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Billno should always have and extension i.e. h1.ih

S 1472 IS

To amend the Internal Revenue Code of 1986 to provide a tax credit for public elementary and secondary school construction, and for other purposes.

November 8, 1997

Ms. MOSELEY-BRAUN (for herself and Mr. KENNEDY) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to provide a tax credit for public elementary and secondary school construction, 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 `School Repair and Construction Act of 1997'.

SEC. 2. PURPOSE.

It is the purpose of this Act to help school districts to improve their crumbling and overcrowded school facilities through the use of Federal tax credits.

SEC. 3. TAX CREDIT FOR PUBLIC ELEMENTARY AND SECONDARY SCHOOL CONSTRUCTION.

(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to general business credits) is amended by adding at the end the following new section:

`SEC. 45D. CREDIT FOR PUBLIC ELEMENTARY AND SECONDARY SCHOOL CONSTRUCTION.

`(a) IN GENERAL- For purposes of section 38, the amount of the school construction credit determined under this section for an eligible taxpayer for any taxable year with respect to an eligible school construction project shall be an amount equal to the lesser of--

`(1) the applicable percentage of the qualified school construction costs, or

`(2) the excess (if any) of--

`(A) the taxpayer's allocable school construction amount with respect to such project under subsection (d), over

`(B) any portion of such allocable amount used under this section for preceding taxable years.

`(b) ELIGIBLE TAXPAYER; ELIGIBLE SCHOOL CONSTRUCTION PROJECT- For purposes of this section--

`(1) ELIGIBLE TAXPAYER- The term `eligible taxpayer' means any person which--

`(A) has entered into a contract with a local educational agency for the performance of construction or related activities in connection with an eligible school construction project, and

`(B) has received an allocable school construction amount with respect to such contract under subsection (d).

`(2) ELIGIBLE SCHOOL CONSTRUCTION PROJECT-

`(A) IN GENERAL- The term `eligible school construction project' means any project related to a public elementary school or secondary school that is conducted for 1 or more of the following purposes:

`(i) Construction of school facilities in order to ensure the health and safety of all students, which may include--

`(I) the removal of environmental hazards,

`(II) improvements in air quality, plumbing, lighting, heating and air conditioning, electrical systems, or basic school infrastructure, and

`(III) building improvements that increase school safety.

`(ii) Construction activities needed to meet the requirements of section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) or of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.).

`(iii) Construction activities that increase the energy efficiency of school facilities.

`(iv) Construction that facilitates the use of modern educational technologies.

`(v) Construction of new school facilities that are needed to accommodate growth in school enrollments.

`(vi) Such other construction as the Secretary of Education determines appropriate.

`(B) SPECIAL RULES- For purposes of this paragraph--

`(i) the term `construction' includes reconstruction, renovation, or other substantial rehabilitation, and

`(ii) an eligible school construction project shall not include the costs of acquiring land (or any costs related to such acquisition).

`(c) QUALIFIED SCHOOL CONSTRUCTION COSTS; APPLICABLE PERCENTAGE- For purposes of this section--

`(1) IN GENERAL- The term `qualified school construction costs' means the aggregate amounts paid to an eligible taxpayer during the taxable year under the contract described in subsection (b)(1).

`(2) APPLICABLE PERCENTAGE- The term `applicable percentage' means, in the case of an eligible school construction project related to a local educational agency, the higher of the following percentages:

`(A) If the local educational agency has a percentage or number of children described in clause (i)(I) or (ii)(I) of section 1125(c)(2)(A) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6335(c)(2)(A)), the applicable percentage is 10 percent.

`(B) If the local educational agency has a percentage or number of children described in clause (i)(II) or (ii)(II) of such section, the applicable percentage is 15 percent.

`(C) If the local educational agency has a percentage or number of children described in clause (i)(III) or (ii)(III) of such section, the applicable percentage is 20 percent.

`(D) If the local educational agency has a percentage or number of children described in clause (i)(IV) or (ii)(IV) of such section, the applicable percentage is 25 percent.

`(E) If the local educational agency has a percentage or number of children described in clause (i)(V) or (ii)(V) of such section, the applicable percentage is 30 percent.

`(d) ALLOCABLE AMOUNT- For purposes of this section--

`(1) IN GENERAL- Subject to paragraph (3), a local educational agency may allocate to any person a school construction amount with respect to any eligible school construction project.

`(2) TIME FOR MAKING ALLOCATION- An allocation shall be taken into account under paragraph (1) only if the allocation is made at the time the contract described in subsection (b)(1) is entered into (or such later time as the Secretary may by regulation allow).

`(3) COORDINATION WITH STATE PROGRAM- A local educational agency may not allocate school construction amounts for any calendar year--

`(A) which in the aggregate exceed the amount of the State school construction ceiling allocated to such agency for such calendar year under subsection (e), or

`(B) if such allocation is inconsistent with any specific allocation required by the State or this section.

`(e) STATE CEILINGS AND ALLOCATION-

`(1) IN GENERAL- A State educational agency shall allocate to local educational agencies within the State for any calendar year a portion of the State school construction ceiling for such year. Such allocations shall be consistent with the State application which has been approved under subsection (f) and with any requirement of this section.

`(2) STATE SCHOOL CONSTRUCTION CEILING-

`(A) IN GENERAL- The State school construction ceiling for any State for any calendar year shall be an amount equal to the State's allocable share of the national school construction amount.

`(B) STATE'S ALLOCABLE SHARE- The State's allocable share of the national school construction amount for a fiscal year shall bear the same relation to the national school construction amount for the fiscal year as the amount the State received under section 1124 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6333) for the preceding fiscal year bears to the total amount received by all States under such section for such preceding fiscal year.

`(C) NATIONAL SCHOOL CONSTRUCTION AMOUNT- The national school construction amount for any calendar year is the lesser of--

`(i) $1,000,000,000, or

`(ii) the amount made available for such year under the School Infrastructure Improvement Trust Fund established under section 9512,

reduced by any amount described in paragraph (3).

`(3) SPECIAL ALLOCATIONS FOR INDIAN TRIBES AND TERRITORIES-

`(A) ALLOCATION TO INDIAN TRIBES- The national school construction amount under paragraph (2)(C) shall be reduced by 1.5 percent for each calendar year and the Secretary of Interior shall allocate such amount among Indian tribes according to their respective need for assistance under this section.

`(B) ALLOCATION TO TERRITORIES- The national school construction amount under paragraph (2)(C) shall be reduced by 0.5 percent for each calendar year and the Secretary of Education shall allocate such amount among the territories according to their respective need for assistance under this section.

`(4) REALLOCATION- If the Secretary of Education determines that a State is not making satisfactory progress in carrying out the State's plan for the use of funds allocated to the State under this section, the Secretary may reallocate all or part of the State school construction ceiling to 1 or more other States that are making satisfactory progress.

`(e) STATE APPLICATION-

`(1) IN GENERAL- A State educational agency shall not be eligible to allocate any amount to a local educational agency for any calendar year unless the agency submits to the Secretary of Education (and the Secretary approves) an application containing such information as the Secretary may require, including--

`(A) an estimate of the overall condition of school facilities in the State, including the projected cost of upgrading schools to adequate condition;

`(B) an estimate of the capacity of the schools in the State to house projected student enrollments, including the projected cost of expanding school capacity to meet rising student enrollment;

`(C) the extent to which the schools in the State have the basic infrastructure elements necessary to incorporate modern technology into their classrooms, including the projected cost of upgrading school infrastructure to enable the use of modern technology in classrooms;

`(D) the extent to which the schools in the State offer the physical infrastructure needed to provide a high-quality education to all students; and

`(E) an identification of the State agency that will allocate credit amounts to local educational agencies within the State.

`(2) SPECIFIC ITEMS IN ALLOCATION- The State shall include in the State's application the process by which the State will allocate the credits to local educational agencies within the State. The State shall consider in its allocation process the extent to which--

`(A) the school district served by the local educational agency has--

`(i) a high number or percentage of the total number of children aged 5 to 17, inclusive, in the State who are counted under section 1124(c) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6333(c)); or

`(ii) a high percentage of the total number of low-income residents in the State;

`(B) the local educational agency lacks the fiscal capacity, including the ability to raise funds through the full use of such agency's bonding capacity and otherwise, to undertake the eligible school construction project without assistance;

`(C) the local area makes an unusually high local tax effort, or has a history of failed attempts to pass bond referenda;

`(D) the local area contains a significant percentage of federally owned land that is not subject to local taxation;

`(E) the threat the condition of the physical facility poses to the safety and well-being of students;

`(F) there is a demonstrated need for the construction, reconstruction, renovation, or rehabilitation based on the condition of the facility;

`(G) the extent to which the facility is overcrowded; and

`(H) the extent to which assistance provided will be used to support eligible school construction projects that would not otherwise be possible to undertake.

`(3) IDENTIFICATION OF AREAS- The State shall include in the State's application the process by which the State will identify the areas of greatest needs (whether those areas are in large urban centers, pockets of rural poverty, fast-growing suburbs, or elsewhere) and how the State intends to meet the needs of those areas.

`(4) ALLOCATIONS ON BASIS OF APPLICATION- The Secretary of Education shall evaluate applications submitted under this subsection and shall approve any such application which meets the requirements of this section.

`(g) REQUIRED ALLOCATIONS- Notwithstanding any process for allocation under a State application under subsection (f), in the case of a State which contains 1 or more of the 100 school districts within the United States which contains the largest number of poor children (as determined by the Secretary of Education), the State shall allocate each calendar year to the local educational agency serving such districts that portion of the State school construction ceiling which bears the same ratio to such ceiling as the number of children in such district for the preceding calendar year who are counted for purposes of section 1124(c) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6333(c)) bears to the total number of children in such State who are so counted.

`(h) DEFINITIONS- For purposes of this section--

`(1) ELEMENTARY SCHOOL; LOCAL EDUCATIONAL AGENCY; SECONDARY SCHOOL; STATE EDUCATIONAL AGENCY- The terms `elementary school', `local educational agency', `secondary school', and `State educational agency' have the meanings given the terms in section 14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801).

`(2) TERRITORIES- The term `territories' means the United States Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.

`(3) STATE- The term `State' means each of the several States of the United States, the District of Columbia, and the Commonwealth of Puerto Rico.'

(b) INCLUSION IN GENERAL BUSINESS CREDIT-

(1) IN GENERAL- Section 38(b) of the Internal Revenue Code of 1986 is amended by striking `plus' at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting `, plus', and by adding at the end the following new paragraph:

`(13) the school construction credit determined under section 45D(a).'

(2) TRANSITION RULE- Section 39(d) of such Code is amended by adding at the end the following new paragraph:

`(8) NO CARRYBACK OF SECTION 45D CREDIT BEFORE ENACTMENT- No portion of the unused business credit for any taxable year which is attributable to the school construction credit determined under section 45D may be carried back to a taxable year ending before the date of the enactment of section 45D.'

(c) ESTABLISHMENT OF SCHOOL INFRASTRUCTURE IMPROVEMENT TRUST FUND-

(1) IN GENERAL- Subchapter A of chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

`SEC. 9512. SCHOOL INFRASTRUCTURE IMPROVEMENT TRUST FUND.

`(a) CREATION OF TRUST FUND- There is established in the Treasury of the United States a trust fund to be known as the `School Infrastructure Improvement Trust Fund', consisting of such amounts as may be credited or paid to such Trust Fund as provided in this section or section 9602(b).

`(b) TRANSFERS TO TRUST FUND-

`(1) IN GENERAL- There are hereby appropriated to the Trust Fund for any calendar year an amount equal to the lesser of--

`(A) the revenue surplus determined under paragraph (2) for the preceding calendar year, or

`(B) $1,000,000,000.

`(2) REVENUE SURPLUS- The revenue surplus determined under this paragraph for any calendar year is an amount equal to the excess (if any) of--

`(A) the Secretary's estimate of revenues received in the Treasury of the United States for the calendar year, over

`(B) the amount the Director of the Congressional Budget Office estimated would be so received in the report provided to the Committees on the Budget of the House and the Senate pursuant to section 202(f)(1) of the Congressional Budget Act of 1974.

`(c) EXPENDITURES FROM TRUST FUND- Amounts in the Trust Fund shall be transferred to the general fund of the Treasury at such times as the Secretary determines appropriate to offset any decrease in Federal revenues by reason of credits allowed under section 38 which are attributable to the school construction credit determined under section 45D.'

(2) CONFORMING AMENDMENT- The table of section for subchapter A of chapter 98 of such Code is amended by adding at the end the following new item:

`Sec. 9512. School Infrastructure Improvement Trust Fund.

(d) CONFORMING AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

`Sec. 45D. Credit for public elementary and secondary school construction.'

(e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1997.

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