[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4337 Engrossed in House (EH)]


  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
109th CONGRESS
  1st Session
                                H. R. 4337

_______________________________________________________________________

                                 AN ACT


 
  To amend the Internal Revenue Code of 1986 to provide for Gulf tax 
credit bonds and advance refundings of certain tax-exempt bonds, and to 
          provide a Federal guarantee of certain State bonds.

    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 ``Gulf Opportunity Zone Public Finance 
Relief Act of 2005''.

SEC. 2. GULF TAX CREDIT BONDS.

    (a) In General.--Subpart H 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. 54A. CREDIT TO HOLDERS OF GULF TAX CREDIT BONDS.

    ``(a) Allowance of Credit.--If a taxpayer holds a Gulf tax credit 
bond on one or more credit allowance dates of the bond occurring during 
any taxable year, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount equal to the sum 
of the credits determined under subsection (b) with respect to such 
dates.
    ``(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 Gulf tax credit 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 Gulf tax credit bond is the product of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (3) for the day on which such bond was 
                sold, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Determination.--For purposes of paragraph (2), with 
        respect to any Gulf tax credit bond, the Secretary shall 
        determine daily or cause to be determined daily a credit rate 
        which shall apply to the first day on which there is a binding, 
        written contract for the sale or exchange of the bond. The 
        credit rate for any day is the credit rate which the Secretary 
        or the Secretary's designee estimates will permit the issuance 
        of Gulf tax credit bonds with a specified maturity or 
        redemption date without discount and without interest cost to 
        the issuer.
            ``(4) Credit allowance date.--For purposes of this section, 
        the term `credit allowance date' means March 15, June 15, 
        September 15, and December 15. Such term also includes the last 
        day on which the bond is outstanding.
            ``(5) 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 or matures.
    ``(c) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under this part 
        (other than subpart C and this section).
    ``(d) Gulf Tax Credit Bond.--For purposes of this section--
            ``(1) In general.--The term `Gulf tax credit bond' means 
        any bond issued as part of an issue if--
                    ``(A) the bond is issued by the State of Alabama, 
                Louisiana, or Mississippi,
                    ``(B) 95 percent or more of the proceeds of such 
                issue are to be used to--
                            ``(i) pay principal, interest, or premiums 
                        on qualified bonds issued by such State or any 
                        political subdivision of such State, or
                            ``(ii) make a loan to any political 
                        subdivision of such State to pay principal, 
                        interest, or premiums on qualified bonds issued 
                        by such political subdivision,
                    ``(C) the Governor of such State designates such 
                bond for purposes of this section,
                    ``(D) the bond is a general obligation of such 
                State and is in registered form (within the meaning of 
                section 149(a)),
                    ``(E) the maturity of such bond does not exceed 2 
                years, and
                    ``(F) the bond is issued after December 31, 2005, 
                and before January 1, 2007.
            ``(2) State matching requirement.--A bond shall not be 
        treated as a Gulf tax credit bond unless--
                    ``(A) the issuer of such bond pledges as of the 
                date of the issuance of the issue an amount equal to 
                the face amount of such bond to be used for payments 
                described in clause (i) of paragraph (1)(B), or loans 
                described in clause (ii) of such paragraph, as the case 
                may be, with respect to the issue of which such bond is 
                a part, and
                    ``(B) any such payment or loan is made in equal 
                amounts from the proceeds of such issue and from the 
                amount pledged under subparagraph (A).
        The requirement of subparagraph (B) shall be treated as met 
        with respect to any such payment or loan made during the 1-year 
        period beginning on the date of the issuance (or any successor 
        1-year period) if such requirement is met when applied with 
        respect to the aggregate amount of such payments and loans made 
        during such period.
            ``(3) Aggregate limit on bond designations.--The maximum 
        aggregate face amount of bonds which may be designated under 
        this section by the Governor of a State shall not exceed--
                    ``(A) $200,000,000 in the case of the State of 
                Louisiana,
                    ``(B) $100,000,000 in the case of the State of 
                Mississippi, and
                    ``(C) $50,000,000 in the case of the State of 
                Alabama.
            ``(4) Special rules relating to arbitrage.--A bond which is 
        part of an issue shall not be treated as a Gulf tax credit bond 
        unless, with respect to the issue of which the bond is a part, 
        the issuer satisfies the arbitrage requirements of section 148 
        with respect to proceeds of the issue and any loans made with 
        such proceeds.
    ``(e) Qualified Bond.--For purposes of this section--
            ``(1) In general.--The term `qualified bond' means any 
        obligation of a State or political subdivision thereof which 
        was outstanding on August 28, 2005.
            ``(2) Exception for private activity bonds.--Such term 
        shall not include any private activity bond.
            ``(3) Exception for advance refundings.--Such term shall 
        not include any bond--
                    ``(A) which is designated as an advance refunding 
                bond under section 149(d)(7), or
                    ``(B) with respect to which there is any 
                outstanding bond to refund such bond.
    ``(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 (c)) and the amount so 
included shall be treated as interest income.
    ``(g) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2)  partnership; s corporation; and other pass-thru 
        entities.--
                    ``(A) In general.--Under regulations prescribed by 
                the Secretary, in the case of a partnership, trust, S 
                corporation, or other pass-thru entity, rules similar 
                to the rules of section 41(g) shall apply with respect 
                to the credit allowable under subsection (a).
                    ``(B) No basis adjustment.--In the case of a bond 
                held by a partnership or an S corporation, rules 
                similar to the rules under section 1397E(i) shall 
                apply.
            ``(3) Bonds held by regulated investment companies.--If any 
        Gulf tax credit 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.
            ``(4) Reporting.--Issuers of Gulf tax credit bonds shall 
        submit reports similar to the reports required under section 
        149(e).''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 54(c) of such Code is amended 
        by inserting ``, section 54A,'' after ``subpart C''.
            (2) Subparagraph (A) of section 6049(d)(8) of such Code is 
        amended--
                    (A) by inserting ``or 54A(f)'' after ``section 
                54(g)'', and
                    (B) by inserting ``or 54A(b)(4), as the case may 
                be'' after ``section 54(b)(4)''.
            (3) The table of sections for subpart H of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

``Sec. 54A. Credit to holders of Gulf tax credit bonds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2005.

SEC. 3. ADVANCE REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.

    (a) In General.--Subsection (d) of section 149 of the Internal 
Revenue Code of 1986 (relating to advance refundings) is amended by 
redesignating paragraph (7) as paragraph (8) and by inserting after 
paragraph (6) the following new paragraph:
            ``(7) Advance refundings of certain gulf coast bonds.--
                    ``(A) In general.--With respect to a bond described 
                in subparagraph (C) which is not a qualified 501(c)(3) 
                bond, one additional advance refunding after the date 
                of the enactment of this paragraph and before January 
                1, 2011, shall be allowed under the applicable rules of 
                this subsection if--
                            ``(i) the Governor of the State designates 
                        the advance refunding bond for purposes of this 
                        paragraph, and
                            ``(ii) the requirements of subparagraph (E) 
                        are met.
                    ``(B) Certain private activity bonds.--With respect 
                to a bond described in subparagraph (C) which is an 
                exempt facility bond described in paragraph (1) or (2) 
                of section 142(a), one advance refunding after the date 
                of the enactment of this paragraph and before January 
                1, 2011, shall be allowed under the applicable rules of 
                this subsection (notwithstanding paragraph (2)) if the 
                requirements of clauses (i) and (ii) of subparagraph 
                (A) are met.
                    ``(C) Bonds described.--A bond is described in this 
                subparagraph if such bond was outstanding on August 28, 
                2005, and is issued by the State of Alabama, Louisiana, 
                or Mississippi, or a political subdivision thereof.
                    ``(D) Aggregate limit.--The maximum aggregate face 
                amount of bonds which may be designated under this 
                paragraph by the Governor of a State shall not exceed--
                            ``(i) $4,500,000,000 in the case of the 
                        State of Louisiana,
                            ``(ii) $2,250,000,000 in the case of the 
                        State of Mississippi, and
                            ``(iii) $1,125,000,000 in the case of the 
                        State of Alabama.
                    ``(E) Additional requirements.--The requirements of 
                this subparagraph are met with respect to any advance 
                refunding of a bond described in subparagraph (C) if--
                            ``(i) no advance refundings of such bond 
                        would be allowed under this title on or after 
                        August 28, 2005,
                            ``(ii) the advance refunding bond is the 
                        only other outstanding bond with respect to the 
                        refunded bond, and
                            ``(iii) the requirements of section 148 are 
                        met with respect to all bonds issued under this 
                        paragraph.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to advance refundings after the date of the enactment of this 
Act.

SEC. 4. FEDERAL GUARANTEE OF CERTAIN STATE BONDS.

    (a) State Bonds Described.--This section shall apply to a bond 
issued as part of an issue if--
            (1) the issue of which such bond is part is an issue of the 
        State of Alabama, Louisiana, or Mississippi,
            (2) the bond is a general obligation of the issuing State 
        and is in registered form,
            (3) the proceeds of the bond are distributed to one or more 
        political subdivisions of the issuing State,
            (4) the maturity of such bond does not exceed 5 years,
            (5) the bond is issued after the date of the enactment of 
        this Act and before January 1, 2008, and
            (6) the bond is designated by the Secretary of the Treasury 
        for purposes of this section.
    (b) Application.--
            (1) In general.--The Secretary of the Treasury may only 
        designate a bond for purposes of this section pursuant to an 
        application submitted to the Secretary by the State which 
        demonstrates the need for such designation on the basis of the 
        criteria specified in paragraph (2).
            (2) Criteria.--For purposes of paragraph (1), the criteria 
        specified in this paragraph are--
                    (A) the loss of revenue base of one or more 
                political subdivisions of the State by reason of 
                Hurricane Katrina,
                    (B) the need for resources to fund infrastructure 
                within, or operating expenses of, any such political 
                subdivision,
                    (C) the lack of access of such political 
                subdivision to capital, and
                    (D) any other criteria as may be determined by the 
                Secretary.
            (3) Guidance for submission and consideration of 
        applications.--The Secretary of the Treasury shall prescribe 
        regulations or other guidance which provide for the time and 
        manner for the submission and consideration of applications 
        under this subsection.
    (c) Federal Guarantee.--A bond described in subsection (a) is 
guaranteed by the United States in an amount equal to 50 percent of the 
outstanding principal with respect to such bond.
    (d) Aggregate Limit on Bond Designations.--The maximum aggregate 
face amount of bonds which may be issued under this section shall not 
exceed $3,000,000,000.

            Passed the House of Representatives November 16, 2005.

            Attest:

                                                                 Clerk.
109th CONGRESS

  1st Session

                               H. R. 4337

_______________________________________________________________________

                                 AN ACT

  To amend the Internal Revenue Code of 1986 to provide for Gulf tax 
credit bonds and advance refundings of certain tax-exempt bonds, and to 
          provide a Federal guarantee of certain State bonds.