SEC. 2. CERTIFICATION OF COST OF FINANCING OF MUNIC-
IPAL OBLIGATIONS. 
(a) IN GENERAL.—Section 149 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(h) CERTIFICATION OF COST OF FINANCING.— 
‘‘(1) IN
GENERAL.—Section 103(a) shall not 
apply to any State or local bond issuance, including 
any private activity bond issuance, unless, with re-
spect to the issue of which such bond is a part, the 
requirements of paragraph (2) are met. 
‘‘(2) OPTIMAL
BOND
FINANCING
CERTIFI-
CATION REQUIREMENT.—The requirements of this 
paragraph are met with respect to an issue if the 
issuer of such bonds has received an optimal bond 
financing certification not later than the date such 
issue is originally issued. 
‘‘(3) OPTIMAL
BOND
FINANCING
CERTIFI-
CATION.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘optimal 
bond financing certification’ means a written 
statement by an independent qualified financial 
adviser which— 
‘‘(i) certifies that, in the opinion of an 
independent qualified financial adviser, the 
fees associated with the issuance and the 
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aggregate interest cost to such issuer with 
respect to such bonds are reasonable com-
pared with fees and interest rate cost 
available in the financial marketplace in 
which such bonds may be sold, without 
materially increasing the risks to the issuer 
or bond obligors, and 
‘‘(ii) details the reasons supporting 
the certification described in subparagraph 
(A) (including the effect the selected legal 
structure has on the aggregate interest 
cost). 
‘‘(B) QUALIFIED
INDEPENDENT
FINAN-
CIAL ADVISOR.— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied independent financial advisor’ means 
an individual who— 
‘‘(I) has the professional quali-
fications required to advise the issuer 
of such bond as to the financial cost 
of such issue and the appropriate 
legal structures and financing alter-
natives for optimization of the cost of 
such issue, and 
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‘‘(II) has a legal fiduciary duty to 
the issuer (whether under common 
law, or otherwise), which includes the 
duty to advise without regard to the 
financial or other interest of the indi-
vidual. 
‘‘(ii) RELATED OR INTERESTED PAR-
TIES
EXCLUDED.—For purposes of this 
subparagraph, an individual shall not be 
treated as an independent qualified finan-
cial adviser if— 
‘‘(I) such adviser is, is employed 
by, or is employed by any person who 
is owned (directly or indirectly) by, 
the underwriter of such bond, 
‘‘(II) such adviser is providing 
any other financial advice with respect 
to the issuance of such bond for which 
such advisor is receiving remuneration 
(or is employed by, or is employed by 
any person who is owned (directly or 
indirectly) by, such a person), or 
‘‘(III) the remuneration of such 
adviser is contingent, directly or indi-
rectly, on the issuance of such issue. 
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‘‘(iii) SPECIAL RULE FOR EMPLOYEES 
OF STATE OR LOCAL GOVERNMENT.—An 
individual shall not fail to be treated as 
qualified independent financial advisor 
solely by reason of being an employee of 
the State or local government with respect 
to which the bond is being issued. 
‘‘(4) OPTIMAL
BOND
FINANCING
CERTIFI-
CATION.—The issuer of any State or local bond 
issuance shall make publicly available the optimal 
bond financing certification with respect to such 
issuance. 
‘‘(5) CALLABLE BONDS.— 
‘‘(A) IN
GENERAL.—A callable State or 
local bond issue shall not be treated as con-
tinuing to meet the requirements of paragraph 
(2) unless the issuer of such bonds has reason-
ably determined as of the first date on which 
outstanding bonds may be called, and annually 
thereafter, that exercising such right to call 
such bonds and refunding such bonds will not 
result in a substantial economic savings to the 
issuer, or private activity user, of such bonds in 
the marketplace in which such bonds would be 
called and refunded. 
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‘‘(B) CALLABLE STATE OR LOCAL BOND.— 
For purposes of this paragraph, the term ‘call-
able State or local bond issue’ means a bond 
issue which provides for a presently exercisable 
optional right to the issuer, or private activity 
user of the proceeds, of such bonds to retire all 
or part of such bonds at a stated date, but only 
if the remaining term to original maturity of 
such bonds is more than 23 months after the 
date that such optional right is first exercisable, 
with or without the payment of any premium to 
the holders of such bonds. 
‘‘(6) TAX
CREDIT
BONDS.—For purposes of 
this subsection, the term ‘State or local bond’ shall 
include any tax credit bond (as defined in section 
853A(e)(1)(A)).’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to obligations issued after the date of the 
enactment of this Act. 
(2) CALLABLE BONDS.—In the case of callable 
obligations originally issued or refunded before the 
date of the enactment of this Act, the amendments 
made by this section shall apply to any such obliga-
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tion that may be called, in whole or in part, before, 
on, or after the date of the enactment of this Act. 
SEC. 3. SMALL ISSUER CREDIT. 
(a) IN GENERAL.—Subchapter B of chapter 65 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new section: 
‘‘SEC. 6433. SMALL ISSUER CREDIT. 
‘‘(a) IN GENERAL.—In the case of bond issued by 
a small issuer, such issuer shall be allowed as a credit with 
respect to such bond an amount equal to 0.05 percent of 
the principle amount of such bond which shall be payable 
by the Secretary as provided in subsection (b). 
‘‘(b) PAYMENT OF CREDIT.—The Secretary shall pay 
to such issuer the amount of the credit determined under 
subsection (a) on such date as the Secretary can reason-
ably determine such issuer is a small issuer for the cal-
endar year. 
‘‘(c) SMALL ISSUER.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘small issuer’ 
means, with respect to any calendar year, any issuer 
if the aggregate face amount of all tax-exempt bonds 
(other than private activity bonds) issued by such 
issuer during such calendar year does not exceed 
$50,000,000. 
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‘‘(2) CERTAIN REFUNDING BONDS NOT TAKEN 
INTO
ACCOUNT
IN
DETERMINING
SMALL
ISSUER 
STATUS.—There shall not be taken into account 
under paragraph (1) any bond issued to refund 
(other than to advance refund) any bond to the ex-
tent the amount of the refunding bond does not ex-
ceed the outstanding amount of the refunded bond.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter B of chapter 65 of such Code is amended 
by adding at the end the following new item: 
‘‘Sec. 6433. Small issuer credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
Æ 
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