I
105TH CONGRESS
1ST SESSION
H. R. 721
To amend the Internal Revenue Code of 1986 to correct the treatment
of tax-exempt financing of professional sports facilities.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 12, 1997
Mr. FRANK of Massachusetts 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 correct
the treatment of tax-exempt financing of professional
sports facilities.
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 the ‘‘Stop Tax-Exempt
Arena Debt Issuance Act’’.
SEC. 2. TREATMENT OF TAX-EXEMPT FINANCING OF PRO-
FESSIONAL SPORTS FACILITIES.
(a) IN GENERAL.—Section 141 of the Internal Reve-
nue 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 PROFESSIONAL
SPORTS FACILITIES TREATED
AS PRIVATE ACTIVITY
BONDS.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘private activity bond’ includes any bond is-
sued as part of an issue if the amount of the pro-
ceeds of the issue which are to be used (directly or
indirectly) to provide professional sports facilities ex-
ceeds the lesser of—
‘‘(A) 5 percent of such proceeds, or
‘‘(B) $5,000,000.
‘‘(2) BOND
NOT
TREATED
AS
A
QUALIFIED
BOND.—For purposes of this title, any bond de-
scribed in paragraph (1) shall not be a qualified
bond.
‘‘(3) PROFESSIONAL SPORTS FACILITIES.—For
purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘professional
sports facilities’ means real property or related
improvements used for professional sports exhi-
bitions, games, or training, regardless if the ad-
mission of the public or press is allowed or
paid.
‘‘(B) USE FOR PROFESSIONAL SPORTS.—
Any use of facilities which generates a direct or
indirect monetary benefit (other than reim-
bursement for out-of pocket expenses) for a
person who uses such facilities for professional
sports exhibitions, games, or training shall be
treated as a use described in subparagraph (A).
‘‘(4) ANTI-ABUSE
REGULATIONS.—The Sec-
retary shall prescribe such regulations as may be ap-
propriate to carry out the purposes of this sub-
section, including such regulations as may be appro-
priate to prevent avoidance of such purposes through
related persons, use of related facilities or multiuse
complexes, or otherwise.’’
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graphs (2), (3), and (5), the amendments made by
this section shall apply to bonds issued on or after
the first date of committee action.
(2) EXCEPTION FOR CONSTRUCTION, BINDING
AGREEMENTS, 
OR
APPROVED
PROJECTS.—The
amendments made by this section shall not apply to
bonds—
(A) the proceeds of which are used for—
(i) the construction or rehabilitation
of a facility—
(I) if such construction or reha-
bilitation began before June 14, 1996,
and was completed on or after such
date, or
(II) if a State or political subdivi-
sion thereof has entered into a bind-
ing contract before June 14, 1996,
that requires the incurrence of signifi-
cant expenditures for such construc-
tion or rehabilitation, and some of
such expenditures are incurred on or
after such date; or
(ii) the acquisition of a facility pursu-
ant to a binding contract entered into by
a State or political subdivision thereof be-
fore June 14, 1996, and
(B) which are the subject of an official ac-
tion taken by relevant government officials be-
fore June 14, 1996—
(i) approving the issuance of such
bonds, or
(ii) approving the submission of the
approval of such issuance to a voter ref-
erendum.
(3) EXCEPTION
FOR
FINAL
BOND
RESOLU-
TIONS.—The amendments made by this section shall
not apply to bonds the proceeds of which are used
for the construction or rehabilitation of a facility if
a State or political subdivision thereof has completed
all necessary governmental approvals for the issu-
ance of such bonds before June 14, 1996.
(4) SIGNIFICANT
EXPENDITURES.—For pur-
poses of paragraph (2)(A)(i)(II), the term ‘‘signifi-
cant expenditures’’ means expenditures equal to or
exceeding 10 percent of the reasonably anticipated
cost of the construction or rehabilitation of the facil-
ity involved.
(5) 
EXCEPTION
FOR
CERTAIN
CURRENT
REFUNDINGS.—
(A) IN GENERAL.—The amendments made
by this section shall not apply to any bond the
proceeds of which are used exclusively to refund
a qualified bond (or a bond which is a part of
a series of refundings of a qualified bond) if—
(i) the amount of the refunding bond
does not exceed the outstanding principal
amount of the refunded bond,
(ii) the average maturity date of the
issue of which the refunding bond is a part
is not later than the average maturity date
of the bonds to be refunded by such issue,
and
(iii) the net proceeds of the refunding
bond are used to redeem the refunded
bond not later than 90 days after the date
of the issuance of the refunding bond.
For purposes of clause (ii), average maturity
shall be determined in accordance with section
147(b)(2)(A) of the Internal Revenue Code of
1986.
(B) QUALIFIED BOND.—For purposes of
subparagraph (A), the term ‘‘qualified bond’’
means any tax-exempt bond to finance a profes-
sional sports facility (as defined in section
141(e)(3) of such Code, as added by subsection
(a)) issued before the first date of committee
action.
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