Permits a tribe to use amounts received through the issuance of a bond to enter into and make payments under contracts: (1) for the design and engineering of the school; and (2) with financial advisors, underwriters, attorneys, trustees, and other professionals who would be able to provide assistance to the tribe in issuing bonds.
Makes any tribal school modernization bond issued by a tribe subject to a trust agreement.
Authorizes the Secretary to deposit not more than $30 million each fiscal year into a tribal school modernization escrow account beginning in FY 2004 from amounts made available for school replacement under the construction account of the Bureau of Indian Affairs. Requires the Secretary to use any amounts deposited to make payments to trustees or for advance planning and design.
Declares that no bond shall be an obligation of, nor shall payment of the principal be guaranteed by the United States. Provides that any amounts earned through the investment of funds under the control of a trustee shall not be subject to Federal income tax.
Amends the Internal Revenue Code to allow a tax credit to individuals who hold such bonds. Permits a separation (including at issuance) of the ownership of such a bond and the entitlement to the credit with respect to such bond.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 410 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 410
To provide for the issuance of bonds to construct and modernize Indian
schools and to provide a credit against Federal income tax for holders
of such bonds.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 28, 2003
Mr. Carson of Oklahoma introduced the following bill; which was
referred to the Committee on Ways and Means, and in addition to the
Committees on Education and the Workforce and Resources, for a period
to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To provide for the issuance of bonds to construct and modernize Indian
schools and to provide a credit against Federal income tax for holders
of such 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 ``Indian School Construction Act of
2003''.
SEC. 2. INDIAN SCHOOL CONSTRUCTION.
(a) Definitions.--In this section:
(1) Bureau.--The term ``Bureau'' means the Bureau of Indian
Affairs of the Department of the Interior.
(2) Indian.--The term ``Indian'' means any individual who
is a member of a tribe.
(3) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
(4) Tribal school.--The term ``tribal school'' means an
elementary school, secondary school, or dormitory that is
operated by a tribal organization or the Bureau for the
education of Indian children and that receives financial
assistance for its operation under an appropriation for the
Bureau under section 102, 103(a), or 208 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450f,
450h(a), and 458d) or under the Tribally Controlled Schools Act
of 1988 (25 U.S.C. 2501 et seq.) under a contract, a grant, or
an agreement, or for a Bureau-operated school.
(5) Tribe.--The term ``tribe'' has the meaning given the
term ``Indian tribal government'' by section 7701(a)(40) of the
Internal Revenue Code of 1986, including the application of
section 7871(d) of such Code. Such term includes any consortium
of tribes approved by the Secretary.
(b) Issuance of Bonds.--
(1) In general.--The Secretary shall establish a pilot
program under which eligible tribes have the authority to issue
qualified tribal school modernization bonds to provide funding
for the construction, rehabilitation, or repair of tribal
schools, including the advance planning and design thereof.
(2) Eligibility.--
(A) In general.--To be eligible to issue any
qualified tribal school modernization bond under the
program under paragraph (1), a tribe shall--
(i) prepare and submit to the Secretary a
plan of construction that meets the
requirements of subparagraph (B);
(ii) provide for quarterly and final
inspection of the project by the Bureau; and
(iii) pledge that the facilities financed
by such bond will be used primarily for
elementary and secondary educational purposes
for not less than the period such bond remains
outstanding.
(B) Plan of construction.--A plan of construction
meets the requirements of this subparagraph if such
plan--
(i) contains a description of the
construction to be undertaken with funding
provided under a qualified tribal school
modernization bond;
(ii) demonstrates that a comprehensive
survey has been undertaken concerning the
construction needs of the tribal school
involved;
(iii) contains assurances that funding
under the bond will be used only for the
activities described in the plan;
(iv) contains response to the evaluation
criteria contained in Instructions and
Application for Replacement School
Construction, Revision 6, dated February 6,
1999; and
(v) contains any other reasonable and
related information determined appropriate by
the Secretary.
(C) Priority.--In determining whether a tribe is
eligible to participate in the program under this
subsection, the Secretary shall give priority to tribes
that, as demonstrated by the relevant plans of
construction, will fund projects--
(i) described in the Education Facilities
Replacement Construction Priorities List as of
FY 2000 of the Bureau of Indian Affairs (65
Fed. Reg. 4623-4624);
(ii) described in any subsequent priorities
list published in the Federal Register; or
(iii) which meet the criteria for ranking
schools as described in Instructions and
Application for Replacement School
Construction, Revision 6, dated February 6,
1999.
(D) Advance planning and design funding.--A tribe
may propose in its plan of construction to receive
advance planning and design funding from the tribal
school modernization escrow account established under
paragraph (6)(B). Before advance planning and design
funds are allocated from the escrow account, the tribe
shall agree to issue qualified tribal school
modernization bonds after the receipt of such funds and
agree as a condition of each bond issuance that the
tribe will deposit into such account or a fund managed by the trustee
as described in paragraph (4)(C) an amount equal to the amount of such
funds received from the escrow account.
(3) Permissible activities.--In addition to the use of
funds permitted under paragraph (1), a tribe may use amounts
received through the issuance of a qualified tribal school
modernization bond to--
(A) enter into and make payments under contracts
with licensed and bonded architects, engineers, and
construction firms in order to determine the needs of
the tribal school and for the design and engineering of
the school;
(B) enter into and make payments under contracts
with financial advisors, underwriters, attorneys,
trustees, and other professionals who would be able to
provide assistance to the tribe in issuing bonds; and
(C) carry out other activities determined
appropriate by the Secretary.
(4) Bond trustee.--
(A) In general.--Notwithstanding any other
provision of law, any qualified tribal school
modernization bond issued by a tribe under this
subsection shall be subject to a trust agreement
between the tribe and a trustee.
(B) Trustee.--Any bank or trust company that meets
requirements established by the Secretary may be
designated as a trustee under subparagraph (A).
(C) Content of trust agreement.--A trust agreement
entered into by a tribe under this paragraph shall
specify that the trustee, with respect to any bond
issued under this subsection shall--
(i) act as a repository for the proceeds of
the bond;
(ii) make payments to bondholders;
(iii) receive, as a condition to the
issuance of such bond, a transfer of funds from
the tribal school modernization escrow account
established under paragraph (6)(B) or from
other funds furnished by or on behalf of the
tribe in an amount, which together with
interest earnings from the investment of such
funds in obligations of or fully guaranteed by
the United States or from other investments
authorized by paragraph (10), will produce
moneys sufficient to timely pay in full the
entire principal amount of such bond on the
stated maturity date therefor;
(iv) invest the funds received pursuant to
clause (iii) as provided by such clause; and
(v) hold and invest the funds in a
segregated fund or account under the agreement,
which fund or account shall be applied solely
to the payment of the costs of items described
in paragraph (3).
(D) Requirements for making direct payments.--
(i) In general.--Notwithstanding any other
provision of law, the trustee shall make any
payment referred to in subparagraph (C)(v) in
accordance with requirements that the tribe
shall prescribe in the trust agreement entered
into under subparagraph (C). Before making a
payment to a contractor under subparagraph
(C)(v), the trustee shall require an inspection
of the project by a local financial institution
or an independent inspecting architect or
engineer, to ensure the completion of the
project.
(ii) Contracts.--Each contract referred to
in paragraph (3) shall specify, or be
renegotiated to specify, that payments under
the contract shall be made in accordance with
this paragraph.
(5) Payments of principal and interest.--
(A) Principal.--No principal payments on any
qualified tribal school modernization bond shall be
required until the final, stated maturity of such bond,
which stated maturity shall be within 15 years from the
date of issuance. Upon the expiration of such period,
the entire outstanding principal under the bond shall
become due and payable.
(B) Interest.--In lieu of interest on a qualified
tribal school modernization bond there shall be awarded
a tax credit under section 1400M of the Internal
Revenue Code of 1986.
(6) Bond guarantees.--
(A) In general.--Payment of the principal portion
of a qualified tribal school modernization bond issued
under this subsection shall be guaranteed solely by
amounts deposited with each respective bond trustee as
described in paragraph (4)(C)(iii).
(B) Establishment of account.--
(i) In general.--Notwithstanding any other
provision of law, beginning in fiscal year
2004, from amounts made available for school
replacement under the construction account of
the Bureau, the Secretary is authorized to
deposit not more than $30,000,000 each fiscal
year into a tribal school modernization escrow
account.
(ii) Payments.--The Secretary shall use any
amounts deposited in the escrow account under
clauses (i) and (iii) to make payments to
trustees appointed and acting pursuant to
paragraph (4) or to make payments described in
paragraph (2)(D).
(iii) Transfers of excess proceeds.--Excess
proceeds held under any trust agreement that
are not needed for any of the purposes
described in clauses (iii) and (v) of paragraph
(4)(C) shall be transferred, from time to time,
by the trustee for deposit into the tribal
school modernization escrow account.
(7) Limitations.--
(A) Obligation to repay.--Notwithstanding any other
provision of law, the principal amount on any qualified
tribal school modernization bond issued under this
subsection shall be repaid only to the extent of any
escrowed funds furnished under paragraph (4)(C)(iii).
No qualified tribal school modernization bond issued by
a tribe shall be an obligation of, nor shall payment of
the principal thereof be guaranteed by, the United
States.
(B) Land and facilities.--Any land or facilities
purchased or improved with amounts derived from
qualified tribal school modernization bonds issued
under this subsection shall not be mortgaged or used as
collateral for such bonds.
(8) Sale of bonds.--Qualified tribal school modernization
bonds may be sold at a purchase price equal to, in excess of,
or at a discount from the par amount thereof.
(9) Treatment of trust agreement earnings.--Any amounts
earned through the investment of funds under the control of a
trustee under any trust agreement described in paragraph (4)
shall not be subject to Federal income tax.
(10) Investment of sinking funds.--Any sinking fund
established for the purpose of the payment of principal on a
qualified tribal school modernization bond shall be invested in
obligations issued by or guaranteed by the United States or in
such other assets as the Secretary of the Treasury may by
regulation allow.
(c) Expansion of Incentives for Tribal Schools.--
(1) In general.--Chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subchapter:
``Subchapter Z--Tribal School Modernization Provisions
``Sec. 1400M. Credit to holders of qualified tribal school
modernization bonds.
``SEC. 1400M. CREDIT TO HOLDERS OF QUALIFIED TRIBAL SCHOOL
MODERNIZATION BONDS.
``(a) Allowance of Credit.--In the case of a taxpayer who holds a
qualified tribal school modernization bond on a credit allowance date
of such bond which occurs during the taxable year, there shall be
allowed as a credit against the tax imposed by this chapter for such
taxable year an amount equal to the sum of the credits determined under
subsection (b) with respect to credit allowance dates during such year
on which the taxpayer holds such bond.
``(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 tribal school modernization bond is 25 percent
of the annual credit determined with respect to such bond.
``(2) Annual credit.--The annual credit determined with
respect to any qualified tribal school modernization bond is
the product of--
``(A) the applicable credit rate, multiplied by
``(B) the outstanding face amount of the bond.
``(3) Applicable credit rate.--For purposes of paragraph
(1), the applicable credit rate with respect to an issue is the
rate equal to an average market yield (as of the date of sale
of the issue) on outstanding long-term corporate obligations
(as determined by the Secretary).
``(4) Special rule for issuance and redemption.--In the
case of a bond which is issued during the 3-month period ending
on a credit allowance date, the amount of the credit determined
under this subsection with respect to such credit allowance
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.
``(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 part
IV of subchapter A (other than subpart C thereof,
relating to refundable credits).
``(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.
``(d) Qualified Tribal School Modernization Bond; Other
Definitions.--For purposes of this section--
``(1) Qualified tribal school modernization bond.--
``(A) In general.--The term `qualified tribal
school modernization bond' means, subject to
subparagraph (B), any bond issued as part of an issue
under section 2(b) of the Indian School Construction
Act of 2003, as in effect on the date of the enactment
of this section, if--
``(i) 95 percent or more of the proceeds of
such issue are to be used for the construction,
rehabilitation, or repair of a school facility
funded by the Bureau of Indian Affairs of the
Department of the Interior or for the
acquisition of land on which such a facility is
to be constructed with part of the proceeds of
such issue,
``(ii) the bond is issued by a tribe,
``(iii) the issuer designates such bond for
purposes of this section, and
``(iv) the term of each bond which is part
of such issue does not exceed 15 years.
``(B) National limitation on amount of bonds
designated.--
``(i) National limitation.--There is a
national qualified tribal school modernization
bond limitation for each calendar year. Such
limitation is--
``(I) $200,000,000 for 2004,
``(II) $200,000,000 for 2005, and
``(III) zero after 2006.
``(ii) Allocation of limitation.--The
national qualified tribal school modernization
bond limitation shall be allocated to tribes by
the Secretary of the Interior subject to the
provisions of section 2 of the Indian School
Construction Act of 2003, as in effect on the
date of the enactment of this section.
``(iii) 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 tribe shall not exceed the
limitation amount allocated to such government
under clause (ii) for such calendar year.
``(iv) Carryover of unused limitation.--If
for any calendar year--
``(I) the limitation amount under
this subparagraph, exceeds
``(II) the amount of qualified
tribal school modernization bonds
issued during such year,
the limitation amount under this subparagraph
for the following calendar year shall be
increased by the amount of such excess. The
preceding sentence shall not apply if such
following calendar year is after 2010.
``(2) Credit allowance date.--The term `credit allowance
date' means--
``(A) March 15,
``(B) June 15,
``(C) September 15, and
``(D) December 15.
Such term includes the last day on which the bond is
outstanding.
``(3) Bond.--The term `bond' includes any obligation.
``(4) Tribe.--The term `tribe' has the meaning given the
term `Indian tribal government' by section 7701(a)(40),
including the application of section 7871(d). Such term
includes any consortium of tribes approved by the Secretary of
the Interior.
``(e) 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)) and the amount so
included shall be treated as interest income.
``(f) Bonds Held by Regulated Investment Companies.--If any
qualified tribal school modernization bond is held by a regulated
investment company, the credit determined under subsection (a) shall be
allowed to shareholders of such company under procedures prescribed by
the Secretary.
``(g) Credits May Be Stripped.--Under regulations prescribed by the
Secretary--
``(1) In general.--There may be a separation (including at
issuance) of the ownership of a qualified tribal school
modernization 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.
``(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 tribal school modernization bond as if
it were a stripped bond and to the credit under this section as
if it were a stripped coupon.
``(h) Treatment for Estimated Tax Purposes.--Solely for purposes of
sections 6654 and 6655, the credit allowed by this section to a
taxpayer by reason of holding a qualified tribal school modernization
bonds on a credit allowance date shall be treated as if it were a
payment of estimated tax made by the taxpayer on such date.
``(i) Credit May Be Transferred.--Nothing in any law or rule of law
shall be construed to limit the transferability of the credit allowed
by this section through sale and repurchase agreements.
``(j) Credit Treated as Allowed Under Part IV of Subchapter A.--For
purposes of subtitle F, the credit allowed by this section shall be
treated as a credit allowable under part IV of subchapter A of this
chapter.
``(k) Reporting.--Issuers of qualified tribal school modernization
bonds shall submit reports similar to the reports required under
section 149(e).''.
(2) Clerical amendment.--The table of subchapters for
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new item:
``Subchapter Z. Tribal school
modernization provisions.''
(d) Sovereign Immunity.--This section and the amendments made by
this section shall not be construed to impact, limit, or affect the
sovereign immunity of the Federal Government or any State or tribal
government.
(e) Effective Date.--This section and the amendments made by this
section shall take effect on the date of the enactment of this Act with
respect to bonds issued after December 31, 2003.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, and Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, and Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, and Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, and Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Executive Comment Requested from Interior.
Referred to the Subcommittee on Education Reform.
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