26 U.S.C. § 145: Qualified 501(c)(3) bond

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 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 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. 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 tax-exempt nonhospital bonds of such organization) exceeds $150,000,000. which are allocated to such organization, and 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). any qualified 501(c)(3) bond other than a qualified hospital bond, and such bond would have been an industrial development bond (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) if 501(c)(3) organizations were not exempt persons, and 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). A bond shall be taken into account under subparagraph (B) 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. If 90 percent or more of the net proceeds of an issue are used with respect to a hospital, no bond which is part of such issue shall be taken into account under subparagraph (B)(ii). For purposes of this subsection, 2 or more organizations under common management or control shall be treated as 1 organization. Rules similar to the rules of subparagraphs (C), (D), and (E) of section 144(a)(10) shall apply for purposes of this subsection. This subsection shall not apply with respect to bonds issued after the date of the enactment of this paragraph as part of an issue 95 percent or more of the net proceeds of which are to be used to finance capital expenditures incurred after such date. For purposes of this section, the term “qualified hospital bond” means any bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used with respect to a hospital. Except as otherwise provided in this subsection, a bond which is part of an issue shall not be a qualified 501(c)(3) bond if any portion of the net proceeds of the issue are to be used directly or indirectly to provide residential rental property for family units. a residential rental property for family units if the first use of such property is pursuant to such issue, qualified residential rental projects (as defined in section 142(d)), or property which is to be substantially rehabilitated in a rehabilitation beginning within the 2-year period ending 1 year after the date of the acquisition of such property. the 1st use of property is pursuant to taxable financing, there was a reasonable expectation (at the time such taxable financing was provided) that such financing would be replaced by tax-exempt financing, and the taxable financing is in fact so replaced within a reasonable period after the taxable financing was provided, If, at the time of the 1st use of property, there was no operating State or local program for tax-exempt financing of the property, the 1st use of the property shall be treated as pursuant to the 1st tax-exempt financing of the property. The term “tax-exempt financing” means financing provided by tax-exempt bonds. The term “taxable financing” means financing which is not tax-exempt financing. Except as provided in subparagraph (B), rules similar to the rules of section 47(c)(1)(B) shall apply in determining for purposes of paragraph (2)(C) whether property is substantially rehabilitated. For purposes of subparagraph (A), clause (ii) of section 47(c)(1)(B) shall not apply, but the Secretary may extend the 24-month period in section 47(c)(1)(B)(i) where appropriate due to circumstances not within the control of the owner. the issuer elects not to have this section apply to such issue, and such issue is an issue of exempt facility bonds, or qualified redevelopment bonds, to which section 146 applies. The amendments made by this section [amending this section and section 148 of this title ] shall apply to obligations issued after October 21, 1988 . the original use of which begins with the taxpayer, and the construction, reconstruction, or rehabilitation of which began before July 14, 1988 , and was completed on or after such date, or the original use of which begins with the taxpayer and with respect to which a binding contract to incur significant expenditures for construction, reconstruction, or rehabilitation was entered into before July 14, 1988 , and some of such expenditures are incurred on or after such date, and described in an inducement resolution or other comparable preliminary approval adopted by an issuing authority (or by a voter referendum) before July 14, 1988 . Subparagraph (A) shall not apply to any bond issued after December 31, 1989 , and shall not apply unless it is reasonably expected (at the time of issuance of the bond) that the facility will be placed in service before January 1, 1990 . 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, the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and the 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.