PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2387 ^ ments of subclause (II), if the issuer elected the application of this subclause, the requirements of paragraph (2) shall be treated as met if the issuer pays the penalty under paragraph (7) or pays a
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penalty with respect to the close of each 6 month period after the date the bonds are issued equal to IVz percent of the amount of the net proceeds of i M*iji the issue which, as of the close of such period, are not spent as required by subclause (II). The penalty, under this subclause shall cease to apply only after .,~, the bonds (including any refunding bonds with ^ respect thereto) are no longer outstanding. (VI) ELECTION TO REBATE ON EARNINGS ON RE- SERVE. — If the issuer so elects, the term 'net pro- ceeds' for purposes of subclause (II) shall not in- clude earnings on any reasonably required reserve _, or replacement fund and the requirements of para- graph (2) shall apply to such earnings, "(VII) POOLED FINANCING BONDS. — At the elec- tion of the issuer of an issue the proceeds of which are to be used to make or finance loans (other than nonpurpose investments) to 2 or more persons, the _ . periods described in clause (i) and this clause shall ""' begin on the date the loan is made in the case of loans made within the 1-year period after the date the bonds were issued. In the case of loans made after such 1-year period, the periods described in clause (i) and this clause shall begin at the close of
such 1-year period. "(VIII) PORTIONS OF ISSUE MAY BE TREATED SEPA- RATELY.— If only a portion of an issue is to be used for construction expenditures referred to in subclause (IV), such portion and the other portion of such issue may, at the election of the issuer, be treated as separate issues for purposes of this clause and clause (i). "(IX) ELECTIONS.— Any election under this clause shall be made on or before the date the bonds are issued; and, once made, shall be irrevocable." (c) POOLED FINANCING BONDS. —Subparagraph (A) of section 148(c)(2) is amended by redesignating subparagraph (D) as subpara- graph (E) and by inserting after subparagraph (C) the following new . subparagraph: (D) BONDS USED TO PROVIDE CONSTRUCTION FINANCING.— ^ In the case of an issue described in subparagraph (A) any portion of which is used to make or finance loans for construction expenditures (within the meaning of subsec- tion (fK4XBXivXrV))- "(i) rules similar to the rules of subsection (f)(4)(B)(ivXVIII) shall apply, and "(ii) subparagraph (A) shall be applied with respect to such portion by substituting '2 years' for '6 months'." (d) CONFORMING AMENDMENT.—Subclause (I) of section 148(f)(4)(B)(ii) is amended by inserting "each place it appears" after "'6 months'". (e) EFFECTIVE DATE.— The amendments made by this section shall 26 USC 148 note, apply to bonds issued after the date of the enactment of this Act.
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