Bill Summary
The "Energy Efficiency for Affordable Housing Act" aims to enhance the financial incentives for the rehabilitation of low-income housing by increasing the low-income housing credit for buildings that achieve improved energy performance.
Key provisions of the legislation include:
1. **Increased Rehabilitation Credit**: The act proposes an increase in the rehabilitation expenditure credit from 130% to 160% for buildings located in high-cost areas that meet enhanced energy performance standards. This is designed to encourage more energy-efficient renovations of existing buildings.
2. **Enhanced Energy Performance Criteria**: A building qualifies for the increased credit if it meets specific energy performance standards set by the Secretary of Energy. This can be achieved either by adhering to advanced construction standards or through a qualified retrofit plan that significantly reduces energy usage.
3. **Definitions**: The legislation defines terms such as "qualified retrofit plan," which outlines the energy-saving modifications, and "baseline energy usage intensity," which establishes a reference point for measuring improvements in energy efficiency.
4. **Implementation Timeline**: The amendments will apply to housing credit allocations made after December 31, 2025, with specific considerations for bond-financed projects.
Overall, this act seeks to promote sustainable practices in affordable housing, improve energy efficiency, and reduce operational costs for low-income housing facilities.
Possible Impacts
The proposed "Energy Efficiency for Affordable Housing Act" could have several impacts on people, particularly those in low-income housing, developers, and energy professionals. Here are three specific examples:
1. **Increased Affordability for Low-Income Tenants**:
The legislation enhances the low-income housing credit for rehabilitation expenditures on buildings that achieve improved energy performance. This means that property owners who make energy-efficient renovations will receive a higher tax credit (up to 130% or 160% in high-cost areas). As a result, landlords may pass on the savings from reduced energy costs to tenants through lower rent, making housing more affordable for low-income individuals and families.
2. **Incentives for Sustainable Development**:
By increasing the financial incentives for energy-efficient renovations, the legislation encourages developers and property owners to invest in sustainable building practices. This could lead to more environmentally friendly housing options, contributing to reduced carbon footprints and improved overall building performance. Communities may benefit from healthier living environments and decreased utility costs, which can enhance the quality of life for residents.
3. **Job Creation for Qualified Professionals**:
The requirement for a "qualified professional" (licensed architect or engineer) to develop and certify the qualified retrofit plans means that there will be increased demand for skilled labor in the energy efficiency sector. This could lead to job creation for architects, engineers, and contractors specializing in energy-efficient building practices. Additionally, training programs and educational opportunities may arise as professionals seek to meet the new demands, potentially boosting local economies and workforce development in green technologies.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2638 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 2638
To amend the Internal Revenue Code of 1986 to increase the low-income
housing credit for rehabilitation expenditures for buildings achieving
enhanced energy performance, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 31, 2025
Ms. Klobuchar (for herself, Ms. Warren, Ms. Smith, and Mr. Van Hollen)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to increase the low-income
housing credit for rehabilitation expenditures for buildings achieving
enhanced energy performance, 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 ``Energy Efficiency for Affordable
Housing Act''.
SEC. 2. INCREASE OF CREDIT.
(a) In General.--Paragraph (2) of section 42(e) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Increase in credit for buildings achieving
enhanced energy performance.--
``(i) In general.--In the case of any
existing building to which subsection (b)(2)
does not apply which achieves enhanced energy
performance, the rehabilitation expenditures
taken into account under subparagraph (A) shall
be 130 percent of such expenditures determined
without regard to this subparagraph.
``(ii) Enhanced energy performance.--For
purposes of clause (i), a building achieves
enhanced energy performance if it meets either
of the following:
``(I) The minimum requirements of
an advanced building construction
standard which shall be determined by
the Secretary of Energy using
prescriptive or performance methods of
calculation and promulgated by the
Secretary of Energy within 180 days of
the date of the enactment of this
subparagraph.
``(II) In the case of a taxpayer
which elects (at such time and in such
manner as the Secretary may provide)
the application of this subclause with
respect to the building, a qualified
retrofit plan.
``(iii) Definitions.--For purposes of this
subparagraph--
``(I) Qualified retrofit plan.--The
term `qualified retrofit plan' means a
written plan prepared and stamped by a
qualified professional which specifies
modifications to a building which, in
the aggregate, are expected to reduce
such building's site energy usage
intensity by 50 percent or more in
comparison to the baseline energy usage
intensity of such building. Such plan
shall require a qualified professional
to certify--
``(aa) the baseline energy
usage intensity of the
building,
``(bb) that the
modifications are expected to
reduce such building's site
energy usage intensity by 50
percent or more in comparison
to the baseline energy usage
intensity of such building, and
``(cc) as of any date
following installation of
building modifications, that
such modifications have been
installed.
``(II) Baseline energy usage
intensity.--The term `baseline energy
usage intensity' means the site energy
usage intensity as of any date during
the 24-month period immediately
preceding the building modifications
described in the qualified retrofit
plan.
``(III) Site energy usage
intensity.--The site energy usage
intensity shall be determined for the
entire building in accordance with such
regulations or other guidance as the
Secretary may provide and measured in
British thermal units per square foot
per year.
``(IV) Qualified professional.--The
term `qualified professional' means an
individual who is a licensed architect
or a licensed engineer or meets such
other requirements as the Secretary of
Energy may provide.''.
(b) Increase for Buildings in High-Cost Areas.--Paragraph (2) of
section 42(e) of the Internal Revenue Code of 1986, as amended by
subsection (a), is further amended by adding at the end the following
new subparagraph:
``(D) Special rule for buildings in high-cost areas
which achieve enhanced energy performance.--In the case
of an existing building to which both subparagraph (C)
and subsection (d)(5)(B) apply (but for this
subparagraph)--
``(i) subsection (d)(5)(B)(i)(II) shall not
apply, and
``(ii) the rehabilitation expenditures
taken into account under subparagraph (A) shall
be 160 percent of such expenditures determined
without regard to this subparagraph.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to buildings with
respect to which housing credit dollar amounts are allocated
after December 31, 2025.
(2) Bond-financed projects.--In the case of any building
some portion of which, or of the land on which the building is
located, is financed by an obligation which is described in
section 42(h)(4)(A) of the Internal Revenue Code of 1986, the
amendments made by this section shall apply to any such
building financed by such an obligation which is part of an
issue the issue date of which is after December 31, 2025.
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