H.R. 3977 — Introduced in House

I 115th CONGRESS 1st Session H. R. 3977 IN THE HOUSE OF REPRESENTATIVES October 5, 2017Mr. Faso introduced the following bill; which was referred to the Committee on Transportation and Infrastructure, and in addition to the Committees on Financial Services, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To establish the Infrastructure Bank for America to serve as a lender for infrastructure projects, both directly and through State and local governments, and for other purposes. 1. Short title This Act may be cited as the Infrastructure Bank for America Act of 2017. 2. Establishment of the Infrastructure Bank for America (a) In general The formation agent shall, in accordance with such rules and regulations as the Secretary of the Treasury may prescribe, make and file with the Secretary at the earliest practicable date after the date of the enactment of this Act, an organization certificate which shall contain such information as the Secretary may require. Upon the making and filing of such organization certificate with the Secretary, such formation agent shall become a body corporate to be known as the Infrastructure Bank Holding Company (hereinafter referred to as the Holding Company), which shall be the parent company of the Infrastructure Bank for America (hereinafter referred to as the Bank), which is hereby established and which shall— (1) serve as a lender for infrastructure projects, both directly and indirectly through State and local governments and State infrastructure banks, as provided under this Act; (2) maintain its principal office in New York City or the District of Columbia or the metropolitan area thereof; (3) be deemed, for purposes of jurisdiction and venue in civil actions to be a Delaware corporation; and (4) have all powers, not inconsistent with the provisions of this Act, as are customary and usual in corporations generally. (b) Regional offices The Bank shall establish regional offices, for the purpose of focusing on projects in different areas of the United States. (c) Board of directors The Bank shall have a board of directors, which shall— (1) initially consist of 7 members, or such other number as the Bank determines appropriate; (2) be elected by the Bank’s shareholders; (3) within the limitations of law and regulation, determine the general policies which shall govern the operations of the Bank, and have power to adopt, amend, and repeal bylaws governing the performance of the powers and duties granted to or imposed upon the Bank by law; and (4) select and effect the appointment of qualified persons to fill the office of the Chief Executive Officer and, along with the Chief Executive Officer, such other offices as may be provided for in the bylaws. (d) Treatment of shareholders of the formation agent The Holding Company shall, upon establishment, issue equity securities of the Holding Company to each shareholder of the formation agent, in an amount that the Board of Directors determines has a value equal to the value of equity securities of the formation agent held by such shareholder upon the establishment of the Holding Company. (e) Earnings and reserves not Government funds The earnings and reserves of the Holding Company and the Bank shall be the sole property of the Holding Company and the Bank and shall not be construed to be Government or public funds or appropriated money. 3. Functions of the Bank (a) In general The Bank shall provide— (1) direct loans and loan guarantees to private entities for the construction or maintenance of revenue-producing infrastructure projects; and (2) indirect loans and loan guarantees to State and local governments and State infrastructure banks, for the construction or maintenance of infrastructure projects. (b) Support for rural projects At least 7 percent of the dollar amount of loans and loan guarantees provided by the Bank shall be with respect to infrastructure projects in rural areas. (c) No commercial or investment banking activities The Bank shall not accept customer deposits nor engage in financial or investment banking activities, such as trust management or underwriting securities. (d) Pledge and credit facilities (1) Pledge The Bank shall have the authority to pledge its loans to the discount window of the Board of Governors of the Federal Reserve System and as advances to any Federal Home Loan Bank. (2) Line of credit The Secretary shall provide a line of credit to the Bank in a similar manner to the facility available to the Federal National Mortgage Association and the Federal Home Loan Banks. 4. Holding Company securities (a) Equity securities (1) In general The Holding Company shall issue such equity securities as the Holding Company determines appropriate. (2) Dividends The Holding Company may make such dividend payments on the equity securities of the Holding Company as the Holding Company determines appropriate. (3) Initial issuance amount The Holding Company shall have the goal of raising $100,000,000,000 in the initial issuance of equity securities, the purpose of which is to fund the Bank. (b) Bonds (1) Standard bonds The Holding Company shall issue standard bonds, with maturities up to 30 years, or longer as needed. (2) Repatriated cash bonds (A) In general The Holding Company shall issue special bonds, named Repatriation Bonds, with maturities up to 30 years or longer as needed, that are only purchasable using dividends to which section 965(g) of the Internal Revenue Code of 1986 applied. (B) Use of repatriated cash to purchase securities For treatment of dividends used to purchased special bonds under this paragraph, see section 965(g) of the Internal Revenue Code of 1986. (C) 5-year limitation The Holding Company may not issue any new Repatriation Bonds after the end of the 5-year period beginning on the date the Bank is established. (3) Other bonds The Holding Company may issue such other bonds, notes, and marketable securities with maturities and interest rates as the Holding Company determines appropriate. (4) Initial issuance amount The Holding Company shall have the goal of making initial bond sales in an aggregate amount of $1,000,000,000,000 or more. (5) Treasury oversight and authority to purchase bonds (A) Approval required Before issuing any bonds, the Holding Company shall submit a proposal for such bond issuance to the Secretary, and the Holding Company may only issue such bonds if the Secretary approves the proposal. (B) Authority to purchase bonds (i) In general The Secretary may purchase bonds issued under this subsection. (ii) Limitation The aggregate amount of outstanding bonds purchased by the Secretary under this subsection may not exceed 5 percent of the total amount of the Holding Company’s outstanding bonds. (c) Leverage limitation The Holding Company and the Bank shall seek to maintain risk based capital at no less than 10 percent. 5. Oversight and regulation (a) Board of Governors of the Federal Reserve System The Board of Governors of the Federal Reserve System shall have oversight and supervisory authority over the Infrastructure Bank Holding Company and the Bank in order to ensure the safe and sound operations of the Infrastructure Bank Holding Company and the Bank. (b) Secretary of the Treasury The Secretary shall establish an office, which shall report to the Assistant Secretary of the Treasury for Financial Institutions, which shall have oversight and supervisory authority over the issuance of bonds by the Infrastructure Bank Holding Company and the Bank in order to ensure the safe and sound financing of the Infrastructure Bank Holding Company and the Bank. 6. Infrastructure Guarantee Fund (a) Establishment The Bank shall establish an Infrastructure Guarantee Fund, which shall be available for State and local governments and other persons who wish to deposit funds to be used with respect to specific loans or loan guarantees made by the Bank, in the event of any non-payment by the recipient of such loan or loan guarantee. (b) Return of funds Any funds described under subsection (a) that are remaining at the time such loans or guaranteed loans are repaid shall be returned to the State or local government or other person who deposited the funds. 7. Holding Company and Bank exemption from taxation The Holding Company and the Bank, including its franchise, its capital, reserves, and surplus, its advances, and its income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipal, or local taxing authority, except that any real property of the Holding Company and the Bank shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed. 8. Extension and modification of dividends received deduction for repatriated foreign earnings used to purchase Holding Company bonds (a) In general Section 965 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (g) Temporary extension and modification (1) In general In the case of an election under this subsection, subsection (f)(1) shall be applied by substituting the date of the enactment of subsection (g) for the date of the enactment of this section. (2) Percentage deductible In the case of an election under this subsection, subsection (a)(1) shall be applied by substituting 100 percent for 85 percent. (3) Requirement to invest in bonds In the case of an election under this subsection— (A) subsection (b)(4) shall not apply, and (B) subsection (a) shall only apply to so much of the portion dividends received by a United States shareholder during the taxable year as does not exceed the amount paid by the shareholder during such taxable year for bonds issued under section 4(b)(2) of the Infrastructure Bank for America Act of 2017. (4) Special rules (A) Recapture in case of bonds sold during recapture period The Secretary shall, by regulations, provide for recapturing the applicable percentage of the benefit under any deduction allowable by this subsection if before the end of the 10-year period beginning on the date of the purchase of the bond to which this subsection applies the taxpayer disposes of such bond. (B) Applicable percentage For purposes of this paragraph, the applicable percentage shall be determined under the following table: In the case of a disposition  in the following year of The applicable  such 10-year period: percentage shall be:First year 100 percentSecond year90 percentThird year80 percentFourth year70 percentFifth year60 percentSixth year50 percentSeventh year40 percentEighth year30 percentNinth year20 percentTenth year10 percent. . (b) Conforming amendment (1) Section 965 of such Code is amended by striking June 30, 2003 each place it occurs and inserting June 30, 2016. (2) Subparagraph (B) of section 965(b)(3) of such Code is amended by striking October 3, 2004 and inserting September 1, 2017. (c) Effective date The amendment made by this section shall apply to taxable years ending on or after the date of the enactment of this Act. 9. Infrastructure Bank Holding Company credit (a) In general Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 45S. Infrastructure Bank Holding Company credit (a) In general For purposes of section 38, in the case of a taxpayer who holds a qualified Holding Company equity investment on a credit allowance date of such investment which occurs during the taxable year, the Infrastructure Bank Holding Company credit determined under this section for such taxable year is an amount equal to 16 percent of the amount paid to the Holding Company for such investment at its original issue. (b) Credit allowance date For purposes of this section, credit allowance date with respect to any qualified Holding Company equity investment is— (1) the date on which such investment is initially made, and (2) each of the 4 anniversary dates of such date thereafter. (c) Qualified Holding Company equity investment For purposes of this section, the term qualified Holding Company equity investment means any equity investment originally issued by the Holding Company to the taxpayer under section 4(a)(1) of the Infrastructure Bank for America Act of 2017 not later than 3 years after the date of the enactment of such Act. (d) Holding Company For purposes of this section, the term Holding Company means the Infrastructure Bank Holding Company established under the Infrastructure Bank for America Act of 2017. (e) Basis reduction The basis of any qualified Holding Company equity investment shall be reduced by the amount of any credit determined under this section with respect to such investment. . (b) Conforming amendments (1) Section 38(b) of such Code is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting , plus, and by adding at the end the following new paragraph: (37) the Infrastructure Bank Holding Company credit determined under section 45S. . (2) Section 1016(a) of such Code is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by adding at the end the following new paragraph: (38) to the extent provided in section 45S(e). . (c) Effective date The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. 10. Definitions For purposes of this Act: (1) Bank The term Bank means the Infrastructure Bank for America established under section 2. (2) Formation agent The term formation agent means an entity selected by the Secretary. (3) Infrastructure Bank Holding Company The term Infrastructure Bank Holding Company means the company— (A) by that name incorporated by the formation agent; and (B) acting as the parent company of the Bank after the establishment of the Bank. (4) Revenue-producing infrastructure project The term revenue-producing infrastructure project means an infrastructure project that, when complete, generates revenue from user fees. (5) Risk based capital The term risk based capital shall have the meaning given that term by the Board of Governors of the Federal Reserve System. (6) Rural The term rural means a county that is neither in a metropolitan statistical area nor in a micropolitan statistical area that is adjacent to a metropolitan statistical area, as those terms are defined by the U.S. Office of Management and Budget and as they are applied under currently applicable Urban Influence Codes, established by the United States Department of Agriculture's Economic Research Service. (7) Secretary The term Secretary means the Secretary of the Treasury. (8) State The term State means each of the several States, the District of Columbia, each territory or possession of the United States, and each federally recognized Indian tribe. (9) State infrastructure bank The term State infrastructure bank means a State infrastructure bank or multistate infrastructure bank established pursuant to— (A) section 350 of the National Highway System Designation Act of 1995; (B) section 1511(l) of the Transportation Equity Act for the 21st Century; or (C) section 610 of title 23, United States Code. (10) State or local government The term State or local government means a State or local government or any agency or instrumentality of a State or local government.