[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2400 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2400

  To amend the Internal Revenue Code of 1986 to modify the low-income 
                            housing credit.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 30, 1999

 Mrs. Johnson of Connecticut introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to modify the low-income 
                            housing credit.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Affordable Housing 
Improvement Act of 1999''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING CREDITS AMONG 
              PROJECTS.

    (a) Selection Criteria.--Subparagraph (C) of section 42(m)(1) 
(relating to certain selection criteria must be used) is amended--
            (1) by inserting ``, including whether the project includes 
        the use of existing housing as part of a community 
        revitalization plan'' before the comma at the end of clause 
        (iii), and
            (2) by striking clauses (v), (vi), and (vii) and inserting 
        the following new clauses:
                            ``(v) tenant populations with special 
                        housing needs,
                            ``(vi) public housing waiting lists,
                            ``(vii) tenant populations of individuals 
                        with children, and
                            ``(viii) projects intended for eventual 
                        tenant ownership.''
    (b) Preference for Community Revitalization Projects Located in 
Qualified Census Tracts.--Clause (ii) of section 42(m)(1)(B) is amended 
by striking ``and'' at the end of subclause (I), by adding ``and'' at 
the end of subclause (II), and by inserting after subclause (II) the 
following new subclause:
                                    ``(III) projects which are located 
                                in qualified census tracts (as defined 
                                in subsection (d)(5)(C)) and the 
                                development of which contributes to a 
                                concerted community revitalization 
                                plan,''.

SEC. 3. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT AGENCIES.

    (a) Market Study; Public Disclosure of Rationale for Not Following 
Credit Allocation Priorities.--Subparagraph (A) of section 42(m)(1) 
(relating to responsibilities of housing credit agencies) is amended by 
striking ``and'' at the end of clause (i), by striking the period at 
the end of clause (ii) and inserting a comma, and by adding at the end 
the following new clauses:
                            ``(iii) a comprehensive market study of the 
                        housing needs of low-income individuals in the 
                        area to be served by the building 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
                            ``(iv) 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) Site Visits.--Clause (iii) of section 42(m)(1)(B) (relating to 
qualified allocation plan) is amended by inserting before the period 
``and in monitoring for noncompliance with habitability standards 
through regular site visits''.

SEC. 4. MODIFICATIONS TO RULES RELATING TO BASIS OF BUILDING WHICH IS 
              ELIGIBLE FOR CREDIT.

    (a) HOME Assistance Not To Disqualify Building for Additional 
Credit Available to Buildings in High Cost Areas.--Clause (i) of 
section 42(i)(2)(E) (relating to buildings receiving HOME assistance) 
is amended by striking the last sentence.
    (b) Adjusted Basis To Include Portion of Certain Buildings Used by 
Low-Income Individuals Who Are Not Tenants and by Project Employees.--
Paragraph (4) of section 42(d) (relating to special rules relating to 
determination of adjusted basis) is amended--
            (1) by striking ``subparagraph (B)'' in subparagraph (A) 
        and inserting ``subparagraphs (B) and (C)'',
            (2) by redesignating subparagraph (C) as subparagraph (D), 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Inclusion of basis of property used to 
                provide services for certain nontenants.--
                            ``(i) In general.--The adjusted basis of 
                        any building located in a qualified census 
                        tract (as defined in paragraph (5)(C)) shall be 
                        determined by taking into account the adjusted 
                        basis of property (of a character subject to 
                        the allowance for depreciation and not 
                        otherwise taken into account) used throughout 
                        the taxable year in providing any community 
                        service facility.
                            ``(ii) Limitation.--The increase in the 
                        adjusted basis of any building which is taken 
                        into account by reason of clause (i) shall not 
                        exceed 20 percent of the eligible basis of the 
                        qualified low-income housing project of which 
                        it is a part. For purposes of the preceding 
                        sentence, all community service facilities 
                        which are part of the same qualified low-income 
                        housing project shall be treated as 1 facility.
                            ``(iii) Community service facility.--For 
                        purposes of this subparagraph, the term 
                        `community service facility' means any facility 
                        designed to serve primarily individuals whose 
                        income is 60 percent or less of area median 
                        income (within the meaning of subsection 
                        (g)(1)(B)).''.

SEC. 5. OTHER MODIFICATIONS.

    (a) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Subsection (c) of section 38 (relating to 
        limitation based on amount of tax) is amended by redesignating 
        paragraph (3) as paragraph (4) and by inserting after paragraph 
        (2) the following new paragraph:
            ``(3) Special rules for low-income housing credit of 
        noncorporate taxpayers.--
                    ``(A) In general.--In the case of the low-income 
                housing credit allowable to a taxpayer other than a 
                corporation--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraph (A) shall not 
                                apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the low-income 
                                housing credit).
                    ``(B) Low-income housing credit.--For purposes of 
                this subsection, the term `low-income housing credit' 
                means the credit allowable under subsection (a) by 
                reason of section 42(a).''
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) is amended by inserting ``or the low-income 
        housing credit'' after ``employment credit''.
    (b) Allocation of Credit Limit to Certain Buildings.--
            (1) The first sentence of section 42(h)(1)(E)(ii) is 
        amended by striking ``(as of'' the first place it appears and 
        inserting ``(as of the later of the date which is 6 months 
        after the date that the allocation was made or''.
            (2) The last sentence of section 42(h)(3)(C) is amended by 
        striking ``project which'' and inserting ``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''.
    (c) Determination of Whether Buildings Are Located in High Cost 
Areas.--The first sentence of section 42(d)(5)(C)(ii)(I) is amended--
            (1) by inserting ``either'' before ``in which 50 percent'', 
        and
            (2) by inserting before the period `` or which has a 
        poverty rate of at least 25 percent''.

SEC. 6. EFFECTIVE DATE.

    (a) In General.--Except as otherwise provided in this section, the 
amendments made by this Act shall apply to--
            (1) housing credit dollar amounts allocated after December 
        31, 1999, and
            (2) buildings placed in service after December 31, 1999, to 
        the extent paragraph (1) of section 42(h) of the Internal 
        Revenue Code of 1986 does not apply to any building by reason 
        of paragraph (4) thereof, but only with respect to bonds issued 
        after December 31, 1999.
    (b) Sections 2 and 3.--In the case of the amendments made by 
sections 2 and 3, subsection (a) of this section shall be applied by 
substituting ``December 31, 2000'' for ``December 31, 1999'' each place 
it appears.
    (c) Credit Allowed Against Minimum Tax.--The amendments made by 
section 5(a) shall apply to taxable years beginning after December 31, 
1999.
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