Affordable Housing Credit Improvement Act of 2023

I 118TH CONGRESS 1ST SESSION H. R. 3238 To amend the Internal Revenue Code of 1986 to reform the low-income housing credit, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 11, 2023 Mr. LAHOOD (for himself, Ms. DELBENE, Mr. WENSTRUP, Mr. BEYER, Ms. TENNEY, Mr. PANETTA, Mr. BUCHANAN, Mr. BLUMENAUER, Mr. KELLY of Pennsylvania, Mr. PASCRELL, Mr. SCHWEIKERT, Mr. DAVIS of Illinois, Mr. FERGUSON, Ms. SA´NCHEZ, Mr. SMUCKER, Mr. HIGGINS of New York, Mrs. MILLER of West Virginia, Ms. SEWELL, Mr. KUSTOFF, Ms. CHU, Mr. FITZPATRICK, Ms. MOORE of Wisconsin, Mr. MOORE of Utah, Mr. KILDEE, Ms. VAN DUYNE, Mr. EVANS, Mr. FEENSTRA, Mr. SCHNEI- DER, Mr. CAREY, Mr. CLEAVER, Mr. EMMER, Mrs. BEATTY, Mr. MCHENRY, Mr. TORRES of New York, Mr. ROSE, Ms. BLUNT ROCH- ESTER, Mr. FLEISCHMANN, Mr. MORELLE, Mr. BALDERSON, Ms. CRAIG, Mr. BERGMAN, Mr. PETERS, Mr. HUDSON, Mr. GOMEZ, Mr. MOOLENAAR, Mr. COHEN, Mr. LAWLER, Mr. KILMER, Mr. LAMALFA, Mrs. LEE of Nevada, Mr. STAUBER, Ms. PEREZ, Mr. MOLINARO, Mr. PHILLIPS, Mr. FINSTAD, Mr. KHANNA, Mr. GARBARINO, Ms. DEAN of Pennsylvania, Mr. JOYCE of Ohio, Ms. TITUS, Mrs. HARSHBARGER, Ms. MANNING, Mr. WITTMAN, Mr. QUIGLEY, Mrs. KIM of California, and Mr. LATURNER) introduced the following bill; which was referred to the Com- mittee on Ways and Means 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 Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3238 IH SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 1 (a) SHORT TITLE.—This Act may be cited as the 2 ‘‘Affordable Housing Credit Improvement Act of 2023’’. 3 (b) TABLE OF CONTENTS.—The table of contents for 4 this Act is as follows: 5 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 pur- poses. Sec. 205. Requirement that low-income housing credit-supported housing pro- tect 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 expendi- tures. Sec. 304. Repeal of qualified census tract population cap. Sec. 305. Determination of community revitalization plan to be made by hous- ing 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 en- ergy 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. VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3238 IH 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 1 ALLOCATION FORMULAS 2 SEC. 101. INCREASES IN STATE ALLOCATIONS. 3 (a) IN GENERAL.—Clause (ii) of section 42(h)(3)(C) 4 of the Internal Revenue Code is amended— 5 (1) in subclause (I), by striking ‘‘$1.75’’ and 6 inserting ‘‘the per capita amount’’, and 7 (2) in subclause (II), by striking ‘‘$2,000,000’’ 8 and inserting ‘‘the minimum amount’’. 9 (b) PER CAPITA AMOUNT; MINIMUM AMOUNT.—Sec- 10 tion 42(h)(3) of the Internal Revenue Code of 1986 is 11 amended by striking subparagraphs (H) and (I) and in- 12 serting the following: 13 ‘‘(H) PER CAPITA AMOUNT.—For purposes 14 of subparagraph (C)(ii)(I), the per capita 15 amount shall be determined as follows: 16 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3238 IH ‘‘(i) CALENDAR YEAR 2023.—For cal- 1 endar year, 2023, the per capita amount is 2 $3.90. 3 ‘‘(ii) CALENDAR YEAR 2024.—For cal- 4 endar year 2024, the per capita amount is 5 the product of— 6 ‘‘(I) 1.25, and 7 ‘‘(II) the dollar amount under 8 clause (i) increased by an amount 9 equal to— 10 ‘‘(aa) such dollar amount, 11 multiplied by 12 ‘‘(bb) the cost-of-living ad- 13 justment determined under sec- 14 tion 1(f)(3) for such calendar 15 year, determined by substituting 16 ‘calendar year 2022’ for ‘cal- 17 endar year 2016’ in subpara- 18 graph (A)(ii) thereof. 19 If the amount determined after appli- 20 cation of the preceding sentence is not 21 a multiple of $5,000, such amount 22 shall be rounded to the next lowest 23 multiple of $5,000. 24 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3238 IH ‘‘(iii) CALENDAR YEARS AFTER 1 2024.—In the case of any calendar year 2 after 2024, the per capita amount is the 3 dollar amount determined under clause (ii) 4 increased by an amount equal to— 5 ‘‘(I) such dollar amount, multi- 6 plied by 7 ‘‘(II) the cost-of-living adjust- 8 ment determined under section 1(f)(3) 9 for such calendar year, determined by 10 substituting ‘calendar year 2023’ for 11 ‘calendar year 2016’ in subparagraph 12 (A)(ii) thereof. 13 Any amount increased under the preceding 14 sentence which is not a multiple of 5 cents 15 shall be rounded to the next lowest mul- 16 tiple of 5 cents. 17 ‘‘(I) MINIMUM AMOUNT.—For purposes of 18 subparagraph (C)(ii)(II), the minimum amount 19 shall be determined as follows: 20 ‘‘(i) CALENDAR YEAR 2023.—For cal- 21 endar year, 2023, the minimum amount is 22 $4,495,000. 23 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3238 IH ‘‘(ii) CALENDAR YEAR 2024.—For cal- 1 endar year 2024, the minimum amount is 2 the product of— 3 ‘‘(I) 1.25, and 4 ‘‘(II) the dollar amount under 5 clause (i) increased by an amount 6 equal to— 7 ‘‘(aa) such dollar amount, 8 multiplied by 9 ‘‘(bb) the cost-of-living ad- 10 justment determined under sec- 11 tion 1(f)(3) for such calendar 12 year, determined by substituting 13 ‘calendar year 2022’ for ‘cal- 14 endar year 2016’ in subpara- 15 graph (A)(ii) thereof. 16 If the amount determined after appli- 17 cation of the preceding sentence is not 18 a multiple of 5 cents, such amount 19 shall be rounded to the next lowest 20 multiple of 5 cents. 21 ‘‘(iii) CALENDAR YEARS AFTER 22 2024.—In the case of any calendar year 23 after 2024, the minimum amount is the 24 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3238 IH dollar amount determined under clause (ii) 1 increased by an amount equal to— 2 ‘‘(I) such dollar amount, multi- 3 plied by 4 ‘‘(II) the cost-of-living adjust- 5 ment determined under section 1(f)(3) 6 for such calendar year, determined by 7 substituting ‘calendar year 2023’ for 8 ‘calendar year 2016’ in subparagraph 9 (A)(ii) thereof. 10 Any amount increased under the preceding 11 sentence which is not a multiple of $5,000 12 shall be rounded to the next lowest mul- 13 tiple of $5,000.’’. 14 (c) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to calendar years beginning after 16 December 31, 2022. 17 TITLE II—REFORMS RELATING 18 TO TENANT ELIGIBILITY 19 SEC. 201. AVERAGE INCOME TEST APPLICABILITY TO EX- 20 EMPT FACILITY BONDS. 21 (a) IN GENERAL.—Paragraph (1) of section 142(d) 22 of the Internal Revenue Code of 1986 is amended— 23 (1) by striking ‘‘(A) or (B)’’ and inserting ‘‘(A), 24 (B), or (C)’’, and 25 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3238 IH (2) by inserting after subparagraph (B) the fol- 1 lowing new subparagraph: 2 ‘‘(C) AVERAGE INCOME TEST.—A project 3 meets the requirements of this subparagraph if 4 it meets the minimum requirements of section 5 42(g)(1)(C).’’. 6 (b) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to elections made under section 8 142(d)(1) of the Internal Revenue Code of 1986 after 9 March 23, 2018. 10 SEC. 202. CODIFICATION OF RULES RELATING TO IN- 11 CREASED TENANT INCOME. 12 (a) IN GENERAL.—Clause (i) of section 42(g)(2)(D) 13 of the Internal Revenue Code of 1986 is amended by strik- 14 ing ‘‘clauses (ii), (iii), and (iv)’’ and all that follows and 15 inserting ‘‘clauses (ii), (iii), (iv), and (vi), notwithstanding 16 an increase in the income of the occupants above the in- 17 come limitation applicable under paragraph (1)— 18 ‘‘(I) a low-income unit shall con- 19 tinue to be treated as a low-income 20 unit if the income of such occupants 21 initially was 60 percent or less of area 22 median gross income and such unit 23 continues to be rent-restricted, and 24 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 3238 IH ‘‘(II) a unit to which, at the time 1 of initial occupancy by such occu- 2 pants, any Federal, State, or local 3 government income restriction ap- 4 plied, and which subsequently becomes 5 part of a building with respect to 6 which rehabilitation expenditures are 7 taken into account under subsection 8 (e), shall be treated as a low-income 9 unit if the income of such occupants 10 initially was 60 percent or less of area 11 median gross income and does not ex- 12 ceed 120 percent of area median gross 13 income as of the date of acquisition of 14 the property by the taxpayer.’’. 15 (b) EXCEPTION.—Subparagraph (D) of section 16 42(g)(2) of the Internal Revenue Code of 1986, as amend- 17 ed by this Act, is further amended by adding at the end 18 the following new clause: 19 ‘‘(vi) EXCEPTION TO RULE RELATING 20 TO INCREASED TENANT INCOME.—In the 21 case of an occupant of a low-income unit 22 who initially qualified to occupy such unit 23 by reason of paragraph (1)(C) with an in- 24 come in excess of 60 percent of area me- 25 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 3238 IH dian gross income but not in excess of 80 1 percent of area median gross income, 2 clause (i) shall be applied for substituting 3 ‘80 percent’ for ‘60 percent’ each place it 4 appears.’’. 5 (c) EFFECTIVE DATE.—The amendments made by 6 this section shall apply to taxable years beginning after 7 December 31, 2022. 8 SEC. 203. MODIFICATION OF STUDENT OCCUPANCY RULES. 9 (a) IN GENERAL.—Subparagraph (D) of section 10 42(i)(3) of the Internal Revenue Code of 1986 is amended 11 to read as follows: 12 ‘‘(D) RULES RELATING TO STUDENTS.— 13 ‘‘(i) IN GENERAL.—A unit occupied 14 solely by individuals who— 15 ‘‘(I) have not attained age 24, 16 and 17 ‘‘(II) are enrolled in a full-time 18 course of study at an institution of 19 higher education (as defined in section 20 3304(f)), 21 shall not be treated as a low-income unit. 22 ‘‘(ii) EXCEPTION FOR CERTAIN FED- 23 ERAL PROGRAMS.—In the case of a feder- 24 ally-assisted building (as defined in sub- 25 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 3238 IH section (d)(6)(C)(i)), clause (i) shall not 1 apply to a unit all of the occupants of 2 which meet all applicable requirements 3 under the housing program described in 4 such subsection through which the building 5 is assisted, financed, or operated. 6 ‘‘(iii) OTHER EXCEPTIONS.—An indi- 7 vidual shall not be treated as described in 8 clause (i) if the individual meets the in- 9 come limitation applicable under subsection 10 (g)(1) to the project of which the building 11 is a part and— 12 ‘‘(I) is married, 13 ‘‘(II) is a person with disabilities 14 (as defined in section 3(b)(3)(E) of 15 the United States Housing Act of 16 1937), 17 ‘‘(III) is a veteran (as defined in 18 section 101(2) of title 38, United 19 States Code), 20 ‘‘(IV) has 1 or more qualifying 21 children (as defined in section 22 152(c)), 23 ‘‘(V) is or has been a victim or 24 threatened victim of domestic violence, 25 VerDate Sep 11 2014 21:50 May 23, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3238.IH H3238 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 3238 IH dating violence, sexual assault, or 1 stalking (as defined in section 40002 2 of the Violence Against Women Act of 3 1994), 4 ‘‘(VI) is or has been a victim of 5 any form of human trafficking, or 6 ‘‘(VII) is, or was prior to attain- 7 ing the age of majority— 8 ‘‘(aa) an emancipated minor 9 or in legal guardianship as deter- 10 mined by a court of competent 11 jurisdiction in the individual’s 12 State of legal residence, 13 ‘‘(bb) under the care and 14 placement responsibility of the 15 State agency responsible for ad- 16 ministering a plan under part B 17 or part E of title IV of the Social 18 Security Act, or 19 ‘‘(cc) an unaccompanied 20 youth (within the meaning of sec- 21 tion 725(6) of the McKinney- 22 Vento Homeless Assistance Act 23 (42 U.S.C. 11434a(6))) or a 24 homeless child or youth (within 25 VerDate Sep 11 2014 21:50 May 23 [Text truncated for display. Full text available on Congress.gov.]