SECTION 1. QUALIFIED ENERGY EFFICIENCY PROPERTY ELIGIBLE FOR ENERGY 
              CREDIT AND GRANTS.

    (a) In General.--Subparagraph (A) of section 48(a)(3) of the 
Internal Revenue Code of 1986 is amended by striking ``or'' at the end 
of clause (vi), by adding ``or'' at the end of clause (vii), and by 
inserting after clause (vii) the following new clause:
                            ``(viii) qualified energy efficiency 
                        property,''.
    (b) Energy Percentage.--Clause (i) of section 48(a)(2)(A) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of subclause (III) and by inserting after subclause (IV) the following 
new subclause:
                                    ``(V) qualified energy efficiency 
                                property described in paragraph 
                                (3)(A)(viii), and''.
    (c) Qualified Energy Efficiency Property.--Section 48(c) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(5) Qualified energy efficiency property.--
                    ``(A) In general.--The term `qualified energy 
                efficiency property' means any property--
                            ``(i) which is residential rental property, 
                        nonresidential real property, or mixed use real 
                        property,
                            ``(ii) which is a qualified building,
                            ``(iii) which achieves a minimum energy 
                        savings of 50 percent or more in comparison to 
                        a reference building which meets the minimum 
                        requirements of Standard 90.1-2001 (as defined 
                        by section 179D(c)(2)), determined under rules 
                        similar to the rules of section 179D(d)(2),
                            ``(iv) in the case of property which is to 
                        be used for residential rental purposes, with 
                        respect to which the taxpayer makes a 
                        certification which meets the requirements of 
                        subparagraph (D), and
                            ``(v) for which the taxpayer has received a 
                        reservation from the Secretary.
                    ``(B) Qualified building.--The term `qualified 
                building' means any building--
                            ``(i) which--
                                    ``(I) is more than 150,000 square 
                                feet and has a floor area ratio (net of 
                                streets and public spaces) of not less 
                                than 3.0, or
                                    ``(II) in States with more than 35 
                                percent of the population living in 
                                Census defined rural areas, is more 
                                than 50,000 square feet,
                            ``(ii) which--
                                    ``(I) is located not more than one-
                                half mile from a location in which 
                                there is direct access to a Fixed 
                                Guideway Transit System, or
                                    ``(II) in States with more than 35 
                                percent of the population living in 
                                Census defined rural areas, is part of 
                                a rural town center redevelopment 
                                project on land previously occupied by 
                                residential, commercial, or industrial 
                                uses and within a Census defined place 
                                containing at least 5,000 people and 
                                1,000 jobs, and
                            ``(iii) for which the site work and 
                        construction is commenced not later than 36 
                        months after the date of the enactment of this 
                        paragraph.
                    ``(C) Special rule for residential rental 
                property.--In the case of a qualified building in which 
                the majority of the building is devoted to residential 
                rental use--
                            ``(i) subparagraph (A)(iii) shall be 
                        applied by substituting `25 percent' for `50 
                        percent', and
                            ``(ii) any mechanical systems which meet 
                        the requirements of Standard 90.1-2001 may be 
                        used in lieu of appendix G to such Standard in 
                        modeling energy use of a reference building.
                    ``(D) Affordable housing requirements.--
                            ``(i) In general.--A certification meets 
                        the requirements of this subparagraph if the 
                        taxpayer certifies that at least 5 percent of 
                        residential rental units will be affordable to 
                        households with incomes not exceeding 60 
                        percent of the area median income at the time 
                        of initial occupancy.
                            ``(ii) Safe harbor.--A taxpayer shall be 
                        treated as meeting the requirement of clause 
                        (i) if the taxpayer files with the municipal 
                        government where the qualified building is 
                        located a land use restriction agreement or 
                        similar agreement designed to ensure the units 
                        remain affordable to an occupied by households 
                        described in clause (i) for the lesser of 99 
                        years or the longest period permissible under 
                        the law of the State in which such units are 
                        located.
                    ``(E) Reservations.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(iv), the Secretary shall issue 
                        a reservation upon receipt of the following:
                                    ``(I) Evidence that the project is 
                                designed to be a qualified energy 
                                efficiency property as described in 
                                clause (viii) of section 48(a)(3)(A) of 
                                the Internal Revenue Code of 1986.
                                    ``(II) Evidence that such property 
                                will be placed in service within a 
                                reasonable time by submission of a site 
                                plan approval from the local 
                                municipality, a letter of support from 
                                the municipality, a building permit, 
                                and an approved tax abatement agreement 
                                or other municipal financial support.
                            ``(ii) Maintenance of reservation.--To 
                        maintain such a reservation, the applicant must 
                        commence construction within 12 months of the 
                        date such reservation was issued.
                    ``(F) Regulations.--The Secretary shall prescribe 
                such regulations as necessary to carry out the purposes 
                of this section not later than 2 months of the date of 
                the enactment of this paragraph.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).
    (e) Grants in Lieu of Tax Credits.--
            (1) In general.--Subsection (d) of section 1603 of the 
        American Recovery and Reinvestment Tax Act of 2009 is amended 
        by inserting after paragraph (8) the following new 
        subparagraph:
            ``(9) Qualified energy efficiency property.--Any qualified 
        energy efficiency property as described in clause (viii) of 
        section 48(a)(3)(A) of such Code.''.
            (2) Grant amount.--Subparagraph (A) of section 1603(b)(2) 
        of the American Recovery and Reinvestment Tax Act of 2009 is 
        amended to read as follows:
                    ``(A) 30 percent in the case of any property 
                described in paragraph (1), (2), (3), (4), or (9) of 
                subsection (d), and''.
Amends the Internal Revenue Code to allow a 30% energy tax credit for qualified energy efficiency property. Defines "qualified energy efficiency property" as property which: (1) is residential rental property, nonresidential real property, or mixed use real property; (2) is a qualified building as defined by this Act; and (3) achieves a specified energy savings.

Amends the American Recovery and Reinvestment Act to allow grants for investment in qualified energy efficiency property in lieu of tax credits.
A bill to amend the Internal Revenue Code of 1986 and section 1603 of the American Recovery and Reinvestment Tax Act of 2009 to provide that qualified energy efficiency property is eligible for the energy credit and the Department of Treasury grant.