[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2367 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2367

    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

                           November 15, 2007

  Mr. Johnson (for himself and Mr. Bingaman) 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. DEFINITIONS.

    In this Act:
            (1) Bureau.--The term ``Bureau'' means the Bureau of Indian 
        Affairs.
            (2) Indian.--The term ``Indian'' means any individual who 
        is a member of an Indian tribe.
            (3) Indian tribe.--
                    (A) In general.--The term ``Indian tribe'' has the 
                meaning given the term ``Indian tribal government'' in 
                section 7701(a)(40) of the Internal Revenue Code of 
                1986 (as modified by section 7871(d) of that Code).
                    (B) Inclusion.--The term ``Indian tribe'' includes 
                any consortium of Indian tribes approved by the 
                Secretary.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.
            (5) 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) receives financial assistance for the operation 
                of the school or dormitory under an appropriation for 
                the Bureau under a contract, grant, or agreement, or 
                for a Bureau-operated school, under--
                            (i) section 102, 103(a), or 208 of the 
                        Indian Self-Determination and Education 
                        Assistance Act (25 U.S.C. 450f, 450h(a), and 
                        458d); or
                            (ii) the Tribally Controlled Schools Act of 
                        1988 (25 U.S.C. 2501 et seq.).

SEC. 3. ISSUANCE OF BONDS.

    (a) In General.--The Secretary shall establish a pilot program 
under which the Secretary shall provide to eligible Indian tribes the 
authority to issue qualified tribal school modernization bonds to 
provide funds for the construction, rehabilitation, and repair of 
tribal schools, including advance planning and design of tribal 
schools.
    (b) Eligibility.--
            (1) In general.--To be eligible to issue a qualified tribal 
        school modernization bond under the program under subsection 
        (a), an Indian tribe shall--
                    (A) prepare and submit to the Secretary a plan of 
                construction that meets the requirements of paragraph 
                (2);
                    (B) provide for quarterly and final inspection by 
                the Bureau of each project to be funded by the bond; 
                and
                    (C) ensure that the facilities to be funded by the 
                bond will be used primarily for elementary and 
                secondary educational purposes for the period during 
                which the bond remains outstanding.
            (2) Plan of construction.--The requirements referred to in 
        paragraph (1)(A) are that the plan shall--
                    (A) contain a description of the construction to be 
                carried out using funds provided under a qualified 
                tribal school modernization bond;
                    (B) demonstrate that a comprehensive survey has 
                been carried out regarding the construction needs of 
                the applicable tribal school;
                    (C) contain assurances that funding under the bond 
                will be used only for the activities described in the 
                plan;
                    (D) contain a response to the evaluation criteria 
                contained in the document entitled ``Instructions and 
                Application for Replacement School Construction, 
                Revision 6'' and dated February 6, 1999; and
                    (E) contain any other reasonable and related 
                information that the Secretary determines to be 
                appropriate.
            (3) Priority.--In determining whether an Indian tribe is 
        eligible to participate in the program under this section, the 
        Secretary shall give priority to Indian tribes that, as 
        demonstrated by the plans of construction of the Indian tribes, 
        will fund projects--
                    (A) described in the list of the Bureau entitled 
                ``Education Facilities Replacement Construction 
                Priorities List as of FY 2004'' (69 Fed. Reg. 13870) 
                (or successor regulations); or
                    (B) that meet the criteria for ranking schools 
                described in the document entitled ``Instructions and 
                Application for Replacement School Construction, 
                Revision 6'' and dated February 6, 1999.
            (4) Advance planning and design funding.--
                    (A) 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 tribal 
                school modernization escrow account established under 
                subsection (f)(2).
                    (B) Conditions.--As a condition of receiving 
                advance planning and design funds under subparagraph 
                (A), an Indian tribe shall agree--
                            (i) to issue qualified tribal school 
                        modernization bonds after the receipt of the 
                        funds; and
                            (ii) to deposit into the escrow account or 
                        a fund managed by a trustee under subsection 
                        (d)(3) an amount equal to the amount of funds 
                        received from the escrow account.
    (c) Permissible Activities.--In addition to the use described in 
subsection (a), an Indian tribe may use amounts received through the 
issuance of a qualified tribal school modernization bond--
            (1) to enter into, and make payments under, contracts with 
        licensed and bonded architects, engineers, and construction 
        firms--
                    (A) to determine the needs of a tribal school; and
                    (B) for the design and engineering of a tribal 
                school;
            (2) to enter into, and make payments under, contracts with 
        financial advisors, underwriters, attorneys, trustees, and 
        other professionals to provide assistance to the Indian tribe 
        in issuing the bonds; and
            (3) to carry out other such activities as the Secretary 
        determines to be appropriate.
    (d) Bond Trustee.--
            (1) In general.--Notwithstanding any other provision of 
        law, any qualified tribal school modernization bond issued by 
        an Indian tribe under this section shall be subject to a trust 
        agreement between the Indian tribe and a trustee.
            (2) Trustee.--Any bank or trust company that meets the 
        requirements established by the Secretary may serve as a 
        trustee for purposes of paragraph (1).
            (3) Content of trust agreement.--A trust agreement entered 
        into by an Indian tribe under this subsection shall specify 
        that the trustee, with respect to any bond issued under this 
        section, shall--
                    (A) act as a repository for the proceeds of the 
                bond;
                    (B) make payments to bondholders;
                    (C) receive, as a condition to the issuance of the 
                bond, a transfer of funds from the tribal school 
                modernization escrow account under subsection (f)(2), 
                or from other funds furnished by or on behalf of the 
                Indian tribe, in an amount that, together with interest 
                earnings from the investment of the funds in 
                obligations of or fully guaranteed by the United 
                States, or from other investments under subsection (j), 
                will be sufficient to pay timely and in full the entire 
                principal amount of the bond on the stated maturity 
                date of the bond;
                    (D) invest the funds received in accordance with 
                subparagraph (C); and
                    (E) hold and invest the funds in a segregated fund 
                or account under the agreement, to be used solely to 
                pay the costs of activities described in subsection 
                (c).
            (4) Requirements for making direct payments.--
                    (A) In general.--Notwithstanding any other 
                provision of law, the trustee shall make each payment 
                described in paragraph (3)(E) in accordance with such 
                requirements as the Indian tribe may prescribe in the 
                trust agreement under paragraph (3).
                    (B) Payments to contractors.--As a condition of 
                making a payment to a contractor under paragraph 
                (3)(E), the trustee shall require an inspection of the 
                project of the contractor, to ensure the completion of 
                the project, by--
                            (i) a local financial institution; or
                            (ii) an independent inspecting architect or 
                        engineer.
                    (C) Contracts.--Each contract under paragraphs (1) 
                and (2) of subsection (c) shall require, or be 
                renegotiated to require, that each payment under the 
                contract shall be made in accordance with this 
                subsection.
    (e) Payments of Principal and Interest.--
            (1) Principal.--
                    (A) In general.--No principal payment on any 
                qualified tribal school modernization bond shall be 
                required until the final, stated maturity of the bond.
                    (B) Maturity.--
                            (i) In general.--The final, stated maturity 
                        of a qualified tribal school modernization bond 
                        shall be not later than the date that is 15 
                        years after the date of issuance of the bond.
                            (ii) Expiration.--On expiration of a 
                        qualified tribal school modernization bond 
                        under clause (i), the entire outstanding 
                        principal under the bond shall become due and 
                        payable.
            (2) Interest.--In lieu of interest on a qualified tribal 
        school modernization bond, there shall be provided a tax credit 
        under section 1400U of the Internal Revenue Code of 1986.
    (f) Bond Guarantees.--
            (1) In general.--Payment of the principal portion of a 
        qualified tribal school modernization bond issued under this 
        section shall be guaranteed solely by amounts deposited with 
        each respective bond trustee as described in subsection 
        (d)(3)(C).
            (2) Escrow account.--
                    (A) In general.--The Secretary may deposit not more 
                than $50,000,000 into a tribal school modernization 
                escrow account.
                    (B) Additional amounts.--
                            (i) In general.--The Secretary may accept 
                        for transfer into the tribal school 
                        modernization escrow account amounts from, as 
                        the Secretary determines to be appropriate--
                                    (I) other Federal departments and 
                                agencies (such as amounts made 
                                available for facility improvement and 
                                repairs);
                                    (II) non-Federal public or private 
                                sources.
                            (ii) Treatment.--Amounts transferred into 
                        the escrow account pursuant to clause (i) shall 
                        not reduce the amount eligible to be deposited 
                        into the account under subparagraph (A).
                    (C) Investment of certain funds.--Amounts made 
                available to carry out any project included on the list 
                of the Bureau entitled ``Education Facilities 
                Replacement Construction Priorities List as of FY 
                2004'' (or successor regulations) (69 Fed. Reg. 13870) 
                shall--
                            (i) be invested in accordance with 
                        subsection (j); and
                            (ii) at the discretion of the Secretary--
                                    (I) be used to pay any increase in 
                                project costs or other facility costs 
                                of the project for which the amounts 
                                are made available; or
                                    (II) be deposited into the tribal 
                                school modernization escrow account.
    (g) Limitations.--
            (1) Obligation to repay.--
                    (A) In general.--Notwithstanding any other 
                provision of law, the principal amount of any qualified 
                tribal school modernization bond issued under this 
                section shall be repaid only to the extent of any 
                escrowed funds provided under subsection (d)(3)(C).
                    (B) Treatment.--No qualified tribal school 
                modernization bond issued by an Indian tribe shall be 
                an obligation of, and no payment of the principal of 
                such a bond shall be guaranteed by, the United States, 
                an Indian tribe, or a tribal school.
            (2) Land and facilities.--No land or facility purchased or 
        improved using amounts provided under a qualified tribal school 
        modernization bond issued under this section shall be mortgaged 
        or used as collateral for the bond.
    (h) 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.
    (i) Treatment of Trust Agreement Earnings.--Amounts earned through 
the investment of funds under the control of a trustee under a trust 
agreement described in subsection (d) shall not be subject to Federal 
income tax.
    (j) Investment of Sinking Funds.--Any sinking fund established for 
the purpose of the payment of principal on a qualified tribal school 
modernization bond shall be invested in--
            (1) obligations issued or guaranteed by the United States; 
        or
            (2) such other assets as the Secretary of the Treasury may 
        allow, by regulation.

SEC. 4. 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. 1400U. Credit to holders of qualified tribal school 
                            modernization bonds.

``SEC. 1400U. 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 of 
        similar ratings (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 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 2008,
                                    ``(II) $200,000,000 for 2009, and
                                    ``(III) $200,000,000 for 2010.
                            ``(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 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) Indian tribe.--The term `Indian 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 Indian 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).''.

SEC. 5. ADDITIONAL PROVISIONS.

    (a) Sovereign Immunity.--Nothing in this Act or an amendment made 
by this Act impacts, limits, or otherwise affects the sovereign 
immunity of the United States or any State or Indian tribal government.
    (b) Application.--This Act and the amendments made by this Act 
shall take effect on the date of enactment of this Act with respect to 
bonds issued after December 31, 2007, regardless of the status of 
regulations promulgated pursuant to this Act or an amendment made by 
this Act.
                                 <all>