[Congressional Record Volume 142, Number 97 (Thursday, June 27, 1996)]
[Senate]
[Pages S7205-S7206]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  EQUITABLE RELIEF WITH RESPECT TO S. 1880, THE STOP TAX-EXEMPT ARENA 
                           DEBT ISSUANCE ACT

  Mr. MOYNIHAN. Mr. President, I recently introduced two bills 
to correct a serious misallocation of our limited resources under the 
present law rules that govern the issuance of tax-exempt bonds. My 
first bill, S. 1879, the Section 501(c)(3) Nonprofit Organizations Tax-
Exempt Bond Reform Act of 1996, would increase funding for educational 
and research facilities at private colleges and universities by 
removing the arbitrary and injurious $150 million cap on the amount of 
tax-exempt bonds that can be issued on their behalf. The Senate has 
twice passed this measure as part of larger legislation that was vetoed 
for unrelated reasons.
  My second bill, S. 1880, the Stop Tax-exempt Arena Debt Issuance 
Act--or ``STADIA'' for short--would provide a particularly appropriate 
revenue offset for the first bill. This bill would end a tax subsidy 
that inures largely to the benefit of wealthy sports franchise owners, 
by eliminating tax-subsidized financing of professional sports 
facilities. This legislation is important in its own right, and would 
close a loophole that ultimately injures State and local governments 
and other issuers of tax exempt bonds, that provides an unintended 
federal subsidy--in fact, contravenes Congressional intent--and that 
contributes to the enrichment of persons who need no Federal assistance 
whatsoever.
  I chose to introduce S. 1880 with an immediate effective date for a 
number of reasons. Most importantly, Congress intended to eliminate the 
issuance of tax-exempt bonds to finance professional sports facilities 
as part of the Tax Reform Act of 1986. An immediate effective date is 
appropriate because the issuance of these bonds contravenes the clear 
and expressed intent of Congress. Also, an immediate effective date is 
necessary to prevent a rush to market. I have no doubt that bond market 
professionals would act very quickly to issue stadium bonds if provided 
a window of opportunity in which to do so. The potential for a rush to 
market would have a predictable impact on the revenue estimate for this 
measure.
  At the same time, I recognized that a few localities may have 
expended significant time and funds in planning and financing a 
professional sports facility, in reliance upon professional advice on 
their ability to issue tax-exempt bonds. Thus, in my introductory 
statement, I specifically requested comment regarding ``the need for 
equitable relief for stadiums already in the planning stages.''
  In response to my request, several localities that had been planning 
to finance professional sports facilities with tax-exempt bonds have 
already come forward. They have provided the details necessary to craft 
appropriate ``binding contract'' type transitional relief. They have 
also informed me that, despite my clear statement that appropriate 
transition relief would be afforded, some proposed stadium deals could 
be delayed or called into question in reaction to the introduction of 
the bill. Let me emphasize that the mere introduction of the bill has 
caused this reaction.
  It is flattering that the mere introduction of a bill is given such 
credence by the bond markets. It is important to note, however, that at 
the time I introduced my bill to eliminate tax-exempt financing for 
professional sports facilities, 1,879 bills were on file in the Senate 
and 3,659 bills were on file in the House in this Congress. The vast 
majority of these bills have not and will not become law, including, in 
all likelihood, S. 1879 and S. 1880.

  The history of this Senator's efforts to remove the $150 million cap 
demonstrates this lesson well. The cap was first imposed under the Tax 
Reform Act of 1986, which President Reagan signed into law on October 
22, 1986. I first introduced legislation to repeal this cap in 1987. 
Since then, legislation to remove the cap has been approved by the 
Finance Committee four times. Twice the legislation was passed by 
Congress, and both times President Bush vetoed the bills containing 
this measure for other reasons. Today, the cap remains in law.

[[Page S7206]]

  At all events, I have considered the circumstances of the localities 
that have contacted my office in response to my earlier request. I am 
told that time is of the essence with respect to several of these 
transactions. Accordingly, in an effort to respond expeditiously to 
this need, I am inserting into the Record language for a binding 
contract-type transition relief provision. This modification represents 
my best effort to draw an equitable line to distinguish between those 
projects that have progressed to a point where the bill should not 
cause a disruption, and those projects that should be subject to the 
bill if enacted. It is my intent that this language be included, as if 
introduced as part of the original bill, if and when the bill is 
adopted in committee or in floor action. Further, I will be certain to 
include this language when reintroducing this legislation in the 105th 
Congress.
  Mr. President, I ask that this language be printed in the Record.
  The material follows:

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to bonds issued on or after June 14, 1996.
       (2) Exception for construction, binding agreements, or 
     approved projects.--The amendments made by this section shall 
     not apply to bonds--
       (A) the proceeds of which are used for--
       (i) the construction or rehabilitation of a facility--
       (I) if such construction or rehabilitation began before 
     June 14, 1996, and was completed on or after such date, or
       (II) if a State or political subdivision thereof has 
     entered into a binding contract before June 14, 1996, that 
     requires the incurrence of significant expenditures for such 
     construction or rehabilitation, and some of such expenditures 
     are incurred on or after such date; or
       (ii) the acquisition of a facility pursuant to a binding 
     contract entered into by a State or political subdivision 
     thereof before June 14, 1996, and
       (B) which are the subject of an official action taken by 
     relevant government officials before June 14, 1996--
       (i) approving the issuance of such bonds, or
       (ii) approving the submission of the approval of such 
     issuance to a voter referendum.
       (3) Exception for final bond resolutions.--The amendments 
     made by this section shall not apply to bonds the proceeds of 
     which are used for the construction or rehabilitation of a 
     facility if a State or political subdivision thereof has 
     adopted a final bond resolution before June 14, 1996, 
     authorizing the issuance of such bonds. For this purpose, a 
     final bond resolution means that all necessary governmental 
     approvals for the issuance of such bonds have been completed.
       (4) Significant expenditures.--For purposes of paragraph 
     (2)(A)(i)(II), the term ``significant expenditures'' means 
     expenditures equal to or exceeding 10 percent of the 
     reasonably anticipated cost of the construction or 
     rehabilitation of the facility involved.

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