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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 428 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Build America 
Bonds Act of 2005''.
    (b) References to Internal Revenue Code of 1986.--Except as 
otherwise expressly provided, whenever in this Act an amendment or 
repeal is expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue Code of 
1986.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) Our Nation's highways, public transportation systems, 
        and rail systems drive our economy, enabling all industries to 
        achieve growth and productivity that makes America strong and 
        prosperous.
            (2) The establishment, maintenance, and improvement of the 
        national transportation network is a national priority, for 
        economic, environmental, energy, security, and other reasons.
            (3) The ability to move people and goods is critical to 
        maintaining State, metropolitan, rural, and local economies.
            (4) The construction of infrastructure requires the skills 
        of numerous occupations, including those in the contracting, 
        engineering, planning and design, materials supply, 
        manufacturing, distribution, and safety industries.
            (5) Investing in transportation infrastructure creates 
        long-term capital assets for the Nation that will help the 
        United States address its enormous infrastructure needs and 
        improve its economic productivity.
            (6) Investment in transportation infrastructure creates 
        jobs and spurs economic activity to put people back to work and 
        stimulate the economy.
            (7) Every billion dollars in transportation investment has 
        the potential to create up to 47,500 jobs.
            (8) Every dollar invested in the Nation's transportation 
        infrastructure yields at least $5.70 in economic benefits 
        because of reduced delays, improved safety, and reduced vehicle 
        operating costs.
            (9) The proposed increases to the Transportation Equity Act 
        for the 21st Century (TEA-21) will not be sufficient to 
        compensate for the Nation's transportation infrastructure 
        deficit.
    (b) Purpose.--The purpose of this Act is to provide financing for 
long-term infrastructure capital investments that are not currently 
being met by existing transportation and infrastructure investment 
programs, including mega-projects, projects of national significance, 
multistate transportation corridors, intermodal transportation 
facilities, and transportation and security improvements to highways, 
public transportation systems, and rail systems.

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

    (a) In General.--Part IV of subchapter A of chapter 1 (relating to 
credits against tax) is amended by adding at the end the following new 
subpart:

  ``Subpart H--Nonrefundable Credit for Holders of Build America Bonds

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

``SEC. 54. CREDIT TO HOLDERS OF BUILD AMERICA BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
Build America bond on a credit allowance date of such bond which occurs 
during the taxable year, there shall be allowed as a credit against the 
tax imposed by this chapter for such taxable year an amount equal to 
the sum of the credits determined under subsection (b) with respect to 
credit allowance dates during such year on which the taxpayer holds 
such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a Build America bond is 25 percent of the annual credit 
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any Build America bond is the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (2), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        date of sale of the issue) on outstanding long-term corporate 
        debt obligations (determined in such manner as the Secretary 
        prescribes).
            ``(4) Credit allowance date.--For purposes of this section, 
        the term `credit allowance date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(5) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than this subpart and subpart C).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(e) Build America Bond.--For purposes of this part, the term 
`Build America bond' means any bond issued as part of an issue if--
            ``(1) the net spendable proceeds from the sale of such 
        issue are to be used--
                    ``(A) for expenditures incurred after the date of 
                the enactment of this section for any qualified 
                project, or
                    ``(B) for deposit in the Build America Trust 
                Account for repayment of Build America bonds at 
                maturity,
            ``(2) the bond is issued by the Transportation Finance 
        Corporation, is in registered form, and meets the Build America 
        bond limitation requirements under subsection (g),
            ``(3) the Transportation Finance Corporation certifies that 
        it meets the State contribution requirement of subsection (k) 
        with respect to such project, as in effect on the date of 
        issuance,
            ``(4) the Transportation Finance Corporation certifies that 
        the State in which an approved qualified project is located 
        meets the requirement described in subsection (l),
            ``(5) except for bonds issued in accordance with subsection 
        (g)(6), the term of each bond which is part of such issue does 
        not exceed 30 years,
            ``(6) the payment of principal with respect to such bond is 
        the obligation of the Transportation Finance Corporation, and
            ``(7) with respect to bonds described in paragraph (1)(A), 
        the issue meets the requirements of subsection (h) (relating to 
        arbitrage).
    ``(f) Qualified Project.--For purposes of this section--
            ``(1) In general.--The term `qualified project' means any--
                    ``(A) qualified highway project, and
                    ``(B) qualified public transportation project,
        proposed by 1 or more States and approved by the Transportation 
        Finance Corporation.
            ``(2) Qualified highway project.--
                    ``(A) In general.--The term `qualified highway 
                project' means any--
                            ``(i) project of regional or national 
                        significance,
                            ``(ii) multistate corridor program,
                            ``(iii) border planning, operations, 
                        technology, and capacity improvement program, 
                        and
                            ``(iv) freight intermodal connector 
                        project.
                    ``(B) Projects of regional and national 
                significance.--
                            ``(i) In general.--The term `project of 
                        regional or national significance' means the 
                        eligible project costs of any surface 
                        transportation project which is eligible for 
                        Federal assistance under title 23, United 
                        States Code, including any freight rail project 
                        and activity eligible under such title, if such 
                        eligible project costs are reasonably 
                        anticipated to equal or exceed the lesser of--
                                    ``(I) $100,000,000, or
                                    ``(II) 50 percent of the amount of 
                                Federal highway assistance funds 
                                apportioned for the most recently 
                                completed fiscal year to the State in 
                                which the project is located.
                            ``(ii) Eligible project costs.--The term 
                        `eligible project costs' means the costs of--
                                    ``(I) development phase activities, 
                                including planning, feasibility 
                                analysis, revenue forecasting, 
                                environmental review, preliminary 
                                engineering and design work, and other 
                                preconstruction activities, and
                                    ``(II) construction, 
                                reconstruction, rehabilitation, and 
                                acquisition of real property (including 
                                land related to the project and 
                                improvements to land), environmental 
                                mitigation, construction contingencies, 
                                acquisition of equipment, and 
                                operational improvements.
                            ``(iii) Criteria for approval.--The 
                        Transportation Finance Corporation may approve 
                        a project of regional or national significance 
                        only if the Corporation determines that the 
                        project is based on the results of preliminary 
                        engineering, and is justified based on the 
                        project's ability--
                                    ``(I) to generate national or 
                                regional economic benefits, including 
                                creating jobs, expanding business 
                                opportunities, and impacting the gross 
                                domestic product,
                                    ``(II) to reduce congestion, 
                                including impacts in the State, region, 
                                and Nation,
                                    ``(III) to improve transportation 
                                safety, including reducing 
                                transportation accidents, injuries, and 
                                fatalities, and
                                    ``(IV) to otherwise enhance the 
                                national transportation system.
                    ``(C) Multistate corridor program.--
                            ``(i) In general.--The term `multistate 
                        corridor program' means any program for 
                        multistate highway and multimodal planning 
                        studies and construction.
                            ``(ii) Criteria for approval.--The 
                        Transportation Finance Corporation shall 
                        consider in approving any multistate corridor 
                        program--
                                    ``(I) the existence and 
                                significance of signed and binding 
                                multijurisdictional agreements,
                                    ``(II) prospects for early 
                                completion of the program, or
                                    ``(III) whether the projects under 
                                such program to be studied or 
                                constructed are located on corridors 
                                identified by section 1105(c) of the 
                                Intermodal Surface Transportation 
                                Efficiency Act of 1991 (Public Law 102-
                                240; 105 Stat. 2032).
                    ``(D) Border planning, operations, technology, and 
                capacity improvement program.--
                            ``(i) In general.--The term `border 
                        planning, operations, technology, and capacity 
                        improvement program' means any program which 
                        includes 1 or more eligible activities to 
                        support coordination and improvement in bi-
                        national transportation planning, operations, 
                        efficiency, information exchange, safety, and 
                        security at the international borders of the 
                        United States with Canada and Mexico.
                            ``(ii) Eligible activities.--For purposes 
                        of this subparagraph, the term `eligible 
                        activities' means--
                                    ``(I) highway and multimodal 
                                planning or environmental studies,
                                    ``(II) cross-border port of entry 
                                and safety inspection improvements, 
                                including operational enhancements and 
                                technology applications,
                                    ``(III) technology and information 
                                exchange activities, and
                                    ``(IV) right-of-way acquisition, 
                                design, and construction, as needed to 
                                implement the enhancements or 
                                applications described in subclauses 
                                (II) and (III), to decrease air 
                                pollution emissions from vehicles or 
                                inspection facilities at border 
                                crossings, or to increase highway 
                                capacity at or near international 
                                borders.
                    ``(E) Freight intermodal connector project.--
                            ``(i) In general.--The term `freight 
                        intermodal connector project' means any project 
                        for the construction of and improvements to 
                        publicly owned freight intermodal connectors to 
                        the National Highway System, the provision of 
                        access to such connectors, and operational 
                        improvements for such connectors (including 
                        capital investment for intelligent 
                        transportation systems), except that a project 
                        located within the boundaries of an intermodal 
                        freight facility shall only include highway 
                        infrastructure modifications necessary to 
                        facilitate direct intermodal access between the 
                        connector and the facility.
                            ``(ii) Criteria for approval.--The 
                        Transportation Finance Corporation shall 
                        consider in approving any freight intermodal 
                        connector project the criteria set forth in the 
                        report of the Department of Transportation to 
                        Congress entitled `Pulling Together: The NHS 
                        and its Connections to Major Intermodal 
                        Terminals'.
                            ``(iii) Freight intermodal connector.--The 
                        term `freight intermodal connector' means the 
                        roadway that connects to an intermodal freight 
                        facility that carries or will carry intermodal 
                        traffic.
                            ``(iv) Intermodal freight facility.--The 
                        term `intermodal freight facility' means a 
                        port, airport, truck-rail terminal, and 
                        pipeline-truck terminal.
            ``(3) Qualified public transportation project.--The term 
        `qualified public transportation project' means a project for 
        public transportation facilities or other facilities which are 
        eligible for assistance under title 49, United States Code, 
        including intercity passenger rail.
    ``(g) Limitation on Amount of Bonds Designated; Allocation of Bond 
Proceeds.--
            ``(1) National limitation.--There is a Build America bond 
        limitation for each calendar year. Such limitation is--
                    ``(A) with respect to bonds described in subsection 
                (e)(1)(A)--
                            ``(i) $5,500,000,000 for 2005,
                            ``(ii) $8,000,000,000 for 2006,
                            ``(iii) $8,000,000,000 for 2007,
                            ``(iv) $3,000,000,000 for 2008,
                            ``(v) $3,000,000,000 for 2009,
                            ``(vi) $2,500,000,000 for 2010, and
                            ``(vii) except as provided in paragraph 
                        (4), zero thereafter, plus
                    ``(B) with respect to bonds described in subsection 
                (e)(1)(B), such amount each calendar year as determined 
                necessary by the Transportation Finance Corporation to 
                provide funds in the Build America Trust Account for 
                the repayment of Build America bonds at maturity, 
                except that the aggregate amount of such bonds for all 
                calendar years shall not exceed $9,000,000,000.
            ``(2) Allocation of bonds for highway and public 
        transportation purposes.--Except with respect to qualified 
        projects described in subsection (j)(3), and subject to 
        paragraph (3)--
                    ``(A) Qualified highway projects.--From Build 
                America bonds issued under the annual limitation in 
                paragraph (1)(A), the Transportation Finance 
                Corporation shall allocate 80 percent of the net 
                spendable proceeds to the States for qualified highway 
                projects designated by law from recommendations 
                submitted to Congress identifying various projects 
                approved as meeting the criteria required for each such 
                project by the Transportation Finance Corporation.
                    ``(B) Qualified public transportation projects.--
                From Build America bonds issued under the annual 
                limitation in paragraph (1)(A), the Transportation 
                Finance Corporation shall allocate 20 percent of the 
                net spendable proceeds to the States for qualified 
                public transportation projects designated by law from 
                recommendations submitted to Congress identifying 
                various projects approved as meeting the criteria 
                required for each such project by the Transportation 
                Finance Corporation.
            ``(3) Minimum allocations to states.--In making allocations 
        for each calendar year under paragraph (2), the Transportation 
        Finance Corporation shall ensure that the amount allocated for 
        qualified projects located in each State for such calendar year 
        is not less than \1/2\ percent of the total amount allocated 
        for such year.
            ``(4) Carryover of unused issuance limitation.--If for any 
        calendar year the limitation amount imposed by paragraph (1) 
        exceeds the amount of Build America bonds issued during such 
        year, such excess shall be carried forward to one or more 
        succeeding calendar years as an addition to the limitation 
        imposed by paragraph (1) and until used by issuance of Build 
        America bonds.
            ``(5) Issuance of small denomination bonds.--From the Build 
        America bond limitation for each year, the Transportation 
        Finance Corporation shall issue a limited quantity of Build 
        America bonds in small denominations suitable for purchase as 
        gifts by individual investors wishing to show their support for 
        investing in America's infrastructure.
    ``(h) Special Rules Relating to Arbitrage.--
            ``(1) In general.--Subject to paragraph (2), an issue shall 
        be treated as meeting the requirements of this subsection if as 
        of the date of issuance, the Transportation Finance Corporation 
        reasonably expects--
                    ``(A) to spend at least 85 percent of the net 
                spendable proceeds from the sale of the issue for 1 or 
                more qualified projects within the 5-year period 
                beginning on such date,
                    ``(B) to incur a binding commitment with a third 
                party to spend at least 10 percent of the net spendable 
                proceeds from the sale of the issue, or to commence 
                construction, with respect to such projects within the 
                12-month period beginning on such date, and
                    ``(C) to proceed with due diligence to complete 
                such projects and to spend the net spendable proceeds 
                from the sale of the issue.
            ``(2) Spent proceeds.--Net spendable proceeds are 
        considered spent by the Transportation Finance Corporation when 
        a sponsor of a qualified project obtains a reimbursement from 
        the Transportation Finance Corporation for eligible project 
        costs.
            ``(3) Rules regarding continuing compliance after 5-year 
        determination.--If at least 85 percent of the net spendable 
        proceeds from the sale of the issue is not expended for 1 or 
        more qualified projects within the 5-year period beginning on 
        the date of issuance, but the requirements of paragraph (1) are 
        otherwise met, an issue shall be treated as continuing to meet 
        the requirements of this subsection if the Transportation 
        Finance Corporation uses all unspent net spendable proceeds 
        from the sale of the issue to redeem bonds of the issue within 
        90 days after the end of such 5-year period.
            ``(4) Reallocation.--In the event the recipient of an 
        allocation under subsection (g) fails to demonstrate to the 
        satisfaction of the Transportation Finance Corporation that its 
        actions will allow the Transportation Finance Corporation to 
        meet the requirements under this subsection, the Transportation 
        Finance Corporation may redistribute the allocation meant for 
        such recipient to other recipients.
    ``(i) Recapture of Portion of Credit Where Cessation of 
Compliance.--
            ``(1) In general.--If any bond which when issued purported 
        to be a Build America bond ceases to be such a qualified bond, 
        the Transportation Finance Corporation shall pay to the United 
        States (at the time required by the Secretary) an amount equal 
        to the sum of--
                    ``(A) the aggregate of the credits allowable under 
                this section with respect to such bond (determined 
                without regard to subsection (c)) for taxable years 
                ending during the calendar year in which such cessation 
                occurs and the 2 preceding calendar years, and
                    ``(B) interest at the underpayment rate under 
                section 6621 on the amount determined under 
                subparagraph (A) for each calendar year for the period 
                beginning on the first day of such calendar year.
            ``(2) Failure to pay.--If the Transportation Finance 
        Corporation fails to timely pay the amount required by 
        paragraph (1) with respect to such bond, the tax imposed by 
        this chapter on each holder of any such bond which is part of 
        such issue shall be increased (for the taxable year of the 
        holder in which such cessation occurs) by the aggregate 
        decrease in the credits allowed under this section to such 
        holder for taxable years beginning in such 3 calendar years 
        which would have resulted solely from denying any credit under 
        this section with respect to such issue for such taxable years.
            ``(3) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (2) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under paragraph (2) shall not be treated as a tax 
                imposed by this chapter for purposes of determining--
                            ``(i) the amount of any credit allowable 
                        under this part, or
                            ``(ii) the amount of the tax imposed by 
                        section 55.
    ``(j) Build America Trust Account.--
            ``(1) In general.--The following amounts shall be held in a 
        Build America Trust Account by the Transportation Finance 
        Corporation:
                    ``(A) The proceeds from the sale of all bonds 
                issued under this section.
                    ``(B) The amount of any matching contributions with 
                respect to such bonds.
                    ``(C) The investment earnings on proceeds from the 
                sale of such bonds.
                    ``(D) Any earnings on any amounts described in 
                subparagraph (A), (B), or (C).
            ``(2) Use of funds.--Amounts in the Build America Trust 
        Account may be used only to pay costs of qualified projects, 
        redeem Build America bonds, and fund the operations of the 
        Transportation Finance Corporation, except that amounts 
        withdrawn from the Build America Trust Account to pay costs of 
        qualified projects may not exceed the aggregate proceeds from 
        the sale of Build America bonds described in subsection 
        (e)(1)(A).
            ``(3) Use of remaining funds in build america trust 
        account.--Upon the redemption of all Build America bonds issued 
        under this section, any remaining amounts in the Build America 
        Trust Account shall be available to the Transportation Finance 
        Corporation to pay the costs of any qualified project.
            ``(4) Costs of qualified projects.--For purposes of this 
        section, the costs of qualified projects which may be funded by 
        amounts in the Build America Trust Account may only relate to 
        capital investments in depreciable assets and may not include 
        any costs relating to operations, maintenance, or rolling 
        stock.
            ``(5) Applicability of federal law.--The requirements of 
        any Federal law, including titles 23, 40, and 49 of the United 
        States Code, which would otherwise apply to projects to which 
        the United States is a party or to funds made available under 
        such law and projects assisted with those funds shall apply 
        to--
                    ``(A) funds made available under the Build America 
                Trust Account for similar qualified projects, including 
                contributions required under subsection (k), and
                    ``(B) similar qualified projects assisted by the 
                Transportation Finance Corporation through the use of 
                such funds.
            ``(6) Investment.--It shall be the duty of the 
        Transportation Finance Corporation to invest in investment 
        grade obligations such portion of the Build America Trust 
        Account as is not, in the judgment of the Board of Directors of 
        the Transportation Finance Corporation, required to meet 
        current withdrawals. To the maximum extent practicable, 
        investments should be made in securities that support 
        transportation investment at the State and local level.
    ``(k) State Contribution Requirements.--
            ``(1) In general.--For purposes of subsection (e)(3), the 
        State contribution requirement of this subsection is met with 
        respect to any qualified project if the Transportation Finance 
        Corporation has received from 1 or more States, not later than 
        the date of issuance of the bond, written commitments for 
        matching contributions of not less than 20 percent (or such 
        smaller percentage as determined under title 23, United States 
        Code, for such State) of the cost of the qualified project.
            ``(2) State matching contributions may not include federal 
        funds.--For purposes of this subsection, State matching 
        contributions shall not be derived, directly or indirectly, 
        from Federal funds, including any transfers from the Highway 
        Trust Fund under section 9503.
    ``(l) Utilization of Updated Construction Technology for Qualified 
Projects.--For purposes of subsection (e)(4), the requirement of this 
subsection is met if the appropriate State agency relating to the 
qualified project has updated its accepted construction technologies to 
match a list prescribed by the Secretary of Transportation and in 
effect on the date of the approval of the project as a qualified 
project.
    ``(m) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Administrative costs.--The term `administrative 
        costs' shall only include costs of issuance of Build America 
        bonds and operation costs of the Transportation Corporation.
            ``(2) Bond.--The term `bond' includes any obligation.
            ``(3) Net spendable proceeds.--The term `net spendable 
        proceeds' means the proceeds from the sale of any Build America 
        bond issued under this section reduced by not more than 5 
        percent of such proceeds for administrative costs.
            ``(4) State.--The term `State' shall have the meaning given 
        such term by section 101 of title 23, United States Code.
            ``(5) Treatment of changes in use.--For purposes of 
        subsection (e)(1)(A), the net spendable proceeds from the sale 
        of an issue shall not be treated as used for a qualified 
        project to the extent that the Transportation Finance 
        Corporation takes any action within its control which causes 
        such proceeds not to be used for a qualified project. The 
        Secretary shall specify remedial actions which may be taken 
        (including conditions to taking such remedial actions) to 
        prevent an action described in the preceding sentence from 
        causing a bond to fail to be a Build America bond.
            ``(6) Partnership; s corporation; and other pass-thru 
        entities.--In the case of a partnership, trust, S corporation, 
        or other pass-thru entity, rules similar to the rules of 
        section 41(g) shall apply with respect to the credit allowable 
        under subsection (a).
            ``(7) Bonds held by regulated investment companies.--If any 
        Build America bond is held by a regulated investment company, 
        the credit determined under subsection (a) shall be allowed to 
        shareholders of such company under procedures prescribed by the 
        Secretary.
            ``(8) Credits may be stripped.--Under regulations 
        prescribed by the Secretary--
                    ``(A) In general.--There may be a separation 
                (including at issuance) of the ownership of a Build 
                America bond and the entitlement to the credit under 
                this section with respect to such bond. In case of any 
                such separation, the credit under this section shall be 
                allowed to the person who on the credit allowance date 
                holds the instrument evidencing the entitlement to the 
                credit and not to the holder of the bond.
                    ``(B) Certain rules to apply.--In the case of a 
                separation described in subparagraph (A), the rules of 
                section 1286 shall apply to the Build America bond as 
                if it were a stripped bond and to the credit under this 
                section as if it were a stripped coupon.
            ``(9) Credits may be transferred.--Nothing in any law or 
        rule of law shall be construed to limit the transferability of 
        the credit or bond allowed by this section through sale and 
        repurchase agreements.
            ``(10) Reporting.--The Transportation Finance Corporation 
        shall submit reports similar to the reports required under 
        section 149(e).
            ``(11) Prohibition on use of highway trust fund.--
        Notwithstanding any other provision of law, no funds derived 
        from the Highway Trust Fund established under section 9503 
        shall be used to pay costs associated with the Build America 
        bonds issued under this section.''.
    (b) Amendments to Other Code Sections.--
            (1) Reporting.--Subsection (d) of section 6049 (relating to 
        returns regarding payments of interest) is amended by adding at 
        the end the following new paragraph:
            ``(8) Reporting of credit on build america bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54(d) and such amounts shall 
                be treated as paid on the credit allowance date (as 
                defined in section 54(b)(4)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A), subsection 
                (b)(4) shall be applied without regard to subparagraphs 
                (A), (H), (I), (J), (K), and (L)(i) of such subsection.
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
            (2) Treatment for estimated tax purposes.--
                    (A) Individual.--Section 6654 (relating to failure 
                by individual to pay estimated income tax) is amended 
                by redesignating subsection (m) as subsection (n) and 
                by inserting after subsection (l) the following new 
                subsection:
    ``(m) Special Rule for Holders of Build America Bonds.--For 
purposes of this section, the credit allowed by section 54 to a 
taxpayer by reason of holding a Build America bond on a credit 
allowance date shall be treated as if it were a payment of estimated 
tax made by the taxpayer on such date.''.
                    (B) Corporate.--Subsection (g) of section 6655 
                (relating to failure by corporation to pay estimated 
                income tax) is amended by adding at the end the 
                following new paragraph:
            ``(5) Special rule for holders of build america bonds.--For 
        purposes of this section, the credit allowed by section 54 to a 
        taxpayer by reason of holding a Build America bond on a credit 
        allowance date shall be treated as if it were a payment of 
        estimated tax made by the taxpayer on such date.''.
    (c) Clerical Amendments.--
            (1) The table of subparts for part IV of subchapter A of 
        chapter 1 is amended by adding at the end the following new 
        item:

    ``subpart h. nonrefundable credit for holders of build america 
                               bonds.''.
            (2) Section 6401(b)(1) is amended by striking ``and G'' and 
        inserting ``G, and H''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 4. TRANSPORTATION FINANCE CORPORATION.

    (a) Establishment and Status.--There is established a body 
corporate to be known as the ``Transportation Finance Corporation'' 
(hereafter in this section referred to as the ``Corporation''). The 
Corporation is not a department, agency, or instrumentality of the 
United States Government, and shall not be subject to title 31, United 
States Code.
    (b) Principal Office; Application of Laws.--The principal office 
and place of business of the Corporation shall be in the District of 
Columbia, and, to the extent consistent with this section, the District 
of Columbia Business Corporation Act (D.C. Code 29-301 et seq.) shall 
apply.
    (c) Functions of Corporation.--The Corporation shall--
            (1) issue Build America bonds for the financing of 
        qualified projects as required under section 54 of the Internal 
        Revenue Code of 1986,
            (2) establish and operate the Build America Trust Account 
        as required under section 54(j) of such Code,
            (3) act as a centralized entity to provide financing for 
        qualified projects,
            (4) leverage resources and stimulate public and private 
        investment in transportation infrastructure,
            (5) encourage States to create additional opportunities for 
        the financing of transportation infrastructure and to provide 
        technical assistance to States, if needed,
            (6) perform any other function the sole purpose of which is 
        to carry out the financing of qualified projects through Build 
        America bonds, and
            (7) not later than February 15 of each year submit a report 
        to Congress--
                    (A) describing the activities of the Corporation 
                for the preceding year, and
                    (B) specifying whether the amounts deposited and 
                expected to be deposited in the Build America Trust 
                Account are sufficient to fully repay at maturity the 
                principal of any outstanding Build America bonds issued 
                pursuant to such section 54.
    (d) Powers of Corporation.--The Corporation--
            (1) may sue and be sued, complain and defend, in its 
        corporate name, in any court of competent jurisdiction,
            (2) may adopt, alter, and use a seal, which shall be 
        judicially noticed,
            (3) may prescribe, amend, and repeal such rules and 
        regulations as may be necessary for carrying out the functions 
        of the Corporation,
            (4) may make and perform such contracts and other 
        agreements with any individual, corporation, or other private 
        or public entity however designated and wherever situated, as 
        may be necessary for carrying out the functions of the 
        Corporation,
            (5) may determine and prescribe the manner in which its 
        obligations shall be incurred and its expenses allowed and 
        paid,
            (6) may, as necessary for carrying out the functions of the 
        Corporation, employ and fix the compensation of employees and 
        officers,
            (7) may lease, purchase, or otherwise acquire, own, hold, 
        improve, use, or otherwise deal in and with such property 
        (real, personal, or mixed) or any interest therein, wherever 
        situated, as may be necessary for carrying out the functions of 
        the Corporation,
            (8) may accept gifts or donations of services or of 
        property (real, personal, or mixed), tangible or intangible, in 
        furtherance of the purposes of this Act, and
            (9) shall have such other powers as may be necessary and 
        incident to carrying out this Act.
    (e) Nonprofit Entity; Restriction on Use of Moneys; Conflict of 
Interests; Audits.--
            (1) Nonprofit entity.--The Corporation shall be a nonprofit 
        corporation and shall have no capital stock.
            (2) Restriction.--No part of the Corporation's revenue, 
        earnings, or other income or property shall inure to the 
        benefit of any of its directors, officers, or employees, and 
        such revenue, earnings, or other income or property shall only 
        be used for carrying out the purposes of this Act.
            (3) Conflict of interests.--No director, officer, or 
        employee of the Corporation shall in any manner, directly or 
        indirectly participate in the deliberation upon or the 
        determination of any question affecting his or her personal 
        interests or the interests of any corporation, partnership, or 
        organization in which he or she is directly or indirectly 
        interested.
            (4) Audits.--
                    (A) Audits by independent certified public 
                accountants.--
                            (i) In general.--The Corporation's 
                        financial statements shall be audited annually 
                        in accordance with generally accepted auditing 
                        standards by independent certified public 
                        accountants that are certified by a regulatory 
                        authority of a State or other political 
                        subdivision of the United States. The audits 
                        shall be conducted at the place or places where 
                        the accounts of the Corporation are normally 
                        kept. All books, accounts, financial records, 
                        reports, files, and all other papers, things, 
                        or property belonging to or in use by the 
                        Corporation and necessary to facilitate the 
                        audit shall be made available to the person or 
                        persons conducting the audits, and full 
                        facilities for verifying transactions with the 
                        balances or securities held by depositories, 
                        fiscal agents, and custodians shall be afforded 
                        to such person or persons.
                            (ii) Reporting requirements.--The report of 
                        each annual audit described in clause (i) shall 
                        be included in the annual report required by 
                        subsection (c)(8).
                    (B) Record keeping requirements.--The Corporation 
                shall ensure that each recipient of assistance from the 
                Corporation keeps--
                            (i) separate accounts with respect to such 
                        assistance,
                            (ii) such records as may be reasonably 
                        necessary to fully disclose--
                                    (I) the amount and the disposition 
                                by such recipient of the proceeds of 
                                such assistance,
                                    (II) the total cost of the project 
                                or undertaking in connection with which 
                                such assistance is given or used, and 
                                the extent to which such costs are for 
                                a qualified project, and
                                    (III) the amount and nature of that 
                                portion of the cost of the project or 
                                undertaking supplied by other sources, 
                                and
                            (iii) such other records as will facilitate 
                        an effective audit.
                    (C) Audit and examination of books.--The 
                Corporation shall ensure that the Corporation, or any 
                of the Corporation's duly authorized representatives, 
                shall have access for the purpose of audit and 
                examination to any books, documents, papers, and 
                records of any recipient of assistance from the 
                Corporation that are pertinent to such assistance.
    (f) Exemption From Taxes.--
            (1) In general.--The Corporation, including its franchise, 
        capital, reserves, surplus, sinking funds, mortgages or other 
        security holdings, and income, shall be exempt from all 
        taxation now or hereafter imposed by the United States, by any 
        territory, dependency, or possession thereof, or by any State, 
        county, municipality, or local taxing authority, except that 
        any real property of the Corporation shall be subject to State, 
        territorial, county, municipal, or local taxation to the same 
        extent according to its value as other real property is taxed.
            (2) Financial obligations.--Build America bonds or other 
        obligations issued by the Corporation and the interest on or 
        tax credits with respect to its bonds or other obligations 
        shall not be subject to taxation by any State, county, 
        municipality, or local taxing authority.
    (g) Assistance for Transportation Purposes.--
            (1) In general.--In order to carry out the corporate 
        functions described in subsection (c), the Corporation shall be 
        eligible to receive discretionary grants, contracts, gifts, 
        contributions, or technical assistance from any Federal 
        department or agency, to the extent permitted by law.
            (2) Agreement.--In order to receive any assistance 
        described in this subsection, the Corporation shall enter into 
        an agreement with the Federal department or agency providing 
        such assistance, under which the Corporation agrees--
                    (A) to use such assistance to provide funding and 
                technical assistance only for activities which the 
                Board of Directors of the Corporation determines are 
                consistent with the corporate functions described in 
                subsection (c), and
                    (B) to review the activities of State 
                transportation agencies and other entities receiving 
                assistance from the Corporation to assure that the 
                corporate functions described in subsection (c) are 
                carried out.
            (3) Construction.--Nothing in this section shall be 
        construed to establish the Corporation as a department, agency, 
        or instrumentality of the United States Government, or to 
        establish the members of the Board of Directors of the 
        Corporation, or the officers and employees of the Corporation, 
        as officers or employees of the United States Government.
    (h) Management of Corporation.--
            (1) Board of directors; membership; designation of 
        chairperson and vice chairperson; appointment considerations; 
        term; vacancies.--
                    (A) Board of directors.--The management of the 
                Corporation shall be vested in a board of directors 
                composed of 15 members appointed by the President, by 
                and with the advice and consent of the Senate.
                    (B) Chairperson and vice chairperson.--The 
                President shall designate 1 member of the Board to 
                serve as Chairperson of the Board and 1 member to serve 
                as Vice Chairperson of the Board.
                    (C) Individuals from private life.--Eleven members 
                of the Board shall be appointed from private life.
                    (D) Federal officers and employees.--Four members 
                of the Board shall be appointed from among officers and 
                employees of agencies of the United States concerned 
                with infrastructure development.
                    (E) Appointment considerations.--All members of the 
                Board shall be appointed on the basis of their 
                understanding of and sensitivity to infrastructure 
                development processes. Members of the Board shall be 
                appointed so that not more than 8 members of the Board 
                are members of any 1 political party.
                    (F) Terms.--Members of the Board shall be appointed 
                for terms of 3 years, except that of the members first 
                appointed, as designated by the President at the time 
                of their appointment, 5 shall be appointed for terms of 
                1 year and 5 shall be appointed for terms of 2 years.
                    (G) Vacancies.--A member of the Board appointed to 
                fill a vacancy occurring before the expiration of the 
                term for which that member's predecessor was appointed 
                shall be appointed only for the remainder of that term. 
                Upon the expiration of a member's term, the member 
                shall continue to serve until a successor is appointed 
                and is qualified.
            (2) Compensation, actual, necessary, and transportation 
        expenses.--Members of the Board shall serve without additional 
        compensation, but may be reimbursed for actual and necessary 
        expenses not exceeding $100 per day, and for transportation 
        expenses, while engaged in their duties on behalf of the 
        Corporation.
            (3) Quorum.--A majority of the Board shall constitute a 
        quorum.
            (4) President of corporation.--The Board of Directors shall 
        appoint a president of the Corporation on such terms as the 
        Board may determine.
                                 <all>
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