[Congressional Record Volume 146, Number 47 (Thursday, April 13, 2000)]
[Senate]
[Pages S2764-S2765]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU:
  S. 2446. A bill to amend the Internal Revenue Code of 1986 to provide 
assistance to homeowners and small businesses to repair Formosan 
termite damage; to the Committee on Finance.


                      Formosan Termite Tax Credit

  Ms. LANDRIEU. Mr. President, I rise today to bring to the attention 
of the Senate a plague that has been afflicted upon our country--
formosan termites. Clearly, any termite is bad news for home and 
building owners, but the formosan termite is especially a problem. This 
aggressive termite species is becoming even more prevalent than native 
termite species in some areas. While native species generally feed on 
dead trees and processed wood, formosan termites have an unbelievably 
horrific appetite with a diet that consists of anything that contains 
wood fiber including homes, buildings and live trees as well as crops 
and plants. Believe it or not, formosan termites can even penetrate 
plaster, plastic and asphalt to get to a new food source.
  Coptotermes formosanus (otherwise known as the formosan termite), 
have invaded port cities in the United States and are spreading rapidly 
across the rest of the country. Right now this exotic species is 
wrecking their special brand of havoc in 14 states including 
California, Arizona, New Mexico, Texas, Louisiana, Arkansas, 
Mississippi, Alabama, Georgia, Florida, South Carolina, North Carolina, 
Virginia, and Hawaii with their map of destruction growing wider daily. 
Experts have estimated that it costs Americans an astonishing $1 
billion each year to repair the harm, with each new case costing 
homeowners an average of $20,000.
  Since the formosan termites was first brought to the United States it 
has spread like a plague through the Southeast. The infestation is most 
severe in New Orleans, where these pests have caused more damage than, 
``tornadoes, hurricanes, and floods combined'' and the total annual 
cost of termite damage and treatment is estimated at $217,000,000. In 
areas like the famed historic French Quarter, where close-packed houses 
share common walls, entire city blocks must be treated--a procedure 
that is costly and complicated. Outside the Quarter, officials fear 
that infestation may have hit as many as one-third of the beloved live 
oaks that shade historic thoroughfares such as St. Charles Avenue. A 
voracious blind creature that eats history--it sounds like something 
from a science-fiction nightmare, but it's real.
  Unfortunately, the only explanation for how this pest came to exist 
in the United States is that it was introduced from east Asia in the 
1940s through the mishandling of U.S. military cargo and troops 
returning home from World War II--I believe that since the government 
caused the damage, the government should do something to relieve the 
burden.
  The bill I am introducing today seeks to provide the victims of 
Formosan Termites with some much needed relief. Under current law, 
small business owners are allowed to deduct the cost to repair Formosan 
Termite damage as a capital loss under IRS code Section 165. For some 
reason, individual homeowners have been denied this same right, 
although they can deduct the cost to repair damages caused by disasters 
which are defined as casualty losses, such as flood and fire. My bill 
simply changes the definition of casualty loss to include Formosan 
Termites so that homeowners are allowed the same deduction that 
business owners are already getting.
  This measure also seeks to make low interest loans financed by the 
issuance of ``qualified'' private activity tax exempt bonds more 
accessible for homeowners and small businesses seeking to repair the 
expensive damage which was inflicted upon their homes by formosan 
termite damage. It does this by expanding current mortgage revenue bond 
provisions to permit homeowners to receive up to a $25,000 home 
improvement loan to repair this damage and also allows small businesses 
and landlords to use issue revenue bonds to finance loans for this same 
purpose. As

[[Page S2765]]

an added incentive, as long as the proceeds are used to purchase tax 
exempt bonds to finance the repair of Formosan Termite damage, banks 
will be allowed to deduct the interest payments on these loans.
  Obviously this legislation will not solve all of the problems 
formosan termites have caused. However, I do believe it is a good first 
step towards alleviating the burden these pests bring upon homeowners 
across the country. I urge everyone to join with me and give the 
victims of this plague a little relief. Thank you.
  Mr. President, I ask unanimous consent that the text of this bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2446

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DEDUCTION FOR INDIVIDUALS FOR LOSSES CAUSED BY 
                   FORMOSAN TERMITE DAMAGE.

       (a) Inclusion of Formosan Termite Damage as Casualty 
     Loss.--Section 165(c)(3) of the Internal Revenue Code of 1986 
     (relating to limitation of deduction of losses of 
     individuals) is amended by inserting ``Formosan termite 
     damage,'' after ``shipwreck,''.
       (b) Conforming Amendment.--Section 165(h)(3) of the 
     Internal Revenue Code of 1986 (defining personal casualty 
     gain) is amended by inserting ``Formosan termite damage,'' 
     after ``shipwreck,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 2. PROCEEDS OF MORTGAGE REVENUE BONDS ALLOWED FOR LOANS 
                   TO HOMEOWNERS TO REPAIR FORMOSAN TERMITE 
                   DAMAGE.

       (a) Exception From Income Requirements.--Section 143(f) of 
     the Internal Revenue Code of 1986 (relating to income 
     requirements) is amended by adding at the end the following 
     new paragraph:
       ``(7) Exception for qualified home improvement loans.--
     Paragraph (1) shall not apply with respect to any qualified 
     home improvement loan used for the repair of Formosan termite 
     damage.''.
       (b) Amounts up to $10,000 Used for Termite Repair Not 
     Included in Calculating Limit for Home Improvement Loan.--
     Paragraph (4) of section 143(k) of the Internal Revenue Code 
     of 1986 (defining qualified home improvement loan) is amended 
     by adding at the end the following flush sentence: ``In 
     calculating the $15,000 amount, any amount up to $10,000 used 
     for the repair of Formosan termite damage shall not be taken 
     into account.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 3. PROCEEDS OF SMALL ISSUE BONDS ALLOWED FOR LOANS TO 
                   LANDLORDS AND SMALL BUSINESSES TO REPAIR 
                   FORMOSAN TERMITE DAMAGE.

       (a) In General.--Subparagraph (B) of section 144(a)(12) of 
     the Internal Revenue Code of 1986 (relating to bonds to 
     finance manufacturing facilities and farm property) is 
     amended by striking ``or'' at the end of clause (i), by 
     striking the period and inserting ``, or'' at the end of 
     clause (ii), and by adding at the end the following new 
     clause:
       ``(iii) any Formosan termite damage repair loan.''.
       (b) Definition of Formosan Termite Damage Repair Loan.--
     Section 144(a)(12) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new subparagraph:
       ``(D) Formosan termite damage repair loan.--For purposes of 
     this paragraph--
       ``(i) In general.--The term `Formosan termite damage repair 
     loan' means the financing of repairs on or in connection with 
     residential rental property or property used by a small 
     business by the owner thereof, for damage caused by Formosan 
     termites.
       ``(ii) Small businesses covered.--The term `small business' 
     means, for any taxable year, any corporation or partnership 
     if the entity meets the $5,000,000 gross receipts test of 
     section 448(c) for the prior taxable year.''.
       (c) Amounts Used in Formosan Termite Repair Not Included in 
     Calculating Limit on Amount of Bond.--Clause (i) of section 
     144(a)(4)(C) of the Internal Revenue Code of 1986 (relating 
     to certain capital expenditures not taken into account) is 
     amended by inserting ``Formosan termite damage,'' after 
     ``storm,''.
       (d) Conforming Amendment.--The heading in section 
     144(a)(12)(B) of the Internal Revenue Code of 1986 is amended 
     by striking ``and farm property'' and inserting ``farm 
     property, and formosan termite repair''.
       (e) Effective Date.--The amendment made by subsection (a) 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 4. EXCEPTION FROM VOLUME CAP FOR PRIVATE ACTIVITY BONDS 
                   USED TO REPAIR FORMOSAN TERMITE DAMAGE.

       (a) Exception From Volume Cap.--Section 146(g) of the 
     Internal Revenue Code of 1986 (relating to exception for 
     certain bonds) is amended by striking ``and'' at the end of 
     paragraph (3), by striking the period at the end of paragraph 
     (4) and inserting a comma, and by adding after paragraph (4) 
     the following new paragraphs:
       ``(5) any qualified mortgage bond if 95 percent or more of 
     the net proceeds of the bond are to be used to provide home 
     improvement loans for the repair of Formosan termite damage, 
     and
       ``(6) any qualified small issue bond if 95 percent or more 
     of the net proceeds of the bond are to be used to provide 
     Formosan termite damage repair loans (as defined in section 
     144(a)(12)(D)).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 5. EXEMPTION OF CERTAIN BONDS USED TO REPAIR FORMOSAN 
                   TERMITE DAMAGE FROM RESTRICTIONS ON DEDUCTION 
                   BY FINANCIAL INSTITUTIONS FOR INTEREST.

       (a) In General.--Clause (ii) of section 265(b)(3)(B) of the 
     Internal Revenue Code of 1986 (defining qualified tax-exempt 
     obligations) is amended by striking ``or'' at the end of 
     subclause (I), by redesignating subclause (II) as subclause 
     (IV), and by inserting after subclause (I) the following new 
     subclauses:

       ``(II) any qualified mortgage bond if 95 percent or more of 
     the net proceeds of the bond are to be used to provide home 
     improvement loans for the repair of Formosan termite damage,
       ``(III) any qualified small issue bond if 95 percent or 
     more of the net proceeds of the bond are to be used to 
     provide Formosan termite damage repair loans (as defined in 
     section 144(a)(12)(D)), or''.

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to bonds issued after the date of the enactment 
     of this Act.
                                 ______