[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1760 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1760

To amend the Internal Revenue Code of 1986 to expand the incentives for 
  the construction, repair, rehabilitation, and renovation of public 
                                schools.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 11, 1999

 Mrs. Johnson of Connecticut introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
     Committee on Education and the Workforce, 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 amend the Internal Revenue Code of 1986 to expand the incentives for 
  the construction, repair, rehabilitation, and renovation of public 
                                schools.

    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 ``America's Better Classrooms Act of 
1999''.

SEC. 2. FINDINGS.

    The Congress hereby finds:
            (1) Public school buildings in urban, suburban, and rural 
        school districts across the United States need extensive 
        repair, rehabilitation, and renovation.
            (2) New buildings will be needed in many school districts 
        as a result of a surge in student enrollments.
            (3) The General Accounting Office has found that more than 
        14 million children attend schools in need of extensive repair 
        or replacement, 7 million children attend schools with safety 
        code violations, and 12 million children attend schools with 
        leaky roofs.
            (4) Many public schools do not have the appropriate 
        infrastructure to be able to use computers and other technology 
        needed to adequately prepare students to meet the challenges of 
        the 21st Century.
            (5) The Federal Government can support public school 
        repair, modernization, and construction without interfering 
        with local control.

SEC. 3. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL CONSTRUCTION 
              BONDS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 30B. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL CONSTRUCTION 
              BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified school construction 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 school construction 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 school construction 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 day before the 
        date of issuance of the issue) on outstanding long-term 
        corporate debt obligations (determined under regulations 
        prescribed 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) Qualified School Construction Bond.--For purposes of this 
section--
            ``(1) In general.--The term `qualified school construction 
        bond' means any bond issued as part of an issue if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are to be used for the construction, 
                rehabilitation, or repair of a public school facility 
                or for the acquisition of land on which such a facility 
                is to be constructed with part of the proceeds of such 
                issue,
                    ``(B) the bond is issued by a State or local 
                government within the jurisdiction of which such school 
                is located,
                    ``(C) the issuer designates such bond for purposes 
                of this section, and
                    ``(D) the term of each bond which is part of such 
                issue does not exceed 15 years.
            ``(2) Limitation on amount of bonds designated.--The 
        maximum aggregate face amount of bonds issued during any 
        calendar year which may be designated under paragraph (1) by 
        any issuer shall not exceed the limitation amount allocated 
        under paragraph (3) for such calendar year to such issuer.
            ``(3) National limitation on amount of bonds designated.--
        There is a national qualified school construction bond 
        limitation for each calendar year. Such limitation is--
                    ``(A) $12,500,000,000 for 2000,
                    ``(B) $12,500,000,000 for 2001, and
                    ``(C) except as provided in paragraph (5), zero 
                after 2001.
            ``(4) Allocation of limitation among states.--
                    ``(A) In general.--The limitation applicable under 
                paragraph (3) for any calendar year shall be allocated 
                among the States by the Secretary. The amount allocated 
                to a State for a calendar year shall be equal to the 
                sum of--
                            ``(i) the amount allocated to the State for 
                        such year under subparagraph (B), and
                            ``(ii) the amount allocated to the State 
                        for such year under subparagraph (C).
                The limitation amount allocated to a State under the 
                preceding sentence shall be allocated by the State 
                education agency to issuers within such State and such 
                allocations may be made only if there is an approved 
                State application.
                    ``(B) Allocation on basis of basic grants under 
                title i of the elementary and secondary education act 
                of 1965.--One-half of the limitation applicable under 
                paragraph (3) for any calendar year shall be allocated 
                among the States in proportion to the respective 
                amounts each such State received for basic grants under 
                subpart 2 of part A of title I of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6331 et 
                seq.) for the most recent fiscal year ending before 
                such calendar year.
                    ``(C) Allocation on basis of total elementary and 
                secondary school age population.--One-half of the 
                limitation applicable under paragraph (3) for any 
                calendar year shall be allocated among the States in 
                proportion to the respective numbers of children in 
                each State who have attained age 5 but not age 18 for 
                the most recent fiscal year ending before such calendar 
                year.
                    ``(D) Minimum allocations to states.--
                            ``(i) In general.--The Secretary shall 
                        adjust the allocations under this paragraph for 
                        any calendar year for each State to the extent 
                        necessary to ensure that the amount allocated 
                        to such State under this paragraph for such 
                        year is not less than an amount equal to such 
                        State's minimum percentage of one-half of the 
                        amount to be allocated under subparagraph (A) 
                        for the calendar year.
                            ``(ii) Minimum percentage.--A State's 
                        minimum percentage for any calendar year is the 
                        minimum percentage described in section 1124(d) 
                        of the Elementary and Secondary Education Act 
                        of 1965 (20 U.S.C. 6334(d)) for such State for 
                        the most recent fiscal year ending before such 
                        calendar year.
                    ``(E) Allocations to certain possessions.--The 
                amount to be allocated under subparagraph (A) to any 
                possession of the United States other than Puerto Rico 
                shall be the amount which would have been allocated if 
                all allocations under subparagraph (A) were made on the 
                basis of respective populations of individuals below 
                the poverty line (as defined by the Office of 
                Management and Budget). In making other allocations, 
                the amount to be allocated under subparagraph (A) shall 
                be reduced by the aggregate amount allocated under this 
                subparagraph to possessions of the United States.
                    ``(F) Approved state application.--For purposes of 
                subparagraph (A), the term `approved State application' 
                means an application which is approved by the Secretary 
                of Education and which includes--
                            ``(i) the results of a recent publicly-
                        available survey (undertaken by the State with 
                        the involvement of local education officials, 
                        members of the public, and experts in school 
                        construction and management) of such State's 
                        needs for public school facilities, including 
                        descriptions of--
                                    ``(I) health and safety problems at 
                                such facilities,
                                    ``(II) the capacity of public 
                                schools in the State to house projected 
                                enrollments, and
                                    ``(III) the extent to which the 
                                public schools in the State offer the 
                                physical infrastructure needed to 
                                provide a high-quality education to all 
                                students, and
                            ``(ii) a description of how the State will 
                        allocate to local educational agencies, or 
                        otherwise use, its allocation under this 
                        subsection to address the needs identified 
                        under subparagraph (A), including a description 
                        of how it will--
                                    ``(I) give high priority to 
                                localities with the greatest needs, as 
                                demonstrated by inadequate school 
                                facilities coupled with a low level of 
                                resources to meet those needs,
                                    ``(II) use its allocation under 
                                this subsection to assist localities 
                                that lack the fiscal capacity to issue 
                                bonds on their own,
                                    ``(III) ensure that its allocation 
                                under this subsection is used only to 
                                supplement, and not supplant, the 
                                amount of school construction, 
                                rehabilitation, and repair in the State 
                                that would have occurred in the absence 
                                of such allocation, and
                                    ``(IV) ensure that the needs of 
                                both rural and urban areas are 
                                recognized.
                Any allocation under subparagraph (A) by a State 
                education agency shall be binding if such agency 
                reasonably determined that the allocation was in 
                accordance with the plan approved under this 
                subparagraph.
            ``(5) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the amount allocated under paragraph (4) to 
                any State, exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under paragraph (1) pursuant to 
                such allocation,
        the limitation amount under paragraph (4) for such State for 
        the following calendar year shall be increased by the amount of 
        such excess.
    ``(d) 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.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) 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.
            ``(2) Local educational agency.--The term `local 
        educational agency' has the meaning given to such term by 
        section 14101 of the Elementary and Secondary Education Act of 
        1965. Such term includes the local educational agency that 
        serves the District of Columbia but does not include any other 
        State agency.
            ``(3) Bond.--The term `bond' includes any obligation.
            ``(4) State.--The term `State' includes the District of 
        Columbia and any possession of the United States.
            ``(5) Public school facility.--The term `public school 
        facility' shall not include--
                    ``(A) any stadium or other facility primarily used 
                for athletic contests or exhibitions or other events 
                for which admission is charged to the general public, 
                or
                    ``(B) any facility which is not owned by a State or 
                local government or any agency or instrumentality of a 
                State or local government.
    ``(f) 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 (d)) and the amount so 
included shall be treated as interest income.
    ``(g) Bonds Held by Regulated Investment Companies.--If any 
qualified school construction 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.
    ``(h) 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 school construction 
        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 school construction bond as if it were a 
        stripped bond and to the credit under this section as if it 
        were a stripped coupon.
    ``(i) 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 school construction bond on a 
credit allowance date shall be treated as if it were a payment of 
estimated tax made by the taxpayer on such date.
    ``(j) 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.
    ``(k) Reporting.--Issuers of qualified school construction bonds 
shall submit reports similar to the reports required under section 
149(e).
    ``(l) Termination.--This section shall not apply to any bond issued 
after December 31, 2004.''
    (b) Reporting.--Subsection (d) of section 6049 of such Code 
(relating to returns regarding payments of interest) is amended by 
adding at the end the following new paragraph:
            ``(8) Reporting of credit on qualified school construction 
        bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 30B(f) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 30B(e)(1)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''
    (c) Conforming Amendments.--
            (1) Subchapter U of chapter 1 of such Code is amended by 
        striking part IV, by redesignating part V as part IV, and by 
        redesignating section 1397F as section 1397E.
            (2) The table of parts of subchapter U of chapter 1 of such 
        Code is amended by striking the last 2 items and inserting the 
        following item:

                              ``Part IV. Regulations.''
            (3) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 30B. Credit to holders of 
                                        qualified public school 
                                        construction bonds.''
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 1999.

SEC. 4. APPLICATION OF CERTAIN LABOR STANDARDS ON CONSTRUCTION PROJECTS 
              FINANCED UNDER PUBLIC SCHOOL CONSTRUCTION PROGRAM.

    Section 439 of the General Education Provisions Act (relating to 
labor standards) is amended--
            (1) by inserting ``(a)'' before ``All laborers and 
        mechanics'', and
            (2) by adding at the end the following:
    ``(b)(1) For purposes of this section, the term `applicable 
program' also includes the qualified zone academy bond provisions 
enacted by section 226 of the Taxpayer Relief Act of 1997 and the 
program established by section 3 of the America's Better Classrooms Act 
of 1999.
    ``(2) A State or local government participating in a program 
described in paragraph (1) shall--
            ``(A) in the awarding of contracts, give priority to 
        contractors with substantial numbers of employees residing in 
        the local education area to be served by the school being 
        constructed; and
            ``(B) include in the construction contract for such school 
        a requirement that the contractor give priority in hiring new 
        workers to individuals residing in such local education area.
    ``(3) In the case of a program described in paragraph (1), nothing 
in this subsection or subsection (a) shall be construed to deny any tax 
credit allowed under such program. If amounts are required to be 
withheld from contractors to pay wages to which workers are entitled, 
such amounts shall be treated as expended for construction purposes in 
determining whether the requirements of such program are met.''.

SEC. 5. EMPLOYMENT AND TRAINING ACTIVITIES RELATING TO CONSTRUCTION OR 
              RECONSTRUCTION OF PUBLIC SCHOOL FACILITIES.

    (a) In General.--Section 134 of the Workforce Investment Act of 
1998 (29 U.S.C. 2864) is amended by adding at the end the following:
    ``(f) Local Employment and Training Activities Relating to 
Construction or Reconstruction of Public School Facilities.--
            ``(1) In general.--In order to provide training services 
        related to construction or reconstruction of public school 
        facilities receiving funding assistance under an applicable 
        program, each State shall establish a specialized program of 
        training meeting the following requirements:
                    ``(A) The specialized program provides training for 
                jobs in the construction industry.
                    ``(B) The program is designed to provide trained 
                workers for projects for the construction or 
                reconstruction of public school facilities receiving 
                funding assistance under an applicable program.
                    ``(C) The program is designed to ensure that 
                skilled workers (residing in the area to be served by 
                the school facilities) will be available for the 
                construction or reconstruction work.
            ``(2) Coordination.--The specialized program established 
        under paragraph (1) shall be integrated with other activities 
        under this Act, with the activities carried out under the 
        National Apprenticeship Act of 1937 by the State Apprenticeship 
        Council or through the Bureau of Apprenticeship and Training in 
        the Department of Labor, as appropriate, and with activities 
        carried out under the Carl D. Perkins Vocational and Technical 
        Education Act of 1998. Nothing in this subsection shall be 
        construed to require services duplicative of those referred to 
        in the preceding sentence.
            ``(3) Applicable program.--In this subsection, the term 
        `applicable program' has the meaning given the term in section 
        439(b) of the General Education Provisions Act (relating to 
        labor standards).''.
    (b) State Plan.--Section 112(b)(17)(A) of the Workforce Investment 
Act of 1998 (29 U.S.C. 2822(b)(17)(A)) is amended--
            (1) in clause (iii), by striking ``and'' at the end;
            (2) by redesignating clause (iv) as clause (v); and
            (3) by inserting after clause (iii) the following:
                            ``(iv) how the State will establish and 
                        carry out a specialized program of training 
                        under section 134(f); and''.
                                 <all>