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priorities and selection criteria of the hous-
ing credit agency.’’.
(b) SITE VISITS.—Clause (iii) of section 42(m)(1)(B)
(relating to qualified allocation plan) is amended by insert-
ing before the period ‘‘and in monitoring for noncompli-
ance with habitability standards through regular site vis-
its’’.
SEC. 504. MODIFICATIONS TO RULES RELATING TO BASIS
OF BUILDING WHICH IS ELIGIBLE FOR CRED-
IT.
(a) ADJUSTED BASIS TO INCLUDE PORTION OF CER-
TAIN BUILDINGS USED BY LOW-INCOME INDIVIDUALS
WHO ARE NOT TENANTS AND BY PROJECT EMPLOY-
EES.—Paragraph (4) of section 42(d) (relating to special
rules relating to determination of adjusted basis) is
amended—
(1) by striking ‘‘subparagraph (B)’’ in subpara-
graph (A) and inserting ‘‘subparagraphs (B) and
(C)’’;
(2) by redesignating subparagraph (C) as sub-
paragraph (D); and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
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‘‘(C) INCLUSION OF BASIS OF PROPERTY
USED
TO
PROVIDE
SERVICES
FOR
CERTAIN
NONTENANTS.—
‘‘(i) 
IN
GENERAL.—The 
adjusted
basis of any building located in a qualified
census tract (as defined in paragraph
(5)(C)) shall be determined by taking into
account the adjusted basis of property (of
a character subject to the allowance for de-
preciation and not otherwise taken into ac-
count) used throughout the taxable year in
providing any community service facility.
‘‘(ii) LIMITATION.—The increase in
the adjusted basis of any building which is
taken into account by reason of clause (i)
shall not exceed 10 percent of the eligible
basis of the qualified low-income housing
project of which it is a part. For purposes
of the preceding sentence, all community
service facilities which are part of the same
qualified low-income housing project shall
be treated as one facility.
‘‘(iii) COMMUNITY
SERVICE
FACIL-
ITY.—For purposes of this subparagraph,
the term ‘community service facility’
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means any facility designed to serve pri-
marily individuals whose income is 60 per-
cent or less of area median income (within
the meaning of subsection (g)(1)(B)).’’.
(b) CERTAIN NATIVE AMERICAN HOUSING ASSIST-
ANCE DISREGARDED IN DETERMINING WHETHER BUILD-
ING IS FEDERALLY SUBSIDIZED FOR PURPOSES OF THE
LOW-INCOME HOUSING CREDIT.—Subparagraph (E) of
section 42(i)(2) (relating to determination of whether
building is federally subsidized) is amended—
(1) in clause (i), by inserting ‘‘or the Native
American Housing Assistance and Self-Determina-
tion Act of 1996 (25 U.S.C. 4101 et seq.) (as in ef-
fect on October 1, 1997)’’ after ‘‘this subpara-
graph)’’; and
(2) in the subparagraph heading, by inserting
‘‘OR NATIVE AMERICAN HOUSING ASSISTANCE’’ after
‘‘HOME ASSISTANCE’’.
SEC. 505. OTHER MODIFICATIONS.
(a) ALLOCATION
OF CREDIT LIMIT
TO CERTAIN
BUILDINGS.—
(1) The first sentence of section 42(h)(1)(E)(ii)
is amended by striking ‘‘(as of’’ the first place it ap-
pears and inserting ‘‘(as of the later of the date
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which is 6 months after the date that the allocation
was made or’’.
(2) The last sentence of section 42(h)(3)(C) is
amended by striking ‘‘project which’’ and inserting
‘‘project which fails to meet the 10 percent test
under paragraph (1)(E)(ii) on a date after the close
of the calendar year in which the allocation was
made or which’’.
(b) DETERMINATION OF WHETHER BUILDINGS ARE
LOCATED IN HIGH COST AREAS.—The first sentence of
section 42(d)(5)(C)(ii)(I) is amended—
(1) by inserting ‘‘either’’ before ‘‘in which 50
percent’’; and
(2) by inserting before the period ‘‘or which has
a poverty rate of at least 25 percent’’.
SEC. 506. CARRYFORWARD RULES.
(a) IN GENERAL.—Clause (ii) of section 42(h)(3)(D)
(relating to unused housing credit carryovers allocated
among certain States) is amended by striking ‘‘the excess’’
and all that follows and inserting ‘‘the excess (if any) of—
‘‘(I) the unused State housing
credit ceiling for the year preceding
such year, over
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‘‘(II) the aggregate housing cred-
it dollar amount allocated for such
year.’’.
(b) CONFORMING AMENDMENT.—The second sen-
tence of section 42(h)(3)(C) (relating to State housing
credit ceiling) is amended by striking ‘‘clauses (i) and
(iii)’’ and inserting ‘‘clauses (i) through (iv)’’.
SEC. 507. EFFECTIVE DATE.
Except as otherwise provided in this subtitle, the
amendments made by this subtitle shall apply to—
(1) housing credit dollar amounts allocated
after December 31, 2000; and
(2) buildings placed in service after such date
to the extent paragraph (1) of section 42(h) of the
Internal Revenue Code of 1986 does not apply to
any building by reason of paragraph (4) thereof, but
only with respect to bonds issued after such date.
Subtitle B—Private Activity Bond
Volume Cap
SEC. 511. ACCELERATION OF PHASE-IN OF INCREASE IN
VOLUME CAP ON PRIVATE ACTIVITY BONDS.
(a) IN GENERAL.—The table contained in section
146(d)(2) (relating to per capita limit; aggregate limit) is
amended to read as follows:
‘‘Calendar Year
Per Capita
Limit
Aggregate
Limit
2001 ....................................................................................
$55.00
$165,000,000
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‘‘Calendar Year
Per Capita
Limit
Aggregate
Limit
2002 ....................................................................................
60.00
180,000,000
2003 ....................................................................................
65.00
195,000,000
2004, 2005, and 2006 .........................................................
70.00
210,000,000
2007 and thereafter ............................................................
75.00
225,000,000.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to calendar years beginning after
2000.
Subtitle C—Exclusion From Gross
Income for Certain Forgiven
Mortgage Obligations
SEC. 512. EXCLUSION FROM GROSS INCOME FOR CERTAIN
FORGIVEN MORTGAGE OBLIGATIONS.
(a) IN GENERAL.—Paragraph (1) of section 108(a)
(relating to exclusion from gross income) is amended by
striking ‘‘or’’ at the end of both subparagraphs (A) and
(C), by striking the period at the end of subparagraph (D)
and inserting ‘‘, or’’, and by inserting after subparagraph
(D) the following new subparagraph:
‘‘(E) in the case of an individual, the in-
debtedness discharged is qualified residential in-
debtedness.’’.
(b) 
QUALIFIED
RESIDENTIAL
INDEBTEDNESS
SHORTFALL.—Section 108 (relating to discharge of in-
debtedness) is amended by adding at the end the following
new subsection:
‘‘(h) QUALIFIED RESIDENTIAL INDEBTEDNESS.—