[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2398 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2398

To amend the Internal Revenue Code of 1986 to clarify certain existing 
  limitations on private business use of facilities financed with tax-
                             exempt bonds.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 30, 1999

  Mr. DeLay 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 clarify certain existing 
  limitations on private business use of facilities financed with tax-
                             exempt bonds.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Private Activity 
Bond Clarification Act of 1999''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or a repeal of, a section or other provision, 
the reference shall be considered to be made to a section of the 
Internal Revenue Code of 1986.

SEC. 2. CLARIFICATION OF EXISTING LIMITATIONS ON PRIVATE BUSINESS USE 
              OF FACILITIES FINANCED WITH TAX-EXEMPT BONDS.

    Section 141(b)(6) is amended by adding the following new 
subparagraphs at the end thereof:
                    ``(C) Aggregation of certain private business 
                uses.--In determining whether an arrangement for the 
                use of financed property by a nongovernmental person 
                constitutes private business use of the property within 
                the meaning of either subparagraph (A) or any 
                regulation under this section which excludes any use of 
                the property by a nongovernmental person from 
                classification as a private business use of the 
                property--
                            ``(i) all nongovernmental persons that have 
                        at any time acted, directly or indirectly, 
                        collectively (or otherwise in concert) to 
                        negotiate an arrangement to facilitate the 
                        financing of property (by the prepayment of 
                        rent or otherwise) in exchange for the 
                        preferential use thereof, and enter into an 
                        arrangement for the use of such property, shall 
                        be treated as related parties; and
                            ``(ii) the terms of use of the financed 
                        property by such related parties under their 
                        respective arrangements with the issuer, 
                        including all renewal options (whether or not 
                        for fair market value consideration), shall be 
                        aggregated and treated as use of the financed 
                        property by a single nongovernmental person.
                    ``(D) Additional rule for certain private business 
                uses.--If, with respect to any 2 or more calendar 
                years, the aggregate term of use determined under 
                clause (ii) of subparagraph (C) exceeds 50 percent of 
                the days on which the property practically and 
                ordinarily would be used (based on custom and usage in 
                the industry) by all persons (including the related 
                parties) for the purpose for which it was designed--
                            ``(i) the property shall be treated as 
                        financed for a principal purpose of providing 
                        the facility for use by the single 
                        nongovernmental person referred to in clause 
                        (ii) of subparagraph (C); and
                            ``(ii) each of the related parties shall be 
                        treated as using the property under an 
                        arrangement with the issuer that conveys 
                        priority rights or other preferential benefits.
                    ``(E) Computation of private business use.--In 
                computing the number of days to which financed property 
                is devoted to private business use, there shall be 
                included any days (or fractions thereof) that the 
                property is otherwise unavailable for government use by 
                reason of such private business use.
                    ``(F) No inference.--The inapplicability of the 50 
                percent limitation of subparagraph (D) shall create no 
                inference with respect to the application of the 
                principles set forth in clauses (i) and (ii) of 
                subparagraph (D) in other appropriate cases.''.

SEC. 3. EFFECTIVE DATE.

    The amendments made by this Act shall apply with respect to bonds 
issued on or after July 1, 1999.
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