,,ii #aafth ,,congress #ast ,session ,s4 #bhff ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,november #ad1 #bjai,mrs4 ,capito 7for herself and ,ms4 ,hassan7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to allow private activity bonds to be used for qualified broadband projects and to provide for tax credit payments to issuers of tax-exempt bonds used to finance broadband infrastructure projects4 #a4 ,short title ,this ,act may be cited as the ,rural ,broadband ,financial ,flexibility ,act4 #b4 ,private activity bonds for qualified broadband projects 7a7 ,in general ,section #adb7;a7 of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of paragraph 7#ad71 by striking the period at the end of paragraph 7#ae7 and inserting 1 or1 and by adding at the end the following new paragraph3 7#af7 qualified broadband projects4 4 7b7 ,qualified broadband projects ,section #adb of such ,code is amended by adding at the end the following new subsection3 7n7 ,qualified broadband project 7#a7 ,in general ,for purposes of subsection 7a77#af71 the term qualified broadband project means any project which-- 7,a7 is designed solely to provide broadband service to #a or more areas-- 7i7 which are rural areas 7as defined in section #cdc7;a77#ac7 of the ,consolidated ,farm and ,rural ,development ,act 7#g ,u4,s4,c4 #aiia7;a77#ac7 without regard to subparagraph 7,b7 or 7,c7 thereof71 and 7ii7 in which more than #ej percent of residential households do not have access to fixed1 terrestrial broadband service which delivers at least #aj megabits per second downstream and at least #a megabit service upstream1 and 7,b7 results in gigabit capable ,internet access to residential or commercial locations but only if at least #ij percent of the residential or commercial locations provided such access under the project are locations where1 before the project1 a broadband service provider-- 7i7 did not provide service1 or 7ii7 did not provide service which meets the minimum speed requirements described in subparagraph 7,a77ii74 7#b7 ,notice to broadband providers ,a project shall not be treated as a qualified broadband project unless1 before the issue date of any issue the proceeds of which are to be used to fund the project1 the issuer-- 7,a7 notifies each broadband service provider providing broadband service in the area within which broadband services are to be provided under the project of the project and its intended scope1 7,b7 includes in such notice a request for information from each such provider with respect to the provider's ability to deploy1 manage1 and maintain a broadband network capable of providing gigabit capable ,internet access to residential or commercial locations1 and 7,c7 allows each such provider at least #ij days to respond to such notice and request4 4 7c7 ,partial exception from volume cap 7#a7 ,in general ,section #adf7;g7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of paragraph 7#c71 by striking the period at the end of paragraph 7#d7 and inserting 1 and1 and by inserting immediately after paragraph 7#d7 the following new paragraph3 7#e7 #ge percent of any exempt facility bond issued as part of an issue described in paragraph 7#af7 of section #adb7;a7 7relating to qualified broadband projects74 4 7#b7 ,government-owned projects ,the last sentence of section #adf7;g7 of such ,code is amended by striking ,paragraph 7#d7 and inserting ,paragraphs 7#d7 and 7#e74 7d7 ,effective date ,the amendments made by this section shall apply to obligations issued in calendar years beginning after the date of the enactment of this ,act4 #c4 ,credit for broadband infrastructure bonds allowed to issuers 7a7 ,in general ,subchapter ,b of chapter #fe of the ,internal ,revenue ,code of #aihf is amended by inserting after section #fdcj the following new section3 #fdca4 ,credit for broadband infrastructure bonds allowed to issuer 7a7 ,in ,general ,in the case of a broadband infrastructure bond1 the issuer of such bond shall be allowed a credit with respect to each interest payment under such bond which shall be payable by the ,secretary as provided in subsection 7b74 7b7 ,payment of ,credit ,the ,secretary shall pay 7contemporaneously with each interest payment date under such bond7 to the issuer of such bond 7or to any person who makes such interest payments on behalf of the issuer7 #ce percent of the interest payable under such bond on such date4 7c7 ,broadband infrastructure bond ,for purposes of this section-- 7#a7 ,in general ,the term broadband infrastructure bond means any obligation 7other than a private activity bond7-- 7,a7 the interest on which would 7but for this section7 be excludable from gross income under section #ajc1 7,b7 which is issued by a qualified issuer1 7,c7 which is issued as part of an issue with respect to which-- 7i7 the requirements of paragraph 7#b7 are met1 7ii7 all of the property to be financed by the net proceeds of the issue is to be owned by a governmental unit 7within the meaning of section #adb7;b77#a771 and 7iii7 the aggregate face amount of bonds issued pursuant to the issue1 when added to the aggregate face amount of broadband infrastructure bonds previously issued by the issuing authority during the calendar year1 does not exceed such issuing authority's allocation of its ,state's volume cap under subsection 7d7 for such year1 and 7,d7 which the issuer designates 7at such time and in such manner as the ,secretary may prescribe7 as an obligation to which this section applies4 7#b7 ,special rules relating to expenditures 7,a7 ,in general ,an issue shall be treated as meeting the requirements of this paragraph if1 as of the date of issuance1 the issuer reasonably expects-- 7i7 #ajj percent of the available project proceeds to be spent in connection with #a or more qualified broadband projects within the #c-year period beginning on such date of issuance1 and 7ii7 a binding commitment with a third party to spend at least #aj percent of such available project proceeds will be incurred within the #f-month period beginning on such date of issuance4 7,b7 ,failure to spend required amount of bond proceeds within #c years 7i7 ,in general ,to the extent that less than #ajj percent of the available project proceeds of the issue are expended by the close of the expenditure period1 the issuer shall redeem all of the nonqualified bonds within #ij days after the end of such period4 ,for purposes of this paragraph1 the amount of the nonqualified bonds required to be redeemed shall be determined in the same manner as under section #adb4 7ii7 ,expenditure period ,for purposes of this section1 the term expenditure period means1 with respect to any issue1 the #c-year period beginning on the date of issuance4 ,such term shall include any extension of such period under clause 7iii74 7iii7 ,extension of period ,upon submission of a request prior to the expiration of the expenditure period 7determined without regard to any extension under this clause71 the ,secretary may extend such period if the issuer establishes that the failure to expend the proceeds within the original expenditure period is due to reasonable cause and the expenditures in connection with #a or more qualified broadband projects will continue to proceed with due diligence4 7,c7 ,reimbursement ,for purposes of this subtitle1 available project proceeds of an issue shall be treated as spent in connection with #a or more qualified broadband projects if such proceeds are used to reimburse the issuer for amounts paid in connection with such projects after the date that an allocation of a ,state's volume cap under subsection 7d7 has been made with respect to such issue1 but only if- 7i7 prior to the payment of the original expenditure1 the issuer declared its intent to reimburse such expenditure with the proceeds of such issue1 7ii7 not later than #fj days after payment of the original expenditure1 the issuer adopts an official intent to reimburse the original expenditure with such proceeds1 and 7iii7 the reimbursement is made not later than #ah months after the date the original expenditure is paid4 7#c7 ,limitation on issue price ,an obligation shall not be treated as a broadband infrastructure bond if the issue price has more than a de minimis amount 7determined under rules similar to the rules of section #abgc7;a77#c77 of premium over the stated principal amount of the obligation4 7#d7 ,available project proceeds ,for purposes of this subsection1 the term available project proceeds means1 with respect to any issue1 the sum of-- 7,a7 the excess of-- 7i7 the proceeds from the sale of an issue1 over 7ii7 the issuance costs financed by the issue 7to the extent that such costs do not exceed #b percent of such proceeds71 plus 7,b7 the proceeds from any investment of the excess described in subparagraph 7,a74 7#e7 ,qualified broadband project ,for purposes of this subsection1 the term qualified broadband project has the meaning given such term by section #adb7n74 7d7 ,limitation on amount of bonds designated 7#a7 ,national limitation ,there is a national broadband infrastructure bond limitation for each calendar year of #b1ejj1jjj1jjj4 7#b7 ,state volume cap2 allocation ,for purposes of this subsection1 the broadband infrastructure bonds volume cap of a ,state for any calendar year is the portion of the national broadband infrastructure bond limitation under paragraph 7#a7 equal to the sum of-- 7,a7 #be1jjj1jjj1 plus 7,b7 the amount which bears the same ratio to #a1bej1jjj1jjj as the-- 7i7 number of individuals in such ,state who reside in rural areas 7as defined in section #cdc7;a77#ac7 of the ,consolidated ,farm and ,rural ,development ,act 7#g ,u4,s4,c4 #aiia7;a77#ac7 without regard to subparagraph 7,b7 or 7,c7 thereof71 bears to 7ii7 the total number of individuals living in such rural areas in all ,states4 7#c7 ,allocation of volume cap 7,a7 ,in general ,for purposes of this section-- 7i7 except as provided in subparagraph 7,c71 #ej percent of the ,state broadband infrastructure bonds volume cap of a ,state for any calendar year shall be allocated to qualified issuers that are not agencies of the ,state in the amount determined under subparagraph 7,b71 and 7ii7 the remaining #ej percent of such volume cap shall be allocated to qualified issuers in such manner as the ,state provides4 7,b7 ,amount of allocation 7i7 ,in general ,the amount of the ,state broadband infrastructure bonds volume cap for any calendar year allocated under this subparagraph to any qualified issuer described in subparagraph 7,a77i7 shall be equal to the amount which bears the same ratio to the amount described in subparagraph 7,a77i7 for such calendar year as-- 7,i7 the number of individuals in such ,state who reside in rural areas 7as defined in section #cdc7;a77#ac7 of the ,consolidated ,farm and ,rural ,development ,act 7#g ,u4,s4,c4 #aiia7;a77#ac7 without regard to subparagraph 7,b7 or 7,c7 thereof7 within the jurisdiction of such qualified issuer1 bears to 7,,ii7 the total number of individuals living in such rural areas in the ,state4 7ii7 ,special rule for overlapping jurisdictions ,for purposes of clause 7i77,i71 if an area is within the jurisdiction of #b or more governmental units1 such area shall be treated as only within the jurisdiction of the unit having jurisdiction over the smallest geographical area unless such unit agrees to surrender all or part of such jurisdiction for such calendar year to the unit with overlapping jurisdiction which has the next smallest geographical area4 7,c7 ,reallocation ,the amount allocated under this paragraph to any qualified issuer may be reallocated by such issuer to the ,state for reallocation to other qualified issuers 7including agencies of the ,state74 7#d7 ,carryover of unused limitation 7,a7 ,in general ,if1 for any calendar year1 a ,state's broadband infrastructure bonds volume cap exceeds the amount of bonds issued during such year which are designated as broadband infrastructure bonds under subsection 7c77#a77;,d7 with respect to broadband projects within such ,state1 the broadband infrastructure bonds volume cap for such ,state for the following calendar year shall be increased by the amount of such excess4 7,b7 ,limitation on carryover ,any carryforward of an excess amount may be carried only to the first #b years following the unused volume cap year4 ,for purposes of the preceding sentence1 a volume cap amount shall be treated as used on a first-in first-out basis4 7e7 ,other rules and definitions 7#a7 ,interest includible in income ,for purposes of this title1 interest on any broadband infrastructure bond shall be includible in gross income4 7#b7 ,credit not a ,federal guarantee ,for purposes of section #adi7;b71 a broadband infrastructure bond shall not be treated as ,federally guaranteed by reason of the credit allowed under this section4 7#c7 ,coordination with section #adh 7,a7 ,yield reduced by credit ,for purposes of section #adh1 the yield on a broadband infrastructure bond shall be determined by reducing the otherwise effective yield by the amount of the credit allowed to the issuer under this section4 7,b7 ,investment during extension period ,an issue shall not be treated as failing to meet the requirements of section #adh by reason of any investment of available project proceeds during the expenditure period4 7#d7 ,rural populations ,for purposes of this section1 the determination of the number of individuals living in rural areas shall be made in consultation with the ,secretary of ,agriculture4 7#e7 ,definitions ,for purposes of this section-- 7,a7 ,qualified issuer ,the term qualified issuer means a ,state or any political subdivision or instrumentality thereof having authority to issue private activity bonds4 7,b7 ,state ,notwithstanding section #ggja7;a77#aj71 the term ,state only includes the #ej ,states4 7f7 ,regulations ,the ,secretary may prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section4 4 7b7 ,conforming amendments 7#a7 ,section #fdja7;b77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking under subparts ,a1 ,b1 ,d1 and ,g of such part ,,iv and inserting under all subparts of such part ,,iv other than such subpart ,c4 7#b7 ,the table of sections for subchapter ,b of chapter #fe of such ,code is amended by inserting after the item related to section #fdcj the following new section3 ,sec4 #fdca4 ,credit for broadband infrastructure bonds allowed to issuer4 4 7c7 ,gross-,up of payment to issuers in case of sequestration ,the amount of any payment under section #fdca7;b7 of the ,internal ,revenue ,code of #aihf made after the date of the enactment of this ,act to which sequestration applies shall be increased by the amount necessary to preserve the full amount of such payment payable to the issuer before sequestration4 ,for purposes of this subsection1 the term sequestration means any reduction in direct spending ordered in accordance with a sequestration report prepared by the ,director of the ,office and ,management and ,budget pursuant to the ,balanced ,budget and ,emergency ,deficit ,control ,act of #aihe or the ,statutory ,pay-,as-,you-,go ,act of #bjaj4 7d7 ,effective date ,the amendments made by this section shall apply to bonds issued in calendar years beginning after the date of the enactment of this ,act4