[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 680 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 680
To provide rental vouchers for the homeless, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 7, 2023
Mr. Wyden introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To provide rental vouchers for the homeless, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Decent,
Affordable, Safe Housing for All Act'' or the ``DASH Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--HOUSING ASSISTANCE
Subtitle A--General Housing Assistance
Sec. 111. Rental vouchers for the homeless.
Sec. 112. Land acquisition and construction.
Sec. 113. Modular construction pilot program.
Sec. 114. Supporting pro-housing development.
Sec. 115. Permanent authorization of appropriations for McKinney-Vento
Homeless Assistance Act grants.
Subtitle B--Rural Housing Assistance
Sec. 121. Rural housing reinvestment.
Sec. 122. Permanent establishment of housing preservation and
revitalization program.
Sec. 123. Eligibility for rural housing vouchers.
Sec. 124. Amount of voucher assistance.
Sec. 125. Use of available rental assistance.
Sec. 126. Funding for multifamily technical improvements.
Sec. 127. Plan for preserving affordability of rental projects.
TITLE II--REVENUE PROVISIONS
Sec. 201. Tax-exempt bond financing requirement.
Sec. 202. Increases in State allocations.
Sec. 203. Buildings designated to serve extremely low-income
households.
Sec. 204. Inclusion of Indian areas as difficult development areas for
purposes of certain buildings.
Sec. 205. Inclusion of rural areas as difficult development areas.
Sec. 206. Increase in credit for bond-financed projects designated by
housing credit agency.
Sec. 207. Repeal of qualified contract option.
Sec. 208. Modification and clarification of rights relating to building
purchase.
Sec. 209. Prohibition of local approval and contribution requirements.
Sec. 210. Increase in credit for low-income housing supportive
services.
Sec. 211. Study of tax incentives for the conversion of commercial
property to affordable housing.
Sec. 212. Renters credit.
Sec. 213. Middle-income housing tax credit.
Sec. 214. Neighborhood homes credit.
Sec. 215. First-time homebuyer refundable credit.
TITLE I--HOUSING ASSISTANCE
Subtitle A--General Housing Assistance
SEC. 111. RENTAL VOUCHERS FOR THE HOMELESS.
(a) In General.--Section 8(o) of the United States Housing Act of
1937 (42 U.S.C. 1437f(o)) is amended by adding at the end the
following:
``(22) Rental vouchers for the homeless.--
``(A) Definitions.--In this paragraph:
``(i) At risk of homelessness.--The term
`at risk of homelessness' has the meaning given
the term in section 401(1) of the McKinney-
Vento Homeless Assistance Act (42 U.S.C.
11360), except that `50 percent' shall be
substituted for `30 percent' in subparagraph
(A) of that section.
``(ii) Capacity-building period.--The term
`capacity-building period' means the 2-year
period beginning on the date on which the
formula is established under subparagraph
(E)(ii).
``(iii) Continuum of care.--The term
`continuum of care' has the meaning given the
term in section 578.3 of title 24, Code of
Federal Regulations, or any successor
regulation.
``(iv) Eligible public housing agency.--The
term `eligible public housing agency' means a
public housing agency that--
``(I) administers assistance under
this subsection through a contract for
annual contributions entered into with
the Secretary;
``(II) has a partnership with a
public child welfare agency and a
continuum of care that--
``(aa) has a system for
identifying and referring
eligible recipients for
assistance under this paragraph
from the public housing agency,
including by providing a
written certification that the
eligible recipient is eligible
to receive the assistance; and
``(bb) will, to the
greatest extent practicable,
provide or facilitate the
provision of supportive
services to those eligible
recipients; and
``(III) submits to the Secretary a
statement describing--
``(aa) how the public
housing agency will connect
eligible recipients with local
community resources, to the
extent available; and
``(bb) the plan for use of
capacity-building funding under
subparagraph (E), including--
``(AA) a timeline
for the use of that
funding within the
capacity-building
period;
``(BB) hiring and
personnel needs;
``(CC) physical
infrastructure needs;
and
``(DD)
technological
infrastructure needs,
including upgrades to
the HMIS, and any other
capacity-related
investments that are
necessary to administer
assistance under this
paragraph.
``(v) Eligible recipient.--The term
`eligible recipient' means any individual or
family experiencing homelessness or at risk of
homelessness with an income that is less than
50 percent of the area median income.
``(vi) Experiencing homelessness;
homeless.--The terms `experiencing
homelessness' and `homeless' means an
individual or family who is--
``(I) living in a place not meant
for human habitation or in an emergency
shelter;
``(II) living in transitional
housing for homeless persons and was
homeless before entering transitional
housing or an emergency shelter;
``(III) fleeing domestic violence;
or
``(IV) at risk of homelessness.
``(vii) HMIS.--The term `HMIS' means the
community-wide homeless management information
system described in section 402(f)(3)(D) of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11360a(f)(3)(D)).
``(viii) Public housing agency.--The term
`public housing agency' includes a tribally
designated housing entity.
``(ix) Referral.--The term `referral' means
an affirmative connection between the voucher
recipient and the organization providing
services to the voucher recipient.
``(x) Service coordinator.--The term
`service coordinator' means an individual
employed directly by a public housing agency
who provides general case management and
referral services to each voucher recipient
served by the public housing agency, which
shall include--
``(I) an individual intake
screening of each voucher recipient to
evaluate the voucher recipient's need
for supportive services; and
``(II) referral to outside
services, including cooperation and
collaboration with a continuum of care.
``(xi) Source of income.--The term `source
of income' means income from any lawful source,
including--
``(I) income from any legal
employment; and
``(II) any assistance, benefit, or
subsidy through any Federal, State, or
local program, whether the program is
administered by a governmental or
nongovernmental entity.
``(xii) Tribally designated housing
entity.--The term `tribally designated housing
entity' has the meaning given the term in
section 4 of the Native American Housing
Assistance and Self-Determination Act of 1996
(25 U.S.C. 4103).
``(xiii) Voucher recipient.--The term
`voucher recipient' means an individual or
family receiving a voucher under this
paragraph.
``(xiv) Youth.--The term `youth' means an
individual under the age of 25.
``(B) Vouchers.--
``(i) Provision of vouchers.--
``(I) In general.--The Secretary
shall provide vouchers for rental
assistance on behalf of each eligible
recipient in accordance with this
paragraph.
``(II) Direct appropriation.--
Subject to subclause (III), there is
appropriated, out of any money in the
Treasury not otherwise appropriated,
for providing rental voucher assistance
under this paragraph for fiscal year
2023 and each fiscal year thereafter--
``(aa) the amount necessary
to fund the provision of a
voucher for rental assistance
under this paragraph on behalf
of each eligible recipient;
``(bb) the amount necessary
to provide administrative fees
under clause (ii) in connection
to each voucher for rental
assistance provided under this
paragraph; and
``(cc) the amount necessary
to fund annual renewals of the
vouchers provided under this
paragraph.
``(III) Number of vouchers.--The
Secretary shall provide--
``(aa) 250,000 vouchers
under this paragraph in fiscal
year 2023; and
``(bb) 400,000 vouchers
under this paragraph in each
fiscal year thereafter until
the Secretary determines that a
smaller number of vouchers is
sufficient to provide all
eligible recipients with
vouchers.
``(ii) Administrative fee for ancillary
costs.--The Secretary shall provide a public
housing agency that requests a voucher under
this paragraph an administrative fee sufficient
to provide assistance to the voucher recipient
for security deposits, moving costs, first or
last month's rent, or other significant
barriers to establishing use of the voucher and
a lease, in an amount that is not more than 3
months' rent for the voucher recipient.
``(iii) Payment standard.--The payment
standard for a voucher provided under this
paragraph may not exceed 125 percent of the
fair market rental in the jurisdiction in which
the voucher is administered.
``(iv) Supplemental voucher payment.--
``(I) In general.--An eligible
public housing agency may supplement
the amount of a voucher provided under
this paragraph in any case in which--
``(aa) the amount of the
voucher is insufficient to
cover the cost of a dwelling
unit within the jurisdiction of
the eligible public housing
agency and that insufficiency
may result in a voucher
recipient losing housing and
becoming homeless or doubled
up; or
``(bb) the eligible public
housing agency submits to the
Secretary a waiver request for
recalculation of the small area
fair market rent applicable to
the dwelling unit, which the
Secretary shall approve or deny
within 45 days of submission of
the request.
``(II) Payment upon denial.--An
eligible public housing agency may
supplement the amount of a voucher
under subclause (I) even if the
Secretary denies the request submitted
under subclause (I)(aa), provided that
the supplementation of the voucher
amount is necessary to maintain housing
for the voucher recipient.
``(v) Conditions on assistance.--
Notwithstanding any other provision of law, the
Secretary--
``(I) may not condition receipt of
a voucher under this paragraph on--
``(aa) participation in any
service or program; or
``(bb) the sobriety or lack
thereof of an eligible
recipient;
``(II) except as provided in
subclause (III), may not prohibit
receipt of a voucher under this
paragraph by an otherwise eligible
recipient due to any criminal
conviction or history of interaction
with the criminal justice system; and
``(III) shall prohibit receipt of a
voucher under this paragraph by
individuals subject to a lifetime
registration requirement under any
State sex offender registration
program.
``(vi) Verification of statement made by
eligible public housing agencies.--
``(I) In general.--Not later than
30 days after the date on which an
eligible public housing agency submits
the statement required under
subparagraph (A)(iv)(III), the
Secretary shall verify the statement.
``(II) Unsatisfactory statement.--
If, upon verification of a statement
under subclause (I), the Secretary
determines that the statement is
unsatisfactory, the Secretary shall
inform the eligible public housing
agency of that determination and the
manner in which the eligible public
housing agency may re-submit the
statement.
``(vii) Identification of eligible
recipients.--A public housing agency shall
partner with continuums of care, public child
welfare agencies, street outreach providers,
health care providers, and other similar
organizations in the State in which the public
housing agency operates to identify eligible
recipients.
``(viii) Requirements for eligible public
housing agencies.--
``(I) In general.--Each eligible
public housing agency providing
assistance under this paragraph shall--
``(aa) on an annual basis
and in conjunction with income
reviews for purposes of
determining income eligibility
for assistance under this
paragraph, verify the
compliance of the eligible
public housing agency with the
eligibility requirements under
this paragraph; and
``(bb) to the greatest
extent possible--
``(AA) work with
continuums of care to
ensure continuity of
data collection under
this paragraph; and
``(BB) utilize the
HMIS to collect and
main the information
required to be
collected under this
paragraph.
``(II) Priority.--In providing
vouchers under this paragraph, an
eligible public housing agency--
``(aa) shall prioritize the
first vouchers made available
under this section for eligible
recipients who are--
``(AA)
unaccompanied homeless
youth;
``(BB) homeless
youth with minor
children; or
``(CC) families
with minor children
experiencing
homelessness;
``(bb) to the extent
possible considering when the
Secretary disburses funds under
this paragraph, shall provide
vouchers to the eligible
recipients described in item
(aa) not later than 1 year
after the end of the capacity-
building period; and
``(cc) may not issue
vouchers to eligible recipients
not described in item (aa)
until the eligible public
housing agency has issued
vouchers to all eligible
recipients described in that
item.
``(ix) Use of voucher upon exit.--An
eligible public housing agency that issued a
voucher to an eligible recipient that is no
longer in use by the eligible recipient may
provide the voucher to any other tenant
eligible for tenant-based assistance under this
subsection.
``(C) Data collection.--
``(i) In general.--The Secretary shall
submit to Congress an annual report on
assistance providing under this paragraph,
which shall include--
``(I) an assessment of the progress
of States toward housing--
``(aa) eligible recipients
in the State; and
``(bb) the total population
of people experiencing
homelessness in the State; and
``(II) the information provided
under clause (ii).
``(ii) Information from public housing
agencies.--Each eligible public housing agency
administering assistance under this paragraph
shall submit to the Secretary and to the State
in which the public housing agency is located
an annual report for each fiscal year that
includes--
``(I) the number of voucher
recipients, including aggregated
demographic information on the age,
sex, gender identity, sexual
orientation, race, ethnicity, and
disability status of each such
recipient in a manner that does not
reveal the personally identifiable
information of each such recipient;
``(II) the number of eligible
recipients who applied during the
fiscal year for assistance under this
paragraph, but were not provided
assistance;
``(III) a brief identification in
each instance described in subclause
(II) of the reason why the eligible
public housing agency was unable to
provide the assistance; and
``(IV) a description of how the
eligible public housing agency
communicated or collaborated with
public child welfare agencies and
continuums of care to collect the data
described in subclauses (I) and (II).
``(D) Supportive services.--
``(i) Administrative fee.--
``(I) In general.--The Secretary
shall establish a fee under subsection
(q) for the costs incurred by public
housing agencies in administering
vouchers under this paragraph.
``(II) Costs.--In establishing the
fee described in subclause (I), the
Secretary shall include the costs to
public housing agencies of employing
full-time or full-time-equivalent
service coordinators.
``(III) Authorization of
appropriations.--There is authorized to
be appropriated $300,000,000 for each
of fiscal years 2023 through 2028 for
the fee described in subclause (I).
``(ii) Hiring of service coordinators.--
``(I) In general.--An eligible
public housing agency shall hire the
appropriate number of service
coordinators to administer supportive
services under this paragraph in
partnership with the public child
welfare agency or continuum of care in
a jurisdiction.
``(II) Insufficient funds.--If an
eligible public housing agency is
unable to hire an appropriate number of
service coordinators under subclause
(I) using the fee described in clause
(i)(I)--
``(aa) the public housing
agency may request an increased
administrative fee from the
Secretary; and
``(bb) the Secretary shall
approve or deny a request
received under item (aa) within
45 days.
``(III) Report to congress.--
Beginning in the first full fiscal year
after the date of enactment of this
paragraph, the Secretary shall submit
an annual report to Congress on
requests for increased administrative
fees received from public housing
agencies under subclause (II).
``(IV) Appropriate number
defined.--For purposes of this clause,
the term `appropriate number', with
respect to service coordinators, means
enough service coordinators so that
each household provided a voucher by a
public housing agency under this
paragraph is able to access a service
coordinator for not less than 30
minutes each week.
``(iii) Provision of services.--Upon intake
of an eligible recipient, a public housing
agency or a public child welfare agency or
continuum of care with which the public housing
agency has partnered shall--
``(I) assign the voucher recipient
a case manager or service coordinator;
and
``(II) provide or secure the
provision of supportive services to
contribute to the housing stability of
the voucher recipient, including--
``(aa) any supportive
service, as defined in section
401 of the McKinney-Vento
Homeless Assistance Act (42
U.S.C. 11360);
``(bb) referrals to health
care providers, including
mental health care providers,
dental health care providers,
and vision health care
providers;
``(cc) referrals to
substance use disorder
treatment, including recovery,
treatment, 12-step programs,
relapse prevention, or
medication-assisted treatment;
``(dd) assistance relating
to enrollment in the Medicare
or Medicaid programs under
titles XVIII and XIX of the
Social Security Act (42 U.S.C.
1395 et seq., 1396 et seq.),
respectively, and referrals to
other services, including--
``(AA) the
supplemental nutrition
assistance program
under the Food and
Nutrition Act of 2008
(7 U.S.C. 2011 et seq.)
(commonly known as the
`SNAP Program'); and
``(BB) the program
of block grants for
States for temporary
assistance for needy
families established
under part A of title
IV of the Social
Security Act (42 U.S.C.
601 et seq.) (commonly
known as the `TANF
Program');
``(ee) advising on
eligibility for the family
self-sufficiency program
established, credit counseling,
and housing counseling
programs;
``(ff) referrals to
education services, including
general educational development
(commonly known as `GED')
preparation and testing,
enrollment in postsecondary
education programs, and credit
recovery; and
``(gg) facilitation of
transportation assistance to
any of the supportive services
described in this subparagraph.
``(iv) Eligibility of private nonprofit
organizations and faith-based organizations.--
``(I) Definitions.--In this clause,
the terms `eligible entity' and
`private nonprofit organization' have
the meanings given those terms in
section 401 of the McKinney-Vento
Homeless Assistance Act (42 U.S.C.
11360).
``(II) Eligibility.--
Notwithstanding any other provision of
law--
``(aa) the Secretary shall
provide that private nonprofit
organizations that are eligible
entities, including faith-based
private nonprofit organizations
that are eligible entities,
shall be eligible to--
``(AA) provide
services described in
clause (iii); and
``(BB) receive
amounts made available
to carry out clause
(iii); and
``(bb) in determining
eligibility for amounts made
available to carry out clause
(iii), the status of an entity
as faith-based or the
possibility that an entity may
be faith-based may not be a
basis for any discrimination
against such entity in any
manner or for any purpose.
``(v) Access.--Services provided under this
subparagraph shall be available to voucher
recipients with low-to-no barrier access.
``(vi) Evaluation.--An eligible public
housing agency, public child welfare agency, or
continuum of care described in clause (iii)
shall evaluate each voucher recipient for
individual case management needs under this
subparagraph.
``(E) Capacity building.--
``(i) Authorization of appropriations.--
There is authorized to be appropriated to the
Secretary $500,000,000 for each of fiscal years
2023 and 2024 to provide funding for capacity
building to eligible public housing agencies.
``(ii) Funding formula.--Not later than 45
days after the date of enactment of this
paragraph, the Secretary shall establish a
formula for allocating the funding authorized
under clause (i) that takes into account--
``(I) the ratio of individuals in
the State in which the eligible public
housing agency operates who are
homeless to the overall population of
the State;
``(II) the proportion of families
in each State with children
experiencing unsheltered homelessness,
as reported in the State's most recent
point-in-time count, to the total
number of unsheltered homeless families
in the State as reported in the same
point-in-time count; and
``(III) the rate of unsheltered
homelessness in each State compared to
each other State, as reported in each
State's most recent point-in-time
count.
``(iii) Disbursement.--Not later than 30
days after an eligible public housing agency
submits an acceptable statement under
subparagraph (A)(iv)(III), the Secretary shall
disburse amounts authorized under clause (i) of
this subparagraph in accordance with the
formula established under clause (ii) of this
subparagraph.
``(iv) Minimum and maximum allocation.--The
Secretary shall ensure that--
``(I) each eligible public housing
agency does not receive more than 10
percent of the amount authorized under
clause (i); and
``(II) each State in which an
eligible public housing agency receives
funds under clause (i) does not receive
more than 25 percent of the total
amount authorized under that clause.
``(v) Eligible activities.--A recipient of
funds authorized under clause (i) may only use
the funds for--
``(I) hiring and personnel needs,
such as case managers and housing
placement advisory;
``(II) physical infrastructure--
``(aa) including increased
office space or facilities for
the provision of supportive
services; and
``(bb) not including
residential housing;
``(III) technological
infrastructure needs, including
upgrades to the HMIS; and
``(IV) any other capacity-related
investments that are necessary for the
public housing agency to--
``(aa) develop, acquire, or
rehabilitate housing that is
affordable to extremely low-
income families, to be made
available to people
experiencing homelessness; or
``(bb) support the
successful administration of
the vouchers under this
paragraph.
``(vi) Requirement for expenditure of
funds.--Each eligible public housing agency
that receives funds under clause (i) shall
expend not less than 60 percent of the funding
during the 2-year period following receipt of
the funding.
``(F) State accountability.--
``(i) In general.--Each eligible public
housing agency providing assistance under this
paragraph shall--
``(I) on a monthly basis, report
caseload and voucher administration
statistics to the State in which the
agency operates; and
``(II) twice annually, submit to
the State in which the agency operates
a report on the progress toward issuing
a voucher under this paragraph to all
eligible recipients, based on--
``(aa) the percentage
reduction in the number of
families with children and
youth that are experiencing
homelessness in the area in
which the agency care operates,
as determined by comparing the
most recent point-in-time count
with the point-in-time count
conducted 1 year prior; and
``(bb) the percentage
reduction in the number of
children experiencing
homelessness in the State, as
documented under the
requirements of the program
authorized under subtitle B of
title VII of the McKinney-Vento
Homeless Assistance Act (42
U.S.C. 11431 et seq.).
``(ii) Benchmarks.--Each year, each State
shall meet the benchmarks described in this
clause, based equally on the percentage
reduction in reported population of children
and families experiencing homelessness in the
following year's point-in-time count and the
percentage reduction in population of students
experiencing homelessness:
``(I) Annual report.--Each State
shall submit an annual report to the
Secretary that contains--
``(aa) data collected from
schools pursuant to the program
authorized under subtitle B of
title VII of the McKinney-Vento
Homeless Assistance Act (42
U.S.C. 11431 et seq.),
including the number of
students--
``(AA) experiencing
unsheltered
homelessness;
``(BB) living in
shelters;
``(CC) living in
motels, hotels, or
campgrounds;
``(DD) living in a
car or other motor
vehicle; or
``(EE) sharing the
housing of other
persons due to loss of
housing, economic
hardship, or similar
reasoning; and
``(bb) the information
received from each public
housing agency in the State
under clause (i)(II).
``(II) Issuance of vouchers for
smaller states.--Each State with a rate
of homelessness that is not higher than
10 people per 10,000 shall--
``(aa) not later than 2
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 50 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families;
``(bb) not later than 3
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 70 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families; and
``(cc) not later than 4
years after the end of the
capacity-building period, issue
vouchers under this paragraph
to all people experiencing
homelessness in the State.
``(III) Issuance of vouchers for
larger states.--Each State with a rate
of homelessness that is higher than 10
people per 10,000 shall--
``(aa) not later than 2
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 40 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families;
``(bb) not later than 3
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 60 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families; and
``(cc) not later than 4
years after the end of the
capacity-building period, issue
vouchers under this paragraph
to all people experiencing
homelessness in the State.
``(iii) Penalties.--
``(I) Warning.--Except as provided
in clause (v), if a State does not meet
the applicable benchmarks described in
clause (ii), the Secretary shall
publicly warn the State of the failure
of the State to meet the benchmark and
remind the State of the applicable
penalties.
``(II) Reduction in federal highway
funds.--If a State does not meet the
applicable benchmarks described in
clause (ii)--
``(aa) by the date that is
180 days after the warning by
the Secretary under subclause
(I) of this clause, the Federal
share payable for Federal-aid
highway projects under section
120 of title 23, United States
Code, shall be reduced by 5
percent; or
``(bb) by the date that is
180 days after a reduction made
under item (aa) of this
subclause, the Federal share
payable for Federal-aid highway
projects under section 120 of
title 23, United States Code,
shall be further reduced by 5
percent.
``(iv) Condition on compliance.--Beginning
in the first Notice of Funding Availability
cycle beginning after the date of enactment of
this paragraph, and every Notice of Funding
Availability cycle thereafter, the Secretary
shall condition the awarding of all funding for
vouchers under this paragraph by the Secretary
to a public housing authority in a State on
that State's compliance with the benchmarks
described in clause (ii).
``(v) Unemployment rate.--If the quarterly
unemployment rate of the population of a State
is not less than 6 percent--
``(I) the State shall not be
penalized under clause (iii) for
failure to meet the benchmarks
described in clause (ii); and
``(II) the State shall be required
to meet the benchmarks described in
clause (ii) not later than 180 days
after the date on which the quarterly
unemployment rate descends beneath 6
percent.
``(G) Administrative needs of hud.--
``(i) Authorization of appropriations.--
There is authorized to be appropriated
$15,000,000 for each of fiscal years 2023
through 2027 to the Secretary for the
administrative needs of the Department of
Housing and Urban Development and regional
offices of the Department in carrying out the
voucher program under this paragraph.
``(ii) Prohibition.--None of the funds made
available under this subparagraph may be used
to provide raises or bonuses to any employee of
the Department of Housing and Urban Development
in an amount that is more than 10 percent of
the annual gross salary of the employee.''.
(b) Technical and Conforming Amendment.--Effective on December 29,
2024, paragraph (22) of section 8(o) of the United States Housing Act
of 1937 (42 U.S.C. 1437f(o)), as added by subsection (a), is
redesignated as paragraph (23) and shall appear after paragraph (22),
as added by section 601(a)(2)(B) of division AA of Consolidated
Appropriations Act, 2023 (Public Law 117-328).
SEC. 112. LAND ACQUISITION AND CONSTRUCTION.
(a) Definitions.--In this section--
(1) the term ``at risk of homelessness'' has the meaning
given the term in section 401(1) of the McKinney-Vento Homeless
Assistance Act (42 U.S.C. 11360), except that ``50 percent''
shall be substituted for ``30 percent'' in subparagraph (A) of
that section;
(2) the terms ``extremely low-income'' and ``very low-
income'' have the meanings given those terms in section 1303 of
the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4502);
(3) the term ``homeless'' means an individual or family who
is--
(A) living in a place not meant for human
habitation or in an emergency shelter;
(B) living in transitional housing for homeless
persons and was homeless before entering transitional
housing or an emergency shelter;
(C) fleeing domestic violence; or
(D) at risk of homelessness; and
(4) the term ``Secretary'' means the Secretary of Housing
and Urban Development.
(b) Authorizations of Appropriations.--
(1) In general.--There is authorized to be appropriated to
the Housing Trust Fund established under section 1338 of the
Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4568) $10,000,000,000 for each of fiscal
years 2023 through 2033 for allocation to States in accordance
with subsection (c) of such section 1338, subject to
subsections (c) through (f) of this section.
(2) Administrative needs of states.--
(A) Authorization of appropriations.--There is
authorized to be appropriated to the Secretary
$65,000,000 for each of fiscal years 2023 through 2028
for the administrative needs of States under this
section, in accordance with subparagraph (C).
(B) Allocation.--Of amounts authorized to be
appropriated under subparagraph (A) for each fiscal
year--
(i) $15,000,000 shall be allocated to the
Commonwealth of the Northern Mariana Islands,
Guam, American Samoa, and the Virgin Islands;
and
(ii) the remainder shall be allocated to
States pursuant to the formula established
under paragraph (22)(E)(ii) of section 8(o) of
the United States Housing Act of 1937 (42
U.S.C. 1437f(o)), as added by section 111 of
this Act.
(C) Eligible activities.--A State that receives
funds authorized to be appropriated under subparagraph
(A) may only use the funds for capacity-related
investments that are necessary for the State to
successfully allocate funds made available under
paragraph (1) of this subsection.
(D) Prohibition.--None of the funds made available
under this paragraph may be used to provide raises or
bonuses to any official of the executive branch of a
State.
(c) Revision of Funding Formula.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Secretary shall report to Congress
proposed changes to the funding formula under section
1338(c)(3) of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4568(c)(3)) in order to
ensure that the funding formula takes into account the economic
status of the people of the United States, including the
economic impact of the COVID-19 pandemic.
(2) Contents.--The revised formula proposed under paragraph
(1) shall address the following concerns:
(A) The COVID-19 pandemic and its impacts on the
economic security and housing stability of very low-
income and extremely low-income people of the United
States.
(B) The impacts of differing vacancy rates across
various housing markets in the United States.
(C) The rate of unsheltered homelessness in various
housing markets across the United States.
(D) The impact of differing rates of poverty and
extreme poverty across various States.
(E) The gap between demand for and supply of rental
units that are affordable and available to very low-
income and extremely low-income renters in a State.
(d) Eligible Households.--Housing that is assisted using amounts
made available under subsection (b) may only be used for the benefit of
very low-income or extremely low-income households.
(e) Eligible Activities.--A recipient of funds authorized under
subsection (b)--
(1) may only use the funds for land acquisition and the
acquisition, rehabilitation, or development of rental housing
that is affordable for very low-income or extremely low-income
households; and
(2) shall take all possible measures to expedite
construction of housing described in paragraph (1).
(f) Priority for Occupancy in Dwelling Units.--
(1) First 2 fiscal years.--During the first 2 fiscal years
for which amounts are made available to carry out this section,
the Secretary shall ensure that priority for occupancy in a
dwelling unit that receives assistance under this section is
given to a homeless family or homeless youth.
(2) Subsequent 3 fiscal years.--During the third, fourth,
and fifth fiscal years for which amounts are made available to
carry out this section, the Secretary shall ensure that
priority for occupancy in a dwelling unit that receives
assistance under this section is given to a homeless family or
homeless individual.
SEC. 113. MODULAR CONSTRUCTION PILOT PROGRAM.
(a) Definitions.--In this section:
(1) Eligible entity.--The term ``eligible entity'' means a
public housing agency, a tribally designated housing entity (as
defined in section 4 of the Native American Housing Assistance
and Self Determination Act of 1996 (25 U.S.C. 4103)), a
nonprofit entity, a company, a religious entity, or a unit of
local or Tribal government.
(2) Modular construction.--The term ``modular
construction'' means the method of residential construction by
which building modules are constructed off of the future site
of a building, then brought together on the building site to
form a larger residential building, in an effort to reduce
construction costs.
(3) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(b) Establishment of Program.--
(1) In general.--The Secretary shall establish a pilot
program to provide grants to eligible entities to promote the
construction of affordable housing using modular construction.
(2) Affordability requirement.--To be eligible to receive a
grant under paragraph (1), an eligible entity shall be required
to guarantee affordability for a period of more than 20 years.
(3) Priority.--In awarding grants under paragraph (1), the
Secretary shall give priority to an eligible entity that
fulfills not fewer than two of the following requirements:
(A) The eligible entity--
(i) will construct the housing in groups of
more than 50 units; or
(ii) provides confirmation from the
jurisdiction with land use control over the
site proposed by the eligible entity that--
(I) construction will be completed
within 18 months; and
(II) the housing will be
constructed in groups of more than 30
units.
(B) The eligible entity partners with a public
housing agency or unit of local government that will
issue rental assistance to residents of the affordable
housing through vouchers or grants.
(C) The eligible entity will provide supportive
services (as described in paragraph (21)(D)(iii)(II) of
section 8(o) of the United States Housing Act of 1937
(42 U.S.C. 1437f(o)), as added by section 3 of this
Act) to residents at no charge, or has secured the
provision of publicly or privately administered
supportive services (as so defined) to residents at no
charge.
(c) Matching Requirement.--The Federal share of a project funded
under this section shall be not more than 75 percent of the cost of the
project.
(d) Authorization of Appropriations.--There is authorized to be
appropriated to the Secretary $2,000,000 for each of fiscal years 2023
through 2028 to carry out this section.
SEC. 114. SUPPORTING PRO-HOUSING DEVELOPMENT.
(a) Definitions.--In this section:
(1) Duplex.--The term ``duplex'' means a residential
building divided into 2 units, each of which has a separate
entrance.
(2) Eligible activity.--The term ``eligible activity''
means an activity authorized under section 105(a) of the
Housing and Community Development Act of 1974 (42 U.S.C.
5305(a)).
(3) Eligible entity.--The term ``eligible entity'' means a
jurisdiction that adopts a zoning and community planning method
described in subsection (d)(4) after the date of enactment of
this Act.
(4) Floor area ratio.--The term ``floor area ratio'' means
the measurement of the floor area of a building in relation to
the size of the unit of land on which the building is located.
(5) Jurisdiction.--The term ``jurisdiction'' has the
meaning given the term in section 91.5 of title 24, Code of
Federal Regulations, or any successor regulation.
(6) Low-income.--The term ``low-income'' has the meaning
given the term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(7) Mixed-use housing.--The term ``mixed use housing''
means a building with--
(A) retail or other business, public service, or
nonprofit establishments at the ground level or a lower
level; and
(B) not less than 1 story of residential units
above the establishments described in subparagraph (A).
(8) Quadplex.--The term ``quadplex'' means a residential
building divided into 4 units, each of which has a separate
entrance.
(9) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(10) Triplex.--The term ``triplex'' means a residential
building divided into 3 units, each of which has a separate
entrance.
(11) Multifamily housing.--The term ``multifamily
housing''--
(A) means housing accommodations that--
(i) are designed principally for
residential use;
(ii) conform to standards satisfactory to
the Secretary; and
(iii) consist of not less than 5 rental
units on a site; and
(B) includes units that are detached, semidetached,
row house, or multifamily structures.
(b) Zoning Information Reporting Requirement.--
(1) In general.--The Secretary shall require a jurisdiction
that receives, directly or indirectly, any funding from the
Secretary to submit to the Secretary a report containing
information about the zoning and community planning methods of
the jurisdiction, unless the jurisdiction already reports such
information.
(2) Additional information.--Upon receiving a report
described in paragraph (1) from a jurisdiction, the Secretary
may request additional information, at the discretion of the
Secretary.
(c) Prohibited Zoning Methods.--
(1) In general.--On and after the date that is 180 days
after the date of enactment of this Act, a jurisdiction that
uses a zoning and community planning method described in
paragraph (2) may not receive, directly or indirectly, amounts
from a grant awarded under subsection (d).
(2) Prohibited methods.--The methods referred to in
paragraph (1) are the following:
(A) Prohibiting or discouraging duplexes in areas
zoned for single-family homes.
(B) Prohibiting or discouraging single-room
occupancy development in areas zoned for multifamily
homes.
(C) In areas within one half-mile of a multimodal
transit stop, maintaining requirements of more than 1
parking spot for a resident's car per residential unit.
(D) Prohibiting or discouraging accessory dwelling
units (commonly known as an ``ADU'' or ``granny flat'')
on the premises of single-family homes.
(E) Prohibiting or discouraging the conversion of
commercial property into residential property.
(F) Prohibiting or discouraging the development of
multifamily housing or mixed-use housing in commercial
areas.
(3) Exception.--A jurisdiction shall not be penalized under
paragraph (1) based on the use of a zoning and community
planning method described in paragraph (2) over which the
jurisdiction does not have control.
(d) Grant Program.--
(1) Establishment.--The Secretary shall establish a program
under which the Secretary awards competitive grants to eligible
entities to use for eligible activities.
(2) Priority.--In awarding grants under paragraph (1), the
Secretary--
(A) shall give priority to an eligible entity that
adopt more than one of the zoning and community
planning methods described in paragraph (4); and
(B) in giving priority to an eligible entity under
subparagraph (A) of this paragraph, shall base the
degree of priority given on the number of such methods
that the eligible entity has adopted, relative to the
number of such methods that each other eligible entity
has adopted.
(3) Amount of grant.--
(A) In general.--The amount of a grant awarded to
an eligible entity under paragraph (1) shall be not
less than--
(i) $5,000,000 for an eligible entity with
a population of less than 80,000;
(ii) $20,000,000 for an eligible entity
with a population of less than 100,000;
(iii) $40,000,000 for an eligible entity
with a population of less than 500,000;
(iv) $100,000,000 for an eligible entity
with a population of less than 1,000,000; and
(v) $125,000,000 for an eligible entity
with a population of not less than 1,000,000.
(B) Population calculation.--The Secretary shall
calculate the population of an eligible entity for
purposes of subparagraph (A) using the most recently
available data from the Bureau of the Census.
(4) Encouraged zoning and community planning methods.--The
zoning and community planning methods described in this
paragraph are the following:
(A) Allowing--
(i) duplexes, triplexes, and quadplexes, or
other multifamily housing, in areas zoned for
single-family homes;
(ii) the subdivision of existing single-
family homes into multiple units; and
(iii) waivers to permitting or zoning
requirements to incentivize the construction
of--
(I) accessory dwelling units;
(II) additions to existing single-
family homes to create duplexes,
triplexes, or quadplexes; or
(III) other additions that do not
require demolition of an existing home
on a given unit of land.
(B) Incentivizing the development of single-room
occupancy multifamily housing and accessory dwelling
units through expedited permitting, reduced fees, or
other incentives.
(C) Not imposing a minimum lot size or minimum unit
square-foot requirements.
(D) Incentivizing the development of commercial
property into residential housing.
(E) Eliminating or lowering requirements for per-
unit parking spots.
(F) Allowing increased floor area ratios.
(G) Eliminating or raising height limits on
development to encourage building vertically rather
than horizontally.
(H) Waiving or eliminating fees or permits for
development in exchange for the development of a larger
number of units that are affordable to low-income
people.
(5) Regulations.--The Secretary may promulgate any
regulations necessary to carry out this subsection.
(6) Authorization of appropriations.--There are authorized
to be appropriated to carry out this subsection $4,000,000,000
for each of fiscal years 2023 through 2028.
SEC. 115. PERMANENT AUTHORIZATION OF APPROPRIATIONS FOR MCKINNEY-VENTO
HOMELESS ASSISTANCE ACT GRANTS.
Section 408 of the McKinney-Vento Homeless Assistance Act (42
U.S.C. 11364) is amended to read as follows:
``SEC. 408. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated to carry out this title
such sums as may be necessary for each fiscal year.''.
Subtitle B--Rural Housing Assistance
SEC. 121. RURAL HOUSING REINVESTMENT.
(a) Definitions.--In this section:
(1) Broad-based nonprofit organization.--The term ``broad-
based nonprofit organization'' means a nonprofit organization
that has a membership that reflects a variety of interests in
the area in which housing assisted under this section will be
located.
(2) Covered program.--The term ``covered program'' means--
(A) the Very Low-Income Housing Repair Loans and
Grants Program under section 504 of the Housing Act of
1949 (42 U.S.C. 1474);
(B) the Farm Labor Housing loan program under
section 514 of the Housing Act of 1949 (42 U.S.C.
1484);
(C) the Rural Rental Housing Loan program under
section 515 of the Housing Act of 1949 (42 U.S.C.
1485);
(D) the Farm Labor Housing grant program under
section 516 of the Housing Act of 1949 (42 U.S.C.
1486); and
(E) the Rural Rental Assistance program under
section 521 of the Housing Act of 1949 (42 U.S.C.
1490a).
(3) Domestic farm laborer.--The term ``domestic farm
laborer'' means an individual who receives a substantial
portion of the individual's income from the primary production
of processed or unprocessed agricultural or aquacultural
commodities or other farm labor employment.
(4) Eligible entity.--The term ``eligible entity'' means--
(A) a broad-based nonprofit organization;
(B) a nonprofit organization with experience in
developing affordable housing, rural housing, or
housing for domestic farm laborers;
(C) a nonprofit organization of domestic farm
laborers;
(D) a federally recognized Indian Tribe;
(E) a community organization;
(F) an agency of a State or of a political
subdivision of a State; or
(G) a limited partnership with a nonprofit general
partner.
(5) Green building certification.--The term ``green
building certification'' means--
(A) a certification from the Residential New
Construction Program of the Energy Star program
established by section 324A of the Energy Policy and
Conservation Act (42 U.S.C. 6294a);
(B) a certification from the Zero Energy Ready Home
program of the Department of Energy; and
(C) a certification or accreditation that is
substantially similar to a certification described in
subparagraph (A) or (B) that requires the housing
project to be at least 10 percent more efficient than
homes built to the building code standards of the
applicable State.
(6) Low-income.--The term ``low-income'' has the meaning
given the term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(7) Secretary.--The term ``Secretary'' means the Secretary
of Agriculture.
(b) Assistance.--
(1) Loans and grants.--
(A) In general.--The Secretary shall award
additional loans and grants, including zero-percent
interest loans, under the covered programs to eligible
entities that construct or preserve off-farm affordable
housing, including multifamily housing, for domestic
farm laborers or multifamily housing for low-income
individuals living in rural areas to increase and
preserve the supply of available and affordable rental
housing for--
(i) low-income individuals living in rural
areas; and
(ii) domestic farm laborers.
(B) Timeline.--
(i) Notice of funding availability.--Not
later than 180 days after the date of enactment
of this Act, the Secretary shall publish a
notice of funding availability to solicit
applications for loans and grants to be awarded
under subparagraph (A).
(ii) Awards.--Not later than 1 year after
the date of enactment of this Act, the
Secretary shall award loans and grants,
including zero-percent interest loans, to
eligible entities under subparagraph (A).
(C) Local contribution for grants.--
(i) In general.--An eligible entity that
receives a grant under this section shall
contribute not less than 10 percent of the
total project cost from sources other than the
grant.
(ii) Timing of availability.--An eligible
entity may not receive a grant under this
section unless the funds required under clause
(i) are available to the eligible entity as of
the date on which the grant is awarded.
(iii) Sources.--An eligible entity may use
amounts from a loan financed by the Rural
Housing Service or the Federal Housing
Administration to satisfy the requirement under
clause (i).
(2) Rental assistance for off-farm affordable housing and
multifamily housing.--
(A) In general.--In addition to loans and grants
under paragraph (1), the Secretary, acting through the
Under Secretary for Rural Development, shall provide
rental assistance to--
(i) owners of off-farm affordable housing
for domestic farm laborers that is assisted by
a loan or grant under paragraph (1); and
(ii) owners of affordable multifamily
housing for low-income individuals living in
rural areas that is assisted by a loan or grant
under paragraph (1).
(B) Amount of rent.--In providing rental assistance
under subparagraph (A), the Secretary shall make
assistance payments to the owners of housing described
in that subparagraph in order to make available to low-
income occupants of such housing rentals at rates
commensurate to income and not exceeding the highest
of--
(i) 30 percent of adjusted income (as
defined in section 3(b)(5) of the United States
Housing Act of 1937 (42 U.S.C. 1437a(b)(5)),
except that the amount shall be calculated on a
monthly basis);
(ii) 10 percent of monthly income; or
(iii) if the person or family is receiving
payments for welfare assistance from a public
agency, the portion (if any) of the payments
that is specifically designated by the agency
to meet the housing costs of the person or
family.
(C) Cap on rent increases.--The rent or
contribution to rent paid by any recipient of
assistance under this paragraph shall not increase as a
result of this section or any other provision of
Federal law or regulation by more than 10 percent
during any 12-month period, unless the increase above
10 percent is attributable to increases in income that
are unrelated to this subsection or the other provision
of Federal law or regulation.
(D) Amount of assistance.--The amount of an
assistance payment made on behalf of a tenant under
this paragraph shall be equal to the difference
between--
(i) the monthly contribution of the tenant,
which shall be the applicable amount under
subparagraph (B); and
(ii) the fair market rental for the
jurisdiction in which the property is located,
as established by the Secretary under section
8(c) of the United States Housing Act of 1937
(42 U.S.C. 1437a(c)).
(E) Regulations.--The Secretary may promulgate any
regulation that is necessary and proper to carry out
this paragraph.
(3) Priority.--In awarding assistance for farm labor
housing and multi-family housing under paragraphs (1) and (2),
the Secretary shall give priority to an applicant seeking
assistance for a housing project that--
(A) as determined by the Secretary, is energy
efficient and generates energy, such as through geo-
exchange systems, ground-source heat pumps, wind
turbines, and solar energy systems; or
(B) has a green building certification.
(c) Funding.--
(1) Farm labor housing loans and grants programs.--There is
authorized to be appropriated to the Secretary $78,000,000 for
each of fiscal years 2023 through 2033 to award loans and
grants under subsection (b)(1)(A) through the Farm Labor
Housing loan program and Farm Labor Housing grant program under
sections 514 and 516, respectively, of the Housing Act of 1949
(42 U.S.C. 1484, 1486).
(2) Rural rental housing loan program.--There is authorized
to be appropriated to the Secretary $100,000,000 for each of
fiscal years 2023 through 2033 to award loans under subsection
(b)(1)(A) through the Rural Rental Housing Loan program under
section 515 of the Housing Act of 1949 (42 U.S.C. 1485).
(3) Rural rental assistance program.--There is authorized
to be appropriated to the Secretary $2,500,000,000 for each of
fiscal years 2023 through 2033 to award loans under subsection
(b)(1)(A) through the Rural Rental Assistance program under
section 521 of the Housing Act of 1949 (42 U.S.C. 1490a).
(4) Rental assistance under (b)(2) of this section.--There
is authorized to be appropriated to the Secretary $250,000,000
for each of fiscal years 2023 through 2033 for rental
assistance payments under subsection (b)(2).
SEC. 122. PERMANENT ESTABLISHMENT OF HOUSING PRESERVATION AND
REVITALIZATION PROGRAM.
Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) is
amended by adding at the end the following:
``SEC. 545. HOUSING PRESERVATION AND REVITALIZATION PROGRAM.
``(a) Establishment.--The Secretary shall carry out a program under
this section for the preservation and revitalization of multifamily
rental housing projects financed under section 515 or both sections 514
and 516.
``(b) Notice of Maturing Loans.--
``(1) To owners.--On an annual basis, the Secretary shall
provide written notice to each owner of a property financed
under section 515 or both sections 514 and 516 that will mature
within the 4-year period beginning upon the provision of such
notice, setting forth the options and financial incentives that
are available to facilitate the extension of the loan term or
the option to decouple a rental assistance contract pursuant to
subsection (f).
``(2) To tenants.--
``(A) In general.--For each property financed under
section 515 or both sections 514 and 516, not later
than the date that is 2 years before the date that such
loan will mature, the Secretary shall provide written
notice to each household residing in such property that
informs them of the date of the loan maturity, the
possible actions that may happen with respect to the
property upon such maturity, and how to protect their
right to reside in federally assisted housing after
such maturity.
``(B) Language.--Notice under this paragraph shall
be provided in plain English and shall be translated
into other languages in the case of any property
located in an area in which a significant number of
residents speak such other languages.
``(c) Loan Restructuring.--Under the program under this section,
the Secretary may restructure such existing housing loans, as the
Secretary considers appropriate, for the purpose of ensuring that such
projects have sufficient resources to preserve the projects to provide
safe and affordable housing for low-income residents and farm laborers,
by--
``(1) reducing or eliminating interest;
``(2) deferring loan payments;
``(3) subordinating, reducing, or reamortizing loan debt;
and
``(4) providing other financial assistance, including
advances, payments, and incentives (including the ability of
owners to obtain reasonable returns on investment) required by
the Secretary.
``(d) Renewal of Rental Assistance.--When the Secretary offers to
restructure a loan pursuant to subsection (c), the Secretary shall
offer to renew the rental assistance contract under section 521(a)(2)
for a 20-year term that is subject to annual appropriations, provided
that the owner agrees to bring the property up to such standards that
will ensure its maintenance as decent, safe, and sanitary housing for
the full term of the rental assistance contract.
``(e) Restrictive Use Agreements.--
``(1) Requirement.--As part of the preservation and
revitalization agreement for a project, the Secretary shall
obtain a restrictive use agreement that obligates the owner to
operate the project in accordance with this title.
``(2) Term.--
``(A) No extension of rental assistance contract.--
Except when the Secretary enters into a 20-year
extension of the rental assistance contract for the
project, the term of the restrictive use agreement for
the project shall be consistent with the term of the
restructured loan for the project.
``(B) Extension of rental assistance contract.--If
the Secretary enters into a 20-year extension of the
rental assistance contract for a project, the term of
the restrictive use agreement for the project shall be
for 20 years.
``(C) Termination.--The Secretary may terminate the
20-year use restrictive use agreement for a project
prior to the end of its term if the 20-year rental
assistance contract for the project with the owner is
terminated at any time for reasons outside the owner's
control.
``(f) Decoupling of Rental Assistance.--
``(1) Renewal of rental assistance contract.--If the
Secretary determines that a maturing loan for a project cannot
reasonably be restructured in accordance with subsection (c)
and the project was operating with rental assistance under
section 521, the Secretary may renew the rental assistance
contract, notwithstanding any provision of section 521, for a
term, subject to annual appropriations, of at least 10 years
but not more than 20 years.
``(2) Rents.--Any agreement to extend the term of the
rental assistance contract under section 521 for a project
shall obligate the owner to continue to maintain the project as
decent, safe, and sanitary housing and to operate the
development in accordance with this title, except that rents
shall be based on the lesser of--
``(A) the budget-based needs of the project; or
``(B) the operating cost adjustment factor as a
payment standard as provided under section 524 of the
Multifamily Assisted Housing Reform and Affordability
Act of 1997 (42 U.S.C. 1437 note).
``(g) Multifamily Housing Transfer Technical Assistance.--Under the
program under this section, the Secretary may provide grants to
qualified nonprofit organizations and public housing agencies to
provide technical assistance, including financial and legal services,
to borrowers under loans under this title for multifamily housing to
facilitate the acquisition of such multifamily housing properties in
areas where the Secretary determines there is a risk of loss of
affordable housing.
``(h) Transfer of Rental Assistance.--After the loan or loans for a
rental project originally financed under section 515 or both sections
514 and 516 have matured or have been prepaid and the owner has chosen
not to restructure the loan pursuant to subsection (c), a tenant
residing in such project shall have 18 months prior to loan maturation
or prepayment to transfer the rental assistance assigned to the
tenant's unit to another rental project originally financed under
section 515 or both sections 514 and 516, and the owner of the initial
project may rent the tenant's previous unit to a new tenant without
income restrictions.
``(i) Administrative Expenses.--Of any amounts made available for
the program under this section for any fiscal year, the Secretary may
use not more than $1,000,000 for administrative expenses for carrying
out such program.
``(j) Authorization of Appropriations.--There is authorized to be
appropriated for the program under this section $200,000,000 for each
of fiscal years 2023 through 2028.''.
SEC. 123. ELIGIBILITY FOR RURAL HOUSING VOUCHERS.
Section 542 of the Housing Act of 1949 (42 U.S.C. 1490r) is amended
by adding at the end the following:
``(c) Eligibility of Households in Section 514, 515, and 516
Projects.--The Secretary may provide rural housing vouchers under this
section for any low-income household (including those not receiving
rental assistance) residing in a property financed with a loan made or
insured under section 514 or 515 (42 U.S.C. 1484, 1485) which has been
prepaid, has been foreclosed, or has matured after September 30, 2005,
or residing in a property assisted under section 514 or 516 that is
owned by a nonprofit organization or public agency.''.
SEC. 124. AMOUNT OF VOUCHER ASSISTANCE.
Notwithstanding any other provision of law, in the case of any
rural housing voucher provided pursuant to section 542 of the Housing
Act of 1949 (42 U.S.C. 1490r), the amount of the monthly assistance
payment for the household on whose behalf such assistance is provided
shall be determined as provided in subsection (a) of such section 542.
SEC. 125. USE OF AVAILABLE RENTAL ASSISTANCE.
Section 521(d) of the Housing Act of 1949 (42 U.S.C. 1490a(d)) is
amended by adding at the end the following:
``(3) In the case of any rental assistance contract authority that
becomes available because of the termination of assistance on behalf of
an assisted family--
``(A) at the option of the owner of the rental project, the
Secretary shall provide the owner a period of 6 months before
such assistance is made available pursuant to subparagraph (B)
during which the owner may use such assistance authority to
provide assistance on behalf of an eligible unassisted family
that--
``(i) is residing in the same rental project that
the assisted family resided in prior to such
termination; or
``(ii) newly occupies a dwelling unit in such
rental project during such period; and
``(B) except for assistance used as provided in
subparagraph (A), the Secretary shall use such remaining
authority to provide such assistance on behalf of eligible
families residing in other rental projects originally financed
under section 515 or both sections 514 and 516.''.
SEC. 126. FUNDING FOR MULTIFAMILY TECHNICAL IMPROVEMENTS.
There is authorized to be appropriated to the Secretary of
Agriculture $50,000,000 for fiscal year 2023 for improving the
technology of the Department of Agriculture used to process loans for
multifamily housing and otherwise managing such housing. Such
improvements shall be made within the 5-year period beginning upon the
appropriation of such amounts and such amount shall remain available
until the expiration of such 5-year period.
SEC. 127. PLAN FOR PRESERVING AFFORDABILITY OF RENTAL PROJECTS.
(a) Plan.--Not later than 180 days after the date of enactment of
this Act, the Secretary of Agriculture (in this section referred to as
the ``Secretary'') shall submit a written plan to Congress for
preserving the affordability for low-income families of rental projects
for which loans were made under section 515 of the Housing Act of 1949
(42 U.S.C. 1485) or made to nonprofit or public agencies under section
514 of that Act (42 U.S.C. 1484) and avoiding the displacement of
tenant households, which shall--
(1) set forth specific performance goals and measures;
(2) set forth the specific actions and mechanisms by which
such goals will be achieved;
(3) set forth specific measurements by which progress
towards achievement of each goal can be measured;
(4) provide for detailed reporting on outcomes; and
(5) include any legislative recommendations to assist in
achievement of the goals under the plan.
(b) Advisory Committee.--
(1) Establishment; purpose.--The Secretary shall establish
an advisory committee whose purpose shall be to assist the
Secretary--
(A) in preserving properties assisted under section
514 or 515 of the Housing Act of 1949 (42 U.S.C. 1484,
1485) that are owned by nonprofit or public agencies
through the multifamily housing preservation and
revitalization program under section 545 of that Act
(as added by this subtitle); and
(B) implementing the plan required under subsection
(a) of this section.
(2) Member.--The advisory committee shall consist of 14
members, appointed by the Secretary, as follows:
(A) A State Director of Rural Development for the
Department of Agriculture.
(B) The Administrator for Rural Housing Service of
the Department of Agriculture.
(C) Two representatives of for-profit developers or
owners of multifamily rural rental housing.
(D) Two representatives of nonprofit developers or
owners of multifamily rural rental housing.
(E) Two representatives of State housing finance
agencies.
(F) Two representatives of tenants of multifamily
rural rental housing.
(G) One representative of a community development
financial institution that is involved in preserving
the affordability of housing assisted under sections
514, 515, and 516 of the Housing Act of 1949 (42 U.S.C.
1484, 1485, 1486).
(H) One representative of a nonprofit organization
that operates nationally and has actively participated
in the preservation of housing assisted by the Rural
Housing Service by conducting research regarding, and
providing financing and technical assistance for,
preserving the affordability of such housing.
(I) One representative of low-income housing tax
credit investors.
(J) One representative of regulated financial
institutions that finance affordable multifamily rural
rental housing developments.
(3) Meetings.--The advisory committee shall meet not less
often than once each calendar quarter.
(4) Functions.--In providing assistance to the Secretary to
carry out its purpose, the advisory committee shall carry out
the following functions:
(A) Assisting the Rural Housing Service of the
Department of Agriculture to improve estimates of the
size, scope, and condition of rental housing portfolio
of the Service, including the time frames for maturity
of mortgages and costs for preserving the portfolio as
affordable housing.
(B) Reviewing current policies and procedures of
the Rural Housing Service regarding preservation of
affordable rental housing financed under sections 514,
515, 516, and 538 of the Housing Act of 1949 (42 U.S.C.
1484, 1485, 1486, 1490p-2), the Multifamily
Preservation and Revitalization Demonstration program
(commonly known as the ``MPR''), and the Rural Rental
Assistance program under section 521 of the Housing Act
of 1949 (42 U.S.C. 1490a) and making recommendations
regarding improvements and modifications to such
policies and procedures.
(C) Providing ongoing review of Rural Housing
Service program results.
(D) Providing reports to Congress and the public on
meetings, recommendations, and other findings of the
advisory committee.
TITLE II--REVENUE PROVISIONS
SEC. 201. TAX-EXEMPT BOND FINANCING REQUIREMENT.
(a) In General.--Section 42(h)(4)(B) of the Internal Revenue Code
of 1986 is amended to read as follows:
``(B) Special rule where a required percent of
buildings is financed with tax-exempt bonds subject to
volume cap.--For purposes of subparagraph (A),
paragraph (1) shall not apply to any portion of the
credit allowable under subsection (a) with respect to a
building if--
``(i) 50 percent or more of the aggregate
basis of any such building and the land on
which the building is located is financed by
any obligation described in subparagraph (A),
or
``(ii) 25 percent or more of the aggregate
basis of such building and the land on which
the building is located is financed by any
obligation which is described in subparagraph
(A) and issued in calendar year 2024, 2025,
2026, 2027, or 2028.''.
(b) Effective Date.--The amendment made by this section shall apply
to any building some portion of which, or of the land on which the
building is located, is financed by an obligation which is described in
section 42(h)(4)(A) and which is part of an issue the issue date of
which is after December 31, 2023.
SEC. 202. INCREASES IN STATE ALLOCATIONS.
(a) In General.--Clause (ii) of section 42(h)(3)(C) of the Internal
Revenue Code is amended--
(1) by striking ``$1.75'' in subclause (I) and inserting
``the per capita amount'', and
(2) by striking ``$2,000,000'' in subclause (II) and
inserting ``the minimum amount''.
(b) Per Capita Amount; Minimum Amount.--Section 42(h)(3) of the
Internal Revenue Code of 1986 is amended by striking subparagraphs (H)
and (I) and inserting the following:
``(H) Per capita amount.--For purposes of
subparagraph (C)(ii)(I), the per capita amount shall be
determined as follows:
``(i) Calendar year 2023.--For calendar
year, 2023, the per capita amount is $3.90.
``(ii) Calendar year 2024.--For calendar
year 2024, the per capita amount is the product
of--
``(I) 1.25, and
``(II) the dollar amount under
clause (i) increased by an amount equal
to--
``(aa) such dollar amount,
multiplied by
``(bb) the cost-of-living
adjustment determined under
section 1(f)(3) for such
calendar year, determined by
substituting `calendar year
2022' for `calendar year 2016'
in subparagraph (A)(ii)
thereof.
If the amount determined after application of the
preceding sentence is not a multiple of $5,000, such
amount shall be rounded to the next lowest multiple of
$5,000.
``(iii) Calendar years after 2024.--In the
case of any calendar year after 2024, the per
capita amount is the dollar amount determined
under clause (ii) increased by an amount equal
to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting `calendar
year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any amount increased under the preceding
sentence which is not a multiple of 5 cents
shall be rounded to the next lowest multiple of
5 cents.
``(I) Minimum amount.--For purposes of subparagraph
(C)(ii)(II), the minimum amount shall be determined as
follows:
``(i) Calendar year 2023.--For calendar
year, 2023, the minimum amount is $4,495,000.
``(ii) Calendar year 2024.--For calendar
year 2024, the minimum amount is the product
of--
``(I) 1.25, and
``(II) the dollar amount under
clause (i) increased by an amount equal
to--
``(aa) such dollar amount,
multiplied by
``(bb) the cost-of-living
adjustment determined under
section 1(f)(3) for such
calendar year, determined by
substituting `calendar year
2022' for `calendar year 2016'
in subparagraph (A)(ii)
thereof.
If the amount determined after application of
the preceding sentence is not a multiple of 5
cents, such amount shall be rounded to the next
lowest multiple of 5 cents.
``(iii) Calendar years after 2024.--In the
case of any calendar year after 2024, the
minimum amount is the dollar amount determined
under clause (ii) increased by an amount equal
to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting `calendar
year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any amount increased under the preceding
sentence which is not a multiple of $5,000
shall be rounded to the next lowest multiple of
$5,000.''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2022.
SEC. 203. BUILDINGS DESIGNATED TO SERVE EXTREMELY LOW-INCOME
HOUSEHOLDS.
(a) Reserved State Allocation.--
(1) In general.--Section 42(h) of the Internal Revenue Code
of 1986 is amended--
(A) by redesignating paragraphs (6), (7), and (8)
as paragraphs (7), (8), and (9), respectively, and
(B) by inserting after paragraph (5) the following
new paragraph:
``(6) Portion of state ceiling set-aside for projects
designated to serve extremely low-income households.--
``(A) In general.--Not more than 92 percent of the
portion of the State housing credit ceiling amount
described in paragraph (3)(C)(ii) for any State for any
calendar year shall be allocated to buildings other
than buildings described in subparagraph (B).
``(B) Buildings described.--A building is described
in this subparagraph if 20 percent or more of the
residential units in such building are rent-restricted
(determined as if the imputed income limitation
applicable to such units were 30 percent of area median
gross income) and are designated by the taxpayer for
occupancy by households the aggregate household income
of which does not exceed the greater of--
``(i) 30 percent of area median gross
income, or
``(ii) 100 percent of an amount equal to
the Federal poverty line (within the meaning of
section 36B(d)(3)).
``(C) Exception.--A building shall not be treated
as described in subparagraph (B) if such building is a
part of a qualified low-income housing project with
respect to which the taxpayer elects the requirements
of subsection (g)(1)(C).''.
(2) Conforming amendment.--Section 42(b)(4)(C) of such Code
is amended by striking ``(h)(7)'' and inserting ``(h)(8)''.
(b) Increase in Credit.--Paragraph (5) of section 42(d) of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new subparagraph:
``(C) Increase in credit for buildings designated
to serve extremely low-income households.--
``(i) In general.--In the case of any
building--
``(I) which is described in
subsection (h)(6)(B), and
``(II) which is designated by the
housing credit agency as requiring the
increase in credit under this
subparagraph in order for such building
to be financially feasible as part of a
qualified low-income housing project,
subparagraph (B) shall not apply to the portion
of such building which is comprised of
residential units described in subsection
(h)(6)(B) (determined in a manner similar to
the unit fraction under subsection (c)(1)(C)),
and the eligible basis of such portion of the
building shall be 150 percent of such basis
determined without regard to this subparagraph.
``(ii) Allocation rules applicable to
projects to which clause (i) applies.--
``(I) State housing credit
ceiling.--For any calendar year, no
more than 13 percent of the portion of
the State housing credit ceiling
described in subsection (h)(3)(C)(ii)
shall be allocated to buildings to
which clause (i) applies.
``(II) Application to projects
financed with tax-exempt bonds.--In the
case of any building which is financed
by an obligation described in
subsection (h)(4), clause (i) shall not
apply unless--
``(aa) the State in which
the issuing authority issuing
such obligation is located
designates such obligation as
an obligation to which this
subparagraph applies, and
``(bb) the aggregate face
amount of obligations
designated under item (aa) by
such State in the calendar year
during which such obligation is
issued does not exceed 8
percent of the State ceiling of
such State under section
146(d)(1) for such year.''.
(c) Effective Date.--The amendments made by this section shall
apply to allocations of housing credit dollar amount after December 31,
2023, and to buildings that are described in section 42(h)(4)(B) taking
into account only obligations that are part of an issue the issue date
of which is after December 31, 2023.
SEC. 204. INCLUSION OF INDIAN AREAS AS DIFFICULT DEVELOPMENT AREAS FOR
PURPOSES OF CERTAIN BUILDINGS.
(a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the
Internal Revenue Code of 1986 is amended by inserting before the period
the following: ``, and any Indian area''.
(b) Indian Area.--Clause (iii) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986 is amended by redesignating subclause
(II) as subclause (IV) and by inserting after subclause (I) the
following new subclauses:
``(II) Indian area.--For purposes
of subclause (I), the term `Indian
area' means any Indian area (as defined
in section 4(11) of the Native American
Housing Assistance and Self
Determination Act of 1996 (25 U.S.C.
4103(11))).
``(III) Special rule for buildings
in indian areas.--In the case of an
area which is a difficult development
area solely because it is an Indian
area, a building shall not be treated
as located in such area unless such
building is assisted or financed under
the Native American Housing Assistance
and Self Determination Act of 1996 (25
U.S.C. 4101 et seq.) or the project
sponsor is an Indian tribe (as defined
in section 45A(c)(6)), a tribally
designated housing entity (as defined
in section 4(22) of such Act (25 U.S.C.
4103(22))), or wholly owned or
controlled by such an Indian tribe or
tribally designated housing entity.''.
(c) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2023.
SEC. 205. INCLUSION OF RURAL AREAS AS DIFFICULT DEVELOPMENT AREAS.
(a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the
Internal Revenue Code of 1986, as amended by section 204, is further
amended by inserting ``, any rural area'' after ``median gross
income''.
(b) Rural Area.--Clause (iii) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986, as amended by section 204, is further
amended by redesignating subclause (IV) as subclause (V) and by
inserting after subclause (III) the following new subclause:
``(IV) Rural area.--For purposes of
subclause (I), the term `rural area'
means any non-metropolitan area, or any
rural area as defined by section 520 of
the Housing Act of 1949, which is
identified by the qualified allocation
plan under subsection (m)(1)(B).''.
(c) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2023.
SEC. 206. INCREASE IN CREDIT FOR BOND-FINANCED PROJECTS DESIGNATED BY
HOUSING CREDIT AGENCY.
(a) In General.--Clause (v) of section 42(d)(5)(B) of the Internal
Revenue Code of 1986 is amended by striking the second sentence.
(b) Technical Amendments.--Clause (v) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986, as amended by subsection (a), is further
amended--
(1) by striking ``State'' in the heading; and
(2) by striking ``State housing credit agency'' and
inserting ``housing credit agency''.
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
apply to a building if--
(A) any portion of such building is financed by an
obligation described in paragraph (2), or
(B) the land on which the building is located is
financed by an obligation described in paragraph (2).
(2) Obligation described.--An obligation is described in
this paragraph if such obligation--
(A) is described in section 42(h)(4)(A) of the
Internal Revenue Code of 1986, and
(B) is issued after December 31, 2023.
SEC. 207. REPEAL OF QUALIFIED CONTRACT OPTION.
(a) Termination of Option for Certain Buildings.--
(1) In general.--Subclause (II) of section 42(h)(7)(E)(i)
of the Internal Revenue Code of 1986, as redesignated by
section 203, is amended by inserting ``in the case of a
building described in clause (iii),'' before ``on the last
day''.
(2) Buildings described.--Subparagraph (E) of section
42(h)(7) of such Code, as so redesignated, is amended by adding
at the end the following new clause:
``(iii) Buildings described.--A building
described in this clause is a building--
``(I) which received its allocation
of housing credit dollar amount before
January 1, 2024, or
``(II) in the case of a building
any portion of which is financed as
described in paragraph (4), and which
received before January 1, 2024, under
the rules of paragraphs (1) and (2) of
subsection (m), a determination from
the issuer of the tax-exempt bonds or
the housing credit agency that the
building would be eligible under the
qualified allocation plan to receive an
allocation of housing credit dollar
amount or that the credits to be earned
are necessary for financial feasibility
of the project and its viability as a
qualified low-income housing project
throughout the credit period.''.
(b) Rules Relating to Existing Projects.--Subparagraph (F) of
section 42(h)(7) of the Internal Revenue Code of 1986, as redesignated
by section 203, is amended by striking ``the nonlow-income portion''
and all that follows and inserting ``the nonlow-income portion and the
low-income portion of the building for fair market value (determined by
the housing credit agency by taking into account the rent restrictions
required for the low-income portion of the building to continue to meet
the standards of paragraphs (1) and (2) of subsection (g)). The
Secretary shall prescribe such regulations as may be necessary or
appropriate to carry out this paragraph.''.
(c) Conforming Amendments.--
(1) Paragraph (7) of section 42(h) of the Internal Revenue
Code of 1986, as redesignated by section 203, is amended by
striking subparagraph (G) and by redesignating subparagraphs
(H), (I), (J), and (K) as subparagraphs (G), (H), (I), and (J),
respectively.
(2) Subclause (II) of section 42(h)(7)(E)(i) of such Code,
as so redesignated and as amended by subsection (a), is further
amended by striking ``subparagraph (I)'' and inserting
``subparagraph (H)''.
(d) Technical Amendment.--Subparagraph (I) of section 42(h)(7) of
the Internal Revenue Code of 1986, as redesignated by section 203 and
subsection (c), is amended by striking ``agreement'' and inserting
``commitment''.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on the date
of the enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to buildings with respect to which a written
request described in section 42(h)(7)(H) of the Internal
Revenue Code of 1986, as redesignated by section 203 and
subsection (c), is submitted after the date of the enactment of
this Act.
SEC. 208. MODIFICATION AND CLARIFICATION OF RIGHTS RELATING TO BUILDING
PURCHASE.
(a) Modification of Right of First Refusal.--
(1) In general.--Subparagraph (A) of section 42(i)(7) of
the Internal Revenue Code of 1986 is amended by striking ``a
right of 1st refusal'' and inserting ``an option''.
(2) Conforming amendment.--The heading of paragraph (7) of
section 42(i) of such Code is amended by striking ``right of
1st refusal'' and inserting ``option''.
(b) Clarification With Respect to Right of First Refusal and
Purchase Options.--
(1) Purchase of partnership interest.--
(A) In general.--Subparagraph (A) of section
42(i)(7) of the Internal Revenue Code of 1986, as
amended by subsection (a), is amended by striking ``the
property'' and inserting ``the property or all of the
partnership interests (other than interests of the
person exercising such option or a related party
thereto (within the meaning of section 267(b) or
707(b)(1))) relating to the property''.
(B) Application to S corporations and other pass-
through entities.--Subparagraph (A) of section 42(i)(7)
of such Code is amended by adding at the end the
following: ``Except as provided by the Secretary, the
rules of this paragraph shall apply to S corporations
and other pass-through entities in the same manner as
such rules apply to partnerships.''.
(C) Conforming amendment.--Subparagraph (B) of
section 42(i)(7) of such Code is amended by adding at
the end the following: ``In the case of a purchase of
all of the partnership interests, the minimum purchase
price under this subparagraph shall be an amount not
less than the sum of the interests' shares of the
amount which would be determined with respect to the
property under this subparagraph without regard to this
sentence.''.
(2) Property includes assets relating to the building.--
Paragraph (7) of section 42(i) of such Code is amended by
adding at the end the following new subparagraph:
``(C) Property.--For purposes of subparagraph (A),
the term `property' may include all or any of the
assets held for the development, operation, or
maintenance of a building.''.
(3) Exercise of right of first refusal and purchase
options.--Subparagraph (A) of section 42(i)(7) of such Code, as
amended by subsection (a) and paragraph (1)(A), is amended by
adding at the end the following: ``For purposes of determining
whether an option, including a right of first refusal, to
purchase property or all of the partnership interests holding
(directly or indirectly) such property is described in the
preceding sentence--
``(i) such option or right of first refusal
shall be exercisable with or without the
approval of any owner of the project (including
any partner, member, or affiliated organization
of such an owner), and
``(ii) a right of first refusal shall be
exercisable in response to any offer to
purchase the property or all of the partnership
interests, including an offer by a related
party.''.
(c) Other Conforming Amendment.--Subparagraph (B) of section
42(i)(7) of the Internal Revenue Code of 1986, as amended by subsection
(b), is amended by striking ``the sum of'' and all that follows through
``application of clause (ii).'' and inserting the following: ``the
principal amount of outstanding indebtedness secured by the building
(other than indebtedness incurred within the 5-year period ending on
the date of the sale to the tenants).''.
(d) Effective Dates.--
(1) Modification of right of first refusal.--The amendments
made by subsections (a) and (c) shall apply to agreements
entered into or amended after the date of the enactment of this
Act.
(2) Clarification.--The amendments made by subsection (b)
shall apply to agreements among the owners of the project
(including partners, members, and their affiliated
organizations) and persons described in section 42(i)(7)(A) of
the Internal Revenue Code of 1986 entered into before, on, or
after the date of the enactment of this Act.
(3) No effect on agreements.--None of the amendments made
by this section is intended to supersede express language in
any agreement with respect to the terms of a right of first
refusal or option permitted by section 42(i)(7) of the Internal
Revenue Code of 1986 in effect on the date of the enactment of
this Act.
SEC. 209. PROHIBITION OF LOCAL APPROVAL AND CONTRIBUTION REQUIREMENTS.
(a) In General.--Paragraph (1) of section 42(m) of the Internal
Revenue Code of 1986 is amended--
(1) by striking clause (ii) of subparagraph (A) and by
redesignating clauses (iii) and (iv) thereof as clauses (ii)
and (iii), respectively; and
(2) by adding at the end the following new subparagraph:
``(E) Local approval or contribution not taken into
account.--The selection criteria under a qualified
allocation plan shall not include consideration of--
``(i) any support or opposition with
respect to the project from local or elected
officials, or
``(ii) any local government contribution to
the project, except to the extent such
contribution is taken into account as part of a
broader consideration of the project's ability
to leverage outside funding sources, and is not
prioritized over any other source of outside
funding.''.
(b) Effective Date.--The amendments made by this section shall
apply to allocations of housing credit dollar amounts made after
December 31, 2023.
SEC. 210. INCREASE IN CREDIT FOR LOW-INCOME HOUSING SUPPORTIVE
SERVICES.
(a) In General.--Paragraph (5) of section 42(d) of the Internal
Revenue Code of 1986, as amended by section 203, is further amended by
adding at the end the following new subparagraphs:
``(D) Increase in credit for providing supportive
services.--
``(i) In general.--In the case of any
building which includes common areas, or
property used therein, dedicated to the
provision of on-site qualified supportive
services, except as provided in subparagraphs
(E) and (F), the eligible basis of the portion
of the building which is comprised of such
areas or property (after the application of
subparagraphs (A) and (B)) shall be increased
by an amount equal to 50 percent of such basis
determined without regard to this subparagraph
and subparagraphs (B) and (C).
``(ii) Qualified supportive services.--For
purposes of clause (i), the term `qualified
supportive services' means services--
``(I) provided by the owner of a
building (directly or through contracts
with third-party service providers)
primarily to tenants of the building,
``(II) which are intended to
promote economic self-sufficiency and
physical and mental health and well-
being in pursuit of retaining permanent
housing, including childcare or
eldercare services, health services,
coordination of tenant benefits, job
training, financial counseling,
resident engagement services, or such
other similar services as may be
defined by the allocating agency in the
qualified allocation plan,
``(III) which are provided to
tenants and other beneficiaries as may
be specified by the housing credit
agency, including specifications as to
which services may be provided to non-
tenants,
``(IV) which are provided at no
cost to beneficiaries other than any
fee, copay, or coinsurance customarily
charged by service providers for
similar services, and
``(V) usage of or participation in
which is not a condition of tenancy in
the building.
Such term includes reasonable and necessary
measures for the provision of such services,
including measures to engage tenants and other
beneficiaries in and coordinate such services,
and measures required to obtain the
certification described in subparagraph
(E)(ii)(III).
``(E) Extended supportive services commitment.--
``(i) In general.--Subparagraph (D)(i)
shall not apply to a building for any taxable
year unless an extended supportive services
commitment is in effect for such taxable year.
``(ii) Extended supportive services
commitment.--The term `extended supportive
services commitment' means any agreement
between the owner of a building and the housing
credit agency which--
``(I) provides estimates of the
amounts to be spent, updated at least
once every 5 years, on the provision of
qualified supportive services to
tenants of such building and other
beneficiaries for each taxable year
remaining in the credit period,
``(II) requires the designation of
one or more individuals to engage
tenants regarding, and coordinate
delivery of, qualified supportive
services,
``(III) requires the maintenance of
an appropriate certification, as
determined by the Secretary in
consultation with the housing credit
agencies, for qualified supportive
services, subject to recertification at
least once every 5 years,
``(IV) requires appropriate annual
reporting to the housing credit agency
on expenditures and outcomes, as
determined by such agency, and
``(V) is binding on all successors
in ownership of such building.
``(iii) Exceptions if foreclosure or if no
buyer willing to maintain services.--The
requirement of clause (ii)(V) for any building
shall terminate on the date the building is
acquired by foreclosure (or instrument in lieu
of foreclosure) unless the housing credit
agency determines that such acquisition is part
of an arrangement with the taxpayer a purpose
of which is to terminate such requirement.
``(iv) Effect of noncompliance.--If, during
a taxable year, there is a determination by the
housing credit agency that an extended
supportive services commitment was not in
effect as of the beginning of such year or that
there is evidence of other noncompliance as
determined by the housing credit agency
(including failure to provide qualified
supportive services)--
``(I) such determination shall not
apply to any period before such year
and subparagraph (D)(i) shall apply to
such taxable year without regard to
such determination if the failure is
corrected within 1 year from the date
of the determination, and
``(II) in the case of any year to
which such determination does apply, if
the failure is not corrected within 1
year from the date of the
determination, the credit recapture
amount under subsection (j)(1) for the
year in which such 1 year period
expires shall be increased by the
amount of any increase in the credit
under this section by reason of
subparagraph (D)(i) for the year to
which the determination applies.
``(v) Projects which consist of more than 1
building.--Rules similar to the rules of
subsection (h)(7)(J) shall apply.
``(F) Responsibilities of housing credit agency.--
Subparagraph (D)(i) shall not apply to a building for
any taxable year unless--
``(i) the housing credit agency sets forth
criteria--
``(I) to determine appropriate,
evidence-based supportive services,
``(II) for the selection of
appropriate and competent service
providers, and
``(III) which common areas or
property described in subparagraph
(D)(i) shall meet in order to qualify
for the increase in credit under
subparagraph (D),
``(ii) the housing credit agency provides a
procedure that the agency (or an agent or other
private contractor of such agency) shall follow
in monitoring for noncompliance with the
provisions of this subparagraph and
subparagraphs (D) and (E) and in reporting such
noncompliance to the Secretary, and
``(iii) appropriate books and records for
expenditures with respect to the qualified
supportive services are maintained on an annual
basis, and are available for inspection upon
request by the housing credit agency.''.
(b) Effective Date.--The amendment made by this section shall apply
to buildings which receive allocations of housing credit dollar amount
or, in the case of projects financed by tax-exempt obligations as
described in section 42(h)(4) of the Internal Revenue Code of 1986,
which are first taken into account under section 146 of such Code,
after the date of the enactment of this Act.
SEC. 211. STUDY OF TAX INCENTIVES FOR THE CONVERSION OF COMMERCIAL
PROPERTY TO AFFORDABLE HOUSING.
Within 6 months of the date of the enactment of this Act, the
Secretary of the Treasury, the Secretary of Housing and Urban
Development, the Deputy Under Secretary for Rural Development of the
Department of Agriculture, and the Director of the Office of Management
and Budget shall collaborate to produce a cost-benefit analysis of
providing tax incentives, including the non-recognition of capital
gains, to the owners of vacant or under-utilized commercial real estate
in exchange for selling these properties to State, local, or tribal
housing finance agencies for conversion to affordable rental housing
for low-income residents, including shelters for the homeless.
SEC. 212. RENTERS CREDIT.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 36B the following new section:
``SEC. 36C. RENTERS CREDIT.
``(a) Allowance of Credit.--
``(1) In general.--There shall be allowed as a credit
against the tax imposed by this subtitle for any taxable year
an amount equal to the sum of the amounts determined under
paragraph (2) for all qualified buildings with a credit period
which includes months occurring during the taxable year.
``(2) Qualified building amount.--The amount determined
under this paragraph with respect to any qualified building for
any taxable year shall be an amount equal to the lesser of--
``(A) the aggregate qualified rental reduction
amounts for all eligible units within such building for
months occurring during the taxable year which are
within the credit period for such building, or
``(B) the rental reduction credit amount allocated
to such building for such months.
``(3) Qualified building.--For purposes of this section--
``(A) In general.--The term `qualified building'
means any building which is residential rental property
(as defined in section 168(e)(2)(A)) of the taxpayer
with respect to which--
``(i) a rental reduction credit amount has
been allocated by a rental reduction credit
agency of a State, and
``(ii) a qualified rental reduction
agreement is in effect.
``(B) Building not disqualified by other
assistance.--A building shall not fail to be treated as
a qualified building merely because--
``(i) a credit was allowed under section 42
with respect to such building or there was any
other Federal assistance in the construction or
rehabilitation of such building,
``(ii) the rehabilitation credit determined
under section 47 was allowed under section 38
with respect to such building, or
``(iii) Federal rental assistance was
provided for such building during any period
preceding the credit period.
``(b) Qualified Rental Reduction Amount.--For purposes of this
section--
``(1) In general.--The term `qualified rental reduction
amount' means, with respect to any eligible unit for any month,
an amount equal to the applicable percentage (as determined
under subsection (e)(1)) of the excess of--
``(A) the applicable rent for such unit, over
``(B) the family rental payment required for such
unit.
``(2) Applicable rent.--
``(A) In general.--The term `applicable rent'
means, with respect to any eligible unit for any month,
the lesser of--
``(i) the amount of rent which would be
charged for a substantially similar unit with
the same number of bedrooms in the same
building which is not an eligible unit, or
``(ii) an amount equal to the market rent
standard for such unit.
``(B) Market rent standard.--
``(i) In general.--The market rent standard
with respect to any eligible unit is--
``(I) the small area fair market
rent determined by the Secretary of
Housing and Urban Development for units
with the same number of bedrooms in the
same zip code tabulation area, or
``(II) if there is no rent
described in subclause (I) for such
area, the fair market rent determined
by such Secretary for units with the
same number of bedrooms in the same
county.
``(ii) State option.--A State may in its
rental reduction allocation plan provide that
the market rent standard for all (or any part)
of a zip code tabulation area or county within
the State shall be equal to a percentage (not
less than 75 nor more than 125) of the amount
determined under clause (i) (after application
of clause (iii)) for such area or county.
``(iii) Minimum amount.--Notwithstanding
clause (i), the market rent standard with
respect to any eligible unit for any year in
the credit period after the first year in the
credit period for such unit shall not be less
than the market rent standard determined for
such first year.
``(3) Family rental payment requirements.--
``(A) In general.--Each qualified rental reduction
agreement with respect to any qualified building shall
require that the family rental payment for an eligible
unit within such building for any month shall be equal
to the lesser of--
``(i) 30 percent of the monthly family
income of the residents of the unit (as
determined under subsection (e)(5)), or
``(ii) the applicable rent for such unit.
``(B) Utility costs.--Any utility allowance
(determined by the Secretary in the same manner as
under section 42(g)(2)(B)(ii)) paid by residents of an
eligible unit shall be taken into account as rent in
determining the family rental payment for such unit for
purposes of this paragraph.
``(c) Rental Reduction Credit Amount.--For purposes of this
section--
``(1) Determination of amount.--
``(A) In general.--The term `rental reduction
credit amount' means, with respect to any qualified
building, the dollar amount which is allocated to such
building (and to eligible units within such building)
under this subsection. Such dollar amount shall be
allocated to months in the credit period with respect
to such building (and such units) on the basis of the
estimates described in paragraph (2)(B).
``(B) Allocation on project basis.--In the case of
a project which includes (or will include) more than 1
building, the rental reduction credit amount shall be
the dollar amount which is allocated to such project
for all buildings included in such project. Subject to
the limitation under subsection (e)(3)(B), such amount
shall be allocated among such buildings in the manner
specified by the taxpayer unless the qualified rental
reduction agreement with respect to such project
provides for such allocation.
``(2) State allocation.--
``(A) In general.--Except as provided in
subparagraph (C), each rental reduction credit agency
of a State shall each calendar year allocate its
portion of the State rental reduction credit ceiling to
qualified buildings (and to eligible units within each
such building) in accordance with the State rental
reduction allocation plan.
``(B) Allocations to each building.--The rental
reduction credit amount allocated to any qualified
building shall not exceed the aggregate qualified
rental reduction amounts which such agency estimates
will occur over the credit period for eligible units
within such building, based on reasonable estimates of
rents, family incomes, and vacancies in accordance with
procedures established by the State as part of its
State rental reduction allocation plan.
``(C) Specific allocations.--
``(i) Nonprofit organizations.--At least 25
percent of the State rental reduction credit
ceiling for any State for any calendar year
shall be allocated to qualified buildings in
which a qualified nonprofit organization (as
defined in section 42(h)(5)(C)) owns (directly
or through 1 or more partnerships) an interest
and materially participates (within the meaning
of section 469(h)) in the operation of the
building throughout the credit period. A State
may waive or lower the requirement under this
clause for any calendar year if it determines
that meeting such requirement is not feasible.
``(ii) Rural areas.--
``(I) In general.--The State rental
reduction credit ceiling for any State
for any calendar year shall be
allocated to buildings in rural areas
(as defined in section 520 of the
Housing Act of 1949) in an amount
which, as determined by the Secretary
of Housing and Urban Development, bears
the same ratio to such ceiling as the
number of extremely low-income
households with severe rent burdens in
such rural areas bears to the total
number of such households in the State.
``(II) Alternative 5-year testing
period.--In the case of the 5-calendar
year period beginning in 2023, a State
shall not be treated as failing to meet
the requirements of subclause (I) for
any calendar year in such period if, as
determined by the Secretary, the
average annual amount allocated to such
rural areas during such period meets
such requirements.
``(3) Application of allocated credit amount.--
``(A) Amount available to taxpayer for all months
in credit period.--Any rental reduction credit amount
allocated to any qualified building out of the State
rental reduction credit ceiling for any calendar year
shall apply to such building for all months in the
credit period ending during or after such calendar
year.
``(B) Ceiling for allocation year reduced by entire
credit amount.--Any rental reduction credit amount
allocated to any qualified building out of an
allocating agency's State rental reduction credit
ceiling for any calendar year shall reduce such ceiling
for such calendar year by the entire amount so
allocated for all months in the credit period (as
determined on the basis of the estimates under
paragraph (2)(B)) and no reduction shall be made in
such agency's State rental reduction credit ceiling for
any subsequent calendar year by reason of such
allocation.
``(4) State rental reduction credit ceiling.--
``(A) In general.--The State rental reduction
credit ceiling applicable to any State for any calendar
year shall be an amount equal to the sum of--
``(i) the greater of--
``(I) the per capita dollar amount
multiplied by the State population, or
``(II) the minimum ceiling amount,
plus
``(ii) the amount of the State rental
reduction credit ceiling returned in the
calendar year.
``(B) Return of state ceiling amounts.--For
purposes of subparagraph (A)(ii), except as provided in
subsection (d)(2), the amount of the State rental
reduction credit ceiling returned in a calendar year
equals the amount of the rental reduction credit amount
allocated to any building which, after the close of the
calendar year for which the allocation is made--
``(i) is canceled by mutual consent of the
rental reduction credit agency and the taxpayer
because the estimates made under paragraph
(2)(B) were substantially incorrect, or
``(ii) is canceled by the rental reduction
credit agency because the taxpayer violates the
qualified rental reduction agreement and, under
the terms of the agreement, the rental
reduction credit agency is authorized to cancel
all (or any portion) of the allocation by
reason of the violation.
``(C) Per capita dollar amount; minimum ceiling
amount.--For purposes of this paragraph--
``(i) Per capita dollar amount.--The per
capita dollar amount is--
``(I) for calendar year 2023,
$12.30,
``(II) for calendar year 2024,
$24.50, and
``(III) for calendar years 2025 and
thereafter, $36.75.
``(ii) Minimum ceiling amount.--The minimum
ceiling amount is--
``(I) for calendar year 2023,
$14,000,000,
``(II) for calendar year 2024,
$28,000,000, and
``(III) for calendar years 2025 and
thereafter, $42,000,000.
``(iii) Cost-of-living adjustment.--In the
case of a calendar year beginning after 2025,
the $36.75 and $42,000,000 amounts in clauses
(i)(III) and (ii)(III) shall each be increased
by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2024' for
`calendar year 2016' in subparagraph
(A)(ii) thereof.
In the case of the $42,000,000 amount, any
increase under this clause which is not a
multiple of $5,000 shall be rounded to the next
lowest multiple of $5,000 and in the case of
the $36.75 amount, any increase under this
clause which is not a multiple of 5 cents shall
be rounded to the next lowest multiple of 5
cents.
``(D) Population.--For purposes of this paragraph,
population shall be determined in accordance with
section 146(j).
``(E) Unused rental reduction credit allocated
among certain states.--
``(i) In general.--The unused rental
reduction credit of a State for any calendar
year shall be assigned to the Secretary for
allocation among qualified States for the
succeeding calendar year.
``(ii) Unused rental reduction credit.--For
purposes of this subparagraph, the unused
rental reduction credit of a State for any
calendar year is the excess (if any) of--
``(I) the State rental reduction
credit ceiling for the year preceding
such year, over
``(II) the aggregate rental
reduction credit amounts allocated for
such year.
``(iii) Formula for allocation of unused
credit among qualified states.--The amount
allocated under this subparagraph to a
qualified State for any calendar year shall be
the amount determined by the Secretary to bear
the same ratio to the aggregate unused rental
reduction credits of all States for the
preceding calendar year as such State's
population for the calendar year bears to the
population of all qualified States for the
calendar year. For purposes of the preceding
sentence, population shall be determined in
accordance with section 146(j).
``(iv) Qualified state.--For purposes of
this subparagraph, the term `qualified State'
means, with respect to a calendar year, any
State--
``(I) which allocated its entire
State rental reduction credit ceiling
for the preceding calendar year, and
``(II) for which a request is made
(at such time and in such manner as the
Secretary may prescribe) to receive an
allocation under clause (iii).
``(5) Other definitions.--For purposes of this section--
``(A) Rental reduction credit agency.--The term
`rental reduction credit agency' means any agency
authorized by a State to carry out this section. Such
authorization shall include the jurisdictions within
the State where the agency may allocate rental
reduction credit amounts.
``(B) Possessions treated as states.--The term
`State' includes a possession of the United States.
``(C) Family.--The term `family' has the same
meaning as when used in the United States Housing Act
of 1937.
``(d) Modifications To Correct Inaccurate Amounts Due to Incorrect
Estimates.--
``(1) Establishment of reserves.--
``(A) In general.--Each rental reduction credit
agency of a State shall establish a reserve for the
transfer and reallocation of amounts pursuant to this
paragraph, and notwithstanding any other provision of
this section, the rental reduction credit amount
allocated to any building by such agency shall be zero
unless such agency has in effect such a reserve at the
time of the allocation of such credit amount.
``(B) Transfers to reserve.--
``(i) In general.--If, for any taxable
year, a taxpayer would (but for this
subparagraph) not be able to use the entire
rental reduction credit amount allocated to a
qualified building by a rental reduction credit
agency of a State for the taxable year because
of a rental reduction shortfall, then the
taxpayer shall for the taxable year transfer to
the reserve established by such agency under
subparagraph (A) an amount equal to such rental
reduction shortfall.
``(ii) Rental reduction shortfall.--For
purposes of this subparagraph, the rental
reduction shortfall for any qualified building
for any taxable year is the amount by which the
aggregate amount of the excesses determined
under subsection (b)(1) for all eligible units
within such building are less than such
aggregate amount estimated under subsection
(c)(2)(B) for the taxable year.
``(iii) Treatment of transferred amount.--
For purposes of subsection (a)(2)(A), the
aggregate qualified rental reduction amounts
for all eligible units within a qualified
building with respect to which clause (i)
applies for any taxable year shall be increased
by an amount equal to the applicable percentage
(determined under subsection (e)(1) for the
building) of the amount of the transfer to the
reserve under clause (i) with respect to such
building for such taxable year.
``(C) Reallocation of amounts transferred.--
``(i) In general.--If, for any taxable
year--
``(I) the aggregate qualified
rental reduction amounts for all
eligible units within a qualified
building for the taxable year, exceed
``(II) the rental reduction credit
amount allocated to such building by a
rental reduction credit agency of a
State for the taxable year (determined
after any increase under paragraph
(2)),
the rental reduction credit agency shall, upon
application of the taxpayer, pay to the
taxpayer from the reserve established by such
agency under subparagraph (A) the amount which,
when multiplied by the applicable percentage
(determined under subsection (e)(1) for the
building), equals such excess. If the amount in
the reserve is less than the amounts requested
by all taxpayers for taxable years ending
within the same calendar year, the agency shall
ratably reduce the amount of each payment
otherwise required to be made.
``(ii) Excess reserve amounts.--If a rental
reduction credit agency of a State determines
that the balance in its reserve is in excess of
the amounts reasonably needed over the
following 5 calendar years to make payments
under clause (i), the agency may withdraw such
excess but only to--
``(I) reduce the rental payments of
eligible tenants in a qualified
building in units other than eligible
units, or of eligible tenants in units
in a building other than a qualified
building, to amounts no higher than the
sum of rental payments required for
eligible tenants in qualified buildings
under subsection (b)(3) and any rental
charges to such tenants in excess of
the market rent standard; or
``(II) address maintenance and
repair needs in qualified buildings
that cannot reasonably be met using
other resources available to the owners
of such buildings.
``(D) Administration.--Each rental reduction credit
agency of a State shall establish procedures for the
timing and manner of transfers and payments made under
this paragraph.
``(E) Special rule for projects.--In the case of a
rental reduction credit allocated to a project
consisting of more than 1 qualified building, a
taxpayer may elect to have this paragraph apply as if
all such buildings were 1 qualified building if the
applicable percentage for each such building is the
same.
``(F) Alternative methods of transfer and
reallocation.--Upon request to, and approval by, the
Secretary, a State may establish an alternative method
for the transfer and reallocation of amounts otherwise
required to be transferred to, and allocated from, a
reserve under this paragraph. Any State adopting an
alternative method under this subparagraph shall, at
such time and in such manner as the Secretary
prescribes, provide to the Secretary and the Secretary
of Housing and Urban Development detailed reports on
the operation of such method, including providing such
information as such Secretaries may require.
``(2) Allocation of returned state ceiling amounts.--In the
case of any rental reduction credit amount allocated to a
qualified building which is canceled as provided in subsection
(c)(4)(B)(i), the rental reduction credit agency may, in lieu
of treating such allocation as a returned credit amount under
subsection (c)(4)(A)(ii), elect to allocate, upon the request
of the taxpayer, such amount to any other qualified building
for which the credit amount allocated in any preceding calendar
year was too small because the estimates made under subsection
(c)(2)(B) were substantially incorrect.
``(3) Renting to noneligible tenants.--If, after the
application of paragraphs (1)(C) (or any similar reallocation
under paragraph (1)(F)) and (2), a rental reduction credit
agency of a State determines that, because of the incorrect
estimates under subsection (c)(2)(B), the aggregate qualified
rental reduction amounts for all eligible units within a
qualified building will (on an ongoing basis) exceed the rental
reduction credit amount allocated to such building, a taxpayer
may elect, subject to subsection (g)(2) and only to the extent
necessary to eliminate such excess, rent vacant eligible units
without regard to the requirements that such units be rented
only to eligible tenants and at the rental rate determined
under subsection (b)(3).
``(e) Terms Relating to Rental Reduction Credit and Requirements.--
For purposes of this section--
``(1) Applicable percentage.--
``(A) In general.--The term `applicable percentage'
means, with respect to any qualified building, the
percentage (not greater than 110 percent) set by the
rental reduction credit agency at the time it allocates
the rental reduction dollar amount to such building.
``(B) Higher percentage for high-opportunity
areas.--The rental reduction credit agency may set a
percentage under subparagraph (A) up to 120 percent for
any qualified building which--
``(i) targets its eligible units for rental
to families with children, and
``(ii) is located in a neighborhood which
has a poverty rate of no more than 10 percent.
``(2) Credit period.--
``(A) In general.--The term `credit period' means,
with respect to any qualified building, the 15-year
period beginning with the first month for which the
qualified rental reduction agreement is in effect with
respect to such building.
``(B) State option to reduce period.--A rental
reduction credit agency may provide a credit period for
any qualified building which is less than 15 years.
``(3) Eligible unit.--
``(A) In general.--The term `eligible unit' means,
with respect to any qualified building, a unit--
``(i) which is occupied by an eligible
tenant,
``(ii) the rent of which for any month
equals 30 percent of the monthly family income
of the residents of such unit (as determined
under paragraph (5)),
``(iii) with respect to which the tenant is
not concurrently receiving rental assistance
under any other Federal program, and
``(iv) which is certified to the rental
reduction credit agency as an eligible unit for
purposes of this section and the qualified
rental reduction agreement.
Notwithstanding clause (iii), a State may provide in
its State rental reduction allocation plan that an
eligible unit shall also not include a unit with
respect to which any resident is receiving rental
assistance under a State or local program.
``(B) Limitation on number of units.--
``(i) In general.--The number of units
which may be certified as eligible units with
respect to any qualified building under
subparagraph (A)(iv) at any time shall not
exceed the greater of--
``(I) 40 percent of the total units
in such building, or
``(II) 25 units.
In the case of an allocation to a project under
subsection (c)(1)(B), the limitation under the
preceding sentence shall be applied on a
project basis and the certification of such
eligible units shall be allocated to each
building in the project, except that if
buildings in such project are on non-contiguous
tracts of land, buildings on each such tract
shall be treated as a separate project for
purposes of applying this sentence.
``(ii) Buildings receiving previous federal
rental assistance.--If, at any time prior to
the entering into of a qualified rental
reduction agreement with respect to a qualified
building, tenants in units within such building
had been receiving project-based rental
assistance under any other Federal program,
then, notwithstanding clause (i), the maximum
number of units which may be certified as
eligible units with respect to the building
under subparagraph (A)(iv) shall not be less
than the sum of--
``(I) the maximum number of units
in the building previously receiving
such assistance at any time before the
agreement takes effect, plus
``(II) the amount determined under
clause (i) without taking into account
the units described in subclause (I).
``(4) Eligible tenant.--
``(A) In general.--The term `eligible tenant' means
any individual if the individual's family income does
not exceed the greater of--
``(i) 30 percent of the area median gross
income (as determined under section 42(g)(1)),
or
``(ii) the applicable poverty line for a
family of the size involved.
``(B) Treatment of individuals whose incomes rise
above limit.--
``(i) In general.--Notwithstanding an
increase in the family income of residents of a
unit above the income limitation applicable
under subparagraph (A), such residents shall
continue to be treated as eligible tenants if
the family income of such residents initially
met such income limitation and such unit
continues to be certified as an eligible unit
under this section.
``(ii) No rental reduction for at least 2
years.--A qualified rental reduction agreement
with respect to a qualified building shall
provide that if, by reason of an increase in
family income described in clause (i), there is
no qualified rental reduction amount with
respect to the dwelling unit for 2 consecutive
years, the taxpayer shall rent the next
available unit to an eligible tenant (without
regard to whether such unit is an eligible unit
under this section).
``(C) Applicable poverty line.--The term
`applicable poverty line' means the most recently
published poverty line (within the meaning of section
2110(c)(5) of the Social Security Act (42 U.S.C.
1397jj(c)(5))) as of the time of the determination as
to whether an individual is an eligible tenant.
``(5) Family income.--
``(A) In general.--Family income shall be
determined in the same manner as under section 8 of the
United States Housing Act of 1937.
``(B) Time for determining income.--
``(i) In general.--Except as provided in
this subparagraph, family income shall be
determined at least annually on the basis of
income for the preceding calendar year.
``(ii) Families on fixed income.--If at
least 90 percent of the family income of the
residents of a unit at the time of any
determination under clause (i) is derived from
payments under title II or XVI of the Social
Security Act (or any similar fixed income
amounts specified by the Secretary), the
taxpayer may elect to treat such payments (or
amounts) as the family income of such residents
for the year of the determination and the 2
succeeding years, except that the taxpayer
shall, in such manner as the Secretary may
prescribe, adjust such amount for increases in
the cost of living.
``(iii) Initial income.--The Secretary may
allow a State to provide that the family income
of residents at the time such residents first
rent a unit in a qualified building may be
determined on the basis of current or
anticipated income.
``(iv) Special rules where family income is
reduced.--If residents of a unit establish (in
such manner as the rental reduction credit
agency provides) that their family income has
been reduced by at least 10 percent below such
income for the determination year--
``(I) such residents may elect, at
such time and in such manner as such
agency may prescribe, to have their
family income redetermined, and
``(II) clause (ii) shall not apply
to any of the 2 succeeding years
described in such clause which are
specified in the election.
``(f) State Rental Reduction Allocation Plan.--
``(1) Adoption of plan required.--
``(A) In general.--For purposes of this section--
``(i) each State shall, before the
allocation of its State rental reduction credit
ceiling, establish and have in effect a State
rental reduction allocation plan, and
``(ii) notwithstanding any other provision
of this section, the rental reduction credit
amount allocated to any building shall be zero
unless such amount was allocated pursuant to a
State rental reduction allocation plan.
Such plan shall only be adopted after such plan is made
public and at least 60 days has been allowed for public
comment.
``(B) State rental reduction allocation plan.--For
purposes of this section, the term `State rental
reduction allocation plan' means, with respect to any
State, any plan of the State meeting the requirements
of paragraphs (2) and (3).
``(2) General plan requirements.--A plan shall meet the
requirements of this paragraph only if--
``(A) the plan sets forth the criteria and
priorities which a rental reduction credit agency of
the State shall use in allocating the State rental
reduction credit ceiling to eligible units within a
building,
``(B) the plan provides that no credit allocation
shall be made which is not in accordance with the
criteria and priorities set forth under subparagraph
(A) unless such agency provides a written explanation
to the general public for any credit allocation which
is not so made and the reasons why such allocation is
necessary, and
``(C) the plan provides that such agency is
required to prioritize the renewal of existing credit
allocations at the time of the expiration of the
qualified rental reduction agreement with respect to
the allocation, including, where appropriate, a
commitment within a qualified rental reduction
agreement that the credit allocation will be renewed if
the terms of the agreement have been met and sufficient
new credit authority is available.
``(3) Specific requirements.--A plan shall meet the
requirements of this paragraph only if--
``(A) the plan provides methods for determining--
``(i) the amount of rent which would be
charged for a substantially similar unit in the
same building which is not an eligible unit for
purposes of subsection (b)(2)(A)(i), including
whether such determination may be made by self-
certification or by undertaking rent
reasonableness assessments similar to
assessments required under section 8(o)(10) of
the United States Housing Act of 1937 (42
U.S.C. 1437f(o)(10)),
``(ii) the qualified rental reduction
amounts under subsection (c)(2)(B), and
``(iii) the applicable percentage under
subsection (e)(1),
``(B) the plan provides a procedure that the rental
reduction credit agency (or an agent or other private
contractor of such agency) will follow in monitoring
for--
``(i) noncompliance with the provisions of
this section and the qualified rental reduction
agreement and in notifying the Internal Revenue
Service of any such noncompliance of which such
agency becomes aware, and
``(ii) noncompliance with habitability
standards through regular site visits,
``(C) the plan requires a person receiving a credit
allocation to report to the rental reduction credit
agency such information as is necessary to ensure
compliance with the provisions of this section and the
qualified rental reduction agreement, and
``(D) the plan provides methods by which any excess
reserve amounts which become available under subsection
(d)(1)(C)(ii) will be used to reduce rental payments of
eligible tenants or to address maintenance and repair
needs in qualified buildings, including how such
assistance will be allocated among eligible tenants and
qualified buildings.
``(g) Qualified Rental Reduction Agreement.--For purposes of this
section--
``(1) In general.--The term `qualified rental reduction
agreement' means, with respect to any building which is
residential rental property (as defined in section
168(e)(2)(A)), a written, binding agreement between a rental
reduction credit agency and the taxpayer which specifies--
``(A) the number of eligible units within such
building for which a rental reduction credit amount is
being allocated,
``(B) the credit period for such building,
``(C) the rental reduction credit amount allocated
to such building (and dwelling units within such
building) and the portion of such amount allocated to
each month within the credit period under subsection
(c)(2)(B),
``(D) the applicable percentage to be used in
computing the qualified rental reduction amounts with
respect to the building,
``(E) the method for determining the amount of rent
which may be charged for eligible units within the
building, and
``(F) whether--
``(i) the agency commits to entering into a
new agreement with the taxpayer if the terms of
the agreement have been met and sufficient new
credit authority is available for such new
agreement, and
``(ii) the taxpayer is required to accept
such new agreement.
``(2) Tenant protections.--A qualified rental reduction
agreement shall provide the following:
``(A) Non-displacement of non-eligible tenants.--A
taxpayer receiving a rental reduction credit amount may
not refuse to renew the lease of or evict (other than
for good cause) a tenant of a unit who is not an
eligible tenant at any time during the credit period
and such unit shall not be treated as an eligible unit
while such tenant resides there.
``(B) Only good cause evictions of eligible
tenants.--A taxpayer receiving a rental reduction
credit amount may not refuse to renew the lease of or
evict (other than for good cause) an eligible tenant of
an eligible unit.
``(C) Mobility.--A taxpayer receiving a rental
reduction credit amount shall--
``(i) give priority to rent any available
unit of suitable size to tenants who are
eligible tenants who are moving from another
qualified building where such tenants had lived
at least 1 year and were in good standing, and
``(ii) inform eligible tenants within the
building of their right to move after 1 year
and provide a list maintained by the State of
qualified buildings where such tenants might
move.
``(iii) Fair housing and civil rights.--If
a taxpayer receives a rental reduction credit
amount--
``(I) such taxpayer shall comply
with the Fair Housing Act with respect
to the building, and
``(II) the receipt of such amount
shall be treated as the receipt of
Federal financial assistance for
purposes of applying any Federal civil
rights laws.
``(iv) Admissions preferences.--A taxpayer
receiving a rental reduction credit amount
shall comply with any admissions preferences
established by the State for tenants within
particular demographic groups eligible for
health or social services.
``(3) Compliance requirements.--A qualified rental
reduction agreement shall provide that a taxpayer receiving a
rental reduction credit amount shall comply with all reporting
and other procedures established by the State to ensure
compliance with this section and such agreement.
``(4) Projects.--In the case of a rental reduction credit
allocated to a project consisting of more than 1 building, the
rental reduction credit agency may provide for a single
qualified rental reduction agreement which applies to all
buildings which are part of such project.
``(h) Certifications and Other Reports to Secretary.--
``(1) Certification with respect to 1st year of credit
period.--Following the close of the 1st taxable year in the
credit period with respect to any qualified building, the
taxpayer shall certify to the Secretary (at such time and in
such form and in such manner as the Secretary prescribes)--
``(A) the information described in subsection
(g)(1) required to be contained in the qualified rental
reduction agreement with respect to the building, and
``(B) such other information as the Secretary may
require.
In the case of a failure to make the certification required by
the preceding sentence on the date prescribed therefor, unless
it is shown that such failure is due to reasonable cause and
not to willful neglect, no credit shall be allowable by reason
of subsection (a) with respect to such building for any taxable
year ending before such certification is made.
``(2) Annual reports to the secretary.--The Secretary may
require taxpayers to submit an information return (at such time
and in such form and manner as the Secretary prescribes) for
each taxable year setting forth--
``(A) the information described in paragraph (1)(A)
for the taxable year, and
``(B) such other information as the Secretary may
require.
The penalty under section 6652(j) shall apply to any failure to
submit the return required by the Secretary under the preceding
sentence on the date prescribed therefor.
``(3) Annual reports from rental reduction credit agency.--
``(A) Reports.--Each rental reduction credit agency
which allocates any rental reduction credit amount to 1
or more buildings for any calendar year shall submit to
the Secretary (at such time and in such manner as the
Secretary shall prescribe) an annual report
specifying--
``(i) the amount of rental reduction credit
amounts allocated to each such building for
such year,
``(ii) sufficient information to identify
each such building and the taxpayer with
respect thereto,
``(iii) information as to the demographic
and income characteristics of eligible tenants
of all such buildings to which such amounts
were allocated, and
``(iv) such other information as the
Secretary may require.
``(B) Penalty.--The penalty under section 6652(j)
shall apply to any failure to submit the report
required by subparagraph (A) on the date prescribed
therefor.
``(C) Information made public.--The Secretary
shall, in consultation with Secretary of Housing and
Urban Development, make information reported under this
paragraph for each qualified building available to the
public annually to the greatest degree possible without
disclosing personal information about individual
tenants.
``(i) Special Rule for Payments to Partnerships and S
Corporations.--For purposes of this subtitle, in the case of any
qualified building directly held by any partnership or S corporation,
the payment under section 6434 shall be made in lieu of the credit
determined under this section with respect to such building.
``(j) Regulations and Guidance.--The Secretary shall prescribe such
regulations or guidance as may be necessary to carry out the purposes
of this section, including--
``(1) providing necessary forms and instructions, and
``(2) providing for proper treatment of projects for which
a credit is allowed both under this section and section 42.''.
(b) Payment to Partnerships and S Corporations in Lieu of Credit.--
(1) In general.--Subchapter B of chapter 65 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 6434. PAYMENTS IN LIEU OF RENTERS CREDIT FOR PARTNERSHIPS AND S
CORPORATIONS.
``(a) In General.--In the case of any qualified building (as
defined in section 36C(a)(3)) directly held by any partnership or S
corporation, the Secretary shall pay to such partnership or S
corporation for any taxable year an amount equal to the amount of the
credit which, but for section 36C(i), would be allowed under section
36C with respect to such building.
``(b) Regulatory Authority.--The Secretary shall prescribe such
regulations, rules, and guidance as may be necessary to carry out
section 36C(i), section 92, and this section, including regulations,
rules, and guidance providing for--
``(1) the application of the rules under section 36C with
respect to payments under this section in the same manner as
such rules apply for purposes of the credit under section 36C,
``(2) the time and manner of payments under subsection (a),
and
``(3) the determination of a partner's distributive share,
or an S corporation shareholder's pro rata share, of any
payment under subsection (a).''.
(2) Conforming amendment.--The table of sections for
subchapter B of chapter 65 of the Internal Revenue Code of 1986
is amended by adding at the end the following new item:
``Sec. 6434. Payments in lieu of renters credit for partnerships and S
corporations.''.
(c) Credit Includible in Gross Income.--
(1) In general.--Part II of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new section:
``SEC. 92. INCLUSION IN INCOME OF RENTERS CREDIT AND PAYMENTS.
``Gross income includes the amount of the credit allowed to the
taxpayer under section 36C for the taxable year and the amount of any
payment in lieu of such credit under section 6434.''.
(2) Income disregarded for alternative minimum taxable
income.--Section 56(a) of such Code is amended by adding at the
end the following:
``(8) Section 92 not applicable.--Section 92 (relating to
inclusion in income of renters credit) shall not apply.''.
(3) Conforming amendment.--The table of sections for part
II of subchapter B of chapter 1 of such Code is amended by
adding at the end the following new item:
``Sec. 92. Inclusion in income of renters credit and payments.''.
(d) Administrative Fees.--No provision of, or amendment made by,
this Act shall be construed to prevent a rental reduction credit agency
of a State from imposing fees to cover its costs or from levying any
such fee on a taxpayer applying for or receiving a rental reduction
credit amount.
(e) Other Conforming Amendments.--
(1) Section 6211(b)(4) of the Internal Revenue Code of 1986
is amended by inserting ``36C (including any related payment
under section 6434),'' after ``36B,''.
(2) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``36C (including any
related payment under section 6434),'' after ``36B,''.
(3) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 36B
the following new item:
``Sec. 36C. Renters credit.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
SEC. 213. MIDDLE-INCOME HOUSING TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 42 the following new section:
``SEC. 42A. MIDDLE-INCOME HOUSING CREDIT.
``(a) In General.--For purposes of section 38, the amount of the
middle-income housing credit determined under this section for any
taxable year in the credit period shall be an amount equal to--
``(1) the applicable percentage, of
``(2) the qualified basis of each qualified middle-income
building.
``(b) Applicable Percentage.--
``(1) Determination of applicable percentage.--For purposes
of this section--
``(A) In general.--The term `applicable percentage'
means, with respect to any building, the appropriate
percentage prescribed by the Secretary for the earlier
of--
``(i) the month in which such building is
placed in service, or
``(ii) at the election of the taxpayer, the
month in which the taxpayer and the housing
credit agency enter into an agreement with
respect to such building (which is binding on
such agency, the taxpayer, and all successors
in interest) as to the housing credit dollar
amount to be allocated to such building.
A month may be elected under clause (ii) only if the
election is made not later than the 5th day after the
close of such month. Such an election, once made, shall
be irrevocable.
``(B) Method of prescribing percentages.--The
percentages prescribed by the Secretary for any month
shall be percentages which will yield over a 15-year
period amounts of credit under subsection (a) which
have a present value equal to--
``(i) 50 percent of the qualified basis of
a new building which is not Federally
subsidized for the taxable year, and
``(ii) 20 percent of the qualified basis of
a building not described in clause (i).
``(C) Method of discounting.--The present value
under subparagraph (B) shall be determined--
``(i) as of the last day of the 1st year of
the 15-year period referred to in subparagraph
(B),
``(ii) by using a discount rate equal to 72
percent of the average of the annual Federal
mid-term rate and the annual Federal long-term
rate applicable under section 1274(d)(1) to the
month applicable under clause (i) or (ii) of
subparagraph (A) and compounded annually, and
``(iii) by assuming that the credit
allowable under this section for any year is
received on the last day of such year.
``(2) Minimum credit rate.--
``(A) In general.--The applicable percentage for
any building which is not Federally subsidized for the
taxable year shall not be less than 5 percent.
``(B) Minimum credit rate for federally subsidized
buildings.--In the case of any building to which
subparagraph (A) does not apply, except as provided in
paragraph (3), the applicable percentage shall not be
less than 2 percent.
``(3) Exception for certain federally subsidized
buildings.--In the case of any building to which paragraph
(2)(A) does not apply, the applicable percentage is zero
unless--
``(A) a credit is allowed under section 42 with
respect to such building for the taxable year, and
``(B) such building is financed by tax-exempt bonds
as described in section 42(h)(4).
``(4) Cross references.--
``(A) For treatment of certain rehabilitation
expenditures as separate new buildings, see subsection
(e).
``(B) For determination of applicable percentage
for increases in qualified basis after the 1st year of
the credit period, see subsection (f)(3).
``(C) For authority of housing credit agency to
limit applicable percentage and qualified basis which
may be taken into account under this section with
respect to any building, see subsection (h)(6).
``(c) Qualified Basis; Qualified Middle-Income Building.--For
purposes of this section--
``(1) Qualified basis.--
``(A) Determination.--The qualified basis of any
qualified middle-income building for any taxable year
is an amount equal to--
``(i) the applicable fraction (determined
as of the close of such taxable year) of
``(ii) the eligible basis of such building
(determined under subsection (d)).
``(B) Applicable fraction.--For purposes of
subparagraph (A), the term `applicable fraction' means
the smaller of the unit fraction or the floor space
fraction.
``(C) Unit fraction.--For purposes of subparagraph
(B), the term `unit fraction' means the fraction--
``(i) the numerator of which is the number
of middle-income units in the building, and
``(ii) the denominator of which is the
number of residential rental units (whether or
not occupied) in such building.
``(D) Floor space fraction.--For purposes of
subparagraph (B), the term `floor space fraction' means
the fraction--
``(i) the numerator of which is the total
floor space of the middle-income units in such
building, and
``(ii) the denominator of which is the
total floor space of the residential rental
units (whether or not occupied) in such
building.
``(2) Qualified middle-income building.--The term
`qualified middle-income building' means any building which is
part of a qualified middle-income housing project at all times
during the period--
``(A) beginning on the 1st day in the credit period
on which such building is part of such a project, and
``(B) ending on the last day of the credit period
with respect to such building.
``(d) Eligible Basis.--For purposes of this section--
``(1) New buildings.--The eligible basis of a new building
is its adjusted basis as of the close of the 1st taxable year
of the credit period.
``(2) Existing buildings.--
``(A) In general.--The eligible basis of an
existing building is--
``(i) in the case of a building which meets
the requirements of subparagraph (B), its
adjusted basis as of the close of the 1st
taxable year of the credit period, and
``(ii) zero in any other case.
``(B) Requirements.--A building meets the
requirements of this subparagraph if--
``(i) the building is acquired by purchase
(as defined in section 179(d)(2)),
``(ii) there is a period of at least 10
years between the date of its acquisition by
the taxpayer and the date the building was last
placed in service,
``(iii) the building was not previously
placed in service by the taxpayer or by any
person who was a related person with respect to
the taxpayer as of the time previously placed
in service, and
``(iv) except as provided in subsection
(f)(5), a credit is allowable under subsection
(a) by reason of subsection (e) with respect to
the building.
``(C) Adjusted basis.--For purposes of subparagraph
(A), the adjusted basis of any building shall not
include so much of the basis of such building as is
determined by reference to the basis of other property
held at any time by the person acquiring the building.
``(D) Special rules.--
``(i) Special rules for certain
transfers.--For purposes of determining under
subparagraph (B)(ii) when a building was last
placed in service, there shall not be taken
into account any placement in service--
``(I) in connection with the
acquisition of the building in a
transaction in which the basis of the
building in the hands of the person
acquiring it is determined in whole or
in part by reference to the adjusted
basis of such building in the hands of
the person from whom acquired,
``(II) by a person whose basis in
such building is determined under
section 1014(a) (relating to property
acquired from a decedent),
``(III) by any governmental unit or
qualified nonprofit organization if the
requirements of subparagraph (B)(ii)
are met with respect to the placement
in service by such unit or organization
and all the income from such property
is exempt from Federal income taxation,
``(IV) by any person who acquired
such building by foreclosure (or by
instrument in lieu of foreclosure) of
any purchase-money security interest
held by such person if the requirements
of subparagraph (B)(ii) are met with
respect to the placement in service by
such person and such building is resold
within 12 months after the date such
building is placed in service by such
person after such foreclosure, or
``(V) of a single-family residence
by any individual who owned and used
such residence for no other purpose
than as his principal residence.
``(ii) Related person.--For purposes of
subparagraph (B)(iii), a person (hereinafter in
this subclause referred to as the `related
person') is related to any person if the
related person bears a relationship to such
person specified in section 267(b) or
707(b)(1), or the related person and such
person are engaged in trades or businesses
under common control (within the meaning of
subsections (a) and (b) of section 52).
``(3) Special rules relating to determination of adjusted
basis.--For purposes of this subsection--
``(A) In general.--Except as provided in
subparagraph (B), the adjusted basis of any building
shall be determined without regard to the adjusted
basis of any property which is not residential rental
property.
``(B) Basis of property in common areas, etc.,
included.--
``(i) In general.--Except as provided in
clause (ii), the adjusted basis of any building
shall be determined by taking into account the
adjusted basis of property (of a character
subject to the allowance for depreciation) used
in common areas or provided as comparable
amenities to all residential rental units in
such building.
``(ii) Special rule.--In the case of any
building for which the low-income housing tax
credit is allowable under section 42, the
adjusted basis of the building under this
section shall be determined without regard to
property used in common areas or provided as
comparable amenities to all residential rental
units in such building.
``(C) No reduction for depreciation.--The adjusted
basis of any building shall be determined without
regard to paragraphs (2) and (3) of section 1016(a).
``(4) Federal grants not taken into account in determining
eligible basis.--The eligible basis of a building shall not
include any costs financed with the proceeds of a Federally
funded grant.
``(5) Credit allowable for certain buildings acquired
during 10-year period.--On application by the taxpayer, the
Secretary may waive paragraph (2)(B)(ii) with respect to any
building acquired from an insured depository institution in
default (as defined in section 3 of the Federal Deposit
Insurance Act) or from a receiver or conservator of such an
institution.
``(6) Acquisition of building before end of prior credit
period.--
``(A) In general.--Under regulations prescribed by
the Secretary, in the case of a building described in
subparagraph (B) (or interest therein) which is
acquired by the taxpayer--
``(i) paragraph (2)(B) shall not apply, but
``(ii) the credit allowable by reason of
subsection (a) to the taxpayer for any period
after such acquisition shall be equal to the
amount of credit which would have been
allowable under subsection (a) for such period
to the prior owner referred to in subparagraph
(B) had such owner not disposed of the
building.
``(B) Description of building.--A building is
described in this subparagraph if--
``(i) a credit was allowed by reason of
subsection (a) to any prior owner of such
building, and
``(ii) the taxpayer acquired such building
before the end of the credit period for such
building with respect to such prior owner
(determined without regard to any disposition
by such prior owner).
``(e) Rehabilitation Expenditures Treated as Separate New
Building.--
``(1) In general.--Rehabilitation expenditures paid or
incurred by the taxpayer with respect to any building shall be
treated for purposes of this section as a separate new
building.
``(2) Rehabilitation expenditures.--For purposes of
paragraph (1)--
``(A) In general.--The term `rehabilitation
expenditures' means amounts chargeable to capital
account and incurred for property (or additions or
improvements to property) of a character subject to the
allowance for depreciation in connection with the
rehabilitation of a building.
``(B) Cost of acquisition, etc., not included.--
Such term does not include the cost of acquiring any
building (or interest therein) or any amount not
permitted to be taken into account under paragraph (3)
of subsection (d).
``(C) Certain relocation costs.--In the case of a
rehabilitation of a building to which section 280B does
not apply, costs relating to the relocation of
occupants, including--
``(i) amounts paid to occupants,
``(ii) amounts paid to third parties for
services relating to such relocation, and
``(iii) amounts paid for temporary housing
for occupants,
shall be treated as chargeable to capital account and
taken into account as rehabilitation expenditures.
``(3) Minimum expenditures to qualify.--
``(A) In general.--Paragraph (1) shall apply to
rehabilitation expenditures with respect to any
building only if--
``(i) the expenditures are allocable to 1
or more middle-income units or substantially
benefit such units, and
``(ii) the amount of such expenditures
during any 24-month period meets the
requirements of whichever of the following
subclauses requires the greater amount of such
expenditures:
``(I) The requirement of this
subclause is met if such amount is not
less than 20 percent of the adjusted
basis of the building (determined as of
the 1st day of such period and without
regard to paragraphs (2) and (3) of
section 1016(a)).
``(II) The requirement of this
subclause is met if the qualified basis
attributable to such amount, when
divided by the number of middle-income
units in the building, is equal to or
greater than the dollar amount in
effect under section
42(e)(3)(A)(ii)(II) for the calendar
year in which such expenditures are
treated as placed in service under
paragraph (4).
``(B) Date of determination.--The determination
under subparagraph (A) shall be made as of the close of
the 1st taxable year in the credit period with respect
to such expenditures.
``(4) Special rules.--For purposes of applying this section
with respect to expenditures which are treated as a separate
building by reason of this subsection--
``(A) such expenditures shall be treated as placed
in service at the close of the 24-month period referred
to in paragraph (3)(A), and
``(B) the applicable fraction under subsection
(c)(1) shall be the applicable fraction for the
building (without regard to paragraph (1)) with respect
to which the expenditures were incurred.
Nothing in subsection (d)(2) shall prevent a credit from being
allowed by reason of this subsection.
``(5) No double counting.--Rehabilitation expenditures may,
at the election of the taxpayer, be taken into account under
this subsection or subsection (d)(2)(A)(i) but not under both
such subsections.
``(6) Regulations to apply subsection with respect to group
of units in building.--The Secretary may prescribe regulations,
consistent with the purposes of this subsection, treating a
group of units with respect to which rehabilitation
expenditures are incurred as a separate new building.
``(f) Definition and Special Rules Relating to Credit Period.--
``(1) Credit period defined.--For purposes of this section,
the term `credit period' means, with respect to any building,
the period of 15 taxable years beginning with--
``(A) the taxable year in which the building is
placed in service, or
``(B) at the election of the taxpayer, the
succeeding taxable year,
but only if the building is a qualified middle-income building
as of the close of the 1st year of such period. The election
under subparagraph (B), once made, shall be irrevocable.
``(2) Special rule for 1st year of credit period.--
``(A) In general.--The credit allowable under
subsection (a) with respect to any building for the 1st
taxable year of the credit period shall be determined
by substituting for the applicable fraction under
subsection (c)(1) the fraction--
``(i) the numerator of which is the sum of
the applicable fractions determined under
subsection (c)(1) as of the close of each full
month of such year during which such building
was in service, and
``(ii) the denominator of which is 12.
``(B) Disallowed 1st-year credit allowed in 16th
year.--Any reduction by reason of subparagraph (A) in
the credit allowable (without regard to subparagraph
(A)) for the 1st taxable year of the credit period
shall be allowable under subsection (a) for the 1st
taxable year following the credit period.
``(3) Determination of applicable percentage with respect
to increases in qualified basis after 1st year of credit
period.--
``(A) In general.--In the case of any building
which was a qualified middle-income building as of the
close of the 1st year of the credit period, if--
``(i) as of the close of any taxable year
in the credit period (after the 1st year of
such period) the qualified basis of such
building, exceeds
``(ii) the qualified basis of such building
as of the close of the 1st year of the credit
period,
the applicable percentage which shall apply under
subsection (a) for the taxable year to such excess
shall be the percentage equal to \2/3\ of the
applicable percentage which (after the application of
subsection (h)) would but for this paragraph apply to
such basis.
``(B) 1st year computation applies.--A rule similar
to the rule of paragraph (2)(A) shall apply to any
increase in qualified basis to which subparagraph (A)
applies for the 1st year of such increase.
``(4) Dispositions of property.--If a building (or an
interest therein) is disposed of during any year for which
credit is allowable under subsection (a), such credit shall be
allocated between the parties on the basis of the number of
days during such year the building (or interest) was held by
each.
``(5) Credit period for existing buildings not to begin
before rehabilitation credit allowed.--
``(A) In general.--The credit period for an
existing building shall not begin before the 1st
taxable year of the credit period for rehabilitation
expenditures with respect to the building.
``(B) Acquisition credit allowed for certain
buildings not allowed a rehabilitation credit.--
``(i) In general.--In the case of a
building described in clause (ii)--
``(I) subsection (d)(2)(B)(iv)
shall not apply, and
``(II) the credit period for such
building shall not begin before the
taxable year which would be the 1st
taxable year of the credit period for
rehabilitation expenditures with
respect to the building under the
modifications described in clause
(ii)(II).
``(ii) Building described.--A building is
described in this clause if--
``(I) a waiver is granted under
subsection (d)(4) with respect to the
acquisition of the building, and
``(II) a credit would be allowed
for rehabilitation expenditures with
respect to such building if subsection
(e)(3)(A)(ii)(I) did not apply and if
the dollar amount in effect under
subsection (e)(3)(A)(ii)(II) were two-
thirds of such amount.
``(g) Qualified Middle-Income Housing Project.--For purposes of
this section--
``(1) In general.--The term `qualified middle-income
housing project' means any project for residential rental
property if 60 percent or more of the residential units in such
project are both rent-restricted and occupied by individuals
whose income is 100 percent or less of area median gross
income. For purposes of the preceding sentence, residential
units in a building which is not a qualified middle-income
building by reason of subsection (c)(2)(B) shall not be taken
into account.
``(2) Rent-restricted units.--
``(A) In general.--For purposes of paragraph (1), a
residential unit is rent-restricted if the gross rent
with respect to such unit does not exceed 30 percent of
the imputed income limitation applicable to such unit.
For purposes of the preceding sentence, the amount of
the income limitation under paragraph (1) applicable
for any period shall not be less than such limitation
applicable for the earliest period the building (which
contains the unit) was included in the determination of
whether the project is a qualified middle-income
housing project.
``(B) Gross rent.--For purposes of subparagraph
(A), gross rent--
``(i) includes any utility allowance
determined by the Secretary after taking into
account such determinations under section 8 of
the United States Housing Act of 1937,
``(ii) does not include any fee for a
supportive service which is paid to the owner
of the unit (on the basis of the middle-income
status of the tenant of the unit) by any
governmental program of assistance (or by an
organization described in section 501(c)(3) and
exempt from tax under section 501(a)) if such
program (or organization) provides assistance
for rent and the amount of assistance provided
for rent is not separable from the amount of
assistance provided for supportive services,
and
``(iii) does not include any rental payment
to the owner of the unit to the extent such
owner pays an equivalent amount to the Farmers'
Home Administration under section 515 of the
Housing Act of 1949.
For purposes of clause (ii), the term `supportive
service' means any service provided under a planned
program of services designed to enable residents of a
residential rental property to remain independent and
avoid placement in a hospital, nursing home, or
intermediate care facility for the mentally or
physically handicapped.
``(C) Imputed income limitation applicable to
unit.--For purposes of this paragraph, the imputed
income limitation applicable to a unit is the income
limitation which would apply under paragraph (1) to
individuals occupying the unit if the number of
individuals occupying the unit were as follows:
``(i) In the case of a unit which does not
have a separate bedroom, 1 individual.
``(ii) In the case of a unit which has 1 or
more separate bedrooms, 1.5 individuals for
each separate bedroom.
In the case of a project with respect to which a credit
is allowable by reason of this section and for which
financing is provided by a bond described in section
142(a)(7), the imputed income limitation shall apply in
lieu of the otherwise applicable income limitation for
purposes of applying section 142(d)(4)(B)(ii).
``(D) Treatment of units occupied by individuals
whose incomes rise above limit.--
``(i) In general.--Except as provided in
clause (ii), notwithstanding an increase in the
income of the occupants of a middle-income unit
above the income limitation applicable under
paragraph (1), such unit shall continue to be
treated as a middle-income unit if the income
of such occupants initially met such income
limitation and such unit continues to be rent-
restricted.
``(ii) Next available unit must be rented
to middle-income tenant if income rises above
140 percent of income limit.--If the income of
the occupants of the unit increases above 140
percent of the income limitation applicable
under paragraph (1), clause (i) shall cease to
apply to such unit if any residential rental
unit in the building (of a size comparable to,
or smaller than, such unit) is occupied by a
new resident whose income exceeds such income
limitation.
``(3) Date for meeting requirements.--
``(A) In general.--Except as otherwise provided in
this paragraph, a building shall be treated as a
qualified middle-income building only if the project
(of which such building is a part) meets the
requirements of paragraph (1) not later than the close
of the 1st year of the credit period for such building.
``(B) Buildings which rely on later buildings for
qualification.--
``(i) In general.--In determining whether a
building (hereinafter in this subparagraph
referred to as the `prior building') is a
qualified middle-income building, the taxpayer
may take into account 1 or more additional
buildings placed in service during the 12-month
period described in subparagraph (A) with
respect to the prior building only if the
taxpayer elects to apply clause (ii) with
respect to each additional building taken into
account.
``(ii) Treatment of elected buildings.--In
the case of a building which the taxpayer
elects to take into account under clause (i),
the period under subparagraph (A) for such
building shall end at the close of the 12-month
period applicable to the prior building.
``(iii) Date prior building is treated as
placed in service.--For purposes of determining
the credit period for the prior building, the
prior building shall be treated for purposes of
this section as placed in service on the most
recent date any additional building elected by
the taxpayer (with respect to such prior
building) was placed in service.
``(C) Special rule.--A building--
``(i) other than the 1st building placed in
service as part of a project, and
``(ii) other than a building which is
placed in service during the 12-month period
described in subparagraph (A) with respect to a
prior building which becomes a qualified
middle-income building,
shall in no event be treated as a qualified middle-
income building unless the project is a qualified
middle-income housing project (without regard to such
building) on the date such building is placed in
service.
``(D) Projects with more than 1 building must be
identified.--For purposes of this section, a project
shall be treated as consisting of only 1 building
unless, before the close of the 1st calendar year in
the project period (as defined in subsection
(h)(1)(F)(ii)), each building which is (or will be)
part of such project is identified in such form and
manner as the Secretary may provide.
``(4) Certain rules made applicable.--Paragraphs (2) (other
than subparagraph (A) thereof), (3), and (7) of section 142(d),
and section 6652(j), shall apply for purposes of determining
whether any project is a qualified middle-income housing
project and whether any unit is a middle-income unit; except
that, in applying such provisions for such purposes--
``(A) the term `gross rent' shall have the meaning
given such term by paragraph (2)(B) of this subsection,
and
``(B) the term `applicable income limit' means the
limitation under paragraph (1) of this subsection.
``(5) Election to treat building after credit period as not
part of a project.--For purposes of this section, the taxpayer
may elect to treat any building as not part of a qualified
middle-income housing project for any period beginning after
the credit period for such building.
``(6) Special rule where de minimis equity contribution.--
Property shall not be treated as failing to be residential
rental property for purposes of this section merely because the
occupant of a residential unit in the project pays (on a
voluntary basis) to the lessor a de minimis amount to be held
toward the purchase by such occupant of a residential unit in
such project if--
``(A) all amounts so paid are refunded to the
occupant on the cessation of his occupancy of a unit in
the project, and
``(B) the purchase of the unit is not permitted
until after the close of the credit period with respect
to the building in which the unit is located.
Any amount paid to the lessor as described in the preceding
sentence shall be included in gross rent under paragraph (2)
for purposes of determining whether the unit is rent-
restricted.
``(7) Scattered site projects.--Buildings which would (but
for their lack of proximity) be treated as a project for
purposes of this section shall be so treated if all of the
dwelling units in each of the buildings are rent-restricted
(within the meaning of paragraph (2)) residential rental units.
``(8) Waiver of certain recertifications.--On application
by the taxpayer, the Secretary may waive any annual
recertification of tenant income for purposes of this
subsection, if the entire building is occupied by middle-income
tenants.
``(9) Clarification of general public use requirement.--A
project does not fail to meet the general public use
requirement solely because of occupancy restrictions or
preferences that favor tenants--
``(A) with special needs, or
``(B) who are members of a specified group under a
Federal program or State program or policy that
supports housing for such a specified group.
``(h) Limitation on Aggregate Credit Allowable With Respect to
Projects Located in a State.--
``(1) Credit may not exceed credit amount allocated to
building.--
``(A) In general.--The amount of the credit
determined under this section for any taxable year with
respect to any building shall not exceed the housing
credit dollar amount allocated to such building under
this subsection.
``(B) Time for making allocation.--Except in the
case of an allocation which meets the requirements of
subparagraph (C), (D), (E), or (F), an allocation shall
be taken into account under subparagraph (A) only if it
is made not later than the close of the calendar year
in which the building is placed in service.
``(C) Exception where binding commitment.--An
allocation meets the requirements of this subparagraph
if there is a binding commitment (not later than the
close of the calendar year in which the building is
placed in service) by the housing credit agency to
allocate a specified housing credit dollar amount to
such building beginning in a specified later taxable
year.
``(D) Exception where increase in qualified
basis.--
``(i) In general.--An allocation meets the
requirements of this subparagraph if such
allocation is made not later than the close of
the calendar year in which ends the taxable
year to which it will 1st apply but only to the
extent the amount of such allocation does not
exceed the limitation under clause (ii).
``(ii) Limitation.--The limitation under
this clause is the amount of credit allowable
under this section (without regard to this
subsection) for a taxable year with respect to
an increase in the qualified basis of the
building equal to the excess of--
``(I) the qualified basis of such
building as of the close of the 1st
taxable year to which such allocation
will apply, over
``(II) the qualified basis of such
building as of the close of the 1st
taxable year to which the most recent
prior housing credit allocation with
respect to such building applied.
``(iii) Housing credit dollar amount
reduced by full allocation.--Notwithstanding
clause (i), the full amount of the allocation
shall be taken into account under paragraph
(2).
``(E) Exception where 10 percent of cost
incurred.--
``(i) In general.--An allocation meets the
requirements of this subparagraph if such
allocation is made with respect to a qualified
building which is placed in service not later
than the close of the second calendar year
following the calendar year in which the
allocation is made.
``(ii) Qualified building.--For purposes of
clause (i), the term `qualified building' means
any building which is part of a project if the
taxpayer's basis in such project (as of the
date which is 1 year after the date that the
allocation was made) is more than 10 percent of
the taxpayer's reasonably expected basis in
such project (as of the close of the second
calendar year referred to in clause (i)). Such
term does not include any existing building
unless a credit is allowable under subsection
(e) for rehabilitation expenditures paid or
incurred by the taxpayer with respect to such
building for a taxable year ending during the
second calendar year referred to in clause (i)
or the prior taxable year.
``(F) Allocation of credit on a project basis.--
``(i) In general.--In the case of a project
which includes (or will include) more than 1
building, an allocation meets the requirements
of this subparagraph if--
``(I) the allocation is made to the
project for a calendar year during the
project period,
``(II) the allocation only applies
to buildings placed in service during
or after the calendar year for which
the allocation is made, and
``(III) the portion of such
allocation which is allocated to any
building in such project is specified
not later than the close of the
calendar year in which the building is
placed in service.
``(ii) Project period.--For purposes of
clause (i), the term `project period' means the
period--
``(I) beginning with the 1st
calendar year for which an allocation
may be made for the 1st building placed
in service as part of such project, and
``(II) ending with the calendar
year the last building is placed in
service as part of such project.
``(2) Allocated credit amount to apply to all taxable years
ending during or after credit allocation year.--Any housing
credit dollar amount allocated to any building for any calendar
year--
``(A) shall apply to such building for all taxable
years in the credit period ending during or after such
calendar year, and
``(B) shall reduce the aggregate housing credit
dollar amount of the allocating agency only for such
calendar year.
``(3) Housing credit dollar amount for agencies.--
``(A) In general.--The aggregate housing credit
dollar amount which a housing credit agency may
allocate for any calendar year is the portion of the
State housing credit ceiling allocated under this
paragraph for such calendar year to such agency.
``(B) State ceiling initially allocated to state
housing credit agencies.--Except as provided in
subparagraph (D), the State housing credit ceiling for
each calendar year shall be allocated to the housing
credit agency of such State. If there is more than 1
housing credit agency of a State, all such agencies
shall be treated as a single agency.
``(C) State housing credit ceiling.--The State
housing credit ceiling applicable to any State for any
calendar year shall be an amount equal to the sum of--
``(i) the greater of--
``(I) $1.00 multiplied by the State
population, or
``(II) $1,140,000, plus
``(ii) the amount of State housing credit
ceiling returned in the calendar year.
For purposes of clause (ii), the amount of State
housing credit ceiling returned in the calendar year
equals the housing credit dollar amount previously
allocated within the State to any project which fails
to meet the 10 percent test under paragraph (1)(E)(ii)
on a date after the close of the calendar year in which
the allocation was made or which does not become a
qualified middle-income housing project within the
period required by this section or the terms of the
allocation or to any project with respect to which an
allocation is cancelled by mutual consent of the
housing credit agency and the allocation recipient.
``(D) State may provide for different allocation.--
Rules similar to the rules of section 146(e) (other
than paragraph (2)(B) thereof) shall apply for purposes
of this paragraph.
``(E) Population.--For purposes of this paragraph,
population shall be determined in accordance with
section 146(j).
``(F) Cost-of-living adjustment.--
``(i) In general.--In the case of a
calendar year after 2024, the $1,140,000 and
$1.00 amounts in subparagraph (C) shall each be
increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2023' for
`calendar year 2016' in subparagraph
(A)(ii) thereof.
``(ii) Rounding.--
``(I) In the case of the $1,140,000
amount, any increase under clause (i)
which is not a multiple of $5,000 shall
be rounded to the next lowest multiple
of $5,000.
``(II) In the case of the $1.00
amount, any increase under clause (i)
which is not a multiple of 5 cents
shall be rounded to the next lowest
multiple of 5 cents.
``(4) Portion of state ceiling set-aside for certain
projects involving qualified nonprofit organizations.--
``(A) In general.--Not more than 90 percent of the
State housing credit ceiling (determined without regard
to paragraph (7)) for any State for any calendar year
shall be allocated to projects other than qualified
middle-income housing projects described in
subparagraph (B).
``(B) Projects involving qualified nonprofit
organizations.--For purposes of subparagraph (A), a
qualified middle-income housing project is described in
this subparagraph if a qualified nonprofit organization
is to own an interest in the project (directly or
through a partnership) and materially participate
(within the meaning of section 469(h)) in the
development and operation of the project throughout the
credit period.
``(C) Qualified nonprofit organization.--For
purposes of this paragraph, the term `qualified
nonprofit organization' means any organization if--
``(i) such organization is described in
paragraph (3) or (4) of section 501(c) and is
exempt from tax under section 501(a),
``(ii) such organization is determined by
the State housing credit agency not to be
affiliated with or controlled by a for-profit
organization; and
``(iii) one of the exempt purposes of such
organization includes the fostering of middle-
income housing.
``(D) Treatment of certain subsidiaries.--
``(i) In general.--For purposes of this
paragraph, a qualified nonprofit organization
shall be treated as satisfying the ownership
and material participation test of subparagraph
(B) if any qualified corporation in which such
organization holds stock satisfies such test.
``(ii) Qualified corporation.--For purposes
of clause (i), the term `qualified corporation'
means any corporation if 100 percent of the
stock of such corporation is held by 1 or more
qualified nonprofit organizations at all times
during the period such corporation is in
existence.
``(E) State may not override set-aside.--Nothing in
subparagraph (E) of paragraph (3) shall be construed to
permit a State not to comply with subparagraph (A) of
this paragraph.
``(5) Buildings eligible for credit only if minimum long-
term commitment to middle-income housing.--
``(A) In general.--No credit shall be allowed by
reason of this section with respect to any building for
the taxable year unless an extended middle-income
housing commitment is in effect as of the end of such
taxable year.
``(B) Extended middle-income housing commitment.--
For purposes of this paragraph, the term `extended
middle-income housing commitment' means any agreement
between the taxpayer and the housing credit agency--
``(i) which requires that the applicable
fraction (as defined in subsection (c)(1)) for
the building for each taxable year in the
extended use period will not be less than the
applicable fraction specified in such agreement
and which prohibits the actions described in
subclauses (I) and (II) of subparagraph
(E)(ii),
``(ii) which allows individuals who meet
the income limitation applicable to the
building under subsection (g) (whether
prospective, present, or former occupants of
the building) the right to enforce in any State
court the requirement and prohibitions of
clause (i),
``(iii) which prohibits the disposition to
any person of any portion of the building to
which such agreement applies unless all of the
building to which such agreement applies is
disposed of to such person,
``(iv) which prohibits the refusal to lease
to a holder of a voucher or certificate of
eligibility under section 8 of the United
States Housing Act of 1937 because of the
status of the prospective tenant as such a
holder,
``(v) which is binding on all successors of
the taxpayer, and
``(vi) which, with respect to the property,
is recorded pursuant to State law as a
restrictive covenant.
``(C) Allocation of credit may not exceed amount
necessary to support commitment.--The housing credit
dollar amount allocated to any building may not exceed
the amount necessary to support the applicable fraction
specified in the extended middle-income housing
commitment for such building, including any increase in
such fraction pursuant to the application of subsection
(f)(3) if such increase is reflected in an amended
middle-income housing commitment.
``(D) Extended use period.--For purposes of this
paragraph, the term `extended use period' means the
period--
``(i) beginning on the 1st day in the
credit period on which such building is part of
a qualified middle-income housing project, and
``(ii) ending on the later of--
``(I) the date specified by such
agency in such agreement, or
``(II) the date which is 15 years
after the close of the credit period.
``(E) Exceptions if foreclosure or if no buyer
willing to maintain middle-income status.--
``(i) In general.--The extended use period
for any building shall terminate on the date
the building is acquired by foreclosure (or
instrument in lieu of foreclosure) unless the
Secretary determines that such acquisition is
part of an arrangement with the taxpayer a
purpose of which is to terminate such period.
``(ii) Eviction, etc., of existing middle-
income tenants not permitted.--The termination
of an extended use period under clause (i)
shall not be construed to permit before the
close of the 3-year period following such
termination--
``(I) the eviction or the
termination of tenancy (other than for
good cause) of an existing tenant of
any middle-income unit, or
``(II) any increase in the gross
rent with respect to such unit not
otherwise permitted under this section.
``(F) Effect of noncompliance.--If, during a
taxable year, there is a determination that an extended
middle-income housing agreement was not in effect as of
the beginning of such year, such determination shall
not apply to any period before such year and
subparagraph (A) shall be applied without regard to
such determination if the failure is corrected within 1
year from the date of the determination.
``(G) Projects which consist of more than 1
building.--The application of this paragraph to
projects which consist of more than 1 building shall be
made under regulations prescribed by the Secretary.
``(6) Special rules.--
``(A) Building must be located within jurisdiction
of credit agency.--A housing credit agency may allocate
its aggregate housing credit dollar amount only to
buildings located in the jurisdiction of the
governmental unit of which such agency is a part.
``(B) Agency allocations in excess of limit.--If
the aggregate housing credit dollar amounts allocated
by a housing credit agency for any calendar year exceed
the portion of the State housing credit ceiling
allocated to such agency for such calendar year, the
housing credit dollar amounts so allocated shall be
reduced (to the extent of such excess) for buildings in
the reverse of the order in which the allocations of
such amounts were made.
``(C) Credit reduced if allocated credit dollar
amount is less than credit which would be allowable
without regard to placed in service convention, etc.--
``(i) In general.--The amount of the credit
determined under this section with respect to
any building shall not exceed the clause (ii)
percentage of the amount of the credit which
would (but for this subparagraph) be determined
under this section with respect to such
building.
``(ii) Determination of percentage.--For
purposes of clause (i), the clause (ii)
percentage with respect to any building is the
percentage which--
``(I) the housing credit dollar
amount allocated to such building,
bears to
``(II) the credit amount determined
in accordance with clause (iii).
``(iii) Determination of credit amount.--
The credit amount determined in accordance with
this clause is the amount of the credit which
would (but for this subparagraph) be determined
under this section with respect to the building
if--
``(I) this section were applied
without regard to paragraphs (2)(A) and
(3)(B) of subsection (f), and
``(II) subsection (f)(3)(A) were
applied without regard to `the
percentage equal to \2/3\ of'.
``(D) Housing credit agency to specify applicable
percentage and maximum qualified basis.--In allocating
a housing credit dollar amount to any building, the
housing credit agency shall specify the applicable
percentage and the maximum qualified basis which may be
taken into account under this section with respect to
such building. The applicable percentage and maximum
qualified basis so specified shall not exceed the
applicable percentage and qualified basis determined
under this section without regard to this subsection.
``(7) Increase in state ceiling dedicated to certain rural
development projects.--
``(A) In general.--The State housing credit ceiling
for any calendar year shall be increased by an amount
equal to 5 percent of the amount determined under
paragraph (3)(C)(i).
``(B) Use of increased amount.--The amount of the
increase under subparagraph (A) for any calendar year
may only be allocated to buildings located in a rural
area (as defined in section 42(d)(5)(B)(iii)(IV)).
``(8) Other definitions.--For purposes of this subsection--
``(A) Housing credit agency.--The term `housing
credit agency' means any agency authorized to carry out
this subsection.
``(B) Possessions treated as states.--The term
`State' includes a possession of the United States.
``(9) Credit for buildings financed by tax-exempt bonds
subject to volume cap not taken into account.--Rules similar to
the rules of subsections (h)(4), (m)(1)(D), and (m)(2)(D) of
section 42 shall apply for purposes of this subsection.
``(i) Definitions and Special Rules.--For purposes of this
section--
``(1) Middle-income unit.--
``(A) In general.--The term `middle-income unit'
means any unit in a building if--
``(i) such unit is rent-restricted (as
defined in subsection (g)(2)), and
``(ii) the individuals occupying such unit
meet the income limitation applicable under
subsection (g)(1) to the project of which such
building is a part.
``(B) Exceptions.--
``(i) Exclusion of low-income units.--A
unit shall not be treated as a middle-income
unit if such unit is a low-income unit (as
defined under section 42(i)(3)).
``(ii) Unit must be suitable for permanent
occupancy.--
``(I) In general.--A unit shall not
be treated as a middle-income unit
unless the unit is suitable for
occupancy and used other than on a
transient basis.
``(II) Suitability for occupancy.--
For purposes of subclause (I), the
suitability of a unit for occupancy
shall be determined under regulations
prescribed by the Secretary taking into
account local health, safety, and
building codes.
``(III) Single-room occupancy
units.--For purposes of subclause (I),
a single-room occupancy unit shall not
be treated as used on a transient basis
merely because it is rented on a month-
by-month basis.
``(C) Special rule for buildings having 4 or fewer
units.--In the case of any building which has 4 or
fewer residential rental units, no unit in such
building shall be treated as a middle-income unit if
the units in such building are owned by--
``(i) any individual who occupies a
residential unit in such building, or
``(ii) any person who is related (as
defined in subsection (d)(2)(D)(ii)) to such
individual.
``(D) Rules relating to students.--
``(i) In general.--A unit occupied solely
by individuals who--
``(I) have not attained age 24, and
``(II) are enrolled in a full-time
course of study at an institution of
higher education (as defined in section
3304(f)),
shall not be treated as a middle-income unit.
``(ii) Exceptions.--Clause (i) shall not
apply to a unit occupied by an individual who--
``(I) is married, if such
individual's spouse also occupies the
unit,
``(II) is a person with
disabilities (as defined in section
3(b)(3)(E) of the United States Housing
Act of 1937),
``(III) is a veteran (as defined in
section 101(2) of title 38, United
States Code),
``(IV) has one or more qualifying
children (as defined in section
152(c)), if such children also occupy
the unit, the individual is not a
dependent (as defined in section 152,
determined without regard to
subsections (b)(1), (b)(2), and
(d)(1)(B) thereof) of another
individual, and such children are not
claimed as dependents (as so defined)
of another individual, or
``(V) is, or was immediately prior
to attaining the age of majority--
``(aa) an emancipated minor
or in legal guardianship as
determined by a court of
competent jurisdiction in the
individual's State of legal
residence,
``(bb) under the care and
placement responsibility of the
State agency responsible for
administering a plan under part
B or part E of title IV of the
Social Security Act, or
``(cc) was an unaccompanied
youth (within the meaning of
section 725(6) of the McKinney-
Vento Homeless Assistance Act
(42 U.S.C. 11434a(6))) or a
homeless child or youth (within
the meaning of section 725(2)
of such Act (42 U.S.C.
11434a(2))).
``(E) Owner-occupied buildings having 4 or fewer
units eligible for credit where development plan.--
``(i) In general.--Subparagraph (C) shall
not apply to the acquisition or rehabilitation
of a building pursuant to a development plan of
action sponsored by a State or local government
or a qualified nonprofit organization.
``(ii) Limitation on credit.--In the case
of a building to which clause (i) applies, the
applicable fraction shall not exceed 80 percent
of the unit fraction.
``(iii) Certain unrented units treated as
owner-occupied.--In the case of a building to
which clause (i) applies, any unit which is not
rented for 90 days or more shall be treated as
occupied by the owner of the building as of the
1st day it is not rented.
``(2) New building.--The term `new building' means a
building the original use of which begins with the taxpayer.
``(3) Existing building.--The term `existing building'
means any building which is not a new building.
``(4) Application to estates and trusts.--In the case of an
estate or trust, the amount of the credit determined under
subsection (a) shall be apportioned between the estate or trust
and the beneficiaries on the basis of the income of the estate
or trust allocable to each.
``(5) Impact of tenant's option to acquire property.--
``(A) In general.--No Federal income tax benefit
shall fail to be allowable to the taxpayer with respect
to any qualified middle-income building merely by
reason of an option held by the tenants (in cooperative
form or otherwise) or resident management corporation
of such building or by a qualified nonprofit
organization or government agency to purchase the
property or all of the partnership interests (other
than interests of the person exercising such option or
a related party thereto (within the meaning of section
267(b) or 707(b)(1))) relating to the property after
the close of the credit period for a price which is not
less than the minimum purchase price determined under
subparagraph (B).
``(B) Minimum purchase price.--For purposes of
subparagraph (A), the minimum purchase price under this
subparagraph is an amount equal to the principal amount
of outstanding indebtedness secured by the building
(other than indebtedness incurred within the 5-year
period ending on the date of the sale to the tenants).
In the case of a purchase of a partnership interest,
the minimum purchase price is an amount equal to such
interest's ratable share of the amount determined under
the preceding sentence.
``(6) Treatment of rural projects.--For purposes of this
section, in the case of any project for residential rental
property located in a rural area (as defined in section 520 of
the Housing Act of 1949), any income limitation measured by
reference to area median gross income shall be measured by
reference to the greater of area median gross income or
national non-metropolitan median income.
``(7) Determination of whether building is federally
subsidized.--
``(A) In general.--Except as otherwise provided in
this paragraph, for purposes of this section, a project
shall be treated as Federally subsidized for any
taxable year if, at any time during such taxable year
or any prior taxable year, there is or was outstanding
any obligation the interest on which is exempt from tax
under section 103 the proceeds of which are or were
used (directly or indirectly) with respect to such
project or the operation thereof.
``(B) Special rule for subsidized construction
financing.--Subparagraph (A) shall not apply to any
tax-exempt obligation used to provide construction
financing for any building if--
``(i) such obligation (when issued)
identified the building for which the proceeds
of such obligation would be used, and
``(ii) such obligation is redeemed before
such building is placed in service.
``(8) Reduction in basis.--In the case of any building for
which a credit is allowable under this section and section 42,
the basis of the building shall be reduced by the amount of
such credit allowed under subsection (a).
``(j) Application of At-Risk Rules.--For purposes of this section--
``(1) In general.--Except as otherwise provided in this
subsection, rules similar to the rules of section 49(a)(1)
(other than subparagraphs (D)(ii)(II) and (D)(iv)(I) thereof),
section 49(a)(2), and section 49(b)(1) shall apply in
determining the qualified basis of any building in the same
manner as such sections apply in determining the credit base of
property.
``(2) Special rules for determining qualified person.--For
purposes of paragraph (1)--
``(A) In general.--If the requirements of
subparagraphs (B), (C), and (D) are met with respect to
any financing borrowed from a qualified nonprofit
organization, the determination of whether such
financing is qualified commercial financing with
respect to any qualified middle-income building shall
be made without regard to whether such organization--
``(i) is actively and regularly engaged in
the business of lending money, or
``(ii) is a person described in section
49(a)(1)(D)(iv)(II).
``(B) Financing secured by property.--The
requirements of this subparagraph are met with respect
to any financing if such financing is secured by the
qualified middle-income building, except that this
subparagraph shall not apply in the case of a federally
assisted building described in subsection (d)(5)(B)
if--
``(i) a security interest in such building
is not permitted by a Federal agency holding or
insuring the mortgage secured by such building,
and
``(ii) the proceeds from the financing (if
any) are applied to acquire or improve such
building.
``(C) Portion of building attributable to
financing.--The requirements of this subparagraph are
met with respect to any financing for any taxable year
in the credit period if, as of the close of such
taxable year, not more than 60 percent of the eligible
basis of the qualified middle-income building is
attributable to such financing (reduced by the
principal and interest of any governmental financing
which is part of a wrap-around mortgage involving such
financing).
``(D) Repayment of principal and interest.--The
requirements of this subparagraph are met with respect
to any financing if such financing is fully repaid on
or before the earliest of--
``(i) the date on which such financing
matures,
``(ii) the 90th day after the close of the
credit period with respect to the qualified
middle-income building, or
``(iii) the date of its refinancing or the
sale of the building to which such financing
relates.
In the case of a qualified nonprofit organization which
is not described in section 49(a)(1)(D)(iv)(II) with
respect to a building, clause (ii) of this subparagraph
shall be applied as if the date described therein were
the 90th day after the earlier of the date the building
ceases to be a qualified middle-income building or the
date which is 15 years after the close of a credit
period with respect thereto.
``(3) Present value of financing.--If the rate of interest
on any financing described in paragraph (2)(A) is less than the
rate which is 1 percentage point below the applicable Federal
rate as of the time such financing is incurred, then the
qualified basis (to which such financing relates) of the
qualified middle-income building shall be the present value of
the amount of such financing, using as the discount rate such
applicable Federal rate. For purposes of the preceding
sentence, the rate of interest on any financing shall be
determined by treating interest to the extent of government
subsidies as not payable.
``(4) Failure to fully repay.--
``(A) In general.--To the extent that the
requirements of paragraph (2)(D) are not met, then the
taxpayer's tax under this chapter for the taxable year
in which such failure occurs shall be increased by an
amount equal to the applicable portion of the credit
under this section with respect to such building,
increased by an amount of interest for the period--
``(i) beginning with the due date for the
filing of the return of tax imposed by chapter
1 for the 1st taxable year for which such
credit was allowable, and
``(ii) ending with the due date for the
taxable year in which such failure occurs,
determined by using the underpayment rate and method
under section 6621.
``(B) Applicable portion.--For purposes of
subparagraph (A), the term `applicable portion' means
the aggregate decrease in the credits allowed to a
taxpayer under section 38 for all prior taxable years
which would have resulted if the eligible basis of the
building were reduced by the amount of financing which
does not meet requirements of paragraph (2)(D).
``(C) Certain rules to apply.--Rules similar to the
rules of subparagraphs (A) and (D) of section 42(j)(4)
shall apply for purposes of this subsection.
``(k) Certifications and Other Reports to Secretary.--
``(1) Certification with respect to 1st year of credit
period.--Following the close of the 1st taxable year in the
credit period with respect to any qualified middle-income
building, the taxpayer shall certify to the Secretary (at such
time and in such form and in such manner as the Secretary
prescribes)--
``(A) the taxable year, and calendar year, in which
such building was placed in service,
``(B) the adjusted basis and eligible basis of such
building as of the close of the 1st year of the credit
period,
``(C) the maximum applicable percentage and
qualified basis permitted to be taken into account by
the appropriate housing credit agency under subsection
(h), and
``(D) such other information as the Secretary may
require.
In the case of a failure to make the certification required by
the preceding sentence on the date prescribed therefor, unless
it is shown that such failure is due to reasonable cause and
not to willful neglect, no credit shall be allowable by reason
of subsection (a) with respect to such building for any taxable
year ending before such certification is made.
``(2) Annual reports to the secretary.--The Secretary may
require taxpayers to submit an information return (at such time
and in such form and manner as the Secretary prescribes) for
each taxable year setting forth--
``(A) the qualified basis for the taxable year of
each qualified middle-income building of the taxpayer,
``(B) the information described in paragraph (1)(C)
for the taxable year, and
``(C) such other information as the Secretary may
require.
The penalty under section 6652(j) shall apply to any failure to
submit the return required by the Secretary under the preceding
sentence on the date prescribed therefor.
``(3) Annual reports from housing credit agencies.--Each
agency which allocates any housing credit amount to any
building for any calendar year shall submit to the Secretary
(at such time and in such manner as the Secretary shall
prescribe) an annual report specifying--
``(A) the amount of housing credit amount allocated
to each building for such year,
``(B) sufficient information to identify each such
building and the taxpayer with respect thereto, and
``(C) such other information as the Secretary may
require.
The penalty under section 6652(j) shall apply to any failure to
submit the report required by the preceding sentence on the
date prescribed therefor.
``(l) Responsibilities of Housing Credit Agencies.--
``(1) Plans for allocation of credit among projects.--
``(A) In general.--Notwithstanding any other
provision of this section, the housing credit dollar
amount with respect to any building shall be zero
unless--
``(i) such amount was allocated pursuant to
a qualified allocation plan of the housing
credit agency which is approved by the
governmental unit (in accordance with rules
similar to the rules of section 42(m)(1)) of
which such agency is a part,
``(ii) a comprehensive market study of the
housing needs of middle-income individuals in
the area to be served by the project is
conducted before the credit allocation is made
and at the developer's expense by a
disinterested party who is approved by such
agency, and
``(iii) a written explanation is available
to the general public for any allocation of a
housing credit dollar amount which is not made
in accordance with established priorities and
selection criteria of the housing credit
agency.
``(B) Qualified allocation plan.--For purposes of
this paragraph, the term `qualified allocation plan'
means any plan--
``(i) which sets forth selection criteria
to be used to determine housing priorities of
the housing credit agency which are appropriate
to local conditions,
``(ii) which also gives preference in
allocating housing credit dollar amounts among
selected projects to--
``(I) projects obligated to serve
qualified tenants for the longest
periods,
``(II) projects in areas where
rents are unaffordable to median income
households,
``(III) projects which target
housing to tenants at a range of
incomes between 60 and 100 percent of
area median gross income, and
``(IV) projects located near
transit hubs, and
``(iii) which provides a procedure that the
agency (or an agent or other private contractor
of such agency) will follow in monitoring for
noncompliance with the provisions of this
section and in notifying the Internal Revenue
Service of such noncompliance which such agency
becomes aware of and in monitoring for
noncompliance with habitability standards
through regular site visits.
``(C) Certain selection criteria must be used.--The
selection criteria set forth in a qualified allocation
plan must include--
``(i) project location,
``(ii) housing needs characteristics,
``(iii) project characteristics, including
whether the project includes the use of
existing housing as part of a community
revitalization plan,
``(iv) sponsor characteristics,
``(v) tenant populations with special
housing needs,
``(vi) tenant populations of individuals
with children,
``(vii) projects intended for eventual
tenant ownership,
``(viii) the energy efficiency of the
project, and
``(ix) the historic nature of the project.
``(D) Certain selection criteria prohibited.--The
selection criteria set forth in a qualified allocation
plan shall not include a requirement of local approval
or local contributions, either as a threshold
qualification requirement or as part of a point system
to be considered for allocations of housing credit
dollar amount.
``(2) Credit allocated to building not to exceed amount
necessary to assure project feasibility.--
``(A) In general.--The housing credit dollar amount
allocated to a project shall not exceed the amount the
housing credit agency determines is necessary for the
financial feasibility of the project and its viability
as a qualified middle-income housing project throughout
the credit period.
``(B) Agency evaluation.--In making the
determination under subparagraph (A), the housing
credit agency shall consider--
``(i) the sources and uses of funds and the
total financing planned for the project,
``(ii) any proceeds or receipts expected to
be generated by reason of tax benefits,
``(iii) the percentage of the housing
credit dollar amount used for project costs
other than the cost of intermediaries, and
``(iv) the reasonableness of the
developmental and operational costs of the
project.
Clause (iii) shall not be applied so as to impede the
development of projects in hard-to-develop areas. Such
a determination shall not be construed to be a
representation or warranty as to the feasibility or
viability of the project.
``(C) Determination made when credit amount applied
for and when building placed in service.--
``(i) In general.--A determination under
subparagraph (A) shall be made as of each of
the following times:
``(I) The application for the
housing credit dollar amount.
``(II) The allocation of the
housing credit dollar amount.
``(III) The date the building is
placed in service.
``(ii) Certification as to amount of other
subsidies.--Prior to each determination under
clause (i), the taxpayer shall certify to the
housing credit agency the full extent of all
Federal, State, and local subsidies which apply
(or which the taxpayer expects to apply) with
respect to the building.
``(m) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations--
``(1) dealing with--
``(A) projects which include more than 1 building
or only a portion of a building, or
``(B) buildings which are placed in service in
portions,
``(2) providing for the application of this section to
short taxable years,
``(3) preventing the avoidance of the rules of this
section, and
``(4) providing the opportunity for housing credit agencies
to correct administrative errors and omissions with respect to
allocations and record keeping within a reasonable period after
their discovery, taking into account the availability of
regulations and other administrative guidance from the
Secretary.''.
(b) Treatment as Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 is amended by striking ``plus'' at
the end of paragraph (40), by striking the period at the end of
paragraph (41) and inserting ``, plus'', and by adding at the end the
following new paragraph:
``(42) the middle-income housing credit determined under
section 42A(a).''.
(c) Unused Allocations Carried Over to Low-Income Housing Credit.--
(1) In general.--Clause (i) of section 42(h)(3)(C) of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``the unused'' and inserting ``the
sum of--
``(I) the unused'',
(B) by inserting ``plus'' after ``calendar year,'',
and
(C) by adding at the end the following new
subclause:
``(II) the unused middle-income
State housing credit (if any) of such
State for the preceding calendar
year,''.
(2) Unused middle-income state housing credit.--The second
sentence of section 42(h)(3)(C) of such Code is amended by
inserting ``, and the unused middle-income State housing credit
for any calendar year is the excess (if any) of the amount
described in section 42A(h)(3)(C) (after application of section
42A(h)(7)) for such State over the aggregate amount of middle-
income housing credit dollar amount allocated by such State
under section 42A for such year'' after ``for such year''.
(3) Unused middle income state housing credit included in
carryover allocation.--Section 42(h)(3)(D)(ii) of such Code is
amended--
(A) by inserting ``the sum of'' after ``is the
excess (if any) of''; and
(B) by inserting ``plus the unused middle-income
State housing credit (as so defined)'' after ``as
defined in subparagraph (C)(i))''.
(d) Reduction in Basis.--Section 1016(a) of the Internal Revenue
Code of 1986 is amended--
(1) by striking ``and'' at the end of paragraph (37);
(2) by redesignating paragraph (38) as paragraph (39); and
(3) by inserting after paragraph (37) the following new
paragraph:
``(38) to the extent provided in section 42A(i)(8), and''.
(e) Treatment Under Base Erosion Minimum Tax.--Section 59A(b)(4) of
he Internal Revenue Code of 1986 is amended by redesignating
subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively,
and by inserting after subparagraphs (A) the following new
subparagraph:
``(B) the middle-income housing credit determined
under section 42A(a),''.
(f) Conforming Amendments.--
(1) Section 45L(e) of the Internal Revenue Code of 1986 is
amended by inserting ``or 42A'' after ``42''.
(2) Section 50(c)(3)(C) of such Code is amended by
inserting ``or 42A'' after ``42''.
(3) Section 55(c)(1) of such Code is amended by inserting
``42A(j),'' before ``45(e)(11)(C)''.
(4) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of
section 469 of such Code are each amended by inserting ``or
42A'' after ``42''.
(5) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 42 the following new item:
``Sec. 42A. Middle-income housing credit.''.
(g) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2023, in
taxable years ending after such date.
SEC. 214. NEIGHBORHOOD HOMES CREDIT.
(a) Findings and Purpose.--
(1) Findings.--Congress finds the following:
(A) Experts have determined that it could take
nearly a decade to address the housing shortage in the
United States, in large part due to increasing housing
prices and decreased housing inventory.
(B) The housing supply shortage disproportionately
impacts low-income and distressed communities.
(C) Homeownership is a primary source of household
wealth and neighborhood stability. Many distressed
communities have low rates of homeownership and lack
quality, affordable starter homes.
(D) Housing revitalization in distressed
communities is prevented by the value gap, the
difference between the price to rehabilitate a home and
the sale value of the home.
(E) The Neighborhood Homes Investment Act can
address the value gap to increase housing
rehabilitation in distressed communities.
(F) This section and the amendments made by this
section have the potential to generate 500,000 homes
over 10 years, $125,000,000,000 of total development
activity, over 800,000 jobs in construction and
construction-related industries, and over
$35,000,000,000 in Federal, state, and local tax
revenues.
(2) Sense of congress.--It is the sense of Congress that
the neighborhood homes credit (as added under this section)
should be an activity administered in a manner which--
(A) is consistent with the Fair Housing Act of 1968
(42 U.S.C. 3601 et seq.);
(B) empowers residents in eligible communities; and
(C) revitalizes distressed neighborhoods.
(b) Allowance of Credit.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986, as amended by section
213, is amended by inserting after section 42A the following new
section:
``SEC. 42B. NEIGHBORHOOD HOMES CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the
neighborhood homes credit determined under this section for the taxable
year is, with respect to each qualified residence sold by the taxpayer
during such taxable year in an affordable sale, the lesser of--
``(1) an amount equal to--
``(A) the excess (if any) of--
``(i) the reasonable development costs paid
or incurred by the taxpayer with respect to
such qualified residence, over
``(ii) the sale price of such qualified
residence (reduced by any reasonable expenses
paid or incurred by the taxpayer in connection
with such sale), or
``(B) if the neighborhood homes credit agency
determines it is necessary to ensure financial
feasibility, an amount not to exceed 120 percent of the
amount under subparagraph (A),
``(2) 35 percent of the eligible development costs paid or
incurred by the taxpayer with respect to such qualified
residence, or
``(3) 28 percent of the national median sale price for new
homes (as determined pursuant to the most recent census data
available as of the date on which the neighborhood homes credit
agency makes an allocation for the qualified project).
``(b) Development Costs.--For purposes of this section--
``(1) Reasonable development costs.--
``(A) In general.--The term `reasonable development
costs' means amounts paid or incurred for the
acquisition of buildings and land, construction,
substantial rehabilitation, demolition of structures,
or environmental remediation, to the extent that the
neighborhood homes credit agency determines that such
amounts meet the standards specified pursuant to
subsection (f)(1)(C) (as of the date on which
construction or substantial rehabilitation is
substantially complete, as determined by such agency)
and are necessary to ensure the financial feasibility
of such qualified residence.
``(B) Considerations in making determination.--In
making the determination under subparagraph (A), the
neighborhood homes credit agency shall consider--
``(i) the sources and uses of funds and the
total financing,
``(ii) any proceeds or receipts generated
or expected to be generated by reason of tax
benefits, and
``(iii) the reasonableness of the
developmental costs and fees.
``(2) Eligible development costs.--The term `eligible
development costs' means the amount which would be reasonable
development costs if the amounts taken into account as paid or
incurred for the acquisition of buildings and land did not
exceed 75 percent of such costs determined without regard to
any amount paid or incurred for the acquisition of buildings
and land.
``(3) Substantial rehabilitation.--The term `substantial
rehabilitation' means amounts paid or incurred for
rehabilitation of a qualified residence if such amounts exceed
the greater of--
``(A) $20,000, or
``(B) 20 percent of the amounts paid or incurred by
the taxpayer for the acquisition of buildings and land
with respect to such qualified residence.
``(4) Construction and rehabilitation only after allocation
taken into account.--
``(A) In general.--The terms `reasonable
development costs' and `eligible development costs'
shall not include any amount paid or incurred before
the date on which an allocation is made to the taxpayer
under subsection (e) with respect to the qualified
project of which the qualified residence is part unless
such amount is paid or incurred for the acquisition of
buildings or land.
``(B) Land and building acquisition costs.--Amounts
paid or incurred for the acquisition of buildings or
land shall be included under paragraph (A) only if paid
or incurred not more than 3 years before the date on
which the allocation referred to in subparagraph (A) is
made. If the taxpayer acquired any building or land
from an entity (or any related party to such entity)
that holds an ownership interest in the taxpayer, then
such entity must also have acquired such property
within such 3-year period, and the acquisition cost
included under subparagraph (A) with respect to the
taxpayer shall not exceed the amount such entity paid
or incurred to acquire such property.
``(c) Qualified Residence.--For purposes of this section--
``(1) In general.--The term `qualified residence' means a
residence that--
``(A) is real property affixed on a permanent
foundation,
``(B) is--
``(i) a house which is comprised of 4 or
fewer residential units,
``(ii) a condominium unit, or
``(iii) a house or an apartment owned by a
cooperative housing corporation (as defined in
section 216(b)),
``(C) is part of a qualified project with respect
to which the neighborhood homes credit agency has made
an allocation under subsection (e), and
``(D) is located in a qualified census tract
(determined as of the date of such allocation).
``(2) Qualified census tract.--
``(A) In general.--The term `qualified census
tract' means a census tract--
``(i) which--
``(I) has a median family income
which does not exceed 80 percent of the
median family income for the applicable
area,
``(II) has a poverty rate that is
not less than 130 percent of the
poverty rate of the applicable area,
and
``(III) has a median value for
owner-occupied homes that does not
exceed the median value for owner-
occupied homes in the applicable area,
``(ii) which--
``(I) is located in a city which
has a population of not less than
50,000 and such city has a poverty rate
that is not less than 150 percent of
the poverty rate of the applicable
area,
``(II) has a median family income
which does not exceed the median family
income for the applicable area, and
``(III) has a median value for
owner-occupied homes that does not
exceed 80 percent of the median value
for owner-occupied homes in the
applicable area,
``(iii) which--
``(I) is located in a
nonmetropolitan county,
``(II) has a median family income
which does not exceed the median family
income for the applicable area, and
``(III) has been designated by a
neighborhood homes credit agency under
this clause, or
``(iv) which is not otherwise a qualified
census tract and is located in a disaster area
(as defined in section 7508A(d)(3)), but only
with respect to credits allocated in any period
during which the President of the United States
has determined that such area warrants
individual or individual and public assistance
by the Federal Government under the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act.
``(B) Applicable area.--The term `applicable area'
means--
``(i) in the case of a metropolitan census
tract, the metropolitan area in which such
census tract is located, and
``(ii) in the case of a census tract other
than a census tract described in clause (i),
the State.
``(d) Affordable Sale.--For purposes of this section--
``(1) In general.--The term `affordable sale' means a sale
to a qualified homeowner of a qualified residence that the
neighborhood homes credit agency certifies as meeting the
standards promulgated under subsection (f)(1)(D) for a price
that does not exceed--
``(A) in the case of any qualified residence not
described in subparagraph (B), (C), or (D), the amount
equal to the product of 4 multiplied by the median
family income for the applicable area (as determined
pursuant to the most recent census data available as of
the date of the contract for such sale),
``(B) in the case of a house comprised of 2
residential units, 125 percent of the amount described
in subparagraph (A),
``(C) in the case of a house comprised of 3
residential units, 150 percent of the amount described
in subparagraph (A), or
``(D) in the case of a house comprised of 4
residential units, 175 percent of the amount described
in subparagraph (A).
``(2) Qualified homeowner.--The term `qualified homeowner'
means, with respect to a qualified residence, an individual--
``(A) who owns and uses such qualified residence as
the principal residence of such individual, and
``(B) whose family income (determined as of the
date that a binding contract for the affordable sale of
such residence is entered into) is 140 percent or less
of the median family income for the applicable area in
which the qualified residence is located.
``(e) Credit Ceiling and Allocations.--
``(1) Credit limited based on allocations to qualified
projects.--
``(A) In general.--The credit allowed under
subsection (a) to any taxpayer for any taxable year
with respect to one or more qualified residences which
are part of the same qualified project shall not exceed
the excess (if any) of--
``(i) the amount allocated by the
neighborhood homes credit agency under this
paragraph to such taxpayer with respect to such
qualified project, over
``(ii) the aggregate amount of credit
allowed under subsection (a) to such taxpayer
with respect to qualified residences which are
a part of such qualified project for all prior
taxable years.
``(B) Deadline for completion.--No credit shall be
allowed under subsection (a) with respect to any
qualified residence unless the affordable sale of such
residence is during the 5-year period beginning on the
date of the allocation to the qualified project of
which such residence is a part (or, in the case of a
qualified residence to which subsection (i) applies,
the rehabilitation of such residence is completed
during such 5-year period).
``(2) Limitations on allocations to qualified projects.--
``(A) Allocations limited by state neighborhood
homes credit ceiling.--The aggregate amount allocated
to taxpayers with respect to qualified projects by the
neighborhood homes credit agency of any State for any
calendar year shall not exceed the State neighborhood
homes credit amount of such State for such calendar
year.
``(B) Set-aside for certain projects involving
qualified nonprofit organizations.--Rules similar to
the rules of section 42(h)(5) shall apply for purposes
of this section.
``(3) Determination of state neighborhood homes credit
ceiling.--
``(A) In general.--The State neighborhood homes
credit amount for a State for a calendar year is an
amount equal to the sum of--
``(i) the greater of--
``(I) the product of $7, multiplied
by the State population (determined in
accordance with section 146(j)), or
``(II) $9,000,000, and
``(ii) any amount previously allocated to
any taxpayer with respect to any qualified
project by the neighborhood homes credit agency
of such State which can no longer be allocated
to any qualified residence because the 5-year
period described in paragraph (1)(B) expires
during calendar year.
``(B) 3-year carryforward of unused limitation.--
The State neighborhood homes credit amount for a State
for a calendar year shall be increased by the excess
(if any) of the State neighborhood homes credit amount
for such State for the preceding calendar year over the
aggregate amount allocated by the neighborhood homes
credit agency of such State during such preceding
calendar year. Any amount carried forward under the
preceding sentence shall not be carried past the third
calendar year after the calendar year in which such
credit amount originally arose, determined on a first-
in, first-out basis.
``(f) Responsibilities of Neighborhood Homes Credit Agencies.--
``(1) In general.--Notwithstanding subsection (e), the
State neighborhood homes credit dollar amount shall be zero for
a calendar year unless the neighborhood homes credit agency of
the State--
``(A) allocates such amount pursuant to a qualified
allocation plan of the neighborhood homes credit
agency,
``(B) allocates not more than 20 percent of amounts
allocated in the previous year (or for allocations made
in 2024, not more than 20 percent of the neighborhood
homes credit ceiling for such year) to projects with
respect to qualified residences which--
``(i) are located in census tracts
described in subsection (c)(2)(A)(iii),
(c)(2)(A)(iv), (i)(5), or
``(ii) are not located in a qualified
census tract but meet the requirements of
subsection (i)(8),
``(C) promulgates standards with respect to
reasonable qualified development costs and fees,
``(D) promulgates standards with respect to
construction quality,
``(E) in the case of any neighborhood homes credit
agency which makes an allocation to a qualified project
which includes any qualified residence to which
subsection (i) applies, promulgates standards with
respect to protecting the owners of such residences,
including the capacity of such owners to pay
rehabilitation costs not covered by the credit provided
by this section and providing for the disclosure to
such owners of their rights and responsibilities with
respect to the rehabilitation of such residences,
``(F) submits to the Secretary (at such time and in
such manner as the Secretary may prescribe) an annual
report specifying--
``(i) the amount of the neighborhood homes
credits allocated to each qualified project for
the previous year,
``(ii) with respect to each qualified
residence completed in the preceding calendar
year--
``(I) the census tract in which
such qualified residence is located,
``(II) with respect to the
qualified project that includes such
qualified residence, the year in which
such project received an allocation
under this section,
``(III) whether such qualified
residence was new, substantially
rehabilitated and sold to a qualified
homeowner, or substantially
rehabilitated pursuant to subsection
(i),
``(IV) the eligible development
costs of such qualified residence,
``(V) the amount of the
neighborhood homes credit with respect
to such qualified residence,
``(VI) the sales price of such
qualified residence, if applicable, and
``(VII) the family income of the
qualified homeowner (expressed as a
percentage of the applicable area
median family income for the location
of the qualified residence), and
``(iii) such other information as the
Secretary may require, and
``(G) makes available to the general public a
written explanation for any allocation of a
neighborhood homes credit dollar amount which is not
made in accordance with established priorities and
selection criteria of the neighborhood homes credit
agency.
Subparagraph (B) shall be applied by substituting `40 percent'
for `20 percent' each place it appears in the case of any State
in which at least 45 percent of the State population resides
outside metropolitan statistical areas (within the meaning of
section 143(k)(2)(B)) and less than 20 percent of the census
tracts located in the State are described in subsection
(c)(2)(A)(i).
``(2) Qualified allocation plan.--For purposes of this
subsection, the term `qualified allocation plan' means any plan
which--
``(A) sets forth the selection criteria to be used
to prioritize qualified projects for allocations of
State neighborhood homes credit dollar amounts,
including--
``(i) the need for new or substantially
rehabilitated owner-occupied homes in the area
addressed by the project,
``(ii) the expected contribution of the
project to neighborhood stability and
revitalization, including the impact on
neighborhood residents,
``(iii) the capability and prior
performance of the project sponsor, and
``(iv) the likelihood the project will
result in long-term homeownership,
``(B) has been made available for public comment,
and
``(C) provides a procedure that the neighborhood
homes credit agency (or any agent or contractor of such
agency) shall follow for purposes of--
``(i) identifying noncompliance with any
provisions of this section, and
``(ii) notifying the Internal Revenue
Service of any such noncompliance of which the
agency becomes aware.
``(g) Repayment.--
``(1) In general.--
``(A) Sold during 5-year period.--If a qualified
residence is sold during the 5-year period beginning
immediately after the affordable sale of such qualified
residence referred to in subsection (a), the seller
shall transfer an amount equal to the repayment amount
to the relevant neighborhood homes credit agency.
``(B) Use of repayments.--A neighborhood homes
credit agency shall use any amount received pursuant to
subparagraph (A) only for purposes of qualified
projects.
``(2) Repayment amount.--For purposes of paragraph (1)(A)--
``(A) In general.--The repayment amount is an
amount equal to the applicable percentage of the gain
from the sale to which the repayment relates.
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage is 50
percent, reduced by 10 percentage points for each year
of the 5-year period referred to in paragraph (1)(A)
which ends before the date of such sale.
``(3) Lien for repayment amount.--A neighborhood homes
credit agency receiving an allocation under this section shall
place a lien on each qualified residence that is built or
rehabilitated as part of a qualified project for an amount such
agency deems necessary to ensure potential repayment pursuant
to paragraph (1)(A).
``(4) Waiver.--
``(A) In general.--The neighborhood homes credit
agency may waive the repayment required under paragraph
(1)(A) if the agency determines that making a repayment
would constitute a hardship to the seller.
``(B) Hardship.--For purposes of subparagraph (A),
with respect to the seller, a hardship may include--
``(i) divorce,
``(ii) disability,
``(iii) illness, or
``(iv) any other hardship identified by the
neighborhood homes credit agency for purposes
of this paragraph.
``(h) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Neighborhood homes credit agency.--The term
`neighborhood homes credit agency' means the agency designated
by the governor of a State as the neighborhood homes credit
agency of the State.
``(2) Qualified project.--The term `qualified project'
means a project that a neighborhood homes credit agency
certifies will build or substantially rehabilitate one or more
qualified residences.
``(3) Determinations of family income.--Rules similar to
the rules of section 143(f)(2) shall apply for purposes of this
section.
``(4) Possessions treated as states.--The term `State'
includes the District of Columbia and the possessions of the
United States.
``(5) Special rules related to condominiums and cooperative
housing corporations.--
``(A) Determination of development costs.--In the
case of a qualified residence described in clause (ii)
or (iii) of subsection (c)(1)(A), the reasonable
development costs and eligible development costs of
such qualified residence shall be an amount equal to
such costs, respectively, of the entire condominium or
cooperative housing property in which such qualified
residence is located, multiplied by a fraction--
``(i) the numerator of which is the total
floor space of such qualified residence, and
``(ii) the denominator of which is the
total floor space of all residences within such
property.
``(B) Tenant-stockholders of cooperative housing
corporations treated as owners.--In the case of a
cooperative housing corporation (as such term is
defined in section 216(b)), a tenant-stockholder shall
be treated as owning the house or apartment which such
person is entitled to occupy.
``(6) Related party sales not treated as affordable
sales.--
``(A) In general.--A sale between related persons
shall not be treated as an affordable sale.
``(B) Related persons.--For purposes of this
paragraph, a person (in this subparagraph referred to
as the `related person') is related to any person if
the related person bears a relationship to such person
specified in section 267(b) or 707(b)(1), or the
related person and such person are engaged in trades or
businesses under common control (within the meaning of
subsections (a) and (b) of section 52). For purposes of
the preceding sentence, in applying section 267(b) or
707(b)(1), `10 percent' shall be substituted for `50
percent'.
``(7) Inflation adjustment.--
``(A) In general.--In the case of a calendar year
after 2023, the dollar amounts in subsections
(b)(3)(A), (e)(3)(A)(i)(I), (e)(3)(A)(i)(II), and
(i)(2)(C) shall each be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year by substituting `calendar year
2022' for `calendar year 2016' in subparagraph
(A)(ii) thereof.
``(B) Rounding.--
``(i) In the case of the dollar amounts in
subsection (b)(3)(A) and (i)(2)(C), any
increase under paragraph (1) which is not a
multiple of $1,000 shall be rounded to the
nearest multiple of $1,000.
``(ii) In the case of the dollar amount in
subsection (e)(3)(A)(i)(I), any increase under
paragraph (1) which is not a multiple of $0.01
shall be rounded to the nearest multiple of
$0.01.
``(iii) In the case of the dollar amount in
subsection (e)(3)(A)(i)(II), any increase under
paragraph (1) which is not a multiple of
$100,000 shall be rounded to the nearest
multiple of $100,000.
``(8) Report.--
``(A) In general.--The Secretary shall annually
issue a report, to be made available to the public,
which contains the information submitted pursuant to
subsection (f)(1)(F).
``(B) De-identification.--The Secretary shall
ensure that any information made public pursuant to
subparagraph (A) excludes any information that would
allow for the identification of qualified homeowners.
``(9) List of qualified census tracts.--The Secretary of
Housing and Urban Development shall, for each year, make
publicly available a list of qualified census tracts under--
``(A) on a combined basis, clauses (i) and (ii) of
subsection (c)(2)(A),
``(B) clause (iii) of such subsection, and
``(C) subsection (i)(5)(A).
``(10) Denial of deductions if converted to rental
housing.--If, during the 5-year period beginning immediately
after the affordable sale of a qualified residence referred to
in subsection (a), an individual who owns a qualified residence
(whether or not such individual was the purchaser in such
affordable sale) fails to use such qualified residence as such
individual's principal residence for any period of time, no
deduction shall be allowed for expenses paid or incurred by
such individual with respect to renting, during such period of
time, such qualified residence.
``(i) Application of Credit With Respect to Owner-Occupied
Rehabilitations.--
``(1) In general.--In the case of a qualified
rehabilitation by the taxpayer of any qualified residence which
is owned (as of the date that the written binding contract
referred to in paragraph (3) is entered into) by a specified
homeowner, the rules of paragraphs (2) through (7) shall apply.
``(2) Alternative credit determination.--In the case of any
qualified residence described in paragraph (1), the
neighborhood homes credit determined under subsection (a) with
respect to such residence shall (in lieu of any credit
otherwise determined under subsection (a) with respect to such
residence) be allowed in the taxable year during which the
qualified rehabilitation is completed (as determined by the
neighborhood homes credit agency) and shall be equal to the
least of--
``(A) the excess (if any) of--
``(i) the amounts paid or incurred by the
taxpayer for the qualified rehabilitation of
the qualified residence to the extent that such
amounts are certified by the neighborhood homes
credit agency (at the time of the completion of
such rehabilitation) as meeting the standards
specified pursuant to subsection (f)(1)(C),
over
``(ii) any amounts paid to such taxpayer
for such rehabilitation,
``(B) 50 percent of the amounts described in
subparagraph (A)(i), or
``(C) $50,000.
``(3) Qualified rehabilitation.--
``(A) In general.--For purposes of this subsection,
the term `qualified rehabilitation' means a
rehabilitation or reconstruction performed pursuant to
a written binding contract between the taxpayer and the
specified homeowner if the amount paid or incurred by
the taxpayer in the performance of such rehabilitation
or reconstruction exceeds the dollar amount in effect
under subsection (b)(3)(A).
``(B) Application of limitation to expenses paid or
incurred after allocation.--A rule similar to the rule
of section (b)(4) shall apply for purposes of this
subsection.
``(4) Specified homeowner.--For purposes of this
subsection, the term `qualified homeowner' means, with respect
to a qualified residence, an individual--
``(A) who owns and uses such qualified residence as
the principal residence of such individual as of the
date that the written binding contract referred to in
paragraph (3) is entered into, and
``(B) whose family income (determined as of such
date) does not exceed the median family income for the
applicable area (with respect to the census tract in
which the qualified residence is located).
``(5) Additional census tracts in which owner-occupied
residences may be located.--In the case of any qualified
residence described in paragraph (1), the term `qualified
census tract' includes any census tract which--
``(A) meets the requirements of subsection
(c)(2)(A)(i) without regard to subclause (III) thereof,
and
``(B) is designated by the neighborhood homes
credit agency for purposes of this paragraph.
``(6) Modification of repayment requirement.--In the case
of any qualified residence described in paragraph (1),
subsection (g) shall be applied by beginning the 5-year period
otherwise described therein on the date on which the qualified
homeowner acquired such residence.
``(7) Related parties.--Paragraph (1) shall not apply if
the taxpayer is the owner of the qualified residence described
in paragraph (1) or is related (within the meaning of
subsection (h)(6)(B)) to such owner.
``(8) Pyrrhotite remediation.--The requirement of
subsection (c)(1)(C) shall not apply to a qualified
rehabilitation under this subsection of a qualified residence
that is documented by an engineer's report and core testing to
have a foundation that is adversely impacted by pyrrhotite or
other iron sulfide minerals.
``(j) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations that prevent avoidance of the rules, and
abuse of the purposes, of this section.''.
(c) Credit Allowed as Part of General Business Credit.--Section
38(b) of the Internal Revenue Code of 1986, as amended by section 213,
is amended by striking ``plus'' at the end of paragraph (41), by
striking the period at the end of paragraph (42) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(43) the neighborhood homes credit determined under
section 42B(a).''.
(d) Credit Allowed Against Alternative Minimum Tax.--Section
38(c)(4)(B) of the Internal Revenue Code of 1986 is amended by
redesignating clauses (iv) through (xii) as clauses (v) through (xiii),
respectively, and by inserting after clause (iii) the following new
clause:
``(iv) the credit determined under section
42B,''.
(e) Basis Adjustments.--
(1) Energy efficient home improvement credit.--Section
25C(g) of the Internal Revenue Code of 1986 is amended by
adding after the first sentence the following new sentence:
``This subsection shall not apply for purposes of determining
the eligible development costs or adjusted basis of any
building under section 42B.''.
(2) Residential clean energy credit.--Section 25D(f) of
such Code is amended by adding after the first sentence the
following new sentence: ``This subsection shall not apply for
purposes of determining the eligible development costs or
adjusted basis of any building under section 42B.''.
(3) New energy efficient home credit.--Section 45L(e) of
such Code is amended by inserting ``or for purposes of
determining the eligible development costs or adjusted basis of
any building under section 42B'' after ``section 42''.
(f) Exclusion From Gross Income.--Part III of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting
before section 140 the following new section:
``SEC. 139J. STATE ENERGY SUBSIDIES FOR QUALIFIED RESIDENCES.
``(a) Exclusion From Gross Income.--Gross income shall not include
the value of any subsidy provided to a taxpayer (whether directly or
indirectly) by any State energy office (as defined in section 124(a) of
the Energy Policy Act of 2005 (42 U.S.C. 15821(a))) for purposes of any
energy improvements made to a qualified residence (as defined in
section 42B(c)(1)).''.
(g) Conforming Amendments.--
(1) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of
section 469 of the Internal Revenue Code of 1986, as amended by
section 213, are each amended by striking ``or 42A'' and
inserting ``, 42A, or 42B''.
(2) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code, as amended by section
213, is amended by inserting after the item relating to section
42A the following new item:
``Sec. 42B. Neighborhood homes credit.''.
(3) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by inserting before the item
relating to section 140 the following new item:
``Sec. 139J. State energy subsidies for qualified residences.''.
(h) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2023.
SEC. 215. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.
(a) In General.--Section 36 of the Internal Revenue Code of 1986 is
amended to read as follows:
``SEC. 36. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.
``(a) Allowance of Credit.--In the case of an individual who is a
first-time homebuyer of a principal residence in the United States
during a taxable year, there shall be allowed as a credit against the
tax imposed by this subtitle for such taxable year an amount equal to
20 percent of the purchase price of the residence.
``(b) Limitations; Special Rules Based on Marital and Filing
Status.--
``(1) Dollar limitation.--The credit allowed under
subsection (a) shall not exceed $15,000.
``(2) Limitation based on purchase price.--The amount
allowable as a credit under subsection (a) (determined without
regard to this paragraph and paragraph (3), and after the
application of paragraph (1)) for the taxable year shall be
reduced (but not below zero) by the amount which bears the same
ratio to the amount which is so allowable as--
``(A) the excess (if any) of--
``(i) the purchase price of the residence,
over
``(ii) an amount equal to 110 percent of
the conforming loan limit applicable to the
residence, bears to
``(B) $100,000.
For purposes of the preceding sentence, the term `conforming
loan limit' with respect to any residence means the applicable
limitation governing the maximum original principal obligation
for a mortgage secured by a residence of the same type, as
determined and adjusted annually under section 302(b)(2) of the
Federal National Mortgage Association Charter Act and section
305(a)(2) of the Federal Home Loan Mortgage Corporation Act.
``(3) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount allowable as a credit
under subsection (a) (determined without regard to this
paragraph and after the application of paragraphs (1)
and (2)) for the taxable year shall be reduced (but not
below zero) by the amount which bears the same ratio to
the amount which is so allowable as--
``(i) the excess (if any) of--
``(I) the taxpayer's modified
adjusted gross income for the preceding
taxable year, over
``(II) the applicable threshold,
bears to
``(ii) $50,000.
``(B) Modified adjusted gross income.--For purposes
of subparagraph (A), the term `modified adjusted gross
income' with respect to any taxable year means the
adjusted gross income of the taxpayer for such taxable
year increased by any amount excluded from gross income
under section 911, 931, or 933 for such taxable year.
``(C) Applicable threshold.--For purposes of
subparagraph (A), the applicable threshold is--
``(i) except as provided in clauses (ii)
and (iii), $100,000,
``(ii) an amount equal to 150 percent of
the amount in effect under clause (i), in the
case of a head of household (as defined in
section 2(b)), and
``(iii) an amount equal to 200 percent of
the amount in effect under clause (i), in the
case of a joint return.
``(4) Additional limitations.--No credit shall be allowed
under subsection (a) with respect to the purchase of any
residence for a taxable year--
``(A) if the taxpayer is a nonresident alien, or
``(B) if--
``(i) the taxpayer has not attained age 18
as of the date of such purchase, or
``(ii) a deduction under section 151 with
respect to the taxpayer is allowable to another
taxpayer for the taxable year.
In the case of a taxpayer who is married, the taxpayer shall be
treated as meeting the age requirement of subparagraph (B)(i)
if the taxpayer or the taxpayer's spouse meets such age
requirement.
``(5) Multiple purchasers.--If 2 or more individuals who
are not married purchase a principal residence, the amount of
the credit under subsection (a) shall be allocated among such
individuals in such manner as the Secretary may prescribe by
taking into account the requirements of paragraphs (2) and (3),
except that the total amount of the credits allowed to all such
individuals shall not exceed the limitation under paragraph (1)
(as modified by paragraph (7)).
``(6) Married couples must file joint return.--If an
individual is married at the close of the taxable year, the
credit shall be allowed under subsection (a) only if the
individual and the individual's spouse file a joint return for
the taxable year.
``(7) Adjustment for inflation.--In the case of any taxable
year beginning after December 31, 2024, each of the dollar
amounts in paragraphs (1), (2)(A)(ii), and (3)(C)(i) shall be
increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be
rounded to the next lowest multiple of $50.
``(c) Definitions.--For purposes of this section--
``(1) First-time homebuyer.--
``(A) In general.--The term `first-time homebuyer'
means any individual who acquires a principal residence
located in the United States by purchase if such
individual (and, if married, such individual's
spouse)--
``(i) has not claimed any credit or
deduction under this title for any previous
taxable year with respect to the purchase or
ownership of any residence or residential real
estate (including for any expenditures relating
to the placing in service of any property on,
in connection with, or for use in such a
residence or real estate), and
``(ii) attests under penalty of perjury
that--
``(I) the individual (and, if
married, the individual's spouse) has
not owned a principal residence at any
time prior to the purchase of the
principal residence to which this
section applies, and
``(II) the principal residence to
which this section applies was not
acquired from a person related to such
individual or spouse.
``(B) Waiver in case of certain changes in
status.--The Secretary may, in such manner as the
Secretary may prescribe, waive the requirements of
subparagraph (A) for a taxable year in the case of an
individual who is not eligible to file a joint return
for the taxable year, and who was married at the time
the individual or the individual's former spouse
purchased a previous residence.
``(2) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121.
``(3) Purchase.--
``(A) In general.--The term `purchase' means any
acquisition, but only if--
``(i) the property is not acquired from a
person related to the person acquiring such
property (or, if either such person is married,
such individual's spouse), and
``(ii) the basis of the property in the
hands of the person acquiring such property is
not determined--
``(I) in whole or in part by
reference to the adjusted basis of such
property in the hands of the person
from whom acquired, or
``(II) under section 1014(a).
``(B) Construction.--A residence which is
constructed by the taxpayer shall be treated as
purchased by the taxpayer on the date the taxpayer
first occupies such residence.
``(4) Purchase price.--The term `purchase price' means the
adjusted basis (without regard to any reduction under section
1016(a)(38)) of the principal residence on the date such
residence is purchased.
``(5) Related persons.--A person shall be treated as
related to another person if the relationship between such
persons would result in the disallowance of losses under
section 267 or 707(b) (but, in applying subsections (b) and (c)
of section 267 for purposes of this section, paragraph (4) of
section 267(c) shall be treated as providing that the family of
an individual shall include only the individual's spouse,
ancestors, lineal descendants, and spouse's ancestors and
lineal descendants).
``(6) Marital status.--An individual's marital status shall
be determined in accordance with section 7703.
``(d) Denial and Recapture Rules in Case of Disposal of Residence
Within 6 Taxable Years.--
``(1) Denial of credit in case of disposal within taxable
year.--No credit under subsection (a) shall be allowed to any
taxpayer for any taxable year with respect to the purchase of a
residence if the taxpayer disposes of such residence (or such
residence ceases to be the principal residence of the taxpayer
(and, if married, the taxpayer's spouse)) before the close of
such taxable year.
``(2) Phased-out recapture.--
``(A) In general.--Except as provided in
subparagraph (D), if the taxpayer disposes of the
residence with respect to which a credit was allowed
under subsection (a) (or such residence ceases to be
the principal residence of the taxpayer (and, if
married, the taxpayer's spouse)) during the 5-taxable-
year period beginning with the taxable year immediately
following the credit year, the tax imposed by this
chapter for the taxable year in which such disposal (or
cessation) occurs shall be increased by an amount equal
to the recapture percentage of the amount of the credit
so allowed.
``(B) Credit year.--For purposes of subparagraph
(A), the term `credit year' means the taxable year in
which the credit under subsection (a) was allowed.
``(C) Recapture percentage.--For purposes of
subparagraph (A), the recapture percentage with respect
to any disposal or cessation described in such
subparagraph shall be determined in accordance with the
following table:
``If the disposal or The recapture
cessation occurs in: percentage is:
The 1st taxable year beginning after the 100 percent
credit year.
The 2nd taxable year beginning after the 80 percent
credit year.
The 3rd taxable year beginning after the 60 percent
credit year.
The 4th taxable year beginning after the 40 percent
credit year.
The 5th taxable year beginning after the 20 percent.
credit year.
``(D) Exceptions.--This paragraph shall not apply
in the case of a disposal or cessation described in
subparagraph (A) which occurs after or incident to any
of the following:
``(i) Death of the taxpayer or the
taxpayer's spouse.
``(ii) Divorce of the taxpayer.
``(iii) Involuntary conversion of the
residence (within the meaning of section
121(d)(5)(A)).
``(iv) Relocation of duty station or
qualified official extended duty (as defined in
section 121(d)(9)(C)) of the taxpayer or the
taxpayer's spouse who is a member of the
uniformed services (as defined in section
121(d)(9)(C)(ii)), a member of the Foreign
Service of the United States (as defined in
section 121(d)(9)(C)(iii)), or an employee of
the intelligence community (as defined in
section 121(d)(9)(C)(iv)).
``(v) Change of employment of the taxpayer
or the taxpayer's spouse which meets the
conditions of section 217(c).
``(vi) Loss of employment, health
conditions, or such other unforeseen
circumstances as may be specified by the
Secretary.
``(e) Adjustment to Basis.--For purposes of this subtitle, if a
credit is allowed under this section with respect to any property, the
taxpayer's basis in such property shall be reduced by the amount of the
credit so allowed.
``(f) Reporting.--
``(1) In general.--A credit shall be allowed under this
section only if the following are included on the return of
tax:
``(A) The individual's (and, if married, the
individual's spouse's) social security number issued by
the Social Security Administration.
``(B) The street address (not including a post
office box) of the principal residence purchased.
``(C) The purchase price of the principal
residence.
``(D) The date of purchase of the principal
residence.
``(E) The closing disclosure relating to the
purchase (in the case of a purchase financed by a
mortgage).
``(2) Reporting of real estate transactions.--If the
Secretary requires information reporting under section 6045 by
a person described in subsection (e)(2) thereof to verify the
eligibility of taxpayers for the credit allowable by this
section, the exception provided by section 6045(e)(5) shall not
apply.''.
(b) Conforming Amendment Relating to Basis Adjustment.--Subsection
(a) of section 1016 of the Internal Revenue Code of 1986, as amended by
section 213, is further amended--
(1) by redesignating paragraphs (38) and (39) as paragraphs
(39) and (40), respectively; and
(2) by inserting after paragraph (37) the following new
paragraph:
``(38) to the extent provided in section 36(e).''.
(c) Conforming Amendment.--Section 26(b)(2) of the Internal Revenue
Code of 1986 is amended by striking subparagraph (W) and by
redesignating subparagraphs (X), (Y), and (Z) as subparagraphs (W),
(X), and (Y), respectively.
(d) Clerical Amendment.--The item relating to section 36 in the
table of sections for subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended to read as follows:
``Sec. 36. First-time homebuyer refundable credit.''.
(e) Authority To Treat Claim of Credit as Error, etc.--Subparagraph
(N) of section 6213(g)(2) of the Internal Revenue Code of 1986 is
amended to read as follows:
``(N) in the case of a return claiming the credit
under section 36--
``(i) the omission of a social security
number required under section 36(f)(1)(A),
``(ii) the inclusion of a social security
number so required if--
``(I) the claim of the credit on
the return reflects the treatment of
such individual as being of an age
different from the individual's age
based on such social security number,
or
``(II) except as provided in
section 36(c)(1)(B), such social
security number has been included
(other than as a dependent for purposes
of section 151) on a return for any
previous taxable year claiming any
credit or deduction described in
section 36(c)(1)(A)(i),
``(iii) the omission of any other required
information or documentation described in
section 36(f)(1), including the inclusion of a
post office box instead of a street address for
the purchased residence,
``(iv) the inclusion of any information or
documentation described in clause (iii) if such
information or documentation does not support a
valid claim for the credit, or
``(v) a claim of such credit for a taxable
year with respect to the purchase of a
residence made after the last day of such
taxable year,''.
(f) IRS Recordkeeping.--Notwithstanding the limitations on
assessment and collection under section 6501 of the Internal Revenue
Code of 1986, the Commissioner of Internal Revenue shall maintain
records of returns and return information (as defined in section
6103(b)(2) of such Code) of any taxpayer claiming the credit under
section 36 of such Code (as amended by this section) for the taxable
year in which such credit is claimed and succeeding taxable years in
the individual master files of the Internal Revenue Service.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2023.
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