Affordable Housing Bond Enhancement Act

II 118TH CONGRESS 1ST SESSION S. 1805 To amend the Internal Revenue Code of 1986 to expand housing investment with mortgage revenue bonds, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 6, 2023 Ms. CORTEZ MASTO (for herself and Mr. CASSIDY) 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 expand housing investment with mortgage revenue bonds, 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; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Affordable Housing Bond Enhancement Act’’. 5 (b) AMENDMENT OF 1986 CODE.—Except as other- 6 wise expressly provided, whenever in this Act an amend- 7 ment or repeal is expressed in terms of an amendment 8 to, or repeal of, a section or other provision, the reference 9 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 1805 IS shall be considered to be made to a section or other provi- 1 sion of the Internal Revenue Code of 1986. 2 (c) TABLE OF CONTENTS.—The table of contents for 3 this Act is as follows: 4 Sec. 1. Short title; table of contents. Sec. 2. Reporting requirements for bond usage. Sec. 3. Use of carryforward bond authority. Sec. 4. Elimination of Refinancing Limitation for Mortgage Revenue Bonds. Sec. 5. Increase in financing limit for qualified home improvement loans. Sec. 6. Revision of recapture tax for mortgage revenue bonds. Sec. 7. Modifying calculation of credit for interest paid on certified indebted- ness. Sec. 8. Extension of period for mortgage credit certificate to be in effect. Sec. 9. Extension of period to revoke election to issue mortgage credit certifi- cates. Sec. 10. Adjustment of public notice requirement. Sec. 11. Elimination of lender reporting requirement. SEC. 2. REPORTING REQUIREMENTS FOR BOND USAGE. 5 (a) IN GENERAL.—Section 146 is amended by adding 6 at the end the following: 7 ‘‘(o) REPORTING.—Not later than December 31 of 8 each calendar year, the Secretary shall submit a report 9 to the Committee on Banking, Housing, and Urban Af- 10 fairs of the Senate, the Committee on Financial Services 11 of the House of Representatives, the Committee on Ways 12 and Means of the House of Representatives, and the Com- 13 mittee on Finance of the Senate, containing information, 14 as provided to the Secretary by State and local issuing 15 authorities, which specifies for each State— 16 ‘‘(1) the State ceiling of the State for the pre- 17 ceding calendar year, 18 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 1805 IS ‘‘(2) the aggregate amount of carryforwards 1 available to all issuing authorities in the State avail- 2 able as of the first day of such preceding calendar 3 year, 4 ‘‘(3) the total bond authority for such State for 5 such preceding calendar year, as represented by the 6 sum of the amounts reported under paragraphs (1) 7 and (2), 8 ‘‘(4) the aggregate amount of private activity 9 bonds issued by issuing authorities in the State dur- 10 ing such preceding calendar year for each purpose 11 described in subsection (f)(5), including— 12 ‘‘(A) the amount of such bonds that were 13 subject to the volume cap, and 14 ‘‘(B) the amount of such bonds that were 15 issued pursuant to a carryforward under sub- 16 section (f), 17 ‘‘(5) the aggregate amount of carryforwards de- 18 scribed in paragraph (2) that expired after the last 19 day of the preceding calendar year, and 20 ‘‘(6) total amount of any excess amounts de- 21 scribed in paragraph (1) of subsection (f) for the 22 preceding calendar year which issuing authorities in 23 the State did not elect to treat as a carryforward 24 under such subsection.’’. 25 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 1805 IS (b) ELECTRONIC REPORTS BY ISSUERS.—Section 1 149(e) is amended by adding at the end the following new 2 paragraph: 3 ‘‘(4) ELECTRONIC REPORTING.—Any statement 4 required under paragraph (2) shall be submitted 5 electronically.’’. 6 (c) AUTHORITY TO DISCLOSE INFORMATION.—Sec- 7 tion 6103(f) is amended by adding at the end the following 8 new paragraph: 9 ‘‘(6) VOLUME CAP REPORTING.—The Secretary 10 may disclose to the committees described in section 11 146(o) the information required under such sec- 12 tion.’’. 13 (d) EFFECTIVE DATE.—The amendment made by 14 this section shall apply to calendar years beginning after 15 the date of enactment of this Act. 16 SEC. 3. USE OF CARRYFORWARD BOND AUTHORITY. 17 (a) IN GENERAL.—Paragraph (3) of section 146(f) 18 is amended— 19 (1) by striking subparagraph (A) and inserting 20 the following: 21 ‘‘(A) IN GENERAL.—If any issuing author- 22 ity— 23 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 1805 IS ‘‘(i) elects a carryforward under para- 1 graph (1) with respect to any carryforward 2 purpose, 3 ‘‘(ii) receives a carryforward under 4 paragraph (4)(B)(i) with respect to any 5 carryforward purpose, or 6 ‘‘(iii) redesignates a carryforward 7 under paragraph (4)(B)(ii) for any 8 carryforward purpose, 9 any private activity bonds issued by such au- 10 thority with respect to such purpose at any time 11 during the 3 calendar years following the cal- 12 endar year in which the carryforward arose 13 shall not be taken into account under sub- 14 section (a) to the extent the amount of such 15 bonds issued at or prior to such time does not 16 exceed the amount of the carryforward elected, 17 received, or redesignated for such purpose, as 18 reduced by any amount subsequently trans- 19 ferred to another issuing authority or redesig- 20 nated for another purpose pursuant to para- 21 graph (4)(B).’’, and 22 (2) in subparagraph (B), by inserting ‘‘, or re- 23 ceived or redesignated for,’’ after ‘‘with respect to’’. 24 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 1805 IS (b) ELECTION.—Paragraph (4) of section 146(f) is 1 amended to read as follows: 2 ‘‘(4) ELECTION.— 3 ‘‘(A) IN GENERAL.—Except as provided in 4 subparagraph (B), any election under this sub- 5 section (and any identification or specification 6 contained therein), once made, shall be irrev- 7 ocable. 8 ‘‘(B) EXCEPTION FOR HOUSING.— 9 ‘‘(i) TRANSFER.—In the case of any 10 carryforward elected under paragraph (1) 11 by an issuing authority with respect to any 12 carryforward purpose, during the period 13 described in paragraph (3)(A) with respect 14 to such carryforward, such issuing author- 15 ity may transfer such carryforward to any 16 issuing authority within the same State 17 that is authorized to issue qualified mort- 18 gage bonds or exempt facility bonds de- 19 scribed in section 142(a)(7). 20 ‘‘(ii) REDESIGNATION.—In the case of 21 any carryforward— 22 ‘‘(I) elected under paragraph (1) 23 by an issuing authority with respect 24 to any carryforward purpose which 25 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 1805 IS has not been transferred pursuant to 1 clause (i), or 2 ‘‘(II) received by an issuing au- 3 thority pursuant to clause (i) with re- 4 spect to any carryforward purpose, 5 during the period described in paragraph 6 (3)(A) with respect to such carryforward, 7 such issuing authority may redesignate 8 such carryforward to be for the purpose of 9 issuing qualified mortgage bonds or mort- 10 gage credit certificates, or for the purpose 11 of issuing exempt facility bonds described 12 in section 142(a)(7). 13 ‘‘(iii) STATE DIRECTION.—In the case 14 of a State which has enacted a law de- 15 scribed in subsection (e)(1), such State 16 may, by law, prohibit, limit, require, or 17 otherwise direct transfer or redesignation 18 by issuing authorities within such State 19 (except in the case of a constitutional 20 home rule city) pursuant to this subpara- 21 graph.’’. 22 (c) EFFECTIVE DATE.—The amendments made by 23 this section shall apply to elections made under section 24 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 1805 IS 146(f) of the Internal Revenue Code of 1986 after Decem- 1 ber 31, 2023. 2 SEC. 4. ELIMINATION OF REFINANCING LIMITATION FOR 3 MORTGAGE REVENUE BONDS. 4 (a) IN GENERAL.—Section 143(i)(1) is amended by 5 adding at the end the following: 6 ‘‘(D) EXCEPTION FOR REFINANCING FOR 7 CERTAIN MORTGAGORS.— 8 ‘‘(i) IN GENERAL.—The refinancing of 9 a mortgage on a residence of a mortgagor 10 who, as of the date of such refinancing, 11 satisfies the principal residence require- 12 ments under subsection (c)(1) and the in- 13 come requirements under subsection (f) 14 shall not be treated as the acquisition or 15 replacement of an existing mortgage for 16 purposes of subparagraph (A). 17 ‘‘(ii) SPECIAL RULE.—In applying 18 clause (i) to any refinancing— 19 ‘‘(I) subsection (d) shall not 20 apply, and 21 ‘‘(II) subsection (e) shall be ap- 22 plied by using the market value of the 23 residence at the time of refinancing in 24 lieu of the acquisition cost.’’. 25 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 1805 IS (b) EFFECTIVE DATE.—The amendment made by 1 this section shall apply to refinancing loans made on or 2 after the date of enactment of this Act. 3 SEC. 5. INCREASE IN FINANCING LIMIT FOR QUALIFIED 4 HOME IMPROVEMENT LOANS. 5 (a) INCREASE IN FINANCING LIMIT.—Paragraph (4) 6 of section 143(k) is amended by striking ‘‘$15,000’’ and 7 inserting ‘‘$50,000’’. 8 (b) INFLATION ADJUSTMENT.—Paragraph (4) of sec- 9 tion 143(k), as amended by subsection (a), is amended— 10 (1) by redesignating subparagraphs (A) and 11 (B) as clauses (i) and (ii), respectively, and by mov- 12 ing such clauses (as so redesignated) 2 ems to the 13 right, 14 (2) by striking ‘‘The term’’ and inserting the 15 following: 16 ‘‘(A) IN GENERAL.—The term’’, and 17 (3) by adding at the end the following: 18 ‘‘(B) INFLATION ADJUSTMENT.— 19 ‘‘(i) IN GENERAL.—In the case of any 20 calendar year beginning after 2024, the 21 $50,000 amount in subparagraph (A) shall 22 be increased by an amount equal to— 23 ‘‘(I) such dollar amount, multi- 24 plied by 25 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •S 1805 IS ‘‘(II) the cost-of-living adjust- 1 ment determined under section 1(f)(3) 2 for such calendar year, determined by 3 substituting ‘2023’ for ‘2016’ in sub- 4 paragraph (A)(ii) thereof. 5 ‘‘(ii) ROUNDING.—If any increase 6 under clause (i) is not a multiple of $100, 7 such increase shall be rounded to the near- 8 est multiple of $100.’’. 9 (c) EFFECTIVE DATES.—The amendments made by 10 this section shall apply to loans made after the last day 11 of the calendar year which includes the date of the enact- 12 ment of this Act. 13 SEC. 6. REVISION OF RECAPTURE TAX FOR MORTGAGE 14 REVENUE BONDS. 15 (a) IN GENERAL.—Subparagraph (C) of section 16 143(m)(4) is amended to read as follows: 17 ‘‘(C) HOLDING PERIOD PERCENTAGE.— 18 ‘‘(i) IN GENERAL.—The term ‘holding 19 period percentage’ means the percentage 20 determined in accordance with the fol- 21 lowing table: 22 ‘‘If the disposition occurs during a year after the testing date which is: The holding period percentage is: The 1st such year ........................................................................ 20 The 2nd such year ....................................................................... 40 The 3rd such year ........................................................................ 60 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6211 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •S 1805 IS ‘‘If the disposition occurs during a year after the testing date which is: The holding period percentage is: The 4th such year ........................................................................ 80 The 5th such year ........................................................................ 100. ‘‘(ii) RETIREMENTS OF INDEBTED- 1 NESS.—If the Federally-subsidized indebt- 2 edness is completely repaid during any 3 year of the 4-year period beginning on the 4 testing date, the holding period percentage 5 for succeeding years shall be zero.’’. 6 (b) CONFORMING AMENDMENTS.— 7 (1) Section 143(m)(2)(B) is amended by strik- 8 ing ‘‘9 years’’ and inserting ‘‘5 years’’. 9 (2) Section 143(m)(7)(B)(ii) is amended by 10 striking ‘‘9-year period’’ and inserting ‘‘5-year pe- 11 riod’’. 12 (c) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 December 31, 2024. 15 SEC. 7. MODIFYING CALCULATION OF CREDIT FOR INTER- 16 EST PAID ON CERTIFIED INDEBTEDNESS. 17 (a) IN GENERAL.—Section 25 is amended— 18 (1) in subsection (a)— 19 (A) in paragraph (1), by striking subpara- 20 graph (B) and inserting the following: 21 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1805.IS S1805 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •S 1805 IS ‘‘(B) the certified indebtedness amount on 1 which interest was paid or accrued by the tax- 2 payer during the taxable year.’’, and 3 (B) in paragraph (2)— 4 (i) in the heading, by striking 5 ‘‘WHERE CREDIT RATE EXCEEDS 20 PER- 6 CENT’’, and 7 (ii) in subparagraph (A), by striking 8 ‘‘If the certificate credit rate exceeds 20 9 percent, the’’ and inserting ‘‘The’’, and 10 (2) in subsection (d)— 11 (A) by striking paragraph (1) and insert- 12 ing the following: 13 ‘‘(1) IN GENERAL.— 14 ‘‘(A) CERTIFICATE CREDIT RATE.—The 15 certificate credit rate specified in any mortgage 16 credit certificate shall not be less than 1 per- 17 cent or more than 5 percent. 18 ‘‘(B) ANNUAL RATE.—With respect to any 19 mortgage credit certificate, the issuing author- 20 ity may elect to specify a different annual cer- 21 tificate credit rate for each year of the term of 22 the mortgage.’’, and 23 (B) in paragraph (2)— 24 VerDate Sep 11 2014 02:27 Jun 23, 2023 Jkt 039200 PO 00000 F [Text truncated for display. 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