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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2440 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 2440
To amend the Internal Revenue Code of 1986 to provide for school
infrastructure finance and innovation tax credit bonds.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 27, 2025
Mr. Hudson (for himself and Ms. Sewell) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
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
credit allowance 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.--
``(1) In general.--The amount of the credit determined
under this subsection with respect to any credit allowance date
for a SIFIA bond is 25 percent of the annual credit determined
for such bond.
``(2) Annual credit.--For purposes of this subsection, the
term `annual credit' means an amount equal to the product of--
``(A) the applicable credit rate, multiplied by
``(B) the face amount of the bond.
``(3) Applicable credit rate.--For purposes of paragraph
(2), the term `applicable credit rate' means 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 credit
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.
``(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) Credit Allowance Date.--For purposes of this section, the
term `credit allowance date' means, with respect to a bond during the
taxable year, any of the following dates:
``(1) March 15.
``(2) June 15.
``(3) September 15.
``(4) December 15.
Such term includes the last day on which the bond is outstanding.
``(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 (7)(A) 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,
``(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),
``(G) the private, for-profit entity described in
subparagraph (A) meets the allocation requirements of
paragraph (5) and the reporting requirements of
paragraph (6), and
``(H) the bond is issued before January 1, 2031.
``(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 (1)(D) is
$10,000,000,000.
``(B) Annual limitation.--The maximum aggregate
face amount of SIFIA bonds issued under this subsection
that may be designated under subparagraph (1)(D) in any
calendar year is $2,500,000,000.
``(C) Set-aside for rural areas.--
``(i) $1,000,000,000 of the overall
limitation described in subparagraph (A) shall
be set aside for projects located in rural
areas.
``(ii) For purposes of 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 school district shall be allocated more
than $1,500,000,000 in aggregate face amount of SIFIA
bonds under this subsection,
``(B) no more than $500,000,000 in aggregate face
amount of SIFIA bonds shall be allocated under this
subsection for the construction, expansion, renovation,
furnishing, or equipping of qualified school facilities
that are operated by a nonprofit organization under a
charter or other agreement between the applicable
school district and such nonprofit organization,
``(C) 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, and
``(D) in making such allocations, the Secretary
shall give preference to the financing of projects for
which the private for-profit developer is a preferred
concern.
``(5) Requirements relating to private, for-profit
entities.--A private, for-profit entity meets the requirements
of this paragraph if such entity--
``(A) has experience developing, owning, and
operating public schools leased to public school
districts that are net-zero buildings, and
``(B) demonstrates to the Secretary (in such manner
as the Secretary may provide) that such entity has
experience leasing public school buildings to a local
education agency, including at least two projects with
respect to which--
``(i) such entity (or a related person)
developed, owned, and was responsible for--
``(I) maintenance of--
``(aa) the heating,
ventilation, and air
conditioning system, or
``(bb) the solar
photovoltaic system, and
``(ii) the electrical service was in the
name of such entity for a minimum of four
years.
``(6) Reporting requirements.--A private entity meets the
requirements of this paragraph if such entity, in cooperation
with the applicable school district, periodically submits such
reports as the Secretary shall prescribe relating to the costs
and benefits of the financing, including--
``(A) tax benefits to the Federal Government and
cost savings to the school district, and
``(B) information related to any improvements in
student performance or teacher retention.
``(7) Definitions.--For purposes of this subsection--
``(A) Qualified school facilities.--The term
`qualified school facilities' means one or more school
buildings for a public elementary school or public
secondary school or for administrative or support
facilities relating to such school facilities, together
with related furnishings and equipment.
``(B) School district.--The term `school district'
means a public board of education or other public
authority legally constituted within a State for
administrative control or direction of public
elementary or secondary schools in the State or
political subdivision of a State.
``(C) Preferred concern.--The term `preferred
concern' means either a small business concern, a
minority owned concern, or a woman owned concern.
``(D) Small business concern.--
``(i) In general.--Subject to the
provisions of clause (ii), the term `small
business concern' means an entity which,
together with any related person, has fewer
than 500 employees.
``(ii) Small business size standards.--For
purposes of clause (i), the determination of
number of employees shall be made in a manner
consistent with--
``(I) section 3 of the Small
Business Act (15 U.S.C. 632), and
``(II) part 121 of title 13, Code
of Federal Regulations.
``(E) Minority owned.--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.
``(F) Woman owned.--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.
``(G) Nonprofit organization.--The term `nonprofit
organization' means an organization described in
section 501(c) and exempt from tax under section
501(a).
``(H) Net-zero energy building.--The term `net-zero
building' has the meaning given such term under section
410(20) of the Energy Independence and Security Act of
2007 (42 U.S.C. 17061(20)), applied by substituting
`school building' for `commercial building'.
``(I) Related person.--The term `related person'
has the meaning given such term in section 144(a)(3).
``(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) 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.
``(9) 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.''.
(b) Treatment of Interest as Unrelated Business Taxable Income.--
Section 512(b)(1) of such Code is amended by inserting ``(other than
interest of SIFIA bonds issued under section 54BB)'' after
``interest''.
(c) 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''.
(d) 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).
(e) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 2025.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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