[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3097 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H.R. 3097

  To prevent governmental entities from using tax-exempt financing to 
        engage in unfair competition against private enterprise.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 18, 1999

 Mr. Sanford introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To prevent governmental entities from using tax-exempt financing to 
        engage in unfair competition against private enterprise.

    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 ``Private Enterprise Protection Act''.

SEC. 2. DENIAL OF TAX-EXEMPT FINANCING FOR CERTAIN FACILITIES THAT USE 
              TAX-EXEMPT FINANCING TO COMPETE WITH PRIVATE SECTOR 
              FACILITIES.

    (a) In General.--Section 141 of the Internal Revenue Code of 1986 
(defining private activity bond and qualified bond) is amended by 
redesignating subsection (e) as subsection (f) and by inserting after 
subsection (d) the following new subsection:
    ``(e) Certain Issues Used for Facilities That Compete With Private 
Sector Facilities.--
            ``(1) In General.--For purposes of this title, the term 
        `private activity bond' includes any bond that is issued as 
        part of an issue if the amount of the proceeds of the issue 
        which are to be used (directly or indirectly) to finance the 
        construction, reconstruction, rehabilitation, or expansion of a 
        disqualified facility exceeds the lesser of--
                    ``(A) 5 percent of such proceeds, or
                    ``(B) $1,000,000.
            ``(2) Bond not treated as a qualified bond.--Except as 
        provided in subparagraph (3)(B), a facility financed with a 
        qualified bond, as defined in subsection (f), shall not be 
        treated as disqualified facility.
            ``(3) Disqualified facility.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `disqualified facility' 
                means real property or related improvements which are 
                to be used (directly or indirectly) by one or more 
                nongovernmental persons in connection with a trade or 
                business conducted by such person or persons (whether 
                or not such use otherwise constitutes `private business 
                use' within the meaning of subsection (b)(6)) if--
                            ``(i) on or before the date on which the 
                        bonds are issued to finance the construction, 
                        reconstruction, rehabilitation, or expansion of 
                        such disqualified facility, a facility 
                        substantially similar in purpose or use to the 
                        disqualified facility has been placed in 
                        service by one or more nongovernmental persons 
                        within 5 miles of such disqualified facility;
                            ``(ii) such other facility was not financed 
                        with bonds the interest on which was or is 
                        exempt under section 103; and
                            ``(iii) with respect to any calendar year, 
                        the aggregate use of the disqualified facility 
                        by one or more of the nongovernmental persons 
                        who have used, or do use the facility referred 
                        to in clause (i) in connection with a trade or 
                        business conducted by such person or persons 
                        exceeds 25 percent of the days on which the 
                        disqualified facility practically and 
                        ordinarily would be used (by custom and usage 
                        in the industry) by all persons.
                    ``(B) The term `disqualified facility' shall 
                include any facility (including a facility financed 
                with a qualified bond as defined in subsection (f)) 
                described in subdivisions (i) and (ii) of subparagraph 
                (A) without regard to subdivision (iii), if--
                            ``(i) the function served by the facility 
                        could be served by a facility substantially 
                        similar in purpose or use to the disqualified 
                        facility and owned by one or more 
                        nongovernmental person; and
                            ``(ii) the facility is of the kind 
                        described in subparagraphs (A) of 
section 142(c)(2) without regard to private business use.
                    ``(C) The term `disqualified facility' shall not 
                include any facility that (i) constitutes an integral 
                part of a school, a hospital or similar facility the 
                principal purpose of which is to provide on a regular 
                basis educational instruction, in accordance with an 
                established curriculum, or medical care, or (ii) is 
                designed and used principally for professional sports 
                exhibitions or games.
                    ``(D) Trade or business.--For purposes of 
                subparagraph (A), the term `trade or business' includes 
                the sponsorship of trade shows and similar exhibitions 
                and the leasing of space to exhibitors, without regard 
                to whether the sponsor is organized as a not-for-profit 
                organization, but only if one or more of the exhibitors 
                are engaged in the active conduct of a trade or 
                business for profit.
            ``(4) Qualified rehabilitations.--A bond shall not be 
        treated as a bond described in paragraph (1) if it is issued as 
        part of an issue substantially all of the proceeds of which are 
        used for the reconstruction or rehabilitation of a facility, 
        but only if such facility is not materially expanded as the 
        result of such rehabilitation.
            ``(5) Anti-abuse regulations.--The Secretary shall 
        prescribe such regulations as may be appropriate to carry out 
        the purposes of this subsection, including such regulations as 
        may be appropriate to prevent avoidance of such purposes 
        through multiple bond issues, related persons, use of related 
        facilities or multi-use complexes or otherwise.''
    (b) Effective Date.--
            (1) In general.--Except as provided in this subsection (b), 
        the amendments made by this section shall apply to bonds issued 
        on or after October 18, 1999.
            (2) Exception for construction and certain binding 
        agreements.--
                    (A) The amendments made by this section shall not 
                apply to bonds the proceeds of which are used for the 
                construction, reconstruction, rehabilitation or 
                expansion of a facility--
                            (i) if such construction, reconstruction, 
                        rehabilitation or expansion has physically 
                        commenced in a material fashion (other than 
                        site testing, site preparation or similar 
                        activities) before October 18, 1999, and has 
                        resulted in significant expenditures before 
                        such date, and was completed on or after such 
                        date, or
                            (ii) if a State or political subdivision 
                        thereof has entered into a binding contract 
                        before October 18, 1999, that require the 
                        incurrence of significant expenditures for such 
                        construction, reconstruction, rehabilitation or 
                        expansion (other than expenditures related to 
                        the issuance of bonds or to architectural or 
                        engineering plans), and some or all of such 
                        expenditures are incurred on or after such 
                        date.
                    (B) For purposes of subparagraph (A), the term 
                ``significant expenditures'' means expenditures equal 
                to or exceeding 10 percent of the reasonably 
                anticipated cost of the construction, reconstruction, 
                and rehabilitation.
            (3) Exception for certain facilities.--The amendments made 
        to section 141(e)(3)(B) as added by this Act, shall be 
        effective as of date of enactment.
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