1.
This Act may be cited as the
Rural Renaissance
Act
.
2.
Rural Renaissance Corporation
Subtitle D of the
Consolidated Farm and Rural Development
Act (7
U.S.C. 1981 et seq.) is amended by adding at the end the
following new section:
379E.
Rural Renaissance Corporation
(a)
There is established a body corporate to be known as the
Rural Renaissance Corporation
(hereafter in this section
referred to as the Corporation
). The Corporation is not a
department, agency, or instrumentality of the United States Government, and
shall not be subject to title 31, United States Code.
(b)
Principal office; application of laws
The principal office and place of business of the Corporation
shall be in the District of Columbia, and, to the extent consistent with this
section, the District of Columbia Business Corporation Act (D.C. Code 29–301 et
seq.) shall apply.
(c)
The Corporation shall—
(1)
issue rural renaissance bonds for the financing of qualified
projects as required under section 54 of the Internal Revenue Code of
1986,
(2)
establish an allocation plan as required under section
54(f)(2)(A) of such Code,
(3)
establish and operate the Rural Renaissance Trust Account as
required under section 54(i) of such Code,
(4)
perform any other function the sole purpose of which is to
carry out the financing of qualified projects through rural renaissance bonds,
and
(5)
not later than February 15 of each year submit a report to
Congress—
(A)
describing the activities of the Corporation for the preceding
year, and
(B)
specifying whether the amounts deposited and expected to be
deposited in the Rural Renaissance Trust Account are sufficient to fully repay
at maturity the principal of any outstanding rural renaissance bonds issued
pursuant to such section 54.
(d)
The Corporation—
(1)
may sue and be sued, complain and defend, in its corporate
name, in any court of competent jurisdiction,
(2)
may adopt, alter, and use a seal, which shall be judicially
noticed,
(3)
may prescribe, amend, and repeal such rules and regulations as
may be necessary for carrying out the functions of the Corporation,
(4)
may make and perform such contracts and other agreements with
any individual, corporation, or other private or public entity however
designated and wherever situated, as may be necessary for carrying out the
functions of the Corporation,
(5)
may determine and prescribe the manner in which its obligations
shall be incurred and its expenses allowed and paid,
(6)
may, as necessary for carrying out the functions of the
Corporation, employ and fix the compensation of employees and officers,
(7)
may lease, purchase, or otherwise acquire, own, hold, improve,
use, or otherwise deal in and with such property (real, personal, or mixed) or
any interest therein, wherever situated, as may be necessary for carrying out
the functions of the Corporation,
(8)
may accept gifts or donations of services or of property (real,
personal, or mixed), tangible or intangible, in furtherance of the purposes of
this section, and
(9)
shall have such other powers as may be necessary and incident
to carrying out this section.
(e)
Nonprofit entity; restriction on use of moneys; conflict of
interests; independent audits
(1)
The Corporation shall be a nonprofit corporation and shall have
no capital stock.
(2)
No part of the Corporation’s revenue, earnings, or other income
or property shall inure to the benefit of any of its directors, officers, or
employees, and such revenue, earnings, or other income or property shall only
be used for carrying out the purposes of this section.
(3)
No director, officer, or employee of the Corporation shall in
any manner, directly or indirectly participate in the deliberation upon or the
determination of any question affecting his or her personal interests or the
interests of any corporation, partnership, or organization in which he or she
is directly or indirectly interested.
(4)
An independent certified public accountant shall audit the
financial statements of the Corporation each year. The audit shall be carried
out at the place at which the financial statements normally are kept and under
generally accepted auditing standards. A report of the audit shall be available
to the public and shall be included in the report required under subsection
(c)(5).
(f)
The Corporation, including its franchise and income, is exempt
from taxation imposed by the United States, by any territory or possession of
the United States, or by any State, county, municipality, or local taxing
authority.
(g)
Management of Corporation
(1)
Board of Directors; membership; designation of chairperson
and vice chairperson; appointment considerations; term; vacancies
(A)
The management of the Corporation shall be vested in a board of
directors composed of 7 members appointed by the President, by and with the
advice and consent of the Senate.
(B)
Chairperson and vice chairperson
The President shall designate 1 member of the Board to serve as
Chairperson of the Board and 1 member to serve as Vice Chairperson of the
Board.
(C)
Individuals from private life
Five members of the Board shall be appointed from private
life.
(D)
Federal officers and employees
Two members of the Board shall be appointed from among officers
and employees of agencies of the United States concerned with rural
development.
(E)
Appointment considerations
All members of the Board shall be appointed on the basis of
their understanding of and sensitivity to rural development processes. Members
of the Board shall be appointed so that not more than 4 members of the Board
are members of any 1 political party.
(F)
Members of the Board shall be appointed for terms of 3 years,
except that of the members first appointed, as designated by the President at
the time of their appointment, 2 shall be appointed for terms of 1 year and 2
shall be appointed for terms of 2 years.
(G)
A member of the Board appointed to fill a vacancy occurring
before the expiration of the term for which that member’s predecessor was
appointed shall be appointed only for the remainder of that term. Upon the
expiration of a member’s term, the member shall continue to serve until a
successor is appointed and is qualified.
(2)
Compensation, actual, necessary, and transportation
expenses
Members of the Board shall serve without additional
compensation, but may be reimbursed for actual and necessary expenses not
exceeding $100 per day, and for transportation expenses, while engaged in their
duties on behalf of the Corporation.
(3)
A majority of the Board shall constitute a quorum.
(4)
The Board of Directors shall appoint a president of the
Corporation on such terms as the Board may determine.
.
3.
Credit to holders of rural renaissance bonds
(a)
Part IV of subchapter A of chapter 1 of the Internal Revenue Code
of 1986 (relating to credits against tax) is amended by adding at the end the
following new subpart:
H
Nonrefundable credit for holders of rural renaissance
bonds
Sec. 54. Credit to holders of rural
renaissance bonds.
54.
Credit to holders of rural renaissance bonds
(a)
In the case of a taxpayer who holds a rural renaissance 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)
(1)
The amount of the credit determined under this subsection with
respect to any credit allowance date for a rural renaissance bond is 25 percent
of the annual credit determined with respect to such bond.
(2)
The annual credit determined with respect to any rural
renaissance bond is the product of—
(A)
the applicable credit rate, multiplied by
(B)
the outstanding face amount of the bond.
(3)
For purposes of paragraph (2), 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 sale of the issue) on outstanding long-term corporate debt
obligations (determined in such manner as the Secretary prescribes).
(4)
For purposes of this section, 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.
(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.
(c)
Limitation based on amount of tax
(1)
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 this part (other than
this subpart and subpart C).
(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)
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.
(e)
For purposes of this part, the term rural renaissance
bond means any bond issued as part of an issue if—
(1)
95 percent or more of the proceeds from the sale of such issue
are to be used—
(A)
for expenditures incurred after the date of the enactment of
this section for any qualified project, or
(B)
for deposit in the Rural Renaissance Trust Account for
repayment of rural renaissance bonds at maturity,
(2)
the bond is issued by the Rural Renaissance Corporation, is in
registered form, and meets the rural renaissance bond limitation requirements
under subsection (f),
(3)
except for bonds issued in accordance with subsection (f)(4),
the term of each bond which is part of such issue does not exceed 30
years,
(4)
the payment of principal with respect to such bond is the
obligation of the Rural Renaissance Corporation, and
(5)
the issue meets the requirements of subsection (g) (relating to
arbitrage).
(f)
Limitation on amount of bonds designated
(1)
There is a rural renaissance bond limitation for each calendar
year. Such limitation is—
(A)
for 2006—
(i)
with respect to bonds described in subsection (e)(1)(A),
$50,000,000,000, plus
(ii)
with respect to bonds described in subsection (e)(1)(B), such
amount (not to exceed $15,000,000,000) as determined necessary by the Rural
Renaissance Corporation to provide funds in the Rural Renaissance Trust Account
for the repayment of rural renaissance bonds at maturity, and
(B)
except as provided in paragraph (3), zero thereafter.
(2)
Limitation allocated to qualified projects among
States
(A)
Subject to subparagraph (B), the limitation applicable under
paragraph (1)(A)(i) for any calendar year shall be allocated by the Rural
Renaissance Corporation for qualified projects among the States under an
allocation plan established by the Corporation and submitted to Congress for
consideration.
(B)
Minimum allocations to States
In establishing the allocation plan under subparagraph (A), the
Rural Renaissance Corporation shall ensure that the aggregate amount allocated
for qualified projects located in each State under such plan is not less than
$500,000,000.
(3)
Carryover of unused limitation
If for any calendar year—
(A)
the rural renaissance bond limitation amount, exceeds
(B)
the amount of bonds issued during such year by the Rural
Renaissance Corporation, the rural renaissance bond limitation amount for the
following calendar year shall be increased by the amount of such excess. Any
carryforward of a rural renaissance bond limitation amount may be carried only
to calendar year 2007 or 2008.
(4)
Issuance of small denomination bonds
From the rural renaissance bond limitation for each year, the
Rural Renaissance Corporation shall issue a limited quantity of rural
renaissance bonds in small denominations suitable for purchase as gifts by
individual investors wishing to show their support for investing in rural
America.
(g)
Special rules relating to arbitrage
(1)
Subject to paragraph (2), an issue shall be treated as meeting
the requirements of this subsection if as of the date of issuance, the Rural
Renaissance Corporation reasonably expects—
(A)
to spend at least 95 percent of the proceeds from the sale of
the issue for 1 or more qualified projects within the 3-year period beginning
on such date,
(B)
to incur a binding commitment with a third party to spend at
least 10 percent of the proceeds from the sale of the issue, or to commence
construction, with respect to such projects within the 6-month period beginning
on such date, and
(C)
to proceed with due diligence to complete such projects and to
spend the proceeds from the sale of the issue.
(2)
Rules regarding continuing compliance after 3-year
determination
If at least 95 percent of the proceeds from the sale of the
issue is not expended for 1 or more qualified projects within the 3-year period
beginning on the date of issuance, but the requirements of paragraph (1) are
otherwise met, an issue shall be treated as continuing to meet the requirements
of this subsection if either—
(A)
the Rural Renaissance Corporation uses all unspent proceeds
from the sale of the issue to redeem bonds of the issue within 90 days after
the end of such 3-year period, or
(B)
the following requirements are met:
(i)
The Rural Renaissance Corporation spends at least 75 percent of
the proceeds from the sale of the issue for 1 or more qualified projects within
the 3-year period beginning on the date of issuance.
(ii)
The Rural Renaissance Corporation spends at least 95 percent of
the proceeds from the sale of the issue for 1 or more qualified projects within
the 4-year period beginning on the date of issuance, and uses all unspent
proceeds from the sale of the issue to redeem bonds of the issue within 90 days
after the end of the 4-year period beginning on the date of issuance.
(h)
Recapture of portion of credit where cessation of
compliance
(1)
If any bond which when issued purported to be a rural
renaissance bond ceases to be such a qualified bond, the Rural Renaissance
Corporation shall pay to the United States (at the time required by the
Secretary) an amount equal to the sum of—
(A)
the aggregate of the credits allowable under this section with
respect to such bond (determined without regard to subsection (c)) for taxable
years ending during the calendar year in which such cessation occurs and the 2
preceding calendar years, and
(B)
interest at the underpayment rate under section 6621 on the
amount determined under subparagraph (A) for each calendar year for the period
beginning on the first day of such calendar year.
(2)
If the Rural Renaissance Corporation fails to timely pay the
amount required by paragraph (1) with respect to such bond, the tax imposed by
this chapter on each holder of any such bond which is part of such issue shall
be increased (for the taxable year of the holder in which such cessation
occurs) by the aggregate decrease in the credits allowed under this section to
such holder for taxable years beginning in such 3 calendar years which would
have resulted solely from denying any credit under this section with respect to
such issue for such taxable years.
(3)
(A)
The tax for the taxable year shall be increased under paragraph
(2) only with respect to credits allowed by reason of this section which were
used to reduce tax liability. In the case of credits not so used to reduce tax
liability, the carryforwards and carrybacks under section 39 shall be
appropriately adjusted.
(B)
Any increase in tax under paragraph (2) shall not be treated as
a tax imposed by this chapter for purposes of determining—
(i)
the amount of any credit allowable under this part, or
(ii)
the amount of the tax imposed by section 55.
(i)
Rural Renaissance Trust Account
(1)
The following amounts shall be held in a Rural Renaissance
Trust Account by the Rural Renaissance Corporation:
(A)
The proceeds from the sale of all bonds issued under this
section.
(B)
The amount of any matching contributions with respect to such
bonds.
(C)
The investment earnings on proceeds from the sale of such
bonds.
(D)
Any earnings on any amounts described in subparagraph (A), (B),
or (C).
(2)
Amounts in the Rural Renaissance Trust Account may be used only
to pay costs of qualified projects, redeem rural renaissance bonds, and fund
the operations of the Rural Renaissance Corporation, except that amounts
withdrawn from the Rural Renaissance Trust Account to pay costs of qualified
projects may not exceed the aggregate proceeds from the sale of rural
renaissance bonds described in subsection (e)(1)(A).
(3)
Use of remaining funds in Rural Renaissance Trust
Account
Upon the redemption of all rural renaissance bonds issued under
this section, any remaining amounts in the Rural Renaissance Trust Account
shall be available to the Rural Renaissance Corporation for any qualified
project.
(j)
For purposes of this section—
(1)
Subject to paragraph (3), the term qualified
project means a project which—
(A)
includes 1 or more of the projects described in paragraph
(2),
(B)
is located in a rural area, and
(C)
is proposed by a State and approved by the Rural Renaissance
Corporation.
(2)
A project described in this paragraph is—
(A)
a water or waste treatment project,
(B)
a conservation project, including any project to protect water
quality or air quality (including odor abatement), any project to prevent soil
erosion, and any project to protect wildlife habitat, including any project to
assist agricultural producers in complying with Federal, State, or local
regulations,
(C)
an affordable housing project,
(D)
a community facility project, including hospitals, fire and
police stations, and nursing and assisted-living facilities,
(E)
a value-added agriculture or renewable energy facility project
for agricultural producers or farmer-owned entities, including any project to
promote the production or processing of ethanol, biodiesel, animal waste,
biomass, raw commodities, or wind as a fuel,
(F)
a rural venture capital project for, among others, farmer-owned
entities,
(G)
a distance learning or telemedicine project,
(H)
a project to expand broadband technology, and
(I)
a rural teleworks project.
(3)
For purposes of this subsection—
(A)
any project described in subparagraph (E) or (F) of paragraph
(2) for a farmer-owned entity may be considered a qualified project if such
entity is located in a rural area, or in the case of a farmer-owned entity the
headquarters of which are located in a nonrural area, if the project is located
in a rural area, and
(B)
any project for a farmer-owned entity which is a facility
described in paragraph (2)(E) for agricultural producers may be considered a
qualified project regardless of whether the facility is located in a rural or
nonrural area.
(4)
Approval guidelines and criteria
(A)Not later than 60 days after the date of the enactment of
this section, the Rural Renaissance Corporation shall consult with the
appropriate committees of Congress regarding the development of guidelines and
criteria for the approval by the Corporation of projects as qualified projects
for inclusion in the allocation plan established under subsection (f)(2)(A) and
shall submit such guidelines and criteria to such committees.
(B)Appropriate
committees of CongressFor purposes of subparagraph (A), the term
appropriate committees of Congress means the Committee on
Agriculture, Nutrition, and Forestry, the Committee on Commerce, Science, and
Transportation, and the Committee on Finance of the Senate and the Committee on
Agriculture, the Committee on Energy and Commerce, and the Committee on Ways
and Means of the House of Representatives.
(k)
Other definitions and special rules
For purposes of this section—
(1)
The term bond includes any obligation.
(2)
The term rural area means any area other
than—
(A)
a city or town which has a population of greater than 50,000
inhabitants, or
(B)
the urbanized area contiguous and adjacent to such a city or
town.
(3)
Rural Renaissance Corporation
The term Rural Renaissance Corporation means the
Rural Renaissance Corporation established under section 379E of the
Consolidated Farm and Rural Development
Act.
(4)
Treatment of changes in use
For purposes of subsection (e)(1)(A), the proceeds from the
sale of an issue shall not be treated as used for a qualified project to the
extent that the Rural Renaissance Corporation takes any action within its
control which causes such proceeds not to be used for a qualified project. The
Secretary shall specify remedial actions that may be taken (including
conditions to taking such remedial actions) to prevent an action described in
the preceding sentence from causing a bond to fail to be a rural renaissance
bond.
(5)
Partnership; s corporation; and other pass-thru
entities
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).
(6)
Bonds held by regulated investment companies
If any rural renaissance 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.
(7)
Under regulations prescribed by the Secretary—
(A)
There may be a separation (including at issuance) of the
ownership of a rural renaissance 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.
(B)
In the case of a separation described in subparagraph (A), the
rules of section 1286 shall apply to the rural renaissance bond as if it were a
stripped bond and to the credit under this section as if it were a stripped
coupon.
(8)
The Rural Renaissance Corporation shall submit reports similar
to the reports required under section 149(e).
.
(b)
Amendments to other Code sections
(1)
Subsection (d) of section 6049 of the Internal Revenue Code of
1986 (relating to returns regarding payments of interest) is amended by adding
at the end the following new paragraph:
(8)
Reporting of credit on rural renaissance bonds
(A)
For purposes of subsection (a), the term interest
includes amounts includible in gross income under section 54(d) and such
amounts shall be treated as paid on the credit allowance date (as defined in
section 54(b)(4)).
(B)
Reporting to corporations, etc
Except as otherwise provided in regulations, in the case of any
interest described in subparagraph (A), subsection (b)(4) shall be applied
without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i) of such
subsection.
(C)
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.
.
(2)
Treatment for estimated tax purposes
(A)
Section 6654 of such Code (relating to failure by individual to
pay estimated income tax) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the following new
subsection:
(m)
Special rule for holders of rural renaissance bonds
For purposes of this section, the credit allowed by section 54
to a taxpayer by reason of holding a rural renaissance 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.
.
(B)
Subsection (g) of section 6655 of such Code (relating to failure
by corporation to pay estimated income tax) is amended by adding at the end the
following new paragraph:
(5)
Special rule for holders of rural renaissance bonds
For purposes of this section, the credit allowed by section 54
to a taxpayer by reason of holding a rural renaissance 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.
.
(c)
(1)
The table of subparts for 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 item:
Subpart H. Nonrefundable credit for
holders of rural renaissance
bonds.
.
(2)
Section 6401(b)(1) of such Code is amended by striking and
G
and inserting G, and H
.
(d)The amendments made by this section shall apply to
obligations issued after December 31, 2005.