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`Sec. 1400L. Tax benefits for New York Liberty Zone.
`(d) TAX-EXEMPT BOND FINANCING-
`(1) IN GENERAL- For purposes of this title, any qualified New York Liberty Bond shall be treated as an exempt facility bond .
`(2) QUALIFIED NEW YORK LIBERTY BOND - For purposes of this subsection, the term `qualified New York Liberty Bond' means any bond issued as part of an issue if--
`(A) 95 percent or more of the net proceeds (as defined in section 150(a)(3)) of such issue are to be used for qualified project costs,
`(B) such bond is issued by the State of New York or any political subdivision thereof,
`(C) the Governor or the Mayor designates such bond for purposes of this section, and
`(D) such bond is issued after the date of the enactment of this section and before January 1, 2005.
`(3) LIMITATIONS ON AMOUNT OF BONDS-
`(A) AGGREGATE AMOUNT DESIGNATED- The maximum aggregate face amount of bonds which may be designated under this subsection shall not exceed $8,000,000,000, of which not to exceed $4,000,000,000 may be designated by the Governor and not to exceed $4,000,000,000 may be designated by the Mayor.
`(B) SPECIFIC LIMITATIONS- The aggregate face amount of bonds issued which are to be used for--
`(i) costs for property located outside the New York Liberty Zone shall not exceed $2,000,000,000,
`(ii) residential rental property shall not exceed $1,600,000,000, and
`(iii) costs with respect to property used for retail sales of tangible property and functionally related and subordinate property shall not exceed $800,000,000.
The limitations under clauses (i), (ii), and (iii) shall be allocated proportionately between the bonds designated by the Governor and the bonds designated by the Mayor in proportion to the respective amounts of bonds designated by each.
`(C) MOVABLE PROPERTY- No bonds shall be issued which are to be used for movable fixtures and equipment.
`(4) QUALIFIED PROJECT COSTS- For purposes of this subsection--
`(A) IN GENERAL- The term `qualified project costs' means the cost of acquisition, construction, reconstruction, and renovation of--
`(i) nonresidential real property and residential rental property (including fixed tenant improvements associated with such property) located in the New York Liberty Zone, and
`(ii) public utility property (as defined in section 168(i)(10)) located in the New York Liberty Zone.
`(B) COSTS FOR CERTAIN PROPERTY OUTSIDE ZONE INCLUDED- Such term includes the cost of acquisition, construction, reconstruction, and renovation of nonresidential real property (including fixed tenant improvements associated with such property) located outside the New York Liberty Zone but within the City of New York, New York, if such property is part of a project which consists of at least 100,000 square feet of usable office or other commercial space located in a single building or multiple adjacent buildings.
`(5) SPECIAL RULES- In applying this title to any qualified New York Liberty Bond , the following modifications shall apply:
`(A) Section 146 (relating to volume cap) shall not apply.
`(B) Section 147(d) (relating to acquisition of existing property not permitted) shall be applied by substituting `50 percent' for `15 percent' each place it appears.
`(C) Section 148(f)(4)(C) (relating to exception from rebate for certain proceeds to be used to finance construction expenditures) shall apply to the available construction proceeds of bonds issued under this section.
`(D) Repayments of principal on financing provided by the issue--
`(i) may not be used to provide financing, and
`(ii) must be used not later than the close of the 1st semiannual period beginning after the date of the repayment to redeem bonds which are part of such issue.
The requirement of clause (ii) shall be treated as met with respect to amounts received within 10 years after the date of issuance of the issue (or, in the case of a refunding bond , the date of issuance of the original bond ) if such amounts are used by the close of such 10 years to redeem bonds which are part of such issue.
`(E) Section 57(a)(5) shall not apply.
`(6) SEPARATE ISSUE TREATMENT OF PORTIONS OF AN ISSUE- This subsection shall not apply to the portion of an issue which (if issued as a separate issue) would be treated as a qualified bond or as a bond that is not a private activity bond (determined without regard to paragraph (1)), if the issuer elects to so treat such portion.
`(e) ADVANCE REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS-
`(1) IN GENERAL- With respect to a bond described in paragraph (2) issued as part of an issue 90 percent (95 percent in the case of a bond described in paragraph (2)(C)) or more of the net proceeds (as defined in section 150(a)(3)) of which were used to finance facilities located within the City of New York, New York (or property which is functionally related and subordinate to facilities located within the City of New York for the furnishing of water), one additional advanced refunding after the date of the enactment of this section and before January 1, 2005, shall be allowed under the applicable rules of section 149(d) if--
`(A) the Governor or the Mayor designates the advance refunding bond for purposes of this subsection, and
`(B) the requirements of paragraph (4) are met.
`(2) BONDS DESCRIBED- A bond is described in this paragraph if such bond was outstanding on September 11, 2001, and is--
`(A) a State or local bond (as defined in section 103(c)(1)) which is a general obligation of the City of New York, New York,
`(B) a State or local bond (as so defined) other than a private activity bond (as defined in section 141(a)) issued by the New York Municipal Water Finance Authority or the Metropolitan Transportation Authority of the State of New York, or
`(C) a qualified 501(c)(3) bond (as defined in section 145(a)) which is a qualified hospital bond (as defined in section 145(c)) issued by or on behalf of the State of New York or the City of New York, New York.
`(3) AGGREGATE LIMIT- For purposes of paragraph (1), the maximum aggregate face amount of bonds which may be designated under this subsection by the Governor shall not exceed $4,500,000,000 and the maximum aggregate face amount of bonds which may be designated under this subsection by the Mayor shall not exceed $4,500,000,000.
`(4) ADDITIONAL REQUIREMENTS- The requirements of this paragraph are met with respect to any advance refunding of a bond described in paragraph (2) if--
`(A) no advance refundings of such bond would be allowed under any provision of law after September 11, 2001,
`(B) the advance refunding bond is the only other outstanding bond with respect to the refunded bond , and
`(C) the requirements of section 148 are met with respect to all bonds issued under this subsection.
`(f) INCREASE IN EXPENSING UNDER SECTION 179-
`(1) IN GENERAL- For purposes of section 179--
`(A) the limitation under section 179(b)(1) shall be increased by the lesser of--
`(i) $35,000, or
`(ii) the cost of section 179 property which is qualified New York Liberty Zone property placed in service during the taxable year, and
`(B) the amount taken into account under section 179(b)(2) with respect to any section 179 property which is qualified New York Liberty Zone property shall be 50 percent of the cost thereof.
`(2) QUALIFIED NEW YORK LIBERTY ZONE PROPERTY- For purposes of this subsection, the term `qualified New York Liberty Zone property' has the meaning given such term by subsection (b)(2).
`(3) RECAPTURE- Rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified New York Liberty Zone property which ceases to be used in the New York Liberty Zone.
`(g) EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN- Notwithstanding subsections (g) and (h) of section 1033, clause (i) of section 1033(a)(2)(B) shall be applied by substituting `5 years' for `2 years' with respect to property which is compulsorily or involuntarily converted as a result of the terrorist attacks on September 11, 2001, in the New York Liberty Zone but only if substantially all of the use of the replacement property is in the City of New York, New York.
`(h) NEW YORK LIBERTY ZONE- For purposes of this section, the term `New York Liberty Zone' means the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York.
`(i) REFERENCES TO GOVERNOR AND MAYOR- For purposes of this section, the terms `Governor' and `Mayor' mean the Governor of the State of New York and the Mayor of the City of New York, New York, respectively.'.