I
106TH CONGRESS
1ST SESSION
H.R. 3097
To prevent governmental entities from using tax-exempt financing to engage
in unfair competition against private enterprise.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 18, 1999
Mr. SANFORD introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To prevent governmental entities from using tax-exempt fi-
nancing to engage in unfair competition against private
enterprise.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as ‘‘Private Enterprise Protec-
tion Act’’.
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SEC. 2. DENIAL OF TAX-EXEMPT FINANCING FOR CERTAIN
FACILITIES THAT USE TAX-EXEMPT FINANC-
ING TO COMPETE WITH PRIVATE SECTOR FA-
CILITIES.
(a) IN GENERAL.—Section 141 of the Internal Rev-
enue Code of 1986 (defining private activity bond and
qualified bond) is amended by redesignating subsection (e)
as subsection (f) and by inserting after subsection (d) the
following new subsection:
‘‘(e) CERTAIN ISSUES USED FOR FACILITIES THAT
COMPETE WITH PRIVATE SECTOR FACILITIES.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘private activity bond’ includes any bond
that is issued as part of an issue if the amount of
the proceeds of the issue which are to be used (di-
rectly or indirectly) to finance the construction, re-
construction, rehabilitation, or expansion of a dis-
qualified facility exceeds the lesser of—
‘‘(A) 5 percent of such proceeds, or
‘‘(B) $1,000,000.
‘‘(2) BOND
NOT
TREATED
AS
A
QUALIFIED
BOND.—Except as provided in subparagraph (3)(B),
a facility financed with a qualified bond, as defined
in subsection (f), shall not be treated as disqualified
facility.
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‘‘(3) DISQUALIFIED
FACILITY.—For purposes
of this subsection—
‘‘(A) IN GENERAL.—The term ‘disqualified
facility’ means real property or related improve-
ments which are to be used (directly or indi-
rectly) by one or more nongovernmental persons
in connection with a trade or business con-
ducted by such person or persons (whether or
not such use otherwise constitutes ‘private busi-
ness use’ within the meaning of subsection
(b)(6)) if—
‘‘(i) on or before the date on which
the bonds are issued to finance the con-
struction, reconstruction, rehabilitation, or
expansion of such disqualified facility, a fa-
cility substantially similar in purpose or
use to the disqualified facility has been
placed in service by one or more non-
governmental persons within 5 miles of
such disqualified facility;
‘‘(ii) such other facility was not fi-
nanced with bonds the interest on which
was or is exempt under section 103; and
‘‘(iii) with respect to any calendar
year, the aggregate use of the disqualified
HR 3097 IH
facility by one or more of the nongovern-
mental persons who have used, or do use
the facility referred to in clause (i) in con-
nection with a trade or business conducted
by such person or persons exceeds 25 per-
cent of the days on which the disqualified
facility practically and ordinarily would be
used (by custom and usage in the indus-
try) by all persons.
‘‘(B) The term ‘disqualified facility’ shall
include any facility (including a facility financed
with a qualified bond as defined in subsection
(f)) described in subdivisions (i) and (ii) of sub-
paragraph (A) without regard to subdivision
(iii), if—
‘‘(i) the function served by the facility
could be served by a facility substantially
similar in purpose or use to the disquali-
fied facility and owned by one or more
nongovernmental person; and
‘‘(ii) the facility is of the kind de-
scribed in subparagraphs (A) of section
142(c)(2) without regard to private busi-
ness use.
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‘‘(C) The term ‘disqualified facility’ shall
not include any facility that (i) constitutes an
integral part of a school, a hospital or similar
facility the principal purpose of which is to pro-
vide on a regular basis educational instruction,
in accordance with an established curriculum,
or medical care, or (ii) is designed and used
principally for professional sports exhibitions or
games.
‘‘(D) TRADE OR BUSINESS.—For purposes
of subparagraph (A), the term ‘trade or busi-
ness’ includes the sponsorship of trade shows
and similar exhibitions and the leasing of space
to exhibitors, without regard to whether the
sponsor is organized as a not-for-profit organi-
zation, but only if one or more of the exhibitors
are engaged in the active conduct of a trade or
business for profit.
‘‘(4) QUALIFIED
REHABILITATIONS.—A bond
shall not be treated as a bond described in para-
graph (1) if it is issued as part of an issue substan-
tially all of the proceeds of which are used for the
reconstruction or rehabilitation of a facility, but only
if such facility is not materially expanded as the re-
sult of such rehabilitation.