[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3097 Introduced in House (IH)]
106th CONGRESS
1st Session
H.R. 3097
To prevent governmental entities from using tax-exempt financing to
engage in unfair competition against private enterprise.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 18, 1999
Mr. Sanford introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To prevent governmental entities from using tax-exempt financing to
engage in unfair competition against private enterprise.
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 ``Private Enterprise Protection Act''.
SEC. 2. DENIAL OF TAX-EXEMPT FINANCING FOR CERTAIN FACILITIES THAT USE
TAX-EXEMPT FINANCING TO COMPETE WITH PRIVATE SECTOR
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 Facilities That Compete With Private
Sector Facilities.--
``(1) In General.--For purposes of this title, the term
`private activity bond' includes any bond that is issued as
part of an issue if the amount of the proceeds of the issue
which are to be used (directly or indirectly) to finance the
construction, reconstruction, rehabilitation, or expansion of a
disqualified facility exceeds the lesser of--
``(A) 5 percent of such proceeds, or
``(B) $1,000,000.
``(2) Bond not treated as a qualified bond.--Except as
provided in subparagraph (3)(B), a facility financed with a
qualified bond, as defined in subsection (f), shall not be
treated as disqualified facility.
``(3) Disqualified facility.--For purposes of this
subsection--
``(A) In general.--The term `disqualified facility'
means real property or related improvements which are
to be used (directly or indirectly) by one or more
nongovernmental persons in connection with a trade or
business conducted by such person or persons (whether
or not such use otherwise constitutes `private business
use' within the meaning of subsection (b)(6)) if--
``(i) on or before the date on which the
bonds are issued to finance the construction,
reconstruction, rehabilitation, or expansion of
such disqualified facility, a facility
substantially similar in purpose or use to the
disqualified facility has been placed in
service by one or more nongovernmental persons
within 5 miles of such disqualified facility;
``(ii) such other facility was not financed
with bonds the interest on which was or is
exempt under section 103; and
``(iii) with respect to any calendar year,
the aggregate use of the disqualified facility
by one or more of the nongovernmental persons
who have used, or do use the facility referred
to in clause (i) in connection with a trade or
business conducted by such person or persons
exceeds 25 percent of the days on which the
disqualified facility practically and
ordinarily would be used (by custom and usage
in the industry) by all persons.
``(B) The term `disqualified facility' shall
include any facility (including a facility financed
with a qualified bond as defined in subsection (f))
described in subdivisions (i) and (ii) of subparagraph
(A) without regard to subdivision (iii), if--
``(i) the function served by the facility
could be served by a facility substantially
similar in purpose or use to the disqualified
facility and owned by one or more
nongovernmental person; and
``(ii) the facility is of the kind
described in subparagraphs (A) of
section 142(c)(2) without regard to private business use.
``(C) The term `disqualified facility' shall not
include any facility that (i) constitutes an integral
part of a school, a hospital or similar facility the
principal purpose of which is to provide on a regular
basis educational instruction, in accordance with an
established curriculum, or medical care, or (ii) is
designed and used principally for professional sports
exhibitions or games.
``(D) Trade or business.--For purposes of
subparagraph (A), the term `trade or business' includes
the sponsorship of trade shows and similar exhibitions
and the leasing of space to exhibitors, without regard
to whether the sponsor is organized as a not-for-profit
organization, but only if one or more of the exhibitors
are engaged in the active conduct of a trade or
business for profit.
``(4) Qualified rehabilitations.--A bond shall not be
treated as a bond described in paragraph (1) if it is issued as
part of an issue substantially all of the proceeds of which are
used for the reconstruction or rehabilitation of a facility,
but only if such facility is not materially expanded as the
result of such rehabilitation.
``(5) 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 multiple bond issues, related persons, use of related
facilities or multi-use complexes or otherwise.''
(b) Effective Date.--
(1) In general.--Except as provided in this subsection (b),
the amendments made by this section shall apply to bonds issued
on or after October 18, 1999.
(2) Exception for construction and certain binding
agreements.--
(A) The amendments made by this section shall not
apply to bonds the proceeds of which are used for the
construction, reconstruction, rehabilitation or
expansion of a facility--
(i) if such construction, reconstruction,
rehabilitation or expansion has physically
commenced in a material fashion (other than
site testing, site preparation or similar
activities) before October 18, 1999, and has
resulted in significant expenditures before
such date, and was completed on or after such
date, or
(ii) if a State or political subdivision
thereof has entered into a binding contract
before October 18, 1999, that require the
incurrence of significant expenditures for such
construction, reconstruction, rehabilitation or
expansion (other than expenditures related to
the issuance of bonds or to architectural or
engineering plans), and some or all of such
expenditures are incurred on or after such
date.
(B) For purposes of subparagraph (A), the term
``significant expenditures'' means expenditures equal
to or exceeding 10 percent of the reasonably
anticipated cost of the construction, reconstruction,
and rehabilitation.
(3) Exception for certain facilities.--The amendments made
to section 141(e)(3)(B) as added by this Act, shall be
effective as of date of enactment.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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