To amend the Internal Revenue Code of 1986 to improve access to tax-exempt debt for small nonprofit health care and educational institutions.

June 14, 2001

Mr. JEFFORDS (for himself and Mr. LEAHY) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to improve access to tax-exempt debt for small nonprofit health care and educational institutions.

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 `Health and Higher Education Facilities Improvement Act of 2001'.

SEC. 2. IMPROVED ACCESS TO TAX-EXEMPT DEBT FOR SMALL NONPROFIT HEALTH CARE AND EDUCATIONAL INSTITUTIONS.

(a) IN GENERAL- Section 265(b)(3) of the Internal Revenue Code of 1986 (relating to exception for certain tax-exempt obligations) is amended by adding at the end the following:

`(G) ELECTION TO APPLY LIMITATION ON AMOUNT OF OBLIGATIONS AT BORROWER LEVEL-

`(i) IN GENERAL- An issuer, the proceeds of the obligations of which are to be used to make or finance eligible loans, may elect to apply subparagraphs (C) and (D) by treating each borrower as the issuer of a separate issue.

`(ii) ELIGIBLE LOAN- For purposes of this subparagraph--

`(I) IN GENERAL- The term `eligible loan' means 1 or more loans to a qualified borrower the proceeds of which are used by the borrower for health care or educational purposes and the aggregate amount of which issued during any calendar year does not exceed $10,000,000.

`(II) QUALIFIED BORROWER- The term `qualified borrower' means a borrower which is an organization described in section 501(c)(3) and exempt from taxation under section 501(a).

`(iii) MANNER OF ELECTION- The election described in clause (i) may be made by an issuer for any calendar year at any time prior to its first issuance during such year of obligations the proceeds of which will be used to make or finance 1 or more eligible loans.

`(iv) MODIFICATION OF RULE FOR COMPOSITE ISSUES- In the case of an obligation which is issued by any issuer which has made the election described in clause (i), subparagraph (F) shall be applied without regard to clause (i) of such subparagraph.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2001.

END