[Congressional Record Volume 153, Number 64 (Friday, April 20, 2007)]
[Senate]
[Pages S4813-S4815]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU:
  S. 1180. A bill to amend the Internal Revenue Code of 1986 to extend 
the placed-in-service date requirement for low-income housing credit 
buildings in the Gulf Opportunity Zone, and for other purposes; to the 
Committee on Finance.
  Ms. LANDRIEU. Mr. President, as the gulf coast recovers from Katrina 
and Rita, rebuilding our housing remains the key to our recovery. I 
have talked about this issue on this floor before. We need housing so 
that our citizens have a place to live while they rebuild our 
businesses, restore our infrastructure, and renew our communities. 
Congress and the President responded by making billions of dollars 
available to us and we are grateful for this assistance.
  I am proud to say that this assistance is working. Every time I go 
home I see signs of improvement. They are often small: a gas station or 
a store reopening on a corner; children playing on a street where no 
one lived only a few months before. I wish I could say that these signs 
are everywhere, but they are not. Some parts of New Orleans are doing 
well, some are not. We knew from the start that recovery would take 
longer in some areas than in others; and we all knew that nothing would 
happen overnight.
  America has never rebuilt a city of 500,000 people before. Our 
experience in Louisiana and in the Gulf has taught us some valuable 
lessons about postcatastrophe rebuilding and recovery. We have learned 
about the shortcomings of government programs at FEMA, the Small 
Business Administration, and other agencies. In responding to Katrina 
they used the systems that worked great for smaller disasters, but were 
woefully inadequate for larger ones. For future megacatastrophes we now 
understand that it may take government programs several months to ramp 
up before they are in a position to distribute assistance.
  One of the key lessons we have learned from this catastrophe has been 
the affect of such massive destruction

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and displacement on the supply and the costs of labor and building 
materials, and the impact these have on how long it takes to rebuild. 
New Orleans, for example, is about half the population it used to be. 
We do not have enough workers in building and contracting to meet the 
huge demand we have for this work. As a result, it may take several 
months to get building started. Developers are also having difficulty 
getting insurance and the infrastructure in many areas is still heavily 
damaged.
  This timing delay means that Congress will have to reexamine the 
policies that we have enacted to help rebuild the Gulf region in order 
to ensure that they are meeting the new kinds of disaster recovery 
challenges Katrina and Rita have posed. The Gulf Opportunity Zone Act 
of 2005 was one of the major pieces of legislation that we passed. The 
GO Zone Act provided important tax incentives to encourage investment 
in businesses and housing in the Gulf.
  To help ensure that we can rebuild our housing, GO Zone Act increased 
the state's allocation of Low Income Housing Tax Credits, LIHTC. These 
credits finance affordable and mixed income housing. Under the GO Zone 
Act, any housing developed with these tax credits must be built and 
operating by December 31, 2008. The statute refers to this as the 
``placed in service'' date. This date is consistent with the normal 
LIHTC program guidelines that require tax credit housing developments 
to be placed in service within 2 years of allocation.
  The Louisiana Housing Finance Agency, LHFA, reports that there was a 
great demand for these GO Zone credits. For the credits allocated in 
2006, the LHFA received 266 applications from developers for more than 
$253 million. But it only funded 102 projects with $56.9 million in tax 
credits.
  For 2007 and 2008, however, the State received far fewer 
applications. The reason for this is because of the placed-in-service 
date. Because of the labor shortage, increased costs, and lack of 
insurance that we are facing in the Gulf, developers are not sure 
whether they can get their projects placed in service by the end of 
2008. Yet there is still a huge need for the housing that these credits 
will fund.
  The placed-in-service date is also raising new concerns. I have heard 
from a number of organizations that already received tax credit 
allocations before 2006 who are concerned that they will not be able to 
get their developments placed in service by the end of 2008. The LHFA 
estimates that 65 percent of the affordable housing units under 
development in New Orleans, roughly 11,050 units, will not make the 
deadline to be available for rent by the end of 2008. In the 
surrounding parishes, home sales prices have literally hit the roof 
meaning working and middle-income families cannot reasonably justify 
living in the area that they still call home, 19 months since the 
storm. Again, the culprit is the shortages and increased costs that I 
mentioned before. Some developers have even told me that they face 
losing credits that had been allocated to them before the storm because 
building has been delayed in the region. Since Katrina, rental prices 
have increased by 39 percent.
  Today, I am introducing legislation that will help to ensure that 
these housing tax credits are available so that we can continue the 
road to recovery. The Workforce Housing for the GO Zone Act of 2007 
will extend the placed-in-service date for the GO Zone Low Income 
Housing Tax Credit by an additional 2 years. This will allow developers 
to make full use of the credits that are available to build affordable 
housing in the Gulf Coast.
  Another critical provision lets GO Zone low-income housing projects 
receive additional federally subsidized loans without losing tax 
credits. The Low Income Housing Tax Credit provisions included in this 
bill further assist our people to return home. These credits are 
competitively awarded to qualified developers and subject to constant 
oversight by the State housing authority to make sure that only quality 
affordable housing is being constructed. The citizens of the gulf coast 
are ready to go back home, and this legislation helps get them there.
  I ask unanimous consent that a copy of the legislation be printed in 
the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1180

       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 ``Workforce Housing 
     Construction for the GO Zone Act of 2007''.

     SEC. 2. EXTENSION OF PLACED-IN-SERVICE DATE REQUIREMENT FOR 
                   LOW-INCOME HOUSING CREDIT BUILDINGS IN GULF 
                   OPPORTUNITY ZONE.

       Section 1400N(c) of the Internal Revenue Code of 1986 is 
     amended--
       (1) by striking ``or 2008'' in paragraph (3)(A) and 
     inserting ``2008, 2009, or 2010'',
       (2) by striking ``during such period'' in paragraph 
     (3)(B)(ii) and inserting ``during the period described in 
     subparagraph (A)'', and
       (3) by striking ``or 2008'' in paragraph (4)(A) and 
     inserting ``2008, 2009, or 2010''.

     SEC. 3. PRESERVATION OF PREVIOUS LOW-INCOME HOUSING CREDIT 
                   BUILDINGS IN GULF OPPORTUNITY ZONE.

       (a) In General.--If an owner of a qualified low-income 
     building (as defined in section 42(c)(2) of the Internal 
     Revenue Code of 1986) located in the GO Zone (as defined in 
     section 1400M(1) of such Code) in the second taxable year or 
     later of the credit period (as defined in section 42(f)(1) of 
     such Code) for such building--
       (1) suffers a reduction in the qualified basis (as 
     determined under section 42(b)(1) of such Code) of such 
     building (hereinafter referred to as the ``lost qualified 
     basis'') as a result of a disaster that caused the President 
     to issue a major disaster declaration as a result of 
     Hurricanes Katrina and Rita, but under subsection (j)(4)(E) 
     of section 42 of such Code avoids recapture or loss of low-
     income housing credits previously allowed under such section 
     with respect to such building (hereinafter referred to as the 
     ``existing credits'') by restoring the lost qualified basis 
     by reconstruction, replacement, or rehabilitation within a 
     reasonable period established by the Secretary of the 
     Treasury, and
       (2) obtains an allocation of additional low-income housing 
     credits under such section to fund, in whole or in part, the 
     reconstruction, replacement, or rehabilitation of such 
     building (hereinafter referred to as the ``new credits''),

     then the qualified basis of such building for purposes of 
     determining the new credits shall equal the excess (if any) 
     of such building's qualified basis as of the close of the 
     first taxable year of the credit period (as so defined) with 
     respect to the new credits (assuming such reconstruction, 
     replacement, or rehabilitation expenditures meet the 
     requirements for treatment as a separate new building), over 
     such building's qualified basis with respect to the existing 
     credits as determined immediately prior to the disaster 
     referred to in paragraph (1).
       (b) Special Rule for Time for Making Allocations of 
     Credits.--For purposes of section 42(h)(1)(E)(ii) of the 
     Internal Revenue Code of 1986, buildings described in 
     subsection (a) shall be deemed to be qualified buildings.
       (c) Avoidance of Recapture of Credit.--For purposes of 
     section 42(j)(4)(E) of the Internal Revenue Code of 1986, 
     qualified low-income housing projects (as defined in section 
     42(g)(1) of such Code) suffering casualty as a result of a 
     disaster that caused the President to issue a major disaster 
     declaration for the Go Zone (as defined in section 
     1400M(1))shall be deemed to have restored any casualty loss 
     by reconstruction or replacement within a reasonable period 
     if such loss is restored before January 1, 2011.

     SEC. 4. CREDIT ALLOWABLE FOR CERTAIN BUILDINGS ACQUIRED 
                   DURING 10-YEAR PERIOD IN THE KATRINA, RITA, AND 
                   WILMA DISASTER AREAS.

       Section 1400N(c) of the Internal Revenue Code of 1986 is 
     amended by redesignating paragraph (5) as paragraph (6) and 
     by inserting after paragraph (4) the following new paragraph:
       ``(5) Credit allowable for buildings acquired during 10-
     year period.--A waiver may be granted under section 
     42(d)(6)(A) (without regard to any clause thereof) with 
     respect to any building in the Gulf Opportunity Zone, the 
     Rita GO Zone, or the Wilma GO Zone.''.

     SEC. 5. INCLUSION OF BASIS OF PROPERTY FOR MIXED INCOME 
                   HOUSING IN KATRINA, RITA, AND WILMA DISASTER 
                   AREAS.

       Section 1400N(c) of the Internal Revenue Code of 1986, as 
     amended by this Act, is amended by redesignating paragraph 
     (6) as paragraph (7) and by inserting after paragraph (5) the 
     following new paragraph:
       ``(6) Increase in applicable fraction for mixed income 
     projects.--
       ``(A) In general.--In the case of any qualified low-income 
     housing project under section 42(g) which is located in the 
     Gulf Opportunity Zone, the Rita GO Zone, or the Wilma GO Zone 
     and in which the applicable fraction for any building of such 
     qualified low-income housing project is not less than 20 
     percent and not more than 60 percent but for the provisions 
     of this subparagraph, the numerator of the applicable 
     fraction under section 42(c)(1)(B) shall be increased by--
       ``(i) one or 5 percent of the total number of units 
     (whichever adjustment provides the largest unit fraction) for 
     each building in the qualified low income housing project in 
     the case of the unit fraction under section 42(c)(1)(C), and

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       ``(ii) five percent of the total floor space in the case of 
     the floor space fraction under section 42(c)(1)(D).
       ``(B) Application.--Subparagraph (A) shall apply to--
       ``(i) housing credit dollar amounts allocated after 
     December 31, 2007, and
       ``(ii) buildings placed in service after such date to the 
     extent paragraph (1) of section 42(h) does not apply to any 
     building by reason of paragraph (4) thereof, but only with 
     respect to bonds issued after such date.''.

     SEC. 6. OVER INCOME LOANS FOR KATRINA, RITA, AND WILMA 
                   DISASTER AREAS.

       (a) In General.--Section 1400N(a)(5)(B) of the Internal 
     Revenue Code of 1986 is amended by adding ``and'' at the end 
     of clause (ii), by striking clause (iii), and by 
     redesignating clause (iv) as clause (iii).
       (b) Mortgage Revenue Bonds.--Section 1400T(a) of the 
     Internal Revenue Code of 1986 is amended by adding ``and'' at 
     the end of paragraph (1), by striking paragraph (2), and by 
     redesignating paragraph (3) as paragraph (2).
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 7. COMMUNITY DEVELOPMENT BLOCK GRANTS NOT TAKEN INTO 
                   ACCOUNT IN DETERMINING IF BUILDINGS ARE 
                   FEDERALLY SUBSIDIZED.

       Section 1400N(c) of the Internal Revenue Code of 1986, as 
     amended by this Act, is amended by redesignating paragraph 
     (7) as paragraph (8) and by inserting after paragraph (6) the 
     following new paragraph:
       ``(7) Community development block grants not taken into 
     account in determining if buildings are federally 
     subsidized.--For purpose of applying section 42(i)(2)(D) to 
     any building which is placed in service in the Gulf 
     Opportunity Zone, the Rita GO Zone, or the Wilma GO Zone 
     during the period beginning on January 1, 2006, and ending on 
     December 31, 2010, a loan shall not be treated as a below 
     market Federal loan solely by reason of any assistance 
     provided under section 106, 107, or 108 of the Housing and 
     Community Development Act of 1974 by reason of section 122 of 
     such Act or any provision of the Department of Defense 
     Appropriations Act, 2006, or the Emergency Supplemental 
     Appropriations Act for Defense, the Global War on Terror, and 
     Hurricane Recovery, 2006.''.

     SEC. 8. APPLICATION OF THE DEFINITIONS AND SPECIAL RULES 
                   UNDER SECTION 42(I) OF THE INTERNAL REVENUE 
                   CODE OF 1986 FOR BOND-FINANCED PROJECTS.

       (a) In General.--For purposes of qualifying as a qualified 
     residential rental project under section 142(d)(1) of the 
     Internal Revenue Code of 1986 [in the Gulf Opportunity Zone, 
     the Rita GO Zone, or the Wilma GO Zone], the special 
     definitions and special rules for low-income units in section 
     42(i)(3) of such Code shall apply.
       (b) Effective Date.--This section shall take apply to bonds 
     issued after the date of the enactment of this Act.

     SEC. 9. SPECIAL TAX-EXEMPT BOND FINANCING RULE FOR REPAIRS 
                   AND RECONSTRUCTIONS OF RESIDENCES IN THE GO 
                   ZONES.

       Section 1400N(a) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new paragraph:
       ``(7) Special rule for repairs and reconstructions.--
       ``(A) In general.--For purposes of section 143 and this 
     subsection, any qualified GO Zone repair or reconstruction 
     shall be treated as a qualified rehabilitation.
       ``(B) Qualified go zone repair or reconstruction.--For 
     purposes of subparagraph (A), the term `qualified GO Zone 
     repair or reconstruction' means any repair of damage caused 
     by Hurricane Katrina, Hurricane Rita, or Hurricane Wilma to a 
     building located in the Gulf Opportunity Zone, the Rita GO 
     Zone, or the Wilma GO Zone (or reconstruction of such 
     building in the case of damage constituting destruction) if 
     the expenditures for such repair or reconstruction are 25 
     percent or more of the mortgagor's adjusted basis in the 
     residence. For purposes of the preceding sentence, the 
     mortgagor's adjusted basis shall be determined as of the 
     completion of the repair or reconstruction or, if later, the 
     date on which the mortgagor acquires the residence.
       ``(C) Termination.--This paragraph shall apply only to 
     owner-financing provided after the date of the enactment of 
     this paragraph and before January 1, 2011.''.
                                 ______