[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5137 Introduced in House (IH)]







109th CONGRESS
  2d Session
                                H. R. 5137

To assist first-time homebuyers to attain home ownership, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 6, 2006

   Mr. Hastings of Florida introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
   Committee on Financial Services, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To assist first-time homebuyers to attain home ownership, 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, ETC.

    (a) Short Title.--This Act may be cited as the ``Workforce Housing 
Act of 2006''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title, etc
Sec. 2. Congressional findings
Sec. 3. Mortgage down payment accounts
Sec. 4. Refundable credit for contributions to mortgage down payment 
                            accounts
Sec. 5. Amendments to American Dream Downpayment Initiative
Sec. 6. Production of affordable home ownership housing

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress finds that--
            (1) home prices have increased nationally an average 50 
        percent in the past five years;
            (2) in 2005, the median price for a home in the United 
        States was $213,900, but only about 11 percent of the adult 
        population in the country could afford to purchase such a home;
            (3) as a result of such prohibitive housing costs, 
        employers often cannot maintain or retain a pool of qualified 
        workers to fill jobs;
            (4) rising energy costs add to the burden that working 
        families face when trying to purchase a home;
            (5) in 2005, families in the United States spent, on 
        average, $4,300 on all energy costs (including home energy 
        bills and gasoline), which is approximately $600 more than they 
        spent on such costs in 2004;
            (6) residential appliances, including heating and cooling 
        equipment and water heaters, consume 90 percent of all energy 
        used in the residential sector in the United States;
            (7) homes and appliances that fail to use energy 
        efficiently cost on average $500 per year to operate and 
        require over 30 percent more resources, further increasing the 
        dependence on fossil fuels, and jeopardizing the energy 
        security, of the United States;
            (8) within 15 years, renewable energy could be generating 
        enough electricity to power 40,000,000 homes and offset 70 days 
        of oil imports into the United States;
            (9) when workers can use nearby mass transit, instead of 
        driving to work, toxic greenhouse gases that contribute to 
        global warming are reduced by 77 pounds per person per year; 
        and
            (10) to ensure there is an adequate supply of workforce 
        housing and reduce some of the negative affects of high energy 
        demands, it is critical to provide incentives for producing 
        affordable homes that are close to transportation hubs and make 
        the best use of efficient, renewable energy.

SEC. 3. MORTGAGE DOWN PAYMENT ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 224 as 
section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. MORTGAGE DOWN PAYMENT ACCOUNTS.

    ``(a) Allowance of Deduction.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a deduction for the taxable year an amount 
        equal to the aggregate amount paid in cash during such taxable 
        year by the taxpayer to the mortgage down payment account of 
        the taxpayer.
            ``(2) Dollar limitation.--
                    ``(A) In general.--The amount allowed as a 
                deduction under subsection (a) with respect to the 
                taxpayer for any taxable year shall not exceed the 
                applicable dollar limit.
                    ``(B) Applicable dollar limit.--
                            ``(i) In the case of a taxpayer whose 
                        modified adjusted gross income for the taxable 
                        year does not exceed 125 percent of area median 
                        income, the applicable dollar limit shall be 
                        equal to $10,000.
                            ``(ii) In the case of any other taxpayer, 
                        the applicable dollar limit shall be zero.
                    ``(C) Area median income.--For purposes of 
                subparagraph (B)--
                            ``(i) In general.--The area median income 
                        means the area median income determined by the 
                        Secretary of Housing and Urban Development for 
                        the calendar year ending with or within the 
                        taxable year of the taxpayer.
                            ``(ii) Taxpayer residing in more than 1 
                        area for the taxable year.--In the case that 
                        the taxpayer had more than one principal 
                        residence during the taxable year, the area 
                        median income means the sum of the residing 
                        percentage of the area median income for each 
                        area in which the taxpayer had a principal 
                        residence during the taxable year.
                            ``(iii) Residing percentage.--For purposes 
                        of clause (ii), the term `residing percentage' 
                        means the ratio of the number of days that the 
                        taxpayer had his principal residence in an area 
                        bears to 365.
                    ``(D) Modified adjusted gross income.--The term 
                `modified adjusted gross income' means the adjusted 
                gross income of the taxpayer for the taxable year 
                increased by any amount excluded from gross income 
                under section 911, 931, or 933.
            ``(3) Coordination with mortgage down payment credit.--No 
        amount shall be allowed as a deduction under paragraph (1) to 
        the taxpayer if a credit is allowed under section 36 for the 
        taxable year.
            ``(4) Deduction not allowed to dependents.--A deduction 
        shall not be allowed to an individual for a taxable year under 
        paragraph (1) if such individual is a dependent for whom a 
        deduction is allowable under section 151 to another taxpayer 
        for any taxable year beginning in the same calendar year in 
        which such individual's taxable year begins.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Mortgage down payment account.--The term `mortgage 
        down payment account' means a trust created or organized in the 
        United States exclusively for the purpose of paying the 
        qualified expenses of a taxpayer, but only if the written 
        governing instrument creating the trust meets the following 
        requirements:
                    ``(A) No contribution will be accepted--
                            ``(i) unless it is in cash, or
                            ``(ii) except in the case of rollover 
                        contributions and contributions under section 
                        36(b)(3)(B), if such contribution would result 
                        in aggregate contributions for the taxable year 
                        exceeding the amount allowed as a deduction 
                        under subsection (a).
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                that person will administer the trust will be 
                consistent with the requirements of this section or who 
                has so demonstrated with respect to any individual 
                retirement plan.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust shall not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
            ``(2) Qualified expenses.--The term `qualified expenses' 
        means with respect to a principal residence of the taxpayer who 
        is a first-time homebuyer--
                    ``(A) the costs of acquiring, constructing, or 
                reconstructing the residence, including any usual or 
                reasonable settlement, financing, or other closing 
                costs qualified acquisition costs,
                    ``(B) the cost of repairing or replacing major 
                structural components of the residence, and
                    ``(C) the costs of purchasing a major appliances 
                for service in the residence.
            ``(3) First-time homebuyer.--
                    ``(A) In general.--The term `first-time homebuyer' 
                means any individual if--
                            ``(i) such individual (and if married, such 
                        individual's spouse) had no present ownership 
                        interest in a principal residence during the 2-
                        year period ending on the date of acquisition 
                        of the principal residence to which this 
                        subsection applies, and
                            ``(ii) subsection (h) or (k) of section 
                        1034 (as in effect on the day before the date 
                        of the enactment of this paragraph) did not 
                        suspend the running of any period of time 
                        specified in section 1034 (as so in effect) 
                        with respect to such individual on the day 
                        before the end of the period specified in 
                        clause (i).
                    ``(B) Principal residence.--The term `principal 
                residence' has the same meaning as when used in section 
                121.
                    ``(C) Date of acquisition.--The term `date of 
                acquisition' means the date--
                            ``(i) on which a binding contract to 
                        acquire the principal residence to which 
                        subparagraph (A) applies is entered into, or
                            ``(ii) on which construction or 
                        reconstruction of such a principal residence is 
                        commenced.
    ``(c) Tax Treatment of Account.--
            ``(1) In general.--A mortgage down payment account shall be 
        exempt from taxation under this subtitle. Notwithstanding the 
        preceding sentence, the mortgage down payment account shall be 
        subject to the taxes imposed by section 511 (relating to 
        imposition of tax on unrelated business income of charitable 
        organizations).
            ``(2) Account terminations.--Rules similar to the rules of 
        paragraphs (2) and (4) of section 408(e) shall apply to any 
        mortgage down payment account.
    ``(d) Tax Treatment of Distributions.--
            ``(1) In general.--Any distribution shall be includible in 
        the gross income of the distributee in the manner as provided 
        in section 72.
            ``(2) Qualified distributions.--
                    ``(A) Exclusion.--Any qualified distribution from a 
                mortgage down payment account shall not be includible 
                in gross income.
                    ``(B) Qualified distribution.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `qualified 
                        distribution' means any payment of 
                        distribution--
                                    ``(I) if the qualified expenses of 
                                the designated beneficiary during the 
                                taxable year are not less than the 
                                aggregate distributions during the 
                                taxable year,
                                    ``(II) made on or after the date on 
                                which the individual attains age 59\1/
                                2\,
                                    ``(III) made to a beneficiary (or 
                                to the estate of the individual) on or 
                                after the death of the individual, or
                                    ``(IV) attributable to the 
                                individual's being disabled (within the 
                                meaning of section 72(m)(7).
                    ``(C) Distributions in excess of expenses.--
                            ``(i) In general.--If such aggregate 
                        distributions exceed such expenses during the 
                        taxable year, the amount otherwise includible 
                        in gross income under paragraph (1) shall be 
                        reduced by the amount which bears the same 
                        ratio to the amount which would be includible 
                        in gross income under paragraph (1) (without 
                        regard to this subparagraph) as the qualified 
                        expenses bear to such aggregate distributions.
                            ``(ii) Mortgage grant programs, etc.--The 
                        amount of qualified expenses otherwise taken 
                        into account under subparagraph (B) with 
                        respect to an individual shall be reduced by 
                        any payment for such expenses which is 
                        excludible from gross income under any law of 
                        the United States.
            ``(3) Additional tax for distributions not used for 
        qualified expenses.--
                    ``(A) In general.--The tax imposed by this chapter 
                for any taxable year on any taxpayer who receives a 
                payment or distribution from a mortgage down payment 
                account which is includible in gross income shall be 
                increased by 10 percent of the amount which is so 
                includible.
                    ``(B) Contributions returned before certain date.--
                Subparagraph (A) shall not apply to the distribution of 
                any contribution made during a taxable year on behalf 
                of the designated beneficiary if--
                            ``(i) such distribution is made before the 
                        first day of the sixth month of the taxable 
                        year following the taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                 Any net income described in clause (ii) shall be 
                included in gross income for the taxable year in which 
                such excess contribution was made.
            ``(4) Rollover contributions.--Paragraph (1) shall not 
        apply to any amount paid or distributed from a mortgage down 
        payment account to the extent that the amount received is paid, 
        not later than the 60th day after the date of such payment or 
        distribution, into another mortgage down payment account for 
        the taxpayer. The preceding sentence shall not apply to any 
        payment or distribution if such paragraph applied to any prior 
        payment or distribution during the 12-month period ending on 
        the date of the payment or distribution.
    ``(e) Recapture.--The Secretary shall, by regulations, provide for 
recapturing the benefit provided under this section and section 36 with 
respect to any property which ceases to be the principal residence of 
the taxpayer before the end of the 15-year period beginning on the last 
date on which amounts were excluded from gross income under subsection 
(d)(2) with respect to such property. Such regulations shall provide 
exceptions in the case of the divorce, disability, or death of the 
taxpayer.
    ``(f) Community Property Laws.--This section shall be applied 
without regard to any community property laws.
    ``(g) Custodial Accounts.--For purposes of this section, a 
custodial account shall be treated as a trust if the assets of such 
account are held by a bank (as defined in section 408(n) or another 
person who demonstrates, to the satisfaction of the Secretary, that the 
manner in which he will administer the account will be consistent with 
the requirements of this section, and if the custodial account would, 
except for the fact that it is not a trust, constitute an account 
described in subsection (b)(1). For purposes of this title, in the case 
of a custodial account treated as a trust by reason of the preceding 
sentence, the custodian of such account shall be treated as the trustee 
thereof.
    ``(h) Reports.--The trustee of a mortgage down payment account 
shall make such reports regarding such account to the Secretary and to 
the beneficiary of the account with respect to contributions, 
distributions, and such other matters as the Secretary may require. The 
reports required by this subsection shall be filed at such time and in 
such manner and furnished to such individuals at such time and in such 
manner as may be required.''.
    (b) Deduction Allowed Whether or not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62 of such Code is amended by 
inserting before the last sentence at the end the following new 
paragraph:
            ``(21) Mortgage down payment account.--The deduction 
        allowed by section 224.''.
    (c) Prohibited Transactions.--
            (1) Exception for taxable distributions from mortgage down 
        payment accounts.--Subsection (c) of section 4975 of such Code 
        (defining to prohibited transaction) is amended by adding at 
        the end the following new paragraph:
            ``(7) Special rule for mortgage down payment accounts.--An 
        individual for whose benefit a mortgage down payment account is 
        established and any contributor to such account shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if section 224(d)(3) applies with 
        respect to such transaction.''.
            (2) Plan defined.--Paragraph (1) of section 4975(e) of such 
        Code is amended by striking ``or'' at the end of subparagraph 
        (F), by striking the period at the end of subparagraph (G) and 
        inserting ``, or'', and by inserting after subparagraph (G) the 
        following new subparagraph:
                    ``(H) a mortgage down payment account described in 
                section 224.''.
    (d) Excess Contributions.--
            (1) In general.--Section 4973(a) of such Code relating to 
        tax imposed) is amended by striking ``or'' at the end of 
        paragraph (4), by inserting ``or'' at the end of paragraph (5), 
        and by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) a mortgage down payment account (within the meaning 
        of section 224(b)(1)).''.
            (2) Excess contributions to mortgage down payment 
        accounts.--Section 4973 of such Code (relating to tax on excess 
        contributions to certain tax-favored accounts and annuities) is 
        amended by adding at the end the following new subsection:
    ``(h) Excess Contributions to Mortgage Down Payment Accounts.--For 
purposes of this section--
            ``(1) In general.--In the case of contributions to a 
        mortgage down payment account, the term `excess contributions' 
        means the sum of--
                    ``(A) the excess (if any) of--
                            ``(i) the amount contributed for the 
                        taxable year to the accounts (other than a 
                        rollover contribution described in section 
                        224(d)(4) and contributions under section 
                        36(c), over
                            ``(ii) the amount allowable as a deduction 
                        under section 224 for such contributions or as 
                        a credit under section 36 for such 
                        contributions, as the case may be, and
                    ``(B) the amount determined under this subsection 
                for the preceding taxable year, reduced by the sum of--
                            ``(i) the distributions out of the accounts 
                        for the taxable year (other than rollover 
                        distributions), and
                            ``(ii) the excess (if any) of the maximum 
                        amount which may be contributed to the accounts 
                        for the taxable year over the amount 
                        contributed to the accounts for the taxable 
                        year.
            ``(2) Special rules.--For purposes of paragraph (1), the 
        following contributions shall not be taken into account:
                    ``(A) Any contribution which is distributed out of 
                the mortgage down payment account in a distribution to 
                which section 224(d)(3)(B) applies.
                    ``(B) Any rollover contribution.''.
    (e) Penalty on Failure to Report.--Paragraph (2) of section 6693(a) 
of such Code (relating to provisions) is amended by striking ``and'' at 
the end of subparagraph (D), by striking the period at the end of 
subparagraph (E) and inserting ``, and'', and by inserting after 
subparagraph (E) the following new subparagraph:
                    ``(F) section 224(g) (relating to mortgage down 
                payment accounts).''.
    (f) Conforming Amendments.--
            (1) Section 26(b)(2) of such Code is amended by striking 
        ``and'' at the end of subparagraph S, by striking the period at 
        the end of subparagraph (T) and inserting ``, and'', and by 
        inserting after subparagraph (T) the following new 
        subparagraph:
            ``(U) section 224(d)(3) (relating to additional tax for 
        distributions not used for qualified expenses).''.
            (2) Section 72(t)(8)(C) of such Code is amended by 
        inserting at the end the following new sentence: ``Such costs 
        shall not include any amount taken into account under section 
        224.''.
    (g) Clerical Amendments.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by redesignating the 
item relating to section 224 as an item relating to section 225 and by 
inserting after the item relating to section 223 the following new 
item:

``Sec. 224. Mortgage down payment accounts''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

SEC. 4. REFUNDABLE CREDIT FOR CONTRIBUTIONS TO MORTGAGE DOWN PAYMENT 
              ACCOUNTS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by redesignating 
section 36 as section 37 and by inserting after section 35 the 
following new section:

``SEC. 36. CONTRIBUTIONS TO MORTGAGE DOWN PAYMENT ACCOUNTS.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter an amount 
equal to the amount contributed by the individual to any mortgage down 
payment account of the taxpayer.
    ``(b) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) with respect to the taxpayer for any taxable 
        year shall not exceed the applicable dollar limit.
            ``(2) Applicable dollar limit.--
                    ``(A) In general.--In the case of a taxpayer whose 
                modified adjusted gross income for the taxable year 
                does not exceed 100 percent of area median income, the 
                applicable dollar limit shall be equal to $2,500 
                ($5,000 in the case of a joint return).
                    ``(B) No credit for incomes in excess of limit.--In 
                the case of any other taxpayer, the applicable dollar 
                limit shall be zero.
            ``(3) Area median income.--For purposes of paragraph (2)--
                    ``(A) In general.--The area median income means the 
                area median income determined by the Secretary of 
                Housing and Urban Development for the calendar year 
                ending with or within the taxable year of the taxpayer.
                    ``(B) Taxpayer residing in more than 1 area for the 
                taxable year.--In the case that the taxpayer had more 
                than one principal residence during the taxable year, 
                the area median income means the sum of the residing 
                percentage of the area median income for each area in 
                which the taxpayer had a principal residence during the 
                taxable year.
                    ``(C) Residing percentage.--For purposes of 
                subparagraph (B), the term `residing percentage' means 
                the ratio of the number of days that the taxpayer had 
                his principal residence in an area bears to 365.
            ``(4) Modified adjusted gross income.--For purposes of this 
        subsection, the term `modified adjusted gross income' means the 
        adjusted gross income of the taxpayer for the taxable year 
        increased by any amount excluded from gross income under 
        section 911, 931, or 933.
    ``(c) One-Time Federal Match.--
            ``(1) In general.--In the case of a taxpayer for whom an 
        election is in effect under this subsection for any taxable 
        year, the amount allowed as a credit under subsection (a) shall 
        be increased by $500.
            ``(2) Completion of home ownership counseling course.--A 
        individual may not make an election under this subsection 
        unless the individual (and if married, such individual's 
        spouse) has completed the home ownership counseling under a 
        program that meets the requirements under section 271(c)(2)(C) 
        of the Cranston-Gonzalez National Affordable Housing Act.
            ``(3) Election applies only to 1 taxable year.--An election 
        to have paragraph (1) apply with respect to any eligible 
        individual may not be made for any taxable year if such an 
        election is in effect with respect to such individual for any 
        other prior taxable year.
            ``(4) Taxpayer must not have deficiency.--Under regulations 
        prescribed by the Secretary, an election under this subsection 
        shall not be effective for any taxable year for which the 
        taxpayer has unpaid tax or a deficiency.
    ``(d) Deposit of Credit Amounts in Mortgage Down Payment Account.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title--
                    ``(A) no amount shall be allowed as a credit under 
                this section unless the taxpayer designates a mortgage 
                down payment account into which such credit can be 
                contributed, and
                    ``(B) the entire amount of the credit allowed under 
                this section shall be treated as an overpayment 
                described in section 6401(b).
            ``(2) Credit deposited into account.--The Secretary shall 
        deposit by electronic funds transfer into such designated 
        mortgage down payment account the amount treated as an 
        overpayment under paragraph (1)(B).
            ``(3) Joint returns.--In the case of a payment under this 
        subsection with respect to a joint return, half of such payment 
        shall be treated as having been made to each individual filing 
        such return.
    ``(e) Credit not Allowed to Dependents.--A credit shall not be 
allowed to an individual for a taxable year under subsection (a) if 
such individual is a dependent for whom a deduction is allowable under 
section 151 to another taxpayer for any taxable year beginning in the 
same calendar year in which such individual's taxable year begins.''.
    (b) Conforming Amendments.--
            (1) Section 72(t)(8)(C) of such Code is amended by 
        inserting ``or 36'' before the period at the end.
            (2) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 36 of such Code''.
            (3) The table of sections for subpart C of part IV of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        redesignating the item relating to section 36 as an item 
        relating to section 37 and by inserting before the item 
        relating to section 37 the following new item:

``Sec. 36. Contributions to mortgage down payment accounts''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2006.

SEC. 5. AMENDMENTS TO AMERICAN DREAM DOWNPAYMENT INITIATIVE.

    (a) Home Ownership Counseling Requirement.--Section 271(c) of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12821(c)) 
is amended--
            (1) in paragraph (1), by adding at the end the following 
        new subparagraph:
                    ``(C) Home ownership counseling.--Providing home 
                ownership counseling that meets the requirements of 
                paragraph (2)(C) for families who are provided 
                downpayment assistance under this section.''.
            (2) in paragraph (2), by adding at the end the following 
        new subparagraph:
                    ``(C) Home ownership counseling requirement.--
                Downpayment assistance under this section may not be 
                provided under this section on behalf of a family 
                unless the family has completed a program of counseling 
                with respect to the responsibilities and financial 
                management involved in home ownership that is approved 
                by the Secretary and includes counseling regarding 
                strategies to save money, qualifying for a mortgage 
                loan, methods to avoid predatory lenders and 
                foreclosure, and, where appropriate by region, any 
                requirements and costs regarding obtaining flood or 
                other disaster-specific insurance coverage.''.
    (b) Amount and Use of Downpayment Assistance.--Section 271(c) of 
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12821(c)) is amended--
            (1) in paragraph (1)(A), by inserting after the period at 
        the end the following: ``Such assistance may be used to pay the 
        principal obligation of a mortgage loan, taxes, insurance, 
        service charges, appraisal, and any other fees in connection 
        with acquisition of a principal residence.''; and
            (2) in paragraph (2)(A)--
                    (A) in clause (i), by striking ``6 percent'' and 
                inserting ``10 percent''; and
                    (B) in clause (ii), by striking ``$10,000'' and 
                inserting ``$15,000''.
    (c) Priority for Certain Populations.--Section 271(c)(2) of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12821(c)(2)), as amended by the preceding provisions of this section, 
is further amended by adding at the end the following new subparagraph:
                    ``(D) Authority for jurisdiction to provide 
                priority for certain populations.--In providing 
                assistance with amounts from a grant under this 
                section, a participating jurisdiction may, in the 
                discretion of the jurisdiction, provide priority for 
                such assistance to certain categories of eligible low-
                income families, who may include elderly persons, 
                members of the Armed Forces, teachers, first 
                responders, other service workers, persons displaced by 
                natural disasters or governmental actions, nurses or 
                other health care providers, or any other categories of 
                eligible low-income families that the participating 
                jurisdiction considers appropriate.''.
    (d) Definition of First-Time Homebuyer.--Section 271(a) of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12821(a)) 
is amended--
            (1) by resdesignating paragraphs (2) through (4) as 
        paragraphs (2) through (5), respectively; and
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) First-time homebuyer.--The term `first-time 
        homebuyer' has the meaning given such term in paragraph (14) of 
        section 104, except that an individual may not be excluded from 
        consideration as a first-time homebuyer under such paragraph on 
        the basis that the individual--
                    ``(A) owns or owned a home with, or resided in a 
                home owned by, a spouse, former spouse, or other person 
                if such individual no longer resides in such home and 
                was a victim of domestic abuse (as such term is defined 
                in section 40002 of the Violence Against Women Act of 
                1994 (42 U.S.C. 13925)) from such spouse, former 
                spouse, or other person; or
                    ``(B) owns or owned, as a principal residence 
                during the 3-year period referred to in such paragraph, 
                a home from which such person is displaced as a result 
                of a government action other than eviction from public 
                housing assisted under title I of the United States 
                Housing Act of 1937 (42 U.S.C. 1437 et seq.).''.
    (e) Period of Affordability.--Paragraph (2) of section 271(f) of 
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12821) 
is amended by inserting before the period at the end the following: ``, 
except that any housing purchased with downpayment assistance under 
this section shall meet the affordability requirements under section 
215(b) and the regulations issued under such section for a minimum 
period of 15 years, regardless of the amount of such downpayment 
assistance provided''.
    (f) Report.--Subsection (h) of section 271 of the Cranston-Gonzalez 
National Affordable Housing Act (42 U.S.C. 12821) is amended--
            (1) by striking ``June 30, 2006'' and inserting ``June 30 
        of each year ''; and
            (2) by adding after and below paragraph (2) the following:
``The report under this subsection shall include information regarding 
the quality and quantity of housing purchased using assistance made 
available under this section, the amount of assistance provided per 
family, the incomes of the families assisted, the amount of time that 
low-income families assisted under this section continue to reside in 
housing purchased with such assistance, the quality of home ownership 
counseling provided in connection with such assistance, the types of 
priorities established by participating jurisdictions pursuant to 
subsection (c)(2)(D), and the benefits to such jurisdictions resulting 
from establishing such priorities.''.
    (g) Authorization of Appropriations.--Subsection (k) of section 271 
of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12821(k)) is amended by striking ``2007'' and inserting the following: 
``2006 and $200,000,000 for each of fiscal years 2007 through 2014''.

SEC. 6. PRODUCTION OF AFFORDABLE HOME OWNERSHIP HOUSING.

    (a) Program Authority.--The Secretary of Housing and Urban 
Development shall carry out a program to make grants to units of 
general local government to provide financial assistance to developers 
for the production of housing for home ownership that meets the 
requirements of this section and is affordable to low- and moderate-
income families.
    (b) Grant and Assistance Amounts.--The Secretary shall establish 
limitations--
            (1) regarding the amount of a grant that may be made under 
        this section to a unit of general local government; and
            (2) the portion of the total development costs of housing 
        to be constructed using such grant amounts that may be funded 
        with such grant amounts.
    (c) Affordable Dwelling Units.--Amounts from a grant under this Act 
may be used only for costs involved in the development of housing of 
which not less than 25 percent of the single-family dwelling units are 
affordable dwelling units that meet the following requirements:
            (1) Home ownership.--Such affordable dwelling units shall 
        be made available only for purchase by the occupying family, 
        which may include ownership of a one-family unit in a 
        condominium project and an undivided interest in the common 
        areas or a membership interest and occupancy agreement in 
        cooperative housing project, and may not be made available for 
        rental.
            (2) Low- and moderate-income limitations; principal 
        residence.--Such affordable dwelling units shall be available 
        for purchase by a family who is a first-time homebuyer, for use 
        only as the principal residence of such family, as follows:
                    (A) Low-income units.--Not less than 15 percent 
                shall be available for purchase only by low-income 
                families.
                    (B) Moderate-income units.--Not less than 10 
                percent shall be available for purchase only by 
                moderate-income families.
            (3) Affordability.--Such affordable dwelling units shall be 
        made available for purchase at an initial purchase price that 
        does not exceed such percentage of the median purchase price 
        for the area in which the housing is located, as the grantee 
        unit of general local government shall provide, with 
        adjustments based on the size of the dwelling unit as the unit 
        of general local government considers appropriate.
            (4) Resale restrictions.--Such affordable dwelling units 
        shall be subject to resale and recapture restrictions that are 
        established by the grantee unit of general local government and 
        determined by the Secretary to comply with the requirements for 
        such restrictions under section 215(b)(3) of the Cranston-
        Gonzalez National Affordable Housing Act (42 U.S.C. 
        12745(b)(3)).
            (5) Priority for certain populations.--The grantee unit of 
        general local government may require that priority be given, 
        among prospective purchasers of such affordable dwelling units, 
        to certain categories of low- and moderate-income families 
        otherwise eligible to purchase such dwelling units, who may 
        include elderly persons, members of the Armed Forces, teachers, 
        first responders, other service workers, persons displaced by 
        natural disasters or governmental actions, nurses or other 
        health care providers, or any other categories of eligible low-
        income families that the unit of general local government 
        considers appropriate.
            (6) Location.--Except as provided in subsection (d), such 
        affordable dwelling units shall be located together with and 
        among the other dwelling units developed using amounts from a 
        grant under this section.
    (d) Increase in Affordable Units for Flexibility in Location.--A 
unit of general local government may provide that the affordable 
dwelling units developed using amounts from a grant under this section 
are located at a site separate from the site of other dwelling units 
developed using such grant amounts, but only if the unit of general 
local government requires that the percentage of affordable dwelling 
units developed using such grant amounts is greater than the percentage 
specified in subsection (c).
    (e) Mixed Income Requirements.--Any housing constructed in whole or 
in part with amounts from a grant under this Act to a unit of general 
local government shall meet such requirements regarding income 
eligibility as such unit shall establish to ensure that the families 
purchasing such housing include a broad range of incomes.
    (f) Code Compliance.--All dwelling units in any housing constructed 
in whole or in part with amounts from a grant under this Act shall 
comply with all applicable Federal, State, and local law, regulations, 
and requirements relating to housing construction, quality, and safety, 
including any requirements regarding earthquake- or windstorm-resistant 
construction.
    (g) Cost Limits.--
            (1) In general.--Each unit of general local government that 
        receives a grant under this section shall establish limitations 
        on the amount of grant funds that may be invested in housing 
        constructed with such funds on a per unit basis. Such limits 
        may be established on a market-by-market basis, with 
        adjustments made for the number of bedrooms in a dwelling unit, 
        and shall reflect the actual cost of new construction of 
        housing that complies with subsection (f). Adjustments of such 
        cost limitations may be made over time to reflect inflation.
            (2) Criteria.-- The Secretary shall ensure that the cost 
        limitations established by each unit of general local 
        government--
                    (A) provide for development of nonluxury housing 
                with appropriate amenities;
                    (B) facilitate compliance with the mixed-income 
                requirement under subsection (e).
    (h) Development Incentives.--The Secretary may not make a grant 
under this section to a unit of general local government unless the 
Secretary determines that such unit has provided one or both of the 
following incentives with respect to any housing to be produced in 
whole or in part with such grant amounts:
            (1) Excess density.--The unit of general local government 
        has provided, for such housing, such exceptions to any 
        requirements regarding the density of housing or dwelling units 
        located in an area, so as to encourage the production of 
        affordable dwelling units.
            (2) Regulatory flexibility.--The unit of general local 
        government has provided--
                    (A) with respect to such housing, exceptions to 
                existing regulatory requirements regarding housing 
                location and construction designed to encourage the 
                production of affordable dwelling units, which may 
                include providing for expedited obtaining of 
                construction permits, reduced parking requirements, 
                reduced setbacks from streets, narrower streets, and 
                other reduced development restrictions; and
                    (B) financial incentives designed to encourage the 
                production of affordable dwelling units, which may 
                include reduced permit fees, providing subsidized 
                construction loans, availability of publicly owned 
                lands at reduced prices, providing mortgage financing 
                for low- and moderate-income families purchasing such 
                housing, and tax exemptions for such families 
                purchasing such housing.
    (i) Incentives.--
            (1) In general.--Notwithstanding the limitation under 
        subsection (b)(2) on the portion of the development costs of 
        housing to be constructed using grant amounts under this 
        section that may be funded with such grant amounts, each unit 
        of general local government that receives a grant under this 
        section shall provide the following incentives:
                    (A) Transportation.--The unit of general local 
                government shall provide that the portion of the 
                development costs of any housing that may be so funded 
                shall be increased by such percentage as the unit of 
                general local government considers appropriate, subject 
                to paragraph (2), if the unit of general local 
                government determines that such housing is located 
                within one-third of a mile of a mass transportation 
                station (including any subway, rail, bus, or other 
                commuter transportation system station) providing 
                service during peak use periods on weekdays not less 
                than every 15 minutes.
                    (B) Energy efficiency.--The unit of general local 
                government shall provide that the portion of the 
                development costs of any housing that may be so funded 
                shall be increased by such percentage as the unit of 
                general local government considers appropriate, subject 
                to paragraph (2), if the unit of general local 
                government determines that such housing complies with--
                            (i) the standards established under the 
                        Energy Star Program under section 324A of the 
                        Energy Policy and Conservation Act (42 U.S.C. 
                        6294a); and
                            (ii) the requirements to be eligible for a 
                        deduction under section 179D of the Internal 
                        Revenue Code of 1986 (relating to energy 
                        efficient commercial buildings), except that, 
                        for purposes of this paragraph, subsection (c) 
                        of such section shall be applied--
                                    (I) in the case of any housing that 
                                is single-family housing, multifamily 
                                housing of three or fewer stories above 
                                grade, or modular housing, by 
                                substituting Standard 90.2-2004 of the 
                                American Society of Heating, 
                                Refridgerating, and Air Conditioning 
                                Engineers and the Illuminating 
                                Engineering Society of North America 
                                for Standard 90.1-2001, each place such 
                                standard appears; and
                                    (II) in the case of any multifamily 
                                housing of four stories or more above 
                                grade, by substituting Standard 90.1-
                                2004 of the American Society of 
                                Heating, Refridgerating, and Air 
                                Conditioning Engineers and the 
                                Illuminating Engineering Society of 
                                North America for Standard 90.1-2001, 
                                each place such standard appears.
                    (C) Solar energy.--The unit of general local 
                government shall provide that the portion of the 
                development costs of any housing that may be so funded 
                shall be increased by such percentage as the unit of 
                general local government considers appropriate, subject 
                to paragraph (2), if the unit of general local 
                government determines that such housing complies with 
                the requirements under section 48(a) of the Internal 
                Revenue Code of 1986 for an energy credit, including by 
                use of a passive, active, or thermal solar energy 
                system.
            (2) Percentage limitation.--The aggregate increase for any 
        housing by reason of the operation of subparagraphs (A) through 
        (C) of paragraph (1) may not in any case exceed 15 percent.
    (j) Home Ownership Counseling.--Amounts from a grant under this 
section may not be used for the development of any housing unless the 
unit of general local government ensures, in accordance with such 
requirements as the Secretary shall establish--
            (1) that an affordable dwelling unit in such housing will 
        not be sold to a low- or moderate-income family unless the 
        family has completed home ownership counseling under a program 
        that meets the requirements under section 271(c)(2)(C) of the 
        Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
        12821(c)(2)(C)); and
            (2) that participation in such a program of home ownership 
        counseling will be made available to each such family at cost 
        to such family not exceeding $25.
    (k) Reporting.--
            (1) To secretary.--Each unit of general local government 
        that receives a grant under this section shall submit to the 
        Secretary such reports as the Secretary shall require to 
        determine the uses of grant amounts provided under this section 
        and the effectiveness of such uses. Such reports shall contain 
        such information as the Secretary considers necessary to 
        determine--
                    (A) the quality and quantity of dwelling units and 
                affordable dwelling units developed by a unit of 
                general local government using grant amounts under this 
                section;
                    (B) the amount of time taken to develop such 
                dwelling units;
                    (C) the number of low- and moderate-income families 
                who have purchased such dwelling units;
                    (D) the amount of time that such families continue 
                to reside in such dwelling units;
                    (E) any benefits to employers and to communities 
                resulting from the development of such housing that is 
                eligible for the incentive under subsection (g)(1), 
                including benefits relating to reducing pollution and 
                motor vehicle traffic;
                    (F) any benefits to communities resulting from the 
                development of any such housing that is eligible for 
                the incentive under subsection (g)(2); and
                    (G) the effects that provision of home ownership 
                opportunities in such housing has had on the tax 
                revenues of units of general local government.
            (2) To congress.--The Secretary shall submit a report to 
        the Congress not less than annually regarding the program under 
        this section. Such report shall aggregate and summarize, for 
        the entire program, the information submitted in reports to the 
        Secretary pursuant to paragraph (1).
    (l) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Affordable dwelling unit.--The term ``affordable 
        dwelling unit'' means a dwelling unit produced in whole or in 
        part with amounts from a grant under this section that meets 
        the requirements of subsection (c).
            (2) Development costs.--The term ``development costs'' 
        means, with respect to housing to be produced with amounts from 
        a grant under this section, costs incurred for any or all 
        undertakings necessary for planning, land acquisition, 
        demolition, construction, or equipment, including any necessary 
        financing, and in otherwise carrying out the development of 
        such housing, as determined by the Secretary.
            (3) Low-income family.--The term ``low-income family'' 
        means a family whose income does not exceed 80 percent of the 
        median income for the area, as determined by the Secretary with 
        adjustments for smaller and larger families, except that the 
        Secretary may establish income ceilings higher or lower than 80 
        percent of the median for the area on the basis of the 
        Secretary's findings that such variations are necessary because 
        of prevailing levels of construction costs or unusually high or 
        low family incomes.
            (4) Moderate-income family.--The term ``moderate-income 
        family'' means a family who is not a low-income family and 
        whose income does not exceed 125 percent of the median income 
        for the area, as determined by the Secretary with adjustments 
        for smaller and larger families, except that the Secretary may 
        establish income ceilings higher or lower than 125 percent of 
        the median for the area on the basis of the Secretary's 
        findings that such variations are necessary because of 
        prevailing levels of construction costs or unusually high or 
        low family incomes.
            (5) Unit of general local government.--The term ``unit of 
        general local government'' has the meaning given such term in 
        section 104 of the Cranston-Gonzalez National Affordable 
        Housing Act (42 U.S.C. 12704).
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
    (m) Authorization of Appropriations.--There is authorized to be 
appropriated to the Secretary for grants under this section 
$125,000,000 for each of fiscal years 2007 through 2014.
    (n) Regulations.--The Secretary may issue any regulations necessary 
to carry out this section.
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