REHAB Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 6175 To amend the Internal Revenue Code of 1986 to modify the rehabilitation credit. IN THE HOUSE OF REPRESENTATIVES MARCH 10, 2020 Mr. BLUMENAUER (for himself, Mr. KELLY of Pennsylvania, Mr. KILDEE, and Mr. LAHOOD) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to modify the rehabilitation credit. 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 ‘‘Revitalizing Econo- 4 mies, Housing, And Businesses Act of 2020’’ or as the 5 ‘‘REHAB Act of 2020’’. 6 SEC. 2. MODIFICATION OF REHABILITATION CREDIT. 7 (a) REINSTATEMENT OF CREDIT FOR QUALIFIED 8 REHABILITATED BUILDINGS.— 9 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 6175 IH (1) IN GENERAL.—Subsection (a) of section 47 1 of the Internal Revenue Code of 1986 is amended to 2 read as follows: 3 ‘‘(a) DETERMINATION OF CREDIT.— 4 ‘‘(1) IN GENERAL.—For purposes of section 46, 5 the rehabilitation credit for any taxable year is the 6 sum of— 7 ‘‘(A) in the case of any qualified rehabili- 8 tated building other than a certified historic 9 structure which is placed in service during such 10 taxable year, 10 percent of the qualified reha- 11 bilitation expenditures with respect to such 12 building, and 13 ‘‘(B) in the case of any qualified rehabili- 14 tated building which is a certified historic struc- 15 ture which is placed in service during such tax- 16 able year or any of the 4 immediately preceding 17 taxable years, the ratable share for such taxable 18 year. 19 ‘‘(2) RATABLE SHARE.—For purposes of para- 20 graph (1)(B), the ratable share for any taxable year 21 is an amount equal to 20 percent of the qualified re- 22 habilitation expenditures with respect to the certified 23 historic structure, as allocated ratably to each of the 24 5 years to which paragraph (1)(B) applies.’’. 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 6175 IH (2) CONFORMING AMENDMENTS.— 1 (A) Section 47(c) of such Code is amend- 2 ed— 3 (i) in paragraph (1)— 4 (I) in subparagraph (A), by 5 amending clause (iii) to read as fol- 6 lows: 7 ‘‘(iii) in the case of any building other 8 than a certified historic structure, in the 9 rehabilitation process— 10 ‘‘(I) 50 percent or more of the 11 existing external walls of such build- 12 ing are retained in place as external 13 walls, 14 ‘‘(II) 75 percent or more of the 15 existing external walls of such build- 16 ing are retained in place as internal or 17 external walls, and 18 ‘‘(III) 75 percent or more of the 19 existing internal structural framework 20 of such building is retained in place, 21 and’’, and 22 (II) by redesignating subpara- 23 graphs (B) and (C) as subparagraphs 24 (C) and (D), respectively, and by in- 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 6175 IH serting after subparagraph (A) the 1 following new subparagraph: 2 ‘‘(B) BUILDING MUST BE FIRST PLACED 3 IN SERVICE BEFORE 1936.—In the case of a 4 building other than a certified historic struc- 5 ture, a building shall not be a qualified rehabili- 6 tated building unless the building was first 7 placed in service before 1936.’’, and 8 (ii) in paragraph (2)(B), by amending 9 clause (iv) to read as follows: 10 ‘‘(iv) CERTIFIED HISTORIC STRUC- 11 TURE, ETC.—Any expenditure attributable 12 to the rehabilitation of a certified historic 13 structure or a building in a registered his- 14 toric district, unless the rehabilitation is a 15 certified rehabilitation (within the meaning 16 of subparagraph (C)). The preceding sen- 17 tence shall not apply to a building in a reg- 18 istered historic district if— 19 ‘‘(I) such building was not a cer- 20 tified historic structure, 21 ‘‘(II) the Secretary of the Inte- 22 rior certified to the Secretary that 23 such building is not of historic signifi- 24 cance to the district, and 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 6175 IH ‘‘(III) if the certification referred 1 to in subclause (II) occurs after the 2 beginning of the rehabilitation of such 3 building, the taxpayer certifies to the 4 Secretary that, at the beginning of 5 such rehabilitation, he in good faith 6 was not aware of the requirements of 7 subclause (II).’’. 8 (B) Paragraph (4) of section 145(d) of 9 such Code is amended— 10 (i) by striking ‘‘of section 11 47(c)(1)(B)’’ each place it appears and in- 12 serting ‘‘of section 47(c)(1)(C)’’, and 13 (ii) by striking ‘‘section 14 47(c)(1)(B)(i)’’ and inserting ‘‘section 15 47(c)(1)(C)(i)’’. 16 (b) INCREASE IN CREDIT RATE FOR QUALIFIED RE- 17 HABILITATED BUILDINGS OTHER THAN CERTIFIED HIS- 18 TORIC STRUCTURES.—Section 47(a)(1) of such Code, as 19 amended by subsection (a), is amended by striking ‘‘10 20 percent’’ and inserting ‘‘15 percent’’. 21 (c) MODIFICATION OF DATE BEFORE WHICH BUILD- 22 INGS OTHER THAN CERTIFIED HISTORIC STRUCTURES 23 MUST BE PLACED IN SERVICE.—Section 47(c)(1)(B) of 24 such Code, as amended by subsection (a), is amended by 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 6175 IH striking ‘‘1936’’ and inserting ‘‘the calendar year which 1 is 50 years prior to the calendar year in which the building 2 is placed in service (within the meaning of subsection 3 (b)(1))’’. 4 (d) REQUIREMENT THAT BUILDINGS OTHER CER- 5 TIFIED HISTORIC STRUCTURES MUST BE CLOSE TO PUB- 6 LIC TRANSPORTATION CENTERS.—Section 47(c)(1) of 7 such Code, as amended by subsection (a), is amended by 8 redesignating subparagraphs (C) and (D) as subpara- 9 graphs (D) and (E), respectively, and by inserting after 10 subparagraph (B) the following new subparagraph: 11 ‘‘(C) BUILDING MUST BE CLOSE TO PUB- 12 LIC TRANSPORTATION CENTER.— 13 ‘‘(i) IN GENERAL.—In the case of a 14 building other than a certified historic 15 structure, a building shall not be a quali- 16 fied rehabilitated building unless the build- 17 ing is not further than one-half mile from 18 at least one of the following: 19 ‘‘(I) A location which provides 20 passenger boarding on a fixed guide- 21 way (as defined in section 5302(7) of 22 title 49, United States Code), com- 23 muter rail passenger transportation 24 (as defined in section 24102(3) of 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 6175 IH title 49, United States Code), or 1 intercity rail passenger transportation 2 (as defined in section 24102(4) of 3 title 49, United States Code). 4 ‘‘(II) A planned site for a loca- 5 tion described in subclause (I) if the 6 Secretary of Transportation has 7 issued a full funding grant agreement 8 with respect to such location under 9 section 5309(k)(2) of title 49, United 10 States Code. 11 ‘‘(ii) IDENTIFICATION OF QUALIFIED 12 AREAS.—The Secretary, in consultation 13 with the Secretary of Transportation, shall 14 identify areas which are described in clause 15 (i).’’. 16 (e) ELIMINATION OF CERTAIN LODGING RESTRIC- 17 TIONS ON BUILDINGS OTHER THAN CERTIFIED HISTORIC 18 STRUCTURES.—Section 50(b)(2)(C) of such Code is 19 amended by striking ‘‘certified historic structure’’ and in- 20 serting ‘‘qualified rehabilitated building’’. 21 (f) REQUIREMENT THAT BUILDINGS THAT ARE NOT 22 CERTIFIED HISTORIC STRUCTURES AND NOT IN A REG- 23 ISTERED HISTORIC DISTRICT RECEIVE CERTIFICATION 24 OF STATUS.—Section 47(c)(1) of such Code, as amended 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 6175 IH by subsections (a) and (d), is amended by redesignating 1 subparagraphs (D) and (E) as subparagraphs (E) and 2 (F), respectively, and by inserting after subparagraph (C) 3 the following new subparagraph: 4 ‘‘(D) BUILDINGS THAT ARE NOT CER- 5 TIFIED HISTORIC STRUCTURES AND NOT IN 6 REGISTERED HISTORIC DISTRICT MUST RE- 7 CEIVE CERTIFICATION OF STATUS.— 8 ‘‘(i) IN GENERAL.—In the case of a 9 building which is neither a certified his- 10 toric structure nor located in a registered 11 historic district, such building shall not be 12 a qualified rehabilitated building unless the 13 Secretary of the Interior certifies to the 14 Secretary that such building is— 15 ‘‘(I) not a certified historic struc- 16 ture, and 17 ‘‘(II) not in a registered historic 18 district. 19 ‘‘(ii) DETERMINATIONS BY NATIONAL 20 PARK SERVICE.—To the maximum extent 21 practicable, the Secretary of the Interior 22 shall make certifications under clause (i) 23 within 30 days of the receipt of an applica- 24 tion for such certification.’’. 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 6175 IH (g) CREDIT FOR CERTAIN RELATED EXPENDI- 1 TURES.— 2 (1) CREDIT FOR CERTAIN EXPENDITURES FOR 3 PUBLIC INFRASTRUCTURE.—Section 47(c)(2) of 4 such Code is amended by adding at the end the fol- 5 lowing new subparagraph: 6 ‘‘(E) TREATMENT OF CERTAIN EXPENDI- 7 TURES FOR PUBLIC INFRASTRUCTURE.— 8 ‘‘(i) IN GENERAL.—In the case of any 9 qualified rehabilitated building, expendi- 10 tures for qualified public infrastructure (or 11 improvements thereto) shall be treated for 12 purposes of this section as qualified reha- 13 bilitation expenditures with respect to such 14 building if providing such qualified public 15 infrastructure is related to such building 16 and is required by any State or local gov- 17 ernment. 18 ‘‘(ii) LIMITATION.—The amount treat- 19 ed as qualified rehabilitation expenditures 20 with respect to any building under clause 21 (i) shall not exceed 25 percent of the quali- 22 fied rehabilitation expenditures with re- 23 spect to such building (determined after 24 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 6175 IH the application of clause (i) and subpara- 1 graph (F)). 2 ‘‘(iii) BONUS CREDIT AMOUNT.—In 3 the case of any amount treated as qualified 4 rehabilitation expenditures under clause 5 (i), subsection (a)(1) shall be applied by 6 substituting ‘25 percent’ for ‘15 percent’. 7 ‘‘(iv) QUALIFIED PUBLIC INFRA- 8 STRUCTURE.—For purposes of this sub- 9 paragraph, the term ‘qualified public infra- 10 structure’ means water and sewer lines, 11 electrical lines and equipment, tele- 12 communications lines and equipment, and 13 road and sidewalks, which are located in 14 the public right of way and are not owned 15 by the taxpayer.’’. 16 (2) CREDIT FOR EXPANSION AND ADJACENT 17 BUILDINGS WITH RESPECT TO QUALIFIED REHABILI- 18 TATED BUILDINGS OTHER THAN CERTIFIED HIS- 19 TORIC STRUCTURES.—Section 47(c)(2) of such 20 Code, as amended by paragraph (1), is amended by 21 adding at the end the following new subparagraph: 22 ‘‘(F) TREATMENT OF BUILDING EXPAN- 23 SIONS AND CERTAIN ADJACENT BUILDINGS 24 WITH RESPECT TO QUALIFIED REHABILITATED 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 6175 IH BUILDINGS OTHER THAN CERTIFIED HISTORIC 1 STRUCTURES.— 2 ‘‘(i) IN GENERAL.—In the case any 3 qualified rehabilitated building other than 4 a certified historic structure— 5 ‘‘(I) clause (iii) of subparagraph 6 (B) shall not apply, and 7 ‘‘(II) amounts described in sub- 8 paragraph (A)(i) which are in connec- 9 tion with the rehabilitation or con- 10 struction of a qualified adjacent build- 11 ing shall be treated as qualified reha- 12 bilitation expenditures with respect to 13 such qualified rehabilitated building. 14 ‘‘(ii) LIMITATION.—The amount treat- 15 ed as qualified rehabilitation expenditures 16 with respect to any qualified rehabilitated 17 building under clause (i) shall not exceed 18 100 percent of the qualified rehabilitation 19 expenditures with respect to such building 20 (determined without regard to clause (i) 21 and subparagraph (E)). 22 ‘‘(iii) QUALIFIED ADJACENT BUILD- 23 ING.—For purposes of this subparagraph, 24 the term ‘qualified adjacent building’ 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 6175 IH means, with respect to any qualified reha- 1 bilitated building, any building if such 2 building and such qualified rehabilitated 3 building are both on the same block.’’. 4 (3) RELATED EXPENDITURES DISREGARDED IN 5 DETERMINING IF REHABILITATION IS SUBSTAN- 6 TIAL.—Section 47(c)(1)(E), as redesignated by sub- 7 sections (a), (d), and (f), is amended by adding at 8 the end the following new clause: 9 ‘‘(iv) CERTAIN EXPENDITURES DIS- 10 REGARDED.—Amounts which are otherwise 11 treated as qualified rehabilitation expendi- 12 tures by reason of subparagraph (E) or 13 (F) of paragraph (2) shall not be treated 14 as qualified rehabilitation expenditures for 15 purposes of this subparagraph.’’. 16 (h) BONUS CREDIT FOR RENT-RESTRICTED HOUS- 17 ING UNITS.—Section 47 of such Code is amended by add- 18 ing at the end the following new subsection: 19 ‘‘(e) BONUS CREDIT FOR RENT-RESTRICTED HOUS- 20 ING UNITS.— 21 ‘‘(1) IN GENERAL.—Subsection (a)(1) shall be 22 applied by substituting ‘25 percent’ for ‘15 percent’ 23 with respect to so much of the qualified rehabilita- 24 tion expenditures (determined without regard to sub- 25 VerDate Sep 11 2014 21:19 Apr 10, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H6175.IH H6175 pamtmann on DSKBC07HB2PROD with BILLS 13 •HR 6175 IH section (c)(2)(E)) with respect to any qualified reha- 1 bilitated building as are properly allocable to resi- 2 dential units which are— 3 ‘‘(A) rent-restricted (within the meaning of 4 section 42(g)(2)), and 5 ‘‘(B) occupied by individuals whose income 6 is 100 percent or less of area median gross in- 7 come (within the meaning of section 42(g)(1)). 8 ‘‘(2) FAILURE TO MAINTAIN RENT-RESTRICTION 9 SUBJECT TO RECAPTURE.—In the case of any fail- 10 ure to maintain any residential unit taken into ac- 11 count under paragraph (1) as a residential unit de- 12 scribed in [Text truncated for display. 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