Emergency Affordable Housing Act of 2020

II 116TH CONGRESS 2D SESSION S. 4078 To amend the Internal Revenue Code of 1986 to improve the low-income housing credit and provide relief relating to the coronavirus emergency, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 25, 2020 Mr. WYDEN (for himself, Ms. CANTWELL, Mr. BENNET, and Mr. CARDIN) in- troduced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To amend the Internal Revenue Code of 1986 to improve the low-income housing credit and provide relief relating to the coronavirus emergency, 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 ‘‘Emergency Affordable 4 Housing Act of 2020’’. 5 SEC. 2. EXTENSION OF PERIOD FOR REHABILITATION EX- 6 PENDITURES. 7 (a) IN GENERAL.—Clause (ii) of section 42(e)(3)(A) 8 of the Internal Revenue Code of 1986 is amended by in- 9 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 2 •S 4078 IS serting ‘‘(any 36-month period, in the case of buildings 1 receiving an allocation of housing credit dollar amount be- 2 fore January 1, 2022)’’ after ‘‘24-month period’’. 3 (b) CONFORMING AMENDMENT.—Subparagraph (A) 4 of section 42(e)(4) of the Internal Revenue Code of 1986 5 is amended by inserting ‘‘(or 36-month period, if applica- 6 ble)’’ after ‘‘24-month period’’. 7 (c) EFFECTIVE DATE.—The amendments made by 8 this section shall apply to buildings receiving an allocation 9 of housing credit dollar amount after December 31, 2016. 10 SEC. 3. EXTENSION OF BASIS EXPENDITURE DEADLINE. 11 (a) IN GENERAL.—Clause (i) of section 42(h)(1)(E) 12 of the Internal Revenue Code of 1986 is amended by in- 13 serting ‘‘(the third calendar year, in the case of an alloca- 14 tion made before January 1, 2022)’’ after ‘‘second cal- 15 endar year’’. 16 (b) QUALIFIED BUILDING.—Clause (ii) of section 17 42(h)(1)(E) of the Internal Revenue Code of 1986 is 18 amended— 19 (1) by striking ‘‘the date which is 1 year after 20 the date that the allocation was made’’ and inserting 21 ‘‘the applicable date’’; 22 (2) by inserting ‘‘(or third, if applicable)’’ after 23 ‘‘second’’ in the first sentence; 24 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 3 •S 4078 IS (3) by inserting ‘‘(or third)’’ after ‘‘second’’ in 1 the second sentence; 2 (4) by striking ‘‘BUILDING.—For purposes of’’ 3 and inserting ‘‘BUILDING.— 4 ‘‘(I) IN GENERAL.—For purposes 5 of’’; and 6 (5) by adding at the end the following new sub- 7 clause: 8 ‘‘(II) APPLICABLE DATE.—For 9 purposes of subclause (I), the applica- 10 ble date is 1 year after the date that 11 the allocation was made with respect 12 to the building (2 years, in the case of 13 allocations made before January 1, 14 2022).’’. 15 (c) EFFECTIVE DATE.—The amendments made by 16 this section shall apply to buildings receiving an allocation 17 of housing credit dollar amount after December 31, 2016. 18 SEC. 4. TAX-EXEMPT BOND FINANCING REQUIREMENT. 19 (a) IN GENERAL.—Subparagraph (B) of section 20 42(h)(4) of the Internal Revenue Code of 1986 is amended 21 by adding at the end the following: ‘‘In the case of build- 22 ings financed by an obligation issued in calendar years 23 ending before January 1, 2022, the preceding sentence 24 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 4 •S 4078 IS shall be applied by substituting ‘25 percent’ for ‘50 per- 1 cent’.’’. 2 (b) EFFECTIVE DATE.—The amendment made by 3 this section shall apply to buildings placed in service in 4 taxable years beginning after December 31, 2019. 5 SEC. 5. MINIMUM CREDIT RATE. 6 (a) IN GENERAL.—Subsection (b) of section 42 of the 7 Internal Revenue Code of 1986 is amended— 8 (1) by redesignating paragraph (3) as para- 9 graph (4); and 10 (2) by inserting after paragraph (2) the fol- 11 lowing new paragraph: 12 ‘‘(3) MINIMUM CREDIT RATE.—In the case of 13 any new or existing building to which paragraph (2) 14 does not apply, the applicable percentage shall not 15 be less than 4 percent.’’. 16 (b) EFFECTIVE DATE.—The amendments made by 17 this section shall apply to buildings which receive alloca- 18 tions of housing credit dollar amount or, in the case of 19 projects financed by tax-exempt bonds as described in sec- 20 tion 42(h)(4) of the Internal Revenue Code of 1986, which 21 are placed in service by the taxpayer after January 20, 22 2020. 23 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 5 •S 4078 IS SEC. 6. INCREASES IN STATE ALLOCATIONS. 1 (a) IN GENERAL.—Clause (ii) of section 42(h)(3)(C) 2 of the Internal Revenue Code of 1986 is amended— 3 (1) by striking ‘‘$1.75’’ in subclause (I) and in- 4 serting ‘‘$4.56 ($3.58 in the case of calendar year 5 2021)’’; and 6 (2) by striking ‘‘$2,000,000’’ in subclause (II) 7 and inserting ‘‘$5,214,051 ($4,097,486 in the case 8 of calendar year 2021)’’. 9 (b) COST-OF-LIVING ADJUSTMENT.—Subparagraph 10 (H) of section 42(h)(3) of the Internal Revenue Code of 11 1986 is amended— 12 (1) by striking ‘‘2002’’ in clause (i) and insert- 13 ing ‘‘2020’’; 14 (2) by striking ‘‘the $2,000,000 and $1.75 15 amounts in subparagraph (C)’’ in clause (i) and in- 16 serting ‘‘the dollar amounts applicable to such cal- 17 endar year under subclauses (I) and (II) of subpara- 18 graph (C)(ii)’’; 19 (3) by striking ‘‘2001’’ in clause (i)(II) and in- 20 serting ‘‘2019’’; 21 (4) by striking ‘‘$2,000,000 amount’’ in clause 22 (ii)(I) and inserting ‘‘amount under subparagraph 23 (C)(ii)(II)’’; and 24 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 6 •S 4078 IS (5) by striking ‘‘$1.75 amount’’ in clause 1 (ii)(II) and inserting ‘‘amount under subparagraph 2 (C)(ii)(I)’’. 3 (c) EFFECTIVE DATE.—The amendments made by 4 this section shall apply to calendar years beginning after 5 December 31, 2020. 6 SEC. 7. INCREASE IN CREDIT FOR CERTAIN PROJECTS DES- 7 IGNATED TO SERVE EXTREMELY LOW-IN- 8 COME HOUSEHOLDS. 9 (a) IN GENERAL.—Paragraph (5) of section 42(d) of 10 the Internal Revenue Code of 1986 is amended by adding 11 at the end the following new subparagraph: 12 ‘‘(C) INCREASE IN CREDIT FOR PROJECTS 13 DESIGNATED TO SERVE EXTREMELY LOW-IN- 14 COME HOUSEHOLDS.—In the case of any build- 15 ing— 16 ‘‘(i) 20 percent or more of the resi- 17 dential units in which are rent-restricted 18 (determined as if the imputed income limi- 19 tation applicable to such units were 30 20 percent of area median gross income) and 21 are designated by the taxpayer for occu- 22 pancy by households the aggregate house- 23 hold income of which does not exceed the 24 greater of— 25 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 7 •S 4078 IS ‘‘(I) 30 percent of area median 1 gross income, or 2 ‘‘(II) 100 percent of an amount 3 equal to the Federal poverty line 4 (within the meaning of section 5 36B(d)(3)), and 6 ‘‘(ii) which is designated by the hous- 7 ing credit agency as requiring the increase 8 in credit under this subparagraph in order 9 for such building to be financially feasible 10 as part of a qualified low-income housing 11 project, 12 subparagraph (B) shall not apply to the portion 13 of such building which is comprised of such 14 units, and the eligible basis of such portion of 15 the building shall be 150 percent of such basis 16 determined without regard to this subpara- 17 graph.’’. 18 (b) RESERVED STATE ALLOCATION.—Subparagraph 19 (C) of section 42(h)(3) of the Internal Revenue Code of 20 1986 is amended— 21 (1) by striking ‘‘plus’’ at the end of clause (iii); 22 (2) by striking the period at the end of clause 23 (iv) and inserting ‘‘, plus’’; 24 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 8 •S 4078 IS (3) by inserting after clause (iv) the following 1 new clause: 2 ‘‘(v) an amount equal to 10 percent of 3 the sum of the amounts determined under 4 clauses (i), (ii), (iii), and (iv) (if any).’’; 5 and 6 (4) by adding at the end the following: ‘‘Any 7 amount allocated pursuant to clause (v) shall be ac- 8 counted for separately and shall be allocated only to 9 buildings to which subsection (d)(5)(C) applies.’’. 10 (c) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to buildings which receive alloca- 12 tions of housing credit dollar amount or, in the case of 13 projects financed by tax-exempt bonds as described in sec- 14 tion 42(h)(4) of the Internal Revenue Code of 1986, which 15 receive a determination of housing credit dollar amount, 16 after the date of the enactment of this Act. 17 SEC. 8. INCLUSION OF INDIAN AREAS AS DIFFICULT DE- 18 VELOPMENT AREAS FOR PURPOSES OF CER- 19 TAIN BUILDINGS. 20 (a) IN GENERAL.—Subclause (I) of section 21 42(d)(5)(B)(iii) of the Internal Revenue Code of 1986 is 22 amended by inserting before the period the following: ‘‘, 23 and any Indian area’’. 24 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 9 •S 4078 IS (b) INDIAN AREA.—Clause (iii) of section 1 42(d)(5)(B) of the Internal Revenue Code of 1986 is 2 amended by redesignating subclause (II) as subclause (IV) 3 and by inserting after subclause (I) the following new sub- 4 clauses: 5 ‘‘(II) INDIAN AREA.—For pur- 6 poses of subclause (I), the term ‘In- 7 dian area’ means any Indian area (as 8 defined in section 4(11) of the Native 9 American Housing Assistance and 10 Self Determination Act of 1996 (25 11 U.S.C. 4103(11))). 12 ‘‘(III) SPECIAL RULE FOR 13 BUILDINGS IN INDIAN AREAS.—In the 14 case of an area which is a difficult de- 15 velopment area solely because it is an 16 Indian area, a building shall not be 17 treated as located in such area unless 18 such building is assisted or financed 19 under the Native American Housing 20 Assistance and Self Determination 21 Act of 1996 (25 U.S.C. 4101 et seq.) 22 or the project sponsor is an Indian 23 tribe (as defined in section 24 45A(c)(6)), a tribally designated hous- 25 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 10 •S 4078 IS ing entity (as defined in section 4(22) 1 of such Act (25 U.S.C. 4103(22))), or 2 wholly owned or controlled by such an 3 Indian tribe or tribally designated 4 housing entity.’’. 5 (c) EFFECTIVE DATE.—The amendments made by 6 this section shall apply to buildings placed in service after 7 December 31, 2019. 8 SEC. 9. INCLUSION OF RURAL AREAS AS DIFFICULT DEVEL- 9 OPMENT AREAS. 10 (a) IN GENERAL.—Subclause (I) of section 11 42(d)(5)(B)(iii) of the Internal Revenue Code of 1986, as 12 amended by section 8, is amended by inserting ‘‘, any 13 rural area’’ after ‘‘median gross income’’. 14 (b) RURAL AREA.—Clause (iii) of section 15 42(d)(5)(B) of the Internal Revenue Code of 1986, as 16 amended by section 8, is further amended by redesig- 17 nating subclause (IV) as subclause (V) and by inserting 18 after subclause (III) the following new subclause: 19 ‘‘(IV) RURAL AREA.—For pur- 20 poses of subclause (I), the term ‘rural 21 area’ means any non-metropolitan 22 area, or any rural area as defined by 23 section 520 of the Housing Act of 24 1949, which is identified by the quali- 25 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 11 •S 4078 IS fied allocation plan under subsection 1 (m)(1)(B).’’. 2 (c) EFFECTIVE DATE.—The amendments made by 3 this section shall apply to buildings placed in service after 4 December 31, 2019. 5 SEC. 10. INCREASE IN CREDIT FOR BOND-FINANCED 6 PROJECTS DESIGNATED BY HOUSING CREDIT 7 AGENCY. 8 (a) IN GENERAL.—Clause (v) of section 42(d)(5)(B) 9 of the Internal Revenue Code of 1986 is amended by strik- 10 ing the second sentence. 11 (b) TECHNICAL AMENDMENT.—Clause (v) of section 12 42(d)(5)(B) of the Internal Revenue Code of 1986, as 13 amended by subsection (a), is further amended— 14 (1) by striking ‘‘STATE’’ in the heading; and 15 (2) by striking ‘‘State housing credit agency’’ 16 and inserting ‘‘housing credit agency’’. 17 (c) EFFECTIVE DATE.—The amendments made by 18 this section shall apply to buildings which receive a deter- 19 mination of housing credit dollar amount after the date 20 of the enactment of this Act. 21 SEC. 11. REPEAL OF QUALIFIED CONTRACT OPTION. 22 (a) TERMINATION OF OPTION FOR CERTAIN BUILD- 23 INGS.— 24 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 12 •S 4078 IS (1) IN GENERAL.—Subclause (II) of section 1 42(h)(6)(E)(i) of the Internal Revenue Code of 1986 2 is amended by inserting ‘‘in the case of a building 3 described in clause (iii),’’ before ‘‘on the last day’’. 4 (2) BUILDINGS DESCRIBED.—Subparagraph 5 (E) of section 42(h)(6) of such Code is amended by 6 adding at the end the following new clause: 7 ‘‘(iii) BUILDINGS DESCRIBED.—A 8 building described in this clause is a build- 9 ing— 10 ‘‘(I) which received its allocation 11 of housing credit dollar amount before 12 January 1, 2020, or 13 ‘‘(II) in the case of a building 14 any portion of which is financed as 15 described in paragraph (4), which re- 16 ceived before January 1, 2020, a de- 17 termination from the issuer of the 18 tax-exempt bonds or the housing cred- 19 it agency that the building is eligible 20 to receive an allocation of housing 21 credit dollar amount under the rules 22 of paragraphs (1) and (2) of sub- 23 section (m).’’. 24 VerDate Sep 11 2014 06:09 Jul 08, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4078.IS S4078 kjohnson on DSK79L0C42PROD with BILLS 13 •S 4078 IS (b) RULES RELATING TO EXISTING PROJECTS.— 1 Subparagraph (F) of section 42(h)(6) of the Internal Rev- 2 enue Code of 1986 is amended by striking ‘‘the nonlow- 3 income portion’’ and all that follows and inserting ‘‘the 4 nonlow-income portion and the low-income portion of the 5 building for fair market value (determined by the housing 6 credit [Text truncated for display. 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