MODIFICATIONS TO ENTERPRISE ZONE FACILITY BOND RULES FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

SEC. 955. MODIFICATIONS TO ENTERPRISE ZONE FACILITY BOND RULES FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) Modifications Relating to Enterprise Zone Business.—Paragraph (3) of section 1394(b) (defining enterprise zone business) is amended to read as follows: “(3) Enterprise zone business.— “(A) In general.—Except as modified in this paragraph, the term ‘enterprise zone business’ has the meaning given such term by section 1397B. “(B) Modifications.—In applying section 1397B for purposes of this section— “(i) Businesses in enterprise communities eligible.—References in section 1397B to empowerment zones shall be treated as including references to enterprise communities. “(ii) Waiver of requirements during startup period.—A 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 1397B 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 period.—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 1397B if at least 35 percent of the employees of such business for such year are residents of an empowerment zone or an enterprise community. 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 1397B(a). “(C) Definitions relating to subparagraph (b).—For purposes of subparagraph (B)— “(i) Startup period.—The term ‘startup period’ means, with respect to any property being provided for any business, the period before the first taxable year beginning more than 2 years after the later of— “(I) the date of issuance of the issue providing such property, or “(II) 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)).111 STAT. 890 “(ii) Testing period.—The term ‘testing period’ means the first 3 taxable years beginning after the startup period. “(D) Portions of business may be enterprise zone business.—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.”. (b) Modifications Relating to Qualified Zone Property.—Paragraph (2) of section 1394(b) (defining qualified zone property) is amended to read as follows: “(2) Qualified zone property.—The term ‘qualified zone property’ has the meaning given such term by section 1397C; except that— “(A) the references to empowerment zones shall be treated as including references to enterprise communities, and “(B) section 1397C(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’.”. (c) Effective Date.—The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.