Increased credit amounts and credit allocation set-asides for certain buildings

(a)

Increased credit amounts

(1)

In general

Section 42(d)(5) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraphs:

(C)

Increase in credit for prevailing wage buildings

(i)

In general

In the case of any building which pays applicable laborers at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such facility is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code, and which is designated by the housing credit agency as requiring the increase in credit under this subparagraph in order for such payments to be financially feasible as part of a qualified low-income housing project— (I)in the case of a new building, the eligible basis of such building shall be increased by 50 percent of such basis determined without regard to this subparagraph and subparagraphs (B), (D), (E), (F), and (G), and(II)in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by 50 percent of such expenditures determined without regard to this subparagraph and subparagraphs (B), (D), (E), (F), and (G). (ii)

Applicable laborers

For purposes of this clause, the term applicable laborers means, with respect to any building, any laborers employed by the taxpayer, or any contractor or subcontractor, in the construction, alteration, or repair of the building.(D)

Increase in credit for buildings powered by renewable energy

(i)

In general

In the case of any building which utilizes renewable energy (as defined in section 203(b)(2) of the Energy Policy Act of 2005), and which is designated by the housing credit agency as requiring the increase in credit under this subparagraph in order for such renewable energy use to be financially feasible as part of a qualified low-income housing project— (I)in the case of a new building, the eligible basis of such building shall be increased by the applicable percentage of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (E), (F), and (G), and(II)in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by the applicable percentage of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (E), (F), and (G). (ii)

Applicable percentage

For purposes of this subparagraph, the applicable percentage is 50 percent of the percentage of the energy utilized by such building which is from renewable energy (as so defined). (E)

Increase in credit for buildings near public transportation

(i)

In general

In the case of any building which is located in a public transportation zone and which is designated by the 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— (I)in the case of a new building, the eligible basis of such building shall be increased by 25 percent of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (D), (F), and (G), and(II)in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by 25 percent of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (D), (F), and (G). (ii)

Public transportation zone

For purposes of this subparagraph, a building is located in a public transportation zone if—(I)the building is within one-half mile of an existing commuter rail, light rail, or subway station,(II)the building is within one-quarter mile of one or more existing public bus stops, or(III)the building is located in a census tract—(aa)designated by the Administrator of the Environmental Protection Agency as having above average walkability, or (bb)which is adjacent to 2 or more such census tracts described in item (aa). (F)

Increase in credit for buildings serving households with people with disabilities

(i)

In general

In the case of any building which has low-income units that meet the applicable design standards for occupancy by persons with mental, physical, sensory, or developmental disabilities, and which is designated by the 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— (I)in the case of a new building, the eligible basis of such building shall be increased by the applicable percentage of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (D), (D), and (G), and(II)in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by the applicable percentage of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (D), (E), and (G). (ii)

Design standards

For purposes of clause (i), the term applicable design standards means the principles and standards of adaptable design as detailed in the Uniform Federal Accessibility Standards, or any successor standard designated by the Secretary.(iii)

Applicable percentage

For purposes of this subparagraph, the term applicable percentage means the number of percentage points (not to exceed 50 percentage points) by which—(I)the ratio (expressed as a percentage and rounded to the nearest percent) of the number of low-income units in the building that meet the applicable design standards for occupancy by persons with mental, physical, sensory, or developmental disabilities bears to the total number of units in the building, exceeds(II)5 percentage points.(G)

Increase in credit for buildings serving extremely low-income families

(i)

In general

In the case of any building in which 20 percent of the units are occupied by extremely low-income families and which is designated by the 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— (I)in the case of a new building, the eligible basis of such building shall be increased by 50 percent of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (D), (E), and (F), and(II)in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by 50 percent of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (D), (E), and (F).(ii)

Extremely low-income families

For purposes of this subparagraph, the term extremely low-income families means families whose annual incomes do not exceed 30 percent of the area median gross income, as determined in consultation with the Secretary of Health and Human Services. (H)

Limitation

Notwithstanding subparagraphs (B), (C), (D), (E), (F), and (G)—(i)the eligible basis of any building shall not exceed an amount equal to 250 percent of such basis determined without regard to subparagraphs (B), (C), (D), (E), (F), and (G), and(ii)the rehabilitation expenditures taken into account under subsection (e) shall not exceed 250 percent of such expenditures determined without regard to subparagraphs (B), (C), (D), (E), (F), and (G).

(2)

Conforming amendments

Section 42(d)(5)(B)(i) of such Code is amended—(A)by striking shall be 130 percent of each place it appears in subclauses (I) and (II) and inserting shall be increased by 30 percent of, and(B)by striking this subparagraph each place it appears in subclauses (I) and (II) and inserting this subparagraph and subparagraphs (B), (C), (D), (E), (F), and (G).(3)

Effective date

The amendments made by this subsection shall apply to buildings placed in service after the date of the enactment of this Act.(b)

Set-Aside for certain projects

(1)

In general

Section 42(h) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(9)

Portion of State ceiling set-aside for certain projects

(A)

In general

Not more than two-thirds of the State housing credit ceiling for any State for any calendar year shall be allocated to projects other than qualified low-income housing projects described in subparagraphs (C), (D), (E), (F), and (G) of subsection (d)(5). (B)

State may not override set-aside

Nothing in subparagraph (F) of paragraph (3) shall be construed to permit a State not to comply with subparagraph (A) of this paragraph.

(2)

Effective date

The amendments made by this subsection shall apply to calendar years beginning after the date of the enactment of this Act.

Tax-exempt bond financing requirement

(a)

In general

Section 42(h)(4) of the Internal Revenue Code of 1986 is amended by striking subparagraph (B) and inserting the following:

(B)

Special rule where minimum percent of buildings is financed with tax-exempt bonds subject to volume cap

For purposes of subparagraph (A), paragraph (1) shall not apply to any portion of the credit allowable under subsection (a) with respect to a building if—(i)50 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more obligations described in subparagraph (A), or(ii)(I)15 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more qualified obligations, and(II)1 or more of such qualified obligations—(aa)are part of an issue the issue date of which is after December 31, 2023, and(bb)provide the financing for not less than 5 percent of the aggregate basis of such building and the land on which the building is located.(C)

Qualified obligation

For purposes of subparagraph (B)(ii), the term qualified obligation means an obligation which is described in subparagraph (A) and which is part of an issue the issue date of which is before January 1, 2026.

(b)

Effective date

(1)

In general

The amendment made by this section shall apply to buildings placed in service in taxable years beginning after December 31, 2023.(2)

Rehabilitation expenditures treated as separate new building

In the case of any building with respect to which any expenditures are treated as a separate new building under section 42(e) of the Internal Revenue Code of 1986, for purposes of paragraph (1), both the existing building and the separate new building shall be treated as having been placed in service on the date such expenditures are treated as placed in service under section 42(e)(4) of such Code.