SECTION 1. MODIFICATIONS TO SMALL ISSUE BOND PROVISIONS.

    (a) Increase in Amount of Qualified Small Issue Bonds Permitted for 
Facilities to be Used by Related Principal Users.--
            (1) In general.--Clause (i) of section 144(a)(4)(A) 
        (relating to $10,000,000 limit in certain cases) is amended by 
        striking ``$10,000,000'' and inserting ``$20,000,000''.
            (2) Cost-of-living adjustment.--Section 144(a)(4) is 
        amended by adding at the end the following:
                    ``(G) Cost-of-living adjustment.--In the case of a 
                taxable year beginning in a calendar year after 2002, 
                the $20,000,000 amount under subparagraph (A) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment under 
                        section 1(f)(3) for the calendar year in which 
                        the taxable year begins, determined by 
                        substituting `calendar year 2001' for `calendar 
                        year 1992' in subparagraph (B) thereof.''.
            (3) Clerical amendment.--The heading of paragraph (4) of 
        section 144(a) is amended by striking ``$10,000,000'' and 
        inserting ``$20,000,000''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to--
                    (A) obligations issued after the date of the 
                enactment of this Act, and
                    (B) capital expenditures made after such date with 
                respect to obligations issued on or before such date.
    (b) Definition of Manufacturing Facility.--
            (1) In general.--Section 144(a)(12)(C) (relating to 
        definition of manufacturing facility) is amended to read as 
        follows:
                    ``(C) Manufacturing facility.--For purposes of this 
                paragraph, the term `manufacturing facility' means any 
                facility which is used in--
                            ``(i) the manufacturing or production of 
                        tangible personal property (including the 
                        processing resulting in a change in the 
                        condition of such property),
                            ``(ii) the manufacturing, development, or 
                        production of specifically developed software 
                        products or processes if--
                                    ``(I) it takes more than 6 months 
                                to develop or produce such products,
                                    ``(II) the development or 
                                production could not with due diligence 
                                be reasonably expected to occur in less 
                                than 6 months, and
                                    ``(III) the software product or 
                                process comprises programs, routines, 
                                and attendant documentation developed 
                                and maintained for use in computer and 
                                telecommunications technology, or
                            ``(iii) the manufacturing, development, or 
                        production of specially developed biobased or 
                        bioenergy products or processes if--
                                    ``(I) it takes more than 6 months 
                                to develop or produce,
                                    ``(II) the development or 
                                production could not with due diligence 
                                be reasonably expected to occur in less 
                                than 6 months, and
                                    ``(III) the biobased or bioenergy 
                                product or process comprises products, 
                                processes, programs, routines, and 
                                attendant documentation developed and 
                                maintained for the utilization of 
                                biological materials in commercial or 
                                industrial products, for the 
                                utilization of renewable domestic 
                                agricultural or forestry materials in 
                                commercial or industrial products, or 
                                for the utilization of biomass 
                                materials.
                    ``(D) Related facilities.--For purposes of 
                subparagraph (C), the term `manufacturing facility' 
                includes a facility which is directly and functionally 
                related to a manufacturing facility (determined without 
                regard to subparagraph (C)) if--
                            ``(i) such facility, including an office 
                        facility and a research and development 
                        facility, is located on the same site as the 
                        manufacturing facility, and
                            ``(ii) not more than 40 percent of the net 
                        proceeds of the issue are used to provide such 
                        facility,
                but shall not include a facility used solely for 
                research and development activities.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to obligations issued after the date of the 
        enactment of this Act.
Amends the Internal Revenue Code regarding qualified small issue bonds to: (1) increase the cap and capital expenditure amounts from $10 million to $20 million, with an inflation adjustment beginning in 2003; and (2) expand the definition of "manufacturing facility" to include certain biotech and software production.
A bill to amend the Internal Revenue Code of 1986 to modify the qualified small issue bond provisions.