SIFIA Act
Bill: H.R.9668 | Sponsor: Rep. Sewell, Terri A. (D-AL)
Policy area: Taxation

Summary:
School Infrastructure Finance and Innovation Act or the SIFIA Act
This bill allows a new tax credit for the issuance of school infrastructure finance and innovation bonds (SIFIA bonds). The bill defines SIFIA bonds as any bond issue if 100% of the project proceeds of such issue are to be used for the design, construction, expansion, renovation, furnishing, or equipping of qualified school facilities.

To amend the Internal Revenue Code of 1986 to provide for school 
        infrastructure finance and innovation tax credit bonds.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``School Infrastructure Finance and 
Innovation Act'' or the ``SIFIA Act''.

SEC. 2. SIFIA BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 is amended by 
adding at the end the following new subpart:

                        ``Subpart K--SIFIA Bonds

``Sec. 54BB. SIFIA bonds.

``SEC. 54BB. SIFIA BONDS.

    ``(a) In General.--If a taxpayer holds a SIFIA bond on one or more 
interest payment dates of the bond 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.--The amount of the credit determined under 
this subsection with respect to any interest payment date for a SIFIA 
bond is 100 percent of the amount of interest payable by the issuer 
with respect to such date.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than subpart C and this subpart).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year 
        (determined before the application of paragraph (1) for such 
        succeeding taxable year).
    ``(d) Interest Payment Date.--For purposes of this section, the 
term `interest payment date' means any date on which the holder of 
record of the SIFIA bond is entitled to a payment of interest under 
such bond.
    ``(e) Sifia Bonds.--
            ``(1) In general.--For purposes of this section, the term 
        `SIFIA bond' means any bond issued as part of an issue if--
                    ``(A) 100 percent of the available project proceeds 
                of such issue are to be used for the design, 
                construction, expansion, renovation, furnishing, or 
                equipping of qualified school facilities (as defined in 
                paragraph (5) of this subsection) pursuant to an 
                agreement under which a private, for-profit entity 
                agrees with a State or local educational agency--
                            ``(i) to construct, expand, or renovate one 
                        or more buildings constituting the qualified 
                        school facilities (together with any related 
                        design, furnishing, and equipping of such 
                        buildings),
                            ``(ii) to operate the facilities at least 
                        until the date the facilities are first placed 
                        in service and operating substantially at their 
                        design level, and
                            ``(iii) at or before the end of the 
                        agreement, to transfer the facilities to such 
                        agency for no additional consideration,
                    ``(B) all buildings whose construction, expansion, 
                or renovations is included in the qualified school 
                facilities being financed with proceeds of a SIFIA bond 
                are reasonably expected to be net-zero energy buildings 
                as defined in section 410(20) of the Energy 
                Independence and Security Act of 2007 (42 U.S.C. 
                17061(20), treating school buildings as `commercial 
                buildings' for purposes of that section),
                    ``(C) the interest on such bond would (but for this 
                section and section 141) be excludable from gross 
                income under section 103,
                    ``(D) the issuer designates such bond as a SIFIA 
                bond for purposes of this subsection,
                    ``(E) the bond is not issued with more than a de 
                minimis amount of premium (determined under rules 
                similar to the rules of section 1273(a)(3)) over the 
                stated principal amount of the bond,
                    ``(F) the issue of which such bond is a part 
                satisfies the expenditure period requirements of 
                paragraph (2), and
                    ``(G) the bond is issued before January 1, 2027.
            ``(2) 6-year expenditure period.--
                    ``(A) In general.--An issue shall be treated as 
                meeting the requirements of this paragraph if, as of 
                the date of issuance, the issuer reasonably expects 100 
                percent of the available project proceeds to be spent 
                for purposes described in subparagraphs (1)(A) and 
                (1)(B) within the 6-year period beginning on such date 
                of issuance.
                    ``(B) Failure to spend required amount of bond 
                proceeds within 6 years.--To the extent that less than 
                100 percent of the available project proceeds of the 
                issue are expended at the close of the period described 
                in subparagraph (A) with respect to such issue, the 
                issuer shall redeem all of the nonqualified bonds 
                within 90 days after the end of such period. For 
                purposes of this paragraph, the amount of the 
                nonqualified bonds required to be redeemed shall be 
                determined in the same manner as under section 141.
            ``(3) Limitation on amount of sifia bonds designated.--
                    ``(A) Overall limitation.--The maximum aggregate 
                face amount of SIFIA bonds issued under this subsection 
                that may be designated under subparagraph (2)(D) is 
                $200,000,000,000.
                    ``(B) Set-aside for rural areas.--Subject to the 
                provisions of this subparagraph, $45,000,000,000 of the 
                overall limitation described in subparagraph (A) shall 
                be set aside for projects located in rural areas. As 
                used in this section, the term `rural area' means any 
                area which is--
                            ``(i) outside of a metropolitan statistical 
                        area (as such area is defined by the Secretary 
                        of Commerce), or
                            ``(ii) determined by the Secretary of 
                        Agriculture, after consultation with the 
                        Secretary of Commerce, to be a rural area.
            ``(4) Allocation of limitation.--The authority to issue 
        SIFIA bonds within the limitations set forth in paragraph (3) 
        shall be allocated by the Secretary to prospective issuers on a 
        first come-first served basis, under rules to be prescribed by 
        the Secretary, provided that--
                    ``(A) no issuer (together with any entities that 
                would be aggregated with such issuer under section 
                265(b)(3)(E)) shall be allocated the authority to issue 
                more than $15,000,000,000 in aggregate face amount of 
                SIFIA bonds under this subsection,
                    ``(B) an issuer applying for an allocation shall 
                certify (based on the certifications of any conduit 
                borrower of bond proceeds where applicable) that it 
                reasonably expects to commence the project to be 
                financed with proceeds of the bonds within 6 months of 
                the issue date of the bonds, and to expend all of the 
                available project proceeds within 6 years of the issue 
                date of the bonds,
                    ``(C) in making such allocations, the Secretary 
                shall give preference to the financing of projects that 
                are reasonably expected to be commenced and completed 
                as early as possible, based on definite, non-contingent 
                plans and arrangements to proceed as expeditiously as 
                possible with the construction, expansion, or 
                renovation of the project facilities upon the receipt 
                of financing, and
                    ``(D) in making such allocations, the Secretary 
                shall also give preference to the financing of projects 
                for which either (i) at least 10 percent of the equity 
                investment is provided by one or more preferred 
                concerns, (ii) the general contractor is a preferred 
                concern, or (iii) at least 30 percent of the amounts 
                paid to building trade subcontractors will be paid to 
                subcontractors that are preferred concerns.
            ``(5) Qualified school facilities.--For purposes of this 
        subsection, the term `qualified school facilities' means one or 
        more school buildings for a public elementary school or public 
        secondary school (as such terms are defined in section 14101 of 
        the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        8801)), or for administrative or support facilities relating to 
        such school facilities, together with related furnishings and 
        equipment.
            ``(6) Preferred concern.--For purposes of this subsection, 
        the term `preferred concern' means either a small business 
        concern, a minority owned concern, or a woman owned concern.
            ``(7) Small business concern.--For purposes of this 
        subsection, the term `small business concern' means an entity 
        determined to be a small business concern under 15 U.S.C. 
        632(a).
            ``(8) Minority owned.--For purposes of this subsection, the 
        term `minority owned' with respect to an entity means an entity 
        not less than 51 percent of which is owned by 1 or more 
        individuals who are citizens of the United States and who are 
        Asian American, Native Hawaiian, Pacific Islander, African 
        American, Hispanic, Puerto Rican, Native American, or Alaska 
        Native.
            ``(9) Woman owned.--For purposes of this subsection, the 
        term `woman owned' with respect to an entity means an entity 
        not less than 51 percent of which is owned by 1 or more women.
    ``(f) Other Applicable Rules.--
            ``(1) Interest includible in gross income.--For purposes of 
        this title, interest on any SIFIA bond shall be includible in 
        gross income.
            ``(2) Credit treated as interest.--For purposes of this 
        subtitle, the credit determined under subsection (a) shall be 
        treated as interest which is includible in gross income.
            ``(3) S corporations and partnerships.--In the case of a 
        tax credit bond held by an S corporation or partnership, the 
        allocation of credit allowed by this section to the 
        shareholders of such corporation or partners of such 
        partnership shall be treated as a distribution.
            ``(4) Bonds held by real estate investment trusts.--If any 
        qualified tax credit bond is held by a real estate investment 
        trust the credit determined under subsection (a) shall be 
        allowed to beneficiaries of such trust (and any gross income 
        included under paragraph (2) with respect to such credit shall 
        be distributed to such beneficiaries) under procedures 
        prescribed by the Secretary (similar to the procedures 
        prescribed by the Secretary under section 54A(h) (as in effect 
        before its repeal by Public Law 115-97)).
            ``(5) Credits may be stripped.--Under regulations 
        prescribed by the Secretary (similar to regulations prescribed 
        under section 54A(i) (as in effect before its repeal by Public 
        Law 115-97))--
                    ``(A) In general.--There may be a separation 
                (including at issuance) of the ownership of a qualified 
                tax credit bond and the entitlement 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 who on the credit allowance date 
                holds the instrument evidencing the entitlement to the 
                credit and not to the holder of the bond.
                    ``(B) Certain rules to apply.--In the case of a 
                separation described in subparagraph (A), the rules of 
                section 1286 shall apply to the qualified tax credit 
                bond as if it were a stripped bond and to the credit 
                under this section as if it were a stripped coupon.
            ``(6) Not treated as federally guaranteed.--For purposes of 
        section 149(b), a SIFIA bond shall not be treated as federally 
        guaranteed by reason of the credit allowed under subsection 
        (g).
            ``(7) Yield determination.--For purposes of section 148, 
        the yield on a SIFIA bond shall be determined without regard to 
        the credit allowed under subsection (a).
            ``(8) Maximum interest rate.--An issue shall be treated as 
        meeting the requirements of this section if the rate of 
        interest payable on any bond which is part of such issue is no 
        greater than the rate which the Secretary estimates will permit 
        the issuance of each such bond with a specified maturity or 
        redemption date without discount and without interest cost to 
        the issuer. The applicable interest rate with respect to any 
        such bond shall be determined as of the first day on which 
        there is a binding, written contract for the sale or exchange 
        of the bond.
            ``(9) Maturity limitation.--
                    ``(A) In general.--An issue shall be treated as 
                meeting the requirements of this section if the 
                maturity of any bond which is part of such issue does 
                not exceed the maximum term determined by the Secretary 
                under subparagraph (B).
                    ``(B) Maximum term.--During each calendar month, 
                the Secretary shall determine the maximum term 
                permitted under this paragraph for bonds issued during 
                the following calendar month. Such maximum term shall 
                be the term which the Secretary estimates will result 
                in the present value of the obligation to repay the 
                principal on the bond being equal to 20 percent of the 
                face amount of such bond. Such present value shall be 
                determined using as a discount rate the average annual 
                interest rate of tax-exempt obligations having a term 
                of 10 years or more which are issued during the month. 
                If the term as so determined is not a multiple of a 
                whole year, such term shall be rounded to the next 
                highest whole year.
            ``(10) Depreciation.--If the school facilities financed 
        with proceeds of SIFIA bonds are owned by a person otherwise 
        entitled to allowance for depreciation with respect to such 
        facility, that person may make an irrevocable election (binding 
        on any successors in interest) not to claim depreciation with 
        respect to the property financed with proceeds of the SIFIA 
        bonds for so long as the issue of which such bonds are a part 
        is outstanding. Such election shall be deemed to have been made 
        if the person fails to claim depreciation with respect to the 
        property in the first tax return filed by the person in which 
        such depreciation could have been claimed. To the extent the 
        person elects not to claim depreciation under this paragraph, 
        the basis of the financed property shall not be reduced under 
        section 1016 or otherwise for the depreciation that could have 
        been claimed.
    ``(g) Direct-Pay Credit Payments.--
            ``(1) Election.--In lieu of the tax credits otherwise 
        provided for under this section, the issuer of a SIFIA bond may 
        elect to be allowed a credit with respect to each interest 
        payment under such bond, which shall be payable by the 
        Secretary in the amounts and at the times set forth in 
        paragraph (2).
            ``(2) Amount and timing of credit payments.--The Secretary 
        shall pay (contemporaneously with each interest payment date 
        under such bond) to the issuer of such bond (or to any person 
        who makes interest payments on behalf of the issuer) 100 
        percent of the interest payable under such bond on such date.
            ``(3) Election.--The election under paragraph (1) shall be 
        made in writing before the first interest payment date with 
        respect to the bond in such form and manner as the Secretary 
        shall prescribe. Such election, once made, shall be 
        irrevocable.
            ``(4) Other applicable rules.--In the case of a SIFIA bond 
        with respect to which an election is made under this 
        subsection, the following rules shall apply:
                    ``(A) Interest on any such bond shall be includible 
                in gross income for purposes of this title.
                    ``(B) Any payments made under this subsection shall 
                not be includible as income for purposes of this title.
                    ``(C) The deduction otherwise allowable under this 
                title with respect to interest paid under such bond 
                shall be reduced by the amount of the payment made 
                under this subsection with respect to that interest.
                    ``(D) For purposes of section 148, the yield on a 
                SIFIA bond for which credit payments have been elected 
                under this subsection shall be reduced by the amount of 
                such credit payments.''.
    (b) Clerical Amendments.--The table of subparts for part IV of 
subchapter A of chapter 1 is amended by adding at the end the 
following:

                      ``subpart k--sifia bonds''.

    (c) Direct Purchases of SIFIA Bonds.--The Secretary shall purchase 
SIFIA bonds that the issuer is otherwise unable to sell, subject to 
procedures and credit standards to be established by the Secretary, 
which standards and procedures shall be similar to those applicable to 
loans made under lines of credit under section 1503 of the 
Transportation Infrastructure Finance and Innovation Act of 1998 (23 
U.S.C. 184).
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2021.
                                 <all>