(a) Elective exception from volume cap on tax-Exempt bonds

Section 146 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(o) Elective exception for certain exempt facility bonds for qualified residential rental projects

(1) In general

An issuing authority may elect (at such time and in such manner as the Secretary may prescribe) to exempt any bond described in paragraph (2) from such authority’s volume cap.

(2) Bond described

A bond described in this paragraph is any exempt facility bond issued as part of an issue described in section 142(a)(7) if 95 percent or more of the net proceeds of the issue are used to preserve, improve, or replace—

(A)

any qualified low-income building (as defined in section 42(c)(2)) the compliance period (as defined in section 42(i)(1)) for which has closed, but the extended use period (as defined in section 42(h)(6)(D)) for which has not closed, before the issue date of such issue,

(B)

any federally assisted building (as defined in section 42(d)(6)(C)(i)), or

(C)

any State-assisted building (as defined in section 42(d)(6)(C)(ii)).

(3) Modified application of exception to prohibition on acquisition of existing property

In the case of any bond exempted under paragraph (1), section 147(d) shall be applied by substituting 50 percent for 15 percent both places it appears.

(4) Duration of election

Any election under this subsection, once made, shall be irrevocable.

(b) Exception from low-Income housing tax credit limitation

Section 42(h)(4) of such Code is amended by adding at the end the following new subparagraph:

(C) Exception for certain bonds exempt from volume cap

The requirement of subparagraph (A)(i) shall be treated as met with respect to any obligation which would, but for an election made under section 146(o), be taken into account under section 146.

(c) Effective date

The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.