“(a) Certain Current Refundings.—“(1) In general.—Except as provided in paragraph (3), the amendments made by section 1301 [for classification see section 1311(a) of this note] shall not apply to any bond the proceeds of which are used exclusively to refund (other than to advance refund) a qualified bond (or a bond which is part of a series of refundings of a qualified bond) if—“(A) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and
“(B)(i) the average maturity of the issue of which the refunding bond is a part does not exceed 120 percent of the average reasonably expected economic life of the facilities being financed with the net proceeds of such issue (determined under section 147(b) of the 1986 Code), or
“(ii) the refunding bond has a maturity date not later than the date which is 17 years after the date on which the qualified bond was issued.
In the case of a qualified bond which was (when issued) a qualified mortgage bond or a qualified veterans’ mortgage bond, subparagraph (B)(i) shall not apply and subparagraph (B)(ii) shall be applied by substituting ‘32 years’ for ‘17 years’.
“(2) Qualified bond.—For purposes of paragraph (1), the term ‘qualified bond’ means any bond (other than a refunding bond)—“(A) issued before August 16, 1986, or
“(B) issued after August 15, 1986, if section 1312(a) applies to such bond.
“(3) Certain amendments to apply.—The following provisions of the 1986 Code shall be treated as included in section 103 and section 103A (as appropriate) of the 1954 Code and shall apply to refunding bonds described in paragraph (1):“(A) The requirements of section 147(f) (relating to public approval required for private activity bonds) but only if the maturity date of the refunding bond is later than the maturity date of the refunded bond.
“(B) The requirements of section 147(g) (relating to restriction on issuance costs financed by issue).
“(C) The requirements of sections 143(g) and 148 (relating to arbitrage).
“(D) The requirements of section 149(e) (relating to information reporting).
“(E) The provisions of section 150(b) (relating to changes in use).
Subparagraphs (A) and (D) shall apply only if the refunding bond is issued after December 31, 1986. In the case of a refunding bond described in paragraph (1) with respect to a qualified bond described in paragraph (2)(B), the requirements of section 1312(b)(1) which applied to such qualified bond shall be treated as specified in this paragraph with respect to such refunding bond.
“(4) Special rules for certain government bonds issued after august 15, 1986.—In the case of any bond described in section 1312(c)(2)—“(A) paragraph (2) of this subsection shall be applied by substituting ‘August 31, 1986’ for ‘August 15, 1986’ and by substituting ‘September 1, 1986’ for ‘August 16, 1986’,
“(B) paragraph (3) shall be applied without regard to subparagraphs (A), (B), and (E), and
“(C) such bond shall not be treated as a private activity bond for purposes of applying the requirements referred to in subparagraphs (C) and (D) of paragraph (3).
“(b) Certain Advance Refundings.—“(1) In general.—Except as provided in paragraph (3), the amendments made by section 1301 [for classification see section 1311(a) of this note] shall not apply to any bond the proceeds of which are used exclusively to advance refund a bond if—“(A) the refunded bond is described in paragraph (2), and
“(B) the requirements of subsection (a)(1)(B) are met.
“(2) Non-idb’s, etc.—A bond is described in this paragraph if such bond is not described in subsection (b)(2) or (o)(2)(A) of section 103 of the 1954 Code and was issued (or was issued to refund a bond issued) before August 16, 1986. For purposes of the preceding sentence, the determination of whether a bond is described in such subsection (o)(2)(A) shall be made without regard to any exception other than section 103(o)(2)(C) of such Code.
“(3) Certain amendments to apply.—The following provisions of the 1986 Code shall be treated as included in section 103 and section 103A (as appropriate) of the 1954 Code and shall apply to refunding bonds described in paragraph (1):“(A) The requirements of section 147(f) (relating to public approval required for private activity bonds).
“(B) The requirements of section 147(g) (relating to restriction on issuance costs financed by issue).
“(C) The requirements of section 148 (relating to arbitrage), except that section 148(d)(3) shall not apply to proceeds of such bonds to be used to discharge the refunded bonds.
“(D) The requirements of [former] paragraphs (3) and (4) of section 149(d) (relating to advance refundings).
“(E) The requirements of section 149(e) (relating to information reporting).
“(F) The provisions of section 150(b) (relating to changes in use).
“(G) Except as provided in the last sentence of subsection (c)(2) of this section, the requirements of section 145(b) (relating to $150,000,000 limitation on bonds other than hospital bonds).
Subparagraphs (A) and (E) shall apply only if the refunding bond is issued after December 31, 1986.
“(4) Special rule for certain government bonds issued after august 15, 1986.—In the case of any bond described in section 1312(c)(2)—“(A) paragraph (2) of this subsection shall be applied by substituting ‘September 1, 1986’ for ‘August 16, 1986’,
“(B) paragraph (3) shall be applied without regard to subparagraphs (A), (B), and (F), and
“(C) such bond shall not be treated as a private activity bond for purposes of applying the requirements referred to in subparagraphs (C) and (E).
“(5) Certain refunding bonds subject to volume cap.—Any refunding bond described in paragraph (1) the proceeds of which are used to refund a bond issued as part of an issue 5 percent or more of the net proceeds of which are or will be used to provide an output facility (within the meaning of section 141(b)(4) of the 1986 Code) shall be treated as a private activity bond for purposes of section 146 of the 1986 Code (to the extent of the nongovernmental use of such issue, under rules similar to the rules of section 146(m)(2) of such Code). For purposes of the preceding sentence, use by a 501(c)(3) organization with respect to its activities which do not constitute unrelated trades or businesses (determined by applying section 513(a) of the 1986 Code) shall not be taken into account.
“(c) Treatment of Certain Refundings of Certain IDB’s and 501(c)(3) Bonds.—“(1) $40,000,000 limit for certain small issue bonds.—Paragraph (10) of section 144(a) of the 1986 Code shall not apply to any bond (or series of bonds) the proceeds of which are used exclusively to refund a tax-exempt bond to which such paragraph and the corresponding provision of prior law did not apply if—“(A) the average maturity date of the issue of which the refunding bond is a part is not later than the average maturity date of the bonds to be refunded by such issue,
“(B) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and
“(C) the net proceeds of the refunding bond are used to redeem the refunded bond not later than 90 days after the date of the issuance of the refunding bond.
For purposes of subparagraph (A), average maturity shall be determined in accordance with section 147(b)(2)(A) of the 1986 Code.
“(2) $150,000,000 limitation for certain 501(c)(3) bonds.—Subsection (b) of section 145 of the 1986 Code (relating to $150,000,000 limitation for nonhospital bonds) shall not apply to any bond (or series of bonds) the proceeds of which are used exclusively to refund a tax-exempt bond to which such subsection did not apply if—“(A)(i) the average maturity of the issue of which the refunding bond is a part does not exceed 120 percent of the average reasonably expected economic life of the facilities being financed with the net proceeds of such issue (determined under section 147(b) of the 1986 Code), or
“(ii) the refunding bond has a maturity date not later than the later of the date which is 17 years after the date on which the qualified bond (as defined in subsection (a)(2)) was issued, and
“(B) the requirements of subparagraphs (B) and (C) of paragraph (1) are met with respect to the refunding bond.
Subsection (b) of section 145 of the 1986 Code shall not apply to the 1st advance refunding after March 14, 1986, of a bond issued before January 1, 1986.
“(3) Application to later issues.—Any bond to which section 144(a)(10) or 145(b) of the 1986 Code does not apply by reason of this section shall be taken into account in determining whether such section applies to any later issue.
“(d) Mortgage and Student Loan Targeting Rules To Apply to Loans Made More Than 3 Years After the Date of the Original Issue.—Subsections (a)(3) and (b)(3) shall be treated as including the requirements of subsections (e) and (f) of section 143 and paragraphs (3) and (4) of section 144(b) of the 1986 Code with respect to bonds the proceeds of which are used to finance loans made more than 3 years after the date of the issuance of the original bond.