article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Home Energy Conservation Act of 2010''. SEC. 2. HOME ENERGY CONSERVATION BONDS. (a) In General.--Subpart I of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: ``SEC. 54G. HOME ENERGY CONSERVATION BONDS. ``(a) Home Energy Conservation Bond.--For purposes of this subchapter, the term `home energy conservation bond' means any bond issued as part of an issue if-- ``(1) 100 percent of the available project proceeds of such issue are to be used to make qualified residential energy efficiency assistance grants and loans, ``(2) not less than 20 percent of the available project proceeds of such issue are to be used to make qualified low- income residential energy efficiency assistance grants and loans, ``(3) not less than 10 percent of the available project proceeds of such issue are to be used to make qualified very low-income residential energy efficiency assistance grants, ``(4) repayments of principal and applicable interest on financing provided by the issue are used not later than the close of the 3-month period beginning on the date the prepayment (or complete repayment) is received to redeem bonds which are part of the issue or to make qualified residential energy efficiency assistance grants and loans, ``(5) the bond is issued by a State or local government, and ``(6) the issuer designates such bond for purposes of this section. ``(b) Limitation on Amount of Bonds Designated.--The maximum aggregate face amount of bonds which may be designated under subsection (a) by any issuer shall not exceed the limitation amount allocated under subsection (d) to such issuer. ``(c) National Limitation on Amount of Bonds Designated.--There is a national home energy conservation bond limitation of $2,400,000,000. ``(d) Allocations.-- ``(1) In general.--The limitation under subsection (c) shall be allocated by the Secretary among the States in proportion to the population of the States. ``(2) Allocations to largest local governments.-- ``(A) In general.--In the case of any State in which there is a large local government, each such local government shall be allocated a portion of such State's allocation which bears the same ratio to the State's allocation (determined without regard to this subparagraph) as the population of such large local government bears to the population of such State. ``(B) Allocation of unused limitation to state.-- The amount allocated under this subsection to a large local government may be reallocated by such local government to the State in which such local government is located. ``(C) Large local government.--For purposes of this section, the term `large local government' means any municipality or county if such municipality or county has a population of 500,000 or more. ``(e) Qualified Residential Energy Efficiency Assistance Grants and Loans.--For purposes of this section-- ``(1) In general.--Qualified residential energy efficiency assistance grants and loans are any grant or low-interest loan, as the case may be, to acquire (including reasonable installation and testing costs) any of the following: ``(A) Any property which meets (at a minimum) the requirements of the Energy Star program and which is to be installed in a dwelling unit. ``(B) Any property not described in subparagraph (A) which meets (at a minimum) the requirements of the Water Sense program and which is to be installed in a dwelling unit. ``(C) Any improvements to a dwelling unit which are made pursuant to a plan which-- ``(i) is developed by a Residential Energy Services Network (RESNET), Building Performance Institute (BPI), or equivalent, energy efficiency expert, and ``(ii) is certified by such energy efficiency expert (based on testing done before and after such improvements) as resulting in at least a 20 percent reduction in total household energy consumption related to heating, cooling, lighting, and appliances. For purposes of this subparagraph, improvements to a dwelling unit for basic health and safety may be taken into account to the extent that such improvements do not exceed 10 percent of the value of the grant or loan and are required under State or local law as a condition of making the other improvement described in this subparagraph. ``(2) Dollar limitations.-- ``(A) Dwelling unit improvements.-- ``(i) In general.--Such term shall not include any grant or loan for improvements described in paragraph (1)(C) with respect to any dwelling unit to the extent that such grant or loan (when added to all other grants or loans for such improvements) exceeds $5,000. ``(ii) Increased limitation for certain principal residences.--In the case of a dwelling unit which is used as a principal residence (within the meaning of section 121) by the recipient of the grant or loan referred to in clause (i)-- ``(I) clause (i) shall be applied by substituting `$12,000' for `$5,000' if such grant or loan would satisfy the requirements of paragraph (1)(C) if such paragraph were applied by substituting `40 percent' for `20 percent', and ``(II) in any case to which subclause (I) does not apply, clause (i) shall be applied by substituting `$8,000' for `$5,000' if such grant or loan would satisfy the requirements of paragraph (1)(C) if such paragraph were applied by substituting `30 percent' for `20 percent'. ``(iii) Increased limitation for cash positive loans.--In the case of a dwelling unit which is used as a principal residence (within the meaning of section 121) by the recipient of a loan with respect to which the reduced energy costs which result from the improvements described in paragraph (1)(C) exceed the payments required under the terms of the loan-- ``(I) clause (i) shall be applied by substituting `$12,000' for `$5,000', and ``(II) clause (ii) shall not apply. ``(B) Reduction in water consumption.--Such term shall not include any grant or loan for property described in paragraph (1)(B) with respect to any dwelling unit to the extent that such grant or loan (when added to all other grants or loans for such property) exceeds $500. ``(3) Low-interest loan.--The term `low interest loan' means any loan which charges interest at a rate which does not exceed the applicable Federal rate in effect under section 1288(b)(1) determined as of the issuance of the loan. ``(4) Exclusion of certain property.--The following property shall not be taken into account for purposes of paragraph (1): ``(A) Any equipment used in connection with a swimming pool, hot tub, or similar property. ``(B) Any television. ``(C) Any device for converting digital signal to analog. ``(D) Any DVD player. ``(E) Any video cassette recorder (VCR). ``(F) Any audio equipment. ``(G) Any cordless phone. ``(H) Any other item of property where there is substantial recreational use. ``(f) Qualified Low-Income Residential Efficiency Assistance Grants and Loans.-- ``(1) In general.--Qualified low-income residential energy efficiency assistance grants and loans are any qualified residential energy efficiency assistance grant or loan, as the case may be, with respect to a dwelling unit which is occupied (at the time of the grant or loan) by individuals whose income is 100 percent or less of area median gross income. Rules similar to the rules of section 142(d)(2)(B) shall apply for purposes of this paragraph. ``(2) Restriction to grants and very low interest loans.-- Such term shall not include any loan unless the rate of interest on such loan does not exceed the excess of-- ``(A) the applicable Federal rate in effect under section 1288(b)(1) determined as of the issuance of the loan, over ``(B) 100 basis points. ``(g) Qualified Very Low-Income Residential Efficiency Assistance Grants.--For purposes of this section, qualified very low-income residential energy efficiency assistance grants are any qualified low- income residential energy efficiency assistance grant with respect to a dwelling unit which is occupied (at the time of the grant) by individuals whose income is 50 percent or less of area median gross income. Rules similar to the rules of section 142(d)(2)(B) shall apply for purposes of this paragraph. ``(h) Definitions and Special Rules.--For purposes of this section-- ``(1) Applicable interest.--The term `applicable interest' means, with respect to any loan, so much of any interest on such loan which exceeds 1 percentage point. ``(2) Special rule relating to arbitrage.--An issue shall not be treated as failing to meet the requirements of section 54A(d)(4)(A) by reason of any investment of available project proceeds in qualified residential energy efficiency assistance loans. ``(3) Exclusion of administrative expenses.--The amount treated as used to make any grant or loan described in this section shall not exceed the amount of such grant or loan. ``(4) Population.--The population of any State or local government shall be determined as provided in section 146(j) for the calendar year which includes the date of the enactment of this section. ``(5) Reporting.-- ``(A) Reports by issuers.--Issuers of home energy conservation bonds shall, not later than 6 months after the expenditure period (as defined in section 54A) and annually thereafter until the last such bond is redeemed, submit reports to the Secretary regarding such bonds, including information regarding-- ``(i) the number and monetary value of loans and grants provided and the purposes for which provided, ``(ii) the number of dwelling units the energy efficiency of which improved as result of such loans and grants, ``(iii) the types of property described in subparagraphs (A) and (B) of subsection (e)(1) installed as a result of such loans and grants and the projected energy savings with respect to such property, and ``(iv) the projected energy savings as a result of such loans and grants for improvements described in subsection (e)(1)(C). ``(B) Report to congress.--Not later than 12 months after receipt of the first report under subparagraph (A) and annually thereafter until the last such report is required to be submitted, the Secretary, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency, shall submit a report to Congress regarding the bond program under this section, including information regarding-- ``(i) the aggregate of each category of information described in subparagraph (A) (including any independent assessment of projected energy savings), and ``(ii) an estimate of the amount of greenhouse gas emissions reduced as a result of such bond program.''. (b) Treatment as a Specified Tax Credit Bond for Purposes of Direct Payment Provisions.--Subparagraph (A) of section 6431(f)(3) of such Code is amended by striking ``or'' at the end of clause (iii), by striking ``and'' at the end of clause (iv) and inserting ``or'', and by adding at the end the following new clause: ``(v) a home energy conservation bond (as defined in section 54G), and''. (c) Conforming Amendments.-- (1) Paragraph (1) of section 54A(d) of such Code is amended by striking ``or'' at the end of subparagraph (D), by inserting ``or'' at the end of subparagraph (E), and by inserting after subparagraph (E) the following new subparagraph: ``(F) a home energy conservation bond,''. (2) Subparagraph (C) of section 54A(d)(2) of such Code is amended by striking ``and'' at the end of clause (iv), by striking the period at the end of clause (v) and inserting ``, and'', and by adding at the end the following new clause: ``(vi) in the case of a home energy conservation bond, a purpose specified in section 54G(a)(1).''. (3) The table of sections for subpart I of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: ``Sec. 54G. Home energy conservation bonds.''. (d) Effective Date.--The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.
summary: Home Energy Conservation Act of 2010 - Amends the Internal Revenue Code to allow the issuance of tax-exempt home energy conservation bonds to finance qualified residential energy efficiency assistance grants and loans and extend such grants and loans to low and very-low income taxpayers. Imposes a national home energy conservation bond limitation amount of $2.4 billion and allocates such amount to states in proportion to state population. Defines "qualified residential energy efficiency assistance grants and loans" as any grant or loan to acquire: (1) any property which meets (at a minimum) the requirements of the Energy Star program or the Water Sense program and which is to be installed in a dwelling unit; and (2) any improvement to a dwelling unit made under a plan which is developed by a Residential Energy Services Network, Building Performance Institute, or equivalent energy efficiency expert and is certified by such expert as resulting in at least a 20% reduction in total household energy consumption related to heating, cooling, lighting, and appliances. Imposes dollar limitations on such grants and loans and excludes certain types of property from such grant and loan program, including equipment used in connection with a swimming pool or hot tub, any television, any device for converting a digital signal to analog, any DVD player, video cassette recorder, audio equipment, cordless phone, or other property where there is a substantial recreational use.