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may waive any portion of an allocation made under this subparagraph.

‘‘(B) LARGE MUNICIPALITIES.—For purposes of subparagraph (A), the term ‘large municipality’ means a municipality with a population of more than 100,000.

‘‘(C) DETERMINATION OF LOCAL EMPLOYMENT DECLINES.—For purposes of this paragraph, the employment decline of any municipality or county shall be determined in the same manner as determining the State employment decline under paragraph (2), except that in the case of a municipality any portion of which is in a county, such portion shall be treated as part of such municipality and not part of such county. ‘‘(4) NATIONAL LIMITATIONS.—

‘‘(A) RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS.—There is a national recovery zone economic development bond limitation of $10,000,000,000.

‘‘(B) RECOVERY ZONE FACILITY BONDS.—There is a national recovery zone facility bond limitation of $15,000,000,000. ‘‘(b) RECOVERY ZONE.—For purposes of this part, the term

‘recovery zone’ means— ‘‘(1) any area designated by the issuer as having significant poverty, unemployment, rate of home foreclosures, or general distress, ‘‘(2) any area designated by the issuer as economically distressed by reason of the closure or realignment of a military installation pursuant to the Defense Base Closure and Realignment Act of 1990, and ‘‘(3) any area for which a designation as an empowerment zone or renewal community is in effect.

‘‘SEC. 1400U–2. RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS.

‘‘(a) IN GENERAL.—In the case of a recovery zone economic development bond— ‘‘(1) such bond shall be treated as a qualified bond for purposes of section 6431, and

‘‘(2) subsection (b) of such section shall be applied by substituting ‘45 percent’ for ‘35 percent’. ‘‘(b) RECOVERY ZONE ECONOMIC DEVELOPMENT BOND.—

‘‘(1) IN GENERAL.—For purposes of this section, the term ‘recovery zone economic development bond’ means any build America bond (as defined in section 54AA(d)) issued before January 1, 2011, as part of issue if—

‘‘(A) 100 percent of the excess of— ‘‘(i) the available project proceeds (as defined in section 54A) of such issue, over

‘‘(ii) the amounts in a reasonably required reserve (within the meaning of section 150(a)(3)) with respect to such issue,

are to be used for one or more qualified economic development purposes, and

‘‘(B) the issuer designates such bond for purposes of this section. ‘‘(2) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—The

maximum aggregate face amount of bonds which may be designated by any issuer under paragraph (1) shall not exceed

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the amount of the recovery zone economic development bond limitation allocated to such issuer under section 1400U–1. ‘‘(c) QUALIFIED ECONOMIC DEVELOPMENT PURPOSE.—For pur

poses of this section, the term ‘qualified economic development purpose’ means expenditures for purposes of promoting development or other economic activity in a recovery zone, including—

‘‘(1) capital expenditures paid or incurred with respect to property located in such zone, ‘‘(2) expenditures for public infrastructure and construction of public facilities, and ‘‘(3) expenditures for job training and educational programs.

‘‘SEC. 1400U–3. RECOVERY ZONE FACILITY BONDS.

‘‘(a) IN GENERAL.—For purposes of part IV of subchapter B (relating to tax exemption requirements for State and local bonds), the term ‘exempt facility bond’ includes any recovery zone facility bond.

‘‘(b) RECOVERY ZONE FACILITY BOND.—

‘‘(1) IN GENERAL.—For purposes of this section, the term ‘recovery zone facility 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 recovery zone property,

‘‘(B) such bond is issued before January 1, 2011, and

‘‘(C) the issuer designates such bond for purposes of this section. ‘‘(2) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—The

maximum aggregate face amount of bonds which may be designated by any issuer under paragraph (1) shall not exceed the amount of recovery zone facility bond limitation allocated to such issuer under section 1400U–1. ‘‘(c) RECOVERY ZONE PROPERTY.—For purposes of this section—

‘‘(1) IN GENERAL.—The term ‘recovery zone property’ means any property to which section 168 applies (or would apply but for section 179) if—

‘‘(A) such property was constructed, reconstructed, renovated, or acquired by purchase (as defined in section 179(d)(2)) by the taxpayer after the date on which the designation of the recovery zone took effect,

‘‘(B) the original use of which in the recovery zone commences with the taxpayer, and

‘‘(C) substantially all of the use of which is in the recovery zone and is in the active conduct of a qualified business by the taxpayer in such zone. ‘‘(2) QUALIFIED BUSINESS.—The term ‘qualified business’

means any trade or business except that—

‘‘(A) the rental to others of real property located in a recovery zone shall be treated as a qualified business only if the property is not residential rental property (as defined in section 168(e)(2)), and

‘‘(B) such term shall not include any trade or business consisting of the operation of any facility described in section 144(c)(6)(B). ‘‘(3) SPECIAL RULES FOR SUBSTANTIAL RENOVATIONS AND

SALE-LEASEBACK.—Rules similar to the rules of subsections

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(a)(2) and (b) of section 1397D shall apply for purposes of this subsection. ‘‘(d) NONAPPLICATION OF CERTAIN RULES.—Sections 146

(relating to volume cap) and 147(d) (relating to acquisition of

existing property not permitted) shall not apply to any recovery

zone facility bond.’’.

(b) CLERICAL AMENDMENT.—The table of parts for subchapter Y of chapter 1 of such Code is amended by adding at the end the following new item:

‘‘PART III. RECOVERY ZONE BONDS.’’.

(c) EFFECTIVE DATE.—The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

SEC. 1402. TRIBAL ECONOMIC DEVELOPMENT BONDS.

(a) IN GENERAL.—Section 7871 is amended by adding at the end the following new subsection: ‘‘(f) TRIBAL ECONOMIC DEVELOPMENT BONDS.— ‘‘(1) ALLOCATION OF LIMITATION.—

‘‘(A) IN GENERAL.—The Secretary shall allocate the national tribal economic development bond limitation among the Indian tribal governments in such manner as the Secretary, in consultation with the Secretary of the Interior, determines appropriate.

‘‘(B) NATIONAL LIMITATION.—There is a national tribal economic development bond limitation of $2,000,000,000. ‘‘(2) BONDS TREATED AS EXEMPT FROM TAX.—In the case

of a tribal economic development bond—

‘‘(A) notwithstanding subsection (c), such bond shall be treated for purposes of this title in the same manner as if such bond were issued by a State,

‘‘(B) the Indian tribal government issuing such bond and any instrumentality of such Indian tribal government shall be treated as a State for purposes of section 141, and

‘‘(C) section 146 shall not apply. ‘‘(3) TRIBAL ECONOMIC DEVELOPMENT BOND.—

‘‘(A) IN GENERAL.—For purposes of this section, the term ‘tribal economic development bond’ means any bond issued by an Indian tribal government—

‘‘(i) the interest on which would be exempt from tax under section 103 if issued by a State or local government, and

‘‘(ii) which is designated by the Indian tribal government as a tribal economic development bond for purposes of this subsection. ‘‘(B) EXCEPTIONS.—Such term shall not include any

bond issued as part of an issue if any portion of the proceeds of such issue are used to finance—

‘‘(i) any portion of a building in which class II or class III gaming (as defined in section 4 of the Indian Gaming Regulatory Act) is conducted or housed or any other property actually used in the conduct of such gaming, or

‘‘(ii) any facility located outside the Indian reservation (as defined in section 168(j)(6)).

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‘‘(C) LIMITATION ON AMOUNT OF BONDS DESIGNATED.— The maximum aggregate face amount of bonds which may be designated by any Indian tribal government under subparagraph (A) shall not exceed the amount of national tribal economic development bond limitation allocated to such government under paragraph (1).’’.

(b)

STUDY.—The Secretary of the Treasury, or the Secretary’s delegate, shall conduct a study of the effects of the amendment made by subsection (a). Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury, or the Secretary’s delegate, shall report to Congress on the results of the study conducted under this paragraph, including the Secretary’s recommendations regarding such amendment.

(c)

EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to obligations issued after the date of the enactment of this Act.

SEC. 1403. INCREASE IN NEW MARKETS TAX CREDIT.

(a)

IN GENERAL.—Section 45D(f)(1) is amended— (1) by striking ‘‘and’’ at the end of subparagraph (C),

(2)

by striking ‘‘, 2007, 2008, and 2009.’’ in subparagraph (D), and inserting ‘‘and 2007,’’, and

(3) by adding at the end the following new subparagraphs: ‘‘(E) $5,000,000,000 for 2008, and ‘‘(F) $5,000,000,000 for 2009.’’.

(b) SPECIAL RULE FOR ALLOCATION OF INCREASED 2008 LIMITA-TION.—The amount of the increase in the new markets tax credit limitation for calendar year 2008 by reason of the amendments made by subsection (a) shall be allocated in accordance with section 45D(f)(2) of the Internal Revenue Code of 1986 to qualified community development entities (as defined in section 45D(c) of such Code) which—

(1)

submitted an allocation application with respect to calendar year 2008, and (2)(A) did not receive an allocation for such calendar year, or

(B)

received an allocation for such calendar year in an amount less than the amount requested in the allocation application.

SEC. 1404. COORDINATION OF LOW-INCOME HOUSING CREDIT AND LOW-INCOME HOUSING GRANTS.

Subsection (i) of section 42 is amended by adding at the end the following new paragraph: ‘‘(9) COORDINATION WITH LOW-INCOME HOUSING GRANTS.—