119-hr2440

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2440 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 2440

 To amend the Internal Revenue Code of 1986 to provide for school 
 infrastructure finance and innovation tax credit bonds.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 March 27, 2025

Mr. Hudson (for himself and Ms. Sewell) introduced the following bill; 
 which was referred to the Committee on Ways and Means

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to provide for school 
 infrastructure finance and innovation tax credit bonds.

 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 Infrastructure Finance and 
Innovation Act'' or the ``SIFIA Act''.

SEC. 2. SIFIA BONDS.

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

 ``Subpart K--SIFIA Bonds

``

Sec. 54BB. SIFIA bonds.

``

SEC. 54BB. SIFIA BONDS.

 ``

    (a) In General.--If a taxpayer holds a SIFIA bond on one or more 
credit allowance dates of the bond during any taxable year, there shall 
be allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to the sum of the credits determined under 
subsection

    (b) with respect to such dates.
 ``

    (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 SIFIA bond is 25 percent of the annual credit determined 
 for such bond.
 ``

    (2) Annual credit.--For purposes of this subsection, the 
 term `annual credit' means an amount equal to the product of--
 ``
        (A) the applicable credit rate, multiplied by
 ``
        (B) the face amount of the bond.
 ``

    (3) Applicable credit rate.--For purposes of paragraph

    (2) , the term `applicable credit rate' means the rate which the 
 Secretary estimates will permit the issuance of each such bond 
 with a specified maturity or redemption date without discount 
 and without interest cost to the issuer. The applicable credit 
 rate with respect to any such bond shall be determined as of 
 the first day on which there is a binding, written contract for 
 the sale or exchange of the bond.
 ``
            (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 subpart C and this subpart).
 ``

    (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 
 (determined before the application of paragraph

    (1) for such 
 succeeding taxable year).
 ``
            (d) Credit Allowance Date.--For purposes of this section, the 
term `credit allowance date' means, with respect to a bond during the 
taxable year, any of the following dates:
 ``

    (1) March 15.
 ``

    (2) June 15.
 ``

    (3) September 15.
 ``

    (4) December 15.
Such term includes the last day on which the bond is outstanding.
 ``

    (e) SIFIA Bonds.--
 ``

    (1) In general.--For purposes of this section, the term 
 `SIFIA bond' means any bond issued as part of an issue if--
 ``
        (A) 100 percent of the available project proceeds 
 of such issue are to be used for the design, 
 construction, expansion, renovation, furnishing, or 
 equipping of qualified school facilities (as defined in 
 paragraph

    (7)
        (A) of this subsection) pursuant to an 
 agreement under which a private, for-profit entity 
 agrees with a State or local educational agency--
 ``
            (i) to construct, expand, or renovate one 
 or more buildings constituting the qualified 
 school facilities (together with any related 
 design, furnishing, and equipping of such 
 buildings),
 ``
            (ii) to operate the facilities at least 
 until the date the facilities are first placed 
 in service and operating substantially at their 
 design level, and
 ``
            (iii) at or before the end of the 
 agreement, to transfer the facilities to such 
 agency for no additional consideration,
 ``
        (B) all buildings whose construction, expansion, 
 or renovations is included in the qualified school 
 facilities being financed with proceeds of a SIFIA bond 
 are reasonably expected to be net-zero energy 
 buildings,
 ``
            (C) the interest on such bond would (but for this 
 section and 

section 141) be excludable from gross 
 income under 

section 103,
 ``
            (D) the issuer designates such bond as a SIFIA 
 bond for purposes of this subsection,
 ``
        (E) the bond is not issued with more than a de 
 minimis amount of premium (determined under rules 
 similar to the rules of 

section 1273

    (a)

    (3) ) over the 
 stated principal amount of the bond,
 ``
        (F) the issue of which such bond is a part 
 satisfies the expenditure period requirements of 
 paragraph

    (2) ,
 ``
        (G) the private, for-profit entity described in 
 subparagraph
        (A) meets the allocation requirements of 
 paragraph

    (5) and the reporting requirements of 
 paragraph

    (6) , and
 ``
        (H) the bond is issued before January 1, 2031.
 ``

    (2) 6-year expenditure period.--
 ``
        (A) In general.--An issue shall be treated as 
 meeting the requirements of this paragraph if, as of 
 the date of issuance, the issuer reasonably expects 100 
 percent of the available project proceeds to be spent 
 for purposes described in subparagraphs

    (1)
        (A) and

    (1)
        (B) within the 6-year period beginning on such date 
 of issuance.
 ``
        (B) Failure to spend required amount of bond 
 proceeds within 6 years.--To the extent that less than 
 100 percent of the available project proceeds of the 
 issue are expended at the close of the period described 
 in subparagraph
        (A) with respect to such issue, the 
 issuer shall redeem all of the nonqualified bonds 
 within 90 days after the end of such period. For 
 purposes of this paragraph, the amount of the 
 nonqualified bonds required to be redeemed shall be 
 determined in the same manner as under 

section 141.
 ``

    (3) Limitation on amount of sifia bonds designated.--
 ``
        (A) Overall limitation.--The maximum aggregate 
 face amount of SIFIA bonds issued under this subsection 
 that may be designated under subparagraph

    (1)
            (D) is 
 $10,000,000,000.
 ``
        (B) Annual limitation.--The maximum aggregate 
 face amount of SIFIA bonds issued under this subsection 
 that may be designated under subparagraph

    (1)
            (D) in any 
 calendar year is $2,500,000,000.
 ``
            (C) Set-aside for rural areas.--
 ``
            (i) $1,000,000,000 of the overall 
 limitation described in subparagraph
        (A) shall 
 be set aside for projects located in rural 
 areas.
 ``
            (ii) For purposes of this section, the 
 term `rural area' means any area which is--
 ``
            (I) outside of a metropolitan 
 statistical area (as such area is 
 defined by the Secretary of Commerce) 
 or
 ``
            (II) determined by the Secretary 
 of Agriculture, after consultation with 
 the Secretary of Commerce, to be a 
 rural area.
 ``

    (4) Allocation of limitation.--The authority to issue 
 SIFIA bonds within the limitations set forth in paragraph

    (3) shall be allocated by the Secretary to prospective issuers on a 
 first come-first served basis, under rules to be prescribed by 
 the Secretary, provided that--
 ``
        (A) no school district shall be allocated more 
 than $1,500,000,000 in aggregate face amount of SIFIA 
 bonds under this subsection,
 ``
        (B) no more than $500,000,000 in aggregate face 
 amount of SIFIA bonds shall be allocated under this 
 subsection for the construction, expansion, renovation, 
 furnishing, or equipping of qualified school facilities 
 that are operated by a nonprofit organization under a 
 charter or other agreement between the applicable 
 school district and such nonprofit organization,
 ``
            (C) an issuer applying for an allocation shall 
 certify (based on the certifications of any conduit 
 borrower of bond proceeds where applicable) that it 
 reasonably expects to commence the project to be 
 financed with proceeds of the bonds within 6 months of 
 the issue date of the bonds, and to expend all of the 
 available project proceeds within 6 years of the issue 
 date of the bonds, and
 ``
            (D) in making such allocations, the Secretary 
 shall give preference to the financing of projects for 
 which the private for-profit developer is a preferred 
 concern.
 ``

    (5) Requirements relating to private, for-profit 
 entities.--A private, for-profit entity meets the requirements 
 of this paragraph if such entity--
 ``
        (A) has experience developing, owning, and 
 operating public schools leased to public school 
 districts that are net-zero buildings, and
 ``
        (B) demonstrates to the Secretary (in such manner 
 as the Secretary may provide) that such entity has 
 experience leasing public school buildings to a local 
 education agency, including at least two projects with 
 respect to which--
 ``
            (i) such entity (or a related person) 
 developed, owned, and was responsible for--
 ``
            (I) maintenance of--
 ``

    (aa) the heating, 
 ventilation, and air 
 conditioning system, or
 ``

    (bb) the solar 
 photovoltaic system, and
 ``
            (ii) the electrical service was in the 
 name of such entity for a minimum of four 
 years.
 ``

    (6) Reporting requirements.--A private entity meets the 
 requirements of this paragraph if such entity, in cooperation 
 with the applicable school district, periodically submits such 
 reports as the Secretary shall prescribe relating to the costs 
 and benefits of the financing, including--
 ``
        (A) tax benefits to the Federal Government and 
 cost savings to the school district, and
 ``
        (B) information related to any improvements in 
 student performance or teacher retention.
 ``

    (7) === Definitions. ===
-For purposes of this subsection--
 ``
        (A) Qualified school facilities.--The term 
 `qualified school facilities' means one or more school 
 buildings for a public elementary school or public 
 secondary school or for administrative or support 
 facilities relating to such school facilities, together 
 with related furnishings and equipment.
 ``
        (B) School district.--The term `school district' 
 means a public board of education or other public 
 authority legally constituted within a State for 
 administrative control or direction of public 
 elementary or secondary schools in the State or 
 political subdivision of a State.
 ``
            (C) Preferred concern.--The term `preferred 
 concern' means either a small business concern, a 
 minority owned concern, or a woman owned concern.
 ``
            (D) Small business concern.--
 ``
            (i) In general.--Subject to the 
 provisions of clause
            (ii) , the term `small 
 business concern' means an entity which, 
 together with any related person, has fewer 
 than 500 employees.
 ``
            (ii) Small business size standards.--For 
 purposes of clause
            (i) , the determination of 
 number of employees shall be made in a manner 
 consistent with--
 ``
            (I) section 3 of the Small 
 Business Act (15 U.S.C. 632), and
 ``
            (II) part 121 of title 13, Code 
 of Federal Regulations.
 ``
        (E) Minority owned.--The term `minority owned' 
 with respect to an entity means an entity not less than 
 51 percent of which is owned by 1 or more individuals 
 who are citizens of the United States and who are Asian 
 American, Native Hawaiian, Pacific Islander, African 
 American, Hispanic, Puerto Rican, Native American, or 
 Alaska Native.
 ``
        (F) Woman owned.--The term `woman owned' with 
 respect to an entity means an entity not less than 51 
 percent of which is owned by 1 or more women.
 ``
        (G) Nonprofit organization.--The term `nonprofit 
 organization' means an organization described in 
 

section 501
            (c) and exempt from tax under 

section 501

    (a) .
 ``
        (H) Net-zero energy building.--The term `net-zero 
 building' has the meaning given such term under 

section 410

    (20) of the Energy Independence and Security Act of 
 2007 (42 U.S.C. 17061

    (20) ), applied by substituting 
 `school building' for `commercial building'.
 ``
            (I) Related person.--The term `related person' 
 has the meaning given such term in 

section 144

    (a)

    (3) .
 ``

    (f) Other Applicable Rules.--
 ``

    (1) Interest includible in gross income.--For purposes of 
 this title, interest on any SIFIA bond shall be includible in 
 gross income.
 ``

    (2) Credit treated as interest.--For purposes of this 
 subtitle, the credit determined under subsection

    (a) shall be 
 treated as interest which is includible in gross income.
 ``

    (3) S corporations and partnerships.--In the case of a 
 tax credit bond held by an S corporation or partnership, the 
 allocation of credit allowed by this section to the 
 shareholders of such corporation or partners of such 
 partnership shall be treated as a distribution.
 ``

    (4) Bonds held by real estate investment trusts.--If any 
 qualified tax credit bond is held by a real estate investment 
 trust the credit determined under subsection

    (a) shall be 
 allowed to beneficiaries of such trust (and any gross income 
 included under paragraph

    (2) with respect to such credit shall 
 be distributed to such beneficiaries) under procedures 
 prescribed by the Secretary (similar to the procedures 
 prescribed by the Secretary under 

section 54A

    (h) (as in effect 
 before its repeal by Public Law 115-97)).
 ``

    (5) Credits may be stripped.--Under regulations 
 prescribed by the Secretary (similar to regulations prescribed 
 under 

section 54A
            (i) (as in effect before its repeal by Public 
 Law 115-97)--
 ``
        (A) In general.--There may be a separation 
 (including at issuance) of the ownership of a qualified 
 tax credit 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 qualified tax credit 
 bond as if it were a stripped bond and to the credit 
 under this section as if it were a stripped coupon.
 ``

    (6) Not treated as federally guaranteed.--For purposes of 
 

section 149

    (b) , a SIFIA bond shall not be treated as federally 
 guaranteed by reason of the credit allowed under subsection

    (g) .
 ``

    (7) Yield determination.--For purposes of 

section 148, 
 the yield on a SIFIA bond shall be determined without regard to 
 the credit allowed under subsection

    (a) .
 ``

    (8) Maturity limitation.--
 ``
        (A) In general.--An issue shall be treated as 
 meeting the requirements of this section if the 
 maturity of any bond which is part of such issue does 
 not exceed the maximum term determined by the Secretary 
 under subparagraph
        (B) .
 ``
        (B) Maximum term.--During each calendar month, 
 the Secretary shall determine the maximum term 
 permitted under this paragraph for bonds issued during 
 the following calendar month. Such maximum term shall 
 be the term which the Secretary estimates will result 
 in the present value of the obligation to repay the 
 principal on the bond being equal to 20 percent of the 
 face amount of such bond. Such present value shall be 
 determined using as a discount rate the average annual 
 interest rate of tax-exempt obligations having a term 
 of 10 years or more which are issued during the month. 
 If the term as so determined is not a multiple of a 
 whole year, such term shall be rounded to the next 
 highest whole year.
 ``

    (9) Depreciation.--If the school facilities financed with 
 proceeds of SIFIA bonds are owned by a person otherwise 
 entitled to allowance for depreciation with respect to such 
 facility, that person may make an irrevocable election (binding 
 on any successors in interest) not to claim depreciation with 
 respect to the property financed with proceeds of the SIFIA 
 bonds for so long as the issue of which such bonds are a part 
 is outstanding. Such election shall be deemed to have been made 
 if the person fails to claim depreciation with respect to the 
 property in the first tax return filed by the person in which 
 such depreciation could have been claimed. To the extent the 
 person elects not to claim depreciation under this paragraph, 
 the basis of the financed property shall not be reduced under 
 

section 1016 or otherwise for the depreciation that could have 
 been claimed.''.

    (b) Treatment of Interest as Unrelated Business Taxable Income.--

Section 512

    (b)

    (1) of such Code is amended by inserting ``(other than 
interest of SIFIA bonds issued under 

section 54BB)'' after 
``interest''.
            (c) Clerical Amendments.--The table of subparts for part IV of 
subchapter A of chapter 1 is amended by adding at the end the 
following:

 ``subpart k--sifia bonds''.
            (d) Direct Purchases of SIFIA Bonds.--The Secretary shall purchase 
SIFIA bonds that the issuer is otherwise unable to sell, subject to 
procedures and credit standards to be established by the Secretary, 
which standards and procedures shall be similar to those applicable to 
loans made under lines of credit under 

section 1503 of the 
Transportation Infrastructure Finance and Innovation Act of 1998 (23 
U.S.C. 184).

    (e) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2025.
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