Enterprise Zone Facility Bonds

§ 1394. Tax-exempt enterprise zone facility bonds(a) In generalFor 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. (b) Enterprise zone facilityFor purposes of this section—(1) In generalThe 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. (2) Qualified zone propertyThe term “qualified zone property” has the meaning given such term by section 1397D; except that—(A) the references to empowerment zones shall be treated as including references to enterprise communities, and (B) 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”. (3) Enterprise zone business(A) In generalExcept as modified in this paragraph, the term “enterprise zone business” has the meaning given such term by section 1397C. (B) ModificationsIn applying section 1397C for purposes of this section—(i) Businesses in enterprise communities eligible(I) In generalExcept as provided in subclause (II), references in section 1397C to empowerment zones shall be treated as including references to enterprise communities. (II) Special rule for employee residence testFor 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. (ii) Waiver of requirements during startup periodA business shall not fail to be treated as an enterprise zone business during the startup period if—(I) 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 (II) such business makes bona fide efforts to be such a business. (iii) Reduced requirements after testing periodA 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).