H.R. 2440

[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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