Code Section 7871


Code Section Effective Date Name of Act Name of Provision 10yr Revenue Estimate ($millions)
7871(f) 2/17/2009 The American Recovery and Reinvestment Act of 2009 (Public Law 111-5) Tribal economic development bonds -315

Tribal economic development bonds

Explanation of Provision

The provision allows Indian tribal governments to issue ‘‘tribal  economic development bonds.’’ There is a national bond limitation  of $2 billion, to be allocated as the Secretary determines appropriate, in consultation with the Secretary of the Interior. Tribal economic development bonds issued by an Indian tribal government are treated as if such bond were issued by a State except that section 146 (relating to State volume limitations) does not apply.

The Act defines a tribal economic development bond as any bond issued by an Indian tribal government (1) the interest on which would be tax-exempt if issued by a State or local government, and (2) that is designated by the Indian tribal government as a tribal economic development bond. The aggregate face amount of bonds that may be designated by any Indian tribal government cannot exceed the amount of national tribal economic development bond limitation allocated to such government.

Tribal economic development bonds cannot be used to finance any portion of a building in which class II or class III gaming (as defined in section 4 of the Indian Gaming Regulatory Act) is conducted, or housed, or any other property used in the conduct of such gaming. Nor can tribal economic development bonds be used to finance any facility located outside of the Indian reservation.

The Act also clarifies that for purposes of section 141 of the Code, use of bond proceeds by an Indian tribe, or instrumentality thereof, is treated as use by a State.

Treasury Study

The provision requires that the Treasury Department study the effects of tribal economic development bonds. One year after the date of enactment, a report is to be submitted to Congress providing the results of such study along with any recommendations, including whether the restrictions of section 7871(c) should be eliminated or otherwise modified.

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