[Congressional Record Volume 151, Number 18 (Thursday, February 17, 2005)]
[Senate]
[Pages S1643-S1647]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. TALENT (for himself, Mr. Wyden, Mr. Allen, Mr. Coleman, 
        Ms. Collins, Mr. Corzine, Mr. Dayton, Mrs. Dole, Mr. Graham, 
        and Mr. Vitter):
  S. 428. A bill to provide $30,000,000,000 in new transportation 
infrastructure funding in addition to TEA-21 levels through bonding to 
empower States and local governments to complete significant long-term 
capital improvement projects for highways, public transportation 
systems, and rail systems, and for other purposes; to the Committee on 
Finance.
  Mr. TALENT. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 428

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

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Build 
     America Bonds Act of 2005''.
       (b) References to Internal Revenue Code of 1986.--Except as 
     otherwise expressly provided, whenever in this Act an 
     amendment or repeal is expressed in terms of an amendment to, 
     or repeal of, a section or other provision, the reference 
     shall be considered to be made to a section or other 
     provision of the Internal Revenue Code of 1986.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds the following:
       (1) Our Nation's highways, public transportation systems, 
     and rail systems drive our economy, enabling all industries 
     to achieve growth and productivity that makes America strong 
     and prosperous.
       (2) The establishment, maintenance, and improvement of the 
     national transportation network is a national priority, for 
     economic, environmental, energy, security, and other reasons.
       (3) The ability to move people and goods is critical to 
     maintaining State, metropolitan, rural, and local economies.
       (4) The construction of infrastructure requires the skills 
     of numerous occupations, including those in the contracting, 
     engineering, planning and design, materials supply, 
     manufacturing, distribution, and safety industries.
       (5) Investing in transportation infrastructure creates 
     long-term capital assets for the Nation that will help the 
     United States address its enormous infrastructure needs and 
     improve its economic productivity.
       (6) Investment in transportation infrastructure creates 
     jobs and spurs economic activity to put people back to work 
     and stimulate the economy.
       (7) Every billion dollars in transportation investment has 
     the potential to create up to 47,500 jobs.
       (8) Every dollar invested in the Nation's transportation 
     infrastructure yields at least $5.70 in economic benefits 
     because of reduced delays, improved safety, and reduced 
     vehicle operating costs.
       (9) The proposed increases to the Transportation Equity Act 
     for the 21st Century (TEA-21) will not be sufficient to 
     compensate for the Nation's transportation infrastructure 
     deficit.
       (b) Purpose.--The purpose of this Act is to provide 
     financing for long-term infrastructure capital investments 
     that are not currently being met by existing transportation 
     and infrastructure investment programs, including mega-
     projects, projects of national significance, multistate 
     transportation corridors, intermodal transportation 
     facilities, and transportation and security improvements to 
     highways, public transportation systems, and rail systems.

     SEC. 3. CREDIT TO HOLDERS OF BUILD AMERICA BONDS.

       (a) In General.--Part IV of subchapter A of chapter 1 
     (relating to credits against tax) is amended by adding at the 
     end the following new subpart:

  ``Subpart H--Nonrefundable Credit for Holders of Build America Bonds

``Sec. 54. Credit to holders of Build America bonds.

[[Page S1644]]

     ``SEC. 54. CREDIT TO HOLDERS OF BUILD AMERICA BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a Build America 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 Build America 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 Build America 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 
     (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) Credit allowance date.--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) 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 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) Build America Bond.--For purposes of this part, the 
     term `Build America bond' means any bond issued as part of an 
     issue if--
       ``(1) the net spendable 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 Build America Trust Account for 
     repayment of Build America bonds at maturity,
       ``(2) the bond is issued by the Transportation Finance 
     Corporation, is in registered form, and meets the Build 
     America bond limitation requirements under subsection (g),
       ``(3) the Transportation Finance Corporation certifies that 
     it meets the State contribution requirement of subsection (k) 
     with respect to such project, as in effect on the date of 
     issuance,
       ``(4) the Transportation Finance Corporation certifies that 
     the State in which an approved qualified project is located 
     meets the requirement described in subsection (l),
       ``(5) except for bonds issued in accordance with subsection 
     (g)(6), the term of each bond which is part of such issue 
     does not exceed 30 years,
       ``(6) the payment of principal with respect to such bond is 
     the obligation of the Transportation Finance Corporation, and
       ``(7) with respect to bonds described in paragraph (1)(A), 
     the issue meets the requirements of subsection (h) (relating 
     to arbitrage).
       ``(f) Qualified Project.--For purposes of this section--
       ``(1) In general.--The term `qualified project' means any--
       ``(A) qualified highway project, and
       ``(B) qualified public transportation project,

     proposed by 1 or more States and approved by the 
     Transportation Finance Corporation.
       ``(2) Qualified highway project.--
       ``(A) In general.--The term `qualified highway project' 
     means any--
       ``(i) project of regional or national significance,
       ``(ii) multistate corridor program,
       ``(iii) border planning, operations, technology, and 
     capacity improvement program, and
       ``(iv) freight intermodal connector project.
       ``(B) Projects of regional and national significance.--
       ``(i) In general.--The term `project of regional or 
     national significance' means the eligible project costs of 
     any surface transportation project which is eligible for 
     Federal assistance under title 23, United States Code, 
     including any freight rail project and activity eligible 
     under such title, if such eligible project costs are 
     reasonably anticipated to equal or exceed the lesser of--

       ``(I) $100,000,000, or
       ``(II) 50 percent of the amount of Federal highway 
     assistance funds apportioned for the most recently completed 
     fiscal year to the State in which the project is located.

       ``(ii) Eligible project costs.--The term `eligible project 
     costs' means the costs of--

       ``(I) development phase activities, including planning, 
     feasibility analysis, revenue forecasting, environmental 
     review, preliminary engineering and design work, and other 
     preconstruction activities, and
       ``(II) construction, reconstruction, rehabilitation, and 
     acquisition of real property (including land related to the 
     project and improvements to land), environmental mitigation, 
     construction contingencies, acquisition of equipment, and 
     operational improvements.

       ``(iii) Criteria for approval.--The Transportation Finance 
     Corporation may approve a project of regional or national 
     significance only if the Corporation determines that the 
     project is based on the results of preliminary engineering, 
     and is justified based on the project's ability--

       ``(I) to generate national or regional economic benefits, 
     including creating jobs, expanding business opportunities, 
     and impacting the gross domestic product,
       ``(II) to reduce congestion, including impacts in the 
     State, region, and Nation,
       ``(III) to improve transportation safety, including 
     reducing transportation accidents, injuries, and fatalities, 
     and
       ``(IV) to otherwise enhance the national transportation 
     system.

       ``(C) Multistate corridor program.--
       ``(i) In general.--The term `multistate corridor program' 
     means any program for multistate highway and multimodal 
     planning studies and construction.
       ``(ii) Criteria for approval.--The Transportation Finance 
     Corporation shall consider in approving any multistate 
     corridor program--

       ``(I) the existence and significance of signed and binding 
     multijurisdictional agreements,
       ``(II) prospects for early completion of the program, or
       ``(III) whether the projects under such program to be 
     studied or constructed are located on corridors identified by 
     section 1105(c) of the Intermodal Surface Transportation 
     Efficiency Act of 1991 (Public Law 102-240; 105 Stat. 2032).

       ``(D) Border planning, operations, technology, and capacity 
     improvement program.--
       ``(i) In general.--The term `border planning, operations, 
     technology, and capacity improvement program' means any 
     program which includes 1 or more eligible activities to 
     support coordination and improvement in bi-national 
     transportation planning, operations, efficiency, information 
     exchange, safety, and security at the international borders 
     of the United States with Canada and Mexico.
       ``(ii) Eligible activities.--For purposes of this 
     subparagraph, the term `eligible activities' means--

       ``(I) highway and multimodal planning or environmental 
     studies,
       ``(II) cross-border port of entry and safety inspection 
     improvements, including operational enhancements and 
     technology applications,
       ``(III) technology and information exchange activities, and
       ``(IV) right-of-way acquisition, design, and construction, 
     as needed to implement the enhancements or applications 
     described in subclauses (II) and (III), to decrease air 
     pollution emissions from vehicles or inspection facilities at 
     border crossings, or to increase highway capacity at or near 
     international borders.

       ``(E) Freight intermodal connector project.--
       ``(i) In general.--The term `freight intermodal connector 
     project' means any project for the construction of and 
     improvements to publicly owned freight intermodal connectors 
     to the National Highway System, the provision of access to 
     such connectors, and operational improvements for such 
     connectors (including capital investment for intelligent 
     transportation systems), except that a project located within 
     the boundaries of an intermodal freight facility shall only 
     include highway infrastructure modifications necessary to 
     facilitate direct intermodal access between the connector and 
     the facility.
       ``(ii) Criteria for approval.--The Transportation Finance 
     Corporation shall consider in approving any freight 
     intermodal connector project the criteria set forth in the 
     report of the Department of Transportation to Congress 
     entitled `Pulling Together: The NHS and its Connections to 
     Major Intermodal Terminals'.
       ``(iii) Freight intermodal connector.--The term `freight 
     intermodal connector' means the roadway that connects to an 
     intermodal freight facility that carries or will carry 
     intermodal traffic.

[[Page S1645]]

       ``(iv) Intermodal freight facility.--The term `intermodal 
     freight facility' means a port, airport, truck-rail terminal, 
     and pipeline-truck terminal.
       ``(3) Qualified public transportation project.--The term 
     `qualified public transportation project' means a project for 
     public transportation facilities or other facilities which 
     are eligible for assistance under title 49, United States 
     Code, including intercity passenger rail.
       ``(g) Limitation on Amount of Bonds Designated; Allocation 
     of Bond Proceeds.--
       ``(1) National limitation.--There is a Build America bond 
     limitation for each calendar year. Such limitation is--
       ``(A) with respect to bonds described in subsection 
     (e)(1)(A)--
       ``(i) $5,500,000,000 for 2005,
       ``(ii) $8,000,000,000 for 2006,
       ``(iii) $8,000,000,000 for 2007,
       ``(iv) $3,000,000,000 for 2008,
       ``(v) $3,000,000,000 for 2009,
       ``(vi) $2,500,000,000 for 2010, and
       ``(vii) except as provided in paragraph (4), zero 
     thereafter, plus
       ``(B) with respect to bonds described in subsection 
     (e)(1)(B), such amount each calendar year as determined 
     necessary by the Transportation Finance Corporation to 
     provide funds in the Build America Trust Account for the 
     repayment of Build America bonds at maturity, except that the 
     aggregate amount of such bonds for all calendar years shall 
     not exceed $9,000,000,000,000.
       ``(2) Allocation of bonds for highway and public 
     transportation purposes.--Except with respect to qualified 
     projects described in subsection (j)(3), and subject to 
     paragraph (3)--
       ``(A) Qualified highway projects.--From Build America bonds 
     issued under the annual limitation in paragraph (1)(A), the 
     Transportation Finance Corporation shall allocate 80 percent 
     of the net spendable proceeds to the States for qualified 
     highway projects designated by law from recommendations 
     submitted to Congress identifying various projects approved 
     as meeting the criteria required for each such project by the 
     Transportation Finance Corporation.
       ``(B) Qualified public transportation projects.--From Build 
     America bonds issued under the annual limitation in paragraph 
     (1)(A), the Transportation Finance Corporation shall allocate 
     20 percent of the net spendable proceeds to the States for 
     qualified public transportation projects designated by law 
     from recommendations submitted to Congress identifying 
     various projects approved as meeting the criteria required 
     for each such project by the Transportation Finance 
     Corporation.
       ``(3) Minimum allocations to states.--In making allocations 
     for each calendar year under paragraph (2), the 
     Transportation Finance Corporation shall ensure that the 
     amount allocated for qualified projects located in each State 
     for such calendar year is not less than \1/2\ percent of the 
     total amount allocated for such year.
       ``(4) Carryover of unused issuance limitation.--If for any 
     calendar year the limitation amount imposed by paragraph (1) 
     exceeds the amount of Build America bonds issued during such 
     year, such excess shall be carried forward to one or more 
     succeeding calendar years as an addition to the limitation 
     imposed by paragraph (1) and until used by issuance of Build 
     America bonds.
       ``(5) Issuance of small denomination bonds.--From the Build 
     America bond limitation for each year, the Transportation 
     Finance Corporation shall issue a limited quantity of Build 
     America bonds in small denominations suitable for purchase as 
     gifts by individual investors wishing to show their support 
     for investing in America's infrastructure.
       ``(h) Special Rules Relating to Arbitrage.--
       ``(1) In general.--Subject to paragraph (2), an issue shall 
     be treated as meeting the requirements of this subsection if 
     as of the date of issuance, the Transportation Finance 
     Corporation reasonably expects--
       ``(A) to spend at least 85 percent of the net spendable 
     proceeds from the sale of the issue for 1 or more qualified 
     projects within the 5-year period beginning on such date,
       ``(B) to incur a binding commitment with a third party to 
     spend at least 10 percent of the net spendable proceeds from 
     the sale of the issue, or to commence construction, with 
     respect to such projects within the 12-month period beginning 
     on such date, and
       ``(C) to proceed with due diligence to complete such 
     projects and to spend the net spendable proceeds from the 
     sale of the issue.
       ``(2) Spent proceeds.--Net spendable proceeds are 
     considered spent by the Transportation Finance Corporation 
     when a sponsor of a qualified project obtains a reimbursement 
     from the Transportation Finance Corporation for eligible 
     project costs.
       ``(3) Rules regarding continuing compliance after 5-year 
     determination.--If at least 85 percent of the net spendable 
     proceeds from the sale of the issue is not expended for 1 or 
     more qualified projects within the 5-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 the 
     Transportation Finance Corporation uses all unspent net 
     spendable proceeds from the sale of the issue to redeem bonds 
     of the issue within 90 days after the end of such 5-year 
     period.
       ``(4) Reallocation.--In the event the recipient of an 
     allocation under subsection (g) fails to demonstrate to the 
     satisfaction of the Transportation Finance Corporation that 
     its actions will allow the Transportation Finance Corporation 
     to meet the requirements under this subsection, the 
     Transportation Finance Corporation may redistribute the 
     allocation meant for such recipient to other recipients.
       ``(i) Recapture of Portion of Credit Where Cessation of 
     Compliance.--
       ``(1) In general.--If any bond which when issued purported 
     to be a Build America bond ceases to be such a qualified 
     bond, the Transportation Finance 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) Failure to pay.--If the Transportation Finance 
     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) Special rules.--
       ``(A) Tax benefit rule.--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) No credits against tax.--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.
       ``(j) Build America Trust Account.--
       ``(1) In general.--The following amounts shall be held in a 
     Build America Trust Account by the Transportation Finance 
     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) Use of funds.--Amounts in the Build America Trust 
     Account may be used only to pay costs of qualified projects, 
     redeem Build America bonds, and fund the operations of the 
     Transportation Finance Corporation, except that amounts 
     withdrawn from the Build America Trust Account to pay costs 
     of qualified projects may not exceed the aggregate proceeds 
     from the sale of Build America bonds described in subsection 
     (e)(1)(A).
       ``(3) Use of remaining funds in build america trust 
     account.--Upon the redemption of all Build America bonds 
     issued under this section, any remaining amounts in the Build 
     America Trust Account shall be available to the 
     Transportation Finance Corporation to pay the costs of any 
     qualified project.
       ``(4) Costs of qualified projects.--For purposes of this 
     section, the costs of qualified projects which may be funded 
     by amounts in the Build America Trust Account may only relate 
     to capital investments in depreciable assets and may not 
     include any costs relating to operations, maintenance, or 
     rolling stock.
       ``(5) Applicability of federal law.--The requirements of 
     any Federal law, including titles 23, 40, and 49 of the 
     United States Code, which would otherwise apply to projects 
     to which the United States is a party or to funds made 
     available under such law and projects assisted with those 
     funds shall apply to--
       ``(A) funds made available under the Build America Trust 
     Account for similar qualified projects, including 
     contributions required under subsection (k), and
       ``(B) similar qualified projects assisted by the 
     Transportation Finance Corporation through the use of such 
     funds.
       ``(6) Investment.--It shall be the duty of the 
     Transportation Finance Corporation to invest in investment 
     grade obligations such portion of the Build America Trust 
     Account as is not, in the judgment of the Board of Directors 
     of the Transportation Finance Corporation, required to meet 
     current withdrawals. To the maximum extent practicable, 
     investments should be made in securities that support 
     transportation investment at the State and local level.
       ``(k) State Contribution Requirements.--
       ``(1) In general.--For purposes of subsection (e)(3), the 
     State contribution requirement of this subsection is met with 
     respect to any qualified project if the Transportation 
     Finance Corporation has received from 1 or more States, not 
     later than the

[[Page S1646]]

     date of issuance of the bond, written commitments for 
     matching contributions of not less than 20 percent (or such 
     smaller percentage as determined under title 23, United 
     States Code, for such State) of the cost of the qualified 
     project.
       ``(2) State matching contributions may not include federal 
     funds.--For purposes of this subsection, State matching 
     contributions shall not be derived, directly or indirectly, 
     from Federal funds, including any transfers from the Highway 
     Trust Fund under section 9503.
       ``(l) Utilization of Updated Construction Technology for 
     Qualified Projects.--For purposes of subsection (e)(4), the 
     requirement of this subsection is met if the appropriate 
     State agency relating to the qualified project has updated 
     its accepted construction technologies to match a list 
     prescribed by the Secretary of Transportation and in effect 
     on the date of the approval of the project as a qualified 
     project.
       ``(m) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Administrative costs.--The term `administrative 
     costs' shall only include costs of issuance of Build America 
     bonds and operation costs of the Transportation Corporation.
       ``(2) Bond.--The term `bond' includes any obligation.
       ``(3) Net spendable proceeds.--The term `net spendable 
     proceeds' means the proceeds from the sale of any Build 
     America bond issued under this section reduced by not more 
     than 5 percent of such proceeds for administrative costs.
       ``(4) State.--The term `State' shall have the meaning given 
     such term by section 101 of title 23, United States Code.
       ``(5) Treatment of changes in use.--For purposes of 
     subsection (e)(1)(A), the net spendable proceeds from the 
     sale of an issue shall not be treated as used for a qualified 
     project to the extent that the Transportation Finance 
     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 which 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 Build America bond.
       ``(6) 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).
       ``(7) Bonds held by regulated investment companies.--If any 
     Build America 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.
       ``(8) Credits may be stripped.--Under regulations 
     prescribed by the Secretary--
       ``(A) In general.--There may be a separation (including at 
     issuance) of the ownership of a Build America 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) Certain rules to apply.--In the case of a separation 
     described in subparagraph (A), the rules of section 1286 
     shall apply to the Build America bond as if it were a 
     stripped bond and to the credit under this section as if it 
     were a stripped coupon.
       ``(9) Credits may be transferred.--Nothing in any law or 
     rule of law shall be construed to limit the transferability 
     of the credit or bond allowed by this section through sale 
     and repurchase agreements.
       ``(10) Reporting.--The Transportation Finance Corporation 
     shall submit reports similar to the reports required under 
     section 149(e).
       ``(11) Prohibition on use of highway trust fund.--
     Notwithstanding any other provision of law, no funds derived 
     from the Highway Trust Fund established under section 9503 
     shall be used to pay costs associated with the Build America 
     bonds issued under this section.''.
       (b) Amendments to Other Code Sections.--
       (1) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(8) Reporting of credit on build america bonds.--
       ``(A) In general.--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) Regulatory authority.--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) Individual.--Section 6654 (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 Build America Bonds.--For 
     purposes of this section, the credit allowed by section 54 to 
     a taxpayer by reason of holding a Build America 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) Corporate.--Subsection (g) of section 6655 (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 build america bonds.--For 
     purposes of this section, the credit allowed by section 54 to 
     a taxpayer by reason of holding a Build America 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) Clerical Amendments.--
       (1) The table of subparts for part IV of subchapter A of 
     chapter 1 is amended by adding at the end the following new 
     item:


    ``Subpart H. Nonrefundable Credit for Holders of Build America 
                               Bonds.''.

       (2) Section 6401(b)(1) is amended by striking ``and G'' and 
     inserting ``G, and H''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

     SEC. 4. TRANSPORTATION FINANCE CORPORATION.

       (a) Establishment and Status.--There is established a body 
     corporate to be known as the ``Transportation Finance 
     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) Functions of Corporation.--The Corporation shall--
       (1) issue Build America bonds for the financing of 
     qualified projects as required under section 54 of the 
     Internal Revenue Code of 1986,
       (2) establish and operate the Build America Trust Account 
     as required under section 54(j) of such Code,
       (3) act as a centralized entity to provide financing for 
     qualified projects,
       (4) leverage resources and stimulate public and private 
     investment in transportation infrastructure,
       (5) encourage States to create additional opportunities for 
     the financing of transportation infrastructure and to provide 
     technical assistance to States, if needed,
       (6) perform any other function the sole purpose of which is 
     to carry out the financing of qualified projects through 
     Build America bonds, and
       (7) 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 Build America Trust Account are 
     sufficient to fully repay at maturity the principal of any 
     outstanding Build America bonds issued pursuant to such 
     section 54.
       (d) Powers of Corporation.--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 Act, and
       (9) shall have such other powers as may be necessary and 
     incident to carrying out this Act.
       (e) Nonprofit Entity; Restriction on Use of Moneys; 
     Conflict of Interests; Audits.--
       (1) Nonprofit entity.--The Corporation shall be a nonprofit 
     corporation and shall have no capital stock.
       (2) Restriction.--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

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     revenue, earnings, or other income or property shall only be 
     used for carrying out the purposes of this Act.
       (3) Conflict of interests.--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) Audits.--
       (A) Audits by independent certified public accountants.--
       (i) In general.--The Corporation's financial statements 
     shall be audited annually in accordance with generally 
     accepted auditing standards by independent certified public 
     accountants that are certified by a regulatory authority of a 
     State or other political subdivision of the United States. 
     The audits shall be conducted at the place or places where 
     the accounts of the Corporation are normally kept. All books, 
     accounts, financial records, reports, files, and all other 
     papers, things, or property belonging to or in use by the 
     Corporation and necessary to facilitate the audit shall be 
     made available to the person or persons conducting the 
     audits, and full facilities for verifying transactions with 
     the balances or securities held by depositories, fiscal 
     agents, and custodians shall be afforded to such person or 
     persons.
       (ii) Reporting requirements.--The report of each annual 
     audit described in clause (i) shall be included in the annual 
     report required by subsection (c)(8).
       (B) Record keeping requirements.--The Corporation shall 
     ensure that each recipient of assistance from the Corporation 
     keeps--
       (i) separate accounts with respect to such assistance,
       (ii) such records as may be reasonably necessary to fully 
     disclose--

       (I) the amount and the disposition by such recipient of the 
     proceeds of such assistance,
       (II) the total cost of the project or undertaking in 
     connection with which such assistance is given or used, and 
     the extent to which such costs are for a qualified project, 
     and
       (III) the amount and nature of that portion of the cost of 
     the project or undertaking supplied by other sources, and

       (iii) such other records as will facilitate an effective 
     audit.
       (C) Audit and examination of books.--The Corporation shall 
     ensure that the Corporation, or any of the Corporation's duly 
     authorized representatives, shall have access for the purpose 
     of audit and examination to any books, documents, papers, and 
     records of any recipient of assistance from the Corporation 
     that are pertinent to such assistance.
       (f) Exemption From Taxes.--
       (1) In general.--The Corporation, including its franchise, 
     capital, reserves, surplus, sinking funds, mortgages or other 
     security holdings, and income, shall be exempt from all 
     taxation now or hereafter imposed by the United States, by 
     any territory, dependency, or possession thereof, or by any 
     State, county, municipality, or local taxing authority, 
     except that any real property of the Corporation shall be 
     subject to State, territorial, county, municipal, or local 
     taxation to the same extent according to its value as other 
     real property is taxed.
       (2) Financial obligations.--Build America bonds or other 
     obligations issued by the Corporation and the interest on or 
     tax credits with respect to its bonds or other obligations 
     shall not be subject to taxation by any State, county, 
     municipality, or local taxing authority.
       (g) Assistance for Transportation Purposes.--
       (1) In general.--In order to carry out the corporate 
     functions described in subsection (c), the Corporation shall 
     be eligible to receive discretionary grants, contracts, 
     gifts, contributions, or technical assistance from any 
     Federal department or agency, to the extent permitted by law.
       (2) Agreement.--In order to receive any assistance 
     described in this subsection, the Corporation shall enter 
     into an agreement with the Federal department or agency 
     providing such assistance, under which the Corporation 
     agrees--
       (A) to use such assistance to provide funding and technical 
     assistance only for activities which the Board of Directors 
     of the Corporation determines are consistent with the 
     corporate functions described in subsection (c), and
       (B) to review the activities of State transportation 
     agencies and other entities receiving assistance from the 
     Corporation to assure that the corporate functions described 
     in subsection (c) are carried out.
       (3) Construction.--Nothing in this section shall be 
     construed to establish the Corporation as a department, 
     agency, or instrumentality of the United States Government, 
     or to establish the members of the Board of Directors of the 
     Corporation, or the officers and employees of the 
     Corporation, as officers or employees of the United States 
     Government.
       (h) Management of Corporation.--
       (1) Board of directors; membership; designation of 
     chairperson and vice chairperson; appointment considerations; 
     term; vacancies.--
       (A) Board of directors.--The management of the Corporation 
     shall be vested in a board of directors composed of 15 
     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.--Eleven members of the 
     Board shall be appointed from private life.
       (D) Federal officers and employees.--Four members of the 
     Board shall be appointed from among officers and employees of 
     agencies of the United States concerned with infrastructure 
     development.
       (E) Appointment considerations.--All members of the Board 
     shall be appointed on the basis of their understanding of and 
     sensitivity to infrastructure development processes. Members 
     of the Board shall be appointed so that not more than 8 
     members of the Board are members of any 1 political party.
       (F) Terms.--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, 5 shall be appointed for terms of 1 year and 5 
     shall be appointed for terms of 2 years.
       (G) Vacancies.--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) Quorum.--A majority of the Board shall constitute a 
     quorum.
       (4) President of corporation.--The Board of Directors shall 
     appoint a president of the Corporation on such terms as the 
     Board may determine.
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