Page:United States Statutes at Large Volume 103 Part 3.djvu/318

 103 STAT. 2386 PUBLIC LAW 101-239—DEC. 19, 1989 replacement fund shall not be considered gross pro- ceeds for purposes of this subparagraph only, (b) CONSTRUCTION BONDS. —Subparagraph (B) of section 148(fK4) (relating to temporary investments) is £unended by adding at the end thereof the following new clause: "(iv) 2-YEAR PERIOD FOR CERTAIN CONSTRUCTION BONDS.— "(I) IN GENERAL. —In the case of an issue de- .'- t scribed in subclause (IV), clause (i) shall be applied by substituting '2 years' for '6 months' each place it appears. , "(II) PROCEEDS MUST BE SPENT WITHIN CERTAIN ^\ \'^, PERIODS.— Subclause (I) shall not apply to any issue if less than 10 percent of the net proceeds of the issue are spent for the governmental purposes of ^ the issue within the 6-month period beginning on the date the bonds are issued, less than 45 percent of such proceeds are spent for such purposes within the 1-year period beginning on such date, less than 75 percent of such proceeds are spent for such purposes within the 18-month period beginning on such date, or less than 100 percent of such proceeds are spent for such purposes within the 2-year period beginning on such date. For purposes of the preceding sentence, the term net proceeds' includes investment proceeds earned before the close of the period involved on the investment of the sale proceeds of the issue. "(Ill) EXCEPTION FOR REASONABLE RETAINAGE. — i> For purposes of subclause (II), 100 percent of the '. „• net proceeds of an issue shall be treated as spent for the governmental purposes of the issue within ,.. the 2-year period beginning on the date the bonds are issued if such requirement is met within the ^ 3-year period beginning on such date and such requirement would have been met within such 2- year period but for a reasonable retainage (not i-. ,. exceeding 5 percent of the net proceeds of the issue). - ' " (IV) ISSUES TO WHICH SUBCLAUSE (I) APPLIES. — An issue is described in this subclause if at least 75 percent of the net proceeds of the issue are to be used for construction expenditures with respect to property which is owned by a governmental unit or ,. -, a 501(c)(3) organization. For purposes of the preced- ing sentence, the term 'construction' includes reconstruction and rehabilitation, and section 142(b)(l) shall apply. An issue is not described in this subclause if any bond which is part of such issue is a bond other than a qualified 501(c)(3) bond, a bond.which is not a private activity bond, or a private activity bond to finance property to be owned by a governmental unit or a 501(c)(3) =; organization. (V) ELECTION TO PAY PENALTY IN UEU OF J< REBATE. — In the case of an issue described in subclause (IV) which fails to meet the require-

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