Par. 4. Sections 1.141-0 through 1.141-16 are added to read as follows:
(a) Actual compliance required. Except as provided in Sec. 1.145-1 and this section, a private activity bond is a qualified bond only if the issue of which it is a part satisfies all of the applicable requirements under section 141(e) throughout the term of the issue.
(b) Remedial actions available--(1) In general. Except as otherwise provided in paragraph (c) of this section, if an action results in nonqualified use, the remedial actions in Sec. 1.141-13 (other than the actions permitted under Sec. 1.141-13(d)) may be applied to prevent the bonds from ceasing to be treated as tax-exempt bonds (but not to failures existing as of the issue date).
(2) Nonqualified use. For purposes of this section, nonqualified use means failures to satisfy the applicable requirements of section 142 (except paragraph (d)), 144 (except paragraphs (a)(4) and (a)(10)), 147(c), 147(d), 147(e), or 147(f).
(c) Limitation on remedial action--(1) Failure to spend proceeds. In the case of a failure to spend on qualifying costs the percentage of net proceeds required under sections 142(a), 144(a)(1), 144(b), or 144(c)(1), paragraph (b) of this section applies only if the amount of the issue was based on reasonable estimates of the cost of facilities (or other property) to be provided by the issue and the failure to expend the net proceeds on qualifying costs was due to circumstances that were not reasonably foreseeable as of the issue date.
(2) Amount of nonqualified bonds. For failures described in paragraph (c)(1) of this section, the nonqualified bonds for purposes of paragraph (b) of this section are those bonds having an amount that, if treated as redeemed, would result in the net proceeds of the remaining bonds of the issue satisfying the requirement for the percentage of the net proceeds to be used for qualifying costs.