S 2367
110th CONGRESS
1st Session
S. 2367
To provide for the issuance of bonds to provide funding for
the construction of schools of the Bureau of Indian Affairs, and for
other purposes.
IN THE SENATE OF THE UNITED STATES
November 15, 2007
Mr. JOHNSON (for himself and Mr. BINGAMAN) introduced the following
bill; which was read twice and referred to the Committee on Finance
A BILL
To provide for the issuance of bonds to provide funding for
the construction of schools of the Bureau of Indian Affairs, and for
other purposes.
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'.
SEC. 2. DEFINITIONS.
(1) BUREAU- The term `Bureau' means the Bureau of Indian Affairs.
(2) INDIAN- The term `Indian' means any individual who is a member
of an Indian tribe.
(A) IN GENERAL- The term `Indian tribe' has the meaning given the
term `Indian tribal government' in section 7701(a)(40) of the Internal
Revenue Code of 1986 (as modified by section 7871(d) of that Code).
(B) INCLUSION- The term `Indian tribe' includes any consortium of
Indian tribes approved by the Secretary.
(4) SECRETARY- The term `Secretary' means the Secretary of the Interior.
(5) TRIBAL SCHOOL- The term `tribal school' means an elementary school,
secondary school, or dormitory that--
(A) is operated by a tribal organization or the Bureau for the education
of Indian children; and
(B) receives financial assistance for the operation of the school
or dormitory under an appropriation for the Bureau under a contract,
grant, or agreement, or for a Bureau-operated school, under--
(i) 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
(ii) the Tribally Controlled Schools Act of 1988 (25 U.S.C. 2501
et seq.).
SEC. 3. ISSUANCE OF BONDS.
(a) In General- The Secretary shall establish a pilot program under
which the Secretary shall provide to eligible Indian tribes the authority
to issue qualified tribal school modernization bonds to provide funds
for the construction, rehabilitation, and repair of tribal schools,
including advance planning and design of tribal schools.
(1) IN GENERAL- To be eligible to issue a qualified tribal school
modernization bond under the program under subsection (a), an Indian
tribe shall--
(A) prepare and submit to the Secretary a plan of construction that
meets the requirements of paragraph (2);
(B) provide for quarterly and final inspection by the Bureau of
each project to be funded by the bond; and
(C) ensure that the facilities to be funded by the bond will be
used primarily for elementary and secondary educational purposes
for the period during which the bond remains outstanding.
(2) PLAN OF CONSTRUCTION- The requirements referred to in paragraph
(1)(A) are that the plan shall--
(A) contain a description of the construction to be carried out
using funds provided under a qualified tribal school modernization
bond;
(B) demonstrate that a comprehensive survey has been carried out
regarding the construction needs of the applicable tribal school;
(C) contain assurances that funding under the bond will be used
only for the activities described in the plan;
(D) contain a response to the evaluation criteria contained in the
document entitled `Instructions and Application for Replacement
School Construction, Revision 6' and dated February 6, 1999; and
(E) contain any other reasonable and related information that the
Secretary determines to be appropriate.
(3) PRIORITY- In determining whether an Indian tribe is eligible to
participate in the program under this section, the Secretary shall
give priority to Indian tribes that, as demonstrated by the plans
of construction of the Indian tribes, will fund projects--
(A) described in the list of the Bureau entitled `Education Facilities
Replacement Construction Priorities List as of FY 2004' (69 Fed.
Reg. 13870) (or successor regulations); or
(B) that meet the criteria for ranking schools described in the
document entitled `Instructions and Application for Replacement
School Construction, Revision 6' and dated February 6, 1999.
(4) ADVANCE PLANNING AND DESIGN FUNDING-
(A) IN GENERAL- An Indian tribe may propose in the plan of construction
of the Indian tribe to receive advance planning and design funding
from the tribal school modernization escrow account established
under subsection (f)(2).
(B) CONDITIONS- As a condition of receiving advance planning and
design funds under subparagraph (A), an Indian tribe shall agree--
(i) to issue qualified tribal school modernization bonds after
the receipt of the funds; and
(ii) to deposit into the escrow account or a fund managed by a
trustee under subsection (d)(3) an amount equal to the amount
of funds received from the escrow account.
(c) Permissible Activities- In addition to the use described in subsection
(a), an Indian tribe may use amounts received through the issuance of
a qualified tribal school modernization bond--
(1) to enter into, and make payments under, contracts with licensed
and bonded architects, engineers, and construction firms--
(A) to determine the needs of a tribal school; and
(B) for the design and engineering of a tribal school;
(2) to enter into, and make payments under, contracts with financial
advisors, underwriters, attorneys, trustees, and other professionals
to provide assistance to the Indian tribe in issuing the bonds; and
(3) to carry out other such activities as the Secretary determines
to be appropriate.
(1) IN GENERAL- Notwithstanding any other provision of law, any qualified
tribal school modernization bond issued by an Indian tribe under this
section shall be subject to a trust agreement between the Indian tribe
and a trustee.
(2) TRUSTEE- Any bank or trust company that meets the requirements
established by the Secretary may serve as a trustee for purposes of
paragraph (1).
(3) CONTENT OF TRUST AGREEMENT- A trust agreement entered into by
an Indian tribe under this subsection shall specify that the trustee,
with respect to any bond issued under this section, shall--
(A) act as a repository for the proceeds of the bond;
(B) make payments to bondholders;
(C) receive, as a condition to the issuance of the bond, a transfer
of funds from the tribal school modernization escrow account under
subsection (f)(2), or from other funds furnished by or on behalf
of the Indian tribe, in an amount that, together with interest earnings
from the investment of the funds in obligations of or fully guaranteed
by the United States, or from other investments under subsection
(j), will be sufficient to pay timely and in full the entire principal
amount of the bond on the stated maturity date of the bond;
(D) invest the funds received in accordance with subparagraph (C);
and
(E) hold and invest the funds in a segregated fund or account under
the agreement, to be used solely to pay the costs of activities
described in subsection (c).
(4) REQUIREMENTS FOR MAKING DIRECT PAYMENTS-
(A) IN GENERAL- Notwithstanding any other provision of law, the
trustee shall make each payment described in paragraph (3)(E) in
accordance with such requirements as the Indian tribe may prescribe
in the trust agreement under paragraph (3).
(B) PAYMENTS TO CONTRACTORS- As a condition of making a payment
to a contractor under paragraph (3)(E), the trustee shall require
an inspection of the project of the contractor, to ensure the completion
of the project, by--
(i) a local financial institution; or
(ii) an independent inspecting architect or engineer.
(C) CONTRACTS- Each contract under paragraphs (1) and (2) of subsection
(c) shall require, or be renegotiated to require, that each payment
under the contract shall be made in accordance with this subsection.
(e) Payments of Principal and Interest-
(A) IN GENERAL- No principal payment on any qualified tribal school
modernization bond shall be required until the final, stated maturity
of the bond.
(i) IN GENERAL- The final, stated maturity of a qualified tribal
school modernization bond shall be not later than the date that
is 15 years after the date of issuance of the bond.
(ii) EXPIRATION- On expiration of a qualified tribal school modernization
bond under clause (i), the entire outstanding principal under
the bond shall become due and payable.
(2) INTEREST- In lieu of interest on a qualified tribal school modernization
bond, there shall be provided a tax credit under section 1400U of
the Internal Revenue Code of 1986.
(1) IN GENERAL- Payment of the principal portion of a qualified tribal
school modernization bond issued under this section shall be guaranteed
solely by amounts deposited with each respective bond trustee as described
in subsection (d)(3)(C).
(A) IN GENERAL- The Secretary may deposit not more than $50,000,000
into a tribal school modernization escrow account.
(i) IN GENERAL- The Secretary may accept for transfer into the
tribal school modernization escrow account amounts from, as the
Secretary determines to be appropriate--
(I) other Federal departments and agencies (such as amounts
made available for facility improvement and repairs);
(II) non-Federal public or private sources.
(ii) TREATMENT- Amounts transferred into the escrow account pursuant
to clause (i) shall not reduce the amount eligible to be deposited
into the account under subparagraph (A).
(C) INVESTMENT OF CERTAIN FUNDS- Amounts made available to carry
out any project included on the list of the Bureau entitled `Education
Facilities Replacement Construction Priorities List as of FY 2004'
(or successor regulations) (69 Fed. Reg. 13870) shall--
(i) be invested in accordance with subsection (j); and
(ii) at the discretion of the Secretary--
(I) be used to pay any increase in project costs or other facility
costs of the project for which the amounts are made available;
or
(II) be deposited into the tribal school modernization escrow
account.
(A) IN GENERAL- Notwithstanding any other provision of law, the
principal amount of any qualified tribal school modernization bond
issued under this section shall be repaid only to the extent of
any escrowed funds provided under subsection (d)(3)(C).
(B) TREATMENT- No qualified tribal school modernization bond issued
by an Indian tribe shall be an obligation of, and no payment of
the principal of such a bond shall be guaranteed by, the United
States, an Indian tribe, or a tribal school.
(2) LAND AND FACILITIES- No land or facility purchased or improved
using amounts provided under a qualified tribal school modernization
bond issued under this section shall be mortgaged or used as collateral
for the bond.
(h) Sale of Bonds- A qualified tribal school modernization bond may
be sold at a purchase price equal to, in excess of, or at a discount
from the par amount of the bond.
(i) Treatment of Trust Agreement Earnings- Amounts earned through the
investment of funds under the control of a trustee under a trust agreement
described in subsection (d) shall not be subject to Federal income tax.
(j) 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--
(1) obligations issued or guaranteed by the United States; or
(2) such other assets as the Secretary of the Treasury may allow,
by regulation.
SEC. 4. EXPANSION OF INCENTIVES FOR TRIBAL SCHOOLS.
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. 1400U. Credit to holders of qualified tribal school modernization
bonds.
`SEC. 1400U. 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.
`(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 of similar ratings (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(c) of the Indian School Construction
Act, as in effect on the date of 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 an Indian 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 2008,
`(II) $200,000,000 for 2009, and
`(III) $200,000,000 for 2010.
`(ii) ALLOCATION OF LIMITATION- The national qualified tribal
school modernization bond limitation shall be allocated to Indian
tribes by the Secretary of the Interior subject to the provisions
of section 2 of the Indian School Construction Act, as in effect
on the date of 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 Indian
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 2012.
`(2) CREDIT ALLOWANCE DATE- The term `credit allowance date' means--
Such term includes the last day on which the bond is outstanding.
`(3) BOND- The term `bond' includes any obligation.
`(4) INDIAN TRIBE- The term `Indian 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 Indian 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).'.
SEC. 5. ADDITIONAL PROVISIONS.
(a) Sovereign Immunity- Nothing in this Act or an amendment made by
this Act impacts, limits, or otherwise affects the sovereign immunity
of the United States or any State or Indian tribal government.
(b) Application- This Act and the amendments made by this Act shall
take effect on the date of enactment of this Act with respect to bonds
issued after December 31, 2007, regardless of the status of regulations
promulgated pursuant to this Act or an amendment made by this Act.
END
