26 U.S.C. § 1394: Tax-exempt enterprise zone facility bonds

For purposes of part IV of subchapter B of this chapter (relating to tax exemption requirements for State and local bonds), the term “exempt facility bond” includes any bond issued as part of an issue 95 percent or more of the net proceeds (as defined in section 150(a)(3)) of which are to be used to provide any enterprise zone facility. The term “enterprise zone facility” means any qualified zone property the principal user of which is an enterprise zone business, and any land which is functionally related and subordinate to such property. the references to empowerment zones shall be treated as including references to enterprise communities, and section 1397D(a)(2) shall be applied by substituting “an amount equal to 15 percent of the adjusted basis” for “an amount equal to the adjusted basis”. Except as modified in this paragraph, the term “enterprise zone business” has the meaning given such term by section 1397C. Except as provided in subclause (II), references in section 1397C to empowerment zones shall be treated as including references to enterprise communities. For purposes of subsections (b)(6) and (c)(5) of section 1397C, an employee shall be treated as a resident of an empowerment zone if such employee is a resident of an empowerment zone, an enterprise community, or a qualified low-income community within an applicable nominating jurisdiction. as of the beginning of the startup period, it is reasonably expected that such business will be an enterprise zone business (as defined in section 1397C as modified by this paragraph) at the end of such period, and such business makes bona fide efforts to be such a business. A business shall not fail to be treated as an enterprise zone business for any taxable year beginning after the testing period by reason of failing to meet any requirement of subsection (b) or (c) of section 1397C if at least 35 percent of the employees of such business for such year are residents of an empowerment zone, an enterprise community, or a qualified low-income community within an applicable nominating jurisdiction. The preceding sentence shall not apply to any business which is not a qualified business by reason of paragraph (1), (4), or (5) of section 1397C(d). the poverty rate for such tract is at least 20 percent, or the median family income for such tract does not exceed 80 percent of statewide median family income (or, in the case of a tract located within a metropolitan area, metropolitan area median family income if greater). The Secretary shall prescribe regulations under which 1 or more targeted populations (within the meaning of section 103(20) of the Riegle Community Development and Regulatory Improvement Act of 1994) may be treated as qualified low-income communities. In the case of an area which is not tracted for population census tracts, the equivalent county divisions (as defined by the Bureau of the Census for purposes of defining poverty areas) shall be used for purposes of determining poverty rates and median family income. In the case of a population census tract located within a high migration rural county, clause (i)(II) shall be applied to areas not located within a metropolitan area by substituting “85 percent” for “80 percent”. For purposes of this clause, the term “high migration rural county” means any county which, during the 20-year period ending with the year in which the most recent census was conducted, has a net out-migration of inhabitants from the county of at least 10 percent of the population of the county at the beginning of such period. the date of issuance of the issue providing such property, or the date such property is first placed in service after such issuance (or, if earlier, the date which is 3 years after the date described in subclause (I)). The term “testing period” means the first 3 taxable years beginning after the startup period. The term “applicable nominating jurisdiction” means, with respect to any empowerment zone or enterprise community, any local government that nominated such community for designation under section 1391. The term “enterprise zone business” includes any trades or businesses which would qualify as an enterprise zone business (determined after the modifications of subparagraph (B)) if such trades or businesses were separately incorporated. $3,000,000 with respect to any 1 empowerment zone or enterprise community, or $20,000,000 with respect to all empowerment zones and enterprise communities. For purposes of paragraph (1), the aggregate amount of outstanding enterprise zone facility bonds allocable to any person shall be determined under rules similar to the rules of section 144(a)(10), taking into account only bonds to which subsection (a) applies. The requirements of sections 147(c)(1)(A) and 147(d) shall not apply to any bond described in subsection (a). the issuer and any principal user in good faith attempted to meet such requirements, and any failure to meet such requirements is corrected within a reasonable period after such failure is first discovered. substantially all of the facility with respect to which the financing was provided ceases to be used in an empowerment zone or enterprise community, or the principal user of such facility ceases to be an enterprise zone business (as defined in subsection (b)). Paragraphs (1) and (2) shall not apply solely by reason of the termination or revocation of a designation as an empowerment zone or an enterprise community. Paragraphs (1) and (2) shall not apply to any cessation resulting from bankruptcy. such bond shall not be treated as a private activity bond for purposes of section 146, and subsection (c) of this section shall not apply. Paragraph (1) shall apply to an empowerment zone facility bond only if such bond is designated for purposes of this subsection by the local government which nominated the area to which such bond relates. $60,000,000 if such zone is in a rural area, $130,000,000 if such zone is in an urban area and the zone has a population of less than 100,000, and $230,000,000 if such zone is in an urban area and the zone has a population of at least 100,000. Bonds to which paragraph (1) applies shall not be taken into account in applying the limitation of subsection (c) to other bonds. the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and the refunded bond is redeemed not later than 90 days after the date of issuance of the refunding bond. in the case of obligations issued before January 1, 2002 , only empowerment zones designated under section 1391(g) were taken into account under sections 1397C and 1397D, and in the case of obligations issued after December 31, 2001 , all empowerment zones (other than the District of Columbia Enterprise Zone) were taken into account under sections 1397C and 1397D.