[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3237 Introduced in Senate (IS)]

<DOC>






114th CONGRESS
  2d Session
                                S. 3237

  To amend the Internal Revenue Code of 1986 to reform the low-income 
                housing credit, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 14, 2016

  Ms. Cantwell (for herself, Mr. Hatch, and Mr. Wyden) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to reform the low-income 
                housing credit, 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 ``Affordable Housing 
Credit Improvement Act of 2016''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
              TITLE I--REFORM OF STATE ALLOCATION FORMULAS

Sec. 101. Increases in State allocations.
            TITLE II--REFORMS RELATING TO TENANT ELIGIBILITY

Sec. 201. Average income test.
Sec. 202. Uniform income eligibility for rural projects.
Sec. 203. Codification of rules relating to increased tenant income.
Sec. 204. Modification of student occupancy rules.
Sec. 205. Tenant voucher payments taken into account as rent for 
                            certain purposes.
 TITLE III--CREDIT RATE AND OTHER RULES RELATING TO CREDIT ELIGIBILITY 
                           AND DETERMINATION

Sec. 301. Minimum credit rate.
Sec. 302. Reconstruction or replacement period after casualty loss.
Sec. 303. Modification of rights relating to building purchase.
Sec. 304. Modification of 10-year rule; limitation on acquisition 
                            basis.
Sec. 305. Certain relocation costs taken into account as rehabilitation 
                            expenditures.
Sec. 306. Repeal of qualified census tract population cap.
Sec. 307. Determination of community revitalization plan to be made by 
                            State housing credit agency.
Sec. 308. Prohibition of local approval and contribution requirements.
Sec. 309. Increase in credit for certain projects designated to serve 
                            extremely low-income households.
Sec. 310. Increase in credit for bond-financed projects designated by 
                            State agency.
Sec. 311. Elimination of basis reduction for low-income housing 
                            properties receiving certain energy 
                            benefits.
        TITLE IV--REFORMS RELATING TO NATIVE AMERICAN ASSISTANCE

Sec. 401. Selection criteria under qualified allocation plans.
Sec. 402. Inclusion of Indian areas as difficult development areas for 
                            purposes of certain buildings.
                 TITLE V--AFFORDABLE HOUSING TAX CREDIT

Sec. 501. Affordable housing tax credit.

              TITLE I--REFORM OF STATE ALLOCATION FORMULAS

SEC. 101. INCREASES IN STATE ALLOCATIONS.

    (a) Phase-In of Increases.--
            (1) In general.--Clause (ii) of section 42(h)(3)(C) of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``$1.75'' in subclause (I) and 
                inserting ``the per capita dollar amount'', and
                    (B) by striking ``$2,000,000'' in subclause (II) 
                and inserting ``the minimum ceiling amount''.
            (2) Per capita dollar amount; minimum ceiling amount.--
        Subparagraph (I) of section 42(h)(3) of such Code is amended to 
        read as follows:
                    ``(I) 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 2016, 
                                $2.35,
                                    ``(II) for calendar year 2017, 
                                $2.59,
                                    ``(III) for calendar year 2018, 
                                $2.82,
                                    ``(IV) for calendar year 2019, 
                                $3.06,
                                    ``(V) for calendar year 2020, 
                                $3.29, and
                                    ``(VI) $3.53 thereafter.
                            ``(ii) Minimum ceiling amount.--The minimum 
                        ceiling amount is--
                                    ``(I) for calendar year 2016, 
                                $2,690,000,
                                    ``(II) for calendar year 2017, 
                                $2,959,000,
                                    ``(III) for calendar year 2018, 
                                $3,228,000,
                                    ``(IV) for calendar year 2019, 
                                $3,497,000,
                                    ``(V) for calendar year 2020, 
                                $3,766,000, and
                                    ``(VI) $4,035,000 thereafter.''.
            (3) Modification of cost-of-living adjustment.--
        Subparagraph (H) of section 42(h)(3) of such Code is amended--
                    (A) by striking ``2002'' in clause (i) and 
                inserting ``2016'',
                    (B) by striking ``the $2,000,000 and $1.75 amounts 
                in subparagraph (C)'' in clause (i) and inserting ``the 
                dollar amounts applicable to such calendar year under 
                clauses (i) and (ii) of subparagraph (I)'',
                    (C) by striking ``2001'' in clause (i)(II) and 
                inserting ``2015'',
                    (D) by striking ``$2,000,000'' in clause (ii)(I) 
                and inserting ``minimum ceiling'', and
                    (E) by striking ``$1.75'' in clause (ii)(II) and 
                inserting ``per capita dollar''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to calendar years beginning after December 31, 
        2016.
    (b) Permanent Increases.--
            (1) In general.--Clause (ii) of section 42(h)(3)(C) of the 
        Internal Revenue Code of 1986, as amended by subsection (a)(1), 
        is amended--
                    (A) by striking ``the per capita dollar amount'' in 
                subclause (I) and inserting ``$3.53'', and
                    (B) by striking ``the minimum ceiling amount'' in 
                subclause (II) and inserting ``$4,035,000''.
            (2) Conforming amendment.--Paragraph (3) of section 42(h) 
        of such Code is amended by striking subparagraph (I), as 
        amended by subsection (a)(2).
            (3) Cost-of-living adjustment.--Subparagraph (H) of section 
        42(h)(3) of such Code, as amended by subsection (a)(3), is 
        amended--
                    (A) by striking ``the dollar amounts applicable to 
                such calendar year under clauses (i) and (ii) of 
                subparagraph (I)'' in clause (i) and inserting ``the 
                $4,035,000 and $3.53 amounts in subparagraph (C)'',
                    (B) by striking ``minimum ceiling'' in clause 
                (ii)(I) and inserting ``$4,035,000'', and
                    (C) by striking ``per capita dollar'' in clause 
                (ii)(II) and inserting ``$3.53''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to calendar years beginning after December 31, 
        2021.

            TITLE II--REFORMS RELATING TO TENANT ELIGIBILITY

SEC. 201. AVERAGE INCOME TEST.

    (a) In General.--Paragraph (1) of section 42(g) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``subparagraph (A) or (B)'' and inserting 
        ``subparagraph (A), (B), or (C)'', and
            (2) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Average income test.--
                            ``(i) In general.--The project meets the 
                        minimum requirements of this subparagraph if 40 
                        percent or more (25 percent or more in the case 
                        of a project described in section 142(d)(6)) of 
                        the residential units in such project are both 
                        rent-restricted and occupied by individuals 
                        whose income does not exceed the imputed income 
                        limitation designated by the taxpayer with 
                        respect to the respective unit.
                            ``(ii) Special rules relating to income 
                        limitation.--For purposes of clause (i)--
                                    ``(I) Designation.--The taxpayer 
                                shall designate the imputed income 
                                limitation of each unit taken into 
                                account under such clause.
                                    ``(II) Average test.--The average 
                                of the imputed income limitations 
                                designated under subclause (I) shall 
                                not exceed 60 percent of area median 
                                gross income.
                                    ``(III) 10-percent increments.--The 
                                designated imputed income limitation of 
                                any unit under subclause (I) shall be 
                                20 percent, 30 percent, 40 percent, 50 
                                percent, 60 percent, 70 percent, or 80 
                                percent of area median gross income.''.
    (b) Rules Relating to Next Available Unit.--Subparagraph (D) of 
section 42(g)(2) of the Internal Revenue Code of 1986 is amended--
            (1) in clause (i), by striking ``clause (ii)'' and 
        inserting ``clauses (ii), (iii), and (iv)'',
            (2) in clause (ii)--
                    (A) by striking ``If'' and inserting ``In the case 
                of a project with respect to which the taxpayer elects 
                the requirements of subparagraph (A) or (B) of 
                paragraph (1), if'',
                    (B) by striking the second sentence, and
                    (C) by striking ``Next available unit must be 
                rented to low-income tenant if income rises above 140 
                percent of income limit'' in the heading and inserting 
                ``Rental of next available unit in case of 20-50 or 40-
                60 test'', and
            (3) by adding at the end the following new clauses:
                            ``(iii) Rental of next available unit in 
                        case of average income test.--In the case of a 
                        project with respect to which the taxpayer 
                        elects the requirements of subparagraph (C) of 
                        paragraph (1), if the income of the occupants 
                        of the unit increases above 140 percent of the 
                        greater of--
                                    ``(I) 60 percent of area median 
                                gross income, or
                                    ``(II) the imputed income 
                                limitation designated with respect to 
                                the unit under paragraph (1)(C)(ii)(I),
                        clause (i) shall cease to apply to any 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 the limitation described 
                        in clause (v).
                            ``(iv) Deep rent skewed projects.--In the 
                        case of a project described in section 
                        142(d)(4)(B), clause (ii) or (iii), whichever 
                        is applicable, shall be applied by substituting 
                        `170 percent' for `140 percent', and--
                                    ``(I) in the case of clause (ii), 
                                by substituting `any low-income unit in 
                                the building is occupied by a new 
                                resident whose income exceeds 40 
                                percent of area median gross income' 
                                for `any residential rental unit' and 
                                all that follows in such clause, and
                                    ``(II) in the case of clause (iii), 
                                by substituting `any low-income unit in 
                                the building is occupied by a new 
                                resident whose income exceeds the 
                                lesser of 40 percent of area median 
                                gross income or the imputed income 
                                limitation designated with respect to 
                                such unit under paragraph 
                                (1)(C)(ii)(I)' for `any residential 
                                rental unit' and all that follows in 
                                such clause.
                            ``(v) Limitation described.--For purposes 
                        of clause (iii), the limitation described in 
                        this clause with respect to any unit is--
                                    ``(I) the imputed income limitation 
                                designated with respect to such unit 
                                under paragraph (1)(C)(ii)(I), in the 
                                case of a unit which was taken into 
                                account as a low-income unit prior to 
                                becoming vacant, and
                                    ``(II) the imputed income 
                                limitation which would have to be 
                                designated with respect to such unit 
                                under such paragraph in order for the 
                                project to continue to meet the 
                                requirements of paragraph 
                                (1)(C)(ii)(II), in the case of any 
                                other unit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to elections made under section 42(g)(1) of the Internal Revenue 
Code of 1986 after the date of the enactment of this Act.

SEC. 202. UNIFORM INCOME ELIGIBILITY FOR RURAL PROJECTS.

    (a) In General.--Paragraph (8) of section 42(i) of the Internal 
Revenue Code of 1986 is amended by striking the second sentence.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

SEC. 203. CODIFICATION OF RULES RELATING TO INCREASED TENANT INCOME.

    (a) In General.--Clause (i) of section 42(g)(2)(D) of the Internal 
Revenue Code of 1986, as amended by this Act, is amended by striking 
``clauses (ii), (iii), and (iv)'' and all that follows and inserting 
``clauses (ii), (iii), (iv), and (vi), notwithstanding an increase in 
the income of the occupants above the income limitation applicable 
under paragraph (1)--
                                    ``(I) a low-income unit shall 
                                continue to be treated as a low-income 
                                unit if the income of such occupants 
                                initially was 60 percent or less of 
                                area median gross income and such unit 
                                continues to be rent-restricted, and
                                    ``(II) a unit to which, at the time 
                                of initial occupancy by such occupants, 
                                any Federal, State, or local government 
                                income restriction applied, and which 
                                subsequently becomes part of a building 
                                with respect to which rehabilitation 
                                expenditures are taken into account 
                                under subsection (e), shall be treated 
                                as a low-income unit if the income of 
                                such occupants initially was 60 percent 
                                or less of area median gross income and 
                                does not exceed 120 percent of area 
                                median gross income as of the date of 
                                acquisition of the property by the 
                                taxpayer.''.
    (b) Exception.--Subparagraph (D) of section 42(g)(2) of the 
Internal Revenue Code of 1986, as amended by this Act, is amended by 
adding at the end the following new clause:
                            ``(vi) Exception to rule relating to 
                        increased tenant income.--In the case of an 
                        occupant of a low-income unit who initially 
                        qualified to occupy such unit by reason of 
                        paragraph (1)(C) with an income in excess of 60 
                        percent of area median gross income but not in 
                        excess of 80 percent of area median gross 
                        income, clause (i) shall be applied for 
                        substituting `80 percent' for `60 percent' each 
                        place it appears.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 204. MODIFICATION OF STUDENT OCCUPANCY RULES.

    (a) In General.--Subparagraph (D) of section 42(i)(3) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                    ``(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 low-income unit.
                            ``(ii) Exception for certain federal 
                        programs.--In the case of a federally assisted 
                        building (as defined in subsection 
                        (d)(6)(C)(i)), clause (i) shall not apply to a 
                        unit the occupants of which meet all 
                        requirements applicable under the housing 
                        program described in subsection (d)(6)(C)(i) 
                        through which the building is assisted, 
                        financed, or operated.
                            ``(iii) Other exceptions.--Clause (i) shall 
                        not apply to a unit occupied by an individual 
                        who--
                                    ``(I) is married,
                                    ``(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)), or
                                    ``(V) meets the income limitation 
                                applicable under subsection (g)(1) to 
                                the project of which the building is a 
                                part and 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))).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

SEC. 205. TENANT VOUCHER PAYMENTS TAKEN INTO ACCOUNT AS RENT FOR 
              CERTAIN PURPOSES.

    (a) In General.--Subparagraph (B) of section 42(g)(2) is amended by 
adding at the end the following new sentence: ``In the case of a 
project with respect to which the taxpayer elects the requirements of 
subparagraph (C) of paragraph (1), or the portion of a project to which 
subsection (d)(5)(C) applies, clause (i) shall not apply with respect 
to any tenant-based assistance (as defined in section 8(f)(7) of the 
United States Housing Act of 1937 (42 U.S.C. 1437f(f)(7))).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to rent paid in taxable years beginning after December 31, 2016.

 TITLE III--CREDIT RATE AND OTHER RULES RELATING TO CREDIT ELIGIBILITY 
                           AND DETERMINATION

SEC. 301. MINIMUM CREDIT RATE.

    (a) In General.--Subsection (b) of section 42 of the Internal 
Revenue Code of 1986 is amended--
            (1) by redesignating paragraph (3) as paragraph (4), and
            (2) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) Minimum credit rate.--In the case of any new or 
        existing building to which paragraph (2) does not apply and 
        which is placed in service by the taxpayer after December 31, 
        2015, the applicable percentage shall not be less than 4 
        percent.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2015.

SEC. 302. RECONSTRUCTION OR REPLACEMENT PERIOD AFTER CASUALTY LOSS.

    (a) In General.--Subparagraph (E) of section 42(j)(4) of the 
Internal Revenue Code of 1986 is amended by striking ``a reasonable 
period established by the Secretary'' and inserting ``a reasonable 
period established by the applicable housing credit agency (not to 
exceed 25 months from the date on which the casualty loss arises). The 
determination under paragraph (1) shall not be made with respect to a 
property the basis of which is affected by a casualty loss until the 
period described in the preceding sentence with respect to such 
property has expired.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to casualty losses arising after the date of the enactment of this Act.

SEC. 303. MODIFICATION OF RIGHTS RELATING TO BUILDING PURCHASE.

    (a) In General.--Subparagraph (A) of section 42(i)(7) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``a right of 1st refusal'' and inserting 
        ``an option'', and
            (2) by striking ``the property'' and inserting ``the 
        property or a partnership interest relating to the property''.
    (b) Conforming Amendment.--Subparagraph (B) of section 42(i)(7) of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new sentence: ``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 first 
sentence of this subparagraph.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to agreements entered into or amended after the date of the 
enactment of this Act.

SEC. 304. MODIFICATION OF 10-YEAR RULE; LIMITATION ON ACQUISITION 
              BASIS.

    (a) In General.--Clause (ii) of section 42(d)(2)(B) of the Internal 
Revenue Code of 1986 is amended by inserting ``, or the taxpayer elects 
the application of subparagraph (C)(ii)'' after ``service''.
    (b) Limitation on Acquisition Basis.--Subparagraph (C) of section 
42(d)(2) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``For purposes of subparagraph (A), the 
        adjusted basis'' and inserting ``For purposes of subparagraph 
        (A)--
                            ``(i) In general.--The adjusted basis'', 
                        and
            (2) by adding at the end the following new clauses:
                            ``(ii) Buildings in service within previous 
                        10 years.--If the period between the date of 
                        acquisition of the building by the taxpayer and 
                        the date the building was last placed in 
                        service is less than 10 years, the taxpayer's 
                        basis attributable to the acquisition of the 
                        building which is taken into account in 
                        determining the adjusted basis shall not exceed 
                        the sum of--
                                    ``(I) the lowest amount paid for 
                                acquisition of the building by any 
                                person during the 10 years preceding 
                                the date of the acquisition of the 
                                building by the taxpayer, adjusted as 
                                provided in clause (iii), and
                                    ``(II) the value of any capital 
                                improvements made by the person who 
                                sells the building to the taxpayer 
                                which are reflected in such seller's 
                                basis.
                            ``(iii) Adjustment.--With respect to a 
                        basis determination made in any taxable year, 
                        the amount described in clause (ii)(I) shall be 
                        increased by an amount equal to--
                                    ``(I) such amount, multiplied by
                                    ``(II) a cost-of-living adjustment, 
                                determined in the same manner as under 
                                section 1(f)(3) for the calendar year 
                                in which the taxable year begins by 
                                taking into account the acquisition 
                                year in lieu of calendar year 1992.
                        For purposes of the preceding sentence, the 
                        acquisition year is the calendar year in which 
                        the lowest amount referenced in clause (ii)(I) 
                        was paid for the acquisition of the 
                        building.''.
    (c) Conforming Amendments.--Clause (i) of section 42(d)(2)(D) of 
the Internal Revenue Code of 1986 is amended--
            (1) by striking ``for subparagraph (b)'' in the heading, 
        and
            (2) by striking ``subparagraph (B)(ii)'' in the matter 
        preceding subclause (I) and inserting ``subparagraph (B)(ii) or 
        (C)(ii)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2015.

SEC. 305. CERTAIN RELOCATION COSTS TAKEN INTO ACCOUNT AS REHABILITATION 
              EXPENDITURES.

    (a) In General.--Paragraph (2) of section 42(e) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(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.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after December 31, 2015.

SEC. 306. REPEAL OF QUALIFIED CENSUS TRACT POPULATION CAP.

    (a) In General.--Clause (ii) of section 42(d)(5)(B) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking subclauses (II) and (III), and
            (2) by striking ``Qualified census tract.--
                                    ``(I) In general.--The term'',
        and inserting ``Qualified census tract.--The term''.
    (b) Technical Corrections.--Sections 42(d)(4)(C)(i) and 
42(m)(1)(B)(ii)(III) of the Internal Revenue Code of 1986 are each 
amended by striking ``as defined in paragraph (5)(C)'' and inserting 
``as defined in paragraph (5)(B)(ii)''.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to designations of qualified census tracts under section 
42(d)(5)(B)(ii) of the Internal Revenue Code of 1986 after December 31, 
2016.

SEC. 307. DETERMINATION OF COMMUNITY REVITALIZATION PLAN TO BE MADE BY 
              STATE HOUSING CREDIT AGENCY.

    (a) In General.--Subclause (III) of section 42(m)(1)(B)(ii) of the 
Internal Revenue Code of 1986 is amended by inserting ``, as determined 
by the State housing credit agency,'' after ``the development of 
which''.
    (b) Effective Date.--The amendment made by this section shall apply 
to allocations of housing credit dollar amounts made after December 31, 
2016.

SEC. 308. PROHIBITION OF LOCAL APPROVAL AND CONTRIBUTION REQUIREMENTS.

    Not later than 120 days after the date of the enactment of this 
Act, the Secretary of the Treasury shall issue guidance prohibiting 
States from including 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 under the State's qualified allocation plan for 
purposes of section 42(m)(1)(B) of the Internal Revenue Code of 1986 
(other than the requirement of section 42(m)(1)(A)(ii) of such Code).

SEC. 309. INCREASE IN CREDIT FOR CERTAIN PROJECTS DESIGNATED TO SERVE 
              EXTREMELY LOW-INCOME HOUSEHOLDS.

    (a) In General.--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 projects designated to 
                serve extremely low-income households.--In the case of 
                any building--
                            ``(i) 20 percent or more of the residential 
                        units in which 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)), and
                            ``(ii) which is designated by the State 
                        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 such units, and the 
                eligible basis of such portion of the building shall be 
                150 percent of such basis determined without regard to 
                this subparagraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to buildings placed in service after December 31, 2015.

SEC. 310. INCREASE IN CREDIT FOR BOND-FINANCED PROJECTS DESIGNATED BY 
              STATE AGENCY.

    (a) In General.--Clause (v) of section 42(d)(5)(B) is amended by 
striking the second sentence.
    (b) Effective Date.--The amendment made by this section shall apply 
to buildings placed in service after December 31, 2015.

SEC. 311. ELIMINATION OF BASIS REDUCTION FOR LOW-INCOME HOUSING 
              PROPERTIES RECEIVING CERTAIN ENERGY BENEFITS.

    (a) New Energy Efficient Home Credit.--Subsection (e) of section 
45L of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``Adjustment.--For purposes'' and inserting 
        ``Adjustment.--
            ``(1) In general.--For purposes'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception for low-income housing properties.--
        Paragraph (1) shall not apply to any property with respect to 
        which a credit is allowed under section 42.''.
    (b) Energy Efficient Commercial Buildings Deduction.--Subsection 
(e) of section 179D of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``Reduction.--For purposes'' and inserting 
        ``Reduction.--
            ``(1) In general.--For purposes'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception for low-income housing properties.--
        Paragraph (1) shall not apply to any property with respect to 
        which a credit is allowed under section 42.''.
    (c) Energy Credit.--Paragraph (3) of section 50(c) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``and'' at the end of subparagraph (A),
            (2) by striking the period at the end of subparagraph (B) 
        and inserting ``, and'', and
            (3) by adding at the end the following new subparagraph:
                    ``(C) paragraph (1) shall not apply to any property 
                with respect to which a credit is allowed under section 
                42.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2015.

        TITLE IV--REFORMS RELATING TO NATIVE AMERICAN ASSISTANCE

SEC. 401. SELECTION CRITERIA UNDER QUALIFIED ALLOCATION PLANS.

    (a) In General.--Subparagraph (C) of section 42(m)(1) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (ix), by striking the period at the end of clause (x) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(xi) the affordable housing needs of 
                        individuals in the State who are members of 
                        Indian tribes (as defined in section 
                        45A(c)(6)).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to allocations of credits under section 42 of the Internal 
Revenue Code of 1986 made after December 31, 2016.

SEC. 402. 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 (III) and by inserting after subclause (I) the 
following new subclause:
                                    ``(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)).''.
    (c) Eligible Buildings.--Clause (iii) of section 42(d)(5)(B) of the 
Internal Revenue Code of 1986, as amended by subsection (b), is amended 
by adding at the end the following new subclause:
                                    ``(IV) 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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2016.

                 TITLE V--AFFORDABLE HOUSING TAX CREDIT

SEC. 501. AFFORDABLE HOUSING TAX CREDIT.

    (a) In General.--The heading of section 42 of the Internal Revenue 
Code of 1986 is amended by striking ``low-income'' and inserting 
``affordable''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 42 of the Internal Revenue 
        Code of 1986 is amended by striking ``low-income'' and 
        inserting ``affordable''.
            (2) Paragraph (5) of section 38(b) of such Code is amended 
        by striking ``low-income'' and inserting ``affordable''.
            (3) The heading of subparagraph (D) of section 469(i)(3) of 
        such Code is amended by striking ``low-income'' and inserting 
        ``affordable''.
            (4) The heading of subparagraph (B) of section 469(i)(6) of 
        such Code is amended by striking ``low-income'' and inserting 
        ``affordable''.
            (5) Paragraph (7) of section 772(a) of such Code is amended 
        by striking ``low-income'' and inserting ``affordable''.
            (6) Paragraph (5) of section 772(d) of such Code is amended 
        by striking ``low-income'' and inserting ``affordable''.
    (c) Clerical Amendment.--The item relating to section 42 in the 
table of sections for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended to read as follows:

``Sec. 42. Affordable housing credit.''.
                                 <all>