[Congressional Record Volume 154, Number 30 (Monday, February 25, 2008)]
[Senate]
[Pages S1139-S1142]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

       By Ms. CANTWELL (for herself, Mr. Smith, Mr. Kerry, Mr. Coleman, 
        and Mr. Salazar):
   S. 2666. A bill to amend the Internal Revenue Code of 1986 to 
encourage investment in affordable housing, and for other purposes; to 
the Committee on Finance.
   Ms. CANTWELL. Mr. President, the issues of housing are very much on 
the minds of the American people and those of us in Congress. While we 
focus on the challenges that homeowners currently are facing, we must 
not fail to recognize that there are a lot of families that dare not 
dream of owning their own home; they dream simply of having access to 
safe, affordable rental housing in our communities.
   Today, I am pleased to introduce the Affordable Housing Investment 
Act, a bill that will update and modernize the low-income housing tax 
credit program--a program that we all know has been tremendously 
successful in helping construct needed affordable housing in 
communities across our country.
   We often find ourselves reacting to Government programs that are 
broken; this bill is about a Government program that works but can be 
improved upon. The low-income housing tax credit program was created as 
part of the Tax Reform Act of 1986 and made permanent in 1993. Designed 
as a public/private funding partnership, largely administered by the 
States, this program has become the most successful housing production 
program in existence.
   These tax credits make it attractive for investors to forego highly 
profitable luxury residences, in order to provide housing for those 
most in need. Without affordable housing, many low-income Americans 
would find themselves on the street. Instead, these families can 
provide shelter to their children and have a secure place to live near 
where they work and go to school.
   State agencies award housing tax credits to housing developers, who 
turn the credits into construction funds by selling them to investors. 
There funds allow developers to borrow less money and pass through the 
savings in lower rental rates for low-income tenants. Investors, in 
turn, receive a 10-year tax credit based on the cost of constructing or 
rehabilitating apartments that cannot be rented to anyone whose median 
income is higher than 60 percent of the median income in the area.
   Each State's annual housing credit allocation is capped. In 2007, 
the cap is $1.95 per capita, with a minimum of $2.275 million. States 
put each development through three separate, rigorous evaluations to 
make sure it receives only enough housing credits to make it viable as 
low-income housing for the long term.
   Since its inception, this program has created nearly 2 million homes 
for low-income families at restricted rents for terms of at least 30 
years--housing that would not have occurred without the tax credit.
   The credit is responsive to the needs of local communities. It works 
for new construction, rehabilitation, and preservation of affordable 
housing. It works in cities, suburbs, and rural areas. It revitalizes 
low-income communities. It serves families, the elderly, the disabled, 
and the homeless. Each State sets its own housing priorities, and 
developers compete aggressively to meet these priorities.
   The program is cost efficient and has a high compliance rate. The 
marketplace imposes discipline on the program so that taxpayers' 
dollars are well-spent. Investors receive their tax credits only if 
housing is built on time and on budget, operates successfully within 
local housing markets, and is well maintained over time. The annual 
failure rate for housing credit properties is 0.02 percent annually, 
well below that for other housing or commercial real estate.
   As successful as the housing tax credit program is, it could benefit 
significantly from updating.
   The Affordable Housing Investment Act of 2008, which I am 
introducing with Senators Smith, Kerry, Coleman and Salazar, modernizes 
the tax credit rules in order to make it even more useful.
   First, it eliminates the penalties for combining housing credits 
with other Federal housing programs. The bill proposes to remove 
various restrictions that make it hard to coordinate housing credits 
with other Federal policies and programs. These restrictions frustrate 
efforts to address local needs and add unnecessary legal and accounting 
costs. In some cases, these restrictions were set many years ago to 
prevent properties from receiving excessive subsidies. Such 
restrictions are no longer needed because States examine each project 
at three points to ensure that it needs the amount of housing credits 
allocated to it. In addition, the high demand for housing credits and 
other subsidies motivates all subsidy providers to limit subsidies to 
the minimum amount necessary.
   Second, the bill helps foster low-income community revitalization by 
facilitating the construction of child care, primary health care, 
recreation and other community service facilities and aiding with the 
specific needs for housing in rural areas.
   Third, the bill preserves existing affordable housing by easing 
restrictions on rehabilitation of older properties.
   Finally, the bill eliminates unneeded inefficiencies in the tax laws 
that serve no public policy purpose.
   The legislation has been endorsed by the National Council of State 
Housing Agencies, the Affordable Housing Tax Credit Coalition, the 
Housing Development Consortium, Local Initiatives Support Corporation 
and Impact Capital, National Association of State and Local Equity 
Funds, Seattle Housing Authority, and the Washington State Housing 
Finance Commission.
   The tax credit program may be invisible to the people that now have 
a roof over their head, but it is indispensable to our ability to meet 
the growing demand--and diminishing supply--for affordable housing.
   For example, Port Orchard Vista--a 42-unit apartment building for 
low-income seniors--would not have been built without the tax credit 
program. One resident, a 62-year-old grandmother named Jackie, would be 
homeless if this project had not been built. Jackie's Social Security 
check is $600 per month. Her rent was $605, not including utilities--or 
groceries! She was selling her furniture and her mom's old

[[Page S1140]]

cookbooks to make up the difference. She was just a few months away 
from being homeless.
   Thanks to the tax credits, the Kitsap County Consolidated Housing 
Authority was able to get this project built and keep Jackie off the 
street. Today, Jackie's rent is $200--including utilities.
   The Village at Overlake Station in Redmond, Washington, was built in 
2001 and offers beautiful public spaces and apartment homes. Sarah, a 
single mother, came to Overlake Station in late 2005 after spending 
that summer and fall living out of her vehicle with her two children. 
She was extremely grateful to find a suitable, affordable apartment 
before the cold weather came. She and her children were forced to 
huddle together in the backseat of her car to stay warm as they slept 
and she was concerned about their safety. Though she tried to be 
cautious, she just knew she should find a better way to take care of 
her children.
   Sarah and her children have proudly lived at Overlake for 2 years. 
Soon they will move into a new house, thanks to Habitat for Humanity. 
In two years, Sarah has gone from homelessness to homeownership--thanks 
to the Low-Income Housing Tax Credit program.
   These stories can be replicated in every community in my State and 
across the country.
   In 2002, the Millennial Housing Commission said in its final report 
to the Congress:

        Securing access to decent, affordable housing is 
     fundamental to the American Dream. All Americans want to live 
     in good-quality homes they can afford without sacrificing 
     other basic needs. All Americans want to live in safe 
     communities with ready access to job opportunities, good 
     schools, and amenities. All parents want their children to 
     grow up with positive role models and peer influences nearby. 
     And the overwhelming majority of Americans want to purchase a 
     home as a way to build wealth.

   By leveraging private capital to build affordable housing units, we 
are also helping our local communities. People left with no affordable 
housing options join the ranks of the homeless and then become the 
responsibility of our cash-strapped communities. We can alleviate some 
of the community responsibilities of caring for the homeless, the 
disabled, and other vulnerable low-income families by helping to 
provide these people an affordable place to call home. I encourage my 
colleagues to join me in this effort.
   Mr. President, I ask unanimous consent that the text of the bill 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. 2666

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

     SECTION 1. SHORT TITLE, ETC.

       (a) Short Title.--This Act may be cited as the ``Affordable 
     Housing Investment Act of 2008''.
       (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, etc.

       TITLE I--FACILITATE DEVELOPMENT OF HOUSING CREDIT PROPERTY

Sec. 101. Renaming the low-income housing credit as the affordable 
              housing credit.
Sec. 102. Modification of rules for determining applicable percentage.
Sec. 103. Increase in credit for buildings in State designated areas.
Sec. 104. Modification of scattered site rule.
Sec. 105. Treatment of rural projects.
Sec. 106. Expansion of allowable basis for community service 
              facilities.

   TITLE II--IMPROVE COORDINATION WITH OTHER FEDERAL HOUSING PROGRAMS

Sec. 201. Affordable housing credits allowed for section 8 moderate 
              rehabilitation developments.
Sec. 202. Modification to low-income housing credit rules for reduction 
              of eligible basis by grants received.

   TITLE III--FACILITATE PRIVATE INVESTMENT CAPITAL TO INCREASE THE 
              EFFICIENCY OF AFFORDABLE HOUSING INVESTMENT

Sec. 301. Repeal of recapture bond rule.
Sec. 302. Affordable housing credit allowed against alternative minimum 
              tax.
Sec. 303. Interest on qualified mortgage bonds, qualified veterans' 
              mortgage bonds, and qualified residential rental project 
              exempt facility bonds exempt from alternative minimum 
              tax.

          TITLE IV--HELP PRESERVE EXISTING AFFORDABLE HOUSING

Sec. 401. Repeal of 10-year rule for acquisition housing credits.
Sec. 402. Modification of related person rule for affordable housing 
              credit.

     TITLE V--SIMPLIFY ADMINISTRATION OF THE HOUSING CREDIT PROGRAM

Sec. 501. Elimination of certain annual recertifications of tenant 
              incomes.

  TITLE VI--CONFORM MULTIFAMILY HOUSING BOND RULES TO HOUSING CREDIT 
                                 RULES

Sec. 601. Coordination of certain rules applicable to affordable 
              housing credit and qualified residential rental project 
              exempt facility bonds.

          TITLE VII--IMPROVE THE MORTGAGE REVENUE BOND PROGRAM

Sec. 701. Special rule for use of mortgage bonds for disaster victims, 
              single parents, and homemakers.
Sec. 702. Repeal of required use of certain principal repayments on 
              qualified mortgage issues to redeem bonds.

                       TITLE VIII--EFFECTIVE DATE

Sec. 801. Effective date.

       TITLE I--FACILITATE DEVELOPMENT OF HOUSING CREDIT PROPERTY

     SEC. 101. RENAMING THE LOW-INCOME HOUSING CREDIT AS THE 
                   AFFORDABLE HOUSING CREDIT.

       (a) In General.--The heading of section 42 (relating to 
     low-income housing credit) is amended by striking ``low-
     income'' and inserting ``affordable''.
       (b) Conforming Amendments.--
       (1) Sections 38(b)(5), 42(a), 772(a)(7), and 772(d)(5) are 
     each amended by striking ``low-income'' and inserting 
     ``affordable''.
       (2) The headings of subparagraphs (3)(D) and (6)(B) of 
     section 469(i) are each amended by striking ``low-income'' 
     and inserting ``affordable''.
       (3) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 42 and inserting the following:

``Sec. 42. Affordable housing credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 102. MODIFICATION OF RULES FOR DETERMINING APPLICABLE 
                   PERCENTAGE.

       (a) In General.--Subsection (b) of section 42 is amended--
       (1) by striking the semicolon and all that follows to the 
     period in the heading,
       (2) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) In general.--For purposes of this section, the term 
     `applicable percentage' means the greater of the alternative 
     applicable percentage determined under paragraph (2) or--
       ``(A) 9 percent in the case of any building to which 
     subparagraph (B) does not apply, and
       ``(B) 4 percent in the case of--
       ``(i) any existing building, and
       ``(ii) any new building if, at any time during the taxable 
     year or any prior taxable year, there is or was outstanding 
     any obligation--

       ``(I) not taken into account under section 146,
       ``(II) which is exempt from tax under section 103, and
       ``(III) the proceeds of which are or were used (directly or 
     indirectly) with respect to such building or the operation 
     thereof.'',

       (3) by striking ``Buildings placed in service after 1987'' 
     in the heading for paragraph (2) and inserting ``Alternative 
     applicable percentage'', and
       (4) by striking ``In the case of any qualified low-income 
     building placed in service by the taxpayer after 1987, the 
     term `applicable percentage' means'' in paragraph (2)(A) and 
     inserting ``For purposes of paragraph (1), the term 
     `alternative applicable percentage' means''.
       (b) Modification of Rules Related to Federal Subsidies.--
       (1) In general.--Paragraph (2) of section 42(i) (relating 
     to determination of whether building is Federally subsidized) 
     is amended to read as follows:
       ``(2) Exceptions for certain new buildings otherwise 
     subject to 4 percent credit limitation.--
       ``(A) Election to reduce eligible basis by proceeds of 
     obligations.--A tax-exempt obligation shall not be taken into 
     account under subsection (b)(1)(B)(ii) if the taxpayer elects 
     to exclude the proceeds of such obligation from the eligible 
     basis of the building for purposes of subsection (d).
       ``(B) Special rule for subsidized construction financing.--
     A tax-exempt obligation used to provide construction 
     financing for any building shall not be taken into account 
     under subsection (b)(1)(B)(ii) if--
       ``(i) such obligation (when issued) identified the building 
     for which the proceeds of such obligation would be used, and
       ``(ii) such obligation is redeemed before such building is 
     placed in service.''.
       (2) Conforming amendment.--Section 1400N(c)(6) is amended 
     by striking ``December 31, 2010'' and inserting ``the date of 
     the enactment of the Affordable Housing Investment Act of 
     2008''.

[[Page S1141]]

     SEC. 103. INCREASE IN CREDIT FOR BUILDINGS IN STATE 
                   DESIGNATED AREAS.

       (a) In General.--Clause (i) of section 42(d)(5)(C) 
     (relating to increase in credit for buildings in high cost 
     areas) is amended by striking ``or difficult development 
     area'' and inserting ``, difficult development area, or State 
     designated project''.
       (b) State Designated Project.--Subparagraph (C) of section 
     42(d)(5) is amended by adding at the end the following new 
     clause:
       ``(v) State designated project.--For purposes of this 
     subparagraph, the term `State designated project' means any 
     project published as part of a State's qualified allocation 
     plan (as defined in subsection (m)(1)(B)) and designated by 
     the housing credit agency as meeting such criteria for 
     designation under this clause as the State in which such 
     project is located may specify. The rules of clauses (ii)(II) 
     and (iii)(II) shall not apply for purposes designations made 
     under this clause.''.
       (c) Conforming Amendment.--The heading of subparagraph (C) 
     of section 42(d)(5) is amended by striking ``buildings in 
     high cost areas'' and inserting ``certain buildings''.

     SEC. 104. MODIFICATION OF SCATTERED SITE RULE.

       Paragraph (7) of section 42(g) (relating to scattered site 
     projects) is amended to read as follows:
       ``(7) Scattered site projects.--Buildings which would (but 
     for their lack of proximity) be treated as a project for 
     purposes of this section shall be so treated if the rent-
     restricted (within the meaning of paragraph (2)) residential 
     units of such project are distributed among such buildings in 
     proportion to the number of residential units in each 
     building.''.

     SEC. 105. TREATMENT OF RURAL PROJECTS.

       Section 42(i) (relating to definitions and special rules) 
     is amended by adding at the end the following new paragraph:
       ``(8) Treatment of rural projects.--For purposes of this 
     section, in the case of any project for residential rental 
     property located in a rural area (as defined in section 520 
     of the Housing Act of 1949), any income limitation measured 
     by reference to area median gross income shall be measured by 
     reference to the greater of area median gross income or 
     national non-metropolitan median income.''.

     SEC. 106. EXPANSION OF ALLOWABLE BASIS FOR COMMUNITY SERVICE 
                   FACILITIES.

       Section 42(d)(4)(C) (relating to inclusion of basis of 
     property used to provide services for certain nontenants) is 
     amended--
       (1) by striking ``10 percent of the eligible basis'' in 
     clause (ii)and inserting ``20 percent of the first $5,000,000 
     in eligible basis plus 10 percent of the remaining eligible 
     basis'', and
       (2) by adding at the end the following new flush sentences:

     ``For each calendar year beginning after 2008, the dollar 
     amount in clause (ii) shall be increased by an amount equal 
     to such dollar amount multiplied by the cost-of-living 
     adjustment determined under section 1(f)(3), determined by 
     substituting `calendar year 2007' for `calendar year 1992' in 
     subparagraph (B) thereof. If any amount adjusted under the 
     preceding sentence is not a multiple of $100,000, such amount 
     shall be rounded to the next lowest multiple of $100,000.''.

   TITLE II--IMPROVE COORDINATION WITH OTHER FEDERAL HOUSING PROGRAMS

     SEC. 201. AFFORDABLE HOUSING CREDITS ALLOWED FOR SECTION 8 
                   MODERATE REHABILITATION DEVELOPMENTS.

       Paragraph (2) of section 42(c) (relating to qualified low-
     income building) is amended by striking the last sentence.

     SEC. 202. MODIFICATION TO LOW-INCOME HOUSING CREDIT RULES FOR 
                   REDUCTION OF ELIGIBLE BASIS BY GRANTS RECEIVED.

       (a) In General.--The Secretary of the Treasury shall modify 
     Treasury Regulations section 1.42-16(b) to provide that none 
     of the following shall be considered a grant made with 
     respect to a building or its operation for purposes of 
     section 42(d)(5)(A) of the Internal Revenue Code of 1986:
       (1) Rental assistance under section 521 of the Housing Act 
     of 1949 (42 U.S.C. 1490a).
       (2) Assistance under section 538(f)(5) of the Housing Act 
     of 1949 (42 U.S.C. 1490p-2(f)(5)).
       (3) Interest reduction payments under section 236 of the 
     National Housing Act (12 U.S.C. 1715z-1).
       (4) Rental assistance under section 202 of the Housing Act 
     of 1959 (12 U.S.C. 1701q).
       (5) Rental assistance under section 811 of the Cranston-
     Gonzalez National Affordable Housing Act (42 U.S.C. 8013).
       (6) Modernization, operating, and rental assistance 
     pursuant to section 202 of the Native American Housing 
     Assistance and Self-Determination Act of 1996 (25 U.S.C. 
     4132).
       (7) Assistance under title IV of the Stewart B. McKinney 
     Homeless Assistance Act (42 U.S.C. 11361 et seq.).
       (8) Tenant-based rental assistance under section 212 of the 
     Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
     12742).
       (9) Assistance under the AIDS Housing Opportunity Act (42 
     U.S.C. 12901 et seq.).
       (10) Per diem payments under section 2012 of title 38, 
     United States Code.
       (11) Rent supplements under section 101 of the Housing and 
     Urban Development Act of 1965 (12 U.S.C. 1701s).
       (12) Assistance under section 542 of the Housing Act of 
     1949 (42 U.S.C. 1490r).
       (13) Any other ongoing payment used to enable the property 
     to be rented to low-income tenants.
       (b) Effective Date.--The modifications required by this 
     section shall take effect on the date of the enactment of 
     this Act.
       (c) No Inference.--Nothing contained in subsection (a) may 
     be construed to create any inference with respect to the 
     consideration of any program specified under subsection (a) 
     as a grant made with respect to a building or its operation 
     for purposes of section 42(d)(5)(A) of the Internal Revenue 
     Code of 1986 as in effect on the day before such date of 
     enactment.

   TITLE III--FACILITATE PRIVATE INVESTMENT CAPITAL TO INCREASE THE 
              EFFICIENCY OF AFFORDABLE HOUSING INVESTMENT

     SEC. 301. REPEAL OF RECAPTURE BOND RULE.

       (a) In General.--Paragraph (6) of section 42(j) (relating 
     to recapture of credit) is amended to read as follows:
       ``(6) No recapture on disposition of building (or interest 
     therein) reasonably expected to continue as a qualified low-
     income building.--
       ``(A) In general.--In the case of a disposition of a 
     building or an interest therein, the taxpayer shall be 
     discharged from liability for any additional tax under this 
     subsection by reason of such disposition if it is reasonably 
     expected that such building will continue to be operated as a 
     qualified low-income building for the remaining compliance 
     period with respect to such building.
       ``(B) Statute of limitations.--
       ``(i) Extension of period.--The period for assessing a 
     deficiency attributable to the application of subparagraph 
     (A) with respect to a building (or interest therein) during 
     the compliance period with respect to such building shall not 
     expire before the expiration of 3 years after the end of such 
     compliance period.
       ``(ii) Assessment.--Such deficiency may be assessed before 
     the expiration of the 3-year period referred to in clause (i) 
     notwithstanding the provisions of any other law or rule of 
     law which would otherwise prevent such assessment.''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 (relating to information concerning transactions 
     with other persons) is amended by inserting after section 
     6050V the following new section:

     ``SEC. 6050W. RETURNS RELATING TO PAYMENT OF LOW-INCOME 
                   HOUSING CREDIT REPAYMENT AMOUNT.

       ``(a) Requirement of Reporting.--Every person who, at any 
     time during the taxable year, is an owner of a building (or 
     an interest therein)--
       ``(1) which is in the compliance period at any time during 
     such year, and
       ``(2) with respect to which recapture is required by 
     section 42(j),

     shall, at such time as the Secretary may prescribe, make the 
     return described in subsection (b).
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of each person who, with 
     respect to such building or interest, was formerly an 
     investor in such owner at any time during the compliance 
     period,
       ``(B) the amount (if any) of any credit recapture amount 
     required under section 42(j), and
       ``(C) such other information as the Secretary may 
     prescribe.
       ``(c) Statements To Be Furnished to Persons With Respect to 
     Whom Information Is Required.--Every person required to make 
     a return under subsection (a) shall furnish to each person 
     whose name is required to be set forth in such return a 
     written statement showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person, and
       ``(2) the information required to be shown on the return 
     with respect to such person.

     The written statement required under the preceding sentence 
     shall be furnished on or before March 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.
       ``(d) Compliance Period.--For purposes of this section, the 
     term `compliance period' has the meaning given such term by 
     section 42(i).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) (relating to 
     definitions) is amended by inserting after clause (xxi) the 
     following new clause:
       ``(xxii) section 6050W (relating to returns relating to 
     payment of low-income housing credit repayment amount),''.
       (B) Paragraph (2) of section 6724(d) is amended by striking 
     ``or'' at the end of subparagraph (BB), by striking the 
     period at the end of subparagraph (CC) and inserting ``, 
     or'', and by adding after subparagraph (CC) the following new 
     subparagraph:
       ``(DD) section 6050W (relating to returns relating to 
     payment of low-income housing credit repayment amount).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 is amended by 
     inserting after the item relating to section 6050V the 
     following new item:

[[Page S1142]]

``Sec. 6050W. Returns relating to payment of low-income housing credit 
              repayment amount.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to any liability for the credit recapture 
     amount under section 42(j) of the Internal Revenue Code of 
     1986 that arises after the date of the enactment of this Act.
       (2) Special rule for low-income housing buildings sold 
     before date of enactment of this act.--In the case of a 
     building disposed of before the date of the enactment of this 
     Act with respect to which the taxpayer posted a bond (or 
     alternative form of security) under section 42(j) of the 
     Internal Revenue Code of 1986 (as in effect before such date 
     of enactment), the taxpayer may elect (by notifying the 
     Secretary of the Treasury in writing)--
       (A) to cease to be subject to the bond requirements under 
     section 42(j)(6) of such Code, as in effect before such date 
     of enactment, and
       (B) to be subject to the requirements of section 42(j) of 
     such Code, as amended by this section.

     SEC. 302. AFFORDABLE HOUSING CREDIT ALLOWED AGAINST 
                   ALTERNATIVE MINIMUM TAX.

       (a) In General.--Subparagraph (B) of section 38(c)(4) 
     (relating to special rules for specified credits) is amended 
     by redesignating clauses (ii), (iii), and (iv) as clauses 
     (iii), (iv), and (v), respectively, and by inserting after 
     clause (i) the following new clause:
       ``(ii) the credit determined under section 42(a),''.
       (b) Effective Date.--The amendments made by this subsection 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 303. INTEREST ON QUALIFIED MORTGAGE BONDS, QUALIFIED 
                   VETERANS' MORTGAGE BONDS, AND QUALIFIED 
                   RESIDENTIAL RENTAL PROJECT EXEMPT FACILITY 
                   BONDS EXEMPT FROM ALTERNATIVE MINIMUM TAX.

       (a) In General.--Clause (ii) of section 57(a)(5)(C) 
     (relating to exception for qualified 501(c)(3) bonds) is 
     amended to read as follows:
       ``(ii) Exception for certain bonds.--For purposes of clause 
     (i), the term `private activity bond' shall not include--

       ``(I) any qualified 501(c)(3) bond (as defined in section 
     145);
       ``(II) any qualified mortgage bond (as defined in section 
     143(a));
       ``(III) any qualified veterans' mortgage bond (as defined 
     in section 143(b)); and
       ``(IV) any exempt facility bond (as defined in section 
     142(a)) issued as part of an issue 95 percent or more of the 
     net proceeds of which are to be used to provide qualified 
     residential rental projects (as defined in section 
     142(d)).''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to bonds originally issued after the date of the 
     enactment of this Act.

          TITLE IV--HELP PRESERVE EXISTING AFFORDABLE HOUSING

     SEC. 401. REPEAL OF 10-YEAR RULE FOR ACQUISITION HOUSING 
                   CREDITS.

       (a) In General.--Subparagraph (B) of section 42(d)(2) 
     (relating to existing buildings) is amended by striking 
     clause (ii) and by redesignating clauses (iii) and (iv) as 
     clauses (ii) and (iii), respectively.
       (b) Conforming Amendment.--Section 42(d) is amended by 
     striking paragraph (6) and by redesignating paragraph (7) as 
     paragraph (6).

     SEC. 402. MODIFICATION OF RELATED PERSON RULE FOR AFFORDABLE 
                   HOUSING CREDIT.

       (a) In General.--Clause (iii) of section 42(d)(2)(D) 
     (related to related person, etc.) is amended to read as 
     follows:
       ``(iii) Related person.--For purposes of subparagraph 
     (B)(iii), a person (hereinafter in this subclause referred to 
     as the `related person') is related to any person if the 
     related person bears a relationship to such person specified 
     in section 267(b) or 707(b)(1), or the related person and 
     such person are engaged in trades or businesses under common 
     control (within the meaning of subsections (a) and (b) of 
     section 52.''.
       (b) Effective Date.--The amendment made by this subsection 
     shall take effect on the date of the enactment of this Act.

     TITLE V--SIMPLIFY ADMINISTRATION OF THE HOUSING CREDIT PROGRAM

     SEC. 501. ELIMINATION OF CERTAIN ANNUAL RECERTIFICATIONS OF 
                   TENANT INCOMES.

       Paragraph (8) of section 42(g) (relating to qualified low-
     income housing project) is amended--
       (1) by striking ``may waive'' in the mater preceding 
     subparagraph (A);
       (2) by inserting ``may waive'' before ``any recapture'' in 
     subparagraph (A); and
       (3) by inserting ``shall waive'' before ``any annual 
     recertification'' in subparagraph (B).

  TITLE VI--CONFORM MULTIFAMILY HOUSING BOND RULES TO HOUSING CREDIT 
                                 RULES

     SEC. 601. COORDINATION OF CERTAIN RULES APPLICABLE TO 
                   AFFORDABLE HOUSING CREDIT AND QUALIFIED 
                   RESIDENTIAL RENTAL PROJECT EXEMPT FACILITY 
                   BONDS.

       (a) Determination of Next Available Unit.--Paragraph (3) of 
     section 142(d) (relating to current income determinations) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Exception for projects with respect to which 
     affordable housing credit is allowed.--In the case of a 
     project with respect to which credit is allowed under section 
     42, the second sentence of subparagraph (B) shall be applied 
     by substituting `building (within the meaning of section 42)' 
     for `project'.''.
       (b) Students.--Paragraph (2) of section 142(d) (relating to 
     definitions and special rules) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Students.--Students (as defined in section 152(f)(2)) 
     shall not be treated as satisfying the requirements of 
     subparagraph (A) or (B) of paragraph (1) except under rules 
     similar to the rules of 42(i)(3)(D).''.
       (c) Single-Room Occupancy Units.--Paragraph (2) of section 
     142(d) (relating to definitions and special rules), as 
     amended by this Act, is further amended by adding at the end 
     the following new subparagraph:
       ``(D) Single-room occupancy units.--A unit shall not fail 
     to be treated as a residential unit merely because such unit 
     is a single-room occupancy unit (within the meaning of 
     section 42).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to determinations of the status of qualified 
     residential rental projects for periods beginning after the 
     date of the enactment of this Act, with respect to bonds 
     issued before, on, or after such date.

          TITLE VII--IMPROVE THE MORTGAGE REVENUE BOND PROGRAM

     SEC. 701. SPECIAL RULE FOR USE OF MORTGAGE BONDS FOR DISASTER 
                   VICTIMS, SINGLE PARENTS, AND HOMEMAKERS.

       (a) In General.--Paragraph (2) of section 143(d) (relating 
     to exceptions to 3-year requirement) is amended by striking 
     ``and'' at the end of subparagraph (C) and by inserting after 
     subparagraph (D) the following new subparagraphs:
       ``(E) financing of residences for individuals with an 
     ownership interest in a principal residence which--
       ``(i) is located in an area with respect to which a major 
     disaster has been declared by the President under section 401 
     of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act, and
       ``(ii) has been rendered uninhabitable by reason of the 
     major disaster,
       ``(F) financing of residences for individuals who--
       ``(i) are not married, and
       ``(ii) have one or more qualifying children (within the 
     meaning of section 152), and
       ``(G) financing of residences for displaced homemakers,''.
       (b) Displaced Homemakers.--Section 143(d) is amended by 
     adding at the end the following new paragraph:
       ``(4) Displaced homemaker.--For purposes of paragraph 
     (2)(G), the term `displaced homemaker' means any individual 
     who is--
       ``(A) over 18 years of age,
       ``(B) is not employed or underemployed and is experiencing 
     difficulty in obtaining or upgrading employment, and
       ``(C) has not worked full-time full-year in the labor force 
     for a number of years before the date on which financing for 
     a residence is supplied, but has, during such years, worked 
     primarily without remuneration to care for the home and 
     family.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 702. REPEAL OF REQUIRED USE OF CERTAIN PRINCIPAL 
                   REPAYMENTS ON QUALIFIED MORTGAGE ISSUES TO 
                   REDEEM BONDS.

       (a) In General.--Subparagraph (A) of section 143(a)(2) 
     (relating to qualified mortgage issue defined) is amended by 
     inserting ``and'' at the end of clause (ii), by striking ``, 
     and'' at the end of clause (iii) and inserting a period, and 
     by striking clause (iv) and the last sentence.
       (b) Conforming Amendment.--Clause (ii) of section 
     143(a)(2)(D) is amended by striking ``(and clause (iv) of 
     subparagraph (A))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to repayments received after the date of the 
     enactment of this Act.

                       TITLE VIII--EFFECTIVE DATE

     SEC. 801. EFFECTIVE DATE.

       Except as otherwise provided in this Act, the amendments 
     made by this Act shall apply to--
       (1) housing credit dollar amounts allocated after the date 
     of the enactment of this Act, and
       (2) buildings placed in service after such date to the 
     extent paragraph (1) of section 42(h) of the Internal Revenue 
     Code of 1986 does not apply to such building by reason of 
     paragraph (4) thereof, but only with respect to bonds issued 
     after such date.

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