[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1805 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 1805

To amend the Internal Revenue Code of 1986 to expand housing investment 
          with mortgage revenue bonds, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              June 6, 2023

Ms. Cortez Masto (for herself and Mr. Cassidy) 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 expand housing investment 
          with mortgage revenue bonds, 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 
Bond Enhancement Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Reporting requirements for bond usage.
Sec. 3. Use of carryforward bond authority.
Sec. 4. Elimination of Refinancing Limitation for Mortgage Revenue 
                            Bonds.
Sec. 5. Increase in financing limit for qualified home improvement 
                            loans.
Sec. 6. Revision of recapture tax for mortgage revenue bonds.
Sec. 7. Modifying calculation of credit for interest paid on certified 
                            indebtedness.
Sec. 8. Extension of period for mortgage credit certificate to be in 
                            effect.
Sec. 9. Extension of period to revoke election to issue mortgage credit 
                            certificates.
Sec. 10. Adjustment of public notice requirement.
Sec. 11. Elimination of lender reporting requirement.

SEC. 2. REPORTING REQUIREMENTS FOR BOND USAGE.

    (a) In General.--Section 146 is amended by adding at the end the 
following:
    ``(o) Reporting.--Not later than December 31 of each calendar year, 
the Secretary shall submit a report to the Committee on Banking, 
Housing, and Urban Affairs of the Senate, the Committee on Financial 
Services of the House of Representatives, the Committee on Ways and 
Means of the House of Representatives, and the Committee on Finance of 
the Senate, containing information, as provided to the Secretary by 
State and local issuing authorities, which specifies for each State--
            ``(1) the State ceiling of the State for the preceding 
        calendar year,
            ``(2) the aggregate amount of carryforwards available to 
        all issuing authorities in the State available as of the first 
        day of such preceding calendar year,
            ``(3) the total bond authority for such State for such 
        preceding calendar year, as represented by the sum of the 
        amounts reported under paragraphs (1) and (2),
            ``(4) the aggregate amount of private activity bonds issued 
        by issuing authorities in the State during such preceding 
        calendar year for each purpose described in subsection (f)(5), 
        including--
                    ``(A) the amount of such bonds that were subject to 
                the volume cap, and
                    ``(B) the amount of such bonds that were issued 
                pursuant to a carryforward under subsection (f),
            ``(5) the aggregate amount of carryforwards described in 
        paragraph (2) that expired after the last day of the preceding 
        calendar year, and
            ``(6) total amount of any excess amounts described in 
        paragraph (1) of subsection (f) for the preceding calendar year 
        which issuing authorities in the State did not elect to treat 
        as a carryforward under such subsection.''.
    (b) Electronic Reports by Issuers.--Section 149(e) is amended by 
adding at the end the following new paragraph:
            ``(4) Electronic reporting.--Any statement required under 
        paragraph (2) shall be submitted electronically.''.
    (c) Authority To Disclose Information.--Section 6103(f) is amended 
by adding at the end the following new paragraph:
            ``(6) Volume cap reporting.--The Secretary may disclose to 
        the committees described in section 146(o) the information 
        required under such section.''.
    (d) Effective Date.--The amendment made by this section shall apply 
to calendar years beginning after the date of enactment of this Act.

SEC. 3. USE OF CARRYFORWARD BOND AUTHORITY.

    (a) In General.--Paragraph (3) of section 146(f) is amended--
            (1) by striking subparagraph (A) and inserting the 
        following:
                    ``(A) In general.--If any issuing authority--
                            ``(i) elects a carryforward under paragraph 
                        (1) with respect to any carryforward purpose,
                            ``(ii) receives a carryforward under 
                        paragraph (4)(B)(i) with respect to any 
                        carryforward purpose, or
                            ``(iii) redesignates a carryforward under 
                        paragraph (4)(B)(ii) for any carryforward 
                        purpose,
                any private activity bonds issued by such authority 
                with respect to such purpose at any time during the 3 
                calendar years following the calendar year in which the 
                carryforward arose shall not be taken into account 
                under subsection (a) to the extent the amount of such 
                bonds issued at or prior to such time does not exceed 
                the amount of the carryforward elected, received, or 
                redesignated for such purpose, as reduced by any amount 
                subsequently transferred to another issuing authority 
                or redesignated for another purpose pursuant to 
                paragraph (4)(B).'', and
            (2) in subparagraph (B), by inserting ``, or received or 
        redesignated for,'' after ``with respect to''.
    (b) Election.--Paragraph (4) of section 146(f) is amended to read 
as follows:
            ``(4) Election.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any election under this subsection 
                (and any identification or specification contained 
                therein), once made, shall be irrevocable.
                    ``(B) Exception for housing.--
                            ``(i) Transfer.--In the case of any 
                        carryforward elected under paragraph (1) by an 
                        issuing authority with respect to any 
                        carryforward purpose, during the period 
                        described in paragraph (3)(A) with respect to 
                        such carryforward, such issuing authority may 
                        transfer such carryforward to any issuing 
                        authority within the same State that is 
                        authorized to issue qualified mortgage bonds or 
                        exempt facility bonds described in section 
                        142(a)(7).
                            ``(ii) Redesignation.--In the case of any 
                        carryforward--
                                    ``(I) elected under paragraph (1) 
                                by an issuing authority with respect to 
                                any carryforward purpose which has not 
                                been transferred pursuant to clause 
                                (i), or
                                    ``(II) received by an issuing 
                                authority pursuant to clause (i) with 
                                respect to any carryforward purpose,
                        during the period described in paragraph (3)(A) 
                        with respect to such carryforward, such issuing 
                        authority may redesignate such carryforward to 
                        be for the purpose of issuing qualified 
                        mortgage bonds or mortgage credit certificates, 
                        or for the purpose of issuing exempt facility 
                        bonds described in section 142(a)(7).
                            ``(iii) State direction.--In the case of a 
                        State which has enacted a law described in 
                        subsection (e)(1), such State may, by law, 
                        prohibit, limit, require, or otherwise direct 
                        transfer or redesignation by issuing 
                        authorities within such State (except in the 
                        case of a constitutional home rule city) 
                        pursuant to this subparagraph.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to elections made under section 146(f) of the Internal Revenue 
Code of 1986 after December 31, 2023.

SEC. 4. ELIMINATION OF REFINANCING LIMITATION FOR MORTGAGE REVENUE 
              BONDS.

    (a) In General.--Section 143(i)(1) is amended by adding at the end 
the following:
                    ``(D) Exception for refinancing for certain 
                mortgagors.--
                            ``(i) In general.--The refinancing of a 
                        mortgage on a residence of a mortgagor who, as 
                        of the date of such refinancing, satisfies the 
                        principal residence requirements under 
                        subsection (c)(1) and the income requirements 
                        under subsection (f) shall not be treated as 
                        the acquisition or replacement of an existing 
                        mortgage for purposes of subparagraph (A).
                            ``(ii) Special rule.--In applying clause 
                        (i) to any refinancing--
                                    ``(I) subsection (d) shall not 
                                apply, and
                                    ``(II) subsection (e) shall be 
                                applied by using the market value of 
                                the residence at the time of 
                                refinancing in lieu of the acquisition 
                                cost.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to refinancing loans made on or after the date of enactment of this 
Act.

SEC. 5. INCREASE IN FINANCING LIMIT FOR QUALIFIED HOME IMPROVEMENT 
              LOANS.

    (a) Increase in Financing Limit.--Paragraph (4) of section 143(k) 
is amended by striking ``$15,000'' and inserting ``$50,000''.
    (b) Inflation Adjustment.--Paragraph (4) of section 143(k), as 
amended by subsection (a), is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively, and by moving such clauses (as so 
        redesignated) 2 ems to the right,
            (2) by striking ``The term'' and inserting the following:
                    ``(A) In general.--The term'', and
            (3) by adding at the end the following:
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        calendar year beginning after 2024, the $50,000 
                        amount in subparagraph (A) shall be increased 
                        by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year, 
                                determined by substituting `2023' for 
                                `2016' in subparagraph (A)(ii) thereof.
                            ``(ii) Rounding.--If any increase under 
                        clause (i) is not a multiple of $100, such 
                        increase shall be rounded to the nearest 
                        multiple of $100.''.
    (c) Effective Dates.--The amendments made by this section shall 
apply to loans made after the last day of the calendar year which 
includes the date of the enactment of this Act.

SEC. 6. REVISION OF RECAPTURE TAX FOR MORTGAGE REVENUE BONDS.

    (a) In General.--Subparagraph (C) of section 143(m)(4) is amended 
to read as follows:
                    ``(C) Holding period percentage.--
                            ``(i) In general.--The term `holding period 
                        percentage' means the percentage determined in 
                        accordance with the following table:
                                      
``If the disposition occurs during  The holding period percentage is:
        a year after the testing 
        date which is:
        The 1st such year..................................         20 
        The 2nd such year..................................         40 
        The 3rd such year..................................         60 
        The 4th such year..................................         80 
        The 5th such year..................................        100.

                            ``(ii) Retirements of indebtedness.--If the 
                        Federally-subsidized indebtedness is completely 
                        repaid during any year of the 4-year period 
                        beginning on the testing date, the holding 
                        period percentage for succeeding years shall be 
                        zero.''.
    (b) Conforming Amendments.--
            (1) Section 143(m)(2)(B) is amended by striking ``9 years'' 
        and inserting ``5 years''.
            (2) Section 143(m)(7)(B)(ii) is amended by striking ``9-
        year period'' and inserting ``5-year period''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.

SEC. 7. MODIFYING CALCULATION OF CREDIT FOR INTEREST PAID ON CERTIFIED 
              INDEBTEDNESS.

    (a) In General.--Section 25 is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking subparagraph (B) 
                and inserting the following:
                    ``(B) the certified indebtedness amount on which 
                interest was paid or accrued by the taxpayer during the 
                taxable year.'', and
                    (B) in paragraph (2)--
                            (i) in the heading, by striking ``where 
                        credit rate exceeds 20 percent'', and
                            (ii) in subparagraph (A), by striking ``If 
                        the certificate credit rate exceeds 20 percent, 
                        the'' and inserting ``The'', and
            (2) in subsection (d)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) In general.--
                    ``(A) Certificate credit rate.--The certificate 
                credit rate specified in any mortgage credit 
                certificate shall not be less than 1 percent or more 
                than 5 percent.
                    ``(B) Annual rate.--With respect to any mortgage 
                credit certificate, the issuing authority may elect to 
                specify a different annual certificate credit rate for 
                each year of the term of the mortgage.'', and
                    (B) in paragraph (2)--
                            (i) in the heading, by striking 
                        ``certificate credit rates'' and inserting 
                        ``amount of credit certificates'', and
                            (ii) in subparagraph (A)(ii), by inserting 
                        ``average annual'' before ``certificate credit 
                        rate''.
    (b) Effective Date.--The amendments made by this section shall 
apply to mortgage credit certificates issued on or after the first day 
of the second calendar year that begins after the date of the enactment 
of this Act.

SEC. 8. EXTENSION OF PERIOD FOR MORTGAGE CREDIT CERTIFICATE TO BE IN 
              EFFECT.

    (a) In General.--Section 25(e)(3)(B) is amended by striking 
``second'' and inserting ``fourth''.
    (b) Effective Date.--The amendments made by this section shall 
apply to mortgage credit certificates with respect to which the 
limitation under section 25(d)(2)(A) of the Internal Revenue Code of 
1986 is determined by reference to nonissued bond amounts (a defined in 
section 25(d)(2)(B) of such Code) relating to calendar years after 
December 31, 2022.

SEC. 9. EXTENSION OF PERIOD TO REVOKE ELECTION TO ISSUE MORTGAGE CREDIT 
              CERTIFICATES.

    (a) In General.--Section 25(c)(2) is amended by adding at the end 
the following:
                    ``(C) Revocation of election to issue mortgage 
                credit certificates.--
                            ``(i) In general.--For purposes of any 
                        election made by an issuing authority under 
                        subparagraph (A)(ii) during any calendar year, 
                        such issuing authority may subsequently elect 
                        to reduce the nonissued bond amount (as defined 
                        in subsection (d)(2)(B)) for such calendar 
                        year, provided that such election is made not 
                        later than the end of the succeeding calendar 
                        year.
                            ``(ii) Coordination with private activity 
                        bond carryforward limitation.--Under rules 
                        established by the Secretary, nothing in clause 
                        (i) shall be construed to permit an issuing 
                        authority to issue bonds under section 
                        146(f)(3) for a calendar year after the close 
                        of the period prescribed for issuing such bonds 
                        under such section.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to elections made by an issuing authority under section 25(c)(2)(A)(ii) 
of the Internal Revenue Code of 1986 after December 31, 2023.

SEC. 10. ADJUSTMENT OF PUBLIC NOTICE REQUIREMENT.

    (a) In General.--Section 25(e)(5) is amended by striking ``90 
days'' and inserting ``30 days''.
    (b) Effective Date.--The amendments made by this section shall 
apply to notices provided after December 31, 2023.

SEC. 11. ELIMINATION OF LENDER REPORTING REQUIREMENT.

    (a) In General.--Section 25(g) is amended--
            (1) by striking ``each person who makes a loan which is a 
        certified indebtedness amount under any mortgage credit 
        certificate'' and inserting ``each person who issues a mortgage 
        credit certificate'', and
            (2) by striking the second sentence thereof.
    (b) Conforming Amendments.--Section 6709(c) is amended by striking 
``In the case of any report required under the second sentence of 
section 25(g), the'' and inserting ``The''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.
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