H.R. 151 — To amend the Internal Revenue Code of 1986 to provide additional restrictions on tax-exempt bonds used to provide residential rental property for family units.

 
HR 151 IH
101st CONGRESS
1st Session
 H. R. 151
To amend the Internal Revenue Code of 1986 to provide additional restrictions
on tax-exempt bonds used to provide residential rental property for family
units.
IN THE HOUSE OF REPRESENTATIVES
January 3, 1989
Mr. DONNELLY introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide additional restrictions
on tax-exempt bonds used to provide residential rental property for family
units.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. CERTAIN PROPERTY TREATED AS EXISTING PROPERTY FOR PURPOSES OF
RESTRICTION ON USE OF 501(C)(3) BONDS TO PROVIDE RESIDENTIAL RENTAL HOUSING.
  (a) IN GENERAL- Subsection (d) of section 145 of the Internal Revenue
  Code of 1986 is amended by redesignating paragraph (3) as paragraph (4)
  and by inserting after paragraph (2) the following new paragraph:
  `(3) CERTAIN PROPERTY TREATED AS NEW PROPERTY-
  `(A) IN GENERAL- For purposes of paragraph (2)(A), if--
  `(i) the first use of property is pursuant to taxable financing,
  `(ii) there was a reasonable expectation (at the time such financing was
  provided) that such financing would be replaced by tax-exempt financing, and
  `(iii) the taxable financing is in fact so replaced within a reasonable
  period after the taxable financing was provided,
then the 1st use of such property shall be treated as being pursuant to the
tax-exempt financing.
  `(B) DEFINITIONS- For purposes of subparagraph (A)--
 `(i) TAX-EXEMPT FINANCING- The term `tax-exempt financing' means financing
 provided by tax-exempt bonds.
  `(ii) TAXABLE FINANCING- The term `taxable financing' means financing
  which is not tax-exempt financing.'
  (b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect
  as if included in the amendments made by section 5053 of the Technical
  and Miscellaneous Revenue Act of 1988.
SEC. 2. CHANGES IN RULES RELATING TO RESIDENTIAL RENTAL PROPERTY PROVIDED
BY QUALIFIED 501(C)(3) BONDS.
  (a) IN GENERAL- Paragraph (2) of section 145(d) of the Internal Revenue
  Code of 1986 is amended by striking subparagraphs (A), (B), and (C)
  thereof and inserting the following:
  `(A) qualified residential rental projects (as defined in section 142(d)), or
  `(B) in the case of an issue issued by a general purpose governmental unit
  and primarily secured by the full faith and credit of such unit--
  `(i) residential rental property for family units if the 1st use of such
  property is pursuant to such issue, or
  `(ii) 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 the property.'
  (b) CONTINUING CARE FACILITIES TREATED AS RESIDENTIAL RENTAL PROPERTY-
  Paragraph (1) of section 145(d) of such Code is amended by inserting before
  the period `, including any qualified continuing care facility (as defined
  in section 7872(g)(4), determined without regard to subparagraphs (B) and
  (C) thereof).'
  (c) TECHNICAL AMENDMENTS-
  (1) Paragraph (3) of section 145(d) of such Code, as added by section 1, is
  amended by striking `paragraph (2)(A)' and inserting `paragraph `(2)(B)(i)'.
  (2) Subparagraph (A) of section 145(d)(4) of such Code, as redesignated
  by section 1, is amended by striking `paragraph (2)(C)' and inserting
  `paragraph (2)(B)(ii)'.
SEC. 3. TARGETING RULES TO APPLY IN CERTAIN CASES TO GOVERNMENTAL BONDS ISSUED
TO PROVIDE RESIDENTIAL RENTAL PROPERTY LOCATED WITHIN THE JURISDICTION OF
THE ISSUER.
  Paragraph (2) of section 148(b) of the Internal Revenue Code of 1988
  (defining investment property) is amended by striking `or' at the end
  of subparagraph (D) and by striking subparagraph (E) and inserting the
  following:
  `(E) any residential rental property for family units which is not located
  within the jurisdiction of the issuer, or
  `(F) any residential rental property for family units which is located
  within the jurisdiction of the issuer unless--
  `(i) such property is a qualified residential rental project (as defined
  in section 142(d)), or
  `(ii) the issue providing financing for such property is issued by a
  general purpose governmental unit and is primarily secured by the full
  faith and credit of such unit.
Subparagraphs (E) and (F) shall not apply with respect to private activity
bonds or to property which is acquired to implement a court ordered or
approved housing desegregation plan.'
SEC. 4. EFFECTIVE DATE FOR SECTIONS 2 AND 3.
  (a) IN GENERAL- The amendments made by sections 2 and 3 shall apply to
  bonds issued after January 3, 1989.
  (b) EXCEPTION FOR CONSTRUCTION IN PROGRESS OR BINDING AGREEMENTS-
  (1) The amendments made by sections 2 and 3 shall not apply to bonds
  (other than refunding bonds) with respect to a facility--
  (A)(i) the original use of which begins with the taxpayer, and the
  construction, reconstruction, or rehabilitation of which began before
  January 3, 1989, and was completed on or after such date, or
  (ii) 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 January 3, 1989,
  and some of such expenditures are incurred on or after such date, and
  (B) described in an inducement resolution or other comparable preliminary
  approval adopted by an issuing authority (or voter referendum) before
  January 3, 1989.
For purposes of the preceding sentence, the term `significant expenditures'
means expenditures greater than 10 percent of the reasonably anticipated
cost of the construction, reconstruction, or rehabilitation of the facility
involved.
  (2) Paragraph (1) shall not apply to any bond issued after December 31,
  1991, 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, 1992.
  (c) REFUNDINGS- The amendments made by sections 2 and 3 shall not apply
  to any bond issued to refund (or which is part of a series of bonds issued
  to refund) a bond issued before January 4, 1989, if--
  (1) 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,
  (2) the amount of the refunding bond does not exceed the outstanding amount
  of the refunded bond, and
  (3) 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.
For purposes of paragraph (1), average maturity shall be determined in
accordance with section 147(b) of the Internal Revenue Code of 1986.
To amend the Internal Revenue Code of 1986 to provide additional restrictions on tax-exempt bonds used to provide residential rental property for family units.

Sponsors

Subjects

Summary

Full Text

Legislative Actions

Ask about this bill
