A bill to amend the Internal Revenue Code of 1986 to extend the placed-in-service date requirement for low-income housing credit buildings in the Gulf Opportunity Zone, and for other purposes.

Summary: Workforce Housing Construction for the GO Zone Act of 2007 - Amends the Internal Revenue Code to: (1) extend through 2010 the placed-in-service date requirement for buildings in the Gulf Opportunity Zone (GO Zone) for purposes of the low-income housing tax credit; (2) allow a low-income housing tax credit for buildings in the GO Zone, the Rita GO Zone, or the Wilma GO Zone (GO Zones) during a specified 10-year period; (3) provide a basis adjustment for low-income housing projects in the GO Zones; (4) exclude Community Development Block Grant funds from consideration in determining whether GO Zone buildings are federally subsidized; and (5) modify certain rules relating to tax-exempt financing of GO Zone buildings.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Workforce Housing Construction for 
the GO Zone Act of 2007''.

SEC. 2. EXTENSION OF PLACED-IN-SERVICE DATE REQUIREMENT FOR LOW-INCOME 
              HOUSING CREDIT BUILDINGS IN GULF OPPORTUNITY ZONE.

    Section 1400N(c) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``or 2008'' in paragraph (3)(A) and 
        inserting ``2008, 2009, or 2010'',
            (2) by striking ``during such period'' in paragraph 
        (3)(B)(ii) and inserting ``during the period described in 
        subparagraph (A)'', and
            (3) by striking ``or 2008'' in paragraph (4)(A) and 
        inserting ``2008, 2009, or 2010''.

SEC. 3. PRESERVATION OF PREVIOUS LOW-INCOME HOUSING CREDIT BUILDINGS IN 
              GULF OPPORTUNITY ZONE.

    (a) In General.--If an owner of a qualified low-income building (as 
defined in section 42(c)(2) of the Internal Revenue Code of 1986) 
located in the GO Zone (as defined in section 1400M(1) of such Code) in 
the second taxable year or later of the credit period (as defined in 
section 42(f)(1) of such Code) for such building--
            (1) suffers a reduction in the qualified basis (as 
        determined under section 42(b)(1) of such Code) of such 
        building (hereinafter referred to as the ``lost qualified 
        basis'') as a result of a disaster that caused the President to 
        issue a major disaster declaration as a result of Hurricanes 
        Katrina and Rita, but under subsection (j)(4)(E) of section 42 
        of such Code avoids recapture or loss of low-income housing 
        credits previously allowed under such section with respect to 
        such building (hereinafter referred to as the ``existing 
        credits'') by restoring the lost qualified basis by 
        reconstruction, replacement, or rehabilitation within a 
        reasonable period established by the Secretary of the Treasury, 
        and
            (2) obtains an allocation of additional low-income housing 
        credits under such section to fund, in whole or in part, the 
        reconstruction, replacement, or rehabilitation of such building 
        (hereinafter referred to as the ``new credits''),
then the qualified basis of such building for purposes of determining 
the new credits shall equal the excess (if any) of such building's 
qualified basis as of the close of the first taxable year of the credit 
period (as so defined) with respect to the new credits (assuming such 
reconstruction, replacement, or rehabilitation expenditures meet the 
requirements for treatment as a separate new building), over such 
building's qualified basis with respect to the existing credits as 
determined immediately prior to the disaster referred to in paragraph 
(1).
    (b) Special Rule for Time for Making Allocations of Credits.--For 
purposes of section 42(h)(1)(E)(ii) of the Internal Revenue Code of 
1986, buildings described in subsection (a) shall be deemed to be 
qualified buildings.
    (c) Avoidance of Recapture of Credit.--For purposes of section 
42(j)(4)(E) of the Internal Revenue Code of 1986, qualified low-income 
housing projects (as defined in section 42(g)(1) of such Code) 
suffering casualty as a result of a disaster that caused the President 
to issue a major disaster declaration for the Go Zone (as defined in 
section 1400M(1))shall be deemed to have restored any casualty loss by 
reconstruction or replacement within a reasonable period if such loss 
is restored before January 1, 2011.

SEC. 4. CREDIT ALLOWABLE FOR CERTAIN BUILDINGS ACQUIRED DURING 10-YEAR 
              PERIOD IN THE KATRINA, RITA, AND WILMA DISASTER AREAS.

    Section 1400N(c) of the Internal Revenue Code of 1986 is amended by 
redesignating paragraph (5) as paragraph (6) and by inserting after 
paragraph (4) the following new paragraph:
            ``(5) Credit allowable for buildings acquired during 10-
        year period.--A waiver may be granted under section 42(d)(6)(A) 
        (without regard to any clause thereof) with respect to any 
        building in the Gulf Opportunity Zone, the Rita GO Zone, or the 
        Wilma GO Zone.''.

SEC. 5. INCLUSION OF BASIS OF PROPERTY FOR MIXED INCOME HOUSING IN 
              KATRINA, RITA, AND WILMA DISASTER AREAS.

    Section 1400N(c) of the Internal Revenue Code of 1986, as amended 
by this Act, is amended by redesignating paragraph (6) as paragraph (7) 
and by inserting after paragraph (5) the following new paragraph:
            ``(6) Increase in applicable fraction for mixed income 
        projects.--
                    ``(A) In general.--In the case of any qualified 
                low-income housing project under section 42(g) which is 
                located in the Gulf Opportunity Zone, the Rita GO Zone, 
                or the Wilma GO Zone and in which the applicable 
                fraction for any building of such qualified low-income 
                housing project is not less than 20 percent and not 
                more than 60 percent but for the provisions of this 
                subparagraph, the numerator of the applicable fraction 
                under section 42(c)(1)(B) shall be increased by--
                            ``(i) one or 5 percent of the total number 
                        of units (whichever adjustment provides the 
                        largest unit fraction) for each building in the 
                        qualified low income housing project in the 
                        case of the unit fraction under section 
                        42(c)(1)(C), and
                            ``(ii) five percent of the total floor 
                        space in the case of the floor space fraction 
                        under section 42(c)(1)(D).
                    ``(B) Application.--Subparagraph (A) shall apply 
                to--
                            ``(i) housing credit dollar amounts 
                        allocated after December 31, 2007, and
                            ``(ii) buildings placed in service after 
                        such date to the extent paragraph (1) of 
                        section 42(h) does not apply to any building by 
                        reason of paragraph (4) thereof, but only with 
                        respect to bonds issued after such date.''.

SEC. 6. OVER INCOME LOANS FOR KATRINA, RITA, AND WILMA DISASTER AREAS.

    (a) In General.--Section 1400N(a)(5)(B) of the Internal Revenue 
Code of 1986 is amended by adding ``and'' at the end of clause (ii), by 
striking clause (iii), and by redesignating clause (iv) as clause 
(iii).
    (b) Mortgage Revenue Bonds.--Section 1400T(a) of the Internal 
Revenue Code of 1986 is amended by adding ``and'' at the end of 
paragraph (1), by striking paragraph (2), and by redesignating 
paragraph (3) as paragraph (2).
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 7. COMMUNITY DEVELOPMENT BLOCK GRANTS NOT TAKEN INTO ACCOUNT IN 
              DETERMINING IF BUILDINGS ARE FEDERALLY SUBSIDIZED.

    Section 1400N(c) of the Internal Revenue Code of 1986, as amended 
by this Act, is amended by redesignating paragraph (7) as paragraph (8) 
and by inserting after paragraph (6) the following new paragraph:
            ``(7) Community development block grants not taken into 
        account in determining if buildings are federally subsidized.--
        For purpose of applying section 42(i)(2)(D) to any building 
        which is placed in service in the Gulf Opportunity Zone, the 
        Rita GO Zone, or the Wilma GO Zone during the period beginning 
        on January 1, 2006, and ending on December 31, 2010, a loan 
        shall not be treated as a below market Federal loan solely by 
        reason of any assistance provided under section 106, 107, or 
        108 of the Housing and Community Development Act of 1974 by 
        reason of section 122 of such Act or any provision of the 
        Department of Defense Appropriations Act, 2006, or the 
        Emergency Supplemental Appropriations Act for Defense, the 
        Global War on Terror, and Hurricane Recovery, 2006.''.

SEC. 8. APPLICATION OF THE DEFINITIONS AND SPECIAL RULES UNDER SECTION 
              42(I) OF THE INTERNAL REVENUE CODE OF 1986 FOR BOND-
              FINANCED PROJECTS.

    (a) In General.--For purposes of qualifying as a qualified 
residential rental project under section 142(d)(1) of the Internal 
Revenue Code of 1986 [in the Gulf Opportunity Zone, the Rita GO Zone, 
or the Wilma GO Zone], the special definitions and special rules for 
low-income units in section 42(i)(3) of such Code shall apply.
    (b) Effective Date.--This section shall take apply to bonds issued 
after the date of the enactment of this Act.

SEC. 9. SPECIAL TAX-EXEMPT BOND FINANCING RULE FOR REPAIRS AND 
              RECONSTRUCTIONS OF RESIDENCES IN THE GO ZONES.

    Section 1400N(a) of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new paragraph:
            ``(7) Special rule for repairs and reconstructions.--
                    ``(A) In general.--For purposes of section 143 and 
                this subsection, any qualified GO Zone repair or 
                reconstruction shall be treated as a qualified 
                rehabilitation.
                    ``(B) Qualified go zone repair or reconstruction.--
                For purposes of subparagraph (A), the term `qualified 
                GO Zone repair or reconstruction' means any repair of 
                damage caused by Hurricane Katrina, Hurricane Rita, or 
                Hurricane Wilma to a building located in the Gulf 
                Opportunity Zone, the Rita GO Zone, or the Wilma GO 
                Zone (or reconstruction of such building in the case of 
                damage constituting destruction) if the expenditures 
                for such repair or reconstruction are 25 percent or 
                more of the mortgagor's adjusted basis in the 
                residence. For purposes of the preceding sentence, the 
                mortgagor's adjusted basis shall be determined as of 
                the completion of the repair or reconstruction or, if 
                later, the date on which the mortgagor acquires the 
                residence.
                    ``(C) Termination.--This paragraph shall apply only 
                to owner-financing provided after the date of the 
                enactment of this paragraph and before January 1, 
                2011.''.