Internal Revenue Code – Section 142

Sec. 142. Exempt facility bond

-STATUTE-

(a) General rule

For purposes of this part, the term "exempt facility bond" means

any bond issued as part of an issue 95 percent or more of the net

proceeds of which are to be used to provide -

(1) airports,

(2) docks and wharves,

(3) mass commuting facilities,

(4) facilities for the furnishing of water,

(5) sewage facilities,

(6) solid waste disposal facilities,

(7) qualified residential rental projects,

(8) facilities for the local furnishing of electric energy or

gas,

(9) local district heating or cooling facilities,

(10) qualified hazardous waste facilities,

(11) high-speed intercity rail facilities,

(12) environmental enhancements of hydroelectric generating

facilities,

(13) qualified public educational facilities,

(14) qualified green building and sustainable design projects,

or

(15) qualified highway or surface freight transfer facilities.

(b) Special exempt facility bond rules

For purposes of subsection (a) -

(1) Certain facilities must be governmentally owned

(A) In general

A facility shall be treated as described in paragraph (1),

(2), (3), or (12) of subsection (a) only if all of the property

to be financed by the net proceeds of the issue is to be owned

by a governmental unit.

(B) Safe harbor for leases and management contracts

For purposes of subparagraph (A), property leased by a

governmental unit shall be treated as owned by such

governmental unit if -

(i) the lessee makes an irrevocable election (binding on

the lessee and all successors in interest under the lease)

not to claim depreciation or an investment credit with

respect to such property,

(ii) the lease term (as defined in section 168(i)(3)) is

not more than 80 percent of the reasonably expected economic

life of the property (as determined under section 147(b)),

and

(iii) the lessee has no option to purchase the property

other than at fair market value (as of the time such option

is exercised).

 

Rules similar to the rules of the preceding sentence shall

apply to management contracts and similar types of operating

agreements.

(2) Limitation on office space

An office shall not be treated as described in a paragraph of

subsection (a) unless -

(A) the office is located on the premises of a facility

described in such a paragraph, and

(B) not more than a de minimis amount of the functions to be

performed at such office is not directly related to the day-to-

day operations at such facility.

(c) Airports, docks and wharves, mass commuting facilities and high-

speed intercity rail facilities

For purposes of subsection (a) -

(1) Storage and training facilities

Storage or training facilities directly related to a facility

described in paragraph (1), (2), (3) or (11) of subsection (a)

shall be treated as described in the paragraph in which such

facility is described.

(2) Exception for certain private facilities

Property shall not be treated as described in paragraph (1),

(2), (3) or (11) of subsection (a) if such property is described

in any of the following subparagraphs and is to be used for any

private business use (as defined in section 141(b)(6)).

(A) Any lodging facility.

(B) Any retail facility (including food and beverage

facilities) in excess of a size necessary to serve passengers

and employees at the exempt facility.

(C) Any retail facility (other than parking) for passengers

or the general public located outside the exempt facility

terminal.

(D) Any office building for individuals who are not employees

of a governmental unit or of the operating authority for the

exempt facility.

(E) Any industrial park or manufacturing facility.

(d) Qualified residential rental project

For purposes of this section -

(1) In general

The term "qualified residential rental project" means any

project for residential rental property if, at all times during

the qualified project period, such project meets the requirements

of subparagraph (A) or (B), whichever is elected by the issuer at

the time of the issuance of the issue with respect to such

project:

(A) 20-50 test

The project meets the requirements of this subparagraph if 20

percent or more of the residential units in such project are

occupied by individuals whose income is 50 percent or less of

area median gross income.

(B) 40-60 test

The project meets the requirements of this subparagraph if 40

percent or more of the residential units in such project are

occupied by individuals whose income is 60 percent or less of

area median gross income.

 

For purposes of this paragraph, any property shall not be treated

as failing to be residential rental property merely because part

of the building in which such property is located is used for

purposes other than residential rental purposes.

(2) Definitions and special rules

For purposes of this subsection -

(A) Qualified project period

The term "qualified project period" means the period

beginning on the 1st day on which 10 percent of the residential

units in the project are occupied and ending on the latest of -

(i) the date which is 15 years after the date on which 50

percent of the residential units in the project are occupied,

(ii) the 1st day on which no tax-exempt private activity

bond issued with respect to the project is outstanding, or

(iii) the date on which any assistance provided with

respect to the project under section 8 of the United States

Housing Act of 1937 terminates.

(B) Income of individuals; area median gross income

(i) In general

The income of individuals and area median gross income

shall be determined by the Secretary in a manner consistent

with determinations of lower income families and area median

gross income 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).

Determinations under the preceding sentence shall include

adjustments for family size. Subsections (g) and (h) of

section 7872 shall not apply in determining the income of

individuals under this subparagraph.

(ii) Special rule relating to basic housing allowances

For purposes of determining income under this subparagraph,

payments under section 403 of title 37, United States Code,

as a basic pay allowance for housing shall be disregarded

with respect to any qualified building.

(iii) Qualified building

For purposes of clause (ii), the term "qualified building"

means any building located -

(I) in any county in which is located a qualified

military installation to which the number of members of the

Armed Forces of the United States assigned to units based

out of such qualified military installation, as of June 1,

2008, has increased by not less than 20 percent, as

compared to such number on December 31, 2005, or

(II) in any county adjacent to a county described in

subclause (I).

(iv) Qualified military installation

For purposes of clause (iii), the term "qualified military

installation" means any military installation or facility the

number of members of the Armed Forces of the United States

assigned to which, as of June 1, 2008, is not less than

1,000.

(C) Students

Rules similar to the rules of 42(i)(3)(D) (!1) shall apply

for purposes of this subsection.

 

(D) Single-room occupancy units

A unit shall not fail to be treated as a residential unit

merely because such unit is a single-room occupancy unit

(within the meaning of section 42).

(E) Hold harmless for reductions in area median gross income

(i) In general

Any determination of area median gross income under

subparagraph (B) with respect to any project for any calendar

year after 2008 shall not be less than the area median gross

income determined under such subparagraph with respect to

such project for the calendar year preceding the calendar

year for which such determination is made.

(ii) Special rule for certain census changes

In the case of a HUD hold harmless impacted project, the

area median gross income with respect to such project for any

calendar year after 2008 (hereafter in this clause referred

to as the current calendar year) shall be the greater of the

amount determined without regard to this clause or the sum of

-

(I) the area median gross income determined under the HUD

hold harmless policy with respect to such project for

calendar year 2008, plus

(II) any increase in the area median gross income

determined under subparagraph (B) (determined without

regard to the HUD hold harmless policy and this

subparagraph) with respect to such project for the current

calendar year over the area median gross income (as so

determined) with respect to such project for calendar year

2008.

(iii) HUD hold harmless policy

The term "HUD hold harmless policy" means the regulations

under which a policy similar to the rules of clause (i)

applied to prevent a change in the method of determining area

median gross income from resulting in a reduction in the area

median gross income determined with respect to certain

projects in calendar years 2007 and 2008.

(iv) HUD hold harmless impacted project

The term "HUD hold harmless impacted project" means any

project with respect to which area median gross income was

determined under subparagraph (B) for calendar year 2007 or

2008 if such determination would have been less but for the

HUD hold harmless policy.

(3) Current income determinations

For purposes of this subsection -

(A) In general

The determination of whether the income of a resident of a

unit in a project exceeds the applicable income limit shall be

made at least annually on the basis of the current income of

the resident. The preceding sentence shall not apply with

respect to any project for any year if during such year no

residential unit in the project is occupied by a new resident

whose income exceeds the applicable income limit.

(B) Continuing resident's income may increase above the

applicable limit

If the income of a resident of a unit in a project did not

exceed the applicable income limit upon commencement of such

resident's occupancy of such unit (or as of any prior

determination under subparagraph (A)), the income of such

resident shall be treated as continuing to not exceed the

applicable income limit. The preceding sentence shall cease to

apply to any resident whose income as of the most recent

determination under subparagraph (A) exceeds 140 percent of the

applicable income limit if after such determination, but before

the next determination, any residential unit of comparable or

smaller size in the same project is occupied by a new resident

whose income exceeds the applicable income limit.

(C) Exception for projects with respect to which affordable

housing credit is allowed

In the case of a project with respect to which credit is

allowed under section 42, the second sentence of subparagraph

(B) shall be applied by substituting "building (within the

meaning of section 42)" for "project".

(4) Special rule in case of deep rent skewing

(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 percent" for "140 percent", and

(ii) "any low-income unit in the same project is occupied

by a new resident whose income exceeds 40 percent of area

median gross income" for "any residential unit of comparable

or smaller size in the same project is occupied by a new

resident whose income exceeds the applicable income limit".

(B) Deep rent skewed project

A project is described in this subparagraph if the owner of

the project elects to have this paragraph apply and, at all

times during the qualified project period, such project meets

the requirements 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 project are

occupied by individuals whose income is 40 percent or less of

area median gross income.

(ii) The project meets the requirements of this clause if

the gross rent with respect to each low-income unit in the

project does not exceed 30 percent of the applicable income

limit which applies to individuals occupying the unit.

(iii) The project meets the requirements of this clause if

the gross rent with respect to each low-income unit in the

project does not exceed  1/2  of the average gross rent with

respect to units of comparable size which are not occupied by

individuals who meet the applicable income limit.

(C) Definitions applicable to subparagraph (B)

For purposes of subparagraph (B) -

(i) Low-income unit

The term "low-income unit" means any unit which is required

to be occupied by individuals who meet the applicable income

limit.

(ii) Gross rent

The term "gross rent" includes -

(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.

(f) Local furnishing of electric energy or gas

For purposes of subsection (a)(8) -

(1) In general

The local furnishing of electric energy or gas from a facility

shall only include furnishing solely within the area consisting

of -

(A) a city and 1 contiguous county, or

(B) 2 contiguous counties.

(2) Treatment of certain electric energy transmitted outside

local area

(A) In general

A facility shall not be treated as failing to meet the local

furnishing requirement of subsection (a)(8) by reason of

electricity transmitted pursuant to an order of the Federal

Energy Regulatory Commission under section 211 or 213 of the

Federal Power Act (as in effect on the date of the enactment of

this paragraph) if the portion of the cost of the facility

financed with tax-exempt bonds is not greater than the portion

of the cost of the facility which is allocable to the local

furnishing of electric energy (determined without regard to

this paragraph).

(B) Special rule for existing facilities

In the case of a facility financed with bonds issued before

the date of an order referred to in subparagraph (A) which

would (but for this subparagraph) cease to be tax-exempt by

reason of subparagraph (A), such bonds shall not cease to be

tax-exempt bonds (and section 150(b)(4) shall not apply) if, to

the extent necessary to comply with subparagraph (A) -

(i) an escrow to pay principal of, premium (if any), and

interest on the bonds is established within a reasonable

period after the date such order becomes final, and

(ii) bonds are redeemed not later than the earliest date on

which such bonds may be redeemed.

(3) Termination of future financing

For purposes of this section, no bond may be issued as part of

an issue described in subsection (a)(8) with respect to a

facility for the local furnishing of electric energy or gas on or

after the date of the enactment of this paragraph unless -

(A) the facility will -

(i) be used by a person who is engaged in the local

furnishing of that energy source on January 1, 1997, and

(ii) be used to provide service within the area served by

such person on January 1, 1997 (or within a county or city

any portion of which is within such area), or

 

(B) the facility will be used by a successor in interest to

such person for the same use and within the same service area

as described in subparagraph (A).

(4) Election to terminate tax-exempt bond financing by certain

furnishers

(A) In general

In the case of a facility financed with bonds issued before

the date of the enactment of this paragraph which would cease

to be tax-exempt by reason of the failure to meet the local

furnishing requirement of subsection (a)(8) as a result of a

service area expansion, such bonds shall not cease to be tax-

exempt bonds (and section 150(b)(4) shall not apply) if the

person engaged in such local furnishing by such facility makes

an election described in subparagraph (B).

(B) Election

An election is described in this subparagraph if it is an

election made in such manner as the Secretary prescribes, and

such person (or its predecessor in interest) agrees that -

(i) such election is made with respect to all facilities

for the local furnishing of electric energy or gas, or both,

by such person,

(ii) no bond exempt from tax under section 103 and

described in subsection (a)(8) may be issued on or after the

date of the enactment of this paragraph with respect to all

such facilities of such person,

(iii) any expansion of the service area -

(I) is not financed with the proceeds of any exempt

facility bond described in subsection (a)(8), and

(II) is not treated as a nonqualifying use under the

rules of paragraph (2), and

 

(iv) all outstanding bonds used to finance the facilities

for such person are redeemed not later than 6 months after

the later of -

(I) the earliest date on which such bonds may be

redeemed, or

(II) the date of the election.

(C) Related persons

For purposes of this paragraph, the term "person" includes a

group of related persons (within the meaning of section

144(a)(3)) which includes such person.

(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 cooling 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

cooling, or

(ii) process steam.

(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.

(i) High-speed intercity rail facilities

(1) In general

For purposes of subsection (a)(11), the term "high-speed

intercity rail facilities" means any facility (not including

rolling stock) for the fixed guideway rail transportation of

passengers and their baggage between metropolitan statistical

areas (within the meaning of section 143(k)(2)(B)) using vehicles

that are reasonably expected to be capable of attaining a maximum

speed in excess of 150 miles per hour between scheduled stops,

but only if such facility will be made available to members of

the general public as passengers.

(2) Election by nongovernmental owners

A facility shall be treated as described in subsection (a)(11)

only if any owner of such facility which is not a governmental

unit irrevocably elects not to claim -

(A) any deduction under section 167 or 168, and

(B) any credit under this subtitle,

 

with respect to the property to be financed by the net proceeds

of the issue.

(3) Use of proceeds

A bond issued as part of an issue described in subsection

(a)(11) shall not be considered an exempt facility bond unless

any proceeds not used within a 3-year period of the date of the

issuance of such bond are used (not later than 6 months after the

close of such period) to redeem bonds which are part of such

issue.

(j) Environmental enhancements of hydroelectric generating

facilities

(1) In general

For purposes of subsection (a)(12), the term "environmental

enhancements of hydroelectric generating facilities" means

property -

(A) the use of which is related to a federally licensed

hydroelectric generating facility owned and operated by a

governmental unit, and

(B) which -

(i) protects or promotes fisheries or other wildlife

resources, including any fish by-pass facility, fish

hatchery, or fisheries enhancement facility, or

(ii) is a recreational facility or other improvement

required by the terms and conditions of any Federal licensing

permit for the operation of such generating facility.

(2) Use of proceeds

A bond issued as part of an issue described in subsection

(a)(12) shall not be considered an exempt facility bond unless at

least 80 percent of the net proceeds of the issue of which it is

a part are used to finance property described in paragraph

(1)(B)(i).

(k) Qualified public educational facilities

(1) In general

For purposes of subsection (a)(13), the term "qualified public

educational facility" means any school facility which is -

(A) part of a public elementary school or a public secondary

school, and

(B) owned by a private, for-profit corporation pursuant to a

public-private partnership agreement with a State or local

educational agency described in paragraph (2).

(2) Public-private partnership agreement described

A public-private partnership agreement is described in this

paragraph if it is an agreement -

(A) under which the corporation agrees -

(i) to do 1 or more of the following: construct,

rehabilitate, refurbish, or equip a school facility, and

(ii) at the end of the term of the agreement, to transfer

the school facility to such agency for no additional

consideration, and

 

(B) the term of which does not exceed the term of the issue

to be used to provide the school facility.

(3) School facility

For purposes of this subsection, the term "school facility"

means -

(A) any school building,

(B) any functionally related and subordinate facility and

land with respect to such building, including any stadium or

other facility primarily used for school events, and

(C) any property, to which section 168 applies (or would

apply but for section 179), for use in a facility described in

subparagraph (A) or (B).

(4) Public schools

For purposes of this subsection, the terms "elementary school"

and "secondary school" have the meanings given such terms by

section 14101 of the Elementary and Secondary Education Act of

1965 (20 U.S.C. 8801), as in effect on the date of the enactment

of this subsection.

(5) Annual aggregate face amount of tax-exempt financing

(A) In general

An issue shall not be treated as an issue described in

subsection (a)(13) if the aggregate face amount of bonds issued

by the State pursuant thereto (when added to the aggregate face

amount of bonds previously so issued during the calendar year)

exceeds an amount equal to the greater of -

(i) $10 multiplied by the State population, or

(ii) $5,000,000.

(B) Allocation rules

(i) In general

Except as otherwise provided in this subparagraph, the

State may allocate the amount described in subparagraph (A)

for any calendar year in such manner as the State determines

appropriate.

(ii) Rules for carryforward of unused limitation

A State may elect to carry forward an unused limitation for

any calendar year for 3 calendar years following the calendar

year in which the unused limitation arose under rules similar

to the rules of section 146(f), except that the only purpose

for which the carryforward may be elected is the issuance of

exempt facility bonds described in subsection (a)(13).

(l) Qualified green building and sustainable design projects

(1) In general

For purposes of subsection (a)(14), the term "qualified green

building and sustainable design project" means any project which

is designated by the Secretary, after consultation with the

Administrator of the Environmental Protection Agency, as a

qualified green building and sustainable design project and which

meets the requirements of clauses (i), (ii), (iii), and (iv) of

paragraph (4)(A).

(2) Designations

(A) In general

Within 60 days after the end of the application period

described in paragraph (3)(A), the Secretary, after

consultation with the Administrator of the Environmental

Protection Agency, shall designate qualified green building and

sustainable design projects. At least one of the projects

designated shall be located in, or within a 10-mile radius of,

an empowerment zone as designated pursuant to section 1391, and

at least one of the projects designated shall be located in a

rural State. No more than one project shall be designated in a

State. A project shall not be designated if such project

includes a stadium or arena for professional sports exhibitions

or games.

(B) Minimum conservation and technology innovation objectives

The Secretary, after consultation with the Administrator of

the Environmental Protection Agency, shall ensure that, in the

aggregate, the projects designated shall -

(i) reduce electric consumption by more than 150 megawatts

annually as compared to conventional generation,

(ii) reduce daily sulfur dioxide emissions by at least 10

tons compared to coal generation power,

(iii) expand by 75 percent the domestic solar photovoltaic

market in the United States (measured in megawatts) as

compared to the expansion of that market from 2001 to 2002,

and

(iv) use at least 25 megawatts of fuel cell energy

generation.

(3) Limited designations

A project may not be designated under this subsection unless -

(A) the project is nominated by a State or local government

within 180 days of the enactment of this subsection, and

(B) such State or local government provides written

assurances that the project will satisfy the eligibility

criteria described in paragraph (4).

(4) Application

(A) In general

A project may not be designated under this subsection unless

the application for such designation includes a project

proposal which describes the energy efficiency, renewable

energy, and sustainable design features of the project and

demonstrates that the project satisfies the following

eligibility criteria:

(i) Green building and sustainable design

At least 75 percent of the square footage of commercial

buildings which are part of the project is registered for

United States Green Building Council's LEED certification and

is reasonably expected (at the time of the designation) to

receive such certification. For purposes of determining LEED

certification as required under this clause, points shall be

credited by using the following:

(I) For wood products, certification under the

Sustainable Forestry Initiative Program and the American

Tree Farm System.

(II) For renewable wood products, as credited for

recycled content otherwise provided under LEED

certification.

(III) For composite wood products, certification under

standards established by the American National Standards

Institute, or such other voluntary standards as published

in the Federal Register by the Administrator of the

Environmental Protection Agency.

(ii) Brownfield redevelopment

The project includes a brownfield site as defined by

section 101(39) of the Comprehensive Environmental Response,

Compensation, and Liability Act of 1980 (42 U.S.C. 9601),

including a site described in subparagraph (D)(ii)(II)(aa)

thereof.

(iii) State and local support

The project receives specific State or local government

resources which will support the project in an amount equal

to at least $5,000,000. For purposes of the preceding

sentence, the term "resources" includes tax abatement

benefits and contributions in kind.

(iv) Size

The project includes at least one of the following:

(I) At least 1,000,000 square feet of building.

(II) At least 20 acres.

(v) Use of tax benefit

The project proposal includes a description of the net

benefit of the tax-exempt financing provided under this

subsection which will be allocated for financing of one or

more of the following:

(I) The purchase, construction, integration, or other use

of energy efficiency, renewable energy, and sustainable

design features of the project.

(II) Compliance with certification standards cited under

clause (i).

(III) The purchase, remediation, and foundation

construction and preparation of the brownfields site.

(vi) Prohibited facilities

An issue shall not be treated as an issue described in

subsection (a)(14) if any proceeds of such issue are used to

provide any facility the principal business of which is the

sale of food or alcoholic beverages for consumption on the

premises.

(vii) Employment

The project is projected to provide permanent employment of

at least 1,500 full time equivalents (150 full time

equivalents in rural States) when completed and construction

employment of at least 1,000 full time equivalents (100 full

time equivalents in rural States).

 

The application shall include an independent analysis which

describes the project's economic impact, including the amount

of projected employment.

(B) Project description

Each application described in subparagraph (A) shall contain

for each project a description of -

(i) the amount of electric consumption reduced as compared

to conventional construction,

(ii) the amount of sulfur dioxide daily emissions reduced

compared to coal generation,

(iii) the amount of the gross installed capacity of the

project's solar photovoltaic capacity measured in megawatts,

and

(iv) the amount, in megawatts, of the project's fuel cell

energy generation.

(5) Certification of use of tax benefit

No later than 30 days after the completion of the project, each

project must certify to the Secretary that the net benefit of the

tax-exempt financing was used for the purposes described in

paragraph (4).

(6) Definitions

For purposes of this subsection -

(A) Rural State

The term "rural State" means any State which has -

(i) a population of less than 4,500,000 according to the

2000 census,

(ii) a population density of less than 150 people per

square mile according to the 2000 census, and

(iii) increased in population by less than half the rate of

the national increase between the 1990 and 2000 censuses.

(B) Local government

The term "local government" has the meaning given such term

by section 1393(a)(5).

(C) Net benefit of tax-exempt financing

The term "net benefit of tax-exempt financing" means the

present value of the interest savings (determined by a

calculation established by the Secretary) which result from the

tax-exempt status of the bonds.

(7) Aggregate face amount of tax-exempt financing

(A) In general

An issue shall not be treated as an issue described in

subsection (a)(14) if the aggregate face amount of bonds issued

by the State or local government pursuant thereto for a project

(when added to the aggregate face amount of bonds previously so

issued for such project) exceeds an amount designated by the

Secretary as part of the designation.

(B) Limitation on amount of bonds

The Secretary may not allocate authority to issue qualified

green building and sustainable design project bonds in an

aggregate face amount exceeding $2,000,000,000.

(8) Termination

Subsection (a)(14) shall not apply with respect to any bond

issued after September 30, 2012.

(9) Treatment of current refunding bonds

Paragraphs (7)(B) and (8) shall not apply to any bond (or

series of bonds) issued to refund a bond issued under subsection

(a)(14) before October 1, 2012, if -

(A) the average maturity date of the issue of which the

refunding bond is a part is not later than the average maturity

date of the bonds to be refunded by such issue,

(B) the amount of the refunding bond does not exceed the

outstanding amount of the refunded bond, and

(C) 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.

 

For purposes of subparagraph (A), average maturity shall be

determined in accordance with section 147(b)(2)(A).

(m) Qualified highway or surface freight transfer facilities

(1) In general

For purposes of subsection (a)(15), the term "qualified highway

or surface freight transfer facilities" means -

(A) any surface transportation project which receives Federal

assistance under title 23, United States Code (as in effect on

the date of the enactment of this subsection),

(B) any project for an international bridge or tunnel for

which an international entity authorized under Federal or State

law is responsible and which receives Federal assistance under

title 23, United States Code (as so in effect), or

(C) any facility for the transfer of freight from truck to

rail or rail to truck (including any temporary storage

facilities directly related to such transfers) which receives

Federal assistance under either title 23 or title 49, United

States Code (as so in effect).

(2) National limitation on amount of tax-exempt financing for

facilities

(A) National limitation

The aggregate amount allocated by the Secretary of

Transportation under subparagraph (C) shall not exceed

$15,000,000,000.

(B) Enforcement of national limitation

An issue shall not be treated as an issue described in

subsection (a)(15) if the aggregate face amount of bonds issued

pursuant to such issue for any qualified highway or surface

freight transfer facility (when added to the aggregate face

amount of bonds previously so issued for such facility) exceeds

the amount allocated to such facility under subparagraph (C).

(C) Allocation by Secretary of Transportation

The Secretary of Transportation shall allocate the amount

described in subparagraph (A) among qualified highway or

surface freight transfer facilities in such manner as the

Secretary determines appropriate.

(3) Expenditure of proceeds

An issue shall not be treated as an issue described in

subsection (a)(15) unless at least 95 percent of the net proceeds

of the issue is expended for qualified highway or surface freight

transfer facilities within the 5-year period beginning on the

date of issuance. If at least 95 percent of such net proceeds is

not expended within such 5-year period, an issue shall be treated

as continuing to meet the requirements of this paragraph if the

issuer uses all unspent proceeds of the issue to redeem bonds of

the issue within 90 days after the end of such 5-year period. The

Secretary, at the request of the issuer, may extend such 5-year

period if the issuer establishes that any failure to meet such

period is due to circumstances beyond the control of the issuer.

(4) Exception for current refunding bonds

Paragraph (2) shall not apply to any bond (or series of bonds)

issued to refund a bond issued under subsection (a)(15) if -

(A) the average maturity date of the issue of which the

refunding bond is a part is not later than the average maturity

date of the bonds to be refunded by such issue,

(B) the amount of the refunding bond does not exceed the

outstanding amount of the refunded bond, and

(C) the refunded bond is redeemed not later than 90 days

after the date of the issuance of the refunding bond.

 

For purposes of subparagraph (A), average maturity shall be

determined in accordance with section 147(b)(2)(A).

 

-SOURCE-

(Added Pub. L. 99-514, title XIII, Sec. 1301(b), Oct. 22, 1986, 100

Stat. 2606; amended Pub. L. 100-647, title I, Sec. 1013(a)(1),

(39), title VI, Sec. 6180(a)-(b)(2), Nov. 10, 1988, 102 Stat. 3537,

3544, 3727, 3728; Pub. L. 101-239, title VII, Secs. 7108(e)(3),

(n)(1), 7816(s)(1), Dec. 19, 1989, 103 Stat. 2313, 2318, 2423; Pub.

L. 102-486, title XIX, Secs. 1919(a), 1921(a), (b)(1), (2), Oct.

24, 1992, 106 Stat. 3025, 3027, 3028; Pub. L. 104-188, title I,

Secs. 1608(a), 1704(j)(7), Aug. 20, 1996, 110 Stat. 1840, 1882;

Pub. L. 105-206, title VI, Sec. 6023(5), July 22, 1998, 112 Stat.

825; Pub. L. 107-16, title IV, Sec. 422(a), (b), June 7, 2001, 115

Stat. 65; Pub. L. 108-357, title VII, Sec. 701(a), (b), Oct. 22,

2004, 118 Stat. 1536; Pub. L. 109-59, title XI, Sec. 11143(a), (b),

Aug. 10, 2005, 119 Stat. 1963; Pub. L. 109-222, title II, Sec.

209(b)(2), May 17, 2006, 120 Stat. 352; Pub. L. 110-289, div. C,

title I, Secs. 3005(a), 3008(a)-(c), 3009(a), 3010(a), July 30,

2008, 122 Stat. 2885-2888; Pub. L. 110-343, div. B, title III, Sec.

307(a), (b), Oct. 3, 2008, 122 Stat. 3849; Pub. L. 111-5, div. B,

title I, Sec. 1504(a), Feb. 17, 2009, 123 Stat. 355.)

 

 

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

 

-REFTEXT-

REFERENCES IN TEXT

Section 8 of the United States Housing Act of 1937, referred to

in subsec. (d)(2)(A)(iii), (B)(i), (4)(C)(ii), is classified to

section 1437f of Title 42, The Public Health and Welfare.

Sections 211 and 213 of the Federal Power Act, referred to in

subsec. (f)(2)(A), are classified to sections 824j and 824l,

respectively, of Title 16, Conservation.

The date of the enactment of this paragraph, referred to in

subsec. (f)(2)(A), is the date of enactment of Pub. L. 102-486,

which was approved Oct. 24, 1992.

The date of the enactment of this paragraph, referred to in

subsec. (f)(3), (4)(A), (B)(ii), is the date of enactment of Pub.

L. 104-188, which was approved Aug. 20, 1996.

The Solid Waste Disposal Act, referred to in subsec. (h)(1), is

title II of Pub. L. 89-272, Oct. 20, 1965, 79 Stat. 997, as amended

generally by Pub. L. 94-580, Sec. 2, Oct. 21, 1976, 90 Stat. 2795.

Subtitle C of the Solid Waste Disposal Act is classified generally

to subchapter III (Sec. 6921 et seq.) of chapter 82 of Title 42,

The Public Health and Welfare. For complete classification of this

Act to the Code, see Short Title note set out under section 6901 of

Title 42 and Tables.

The date of the enactment of the Tax Reform Act of 1986, referred

to in subsec. (h)(1), is the date of enactment of Pub. L. 99-514,

which was approved Oct. 22, 1986.

Section 14101 of the Elementary and Secondary Education Act of

1965, referred to in subsec. (k)(4), is section 14101 of Pub. L. 89-

10, which was classified to section 8801 of Title 20, Education,

prior to repeal by Pub. L. 107-110, title X, Sec. 1011(5)(C), Jan.

8, 2002, 115 Stat. 1986.

The date of the enactment of this subsection, referred to in

subsec. (k)(4), means the date of enactment of Pub. L. 107-16,

which was approved June 7, 2001.

The enactment of this subsection, referred to in subsec.

(l)(3)(A), probably means the date of enactment of Pub. L. 108-357,

which was approved Oct. 22, 2004.

The date of the enactment of this subsection, referred to in

subsec. (m)(1)(A), is the date of enactment of Pub. L. 109-59,

which was approved Aug. 10, 2005.

 

 

-MISC1-

PRIOR PROVISIONS

A prior section 142, act Aug. 16, 1954, ch. 736, 68A Stat. 40,

enumerated individuals not eligible for standard deduction, prior

to repeal by Pub. L. 95-30, title I, Sec. 101(d)(1), May 23, 1977,

91 Stat. 133, applicable to taxable years beginning after Dec. 31,

1976.

 

AMENDMENTS

2009 - Subsec. (i)(1). Pub. L. 111-5 substituted "be capable of

attaining a maximum speed in excess of" for "operate at speeds in

excess of".

2008 - Subsec. (d)(2)(B). Pub. L. 110-289, Sec. 3005(a),

designated existing provisions as cl. (i), inserted heading, and

added cls. (ii) to (iv).

Subsec. (d)(2)(C). Pub. L. 110-289, Sec. 3008(b), added subpar.

(C).

Subsec. (d)(2)(D). Pub. L. 110-289, Sec. 3008(c), added subpar.

(D).

Subsec. (d)(2)(E). Pub. L. 110-289, Sec. 3009(a), added subpar.

(E).

Subsec. (d)(3)(A). Pub. L. 110-289, Sec. 3010(a), inserted at end

"The preceding sentence shall not apply with respect to any project

for any year if during such year no residential unit in the project

is occupied by a new resident whose income exceeds the applicable

income limit."

Subsec. (d)(3)(C). Pub. L. 110-289, Sec. 3008(a), added subpar.

(C).

Subsec. (l)(8). Pub. L. 110-343, Sec. 307(a), substituted

"September 30, 2012" for "September 30, 2009".

Subsec. (l)(9). Pub. L. 110-343, Sec. 307(b), substituted

"October 1, 2012" for "October 1, 2009".

2006 - Subsec. (d)(2)(B). Pub. L. 109-222 substituted

"Subsections (g) and (h) of section 7872" for "Section 7872(g)".

2005 - Subsec. (a)(15). Pub. L. 109-59, Sec. 11143(a), added par.

(15).

Subsec. (m). Pub. L. 109-59, Sec. 11143(b), added subsec. (m).

2004 - Subsec. (a)(14). Pub. L. 108-357, Sec. 701(a), added par.

(14).

Subsec. (l). Pub. L. 108-357, Sec. 701(b), added subsec. (l).

2001 - Subsec. (a)(13). Pub. L. 107-16, Secs. 422(a), 901,

temporarily added par. (13). See Effective and Termination Dates of

2001 Amendment note below.

Subsec. (k). Pub. L. 107-16, Secs. 422(b), 901, temporarily added

subsec. (k). See Effective and Termination Dates of 2001 Amendment

note below.

1998 - Subsec. (f)(3)(A)(ii). Pub. L. 105-206 struck out comma

after "1997".

1996 - Subsec. (b)(1)(A). Pub. L. 104-188, Sec. 1704(j)(7),

provided that section 1921(b)(2) of Pub. L. 102-486 shall be

applied as if a comma appeared after "(2)" in the material proposed

to be stricken. See 1992 Amendment note below.

Subsec. (f)(3), (4). Pub. L. 104-188, Sec. 1608(a), added pars.

(3) and (4).

1992 - Subsec. (a)(12). Pub. L. 102-486, Sec. 1921(a), added par.

(12).

Subsec. (b)(1)(A). Pub. L. 102-486, Sec. 1921(b)(2), which

directed the substitution of "(2), (3), or (12)" for "(2) or (3)",

was executed by making the substitution for "(2), or (3)". See 1996

Amendment note above.

Subsec. (f). Pub. L. 102-486, Sec. 1919(a), amended subsec. (f)

generally. Prior to amendment, subsec. (f) read as follows: "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."

Subsec. (j). Pub. L. 102-486, Sec. 1921(b)(1), added subsec. (j).

1989 - Subsec. (d)(2)(B). Pub. L. 101-239, Sec. 7108(e)(3),

inserted at end "Section 7872(g) shall not apply in determining the

income of individuals under this subparagraph."

Subsec. (d)(4)(B)(iii). Pub. L. 101-239, Sec. 7108(n)(1),

substituted "exceed  1/2 " for "exceed  1/3 ".

Subsec. (i)(1). Pub. L. 101-239, Sec. 7816(s)(1), inserted

heading "In general".

1988 - Subsec. (a)(11). Pub. L. 100-647, Sec. 6180(a), added par.

(11).

Subsec. (b)(1)(B)(ii). Pub. L. 100-647, Sec. 1013(a)(39),

inserted "section" before "168(i)(3)".

Subsec. (c). Pub. L. 100-647, Sec. 6180(b)(2), substituted "mass

commuting facilities and high-speed intercity rail facilities" for

"and mass commuting facilities" in heading and substituted

"paragraph (1), (2), (3) or (11) of subsection (a)" for "paragraph

(1), (2), or (3) of subsection (a)" in par. (1) and in introductory

text of par. (2).

Subsec. (d)(4)(B)(iii). Pub. L. 100-647, Sec. 1013(a)(1),

substituted "average gross rent" for "average rent".

Subsec. (i). Pub. L. 100-647, Sec. 6180(b)(1), added subsec. (i).

 

EFFECTIVE DATE OF 2009 AMENDMENT

Pub. L. 111-5, div. B, title I, Sec. 1504(b), Feb. 17, 2009, 123

Stat. 355, provided that: "The amendment made by this section

[amending this section] shall apply to obligations issued after the

date of the enactment of this Act [Feb. 17, 2009]."

 

EFFECTIVE DATE OF 2008 AMENDMENT

Pub. L. 110-289, div. C, title I, Sec. 3005(b), July 30, 2008,

122 Stat. 2885, provided that: "The amendments made by this section

[amending this section] shall apply to -

"(1) determinations made after the date of the enactment of

this Act [July 30, 2008] and before January 1, 2012, in the case

of any qualified building (as defined in section

142(d)(2)(B)(iii) of the Internal Revenue Code of 1986) -

"(A) with respect to which housing credit dollar amounts have

been allocated on or before the date of the enactment of this

Act [July 30, 2008], or

"(B) with respect to buildings placed in service before such

date of enactment, to the extent paragraph (1) of section 42(h)

of such Code does not apply to such building by reason of

paragraph (4) thereof, but only with respect to bonds issued

before such date of enactment, and

"(2) determinations made after the date of enactment of this

Act [July 30, 2008], in the case of qualified buildings (as so

defined) -

"(A) with respect to which housing credit dollar amounts are

allocated after the date of the enactment of this Act [July 30,

2008] and before January 1, 2012, or

"(B) with respect to which buildings placed in service after

the date of enactment of this Act [July 30, 2008] and before

January 1, 2012, to the extent paragraph (1) of section 42(h)

of such Code does not apply to such building by reason of

paragraph (4) thereof, but only with respect to bonds issued

after such date of enactment and before January 1, 2012."

Pub. L. 110-289, div. C, title I, Sec. 3008(d), July 30, 2008,

122 Stat. 2887, provided that: "The amendments made by this section

[amending this section] shall apply to determinations of the status

of qualified residential rental projects for periods beginning

after the date of the enactment of this Act [July 30, 2008], with

respect to bonds issued before, on, or after such date."

Pub. L. 110-289, div. C, title I, Sec. 3009(b), July 30, 2008,

122 Stat. 2888, provided that: "The amendment made by this section

[amending this section] shall apply to determinations of area

median gross income for calendar years after 2008."

Pub. L. 110-289, div. C, title I, Sec. 3010(b), July 30, 2008,

122 Stat. 2888, provided that: "The amendment made by this section

[amending this section] shall apply to years ending after the date

of the enactment of this Act [July 30, 2008]."

 

EFFECTIVE DATE OF 2006 AMENDMENT

Pub. L. 109-222, title II, Sec. 209(c), May 17, 2006, 120 Stat.

352, provided that: "The amendment made by this section [amending

this section and section 7872 of this title] shall apply to

calendar years beginning after December 31, 2005, with respect to

loans made before, on, or after such date."

 

EFFECTIVE DATE OF 2005 AMENDMENT

Pub. L. 109-59, title XI, Sec. 11143(d), Aug. 10, 2005, 119 Stat.

1965, provided that: "The amendments made by this section [amending

this section and section 146 of this title] apply to bonds issued

after the date of the enactment of this Act [Aug. 10, 2005]."

 

EFFECTIVE DATE OF 2004 AMENDMENT

Pub. L. 108-357, title VII, Sec. 701(e), Oct. 22, 2004, 118 Stat.

1540, provided that: "The amendments made by this section [amending

this section and section 146 of this title] shall apply to bonds

issued after December 31, 2004."

 

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title IV, Sec. 422(f), June 7, 2001, 115 Stat.

66, provided that: "The amendments made by this section [amending

this section and sections 146 and 147 of this title] shall apply to

bonds issued after December 31, 2001."

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2012, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

 

EFFECTIVE DATE OF 1992 AMENDMENT

Section 1919(b) of Pub. L. 102-486 provided that: "The amendment

made by subsection (a) [amending this section] shall apply to

obligations issued before, on, or after the date of the enactment

of this Act [Oct. 24, 1992]."

Section 1921(c) of Pub. L. 102-486 provided that: "The amendments

made by this section [amending this section and section 146 of this

title] shall apply to bonds issued after the date of the enactment

of this Act [Oct. 24, 1992]."

 

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 7108(e)(3), (n)(1) of Pub. L. 101-239

applicable, except as otherwise provided, to determinations under

section 42 of this title with respect to housing credit dollar

amounts allocated from State housing credit ceilings for calendar

years after 1989, see section 7108(r) of Pub. L. 101-239, set out

as a note under section 42 of this title.

Amendment by section 7816(s) of Pub. L. 101-239 effective, except

as otherwise provided, as if included in the provision of the

Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647,

to which such amendment relates, see section 7817 of Pub. L. 101-

239, set out as a note under section 1 of this title.

 

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by section 1013(a)(1), (39) of Pub. L. 100-647

effective, except as otherwise provided, as if included in the

provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which

such amendment relates, see section 1019(a) of Pub. L. 100-647, set

out as a note under section 1 of this title.

Section 6180(c) of Pub. L. 100-647 provided that: "The amendments

made by this section [amending sections 142, 146, and 147 of this

title] shall apply to bonds issued after the date of enactment of

this Act [Nov. 10, 1988]."

 

ACCOUNTABILITY

Pub. L. 108-357, title VII, Sec. 701(d), Oct. 22, 2004, 118 Stat.

1539, as amended by Pub. L. 110-343, div. B, title III, Sec.

307(c), Oct. 3, 2008, 122 Stat. 3849, provided that: "Each issuer

shall maintain, on behalf of each project, an interest bearing

reserve account equal to 1 percent of the net proceeds of any bond

issued under this section for such project. Not later than 5 years

after the date of issuance of the last issue with respect to such

project, the Secretary of the Treasury, after consultation with the

Administrator of the Environmental Protection Agency, shall

determine whether the project financed with such bonds has

substantially complied with the terms and conditions described in

section 142(l)(4) of the Internal Revenue Code of 1986 (as added by

this section). If the Secretary, after such consultation, certifies

that the project has substantially complied with such terms and

conditions and meets the commitments set forth in the application

for such project described in section 142(l)(4) of such Code,

amounts in the reserve account, including all interest, shall be

released to the project. If the Secretary determines that the

project has not substantially complied with such terms and

conditions, amounts in the reserve account, including all interest,

shall be paid to the United States Treasury."

 

NO INFERENCE WITH RESPECT TO OUTSTANDING BONDS FROM USE OF TERM

"PERSON"

Section 1608(b) of Pub. L. 104-188 provided that: "The use of the

term 'person' in section 142(f)(3) of the Internal Revenue Code of

1986, as added by subsection (a), shall not be construed to affect

the tax-exempt status of interest on any bonds issued before the

date of the enactment of this Act [Aug. 20, 1996]."

 

TAX-EXEMPT BONDS FOR SALE OF ALASKA POWER ADMINISTRATION FACILITY

Section 1804 of Pub. L. 104-188 provided that: "Sections

142(f)(3) (as added by section 1608) and 147(d) of the Internal

Revenue Code of 1986 shall not apply in determining whether any

private activity bond issued after the date of the enactment of

this Act [Aug. 20, 1996] and used to finance the acquisition of the

Snettisham hydroelectric project from the Alaska Power

Administration is a qualified bond for purposes of such Code."

 

-FOOTNOTE-

(!1) So in original. Probably should be "section 42(i)(3)(D)".

 

 

-End-