Short title

This Act may be cited as the

Low Income Housing Tax Credit Exchange Expansion and Job Creation Act of 2010

Grants to states for low-income housing projects in lieu of low-income housing credit allocations for 2010

(a)

In general

The Secretary of the Treasury shall make a grant to the housing credit agency of each State in an amount equal to such State’s low-income housing credit allocation election amount. (b)

Low-Income housing credit allocation election amount

For purposes of this section, the term low-income housing credit allocation election amount means, with respect to any State, such amount as the State may elect which does not exceed 85 percent of the product of— (1)the sum of— (A)100 percent of the State housing credit ceiling for 2010 which is attributable to amounts described in clauses (i) and (iii) of section 42(h)(3)(C) of the Internal Revenue Code of 1986, plus (B)40 percent of the State housing credit ceiling for 2010 which is attributable to amounts described in clauses (ii) and (iv) of such section, multiplied by (2)10. (c)

Subawards for low-Income buildings

(1)

In general

A State housing credit agency receiving a grant under this section shall use such grant to make subawards to finance the construction or acquisition and rehabilitation of qualified low-income buildings. A subaward under this section may be made to finance a qualified low-income building with or without an allocation under section 42 of the Internal Revenue Code of 1986, except that a State housing credit agency may make subawards to finance qualified low-income buildings without an allocation only if it makes a determination that such use will increase the total funds available to the State to build and rehabilitate affordable housing. In complying with such determination requirement, a State housing credit agency shall establish a process in which applicants that are allocated credits are required to demonstrate good faith efforts to obtain investment commitments for such credits before the agency makes such subawards. (2)

Subawards subject to same requirements as low-income housing credit allocations

Any such subaward with respect to any qualified low-income building may be in the form of a grant or a loan of any duration and shall be made in the same manner and shall be subject to the same limitations (including rent, income, and use restrictions on such building) as an allocation of housing credit dollar amount allocated by such State housing credit agency under section 42 of the Internal Revenue Code of 1986, except that such subawards shall not be limited by, or otherwise affect (except as provided in subsection (i)(9) of such section), the State housing credit ceiling applicable to such agency. (3)

Compliance and asset management

The State housing credit agency shall perform asset management functions to ensure compliance with section 42 of the Internal Revenue Code of 1986 and the long-term viability of buildings funded by any subaward under this section. The State housing credit agency may collect reasonable fees from a subaward recipient to cover expenses associated with the performance of its duties under this paragraph, including the reasonable costs of administering such subawards. The State housing credit agency may retain an agent or other private contractor to satisfy the requirements of this paragraph. (4)

Recapture

The State housing credit agency shall impose conditions or restrictions, including a requirement providing for recapture, on any subaward under this section so as to assure that the building with respect to which such subaward is made remains a qualified low-income building during the compliance period. Any amounts of recapture shall be proportional to the length of time of the noncompliance compared to the 15-year compliance period and the percentage of qualified basis out of compliance compared to the total qualified basis. Any such recapture shall be payable to the Secretary of the Treasury for deposit in the general fund of the Treasury and may be enforced by means of liens or such other methods as the Secretary of the Treasury determines appropriate. A State housing credit agency may subordinate any such lien (or other security interest) to other loans made by third parties. (d)

Return of unused grant funds

Any grant funds not used to make subawards under this section before January 1, 2012, shall be returned to the Secretary of the Treasury on such date. The portion of any subaward which is not disbursed before such date shall be returned to the Secretary of the Treasury on such date unless the subawardee has paid or incurred before January 1, 2012, at least 30 percent of the subawardee’s total adjusted basis in land and depreciable property that is reasonably expected to be part of the low-income housing building with respect to which such subaward is made. The portion of any subaward which is not disbursed before January 1, 2013, shall be returned to the Secretary of the Treasury on such date. Any subawards returned to the State housing credit agency on or after January 1, 2012, shall be promptly returned to the Secretary of the Treasury. Any amounts returned to the Secretary of the Treasury under this subsection shall be deposited in the general fund of the Treasury. (e)

Definitions

Any term used in this section which is also used in section 42 of the Internal Revenue Code of 1986 shall have the same meaning for purposes of this section as when used in such section 42. Any reference in this section to the Secretary of the Treasury shall be treated as including the Secretary's delegate. (f)

Appropriations

There is hereby appropriated to the Secretary of the Treasury such sums as may be necessary to carry out this section.

Grants to states for low-income housing projects in lieu of low-income housing credits for bond-subsidized housing projects

(a)

In general

The Secretary of the Treasury shall make a grant to each State in an amount equal to such State’s low-income bond-subsidized housing election amount. (b)

Low-Income bond-Subsidized housing election amount

For purposes of this section— (1)

In general

The term low-income bond-subsidized housing election amount means, with respect to any State, such amount as the State may elect which does not exceed 85 percent of the State’s bond-subsidized credit amount. (2)

Bond-subsidized credit amount

The term bond-subsidized credit amount means, with respect to any State, the aggregate amount of low-income housing credits which the State determines would, but for section 42(i)(9) of the Internal Revenue Code of 1986, be awarded under section 42(h)(4)(B) of such Code times 10 with respect to qualified low-income buildings receiving an allocation of qualified residential rental project bonds of such State during 2010. (3)

Qualified residential rental project bonds

The term qualified residential rental project bond means, with respect to any State, any qualified bond (as defined in section 141(e) of the Internal Revenue Code of 1986) if such bond— (A)is issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide qualified residential rental projects (within the meaning of section 142 of such Code), and (B)is taken into account under section 146 of such Code with respect to the State ceiling applicable to such State. (c)

Subawards for low-Income buildings

(1)

In general

A State receiving a grant under this section shall use such grant to make subawards to finance the construction or acquisition and rehabilitation of qualified low-income buildings which have received the corresponding allocation of qualified residential rental project bonds referred to in subsection (b)(2). (2)

Subawards subject to same requirements as low-income housing credit allocations

Any such subaward with respect to any qualified low-income building may be in the form of a grant or a loan of any duration and shall be made in the same manner and shall be subject to the same limitations (including rent, income, and use restrictions on such building) as an allocation of housing credit dollar amount allocated by the State housing credit agency of such State under section 42 of the Internal Revenue Code of 1986, except that such subawards shall not be limited by, or otherwise affect, the State housing credit ceiling applicable to such agency. (3)

Compliance and asset management

A State receiving a grant under this section shall perform asset management functions to ensure compliance with section 42 of the Internal Revenue Code of 1986 and the long-term viability of buildings funded by any subaward under this section. A State may collect reasonable fees from a subaward recipient to cover expenses associated with the performance of its duties under this paragraph, including the reasonable costs of administering such subawards. A State may retain an agent or other private contractor to satisfy the requirements of this paragraph. (4)

Recapture

A State receiving a grant under this section shall impose conditions or restrictions, including a requirement providing for recapture, on any subaward under this section so as to assure that the building with respect to which such subaward is made remains a qualified low-income building during the compliance period. Any amounts of recapture shall be proportional to the length of time of the noncompliance compared to the 15-year compliance period and the percentage of qualified basis out of compliance compared to the total qualified basis. Any such recapture shall be payable to the Secretary of the Treasury for deposit in the general fund of the Treasury and may be enforced by means of liens or such other methods as the Secretary of the Treasury determines appropriate. A State housing credit agency may subordinate any such lien (or other security interest) to other loans made by third parties. (d)

Reallocation of bond authority

A State housing credit agency shall establish a process in which applicants that are allocated bonds and receive a subaward pursuant to subsection (c) are required to demonstrate good faith efforts to obtain purchasers for such bonds. If a subawardee is unable to obtain purchasers or if the State makes a determination that reallocation of bond authority will increase the total funds available to the State to build and rehabilitate affordable housing, a subawardee may return its bond allocation to the State without affecting its subaward under subsection (c) and the State may reallocate such bond authority only for qualified residential rental projects. Reallocated bonds shall not be taken into account for purposes of determining eligibility for low-income housing credits under section 42(h)(4) of the Internal Revenue Code of 1986 or for purposes of determining eligibility for grants under subsection (c). (e)

Return of unused grant funds

Definitions

Appropriations

There is hereby appropriated to the Secretary of the Treasury such sums as may be necessary to carry out this section.

Coordination of low-income housing credit with low-income housing grants

(a)

In general

Paragraph (9) of section 42(i) of the Internal Revenue Code of 1986 is amended by redesignating subparagraph (B) as subparagraph (D) and by inserting after subparagraph (A) the following new subparagraphs:

(B)

Reduction in state housing credit ceiling for low-income housing grants received in 2010

For purposes of this section, the amounts described in clauses (i) through (iv) of subsection (h)(3)(C) with respect to any State for 2010 shall each be reduced by so much of such amount as is taken into account in determining the amount of any grant to such State under section 2 of the Low Income Housing Tax Credit Exchange Expansion and Job Creation Act of 2010. (C)

Denial of credit for bond-subsidized buildings receiving subawards with 2010 grant funds

No credit shall be determined under this section with respect to any qualified low-income building to the extent of the bond-subsidized credit amount determined with respect to such building under section 3 of the Low Income Housing Tax Credit Exchange Expansion and Job Creation Act of 2010 if any subaward is made with respect to such building under such section.

(b)

Grants and loans not To reduce basis

Subparagraph (D) of section 42(i)(9) of such Code, as redesignated by this section, is amended by striking by the amount of any grant described in subparagraph (A) and inserting by reason of any grant or loan made under section 1602 of the American Recovery and Reinvestment Tax Act of 2009 or section 2 or 3 of the Low Income Housing Tax Credit Exchange Expansion and Job Creation Act of 2010. (c)

Exclusion of grants from gross income

Paragraph (9) of section 42(i) of such Code, as amended by this section, is amended by adding at the end the following new subparagraph:

(E)

Exclusion of grants from gross income

Any grant made under section 1602 of the American Recovery and Reinvestment Tax Act of 2009 or section 2 or 3 of the Low Income Housing Tax Credit Exchange Extension Act of 2009 shall not be includible in the gross income or alternative minimum taxable income of the taxpayer.

(d)

Effective date

(1)

In general

Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years ending after December 31, 2009. (2)

Reductions in State housing credit ceiling

Subparagraph (B) of section 42(i)(9) of the Internal Revenue Code of 1986, as amended by subsection (a), shall apply to determinations of State housing credit ceiling for calendar years after 2009. (3)

Exclusion of grants from gross income

The amendment made by subsection (c) shall apply to taxable years ending after December 31, 2008.