[Congressional Record Volume 145, Number 33 (Wednesday, March 3, 1999)]
[Senate]
[Pages S2215-S2216]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMENDMENT TO THE INTERNAL REVENUE CODE OF 1986
Mr. INOUYE. Mr. President, six thousand miles from where I am
standing today, The Queen's Health System of Hawaii is providing health
care services that benefit the residents of all the Hawaiian Islands.
This year, approximately 18,000 inpatients and more than 200,000
outpatients will seek health care from The Queen's Health Systems. The
organization maintains an open emergency room; admits Medicare and
Medicaid patients; operates a 536-bed accredited teaching hospital;
operates Molokai General Hospital; operates clinics on various islands;
provides home health care; supports nursing programs at Hawaiian
colleges and universities; and promotes good health practices in many
other ways.
In 1885 Queen Emma Kaleleonalani, wife of King Kamehameha IV,
bequeathed land which in large part composes the assets of The Queen
Emma Foundation, a non-profit, tax-exempt, public charity. The
Foundation s charitable purpose is to support and improve health care
services in Hawaii by committing funds generated by Foundation-owned
properties to The Queen's Medical Center, the Queen's Health Systems
and other health care programs benefiting the community.
Much of the land bequeathed by Queen Emma to the Foundation is
encumbered by long-term, fixed rent commercial and industrial ground
leases. As these leases expire, the land and improvements revert back
to the Foundation. The existing, aged improvements thereon will need to
be upgraded in order to enhance and continue the revenue-generating
potential of the properties. However, the Foundation's available cash
and cash flow are insufficient to implement these improvements which
would result in increased financial support to The Queen's Medical
Center, The Queen's Health Systems and other health care programs
benefiting the community. If the Foundation borrows the funds, any
income generated from those improvements would be subject to the debt-
financed property rules of the unrelated business income tax provisions
of the Internal Revenue Code. Since the income would be taxed at the
corporate rate, the amount ultimately available to The Queen's Health
System would be greatly reduced.
Consequently, the generosity and intent of Queen Emma more than 100
years ago are being frustrated by federal tax provisions intended to
prevent abuses. I am sure the Congress never intended the unfortunate
consequences these provisions are having on what is virtually the sole
source of private financial support for this sound and unique system of
providing and delivering health care to the people of Hawaii.
Current law already allows an exception from the debt-financing rules
for certain real estate investments of pension trusts as well as an
exception for educational institutions and their supporting
organizations. The legislation I am introducing today grants similar
relief to institutions like The Queen Emma Foundation which provide and
deliver health care to the people of our nation.
[[Page S2216]]
I request unanimous consent that the full text of my bill be printed
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 523
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. TREATMENT OF CERTAIN HOSPITAL SUPPORT
ORGANIZATIONS AS QUALIFIED ORGANIZATIONS FOR
PURPOSES OF DETERMINING ACQUISITION
INDEBTEDNESS.
(a) In General.--Subparagraph (C) of section 514(c)(9) of
the Internal Revenue Code of 1986 is amended by striking
``or'' at the end of clause (ii), by striking the period at
the end of clause (iii) and inserting ``; or'', and by adding
at the end the following new clause:
``(iv) a qualified hospital support organization (as
defined in subparagraph (I)).''
(b) Qualified Hospital Support Organizations.--Paragraph
(9) of section 514(c) of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subparagraph:
``(I) Qualified hospital support organizations.--For
purposes of subparagraph (C)(iv), the term `qualified
hospital support organization' means, with respect to any
indebtedness, a support organization (as defined in section
509(a)(3)) which supports a hospital described in section
170(b)(1)(A)(iii) and with respect to which--
``(i) more than half of its assets (by value) at any time
since its organization--
``(I) were acquired, directly or indirectly, by gift or
devise, and
``(II) consisted of real property,
``(ii) the fair market value of the organization's
unimproved real estate acquired, directly or indirectly, by
gift or devise, exceeded 10 percent of the fair market value
of all investment assets held by the organization immediately
prior to the time that the indebtedness was incurred, and
``(iii) no member of the organization's governing body was
a disqualified person (as defined in section 4946 but not
including any foundation manager) at any time during the
taxable year in which the indebtedness was incurred.
In the case of any refinancing not in excess of the
indebtedness being refinanced, the determinations under
clauses (ii) and (iii) shall be made by reference to the
earliest date indebtedness meeting the requirements of this
subparagraph (and involved in the chain of indebtedness being
refinanced) was incurred.''
(c) Effective Date.--The amendments made by this section
shall apply to indebtedness incurred on or after the date of
the enactment of this Act.
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By Mr. INOUYE:
S. 524. A bill to amend the Organic Act of Guam to provide
restitution to the people of Guam who suffered atrocities such as
personal injury, forced labor, forced marches, internment, and death
during the occupation of Guam in World War II, and for other purposes;
to the Committee on the Judiciary.
____________________