text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/800

 100 STAT. 2608

PUBLIC LAW 99-514—OCT. 22, 1986

'•ilii a '

"(3) C U R R E N T INCOME DETERMINATIONS.—For purposes of t h i s

subsection— "(A) IN GENERAL.—The determination of w h e the r the income of a resident of a u n i t in a project exceeds the applicable income limit shall be m a d e a t least annual l y on the basis of the c u r r e n t income of the resident. >fic

"(B) C O N T I N U I N G RESIDENT'S INCOME MAY INCREASE ABOVE

 * ,;f^*- THE APPLICABLE LIMIT.—If the income of a resident of a unit

in a project did not exceed the applicable income limit upon ^5« c o m m e n c e m e n t of such resident s occupancy of such unit t,-.,,^ (or a s of any prior determination under subparagraph (A)), the income of such resident shall be treated a s continuing to not exceed the applicable income limit. The preceding j,j „ sentence shall cease to apply to any resident whose income as of the most recent determination under subparagraph \^*-.r (A) exceeds 140 percent of the applicable income limit if jg^. after such determination, b u t before the next determina,,. tion, any residential u n i t of comparable or smaller size in the s a m e project is occupied by a new resident whose ^ income exceeds the applicable income limit. "(4) SPECIAL RULE I N CASE O F DEEP R E N T S K E W I N G. —

%, „4^ ' ^, J

"(A) IN GENERAL.—In the case of any project described in subparagraph (B), the 2d sentence of subparagraph (B) of paragraph (3) shall be applied by substituting— "(i)'170 p e r c e n t ' for ' 1 4 0 percent', and "(ii) ' any low-income u n i t in the same project is occupied by a n e w resident whose income exceeds 40 percent of a r e a median gross income' for ' any residential unit of comparable or smaller size in the s a m e project is occupied by a n e w resident whose income exceeds the applicable income limit'. "(B) D E E P RENT SKE^WED PROJECT.—A project is described

in this subparagraph if the owner of the project elects to have this paragraph apply and, a t all times during the "''' qualified project period, such project meets the require.„,. m e n t s of clauses (i), (ii), and (iii): ^'*',- * "(i) The project meets the requirements of this clause ^ •, if 15 percent or more of the low-income units in the ^y-*;ijl -. project a r e occupied by individuals whose income is 40 percent o r less of a r e a median gross income. ^^ •''*' " "(ii) The project meets the requirements of this -^' '. clause if the gross r e n t with respect to each low-income u n i t in the project does not exceed 30 percent of the ' * applicable income limit which applies to individuals '•i • '.'" occupying the unit. "(iii) The project meets the requirements of this "' clause if the gross r e n t with respect to each low-income ->»•' ' unit in the project does not exceed Va of the average r e n t with respect to units of comparable size which a r e -»i^~ not occupied by individuals w h o meet the applicable i^:\ income limit. "(C) DEFINITIONS APPLICABLE TO SUBPARAGRAPH (B). — For

purposes of subparagraph (B)— "(i) LOW-INCOME U N I T. — The term 'low-income u n i t '

means any u n i t which is required to be occupied by individuals who meet the applicable income limit, "(ii) GROSS RENT.—The term 'gross r e n t ' includes—

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Page:United States Statutes at Large Volume 100 Part 3.djvu/801

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2609

"(I) any payment under section 8 of the United States Housing Act of 1937, and "(II) any utility allowance determined by the Secretary after taking into account such determinations under such section 8. "(5) APPLICABLE INCOME LIMIT.—For purposes of paragraphs (3) and (4), the term 'applicable income limit' means— "(A) the limitation under subparagraph (A) or (B) of paragraph (1) which applies to the project, or "(B) in the case of a unit to which paragraph (4)(B)(i) applies, the limitation which applies to such unit. "(6) SPECIAL RULE FOR CERTAIN HIGH COST HOUSING AREA.—In

the case of a project located in a city having 5 boroughs and a population in excess of 5,000,000, subparagraph (B) of paragraph (1) shall be applied by substituting '25 percent' for '40 percent'. "(7)

CERTIFICATION TO SECRETARY.—The operator

of

any

project with respect to which an election was made under this subsection shall submit to the Secretary (at such time and in such manner as the Secretary shall prescribe) an annual certification as to whether such project continues to meet the requirements of this subsection. Any failure to comply with the provisions of the preceding sentence shall not affect the tax-exempt status of any bond but shall subject the operator to penalty, as provided in section 6652(j). "(e) FACILITIES FOR THE FURNISHING OF WATER.—For purposes of subsection (a)(4), the term 'facilities for the furnishing of water' means any facility for the furnishing of water if— "(1) the water is or will be made available to members of the general public (including electric utility, industrial, agricultural, or commercial users), and "(2) either the facility is operated by a governmental unit or the rates for the furnishing or sale of the water have been established or approved by a State or political subdivision thereof, by an agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or political subdivision thereof. "(0 LOCAL FURNISHING OF ELECTRIC ENERGY OR GAS.—For purposes of subsection (a)(8), the local furnishing of electric energy or gas from a facility shall only include furnishing solely within the area consisting of— "(1) a city and 1 contiguous county, or "(2) 2 contiguous counties. "(g) LOCAL DISTRICT HEATING OR COOLING FACILITY.—

"(1) IN GENERAL.—For purposes of subsection (a)(9), the term 'local district heating or cooling facility' means property used as an integral part of a local district heating or cooling system. "(2) LOCAL DISTRICT HEATING OR COOUNG SYSTEM.—

"(A) IN GENERAL.—For purposes of paragraph (1), the term 'local district heating or cooling system' means any local system consisting of a pipeline or network (which may be connected to a heating or cooling source) providing hot water, chilled water, or steam to 2 or more users for— "(i) residential, commercial, or industrial heating or 4>; cooling, or S'^i "(ii) process steam.

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/802

 100 STAT. 2610

PUBLIC LAW 99-514—OCT. 22, 1986 f'-i !«(/

"(B) LOCAL SYSTEM.—For purposes of this paragraph, a local system includes facilities furnishing heating and cooling to an area consisting of a city and 1 contiguous county. "(h) QUALIFIED HAZARDOUS WASTE FACILITIES.—For purposes of subsection (a)(10), the term 'qualified hazardous waste facility' means any facility for the disposal of hazardous waste by incineration or entombment but only if— "(1) the facility is subject to final permit requirements under subtitle C of title II of the Solid Waste Disposal Act (as in effect on the date of the enactment of the Tax Reform Act of 1986), and "(2) the portion of such facility which is to be provided by the issue does not exceed the portion of the facility which is to be used by persons other than— "(A) the owner or operator of such facility, and ', "(B) any related person (within the meaning of section 144(a)(3)) to such owner or operator, "SEC. 143. MORTGAGE REVENUE BONDS: QUALIFIED MORTGAGE BOND AND QUALIFIED VETERANS' MORTGAGE BOND. "(a) Q U A U F I E D MORTGAGE B O N D. — "(1) QUALIFIED MORTGAGE BOND DEFINED.—

-

"(A) IN GENERAL.—For purposes of this title, the term 'qualified mortgage bond' means a bond which is issued as, part of a qualified mortgage issue. to « «^g) TERMINATION ON DECEMBER 31, 1988.—No bond issued •%siy after December 31, 1988, may be treated as a qualified mortgage bond. "(2) QUALIFIED MORTGAGE ISSUE DEFINED.—

"(A) DEFINITION.—For purposes of this title, the term 'qualified mortgage issue' means an issue by a State or '"'* political subdivision thereof of 1 or more bonds, but only if— "(i) all proceeds of such issue (exclusive of issuance costs and a reasonably required reserve) are to be used f to finance owner-occupied residences, "(ii) such issue meets the requirements of subsections (c), (d), (e), (f), (g), (h), and (i), and "(iii) no bond which is part of such issue meets the - a a.. private business tests of paragraphs (1) and (2) of section 141(b). "(B) GOOD FAITH EFFORT TO COMPLY WITH MORTGAGE ELIGI-

f .,? > r'T /i:,

•jc >

BiliTY REQUIREMENTS.—An issue which fails to meet 1 or more of the requirements of subsections (c), (d), (e), (0, and (i) shall be treated as meeting such requirements if— "(i) the issuer in good faith attempted to meet all such requirements before the mortgages were executed, "(ii) 95 percent or more of the proceeds devoted to owner-financing was devoted to residences with respect to which (at the time the mortgages were executed) all such requirements were met, and "(iii) any failure to meet the requirements of such subsections is corrected within a reasonable period after such failure is first discovered. "(C) GOOD FAITH EFFORT TO COMPLY WITH OTHER REQUIRE-

MENTS.—An issue which fails to meet 1 or more of the

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Page:United States Statutes at Large Volume 100 Part 3.djvu/803

 PUBLIC LAW 99-514—OCT. 22, 1986 ^:

100 STAT. 2611

requirements of subsections (g) and (h) shall be treated as meeting such requirements if— "(i) the issuer in good faith a t t e m p t e d to meet all such requirements, and "(ii) any failure to meet such requirements is due to inadvertent error after taking reasonable steps to comply with such requirements. "(b)

QUALIFIED V E T E R A N S ' MORTGAGE B O N D D E F I N E D. — For pur-

poses of this part, the term 'qualified veterans ' mortgage bond' means any bond— "(1) which is issued as part of a n issue 95 percent or more of the net proceeds of which a r e to be used to provide residences for veterans, f|- secured by the general obligation of a State, "(3) which is part of an issue which meets the requirements of "(4) which does not meet the private business tests of paragraphs (1) and (2) of section 141(b). Rules similar to the rules of subparagraph s (B) and (C) of subsection (a)(2) shall apply to the requirements specified in paragraph (3) of this subsection. "(c) RESIDENCE REQUIREMENTS. —
 * ,"(2) the payment of the principal and interest on which is
 * > subsections (c), (g), (i)(l), and (1), and

H« Q. I

"(1) FOR A RESIDENCE.—A residence meets the requirements of this subsection only if— "(A) it is a single-family residence which can reasonably be expected to become the principal residence of the mortgagor within a reasonable time after the financing is provided, and "(B) it is located within the jurisdiction of the authority issuing the bond. "(2) FOR AN ISSUE.—An issue meets the requirements of this subsection only if all of the residences for which owner-financing is provided under the issue meet the requirements of paragraph (1).

"(d) 3-YEAR REQUIREMENT. —

"(1) IN GENERAL.—An issue meets the requirements of this subsection only if 95 percent or more of the net proceeds of such issue a r e used to finance the residences of mortgagors who had no present ownership interest in their principal residences at '.. any t i m e during the 3-year period ending on the date their mortgage is executed. jj^ "(2) EXCEPTIONS.—For purposes of paragraph (1), the proceeds tj of an issue which a r e used to provide— "(A) financing with respect to targeted a r e a residences, K. - ^^ and "(B) qualified home improvement loans and qualified rehabilitation loans, shall be treated as used as described in paragraph (1). "(3) MORTGAGOR'S INTEREST IN RESIDENCE BEING FINANCED.—

For purposes of paragraph (1), a mortgagor's interest in the residence with respect to which the financing is being provided shall not be t a k e n into account. "(e) P U R C H A S E P R I C E REQUIREMENT. —

ll

"(1) IN GENERAL.—An issue meets the requirements of this subsection only if the acquisition cost of each residence the owner-financing of which is provided under the issue does not

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Page:United States Statutes at Large Volume 100 Part 3.djvu/804

 100 STAT. 2612

PUBLIC LAW 99-514—OCT. 22, 1986 r:f exceed 90 percent of the average area purchase price applicable to such residence. i' "(2) AVERAGE AREA PURCHASE PRICE.—For purposes of paragraph (1), the term 'average area purchase price' means, with o respect to any residence, the average purchase price of single 0 family residences (in the statistical area in which the residence is located) which were purchased during the most recent 12- month period for which sufficient statistical information is » available. The determination under the preceding sentence shall be made as of the date on which the commitment to provide the financing is made (or, if earlier, the date of the a purchase of the residence). "(3) SEPARATE APPLICATION TO NEW RESIDENCES AND OLD RESI-

l DENCES.—For purposes of this subsection, the determination of average area purchase price shall be made separately with "t respect to— "(A) residences which have not been previously occupied, ••y*.-:^

and

"(B) residences which have been previously occupied. I

"(4) SPECIAL RULE FOR 2 TO 4 FAMILY RESIDENCES.—For

pur-

't poses of this subsection, to the extent provided in regulations, the determination of average area purchase price shall be made separately with respect to 1 family, 2 family, 3 family, and 4 = family residences. "(5) SPECIAL RULE FOR TARGETED AREA RESIDENCES.—In

the

1 case of a targeted area residence, paragraph (1) shall be applied J by substituting '110 percent' for '90 percent'. J

"(6) EXCEPTION FOR QUALIFIED HOME IMPROVEMENT LOANS.—

Paragraph (1) shall not apply with respect to any qualified home improvement loan.

'

"(f) INCOME REQUIREMENTS.—

i e ' ^ ?• a ^

"(1) IN GENERAL.—An issue meets the requirements of this subsection only if all owner-financing provided under the issue is provided for mortgagors whose family income is 115 percent or less of the applicable median family income. "(2) DETERMINATION OF FAMILY INCOME.—For purposes of this subsection, the family income of mortgagors, and area median gross income, shall be determined by the Secretary after taking into account the regulations prescribed under section 8 of the United States Housing Act of 1937 (or, if such program is terminated, under such program as in effect immediately before such termination). "(3) SPECIAL RULE FOR APPLYING PARAGRAPH (i) IN THE CASE OF TARGETED AREA RESIDENCES.—In the case of any financing

provided under any issue for targeted area residences— "(A) V of the amount of such financing may be provided b boH; without regard to paragraph (1), and "(B) paragraph (1) shall be treated as satisfied with respect to the remainder of the owner financing if the family income of the mortgagor is 140 percent or less of the 'applicable median family income. ''>". "(4) APPLICABLE MEDIAN FAMILY INCOME.—For purposes of this subsection, the term 'applicable median family income' means, with respect to a residence, whichever of the following is the ei greater: '? "(A) the area median gross income for the area in which to. such residence is located, or

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Page:United States Statutes at Large Volume 100 Part 3.djvu/805

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2613

"(B) the statewide median gross income for the State in which such residence is located. "(g) REQUIREMENTS RELATED TO ARBITRAGE.—

"(1) IN GENERAL.—An issue meets the requirements of this subsection only if such issue meets the requirements of paragraphs (2) and (3) of this subsection. Such requirements shall be in addition to the requirements of section 148 (other than subsection (0 thereof). "(2) EFFECTIVE RATE OF MORTGAGE INTEREST CANNOT EXCEED BOND YIELD BY MORE THAN 1.125 PERCENTAGE POINTS.—

''.

"(A) IN GENERAL.—An issue shall be treated as meeting the requirements of this paragraph only if the excess of^ "(i) the effective rate of interest on the mortgages provided under the issue, over "(ii) the yield on the issue, is not greater than 1.125 percentage points. "(B) EFFECTIVE RATE OF MORTGAGE INTEREST.—

"(i) IN GENERAL.—In determining the effective rate of interest on any mortgage for purposes of this paragraph, there shall be taken into account all fees, charges, and other amounts borne by the mortgagor which are attributable to the mortgage or to the bond issue.

"(ii) SPECIFICATION OF SOME OF THE AMOUNTS TO BE

TREATED AS BORNE BY THE MORTGAGOR.—For purpOSeS of

" ' • !

clause (i), the following items (among others) shall be treated as borne by the mortgagor: "(I) all points or similar charges paid by the seller of the property, and "(II) the excess of the amounts received from any person other than the mortgagor by any person in connection with the acquisition of the mortgagor's interest in the property over the usual and reasonable acquisition costs of a person acquiring like property where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans' mortgage bonds, "(iii) SPECIFICATION OF SOME OF THE AMOUNTS TO BE TREATED AS NOT BORNE BY THE MORTGAGOR.—For purposes of clause (i), the following items shall not be taken into account: "(I) any expected rebate of arbitrage profits, and "(II) any application fee, survey fee, credit report fee, insurance charge, or similar amount to the extent such amount does not exceed amounts charged in such area in cases where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans' mortgage bonds. Subclause (II) shall not apply to origination fees, points, or similar amounts. "(iv) PREPAYMENT ASSUMPTIONS.—In determining the

effective rate of interest— "(I) it shall be assumed that the mortgage prepayment rate will be the rate set forth in the most recent applicable mortgage maturity experi-

71-19A 0 - 89 - 27: a.. 3 Part3

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text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/806

 100 STAT. 2614

PUBLIC LAW 99-514—OCT. 22, 1986

rr ktiiJ'i •^nj.-.'] ence table published by the Federal Housing Administration, and "(II) p r e payments of principal shall be treated •\:-,. ' a s received on the last day of the month in which •,., • the issuer reasonably expects to receive such prepayments. .f..fi; "(C) YIELD ON THE ISSUE.—For purposes of this subsection, the yield on a n issue shall be determined on the basis of— "(i) the issue price (within the m e a n i n g of sections 1273 and 1274), and ., "(ii) a n expected m a t u r i t y for the bonds which is consistent with the assumptions required under subparagraph (B)(iv). "(3) ARBITRAGE AND INVESTMENT GAINS TO BE USED TO REDUCE

COSTS OF OWNER-FINANCING.—

1) yi*ri f /

.

-r; •. ^'

i'•

^•'

"(A) IN GENERAL.—An issue shall be t r e a t e d as meeting the requirements of this paragraph only if a n a m o u n t equal to the s u m of— "(i) the excess of— ,1 "(I) the a m o u n t earned on all nonpurpose investments (other than investments a t t r i b u t a b l e to an excess described in this clause), over "(II) the a m o u n t which would have been earned if such investments were invested a t a r a t e equal to the yield on the issue, plus "(ii) any income a t t r i b u t a b l e to the excess described in clause (i), is paid or credited to the mortgagors as rapidly as may be practicable.

'^

"(B) INVESTMENT GAINS A N D LOSSES.—For

purposes

of

subparagraph (A), in determining the a m o u n t earned on all nonpurpose investments, any gain or loss on the disposition of such investments shall be t a k e n into account. "(C) REDUCTION WHERE ISSUER DOES NOT USE FULL 1.125 PERCENTAGE POINTS UNDER PARAGRAPH (2).—

',.

10
 * ,r

-^

^>,' *,,,,,,

"(i) IN GENERAL.—The a m o u n t required to be paid or credited to mortgagors under subparagraph (A) (determined under this paragraph without regard to this subparagraph) shall be reduced by the unused paragraph (2) a m o u n t. "(ii) U N U S E D PARAGRAPH (2) A M O U N T. — For purposes

,'t • -.(,

• ,•

of clause (i), the unused paragraph (2) a m o u n t is the a m o u n t which (if it were treated as a n interest payment m a d e by mortgagors) would result in the excess referred to in paragraph (2)(A) being equal to 1.125 percentage points. Such a m o u n t shall be fixed and determined as of the yield determination date. "(D) ELECTION TO PAY UNITED STATES. — Subparagraph (A)

..r.:..^ V -

shall be satisfied with respect to any issue if the issuer elects before issuing the bonds to pay over to the United States— "(i) not less frequently than once each 5 year s after the date of issue, a n a m o u n t equal to 90 percent of the aggregate a m o u n t which would be required to be paid or credited to mortgagors under subparagraph (A) (and not theretofore paid to the United States), and

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Page:United States Statutes at Large Volume 100 Part 3.djvu/807

 PUBLIC LAW 99-514—OCT. 22, 1986

'»

100 STAT. 2615

"(ii) not later than 60 days after the redemption of the last bond, 100 percent of such aggregate amount not theretofore paid to the United States. "(E) SIMPLIFIED ACCOUNTING.—The Secretary shall permit any simplified system of accounting for purposes of this paragraph which the issuer establishes to the satisfaction of the Secretary will assure that the purposes of this paragraph are carried out. "(F) NoNPURPOSE INVESTMENT.—For purposes of this paragraph, the term 'nonpurpose investment' has the meaning given such term by section 148(f)(6)(A).

"(h) PORTION OF LOANS REQUIRED TO B E PLACED IN TARGETED AREAS.—

"(1) IN GENERAL.—An issue meets the requirements of this subsection only if at least 20 percent of the proceeds of the issue which are devoted to providing owner-financing is made available (with reasonable diligence) for owner-financing of targeted area residences for at least 1 year after the date on which owner-financing is first made available with respect to targeted area residences. "(2) LIMITATION.—Nothing in paragraph (1) shall be treated as requiring the making available of an amount which exceeds 40 percent of the average annual aggregate principal amount of mortgages executed during the immediately preceding 3 calendar years for single-family, owner-occupied residences located in targeted areas within the jurisdiction of the issuing authority, "(i) OTHER REQUIREMENTS.— "(1) MORTGAGES MUST BE NEW MORTGAGES.—

"(A) IN GENERAL.—An issue meets the requirements of this subsection only if no part of the proceeds of such issue is used to acquire or replace existing mortgages. "(B) EXCEPTIONS.—Under regulations prescribed by the Secretary, the replacement of— ,, "(i) construction period loans, ' "(ii) bridge loans or similar temporary initial financing, and -i9.«v'. "(iii) in the case of a qualified rehabilitation, an existing mortgage, shall not be treated as the acquisition or replacement of an -8' » existing mortgage for purposes of subparagraph (A). "(2) CERTAIN REQUIREMENTS MUST BE MET WHERE MORTGAGE IS

''

ASSUMED.—An issue meets the requirements of this subsection only if each mortgage with respect to which owner-financing has been provided under such issue may be assumed only if the requirements of subsections (c), (d), and (e), and the requirements of paragraph (1) or (3)(B) of subsection (f) (whichever applies), are met with respect to such assumption, "(j) TARGETED AREA RESIDENCES.—

"(1) IN GENERAL.—For purposes of this section, the term 'targeted area residence' means a residence in an area which is either— "(A) a qualified census tract, or "(B) an area of chronic economic distress. "(2) QUALIFIED CENSUS TRACT.— "(A) IN GENERAL.—For purposes of paragraph (1), the term 'qualified census tract' means a census tract in which

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Page:United States Statutes at Large Volume 100 Part 3.djvu/808

 100 STAT. 2616 -,

PUBLIC LAW 99-514—OCT. 22, 1986 t

"".

70 percent or more of the families have income which is 80 percent or less of the statewide median family income. "(B) DATA USED.—The determination under subparagraph (A) shall be made on the basis of the most recent decennial census for which data are available. "(3) AREA OF CHRONIC ECONOMIC DISTRESS.—

"(A) IN GENERAL.—For purposes of paragraph (1), the term 'area of chronic economic distress' means an area of -- ' chronic economic distress— -' "(i) designated by the State as meeting the standards established by the State for purposes of this subsection, '•'•*'' -'* " and "(ii) the designation of which has been approved by ^the Secretary and the Secretary of Housing and Urban •^ Development. "(B) CRITERIA TO BE USED IN APPROVING STATE DESIGNA-

TIONS.—The criteria used by the Secretary and the Secretary of Housing and Urban Development in evaluating any proposed designation of an area for purposes of this subsection shall be— "(i) the condition of the housing stock, including the age of the housing and the number of abandoned and substandard residential units, "(ii) the need of area residents for owner-financing 'I; under this section, as indicated by low per capita income, a high percentage of families in poverty, a high number of welfare recipients, and high unemployment rates, "(iii) the potential for use of owner-financing under „' ' this section to improve housing conditions in the area, ' '• and "(iv) the existence of a housing assistance plan which ' ' " • provides a displacement program and a public improvements and services program, "(k) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes of this section— "(1) MORTGAGE.—The term 'mortgage' means any ownerfinancing. ,, .j,

.«..

"(2) STATISTICAL AREA.—

"(A) IN GENERAL.—The term 'statistical area' means— "(i) a metropolitan statistical area, and "(ii) any county (or the portion thereof) which is not within a metropolitan statistical area. "(B) METROPOLITAN STATISTICAL AREA.—The term 'metropolitan statistical area' includes the area defined as such by the Secretary of Commerce. "(C) DESIGNATION WHERE ADEQUATE STATISTICAL INFORMATION NOT AVAILABLE.—For purposes of this paragraph, if

,. v^;

j - !. 'f', jv-

there is insufficient recent statistical information with respect to a county (or portion thereof) described in subparagraph (A)(ii), the Secretary may substitute for such county (or portion thereof) another area for which there is sufficient recent statistical information. "(D) DESIGNATION WHERE NO COUNTY.—In the case of any portion of a State which is not within a county, subparagraphs (A)(ii) and (C) shall be applied by substituting for

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Page:United States Statutes at Large Volume 100 Part 3.djvu/809

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2617

'county' a n a r e a designated by the Secretary which is the equivalent of a county. "(3) ACQUISITION COST.—

"(A) IN GENERAL.—The term 'acquisition cost' means the cost of acquiring the residence as a completed residential unit. "(B) EXCEPTIONS.—The term 'acquisition cost' does not include— "(i) usual and reasonable settlement or financing costs, "(ii) the value of services performed by the mortgagor or m e m b e r s of his family in completing the residence, and "(iii) the cost of land which has been owned by the mortgagor for a t least 2 years before the date on which construction of the residence begins. "(C)

^^^ ^"

SPECIAL

RULE

FOR

QUALIFIED

REHABILITATION

" LOANS.—In the case of a qualified rehabilitation loan, for purposes of subsection (e), the term 'acquisition cost' ineludes the cost of the rehabilitation. "(4) QUALIFIED HOME IMPROVEMENT L O A N. — The term

'

'quali-

fied home improvement loan' means the financing (in a n a m o u n t which does not exceed $15,000)— "(A) of alterations, repairs, and improvements on or in connection with a n existing residence by the owner thereof, but "(B) only of such items as substantially protect or improve the basic livability or energy efficiency of the property. "(5) QUALIFIED REHABILITATION LOAN.—

,;

^j^

"(A) IN GENERAL.—The term 'qualified rehabilitation loan' means any owner-financing provided in connection with— "(i) a qualified rehabilitation, or "(ii) the acquisition of a residence with respect to which the r e has been a qualified rehabilitation, but only if the mortgagor to whom such financing is provided is the first resident of the residence after the completion of the rehabilitation. "(B)

QUALIFIED

REHABILITATION.—For

purposes

of

subparagraph (A), the term 'qualified rehabilitation' means r any rehabilitation of a building if— "(i) the r e is a period of a t least 20 years between the date on which the building was first used and the date on which the physical work on such rehabilitation V-': begins, .-,.,;. "(ii) in the rehabilitation process— "(I) 50 percent or more of the existing external walls of such building a r e retained in place as external walls, "(II) 75 percent or more of the existing e x t e r n a l ,, walls of such building a r e retained in place as i n t e r n a l or external walls, and "(III) 75 percent or more of the existing internal s t r u c t u r a l framework of such building is retained i . a in place, and
 * i

•

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Page:United States Statutes at Large Volume 100 Part 3.djvu/810

 100 STAT. 2618

PUBLIC LAW 99-514—OCT. 22, 1986 ii •

"(iii) the expenditures for such rehabilitation are 25 percent or more of the mortgagor's adjusted basis in the residence. - ' *• For purposes of clause (iii), the mortgagor's adjusted basis ,t, shall be determined as of the completion of the rehabilitation or, if later, the date on which the mortgagor acquires the residence. "(6) DETERMINATIONS ON ACTUARIAL BASIS.—All determinations of yield, effective interest rates, and amounts required to be paid or credited to mortgagors or paid to the United States under subsection (g) shall be made on an actuarial basis taking into account the present value of money. "(7) SINGLE-FAMILY AND OWNER-OCCUPIED RESIDENCES INCLUDE CERTAIN RESIDENCES WITH 2 TO 4 UNITS.—Except for purposes of

subsection (h)(2), the terms 'single-family' and 'owner-occupied', when used with respect to residences, include 2, 3, or 4 family residences— "(A) one unit of which is occupied by the owner of the i. units, and "(B) which were first occupied at least 5 years before the mortgage is executed. "(8) COOPERATIVE HOUSING CORPORATIONS.—

,,.

/

'

"(A) IN GENERAL.—In the case of any cooperative housing corporation— "(i) each dwelling unit shall be treated as if it were actually owned by the person entitled to occupy such dwelling unit by reason of his ownership of stock in the corporation, and "(ii) any indebtedness of the corporation allocable to the dwelling unit shall be treated as if it were indebtedness of the shareholder entitled to occupy the dwelling unit. "(B) ADJUSTMENT TO TARGETED AREA REQUIREMENT.—In

^ ^ '' - ' .. •\ '^

the case of any issue to provide financing to a cooperative housing corporation with respect to cooperative housing not located in a targeted area, to the extent provided in regulations, such issue may be combined with 1 or more other issues for purposes of determining whether the requirements of subsection (h) are met. "(C) COOPERATIVE HOUSING CORPORATION.—The term 'cooperative housing corporation' has the meaning given to such term by section 216(b)(l). "(9) TREATMENT OF LIMITED EQUITY COOPERATIVE HOUSING.— "(A) TREATMENT AS RESIDENTIAL RENTAL PROPERTY.—

"' ' •• •

^ ' "^

Except as provided in subparagraph (B), for purposes of this part— "(i) any limited equity cooperative housing shall be treated as residential rental property and not as owneroccupied housing, and "(ii) bonds issued to provide such housing shall be subject to the same requirements and limitations as bonds the proceeds of which are to be used to provide qualified residential rental projects (as defined in section 142(d)). "(B) BONDS SUBJECT TO QUALIFIED MORTGAGE BOND TERMI-

NATION DATE.—Subparagraph (A) shall not apply to any bond issued after the date specified in subsection (a)(l)(B).

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Page:United States Statutes at Large Volume 100 Part 3.djvu/811

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2619

"(C) LIMITED EQUITY COOPERATIVE H O U S I N G. — For purposes

of this paragraph, housing' means any to occupy by reason cooperative housing

the term 'limited equity cooperative dwelUng u n i t which a person is entitled of his ownership of stock in a qualified corporation.

'(D) QUALIFIED COOPERATIVE HOUSING CORPORATION.—For

f>^)i.^'^ nr t •f,. .7. J if,-. •^^'^' ^ ' * J
 * »eh'

purposes of this paragraph, the term 'qualified cooperative housing corporation' means any cooperative housing corporation (as defined in section 216(b)(1)) if— "(i) the consideration paid for stock held by any stockholder entitled to occupy any house or a part m e n t in a building owned or leased by the corporation may not exceed the s u m of— "(I) the consideration paid for such stock by the first such stockholder, as adjusted by a cost-ofliving adjustment determined by the Secretary, "(II) payments m a d e by any stockholder for improvements to such house or a part m e n t, and "(III) payments (other than a m o u n t s t a k e n into account under subclause (I) or (ID) a t t r i b u t a b l e to any stockholder to amortize the principal of the corporation's indebtedness arising from the ac,, quisition or development of real property, including improvements thereof, "(ii) the value of the corporation's assets (reduced by any corporate liabilities), to the e x t e n t such value exceeds the combined transfer values of the o u t s t and i n g corporate stock, shall be used only for public benefit or ' c h a r i t a b l e purposes, or directly to benefit the corporation itself, and shall not be used directly to benefit any stockholder, and "(iii) a t the t i m e of issuance of the issue, such corporation m a k e s a n election under this paragraph. "(E) E F F E C T OF ELECTION.—If a cooperative housing cor-

t'

poration m a k e s a n election under this paragraph, section 216 shall not apply with respect to such corporation (or any successor thereof) during the qualified project period (as defined in section 142(d)(2)). "(F)

j '^

CORPORATION MUST CONTINUE TO BE QUALIFIED CO-

OPERATIVE.—Subparagraph (A)(i) shall not apply to limited equity cooperative housing unless the cooperative housing corporation continues to be a qualified cooperative housing corporation a t all times during the qualified project period (as defined in section 142(d)(2)). "(G) ELECTION IRREVOCABLE.—Any election under this paragraph, once made, shall be irrevocable.

"(1) ADDITIONAL REQUIREMENTS FOR QUALIFIED V E T E R A N S ' M O R T -

GAGE BONDS.—An issue meets the requirements of this subsection only if it meets the requirements of paragraph s (1), (2), and (3). "(1)

V E T E R A N S TO W H O M F I N A N C I N G MAY BE PROVIDED.—An

issue meets the requirements of this paragraph only if each mortgagor to whom financing is provided under the issue is a qualified v e t e r a n. "(2) REQUIREMENT THAT STATE PROGRAM BE IN EFFECT BEFORE

JUNE 22, 1984.—An issue m e e t s the requirements of this para> g r a p h only if it is a general obligation of a State which issued ^ qualified veterans ' mortgage bonds before June 22, 1984.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/812

 llPUBLIC LAW 99-514-OCT. 22, 1986

100 STAT. 2620

"(3) V O L U M E LIMITATION.—

'-

"(A) IN GENERAL.—An issue meets the requirements of this paragraph only if the aggregate a m o u n t of bonds issued pursuant thereto (when added to the aggregate a m o u n t of quaHfied veterans ' mortgage bonds previously issued by the State during the calendar year) does not exceed the State veterans limit for such calendar year.

'? >

^ '- ' '

/' " ',

"(B) STATE VETERANS LIMIT.—A State veterans limit for

any calendar year is the a m o u n t equal to— "(i) the aggregate a m o u n t of qualified veterans bonds issued by such State during the period beginning on • January 1, 1979, and ending on June 22, 1984 (not including the a m o u n t of any qualified veterans bond issued by such State during the calendar year (or portion thereof) in such period for which the a m o u n t of such bonds so issued was the lowest), divided by "(ii) the n u m b e r (not to exceed 5) of calendar years after 1979 and before 1985 during which the State issued qualified veterans bonds (determined by only taking into account bonds issued on or before June 22, 1984).

-i

"(C) T R E A T M E N T OF REFUNDING ISSUES.—

./, ,„. p. J^

....

"(i) IN GENERAL.—For purposes of subparagraph (A), the term 'qualified veterans ' mortgage bond' shall not include any bond issued to refund a n other bond b u t only if the m a t u r i t y date of the refunding bond is not later than the l a t e r of— "(I) the m a t u r i t y date of the bond to be refunded, or "(II) the date 32 years after the date on which the refunded bond w a s issued (or in the case of a series of refundings, the date on which the original bond was issued). The preceding sentence shall apply only to the extent that the a m o u n t of the refunding bond does not exceed the o u t s t and i n g a m o u n t of the refunded bond. "(ii) EXCEPTION FOR ADVANCE R E F U N D I N G. — C l a u s e d)

h

shall not apply to any bond issued to advance refund a n other bond. "(4) QUALIFIED V E T E R A N. — For purposes of t h i s subsection, the

, term 'qualified v e t e r a n ' means any veteran— h "(A) w h o served on active duty a t some t i m e before January 1, 1977, and "(B) w h o applied for the financing before the later o f ^ "(i) the date 30 years after the last date on which r i« " -u such veteran left active service, or "(ii) January 31, 1985. "(5) SPECIAL RULE FOR CERTAIN SHORT-TERM BONDS.—In

,

the

case of any bond— "(A) which has a term of 1 year or less, "(B) which is authorized to be issued under O.R.S. 407.435 (as in effect on the date of the e n a c t m e n t of this subsection), 3: to provide financing for property taxes, and "(C) which is redeemed a t the end of such term, t^ the a m o u n t t a k e n into account under this subsection with respect to such bond shall be Vis of its principal a m o u n t.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/813

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2621

•SEC. 144. QUALIFIED SMALL ISSUE BOND; QUALIFIED STUDENT LOAN BOND; QUALIFIED REDEVELOPMENT BOND. "(a) QUALIFIED SMALL ISSUE BOND.—

"(1) IN GENERAL.—For purposes of this part, the term 'qualified small issue bond' means any bond issued as part of an issue the aggregate authorized face amount of which is $1,000,000 or less and 95 percent or more of the net proceeds of which are to be used— "(A) for the acquisition, construction, reconstruction, or improvement of land or property of a character subject to the allowance for depreciation, or "(B) to redeem part or all of a prior issue which was issued for purposes described in subparagraph (A) or this subparagraph. "(2) CERTAIN PRIOR ISSUES TAKEN INTO ACCOUNT.—If—

"(A) the proceeds of 2 or more issues of bonds (whether or not the issuer of each such issue is the same) are or will be used primarily with respect to facilities located in the same incorporated municipality or located in the same county 0)ut not in any incorporated municipality), "(B) the principal user of such facilities is or will be the same person or 2 or more related persons, and "(C) but for this paragraph, paragraph (1) (or the corresponding provision of prior law) would apply to each such issue, then, for purposes of paragraph (1), in determining the aggregate face amount of any later issue there shall be taken into account the aggregate face amount of tax-exempt bonds issued under all prior such issues and outstanding at the time of such later issue (not including as outstanding any bond which is to be redeemed (other than in an advance refunding) from the net proceeds of the later issue). "(3) RELATED PERSONS.—For purposes of this subsection, a person is a related person to another person if^ "(A) the relationship between such persons would result in a disallowance of losses under section 267 or 707(b), or "(B) such persons are members of the same controlled group of corporations (as defined in section 1563(a), except that 'more than 50 percent' shall be substituted for 'at least 80 percent' each place it appears therein). "(4) $10,000,000 LIMIT IN CERTAIN CASES.— "(A) IN GENERAL.—At the election of the issuer with respect to any issue, this subsection shall be applied— "(i) by substituting '$10,000,000' for '$1,000,000' in paragraph (1), and "(ii) in determining the aggregate face amount of such issue, by taking into account not only the amount described in paragraph (2), but also the aggregate amount of capital expenditures with respect to facili;u ties described in subparagraph (B) paid or incurred during the 6-year period beginning 3 years before the date of such issue and ending 3 years after such date (and financed otherwise than out of the proceeds of outstanding tax-exempt issues to which paragraph (1) (or the corresponding provision of prior law) applied), as if the aggregate amount of such capital expenditures

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Page:United States Statutes at Large Volume 100 Part 3.djvu/814

 100 STAT. 2622

PUBLIC LAW 99-514—OCT. 22, 1986 ii^*CKi:. constituted the face amount of a prior outstanding issue described in paragraph (2). "(B) FACILITIES TAKEN INTO ACCOUNT.—For purposes of

^i Hi..

subparagraph (A)(ii), the facilities described in this subparagraph are facilities— "(i) located in the same incorporated municipality or located in the same county O^ut not in any incorporated municipality), and "(ii) the principal user of which is or will be the same person or 2 or more related persons. For purposes of clause (i), the determination of whether or not facilities are located in the same governmental unit shall be made as of the date of issue of the issue in question. "(C) CERTAIN CAPITAL EXPENDITURES NOT TAKEN INTO AC-

COUNT.—For purposes of subparagraph (A)(ii), any capital expenditure— "(i) to replace property destroyed or damaged by fire, storm, or other casualty, to the extent of the fair «%{ market value of the property replaced, ^'***' "(ii) required by a change made after the date of issue .^ of the issue in question in a Federal or State law or local ordinance of general application or required by a change made after such date in rules and regulations of 'to general application issued under such a law or ordinance, "(iii) required by circumstances which could not be ^ reasonably foreseen on such date of issue or arising out ' •' of a mistake of law or fact (but the aggregate amount of ^ expenditures not taken into account under this clause "• with respect to any issue shall not exceed $1,000,000), ^c« o or i*^ "(iv) described in clause (i) or (ii) of section 41(b)(2)(A) for which a deduction was allowed under section 174(a), R shall not be taken into account. "(D) LIMITATION ON LOSS OF TAX EXEMPTION.—In applying

if ' i>" ^;

« • fii to

subparagraph (A)(ii) with respect to capital expenditures made after the date of any issue, no bond issued as a part of such issue shall cease to be treated as a qualified small issue bond by reason of any such expenditure for any period before the date on which such expenditure is paid or incurred. "(E) CERTAIN REFINANCING ISSUES.—In the case of any issue described in paragraph (1)(B), an election may be made under subparagraph (A) of this paragraph only if all of the prior issues being redeemed are issues to which paragraph (1) (or the corresponding provision of prior law) applied. In applying subparagraph (A)(ii) with respect to such a refinancing issue, capital expenditures shall be taken into account only for purposes of determining whether the prior issues being redeemed qualified (and would have continued to qualify) under paragraph (1) (or the corresponding provision of prior law). "(F) AGGREGATE AMOUNT OF CAPITAL EXPENDITURES WHERE THERE IS URBAN DEVELOPMENT ACTION GRANT.—In

i • J

the case of any issue 95 percent or more of the net proceeds of which are to be used to provide facilities with respect to which an urban development action grant has been made

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Page:United States Statutes at Large Volume 100 Part 3.djvu/815

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2623

»

under section 119 of the Housing and Community Development Act of 1974, capital expenditures of not to exceed $10,000,000 shall not be taken into account for purposes of applying subparagraph (A)(ii). "(5) ISSUES FOR RESIDENTIAL PURPOSES.—This subsection shall not apply to any bond issued as part of an issue 5 percent or more of the net proceeds of which are to be used directly or indirectly to provide residential real property for family units.

"(6) LIMITATIONS ON TREATMENT OF BONDS AS PART OF THE SAME ISSUE.—

'

"(A) IN GENERAL.—For purposes of this subsection, separate lots of bonds which (but for this subparagraph) would be treated as part of the same issue shall be treated as separate issues unless the proceeds of such lots are to be used with respect to 2 or more facilities— "(i) which are located in more than 1 State, or "(ii) which have, or will have, as the same principal user the same person or related persons. "(B) FRANCHISES.—For purposes of subparagraph (A), a person (other than a governmental unit) shall be considered a principal user of a facility if such person (or a group of related persons which includes such person)— "(i) guarantees, arranges, participates in, or assists with the issuance (or pays any portion of the cost of issuance) of any bond the proceeds of which are to be used to finance or refinance such facility, and "(ii) provides any property, or any franchise, trademark, or trade name (within the meaning of section 1253), which is to be used in connection with such facility.

"(7) SUBSECTION NOT TO APPLY IF BONDS ISSUED WITH CERTAIN OTHER TAX-EXEMPT BONDS.—This subsection shall not apply to

any bond issued as part of an issue (other than an issue to which paragraph (4) applies) if the interest on any other bond which is part of such issue is excluded from gross income under any provision of law other than this subsection. "(8)

RESTRICTIONS ON FINANCING CERTAIN FACILITIES.—This

subsection shall not apply to an issue if— "(A) more than 25 percent of the net proceeds of the issue are to be used to provide a facility the primary purpose of which is one of the following: retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment; or "(B) any portion of the proceeds of the issue is to be used to provide the following: any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard, and ice skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility, or racetrack. "(9)

AGGREGATION

OF

ISSUES

WITH

RESPECT TO SINGLE

PROJECT.—For purposes of this subsection, 2 or more issues part or all of the net proceeds of which are to be used with respect to a single building, an enclosed shopping mall, or a strip of offices, stores, or warehouses using substantial common facilities shall be treated as 1 issue (and any person who is a principal user

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Page:United States Statutes at Large Volume 100 Part 3.djvu/816

 100 STAT. 2624

PUBLIC LAW 99-514—OCT. 22, 1986 with respect to any of such issues shall be treated as a principal user with respect to the aggregated issue). "(10) AGGREGATE LIMIT PER TAXPAYER.—

jt, ./^

"(A) IN GENERAL.—This subsection shall not apply to any issue if the aggregate authorized face amount of such issue allocated to any test-period beneficiary (when increased by the outstanding tax-exempt facility-related bonds of such beneficiary) exceeds $40,000,000. "(B) OUTSTANDING TAX-EXEMPT FACILITY-RELATED BONDS.—

,r,a ^. •,, ^^ " . ' -.

"(i) IN GENERAL.—For purposes of applying subparagraph (A) with respect to any issue, the outstanding tax-exempt facility-related bonds of any person who is a test-period beneficiary with respect to such issue is the aggregate amount of tax-exempt bonds referred to in clause (ii)— "(I) which are allocated to such beneficiary, and ' "(II) which are outstanding at the time of such later issue (not including as outstanding any bond which is to be redeemed (other than in an advance refunding) from the net proceeds of the later issue). "(ii) BONDS TAKEN INTO ACCOUNT.—For purposes of

clause (i), the bonds referred to in this clause are— j,: , "(I) exempt facility bonds, qualified small issue i V r-'f,. bonds, and qualified redevelopment bonds, and .'^ /. ' "(II) industrial development bonds (as defined in section 103(b)(2), as in effect on the day before the ,» ^ date of the enactment of the Tax Reform Act of ^ 1986) to which section 141(a) does not apply. "(C) ALLOCATION OF FACE AMOUNT OF ISSUE.—

"(i) IN GENERAL.—Except as otherwise provided in ,.. J .. regulations, the portion of the face amount of an issue allocated to any test-period beneficiary of a facility financed by the proceeds of such issue (other than an owner of such facility) is an amount which bears the same relationship to the entire face amount of such issue as the portion of such facility used by such beneficiary bears to the entire facility. "(ii) OWNERS.—Except as otherwise provided in regu., lations, the portion of the face amount of an issue '" '-.. allocated to any test-period beneficiary who is an owner of a facility financed by the proceeds of such issue is an amount which bears the same relationship to the entire face amount of such issue as the portion of such facility owned by such beneficiary bears to the entire facility. ' "(D) TEST-PERIOD BENEFICIARY.—For purposes of this paragraph, except as provided in regulations, the term 'testperiod beneficiary' means any person who is an owner or a principal user of facilities being financed by the issue at ,,, any time during the 3-year period beginning on the later ^ of,, i.,. '^i^ ^^® ^^^^ such facilities were placed in service, or "(ii) the date of issue. "(E) TREATMENT OF RELATED PERSONS.—For purposes of this paragraph, all persons who are related (within the meaning of paragraph (3)) to each other shall be treated as 1 person.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/817

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2625

"(11) LIMITATION ON ACQUISITION OF DEPRECIABLE FARM PROPERTY.—

"(A) IN GENERAL.—This subsectionshall not apply to any issue if more than $250,000 of the net proceeds of such issue are to be used to provide depreciable farm property with respect to which the principal user is or will be the same person or 2 or more related persons. "(B) DEPRECIABLE FARM PROPERTY.—For purposes of this paragraph, the term 'depreciable farm property' means property of a character subject to the allowance for depreciation which is to be used in a trade or business of farming. "(C) PRIOR ISSUES TAKEN INTO ACCOUNT.—In determining the amount of proceeds of an issue to be used as described in subparagraph (A), there shall be taken into account the aggregate amount of each prior issue to which paragraph (1) (or the corresponding provisions of prior law) applied which were or will be so used. "(12) TERMINATION DATES.—

"(A) IN GENERAL.—This subsection shall not apply to— "(i) any bond (other than a borld described in clause (ii)) issued after December 31, 1986, or "(ii) any bond issued to refund a bond issued on or before such date unless— "(I) the refunding bond has a maturity date not later than the maturity date of the refunded bond, "(II) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, "(III) the interest rate on the refunding bond is lower than the interest rate on the refunded bond, and "(IV) the net proceeds of the refunding bond are used to redeem the refunded bond not later than 90 days after the date of the issuance of the refunding bond. i^

"(B) BONDS ISSUED TO FINANCE MANUFACTURING FACILITIES AND FARM PROPERTY.—In the case of any bond issued as part

of an issue 95 percent or more of the net proceeds of which are to be used to provide— "(i) any manufacturing facility, or "(ii) any land or property in accordance with section 147(c)(2), subparagraph (A) shall be applied by substituting '1989' for '1986'. "(C) MANUFACTURING FACILITY.—For purposes of this paragraph, the term 'manufacturing facility' means any facility which is used in the manufacturing or production of tangible personal property (including the processing resulting in a change in the condition of such property). A rule similar to the rule of section 1420t>)(2) shall apply for purposes of the preceding sentence. '(b) QUALIFIED STUDENT LOAN BOND.—For purposes of this part— "(1) IN GENERAL.—The term 'qualified student loan bond' means any bond issued as part of an issue the applicable percentage or more of the net proceeds of which are to be used directly or indirectly to make or finance student loans under—

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Page:United States Statutes at Large Volume 100 Part 3.djvu/818

 100 STAT. 2626

PUBLIC LAW 99-514—OCT. 22, 1986

.:X'''i U',- "(A) a program of general application to which the Higher Education Act of 1965 applies if— %> "(i) limitations are imposed under the program on— »;., "(I) the maximum amount of loans outstanding f, to any student, and -.,,., i "(II) the maximum rate of interest payable on any loan, "(ii) the loans are directly or indirectly guaranteed . by the Federal Government, "(iii) the financing of loans under the program is not limited by Federal law to the proceeds of tax-exempt bonds, and •^ "(iv) special allowance payments under section 438 of ^,i, the Higher Education Act of 1965— ",...,., "(I) are authorized to be paid with respect to loans made under the program, or •' "(II) would be authorized to be made with respect to loans under the program if such loans were not » financed with the proceeds of tax-exempt bonds, or I "(B) a program of general application approved by the ' State to which part B of title IV of the Higher Education .^ ^ Act of 1965 (relating to guaranteed student loans) does not apply if no loan under such program exceeds the difference ^ between the total cost of attendance and other forms of f student assistance (not including loans pursuant to section 428B(a)(l) of such Act (relating to parent loans) or subpart I .; of part C of title VII of the Public Health Service Act ^' (relating to student assistance)) for which the student borrower may be eligible. A bond issued as part of an issue shall V *' be treated as a qualified student loan bond only if no bond '^'* which is part of such issue meets the private business tests of paragraphs (1) and (2) of section 141Cb). "(2) APPLICABLE PERCENTAGE.—For purposes of paragraph (1),
 * J r

the term 'applicable percentage' means— "(A) 90 percent in the case of the program described in paragraph (I)(A), and "(B) 95 percent in the case of the program described in paragraph (I)(B). "(3) STUDENT BORROWERS MUST BE RESIDENTS OF ISSUING STATE,

ETC.—A student loan shall be treated as being made or financed under a program described in paragraph (1) with respect to an issue only if the student is— "(A) a resident of the State from which the volume cap under section 146 for such loan was derived, or "(B) enrolled at an educational institution located in such
 * rt3

State. .* -

"(4) DISCRIMINATION ON BASIS OF SCHOOL LOCATION NOT PER-

MITTED.—A program shall not be treated as described in paragraph (1)(A) if such program discriminates on the basis of the location (in the United States) of the educational institution in which the student is enrolled. "(c) QUALIFIED REDEVELOPMENT BOND.—For purposes of this part— "(1) IN GENERAL.—The term 'qualified redevelopment bond' means any bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used for 1 or more redevelopment purposes in any designated blighted area.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/819

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2627

"(2) ADDITIONAL REQUIREMENTS.—A bond shall not be treated as a qualified redevelopment bond unless— "(A) the issue described in paragraph (1) is issued pursuant to— "(i) a State law which authorizes the issuance of such bonds for redevelopment purposes in blighted areas, and "(ii) a redevelopment plan which is adopted before such issuance by the governing body described in paragraph (4)(A) with respect to the designated blighted area, "(B)(i) the payment of the principal and interest on such f* ' issue is primarily secured by taxes of general applicability imposed by a general purpose governmental unit, or "(ii) any incresise in real property tax revenues (attributable to increases in assessed value) by reason of the carrying out of such purposes in such area is reserved , exclusively for debt service on such issue (and similar issues) to the extent such increase does not exceed such debt r service, d:u"r "(C) each interest in real property located in such area— "(i) which is acquired by a governmental unit with the proceeds of the issue, and "(ii) which is transferred to a person other than a governmental unit, is transferred for fair market value, ... "(D) the financed area with respect to such issue meets the no additional charge requirements of paragraph (5), and "(E) the use of the proceeds of the issue meets the requirements of paragraph (6). "(3) REDEVELOPMENT PURPOSES.—For purposes of paragraph

I

(1)-

"(A) IN GENERAL.—The term 'redevelopment purposes' means, with respect to any designated blighted area— ii) 4JC, "(i) the acquisition (by a governmental unit having the power to exercise eminent domain) of real property located in such area, "(ii) the clearing and preparation for redevelopment of land in such area which was acquired by such governmental unit, "(iii) the rehabilitation of real property located in jj such area which was acquired by such governmental ,i unit, and "(iv) the relocation of occupants of such real props';,v..... -•erty. ^ "(B) NEW CONSTRUCTION NOT PERMITTED.—The term 're^. development purposes' does not include the construction (other than the rehabilitation) of any property or the enlargement of an existing building. "(4) DESIGNATED BUGHTED AREA.—For purposes of this subsection— "(A) IN GENERAL.—The term 'designated blighted area' means any blighted area designated by the governing body of a local general purpose governmental unit in the jurisdiction of which such area is located. j;^ "(B) BUGHTED AREA.—The term 'blighted area' means any area which the governing body described in subpara-

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Page:United States Statutes at Large Volume 100 Part 3.djvu/820

 100 STAT. 262§

PUBLid LAW 9^-514—OCT. 22, 1986

J-';. '

graph (A) determines to be a blighted area on the basis of the substantial presence of factors such as excessive vacant ,r '. land on which structures were previously located, abandoned or vacant buildings, substandard structures, vacan> cies, and delinquencies in payment of real property taxes. "(C) DESIGNATED AREAS MAY NOT EXCEED 20 PERCENT OF TOTAL ASSESSED VALUE OF REAL PROPERTY IN GOVERNMENT'S JURISDICTION.—

"(i) IN GENERAL.—An area may be designated by a ,..-governmental unit as a blighted area only if the designation percentage with respect to such area, when added to the designation percentages of all other designated blighted areas within the jurisdiction of such governmental unit, does not exceed 20 percent. i''. ' "(ii) DESIGNATION PERCENTAGE.—For purposes of this subparagraph, the term 'designation percentage' means, with respect to any area, the percentage (determined at the time such area is designated) which the assessed value of real property located in such area is of the total assessed value of all real property located > d \,v within the jurisdiction of the governmental unit which designated such area, "(iii) EXCEPTION WHERE BONDS NOT OUTSTANDING.— f " ' The designation percentage of a previously designated blighted area shall not be taken into account under clause (i) if no qualified redevelopment bond (or similar bond) is or will be outstanding with respect to such area. .v >

1* ^^

.-.

"(D) MINIMUM DESIGNATED AREA.—

"(i) IN GENERAL.—Except as provided in clause (ii), an area shall not be treated as a designated blighted area for purposes of this subsection unless such area is contiguous and compact and its area equals or exceeds 100 acres.

.1

'• ^

"(ii) 10-ACRE MINIMUM IN CERTAIN CASES.—Clause (i)

q * '' " - ', •'

H

shall be applied by substituting *10 acres' for '100 acres' if not more than 25 percent of the financed area is to be provided (pursuant to the issue and all other such issues) to 1 person. For purposes of the preceding sentence, all related persons (as defined in subsection (a)(3)) shall be treated as 1 person. For purposes of this clause, an area provided to a developer on a short-term interim basis shall not be treated as provided to such developer.

"(5) No ADDITIONAL CHARGE REQUIREMENTS.—The financed

area with respect to any issue meets the requirements of this paragraph if, while any bond which is part of such issue is outstanding— "(A) no owner or user of property located in the financed -m-i. area is subject to a charge or fee which similarly situated owners or users of comparable property located outside such area are not subject, and "(B) the assessment method or rate of real property taxes with respect to property located in the financed area does not differ from the assessment method or rate of real ' ! property taxes with respect to comparable property located outside such area.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/821

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2629

For purposes of the preceding sentence, the term 'comparable property' means property which is of the same type as the property to which it is being compared and which is located within the jurisdiction of the designating governmental unit. "(6) USE OF PROCEEDS REQUIREMENTS.—The use of the proceeds

of an issue meets the requirements of this paragraph if— "(A) not more than 25 percent of the net proceeds of such issue are to be used to provide (including the provision of -i. land for) facilities described in subsection (a)(8) or section 147(e), and "(B) no portion of the proceeds of such issue is to be used to provide (including the provision of land for) any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises. "(7) FINANCED AREA.—For purposes of this subsection, the term 'financed area' means, with respect to any issue, the portion of the designated blighted area with respect to which the proceeds of such issue are to be used. "(8) RESTRICTION ON ACQUISITION OF LAND NOT TO APPLY.—

Section 147(c) (other than paragraphs (1)(B) and (2) thereof) shall not apply to any qualified redevelopment bond. "SEC. 14.5. QUALIFIED.501(c)(3) BOND.

"(a) IN GENERAL.—For purposes of this part, except as otherwise provided in this section, the term 'qualified 501(c)(3) bond' means any private activity bond issued as part of an issue if— "(1) all property which is to be provided by the net proceeds of the issue is to be owned by a 501(c)(3) organization or a governmental unit, and "(2) such bond would not be a private activity bond if— "(A) 501(c)(3) organizations were treated as governmental units with respect to their activities which do not constitute unrelated trades or businesses, determined by applying section 513(a), and "(B) paragraphs (1) and (2) of section 141(b) were applied by substituting '5 percent' for '10 percent' each place it appears and by substituting 'net proceeds' for 'proceeds' each place it appears. "(b) $150,000,000 LIMITATION ON BONDS OTHER THAN HOSPITAL BONDS.—

"(1) IN GENERAL.—A bond (other than a qualified hospital bond) shall not be treated as a qualified 501(c)(3) bond if the aggregate authorized face amount of the issue (of which such bond is a part) allocated to any 501(c)(3) organization which is a test-period beneficiary (when increased by the outstanding taxexempt nonhospital bonds of such organization) exceeds $150,000,000. "(2) OUTSTANDING TAX-EXEMPT NONHOSPITAL BONDS.—

 * ,'i

"(A) IN GENERAL.—For purposes of applying paragraph (1) with respect to any issue, the outstanding tax-exempt nonhospital bonds of any organization which is a test-period beneficiary with respect to such issue is the aggregate amount of tax-exempt bonds referred to in subparagraph (B)-

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Page:United States Statutes at Large Volume 100 Part 3.djvu/822

 100 STAT. 2630

PUBLIC LAW 99-514—OCT. 22, 1986

b", J;.

' -

"(i) which a r e allocated to such organization, and "(ii) which are outstanding at the time of such later issue (not including as outstanding any bond which is to be redeemed (other than in an advance refunding) from the net proceeds of the later issue). "(B)

BONDS TAKEN INTO ACCOUNT.—For

purposes

of

subparagraph (A), the bonds referred to in this subparagraph are— "(i) any qualified 501(c)(3) bond other than a qualified hospital bond, and f "(ii) any bond to which section 141(a) does not apply if— "(I) such bond would have been an industrial development bond (as defined in section 103(b), as in effect on the day before the date of the enact' • ment of the Tax Reform Act of 1986) if 501(c)(3) organizations were not exempt persons, and "(II) such bond was not described in paragraph . (4), (5), or (6) of such section 103(b) (as in effect on . ' the date such bond was issued). "(C) ONLY NONHOSPITAL PORTION OF BONDS TAKEN INTO ACCOUNT.—
 * f

•.... '

"(i) IN GENERAL.—A bond shall be taken into account under subparagraph (B)(ii) only to the extent that the proceeds of the issue of which such bond is a part are not used with respect to a hospital. '^BJvrfQfli "(ii) SPECIAL RULE.—If 90 percent or more of the net u« • proceeds of an issue are used with respect to a hospital, no bond which is part of such issue shall be taken into tfi account under subparagraph (B)(ii). "(3) AGGREGATION RULE. — For purposes of this subsection, 2 or more organizations under common m a n a g e m e n t or control shall be treated as 1 organization. "(4) ALLOCATION O F FACE AMOUNT O F ISSUE; TEST-PERIOD BENE-

FICIARY.—Rules similar to the rules of subparagraphs (C) and (D) of section 144(a)(10) shall apply for purposes of this subsection. • "(c) QUALIFIED HOSPITAL B O N D. — For purposes of this section, the term 'qualified hospital bond' means any bond issued as part of a n issue 95 percent or more of the n e t proceeds of which a r e to be used with respect to a hospital. "(d) ELECTION O U T. — T h i s section shall not apply to a n issue if— "(1) the issuer elects not to have this section apply to such issue, and "(2) such issue is a n issue of exempt facility bonds, or qualified redevelopment bonds, to which section 146 applies. "SEC. 146. VOLUME CAP.

"(a) GENERAL RULE.—A private activity bond issued as part of an issue meets the requirements of this section if the aggregate face amount of the private activity bonds issued pursuant to such issue, when added to the aggregate face amount of tax-exempt private activity bonds previously issued by the issuing authority during the calendar year, does not exceed such authority's volume cap for such calendar year. "(b) VOLUME CAP FOR STATE AGENCIES.—For purposes of this section—

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Page:United States Statutes at Large Volume 100 Part 3.djvu/823

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2631

"(1) IN GENERAL.—The volume cap for any agency of the State authorized to issue tax-exempt private activity bonds for any calendar year shall be 50 percent of the State ceiling for such calendar year. "(2) SPECIAL RULE WHERE STATE HAS MORE THAN i AGENCY.—If

more than 1 agency of the State is authorized to issue taxexempt private activity bonds, all such agencies shall be treated as a single agency. "(c) VOLUME CAP FOR OTHER ISSUERS.—For purposes of this section— "(1) IN GENERAL.—The volume cap for any issuing authority (other than a State agency) for any calendar year shall be an amount which bears the same ratio to 50 percent of the State ' ceiling for such calendar year as— '*^ "(A) the population of the jurisdiction of such issuing authority, bears to "^ "(B) the population of the entire State. •'

"(2) OVERLAPPING JURISDICTIONS.—For purposes of paragraph

, ^'

(I)(A), if an area is within the jurisdiction of 2 or more governmental units, 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 area. "(d) STATE CEIUNG.—For purposes of this section— "(1) IN GENERAL.—The State ceiling applicable to any State for any calendar year shall be the greater of— "(A) an amount equal to $75 multiplied by the State population, or "(B) $250,000,000. Subparagraph (B) shall not apply to any possession of the United States. "(2) ADJUSTMENT AFTER 1987.—In the case of calendar years t. after 1987, paragraph (1) shall be applied by substituting— b ^... "(A) '$50' for '$75', and "(B) '$150,000,000' for '$250,000,000'. "(3) SPECIAL RULE FOR STATES WITH CONSTITUTIONAL HOME RULE CITIES.—For purposes of this section—

ffJi V

"(A) IN GENERAL.—The volume cap for any constitutional home rule city for any calendar year shall be determined under paragraph (1) of subsection (c) by substituting '100 percent' for '50 percent'. "(B) COORDINATION WITH OTHER ALLOCATIONS.—In the

.f.j.f

case of any State which contains 1 or more constitutional home rule cities, for purposes of applying subsections (b) and (c) with respect to issuing authorities in such State other than constitutional home rule cities, the State ceiling for any calendar year shall be reduced by the aggregate volume caps determined for such year for all constitutional home rule cities in such State. "(C) CONSTITUTIONAL HOME RULE CITY.—For purposes of

 * or'*

-.

this section, the term 'constitutional home rule city means, with respect to any calendar year, any political subdivision of a State which, under a State constitution which was adopted in 1970 and effective on July 1, 1971, had home rule powers on the 1st day of the calendar year.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/824

 100 STAT. 2632

PUBLIC LAW 99-514—OCT. 22, 1986

-'-

"(4) SPECIAL RULE FOR POSSESSIONS WITH POPULATIONS OF LESS THAN THE POPULATION OF THE LEAST POPULOUS STATE.—

"(A) IN GENERAL.—If the population of any possession of the United States for any calendar year is less than the i* " i population of the least populous State (other than a possession) for such calendar year, the limitation under paragraph (1)(A) shall not be less than the amount determined under subparagraph (B) for such calendar year. '•mi. X ''(g) LIMITATION.—The limitation determined under this , 4i subparagraph, with respect a possession, for any calendar ' year is an amount equal to the product of— "(i) the fraction— "(I) the numerator of which is the amount ap,.,. .., plicable under paragraph (1)(B) for such calendar '^' " ** '• year, and "(II) the denominator of which is the State population of the least populous State (other than a possession) for such calendar year, and ", "(ii) the population of such possession for such calendar year. "(e) STATE MAY PROVIDE FOR DIFFERENT ALLOCATION.—For purposes of this section— "(1) IN GENERAL.—Except as provided in paragraph (3), a State may, by law provide a different formula for allocating the State ceiling among the governmental units (or other authori.. ties) in such State having authority to issue tax-exempt private activity bonds. "(2) INTERIM AUTHORITY FOR GOVERNOR.—

.„.

,

-t yv, - '

"(A) IN GENERAL.—Except as otherwise provided in paragraph (3), the Governor of any State may proclaim a different formula for allocating the State ceiling among the governmental units (or other authorities) in such State having authority to issue private activity bonds. "(B) TERMINATION OF AUTHORITY.—The authority provided in subparagraph (A) shall not apply to bonds issued after the earlier of— "(i) the last day of the 1st calendar year after 1986 during which the legislature of the State met in regular session, or "(ii) the effective date of any State legislation with respect to the allocation of the State ceiling. "(3) STATE MAY NOT ALTER ALLOCATION TO CONSTITUTIONAL

,

HOME RULE CITIES.—Except as Otherwise provided in a State constitutional amendment (or law changing the home rule provision adopted in the manner provided by the State constitution), the authority provided in this subsection shall not apply to that portion of the State ceiling which is allocated to any constitutional home rule city in the State unless such city agrees to such different allocation. "if) ELECTIVE CARRYFORWARD OF UNUSED LIMITATION FOR SPECIFIED PURPOSE.—

"(1) IN GENERAL.—If— "(A) an issuing authority's volume cap for any calendar year after 1985, exceeds •*'» -'•' "(B) the aggregate amount of tax-exempt private activity bonds issued during such calendar year by such authority.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/825

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2633

such authority may elect to treat all (or any portion) of such excess as a carryforward for 1 or more carryforward purposes. "(2) ELECTION MUST IDENTIFY PURPOSE.—In any election under paragraph (1), the issuing authority shall— i "(A) identify the purpose for which the carryforward is elected, and "(B) specify the portion of the excess described in paragraph (1) which is to be a carryforward for each such purpose. "(3) USE OF CARRYFORWARD.—

t i ii '«

"(A) IN GENERAL.—If any issuing authority elects a carryforward under paragraph (1) with respect to any carryforward purpose, any private activity bonds issued by such authority with respect to such purpose during the 3 calendar years following the calendar year in which the carryforward arose shall not be taken into account under subsection (a) to the extent the amount of such bonds does not exceed the amount of the carryforward elected for such purpose. "(B)

ORDER

IN

WHICH

CARRYFORWARD

USED.—

Canyforwards elected with respect to any purpose shall be T used in the order of the calendar years in which they arose. "(4) ELECTION.—Any election under this paragraph (and any identification or specification contained therein), once made, ^ shall be irrevocable. "(5) CARRYFORWARD PURPOSE.—The term 'carryforward purpose' means— "(A) the purpose of issuing bonds referred to in one of the clauses of section 141(d)(l)(A), "(B) the purpose of issuing qualified mortgage bonds or ''" mortgage credit certificates, ^ "(C) the purpose of issuing qualified student loan bonds, ^ and "(D) the purpose of issuing qualified redevelopment bonds. "(g) EXCEPTION FOR CERTAIN BONDS.—Only for purposes of this section, the term 'private activity bond' shall not include— "(1) any qualified veterans' mortgage bond, ^ "(2) any qualified 501(c)(3) bond, and "(3) any exempt facility bond issued as part of an issue described in paragraph (1) or (2) of section 142(a) (relating to airports and docks and wharves). "(h) EXCEPTION FOR GOVERNMENT-OWNED SOUD WASTE DISPOSAL FACILITIES.—

"(1) IN GENERAL.—Only for purposes of this section, the term 'private activity bond' shall not include any exempt facility f bond described in section 142(a)(6) which is issued as part of an y !,' issue if all of the property to be financed by the net proceeds of such issue is to be owned by a governmental unit. "(2)

SAFE

HARBOR FOR DETERMINATION OF GOVERNMENT

OWNERSHIP.—In determining ownership for purposes of paragraph (1), section 1420t>XlXB) shall apply, except that a lease term shall be treated eis satisfying clause (ii) thereof if it is not more than 20 years, "(i) TREATMENT OF REFUNDING ISSUES.—For purposes of the volume cap imposed by this section—

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Page:United States Statutes at Large Volume 100 Part 3.djvu/826

 100 STAT. 2634

PUBLIC LAW 99-514—OCT. 22, 1986 '• "(1) IN GENERAL.—The term 'private activity bond' shall not .f- include any bond which is issued to refund another bond to the ".- extent that the amount of such bond does not exceed the outstanding amount of the refunded bond. r "(2) SPECIAL RULES FOR STUDENT LOAN BONDS.—In the case of any qualified student loan bond, paragraph (1) shall apply only .. if the maturity date of the refunding bond is not later than the ff later of— "(A) the maturity date of the bond to be refunded, or "(B) the date 17 years after the date on which the re» '" funded bond was issued (or in the case of a series of V refundings, the date on which the original bond was issued). "(3) SPECIAL RULES FOR QUALIFIED MORTGAGE BONDS.—In the

b case of any qualified mortgage bond, paragraph (1) shall apply s only if the maturity date of the refunding bond is not later than - the later of— "(A) the maturity date of the bond to be refunded, or "(B) the date 32 years after the date on which the refunded bond was issued (or in the case of a series of refundings, the date on which the original bond was issued). cj "(4) EXCEPTION FOR ADVANCE REFUNDING.—This subsection ", shall not apply to any bond issued to advance refund another bond. "(j) POPULATION.—For purposes of this section, determinations of the population of any State (or issuing authority) shall be made with respect to any calendar year on the basis of the most recent census estimate of the resident population of such State (or issuing authority) released by the Bureau of Census before the beginning of such calendar year, "(k) FACILITY MUST B E LOCATED WITHIN STATE.—

"(1) IN GENERAL.—Except as provided in paragraph (2), no _ portion of the State ceiling applicable to any State for any ,^ '" calendar year may be used with respect to financing for a, facility located outside such State. "(2) EXCEPTION FOR CERTAIN FACILITIES WHERE STATE WILL GET PROPORTIONATE SHARE OF BENEFITS.—Paragraph (1) shall not

^' apply to any exempt facility bond described in paragraph (4), (5), (6), or (10) of section 142(a) if the issuer establishes that the State's share of the use of the facility (or its output) will equal or exceed the State's share of the private activity bonds issued to finance the facility. "(1) ISSUER OF QUALIFIED SCHOLARSHIP FUNDING BONDS.—In the

case of a qualified scholarship funding bond, such bond shall be treated for purposes of this section as issued by a State or local issuing authority (whichever is appropriate). "(m) TREATMENT OF AMOUNTS ALLOCATED TO PRIVATE ACTIVITY PORTION OF GOVERNMENT USE BONDS.—

"(1) IN GENERAL.—The volume cap of an issuer shall be ^ reduced by the amount allocated by the issuer to an issue under ^ section 141(b)(5). T

"(2) ADVANCE REFUNDINGS.—Except as otherwise provided by

'i the Secretary, any advance refunding of any part of an issue to <» which an amount was allocated under section 141(b)(5) (or would 3* have been allocated if such section applied to such issue) shall be taken into account under this section to the extent of the &'• amount of the volume cap which was (or would have been) so allocated.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/827

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2635

"(n) REDUCTION FOR MORTGAGE CREDIT CERTIFICATES, ETC.—The

volume cap of any issuing authority for any calendar year shall be reduced by the sum of— "(1) the amount of qualified mortgage bonds which such authority elects not to issue under section 25(c)(2)(A)(ii) during such year, plus "(2) the amount of any reduction in such ceiling under section 25(0 applicable to such authority for such year. "SEC. 147. OTHER REQUIREMENTS APPLICABLE TO CERTAIN PRIVATE ACTIVITY BONDS. "(a) SUBSTANTIAL USER REQUIREMENT.—

"(1) IN GENERAL.—Except as provided in subsection (h), a private activity bond shall not be a qualified bond for any period during which it is held by a person who is a substantial user of the facilities or by a related person of such a substantial user. "(2) RELATED PERSON.—For purposes of paragraph (1), the

following shall be treated as related persons— "(A) 2 or more persons if the relationship between such persons would result in a disallowance of losses under section 267 or 707(b), "(B) 2 or more persons which are members of the same ,^, controlled group of corporations (as defined in section 4,., 1563(a), except that 'more than 50 percent' shall be substituted for 'at least 80 percent' each place it appears therein), , "(C) a partnership and each of its partners (and their spouses and minor children), and "(D) an S corporation and each of its shareholders (and their spouses and minor children). "(b) MATURITY MAY NOT EXCEED 120 PERCENT OF ECONOMIC LIFE.— "(1) GENERAL RULE.—Except as provided in subsection (h), a

private activity bond shall not be a qualified bond if it is issued as part of an issue and— "(A) the average maturity of the bonds issued as part of such issue, exceeds "(B) 120 percent of the average reasonably expected economic life of the facilities being financed with the net proceeds of such issue. "(2) DETERMINATION OF AVERAGES.—For purposes of paragraph (D— "(A) the average maturity of any issue shall be determined by taking into account the respective issue prices of the bonds issued as part of such issue, and "(B) the average reasonably expected economic life of the facilities being financed with any issue shall be determined by taking into account the respective cost of such facilities. .,

"(3) SPECIAL RULES.— "(A) DETERMINATION OF ECONOMIC LIFE.—For purposes of

this subsection, the reasonably expected economic life of any facility shall be determined as of the later of^ "(i) the date on which the bonds are issued, or "(ii) the date on which the facility is placed in service (or expected to be placed in service). "(B) TREATMENT OF LAND.—

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Page:United States Statutes at Large Volume 100 Part 3.djvu/828

 100 STAT. 2636

PUBLIC LAW 99-514—OCT. 22, 1986 sj;"^

..

"(i) L A N D NOT TAKEN INTO ACCOUNT.—Except as pro-

•4 iif. •

vided in clause (ii), land shall not be t a k e n into account under paragraph (1)(B).

,

• •,..'

"(ii) ISSUES WHERE 25 PERCENT OR MORE O F PROCEEDS USED TO FINANCE LAND.—If 25 p e r c e n t or more of the

net proceeds of any issue is to be used to finance land, w •*""V_ such land shall be t a k e n into account under paragraph (1)(B) and shall be t r e a t e d as having a n economic life of 30 years. "(4) SPECIAL RULE ORGANIZATION.—

FOR POOLED

FINANCING

OF

501(C)(3)

"(A) IN GENERAL.—At the election of the issuer, a qualified 501(c)(3) bond shall be t r e a t e d as meeting the requirei m e n t s of paragraph (1) if such bond meets the requirements •* of subparagraph (B). •^"(B) REQUIREMENTS.—A qualified 501(c)(3) bond meets the requirements of this subparagraph if— "(i) 95 percent or more of the n e t proceeds of the c'jir. issue of which such bond is a part a r e to be used to " '^'" ^ m a k e or finance loans to 2 or more 501(c)(3) organizations or government a l u n i t s for acquisition of property "'^-J to be used by such organizations, •'*'*'• "(ii) each loan described in clause (i) satisfies the ''" requirements of paragraph (1) (determined by t r e a t i n g each loan as a s e p a r a t e issue), .J "(iii) before such bond is issued, a d e m and survey was •.!**n conducted which shows a d e m and for financing g r e a t e r than a n a m o u n t equal to 120 percent of the lendable • 'lu. f', proceeds of such issue, and "(iv) 95 percent or more of the n e t proceeds of such ' ' issue a r e to be loaned to 501(c)(3) organizations or government a l units within 1 year of issuance and, to ,' the extent the r e a r e any u n s p e n t proceeds after such ' *''"' 1-year period, bonds issued as part of such issue a r e to be redeemed as soon as possible thereafter (and in no "'• event later than 18 months after issuance). A bond shall not meet the requirements of this subpara^ g r a p h if the m a t u r i t y date of any bond issued as part of ' ' such issue is more than 30 years after the date on which the bond w a s issued (or, in the case of a refunding or series of refundings, the date on which the original bond was issued). "(5) SPECIAL RULE FOR CERTAIN F H A INSURED L O A N S. — P a r a -

g r a p h (1) shall not apply to any bond issued as part of a n issue 95 percent or more of the n e t proceeds of which a r e to be used to finance mortgage loans insured under F H A 242 or under a similar Federal Housing Administration program (as in effect on the date of the e n a c t m e n t of the T a x Reform Act of 1986) where the loan term approved by such Administration plus the maximum m a t u r i t y of debentures which could be issued by such Administration in satisfaction of its obligations exceeds the term permitted under paragraph (1). "(c) LIMITATION ON U S E FOR L A N D ACQUISITION. —

"(1) IN GENERAL.—Except a s provided in subsection (h), a private activity bond shall not be a qualified bond if— "(A) it is issued as part of a n issue and 25 percent or more of the n e t proceeds of such issue a r e to be used (directly or

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Page:United States Statutes at Large Volume 100 Part 3.djvu/829

 PUBLIC LAW 99-514—OCT. 22, 1986
 * r

vr

100 STAT. 2637

indirectly) for the acquisition of land (or an interest therein), or "(B) any portion of the proceeds of such issue is to be used (directly or indirectly) for the acquisition of land (or an interest therein) to be used for farming purposes. "(2) EXCEPTION FOR FIRST-TIME FARMERS.—

"(A) IN GENERAL.—If the requirements of subparagraph (B) are met with respect to any land, paragraph (1) shall not apply to such land, and subsection (d) shall not apply to property to be used thereon for farming purposes, but only to the extent of expenditures (financed with the proceeds of the issue) not in excess of $250,000.

}

,,

"(B) ACQUISITION BY FIRST-TIME FARMERS.—The require-

ihiri 1

j; aidt

ments of this subparagraph are met with respect to any land if— "(i) such land is to be used for farming purposes, and "(ii) such land is to be acquired by an individual who is a first-time farmer, who will be the principal user of such land, and who will materially and substantially participate on the farm of which such land is a part in the operation of such farm. "(C) FIRST-TIME FARMER.—For purposes of this paragraph— "(i) IN GENERAL.—The term 'first-time farmer' means any individual if such individual— "(I) has not at any time had any direct or indirect ownership interest in substantial farmland in the operation of which such individual materially participated, and "(II) has not received financing under this paragraph in an amount which, when added to the financing to be provided under this paragraph, exceeds $250,000. "(ii) AGGREGATION RULES.—Any ownership or material participation, or financing received, by an individual's spouse or minor child shall be treated as ownership and material participation, or financing received, by the individual, "(iii) INSOLVENT FARMER.—For purposes of clause (i), farmland which was previously owned by the individual and was disposed of while such individual was insolvent shall be disregarded if section 108 applied to indebtedness with respect to such farmland. "(D) FARM.—For purposes of this paragraph, the term 'farm' has the meaning given such term by section 6420(c)(2). "(E) SUBSTANTIAL FARMLAND.—For purposes of this paragraph, the term 'substantial farmland' means any parcel of land unless— "(i) such parcel is smaller than 15 percent of the median size of a farm in the county in which such parcel is located, and "(ii) the fair market value of the land does not at any time while held by the individual exceed $125,000. "(F) USED EQUIPMENT LIMITATION.—For purposes of this paragraph, in no event may the amount of financing pro-

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Page:United States Statutes at Large Volume 100 Part 3.djvu/830

 100 STAT. 2638

PUBLIC LAW 99-514—OCT. 22, 1986 ^iXi

vided by reason of this paragraph to a first-time farmer for personal property— b-i "(i) of a character subject to the allowance for depreG-ciation, "(ii) the original use of which does not begin with such farmer, and "i ' 4 > "(iii) which is to be used for farming purposes, exceed $62,500. A rule similar to the rule of subparagraph (C)(ii) shall apply for purposes of the preceding sentence. "(3) EXCEPTION FOR CERTAIN LAND ACQUIRED FOR ENVIRONMENTAL PURPOSES, ETC.—Any land acquired by a governmental

unit (or issuing authority) in connection with an airport, mass commuting facility, dock, or wharf shall not be taken into account under paragraph (1) if— "(A) such land is acquired for noise abatement or wetland preservation, or for future use as an airport, mass commuting facility, dock, or wharf, and "(B) there is not other significant use of such land. "(d) ACQUISITION OF EXISTING PROPERTY NOT PERMITTED.—

\

"(1) IN GENERAL.—Except as provided in subsection (h), a private activity bond shall not be a qualified bond if issued as part of an issue and any portion of the net proceeds of such issue is to be used for the acquisition of any property (or an interest therein) unless the 1st use of such property is pursuant to such acquisition. "(2) EXCEPTION FOR CERTAIN REHABILITATIONS.—Paragraph (1)

shall not apply with respect to any building (and the equipment therefor) if— "(A) the rehabilitation expenditures with respect to such ^•'*"' building, equal or exceed "(B) 15 percent of the portion of the cost of acquiring such building (and equipment) financed with the net proceeds of the issue. A rule similar to the rule of the preceding sentence shall apply in the case of structures other than a building except that subparagraph (B) shall be applied by substituting '100 percent' for '15 percent'. "(3) REHABILITATION EXPENDITURES.—For purposes of this subsection— "(A) IN GENERAL.—Except as provided in this paragraph, the term 'rehabilitation expenditures' means any amount c properly chargeable to capital account which is incurred by the person acquiring the building for property (or additions or improvements to property) in connection with the rehabilitation of a building. In the case of an integrated operation contained in a building before its acquisition, •BZkt'. such term includes rehabilitating existing equipment in •' • such building or replacing it with equipment having substantially the same function. For purposes of this subparagraph, any amount incurred by a successor to the person acquiring the building or by the seller under a sales contract with such person shall be treated as incurred by such person. "(B) CERTAIN EXPENDITURES NOT INCLUDED.—The term 'rehabilitation expenditures' does not include any expendi< ^^? ture described in section 48(g)(2)(B).

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Page:United States Statutes at Large Volume 100 Part 3.djvu/831

 PUBLIC LAW 99-514—OCT. 22, 1986 i

"(C)

100 STAT. 2639

PERIOD DURING WHICH EXPENDITURES MUST BE IN-

CURRED.—The term 'rehabilitation expenditures' shall not include any amount which is incurred after the date 2 years after the later of— "(i) the date on which the building was acquired, or "(ii) the date on which the bond was issued. "(4) SPECIAL RULE FOR CERTAIN PROJECTS.—In the case of a project involving 2 or more buildings, this subsection shall be applied on a project basis. "(e) No PORTION OF BONDS MAY BE ISSUED FOR SKYBOXES, AIRPLANES, GAMBLING ESTABLISHMENTS, ETC.—A private activity bond

shall not be treated as a qualified bond if issued as part of an issue and any portion of the proceeds of such issue is to be used to provide any airplane, skybox or other private luxury box, health club facility, facility primarily used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises. "(f) PUBLIC APPROVAL REQUIRED FOR PRIVATE ACTIVITY BONDS.—

"(1) IN GENERAL.—A private activity bond shall not be a qualified bond unless such bond satisfies the requirements of paragraph (2). "(2) PUBLIC APPROVAL REQUIREMENT.—

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"(A) IN GENERAL.—A bond shall satisfy the requirements of this paragraph if such bond is issued as a part of an issue which has been approved by— "(i) the governmental unit— "(I) which issued such bond, or "(II) on behalf of which such bond was issued, and "(ii) each governmental unit having jurisdiction over the area in which any facility, with respect to which financing is to be provided from the net proceeds of such issue, is located (except that if more than 1 governmental unit within a State has jurisdiction over the entire area within such State in which such facility is located, only 1 such unit need approve such issue). "(B) APPROVAL BY A GOVERNMENTAL UNIT.—For purposes

of subparagraph (A), an issue shall be treated as having been approved by any governmental unit if such issue is approved— "(i) by the applicable elected representative of such governmental unit after a public hearing following reasonable public notice, or "(ii) by voter referendum of such governmental unit. "(C) SPECIAL RULES FOR APPROVAL OF FACILITY.—If there has been public approval under subparagraph (A) of the plan for financing a facility, such approval shall constitute approval under subparagraph (A) for any issue— "(i) which is issued pursuant to such plan within 3 years after the date of the 1st issue pursuant to the approval, and "(ii) all or substantially all of the proceeds of which are to be used to finance such facility or to refund previous financing under such plan. "(D) REFUNDING BONDS.—NO approval under subparagraph (A) shall be necessary with respect to any bond which is issued to refund (other than to advance refund) a bond

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text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/832

 100 STAT. 2640

PUBLIC LAW 99-514—OCT. 22, 1986 ,.; j n ,Q

approved under subparagraph (A) (or treated as approved under subparagraph (O) unless the maturity date of such bond is later than the maturity date of the bond to be refunded. "(E) APPLICABLE ELECTED REPRESENTATIVE.—For purposes

of this paragraph— "(i) IN GENERAL.—The term 'applicable elected repe^;;,;' resentative' means with respect to any governmental unit— "(I) an elected legislative body of such unit, or "(II) the chief elected executive officer, the chief elected State legal officer of the executive branch, or any other elected official of such unit designated for purposes of this paragraph by such chief elected executive officer or by State law. u. "(ii) No APPLICABLE ELECTED REPRESENTATIVE.—If (but for this clause) a governmental unit has no applicable ._, elected representative, the applicable elected represent£ i ative for purposes of clause (i) shall be the applicable I::, ! elected representative of the governmental unit— "(I) which is the next higher governmental unit with such a representative, and ail. "(II) from which the authority of the govern.,. mental unit with no such representative is derived. "(3) SPECIAL RULE FOR APPROVAL OF AIRPORTS.—If—
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"(A) the proceeds of an issue are to be used to finance a facility or facilities located at an airport, and t?r "(B) the governmental unit issuing such bonds is the owner or operator of such airport, such governmental unit shall be deemed to be the only governmental unit having jurisdiction over such airport for purposes of this subsection. "(g) RESTRICTION ON ISSUANCE COSTS FINANCED BY ISSUE.—

"(1) IN GENERAL.—A private activity bond shall not be a qualified bond if the issuance costs financed by the issue (of which such bond is a part) exceed 2 percent of the aggregate face amount of the issue. "(2) SPECIAL RULE FOR SMALL MORTGAGE REVENUE BOND

ISSUES.—In the case of an issue of qualified mortgage bonds or qualified veterans' mortgage bonds, paragraph (1) shall be applied by substituting '3.5 percent' for '2 percent' if the aggregate authorized face amount of the issue does not exceed $20,000,000. "(h) CERTAIN RULES NOT To APPLY TO MORTGAGE REVENUE BONDS, QUALIFIED STUDENT LOAN BONDS, AND QUALIFIED 501(c)(3) BONDS.— "(1) MORTGAGE REVENUE BONDS AND QUALIFIED STUDENT LOAN

BONDS.—Subsections (a), (b), (c), and (d) shall not apply to any qualified mortgage bond, qualified veterans' mortgage bond, or qualified student loan bond. "(2) QUALIFIED 501(CX3) BONDS.—Subsections (a), (c), and (d)

shall not apply to any qualified 501(c)(3) bond and subsection (e) shall be applied as if it did not contain 'health club facility' with respect to such a bond. "Subpart B—Requirements Applicable to All State and Local Bonds ^ fO "Sec. 148. Arbitrage. "Sec. 149. Bonds must be registered to be tax exempt; other requirements.

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