To amend the Internal Revenue Code of 1986 to correct the treatment of tax-exempt financing of professional sports facilities.

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 PROFESSIONAL SPORTS 
              FACILITIES.

    (a) In General.--Section 141 of the Internal Revenue 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 issued as part of an 
        issue if the amount of the proceeds of the issue which are to 
        be used (directly or indirectly) to provide professional sports 
        facilities exceeds 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 described 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 exhibitions, games, or 
                training, regardless if the admission 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 reimbursement 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 Secretary shall 
        prescribe such regulations as may be appropriate to carry out 
        the purposes of this subsection, including such regulations as 
        may be appropriate 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 paragraphs (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 
                                rehabilitation began before September 
                                30, 2001, and was completed on or after 
                                such date, or
                                    (II) if a State or political 
                                subdivision thereof has entered into a 
                                binding contract before September 30, 
                                2001, that requires the incurrence of 
                                significant expenditures for such 
                                construction or rehabilitation, and 
                                some of such expenditures are incurred 
                                on or after such date; or
                            (ii) the acquisition of a facility pursuant 
                        to a binding contract entered into by a State 
                        or political subdivision thereof before 
                        September 30, 2001, and
                    (B) which are the subject of an official action 
                taken by relevant government officials before September 
                30, 2001--
                            (i) approving the issuance of such bonds, 
                        or
                            (ii) approving the submission of the 
                        approval of such issuance to a voter 
                        referendum.
            (3) Exception for final bond resolutions.--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 issuance 
        of such bonds before September 30, 2001.
            (4) Significant expenditures.--For purposes of paragraph 
        (2)(A)(i)(II), the term ``significant expenditures'' means 
        expenditures equal to or exceeding 10 percent of the reasonably 
        anticipated cost of the construction or rehabilitation of the 
        facility 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 professional 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.

Summary: Stop Tax-Exempt Arena Debt Issuance Act - Amends the Internal Revenue Code to treat certain bonds used directly or indirectly for financing professional sports facilities as private activity bonds and not as qualified bonds, except for certain in progress or approved projects, facilities with final bond resolutions, and current refundings.