[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1558 Introduced in Senate (IS)]
106th CONGRESS
1st Session
S. 1558
To amend the Internal Revenue Code of 1986 to provide a tax credit for
holders of Community Open Space bonds the proceeds of which are used
for qualified environmental infrastructure projects, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 5, 1999
Mr. Baucus (for himself and Mr. Hatch) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a tax credit for
holders of Community Open Space bonds the proceeds of which are used
for qualified environmental infrastructure projects, 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 ``Community Open Space Bonds Act of
1999''.
SEC. 2. CREDIT FOR HOLDERS OF COMMUNITY OPEN SPACE BONDS.
(a) In General.--Part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to credits against tax) is
amended by adding at the end the following new subpart:
``Subpart H--Nonrefundable Credit for Holders of Community Open Space
Bonds
``Sec. 54. Credit to holders of Community Open Space bonds.
``SEC. 54. CREDIT TO HOLDERS OF COMMUNITY OPEN SPACE BONDS.
``(a) Allowance of Credit.--In the case of a taxpayer who holds a
Community Open Space bond on a credit allowance date 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 bonds.
``(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 Community Open Space bond is an amount equal to the
product of--
``(A) the credit rate determined by the Secretary
under paragraph (2), multiplied by
``(B) the face amount of the bond held by the
taxpayer on the credit allowance date.
``(2) Determination.--During each calendar month, the
Secretary shall determine a credit rate which shall apply to
bonds issued during the following calendar month. The credit
rate for any 3-month period ending on a credit allowance date
is the percentage which the Secretary estimates will on average
equal the yield on corporate bonds outstanding on the day
before the date of such determination.
``(3) 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) Carryforward 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 each of the 5 taxable years following the unused
credit year and added to the credit allowable under subsection
(a) for each such taxable year, subject to the application of
paragraph (1) to such taxable year.
``(d) Community Open Space Bond.--For purposes of this section--
``(1) In general.--The term `Community Open Space bond'
means any bond issued as part of an issue if--
``(A) 95 percent or more of the proceeds of such
issue are to be used for a qualified environmental
infrastructure project,
``(B) the bond is issued by a State or local
government,
``(C) the issuer--
``(i) designates such bond for purposes of
this section,
``(ii) has a reasonable expectation that at
least 10 percent of the proceeds of such issue
will be spent for qualifying environmental
infrastructure projects within 6 months of the
date such bonds are issued,
``(iii) certifies such proceeds will be
used with due diligence for qualified
environmental infrastructure projects, and
``(iv) has a reasonable expectation that
any property acquired or improved in connection
with the proceeds of such issue, other than
property improved in connection with a
qualified environmental infrastructure project
described in paragraph (2)(A)(v), shall
continue to be dedicated to a qualified use for
a period of not less than 15 years from the
date of such issue,
``(D) such bond satisfies public approval
requirements similar to the requirements of section
147(f)(2),
``(E) except as provided in paragraph (4)(B), the
payment of the principal of such issue is secured by
taxes of general applicability imposed by a general
purpose governmental unit, and
``(F) the term of each bond which is part of such
issue does not exceed 15 years.
``(2) Qualified environmental infrastructure project.--
``(A) In general.--The term `qualified
environmental infrastructure project' means--
``(i) acquisition of qualified property for
use as open space, wetlands, public parks, or
greenways, or to improve access to public lands
by non-motorized means,
``(ii) construction, rehabilitation, or
repair of a visitor facility in connection with
qualified property, including nature centers,
campgrounds, and hiking or biking trails,
``(iii) remediation of qualified property
to enhance water quality by--
``(I) restoring natural hydrology
or planting trees and streamside
vegetation,
``(II) controlling erosion,
``(III) restoring wetlands, or
``(IV) treating conditions caused
by the prior disposal of toxic or other
waste,
``(iv) acquisition of a qualified easement
in order to maintain the use and character of
the property in connection to which such
easement is granted as open space, including an
easement to allow access to public land by non-
motorized means, and
``(v) environmental assessment and
remediation of real property and public
infrastructure owned by a governmental unit and
located in an area where or on which there has
been a release (or threat of release) or
disposal of any hazardous substance (within the
meaning of section 198), but not including any
property described in subparagraph (D).
``(B) Qualified property.--The term `qualified
property' means real property--
``(i) which is, or is to be, owned by--
``(I) a governmental unit, or
``(II) an organization described in
section 501(c)(3) and exempt from
taxation under section 501(a) and which
has as one if its purposes
environmental preservation, and
``(ii) which is reasonably anticipated to
be available for use by members of the general
public, unless such use would change the
character of the property and be contrary to
the qualified use of the property.
``(C) Safe harbor for management contracts.--For
purposes of subparagraph (B), property shall not be
treated as qualified property if any rights or benefits
of such property inure to a private person other than
rights or benefits under a management contract or
similar type of operating agreement to which rules
similar to the rules applicable to tax-exempt bonds
apply.
``(D) Cercla property.--Property is described in
this subparagraph if any portion of such property is
included, or proposed to be included, in the national
priorities list under section 105(a)(8)(B) of the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 U.S.C. 9605(a)(8)(B)).
``(E) Limit on disposition of property.--Any
disposition of any interest in property acquired or
improved in connection with a qualified environmental
project described in this paragraph (except a project
described in subparagraph (A)(v)) shall contain an
option (recorded pursuant to applicable State or local
law) to purchase such property for an amount equal to
the original acquisition price of such property for any
interested organizations described in subparagraph
(B)(i)(II) if such organization purchases such property
subject to a restrictive covenant requiring a continued
qualified use of such property.
``(3) Temporary period exception.--
``(A) In general.--A bond shall not be treated as
failing to meet the requirement of paragraph (1)(A)
solely by reason of the fact that the proceeds of the
issue of which such bond is a part--
``(i) are invested for a reasonable
temporary period (but not more than 36 months)
until such proceeds are needed for the purpose
for which such issue was issued, or
``(ii) are used within 90 days of the close
of such temporary period to redeem bonds which
are a part of such issue.
Any earnings on such proceeds during the period under
clause (i) shall be treated as proceeds of the issue
for purposes of applying paragraph (1)(A).
``(B) Investment of proceeds.--For purposes of
subparagraph (A), proceeds shall only be invested in--
``(i) Government securities, and
``(ii) in the case of a sinking fund
established by the issuer, State and local
government securities issued by the Treasury.
``(4) Special rules for projects described in paragraph
(2)(A)(v).--
``(A) Limit on use of proceeds for project.--This
subsection shall not apply to any bond issued as part
of an issue if an amount of the proceeds from such
issue are used for a qualified environmental
infrastructure project described in paragraph (2)(A)(v)
and involving public infrastructure in excess of an
amount equal to 5 percent of the total amount of such
proceeds used for all projects described in such
paragraph (2)(A)(v).
``(B) Private use and repayment of proceeds.--In
the case of proceeds of an issue which are used for a
qualified environmental infrastructure project
described in paragraph (2)(A)(v), the issue of which
such bonds are a part shall not fail to meet the
requirements of this subsection solely because the
proceeds of a disposition of any interest in such
property are used to redeem such bonds as long as the
purchaser of such property makes an irrevocable
election not to claim any deduction with respect to
such project under section 198.
``(5) Recapture of credit amount.--
``(A) In general.--If, during the taxable year, any
bond that is part of an issue under this section fails
to meet the requirements of this subsection--
``(i) such bond shall not be treated as a
Community Open Space bond for such taxable year
and any succeeding taxable year, and
``(ii) the issuer of such bond shall be
liable for payment to the United States of the
credit recapture amount.
Such payment shall be made at such time and in such
manner as determined by the Secretary.
``(B) Credit recapture amount.--For purposes of
subparagraph (A), the credit recapture amount is an
amount equal to the sum of--
``(i) the aggregate amount of credit
allowed with respect to such bond for the 3
preceding taxable years, plus
``(ii) interest (at the underpayment rate
established under section 6621) on the credit
amount from the date such credit was allowed to
the payment date under subparagraph (A).
``(e) Limitations on Amount of Bonds Designated.--
``(1) In general.--There is a Community Open Space bond
limitation for each calendar year equal to--
``(A) $1,900,000,000 for each of years 2000 through
2004, and
``(B) except as provided in paragraph (3), zero
after 2004.
``(2) Allocation of limitation among states and local
governments.--
``(A) In general.--The limitation amount to be
allocated under paragraph (1) for any calendar year
shall be allocated among States and local governments
with an approved application on a competitive basis by
the Community Open Space Bonds Board (referred to in
this subsection as the `Board') established under
section 3 of the Community Open Space Bonds Act of
1999.
``(B) Approved application.--For purposes of
subparagraph (A), the term `approved application' means
an application which is approved by the Board, and
which includes such information as the Board requires.
``(C) Allocation to each state.--The Board shall,
in accordance with the criteria for approval of
applications, allocate amounts in any calendar year to
at least 1 approved application from each State, or
local government of such State, which submits such
application.
``(3) Carryover of unused limitation.--If for any calendar
year--
``(A) the limitation amount under paragraph (1),
exceeds
``(B) the aggregate limitation amount allocated to
States and local governments under this section,
the limitation amount under paragraph (1) for the following
calendar year shall be increased by the amount of such excess.
No limitation amount shall be carried forward under this
paragraph more than 3 years.
``(f) Other Definitions; Special Rules.--For purposes of this
subpart--
``(1) Bond.--The term `bond' includes any obligation.
``(2) Credit allowance date.--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.
``(3) Qualified easement.--The term `qualified easement'
means a perpetual easement--
``(A) which would be a qualified conservation
contribution under section 170(h) if such easement were
a contribution under such section, and
``(B) which is to be held by an entity described in
subclause (I) or (II) of subsection (d)(2)(B)(i).
``(4) Qualified use.--The term `qualified use' means, with
respect to property, a use which is consistent with the purpose
of the qualified environmental infrastructure project related
to such property.
``(5) State.--The term `State' includes the District of
Columbia, any possession of the United States, and any Indian
tribe (as defined in section 45A(c)(6)).
``(6) Partnership; S corporation; and other pass-thru
entities.--Under regulations prescribed by the Secretary, 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).
``(g) Credit Included in Gross Income.--Gross income includes the
amount of the credit allowed to the taxpayer under this section and the
amount so included shall be treated as interest income.
``(h) Bonds Held By Regulated Investment Companies.--If any
Community Open Space 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.
``(i) Credits May Be Stripped.--Under regulations prescribed by the
Secretary--
``(1) In general.--There may be a separation (including at
issuance) of the ownership of a Community Open Space 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 which, on the
credit allowance date, holds the instrument evidencing the
entitlement to the credit and not to the holder of the bond.
``(2) Certain rules to apply.--In the case of a separation
described in paragraph (1), the rules of section 1286 shall
apply to the Community Open Space bond as if it were a stripped
bond and to the credit under this section as if it were a
stripped coupon.
``(j) Treatment for Estimated Tax Purposes.--Solely for purposes of
sections 6654 and 6655, the credit allowed by this section to a
taxpayer by reason of holding a Community Open Space 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.
``(k) Credit May Be Transferred.--Nothing in any law or rule of law
shall be construed to limit the transferability of the credit allowed
by this section through sale and repurchase agreements.
``(l) Reporting.--Issuers of Community Open Space bonds shall
submit reports similar to the reports required under section 149(e).''
(b) Reporting.--Subsection (d) of section 6049 of the Internal
Revenue Code of 1986 (relating to returns regarding payments of
interest) is amended by adding at the end the following:
``(8) Reporting of credit on community open space bonds.--
``(A) In general.--For purposes of subsection (a),
the term `interest' includes amounts includible in
gross income under section 54(f) and such amounts shall
be treated as paid on the credit allowance date (as
defined in section 54(f)(2)).
``(B) Reporting to corporations, etc.--Except as
otherwise provided in regulations, in the case of any
interest described in subparagraph (A) of this
paragraph, subsection (b)(4) of this section shall be
applied without regard to subparagraphs (A), (H), (I),
(J), (K), and (L)(i).
``(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.''
(c) Clerical Amendments.--
(1) The table of subparts for part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following:
``Subpart H. Nonrefundable Credit for
Holders of Community Open Space
Bonds.''
(2) Section 6401(b)(1) of such Code 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 December 31, 1999.
SEC. 3. COMMUNITY OPEN SPACE BONDS BOARD.
(a) Establishment.--There is established in the Executive Branch a
board to be known as the Community Open Space Bonds Board (in this
section referred to as the ``Board'').
(b) Membership.--
(1) Composition.--The Board shall be composed of 18
members, as follows:
(A) 3 members shall be individuals who are not
otherwise Federal officers or employees and who are
appointed by the President, by and with the advice and
consent of the Senate.
(B) 8 members, not be affiliated with the same
political party, shall be individuals who represent
Governors, or other chief executive officers, of a
State, mayors, and county commissioners and who are
appointed by the President, by and with the advice and
consent of the Senate.
(C) 1 member shall be the Administrator of the
Environmental Protection Agency or the Administrator's
designee.
(D) 1 member shall be the Secretary of Agriculture
or the Secretary's designee.
(E) 1 member shall be the Secretary of Housing and
Urban Development or the Secretary's designee.
(F) 1 member shall be the Secretary of Interior or
the Secretary's designee.
(G) 1 member shall be the Secretary of
Transportation or the Secretary's designee.
(H) 1 member shall be the Secretary of the Treasury
or the Secretary's designee.
(I) 1 member shall be the Director of the Federal
Emergency Management Agency or the Director's designee.
(2) Qualifications and terms.--
(A) Qualifications.--Members of the Board described
in paragraph (1)(A) shall be appointed without regard
to political affiliation and solely on the basis of
their professional experience and expertise in 1 or
more of the following areas:
(i) Tax-exempt organizations which have as
a principal purpose environmental protection
and land conservation.
(ii) Community planning.
(iii) Real estate investment and bond
financing.
In the aggregate, the members of the Board described in
paragraph (1)(A) should collectively bring to bear
expertise in all of the areas described in the
preceding sentence and should represent each position
contained in such paragraph and different regions of
the country.
(B) Terms.--Each member who is described in
subparagraph (A) or (B) of paragraph (1) shall be
appointed for a term of 3 years, except that of the
members first appointed--
(i) 3 members shall be appointed for a term
of 1 year,
(ii) 4 members shall be appointed for a
term of 2 years, and
(iii) 4 members shall be appointed for a
term of 3 years.
(C) Reappointment.--An individual who is described
in subparagraph (A) or (B) of paragraph (1) may be
appointed to no more than one 3-year term on the Board.
(D) Vacancy.--Any vacancy on the Board shall be
filled in the same manner as the original appointment.
Any member appointed to fill a vacancy occurring before
the expiration of the term for which the member's
predecessor was appointed shall be appointed for the
remainder of that term.
(3) Initial meeting.--Not later than 30 days after the date
on which all members of the Board have been appointed, the
Board shall hold its first meeting. Subsequent meetings shall
be determined by the Board by majority vote or held at the call
of the Chairperson.
(4) Quorum.--A majority of the members of the Board shall
constitute a quorum, but a lesser number of members may hold
hearings.
(5) Chairperson.--The member described in paragraph (1)(C)
shall serve as the Chairperson of the Board.
(6) Removal.--
(A) In general.--Any member of the Board appointed
under subparagraph (A) or (B) of paragraph (1) may be
removed at the will of the President.
(B) Secretaries; director; administrator.--An
individual described in subparagraphs (C) through (I)
of paragraph (1) shall be removed upon termination of
service in the office described in each such
subparagraph.
(c) Duties of the Board.--
(1) In general.--The Board shall review applications for
allocation of the Community Open Space bond limitation amounts
under section 54(e)(2) of the Internal Revenue Code of 1986 and
approve applications in accordance with published criteria.
(2) Criteria for approval.--The Board shall promulgate a
regulation to develop criteria for approval of applications
under paragraph (1), taking into consideration the following
guidelines:
(A) A distribution pattern of the overall
limitation amount available for the year which results
in the financing of each category of qualified
environmental infrastructure project and results in an
even distribution among different regions of the
country and sizes of communities.
(B) State or local government support of proposed
projects.
(C) Proposed projects which meet local and regional
environmental protection or planning goals and leverage
or make more efficient or innovative the use of other
public or private resources.
(D) Proposed projects which are intended to
maintain the viability of existing central business
districts, preserve the community's distinct character
and values, and encourage the reuse of property already
served by public infrastructure.
(E) The extent of expected improvement in
environmental quality, outdoor recreation
opportunities, and access to public lands.
(3) Annual report.--The Board shall annually report with
respect to the conduct of its responsibilities under this
section to the President and Congress and such report shall
include--
(A) the overall progress of the Community Open
Space bond program, and
(B) the overall limitation amount allocated during
the year and a description of the amount, region, and
qualified environmental infrastructure project financed
by each allocation.
(4) Conflict of interest.--The Board shall carry out its
duties under this subsection in such a way to ensure that all
conflicts of interest of its members are avoided.
(d) Powers of the Board.--
(1) Hearings.--The Board may hold such hearings, sit and
act at such times and places, take such testimony, and receive
such evidence as the Board considers advisable to carry out the
purposes of this section.
(2) Information from federal agencies.--The Board may
secure directly from any Federal department or agency such
information as the Board considers necessary to carry out the
provisions of this section, including the published and
unpublished data and analytical products of the Bureau of Labor
Statistics. Upon request of the Chairperson of the Board, the
head of such department or agency shall furnish such
information to the Board.
(3) Postal services.--The Board may use the United States
mails in the same manner and under the same conditions as other
departments and agencies of the Federal Government.
(e) Board Personnel Matters.--
(1) Compensation of members.--Each member of the Board who
is not otherwise an officer or employee of the Federal
Government shall be compensated at a rate equal to the daily
equivalent of the annual rate of basic pay prescribed for level
III of the Executive Schedule under section 5315 of title 5,
United States Code, for each day (including travel time) during
which such member is engaged in the performance of the duties
of the Board. All members of the Board who otherwise are
officers or employees of the United States shall serve without
compensation in addition to that received for their services as
officers or employees of the United States.
(2) Travel expenses.--The members of the Board shall be
allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of business
in the performance of services for the Board.
(3) Staff.--
(A) In general.--The Chairperson of the Board may,
without regard to the civil service laws and
regulations, appoint and terminate an executive
director and such other additional personnel as may be
necessary to enable the Board to perform its duties.
The employment of an executive director shall be
subject to confirmation by the Board.
(B) Compensation.--The Chairperson of the Board may
fix the compensation of the executive director and
other personnel without regard to the provisions of
chapter 51 and subchapter III of chapter 53 of title 5,
United States Code, relating to classification of
positions and General Schedule pay rates, except that
the rate of pay for the executive director and other
personnel may not exceed the rate payable for level IV
of the Executive Schedule under section 5316 of such
title.
(4) Detail of government employees.--Any Federal Government
employee may be detailed to the Board without additional
reimbursement (other than the employee's regular compensation),
and such detail shall be without interruption or loss of civil
service status or privilege.
(5) Procurement of temporary and intermittent services.--
The Chairperson of the Board may procure temporary and
intermittent services under section 3109(b) of title 5, United
States Code, at rates for individuals which do not exceed the
daily equivalent of the annual rate of basic pay prescribed for
level V of the Executive Schedule under section 5316 of such
title.
(f) Definitions.--For purposes of this section--
(1) State.--The term `State' includes the District of
Columbia, any possession of the United States, and any Indian
tribe (as defined in section 45A(c)(6)).
(2) Qualified environmental infrastructure project.--The
term `qualified environmental infrastructure project' has the
same meaning given that term in section 54(d)(2) of the
Internal Revenue Code of 1986.
(g) Authorization of Appropriations.--There are authorized to be
appropriated to the Board such sums as are necessary to carry out the
purposes of this section.
(h) Effective Dates.--
(1) In general.--The amendments made by this section shall
take effect on the date of the enactment of this Act.
(2) Initial nominations.--The President shall submit the
initial nominations under subparagraphs (A) and (B) of
subsection (b)(1) to the Senate not later than 90 days after
the date of the enactment of this Act.
(3) Regulations.--Not later than January 1, 2000, the Board
shall publish in the Federal Register the guidelines and
criteria for submission and approval of applications under
subsection (c).
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S10476-10477)
Read twice and referred to the Committee on Finance.
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