To amend the Internal Revenue Code of 1986 to modify the treatment of bonds issued to acquire renewable resources on land subject to conservation easement.

May 3, 2001

Ms. DUNN (for herself, Mr. TANNER, Mr. HERGER, and Mr. MATSUI) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to modify the treatment of bonds issued to acquire renewable resources on land subject to conservation easement.

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 `Community Forestry and Agriculture Conservation Act of 2001'.

SEC. 2. TREATMENT OF BONDS ISSUED TO ACQUIRE RENEWABLE RESOURCES ON LAND SUBJECT TO CONSERVATION EASEMENT.

(a) IN GENERAL- Section 145 of the Internal Revenue Code of 1986 (defining qualified 501(c)(3) bond) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:

`(e) BONDS ISSUED TO ACQUIRE RENEWABLE RESOURCES ON LAND SUBJECT TO CONSERVATION EASEMENT-

`(1) IN GENERAL- If--

`(A) the proceeds of any bond are used to acquire land (or a long-term lease thereof) together with any renewable resource associated with the land (including standing timber, agricultural crops, or water rights) from an unaffiliated person,

`(B) the land is subject to a conservation restriction--

`(i) which is granted in perpetuity to an unaffiliated person that is--

`(I) a 501(c)(3) organization, or

`(II) a Federal, State, or local government conservation organization,

`(ii) which meets the requirements of clauses (ii) and (iii)(II) of section 170(h)(4)(A),

`(iii) which exceeds the requirements of relevant environmental and land use statutes and regulations, and

`(iv) which obligates the owner of the land to pay the costs incurred by the holder of the conservation restriction in monitoring compliance with such restriction,

`(C) a management plan which meets the requirements of the statutes and regulations referred to subparagraph (B)(iii) is developed for the conservation of the renewable resources, and

`(D) such bond would be a qualified 501(c)(3) bond (after the application of paragraph (2)) but for the failure to use revenues derived by the 501(c)(3) organization from the sale, lease, or other use of such renewable resource as otherwise required by this part,

such bond shall not fail to be a qualified 501(c)(3) bond by reason of the failure to so use such revenues if the revenues which are not used as otherwise required by this part are used in a manner consistent with the stated charitable purposes of the 501(c)(3) organization.

`(2) TREATMENT OF TIMBER, ETC-

`(A) IN GENERAL- For purposes of subsection (a), the cost of any renewable resource acquired with proceeds of such bonds shall be treated as a cost of acquiring the land associated with the renewable resource and such land shall not be treated as used for a private business use because of the sale or leasing of the renewable resource to, or other use of the renewable resource by, an unaffiliated person to the extent that such sale, leasing, or other use does not constitute an unrelated trade or business, determined by applying section 513(a).

`(B) APPLICATION OF BOND MATURITY LIMITATION- For purposes of section 147(b), the cost of any land or renewable resource acquired with proceeds of such bonds shall have an economic life commensurate with the economic and ecological feasibility of the financing of such land or renewable resource.

`(C) UNAFFILIATED PERSON- For purposes of this subsection, the term `unaffiliated person' means any person who controls no more than 20 percent of the governing body of another person.'

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to obligations issued after the date of the enactment of this Act.

END