SIFIA Act

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

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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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