I 
109TH CONGRESS 
2D SESSION 
H. R. 5904 
To amend the Internal Revenue Code of 1986 to allow public school districts 
to receive no interest loans for the purchase of renewable energy systems, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 26, 2006 
Mr. MATHESON (for himself, Mr. OTTER, Mr. SALAZAR, and Mr. UDALL of 
Colorado) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow public 
school districts to receive no interest loans for the pur-
chase of renewable energy systems, and for other pur-
poses. 
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 ‘‘Renewable Schools En-
ergy Act of 2006’’. 
SEC. 2. QUALIFIED RENEWABLE SCHOOL ENERGY BONDS. 
(a) IN GENERAL.—Subchapter U of chapter 1 of the 
Internal Revenue Code of 1986 (relating to incentives for 
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education zones) is amended by redesignating section 
1397F as section 1397G and by adding at the end of part 
IV of such subchapter the following new section: 
‘‘SEC. 1397F. QUALIFIED RENEWABLE SCHOOL ENERGY 
BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 
a qualified renewable school energy bond on 1 or more 
credit allowance dates of the bond occurring during any 
taxable year, there shall be allowed as a credit against the 
tax imposed by this chapter for the taxable year an 
amount equal to the sum of the credits determined under 
subsection (b) with respect to such dates. 
‘‘(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 qualified renewable 
school energy bond is 25 percent of the annual cred-
it determined with respect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified renewable 
school energy bond is the product of— 
‘‘(A) the credit rate determined by the Sec-
retary under paragraph (3) for the day on 
which such bond was sold, multiplied by 
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‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) DETERMINATION.—For purposes of para-
graph (2), with respect to any qualified renewable 
school energy bond, the Secretary shall determine 
daily or cause to be determined daily a credit rate 
which shall apply to the first day on which there is 
a binding, written contract for the sale or exchange 
of the bond. The credit rate for any day is the credit 
rate which the Secretary or the Secretary’s designee 
estimates will permit the issuance of qualified renew-
able school energy bonds with a specified maturity 
or redemption date without discount and without in-
terest cost to the qualified issuer. 
‘‘(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 also includes the last day on which the 
bond is outstanding. 
‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
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during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance 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 
or matures. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 
credit allowed under subsection (a) for any taxable year 
shall not exceed the excess of— 
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under part 
IV of subchapter A (other than subpart C thereof, 
relating to refundable credits, subpart H thereof, 
section 1400N(l), and this section). 
‘‘(d) QUALIFIED
RENEWABLE
SCHOOL
ENERGY 
BOND.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘renewable school 
energy bond’ means any bond issued as part of an 
issue if— 
‘‘(A) 95 percent or more of the proceeds of 
such issue are to be used for a qualified pur-
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pose with respect to a qualified school operated 
by an eligible local education agency, 
‘‘(B) the bond is issued by a State or local 
government of an eligible State within the juris-
diction of which such school is located, 
‘‘(C) the issuer— 
‘‘(i) designates such bond for purposes 
of this section, and 
‘‘(ii) certifies that it has the written 
approval of the eligible local education 
agency for such bond issuance, and 
‘‘(D) the term of each bond which is part 
of such issue is 20 years. 
‘‘(2) QUALIFIED SCHOOL.—The term ‘qualified 
school’ means any public school or public school sys-
tem administrative building which is owned by or op-
erated by an eligible local education agency. 
‘‘(3) ELIGIBLE LOCAL EDUCATION AGENCY.— 
The term ‘eligible local education agency’ means any 
local educational agency as defined in section 9101 
of the Elementary and Secondary Education Act of 
1965. 
‘‘(4) ELIGIBLE
STATE.—The term ‘eligible 
State’ means, with respect to any calendar year— 
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‘‘(A) one of the five States with the great-
est percentage population growth for the most 
recent preceding year for which data is avail-
able as determined by the Bureau of the Cen-
sus, and 
‘‘(B) the State with a total percentage 
population growth greater than 9 percent but 
less than 13.9 percent and a total population 
under the age of 19 of less than 300,000 as de-
termined under the 2000 Census. 
‘‘(5) QUALIFIED PURPOSE.—The term ‘quali-
fied purpose’ means, with respect to any qualified 
school, the purchase and installation of renewable 
energy products. 
‘‘(e) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.— 
‘‘(1) NATIONAL LIMITATION.—There is a na-
tional renewable school energy bond limitation for 
each calendar year. Such limitation is $50,000,000 
for 2007, $100,000,000 for 2008, $150,000,000 for 
2009, and, except as provided in paragraph (4), zero 
thereafter. 
‘‘(2) ALLOCATION
OF
LIMITATION.—The na-
tional renewable school energy bond limitation for a 
calendar year shall be allocated by the Secretary— 
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‘‘(A) among the eligible States described in 
subsection (d)(4)(A), 30 percent to the State 
with the greatest percentage population growth, 
20 percent to each of second and third ranked 
States, and 10 percent to each of the fourth 
and fifth ranked States, and 
‘‘(B) to the State described in subsection 
(d)(4)(B), 10 percent. 
The limitation amount allocated to an eligible State 
under the preceding sentence shall be allocated by 
the State education agency to qualified schools with-
in such State. 
‘‘(3) DESIGNATION
SUBJECT
TO
LIMITATION 
AMOUNT.—The maximum aggregate face amount of 
bonds issued during any calendar year which may be 
designated under subsection (d)(1) with respect to 
any qualified school shall not exceed the limitation 
amount allocated to such school under paragraph (2) 
for such calendar year. 
‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 
for any calendar year— 
‘‘(A) the limitation amount for any eligible 
State, exceeds 
‘‘(B) the amount of bonds issued during 
such year which are designated under sub-
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section (d)(1) with respect to qualified schools 
within such State, 
the limitation amount for such State for the fol-
lowing calendar year shall be increased by the 
amount of such excess. Any carryforward of a limi-
tation amount may be carried only to the first 2 
years following the unused limitation year. For pur-
poses of the preceding sentence, a limitation amount 
shall be treated as used on a first-in first-out basis. 
‘‘(f) OTHER DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(1) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(2) STATE.—The term ‘State’ includes the 
District of Columbia and any possession of the 
United States. 
‘‘(g) 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)). 
‘‘(h) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary— 
‘‘(1) IN GENERAL.—There may be a separation 
(including at issuance) of the ownership of a quali-
fied renewable school energy bond and the entitle-
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ment 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 
which, on the credit allowance date, holds the instru-
ment evidencing the entitlement to the credit and 
not to the holder of the bond. 
‘‘(2) CERTAIN RULES TO APPLY.—In the case 
of a separation described in paragraph (1), the rules 
of section 1286 shall apply to the qualified renew-
able school energy bond as if it were a stripped bond 
and to the credit under this section as if it were a 
stripped coupon. 
‘‘(i) CREDIT TREATED AS NONREFUNDABLE BOND-
HOLDER CREDIT.—For purposes of this title, the credit 
allowed by this section shall be treated as a credit allow-
able under subpart H of part IV of subchapter A of this 
chapter. 
‘‘(j) SPECIAL RULES.—For purposes of this section, 
rules similar to the rules under paragraphs (3) and (4) 
of section 54(l) shall apply.’’. 
(b) CONFORMING AMENDMENTS.—The table of sec-
tions for part V of such subchapter is amended by redesig-
nating section 1397F as section 1397G and by adding at 
the end of the table of sections for part IV of such sub-
chapter the following new item: 
‘‘Sec. 1397F. Credit for holders of qualified renewable school energy bonds.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after December 
31, 2006. 
Æ 
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