 

18 equipment, and operational improve19 ments. 

20 ‘‘(iii) CRITERIA FOR APPROVAL.—The 

21 Transportation Finance Corporation may 

22 approve a project of regional or national 

23 significance only if the Corporation deter24 mines that the project is based on the re-
11 

•S 428 IS1S 

1 sults of preliminary engineering, and is 

2 justified based on the project’s ability— 

3 ‘‘(I) to generate national or re4 gional economic benefits, including 

5 creating jobs, expanding business op6 portunities, and impacting the gross 

7 domestic product, 

8 ‘‘(II) to reduce congestion, in9 cluding impacts in the State, region, 

10 and Nation, 

11 ‘‘(III) to improve transportation 

12 safety, including reducing transpor13 tation accidents, injuries, and fatali14 ties, and 

15 ‘‘(IV) to otherwise enhance the 

16 national transportation system. 

17 ‘‘(C) MULTISTATE CORRIDOR PROGRAM.— 

18 ‘‘(i) IN GENERAL.—The term 

19 ‘multistate corridor program’ means any 

20 program for multistate highway and 

21 multimodal planning studies and construc22 tion. 

23 ‘‘(ii) CRITERIA FOR APPROVAL.—The 

24 Transportation Finance Corporation shall 
12 

•S 428 IS1S 

1 consider in approving any multistate cor2 ridor program— 

3 ‘‘(I) the existence and signifi4 cance of signed and binding multi5 jurisdictional agreements, 

6 ‘‘(II) prospects for early comple7 tion of the program, or 

8 ‘‘(III) whether the projects under 

9 such program to be studied or con10 structed are located on corridors iden11 tified by section 1105(c) of the Inter12 modal Surface Transportation Effi13 ciency Act of 1991 (Public Law 102– 

14 240; 105 Stat. 2032). 

15 ‘‘(D) BORDER PLANNING, OPERATIONS, 

16 TECHNOLOGY, AND CAPACITY IMPROVEMENT

17 PROGRAM.— 

18 ‘‘(i) IN GENERAL.—The term ‘border 

19 planning, operations, technology, and ca20 pacity improvement program’ means any 

21 program which includes 1 or more eligible 

22 activities to support coordination and im23 provement in bi-national transportation 

24 planning, operations, efficiency, informa25 tion exchange, safety, and security at the 
13 

•S 428 IS1S 

1 international borders of the United States 

2 with Canada and Mexico. 

3 ‘‘(ii) ELIGIBLE ACTIVITIES.—For pur4 poses of this subparagraph, the term ‘eligi5 ble activities’ means— 

6 ‘‘(I) highway and multimodal 

7 planning or environmental studies, 

8 ‘‘(II) cross-border port of entry 

9 and safety inspection improvements, 

10 including operational enhancements 

11 and technology applications, 

12 ‘‘(III) technology and informa13 tion exchange activities, and 

14 ‘‘(IV) right-of-way acquisition, 

15 design, and construction, as needed to 

16 implement the enhancements or appli17 cations described in subclauses (II) 

18 and (III), to decrease air pollution 

19 emissions from vehicles or inspection 

20 facilities at border crossings, or to in21 crease highway capacity at or near 

22 international borders. 

23 ‘‘(E) FREIGHT INTERMODAL CONNECTOR

24 PROJECT.— 
14 

•S 428 IS1S 

1 ‘‘(i) IN GENERAL.—The term ‘freight 

2 intermodal connector project’ means any 

3 project for the construction of and im4 provements to publicly owned freight inter5 modal connectors to the National Highway 

6 System, the provision of access to such 

7 connectors, and operational improvements 

8 for such connectors (including capital in9 vestment for intelligent transportation sys10 tems), except that a project located within 

11 the boundaries of an intermodal freight fa12 cility shall only include highway infrastruc13 ture modifications necessary to facilitate 

14 direct intermodal access between the con15 nector and the facility. 

16 ‘‘(ii) CRITERIA FOR APPROVAL.—The 

17 Transportation Finance Corporation shall 

18 consider in approving any freight inter19 modal connector project the criteria set 

20 forth in the report of the Department of 

21 Transportation to Congress entitled ‘Pull22 ing Together: The NHS and its Connec23 tions to Major Intermodal Terminals’. 

24 ‘‘(iii) FREIGHT INTERMODAL CON25 NECTOR.—The term ‘freight intermodal 
15 

•S 428 IS1S 

1 connector’ means the roadway that con2 nects to an intermodal freight facility that 

3 carries or will carry intermodal traffic. 

4 ‘‘(iv) INTERMODAL FREIGHT FACIL5 ITY.—The term ‘intermodal freight facility’ 

6 means a port, airport, truck-rail terminal, 

7 and pipeline-truck terminal. 

8 ‘‘(3) QUALIFIED PUBLIC TRANSPORTATION

9 PROJECT.—The term ‘qualified public transportation 

10 project’ means a project for public transportation fa11 cilities or other facilities which are eligible for assist12 ance under title 49, United States Code, including 

13 intercity passenger rail. 

14 ‘‘(g) LIMITATION ON AMOUNT OF BONDS DES15 IGNATED; ALLOCATION OF BOND PROCEEDS.— 

16 ‘‘(1) NATIONAL LIMITATION.—There is a Build 

17 America bond limitation for each calendar year. 

18 Such limitation is— 

19 ‘‘(A) with respect to bonds described in 

20 subsection (e)(1)(A)— 

21 ‘‘(i) $5,500,000,000 for 2005, 

22 ‘‘(ii) $8,000,000,000 for 2006, 

23 ‘‘(iii) $8,000,000,000 for 2007, 

24 ‘‘(iv) $3,000,000,000 for 2008, 

25 ‘‘(v) $3,000,000,000 for 2009, 
16 

•S 428 IS1S 

1 ‘‘(vi) $2,500,000,000 for 2010, and 

2 ‘‘(vii) except as provided in paragraph 

3 (4), zero thereafter, plus 

4 ‘‘(B) with respect to bonds described in 

5 subsection (e)(1)(B), such amount each cal6 endar year as determined necessary by the 

7 Transportation Finance Corporation to provide 

8 funds in the Build America Trust Account for 

9 the repayment of Build America bonds at matu10 rity, except that the aggregate amount of such 

11 bonds for all calendar years shall not exceed 

12 $9,000,000,000. 

13 ‘‘(2) ALLOCATION OF BONDS FOR HIGHWAY

14 AND PUBLIC TRANSPORTATION PURPOSES.—Except 

15 with respect to qualified projects described in sub16 section (j)(3), and subject to paragraph (3)— 

17 ‘‘(A) QUALIFIED HIGHWAY PROJECTS.— 

18 From Build America bonds issued under the 

19 annual limitation in paragraph (1)(A), the 

20 Transportation Finance Corporation shall allo21 cate 80 percent of the net spendable proceeds 

22 to the States for qualified highway projects des23 ignated by law from recommendations sub24 mitted to Congress identifying various projects 

25 approved as meeting the criteria required for 
17 

•S 428 IS1S 

1 each such project by the Transportation Fi2 nance Corporation. 

3 ‘‘(B) QUALIFIED PUBLIC TRANSPORTATION

4 PROJECTS.—From Build America bonds issued 

5 under the annual limitation in paragraph 

6 (1)(A), the Transportation Finance Corporation 

7 shall allocate 20 percent of the net spendable 

8 proceeds to the States for qualified public 

9 transportation projects designated by law from 

10 recommendations submitted to Congress identi11 fying various projects approved as meeting the 

12 criteria required for each such project by the 

13 Transportation Finance Corporation. 

14 ‘‘(3) MINIMUM ALLOCATIONS TO STATES.—In 

15 making allocations for each calendar year under 

16 paragraph (2), the Transportation Finance Corpora17 tion shall ensure that the amount allocated for quali18 fied projects located in each State for such calendar 

year is not less than 1 19 ⁄2 percent of the total amount 

20 allocated for such year. 

21 ‘‘(4) CARRYOVER OF UNUSED ISSUANCE LIMI22 TATION.—If for any calendar year the limitation 

23 amount imposed by paragraph (1) exceeds the 

24 amount of Build America bonds issued during such 

25 year, such excess shall be carried forward to one or 
18 

•S 428 IS1S 

1 more succeeding calendar years as an addition to the 

2 limitation imposed by paragraph (1) and until used 

3 by issuance of Build America bonds. 

4 ‘‘(5) ISSUANCE OF SMALL DENOMINATION

5 BONDS.—From the Build America bond limitation 

6 for each year, the Transportation Finance Corpora7 tion shall issue a limited quantity of Build America 

8 bonds in small denominations suitable for purchase 

9 as gifts by individual investors wishing to show their 

10 support for investing in America’s infrastructure. 

11 ‘‘(h) SPECIAL RULES RELATING TO ARBITRAGE.— 

12 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

13 an issue shall be treated as meeting the require14 ments of this subsection if as of the date of 

15 issuance, the Transportation Finance Corporation 

16 reasonably expects— 

17 ‘‘(A) to spend at least 85 percent of the 

18 net spendable proceeds from the sale of the 

19 issue for 1 or more qualified projects within the 

20 5-year period beginning on such date, 

21 ‘‘(B) to incur a binding commitment with 

22 a third party to spend at least 10 percent of the 

23 net spendable proceeds from the sale of the 

24 issue, or to commence construction, with re-
19 

•S 428 IS1S 

1 spect to such projects within the 12-month pe2 riod beginning on such date, and 

3 ‘‘(C) to proceed with due diligence to com4 plete such projects and to spend the net spend5 able proceeds from the sale of the issue. 

6 ‘‘(2) SPENT PROCEEDS.—Net spendable pro7 ceeds are considered spent by the Transportation Fi8 nance Corporation when a sponsor of a qualified 

9 project obtains a reimbursement from the Transpor10 tation Finance Corporation for eligible project costs. 

11 ‘‘(3) RULES REGARDING CONTINUING COMPLI12 ANCE AFTER 5-YEAR DETERMINATION.—If at least 

13 85 percent of the net spendable proceeds from the 

14 sale of the issue is not expended for 1 or more quali15 fied projects within the 5-year period beginning on 

16 the date of issuance, but the requirements of para17 graph (1) are otherwise met, an issue shall be treat18 ed as continuing to meet the requirements of this 

19 subsection if the Transportation Finance Corpora20 tion uses all unspent net spendable proceeds from 

21 the sale of the issue to redeem bonds of the issue 

22 within 90 days after the end of such 5-year period. 

23 ‘‘(4) REALLOCATION.—In the event the recipi24 ent of an allocation under subsection (g) fails to 

25 demonstrate to the satisfaction of the Transpor-
20 

•S 428 IS1S 

1 tation Finance Corporation that its actions will allow 

2 the Transportation Finance Corporation to meet the 

3 requirements under this subsection, the Transpor4 tation Finance Corporation may redistribute the al5 location meant for such recipient to other recipients. 

6 ‘‘(i) RECAPTURE OF PORTION OF CREDIT WHERE

7 CESSATION OF COMPLIANCE.— 

8 ‘‘(1) IN GENERAL.—If any bond which when 

9 issued purported to be a Build America bond ceases 

10 to be such a qualified bond, the Transportation Fi11 nance Corporation shall pay to the United States (at 

12 the time required by the Secretary) an amount equal 

13 to the sum of— 

14 ‘‘(A) the aggregate of the credits allowable 

15 under this section with respect to such bond 

16 (determined without regard to subsection (c)) 

17 for taxable years ending during the calendar 

18 year in which such cessation occurs and the 2 

19 preceding calendar years, and 

20 ‘‘(B) interest at the underpayment rate 

21 under section 6621 on the amount determined 

22 under subparagraph (A) for each calendar year 

23 for the period beginning on the first day of 

24 such calendar year. 
21 

•S 428 IS1S 

1 ‘‘(2) FAILURE TO PAY.—If the Transportation 

2 Finance Corporation fails to timely pay the amount 

3 required by paragraph (1) with respect to such bond, 

4 the tax imposed by this chapter on each holder of 

5 any such bond which is part of such issue shall be 

6 increased (for the taxable year of the holder in which 

7 such cessation occurs) by the aggregate decrease in 

8 the credits allowed under this section to such holder 

9 for taxable years beginning in such 3 calendar years 

10 which would have resulted solely from denying any 

11 credit under this section with respect to such issue 

12 for such taxable years. 

13 ‘‘(3) SPECIAL RULES.— 

14 ‘‘(A) TAX BENEFIT RULE.—The tax for 

15 the taxable year shall be increased under para16 graph (2) only with respect to credits allowed 

17 by reason of this section which were used to re18 duce tax liability. In the case of credits not so 

19 used to reduce tax liability, the carryforwards 

20 and carrybacks under section 39 shall be appro21 priately adjusted. 

22 ‘‘(B) NO CREDITS AGAINST TAX.—Any in23 crease in tax under paragraph (2) shall not be 

24 treated as a tax imposed by this chapter for 

25 purposes of determining— 
22 

•S 428 IS1S 

1 ‘‘(i) the amount of any credit allow2 able under this part, or 

3 ‘‘(ii) the amount of the tax imposed 

4 by section 55. 

5 ‘‘(j) BUILD AMERICA TRUST ACCOUNT.— 

6 ‘‘(1) IN GENERAL.—The following amounts 

7 shall be held in a Build America Trust Account by 

8 the Transportation Finance Corporation: 

9 ‘‘(A) The proceeds from the sale of all 

10 bonds issued under this section. 

11 ‘‘(B) The amount of any matching con12 tributions with respect to such bonds. 

13 ‘‘(C) The investment earnings on proceeds 

14 from the sale of such bonds. 

15 ‘‘(D) Any earnings on any amounts de16 scribed in subparagraph (A), (B), or (C). 

17 ‘‘(2) USE OF FUNDS.—Amounts in the Build 

18 America Trust Account may be used only to pay 

19 costs of qualified projects, redeem Build America 

20 bonds, and fund the operations of the Transpor21 tation Finance Corporation, except that amounts 

22 withdrawn from the Build America Trust Account to 

23 pay costs of qualified projects may not exceed the 

24 aggregate proceeds from the sale of Build America 

25 bonds described in subsection (e)(1)(A). 
23 

•S 428 IS1S 

1 ‘‘(3) USE OF REMAINING FUNDS IN BUILD

2 AMERICA TRUST ACCOUNT.—Upon the redemption of 

3 all Build America bonds issued under this section, 

4 any remaining amounts in the Build America Trust 

5 Account shall be available to the Transportation Fi6 nance Corporation to pay the costs of any qualified 

7 project. 

8 ‘‘(4) COSTS OF QUALIFIED PROJECTS.—For 

9 purposes of this section, the costs of qualified 

10 projects which may be funded by amounts in the 

11 Build America Trust Account may only relate to 

12 capital investments in depreciable assets and may 

13 not include any costs relating to operations, mainte14 nance, or rolling stock. 

15 ‘‘(5) APPLICABILITY OF FEDERAL LAW.—The 

16 requirements of any Federal law, including titles 23, 

17 40, and 49 of the United States Code, which would 

18 otherwise apply to projects to which the United 

19 States is a party or to funds made available under 

20 such law and projects assisted with those funds shall 

21 apply to— 

22 ‘‘(A) funds made available under the Build 

23 America Trust Account for similar qualified 

24 projects, including contributions required under 

25 subsection (k), and 
24 

•S 428 IS1S 

1 ‘‘(B) similar qualified projects assisted by 

2 the Transportation Finance Corporation 

3 through the use of such funds. 

4 ‘‘(6) INVESTMENT.—It shall be the duty of the 

5 Transportation Finance Corporation to invest in in6 vestment grade obligations such portion of the Build 

7 America Trust Account as is not, in the judgment 

8 of the Board of Directors of the Transportation Fi9 nance Corporation, required to meet current with10 drawals. To the maximum extent practicable, invest11 ments should be made in securities that support 

12 transportation investment at the State and local 

13 level. 

14 ‘‘(k) STATE CONTRIBUTION REQUIREMENTS.— 

15 ‘‘(1) IN GENERAL.—For purposes of subsection 

16 (e)(3), the State contribution requirement of this 

17 subsection is met with respect to any qualified 

18 project if the Transportation Finance Corporation 

19 has received from 1 or more States, not later than 

20 the date of issuance of the bond, written commit21 ments for matching contributions of not less than 20 

22 percent (or such smaller percentage as determined 

23 under title 23, United States Code, for such State) 

24 of the cost of the qualified project. 
25 

•S 428 IS1S 

1 ‘‘(2) STATE MATCHING CONTRIBUTIONS MAY

2 NOT INCLUDE FEDERAL FUNDS.—For purposes of 

3 this subsection, State matching contributions shall 

4 not be derived, directly or indirectly, from Federal 

5 funds, including any transfers from the Highway 

6 Trust Fund under section 9503. 

7 ‘‘(l) UTILIZATION OF UPDATED CONSTRUCTION

8 TECHNOLOGY FOR QUALIFIED PROJECTS.—For purposes 

9 of subsection (e)(4), the requirement of this subsection is 

10 met if the appropriate State agency relating to the quali11 fied project has updated its accepted construction tech12 nologies to match a list prescribed by the Secretary of 

13 Transportation and in effect on the date of the approval 

14 of the project as a qualified project. 

15 ‘‘(m) OTHER DEFINITIONS AND SPECIAL RULES.— 

16 For purposes of this section— 

17 ‘‘(1) ADMINISTRATIVE COSTS.—The term ‘ad18 ministrative costs’ shall only include costs of 

19 issuance of Build America bonds and operation costs 

20 of the Transportation Corporation. 

21 ‘‘(2) BOND.—The term ‘bond’ includes any ob22 ligation. 

23 ‘‘(3) NET SPENDABLE PROCEEDS.—The term 

24 ‘net spendable proceeds’ means the proceeds from 

25 the sale of any Build America bond issued under 
26 

•S 428 IS1S 

1 this section reduced by not more than 5 percent of 

2 such proceeds for administrative costs. 

3 ‘‘(4) STATE.—The term ‘State’ shall have the 

4 meaning given such term by section 101 of title 23, 

5 United States Code. 

6 ‘‘(5) TREATMENT OF CHANGES IN USE.—For 

7 purposes of subsection (e)(1)(A), the net spendable 

8 proceeds from the sale of an issue shall not be treat9 ed as used for a qualified project to the extent that 

10 the Transportation Finance Corporation takes any 

11 action within its control which causes such proceeds 

12 not to be used for a qualified project. The Secretary 

13 shall specify remedial actions which may be taken 

14 (including conditions to taking such remedial ac15 tions) to prevent an action described in the pre16 ceding sentence from causing a bond to fail to be a 

17 Build America bond. 

18 ‘‘(6) PARTNERSHIP; S CORPORATION; AND

19 OTHER PASS-THRU ENTITIES.—In the case of a 

20 partnership, trust, S corporation, or other pass-thru 

21 entity, rules similar to the rules of section 41(g) 

22 shall apply with respect to the credit allowable under 

23 subsection (a). 

24 ‘‘(7) BONDS HELD BY REGULATED INVEST25 MENT COMPANIES.—If any Build America bond is 
27 

•S 428 IS1S 

1 held by a regulated investment company, the credit 

2 determined under subsection (a) shall be allowed to 

3 shareholders of such company under procedures pre4 scribed by the Secretary. 

5 ‘‘(8) CREDITS MAY BE STRIPPED.—Under regu6 lations prescribed by the Secretary— 

7 ‘‘(A) IN GENERAL.—There may be a sepa8 ration (including at issuance) of the ownership 

9 of a Build America bond and the entitlement to 

10 the credit under this section with respect to 

11 such bond. In case of any such separation, the 

12 credit under this section shall be allowed to the 

13 person who on the credit allowance date holds 

14 the instrument evidencing the entitlement to 

15 the credit and not to the holder of the bond. 

16 ‘‘(B) CERTAIN RULES TO APPLY.—In the 

17 case of a separation described in subparagraph 

18 (A), the rules of section 1286 shall apply to the 

19 Build America bond as if it were a stripped 

20 bond and to the credit under this section as if 

21 it were a stripped coupon. 

22 ‘‘(9) CREDITS MAY BE TRANSFERRED.—Noth23 ing in any law or rule of law shall be construed to 

24 limit the transferability of the credit or bond allowed 
28 

•S 428 IS1S 

1 by this section through sale and repurchase agree2 ments. 

3 ‘‘(10) REPORTING.—The Transportation Fi4 nance Corporation shall submit reports similar to 

5 the reports required under section 149(e). 

6 ‘‘(11) PROHIBITION ON USE OF HIGHWAY

7 TRUST FUND.—Notwithstanding any other provision 

8 of law, no funds derived from the Highway Trust 

9 Fund established under section 9503 shall be used 

10 to pay costs associated with the Build America 

11 bonds issued under this section.’’. 

12 (b) AMENDMENTS TO OTHER CODE SECTIONS.— 

13 (1) REPORTING.—Subsection (d) of section 

14 6049 (relating to returns regarding payments of in15 terest) is amended by adding at the end the fol16 lowing new paragraph: 

17 ‘‘(8) REPORTING OF CREDIT ON BUILD AMER18 ICA BONDS.— 

19 ‘‘(A) IN GENERAL.—For purposes of sub20 section (a), the term ‘interest’ includes amounts 

21 includible in gross income under section 54(d) 

22 and such amounts shall be treated as paid on 

23 the credit allowance date (as defined in section 

24 54(b)(4)). 
29 

•S 428 IS1S 

1 ‘‘(B) REPORTING TO CORPORATIONS, 

2 ETC.—Except as otherwise provided in regula3 tions, in the case of any interest described in 

4 subparagraph (A), subsection (b)(4) shall be 

5 applied without regard to subparagraphs (A), 

6 (H), (I), (J), (K), and (L)(i) of such subsection. 

7 ‘‘(C) REGULATORY AUTHORITY.—The Sec8 retary may prescribe such regulations as are 

9 necessary or appropriate to carry out the pur10 poses of this paragraph, including regulations 

11 which require more frequent or more detailed 

12 reporting.’’. 

13 (2) TREATMENT FOR ESTIMATED TAX PUR14 POSES.— 

15 (A) INDIVIDUAL.—Section 6654 (relating 

16 to failure by individual to pay estimated income 

17 tax) is amended by redesignating subsection 

18 (m) as subsection (n) and by inserting after 

19 subsection (l) the following new subsection: 

20 ‘‘(m) SPECIAL RULE FOR HOLDERS OF BUILD

21 AMERICA BONDS.—For purposes of this section, the credit 

22 allowed by section 54 to a taxpayer by reason of holding 

23 a Build America bond on a credit allowance date shall be 

24 treated as if it were a payment of estimated tax made by 

25 the taxpayer on such date.’’. 
30 

•S 428 IS1S 

1 (B) CORPORATE.—Subsection (g) of sec2 tion 6655 (relating to failure by corporation to 

3 pay estimated income tax) is amended by add4 ing at the end the following new paragraph: 

5 ‘‘(5) SPECIAL RULE FOR HOLDERS OF BUILD

6 AMERICA BONDS.—For purposes of this section, the 

7 credit allowed by section 54 to a taxpayer by reason 

8 of holding a Build America bond on a credit allow9 ance date shall be treated as if it were a payment 

10 of estimated tax made by the taxpayer on such 

11 date.’’. 

12 (c) CLERICAL AMENDMENTS.— 

13 (1) The table of subparts for part IV of sub14 chapter A of chapter 1 is amended by adding at the 

15 end the following new item: 

‘‘SUBPART H. NONREFUNDABLE CREDIT FOR HOLDERS OF BUILD AMERICA

BONDS.’’. 

16 (2) Section 6401(b)(1) is amended by striking 

17 ‘‘and G’’ and inserting ‘‘G, and H’’. 

18 (d) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to obligations issued after the date 

20 of the enactment of this Act. 

21 SEC. 4. TRANSPORTATION FINANCE CORPORATION. 

22 (a) ESTABLISHMENT AND STATUS.—There is estab23 lished a body corporate to be known as the ‘‘Transpor24 tation Finance Corporation’’ (hereafter in this section re-
31 

•S 428 IS1S 

1 ferred to as the ‘‘Corporation’’). The Corporation is not 

2 a department, agency, or instrumentality of the United 

3 States Government, and shall not be subject to title 31, 

4 United States Code. 

5 (b) PRINCIPAL OFFICE; APPLICATION OF LAWS.— 

6 The principal office and place of business of the Corpora7 tion shall be in the District of Columbia, and, to the extent 

8 consistent with this section, the District of Columbia Busi9 ness Corporation Act (D.C. Code 29–301 et seq.) shall 

10 apply. 

11 (c) FUNCTIONS OF CORPORATION.—The Corporation 

12 shall— 

13 (1) issue Build America bonds for the financing 

14 of qualified projects as required under section 54 of 

15 the Internal Revenue Code of 1986, 

16 (2) establish and operate the Build America 

17 Trust Account as required under section 54(j) of 

18 such Code, 

19 (3) act as a centralized entity to provide financ20 ing for qualified projects, 

21 (4) leverage resources and stimulate public and 

22 private investment in transportation infrastructure, 

23 (5) encourage States to create additional oppor24 tunities for the financing of transportation infra-
32 

•S 428 IS1S 

1 structure and to provide technical assistance to 

2 States, if needed, 

3 (6) perform any other function the sole purpose 

4 of which is to carry out the financing of qualified 

5 projects through Build America bonds, and 

6 (7) not later than February 15 of each year 

7 submit a report to Congress— 

8 (A) describing the activities of the Cor9 poration for the preceding year, and 

10 (B) specifying whether the amounts depos11 ited and expected to be deposited in the Build 

12 America Trust Account are sufficient to fully 

13 repay at maturity the principal of any out14 standing Build America bonds issued pursuant 

15 to such section 54. 

16 (d) POWERS OF CORPORATION.—The Corporation— 

17 (1) may sue and be sued, complain and defend, 

18 in its corporate name, in any court of competent ju19 risdiction, 

20 (2) may adopt, alter, and use a seal, which shall 

21 be judicially noticed, 

22 (3) may prescribe, amend, and repeal such rules 

23 and regulations as may be necessary for carrying out 

24 the functions of the Corporation, 
33 

•S 428 IS1S 

1 (4) may make and perform such contracts and 

2 other agreements with any individual, corporation, 

3 or other private or public entity however designated 

4 and wherever situated, as may be necessary for car5 rying out the functions of the Corporation, 

6 (5) may determine and prescribe the manner in 

7 which its obligations shall be incurred and its ex8 penses allowed and paid, 

9 (6) may, as necessary for carrying out the func10 tions of the Corporation, employ and fix the com11 pensation of employees and officers, 

12 (7) may lease, purchase, or otherwise acquire, 

13 own, hold, improve, use, or otherwise deal in and 

14 with such property (real, personal, or mixed) or any 

15 interest therein, wherever situated, as may be nec16 essary for carrying out the functions of the Corpora17 tion, 

18 (8) may accept gifts or donations of services or 

19 of property (real, personal, or mixed), tangible or in20 tangible, in furtherance of the purposes of this Act, 

21 and 

22 (9) shall have such other powers as may be nec23 essary and incident to carrying out this Act. 

24 (e) NONPROFIT ENTITY; RESTRICTION ON USE OF

25 MONEYS; CONFLICT OF INTERESTS; AUDITS.— 
34 

•S 428 IS1S 

1 (1) NONPROFIT ENTITY.—The Corporation 

2 shall be a nonprofit corporation and shall have no 

3 capital stock. 

4 (2) RESTRICTION.—No part of the Corpora5 tion’s revenue, earnings, or other income or property 

6 shall inure to the benefit of any of its directors, offi7 cers, or employees, and such revenue, earnings, or 

8 other income or property shall only be used for car9 rying out the purposes of this Act. 

10 (3) CONFLICT OF INTERESTS.—No director, of11 ficer, or employee of the Corporation shall in any 

12 manner, directly or indirectly participate in the de13 liberation upon or the determination of any question 

14 affecting his or her personal interests or the inter15 ests of any corporation, partnership, or organization 

16 in which he or she is directly or indirectly interested. 

17 (4) AUDITS.— 

18 (A) AUDITS BY INDEPENDENT CERTIFIED

19 PUBLIC ACCOUNTANTS.— 

20 (i) IN GENERAL.—The Corporation’s 

21 financial statements shall be audited annu22 ally in accordance with generally accepted 

23 auditing standards by independent certified 

24 public accountants that are certified by a 

25 regulatory authority of a State or other po-
35 

•S 428 IS1S 

1 litical subdivision of the United States. 

2 The audits shall be conducted at the place 

3 or places where the accounts of the Cor4 poration are normally kept. All books, ac5 counts, financial records, reports, files, and 

6 all other papers, things, or property be7 longing to or in use by the Corporation 

8 and necessary to facilitate the audit shall 

9 be made available to the person or persons 

10 conducting the audits, and full facilities for 

11 verifying transactions with the balances or 

12 securities held by depositories, fiscal 

13 agents, and custodians shall be afforded to 

14 such person or persons. 

15 (ii) REPORTING REQUIREMENTS.— 

16 The report of each annual audit described 

17 in clause (i) shall be included in the annual 

18 report required by subsection (c)(8). 

19 (B) RECORD KEEPING REQUIREMENTS.— 

20 The Corporation shall ensure that each recipi21 ent of assistance from the Corporation keeps— 

22 (i) separate accounts with respect to 

23 such assistance, 

24 (ii) such records as may be reasonably 

25 necessary to fully disclose— 
36 

•S 428 IS1S 

1 (I) the amount and the disposi2 tion by such recipient of the proceeds 

3 of such assistance, 

4 (II) the total cost of the project 

5 or undertaking in connection with 

6 which such assistance is given or 

7 used, and the extent to which such 

8 costs are for a qualified project, and 

9 (III) the amount and nature of 

10 that portion of the cost of the project 

11 or undertaking supplied by other 

12 sources, and 

13 (iii) such other records as will facili14 tate an effective audit. 

15 (C) AUDIT AND EXAMINATION OF

16 BOOKS.—The Corporation shall ensure that the 

17 Corporation, or any of the Corporation’s duly 

18 authorized representatives, shall have access for 

19 the purpose of audit and examination to any 

20 books, documents, papers, and records of any 

21 recipient of assistance from the Corporation 

22 that are pertinent to such assistance. 

23 (f) EXEMPTION FROM TAXES.— 

24 (1) IN GENERAL.—The Corporation, including 

25 its franchise, capital, reserves, surplus, sinking 
37 

•S 428 IS1S 

1 funds, mortgages or other security holdings, and in2 come, shall be exempt from all taxation now or here3 after imposed by the United States, by any territory, 

4 dependency, or possession thereof, or by any State, 

5 county, municipality, or local taxing authority, ex6 cept that any real property of the Corporation shall 

7 be subject to State, territorial, county, municipal, or 

8 local taxation to the same extent according to its 

9 value as other real property is taxed. 

10 (2) FINANCIAL OBLIGATIONS.—Build America 

11 bonds or other obligations issued by the Corporation 

12 and the interest on or tax credits with respect to its 

13 bonds or other obligations shall not be subject to 

14 taxation by any State, county, municipality, or local 

15 taxing authority. 

16 (g) ASSISTANCE FOR TRANSPORTATION PUR17 POSES.— 

18 (1) IN GENERAL.—In order to carry out the 

19 corporate functions described in subsection (c), the 

20 Corporation shall be eligible to receive discretionary 

21 grants, contracts, gifts, contributions, or technical 

22 assistance from any Federal department or agency, 

23 to the extent permitted by law. 

24 (2) AGREEMENT.—In order to receive any as25 sistance described in this subsection, the Corpora-
38 

•S 428 IS1S 

1 tion shall enter into an agreement with the Federal 

2 department or agency providing such assistance, 

3 under which the Corporation agrees— 

4 (A) to use such assistance to provide fund5 ing and technical assistance only for activities 

6 which the Board of Directors of the Corpora7 tion determines are consistent with the cor8 porate functions described in subsection (c), 

9 and 

10 (B) to review the activities of State trans11 portation agencies and other entities receiving 

12 assistance from the Corporation to assure that 

13 the corporate functions described in subsection 

14 (c) are carried out. 

15 (3) CONSTRUCTION.—Nothing in this section 

16 shall be construed to establish the Corporation as a 

17 department, agency, or instrumentality of the United 

18 States Government, or to establish the members of 

19 the Board of Directors of the Corporation, or the of20 ficers and employees of the Corporation, as officers 

21 or employees of the United States Government. 

22 (h) MANAGEMENT OF CORPORATION.— 

23 (1) BOARD OF DIRECTORS; MEMBERSHIP; DES24 IGNATION OF CHAIRPERSON AND VICE CHAIR-
39 

•S 428 IS1S 

1 PERSON; APPOINTMENT CONSIDERATIONS; TERM; 

2 VACANCIES.— 

3 (A) BOARD OF DIRECTORS.—The manage4 ment of the Corporation shall be vested in a 

5 board of directors composed of 15 members ap6 pointed by the President, by and with the ad7 vice and consent of the Senate. 

8 (B) CHAIRPERSON AND VICE CHAIR9 PERSON.—The President shall designate 1 

10 member of the Board to serve as Chairperson 

11 of the Board and 1 member to serve as Vice 

12 Chairperson of the Board. 

13 (C) INDIVIDUALS FROM PRIVATE LIFE.— 

14 Eleven members of the Board shall be ap15 pointed from private life. 

16 (D) FEDERAL OFFICERS AND EMPLOY17 EES.—Four members of the Board shall be ap18 pointed from among officers and employees of 

19 agencies of the United States concerned with 

20 infrastructure development. 

21 (E) APPOINTMENT CONSIDERATIONS.—All 

22 members of the Board shall be appointed on the 

23 basis of their understanding of and sensitivity 

24 to infrastructure development processes. Mem25 bers of the Board shall be appointed so that not 
40 

•S 428 IS1S 

1 more than 8 members of the Board are mem2 bers of any 1 political party. 

3 (F) TERMS.—Members of the Board shall 

4 be appointed for terms of 3 years, except that 

5 of the members first appointed, as designated 

6 by the President at the time of their appoint7 ment, 5 shall be appointed for terms of 1 year 

8 and 5 shall be appointed for terms of 2 years. 

9 (G) VACANCIES.—A member of the Board 

10 appointed to fill a vacancy occurring before the 

11 expiration of the term for which that member’s 

12 predecessor was appointed shall be appointed 

13 only for the remainder of that term. Upon the 

14 expiration of a member’s term, the member 

15 shall continue to serve until a successor is ap16 pointed and is qualified. 

17 (2) COMPENSATION, ACTUAL, NECESSARY, AND

18 TRANSPORTATION EXPENSES.—Members of the 

19 Board shall serve without additional compensation, 

20 but may be reimbursed for actual and necessary ex21 penses not exceeding $100 per day, and for trans22 portation expenses, while engaged in their duties on 

23 behalf of the Corporation. 

24 (3) QUORUM.—A majority of the Board shall 

25 constitute a quorum. 
41 

•S 428 IS1S 

1 (4) PRESIDENT OF CORPORATION.—The Board 

2 of Directors shall appoint a president of the Cor3 poration on such terms as the Board may determine. 

Æ