To amend the Internal Revenue Code of 1986 to extend the recovery zone economic development bonds for certain cities.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Urban Recovery and Growth Act''.

SEC. 2. EXTENSION OF RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS FOR 
              CERTAIN CITIES.

    (a) In General.--Part III of subchapter Y of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 1400U-4. EXTENSION OF RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS 
              FOR CERTAIN CITIES.

    ``(a) In General.--In the case of an economic development extension 
bond--
            ``(1) such bond shall be treated for purposes of section 
        6431 as a qualified bond issued before January 1, 2011,
            ``(2) subsection (b) of such section shall be applied by 
        substituting `45 percent' for `35 percent', and
            ``(3) interest on such bond shall be includible in gross 
        income.
    ``(b) Economic Development Extension Bond.--For purposes of this 
section--
            ``(1) In general.--The term `economic development extension 
        bond' means any specified bond issued during the 1-year period 
        beginning on the date of the enactment of this section as part 
        of an 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 purposes, and
                    ``(B) the issuer designates such bond for purposes 
                of this section.
            ``(2) Specified bond.--
                    ``(A) In general.--The term `specified bond' means 
                any obligation (other than a private activity bond) if 
                the interest on such obligation would (but for this 
                section) be excludable from gross income under section 
                103.
                    ``(B) Applicable rules.--For purposes of applying 
                subparagraph (A)--
                            ``(i) rules similar to the rules of section 
                        54AA(d)(2) shall apply, and
                            ``(ii) section 148 shall not apply with 
                        respect to any issue with respect to which the 
                        excess described in paragraph (1)(A) is used 
                        for a qualified purpose described in paragraph 
                        (3)(B).
            ``(3) Qualified purposes.--The term `qualified purposes' 
        means--
                    ``(A) any qualified economic development purpose 
                (as defined in section 1400U-2(c), applied by treating 
                specified cities (and only specified cities) as 
                recovery zones), and
                    ``(B) any refinancing of indebtedness of a 
                specified city which is outstanding on the date of the 
                enactment of this section.
            ``(4) Specified city.--The term `specified city' means any 
        principal city for a metropolitan statistical area (as 
        determined by the Office of Management and Budget) which--
                    ``(A) has an average unemployment rate of not less 
                than 150 percent of the national average rate for the 
                last calendar year ending before the date of the 
                enactment of this section, and
                    ``(B) has lost at least 20 percent of its 
                population between calendar year 2000 and calendar year 
                2010.
            ``(5) Limitation on amount of bonds designated.--
                    ``(A) In general.--The maximum aggregate face 
                amount of bonds which may be designated under paragraph 
                (1) with respect to any specified city shall not exceed 
                the bond limitation allocated to such city under 
                subparagraph (B).
                    ``(B) Allocation.--The Secretary shall allocate 
                bond limitation to each specified city such that the 
                bond limitation allocated to such city bears the same 
                proportion to $1,000,000,000 as the population of such 
                city (as determined for purposes of the 2010 census) 
                bears to the total population of all specified cities 
                (as so determined).''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter Y of chapter 1 of such Code is amended by adding at the end 
the following new item:

``Sec. 1400U-4. Extension of recovery zone economic development bonds 
                            for certain cities.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

Summary: Urban Recovery and Growth Act - Amends the Internal Revenue Code to authorize the issuance of economic development extension bonds for the purpose of economic development or refinancing the indebtedness of a city that has an average unemployment rate of not less than 150 of the national average in the preceding calendar year and that has lost at least 20 of its population between 2000 and 2010.