‘‘(5) Increasing revenues that small- and me-
dium-sized firms derive from sales to the Federal Gov-
ernment and State and local governments. 
‘‘(6) Expanding technology availability to the 
small- and medium-sized firm segment by increasing 
access to, and adoption of, the latest technologies 
being developed at Federal laboratories and at univer-
sities. 
‘‘(7) Improving the business and manufacturing 
practices of small- and medium-sized firms to enable 
them to become competitive in a global marketplace. 
‘‘(b) ADVISORY BOARD.— 
‘‘(1) IN GENERAL.—In carrying out the project, 
the Secretary shall establish an advisory board com-
prised of representatives described in paragraph (2) 
to provide advice and recommendations with respect 
to the establishment and operation of the project. 
‘‘(2) 
REPRESENTATIVES.—Representatives 
re-
ferred to in paragraph (1) shall consist of the respec-
tive executive directors of each Trade Adjustment As-
sistance Center affiliated with the trade adjustment 
assistance for firms program under this chapter. 
‘‘(c) DURATION.—The Secretary shall conduct the 
project for the 3-year period beginning on the date that is 
180 days after the date of the enactment of this Act. 
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‘‘(d) ADMINISTRATION
OF
PROJECT.—In imple-
menting the project, the Secretary shall give preference, in 
entering into contracts for the operation and administra-
tion of the project, to Trade Adjustment Assistance Centers 
affiliated with the trade adjustment assistance for firms 
program under this chapter. 
‘‘(e) REPORT.—The Secretary shall submit to the Con-
gress a report on the project under this section not later 
than 6 months after the date of the completion of the project. 
Such report shall include— 
‘‘(1) information on the impact of the project on 
mitigating the impact of imports in terms of competi-
tiveness; and 
‘‘(2) recommendations on the cost-effectiveness of 
extending or expanding the project. 
‘‘(f) FUNDING.—Of the amounts made available to 
carry out this chapter for fiscal years 2008 through 2012, 
not more than $1,000,000 for each such fiscal year is au-
thorized to be made available to carry out this section.’’. 
(b) CLERICAL AMENDMENT.—The table of contents for 
title II of the Trade Act of 1974 is amended by inserting 
after the item relating to section 265 the following: 
‘‘Sec. 266. Demonstration project on strategic trade transformation assistance.’’. 
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TITLE III—UNEMPLOYMENT 
INSURANCE 
SEC. 301. SHORT TITLE. 
This title may be cited as the ‘‘Unemployment Insur-
ance Modernization Act’’. 
SEC. 302. SPECIAL TRANSFERS TO STATE ACCOUNTS IN 
THE UNEMPLOYMENT TRUST FUND. 
(a) IN GENERAL.—Section 903 of the Social Security 
Act (42 U.S.C. 1103) is amended by adding at the end the 
following: 
‘‘Special Transfers in Fiscal Years 2008 Through 2012 for 
Modernization 
‘‘(f)(1)(A) In addition to any other amounts, the Sec-
retary of Labor shall provide for the making of unemploy-
ment compensation modernization incentive payments 
(hereinafter ‘incentive payments’) to the accounts of the 
States in the Unemployment Trust Fund, by transfer from 
amounts reserved for that purpose in the Federal unemploy-
ment account, in accordance with succeeding provisions of 
this subsection. 
‘‘(B) The maximum incentive payment allowable 
under this subsection with respect to any State shall, as 
determined by the Secretary of Labor, be equal to the 
amount obtained by multiplying $7,000,000,000 times the 
same ratio as is applicable under subsection (a)(2)(B) for 
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purposes of determining such State’s share of any funds to 
be transferred under subsection (a) as of October 1, 2007. 
‘‘(C) Of the maximum incentive payment determined 
under subparagraph (B) with respect to a State— 
‘‘(i) one-third shall be transferred to the account 
of such State upon a certification under paragraph 
(4)(B) that the State law of such State meets the re-
quirements of paragraph (2); and 
‘‘(ii) the remainder shall be transferred to the ac-
count of such State upon a certification under para-
graph (4)(B) that the State law of such State meets 
the requirements of paragraph (3). 
‘‘(2) The State law of a State meets the requirements 
of this paragraph if such State law— 
‘‘(A) uses a base period that includes the most 
recently completed calendar quarter before the start of 
the benefit year for purposes of determining eligibility 
for unemployment compensation; or 
‘‘(B) provides that, in the case of an individual 
who would not otherwise be eligible for unemployment 
compensation under the State law because of the use 
of a base period that does not include the most re-
cently completed calendar quarter before the start of 
the benefit year, eligibility shall be determined using 
a base period that includes such calendar quarter. 
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‘‘(3) The State law of a State meets the requirements 
of this paragraph if such State law includes provisions to 
carry out at least 2 of the following subparagraphs: 
‘‘(A) An individual shall not be denied regular 
unemployment compensation under any State law 
provisions relating to availability for work, active 
search for work, or refusal to accept work, solely be-
cause such individual is seeking only part-time (and 
not full-time) work, except that the State law provi-
sions carrying out this subparagraph may exclude an 
individual if a majority of the weeks of work in such 
individual’s base period do not include part-time 
work. 
‘‘(B) An individual shall not be disqualified 
from regular unemployment compensation for sepa-
rating from employment if that separation is for com-
pelling family reasons. For purposes of this subpara-
graph, the term ‘compelling family reasons’ includes 
at least the following: 
‘‘(i) Domestic violence (verified by such rea-
sonable and confidential documentation as the 
State law may require) which causes the indi-
vidual reasonably to believe that such individ-
ual’s continued employment would jeopardize the 
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safety of the individual or of any member of the 
individual’s immediate family. 
‘‘(ii) The illness or disability of a member 
of the individual’s immediate family. 
‘‘(iii) The need for the individual to accom-
pany such individual’s spouse— 
‘‘(I) to a place from which it is im-
practical for such individual to commute; 
and 
‘‘(II) due to a change in location of the 
spouse’s employment. 
‘‘(C) Weekly unemployment compensation is 
payable under this subparagraph to any individual 
who is unemployed (as determined under the State 
unemployment compensation law), has exhausted all 
rights to regular and (if applicable) extended unem-
ployment compensation under the State law, and is 
enrolled and making satisfactory progress in a State- 
approved training program or in a job training pro-
gram authorized under the Workforce Investment Act 
of 1998. Such program shall prepare individuals who 
have been separated from a declining occupation, or 
who have been involuntarily and indefinitely sepa-
rated from employment as a result of a permanent re-
duction of operations at the individual’s place of em-
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the close of fiscal year 2012, become unrestricted as to use 
as part of the Federal unemployment account. 
‘‘(7) For purposes of this subsection, the terms ‘benefit 
year’, ‘base period’, and ‘week’ have the respective meanings 
given such terms under section 205 of the Federal-State Ex-
tended Unemployment Compensation Act of 1970 (26 
U.S.C. 3304 note). 
‘‘Special Transfers in Fiscal Years 2008 Through 2012 for 
Administration 
‘‘(g)(1) Notwithstanding any other provision of this 
section, the total amount available for transfer to the ac-
counts of the States pursuant to subsection (a) as of the 
beginning of each of fiscal years 2008, 2009, 2010, 2011, 
and 2012 shall be equal to the total amount which (dis-
regarding this subsection) would otherwise be so available, 
increased by $100,000,000. 
‘‘(2) Each State’s share of any additional amount 
made available by this subsection shall be determined, cer-
tified, and computed in the same manner as described in 
subsection (a)(2) and shall be subject to the same limita-
tions on transfers as described in subsection (b). For pur-
poses of applying subsection (b)(2), the balance of any ad-
vances made to a State under section 1201 shall be credited 
against, and operate to reduce (but not below zero)— 
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‘‘(A) first, any additional amount which, as a 
result of the enactment of this subsection, is to be 
transferred to the account of such State in a fiscal 
year; and 
‘‘(B) second, any amount which (disregarding 
this subsection) is otherwise to be transferred to the 
account of such State pursuant to subsections (a) and 
(b) in such fiscal year. 
‘‘(3) Any additional amount transferred to the account 
of a State as a result of the enactment of this subsection— 
‘‘(A) may be used by the State agency of such 
State only in the payment of expenses incurred by it 
for— 
‘‘(i) the administration of the provisions of 
its State law carrying out the purposes of sub-
section (f)(2) or any subparagraph of subsection 
(f)(3); 
‘‘(ii) improved outreach to individuals who 
might be eligible for regular unemployment com-
pensation by virtue of any provisions of the 
State law which are described in clause (i); 
‘‘(iii) the improvement of unemployment 
benefit and unemployment tax operations; and 
‘‘(iv) staff-assisted reemployment services 
for unemployment compensation claimants; and 
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‘‘(B) shall be excluded from the application of 
subsection (c). 
‘‘(4) The total additional amount made available by 
this subsection in a fiscal year shall be taken out of the 
amounts remaining in the employment security adminis-
tration account after subtracting the total amount which 
(disregarding this subsection) is otherwise required to be 
transferred from such account in such fiscal year pursuant 
to subsections (a) and (b).’’. 
(b) REGULATIONS.—The Secretary of Labor may pre-
scribe any regulations necessary to carry out the amend-
ment made by subsection (a). 
SEC. 303. EXTENSION OF FUTA TAX. 
Section 3301 of the Internal Revenue Code of 1986 (re-
lating to rate of tax) is amended— 
(1) by striking ‘‘2007’’ in paragraph (1) and in-
serting ‘‘2010’’, and 
(2) by striking ‘‘2008’’ in paragraph (2) and in-
serting ‘‘2011’’. 
SEC. 304. SAFETY NET REVIEW COMMISSION. 
(a) ESTABLISHMENT.—The Secretary of Labor shall 
establish an advisory commission to be known as the ‘‘Safe-
ty Net Review Commission’’ (hereinafter in this section re-
ferred to as the ‘‘Commission’’). 
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(b) FUNCTION.—It shall be the function of the Commis-
sion to evaluate the unemployment compensation program, 
the Trade Adjustment Assistance program, the Job Corps 
program, a program under the Workforce Investment Act, 
and other employment assistance programs, including the 
purpose, goals, countercyclical effectiveness, coverage, ben-
efit adequacy, trust fund solvency, funding of State admin-
istrative costs, administrative efficiency, and any other as-
pects of each such program, as well as any related provi-
sions of the Internal Revenue Code of 1986, and to make 
recommendations for their improvement. 
(c) MEMBERS.— 
(1) IN GENERAL.—The Commission shall consist 
of 11 members as follows: 
(A) 5 members appointed by the President, 
to include representatives of business, labor, 
State government, and the public. 
(B) 3 members appointed by the President 
pro tempore of the Senate, in consultation with 
the Chairman and ranking member of the Com-
mittee on Finance of the Senate. 
(C) 3 members appointed by the Speaker of 
the House of Representatives, in consultation 
with the Chairman and ranking member of the 
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Committee on Ways and Means of the House of 
Representatives. 
(2) QUALIFICATIONS.—In appointing members 
under subparagraphs (B) and (C) of paragraph (1), 
the President pro tempore of the Senate and the 
Speaker of the House of Representatives shall each ap-
point— 
(A) 1 representative of the interests of busi-
ness, 
(B) 1 representative of the interests of labor, 
and 
(C) 1 representative of the interests of State 
governments. 
(3) VACANCIES.—A vacancy in the Commission 
shall be filled in the manner in which the original 
appointment was made. 
(4) CHAIRMAN.—The President shall appoint the 
Chairman of the Commission from among its mem-
bers. 
(d) STAFF AND OTHER ASSISTANCE.— 
(1) IN GENERAL.—The Commission may engage 
any technical assistance (including actuarial services) 
required by the Commission to carry out its functions 
under this section. 
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100 
(2) ASSISTANCE FROM SECRETARY OF LABOR.— 
The Secretary of Labor shall provide the Commission 
with any staff, office facilities, and other assistance, 
and any data prepared by the Department of Labor, 
required by the Commission to carry out its functions 
under this section. 
(e) COMPENSATION.—Each member of the Commis-
sion— 
(1) shall be entitled to receive compensation at 
the rate of pay for level V of the Executive Schedule 
under section 5316 of title 5, United States Code, for 
each day (including travel time) during which such 
member is engaged in the actual performance of du-
ties vested in the Commission; and 
(2) while engaged in the performance of such du-
ties away from such member’s home or regular place 
of business, shall be allowed travel expenses (including 
per diem in lieu of subsistence) as authorized by sec-
tion 5703 of such title 5 for persons in the Govern-
ment employed intermittently. 
(f) REPORT.—Not later than 6 months after the date 
of the enactment of this Act, the Commission shall submit 
to the President and the Congress a report setting forth the 
findings and recommendations of the Commission as a re-
sult of its evaluation under this section. 
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101 
(g) TERMINATION.—The Commission shall terminate 
2 months after submitting its report pursuant to subsection 
(f). 
TITLE IV—MANUFACTURING 
REDEVELOPMENT ZONES 
SEC. 401. MANUFACTURING REDEVELOPMENT ZONES. 
(a) IN GENERAL.—Subchapter Y of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new part: 
‘‘PART III—MANUFACTURING REDEVELOPMENT 
ZONES 
‘‘Sec. 1400U–1. Designation of manufacturing redevelopment zones. 
‘‘Sec. 1400U–2. Eligibility criteria. 
‘‘Sec. 1400U–3. Manufacturing redevelopment tax credit bonds. 
‘‘Sec. 1400U–4. Tax-exempt manufacturing zone facility bonds. 
‘‘Sec. 1400U–5. Additional low-income housing credits. 
‘‘SEC. 1400U–1. DESIGNATION OF MANUFACTURING REDE-
VELOPMENT ZONES. 
‘‘(a) IN GENERAL.—From among the areas nominated 
for designation under this section, the Secretary may des-
ignate manufacturing redevelopment zones. 
‘‘(b) LIMITATIONS ON DESIGNATIONS.—The Secretary 
may designate in the aggregate 24 nominated areas as 
manufacturing redevelopment zones, subject to the avail-
ability of eligible nominated areas. The Secretary shall des-
ignate manufacturing redevelopment zones in such manner 
that the aggregate population of all such zones does not ex-
ceed 2,000,000. 
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102 
‘‘(c) PERIOD DESIGNATION MAY BE MADE.—A des-
ignation may be made under subsection (a) only during 
the 2-year period beginning on the date of the enactment 
of this section. 
‘‘(d) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.— 
‘‘(1) IN GENERAL.—Any designation under this 
section shall remain in effect during the period begin-
ning on the date of the designation and ending on the 
earliest of— 
‘‘(A) the close of the 10th calendar year be-
ginning on or after the date of the designation, 
‘‘(B) the termination date designated by the 
State and local governments as provided for in 
their nomination, or 
‘‘(C) the date the Secretary revokes the des-
ignation. 
‘‘(2) REVOCATION OF DESIGNATION.—The Sec-
retary may revoke the designation under this section 
of an area if such Secretary determines that the local 
government or the State in which it is located— 
‘‘(A) has modified the boundaries of the 
area, or 
‘‘(B) is not complying substantially with, or 
fails to make progress in achieving the bench-
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103 
marks set forth in, the strategic plan included 
with the application 
‘‘(e) LIMITATIONS ON DESIGNATIONS; APPLICATION.— 
Rules similar to the rules of subsections (e) and (f) of section 
1391 shall apply for purposes of this section except that 
the rules of such subsection (f) shall be applied with respect 
to the eligibility criteria specified in section 1400U–2. 
‘‘(f) DETERMINATIONS OF POPULATION.—Any deter-
mination of population under this part shall be made on 
the basis of the most recent decennial census for which data 
are available. 
‘‘SEC. 1400U–2. ELIGIBILITY CRITERIA. 
‘‘(a) IN GENERAL.—A nominated area shall be eligible 
for designation under section 1400U–1 only if— 
‘‘(1) it meets each of the criteria specified in sec-
tion 1392(a), 
‘‘(2) the nominated area has experienced a sig-
nificant decline in the number of individuals em-
ployed in manufacturing or has a high concentration 
of abandoned or underutilized manufacturing facili-
ties, and 
‘‘(3) no portion of the nominated area is located 
in an empowerment zone or renewal community, un-
less the local government which nominated the area 
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104 
elects to terminate such designation as an empower-
ment zone or renewal community. 
‘‘(b) APPLICATION
OF
CERTAIN
RULES; DEFINI-
TIONS.—For purposes of this subchapter— 
‘‘(1) rules similar to the rules of subsections (b), 
(c), and (d) of section 1392 and paragraphs (4), (7), 
(8), and (9) of section 1393(a) shall apply, and 
‘‘(2) any term defined in section 1393 shall have 
the same meaning when used in this subchapter. 
‘‘(c) DISCRETION TO ADJUST REQUIREMENTS.—In de-
termining whether a nominated area is eligible for designa-
tion as a manufacturing redevelopment zone, the Secretary 
may, where necessary to carry out the purposes of this part, 
waive the requirement of section 1392(a)(4) if it is shown 
that the nominated area has experienced a loss of manufac-
turing jobs during the previous 20 years which is in excess 
of 25 percent. 
‘‘SEC. 1400U–3. MANUFACTURING REDEVELOPMENT TAX 
CREDIT BONDS. 
‘‘(a) IN GENERAL.—For purposes of subpart I of part 
IV of subchapter A (relating to qualified tax credit bonds), 
the term ‘manufacturing redevelopment bond’ means any 
bond issued as part of an issue if— 
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105 
‘‘(1) 100 percent of the available project proceeds 
of such issue are to be used for one or more qualified 
manufacturing redevelopment purposes, 
‘‘(2) the bond is not a private activity bond, and 
‘‘(3) the local government which nominated the 
area to which such bond relates designates such bond 
for purposes of this section. 
‘‘(b) LIMITATION
ON
AMOUNT
OF
BONDS
DES-
IGNATED.—The maximum aggregate face amount of bonds 
which may be designated under subsection (a) with respect 
to any manufacturing redevelopment zone shall not exceed 
$150,000,000. 
‘‘(c) QUALIFIED MANUFACTURING REDEVELOPMENT 
PURPOSE.—For purposes of this section, the term ‘qualified 
manufacturing redevelopment purposes’ means capital ex-
penditures paid or incurred with respect to property located 
in a manufacturing redevelopment zone for purposes of pro-
moting development or other economic activity in such zone, 
including expenditures for environmental remediation, im-
provements to public infrastructure, and construction of 
public facilities. 
‘‘(d) DEFINITIONS.—For purposes of this section, any 
term used in this section which is also used in section 54A 
shall have the same meaning given such term by section 
54A. 
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106 
‘‘SEC. 1400U–4. TAX-EXEMPT MANUFACTURING ZONE FACIL-
ITY BONDS. 
‘‘(a) IN GENERAL.—For purposes of part IV of sub-
chapter B (relating to tax exemption requirements for State 
and local bonds), the term ‘exempt facility bond’ includes 
any bond issued as part of an issue if— 
‘‘(1) 95 percent or more of the net proceeds (as 
defined in section 150(a)(3)) of such issue are to be 
used for manufacturing zone property, and 
‘‘(2) the local government which nominated the 
area to which such bond relates designates such bond 
for purposes of this section. 
‘‘(b) LIMITATION
ON
AMOUNT
OF
BONDS
DES-
IGNATED.— 
‘‘(1) IN GENERAL.—The aggregate face amount 
of bonds which may be designated under subsection 
(a)(2) with respect to any manufacturing redevelop-
ment zone shall not exceed $230,000,000. 
‘‘(2) CURRENT REFUNDING NOT TAKEN INTO AC-
COUNT.—In the case of a refunding (or series of 
refundings) of a bond designated under this section, 
the refunding obligation shall be treated as designated 
under subsection (a)(2) (and shall not be taken into 
account in applying paragraph (1)) if— 
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107 
‘‘(A) the amount of the refunding bond does 
not exceed the outstanding amount of the re-
funded bond, and 
‘‘(B) the refunded bond is redeemed not 
later than 90 days after the date of issuance of 
the refunding bond. 
‘‘(c) LIMITATION ON AMOUNT OF BONDS ALLOCABLE 
TO ANY PERSON.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any issue if the aggregate amount of out-
standing manufacturing zone facility bonds allocable 
to any person (taking into account such issue) ex-
ceeds— 
‘‘(A) $15,000,000 with respect to any 1 
manufacturing redevelopment zone, or 
‘‘(B) $20,000,000 with respect to all manu-
facturing redevelopment zones. 
‘‘(2) AGGREGATE
ENTERPRISE
ZONE
FACILITY 
BOND BENEFIT.—For purposes of paragraph (1), the 
aggregate amount of outstanding manufacturing zone 
facility bonds allocable to any person shall be deter-
mined under rules similar to the rules of section 
144(a)(10), taking into account only bonds to which 
subsection (a) applies. 
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108 
‘‘(d) MANUFACTURING ZONE PROPERTY.—For pur-
poses of this section— 
‘‘(1) IN
GENERAL.—The term ‘manufacturing 
zone property’ means any property to which section 
168 applies (or would apply but for section 179) if— 
‘‘(A) such property was acquired by the tax-
payer by purchase (as defined in section 
179(d)(2)) after the date on which the designa-
tion of the manufacturing redevelopment zone 
took effect, 
‘‘(B) the original use of which in the manu-
facturing redevelopment zone commences with 
the taxpayer, and 
‘‘(C) substantially all of the use of which is 
in the manufacturing redevelopment 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 lo-
cated in a manufacturing redevelopment 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 
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109 
‘‘(B) such term shall not include any trade 
or business consisting of the operation of any fa-
cility described in section 144(c)(6)(B). 
‘‘(3) SPECIAL RULES FOR SUBSTANTIAL RENOVA-
TIONS AND SALE-LEASEBACK.—Rules similar to the 
rules of subsections (a)(2) and (b) of section 1397D 
shall apply for purposes of this subsection. 
‘‘(e) NONAPPLICATION OF CERTAIN RULES.—Sections 
57(a)(5) (relating to tax-exempt interest), 146 (relating to 
volume cap), and 147(d) (relating to acquisition of existing 
property not permitted) shall not apply to any manufac-
turing zone facility bond. 
‘‘SEC. 1400U–5. ADDITIONAL LOW-INCOME HOUSING CRED-
ITS. 
‘‘(a) IN GENERAL.—For purposes of section 42, in the 
case of each calendar year during which the designation 
of a manufacturing redevelopment zone is in effect, the 
State housing credit ceiling of the State which includes such 
manufacturing redevelopment zone shall be increased by the 
lesser of— 
‘‘(1) the aggregate housing credit dollar amount 
allocated by the State housing credit agency of such 
State to buildings located in such manufacturing re-
development zone for such calendar year, or 
‘‘(2) the excess of— 
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110 
‘‘(A) 
the 
manufacturing 
zone 
housing 
amount with respect to such manufacturing rede-
velopment zone, over 
‘‘(B) the aggregate increases under this sub-
section with respect to such zone for all preceding 
calendar years. 
‘‘(b) MANUFACTURING ZONE HOUSING AMOUNT.—For 
purposes of subsection (a), the term ‘manufacturing zone 
housing amount’ means, with respect to any manufacturing 
redevelopment zone, the product of $20 multiplied by the 
population of such zone. 
‘‘(c) OTHER RULES.— 
‘‘(1) CARRYOVERS.—Rules similar to the rules of 
section 1400N(c)(1)(C) shall apply for purposes of 
this section. 
‘‘(2) RETURNED AMOUNTS.—If any amount of 
State housing credit ceiling which was taken into ac-
count under subsection (a)(1) is returned within the 
meaning of section 42(h)(3)(C)(iii)— 
‘‘(A) such amount shall not be taken into 
account under such section, and 
‘‘(B) such allocation shall cease to be treated 
as an increase under this subsection for purposes 
of subsection (a)(2)(B) until reallocated.’’. 
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(b) APPLICATION OF WORK OPPORTUNITY TAX CREDIT 
TO MANUFACTURING REDEVELOPMENT ZONES.—Subpara-
graphs (A) and (B) of section 51(d)(5) of such Code are 
each amended by inserting ‘‘manufacturing redevelopment 
zone,’’ after ‘‘renewal community,’’. 
(c) CONFORMING AMENDMENTS RELATED TO MANU-
FACTURING REDEVELOPMENT TAX CREDIT BONDS.— 
(1) GENERAL RULES.—Part IV of subchapter A 
of chapter 1 of such Code (relating to credits against 
tax) is amended by adding at the end the following 
new subpart: 
‘‘Subpart I—Qualified Tax Credit Bonds 
‘‘Sec. 54A. Credit to holders of qualified tax credit bonds. 
‘‘SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED TAX CREDIT 
BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds a 
qualified tax credit bond on one or more credit allowance 
dates of the bond during any taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of the cred-
its determined under subsection (b) with respect to such 
dates. 
‘‘(b) AMOUNT OF CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit de-
termined under this subsection with respect to any 
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112 
credit allowance date for a qualified tax credit bond 
is 25 percent of the annual credit determined with re-
spect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit deter-
mined with respect to any qualified tax credit bond 
is the product of— 
‘‘(A) the applicable credit rate, multiplied 
by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) APPLICABLE CREDIT RATE.—For purposes 
of paragraph (2), the applicable credit rate is the rate 
which the Secretary estimates will permit the 
issuance of qualified tax credit bonds with a specified 
maturity or redemption date without discount and 
without interest cost to the qualified issuer. The ap-
plicable credit rate with respect to any qualified tax 
credit bond shall be determined as of the first day on 
which there is a binding, written contract for the sale 
or exchange of the bond. 
‘‘(4) SPECIAL RULE FOR ISSUANCE AND REDEMP-
TION.—In the case of a bond which is issued during 
the 3-month period ending on a credit allowance date, 
the amount of the credit determined under this sub-
section with respect to such credit allowance date 
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shall be a ratable portion of the credit otherwise deter-
mined based on the portion of the 3-month period 
during which the bond is outstanding. A similar rule 
shall apply when the bond is redeemed or matures. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 
‘‘(1) IN
GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability (as 
defined in section 26(b)) plus the tax imposed by 
section 55, over 
‘‘(B) the sum of the credits allowable under 
this part (other than subpart C and this sub-
part). 
‘‘(2) CARRYOVER
OF
UNUSED
CREDIT.—If the 
credit allowable under subsection (a) exceeds the limi-
tation imposed by paragraph (1) for such taxable 
year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under 
subsection (a) for such taxable year (determined be-
fore the application of paragraph (1) for such suc-
ceeding taxable year). 
‘‘(d) QUALIFIED TAX CREDIT BOND.—For purposes of 
this section— 
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114 
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 
‘qualified tax credit bond’ means a manufacturing re-
development bond (as defined in section 1400U–3) 
which is part of an issue that meets the requirements 
of paragraphs (2), (3), (4), (5), and (6). 
‘‘(2) SPECIAL
RULES
RELATING
TO
EXPENDI-
TURES.— 
‘‘(A) IN GENERAL.—An issue shall be treat-
ed as meeting the requirements of this paragraph 
if, as of the date of issuance, the issuer reason-
ably expects— 
‘‘(i) 100 percent or more of the avail-
able project proceeds to be spent for 1 or 
more qualified purposes within the 3-year 
period beginning on such date of issuance, 
and 
‘‘(ii) a binding commitment with a 
third party to spend at least 10 percent of 
such available project proceeds will be in-
curred within the 6-month period beginning 
on such date of issuance. 
‘‘(B) 
FAILURE
TO
SPEND
REQUIRED 
AMOUNT OF BOND PROCEEDS WITHIN 3 YEARS.— 
‘‘(i) IN GENERAL.—To the extent that 
less than 100 percent of the available project 
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proceeds of the issue are expended by the 
close of the expenditure period for 1 or more 
qualified purposes, the issuer shall redeem 
all of the nonqualified bonds within 90 days 
after the end of such period. For purposes of 
this paragraph, the amount of the non-
qualified bonds required to be redeemed 
shall be determined in the same manner as 
under section 142. 
‘‘(ii) 
EXPENDITURE
PERIOD.—For 
purposes of this subpart, the term ‘expendi-
ture period’ means, with respect to any 
issue, the 3-year period beginning on the 
date of issuance. Such term shall include 
any extension of such period under clause 
(iii). 
‘‘(iii) EXTENSION OF PERIOD.—Upon 
submission of a request prior to the expira-
tion of the expenditure period (determined 
without regard to any extension under this 
clause), the Secretary may extend such pe-
riod if the issuer establishes that the failure 
to expend the proceeds within the original 
expenditure period is due to reasonable 
cause and the expenditures for qualified 
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116 
purposes will continue to proceed with due 
diligence. 
‘‘(C) QUALIFIED
PURPOSE.—For purposes 
of this paragraph, the term ‘qualified purpose’ 
means a purpose specified in section 1400U– 
3(a)(1). 
‘‘(D) REIMBURSEMENT.—For purposes of 
this subtitle, available project proceeds of an 
issue shall be treated as spent for a qualified 
purpose if such proceeds are used to reimburse 
the issuer for amounts paid for a qualified pur-
pose after the date that the Secretary makes an 
allocation of bond limitation with respect to such 
issue, but only if— 
‘‘(i) prior to the payment of the origi-
nal expenditure, the issuer declared its in-
tent to reimburse such expenditure with the 
proceeds of a qualified tax credit bond, 
‘‘(ii) not later than 60 days after pay-
ment of the original expenditure, the issuer 
adopts an official intent to reimburse the 
original expenditure with such proceeds, 
and 
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‘‘(iii) the reimbursement is made not 
later than 18 months after the date the 
original expenditure is paid. 
‘‘(3) REPORTING.—An issue shall be treated as 
meeting the requirements of this paragraph if the 
issuer of qualified tax credit bonds submits reports 
similar to the reports required under section 149(e). 
‘‘(4) SPECIAL
RULES
RELATING
TO
ARBI-
TRAGE.— 
‘‘(A) IN GENERAL.—An issue shall be treat-
ed as meeting the requirements of this paragraph 
if the issuer satisfies the requirements of section 
148 with respect to the proceeds of the issue. 
‘‘(B) SPECIAL
RULE
FOR
INVESTMENTS 
DURING EXPENDITURE PERIOD.—An issue shall 
not be treated as failing to meet the requirements 
of subparagraph (A) by reason of any investment 
of available project proceeds during the expendi-
ture period. 
‘‘(C) 
SPECIAL
RULE
FOR
RESERVE 
FUNDS.—An issue shall not be treated as failing 
to meet the requirements of subparagraph (A) by 
reason of any fund which is expected to be used 
to repay such issue if— 
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‘‘(i) such fund is funded at a rate not 
more rapid than equal annual installments, 
‘‘(ii) such fund is funded in a manner 
that such fund will not exceed the amount 
necessary to repay the issue if invested at 
the maximum rate permitted under clause 
(iii), and 
‘‘(iii) the yield on such fund is not 
greater than the discount rate determined 
under paragraph (5)(B) with respect to the 
issue. 
‘‘(5) MATURITY LIMITATION.— 
‘‘(A) IN GENERAL.—An issue shall not be 
treated as meeting the requirements of this para-
graph if the maturity of any bond which is part 
of such issue exceeds the maximum term deter-
mined by the Secretary under subparagraph (B). 
‘‘(B) MAXIMUM
TERM.—During each cal-
endar month, the Secretary shall determine the 
maximum term permitted under this paragraph 
for bonds issued during the following calendar 
month. Such maximum term shall be the term 
which the Secretary estimates will result in the 
present value of the obligation to repay the prin-
cipal on the bond being equal to 50 percent of the 
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