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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4693 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
2d Session
S. 4693
To amend the Internal Revenue Code of 1986 to provide an investment
credit for converting non-residential buildings to affordable housing.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 11 (legislative day, July 10), 2024
Ms. Stabenow (for herself, Mr. Brown, Mr. Peters, and Mr. Padilla)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide an investment
credit for converting non-residential buildings to affordable housing.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Revitalizing Downtowns and Main
Streets Act''.
SEC. 2. INVESTMENT CREDIT FOR CONVERSION OF NON-RESIDENTIAL BUILDING TO
AFFORDABLE HOUSING.
(a) In General.--Subpart E of part IV of subchapter A of chapter 1
of subtitle A of the Internal Revenue Code of 1986 is amended by
inserting after section 48E the following new section:
``SEC. 48F. AFFORDABLE HOUSING CONVERSION CREDIT.
``(a) Allowance of Credit.--For purposes of section 46, the
affordable housing conversion credit for any taxable year is an amount
equal to 20 percent of the qualified conversion expenditures of the
taxpayer with respect to a qualified affordable housing building placed
in service by the taxpayer during the taxable year.
``(b) Qualified Conversion Expenditures.--For purposes of this
section--
``(1) In general.--The term `qualified conversion
expenditures' means, with respect to any qualified affordable
housing building, any amount properly chargeable to capital
account--
``(A) for property for which depreciation is
allowable under section 168, and
``(B) in connection with the qualified conversion
of a qualified affordable housing building.
``(2) Certain expenditures not included.--The term
`qualified conversion expenditures' does not include--
``(A) Limitation on period of conversion.--Except
as provided in subsection (f), any amount paid or
incurred other than during the 2-year period ending on
the date on which the taxpayer places the qualified
affordable housing building in service.
``(B) Cost of acquisition.--The cost of acquiring
any building or interest therein.
``(3) Special rule for brownfields.--Paragraph (1)(A) shall
not apply with respect to any expenditure for clean up of
qualifying brownfield property (as defined in section
512(b)(19)).
``(4) Coordination with rehabilitation credit.--In the case
of any qualified conversion expenditures which are taken into
account for purposes of determining the rehabilitation credit
under section 47, the amount of such expenditures taken into
account under this section (determined without regard to this
paragraph) shall be reduced by 50 percent.
``(c) Qualified Conversion.--For purposes of this section--
``(1) In general.--The term `qualified conversion' means
the conversion of an eligible commercial building into a
qualified affordable housing building if the qualified
conversion expenditures of the taxpayer with respect to such
conversion exceed the greater of--
``(A) an amount equal to 50 percent of the adjusted
basis of such building (determined immediately prior to
such conversion), or
``(B) $100,000.
``(2) Eligible commercial building.--The term `eligible
commercial building' means any building which, with respect to
any conversion--
``(A) was originally placed in service not less
than 20 years before the date on which such conversion
begins, and
``(B) immediately prior to such conversion, was
nonresidential real property (as defined in section
168).
``(d) Qualified Affordable Housing Building.--For purposes of this
section--
``(1) In general.--The term `qualified affordable housing
building' means any residential building if during the 30-year
period beginning on the date on which such building is placed
in service by the taxpayer, not less than 20 percent of the
residential units in the building are both rent-restricted and
reserved for individuals whose income is 80 percent or less of
the area median income.
``(2) Rent and income limitation.--For purposes of this
subsection, rules similar to the rules of subsection (g) of
section 42 shall apply to determine whether a unit is rent-
restricted, treatment of units occupied by individuals whose
incomes rise above the limit, and the treatment of units where
Federal rental assistance is reduced as tenant's income
increases.
``(e) Limitation on Aggregate Credit Allowable.--
``(1) Credit may not exceed credit amount allocated to
building.--
``(A) In general.--The amount of the credit
determined under this section with respect to any
building shall not exceed the qualified conversion
credit dollar amount allocated to such building under
this subsection by the housing credit agency of the
State in which such building is located.
``(B) Time for making allocation.--Except in the
case of an allocation which meets the requirements of
subparagraph (C), an allocation shall be taken into
account under subparagraph (A) only if it is made not
later than the close of the calendar year in which the
building is placed in service.
``(C) Exception where binding commitment.--An
allocation meets the requirements of this subparagraph
if there is a binding commitment (not later than the
close of the calendar year in which the building is
placed in service) by the housing credit agency to
allocate a specified housing credit dollar amount to
such building beginning in a later taxable year.
``(2) State limitation.--
``(A) In general.--The aggregate qualified
conversion credit dollar amount which a housing credit
agency of any State may allocate is the sum of--
``(i) the amount which bears the same ratio
to the national qualified conversion credit
limitation as--
``(I) the population of such State,
bears to
``(II) the population of all
States, plus
``(ii) the sum of any amounts determined
under subparagraph (C).
``(B) National qualified conversion credit
limitation.--The national qualified conversion credit
limitation is $12,000,000,000.
``(C) Additional amounts provided for certain
buildings in economically distressed areas.--
``(i) In general.--For purposes of
subparagraph (A)(ii), in any case in which--
``(I) the housing credit agency of
a State allocates an amount to a
building which is located in an
economically distressed area, and
``(II) the Secretary subsequently
designates such amount for purposes of
this paragraph,
the amount determined under this paragraph with
respect to such building shall be the amount
originally allocated by the housing credit
agency of the State under clause (i).
``(ii) Limitation.--The aggregate amount
which the Secretary may designate under clause
(i)(II) shall not exceed $3,000,000,000.
``(iii) Manner of designation.--Not later
than 120 days after the date of the enactment
of this section, the Secretary shall establish
a program for determining the designation of
amounts that may be designated under this
subparagraph.
``(D) Reallocation of certain amounts.--
``(i) In general.--Notwithstanding
subparagraph (A)--
``(I) no amount may be allocated
under paragraph (1) by a housing credit
agency of an undersubscribed State
after December 31, 2027, and
``(II) the dollar amount determined
under subparagraph (A) with respect to
any oversubscribed State after such
date shall be increased by such State's
share of the reallocation amount.
``(ii) State share.--For purposes of clause
(i), an oversubscribed State's share of the
reallocation amount is the amount which bears
the same ratio to the reallocation amount as--
``(I) the population of such State,
bears to
``(II) the population of all
oversubscribed States.
``(iii) Definitions.--For purposes of this
subparagraph--
``(I) Undersubscribed state.--The
term `undersubscribed State' means any
State that is not an oversubscribed
State.
``(II) Oversubscribed state.--The
term `oversubscribed State' means any
State the housing credit agency of
which has allocated all of the
qualified conversion credit dollar
amount which may be allocated by it
before the date described in clause
(i)(I).
``(III) Reallocation amount.--The
term `reallocation amount' means the
sum of the amounts described in
subparagraph (A) which have not been
allocated by undersubscribed States
before the date described in clause
(i)(I).
``(3) Manner of allocation.--
``(A) Plan for allocation.--
``(i) In general.--Notwithstanding any
other provision of this section, the qualified
conversion credit dollar amount with respect to
any building shall be zero unless such amount
was allocated pursuant to a conversion credit
allocation plan of the housing credit agency
which is approved by the governmental unit (in
accordance with rules similar to the rules of
section 147(f)(2) (other than subparagraph
(B)(ii) thereof)) of which such agency is a
part.
``(ii) Conversion credit allocation plan.--
For purposes of this subparagraph, the term
`conversion credit allocation plan' means a
plan--
``(I) which sets selection criteria
for allocations, taking into account--
``(aa) whether the credit
is needed to assure the
financial feasibility of the
conversion,
``(bb) the extent to which
the conversion results in the
creation of affordable housing,
``(cc) the extent to which
the conversion results in the
creation of housing near
transportation, employment, and
commercial opportunities,
``(dd) the extent to which
the conversion will support
small businesses and economic
revitalization in the
surrounding area,
``(ee) the degree of local
government support for the
conversion, and
``(ff) the readiness of the
building for a qualified
conversion, and
``(II) which provides a procedure
that the agency (or an agent or other
private contractor of such agency) will
follow in monitoring for noncompliance
with the requirements of subsection (d)
and in notifying the Internal Revenue
Service of such noncompliance.
``(B) Binding allocation agreements; reporting.--In
making allocations of qualified conversion credit
dollar amounts, each housing credit agency shall--
``(i) enter into binding agreements with
taxpayers for the allocation of qualified
conversion credit dollar amounts, which
agreements shall specify the amount of
qualified conversion credit dollar amount
allocated to the building and the terms for any
modifications or withdrawal of such allocation,
and
``(ii) report to the Secretary, at such
time and in such manner as the Secretary may
require, the amount of allocations made with
respect to any building.
``(C) State extended use requirements permitted
past 30 years.--For purposes of this paragraph, a
housing credit agency's plan shall not fail to be
treated as a conversion credit allocation plan merely
because it includes, and nothing in this section shall
be construed to limit a binding allocation agreement
from including, affordability or rent restriction
requirements with respect to the building that apply
for a longer period than the 30-year period described
in subsections (d) and (g)(1)(B).
``(4) Definitions and other rules.--
``(A) Housing credit agency.--The term `housing
credit agency' means, with respect to any State, the
housing credit agency authorized under section 42(h)(8)
or such other agency as authorized by the State for
purposes of this section.
``(B) Economically distressed area.--The term
`economically distressed area' means any area which--
``(i) which has been designated as a
qualified census tract under section
42(d)(5)(B)(ii) or as a difficult development
area under section 42(d)(5)(B)(iii), or
``(ii) which meets the requirement of
section 301(a)(3) of the Public Works and
Economic Development Act of 1965.
``(C) State.--The term `State' includes a
possession of the United States.
``(D) Other rules.--Rules similar to the rules of
subparagraphs (A) and (B) of section 42(h)(7) shall
apply for purposes of this section.
``(f) Progress Expenditures.--If the Secretary determines, on the
basis of architectural plans and specifications that a qualified
conversion is reasonably expected to exceed 2 years, rules similar to
the rules of section 47(d) shall apply with respect to such conversion
for purposes of this section.
``(g) Special Rules for Certain Areas.--
``(1) Qualified census tracts and difficult development
areas.--In the case of a qualified affordable housing
building--
``(A) which is located in any area which is
designated as a qualified census tract under section
42(d)(5)(B)(ii) or as a difficult development area
under section 42(d)(5)(B)(iii)), and
``(B) with respect to which during 30-year period
beginning on the date on which such building is placed
in service by the taxpayer, not less than 20 percent of
the residential units in the building are both rent-
restricted and reserved for individuals whose income is
60 percent or less of the area median income,
subsection (a) shall be applied by substituting `30 percent'
for `20 percent'.
``(2) Historic preservation in rural areas.--
``(A) In general.--In the case of a qualified
affordable housing building which is in a rural area
and is part of an historic preservation project, the
taxpayer may elect to substitute `35 percent' for `20
percent' under subsection (a) with respect to such
portion of the aggregate qualified conversion
expenditures taken into account under such subsection
as does not exceed $2,000,000.
``(B) Definitions.--For purposes of this
paragraph--
``(i) Rural area.--The term `rural area'
shall have the meaning given such term under
section 1393(a)(2).
``(ii) Historic preservation project.--The
term `historic preservation project' means a
qualified conversion which involves the
certified rehabilitation of a certified
historic structure. Whether conversion of a
certified historic structure involves certified
rehabilitation shall be determined under rules
similar to the rules of section 47(c)(2)(C).
``(h) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance--
``(1) providing for the recapture of the credit determined
under subsection (a) if the qualified affordable housing
building ceases to be a qualified affordable housing building
during the 30-year period beginning on the date that such
building is placed in service by the taxpayer,
``(2) detailing any certifications required from the
taxpayer or any housing credit agency of a State,
``(3) with respect to the application of subsection (b)(4),
``(4) with respect to information reporting on allocations
of qualified conversion credit dollar amounts,
``(5) providing rules for making a determination as to
whether an area is described in subsection (e)(4)(B), and
``(6) which encourages housing credit agencies to allocate,
to the extent practicable, qualified conversion credit dollar
amounts to non-metropolitan counties within the State in
proportion to the non-metropolitan population of the State, but
only to the extent it is demonstrated within such non-
metropolitan counties that there are sufficient qualified
conversion expenditures to warrant such allocations.''.
(b) Transferability of Credit.--Section 6418(f)(1)(A) of such Code
is amended by adding at the end the following new clause:
``(xii) The affordable housing conversion
credit determined under section 48F.''.
(c) Conforming Amendments.--
(1) Section 46 of such Code is amended in paragraph (6) by
striking ``and'' at the end, in paragraph (7) by striking the
period at the end and inserting ``, and'', and by adding at the
end the following new paragraph:
``(8) the affordable housing conversion credit.''.
(2) Section 49(a)(1)(C) of such Code is amended by striking
``and'' at the end of clause (vii), by striking the period at
the end of clause (viii), and by adding at the end the follow
new clause:
``(ix) the basis of any property which is
being converted as part of a qualified
conversion under section 48F.''.
(3) Section 50(a)(2)(E) of such Code is amended by striking
``or 48E(e)'' and inserting ``48E(e), or 48F(f)''.
(4) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of subtitle A of such Code is amended
by adding at the end the following new item:
``Sec. 48F. Affordable housing conversion credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to qualified affordable housing buildings (as defined in section
48F of the Internal Revenue Code of 1986, as added by this section)
placed in service after the date of the enactment of this Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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