[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4693 Introduced in Senate (IS)]

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118th CONGRESS
  2d Session
                                S. 4693

  To amend the Internal Revenue Code of 1986 to provide an investment 
 credit for converting non-residential buildings to affordable housing.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                July 11 (legislative day, July 10), 2024

  Ms. Stabenow (for herself, Mr. Brown, Mr. Peters, and Mr. Padilla) 
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 provide an investment 
 credit for converting non-residential buildings to affordable housing.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Revitalizing Downtowns and Main 
Streets Act''.

SEC. 2. INVESTMENT CREDIT FOR CONVERSION OF NON-RESIDENTIAL BUILDING TO 
              AFFORDABLE HOUSING.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of subtitle A of the Internal Revenue Code of 1986 is amended by 
inserting after section 48E the following new section:

``SEC. 48F. AFFORDABLE HOUSING CONVERSION CREDIT.

    ``(a) Allowance of Credit.--For purposes of section 46, the 
affordable housing conversion credit for any taxable year is an amount 
equal to 20 percent of the qualified conversion expenditures of the 
taxpayer with respect to a qualified affordable housing building placed 
in service by the taxpayer during the taxable year.
    ``(b) Qualified Conversion Expenditures.--For purposes of this 
section--
            ``(1) In general.--The term `qualified conversion 
        expenditures' means, with respect to any qualified affordable 
        housing building, any amount properly chargeable to capital 
        account--
                    ``(A) for property for which depreciation is 
                allowable under section 168, and
                    ``(B) in connection with the qualified conversion 
                of a qualified affordable housing building.
            ``(2) Certain expenditures not included.--The term 
        `qualified conversion expenditures' does not include--
                    ``(A) Limitation on period of conversion.--Except 
                as provided in subsection (f), any amount paid or 
                incurred other than during the 2-year period ending on 
                the date on which the taxpayer places the qualified 
                affordable housing building in service.
                    ``(B) Cost of acquisition.--The cost of acquiring 
                any building or interest therein.
            ``(3) Special rule for brownfields.--Paragraph (1)(A) shall 
        not apply with respect to any expenditure for clean up of 
        qualifying brownfield property (as defined in section 
        512(b)(19)).
            ``(4) Coordination with rehabilitation credit.--In the case 
        of any qualified conversion expenditures which are taken into 
        account for purposes of determining the rehabilitation credit 
        under section 47, the amount of such expenditures taken into 
        account under this section (determined without regard to this 
        paragraph) shall be reduced by 50 percent.
    ``(c) Qualified Conversion.--For purposes of this section--
            ``(1) In general.--The term `qualified conversion' means 
        the conversion of an eligible commercial building into a 
        qualified affordable housing building if the qualified 
        conversion expenditures of the taxpayer with respect to such 
        conversion exceed the greater of--
                    ``(A) an amount equal to 50 percent of the adjusted 
                basis of such building (determined immediately prior to 
                such conversion), or
                    ``(B) $100,000.
            ``(2) Eligible commercial building.--The term `eligible 
        commercial building' means any building which, with respect to 
        any conversion--
                    ``(A) was originally placed in service not less 
                than 20 years before the date on which such conversion 
                begins, and
                    ``(B) immediately prior to such conversion, was 
                nonresidential real property (as defined in section 
                168).
    ``(d) Qualified Affordable Housing Building.--For purposes of this 
section--
            ``(1) In general.--The term `qualified affordable housing 
        building' means any residential building if during the 30-year 
        period beginning on the date on which such building is placed 
        in service by the taxpayer, not less than 20 percent of the 
        residential units in the building are both rent-restricted and 
        reserved for individuals whose income is 80 percent or less of 
        the area median income.
            ``(2) Rent and income limitation.--For purposes of this 
        subsection, rules similar to the rules of subsection (g) of 
        section 42 shall apply to determine whether a unit is rent-
        restricted, treatment of units occupied by individuals whose 
        incomes rise above the limit, and the treatment of units where 
        Federal rental assistance is reduced as tenant's income 
        increases.
    ``(e) Limitation on Aggregate Credit Allowable.--
            ``(1) Credit may not exceed credit amount allocated to 
        building.--
                    ``(A) In general.--The amount of the credit 
                determined under this section with respect to any 
                building shall not exceed the qualified conversion 
                credit dollar amount allocated to such building under 
                this subsection by the housing credit agency of the 
                State in which such building is located.
                    ``(B) Time for making allocation.--Except in the 
                case of an allocation which meets the requirements of 
                subparagraph (C), an allocation shall be taken into 
                account under subparagraph (A) only if it is made not 
                later than the close of the calendar year in which the 
                building is placed in service.
                    ``(C) Exception where binding commitment.--An 
                allocation meets the requirements of this subparagraph 
                if there is a binding commitment (not later than the 
                close of the calendar year in which the building is 
                placed in service) by the housing credit agency to 
                allocate a specified housing credit dollar amount to 
                such building beginning in a later taxable year.
            ``(2) State limitation.--
                    ``(A) In general.--The aggregate qualified 
                conversion credit dollar amount which a housing credit 
                agency of any State may allocate is the sum of--
                            ``(i) the amount which bears the same ratio 
                        to the national qualified conversion credit 
                        limitation as--
                                    ``(I) the population of such State, 
                                bears to
                                    ``(II) the population of all 
                                States, plus
                            ``(ii) the sum of any amounts determined 
                        under subparagraph (C).
                    ``(B) National qualified conversion credit 
                limitation.--The national qualified conversion credit 
                limitation is $12,000,000,000.
                    ``(C) Additional amounts provided for certain 
                buildings in economically distressed areas.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), in any case in which--
                                    ``(I) the housing credit agency of 
                                a State allocates an amount to a 
                                building which is located in an 
                                economically distressed area, and
                                    ``(II) the Secretary subsequently 
                                designates such amount for purposes of 
                                this paragraph,
                        the amount determined under this paragraph with 
                        respect to such building shall be the amount 
                        originally allocated by the housing credit 
                        agency of the State under clause (i).
                            ``(ii) Limitation.--The aggregate amount 
                        which the Secretary may designate under clause 
                        (i)(II) shall not exceed $3,000,000,000.
                            ``(iii) Manner of designation.--Not later 
                        than 120 days after the date of the enactment 
                        of this section, the Secretary shall establish 
                        a program for determining the designation of 
                        amounts that may be designated under this 
                        subparagraph.
                    ``(D) Reallocation of certain amounts.--
                            ``(i) In general.--Notwithstanding 
                        subparagraph (A)--
                                    ``(I) no amount may be allocated 
                                under paragraph (1) by a housing credit 
                                agency of an undersubscribed State 
                                after December 31, 2027, and
                                    ``(II) the dollar amount determined 
                                under subparagraph (A) with respect to 
                                any oversubscribed State after such 
                                date shall be increased by such State's 
                                share of the reallocation amount.
                            ``(ii) State share.--For purposes of clause 
                        (i), an oversubscribed State's share of the 
                        reallocation amount is the amount which bears 
                        the same ratio to the reallocation amount as--
                                    ``(I) the population of such State, 
                                bears to
                                    ``(II) the population of all 
                                oversubscribed States.
                            ``(iii) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) Undersubscribed state.--The 
                                term `undersubscribed State' means any 
                                State that is not an oversubscribed 
                                State.
                                    ``(II) Oversubscribed state.--The 
                                term `oversubscribed State' means any 
                                State the housing credit agency of 
                                which has allocated all of the 
                                qualified conversion credit dollar 
                                amount which may be allocated by it 
                                before the date described in clause 
                                (i)(I).
                                    ``(III) Reallocation amount.--The 
                                term `reallocation amount' means the 
                                sum of the amounts described in 
                                subparagraph (A) which have not been 
                                allocated by undersubscribed States 
                                before the date described in clause 
                                (i)(I).
            ``(3) Manner of allocation.--
                    ``(A) Plan for allocation.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of this section, the qualified 
                        conversion credit dollar amount with respect to 
                        any building shall be zero unless such amount 
                        was allocated pursuant to a conversion credit 
                        allocation plan of the housing credit agency 
                        which is approved by the governmental unit (in 
                        accordance with rules similar to the rules of 
                        section 147(f)(2) (other than subparagraph 
                        (B)(ii) thereof)) of which such agency is a 
                        part.
                            ``(ii) Conversion credit allocation plan.--
                        For purposes of this subparagraph, the term 
                        `conversion credit allocation plan' means a 
                        plan--
                                    ``(I) which sets selection criteria 
                                for allocations, taking into account--
                                            ``(aa) whether the credit 
                                        is needed to assure the 
                                        financial feasibility of the 
                                        conversion,
                                            ``(bb) the extent to which 
                                        the conversion results in the 
                                        creation of affordable housing,
                                            ``(cc) the extent to which 
                                        the conversion results in the 
                                        creation of housing near 
                                        transportation, employment, and 
                                        commercial opportunities,
                                            ``(dd) the extent to which 
                                        the conversion will support 
                                        small businesses and economic 
                                        revitalization in the 
                                        surrounding area,
                                            ``(ee) the degree of local 
                                        government support for the 
                                        conversion, and
                                            ``(ff) the readiness of the 
                                        building for a qualified 
                                        conversion, and
                                    ``(II) which provides a procedure 
                                that the agency (or an agent or other 
                                private contractor of such agency) will 
                                follow in monitoring for noncompliance 
                                with the requirements of subsection (d) 
                                and in notifying the Internal Revenue 
                                Service of such noncompliance.
                    ``(B) Binding allocation agreements; reporting.--In 
                making allocations of qualified conversion credit 
                dollar amounts, each housing credit agency shall--
                            ``(i) enter into binding agreements with 
                        taxpayers for the allocation of qualified 
                        conversion credit dollar amounts, which 
                        agreements shall specify the amount of 
                        qualified conversion credit dollar amount 
                        allocated to the building and the terms for any 
                        modifications or withdrawal of such allocation, 
                        and
                            ``(ii) report to the Secretary, at such 
                        time and in such manner as the Secretary may 
                        require, the amount of allocations made with 
                        respect to any building.
                    ``(C) State extended use requirements permitted 
                past 30 years.--For purposes of this paragraph, a 
                housing credit agency's plan shall not fail to be 
                treated as a conversion credit allocation plan merely 
                because it includes, and nothing in this section shall 
                be construed to limit a binding allocation agreement 
                from including, affordability or rent restriction 
                requirements with respect to the building that apply 
                for a longer period than the 30-year period described 
                in subsections (d) and (g)(1)(B).
            ``(4) Definitions and other rules.--
                    ``(A) Housing credit agency.--The term `housing 
                credit agency' means, with respect to any State, the 
                housing credit agency authorized under section 42(h)(8) 
                or such other agency as authorized by the State for 
                purposes of this section.
                    ``(B) Economically distressed area.--The term 
                `economically distressed area' means any area which--
                            ``(i) which has been designated as a 
                        qualified census tract under section 
                        42(d)(5)(B)(ii) or as a difficult development 
                        area under section 42(d)(5)(B)(iii), or
                            ``(ii) which meets the requirement of 
                        section 301(a)(3) of the Public Works and 
                        Economic Development Act of 1965.
                    ``(C) State.--The term `State' includes a 
                possession of the United States.
                    ``(D) Other rules.--Rules similar to the rules of 
                subparagraphs (A) and (B) of section 42(h)(7) shall 
                apply for purposes of this section.
    ``(f) Progress Expenditures.--If the Secretary determines, on the 
basis of architectural plans and specifications that a qualified 
conversion is reasonably expected to exceed 2 years, rules similar to 
the rules of section 47(d) shall apply with respect to such conversion 
for purposes of this section.
    ``(g) Special Rules for Certain Areas.--
            ``(1) Qualified census tracts and difficult development 
        areas.--In the case of a qualified affordable housing 
        building--
                    ``(A) which is located in any area which is 
                designated as a qualified census tract under section 
                42(d)(5)(B)(ii) or as a difficult development area 
                under section 42(d)(5)(B)(iii)), and
                    ``(B) with respect to which during 30-year period 
                beginning on the date on which such building is placed 
                in service by the taxpayer, not less than 20 percent of 
                the residential units in the building are both rent-
                restricted and reserved for individuals whose income is 
                60 percent or less of the area median income,
        subsection (a) shall be applied by substituting `30 percent' 
        for `20 percent'.
            ``(2) Historic preservation in rural areas.--
                    ``(A) In general.--In the case of a qualified 
                affordable housing building which is in a rural area 
                and is part of an historic preservation project, the 
                taxpayer may elect to substitute `35 percent' for `20 
                percent' under subsection (a) with respect to such 
                portion of the aggregate qualified conversion 
                expenditures taken into account under such subsection 
                as does not exceed $2,000,000.
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Rural area.--The term `rural area' 
                        shall have the meaning given such term under 
                        section 1393(a)(2).
                            ``(ii) Historic preservation project.--The 
                        term `historic preservation project' means a 
                        qualified conversion which involves the 
                        certified rehabilitation of a certified 
                        historic structure. Whether conversion of a 
                        certified historic structure involves certified 
                        rehabilitation shall be determined under rules 
                        similar to the rules of section 47(c)(2)(C).
    ``(h) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance--
            ``(1) providing for the recapture of the credit determined 
        under subsection (a) if the qualified affordable housing 
        building ceases to be a qualified affordable housing building 
        during the 30-year period beginning on the date that such 
        building is placed in service by the taxpayer,
            ``(2) detailing any certifications required from the 
        taxpayer or any housing credit agency of a State,
            ``(3) with respect to the application of subsection (b)(4),
            ``(4) with respect to information reporting on allocations 
        of qualified conversion credit dollar amounts,
            ``(5) providing rules for making a determination as to 
        whether an area is described in subsection (e)(4)(B), and
            ``(6) which encourages housing credit agencies to allocate, 
        to the extent practicable, qualified conversion credit dollar 
        amounts to non-metropolitan counties within the State in 
        proportion to the non-metropolitan population of the State, but 
        only to the extent it is demonstrated within such non-
        metropolitan counties that there are sufficient qualified 
        conversion expenditures to warrant such allocations.''.
    (b) Transferability of Credit.--Section 6418(f)(1)(A) of such Code 
is amended by adding at the end the following new clause:
                            ``(xii) The affordable housing conversion 
                        credit determined under section 48F.''.
    (c) Conforming Amendments.--
            (1) Section 46 of such Code is amended in paragraph (6) by 
        striking ``and'' at the end, in paragraph (7) by striking the 
        period at the end and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(8) the affordable housing conversion credit.''.
            (2) Section 49(a)(1)(C) of such Code is amended by striking 
        ``and'' at the end of clause (vii), by striking the period at 
        the end of clause (viii), and by adding at the end the follow 
        new clause:
                            ``(ix) the basis of any property which is 
                        being converted as part of a qualified 
                        conversion under section 48F.''.
            (3) Section 50(a)(2)(E) of such Code is amended by striking 
        ``or 48E(e)'' and inserting ``48E(e), or 48F(f)''.
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of subtitle A of such Code is amended 
        by adding at the end the following new item:

``Sec. 48F. Affordable housing conversion credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to qualified affordable housing buildings (as defined in section 
48F of the Internal Revenue Code of 1986, as added by this section) 
placed in service after the date of the enactment of this Act.
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