Affordable Housing Credit Improvement Act of 2023
This bill revises provisions of the low-income housing tax credit and renames it as the affordable housing tax credit.
The bill increases the per capita dollar amount of the credit and its minimum ceiling amount beginning in 2023 and extends the inflation adjustment for such amounts.
The bill modifies tenant income eligibility requirements and the average income formula for determining such income. It also revises rules for student occupancy of rental units and tenant voucher payments, and prohibits any refusal to rent to victims of domestic abuse.
The bill further modifies the credit to
The bill also includes Indian and rural areas as difficult development areas and modifies other requirements relating to casualty losses, tax-exempt bond financing, and foreclosures.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1557 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 1557
To amend the Internal Revenue Code of 1986 to reform the low-income
housing credit, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 11, 2023
Ms. Cantwell (for herself, Mr. Young, Mr. Wyden, and Mrs. Blackburn)
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 reform the low-income
housing credit, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Affordable Housing
Credit Improvement Act of 2023''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--REFORM OF STATE ALLOCATION FORMULAS
Sec. 101. Increases in State allocations.
TITLE II--REFORMS RELATING TO TENANT ELIGIBILITY
Sec. 201. Average income test applicability to exempt facility bonds.
Sec. 202. Codification of rules relating to increased tenant income.
Sec. 203. Modification of student occupancy rules.
Sec. 204. Tenant voucher payments taken into account as rent for
certain purposes.
Sec. 205. Requirement that low-income housing credit-supported housing
protect victims of domestic abuse.
Sec. 206. Clarification of general public use requirement relating to
veterans, etc.
TITLE III--RULES RELATING TO CREDIT ELIGIBILITY AND DETERMINATION
Sec. 301. Reconstruction or replacement period after casualty loss.
Sec. 302. Modification of previous ownership rules; limitation on
acquisition basis.
Sec. 303. Certain relocation costs taken into account as rehabilitation
expenditures.
Sec. 304. Repeal of qualified census tract population cap.
Sec. 305. Determination of community revitalization plan to be made by
housing credit agency.
Sec. 306. Prohibition of local approval and contribution requirements.
Sec. 307. Increase in credit for certain projects designated to serve
extremely low-income households.
Sec. 308. Increase in credit for bond-financed projects designated by
State agency.
Sec. 309. Elimination of basis reduction for low-income housing
properties energy efficient commercial
building deduction.
Sec. 310. Restriction of planned foreclosures.
Sec. 311. Increase of population cap for difficult development areas.
Sec. 312. Increased cost oversight and accountability.
Sec. 313. Tax-exempt bond financing requirement.
TITLE IV--REFORMS RELATING TO NATIVE AMERICAN ASSISTANCE
Sec. 401. Selection criteria under qualified allocation plans.
Sec. 402. Inclusion of Indian areas as difficult development areas for
purposes of certain buildings.
TITLE V--REFORMS RELATING TO RURAL ASSISTANCE
Sec. 501. Inclusion of rural areas as difficult development areas.
Sec. 502. Uniform income eligibility for rural projects.
TITLE VI--EXEMPT FACILITY BONDS
Sec. 601. Revision and clarification of the treatment of refunding
issues.
TITLE VII--AFFORDABLE HOUSING TAX CREDIT
Sec. 701. Affordable housing tax credit.
TITLE VIII--DATA AND TRANSPARENCY
Sec. 801. Sense of Congress.
TITLE I--REFORM OF STATE ALLOCATION FORMULAS
SEC. 101. INCREASES IN STATE ALLOCATIONS.
(a) In General.--Clause (ii) of section 42(h)(3)(C) of the Internal
Revenue Code is amended--
(1) in subclause (I), by striking ``$1.75'' and inserting
``the per capita amount'', and
(2) in subclause (II), by striking ``$2,000,000'' and
inserting ``the minimum amount''.
(b) Per Capita Amount; Minimum Amount.--Section 42(h)(3) of the
Internal Revenue Code of 1986 is amended by striking subparagraphs (H)
and (I) and inserting the following:
``(H) Per capita amount.--For purposes of
subparagraph (C)(ii)(I), the per capita amount shall be
determined as follows:
``(i) Calendar year 2023.--For calendar
year, 2023, the per capita amount is $3.90.
``(ii) Calendar year 2024.--For calendar
year 2024, the per capita amount is the product
of--
``(I) 1.25, and
``(II) the dollar amount under
clause (i) increased by an amount equal
to--
``(aa) such dollar amount,
multiplied by
``(bb) the cost-of-living
adjustment determined under
section 1(f)(3) for such
calendar year, determined by
substituting `calendar year
2022' for `calendar year 2016'
in subparagraph (A)(ii)
thereof.
If the amount determined after
application of the preceding sentence
is not a multiple of $5,000, such
amount shall be rounded to the next
lowest multiple of $5,000.
``(iii) Calendar years after 2024.--In the
case of any calendar year after 2024, the per
capita amount is the dollar amount determined
under clause (ii) increased by an amount equal
to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting `calendar
year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any amount increased under the preceding
sentence which is not a multiple of 5 cents
shall be rounded to the next lowest multiple of
5 cents.
``(I) Minimum amount.--For purposes of subparagraph
(C)(ii)(II), the minimum amount shall be determined as
follows:
``(i) Calendar year 2023.--For calendar
year, 2023, the minimum amount is $4,495,000.
``(ii) Calendar year 2024.--For calendar
year 2024, the minimum amount is the product
of--
``(I) 1.25, and
``(II) the dollar amount under
clause (i) increased by an amount equal
to--
``(aa) such dollar amount,
multiplied by
``(bb) the cost-of-living
adjustment determined under
section 1(f)(3) for such
calendar year, determined by
substituting `calendar year
2022' for `calendar year 2016'
in subparagraph (A)(ii)
thereof.
If the amount determined after
application of the preceding sentence
is not a multiple of 5 cents, such
amount shall be rounded to the next
lowest multiple of 5 cents.
``(iii) Calendar years after 2024.--In the
case of any calendar year after 2024, the
minimum amount is the dollar amount determined
under clause (ii) increased by an amount equal
to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting `calendar
year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any amount increased under the preceding
sentence which is not a multiple of $5,000
shall be rounded to the next lowest multiple of
$5,000.''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2022.
TITLE II--REFORMS RELATING TO TENANT ELIGIBILITY
SEC. 201. AVERAGE INCOME TEST APPLICABILITY TO EXEMPT FACILITY BONDS.
(a) In General.--Paragraph (1) of section 142(d) of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``(A) or (B)'' and inserting ``(A), (B), or
(C)'', and
(2) by inserting after subparagraph (B) the following new
subparagraph:
``(C) Average income test.--A project meets the
requirements of this subparagraph if it meets the
minimum requirements of section 42(g)(1)(C).''.
(b) Effective Date.--The amendments made by this section shall
apply to elections made under section 142(d)(1) of the Internal Revenue
Code of 1986 after March 23, 2018.
SEC. 202. CODIFICATION OF RULES RELATING TO INCREASED TENANT INCOME.
(a) In General.--Clause (i) of section 42(g)(2)(D) of the Internal
Revenue Code of 1986 is amended by striking ``clauses (ii), (iii), and
(iv)'' and all that follows and inserting ``clauses (ii), (iii), (iv),
and (vi), notwithstanding an increase in the income of the occupants
above the income limitation applicable under paragraph (1)--
``(I) a low-income unit shall
continue to be treated as a low-income
unit if the income of such occupants
initially was 60 percent or less of
area median gross income and such unit
continues to be rent-restricted, and
``(II) a unit to which, at the time
of initial occupancy by such occupants,
any Federal, State, or local government
income restriction applied, and which
subsequently becomes part of a building
with respect to which rehabilitation
expenditures are taken into account
under subsection (e), shall be treated
as a low-income unit if the income of
such occupants initially was 60 percent
or less of area median gross income and
does not exceed 120 percent of area
median gross income as of the date of
acquisition of the property by the
taxpayer.''.
(b) Exception.--Subparagraph (D) of section 42(g)(2) of the
Internal Revenue Code of 1986, as amended by this Act, is further
amended by adding at the end the following new clause:
``(vi) Exception to rule relating to
increased tenant income.--In the case of an
occupant of a low-income unit who initially
qualified to occupy such unit by reason of
paragraph (1)(C) with an income in excess of 60
percent of area median gross income but not in
excess of 80 percent of area median gross
income, clause (i) shall be applied for
substituting `80 percent' for `60 percent' each
place it appears.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
SEC. 203. MODIFICATION OF STUDENT OCCUPANCY RULES.
(a) In General.--Subparagraph (D) of section 42(i)(3) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(D) Rules relating to students.--
``(i) In general.--A unit occupied solely
by individuals who--
``(I) have not attained age 24, and
``(II) are enrolled in a full-time
course of study at an institution of
higher education (as defined in section
3304(f)),
shall not be treated as a low-income unit.
``(ii) Exception for certain federal
programs.--In the case of a federally-assisted
building (as defined in subsection
(d)(6)(C)(i)), clause (i) shall not apply to a
unit all of the occupants of which meet all
applicable requirements under the housing
program described in such subsection through
which the building is assisted, financed, or
operated.
``(iii) Other exceptions.--An individual
shall not be treated as described in clause (i)
if the individual meets the income limitation
applicable under subsection (g)(1) to the
project of which the building is a part and--
``(I) is married,
``(II) is a person with
disabilities (as defined in section
3(b)(3)(E) of the United States Housing
Act of 1937),
``(III) is a veteran (as defined in
section 101(2) of title 38, United
States Code),
``(IV) has 1 or more qualifying
children (as defined in section
152(c)),
``(V) is or has been a victim or
threatened victim of domestic violence,
dating violence, sexual assault, or
stalking (as defined in section 40002
of the Violence Against Women Act of
1994),
``(VI) is or has been a victim of
any form of human trafficking, or
``(VII) is, or was prior to
attaining the age of majority--
``(aa) an emancipated minor
or in legal guardianship as
determined by a court of
competent jurisdiction in the
individual's State of legal
residence,
``(bb) under the care and
placement responsibility of the
State agency responsible for
administering a plan under part
B or part E of title IV of the
Social Security Act, or
``(cc) an unaccompanied
youth (within the meaning of
section 725(6) of the McKinney-
Vento Homeless Assistance Act
(42 U.S.C. 11434a(6))) or a
homeless child or youth (within
the meaning of section 725(2)
of such Act (42 U.S.C.
11434a(2))).
For purposes of subclause (VI), an
individual is or has been a victim of
human trafficking if such individual
was subjected to an act or practice
described in paragraph (11) or (12) of
section 103 of the Trafficking Victims
Protection Act of 2000.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2023.
SEC. 204. TENANT VOUCHER PAYMENTS TAKEN INTO ACCOUNT AS RENT FOR
CERTAIN PURPOSES.
(a) In General.--Subparagraph (B) of section 42(g)(2) of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new sentence: ``In the case of a project with respect to
which the taxpayer elects the requirements of subparagraph (C) of
paragraph (1), or the portion of a project to which subsection
(d)(5)(C) applies, clause (i) shall not apply with respect to any
tenant-based assistance (as defined in section 8(f)(7) of the United
States Housing Act of 1937 (42 U.S.C. 1437f(f)(7))).''.
(b) Effective Date.--The amendments made by this section shall
apply to rent paid in taxable years beginning after December 31, 2023.
SEC. 205. REQUIREMENT THAT LOW-INCOME HOUSING CREDIT-SUPPORTED HOUSING
PROTECT VICTIMS OF DOMESTIC ABUSE.
(a) In General.--Subparagraph (B) of section 42(h)(6) of the
Internal Revenue Code of 1986 is amended by striking ``and'' at the end
of clause (v), by striking the period at the end of clause (vi) and
inserting ``, and'', and by adding at the end the following new clause:
``(vii) which--
``(I) prohibits the refusal to
lease to, or termination of a lease by,
a person solely on the basis of
criminal activity directly relating to
domestic violence, dating violence,
sexual assault, or stalking that is
engaged in by a member of the household
of the tenant or any guest or other
person under the control of the tenant,
if the tenant or an affiliated
individual of the tenant is the victim
or threatened victim of such domestic
violence, dating violence, sexual
assault, or stalking, and
``(II) allows prospective, present,
or former occupants of the building the
right to enforce in any State court the
prohibition of subclause (I).''.
(b) Bifurcation.--
(1) In general.--Subparagraph (B) of section 42(h)(6) of
the Internal Revenue Code of 1986, as amended by subsection
(a), is further amended by adding at the end the following new
flush sentence:
``For purposes of clause (vii)(I), rules similar to the
rules of section 41411(b)(3)(B) of the Violence Against
Women Act of 1994 shall apply with respect to the owner
or manager of a building.''.
(2) Effect of bifurcation.--Paragraph (2) of section 42(g)
of such Code is amended by adding at the end the following new
subparagraph:
``(F) Treatment of bifurcation in cases of domestic
violence.--In any case in which--
``(i) an occupant is evicted or removed
from a low-income unit because such occupant
has engaged in criminal activity directly
relating to domestic violence, dating violence,
sexual assault, or stalking against an
affiliated individual or other individual on
the basis of criminal activity directly
relating to domestic violence, dating violence,
sexual assault, or stalking, and
``(ii) the lease on such unit is bifurcated
as provided in the last sentence of subsection
(h)(6)(B),
then the remaining occupants of such low-income unit
shall not be treated as a new tenant for purposes of
this section.''.
(c) Clarification of General Public Use Requirement.--Paragraph (9)
of section 42(g) of the Internal Revenue Code of 1986 is amended by
striking ``or'' at the end of subparagraph (B), by striking the period
at the end of subparagraph (C) and inserting ``, or'', and by adding at
the end the following new subparagraph:
``(D) who are victims or threatened victims of
criminal activity directly relating to domestic
violence, dating violence, sexual assault, or
stalking.''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to agreements
executed or modified on or after the date that is 30 days after
the date of the enactment of this Act.
(2) Public use requirement.--The amendments made by
subsection (c) shall apply to buildings placed in service
before, on, or after the date of the enactment of this Act.
SEC. 206. CLARIFICATION OF GENERAL PUBLIC USE REQUIREMENT RELATING TO
VETERANS, ETC.
(a) In General.--Paragraph (9) of section 42(g) of the Internal
Revenue Code of 1986, as amended by section 205, is further amended by
adding at the end the following flush language:
``Any veteran of the Armed Forces shall be treated as a member
of a specified group under a Federal program for purposes of
subparagraph (B).''.
(b) Qualified Residential Rental Projects.--Paragraph (2) of
section 142(d) of the Internal Revenue Code of 1986 is amended by
adding at the end the following new subparagraph:
``(F) Clarification of general public use
requirement.--A unit shall not fail to meet the general
public use requirement solely because of occupancy
restrictions or preferences, if such restrictions or
preferences meet the general public use requirement of
section 42.''.
(c) Effective Dates.--
(1) In general.--The amendment made by subsection (a) shall
apply to buildings placed in service before, on, or after the
date of the enactment of this Act.
(2) Qualified residential rental projects.--The amendment
made by subsection (b) shall apply to bonds issued before, on,
or after the date of the enactment of this Act.
TITLE III--RULES RELATING TO CREDIT ELIGIBILITY AND DETERMINATION
SEC. 301. RECONSTRUCTION OR REPLACEMENT PERIOD AFTER CASUALTY LOSS.
(a) No Recapture Following Casualty Loss.--Subparagraph (E) of
section 42(j)(4) of the Internal Revenue Code of 1986 is amended to
read as follows:
``(E) No recapture by reason of casualty loss.--
``(i) In general.--The increase in tax
under this subsection shall not apply to a
reduction in qualified basis by reason of a
casualty loss to the extent such loss is
restored by reconstruction or replacement
within a reasonable period established by the
applicable housing credit agency, not to exceed
25 months from the date on which the qualified
casualty loss arises.
``(ii) Qualified casualty losses.--In the
case of a qualified casualty loss, the period
described in clause (i) may be extended, but
not in excess of 12 months, if the applicable
housing credit agency determines the qualified
casualty arose by reason of an event which was
not discrete to the building and which made a
reconstruction or replacement within 25 months
impractical. In the event the applicable
housing credit agency determines a period in
excess of 25 months is necessary for such
reconstruction or replacement, the compliance
period shall be increased by any such
additional time.
``(iii) Application.--The determination
under paragraph (1) shall not be made with
respect to a property the basis of which is
affected by a qualified casualty loss until the
period described in clause (i) (as modified by
clause (ii), if applicable) with respect to
such property has expired.
``(iv) Qualified casualty loss.--For
purposes of this subparagraph, the term
`qualified casualty loss' means a casualty loss
that is the result of a Federally declared
disaster (as defined in section 165(i)(5)).''.
(b) Qualified Basis Following Casualty Loss.--Paragraph (1) of
section 42(c) of the Internal Revenue Code of 1986 is amended by adding
at the end the following new subparagraph:
``(F) Qualified basis following casualty loss.--If
a casualty causes the qualified basis of a building in
any year to be less than the qualified basis in the
immediately preceding year then, in the year of such
casualty and each succeeding year until such building
or the units affected by the casualty are reconstructed
or replaced (but only through the last year of the
period permitted for reconstruction or replacement
under subsection (j)(4)(E))--
``(i) the qualified basis of such building
shall be equal to the qualified basis of such
building as of the last day of the year
preceding the year in which such casualty
occurred,
``(ii) if such building is not
reconstructed or replaced by the expiration of
the applicable period for such reconstruction
or replacement under subsection (j)(4), then
the recapture amount provided for in subsection
(j)(1) shall include the amount of any credit
claimed under this section by reason of the
application of clause (i), and
``(iii) a building which was a qualified
low-income building as of the last day of the
year preceding the year in which such casualty
occurred shall not cease to be a qualified low-
income building solely because of such
casualty.''.
(c) Effective Date.--The amendments made by this section shall
apply to casualties occurring after the date which is 25 months before
the date of the enactment of this Act.
SEC. 302. MODIFICATION OF PREVIOUS OWNERSHIP RULES; LIMITATION ON
ACQUISITION BASIS.
(a) In General.--Clause (ii) of section 42(d)(2)(B) of the Internal
Revenue Code of 1986 is amended by inserting ``, or the taxpayer elects
the application of subparagraph (C)(ii)'' after ``service''.
(b) Limitation on Acquisition Basis.--Subparagraph (C) of section
42(d)(2) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``For purposes of subparagraph (A), the
adjusted basis'' and inserting ``For purposes of subparagraph
(A)--
``(i) In general.--The adjusted basis'',
and
(2) by adding at the end the following new clauses:
``(ii) Buildings in service within previous
10 years.--If the period between the date of
acquisition of the building by the taxpayer and
the date the building was last placed in
service is less than 10 years, the taxpayer's
basis attributable to the acquisition of the
building which is taken into account in
determining the adjusted basis shall not exceed
the sum of--
``(I) the lowest amount paid for
acquisition of the building by any
person during the 10 years preceding
the date of the acquisition of the
building by the taxpayer, adjusted as
provided in clause (iii), and
``(II) the value of any capital
improvements made by the person who
sells the building to the taxpayer
which are reflected in such seller's
basis.
``(iii) Adjustment.--With respect to a
basis determination made in any taxable year,
the amount described in clause (ii)(I) shall be
increased by an amount equal to--
``(I) such amount, multiplied by
``(II) a cost-of-living adjustment,
determined in the same manner as under
section 1(f)(3) for the calendar year
in which the taxable year begins by
taking into account the acquisition
year in lieu of calendar year 1992.
For purposes of the preceding sentence, the
acquisition year is the calendar year in which
the lowest amount referenced in clause (ii)(I)
was paid for the acquisition of the
building.''.
(c) Conforming Amendments.--Clause (i) of section 42(d)(2)(D) of
the Internal Revenue Code of 1986 is amended--
(1) by striking ``for subparagraph (b)'' in the heading,
and
(2) by striking ``subparagraph (B)(ii)'' in the matter
preceding subclause (I) and inserting ``subparagraph (B)(ii) or
(C)(ii)''.
(d) Modification of Placed in Service Rule.--Clause (iii) of
section 42(d)(2)(B) of the Internal Revenue Code of 1986 is amended to
read as follows:
``(iii) the building was not owned by the
taxpayer or by any person related (as of the
date of acquisition by the taxpayer) to the
taxpayer at any time during the 5-year period
ending on the date of acquisition by the
taxpayer, and''.
(e) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2022.
SEC. 303. CERTAIN RELOCATION COSTS TAKEN INTO ACCOUNT AS REHABILITATION
EXPENDITURES.
(a) In General.--Paragraph (2) of section 42(e) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Certain relocation costs.--In the case of a
rehabilitation of a building to which section 280B does
not apply, costs relating to the relocation of
occupants, including--
``(i) amounts paid to occupants,
``(ii) amounts paid to third parties for
services relating to such relocation, and
``(iii) amounts paid for temporary housing
for occupants,
shall be treated as chargeable to capital account and
taken into account as rehabilitation expenditures.''.
(b) Effective Date.--The amendment made by this section shall apply
to expenditures paid or incurred after December 31, 2022.
(c) No Inference.--Nothing in the amendment made by this section
shall be construed to create any inference with respect to the
treatment of relocation costs paid or incurred before December 31,
2022.
SEC. 304. REPEAL OF QUALIFIED CENSUS TRACT POPULATION CAP.
(a) In General.--Clause (ii) of section 42(d)(5)(B) of the Internal
Revenue Code of 1986 is amended--
(1) by striking subclauses (II) and (III), and
(2) by striking ``Qualified census tract.--
``(I) In general.--The term'',
and inserting ``Qualified census tract.--The term''.
(b) Effective Date.--The amendments made by this section shall
apply to designations of qualified census tracts under section
42(d)(5)(B)(ii) of the Internal Revenue Code of 1986 after December 31,
2023.
SEC. 305. DETERMINATION OF COMMUNITY REVITALIZATION PLAN TO BE MADE BY
HOUSING CREDIT AGENCY.
(a) In General.--Subclause (III) of section 42(m)(1)(B)(ii) of the
Internal Revenue Code of 1986 is amended by inserting ``, as determined
by the housing credit agency according to criteria established by such
agency,'' after ``(d)(5)(B)(ii)) and''.
(b) Criteria.--Paragraph (1) of section 42(m) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(E) Criteria for determination relating to
concerted community revitalization plan.--For purposes
of subparagraph (B)(ii)(III), the criteria which shall
be established by a housing credit agency for
determining whether the development of a project
contributes to a concerted community development plan
shall take into account any factors the agency deems
appropriate, including the extent to which the proposed
plan--
``(i) is geographically specific,
``(ii) outlines a clear plan for
implementation and goals for outcomes,
``(iii) includes a strategy for applying
for or obtaining commitments of public or
private investment (or both) in nonhousing
infrastructure, amenities, or services, and
``(iv) demonstrates the need for community
revitalization.''.
(c) Effective Date.--The amendments made by this section shall
apply to allocations of housing credit dollar amounts made under
qualified allocation plans (as defined in section 42(m)(1)(B) of the
Internal Revenue Code of 1986) adopted after December 31, 2023.
SEC. 306. PROHIBITION OF LOCAL APPROVAL AND CONTRIBUTION REQUIREMENTS.
(a) In General.--Paragraph (1) of section 42(m) of the Internal
Revenue Code of 1986, as amended by section 305, is further amended--
(1) by striking clause (ii) of subparagraph (A) and by
redesignating clauses (iii) and (iv) thereof as clauses (ii)
and (iii), and
(2) by adding at the end the following new subparagraph:
``(F) Local approval or contribution not taken into
account.--The selection criteria under a qualified
allocation plan shall not include consideration of--
``(i) any support or opposition with
respect to the project from local or elected
officials, or
``(ii) any local government contribution to
the project, except to the extent such
contribution is taken into account as part of a
broader consideration of the project's ability
to leverage outside funding sources, and is not
prioritized over any other source of outside
funding.''.
(b) Effective Date.--The amendments made by this section shall
apply to allocations of housing credit dollar amounts made under
qualified allocation plans (as defined in section 42(m)(1)(B) of the
Internal Revenue Code of 1986) adopted after December 31, 2023.
SEC. 307. INCREASE IN CREDIT FOR CERTAIN PROJECTS DESIGNATED TO SERVE
EXTREMELY LOW-INCOME HOUSEHOLDS.
(a) In General.--Paragraph (5) of section 42(d) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Increase in credit for projects designated to
serve extremely low-income households.--In the case of
any building--
``(i) 20 percent or more of the residential
units (determined as if the imputed income
limitation applicable to such units were 30
percent of area median gross income) in which
are designated by the taxpayer for occupancy by
households the aggregate household income of
which does not exceed the greater of--
``(I) 30 percent of area median
gross income, or
``(II) 100 percent of an amount
equal to the Federal poverty line
(within the meaning of section
36B(d)(3)), and
``(ii) which is designated by the housing
credit agency as requiring the increase in
credit under this subparagraph in order for
such building to be financially feasible as
part of a qualified low-income housing project,
subparagraph (B) shall not apply to the portion of such
building which is comprised of such units (determined
in a manner similar to the unit fraction under
subsection (c)(1)(C)), and the eligible basis of such
portion of the building shall be 150 percent of such
basis determined without regard to this
subparagraph.''.
(b) Effective Date.--The amendment made by this section shall apply
to buildings which receive allocations of housing credit dollar amount
after the date of enactment of this Act or, in the case of buildings
financed as described in section 42(h)(4)(B) of the Internal Revenue
Code of 1986, to buildings financed by obligations which are part of an
issue the issue date of which is after December 31, 2023.
SEC. 308. INCREASE IN CREDIT FOR BOND-FINANCED PROJECTS DESIGNATED BY
STATE AGENCY.
(a) In General.--Clause (v) of section 42(d)(5)(B) of the Internal
Revenue Code of 1986 is amended by striking the second sentence.
(b) Technical Amendment.--Clause (v) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986, as amended by subsection (a), is further
amended--
(1) by striking ``State'' in the heading, and
(2) by striking ``State housing credit agency'' and
inserting ``housing credit agency''.
(c) Effective Date.--The amendments made by this section shall
apply to buildings described in section 42(h)(4)(B) of the Internal
Revenue Code of 1986 which are financed by obligations which are part
of an issue the issue date of which is after December 31, 2023.
SEC. 309. ELIMINATION OF BASIS REDUCTION FOR LOW-INCOME HOUSING
PROPERTIES ENERGY EFFICIENT COMMERCIAL BUILDING
DEDUCTION.
(a) Energy Efficient Commercial Buildings Deduction.--Subsection
(e) of section 179D of the Internal Revenue Code of 1986 is amended--
(1) by striking ``Reduction.--For purposes'' and inserting
``Reduction.--
``(1) In general.--For purposes'', and
(2) by adding at the end the following new paragraph:
``(2) Exception for affordable housing properties.--
Paragraph (1) shall not apply for purposes of determining
eligible basis under section 42.''.
(b) Effective Date.--The amendments made by this section shall
apply to buildings which receive allocations of housing credit dollar
amount after the date of the enactment of this Act or, in the case of
buildings financed as described in section 42(h)(4)(B) of the Internal
Revenue Code of 1986, to buildings financed by obligations which are
part of an issue the issue date of which is after December 31, 2023.
SEC. 310. RESTRICTION OF PLANNED FORECLOSURES.
(a) In General.--Subclause (I) of section 42(h)(6)(E)(i) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(I) on the 61st day after the
taxpayer (or a successor in interest)
provides notice to the Secretary and
the housing credit agency that the
building has been acquired by
foreclosure (or instrument in lieu of
foreclosure) and that the taxpayer
intends the termination of such period,
unless, before such date, the Secretary
or the housing credit agency determines
that such acquisition is part of an
arrangement with the taxpayer a purpose
of which is to terminate such period,
or''.
(b) Conforming Amendment.--The second sentence of clause (i) of
section 42(h)(6)(E) of the Internal Revenue Code of 1986 is amended by
striking ``Subclause (II)'' and inserting ``Subclauses (I) and (II)''.
(c) Effective Date.--The amendments made by this section shall
apply to acquisitions by foreclosure (or instrument in lieu of
foreclosure) after December 31, 2022.
SEC. 311. INCREASE OF POPULATION CAP FOR DIFFICULT DEVELOPMENT AREAS.
(a) In General.--Subclause (II) of section 42(d)(5)(B)(iii) of the
Internal Revenue Code of 1986 is amended by striking ``20 percent'' and
inserting ``30 percent''.
(b) Effective Date.--The amendment made by this section shall apply
to designations made under section 42(d)(5)(B)(iii) of the Internal
Revenue Code of 1986 after December 31, 2023.
SEC. 312. INCREASED COST OVERSIGHT AND ACCOUNTABILITY.
(a) In General.--Subparagraph (C) of section 42(m)(1) of the
Internal Revenue Code of 1986 is amended by striking ``and'' at the end
of clause (ix), by striking the period at the end of clause (x) and
inserting ``, and'', and by adding at the end the following new clause:
``(xi) the reasonableness of the
development costs of the project.''.
(b) Effective Date.--The amendments made by this section shall
apply to allocations of credits under section 42 of the Internal
Revenue Code of 1986 made after December 31, 2023.
SEC. 313. TAX-EXEMPT BOND FINANCING REQUIREMENT.
(a) In General.--Subparagraph (B) of section 42(h)(4) of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new sentence: ``In the case of buildings financed by an
obligation first taken into account under section 146 in calendar years
beginning after the date of the enactment of the Affordable Housing
Credit Improvement Act of 2023, the preceding sentence shall be applied
by substituting `25 percent' for `50 percent'.''.
(b) Effective Date.--The amendment made by this section shall apply
to any building some portion of which, or of the land on which the
building is located, is financed by an obligation which is described in
section 42(h)(4)(A) of the Internal Revenue Code of 1986 and which is
part of an issue the issue date of which is after December 31, 2023.
TITLE IV--REFORMS RELATING TO NATIVE AMERICAN ASSISTANCE
SEC. 401. SELECTION CRITERIA UNDER QUALIFIED ALLOCATION PLANS.
(a) In General.--Subparagraph (C) of section 42(m)(1) of the
Internal Revenue Code of 1986, as amended by section 312, is further
amended by striking ``and'' at the end of clause (x), by striking the
period at the end of clause (xi) and inserting ``, and'', and by adding
at the end the following new clause:
``(xii) the affordable housing needs of
individuals in the State who are--
``(I) enrolled members of a tribe
with respect to an Indian tribal
government (including any agencies or
instrumentalities of an Indian tribal
government and any Alaska Native
regional or village corporation, as
defined in, or established pursuant to,
the Alaska Native Claims Settlement Act
(43 U.S.C. 1601 et seq.), or
``(II) described in section 801(9)
of the Native American Housing
Assistance and Self-Determination Act
of 1996 (25 U.S.C. 4221(9)).''.
(b) Effective Date.--The amendments made by this section shall
apply to allocations of credits under section 42 of the Internal
Revenue Code of 1986 made after December 31, 2023.
SEC. 402. INCLUSION OF INDIAN AREAS AS DIFFICULT DEVELOPMENT AREAS FOR
PURPOSES OF CERTAIN BUILDINGS.
(a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the
Internal Revenue Code of 1986 is amended by inserting before the period
the following: ``, and any Indian area''.
(b) Indian Area.--Clause (iii) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986 is amended by redesignating subclause
(II) as subclause (III) and by inserting after subclause (I) the
following new subclause:
``(II) Indian area.--For purposes
of subclause (I), the term `Indian
area' means any Indian area (as defined
in section 4(11) of the Native American
Housing Assistance and Self
Determination Act of 1996 (25 U.S.C.
4103(11))) and any housing area (as
defined in section 801(5) of such Act
(25 U.S.C. 4221(5))).''.
(c) Eligible Buildings.--Clause (iii) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986, as amended by subsection (b), is further
amended by adding at the end the following new subclause:
``(IV) Special rule for buildings
in indian areas.--In the case of an
area which is a difficult development
area solely because it is an Indian
area, a building shall not be treated
as located in such area unless such
building is assisted or financed under
the Native American Housing Assistance
and Self Determination Act of 1996 (25
U.S.C. 4101 et seq.) or the project
sponsor is an Indian tribe (as defined
in section 45A(c)(6)), a tribally
designated housing entity (as defined
in section 4(22) of such Act (25 U.S.C.
4103(22))), or wholly owned or
controlled by such an Indian tribe or
tribally designated housing entity.''.
(d) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2023.
TITLE V--REFORMS RELATING TO RURAL ASSISTANCE
SEC. 501. INCLUSION OF RURAL AREAS AS DIFFICULT DEVELOPMENT AREAS.
(a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the
Internal Revenue Code of 1986, as amended by section 402, is further
amended by inserting ``, any rural area'' after ``median gross
income''.
(b) Rural Area.--Clause (iii) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986, as amended by section 402, is further
amended by redesignating subclause (III) as subclause (IV) and by
inserting after subclause (II) the following new subclause:
``(III) Rural area.--For purposes
of subclause (I), the term `rural area'
means any non-metropolitan area, or any
rural area as defined by section 520 of
the Housing Act of 1949, which is
identified by the qualified allocation
plan under subsection (m)(1)(B).''.
(c) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2023.
SEC. 502. UNIFORM INCOME ELIGIBILITY FOR RURAL PROJECTS.
(a) In General.--Paragraph (8) of section 42(i) of the Internal
Revenue Code of 1986 is amended by striking the second sentence.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2022.
TITLE VI--EXEMPT FACILITY BONDS
SEC. 601. REVISION AND CLARIFICATION OF THE TREATMENT OF REFUNDING
ISSUES.
(a) In General.--Subparagraph (A) of section 146(i)(6) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(A) In general.--During the 12-month period
beginning on the date of a repayment of a loan financed
by an issue 95 percent or more of the net proceeds of
which are used to provide projects described in section
142(d), if such repayment is used to provide a new loan
for any project described in section 142(a)(7) or for
any purpose described in subsection (a)(2)(A) or (b) of
section 143, any bond which is issued to refinance such
issue shall be treated as a refunding issue. Any issue
treated as a refunding issue by reason of the preceding
sentence shall be so treated only to the extent the
principal amount of such refunding issue does not
exceed the principal amount of the bonds refunded.''.
(b) Removal of One-Refunding Limit.--Subparagraph (B) of section
146(i)(6) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``4 years'' in clause (i) and inserting
``10 years'',
(2) by striking ``was issued'' in clause (ii) and inserting
``is issued'',
(3) by redesignating clauses (i) (as so amended), (ii) (as
so amended), and (iii) as subclauses (I), (II), and (III),
respectively, and by moving such subclauses 2 ems to the right,
(4) by striking ``Limitations.--Subparagraph (A) shall
apply to only one refunding of the original issue and'' and
inserting ``Limitations.--
``(i) In general.--Subparagraph (A) shall
apply to a bond'', and
(5) by adding at the end the following new clause:
``(ii) Source of loan repayment.--
Subparagraph (A) shall not apply to any
repayment of a loan which is--
``(I) made by a repayment of
another loan, or
``(II) financed by an issue treated
as a refunding issue under subparagraph
(A).''.
(c) Conforming Amendment.--The heading of paragraph (6) of section
146(i) of the Internal Revenue Code of 1986 is amended by striking
``residential rental project bonds as refunding bonds irrespective of
obligor'' and inserting ``bonds as refunding bonds''.
(d) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(c) shall apply to bonds issued on or after the date of the
enactment of this Act.
(2) Removal of one-refunding limit.--The amendments made by
subsection (b) shall apply to repayments of loans received
after July 30, 2008.
TITLE VII--AFFORDABLE HOUSING TAX CREDIT
SEC. 701. AFFORDABLE HOUSING TAX CREDIT.
(a) In General.--The heading of section 42 of the Internal Revenue
Code of 1986 is amended by striking ``low-income'' and inserting
``affordable''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 42 of the Internal Revenue
Code of 1986 is amended by striking ``low-income'' and
inserting ``affordable''.
(2) Paragraph (5) of section 38(b) of such Code is amended
by striking ``low-income'' and inserting ``affordable''.
(3) The heading of subparagraph (D) of section 469(i)(3) of
such Code is amended by striking ``low-income'' and inserting
``affordable''.
(4) The heading of subparagraph (B) of section 469(i)(6) of
such Code is amended by striking ``low-income'' and inserting
``affordable''.
(5) Paragraph (7) of section 772(a) of such Code is amended
by striking ``low-income'' and inserting ``affordable''.
(6) Paragraph (5) of section 772(d) of such Code is amended
by striking ``low-income'' and inserting ``affordable''.
(c) Clerical Amendment.--The item relating to section 42 in the
table of sections for subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended to read as follows:
``Sec. 42. Affordable housing credit.''.
TITLE VIII--DATA AND TRANSPARENCY
SEC. 801. SENSE OF CONGRESS.
(a) Transparency.--It is the sense of Congress that in addition to
expanding and strengthening the affordable housing credit through the
provisions in the Affordable Housing Credit Improvement Act of 2023,
subsequent steps should also be taken to share data and identify other
ways to increase the transparency of the program, and the House of
Representatives and the Senate should work together with Federal
agencies to identify data sources that can be shared.
(b) Discriminatory Land Use Policies.--It is the Sense of Congress
that action should be taken to discourage the use of discriminatory
land use policies and remove barriers to making housing more affordable
to further the original intent of the affordable housing credit
program. The House and Senate should work together to develop
incentives within the affordable housing credit program to encourage
states and localities to remove or reform burdensome land use and
zoning regulations and facilitate the adoption or continuation of
inclusive land use and zoning policies to increase housing supply and
affordability.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
Committee on Banking, Housing, and Urban Affairs. Hearings held.
Committee on Banking, Housing, and Urban Affairs Subcommittee on Housing, Transportation, and Community Development. Hearings held.
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