[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3316 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 3316
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for neighborhood revitalization, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 18, 2019
Mr. Higgins of New York (for himself and Mr. Kelly of Pennsylvania)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for neighborhood revitalization, 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.
This Act may be cited as the ``Neighborhood Homes Investment Act''.
SEC. 2. NEIGHBORHOOD HOMES 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. NEIGHBORHOOD HOMES CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the amount
of the neighborhood homes credit determined under this section for a
taxable year for a qualified project shall be, with respect to each
qualified residence that is part of such qualified project and that
experiences a qualified completion event during such taxable year, an
amount equal to--
``(1) in the case of an affordable sale, with respect to
the seller, the excess of--
``(A) the qualified development cost incurred by
such seller for such residence, over
``(B) the sale price of such residence, or
``(2) in the case of any other qualified completion event,
with respect to a taxpayer other than the owner of the
residence (or a related person with respect to such owner), the
excess of--
``(A) the development cost incurred by such
taxpayer for such residence, over
``(B) the amount received by such taxpayer as
payment for such rehabilitation.
``(b) Limitations.--
``(1) Amount.--The amount determined under subsection (a)
with respect to a residence shall not exceed 35 percent of the
lesser of--
``(A) the qualified development cost, or
``(B) 80 percent of the national median sale price
for new homes.
``(2) Allocations.--
``(A) In general.--The amount determined under
subsection (a) with respect to a residence that is part
of a qualified project and that experiences a qualified
completion event shall not exceed the excess of--
``(i) the amount determined under
subparagraph (B), over
``(ii) the amounts previously determined
under subsection (a) with respect to such
qualified project.
``(B) Allocation amount.--The amount determined
under this paragraph with respect to a residence that
is part of a qualified project and that experiences a
qualified completion event is the least of--
``(i) the amount allocated to such project
by the neighborhood homes credit agency under
this section,
``(ii) the amount such agency determines at
the time of the qualified completion event is
necessary to ensure the financial feasibility
of the project given the sources and uses of
funds and the total financing (including local,
State, and Federal subsidies) planned for the
project, or
``(iii) in the case of a qualified
completion event that occurs after the 5-year
period beginning on the date of the allocation
referred to in clause (i), $0.
``(c) Qualified Development Cost.--For purposes of this section--
``(1) In general.--The term `qualified development cost'
means, with respect to a residence so much of the allowable
development cost as the neighborhood homes credit agency
certifies, at the time of the completion event--
``(A) meets the standards promulgated under
subsection (h)(1)(C), and
``(B) does not represent unreasonable fees by the
taxpayer claiming the credit under subsection (a).
``(2) Allowable development cost.--The term `allowable
development cost' means--
``(A) the cost of construction, substantial
rehabilitation, demolition of any structure, and
environmental remediation, and
``(B) in the case of an affordable sale, so much of
the cost of acquiring buildings and land as does not
exceed an amount equal to 75 percent of the costs
described in subparagraph (A).
``(3) Properties with multiple residences.--The allowable
development cost of any residence shall include on a pro-rata
basis the allowable development cost with respect to common
areas or other comparable amenities.
``(d) Qualified Project.--For purposes of this section, the term
`qualified project' means a project that--
``(1) a neighborhood homes credit agency certifies will
build or substantially rehabilitate 1 or more qualified
residences located in one or more qualified census tracts, and
``(2) is designated by such agency as a qualified project
under this section and is allocated (before such building or
substantial rehabilitation begins) a portion of the amount
allocated to such agency under subsection (g).
``(e) Qualified Census Tract.--For purposes of this section--
``(1) In general.--The term `qualified census tract' means
a census tract--
``(A) with--
``(i) a median gross income which does not
exceed 80 percent of the applicable area median
gross income,
``(ii) a poverty rate that is not less than
130 percent of the applicable area poverty
rate, and
``(iii) a median value for owner-occupied
homes that does not exceed applicable area
median value for owner-occupied homes, or
``(B) that is--
``(i) in a nonmetropolitan county,
``(ii) with a median gross income which
does not exceed the applicable area median
gross income, and
``(iii) designated by a neighborhood homes
credit agency under this clause.
``(2) Additional census tracts for substantial
rehabilitation.--In the case of a residence that is intended
for substantial rehabilitation described in subsection
(f)(5)(B), the term `qualified census tract' includes a census
tract that meets the requirements of paragraph (1)(A), without
regard to clause (iii), and that is designated by the
neighborhood homes credit agency under this paragraph.
``(3) List of qualified census tracts.--The Secretary of
Housing and Urban Development shall make publically available a
list of qualified census tracts under paragraph (1)(A), a list
of qualified census tracts under paragraph (1)(B), and a list
of qualified census tracts under paragraph (2) for each year.
``(f) Other Definitions.--For purposes of this section--
``(1) Qualified residence.--The term `qualified residence'
means a residence that consists of--
``(A) a single-family home containing 4 or fewer
residential units,
``(B) a condominium, or
``(C) a house or an apartment owned by a
cooperative housing corporation (as defined in section
216(b)).
``(2) Affordable sale.--
``(A) In general.--
``(i) In general.--The term `affordable
sale' means a sale to a qualified homeowner of
a residence that the neighborhood homes credit
agency certifies as meeting the standards
promulgated under subsection (h)(1)(D) for a
price that does not exceed--
``(I) in the case of any residence
not described in subclause (II), (III),
or (IV), the amount equal to the
product of 4 multiplied by the
applicable area median gross income,
``(II) in the case of a single-
family home containing two residential
units, 125 percent of the amount
described in subclause (I),
``(III) in the case of a single-
family home containing three
residential units, 150 percent of the
amount described in subclause (I), or
``(IV) in the case of a single-
family home containing four residential
units, 175 percent of the amount
described in subclause (I).
``(ii) Related persons.--
``(I) In general.--A sale between
related persons shall not be treated as
an affordable sale.
``(II) Definition.--For purposes of
this section, a person (in this clause
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). For purposes of the
preceding sentence, in applying section
267(b) or 707(b)(1), `10 percent' shall
be substituted for `50 percent'.
``(3) Applicable area.--The term `applicable area' means--
``(A) in the case of a metropolitan census tract,
the metropolitan area in which such census tract is
located, and
``(B) in the case of a census tract other than a
census tract described in subparagraph (A), the State.
``(4) Substantial rehabilitation.--The term `substantial
rehabilitation' means rehabilitation efforts involving
qualified development costs that are not less than the greater
of--
``(A) $20,000, and
``(B) 20 percent of the cost of acquiring buildings
and land.
``(5) Qualified completion event.--The term `qualified
completion event' means--
``(A) in the case of a residence that is built or
substantially rehabilitated as part of a qualified
project and sold, an affordable sale, or
``(B) in the case of a residence that is
substantially rehabilitated as part of a qualified
project and owned by the same qualified homeowner
throughout such rehabilitation, the completion of such
rehabilitation (as determined by the neighborhood homes
credit agency) to the standards promulgated under
subsection (h)(1)(D).
``(6) Qualified homeowner.--
``(A) In general.--The term `qualified homeowner'
means, with respect to a residence, an individual--
``(i) who owns and uses such residence as
the principal residence of such individual, and
``(ii) whose income is 140 percent or less
of the applicable area median gross income for
the location of the residence.
``(B) Ownership.--For purposes of a cooperative
housing corporation (as such term is defined in section
216(b)), a tenant-stockholder shall be treated as
owning the house or apartment which such person is
entitled to occupy.
``(C) Income.--For purposes of this paragraph,
income shall be a determined in accordance with section
143(f)(2) and 143(f)(4).
``(D) Timing.--For purposes of this paragraph, the
income of a taxpayer shall be determined--
``(i) in the case of a residence that is
built or substantially rehabilitated as part of
a qualified project and sold, at the time a
binding contract for purchase is made, or
``(ii) in the case of a residence that is
occupied by a qualified homeowner and intended
to be substantially rehabilitated as part of a
qualified project, at the time a binding
contract to undertake such rehabilitation is
made.
``(7) Neighborhood homes credit agency.--The term
`neighborhood homes credit agency' means the agency designated
by the governor of a State as the neighborhood homes credit
agency of the State.
``(g) Allocation.--
``(1) State neighborhood homes credit ceiling.--The State
neighborhood homes credit amount for a State for a calendar
year is an amount equal to the sum of--
``(A) the greater of--
``(i) the product of $3, multiplied by the
State population (determined in accordance with
section 146(j)), or
``(ii) $4,000,000, plus
``(B) the converted private activity bond amount
with respect to the State for the calendar year.
``(2) Unused amount.--The State neighborhood homes credit
amount for a calendar year shall be increased by the sum of--
``(A) any amount certified by the neighborhood
homes credit agency of the State as having been
previously allocated to a qualified project and not
used during the 5-year period described in subsection
(b)(2)(iii), plus
``(B) sum of the amount by which the amount
determined under paragraph (1) (without application of
this paragraph) exceeded the amount allocated to
qualified projects in each of the three immediately
preceding calendar years.
``(3) Converted private activity bond amount.--
``(A) In general.--For purposes of this paragraph,
the converted private activity bond amount with respect
to any State for any calendar year shall be 60 percent
of the amount elected by--
``(i) the State agency that is an issuer of
qualified mortgage bonds (as defined in section
143) that is designated by the governor of the
State under this subparagraph for such year, or
``(ii) if no such agency exists, the
neighborhood homes credit agency of the State.
``(B) Reduction of private activity bond ceiling.--
The State ceiling under section 146(d)(1) shall be
reduced by the amount elected under subparagraph (A).
``(4) Portion of state credit ceiling for certain projects
involving qualified nonprofit organizations.--Rules similar to
the rules of section 42(h)(5) shall apply.
``(h) Responsibilities of Neighborhood Homes Credit Agencies.--
``(1) In general.--Notwithstanding subsection (g), the
State neighborhood homes credit dollar amount shall be zero for
a calendar year unless the neighborhood homes credit agency of
the State--
``(A) allocates such amount pursuant to a qualified
allocation plan of the neighborhood homes credit
agency,
``(B) allocates not more than 20 percent of such
amount for the previous year to projects with respect
to residences in census tracts under subsection
(e)(1)(B) or (e)(2),
``(C) promulgates standards with respect to
reasonable qualified development costs,
``(D) promulgates standards with respect to
construction quality, and
``(E) submits to the Secretary (at such time and in
such manner as the Secretary may prescribe) an annual
report specifying--
``(i) the amount of the neighborhood homes
credits allocated to each qualified project for
the previous year, and
``(ii) such other information as the
Secretary may require.
``(2) Qualified allocation plan.--For purposes of this
paragraph, the term `qualified allocation plan' means any plan
which--
``(A) sets forth the selection criteria to be used
to prioritize qualified projects for allocations of
State neighborhood homes credit dollar amounts,
including--
``(i) the need for new or substantially
rehabilitated owner-occupied homes in the area
addressed by the project,
``(ii) the expected contribution of the
project to neighborhood stability and
revitalization,
``(iii) the capability of the project
sponsor, and
``(iv) the likelihood the project will
result in long-term homeownership, and
``(B) has been made available for public comment.
``(i) Possessions Treated as States.--For purposes of this section,
the term `State' includes the District of Columbia and a possession of
the United States.
``(j) Repayment.--
``(1) In general.--If a residence is sold during the 5-year
period beginning on the date of the qualified completion event
described in subsection (a) with respect to such residence, the
seller shall transfer an amount equal to the repayment amount
from the amount realized on such sale to the relevant
neighborhood homes credit agency to be used to stabilize or
revitalize qualified census tracts (determined without regard
to paragraphs (1)(B) and (2) of subsection (e)).
``(2) Repayment amount.--For purposes of paragraph (1), the
repayment amount is an amount equal to 50 percent of the gain
from such resale, reduced by 20 percent for each year of the 5-
year period referred to in paragraph (1) which ends before the
date of the sale referred to in paragraph (1).
``(3) Lien for repayment amount.--A neighborhood homes
credit agency receiving an allocation under this section shall
place a lien on each residence that is built or rehabilitated
as part of a qualified project for the greatest amount that
could be required to be paid under this subsection to such
agency.
``(4) Denial of deductions if converted to rental
housing.--If, during the 5-year period beginning on the date of
the qualified completion event described in subsection (a), an
individual who owns a residence fails to use such residence as
such individual's principal residence for any period of time,
no deduction shall be allowed for expenses paid or incurred by
such individual with respect to renting, during such period of
time, such residence.
``(5) Waiver.--The neighborhood homes credit agency may
waive the repayment required under paragraph (1) in the case of
homeowner experiencing a hardship.
``(k) Inflation Adjustment.--
``(1) In general.--In the case of a calendar year after
2020, the dollar amounts in this section shall be increased by
an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by
substituting `calendar year 2019' for `calendar year
2016' in subparagraph (A)(ii) thereof.
``(2) Rounding.--
``(A) Substantial rehabilitation.--In the case of
the dollar amount in subsection (f)(4), any increase
under the preceding sentence which is not a multiple of
$1,000 shall be rounded to the nearest multiple of
$1,000.
``(B) In the case of the dollar amount in
subsection (g)(1)(A)(i), any increase under the
preceding sentence which is not a multiple of $0.01
shall be rounded to the nearest multiple of $0.01.
``(C) In the case of the dollar amount in
subsection (g)(1)(A)(ii), any increase under the
preceding sentence which is not a multiple of $100,000
shall be rounded to the nearest multiple of
$100,000.''.
(b) Current Year Business Credit Calculation.--Section 38(b) (of
the Internal Revenue Code of 1986) is amended by redesignating
paragraphs (6) through (37) as paragraphs (7) through (38),
respectively, and by inserting after paragraph (5) the following new
paragraph:
``(6) the neighborhood homes credit determined under
section 42A(a),''.
(c) Limitation on Carryback.--Section 39 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``(e) No Carryback of Neighborhood Homes Credit Before Effective
Date.--No amount of the unused credit attributable to section 42A may
be taken into account under section 38(a)(3) for any taxable year
beginning before the date of the enactment of this Act.''.
(d) Cancellation of Indebtedness.--Section 108 of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``or'' at the end of subsection (a)(1)(D),
by striking the period at the end of subsection (a)(1)(E)(ii)
and inserting ``, or'', and adding at the end of subsection
(a)(1) the following new subparagraph:
``(F) if the discharge is qualified neighborhood
homes credit indebtedness.'', and
(2) by adding at the end of subsection (b)(2) the following
new subparagraph:
``(H) Special rules relating to qualified
neighborhood homes credit indebtedness.--For purposes
of this section, the term `qualified neighborhood homes
credit indebtedness' means indebtedness arising in
connection with the development of a qualified
residence under section 42A.''.
(e) Conforming Amendments.--Subsections (i)(3)(D), (i)(6)(B)(i),
and (k)(1) of section 469 of the Internal Revenue Code of 1986 are each
amended by inserting ``or 42A'' after ``section 42''.
(f) Clerical Amendment.--The table of sections for subpart D 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 42 the
following:
``Sec. 42A. Neighborhood homes credit.''
(g) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2019.
<all>
Neighborhood Homes Investment Act
#3316 | HR Congress #116
Policy Area: Taxation
Subjects: Building constructionBusiness investment and capitalEconomic developmentEconomic performance and conditionsGovernment information and archivesHousing and community development fundingHousing finance and home ownershipHousing supply and affordabilityIncome tax creditsInflation and pricesResidential rehabilitation and home repair
Last Action: Referred to the House Committee on Ways and Means. (6/18/2019)
Bill Text Source: Congress.gov
Summary and Impacts
Original Text