Neighborhood Homes Investment Act

I 116TH CONGRESS 1ST SESSION H. R. 3316 To amend the Internal Revenue Code of 1986 to allow a credit against tax for neighborhood revitalization, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 18, 2019 Mr. HIGGINS of New York (for himself and Mr. KELLY of Pennsylvania) in- troduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to allow a credit against tax for neighborhood revitalization, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Neighborhood Homes 4 Investment Act’’. 5 SEC. 2. NEIGHBORHOOD HOMES CREDIT. 6 (a) IN GENERAL.—Subpart D of part IV of sub- 7 chapter A of chapter 1 of the Internal Revenue Code of 8 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 2 •HR 3316 IH 1986 is amended by inserting after section 42 the fol- 1 lowing new section: 2 ‘‘SEC. 42A. NEIGHBORHOOD HOMES CREDIT. 3 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec- 4 tion 38, the amount of the neighborhood homes credit de- 5 termined under this section for a taxable year for a quali- 6 fied project shall be, with respect to each qualified resi- 7 dence that is part of such qualified project and that expe- 8 riences a qualified completion event during such taxable 9 year, an amount equal to— 10 ‘‘(1) in the case of an affordable sale, with re- 11 spect to the seller, the excess of— 12 ‘‘(A) the qualified development cost in- 13 curred by such seller for such residence, over 14 ‘‘(B) the sale price of such residence, or 15 ‘‘(2) in the case of any other qualified comple- 16 tion event, with respect to a taxpayer other than the 17 owner of the residence (or a related person with re- 18 spect to such owner), the excess of— 19 ‘‘(A) the development cost incurred by 20 such taxpayer for such residence, over 21 ‘‘(B) the amount received by such taxpayer 22 as payment for such rehabilitation. 23 ‘‘(b) LIMITATIONS.— 24 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 3 •HR 3316 IH ‘‘(1) AMOUNT.—The amount determined under 1 subsection (a) with respect to a residence shall not 2 exceed 35 percent of the lesser of— 3 ‘‘(A) the qualified development cost, or 4 ‘‘(B) 80 percent of the national median 5 sale price for new homes. 6 ‘‘(2) ALLOCATIONS.— 7 ‘‘(A) IN GENERAL.—The amount deter- 8 mined under subsection (a) with respect to a 9 residence that is part of a qualified project and 10 that experiences a qualified completion event 11 shall not exceed the excess of— 12 ‘‘(i) the amount determined under 13 subparagraph (B), over 14 ‘‘(ii) the amounts previously deter- 15 mined under subsection (a) with respect to 16 such qualified project. 17 ‘‘(B) ALLOCATION AMOUNT.—The amount 18 determined under this paragraph with respect 19 to a residence that is part of a qualified project 20 and that experiences a qualified completion 21 event is the least of— 22 ‘‘(i) the amount allocated to such 23 project by the neighborhood homes credit 24 agency under this section, 25 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 4 •HR 3316 IH ‘‘(ii) the amount such agency deter- 1 mines at the time of the qualified comple- 2 tion event is necessary to ensure the finan- 3 cial feasibility of the project given the 4 sources and uses of funds and the total fi- 5 nancing (including local, State, and Fed- 6 eral subsidies) planned for the project, or 7 ‘‘(iii) in the case of a qualified com- 8 pletion event that occurs after the 5-year 9 period beginning on the date of the alloca- 10 tion referred to in clause (i), $0. 11 ‘‘(c) QUALIFIED DEVELOPMENT COST.—For pur- 12 poses of this section— 13 ‘‘(1) IN GENERAL.—The term ‘qualified devel- 14 opment cost’ means, with respect to a residence so 15 much of the allowable development cost as the neigh- 16 borhood homes credit agency certifies, at the time of 17 the completion event— 18 ‘‘(A) meets the standards promulgated 19 under subsection (h)(1)(C), and 20 ‘‘(B) does not represent unreasonable fees 21 by the taxpayer claiming the credit under sub- 22 section (a). 23 ‘‘(2) ALLOWABLE DEVELOPMENT COST.—The 24 term ‘allowable development cost’ means— 25 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 5 •HR 3316 IH ‘‘(A) the cost of construction, substantial 1 rehabilitation, demolition of any structure, and 2 environmental remediation, and 3 ‘‘(B) in the case of an affordable sale, so 4 much of the cost of acquiring buildings and 5 land as does not exceed an amount equal to 75 6 percent of the costs described in subparagraph 7 (A). 8 ‘‘(3) PROPERTIES WITH MULTIPLE RESI- 9 DENCES.—The allowable development cost of any 10 residence shall include on a pro-rata basis the allow- 11 able development cost with respect to common areas 12 or other comparable amenities. 13 ‘‘(d) QUALIFIED PROJECT.—For purposes of this 14 section, the term ‘qualified project’ means a project that— 15 ‘‘(1) a neighborhood homes credit agency cer- 16 tifies will build or substantially rehabilitate 1 or 17 more qualified residences located in one or more 18 qualified census tracts, and 19 ‘‘(2) is designated by such agency as a qualified 20 project under this section and is allocated (before 21 such building or substantial rehabilitation begins) a 22 portion of the amount allocated to such agency 23 under subsection (g). 24 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 6 •HR 3316 IH ‘‘(e) QUALIFIED CENSUS TRACT.—For purposes of 1 this section— 2 ‘‘(1) IN GENERAL.—The term ‘qualified census 3 tract’ means a census tract— 4 ‘‘(A) with— 5 ‘‘(i) a median gross income which 6 does not exceed 80 percent of the applica- 7 ble area median gross income, 8 ‘‘(ii) a poverty rate that is not less 9 than 130 percent of the applicable area 10 poverty rate, and 11 ‘‘(iii) a median value for owner-occu- 12 pied homes that does not exceed applicable 13 area median value for owner-occupied 14 homes, or 15 ‘‘(B) that is— 16 ‘‘(i) in a nonmetropolitan county, 17 ‘‘(ii) with a median gross income 18 which does not exceed the applicable area 19 median gross income, and 20 ‘‘(iii) designated by a neighborhood 21 homes credit agency under this clause. 22 ‘‘(2) ADDITIONAL CENSUS TRACTS FOR SUB- 23 STANTIAL REHABILITATION.—In the case of a resi- 24 dence that is intended for substantial rehabilitation 25 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 7 •HR 3316 IH described in subsection (f)(5)(B), the term ‘qualified 1 census tract’ includes a census tract that meets the 2 requirements of paragraph (1)(A), without regard to 3 clause (iii), and that is designated by the neighbor- 4 hood homes credit agency under this paragraph. 5 ‘‘(3) LIST OF QUALIFIED CENSUS TRACTS.— 6 The Secretary of Housing and Urban Development 7 shall make publically available a list of qualified cen- 8 sus tracts under paragraph (1)(A), a list of qualified 9 census tracts under paragraph (1)(B), and a list of 10 qualified census tracts under paragraph (2) for each 11 year. 12 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec- 13 tion— 14 ‘‘(1) QUALIFIED RESIDENCE.—The term ‘quali- 15 fied residence’ means a residence that consists of— 16 ‘‘(A) a single-family home containing 4 or 17 fewer residential units, 18 ‘‘(B) a condominium, or 19 ‘‘(C) a house or an apartment owned by a 20 cooperative housing corporation (as defined in 21 section 216(b)). 22 ‘‘(2) AFFORDABLE SALE.— 23 ‘‘(A) IN GENERAL.— 24 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 8 •HR 3316 IH ‘‘(i) IN GENERAL.—The term ‘afford- 1 able sale’ means a sale to a qualified home- 2 owner of a residence that the neighborhood 3 homes credit agency certifies as meeting 4 the standards promulgated under sub- 5 section (h)(1)(D) for a price that does not 6 exceed— 7 ‘‘(I) in the case of any residence 8 not described in subclause (II), (III), 9 or (IV), the amount equal to the prod- 10 uct of 4 multiplied by the applicable 11 area median gross income, 12 ‘‘(II) in the case of a single-fam- 13 ily home containing two residential 14 units, 125 percent of the amount de- 15 scribed in subclause (I), 16 ‘‘(III) in the case of a single-fam- 17 ily home containing three residential 18 units, 150 percent of the amount de- 19 scribed in subclause (I), or 20 ‘‘(IV) in the case of a single-fam- 21 ily home containing four residential 22 units, 175 percent of the amount de- 23 scribed in subclause (I). 24 ‘‘(ii) RELATED PERSONS.— 25 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 9 •HR 3316 IH ‘‘(I) IN GENERAL.—A sale be- 1 tween related persons shall not be 2 treated as an affordable sale. 3 ‘‘(II) DEFINITION.—For pur- 4 poses of this section, a person (in this 5 clause referred to as the ‘related per- 6 son’) is related to any person if the 7 related person bears a relationship to 8 such person specified in section 9 267(b) or 707(b)(1), or the related 10 person and such person are engaged 11 in trades or businesses under common 12 control (within the meaning of sub- 13 sections (a) and (b) of section 52). 14 For purposes of the preceding sen- 15 tence, in applying section 267(b) or 16 707(b)(1), ‘10 percent’ shall be sub- 17 stituted for ‘50 percent’. 18 ‘‘(3) APPLICABLE AREA.—The term ‘applicable 19 area’ means— 20 ‘‘(A) in the case of a metropolitan census 21 tract, the metropolitan area in which such cen- 22 sus tract is located, and 23 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 10 •HR 3316 IH ‘‘(B) in the case of a census tract other 1 than a census tract described in subparagraph 2 (A), the State. 3 ‘‘(4) SUBSTANTIAL REHABILITATION.—The 4 term ‘substantial rehabilitation’ means rehabilitation 5 efforts involving qualified development costs that are 6 not less than the greater of— 7 ‘‘(A) $20,000, and 8 ‘‘(B) 20 percent of the cost of acquiring 9 buildings and land. 10 ‘‘(5) QUALIFIED COMPLETION EVENT.—The 11 term ‘qualified completion event’ means— 12 ‘‘(A) in the case of a residence that is built 13 or substantially rehabilitated as part of a quali- 14 fied project and sold, an affordable sale, or 15 ‘‘(B) in the case of a residence that is sub- 16 stantially rehabilitated as part of a qualified 17 project and owned by the same qualified home- 18 owner throughout such rehabilitation, the com- 19 pletion of such rehabilitation (as determined by 20 the neighborhood homes credit agency) to the 21 standards promulgated under subsection 22 (h)(1)(D). 23 ‘‘(6) QUALIFIED HOMEOWNER.— 24 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 11 •HR 3316 IH ‘‘(A) IN GENERAL.—The term ‘qualified 1 homeowner’ means, with respect to a residence, 2 an individual— 3 ‘‘(i) who owns and uses such residence 4 as the principal residence of such indi- 5 vidual, and 6 ‘‘(ii) whose income is 140 percent or 7 less of the applicable area median gross in- 8 come for the location of the residence. 9 ‘‘(B) OWNERSHIP.—For purposes of a co- 10 operative housing corporation (as such term is 11 defined in section 216(b)), a tenant-stockholder 12 shall be treated as owning the house or apart- 13 ment which such person is entitled to occupy. 14 ‘‘(C) INCOME.—For purposes of this para- 15 graph, income shall be a determined in accord- 16 ance with section 143(f)(2) and 143(f)(4). 17 ‘‘(D) TIMING.—For purposes of this para- 18 graph, the income of a taxpayer shall be deter- 19 mined— 20 ‘‘(i) in the case of a residence that is 21 built or substantially rehabilitated as part 22 of a qualified project and sold, at the time 23 a binding contract for purchase is made, or 24 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 12 •HR 3316 IH ‘‘(ii) in the case of a residence that is 1 occupied by a qualified homeowner and in- 2 tended to be substantially rehabilitated as 3 part of a qualified project, at the time a 4 binding contract to undertake such reha- 5 bilitation is made. 6 ‘‘(7) NEIGHBORHOOD HOMES CREDIT AGEN- 7 CY.—The term ‘neighborhood homes credit agency’ 8 means the agency designated by the governor of a 9 State as the neighborhood homes credit agency of 10 the State. 11 ‘‘(g) ALLOCATION.— 12 ‘‘(1) STATE NEIGHBORHOOD HOMES CREDIT 13 CEILING.—The State neighborhood homes credit 14 amount for a State for a calendar year is an amount 15 equal to the sum of— 16 ‘‘(A) the greater of— 17 ‘‘(i) the product of $3, multiplied by 18 the State population (determined in ac- 19 cordance with section 146(j)), or 20 ‘‘(ii) $4,000,000, plus 21 ‘‘(B) the converted private activity bond 22 amount with respect to the State for the cal- 23 endar year. 24 VerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316 kjohnson on DSK79L0C42 with BILLS 13 •HR 3316 IH ‘‘(2) UNUSED AMOUNT.—The State neighbor- 1 hood homes credit amount for a calendar year shall 2 be increased by the sum of— 3 ‘‘(A) any amount certified by the neighbor- 4 hood homes credit agency of the State as hav- 5 ing been previously allocated to a qualified 6 project and not used during the 5-year period 7 described in subsection (b)(2)(iii), plus 8 ‘‘(B) sum of the amount by which the 9 amount determined under paragraph (1) (with- 10 out application of this paragraph) exceeded the 11 amount allocated to qualified projects in each of 12 the three immediately preceding calendar years. 13 ‘‘(3) CONVERTED PRIVATE ACTIVITY BOND 14 AMOUNT.— 15 ‘‘(A) IN GENERAL.—For purposes of this 16 paragraph, the converted private activity bond 17 amount with respect to any State for any cal- 18 endar year shall be 60 percent of the amount 19 elected by— 20 ‘‘(i) the State agency that is an issuer 21 of qualified mortgage bonds (as defined in 22 section 143) [Text truncated for display. Full text available on Congress.gov.]