I 

108TH CONGRESS 

1ST SESSION H. R. 740

To amend the Internal Revenue Code of 1986 to encourage new school 

construction through the creation of a new class of bond. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 12, 2003

Ms. LORETTA SANCHEZ of California (for herself, Mr. TOWNS, Ms. CORRINE

BROWN of Florida, Mr. PAUL, Mr. BOUCHER, Mr. WEXLER, and Mr. 

HOLDEN) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to encourage 

new school construction through the creation of a new 

class of bond.

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Expand and Rebuild 

5 America’s Schools Act of 2003’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 

8 (1) Many States and school districts will need 

9 to build new schools in order to accommodate in-
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1 creasing student enrollments; the Department of 

2 Education has predicted that the Nation will need 

3 6,000 more schools by the year 2006. 

4 (2) In response to reduced class mandates en5 forced by State governments and increased enroll6 ment, many school districts have been forced to uti7 lize temporary classrooms and other structures to 

8 accommodate increased school populations, along 

9 with resorting to year-round schedules for students. 

10 (3) Research has proven a direct correlation be11 tween the condition of school facilities and student 

12 achievement. Recently, researchers found that stu13 dents assigned to schools in poor condition can be 

14 expected to fall 10.9 percentage points behind those 

15 in buildings in excellent condition. Similar studies 

16 have demonstrated up to a 20 percent improvement 

17 in test scores when students were moved from a 

18 school with poor facilities to a new facility. 

19 (4) While school construction and maintenance 

20 are primarily a State and local concern, States and 

21 communities have not, on their own, met the in22 creasing burden of providing acceptable school facili23 ties, and the poorest communities have had the 

24 greatest difficulty meeting this need. 
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1 (5) Many local educational agencies have dif2 ficulties securing financing for school facility con3 struction and renovation, especially in States that 

require a 2 4 ⁄3 majority of voter approval for the pas5 sage of local bond initiatives. 

6 (6) The Federal Government, by providing in7 terest subsidies and similar types of support, can 

8 lower the costs of State and local school infrastruc9 ture investment, creating an incentive for businesses 

10 to support local school infrastructure improvement 

11 efforts. 

12 (7) The United States competitive position 

13 within the world economy is vulnerable if America’s 

14 future workforce continues to be educated in schools 

15 not equipped for the 21st century. America must do 

16 everything in its power to properly educate its people 

17 to compete in the global marketplace. 

18 SEC. 3. PURPOSES. 

19 The purposes of this Act are—

20 (1) to encourage public-private partnerships for 

21 the financing of school construction and expansion, 

22 and 

23 (2) to help local educational agencies bring all 

24 public school facilities up to an acceptable standard 

25 and build the additional classrooms needed to edu-
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1 cate the growing number of students who will enroll 

2 in the next decade. 

3 SEC. 4. CREDIT TO HOLDERS OF SCHOOL CONSTRUCTION 

4 BONDS. 

5 (a) IN GENERAL.—Subpart B of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 (relating to business-related credits) is amended by 

8 adding at the end the following new section: 

9 ‘‘SEC. 30B. CREDIT TO HOLDERS OF SCHOOL CONSTRUC10 TION BONDS. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli12 gible taxpayer who holds a school construction bond on 

13 the credit allowance date of such bond which occurs during 

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

15 the tax imposed by this chapter for such taxable year the 

16 amount determined under subsection (b). 

17 ‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 

18 determined under this subsection with respect to any 

19 school construction bond is the amount equal to the prod20 uct of—

21 ‘‘(1) the credit rate determined by the Sec22 retary under section 1397E(b)(2) for the month in 

23 which such bond was issued, multiplied by 

24 ‘‘(2) the face amount of the bond held by the 

25 taxpayer on the credit allowance date. 
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1 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 

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

3 shall not exceed the excess of—

4 ‘‘(1) the sum of the regular tax liability (as de5 fined in section 26(b)) plus the tax imposed by sec6 tion 55, over 

7 ‘‘(2) the sum of the credits allowable under this 

8 part (other than under this section and subpart C 

9 thereof, relating to refundable credits) and section 

10 1397E. 

11 ‘‘(d) SCHOOL CONSTRUCTION BOND.—For purposes 

12 of this section—

13 ‘‘(1) IN GENERAL.—The term ‘school construc14 tion bond’ means any bond issued as part of an 

15 issue if—

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

17 such issue are to be used for a qualified pur18 pose with respect to a new qualified school es19 tablished by an eligible local education agency.

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

21 government within the jurisdiction of which 

22 such school is located, 

23 ‘‘(C) the issuer—

24 ‘‘(i) designates such bond for purposes 

25 of this section, 
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1 ‘‘(ii) certifies that it has written as2 surances that the private business con3 tribution requirement of paragraph (2) will 

4 be met with respect to such school, and 

5 ‘‘(iii) certifies that it has the written 

6 approval of the eligible local education 

7 agency for such bond issuance, and 

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

9 of such issue does not exceed the maximum 

10 term permitted under section 1397E(d)(3). 

11 ‘‘(2) PRIVATE BUSINESS CONTRIBUTION RE12 QUIREMENT.—

13 ‘‘(A) IN GENERAL.—For purposes of para14 graph (1), the private business contribution re15 quirement of this paragraph is met with respect 

16 to any issue if the eligible local education agen17 cy that established the qualified school has writ18 ten commitments from private entities to make 

19 qualified contributions having a present value 

20 (as of the date of issuance of the issue) of not 

21 less than 10 percent of the proceeds of the 

22 issue. 

23 ‘‘(B) QUALIFIED CONTRIBUTIONS.—For 

24 purposes of subparagraph (A), the term ‘quali25 fied contribution’ means any contribution (of a 
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1 type and quality acceptable to the eligible local 

2 education agency) of—

3 ‘‘(i) equipment for use in the qualified 

4 school (including state-of-the-art tech5 nology and vocational equipment), 

6 ‘‘(ii) technical assistance in developing 

7 curriculum or in training teachers in order 

8 to promote appropriate market driven tech9 nology in the classroom, 

10 ‘‘(iii) services of employees as volun11 teer mentors, 

12 ‘‘(iv) internships, field trips, or other 

13 educational opportunities outside the 

14 school for students, or 

15 ‘‘(v) any other property or service 

16 specified by the eligible local education 

17 agency. 

18 ‘‘(3) QUALIFIED SCHOOL.—

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

20 school’ means any public school which is estab21 lished by and operated under the supervision of 

22 an eligible local education agency to provide 

23 education or training below the postsecondary 

24 level if—
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1 ‘‘(i) such public school is designed in 

2 cooperation with business to enhance the 

3 academic curriculum, increase graduation 

4 and employment rates, and better prepare 

5 students for the rigors of college and the 

6 increasingly complex workforce, 

7 ‘‘(ii) students in such public school 

8 will be subject to the same academic stand9 ards and assessments as other students 

10 educated by the local education agency, 

11 ‘‘(iii) a well-structured program to al12 leviate overcrowding and to improve stu13 dents’ education has been constructed and 

14 implemented in the opinion of the Sec15 retary of Education, and 

16 ‘‘(iv) at least 2 of the following re17 quirements are met: 

18 ‘‘(I) There is a reasonable expec19 tation (as of the date of issuance of

20 the bonds) that at least 35 percent of 

21 the population attending such public 

22 school will be eligible for free or re23 duced-cost lunches under the school 

24 lunch program established under the 

25 National School Lunch Act. 
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1 ‘‘(II) There is a reasonable ex2 pectation (as of the date of issuance 

3 of the bonds) that the student growth 

4 rate over the next 5 years for the 

5 school district in which such public 

6 school is to be located will be at least 

7 10 percent. 

8 ‘‘(III) The average student-teach9 er ratio for such district as of the 

10 date of issuance of the bonds is at 

11 least 28 to 1. 

12 ‘‘(B) ELIGIBLE LOCAL EDUCATION AGEN13 CY.—The term ‘eligible local education agency’ 

14 means any local educational agency as defined 

15 in section 14101 of the Elementary and Sec16 ondary Education Act of 1965. 

17 ‘‘(4) QUALIFIED PURPOSE.—

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

19 purpose’ means, with respect to any qualified 

20 school—

21 ‘‘(i) constructing a new school facility, 

22 and 

23 ‘‘(ii) providing equipment for use at 

24 such facility. 
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1 ‘‘(B) SCHOOL FACILITY.—The term ‘school 

2 facility’ means a new public structure suitable 

3 for use as a classroom, laboratory, library, 

4 media center, or related facility whose primary 

5 purpose is the instruction of public elementary 

6 or secondary students. Such term does not in7 clude an athletic stadium, or any other struc8 ture or facility intended primarily for athletic 

9 exhibitions, contests, games, or events for which 

10 admission is charged to the general public. 

11 ‘‘(e) LIMITATION ON AMOUNT OF BONDS DES12 IGNATED.—

13 ‘‘(1) NATIONAL LIMITATION.—There is a na14 tional school construction bond limitation for each 

15 calendar year. Such limitation is $400,000,000 for 

16 2004 and 2005, and, except for carryovers as pro17 vided under the rules applicable under paragraph 

18 (4), zero thereafter.

19 ‘‘(2) ALLOCATION OF LIMITATION.—The na20 tional school construction bond limitation for a cal21 endar year shall be allocated by the Secretary among 

22 the States on the basis of their respective popu23 lations of individuals below the poverty line (as de24 fined by the Office of Management and Budget). 

25 The limitation amount allocated to a State under the 
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1 preceding sentence shall be allocated by the Sec2 retary of Education to qualified schools within such 

3 State. 

4 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

5 AMOUNT.—The maximum aggregate face amount of 

6 bonds issued during any calendar year which may be 

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

8 any qualified school shall not exceed the limitation 

9 amount allocated to such school under paragraph (2) 

10 for such calendar year. 

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

12 for any calendar year—

13 ‘‘(A) the limitation amount for any State, 

14 exceeds 

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

16 such year which are designated under sub17 section (d)(1) with respect to qualified schools 

18 within such State, 

19 the limitation amount for such State for the fol20 lowing calendar year shall be increased by the 

21 amount of such excess. 

22 ‘‘(f) OTHER DEFINITIONS.—The definitions in sub23 sections (d)(6) and (f) of section 1397E shall apply for 

24 purposes of this section. 
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1 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

2 income includes the amount of the credit allowed to the 

3 taxpayer under this section.’’

4 (b) CONFORMING AMENDMENT.—The table of sec5 tions for subpart B of part IV of subchapter A of chapter 

6 1 of such Code is amended by adding at the end the fol7 lowing new item:

‘‘Sec. 30B. Credit to holders of school construction bonds.’’

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

9 this section shall apply to obligations issued after Decem10 ber 31, 2003.

Æ