[Congressional Record Volume 156, Number 40 (Thursday, March 18, 2010)]
[Senate]
[Pages S1752-S1753]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Menendez, Mr. Kerry, Ms. 
        Cantwell, Ms. Stabenow, and Mr. Schumer):
  S. 3141. A bill to amend the Internal Revenue Code of 1986 to provide 
special rules for treatment of low-income housing credits, and for 
other purposes; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, among the many casualties of our 
economic downturn is the collapse of the primary form of private 
financing to construct affordable housing. I rise today to introduce 
the Low-Income Housing Tax Credit Recovery Act, which would restore 
investment in the Low-Income Housing Tax Credit program. In doing so, 
the bill will create tens of thousands of new affordable housing units 
and, in turn, thousands of construction jobs. I am grateful to my 
Finance Committee colleagues, Senators Kerry, Cantwell, Menendez, 
Stabenow, and Schumer for joining me in introducing this bill.
  Many of us are familiar with the Low-Income Housing Tax Credit 
program's importance; indeed, I consider it the most successful 
affordable housing production program in our nation's history. Since 
its enactment in 1986, the program has spurred the creation of more 
than 1.7 million units of affordable housing nationwide, including 
nearly 20,000 units in my home State of New Mexico.
  But today, the Housing Credit program is facing tremendous challenges 
in attracting private investment. Having incurred significant losses, 
many traditional investors cannot currently use these tax credits, and 
thus have temporarily exited the market. Moreover, Fannie Mae and 
Freddie Mac--which until recently provided a significant share of 
private investment in Housing Credit projects in New Mexico and 
nationwide--have pulled out entirely. Our bill will help attract new 
private investment to Housing Credit projects in New Mexico and across 
the country.
  First, the bill will permit existing investors to carryback their 
unusable existing housing credits for up to five years. A major 
impediment to new investment today is that traditional Housing Credit 
investors have incurred business losses that prevent them from 
utilizing tax credits on previous investments. Consequently, these 
traditional investors have become disinclined to make new investments--
as doing so would generate further credits they could not use for some 
time. But through a 5-year carryback, many of these traditional 
investors will be able to make use of accumulated credits. Only 
investors who are committed to creating additional affordable housing 
deserve this tax treatment. Accordingly, the bill makes the 5-year 
carryback election available only to the extent that carryback proceeds 
are entirely invested in new affordable housing credit investments.
  Additionally, the bill provides that Housing Credits generated from 
future investments can be carried back 5 years. With its 10-year credit 
stream and 15-year tax compliance period, the Housing Credit program 
faces hurdles lining up investors, as compared to other tax credit 
programs with shorter investment horizons. Without shortening the 
compliance period, a 5-year carryback will make the Housing Credit more 
competitive with other tax credits, by providing greater flexibility. 
This will result in more stable investor demand and thus more resources 
for affordable housing.

  Our bill is based on consensus proposals developed by a broad 
coalition of affordable housing organizations--including housing 
advocates, state housing finance agencies, developers, and investors--
to restore private investment in affordable housing. That these 
proposals will create tens of thousands of affordable housing units and 
thousands of construction jobs was endorsed in studies by Harvard 
University's Joint Center on Housing and Ernst & Young's Tax Credit 
Advisory Services Center.
  I am grateful for the coalition's efforts, as well as input that New 
Mexico stakeholders--including the New Mexico Mortgage Finance 
Authority, Enterprise Community Partners, and the New Mexico Coalition 
to End Homelessness--provided as I developed this bill.
  We must act swiftly to ensure continued progress in constructing 
affordable housing, to meet our nation's affordable housing needs and 
create jobs. I look forward to working with my colleagues to see these 
provisions enacted into law.
  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. 3141

       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 ``Low Income Housing Tax 
     Credit Recovery Act of 2010''.

     SEC. 2. FIVE-YEAR CARRYBACK OF LOW-INCOME HOUSING CREDIT.

       (a) In General.--Subsection (a) of section 39 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(4) 5-year carryback of low-income housing credit.--
       ``(A) In general.--In the case of an applicable low-income 
     housing credit (within the meaning of section 38(c)(6)(C))--
       ``(i) this section shall be applied separately from the 
     business credit (other than the low-income housing credit), 
     and
       ``(ii) paragraph (1) shall be applied by substituting `each 
     of the 5 taxable years' for `the taxable year' in 
     subparagraph (A) thereof.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2007, and to carrybacks of credits from such taxable years.

     SEC. 3. CARRYBACK OF NEW INVESTMENTS.

       (a) In General.--Section 42(f) of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     paragraph:
       ``(6) Special rule for certain investments in 2010 and 
     2011.--
       ``(A) In general.--In the case of a taxpayer who enters 
     into an agreement described in section 38(c)(6)(D)(i)(I) 
     (without regard to the applicable date), which satisfies the 
     requirement of section 38(c)(6)(D)(i)(II), after December 31, 
     2009, and before January 1, 2012, then solely for purposes of 
     determining the taxable year in which the low-income housing 
     credit under this section may be taken into account for 
     purposes of section 38, and the amount of the credit so taken 
     into account--
       ``(i) the preceding paragraphs of this subsection shall not 
     apply,
       ``(ii) the credit period with respect to the housing credit 
     dollar amount to be allocated under such agreement shall be 
     the 1 taxable year in which the taxpayer enters into such 
     agreement,
       ``(iii) subsections (b) and (c)(1) shall not apply, and
       ``(iv) the amount of the credit under this section which is 
     taken into account in the taxable year described in clause 
     (ii) shall be the housing credit dollar amount to be 
     allocated under such agreement.
       ``(B) Requirements of section unaffected.--Except as 
     provided in subparagraph (A), the provisions of this section 
     shall apply to any building to which an agreement described 
     in subparagraph (A) applies as if such subparagraph had not 
     been enacted.
       ``(C) Recapture of excess credit.--If, at the end of the 
     credit period with respect to any building (without regard to 
     subparagraph (A)), the amount of the credit taken into 
     account under subparagraph (A)(iv) with respect to such 
     building exceeds the total amount of the credit which would 
     have been allowed under this section with respect to such 
     building during such credit period but for the application of 
     subparagraph (A), then the amount of such excess shall be 
     recaptured as if it were included in the credit recapture 
     amount under subsection (j).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 4. ALLOWING LOW-INCOME HOUSING CREDITS TO OFFSET 100 
                   PERCENT OF FEDERAL INCOME TAX LIABILITY.

       (a) In General.--Subsection (c) of section 38 is amended by 
     adding at the end the following new paragraph:
       ``(6) Allowing low-income housing credit to offset 100 
     percent of federal income tax liability.--
       ``(A) In general.--In the case of applicable low-income 
     housing credits--
       ``(i) this section shall be applied separately with respect 
     to such credits,
       ``(ii) in applying paragraph (1) to such credits--

       ``(I) the tentative minimum tax shall be treated as being 
     zero, and

[[Page S1753]]

       ``(II) the limitation under paragraph (1) (as modified by 
     subclause (I)) shall be the net income tax (as defined in 
     paragraph (1)) reduced by the credit allowed under subsection 
     (a) for the taxable year (other than the applicable low-
     income housing credits), and

       ``(iii) the excess credit for such taxable year shall, 
     solely for purposes of determining the amount of such excess 
     credit which may be carried back to a preceding taxable year, 
     be increased by the amount of business credit carryforwards 
     which are carried to such taxable year, to which this 
     subparagraph applies, and which are not allowed for such 
     taxable year by reason of the limitation under paragraph (1) 
     (as modified by clause (ii)).
       ``(B) Increase in limitation for taxable years to which 
     excess applicable low-income housing credits are carried 
     back.--
       ``(i) In general.--Solely for purposes of determining the 
     portion of any excess credit described in subparagraph 
     (A)(iii) for which credit will be allowed under subsection 
     (a)(3) for any preceding taxable year, except as provided in 
     clause (ii), the limitation under paragraph (1) for such 
     preceding taxable year shall be determined under rules 
     similar to the rules described in subparagraph (A).
       ``(ii) Ordering rule.--If the excess credit described in 
     subparagraph (A)(iii) includes business credit carryforwards 
     from preceding taxable years, such excess credit shall be 
     treated as allowed for any preceding taxable year on a first-
     in first-out basis.
       ``(C) Applicable low-income housing credits.--For purposes 
     of this subpart, the term `applicable low-income housing 
     credits' means the credit determined under section 42--
       ``(i) to the extent attributable to buildings placed in 
     service after the date of the enactment of this subparagraph, 
     and
       ``(ii) in the case of any other buildings, for taxable 
     years beginning in 2008, 2009, and 2010 (and to business 
     credit carryforwards with respect to such buildings carried 
     to such taxable years) to the extent provided in subparagraph 
     (D).
       ``(D) Previously placed in service buildings.--
       ``(i) In general.--Subparagraph (C)(ii) shall apply to such 
     credits for such a taxable year only--

       ``(I) if the taxpayer has entered into a binding commitment 
     to invest equity not later than the applicable date, with 
     respect to an investment in a future project (which is 
     binding on the taxpayer and all successors in interest) which 
     specifies the dollar amount of such investment, and
       ``(II) to the extent such credits do not exceed the dollar 
     amount of such proposed investment.

       ``(ii) Applicable date.--For purposes of this subparagraph, 
     the applicable date is--

       ``(I) in the case of taxable years beginning in 2008 and 
     2009, September 15, 2010, or
       ``(II) in the case of a taxable year beginning in 2010, the 
     due date (including extensions of time) for filing the 
     taxpayer's return for such taxable year.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2007, and to carrybacks of credits from such taxable years.
                                 ______