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DASH Act
Introduced Jun 11, 2026 · Last action Jun 11, 2026 — Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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Summary
This legislation is called the DASH Act. It is being reviewed by a committee.
Full bill text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9281 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 9281
To provide rental vouchers for the homeless, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 11, 2026
Ms. Hoyle of Oregon (for herself and Mr. Carbajal) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Financial Services, for a period to
be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To provide rental vouchers for the homeless, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Decent,
Affordable, Safe Housing for All Act'' or the ``DASH Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--GENERAL HOUSING ASSISTANCE
Sec. 101. Rental vouchers for the homeless.
Sec. 102. Land acquisition and construction.
Sec. 103. Modular construction pilot program.
Sec. 104. Supporting pro-housing development.
Sec. 105. Permanent authorization of appropriations for McKinney-Vento
Homeless Assistance Act grants.
TITLE II--REVENUE PROVISIONS
Sec. 201. Increases in State allocations.
Sec. 202. Buildings designated to serve extremely low-income
households.
Sec. 203. Inclusion of Indian areas as difficult development areas for
purposes of certain buildings.
Sec. 204. Inclusion of rural areas as difficult development areas.
Sec. 205. Increase in credit for bond-financed projects designated by
housing credit agency.
Sec. 206. Repeal of qualified contract option.
Sec. 207. Modification and clarification of rights relating to building
purchase.
Sec. 208. Prohibition of local approval and contribution requirements.
Sec. 209. Increase in credit for low-income housing supportive
services.
Sec. 210. Study of tax incentives for the conversion of commercial
property to affordable housing.
Sec. 211. Renters credit.
Sec. 212. Middle-income housing tax credit.
Sec. 213. Neighborhood homes credit.
Sec. 214. First-time homebuyer refundable credit.
Sec. 215. Losses from the sale of principal residences.
Sec. 216. Repeal of limitation on personal casualty loss deduction.
Sec. 217. Permanent exclusion from gross income of discharge of
qualified principal residence indebtedness.
TITLE I--GENERAL HOUSING ASSISTANCE
SEC. 101. RENTAL VOUCHERS FOR THE HOMELESS.
(a) In General.--Section 8(o) of the United States Housing Act of
1937 (42 U.S.C. 1437f(o)) is amended by adding at the end the
following:
``(22) Rental vouchers for the homeless.--
``(A) Definitions.--In this paragraph:
``(i) At risk of homelessness.--The term
`at risk of homelessness' has the meaning given
the term in section 401(1) of the McKinney-
Vento Homeless Assistance Act (42 U.S.C.
11360), except that `50 percent' shall be
substituted for `30 percent' in subparagraph
(A) of that section.
``(ii) Capacity-building period.--The term
`capacity-building period' means the 2-year
period beginning on the date on which the
formula is established under subparagraph
(E)(ii).
``(iii) Continuum of care.--The term
`continuum of care' has the meaning given the
term in section 578.3 of title 24, Code of
Federal Regulations, or any successor
regulation.
``(iv) Eligible public housing agency.--The
term `eligible public housing agency' means a
public housing agency that--
``(I) administers assistance under
this subsection through a contract for
annual contributions entered into with
the Secretary;
``(II) has a partnership with a
public child welfare agency and a
continuum of care that--
``(aa) has a system for
identifying and referring
eligible recipients for
assistance under this paragraph
from the public housing agency,
including by providing a
written certification that the
eligible recipient is eligible
to receive the assistance; and
``(bb) will, to the
greatest extent practicable,
provide or facilitate the
provision of supportive
services to those eligible
recipients; and
``(III) submits to the Secretary a
statement describing--
``(aa) how the public
housing agency will connect
eligible recipients with local
community resources, to the
extent available; and
``(bb) the plan for use of
capacity-building funding under
subparagraph (E), including--
``(AA) a timeline
for the use of that
funding within the
capacity-building
period;
``(BB) hiring and
personnel needs;
``(CC) physical
infrastructure needs;
and
``(DD)
technological
infrastructure needs,
including upgrades to
the HMIS, and any other
capacity-related
investments that are
necessary to administer
assistance under this
paragraph.
``(v) Eligible recipient.--The term
`eligible recipient' means any individual or
family experiencing homelessness or at risk of
homelessness with an income that is less than
50 percent of the area median income.
``(vi) Experiencing homelessness;
homeless.--The terms `experiencing
homelessness' and `homeless' means an
individual or family who is--
``(I) living in a place not meant
for human habitation or in an emergency
shelter;
``(II) living in transitional
housing for homeless persons and was
homeless before entering transitional
housing or an emergency shelter;
``(III) fleeing domestic violence;
or
``(IV) at risk of homelessness.
``(vii) HMIS.--The term `HMIS' means the
community-wide homeless management information
system described in section 402(f)(3)(D) of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11360a(f)(3)(D)).
``(viii) Public housing agency.--The term
`public housing agency' includes a tribally
designated housing entity.
``(ix) Referral.--The term `referral' means
an affirmative connection between the voucher
recipient and the organization providing
services to the voucher recipient.
``(x) Service coordinator.--The term
`service coordinator' means an individual
employed directly by a public housing agency
who provides general case management and
referral services to each voucher recipient
served by the public housing agency, which
shall include--
``(I) an individual intake
screening of each voucher recipient to
evaluate the voucher recipient's need
for supportive services; and
``(II) referral to outside
services, including cooperation and
collaboration with a continuum of care.
``(xi) Source of income.--The term `source
of income' means income from any lawful source,
including--
``(I) income from any legal
employment; and
``(II) any assistance, benefit, or
subsidy through any Federal, State, or
local program, whether the program is
administered by a governmental or
nongovernmental entity.
``(xii) Tribally designated housing
entity.--The term `tribally designated housing
entity' has the meaning given the term in
section 4 of the Native American Housing
Assistance and Self-Determination Act of 1996
(25 U.S.C. 4103).
``(xiii) Voucher recipient.--The term
`voucher recipient' means an individual or
family receiving a voucher under this
paragraph.
``(xiv) Youth.--The term `youth' means an
individual under the age of 25.
``(B) Vouchers.--
``(i) Provision of vouchers.--
``(I) In general.--The Secretary
shall provide vouchers for rental
assistance on behalf of each eligible
recipient in accordance with this
paragraph.
``(II) Direct appropriation.--
Subject to subclause (III), there is
appropriated, out of any money in the
Treasury not otherwise appropriated,
for providing rental voucher assistance
under this paragraph for fiscal year
2026 and each fiscal year thereafter--
``(aa) the amount necessary
to fund the provision of a
voucher for rental assistance
under this paragraph on behalf
of each eligible recipient;
``(bb) the amount necessary
to provide administrative fees
under clause (ii) in connection
to each voucher for rental
assistance provided under this
paragraph; and
``(cc) the amount necessary
to fund annual renewals of the
vouchers provided under this
paragraph.
``(III) Number of vouchers.--The
Secretary shall provide--
``(aa) 250,000 vouchers
under this paragraph in fiscal
year 2026; and
``(bb) 400,000 vouchers
under this paragraph in each
fiscal year thereafter until
the Secretary determines that a
smaller number of vouchers is
sufficient to provide all
eligible recipients with
vouchers.
``(ii) Administrative fee for ancillary
costs.--The Secretary shall provide a public
housing agency that requests a voucher under
this paragraph an administrative fee sufficient
to provide assistance to the voucher recipient
for security deposits, application fees, moving
costs, first or last month's rent, or other
significant barriers to establishing use of the
voucher and a lease, in an amount that is not
more than 3 months' rent for the voucher
recipient.
``(iii) Payment standard.--The payment
standard for a voucher provided under this
paragraph may not exceed 125 percent of the
fair market rental in the jurisdiction in which
the voucher is administered.
``(iv) Supplemental voucher payment.--
``(I) In general.--An eligible
public housing agency may supplement
the amount of a voucher provided under
this paragraph in any case in which--
``(aa) the amount of the
voucher is insufficient to
cover the cost of a dwelling
unit within the jurisdiction of
the eligible public housing
agency and that insufficiency
may result in a voucher
recipient losing housing and
becoming homeless or doubled
up; or
``(bb) the eligible public
housing agency submits to the
Secretary a waiver request for
recalculation of the small area
fair market rent applicable to
the dwelling unit, which the
Secretary shall approve or deny
within 45 days of submission of
the request.
``(II) Payment upon denial.--An
eligible public housing agency may
supplement the amount of a voucher
under subclause (I) even if the
Secretary denies the request submitted
under subclause (I)(aa), provided that
the supplementation of the voucher
amount is necessary to maintain housing
for the voucher recipient.
``(v) Conditions on assistance.--
Notwithstanding any other provision of law, the
Secretary--
``(I) may not condition receipt of
a voucher under this paragraph on--
``(aa) participation in any
service or program; or
``(bb) the sobriety or lack
thereof of an eligible
recipient;
``(II) except as provided in
subclause (III), may not prohibit
receipt of a voucher under this
paragraph by an otherwise eligible
recipient due to any criminal
conviction or history of interaction
with the criminal justice system; and
``(III) shall prohibit receipt of a
voucher under this paragraph by
individuals subject to a lifetime
registration requirement under any
State sex offender registration
program.
``(vi) Verification of statement made by
eligible public housing agencies.--
``(I) In general.--Not later than
30 days after the date on which an
eligible public housing agency submits
the statement required under
subparagraph (A)(iv)(III), the
Secretary shall verify the statement.
``(II) Unsatisfactory statement.--
If, upon verification of a statement
under subclause (I), the Secretary
determines that the statement is
unsatisfactory, the Secretary shall
inform the eligible public housing
agency of that determination and the
manner in which the eligible public
housing agency may re-submit the
statement.
``(vii) Identification of eligible
recipients.--
``(I) In general.--A public housing
agency shall partner with continuums of
care, public child welfare agencies,
street outreach providers, health care
providers, and other similar
organizations in the State in which the
public housing agency operates to
identify eligible recipients.
``(II) Considerations.--In
identifying eligible recipients under
subclause (I), the public housing
agency and its partners shall--
``(aa) take into
consideration demographic
information of the eligible
recipients, including the age,
sex, gender identity, sexual
orientation, race, ethnicity,
and disability status of each
such recipient; and
``(bb) coordinate outreach
in a respectful manner with
regard to the information
described in item (aa).
``(III) Continuums of care.--In
partnering with public housing agencies
to identify eligible recipients,
continuums of care shall carry out
assistance and services as planned
under a Congressionally authorized two-
year Notice of Funding Opportunity
(NOFO).
``(viii) Requirements for eligible public
housing agencies.--
``(I) In general.--Each eligible
public housing agency providing
assistance under this paragraph shall--
``(aa) on an annual basis
and in conjunction with income
reviews for purposes of
determining income eligibility
for assistance under this
paragraph, verify the
compliance of the eligible
public housing agency with the
eligibility requirements under
this paragraph; and
``(bb) to the greatest
extent possible--
``(AA) work with
continuums of care to
ensure continuity of
data collection under
this paragraph; and
``(BB) utilize the
HMIS to collect and
maintain the
information required to
be collected under this
paragraph.
``(II) Priority.--In providing
vouchers under this paragraph, an
eligible public housing agency--
``(aa) shall prioritize the
first vouchers made available
under this section for eligible
recipients who are--
``(AA)
unaccompanied homeless
youth;
``(BB) homeless
youth with minor
children; or
``(CC) families
with minor children
experiencing
homelessness;
``(bb) to the extent
possible considering when the
Secretary disburses funds under
this paragraph, shall provide
vouchers to the eligible
recipients described in item
(aa) not later than 1 year
after the end of the capacity-
building period; and
``(cc) may not issue
vouchers to eligible recipients
not described in item (aa)
until the eligible public
housing agency has issued
vouchers to all eligible
recipients described in that
item.
``(ix) Use of voucher upon exit.--An
eligible public housing agency that issued a
voucher to an eligible recipient that is no
longer in use by the eligible recipient may
provide the voucher to any other tenant
eligible for tenant-based assistance under this
subsection.
``(C) Data collection.--
``(i) In general.--The Secretary shall
submit to Congress an annual report on
assistance providing under this paragraph,
which shall include--
``(I) an assessment of the progress
of States toward housing--
``(aa) eligible recipients
in the State; and
``(bb) the total population
of people experiencing
homelessness in the State; and
``(II) the information provided
under clause (ii).
``(ii) Information from public housing
agencies.--Each eligible public housing agency
administering assistance under this paragraph
shall submit to the Secretary and to the State
in which the public housing agency is located
an annual report for each fiscal year that
includes--
``(I) the number of voucher
recipients, including aggregated
demographic information on the age,
sex, gender identity, sexual
orientation, race, ethnicity, and
disability status of each such
recipient in a manner that does not
reveal the personally identifiable
information of each such recipient;
``(II) the number of eligible
recipients who applied during the
fiscal year for assistance under this
paragraph, but were not provided
assistance;
``(III) a brief identification in
each instance described in subclause
(II) of the reason why the eligible
public housing agency was unable to
provide the assistance; and
``(IV) a description of how the
eligible public housing agency
communicated or collaborated with
public child welfare agencies and
continuums of care to collect the data
described in subclauses (I) and (II).
``(D) Supportive services.--
``(i) Administrative fee.--
``(I) In general.--The Secretary
shall establish a fee under subsection
(q) for the costs incurred by public
housing agencies in administering
vouchers under this paragraph.
``(II) Costs.--In establishing the
fee described in subclause (I), the
Secretary shall include the costs to
public housing agencies of employing
full-time or full-time-equivalent
service coordinators.
``(III) Authorization of
appropriations.--There is authorized to
be appropriated $300,000,000 for each
of fiscal years 2026 through 2031 for
the fee described in subclause (I).
``(ii) Hiring of service coordinators.--
``(I) In general.--An eligible
public housing agency shall hire the
appropriate number of service
coordinators to administer supportive
services under this paragraph in
partnership with the public child
welfare agency or continuum of care in
a jurisdiction.
``(II) Insufficient funds.--If an
eligible public housing agency is
unable to hire an appropriate number of
service coordinators under subclause
(I) using the fee described in clause
(i)(I)--
``(aa) the public housing
agency may request an increased
administrative fee from the
Secretary; and
``(bb) the Secretary shall
approve or deny a request
received under item (aa) within
45 days.
``(III) Report to congress.--
Beginning in the first full fiscal year
after the date of enactment of this
paragraph, the Secretary shall submit
an annual report to Congress on
requests for increased administrative
fees received from public housing
agencies under subclause (II).
``(IV) Appropriate number
defined.--For purposes of this clause,
the term `appropriate number', with
respect to service coordinators, means
enough service coordinators so that
each household provided a voucher by a
public housing agency under this
paragraph is able to access a service
coordinator for not less than 30
minutes each week.
``(iii) Provision of services.--Upon intake
of an eligible recipient, a public housing
agency or a public child welfare agency or
continuum of care with which the public housing
agency has partnered shall--
``(I) assign the voucher recipient
a case manager or service coordinator;
and
``(II) provide or secure the
provision of supportive services to
contribute to the housing stability of
the voucher recipient, including--
``(aa) any supportive
service, as defined in section
401 of the McKinney-Vento
Homeless Assistance Act (42
U.S.C. 11360);
``(bb) referrals to health
care providers, including
mental health care providers,
dental health care providers,
and vision health care
providers;
``(cc) referrals to
substance use disorder
treatment, including recovery,
treatment, 12-step programs,
relapse prevention, or
medication-assisted treatment;
``(dd) assistance relating
to enrollment in the Medicare
or Medicaid programs under
titles XVIII and XIX of the
Social Security Act (42 U.S.C.
1395 et seq., 1396 et seq.),
respectively, and referrals to
other services, including--
``(AA) the
supplemental nutrition
assistance program
under the Food and
Nutrition Act of 2008
(7 U.S.C. 2011 et seq.)
(commonly known as the
`SNAP Program'); and
``(BB) the program
of block grants for
States for temporary
assistance for needy
families established
under part A of title
IV of the Social
Security Act (42 U.S.C.
601 et seq.) (commonly
known as the `TANF
Program');
``(ee) advising on
eligibility for the family
self-sufficiency program
established, credit counseling,
and housing counseling
programs;
``(ff) referrals to
education services, including
general educational development
(commonly known as `GED')
preparation and testing,
enrollment in postsecondary
education programs, credit
recovery, and affordable
childcare programs; and
``(gg) facilitation of
transportation assistance to
any of the supportive services
described in this subparagraph.
``(iv) Eligibility of private nonprofit
organizations and faith-based organizations.--
``(I) Definitions.--In this clause,
the terms `eligible entity' and
`private nonprofit organization' have
the meanings given those terms in
section 401 of the McKinney-Vento
Homeless Assistance Act (42 U.S.C.
11360).
``(II) Eligibility.--
Notwithstanding any other provision of
law--
``(aa) the Secretary shall
provide that private nonprofit
organizations that are eligible
entities, including faith-based
private nonprofit organizations
that are eligible entities,
shall be eligible to--
``(AA) provide
services described in
clause (iii); and
``(BB) receive
amounts made available
to carry out clause
(iii); and
``(bb) in determining
eligibility for amounts made
available to carry out clause
(iii), the status of an entity
as faith-based or the
possibility that an entity may
be faith-based may not be a
basis for any discrimination
against such entity in any
manner or for any purpose.
``(v) Access.--Services provided under this
subparagraph shall be available to voucher
recipients with low-to-no barrier access.
``(vi) Evaluation.--An eligible public
housing agency, public child welfare agency, or
continuum of care described in clause (iii)
shall evaluate each voucher recipient for
individual case management needs under this
subparagraph.
``(E) Capacity building.--
``(i) Authorization of appropriations.--
There is authorized to be appropriated to the
Secretary $500,000,000 for each of fiscal years
2026 and 2027 to provide funding for capacity
building to eligible public housing agencies.
``(ii) Funding formula.--Not later than 45
days after the date of enactment of this
paragraph, the Secretary shall establish a
formula for allocating the funding authorized
under clause (i) that takes into account--
``(I) the ratio of individuals in
the State in which the eligible public
housing agency operates who are
homeless to the overall population of
the State;
``(II) the proportion of families
in each State with children
experiencing unsheltered homelessness,
as reported in the State's most recent
point-in-time count, to the total
number of unsheltered homeless families
in the State as reported in the same
point-in-time count; and
``(III) the rate of unsheltered
homelessness in each State compared to
each other State, as reported in each
State's most recent point-in-time
count.
``(iii) Disbursement.--Not later than 30
days after an eligible public housing agency
submits an acceptable statement under
subparagraph (A)(iv)(III), the Secretary shall
disburse amounts authorized under clause (i) of
this subparagraph in accordance with the
formula established under clause (ii) of this
subparagraph.
``(iv) Minimum and maximum allocation.--The
Secretary shall ensure that--
``(I) each eligible public housing
agency does not receive more than 10
percent of the amount authorized under
clause (i); and
``(II) each State in which an
eligible public housing agency receives
funds under clause (i) does not receive
more than 25 percent of the total
amount authorized under that clause.
``(v) Eligible activities.--A recipient of
funds authorized under clause (i) may only use
the funds for--
``(I) hiring and personnel needs,
such as case managers and housing
placement advisory, including increased
educational resources for staff to meet
the needs of voucher recipients;
``(II) physical infrastructure--
``(aa) including increased
office space or facilities for
the provision of supportive
services; and
``(bb) not including
residential housing;
``(III) technological
infrastructure needs, including
upgrades to the HMIS; and
``(IV) any other capacity-related
investments that are necessary for the
public housing agency to--
``(aa) develop, acquire, or
rehabilitate housing that is
affordable to extremely low-
income families, to be made
available to people
experiencing homelessness,
including increased resources
for eligible public housing
agencies to conduct unit
inspections; or
``(bb) support the
successful administration of
the vouchers under this
paragraph.
``(vi) Requirement for expenditure of
funds.--Each eligible public housing agency
that receives funds under clause (i) shall
expend not less than 60 percent of the funding
during the 2-year period following receipt of
the funding.
``(F) State accountability.--
``(i) In general.--Each eligible public
housing agency providing assistance under this
paragraph shall--
``(I) on a monthly basis, report
caseload and voucher administration
statistics to the State in which the
agency operates; and
``(II) twice annually, submit to
the State in which the agency operates
a report on the progress toward issuing
a voucher under this paragraph to all
eligible recipients, based on--
``(aa) the percentage
reduction in the number of
families with children and
youth that are experiencing
homelessness in the area in
which the agency care operates,
as determined by comparing the
most recent point-in-time count
with the point-in-time count
conducted 1 year prior; and
``(bb) the percentage
reduction in the number of
children experiencing
homelessness in the State, as
documented under the
requirements of the program
authorized under subtitle B of
title VII of the McKinney-Vento
Homeless Assistance Act (42
U.S.C. 11431 et seq.).
``(ii) Benchmarks.--Each year, each State
shall meet the benchmarks described in this
clause, based equally on the percentage
reduction in reported population of children
and families experiencing homelessness in the
following year's point-in-time count and the
percentage reduction in population of students
experiencing homelessness:
``(I) Annual report.--Each State
shall submit an annual report to the
Secretary that contains--
``(aa) data collected from
schools pursuant to the program
authorized under subtitle B of
title VII of the McKinney-Vento
Homeless Assistance Act (42
U.S.C. 11431 et seq.),
including the number of
students--
``(AA) experiencing
unsheltered
homelessness;
``(BB) living in
shelters;
``(CC) living in
motels, hotels, or
campgrounds;
``(DD) living in a
car or other motor
vehicle; or
``(EE) sharing the
housing of other
persons due to loss of
housing, economic
hardship, or similar
reasoning; and
``(bb) the information
received from each public
housing agency in the State
under clause (i)(II).
``(II) Issuance of vouchers for
smaller states.--Each State with a rate
of homelessness that is not higher than
10 people per 10,000 shall--
``(aa) not later than 2
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 50 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families;
``(bb) not later than 3
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 70 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families; and
``(cc) not later than 4
years after the end of the
capacity-building period, issue
vouchers under this paragraph
to all people experiencing
homelessness in the State.
``(III) Issuance of vouchers for
larger states.--Each State with a rate
of homelessness that is higher than 10
people per 10,000 shall--
``(aa) not later than 2
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 40 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families;
``(bb) not later than 3
years after the end of the
capacity-building period--
``(AA) issue
vouchers under this
paragraph to not less
than 60 percent of the
population of people
experiencing
homelessness in the
State, using data from
the most recent point-
in-time count; and
``(BB) to the
greatest extent
possible, prioritize
the issuance of those
vouchers to eligible
youth and families; and
``(cc) not later than 4
years after the end of the
capacity-building period, issue
vouchers under this paragraph
to all people experiencing
homelessness in the State.
``(iii) Penalties.--
``(I) Warning.--Except as provided
in clause (v), if a State does not meet
the applicable benchmarks described in
clause (ii), the Secretary shall
publicly warn the State of the failure
of the State to meet the benchmark and
remind the State of the applicable
penalties.
``(II) Reduction in federal highway
funds.--If a State does not meet the
applicable benchmarks described in
clause (ii)--
``(aa) by the date that is
180 days after the warning by
the Secretary under subclause
(I) of this clause, the Federal
share payable for Federal-aid
highway projects under section
120 of title 23, United States
Code, shall be reduced by 5
percent; or
``(bb) by the date that is
180 days after a reduction made
under item (aa) of this
subclause, the Federal share
payable for Federal-aid highway
projects under section 120 of
title 23, United States Code,
shall be further reduced by 5
percent.
``(iv) Condition on compliance.--Beginning
in the first Notice of Funding Availability
cycle beginning after the date of enactment of
this paragraph, and every Notice of Funding
Availability cycle thereafter, the Secretary
shall condition the awarding of all funding for
vouchers under this paragraph by the Secretary
to a public housing authority in a State on
that State's compliance with the benchmarks
described in clause (ii).
``(v) Unemployment rate.--If the quarterly
unemployment rate of the population of a State
is not less than 6 percent--
``(I) the State shall not be
penalized under clause (iii) for
failure to meet the benchmarks
described in clause (ii); and
``(II) the State shall be required
to meet the benchmarks described in
clause (ii) not later than 180 days
after the date on which the quarterly
unemployment rate descends beneath 6
percent.
``(G) Administrative needs of hud.--
``(i) Authorization of appropriations.--
There is authorized to be appropriated
$15,000,000 for each of fiscal years 2026
through 2030 to the Secretary for the
administrative needs of the Department of
Housing and Urban Development and regional
offices of the Department in carrying out the
voucher program under this paragraph.
``(ii) Prohibition.--None of the funds made
available under this subparagraph may be used
to provide raises or bonuses to any employee of
the Department of Housing and Urban Development
in an amount that is more than 10 percent of
the annual gross salary of the employee.''.
(b) Technical and Conforming Amendment.--Effective on December 29,
2027, paragraph (22) of section 8(o) of the United States Housing Act
of 1937 (42 U.S.C. 1437f(o)), as added by subsection (a), is
redesignated as paragraph (23) and shall appear after paragraph (22),
as added by section 601(a)(2)(B) of division AA of the Consolidated
Appropriations Act, 2023 (Public Law 117-328).
SEC. 102. LAND ACQUISITION AND CONSTRUCTION.
(a) Definitions.--In this section--
(1) the term ``at risk of homelessness'' has the meaning
given the term in section 401(1) of the McKinney-Vento Homeless
Assistance Act (42 U.S.C. 11360), except that ``50 percent''
shall be substituted for ``30 percent'' in subparagraph (A) of
that section;
(2) the terms ``extremely low-income'' and ``very low-
income'' have the meanings given those terms in section 1303 of
the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4502);
(3) the term ``homeless'' means an individual or family who
is--
(A) living in a place not meant for human
habitation or in an emergency shelter;
(B) living in transitional housing for homeless
persons and was homeless before entering transitional
housing or an emergency shelter;
(C) fleeing domestic violence; or
(D) at risk of homelessness; and
(4) the term ``Secretary'' means the Secretary of Housing
and Urban Development.
(b) Authorization of Appropriations.--
(1) In general.--There is authorized to be appropriated to
the Housing Trust Fund established under section 1338 of the
Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4568) $10,000,000,000 for each of fiscal
years 2026 through 2036 for allocation to States in accordance
with subsection (c) of such section 1338, subject to
subsections (c) through (f) of this section.
(2) Administrative needs of states.--
(A) Authorization of appropriations.--There is
authorized to be appropriated to the Secretary
$65,000,000 for each of fiscal years 2026 through 2031
for the administrative needs of States under this
section, in accordance with subparagraph (C).
(B) Allocation.--Of amounts authorized to be
appropriated under subparagraph (A) for each fiscal
year--
(i) $15,000,000 shall be allocated to the
Commonwealth of the Northern Mariana Islands,
Guam, American Samoa, and the Virgin Islands;
and
(ii) the remainder shall be allocated to
States pursuant to the formula established
under paragraph (22)(E)(ii) of section 8(o) of
the United States Housing Act of 1937 (42
U.S.C. 1437f(o)), as added by section 101 of
this Act.
(C) Eligible activities.--A State that receives
funds authorized to be appropriated under subparagraph
(A) may only use the funds for capacity-related
investments that are necessary for the State to
successfully allocate funds made available under
paragraph (1) of this subsection.
(D) Prohibition.--None of the funds made available
under this paragraph may be used to provide raises or
bonuses to any official of the executive branch of a
State.
(c) Revision of Funding Formula.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Secretary shall report to Congress
proposed changes to the funding formula under section
1338(c)(3) of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4568(c)(3)) in order to
ensure that the funding formula takes into account the economic
status of the people of the United States.
(2) Contents.--The revised formula proposed under paragraph
(1) shall address the following concerns:
(A) The impacts of differing vacancy rates across
various housing markets in the United States.
(B) The rate of unsheltered homelessness in various
housing markets across the United States.
(C) The impact of differing rates of poverty and
extreme poverty across various States.
(D) The gap between demand for and supply of rental
units that are affordable and available to very low-
income and extremely low-income renters in a State.
(d) Eligible Households.--Housing that is assisted using amounts
made available under subsection (b) may only be used for the benefit of
very low-income or extremely low-income households.
(e) Eligible Activities.--A recipient of funds authorized under
subsection (b)--
(1) may only use the funds for land acquisition and the
acquisition, rehabilitation, or development of rental housing
that is affordable for very low-income or extremely low-income
households; and
(2) shall take all possible measures to expedite
construction of housing described in paragraph (1).
(f) Priority for Occupancy in Dwelling Units.--
(1) First 2 fiscal years.--During the first 2 fiscal years
for which amounts are made available to carry out this section,
the Secretary shall ensure that priority for occupancy in a
dwelling unit that receives assistance under this section is
given to a homeless family or homeless youth.
(2) Subsequent 3 fiscal years.--During the third, fourth,
and fifth fiscal years for which amounts are made available to
carry out this section, the Secretary shall ensure that
priority for occupancy in a dwelling unit that receives
assistance under this section is given to a homeless family or
homeless individual.
SEC. 103. MODULAR CONSTRUCTION PILOT PROGRAM.
(a) Definitions.--In this section:
(1) Eligible entity.--The term ``eligible entity'' means a
public housing agency, a tribally designated housing entity (as
defined in section 4 of the Native American Housing Assistance
and Self Determination Act of 1996 (25 U.S.C. 4103)), a
nonprofit entity, a company, a religious entity, or a unit of
local or Tribal government.
(2) Modular construction.--The term ``modular
construction'' means the method of residential construction by
which building modules are constructed off of the future site
of a building, then brought together on the building site to
form a larger residential building, in an effort to reduce
construction costs.
(3) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(b) Establishment of Program.--
(1) In general.--The Secretary shall establish a pilot
program to provide grants to eligible entities to promote the
construction of affordable housing using modular construction.
(2) Affordability requirement.--To be eligible to receive a
grant under paragraph (1), an eligible entity shall be required
to guarantee affordability for a period of more than 20 years.
(3) Priority.--In awarding grants under paragraph (1), the
Secretary shall give priority to an eligible entity that
fulfills not fewer than two of the following requirements:
(A) The eligible entity--
(i) will construct the housing in groups of
more than 50 units; or
(ii) provides confirmation from the
jurisdiction with land use control over the
site proposed by the eligible entity that--
(I) construction will be completed
within 18 months; and
(II) the housing will be
constructed in groups of more than 30
units.
(B) The eligible entity partners with a public
housing agency or unit of local government that will
issue rental assistance to residents of the affordable
housing through vouchers or grants.
(C) The eligible entity will provide supportive
services (as described in paragraph (21)(D)(iii)(II) of
section 8(o) of the United States Housing Act of 1937
(42 U.S.C. 1437f(o)), as added by section 3 of this
Act) to residents at no charge, or has secured the
provision of publicly or privately administered
supportive services (as so defined) to residents at no
charge.
(c) Matching Requirement.--The Federal share of a project funded
under this section shall be not more than 75 percent of the cost of the
project.
(d) Authorization of Appropriations.--There is authorized to be
appropriated to the Secretary $2,000,000 for each of fiscal years 2026
through 2031 to carry out this section.
SEC. 104. SUPPORTING PRO-HOUSING DEVELOPMENT.
(a) Definitions.--In this section:
(1) Duplex.--The term ``duplex'' means a residential
building divided into 2 units, each of which has a separate
entrance.
(2) Eligible activity.--The term ``eligible activity''
means an activity authorized under section 105(a) of the
Housing and Community Development Act of 1974 (42 U.S.C.
5305(a)).
(3) Eligible entity.--The term ``eligible entity'' means a
jurisdiction that adopts a zoning and community planning method
described in subsection (d)(4) after the date of enactment of
this Act.
(4) Floor area ratio.--The term ``floor area ratio'' means
the measurement of the floor area of a building in relation to
the size of the unit of land on which the building is located.
(5) Jurisdiction.--The term ``jurisdiction'' has the
meaning given the term in section 91.5 of title 24, Code of
Federal Regulations, or any successor regulation.
(6) Low-income.--The term ``low-income'' has the meaning
given the term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(7) Mixed-use housing.--The term ``mixed use housing''
means a building with--
(A) retail or other business, public service, or
nonprofit establishments at the ground level or a lower
level; and
(B) not less than 1 story of residential units
above the establishments described in subparagraph (A).
(8) Quadplex.--The term ``quadplex'' means a residential
building divided into 4 units, each of which has a separate
entrance.
(9) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(10) Triplex.--The term ``triplex'' means a residential
building divided into 3 units, each of which has a separate
entrance.
(11) Multifamily housing.--The term ``multifamily
housing''--
(A) means housing accommodations that--
(i) are designed principally for
residential use;
(ii) conform to standards satisfactory to
the Secretary; and
(iii) consist of not less than 5 rental
units on a site; and
(B) includes units that are detached, semidetached,
row house, or multifamily structures.
(b) Zoning Information Reporting Requirement.--
(1) In general.--The Secretary shall require a jurisdiction
that receives, directly or indirectly, any funding from the
Secretary to submit to the Secretary a report containing
information about the zoning and community planning methods of
the jurisdiction, unless the jurisdiction already reports such
information.
(2) Additional information.--Upon receiving a report
described in paragraph (1) from a jurisdiction, the Secretary
may request additional information, at the discretion of the
Secretary.
(c) Prohibited Zoning Methods.--
(1) In general.--On and after the date that is 180 days
after the date of enactment of this Act, a jurisdiction that
uses a zoning and community planning method described in
paragraph (2) may not receive, directly or indirectly, amounts
from a grant awarded under subsection (d).
(2) Prohibited methods.--The methods referred to in
paragraph (1) are the following:
(A) Prohibiting or discouraging duplexes in areas
zoned for single-family homes.
(B) Prohibiting or discouraging single-room
occupancy development in areas zoned for multifamily
homes.
(C) In areas within one half-mile of a multimodal
transit stop, maintaining requirements of more than 1
parking spot for a resident's car per residential unit.
(D) Prohibiting or discouraging accessory dwelling
units (commonly known as an ``ADU'' or ``granny flat'')
on the premises of single-family homes.
(E) Prohibiting or discouraging the conversion of
commercial property into residential property.
(F) Prohibiting or discouraging the development of
multifamily housing or mixed-use housing in commercial
areas.
(3) Exception.--A jurisdiction shall not be penalized under
paragraph (1) based on the use of a zoning and community
planning method described in paragraph (2) over which the
jurisdiction does not have control.
(d) Grant Program.--
(1) Establishment.--The Secretary shall establish a program
under which the Secretary awards competitive grants to eligible
entities to use for eligible activities.
(2) Priority.--In awarding grants under paragraph (1), the
Secretary--
(A) shall give priority to an eligible entity that
adopt more than one of the zoning and community
planning methods described in paragraph (4); and
(B) in giving priority to an eligible entity under
subparagraph (A) of this paragraph, shall base the
degree of priority given on the number of such methods
that the eligible entity has adopted, relative to the
number of such methods that each other eligible entity
has adopted.
(3) Amount of grant.--
(A) In general.--The amount of a grant awarded to
an eligible entity under paragraph (1) shall be not
less than--
(i) $5,000,000 for an eligible entity with
a population of less than 80,000;
(ii) $20,000,000 for an eligible entity
with a population of less than 100,000;
(iii) $40,000,000 for an eligible entity
with a population of less than 500,000;
(iv) $100,000,000 for an eligible entity
with a population of less than 1,000,000; and
(v) $125,000,000 for an eligible entity
with a population of not less than 1,000,000.
(B) Population calculation.--The Secretary shall
calculate the population of an eligible entity for
purposes of subparagraph (A) using the most recently
available data from the Bureau of the Census.
(4) Encouraged zoning and community planning methods.--The
zoning and community planning methods described in this
paragraph are the following:
(A) Allowing--
(i) duplexes, triplexes, and quadplexes, or
other multifamily housing, in areas zoned for
single-family homes;
(ii) the subdivision of existing single-
family homes into multiple units; and
(iii) waivers to permitting or zoning
requirements to incentivize the construction
of--
(I) accessory dwelling units;
(II) additions to existing single-
family homes to create duplexes,
triplexes, or quadplexes; or
(III) other additions that do not
require demolition of an existing home
on a given unit of land.
(B) Incentivizing the development of single-room
occupancy multifamily housing and accessory dwelling
units through expedited permitting, reduced fees, or
other incentives.
(C) Not imposing a minimum lot size or minimum unit
square-foot requirements.
(D) Incentivizing the development of commercial
property into residential housing.
(E) Eliminating or lowering requirements for per-
unit parking spots.
(F) Allowing increased floor area ratios.
(G) Eliminating or raising height limits on
development to encourage building vertically rather
than horizontally.
(H) Waiving or eliminating fees or permits for
development in exchange for the development of a larger
number of units that are affordable to low-income
people.
(5) Regulations.--The Secretary may promulgate any
regulations necessary to carry out this subsection.
(6) Authorization of appropriations.--There are authorized
to be appropriated to carry out this subsection $4,000,000,000
for each of fiscal years 2026 through 2031.
SEC. 105. PERMANENT AUTHORIZATION OF APPROPRIATIONS FOR MCKINNEY-VENTO
HOMELESS ASSISTANCE ACT GRANTS.
Section 408 of the McKinney-Vento Homeless Assistance Act (42
U.S.C. 11364) is amended to read as follows:
``SEC. 408. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated to carry out this title
such sums as may be necessary for each fiscal year.''.
TITLE II--REVENUE PROVISIONS
SEC. 201. INCREASES IN STATE ALLOCATIONS.
(a) In General.--Clause (ii) of section 42(h)(3)(C) of the Internal
Revenue Code is amended--
(1) by striking ``$1.75'' in subclause (I) and inserting
``the per capita amount'', and
(2) by striking ``$2,000,000'' in subclause (II) and
inserting ``the minimum amount''.
(b) Per Capita Amount; Minimum Amount.--Section 42(h)(3) of the
Internal Revenue Code of 1986 is amended by striking subparagraphs (H)
and (I) and inserting the following:
``(H) Per capita amount.--For purposes of
subparagraph (C)(ii)(I), the per capita amount shall be
determined as follows:
``(i) Calendar year 2026.--For calendar
year, 2026, the per capita amount is $4.30.
``(ii) Calendar year 2027.--For calendar
year 2027, the per capita amount is the product
of--
``(I) 1.25, and
``(II) the dollar amount under
clause (i) increased by an amount equal
to--
``(aa) such dollar amount,
multiplied by
``(bb) the cost-of-living
adjustment determined under
section 1(f)(3) for such
calendar year, determined by
substituting `calendar year
2025' for `calendar year 2016'
in subparagraph (A)(ii)
thereof.
If the amount determined after application of the
preceding sentence is not a multiple of $5,000, such
amount shall be rounded to the next lowest multiple of
$5,000.
``(iii) Calendar years after 2027.--In the
case of any calendar year after 2027, the per
capita amount is the dollar amount determined
under clause (ii) increased by an amount equal
to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting `calendar
year 2026' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any amount increased under the preceding
sentence which is not a multiple of 5 cents
shall be rounded to the next lowest multiple of
5 cents.
``(I) Minimum amount.--For purposes of subparagraph
(C)(ii)(II), the minimum amount shall be determined as
follows:
``(i) Calendar year 2026.--For calendar
year, 2026, the minimum amount is $4,965,000.
``(ii) Calendar year 2027.--For calendar
year 2027, the minimum amount is the product
of--
``(I) 1.25, and
``(II) the dollar amount under
clause (i) increased by an amount equal
to--
``(aa) such dollar amount,
multiplied by
``(bb) the cost-of-living
adjustment determined under
section 1(f)(3) for such
calendar year, determined by
substituting `calendar year
2025' for `calendar year 2016'
in subparagraph (A)(ii)
thereof.
If the amount determined after application of
the preceding sentence is not a multiple of 5
cents, such amount shall be rounded to the next
lowest multiple of 5 cents.
``(iii) Calendar years after 2027.--In the
case of any calendar year after 2027, the
minimum amount is the dollar amount determined
under clause (ii) increased by an amount equal
to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting `calendar
year 2026' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any amount increased under the preceding
sentence which is not a multiple of $5,000
shall be rounded to the next lowest multiple of
$5,000.''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2025.
SEC. 202. BUILDINGS DESIGNATED TO SERVE EXTREMELY LOW-INCOME
HOUSEHOLDS.
(a) Reserved State Allocation.--
(1) In general.--Section 42(h) of the Internal Revenue Code
of 1986 is amended--
(A) by redesignating paragraphs (6), (7), and (8)
as paragraphs (7), (8), and (9), respectively, and
(B) by inserting after paragraph (5) the following
new paragraph:
``(6) Portion of state ceiling set-aside for projects
designated to serve extremely low-income households.--
``(A) In general.--Not more than 92 percent of the
portion of the State housing credit ceiling amount
described in paragraph (3)(C)(ii) for any State for any
calendar year shall be allocated to buildings other
than buildings described in subparagraph (B).
``(B) Buildings described.--A building is described
in this subparagraph if 20 percent or more of the
residential units in such building are rent-restricted
(determined as if the imputed income limitation
applicable to such units were 30 percent of area median
gross income) and are designated by the taxpayer for
occupancy by households the aggregate household income
of which does not exceed the greater of--
``(i) 30 percent of area median gross
income, or
``(ii) 100 percent of an amount equal to
the Federal poverty line (within the meaning of
section 36B(d)(3)).
``(C) Exception.--A building shall not be treated
as described in subparagraph (B) if such building is a
part of a qualified low-income housing project with
respect to which the taxpayer elects the requirements
of subsection (g)(1)(C).''.
(2) Conforming amendment.--Section 42(b)(4)(C) of such Code
is amended by striking ``(h)(7)'' and inserting ``(h)(8)''.
(b) Increase in Credit.--Paragraph (5) of section 42(d) of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new subparagraph:
``(C) Increase in credit for buildings designated
to serve extremely low-income households.--
``(i) In general.--In the case of any
building--
``(I) which is described in
subsection (h)(6)(B), and
``(II) 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,
subparagraph (B) shall not apply to the portion
of such building which is comprised of
residential units described in subsection
(h)(6)(B) (determined in a manner similar to
the unit fraction under subsection (c)(1)(C)),
and the eligible basis of such portion of the
building shall be 150 percent of such basis
determined without regard to this subparagraph.
``(ii) Allocation rules applicable to
projects to which clause (i) applies.--
``(I) State housing credit
ceiling.--For any calendar year, no
more than 13 percent of the portion of
the State housing credit ceiling
described in subsection (h)(3)(C)(ii)
shall be allocated to buildings to
which clause (i) applies.
``(II) Application to projects
financed with tax-exempt bonds.--In the
case of any building which is financed
by an obligation described in
subsection (h)(4), clause (i) shall not
apply unless--
``(aa) the State in which
the issuing authority issuing
such obligation is located
designates such obligation as
an obligation to which this
subparagraph applies, and
``(bb) the aggregate face
amount of obligations
designated under item (aa) by
such State in the calendar year
during which such obligation is
issued does not exceed 8
percent of the State ceiling of
such State under section
146(d)(1) for such year.''.
(c) Effective Date.--The amendments made by this section shall
apply to allocations of housing credit dollar amount after December 31,
2026, and to buildings that are described in section 42(h)(4)(B) of the
Internal Revenue Code of 1986 taking into account only obligations that
are part of an issue the issue date of which is after December 31,
2026.
SEC. 203. INCLUSION OF INDIAN AREAS AS DIFFICULT DEVELOPMENT AREAS FOR
PURPOSES OF CERTAIN BUILDINGS.
(a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the
Internal Revenue Code of 1986 is amended by inserting before the period
the following: ``, and any Indian area''.
(b) Indian Area.--Clause (iii) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986 is amended by redesignating subclause
(II) as subclause (IV) and by inserting after subclause (I) the
following new subclauses:
``(II) Indian area.--For purposes
of subclause (I), the term `Indian
area' means--
``(aa) any Indian area (as
defined in section 4(11) of the
Native American Housing
Assistance and Self
Determination Act of 1996 (25
U.S.C. 4103(11))), and
``(bb) any housing area (as
defined in section 801(5) of
such Act (25 U.S.C. 4221(5))).
``(III) Special rule for buildings
in indian areas.--In the case of an
area which is a difficult development
area solely because it is an Indian
area, a building shall not be treated
as located in such area unless such
building is assisted or financed under
the Native American Housing Assistance
and Self Determination Act of 1996 (25
U.S.C. 4101 et seq.) or the project
sponsor is an Indian tribe (as defined
in section 45A(c)(6)), a tribally
designated housing entity (as defined
in section 4(22) of such Act (25 U.S.C.
4103(22))), or wholly owned or
controlled by such an Indian tribe or
tribally designated housing entity.''.
(c) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2026.
SEC. 204. INCLUSION OF RURAL AREAS AS DIFFICULT DEVELOPMENT AREAS.
(a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the
Internal Revenue Code of 1986, as amended by section 203, is further
amended by inserting ``, any rural area'' after ``median gross
income''.
(b) Rural Area.--Clause (iii) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986, as amended by section 203, is further
amended by redesignating subclause (IV) as subclause (V) and by
inserting after subclause (III) the following new subclause:
``(IV) Rural area.--For purposes of
subclause (I), the term `rural area'
means any non-metropolitan area, or any
rural area as defined by section 520 of
the Housing Act of 1949, which is
identified by the qualified allocation
plan under subsection (m)(1)(B).''.
(c) Effective Date.--The amendments made by this section shall
apply to buildings placed in service after December 31, 2026.
SEC. 205. INCREASE IN CREDIT FOR BOND-FINANCED PROJECTS DESIGNATED BY
HOUSING CREDIT AGENCY.
(a) In General.--Clause (v) of section 42(d)(5)(B) of the Internal
Revenue Code of 1986 is amended by striking the second sentence.
(b) Technical Amendments.--Clause (v) of section 42(d)(5)(B) of the
Internal Revenue Code of 1986, as amended by subsection (a), is further
amended--
(1) by striking ``State'' in the heading; and
(2) by striking ``State housing credit agency'' and
inserting ``housing credit agency''.
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
apply to a building if--
(A) any portion of such building is financed by an
obligation described in paragraph (2), or
(B) the land on which the building is located is
financed by an obligation described in paragraph (2).
(2) Obligation described.--An obligation is described in
this paragraph if such obligation--
(A) is described in section 42(h)(4)(A) of the
Internal Revenue Code of 1986, and
(B) is issued after December 31, 2026.
SEC. 206. REPEAL OF QUALIFIED CONTRACT OPTION.
(a) Termination of Option for Certain Buildings.--
(1) In general.--Subclause (II) of section 42(h)(7)(E)(i)
of the Internal Revenue Code of 1986, as redesignated by
section 202, is amended by inserting ``in the case of a
building described in clause (iii),'' before ``on the last
day''.
(2) Buildings described.--Subparagraph (E) of section
42(h)(7) of such Code, as so redesignated, is amended by adding
at the end the following new clause:
``(iii) Buildings described.--A building
described in this clause is a building--
``(I) which received its allocation
of housing credit dollar amount before
January 1, 2027, or
``(II) in the case of a building
any portion of which is financed as
described in paragraph (4), and which
received before January 1, 2027, under
the rules of paragraphs (1) and (2) of
subsection (m), a determination from
the issuer of the tax-exempt bonds or
the housing credit agency that the
building would be eligible under the
qualified allocation plan to receive an
allocation of housing credit dollar
amount or that the credits to be earned
are necessary for financial feasibility
of the project and its viability as a
qualified low-income housing project
throughout the credit period.''.
(b) Rules Relating to Existing Projects.--Subparagraph (F) of
section 42(h)(7) of the Internal Revenue Code of 1986, as redesignated
by section 202, is amended by striking ``the nonlow-income portion''
and all that follows and inserting ``the nonlow-income portion and the
low-income portion of the building for fair market value (determined by
the housing credit agency by taking into account the rent restrictions
required for the low-income portion of the building to continue to meet
the standards of paragraphs (1) and (2) of subsection (g)). The
Secretary shall prescribe such regulations as may be necessary or
appropriate to carry out this paragraph.''.
(c) Conforming Amendments.--
(1) Paragraph (7) of section 42(h) of the Internal Revenue
Code of 1986, as redesignated by section 202, is amended by
striking subparagraph (G) and by redesignating subparagraphs
(H), (I), (J), and (K) as subparagraphs (G), (H), (I), and (J),
respectively.
(2) Subclause (II) of section 42(h)(7)(E)(i) of such Code,
as so redesignated and as amended by subsection (a), is further
amended by striking ``subparagraph (I)'' and inserting
``subparagraph (H)''.
(d) Technical Amendment.--Subparagraph (I) of section 42(h)(7) of
the Internal Revenue Code of 1986, as redesignated by section 202 and
subsection (c), is amended by striking ``agreement'' and inserting
``commitment''.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on the date
of the enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to buildings with respect to which a written
request described in section 42(h)(7)(H) of the Internal
Revenue Code of 1986, as redesignated by section 202 and
subsection (c), is submitted after the date of the enactment of
this Act.
SEC. 207. MODIFICATION AND CLARIFICATION OF RIGHTS RELATING TO BUILDING
PURCHASE.
(a) Modification of Right of First Refusal.--
(1) In general.--Subparagraph (A) of section 42(i)(7) of
the Internal Revenue Code of 1986 is amended by striking ``a
right of 1st refusal'' and inserting ``an option''.
(2) Conforming amendment.--The heading of paragraph (7) of
section 42(i) of such Code is amended by striking ``right of
1st refusal'' and inserting ``option''.
(b) Clarification With Respect to Right of First Refusal and
Purchase Options.--
(1) Purchase of partnership interest.--
(A) In general.--Subparagraph (A) of section
42(i)(7) of the Internal Revenue Code of 1986, as
amended by subsection (a), is amended by striking ``the
property'' and inserting ``the property or all of the
partnership interests (other than interests of the
person exercising such option or a related party
thereto (within the meaning of section 267(b) or
707(b)(1))) relating to the property''.
(B) Application to S corporations and other pass-
through entities.--Subparagraph (A) of section 42(i)(7)
of such Code is amended by adding at the end the
following: ``Except as provided by the Secretary, the
rules of this paragraph shall apply to S corporations
and other pass-through entities in the same manner as
such rules apply to partnerships.''.
(C) Conforming amendment.--Subparagraph (B) of
section 42(i)(7) of such Code is amended by adding at
the end the following: ``In the case of a purchase of
all of the partnership interests, the minimum purchase
price under this subparagraph shall be an amount not
less than the sum of the interests' shares of the
amount which would be determined with respect to the
property under this subparagraph without regard to this
sentence.''.
(2) Property includes assets relating to the building.--
Paragraph (7) of section 42(i) of such Code is amended by
adding at the end the following new subparagraph:
``(C) Property.--For purposes of subparagraph (A),
the term `property' may include all or any of the
assets held for the development, operation, or
maintenance of a building.''.
(3) Exercise of right of first refusal and purchase
options.--Subparagraph (A) of section 42(i)(7) of such Code, as
amended by subsection (a) and paragraph (1)(A), is amended by
adding at the end the following: ``For purposes of determining
whether an option, including a right of first refusal, to
purchase property or all of the partnership interests holding
(directly or indirectly) such property is described in the
preceding sentence--
``(i) such option or right of first refusal
shall be exercisable with or without the
approval of any owner of the project (including
any partner, member, or affiliated organization
of such an owner), and
``(ii) a right of first refusal shall be
exercisable in response to any offer to
purchase the property or all of the partnership
interests, including an offer by a related
party.''.
(c) Other Conforming Amendment.--Subparagraph (B) of section
42(i)(7) of the Internal Revenue Code of 1986, as amended by subsection
(b), is amended by striking ``the sum of'' and all that follows through
``application of clause (ii).'' and inserting the following: ``the
principal amount of outstanding indebtedness secured by the building
(other than indebtedness incurred within the 5-year period ending on
the date of the sale to the tenants).''.
(d) Effective Dates.--
(1) Modification of right of first refusal.--The amendments
made by subsections (a) and (c) shall apply to agreements
entered into or amended after the date of the enactment of this
Act.
(2) Clarification.--The amendments made by subsection (b)
shall apply to agreements among the owners of the project
(including partners, members, and their affiliated
organizations) and persons described in section 42(i)(7)(A) of
the Internal Revenue Code of 1986 entered into before, on, or
after the date of the enactment of this Act.
(3) No effect on agreements.--None of the amendments made
by this section is intended to supersede express language in
any agreement with respect to the terms of a right of first
refusal or option permitted by section 42(i)(7) of the Internal
Revenue Code of 1986 in effect on the date of the enactment of
this Act.
SEC. 208. PROHIBITION OF LOCAL APPROVAL AND CONTRIBUTION REQUIREMENTS.
(a) In General.--Paragraph (1) of section 42(m) of the Internal
Revenue Code of 1986 is amended--
(1) by striking clause (ii) of subparagraph (A) and by
redesignating clauses (iii) and (iv) thereof as clauses (ii)
and (iii), respectively, and
(2) by adding at the end the following new subparagraph:
``(E) Local approval or contribution not taken into
account.--The selection criteria under a qualified
allocation plan shall not include consideration of--
``(i) any support or opposition with
respect to the project from local or elected
officials, or
``(ii) any local government contribution to
the project, except to the extent such
contribution is taken into account as part of a
broader consideration of the project's ability
to leverage outside funding sources, and is not
prioritized over any other source of outside
funding.''.
(b) Effective Date.--The amendments made by this section shall
apply to allocations of housing credit dollar amounts made after
December 31, 2026.
SEC. 209. INCREASE IN CREDIT FOR LOW-INCOME HOUSING SUPPORTIVE
SERVICES.
(a) In General.--Paragraph (5) of section 42(d) of the Internal
Revenue Code of 1986, as amended by section 202, is further amended by
adding at the end the following new subparagraphs:
``(D) Increase in credit for providing supportive
services.--
``(i) In general.--In the case of any
building which includes common areas, or
property used therein, dedicated to the
provision of on-site qualified supportive
services, except as provided in subparagraphs
(E) and (F), the eligible basis of the portion
of the building which is comprised of such
areas or property (after the application of
subparagraphs (A) and (B)) shall be increased
by an amount equal to 50 percent of such basis
determined without regard to this subparagraph
and subparagraphs (B) and (C).
``(ii) Qualified supportive services.--For
purposes of clause (i), the term `qualified
supportive services' means services--
``(I) provided by the owner of a
building (directly or through contracts
with third-party service providers)
primarily to tenants of the building,
``(II) which are intended to
promote economic self-sufficiency and
physical and mental health and well-
being in pursuit of retaining permanent
housing, including childcare or
eldercare services, health services,
coordination of tenant benefits, job
training, financial counseling,
resident engagement services, or such
other similar services as may be
defined by the allocating agency in the
qualified allocation plan,
``(III) which are provided to
tenants and other beneficiaries as may
be specified by the housing credit
agency, including specifications as to
which services may be provided to non-
tenants,
``(IV) which are provided at no
cost to beneficiaries other than any
fee, copay, or coinsurance customarily
charged by service providers for
similar services, and
``(V) usage of or participation in
which is not a condition of tenancy in
the building.
Such term includes reasonable and necessary
measures for the provision of such services,
including measures to engage tenants and other
beneficiaries in and coordinate such services,
and measures required to obtain the
certification described in subparagraph
(E)(ii)(III).
``(E) Extended supportive services commitment.--
``(i) In general.--Subparagraph (D)(i)
shall not apply to a building for any taxable
year unless an extended supportive services
commitment is in effect for such taxable year.
``(ii) Extended supportive services
commitment.--The term `extended supportive
services commitment' means any agreement
between the owner of a building and the housing
credit agency which--
``(I) provides estimates of the
amounts to be spent, updated at least
once every 5 years, on the provision of
qualified supportive services to
tenants of such building and other
beneficiaries for each taxable year
remaining in the credit period,
``(II) requires the designation of
one or more individuals to engage
tenants regarding, and coordinate
delivery of, qualified supportive
services,
``(III) requires the maintenance of
an appropriate certification, as
determined by the Secretary in
consultation with the housing credit
agencies, for qualified supportive
services, subject to recertification at
least once every 5 years,
``(IV) requires appropriate annual
reporting to the housing credit agency
on expenditures and outcomes, as
determined by such agency, and
``(V) is binding on all successors
in ownership of such building.
``(iii) Exceptions if foreclosure or if no
buyer willing to maintain services.--The
requirement of clause (ii)(V) for any building
shall terminate on the date the building is
acquired by foreclosure (or instrument in lieu
of foreclosure) unless the housing credit
agency determines that such acquisition is part
of an arrangement with the taxpayer a purpose
of which is to terminate such requirement.
``(iv) Effect of noncompliance.--If, during
a taxable year, there is a determination by the
housing credit agency that an extended
supportive services commitment was not in
effect as of the beginning of such year or that
there is evidence of other noncompliance as
determined by the housing credit agency
(including failure to provide qualified
supportive services)--
``(I) such determination shall not
apply to any period before such year
and subparagraph (D)(i) shall apply to
such taxable year without regard to
such determination if the failure is
corrected within 1 year from the date
of the determination, and
``(II) in the case of any year to
which such determination does apply, if
the failure is not corrected within 1
year from the date of the
determination, the credit recapture
amount under subsection (j)(1) for the
year in which such 1 year period
expires shall be increased by the
amount of any increase in the credit
under this section by reason of
subparagraph (D)(i) for the year to
which the determination applies.
``(v) Projects which consist of more than 1
building.--Rules similar to the rules of
subsection (h)(7)(J) shall apply.
``(F) Responsibilities of housing credit agency.--
Subparagraph (D)(i) shall not apply to a building for
any taxable year unless--
``(i) the housing credit agency sets forth
criteria--
``(I) to determine appropriate,
evidence-based supportive services,
``(II) for the selection of
appropriate and competent service
providers, and
``(III) which common areas or
property described in subparagraph
(D)(i) shall meet in order to qualify
for the increase in credit under
subparagraph (D),
``(ii) the housing credit agency provides a
procedure that the agency (or an agent or other
private contractor of such agency) shall follow
in monitoring for noncompliance with the
provisions of this subparagraph and
subparagraphs (D) and (E) and in reporting such
noncompliance to the Secretary, and
``(iii) appropriate books and records for
expenditures with respect to the qualified
supportive services are maintained on an annual
basis, and are available for inspection upon
request by the housing credit agency.''.
(b) Effective Date.--The amendment made by this section shall apply
to buildings which receive allocations of housing credit dollar amount
or, in the case of projects financed by tax-exempt obligations as
described in section 42(h)(4) of the Internal Revenue Code of 1986,
which are first taken into account under section 146 of such Code,
after the date of the enactment of this Act.
SEC. 210. STUDY OF TAX INCENTIVES FOR THE CONVERSION OF COMMERCIAL
PROPERTY TO AFFORDABLE HOUSING.
Within 6 months of the date of the enactment of this Act, the
Secretary of the Treasury, the Secretary of Housing and Urban
Development, the Deputy Under Secretary for Rural Development of the
Department of Agriculture, and the Director of the Office of Management
and Budget shall collaborate to produce a cost-benefit analysis of
providing tax incentives, including the non-recognition of capital
gains, to the owners of vacant or under-utilized commercial real estate
in exchange for selling these properties to State, local, or tribal
housing finance agencies for conversion to affordable rental housing
for low-income residents, including shelters for the homeless.
SEC. 211. RENTERS CREDIT.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 36B the following new section:
``SEC. 36C. RENTERS CREDIT.
``(a) Allowance of Credit.--
``(1) In general.--There shall be allowed as a credit
against the tax imposed by this subtitle for any taxable year
an amount equal to the sum of the amounts determined under
paragraph (2) for all qualified buildings with a credit period
which includes months occurring during the taxable year.
``(2) Qualified building amount.--The amount determined
under this paragraph with respect to any qualified building for
any taxable year shall be an amount equal to the lesser of--
``(A) the aggregate qualified rental reduction
amounts for all eligible units within such building for
months occurring during the taxable year which are
within the credit period for such building, or
``(B) the rental reduction credit amount allocated
to such building for such months.
``(3) Qualified building.--For purposes of this section--
``(A) In general.--The term `qualified building'
means any building which is residential rental property
(as defined in section 168(e)(2)(A)) of the taxpayer
with respect to which--
``(i) a rental reduction credit amount has
been allocated by a rental reduction credit
agency of a State, and
``(ii) a qualified rental reduction
agreement is in effect.
``(B) Building not disqualified by other
assistance.--A building shall not fail to be treated as
a qualified building merely because--
``(i) a credit was allowed under section 42
with respect to such building or there was any
other Federal assistance in the construction or
rehabilitation of such building,
``(ii) the rehabilitation credit determined
under section 47 was allowed under section 38
with respect to such building, or
``(iii) Federal rental assistance was
provided for such building during any period
preceding the credit period.
``(b) Qualified Rental Reduction Amount.--For purposes of this
section--
``(1) In general.--The term `qualified rental reduction
amount' means, with respect to any eligible unit for any month,
an amount equal to the applicable percentage (as determined
under subsection (e)(1)) of the excess of--
``(A) the applicable rent for such unit, over
``(B) the family rental payment required for such
unit.
``(2) Applicable rent.--
``(A) In general.--The term `applicable rent'
means, with respect to any eligible unit for any month,
the lesser of--
``(i) the amount of rent which would be
charged for a substantially similar unit with
the same number of bedrooms in the same
building which is not an eligible unit, or
``(ii) an amount equal to the market rent
standard for such unit.
``(B) Market rent standard.--
``(i) In general.--The market rent standard
with respect to any eligible unit is--
``(I) the small area fair market
rent determined by the Secretary of
Housing and Urban Development for units
with the same number of bedrooms in the
same Zip Code tabulation area, or
``(II) if there is no rent
described in subclause (I) for such
area, the fair market rent determined
by such Secretary for units with the
same number of bedrooms in the same
county.
``(ii) State option.--A State may in its
rental reduction allocation plan provide that
the market rent standard for all (or any part)
of a Zip Code tabulation area or county within
the State shall be equal to a percentage (not
less than 75 nor more than 125) of the amount
determined under clause (i) (after application
of clause (iii)) for such area or county.
``(iii) Minimum amount.--Notwithstanding
clause (i), the market rent standard with
respect to any eligible unit for any year in
the credit period after the first year in the
credit period for such unit shall not be less
than the market rent standard determined for
such first year.
``(3) Family rental payment requirements.--
``(A) In general.--Each qualified rental reduction
agreement with respect to any qualified building shall
require that the family rental payment for an eligible
unit within such building for any month shall be equal
to the lesser of--
``(i) 30 percent of the monthly family
income of the residents of the unit (as
determined under subsection (e)(5)), or
``(ii) the applicable rent for such unit.
``(B) Utility costs.--Any utility allowance
(determined by the Secretary in the same manner as
under section 42(g)(2)(B)(ii)) paid by residents of an
eligible unit shall be taken into account as rent in
determining the family rental payment for such unit for
purposes of this paragraph.
``(c) Rental Reduction Credit Amount.--For purposes of this
section--
``(1) Determination of amount.--
``(A) In general.--The term `rental reduction
credit amount' means, with respect to any qualified
building, the dollar amount which is allocated to such
building (and to eligible units within such building)
under this subsection. Such dollar amount shall be
allocated to months in the credit period with respect
to such building (and such units) on the basis of the
estimates described in paragraph (2)(B).
``(B) Allocation on project basis.--In the case of
a project which includes (or will include) more than 1
building, the rental reduction credit amount shall be
the dollar amount which is allocated to such project
for all buildings included in such project. Subject to
the limitation under subsection (e)(3)(B), such amount
shall be allocated among such buildings in the manner
specified by the taxpayer unless the qualified rental
reduction agreement with respect to such project
provides for such allocation.
``(2) State allocation.--
``(A) In general.--Except as provided in
subparagraph (C), each rental reduction credit agency
of a State shall each calendar year allocate its
portion of the State rental reduction credit ceiling to
qualified buildings (and to eligible units within each
such building) in accordance with the State rental
reduction allocation plan.
``(B) Allocations to each building.--The rental
reduction credit amount allocated to any qualified
building shall not exceed the aggregate qualified
rental reduction amounts which such agency estimates
will occur over the credit period for eligible units
within such building, based on reasonable estimates of
rents, family incomes, and vacancies in accordance with
procedures established by the State as part of its
State rental reduction allocation plan.
``(C) Specific allocations.--
``(i) Nonprofit organizations.--At least 25
percent of the State rental reduction credit
ceiling for any State for any calendar year
shall be allocated to qualified buildings in
which a qualified nonprofit organization (as
defined in section 42(h)(5)(C)) owns (directly
or through 1 or more partnerships) an interest
and materially participates (within the meaning
of section 469(h)) in the operation of the
building throughout the credit period. A State
may waive or lower the requirement under this
clause for any calendar year if it determines
that meeting such requirement is not feasible.
``(ii) Rural areas.--
``(I) In general.--The State rental
reduction credit ceiling for any State
for any calendar year shall be
allocated to buildings in rural areas
(as defined in section 520 of the
Housing Act of 1949) in an amount
which, as determined by the Secretary
of Housing and Urban Development, bears
the same ratio to such ceiling as the
number of extremely low-income
households with severe rent burdens in
such rural areas bears to the total
number of such households in the State.
``(II) Alternative 5-year testing
period.--In the case of the 5-calendar
year period beginning in 2026, a State
shall not be treated as failing to meet
the requirements of subclause (I) for
any calendar year in such period if, as
determined by the Secretary, the
average annual amount allocated to such
rural areas during such period meets
such requirements.
``(3) Application of allocated credit amount.--
``(A) Amount available to taxpayer for all months
in credit period.--Any rental reduction credit amount
allocated to any qualified building out of the State
rental reduction credit ceiling for any calendar year
shall apply to such building for all months in the
credit period ending during or after such calendar
year.
``(B) Ceiling for allocation year reduced by entire
credit amount.--Any rental reduction credit amount
allocated to any qualified building out of an
allocating agency's State rental reduction credit
ceiling for any calendar year shall reduce such ceiling
for such calendar year by the entire amount so
allocated for all months in the credit period (as
determined on the basis of the estimates under
paragraph (2)(B)) and no reduction shall be made in
such agency's State rental reduction credit ceiling for
any subsequent calendar year by reason of such
allocation.
``(4) State rental reduction credit ceiling.--
``(A) In general.--The State rental reduction
credit ceiling applicable to any State for any calendar
year shall be an amount equal to the sum of--
``(i) the greater of--
``(I) the per capita dollar amount
multiplied by the State population, or
``(II) the minimum ceiling amount,
plus
``(ii) the amount of the State rental
reduction credit ceiling returned in the
calendar year.
``(B) Return of state ceiling amounts.--For
purposes of subparagraph (A)(ii), except as provided in
subsection (d)(2), the amount of the State rental
reduction credit ceiling returned in a calendar year
equals the amount of the rental reduction credit amount
allocated to any building which, after the close of the
calendar year for which the allocation is made--
``(i) is canceled by mutual consent of the
rental reduction credit agency and the taxpayer
because the estimates made under paragraph
(2)(B) were substantially incorrect, or
``(ii) is canceled by the rental reduction
credit agency because the taxpayer violates the
qualified rental reduction agreement and, under
the terms of the agreement, the rental
reduction credit agency is authorized to cancel
all (or any portion) of the allocation by
reason of the violation.
``(C) Per capita dollar amount; minimum ceiling
amount.--For purposes of this paragraph--
``(i) Per capita dollar amount.--The per
capita dollar amount is--
``(I) for calendar year 2026,
$12.30,
``(II) for calendar year 2027,
$24.50, and
``(III) for calendar years 2028 and
thereafter, $36.75.
``(ii) Minimum ceiling amount.--The minimum
ceiling amount is--
``(I) for calendar year 2026,
$14,000,000,
``(II) for calendar year 2027,
$28,000,000, and
``(III) for calendar years 2028 and
thereafter, $42,000,000.
``(iii) Cost-of-living adjustment.--In the
case of a calendar year beginning after 2028,
the $36.75 and $42,000,000 amounts in clauses
(i)(III) and (ii)(III) shall each be increased
by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2027' for
`calendar year 2016' in subparagraph
(A)(ii) thereof.
In the case of the $42,000,000 amount, any
increase under this clause which is not a
multiple of $5,000 shall be rounded to the next
lowest multiple of $5,000 and in the case of
the $36.75 amount, any increase under this
clause which is not a multiple of 5 cents shall
be rounded to the next lowest multiple of 5
cents.
``(D) Population.--For purposes of this paragraph,
population shall be determined in accordance with
section 146(j).
``(E) Unused rental reduction credit allocated
among certain states.--
``(i) In general.--The unused rental
reduction credit of a State for any calendar
year shall be assigned to the Secretary for
allocation among qualified States for the
succeeding calendar year.
``(ii) Unused rental reduction credit.--For
purposes of this subparagraph, the unused
rental reduction credit of a State for any
calendar year is the excess (if any) of--
``(I) the State rental reduction
credit ceiling for the year preceding
such year, over
``(II) the aggregate rental
reduction credit amounts allocated for
such year.
``(iii) Formula for allocation of unused
credit among qualified states.--The amount
allocated under this subparagraph to a
qualified State for any calendar year shall be
the amount determined by the Secretary to bear
the same ratio to the aggregate unused rental
reduction credits of all States for the
preceding calendar year as such State's
population for the calendar year bears to the
population of all qualified States for the
calendar year. For purposes of the preceding
sentence, population shall be determined in
accordance with section 146(j).
``(iv) Qualified state.--For purposes of
this subparagraph, the term `qualified State'
means, with respect to a calendar year, any
State--
``(I) which allocated its entire
State rental reduction credit ceiling
for the preceding calendar year, and
``(II) for which a request is made
(at such time and in such manner as the
Secretary may prescribe) to receive an
allocation under clause (iii).
``(5) Other definitions.--For purposes of this section--
``(A) Rental reduction credit agency.--The term
`rental reduction credit agency' means any agency
authorized by a State to carry out this section. Such
authorization shall include the jurisdictions within
the State where the agency may allocate rental
reduction credit amounts.
``(B) Possessions treated as states.--The term
`State' includes a possession of the United States.
``(C) Family.--The term `family' has the same
meaning as when used in the United States Housing Act
of 1937.
``(d) Modifications To Correct Inaccurate Amounts Due to Incorrect
Estimates.--
``(1) Establishment of reserves.--
``(A) In general.--Each rental reduction credit
agency of a State shall establish a reserve for the
transfer and reallocation of amounts pursuant to this
paragraph, and notwithstanding any other provision of
this section, the rental reduction credit amount
allocated to any building by such agency shall be zero
unless such agency has in effect such a reserve at the
time of the allocation of such credit amount.
``(B) Transfers to reserve.--
``(i) In general.--If, for any taxable
year, a taxpayer would (but for this
subparagraph) not be able to use the entire
rental reduction credit amount allocated to a
qualified building by a rental reduction credit
agency of a State for the taxable year because
of a rental reduction shortfall, then the
taxpayer shall for the taxable year transfer to
the reserve established by such agency under
subparagraph (A) an amount equal to such rental
reduction shortfall.
``(ii) Rental reduction shortfall.--For
purposes of this subparagraph, the rental
reduction shortfall for any qualified building
for any taxable year is the amount by which the
aggregate amount of the excesses determined
under subsection (b)(1) for all eligible units
within such building are less than such
aggregate amount estimated under subsection
(c)(2)(B) for the taxable year.
``(iii) Treatment of transferred amount.--
For purposes of subsection (a)(2)(A), the
aggregate qualified rental reduction amounts
for all eligible units within a qualified
building with respect to which clause (i)
applies for any taxable year shall be increased
by an amount equal to the applicable percentage
(determined under subsection (e)(1) for the
building) of the amount of the transfer to the
reserve under clause (i) with respect to such
building for such taxable year.
``(C) Reallocation of amounts transferred.--
``(i) In general.--If, for any taxable
year--
``(I) the aggregate qualified
rental reduction amounts for all
eligible units within a qualified
building for the taxable year, exceed
``(II) the rental reduction credit
amount allocated to such building by a
rental reduction credit agency of a
State for the taxable year (determined
after any increase under paragraph
(2)),
the rental reduction credit agency shall, upon
application of the taxpayer, pay to the
taxpayer from the reserve established by such
agency under subparagraph (A) the amount which,
when multiplied by the applicable percentage
(determined under subsection (e)(1) for the
building), equals such excess. If the amount in
the reserve is less than the amounts requested
by all taxpayers for taxable years ending
within the same calendar year, the agency shall
ratably reduce the amount of each payment
otherwise required to be made.
``(ii) Excess reserve amounts.--If a rental
reduction credit agency of a State determines
that the balance in its reserve is in excess of
the amounts reasonably needed over the
following 5 calendar years to make payments
under clause (i), the agency may withdraw such
excess but only to--
``(I) reduce the rental payments of
eligible tenants in a qualified
building in units other than eligible
units, or of eligible tenants in units
in a building other than a qualified
building, to amounts no higher than the
sum of rental payments required for
eligible tenants in qualified buildings
under subsection (b)(3) and any rental
charges to such tenants in excess of
the market rent standard; or
``(II) address maintenance and
repair needs in qualified buildings
that cannot reasonably be met using
other resources available to the owners
of such buildings.
``(D) Administration.--Each rental reduction credit
agency of a State shall establish procedures for the
timing and manner of transfers and payments made under
this paragraph.
``(E) Special rule for projects.--In the case of a
rental reduction credit allocated to a project
consisting of more than 1 qualified building, a
taxpayer may elect to have this paragraph apply as if
all such buildings were 1 qualified building if the
applicable percentage for each such building is the
same.
``(F) Alternative methods of transfer and
reallocation.--Upon request to, and approval by, the
Secretary, a State may establish an alternative method
for the transfer and reallocation of amounts otherwise
required to be transferred to, and allocated from, a
reserve under this paragraph. Any State adopting an
alternative method under this subparagraph shall, at
such time and in such manner as the Secretary
prescribes, provide to the Secretary and the Secretary
of Housing and Urban Development detailed reports on
the operation of such method, including providing such
information as such Secretaries may require.
``(2) Allocation of returned state ceiling amounts.--In the
case of any rental reduction credit amount allocated to a
qualified building which is canceled as provided in subsection
(c)(4)(B)(i), the rental reduction credit agency may, in lieu
of treating such allocation as a returned credit amount under
subsection (c)(4)(A)(ii), elect to allocate, upon the request
of the taxpayer, such amount to any other qualified building
for which the credit amount allocated in any preceding calendar
year was too small because the estimates made under subsection
(c)(2)(B) were substantially incorrect.
``(3) Renting to noneligible tenants.--If, after the
application of paragraphs (1)(C) (or any similar reallocation
under paragraph (1)(F)) and (2), a rental reduction credit
agency of a State determines that, because of the incorrect
estimates under subsection (c)(2)(B), the aggregate qualified
rental reduction amounts for all eligible units within a
qualified building will (on an ongoing basis) exceed the rental
reduction credit amount allocated to such building, a taxpayer
may elect, subject to subsection (g)(2) and only to the extent
necessary to eliminate such excess, rent vacant eligible units
without regard to the requirements that such units be rented
only to eligible tenants and at the rental rate determined
under subsection (b)(3).
``(e) Terms Relating to Rental Reduction Credit and Requirements.--
For purposes of this section--
``(1) Applicable percentage.--
``(A) In general.--The term `applicable percentage'
means, with respect to any qualified building, the
percentage (not greater than 110 percent) set by the
rental reduction credit agency at the time it allocates
the rental reduction dollar amount to such building.
``(B) Higher percentage for high-opportunity
areas.--The rental reduction credit agency may set a
percentage under subparagraph (A) up to 120 percent for
any qualified building which--
``(i) targets its eligible units for rental
to families with children, and
``(ii) is located in a neighborhood which
has a poverty rate of no more than 10 percent.
``(2) Credit period.--
``(A) In general.--The term `credit period' means,
with respect to any qualified building, the 15-year
period beginning with the first month for which the
qualified rental reduction agreement is in effect with
respect to such building.
``(B) State option to reduce period.--A rental
reduction credit agency may provide a credit period for
any qualified building which is less than 15 years.
``(3) Eligible unit.--
``(A) In general.--The term `eligible unit' means,
with respect to any qualified building, a unit--
``(i) which is occupied by an eligible
tenant,
``(ii) the rent of which for any month
equals 30 percent of the monthly family income
of the residents of such unit (as determined
under paragraph (5)),
``(iii) with respect to which the tenant is
not concurrently receiving rental assistance
under any other Federal program, and
``(iv) which is certified to the rental
reduction credit agency as an eligible unit for
purposes of this section and the qualified
rental reduction agreement.
Notwithstanding clause (iii), a State may provide in
its State rental reduction allocation plan that an
eligible unit shall also not include a unit with
respect to which any resident is receiving rental
assistance under a State or local program.
``(B) Limitation on number of units.--
``(i) In general.--The number of units
which may be certified as eligible units with
respect to any qualified building under
subparagraph (A)(iv) at any time shall not
exceed the greater of--
``(I) 40 percent of the total units
in such building, or
``(II) 25 units.
In the case of an allocation to a project under
subsection (c)(1)(B), the limitation under the
preceding sentence shall be applied on a
project basis and the certification of such
eligible units shall be allocated to each
building in the project, except that if
buildings in such project are on non-contiguous
tracts of land, buildings on each such tract
shall be treated as a separate project for
purposes of applying this sentence.
``(ii) Buildings receiving previous federal
rental assistance.--If, at any time prior to
the entering into of a qualified rental
reduction agreement with respect to a qualified
building, tenants in units within such building
had been receiving project-based rental
assistance under any other Federal program,
then, notwithstanding clause (i), the maximum
number of units which may be certified as
eligible units with respect to the building
under subparagraph (A)(iv) shall not be less
than the sum of--
``(I) the maximum number of units
in the building previously receiving
such assistance at any time before the
agreement takes effect, plus
``(II) the amount determined under
clause (i) without taking into account
the units described in subclause (I).
``(4) Eligible tenant.--
``(A) In general.--The term `eligible tenant' means
any individual if the individual's family income does
not exceed the greater of--
``(i) 30 percent of the area median gross
income (as determined under section 42(g)(1)),
or
``(ii) the applicable poverty line for a
family of the size involved.
``(B) Treatment of individuals whose incomes rise
above limit.--
``(i) In general.--Notwithstanding an
increase in the family income of residents of a
unit above the income limitation applicable
under subparagraph (A), such residents shall
continue to be treated as eligible tenants if
the family income of such residents initially
met such income limitation and such unit
continues to be certified as an eligible unit
under this section.
``(ii) No rental reduction for at least 2
years.--A qualified rental reduction agreement
with respect to a qualified building shall
provide that if, by reason of an increase in
family income described in clause (i), there is
no qualified rental reduction amount with
respect to the dwelling unit for 2 consecutive
years, the taxpayer shall rent the next
available unit to an eligible tenant (without
regard to whether such unit is an eligible unit
under this section).
``(C) Applicable poverty line.--The term
`applicable poverty line' means the most recently
published poverty line (within the meaning of section
2110(c)(5) of the Social Security Act (42 U.S.C.
1397jj(c)(5))) as of the time of the determination as
to whether an individual is an eligible tenant.
``(5) Family income.--
``(A) In general.--Family income shall be
determined in the same manner as under section 8 of the
United States Housing Act of 1937.
``(B) Time for determining income.--
``(i) In general.--Except as provided in
this subparagraph, family income shall be
determined at least annually on the basis of
income for the preceding calendar year.
``(ii) Families on fixed income.--If at
least 90 percent of the family income of the
residents of a unit at the time of any
determination under clause (i) is derived from
payments under title II or XVI of the Social
Security Act (or any similar fixed income
amounts specified by the Secretary), the
taxpayer may elect to treat such payments (or
amounts) as the family income of such residents
for the year of the determination and the 2
succeeding years, except that the taxpayer
shall, in such manner as the Secretary may
prescribe, adjust such amount for increases in
the cost of living.
``(iii) Initial income.--The Secretary may
allow a State to provide that the family income
of residents at the time such residents first
rent a unit in a qualified building may be
determined on the basis of current or
anticipated income.
``(iv) Special rules where family income is
reduced.--If residents of a unit establish (in
such manner as the rental reduction credit
agency provides) that their family income has
been reduced by at least 10 percent below such
income for the determination year--
``(I) such residents may elect, at
such time and in such manner as such
agency may prescribe, to have their
family income redetermined, and
``(II) clause (ii) shall not apply
to any of the 2 succeeding years
described in such clause which are
specified in the election.
``(f) State Rental Reduction Allocation Plan.--
``(1) Adoption of plan required.--
``(A) In general.--For purposes of this section--
``(i) each State shall, before the
allocation of its State rental reduction credit
ceiling, establish and have in effect a State
rental reduction allocation plan, and
``(ii) notwithstanding any other provision
of this section, the rental reduction credit
amount allocated to any building shall be zero
unless such amount was allocated pursuant to a
State rental reduction allocation plan.
Such plan shall only be adopted after such plan is made
public and at least 60 days has been allowed for public
comment.
``(B) State rental reduction allocation plan.--For
purposes of this section, the term `State rental
reduction allocation plan' means, with respect to any
State, any plan of the State meeting the requirements
of paragraphs (2) and (3).
``(2) General plan requirements.--A plan shall meet the
requirements of this paragraph only if--
``(A) the plan sets forth the criteria and
priorities which a rental reduction credit agency of
the State shall use in allocating the State rental
reduction credit ceiling to eligible units within a
building,
``(B) the plan provides that no credit allocation
shall be made which is not in accordance with the
criteria and priorities set forth under subparagraph
(A) unless such agency provides a written explanation
to the general public for any credit allocation which
is not so made and the reasons why such allocation is
necessary, and
``(C) the plan provides that such agency is
required to prioritize the renewal of existing credit
allocations at the time of the expiration of the
qualified rental reduction agreement with respect to
the allocation, including, where appropriate, a
commitment within a qualified rental reduction
agreement that the credit allocation will be renewed if
the terms of the agreement have been met and sufficient
new credit authority is available.
``(3) Specific requirements.--A plan shall meet the
requirements of this paragraph only if--
``(A) the plan provides methods for determining--
``(i) the amount of rent which would be
charged for a substantially similar unit in the
same building which is not an eligible unit for
purposes of subsection (b)(2)(A)(i), including
whether such determination may be made by self-
certification or by undertaking rent
reasonableness assessments similar to
assessments required under section 8(o)(10) of
the United States Housing Act of 1937 (42
U.S.C. 1437f(o)(10)),
``(ii) the qualified rental reduction
amounts under subsection (c)(2)(B), and
``(iii) the applicable percentage under
subsection (e)(1),
``(B) the plan provides a procedure that the rental
reduction credit agency (or an agent or other private
contractor of such agency) will follow in monitoring
for--
``(i) noncompliance with the provisions of
this section and the qualified rental reduction
agreement and in notifying the Internal Revenue
Service of any such noncompliance of which such
agency becomes aware, and
``(ii) noncompliance with habitability
standards through regular site visits,
``(C) the plan requires a person receiving a credit
allocation to report to the rental reduction credit
agency such information as is necessary to ensure
compliance with the provisions of this section and the
qualified rental reduction agreement, and
``(D) the plan provides methods by which any excess
reserve amounts which become available under subsection
(d)(1)(C)(ii) will be used to reduce rental payments of
eligible tenants or to address maintenance and repair
needs in qualified buildings, including how such
assistance will be allocated among eligible tenants and
qualified buildings.
``(g) Qualified Rental Reduction Agreement.--For purposes of this
section--
``(1) In general.--The term `qualified rental reduction
agreement' means, with respect to any building which is
residential rental property (as defined in section
168(e)(2)(A)), a written, binding agreement between a rental
reduction credit agency and the taxpayer which specifies--
``(A) the number of eligible units within such
building for which a rental reduction credit amount is
being allocated,
``(B) the credit period for such building,
``(C) the rental reduction credit amount allocated
to such building (and dwelling units within such
building) and the portion of such amount allocated to
each month within the credit period under subsection
(c)(2)(B),
``(D) the applicable percentage to be used in
computing the qualified rental reduction amounts with
respect to the building,
``(E) the method for determining the amount of rent
which may be charged for eligible units within the
building, and
``(F) whether--
``(i) the agency commits to entering into a
new agreement with the taxpayer if the terms of
the agreement have been met and sufficient new
credit authority is available for such new
agreement, and
``(ii) the taxpayer is required to accept
such new agreement.
``(2) Tenant protections.--A qualified rental reduction
agreement shall provide the following:
``(A) Non-displacement of non-eligible tenants.--A
taxpayer receiving a rental reduction credit amount may
not refuse to renew the lease of or evict (other than
for good cause) a tenant of a unit who is not an
eligible tenant at any time during the credit period
and such unit shall not be treated as an eligible unit
while such tenant resides there.
``(B) Only good cause evictions of eligible
tenants.--A taxpayer receiving a rental reduction
credit amount may not refuse to renew the lease of or
evict (other than for good cause) an eligible tenant of
an eligible unit.
``(C) Mobility.--A taxpayer receiving a rental
reduction credit amount shall--
``(i) give priority to rent any available
unit of suitable size to tenants who are
eligible tenants who are moving from another
qualified building where such tenants had lived
at least 1 year and were in good standing, and
``(ii) inform eligible tenants within the
building of their right to move after 1 year
and provide a list maintained by the State of
qualified buildings where such tenants might
move.
``(D) Fair housing and civil rights.--If a taxpayer
receives a rental reduction credit amount--
``(i) such taxpayer shall comply with the
Fair Housing Act with respect to the building,
and
``(ii) the receipt of such amount shall be
treated as the receipt of Federal financial
assistance for purposes of applying any Federal
civil rights laws.
``(E) Admissions preferences.--A taxpayer receiving
a rental reduction credit amount shall comply with any
admissions preferences established by the State for
tenants within particular demographic groups eligible
for health or social services.
``(3) Compliance requirements.--A qualified rental
reduction agreement shall provide that a taxpayer receiving a
rental reduction credit amount shall comply with all reporting
and other procedures established by the State to ensure
compliance with this section and such agreement.
``(4) Projects.--In the case of a rental reduction credit
allocated to a project consisting of more than 1 building, the
rental reduction credit agency may provide for a single
qualified rental reduction agreement which applies to all
buildings which are part of such project.
``(h) Certifications and Other Reports to Secretary.--
``(1) Certification with respect to 1st year of credit
period.--Following the close of the 1st taxable year in the
credit period with respect to any qualified building, the
taxpayer shall certify to the Secretary (at such time and in
such form and in such manner as the Secretary prescribes)--
``(A) the information described in subsection
(g)(1) required to be contained in the qualified rental
reduction agreement with respect to the building, and
``(B) such other information as the Secretary may
require.
In the case of a failure to make the certification required by
the preceding sentence on the date prescribed therefor, unless
it is shown that such failure is due to reasonable cause and
not to willful neglect, no credit shall be allowable by reason
of subsection (a) with respect to such building for any taxable
year ending before such certification is made.
``(2) Annual reports to the secretary.--The Secretary may
require taxpayers to submit an information return (at such time
and in such form and manner as the Secretary prescribes) for
each taxable year setting forth--
``(A) the information described in paragraph (1)(A)
for the taxable year, and
``(B) such other information as the Secretary may
require.
The penalty under section 6652(j) shall apply to any failure to
submit the return required by the Secretary under the preceding
sentence on the date prescribed therefor.
``(3) Annual reports from rental reduction credit agency.--
``(A) Reports.--Each rental reduction credit agency
which allocates any rental reduction credit amount to 1
or more buildings for any calendar year shall submit to
the Secretary (at such time and in such manner as the
Secretary shall prescribe) an annual report
specifying--
``(i) the amount of rental reduction credit
amounts allocated to each such building for
such year,
``(ii) sufficient information to identify
each such building and the taxpayer with
respect thereto,
``(iii) information as to the demographic
and income characteristics of eligible tenants
of all such buildings to which such amounts
were allocated, and
``(iv) such other information as the
Secretary may require.
``(B) Penalty.--The penalty under section 6652(j)
shall apply to any failure to submit the report
required by subparagraph (A) on the date prescribed
therefor.
``(C) Information made public.--The Secretary
shall, in consultation with the Secretary of Housing
and Urban Development, make information reported under
this paragraph for each qualified building available to
the public annually to the greatest degree possible
without disclosing personal information about
individual tenants.
``(i) Special Rule for Payments to Partnerships and S
Corporations.--For purposes of this subtitle, in the case of any
qualified building directly held by any partnership or S corporation,
the payment under section 6436 shall be made in lieu of the credit
determined under this section with respect to such building.
``(j) Regulations and Guidance.--The Secretary shall prescribe such
regulations or guidance as may be necessary to carry out the purposes
of this section, including--
``(1) providing necessary forms and instructions, and
``(2) providing for proper treatment of projects for which
a credit is allowed both under this section and section 42.''.
(b) Payment to Partnerships and S Corporations in Lieu of Credit.--
(1) In general.--Subchapter B of chapter 65 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 6436. PAYMENTS IN LIEU OF RENTERS CREDIT FOR PARTNERSHIPS AND S
CORPORATIONS.
``(a) In General.--In the case of any qualified building (as
defined in section 36C(a)(3)) directly held by any partnership or S
corporation, the Secretary shall pay to such partnership or S
corporation for any taxable year an amount equal to the amount of the
credit which, but for section 36C(i), would be allowed under section
36C with respect to such building.
``(b) Regulatory Authority.--The Secretary shall prescribe such
regulations, rules, and guidance as may be necessary to carry out
section 36C(i), section 92, and this section, including regulations,
rules, and guidance providing for--
``(1) the application of the rules under section 36C with
respect to payments under this section in the same manner as
such rules apply for purposes of the credit under section 36C,
``(2) the time and manner of payments under subsection (a),
and
``(3) the determination of a partner's distributive share,
or an S corporation shareholder's pro rata share, of any
payment under subsection (a).''.
(2) Conforming amendment.--The table of sections for
subchapter B of chapter 65 of the Internal Revenue Code of 1986
is amended by adding at the end the following new item:
``Sec. 6436. Payments in lieu of renters credit for partnerships and S
corporations.''.
(c) Credit Includible in Gross Income.--
(1) In general.--Part II of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new section:
``SEC. 92. INCLUSION IN INCOME OF RENTERS CREDIT AND PAYMENTS.
``Gross income includes the amount of the credit allowed to the
taxpayer under section 36C for the taxable year and the amount of any
payment in lieu of such credit under section 6436.''.
(2) Income disregarded for alternative minimum taxable
income.--Section 56(a) of such Code is amended by adding at the
end the following:
``(8) Section 92 not applicable.--Section 92 (relating to
inclusion in income of renters credit) shall not apply.''.
(3) Conforming amendment.--The table of sections for part
II of subchapter B of chapter 1 of such Code is amended by
adding at the end the following new item:
``Sec. 92. Inclusion in income of renters credit and payments.''.
(d) Administrative Fees.--No provision of, or amendment made by,
this Act shall be construed to prevent a rental reduction credit agency
of a State from imposing fees to cover its costs or from levying any
such fee on a taxpayer applying for or receiving a rental reduction
credit amount.
(e) Other Conforming Amendments.--
(1) Section 6211(b)(4) of the Internal Revenue Code of 1986
is amended by inserting ``36C (including any related payment
under section 6436),'' after ``36B,''.
(2) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``36C (including any
related payment under section 6436),'' after ``36B,''.
(3) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 36B
the following new item:
``Sec. 36C. Renters credit.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 212. MIDDLE-INCOME HOUSING TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 42 the following new section:
``SEC. 42A. MIDDLE-INCOME HOUSING CREDIT.
``(a) In General.--For purposes of section 38, the amount of the
middle-income housing credit determined under this section for any
taxable year in the credit period shall be an amount equal to--
``(1) the applicable percentage, of
``(2) the qualified basis of each qualified middle-income
building.
``(b) Applicable Percentage.--
``(1) Determination of applicable percentage.--For purposes
of this section--
``(A) In general.--The term `applicable percentage'
means, with respect to any building, the appropriate
percentage prescribed by the Secretary for the earlier
of--
``(i) the month in which such building is
placed in service, or
``(ii) at the election of the taxpayer, the
month in which the taxpayer and the housing
credit agency enter into an agreement with
respect to such building (which is binding on
such agency, the taxpayer, and all successors
in interest) as to the housing credit dollar
amount to be allocated to such building.
A month may be elected under clause (ii) only if the
election is made not later than the 5th day after the
close of such month. Such an election, once made, shall
be irrevocable.
``(B) Method of prescribing percentages.--The
percentages prescribed by the Secretary for any month
shall be percentages which will yield over a 15-year
period amounts of credit under subsection (a) which
have a present value equal to--
``(i) 50 percent of the qualified basis of
a new building which is not federally
subsidized for the taxable year, and
``(ii) 20 percent of the qualified basis of
a building not described in clause (i).
``(C) Method of discounting.--The present value
under subparagraph (B) shall be determined--
``(i) as of the last day of the 1st year of
the 15-year period referred to in subparagraph
(B),
``(ii) by using a discount rate equal to 72
percent of the average of the annual Federal
mid-term rate and the annual Federal long-term
rate applicable under section 1274(d)(1) to the
month applicable under clause (i) or (ii) of
subparagraph (A) and compounded annually, and
``(iii) by assuming that the credit
allowable under this section for any year is
received on the last day of such year.
``(2) Minimum credit rate.--
``(A) In general.--The applicable percentage for
any building which is not federally subsidized for the
taxable year shall not be less than 5 percent.
``(B) Minimum credit rate for federally subsidized
buildings.--In the case of any building to which
subparagraph (A) does not apply, except as provided in
paragraph (3), the applicable percentage shall not be
less than 2 percent.
``(3) Exception for certain federally subsidized
buildings.--In the case of any building to which paragraph
(2)(A) does not apply, the applicable percentage is zero
unless--
``(A) a credit is allowed under section 42 with
respect to such building for the taxable year, and
``(B) such building is financed by tax-exempt bonds
as described in section 42(h)(4).
``(4) Cross references.--
``(A) For treatment of certain rehabilitation
expenditures as separate new buildings, see subsection
(e).
``(B) For determination of applicable percentage
for increases in qualified basis after the 1st year of
the credit period, see subsection (f)(3).
``(C) For authority of housing credit agency to
limit applicable percentage and qualified basis which
may be taken into account under this section with
respect to any building, see subsection (h)(6).
``(c) Qualified Basis; Qualified Middle-Income Building.--For
purposes of this section--
``(1) Qualified basis.--
``(A) Determination.--The qualified basis of any
qualified middle-income building for any taxable year
is an amount equal to--
``(i) the applicable fraction (determined
as of the close of such taxable year), of
``(ii) the eligible basis of such building
(determined under subsection (d)).
``(B) Applicable fraction.--For purposes of
subparagraph (A), the term `applicable fraction' means
the smaller of the unit fraction or the floor space
fraction.
``(C) Unit fraction.--For purposes of subparagraph
(B), the term `unit fraction' means the fraction--
``(i) the numerator of which is the number
of middle-income units in the building, and
``(ii) the denominator of which is the
number of residential rental units (whether or
not occupied) in such building.
``(D) Floor space fraction.--For purposes of
subparagraph (B), the term `floor space fraction' means
the fraction--
``(i) the numerator of which is the total
floor space of the middle-income units in such
building, and
``(ii) the denominator of which is the
total floor space of the residential rental
units (whether or not occupied) in such
building.
``(2) Qualified middle-income building.--The term
`qualified middle-income building' means any building which is
part of a qualified middle-income housing project at all times
during the period--
``(A) beginning on the 1st day in the credit period
on which such building is part of such a project, and
``(B) ending on the last day of the credit period
with respect to such building.
``(d) Eligible Basis.--For purposes of this section--
``(1) New buildings.--The eligible basis of a new building
is its adjusted basis as of the close of the 1st taxable year
of the credit period.
``(2) Existing buildings.--
``(A) In general.--The eligible basis of an
existing building is--
``(i) in the case of a building which meets
the requirements of subparagraph (B), its
adjusted basis as of the close of the 1st
taxable year of the credit period, and
``(ii) zero in any other case.
``(B) Requirements.--A building meets the
requirements of this subparagraph if--
``(i) the building is acquired by purchase
(as defined in section 179(d)(2)),
``(ii) there is a period of at least 10
years between the date of its acquisition by
the taxpayer and the date the building was last
placed in service,
``(iii) the building was not previously
placed in service by the taxpayer or by any
person who was a related person with respect to
the taxpayer as of the time previously placed
in service, and
``(iv) except as provided in subsection
(f)(5), a credit is allowable under subsection
(a) by reason of subsection (e) with respect to
the building.
``(C) Adjusted basis.--For purposes of subparagraph
(A), the adjusted basis of any building shall not
include so much of the basis of such building as is
determined by reference to the basis of other property
held at any time by the person acquiring the building.
``(D) Special rules.--
``(i) Special rules for certain
transfers.--For purposes of determining under
subparagraph (B)(ii) when a building was last
placed in service, there shall not be taken
into account any placement in service--
``(I) in connection with the
acquisition of the building in a
transaction in which the basis of the
building in the hands of the person
acquiring it is determined in whole or
in part by reference to the adjusted
basis of such building in the hands of
the person from whom acquired,
``(II) by a person whose basis in
such building is determined under
section 1014(a) (relating to property
acquired from a decedent),
``(III) by any governmental unit or
qualified nonprofit organization (as
defined in subsection (h)(4)) if the
requirements of subparagraph (B)(ii)
are met with respect to the placement
in service by such unit or organization
and all the income from such property
is exempt from Federal income taxation,
``(IV) by any person who acquired
such building by foreclosure (or by
instrument in lieu of foreclosure) of
any purchase-money security interest
held by such person if the requirements
of subparagraph (B)(ii) are met with
respect to the placement in service by
such person and such building is resold
within 12 months after the date such
building is placed in service by such
person after such foreclosure, or
``(V) of a single-family residence
by any individual who owned and used
such residence for no other purpose
than as his principal residence.
``(ii) 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).
``(3) Eligible basis reduced where disproportionate
standards for units.--
``(A) In general.--Except as provided in
subparagraph (B), the eligible basis of any building
shall be reduced by an amount equal to the portion of
the adjusted basis of the building which is
attributable to residential rental units in the
building which are not middle-income units and which
are above the average quality standard of the middle-
income units in the building.
``(B) Exception where taxpayer elects to exclude
excess costs.--
``(i) In general.--Subparagraph (A) shall
not apply with respect to a residential rental
unit in a building which is not a middle-income
unit if--
``(I) the excess described in
clause (ii) with respect to such unit
is not greater than 15 percent of the
cost described in clause (ii)(II), and
``(II) the taxpayer elects to
exclude from the eligible basis of such
building the excess described in clause
(ii) with respect to such unit.
``(ii) Excess.--The excess described in
this clause with respect to any unit is the
excess of--
``(I) the cost of such unit, over
``(II) the amount which would be
the cost of such unit if the average
cost per square foot of middle-income
units in the building were substituted
for the cost per square foot of such
unit.
The Secretary may by regulation provide for the
determination of the excess under this clause
on a basis other than square foot costs.
``(4) Special rules relating to determination of adjusted
basis.--For purposes of this subsection--
``(A) In general.--Except as provided in
subparagraph (B), the adjusted basis of any building
shall be determined without regard to the adjusted
basis of any property which is not residential rental
property.
``(B) Basis of property in common areas, etc.,
included.--
``(i) In general.--Except as provided in
clause (ii), the adjusted basis of any building
shall be determined by taking into account the
adjusted basis of property (of a character
subject to the allowance for depreciation) used
in common areas or provided as comparable
amenities to all residential rental units in
such building.
``(ii) Special rule.--In the case of any
building for which the low-income housing tax
credit is allowable under section 42, the
adjusted basis of the building under this
section shall be determined without regard to
property used in common areas or provided as
comparable amenities to all residential rental
units in such building.
``(C) No reduction for depreciation.--The adjusted
basis of any building shall be determined without
regard to paragraphs (2) and (3) of section 1016(a).
``(Official legislative text sourced from the public record (cached on CivicsHQ). Display truncated for length.
Official source
View the original bill, actions, and full legislative record on Congress.gov.
Status
In Committee
- 1Introduced
- 2Committee
- 3Floor
- 4Passed
- 5Signed
Timeline reflects current normalized status only. Full action history is not yet stored in the API.
Sponsors
- Rep. Hoyle, Val T. [D-OR-4]DHouseOR
Votes
Voting records are not yet available for this bill.