[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 594 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 594

    To provide for the issuance of bonds to provide funding for the 
construction of schools of the Bureau of Indian Affairs, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 11, 2003

 Mr. Johnson (for himself, Mr. Daschle, Mr. Campbell, Mr. Cochran, and 
 Mrs. Murray) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To provide for the issuance of bonds to provide funding for the 
construction of schools of the Bureau of Indian Affairs, and for other 
                               purposes.

    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 ``Indian School Construction Act''.

SEC. 2. INDIAN SCHOOL CONSTRUCTION.

    (a) Definitions.--In this section:
            (1) Bureau.--The term ``Bureau'' means the Bureau of Indian 
        Affairs of the Department.
            (2) Department.--The term ``Department'' means the 
        Department of the Interior.
            (3) Escrow account.--The term ``escrow account'' means the 
        tribal school modernization escrow account established under 
        subsection (b)(6)(B)(i).
            (4) Indian.--The term ``Indian'' means any individual who 
        is a member of an Indian tribe.
            (5) Indian tribe.--
                    (A) In general.--The term ``Indian tribe'' has the 
                meaning given the term ``Indian tribal government'' by 
                section 7701(a)(40) of the Internal Revenue Code of 
                1986 (including the application of section 7871(d) of 
                that Code).
                    (B) Inclusion.--The term ``Indian tribe'' includes 
                a consortium of Indian tribes approved by the 
                Secretary.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.
            (7) Tribal school.--The term ``tribal school'' means an 
        elementary school, secondary school, or dormitory that--
                    (A) is operated by a tribal organization or the 
                Bureau for the education of Indian children; and
                    (B) under a contract, a grant, or an agreement, or 
                for a Bureau-operated school, receives financial 
                assistance to pay the costs of operation from funds 
                made available under--
                            (i) section 102, 103(a), or 208 of the 
                        Indian Self-Determination and Education 
                        Assistance Act (25 U.S.C. 450f, 450h(a), 458d); 
                        or
                            (ii) the Tribally Controlled Schools Act of 
                        1988 (25 U.S.C. 2501 et seq.).
    (b) Issuance of Bonds.--
            (1) In general.--The Secretary shall establish a pilot 
        program under which eligible Indian tribes may issue qualified 
        tribal school modernization bonds to provide funding for the 
        construction, rehabilitation, or repair of tribal schools 
        (including the advance planning and design of tribal schools).
            (2) Eligibility.--
                    (A) In general.--To be eligible to issue any 
                qualified tribal school modernization bond under the 
                program under paragraph (1), an Indian tribe shall--
                            (i) prepare and submit to the Secretary a 
                        plan of construction that meets the 
                        requirements of subparagraph (B);
                            (ii) provide for quarterly and final 
                        inspection of the project by the Bureau; and
                            (iii) pledge that the facilities financed 
                        by the bond will be used primarily for 
                        elementary and secondary educational purposes 
                        for not less than the period during which the 
                        bond remains outstanding.
                    (B) Plan of construction.--A plan of construction 
                referred to in subparagraph (A)(i) meets the 
                requirements of this subparagraph if the plan--
                            (i) contains a description of the 
                        construction to be carried out with funding 
                        provided under a qualified tribal school 
                        modernization bond;
                            (ii) demonstrates that a comprehensive 
                        survey has been completed to determine the 
                        construction needs of the tribal school 
                        involved;
                            (iii) contains assurances that funding 
                        under the bond will be used only for the 
                        activities described in the plan;
                            (iv) contains a response to the evaluation 
                        criteria contained in Instructions and 
                        Application for Replacement School 
                        Construction, Revision 6, dated February 6, 
                        1999; and
                            (v) contains any other reasonable and 
                        related information determined to be 
                        appropriate by the Secretary.
                    (C) Priority.--In determining whether an Indian 
                tribe is eligible to participate in the program under 
                this subsection, the Secretary shall give priority to 
                an Indian tribe that, as demonstrated by the relevant 
                plans of construction, will fund projects--
                            (i) described in the Education Facilities 
                        Replacement Construction Priorities List, as of 
                        fiscal year 2000, of the Bureau (65 Fed. Reg. 
                        4623);
                            (ii) described in any subsequent priorities 
                        list published in the Federal Register; or
                            (iii) that meet the criteria for ranking 
                        schools as described in Instructions and 
                        Application for Replacement School 
                        Construction, Revision 6, dated February 6, 
                        1999.
                    (D) Advance planning and design funding.--
                            (i) In general.--An Indian tribe may 
                        propose in the plan of construction of the 
                        Indian tribe to receive advance planning and 
                        design funding from the escrow account.
                            (ii) Conditions on allocation of funds.--As 
                        a condition to the allocation to an Indian 
                        tribe of advance planning and design funds from 
                        the escrow account under clause (i), the Indian 
                        tribe shall agree--
                                    (I) to issue qualified tribal 
                                school modernization bonds after the 
                                date of receipt of the funds; and
                                    (II) as a condition of each bond 
                                issuance, that the Indian tribe will 
                                deposit into the escrow account, or a 
                                fund managed by the trustee as 
                                described in paragraph (4)(C), an 
                                amount equal to the amount of funds 
                                received from the escrow account.
            (3) Permissible activities.--In addition to the use of 
        funds permitted under paragraph (1), an Indian tribe may use 
        amounts received through the issuance of a qualified tribal 
        school modernization bond--
                    (A) to enter into and make payments under contracts 
                with licensed and bonded architects, engineers, and 
                construction firms--
                            (i) to determine the needs of the tribal 
                        school; and
                            (ii) for the design and engineering of the 
                        tribal school;
                    (B) enter into and make payments under contracts 
                with financial advisers, underwriters, attorneys, 
                trustees, and other professionals who would be able to 
                provide assistance to the Indian tribe in issuing 
                bonds; and
                    (C) carry out other activities determined to be 
                appropriate by the Secretary.
            (4) Bond trustee.--
                    (A) In general.--Notwithstanding any other 
                provision of law, any qualified tribal school 
                modernization bond issued by an Indian tribe under this 
                subsection shall be subject to a trust agreement 
                between the Indian tribe and a trustee.
                    (B) Trustee.--Any bank or trust company that meets 
                requirements established by the Secretary may be 
                designated as a trustee under subparagraph (A).
                    (C) Content of trust agreement.--A trust agreement 
                entered into by an Indian tribe under this paragraph 
                shall specify that the trustee, with respect to any 
                bond issued under this subsection, shall--
                            (i) act as a repository for the proceeds of 
                        the bond;
                            (ii) make payments to bondholders;
                            (iii) receive, as a condition to the 
                        issuance of the bond, a transfer of funds from 
                        the escrow account, or from other funds 
                        furnished by or on behalf of the Indian tribe, 
                        in an amount that (including interest earnings 
                        from the investment of the funds in obligations 
                        of, or fully guaranteed by, the United States, 
                        or from other investments authorized by 
                        paragraph (10)) will produce funds sufficient 
                        to timely pay in full the entire principal 
                        amount of the bond on the stated maturity date 
                        of the bond;
                            (iv) invest the funds transferred under 
                        clause (iii) in an investment described in that 
                        clause; and
                            (v)(I) hold and invest the funds 
                        transferred under clause (iii) in a segregated 
                        fund or account under the agreement; and
                            (II) use the fund or account solely for 
                        payment of the costs of items described in 
                        paragraph (3).
                    (D) Requirements for making direct payments.--
                            (i) Payments.--
                                    (I) In general.--Notwithstanding 
                                any other provision of law, the trustee 
                                shall make any payment referred to in 
                                subparagraph (C)(v) in accordance with 
                                such requirements as the Indian tribe 
                                shall prescribe in the trust agreement 
                                entered into under subparagraph (C).
                                    (II) Inspection.--Before making a 
                                payment for a project to a contractor 
                                under subparagraph (C)(v), to ensure 
                                completion of the project, the trustee 
                                shall require an inspection of the 
                                project by--
                                            (aa) a local financial 
                                        institution; or
                                            (bb) an independent 
                                        inspecting architect or 
                                        engineer.
                            (ii) Contracts.--Each contract referred to 
                        in paragraph (3) shall specify, or be 
                        renegotiated to specify, that payments under 
                        the contract shall be made in accordance with 
                        this paragraph.
            (5) Payments of principal and interest.--
                    (A) Principal.--
                            (i) In general.--No principal payment on 
                        any qualified tribal school modernization bond 
                        shall be required under this subsection until 
                        the final, stated date on which the bond 
                        reaches maturity.
                            (ii) Maturity; outstanding principal.--With 
                        respect to a qualified tribal school 
                        modernization bond issued under this 
                        subsection--
                                    (I) the bond shall reach maturity 
                                not later than 15 years after the date 
                                of issuance of the bond; and
                                    (II) on the date on which the bond 
                                reaches maturity, the entire 
                                outstanding principal under the bond 
                                shall become due and payable.
                    (B) Interest.--There shall be awarded a tax credit 
                under section 1400M of the Internal Revenue Code of 
                1986 in lieu of interest on a qualified tribal school 
                modernization bond issued under this subsection.
            (6) Bond guarantees.--
                    (A) In general.--Payment of the principal portion 
                of a qualified tribal school modernization bond issued 
                under this subsection shall be guaranteed solely by 
                amounts deposited with each respective bond trustee as 
                described in paragraph (4)(C)(iii).
                    (B) Establishment of account.--
                            (i) In general.--Notwithstanding any other 
                        provision of law, the Secretary may--
                                    (I) establish a tribal school 
                                modernization escrow account; and
                                    (II) beginning in fiscal year 2004, 
                                from amounts made available for school 
                                replacement under the construction 
                                account of the Bureau, deposit not more 
                                than $30,000,000 for each fiscal year 
                                into the escrow account.
                            (ii) Transfers of excess proceeds.--Excess 
                        proceeds held under any trust agreement that 
                        are not needed for any of the purposes 
                        described in clauses (iii) and (v) of paragraph 
                        (4)(C) shall be transferred, from time to time, 
                        by the trustee for deposit into the escrow 
                        account.
                            (iii) Payments.--The Secretary shall use 
                        any amounts deposited in the escrow account 
                        under clauses (i) and (ii)--
                                    (I) to make payments to trustees 
                                appointed and acting in accordance with 
                                paragraph (4); or
                                    (II) to make payments described in 
                                paragraph (2)(D).
            (7) Limitations.--
                    (A) Obligation to repay.--
                            (i) In general.--Notwithstanding any other 
                        provision of law, the principal amount on any 
                        qualified tribal school modernization bond 
                        issued under this subsection shall be repaid 
                        only to the extent of any escrowed funds 
                        provided under paragraph (4)(C)(iii).
                            (ii) No guarantee.--No qualified tribal 
                        school modernization bond issued by an Indian 
                        tribe under this subsection shall be an 
                        obligation of, and no payment of the principal 
                        of such a bond shall be guaranteed by--
                                    (I) the United States;
                                    (II) the Indian tribe; or
                                    (III) the tribal school for which 
                                the bond was issued.
                    (B) Land and facilities.--No land or facility 
                purchased or improved with amounts derived from a 
                qualified tribal school modernization bond issued under 
                this subsection shall be mortgaged or used as 
                collateral for the bond.
            (8) Sale of bonds.--A qualified tribal school modernization 
        bond may be sold at a purchase price equal to, in excess of, or 
        at a discount from, the par amount of the bond.
            (9) Treatment of trust agreement earnings.--No amount 
        earned through the investment of funds under the control of a 
        trustee under any trust agreement described in paragraph (4) 
        shall be subject to Federal income taxation.
            (10) Investment of sinking funds.--A sinking fund 
        established for the purpose of the payment of principal on a 
        qualified tribal school modernization bond issued under this 
        subsection shall be invested in--
                    (A) obligations issued by or guaranteed by the 
                United States; or
                    (B) such other assets as the Secretary of the 
                Treasury may by regulation allow.
    (c) Expansion of Incentives for Tribal Schools.--Chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subchapter:

         ``Subchapter Z--Tribal School Modernization Provisions

``Sec. 1400M. Credit to holders of qualified tribal school 
                            modernization bonds.

``SEC. 1400M. CREDIT TO HOLDERS OF QUALIFIED TRIBAL SCHOOL 
              MODERNIZATION BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified tribal school modernization 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 tribal school modernization 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 tribal school modernization 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 date of sale 
        of the issue) on outstanding long-term corporate obligations 
        (as determined 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) 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.
    ``(d) Qualified Tribal School Modernization Bond; Other 
Definitions.--For purposes of this section--
            ``(1) Qualified tribal school modernization bond.--
                    ``(A) In general.--The term `qualified tribal 
                school modernization bond' means, subject to 
                subparagraph (B), any bond issued as part of an issue 
                under section 2(c) of the Indian School Construction 
                Act, as in effect on the date of the enactment of this 
                section, if--
                            ``(i) 95 percent or more of the proceeds of 
                        such issue are to be used for the construction, 
                        rehabilitation, or repair of a school facility 
                        funded by the Bureau of Indian Affairs of the 
                        Department of the Interior or for the 
                        acquisition of land on which such a facility is 
                        to be constructed with part of the proceeds of 
                        such issue,
                            ``(ii) the bond is issued by an Indian 
                        tribe,
                            ``(iii) the issuer designates such bond for 
                        purposes of this section, and
                            ``(iv) the term of each bond which is part 
                        of such issue does not exceed 15 years.
                    ``(B) National limitation on amount of bonds 
                designated.--
                            ``(i) National limitation.--There is a 
                        national qualified tribal school modernization 
                        bond limitation for each calendar year. Such 
                        limitation is--
                                    ``(I) $200,000,000 for 2004,
                                    ``(II) $200,000,000 for 2005, and
                                    ``(III) zero after 2005.
                            ``(ii) Allocation of limitation.--The 
                        national qualified tribal school modernization 
                        bond limitation shall be allocated to Indian 
                        tribes by the Secretary of the Interior subject 
                        to the provisions of section 2 of the Indian 
                        School Construction Act, as in effect on the 
                        date of the enactment of this section.
                            ``(iii) Designation subject to limitation 
                        amount.--The maximum aggregate face amount of 
                        bonds issued during any calendar year which may 
                        be designated under subsection (d)(1) with 
respect to any Indian tribe shall not exceed the limitation amount 
allocated to such government under clause (ii) for such calendar year.
                            ``(iv) Carryover of unused limitation.--If 
                        for any calendar year--
                                    ``(I) the limitation amount under 
                                this subparagraph, exceeds
                                    ``(II) the amount of qualified 
                                tribal school modernization bonds 
                                issued during such year,
                        the limitation amount under this subparagraph 
                        for the following calendar year shall be 
                        increased by the amount of such excess. The 
                        preceding sentence shall not apply if such 
                        following calendar year is after 2012.
            ``(2) 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.
            ``(3) Bond.--The term `bond' includes any obligation.
            ``(4) Tribe.--The term `tribe' has the meaning given the 
        term `Indian tribal government' by section 7701(a)(40), 
        including the application of section 7871(d). Such term 
        includes any consortium of tribes approved by the Secretary of 
        the Interior.
    ``(e) 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 (c)) and the amount so 
included shall be treated as interest income.
    ``(f) Bonds Held by Regulated Investment Companies.--If any 
qualified tribal school modernization 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.
    ``(g) 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 tribal school 
        modernization 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 tribal school modernization bond as if 
        it were a stripped bond and to the credit under this section as 
        if it were a stripped coupon.
    ``(h) 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 tribal school modernization 
bonds on a credit allowance date shall be treated as if it were a 
payment of estimated tax made by the taxpayer on such date.
    ``(i) 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.
    ``(j) Credit Treated as Allowed Under Part IV of Subchapter A.--For 
purposes of subtitle F, the credit allowed by this section shall be 
treated as a credit allowable under part IV of subchapter A of this 
chapter.
    ``(k) Reporting.--Issuers of qualified tribal school modernization 
bonds shall submit reports similar to the reports required under 
section 149(e).''.
    (d) Conforming Amendment.--The table of subchapters for chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new item:
                              ``Subchapter Z. Tribal school 
                                        modernization provisions.''.
    (e) Additional Provisions.--
            (1) Sovereign immunity.--This section and the amendments 
        made by this section shall not be construed to impact, limit, 
        or affect the sovereign immunity of the Federal Government or 
        any State or tribal government.
            (2) Application.--This section and the amendments made by 
        this section shall take effect on the date of the enactment of 
        this Act with respect to bonds issued after December 31, 2003, 
        regardless of the status of regulations promulgated thereunder.
                                 <all>