Indian School Construction Act

Indian School Construction Act - Directs the Secretary of the Interior to establish a pilot program under which eligible Indian tribes have the authority to issue tribal school modernization bonds to provide funding for the advance planning, design, and construction for the replacement of tribal schools. Requires a tribe, to be eligible to issue bonds under such program, to: (1) submit to the Secretary a plan of construction that meets specified requirements; (2) provide for inspection of the project by the Bureau of Indian Affairs; and (3) pledge that the facilities financed will be used primarily for elementary and secondary educational purposes for not less than the period the bond remains outstanding.

Permits a tribe, in addition, to use amounts received through the issuance of a bond to: (1) enter into and make payments under contracts with architects, engineers, and construction firms to determine the needs of the tribal school and for the design and engineering of the school; (2) enter into and make payments under contracts with financial advisors, underwriters, attorneys, trustees, and other professionals who would be able to provide assistance to the tribe in issuing bonds; and (3) carry out other activities determined appropriate by the Secretary.

Makes any tribal school modernization bond issued by a tribe subject to a trust agreement between the tribe and a trustee.

Requires: (1) that the stated maturity of qualified tribal school modernization bonds be within 15 years from the date of issuance; and (2) upon the expiration of such period, the entire outstanding principal under the bond to become due and payable. Awards a tax credit under this Act in lieu of interest on such bonds.

Requires payment of the principal portion of such bonds to be guaranteed solely by amounts deposited with each bond trustee. Authorizes the Secretary to deposit not more than $30 million into a tribal school modernization escrow account beginning in FY 2001. Requires the Secretary to use any amounts deposited to make payments to trustees or for advance planning and design.

Prohibits: (1) a tribe that issues such a bond from being obligated to repay the principal on the bond, except to the extent of any escrowed funds furnished by the tribe; and (2) any land or facilities purchased or improved with amounts derived from such bonds from being mortgaged or used as collateral for such bonds.

Authorizes bonds to be sold at a purchase price equal to, in excess of, or at a discount from, the par amount.

Provides that any amounts earned through the investment of funds under the control of a trustee shall not be subject to Federal income tax.

Amends the Internal Revenue Code to allow a tax credit to individuals who hold such bonds. Sets forth requirements, limitations, and a special rule for issuance and redemption. Provides for the carryover of any excess credit.

Requires that if any bond that is held by a regulated investment company, such credit be allowed to such company's shareholders under procedures prescribed by the Secretary.

Permits a separation (including at issuance) of the ownership of such a bond and the entitlement to the credit with respect to such bond.

Provides that nothing in any law or rule of law shall be construed to limit the transferability of such credit through sale and repurchase agreements.