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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 680 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  1st Session
                                 S. 680

  To provide rental vouchers for the homeless, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             March 7, 2023

   Mr. Wyden introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 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--HOUSING ASSISTANCE

                 Subtitle A--General Housing Assistance

Sec. 111. Rental vouchers for the homeless.
Sec. 112. Land acquisition and construction.
Sec. 113. Modular construction pilot program.
Sec. 114. Supporting pro-housing development.
Sec. 115. Permanent authorization of appropriations for McKinney-Vento 
                            Homeless Assistance Act grants.
                  Subtitle B--Rural Housing Assistance

Sec. 121. Rural housing reinvestment.
Sec. 122. Permanent establishment of housing preservation and 
                            revitalization program.
Sec. 123. Eligibility for rural housing vouchers.
Sec. 124. Amount of voucher assistance.
Sec. 125. Use of available rental assistance.
Sec. 126. Funding for multifamily technical improvements.
Sec. 127. Plan for preserving affordability of rental projects.
                      TITLE II--REVENUE PROVISIONS

Sec. 201. Tax-exempt bond financing requirement.
Sec. 202. Increases in State allocations.
Sec. 203. Buildings designated to serve extremely low-income 
                            households.
Sec. 204. Inclusion of Indian areas as difficult development areas for 
                            purposes of certain buildings.
Sec. 205. Inclusion of rural areas as difficult development areas.
Sec. 206. Increase in credit for bond-financed projects designated by 
                            housing credit agency.
Sec. 207. Repeal of qualified contract option.
Sec. 208. Modification and clarification of rights relating to building 
                            purchase.
Sec. 209. Prohibition of local approval and contribution requirements.
Sec. 210. Increase in credit for low-income housing supportive 
                            services.
Sec. 211. Study of tax incentives for the conversion of commercial 
                            property to affordable housing.
Sec. 212. Renters credit.
Sec. 213. Middle-income housing tax credit.
Sec. 214. Neighborhood homes credit.
Sec. 215. First-time homebuyer refundable credit.

                      TITLE I--HOUSING ASSISTANCE

                 Subtitle A--General Housing Assistance

SEC. 111. 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 
                                2023 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 2023; 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, 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.--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.
                            ``(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 
                                                main 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 2023 through 2028 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, and credit 
                                        recovery; 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 
                        2023 and 2024 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;
                                    ``(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; 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 2023 
                        through 2027 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, 
2024, 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 Consolidated 
Appropriations Act, 2023 (Public Law 117-328).

SEC. 112. 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) Authorizations 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 2023 through 2033 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 2023 through 2028 
                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 111 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, including the 
        economic impact of the COVID-19 pandemic.
            (2) Contents.--The revised formula proposed under paragraph 
        (1) shall address the following concerns:
                    (A) The COVID-19 pandemic and its impacts on the 
                economic security and housing stability of very low-
                income and extremely low-income people of the United 
                States.
                    (B) The impacts of differing vacancy rates across 
                various housing markets in the United States.
                    (C) The rate of unsheltered homelessness in various 
                housing markets across the United States.
                    (D) The impact of differing rates of poverty and 
                extreme poverty across various States.
                    (E) 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. 113. 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 2023 
through 2028 to carry out this section.

SEC. 114. 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 2023 through 2028.

SEC. 115. 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.''.

                  Subtitle B--Rural Housing Assistance

SEC. 121. RURAL HOUSING REINVESTMENT.

    (a) Definitions.--In this section:
            (1) Broad-based nonprofit organization.--The term ``broad-
        based nonprofit organization'' means a nonprofit organization 
        that has a membership that reflects a variety of interests in 
        the area in which housing assisted under this section will be 
        located.
            (2) Covered program.--The term ``covered program'' means--
                    (A) the Very Low-Income Housing Repair Loans and 
                Grants Program under section 504 of the Housing Act of 
                1949 (42 U.S.C. 1474);
                    (B) the Farm Labor Housing loan program under 
                section 514 of the Housing Act of 1949 (42 U.S.C. 
                1484);
                    (C) the Rural Rental Housing Loan program under 
                section 515 of the Housing Act of 1949 (42 U.S.C. 
                1485);
                    (D) the Farm Labor Housing grant program under 
                section 516 of the Housing Act of 1949 (42 U.S.C. 
                1486); and
                    (E) the Rural Rental Assistance program under 
                section 521 of the Housing Act of 1949 (42 U.S.C. 
                1490a).
            (3) Domestic farm laborer.--The term ``domestic farm 
        laborer'' means an individual who receives a substantial 
        portion of the individual's income from the primary production 
        of processed or unprocessed agricultural or aquacultural 
        commodities or other farm labor employment.
            (4) Eligible entity.--The term ``eligible entity'' means--
                    (A) a broad-based nonprofit organization;
                    (B) a nonprofit organization with experience in 
                developing affordable housing, rural housing, or 
                housing for domestic farm laborers;
                    (C) a nonprofit organization of domestic farm 
                laborers;
                    (D) a federally recognized Indian Tribe;
                    (E) a community organization;
                    (F) an agency of a State or of a political 
                subdivision of a State; or
                    (G) a limited partnership with a nonprofit general 
                partner.
            (5) Green building certification.--The term ``green 
        building certification'' means--
                    (A) a certification from the Residential New 
                Construction Program of the Energy Star program 
                established by section 324A of the Energy Policy and 
                Conservation Act (42 U.S.C. 6294a);
                    (B) a certification from the Zero Energy Ready Home 
                program of the Department of Energy; and
                    (C) a certification or accreditation that is 
                substantially similar to a certification described in 
                subparagraph (A) or (B) that requires the housing 
                project to be at least 10 percent more efficient than 
                homes built to the building code standards of the 
                applicable State.
            (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) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
    (b) Assistance.--
            (1) Loans and grants.--
                    (A) In general.--The Secretary shall award 
                additional loans and grants, including zero-percent 
                interest loans, under the covered programs to eligible 
                entities that construct or preserve off-farm affordable 
                housing, including multifamily housing, for domestic 
                farm laborers or multifamily housing for low-income 
                individuals living in rural areas to increase and 
                preserve the supply of available and affordable rental 
                housing for--
                            (i) low-income individuals living in rural 
                        areas; and
                            (ii) domestic farm laborers.
                    (B) Timeline.--
                            (i) Notice of funding availability.--Not 
                        later than 180 days after the date of enactment 
                        of this Act, the Secretary shall publish a 
                        notice of funding availability to solicit 
                        applications for loans and grants to be awarded 
                        under subparagraph (A).
                            (ii) Awards.--Not later than 1 year after 
                        the date of enactment of this Act, the 
                        Secretary shall award loans and grants, 
                        including zero-percent interest loans, to 
                        eligible entities under subparagraph (A).
                    (C) Local contribution for grants.--
                            (i) In general.--An eligible entity that 
                        receives a grant under this section shall 
                        contribute not less than 10 percent of the 
                        total project cost from sources other than the 
                        grant.
                            (ii) Timing of availability.--An eligible 
                        entity may not receive a grant under this 
                        section unless the funds required under clause 
                        (i) are available to the eligible entity as of 
                        the date on which the grant is awarded.
                            (iii) Sources.--An eligible entity may use 
                        amounts from a loan financed by the Rural 
                        Housing Service or the Federal Housing 
                        Administration to satisfy the requirement under 
                        clause (i).
            (2) Rental assistance for off-farm affordable housing and 
        multifamily housing.--
                    (A) In general.--In addition to loans and grants 
                under paragraph (1), the Secretary, acting through the 
                Under Secretary for Rural Development, shall provide 
                rental assistance to--
                            (i) owners of off-farm affordable housing 
                        for domestic farm laborers that is assisted by 
                        a loan or grant under paragraph (1); and
                            (ii) owners of affordable multifamily 
                        housing for low-income individuals living in 
                        rural areas that is assisted by a loan or grant 
                        under paragraph (1).
                    (B) Amount of rent.--In providing rental assistance 
                under subparagraph (A), the Secretary shall make 
                assistance payments to the owners of housing described 
                in that subparagraph in order to make available to low-
                income occupants of such housing rentals at rates 
                commensurate to income and not exceeding the highest 
                of--
                            (i) 30 percent of adjusted income (as 
                        defined in section 3(b)(5) of the United States 
                        Housing Act of 1937 (42 U.S.C. 1437a(b)(5)), 
                        except that the amount shall be calculated on a 
                        monthly basis);
                            (ii) 10 percent of monthly income; or
                            (iii) if the person or family is receiving 
                        payments for welfare assistance from a public 
                        agency, the portion (if any) of the payments 
                        that is specifically designated by the agency 
                        to meet the housing costs of the person or 
                        family.
                    (C) Cap on rent increases.--The rent or 
                contribution to rent paid by any recipient of 
                assistance under this paragraph shall not increase as a 
                result of this section or any other provision of 
                Federal law or regulation by more than 10 percent 
                during any 12-month period, unless the increase above 
                10 percent is attributable to increases in income that 
                are unrelated to this subsection or the other provision 
                of Federal law or regulation.
                    (D) Amount of assistance.--The amount of an 
                assistance payment made on behalf of a tenant under 
                this paragraph shall be equal to the difference 
                between--
                            (i) the monthly contribution of the tenant, 
                        which shall be the applicable amount under 
                        subparagraph (B); and
                            (ii) the fair market rental for the 
                        jurisdiction in which the property is located, 
                        as established by the Secretary under section 
                        8(c) of the United States Housing Act of 1937 
                        (42 U.S.C. 1437a(c)).
                    (E) Regulations.--The Secretary may promulgate any 
                regulation that is necessary and proper to carry out 
                this paragraph.
            (3) Priority.--In awarding assistance for farm labor 
        housing and multi-family housing under paragraphs (1) and (2), 
        the Secretary shall give priority to an applicant seeking 
        assistance for a housing project that--
                    (A) as determined by the Secretary, is energy 
                efficient and generates energy, such as through geo-
                exchange systems, ground-source heat pumps, wind 
                turbines, and solar energy systems; or
                    (B) has a green building certification.
    (c) Funding.--
            (1) Farm labor housing loans and grants programs.--There is 
        authorized to be appropriated to the Secretary $78,000,000 for 
        each of fiscal years 2023 through 2033 to award loans and 
        grants under subsection (b)(1)(A) through the Farm Labor 
        Housing loan program and Farm Labor Housing grant program under 
        sections 514 and 516, respectively, of the Housing Act of 1949 
        (42 U.S.C. 1484, 1486).
            (2) Rural rental housing loan program.--There is authorized 
        to be appropriated to the Secretary $100,000,000 for each of 
        fiscal years 2023 through 2033 to award loans under subsection 
        (b)(1)(A) through the Rural Rental Housing Loan program under 
        section 515 of the Housing Act of 1949 (42 U.S.C. 1485).
            (3) Rural rental assistance program.--There is authorized 
        to be appropriated to the Secretary $2,500,000,000 for each of 
        fiscal years 2023 through 2033 to award loans under subsection 
        (b)(1)(A) through the Rural Rental Assistance program under 
        section 521 of the Housing Act of 1949 (42 U.S.C. 1490a).
            (4) Rental assistance under (b)(2) of this section.--There 
        is authorized to be appropriated to the Secretary $250,000,000 
        for each of fiscal years 2023 through 2033 for rental 
        assistance payments under subsection (b)(2).

SEC. 122. PERMANENT ESTABLISHMENT OF HOUSING PRESERVATION AND 
              REVITALIZATION PROGRAM.

    Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) is 
amended by adding at the end the following:

``SEC. 545. HOUSING PRESERVATION AND REVITALIZATION PROGRAM.

    ``(a) Establishment.--The Secretary shall carry out a program under 
this section for the preservation and revitalization of multifamily 
rental housing projects financed under section 515 or both sections 514 
and 516.
    ``(b) Notice of Maturing Loans.--
            ``(1) To owners.--On an annual basis, the Secretary shall 
        provide written notice to each owner of a property financed 
        under section 515 or both sections 514 and 516 that will mature 
        within the 4-year period beginning upon the provision of such 
        notice, setting forth the options and financial incentives that 
        are available to facilitate the extension of the loan term or 
        the option to decouple a rental assistance contract pursuant to 
        subsection (f).
            ``(2) To tenants.--
                    ``(A) In general.--For each property financed under 
                section 515 or both sections 514 and 516, not later 
                than the date that is 2 years before the date that such 
                loan will mature, the Secretary shall provide written 
                notice to each household residing in such property that 
                informs them of the date of the loan maturity, the 
                possible actions that may happen with respect to the 
                property upon such maturity, and how to protect their 
                right to reside in federally assisted housing after 
                such maturity.
                    ``(B) Language.--Notice under this paragraph shall 
                be provided in plain English and shall be translated 
                into other languages in the case of any property 
                located in an area in which a significant number of 
                residents speak such other languages.
    ``(c) Loan Restructuring.--Under the program under this section, 
the Secretary may restructure such existing housing loans, as the 
Secretary considers appropriate, for the purpose of ensuring that such 
projects have sufficient resources to preserve the projects to provide 
safe and affordable housing for low-income residents and farm laborers, 
by--
            ``(1) reducing or eliminating interest;
            ``(2) deferring loan payments;
            ``(3) subordinating, reducing, or reamortizing loan debt; 
        and
            ``(4) providing other financial assistance, including 
        advances, payments, and incentives (including the ability of 
        owners to obtain reasonable returns on investment) required by 
        the Secretary.
    ``(d) Renewal of Rental Assistance.--When the Secretary offers to 
restructure a loan pursuant to subsection (c), the Secretary shall 
offer to renew the rental assistance contract under section 521(a)(2) 
for a 20-year term that is subject to annual appropriations, provided 
that the owner agrees to bring the property up to such standards that 
will ensure its maintenance as decent, safe, and sanitary housing for 
the full term of the rental assistance contract.
    ``(e) Restrictive Use Agreements.--
            ``(1) Requirement.--As part of the preservation and 
        revitalization agreement for a project, the Secretary shall 
        obtain a restrictive use agreement that obligates the owner to 
        operate the project in accordance with this title.
            ``(2) Term.--
                    ``(A) No extension of rental assistance contract.--
                Except when the Secretary enters into a 20-year 
                extension of the rental assistance contract for the 
                project, the term of the restrictive use agreement for 
                the project shall be consistent with the term of the 
                restructured loan for the project.
                    ``(B) Extension of rental assistance contract.--If 
                the Secretary enters into a 20-year extension of the 
                rental assistance contract for a project, the term of 
                the restrictive use agreement for the project shall be 
                for 20 years.
                    ``(C) Termination.--The Secretary may terminate the 
                20-year use restrictive use agreement for a project 
                prior to the end of its term if the 20-year rental 
                assistance contract for the project with the owner is 
                terminated at any time for reasons outside the owner's 
                control.
    ``(f) Decoupling of Rental Assistance.--
            ``(1) Renewal of rental assistance contract.--If the 
        Secretary determines that a maturing loan for a project cannot 
        reasonably be restructured in accordance with subsection (c) 
        and the project was operating with rental assistance under 
        section 521, the Secretary may renew the rental assistance 
        contract, notwithstanding any provision of section 521, for a 
        term, subject to annual appropriations, of at least 10 years 
        but not more than 20 years.
            ``(2) Rents.--Any agreement to extend the term of the 
        rental assistance contract under section 521 for a project 
        shall obligate the owner to continue to maintain the project as 
        decent, safe, and sanitary housing and to operate the 
        development in accordance with this title, except that rents 
        shall be based on the lesser of--
                    ``(A) the budget-based needs of the project; or
                    ``(B) the operating cost adjustment factor as a 
                payment standard as provided under section 524 of the 
                Multifamily Assisted Housing Reform and Affordability 
                Act of 1997 (42 U.S.C. 1437 note).
    ``(g) Multifamily Housing Transfer Technical Assistance.--Under the 
program under this section, the Secretary may provide grants to 
qualified nonprofit organizations and public housing agencies to 
provide technical assistance, including financial and legal services, 
to borrowers under loans under this title for multifamily housing to 
facilitate the acquisition of such multifamily housing properties in 
areas where the Secretary determines there is a risk of loss of 
affordable housing.
    ``(h) Transfer of Rental Assistance.--After the loan or loans for a 
rental project originally financed under section 515 or both sections 
514 and 516 have matured or have been prepaid and the owner has chosen 
not to restructure the loan pursuant to subsection (c), a tenant 
residing in such project shall have 18 months prior to loan maturation 
or prepayment to transfer the rental assistance assigned to the 
tenant's unit to another rental project originally financed under 
section 515 or both sections 514 and 516, and the owner of the initial 
project may rent the tenant's previous unit to a new tenant without 
income restrictions.
    ``(i) Administrative Expenses.--Of any amounts made available for 
the program under this section for any fiscal year, the Secretary may 
use not more than $1,000,000 for administrative expenses for carrying 
out such program.
    ``(j) Authorization of Appropriations.--There is authorized to be 
appropriated for the program under this section $200,000,000 for each 
of fiscal years 2023 through 2028.''.

SEC. 123. ELIGIBILITY FOR RURAL HOUSING VOUCHERS.

    Section 542 of the Housing Act of 1949 (42 U.S.C. 1490r) is amended 
by adding at the end the following:
    ``(c) Eligibility of Households in Section 514, 515, and 516 
Projects.--The Secretary may provide rural housing vouchers under this 
section for any low-income household (including those not receiving 
rental assistance) residing in a property financed with a loan made or 
insured under section 514 or 515 (42 U.S.C. 1484, 1485) which has been 
prepaid, has been foreclosed, or has matured after September 30, 2005, 
or residing in a property assisted under section 514 or 516 that is 
owned by a nonprofit organization or public agency.''.

SEC. 124. AMOUNT OF VOUCHER ASSISTANCE.

    Notwithstanding any other provision of law, in the case of any 
rural housing voucher provided pursuant to section 542 of the Housing 
Act of 1949 (42 U.S.C. 1490r), the amount of the monthly assistance 
payment for the household on whose behalf such assistance is provided 
shall be determined as provided in subsection (a) of such section 542.

SEC. 125. USE OF AVAILABLE RENTAL ASSISTANCE.

    Section 521(d) of the Housing Act of 1949 (42 U.S.C. 1490a(d)) is 
amended by adding at the end the following:
    ``(3) In the case of any rental assistance contract authority that 
becomes available because of the termination of assistance on behalf of 
an assisted family--
            ``(A) at the option of the owner of the rental project, the 
        Secretary shall provide the owner a period of 6 months before 
        such assistance is made available pursuant to subparagraph (B) 
        during which the owner may use such assistance authority to 
        provide assistance on behalf of an eligible unassisted family 
        that--
                    ``(i) is residing in the same rental project that 
                the assisted family resided in prior to such 
                termination; or
                    ``(ii) newly occupies a dwelling unit in such 
                rental project during such period; and
            ``(B) except for assistance used as provided in 
        subparagraph (A), the Secretary shall use such remaining 
        authority to provide such assistance on behalf of eligible 
        families residing in other rental projects originally financed 
        under section 515 or both sections 514 and 516.''.

SEC. 126. FUNDING FOR MULTIFAMILY TECHNICAL IMPROVEMENTS.

    There is authorized to be appropriated to the Secretary of 
Agriculture $50,000,000 for fiscal year 2023 for improving the 
technology of the Department of Agriculture used to process loans for 
multifamily housing and otherwise managing such housing. Such 
improvements shall be made within the 5-year period beginning upon the 
appropriation of such amounts and such amount shall remain available 
until the expiration of such 5-year period.

SEC. 127. PLAN FOR PRESERVING AFFORDABILITY OF RENTAL PROJECTS.

    (a) Plan.--Not later than 180 days after the date of enactment of 
this Act, the Secretary of Agriculture (in this section referred to as 
the ``Secretary'') shall submit a written plan to Congress for 
preserving the affordability for low-income families of rental projects 
for which loans were made under section 515 of the Housing Act of 1949 
(42 U.S.C. 1485) or made to nonprofit or public agencies under section 
514 of that Act (42 U.S.C. 1484) and avoiding the displacement of 
tenant households, which shall--
            (1) set forth specific performance goals and measures;
            (2) set forth the specific actions and mechanisms by which 
        such goals will be achieved;
            (3) set forth specific measurements by which progress 
        towards achievement of each goal can be measured;
            (4) provide for detailed reporting on outcomes; and
            (5) include any legislative recommendations to assist in 
        achievement of the goals under the plan.
    (b) Advisory Committee.--
            (1) Establishment; purpose.--The Secretary shall establish 
        an advisory committee whose purpose shall be to assist the 
        Secretary--
                    (A) in preserving properties assisted under section 
                514 or 515 of the Housing Act of 1949 (42 U.S.C. 1484, 
                1485) that are owned by nonprofit or public agencies 
                through the multifamily housing preservation and 
                revitalization program under section 545 of that Act 
                (as added by this subtitle); and
                    (B) implementing the plan required under subsection 
                (a) of this section.
            (2) Member.--The advisory committee shall consist of 14 
        members, appointed by the Secretary, as follows:
                    (A) A State Director of Rural Development for the 
                Department of Agriculture.
                    (B) The Administrator for Rural Housing Service of 
                the Department of Agriculture.
                    (C) Two representatives of for-profit developers or 
                owners of multifamily rural rental housing.
                    (D) Two representatives of nonprofit developers or 
                owners of multifamily rural rental housing.
                    (E) Two representatives of State housing finance 
                agencies.
                    (F) Two representatives of tenants of multifamily 
                rural rental housing.
                    (G) One representative of a community development 
                financial institution that is involved in preserving 
                the affordability of housing assisted under sections 
                514, 515, and 516 of the Housing Act of 1949 (42 U.S.C. 
                1484, 1485, 1486).
                    (H) One representative of a nonprofit organization 
                that operates nationally and has actively participated 
                in the preservation of housing assisted by the Rural 
                Housing Service by conducting research regarding, and 
                providing financing and technical assistance for, 
                preserving the affordability of such housing.
                    (I) One representative of low-income housing tax 
                credit investors.
                    (J) One representative of regulated financial 
                institutions that finance affordable multifamily rural 
                rental housing developments.
            (3) Meetings.--The advisory committee shall meet not less 
        often than once each calendar quarter.
            (4) Functions.--In providing assistance to the Secretary to 
        carry out its purpose, the advisory committee shall carry out 
        the following functions:
                    (A) Assisting the Rural Housing Service of the 
                Department of Agriculture to improve estimates of the 
                size, scope, and condition of rental housing portfolio 
                of the Service, including the time frames for maturity 
                of mortgages and costs for preserving the portfolio as 
                affordable housing.
                    (B) Reviewing current policies and procedures of 
                the Rural Housing Service regarding preservation of 
                affordable rental housing financed under sections 514, 
                515, 516, and 538 of the Housing Act of 1949 (42 U.S.C. 
                1484, 1485, 1486, 1490p-2), the Multifamily 
                Preservation and Revitalization Demonstration program 
                (commonly known as the ``MPR''), and the Rural Rental 
                Assistance program under section 521 of the Housing Act 
                of 1949 (42 U.S.C. 1490a) and making recommendations 
                regarding improvements and modifications to such 
                policies and procedures.
                    (C) Providing ongoing review of Rural Housing 
                Service program results.
                    (D) Providing reports to Congress and the public on 
                meetings, recommendations, and other findings of the 
                advisory committee.

                      TITLE II--REVENUE PROVISIONS

SEC. 201. TAX-EXEMPT BOND FINANCING REQUIREMENT.

    (a) In General.--Section 42(h)(4)(B) of the Internal Revenue Code 
of 1986 is amended to read as follows:
                    ``(B) Special rule where a required percent of 
                buildings is financed with tax-exempt bonds subject to 
                volume cap.--For purposes of subparagraph (A), 
                paragraph (1) shall not apply to any portion of the 
                credit allowable under subsection (a) with respect to a 
                building if--
                            ``(i) 50 percent or more of the aggregate 
                        basis of any such building and the land on 
                        which the building is located is financed by 
                        any obligation described in subparagraph (A), 
                        or
                            ``(ii) 25 percent or more of the aggregate 
                        basis of such building and the land on which 
                        the building is located is financed by any 
                        obligation which is described in subparagraph 
                        (A) and issued in calendar year 2024, 2025, 
                        2026, 2027, or 2028.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to 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) and which is part of an issue the issue date of 
which is after December 31, 2023.

SEC. 202. 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 2023.--For calendar 
                        year, 2023, the per capita amount is $3.90.
                            ``(ii) Calendar year 2024.--For calendar 
                        year 2024, 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 
                                        2022' 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 2024.--In the 
                        case of any calendar year after 2024, 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 2023' 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 2023.--For calendar 
                        year, 2023, the minimum amount is $4,495,000.
                            ``(ii) Calendar year 2024.--For calendar 
                        year 2024, 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 
                                        2022' 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 2024.--In the 
                        case of any calendar year after 2024, 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 2023' 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, 2022.

SEC. 203. 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, 
2023, and to buildings that are described in section 42(h)(4)(B) taking 
into account only obligations that are part of an issue the issue date 
of which is after December 31, 2023.

SEC. 204. 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 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))).
                                    ``(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, 2023.

SEC. 205. 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 204, 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 204, 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, 2023.

SEC. 206. 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, 2023.

SEC. 207. 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 203, 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, 2024, 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, 2024, 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 203, 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 203, 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 203 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 203 and 
        subsection (c), is submitted after the date of the enactment of 
        this Act.

SEC. 208. 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. 209. 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, 2023.

SEC. 210. 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 203, 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. 211. 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. 212. 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 2023, 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 2023, 
                                $12.30,
                                    ``(II) for calendar year 2024, 
                                $24.50, and
                                    ``(III) for calendar years 2025 and 
                                thereafter, $36.75.
                            ``(ii) Minimum ceiling amount.--The minimum 
                        ceiling amount is--
                                    ``(I) for calendar year 2023, 
                                $14,000,000,
                                    ``(II) for calendar year 2024, 
                                $28,000,000, and
                                    ``(III) for calendar years 2025 and 
                                thereafter, $42,000,000.
                            ``(iii) Cost-of-living adjustment.--In the 
                        case of a calendar year beginning after 2025, 
                        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 2024' 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.
                            ``(iii) 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.
                            ``(iv) 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 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 6434 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. 6434. 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. 6434. 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 6434.''.
            (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 6434),'' 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 6434),'' 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, 2022.

SEC. 213. 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 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) 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).
            ``(4) Federal grants not taken into account in determining 
        eligible basis.--The eligible basis of a building shall not 
        include any costs financed with the proceeds of a Federally 
        funded grant.
            ``(5) Credit allowable for certain buildings acquired 
        during 10-year period.--On application by the taxpayer, the 
        Secretary may waive paragraph (2)(B)(ii) with respect to any 
        building acquired from an insured depository institution in 
        default (as defined in section 3 of the Federal Deposit 
        Insurance Act) or from a receiver or conservator of such an 
        institution.
            ``(6) Acquisition of building before end of prior credit 
        period.--
                    ``(A) In general.--Under regulations prescribed by 
                the Secretary, in the case of a building described in 
                subparagraph (B) (or interest therein) which is 
                acquired by the taxpayer--
                            ``(i) paragraph (2)(B) shall not apply, but
                            ``(ii) the credit allowable by reason of 
                        subsection (a) to the taxpayer for any period 
                        after such acquisition shall be equal to the 
                        amount of credit which would have been 
                        allowable under subsection (a) for such period 
                        to the prior owner referred to in subparagraph 
                        (B) had such owner not disposed of the 
                        building.
                    ``(B) Description of building.--A building is 
                described in this subparagraph if--
                            ``(i) a credit was allowed by reason of 
                        subsection (a) to any prior owner of such 
                        building, and
                            ``(ii) the taxpayer acquired such building 
                        before the end of the credit period for such 
                        building with respect to such prior owner 
                        (determined without regard to any disposition 
                        by such prior owner).
    ``(e) Rehabilitation Expenditures Treated as Separate New 
Building.--
            ``(1) In general.--Rehabilitation expenditures paid or 
        incurred by the taxpayer with respect to any building shall be 
        treated for purposes of this section as a separate new 
        building.
            ``(2) Rehabilitation expenditures.--For purposes of 
        paragraph (1)--
                    ``(A) In general.--The term `rehabilitation 
                expenditures' means amounts chargeable to capital 
                account and incurred for property (or additions or 
                improvements to property) of a character subject to the 
                allowance for depreciation in connection with the 
                rehabilitation of a building.
                    ``(B) Cost of acquisition, etc., not included.--
                Such term does not include the cost of acquiring any 
                building (or interest therein) or any amount not 
                permitted to be taken into account under paragraph (3) 
                of subsection (d).
                    ``(C) Certain relocation costs.--In the case of a 
                rehabilitation of a building to which section 280B does 
                not apply, costs relating to the relocation of 
                occupants, including--
                            ``(i) amounts paid to occupants,
                            ``(ii) amounts paid to third parties for 
                        services relating to such relocation, and
                            ``(iii) amounts paid for temporary housing 
                        for occupants,
                shall be treated as chargeable to capital account and 
                taken into account as rehabilitation expenditures.
            ``(3) Minimum expenditures to qualify.--
                    ``(A) In general.--Paragraph (1) shall apply to 
                rehabilitation expenditures with respect to any 
                building only if--
                            ``(i) the expenditures are allocable to 1 
                        or more middle-income units or substantially 
                        benefit such units, and
                            ``(ii) the amount of such expenditures 
                        during any 24-month period meets the 
                        requirements of whichever of the following 
                        subclauses requires the greater amount of such 
                        expenditures:
                                    ``(I) The requirement of this 
                                subclause is met if such amount is not 
                                less than 20 percent of the adjusted 
                                basis of the building (determined as of 
                                the 1st day of such period and without 
                                regard to paragraphs (2) and (3) of 
                                section 1016(a)).
                                    ``(II) The requirement of this 
                                subclause is met if the qualified basis 
                                attributable to such amount, when 
                                divided by the number of middle-income 
                                units in the building, is equal to or 
                                greater than the dollar amount in 
                                effect under section 
                                42(e)(3)(A)(ii)(II) for the calendar 
                                year in which such expenditures are 
                                treated as placed in service under 
                                paragraph (4).
                    ``(B) Date of determination.--The determination 
                under subparagraph (A) shall be made as of the close of 
                the 1st taxable year in the credit period with respect 
                to such expenditures.
            ``(4) Special rules.--For purposes of applying this section 
        with respect to expenditures which are treated as a separate 
        building by reason of this subsection--
                    ``(A) such expenditures shall be treated as placed 
                in service at the close of the 24-month period referred 
                to in paragraph (3)(A), and
                    ``(B) the applicable fraction under subsection 
                (c)(1) shall be the applicable fraction for the 
                building (without regard to paragraph (1)) with respect 
                to which the expenditures were incurred.
        Nothing in subsection (d)(2) shall prevent a credit from being 
        allowed by reason of this subsection.
            ``(5) No double counting.--Rehabilitation expenditures may, 
        at the election of the taxpayer, be taken into account under 
        this subsection or subsection (d)(2)(A)(i) but not under both 
        such subsections.
            ``(6) Regulations to apply subsection with respect to group 
        of units in building.--The Secretary may prescribe regulations, 
        consistent with the purposes of this subsection, treating a 
        group of units with respect to which rehabilitation 
        expenditures are incurred as a separate new building.
    ``(f) Definition and Special Rules Relating to Credit Period.--
            ``(1) Credit period defined.--For purposes of this section, 
        the term `credit period' means, with respect to any building, 
        the period of 15 taxable years beginning with--
                    ``(A) the taxable year in which the building is 
                placed in service, or
                    ``(B) at the election of the taxpayer, the 
                succeeding taxable year,
        but only if the building is a qualified middle-income building 
        as of the close of the 1st year of such period. The election 
        under subparagraph (B), once made, shall be irrevocable.
            ``(2) Special rule for 1st year of credit period.--
                    ``(A) In general.--The credit allowable under 
                subsection (a) with respect to any building for the 1st 
                taxable year of the credit period shall be determined 
                by substituting for the applicable fraction under 
                subsection (c)(1) the fraction--
                            ``(i) the numerator of which is the sum of 
                        the applicable fractions determined under 
                        subsection (c)(1) as of the close of each full 
                        month of such year during which such building 
                        was in service, and
                            ``(ii) the denominator of which is 12.
                    ``(B) Disallowed 1st-year credit allowed in 16th 
                year.--Any reduction by reason of subparagraph (A) in 
                the credit allowable (without regard to subparagraph 
                (A)) for the 1st taxable year of the credit period 
                shall be allowable under subsection (a) for the 1st 
                taxable year following the credit period.
            ``(3) Determination of applicable percentage with respect 
        to increases in qualified basis after 1st year of credit 
        period.--
                    ``(A) In general.--In the case of any building 
                which was a qualified middle-income building as of the 
                close of the 1st year of the credit period, if--
                            ``(i) as of the close of any taxable year 
                        in the credit period (after the 1st year of 
                        such period) the qualified basis of such 
                        building, exceeds
                            ``(ii) the qualified basis of such building 
                        as of the close of the 1st year of the credit 
                        period,
                the applicable percentage which shall apply under 
                subsection (a) for the taxable year to such excess 
                shall be the percentage equal to \2/3\ of the 
                applicable percentage which (after the application of 
                subsection (h)) would but for this paragraph apply to 
                such basis.
                    ``(B) 1st year computation applies.--A rule similar 
                to the rule of paragraph (2)(A) shall apply to any 
                increase in qualified basis to which subparagraph (A) 
                applies for the 1st year of such increase.
            ``(4) Dispositions of property.--If a building (or an 
        interest therein) is disposed of during any year for which 
        credit is allowable under subsection (a), such credit shall be 
        allocated between the parties on the basis of the number of 
        days during such year the building (or interest) was held by 
        each.
            ``(5) Credit period for existing buildings not to begin 
        before rehabilitation credit allowed.--
                    ``(A) In general.--The credit period for an 
                existing building shall not begin before the 1st 
                taxable year of the credit period for rehabilitation 
                expenditures with respect to the building.
                    ``(B) Acquisition credit allowed for certain 
                buildings not allowed a rehabilitation credit.--
                            ``(i) In general.--In the case of a 
                        building described in clause (ii)--
                                    ``(I) subsection (d)(2)(B)(iv) 
                                shall not apply, and
                                    ``(II) the credit period for such 
                                building shall not begin before the 
                                taxable year which would be the 1st 
                                taxable year of the credit period for 
                                rehabilitation expenditures with 
                                respect to the building under the 
                                modifications described in clause 
                                (ii)(II).
                            ``(ii) Building described.--A building is 
                        described in this clause if--
                                    ``(I) a waiver is granted under 
                                subsection (d)(4) with respect to the 
                                acquisition of the building, and
                                    ``(II) a credit would be allowed 
                                for rehabilitation expenditures with 
                                respect to such building if subsection 
                                (e)(3)(A)(ii)(I) did not apply and if 
                                the dollar amount in effect under 
                                subsection (e)(3)(A)(ii)(II) were two-
                                thirds of such amount.
    ``(g) Qualified Middle-Income Housing Project.--For purposes of 
this section--
            ``(1) In general.--The term `qualified middle-income 
        housing project' means any project for residential rental 
        property if 60 percent or more of the residential units in such 
        project are both rent-restricted and occupied by individuals 
        whose income is 100 percent or less of area median gross 
        income. For purposes of the preceding sentence, residential 
        units in a building which is not a qualified middle-income 
        building by reason of subsection (c)(2)(B) shall not be taken 
        into account.
            ``(2) Rent-restricted units.--
                    ``(A) In general.--For purposes of paragraph (1), a 
                residential unit is rent-restricted if the gross rent 
                with respect to such unit does not exceed 30 percent of 
                the imputed income limitation applicable to such unit. 
                For purposes of the preceding sentence, the amount of 
                the income limitation under paragraph (1) applicable 
                for any period shall not be less than such limitation 
                applicable for the earliest period the building (which 
                contains the unit) was included in the determination of 
                whether the project is a qualified middle-income 
                housing project.
                    ``(B) Gross rent.--For purposes of subparagraph 
                (A), gross rent--
                            ``(i) includes any utility allowance 
                        determined by the Secretary after taking into 
                        account such determinations under section 8 of 
                        the United States Housing Act of 1937,
                            ``(ii) does not include any fee for a 
                        supportive service which is paid to the owner 
                        of the unit (on the basis of the middle-income 
                        status of the tenant of the unit) by any 
                        governmental program of assistance (or by an 
                        organization described in section 501(c)(3) and 
                        exempt from tax under section 501(a)) if such 
                        program (or organization) provides assistance 
                        for rent and the amount of assistance provided 
                        for rent is not separable from the amount of 
                        assistance provided for supportive services, 
                        and
                            ``(iii) does not include any rental payment 
                        to the owner of the unit to the extent such 
                        owner pays an equivalent amount to the Farmers' 
                        Home Administration under section 515 of the 
                        Housing Act of 1949.
                For purposes of clause (ii), the term `supportive 
                service' means any service provided under a planned 
                program of services designed to enable residents of a 
                residential rental property to remain independent and 
                avoid placement in a hospital, nursing home, or 
                intermediate care facility for the mentally or 
                physically handicapped.
                    ``(C) Imputed income limitation applicable to 
                unit.--For purposes of this paragraph, the imputed 
                income limitation applicable to a unit is the income 
                limitation which would apply under paragraph (1) to 
                individuals occupying the unit if the number of 
                individuals occupying the unit were as follows:
                            ``(i) In the case of a unit which does not 
                        have a separate bedroom, 1 individual.
                            ``(ii) In the case of a unit which has 1 or 
                        more separate bedrooms, 1.5 individuals for 
                        each separate bedroom.
                In the case of a project with respect to which a credit 
                is allowable by reason of this section and for which 
                financing is provided by a bond described in section 
                142(a)(7), the imputed income limitation shall apply in 
                lieu of the otherwise applicable income limitation for 
                purposes of applying section 142(d)(4)(B)(ii).
                    ``(D) Treatment of units occupied by individuals 
                whose incomes rise above limit.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), notwithstanding an increase in the 
                        income of the occupants of a middle-income unit 
                        above the income limitation applicable under 
                        paragraph (1), such unit shall continue to be 
                        treated as a middle-income unit if the income 
                        of such occupants initially met such income 
                        limitation and such unit continues to be rent-
                        restricted.
                            ``(ii) Next available unit must be rented 
                        to middle-income tenant if income rises above 
                        140 percent of income limit.--If the income of 
                        the occupants of the unit increases above 140 
                        percent of the income limitation applicable 
                        under paragraph (1), clause (i) shall cease to 
                        apply to such unit if any residential rental 
                        unit in the building (of a size comparable to, 
                        or smaller than, such unit) is occupied by a 
                        new resident whose income exceeds such income 
                        limitation.
            ``(3) Date for meeting requirements.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, a building shall be treated as a 
                qualified middle-income building only if the project 
                (of which such building is a part) meets the 
                requirements of paragraph (1) not later than the close 
                of the 1st year of the credit period for such building.
                    ``(B) Buildings which rely on later buildings for 
                qualification.--
                            ``(i) In general.--In determining whether a 
                        building (hereinafter in this subparagraph 
                        referred to as the `prior building') is a 
                        qualified middle-income building, the taxpayer 
                        may take into account 1 or more additional 
                        buildings placed in service during the 12-month 
                        period described in subparagraph (A) with 
                        respect to the prior building only if the 
                        taxpayer elects to apply clause (ii) with 
                        respect to each additional building taken into 
                        account.
                            ``(ii) Treatment of elected buildings.--In 
                        the case of a building which the taxpayer 
                        elects to take into account under clause (i), 
                        the period under subparagraph (A) for such 
                        building shall end at the close of the 12-month 
                        period applicable to the prior building.
                            ``(iii) Date prior building is treated as 
                        placed in service.--For purposes of determining 
                        the credit period for the prior building, the 
                        prior building shall be treated for purposes of 
                        this section as placed in service on the most 
                        recent date any additional building elected by 
                        the taxpayer (with respect to such prior 
                        building) was placed in service.
                    ``(C) Special rule.--A building--
                            ``(i) other than the 1st building placed in 
                        service as part of a project, and
                            ``(ii) other than a building which is 
                        placed in service during the 12-month period 
                        described in subparagraph (A) with respect to a 
                        prior building which becomes a qualified 
                        middle-income building,
                shall in no event be treated as a qualified middle-
                income building unless the project is a qualified 
                middle-income housing project (without regard to such 
                building) on the date such building is placed in 
                service.
                    ``(D) Projects with more than 1 building must be 
                identified.--For purposes of this section, a project 
                shall be treated as consisting of only 1 building 
                unless, before the close of the 1st calendar year in 
                the project period (as defined in subsection 
                (h)(1)(F)(ii)), each building which is (or will be) 
                part of such project is identified in such form and 
                manner as the Secretary may provide.
            ``(4) Certain rules made applicable.--Paragraphs (2) (other 
        than subparagraph (A) thereof), (3), and (7) of section 142(d), 
        and section 6652(j), shall apply for purposes of determining 
        whether any project is a qualified middle-income housing 
        project and whether any unit is a middle-income unit; except 
        that, in applying such provisions for such purposes--
                    ``(A) the term `gross rent' shall have the meaning 
                given such term by paragraph (2)(B) of this subsection, 
                and
                    ``(B) the term `applicable income limit' means the 
                limitation under paragraph (1) of this subsection.
            ``(5) Election to treat building after credit period as not 
        part of a project.--For purposes of this section, the taxpayer 
        may elect to treat any building as not part of a qualified 
        middle-income housing project for any period beginning after 
        the credit period for such building.
            ``(6) Special rule where de minimis equity contribution.--
        Property shall not be treated as failing to be residential 
        rental property for purposes of this section merely because the 
        occupant of a residential unit in the project pays (on a 
        voluntary basis) to the lessor a de minimis amount to be held 
        toward the purchase by such occupant of a residential unit in 
        such project if--
                    ``(A) all amounts so paid are refunded to the 
                occupant on the cessation of his occupancy of a unit in 
                the project, and
                    ``(B) the purchase of the unit is not permitted 
                until after the close of the credit period with respect 
                to the building in which the unit is located.
        Any amount paid to the lessor as described in the preceding 
        sentence shall be included in gross rent under paragraph (2) 
        for purposes of determining whether the unit is rent-
        restricted.
            ``(7) Scattered site projects.--Buildings which would (but 
        for their lack of proximity) be treated as a project for 
        purposes of this section shall be so treated if all of the 
        dwelling units in each of the buildings are rent-restricted 
        (within the meaning of paragraph (2)) residential rental units.
            ``(8) Waiver of certain recertifications.--On application 
        by the taxpayer, the Secretary may waive any annual 
        recertification of tenant income for purposes of this 
        subsection, if the entire building is occupied by middle-income 
        tenants.
            ``(9) Clarification of general public use requirement.--A 
        project does not fail to meet the general public use 
        requirement solely because of occupancy restrictions or 
        preferences that favor tenants--
                    ``(A) with special needs, or
                    ``(B) who are members of a specified group under a 
                Federal program or State program or policy that 
                supports housing for such a specified group.
    ``(h) Limitation on Aggregate Credit Allowable With Respect to 
Projects Located in a State.--
            ``(1) Credit may not exceed credit amount allocated to 
        building.--
                    ``(A) In general.--The amount of the credit 
                determined under this section for any taxable year with 
                respect to any building shall not exceed the housing 
                credit dollar amount allocated to such building under 
                this subsection.
                    ``(B) Time for making allocation.--Except in the 
                case of an allocation which meets the requirements of 
                subparagraph (C), (D), (E), or (F), an allocation shall 
                be taken into account under subparagraph (A) only if it 
                is made not later than the close of the calendar year 
                in which the building is placed in service.
                    ``(C) Exception where binding commitment.--An 
                allocation meets the requirements of this subparagraph 
                if there is a binding commitment (not later than the 
                close of the calendar year in which the building is 
                placed in service) by the housing credit agency to 
                allocate a specified housing credit dollar amount to 
                such building beginning in a specified later taxable 
                year.
                    ``(D) Exception where increase in qualified 
                basis.--
                            ``(i) In general.--An allocation meets the 
                        requirements of this subparagraph if such 
                        allocation is made not later than the close of 
                        the calendar year in which ends the taxable 
                        year to which it will 1st apply but only to the 
                        extent the amount of such allocation does not 
                        exceed the limitation under clause (ii).
                            ``(ii) Limitation.--The limitation under 
                        this clause is the amount of credit allowable 
                        under this section (without regard to this 
                        subsection) for a taxable year with respect to 
                        an increase in the qualified basis of the 
                        building equal to the excess of--
                                    ``(I) the qualified basis of such 
                                building as of the close of the 1st 
                                taxable year to which such allocation 
                                will apply, over
                                    ``(II) the qualified basis of such 
                                building as of the close of the 1st 
                                taxable year to which the most recent 
                                prior housing credit allocation with 
                                respect to such building applied.
                            ``(iii) Housing credit dollar amount 
                        reduced by full allocation.--Notwithstanding 
                        clause (i), the full amount of the allocation 
                        shall be taken into account under paragraph 
                        (2).
                    ``(E) Exception where 10 percent of cost 
                incurred.--
                            ``(i) In general.--An allocation meets the 
                        requirements of this subparagraph if such 
                        allocation is made with respect to a qualified 
                        building which is placed in service not later 
                        than the close of the second calendar year 
                        following the calendar year in which the 
                        allocation is made.
                            ``(ii) Qualified building.--For purposes of 
                        clause (i), the term `qualified building' means 
                        any building which is part of a project if the 
                        taxpayer's basis in such project (as of the 
                        date which is 1 year after the date that the 
                        allocation was made) is more than 10 percent of 
                        the taxpayer's reasonably expected basis in 
                        such project (as of the close of the second 
                        calendar year referred to in clause (i)). Such 
                        term does not include any existing building 
                        unless a credit is allowable under subsection 
                        (e) for rehabilitation expenditures paid or 
                        incurred by the taxpayer with respect to such 
                        building for a taxable year ending during the 
                        second calendar year referred to in clause (i) 
                        or the prior taxable year.
                    ``(F) Allocation of credit on a project basis.--
                            ``(i) In general.--In the case of a project 
                        which includes (or will include) more than 1 
                        building, an allocation meets the requirements 
                        of this subparagraph if--
                                    ``(I) the allocation is made to the 
                                project for a calendar year during the 
                                project period,
                                    ``(II) the allocation only applies 
                                to buildings placed in service during 
                                or after the calendar year for which 
                                the allocation is made, and
                                    ``(III) the portion of such 
                                allocation which is allocated to any 
                                building in such project is specified 
                                not later than the close of the 
                                calendar year in which the building is 
                                placed in service.
                            ``(ii) Project period.--For purposes of 
                        clause (i), the term `project period' means the 
                        period--
                                    ``(I) beginning with the 1st 
                                calendar year for which an allocation 
                                may be made for the 1st building placed 
                                in service as part of such project, and
                                    ``(II) ending with the calendar 
                                year the last building is placed in 
                                service as part of such project.
            ``(2) Allocated credit amount to apply to all taxable years 
        ending during or after credit allocation year.--Any housing 
        credit dollar amount allocated to any building for any calendar 
        year--
                    ``(A) shall apply to such building for all taxable 
                years in the credit period ending during or after such 
                calendar year, and
                    ``(B) shall reduce the aggregate housing credit 
                dollar amount of the allocating agency only for such 
                calendar year.
            ``(3) Housing credit dollar amount for agencies.--
                    ``(A) In general.--The aggregate housing credit 
                dollar amount which a housing credit agency may 
                allocate for any calendar year is the portion of the 
                State housing credit ceiling allocated under this 
                paragraph for such calendar year to such agency.
                    ``(B) State ceiling initially allocated to state 
                housing credit agencies.--Except as provided in 
                subparagraph (D), the State housing credit ceiling for 
                each calendar year shall be allocated to the housing 
                credit agency of such State. If there is more than 1 
                housing credit agency of a State, all such agencies 
                shall be treated as a single agency.
                    ``(C) State housing credit ceiling.--The State 
                housing credit ceiling applicable to any State for any 
                calendar year shall be an amount equal to the sum of--
                            ``(i) the greater of--
                                    ``(I) $1.00 multiplied by the State 
                                population, or
                                    ``(II) $1,140,000, plus
                            ``(ii) the amount of State housing credit 
                        ceiling returned in the calendar year.
                For purposes of clause (ii), the amount of State 
                housing credit ceiling returned in the calendar year 
                equals the housing credit dollar amount previously 
                allocated within the State to any project which fails 
                to meet the 10 percent test under paragraph (1)(E)(ii) 
                on a date after the close of the calendar year in which 
                the allocation was made or which does not become a 
                qualified middle-income housing project within the 
                period required by this section or the terms of the 
                allocation or to any project with respect to which an 
                allocation is cancelled by mutual consent of the 
                housing credit agency and the allocation recipient.
                    ``(D) State may provide for different allocation.--
                Rules similar to the rules of section 146(e) (other 
                than paragraph (2)(B) thereof) shall apply for purposes 
                of this paragraph.
                    ``(E) Population.--For purposes of this paragraph, 
                population shall be determined in accordance with 
                section 146(j).
                    ``(F) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2024, the $1,140,000 and 
                        $1.00 amounts in subparagraph (C) 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 2023' for 
                                `calendar year 2016' in subparagraph 
                                (A)(ii) thereof.
                            ``(ii) Rounding.--
                                    ``(I) In the case of the $1,140,000 
                                amount, any increase under clause (i) 
                                which is not a multiple of $5,000 shall 
                                be rounded to the next lowest multiple 
                                of $5,000.
                                    ``(II) In the case of the $1.00 
                                amount, any increase under clause (i) 
                                which is not a multiple of 5 cents 
                                shall be rounded to the next lowest 
                                multiple of 5 cents.
            ``(4) Portion of state ceiling set-aside for certain 
        projects involving qualified nonprofit organizations.--
                    ``(A) In general.--Not more than 90 percent of the 
                State housing credit ceiling (determined without regard 
                to paragraph (7)) for any State for any calendar year 
                shall be allocated to projects other than qualified 
                middle-income housing projects described in 
                subparagraph (B).
                    ``(B) Projects involving qualified nonprofit 
                organizations.--For purposes of subparagraph (A), a 
                qualified middle-income housing project is described in 
                this subparagraph if a qualified nonprofit organization 
                is to own an interest in the project (directly or 
                through a partnership) and materially participate 
                (within the meaning of section 469(h)) in the 
                development and operation of the project throughout the 
                credit period.
                    ``(C) Qualified nonprofit organization.--For 
                purposes of this paragraph, the term `qualified 
                nonprofit organization' means any organization if--
                            ``(i) such organization is described in 
                        paragraph (3) or (4) of section 501(c) and is 
                        exempt from tax under section 501(a),
                            ``(ii) such organization is determined by 
                        the State housing credit agency not to be 
                        affiliated with or controlled by a for-profit 
                        organization; and
                            ``(iii) one of the exempt purposes of such 
                        organization includes the fostering of middle-
                        income housing.
                    ``(D) Treatment of certain subsidiaries.--
                            ``(i) In general.--For purposes of this 
                        paragraph, a qualified nonprofit organization 
                        shall be treated as satisfying the ownership 
                        and material participation test of subparagraph 
                        (B) if any qualified corporation in which such 
                        organization holds stock satisfies such test.
                            ``(ii) Qualified corporation.--For purposes 
                        of clause (i), the term `qualified corporation' 
                        means any corporation if 100 percent of the 
                        stock of such corporation is held by 1 or more 
                        qualified nonprofit organizations at all times 
                        during the period such corporation is in 
                        existence.
                    ``(E) State may not override set-aside.--Nothing in 
                subparagraph (E) of paragraph (3) shall be construed to 
                permit a State not to comply with subparagraph (A) of 
                this paragraph.
            ``(5) Buildings eligible for credit only if minimum long-
        term commitment to middle-income housing.--
                    ``(A) In general.--No credit shall be allowed by 
                reason of this section with respect to any building for 
                the taxable year unless an extended middle-income 
                housing commitment is in effect as of the end of such 
                taxable year.
                    ``(B) Extended middle-income housing commitment.--
                For purposes of this paragraph, the term `extended 
                middle-income housing commitment' means any agreement 
                between the taxpayer and the housing credit agency--
                            ``(i) which requires that the applicable 
                        fraction (as defined in subsection (c)(1)) for 
                        the building for each taxable year in the 
                        extended use period will not be less than the 
                        applicable fraction specified in such agreement 
                        and which prohibits the actions described in 
                        subclauses (I) and (II) of subparagraph 
                        (E)(ii),
                            ``(ii) which allows individuals who meet 
                        the income limitation applicable to the 
                        building under subsection (g) (whether 
                        prospective, present, or former occupants of 
                        the building) the right to enforce in any State 
                        court the requirement and prohibitions of 
                        clause (i),
                            ``(iii) which prohibits the disposition to 
                        any person of any portion of the building to 
                        which such agreement applies unless all of the 
                        building to which such agreement applies is 
                        disposed of to such person,
                            ``(iv) which prohibits the refusal to lease 
                        to a holder of a voucher or certificate of 
                        eligibility under section 8 of the United 
                        States Housing Act of 1937 because of the 
                        status of the prospective tenant as such a 
                        holder,
                            ``(v) which is binding on all successors of 
                        the taxpayer, and
                            ``(vi) which, with respect to the property, 
                        is recorded pursuant to State law as a 
                        restrictive covenant.
                    ``(C) Allocation of credit may not exceed amount 
                necessary to support commitment.--The housing credit 
                dollar amount allocated to any building may not exceed 
                the amount necessary to support the applicable fraction 
                specified in the extended middle-income housing 
                commitment for such building, including any increase in 
                such fraction pursuant to the application of subsection 
                (f)(3) if such increase is reflected in an amended 
                middle-income housing commitment.
                    ``(D) Extended use period.--For purposes of this 
                paragraph, the term `extended use period' means the 
                period--
                            ``(i) beginning on the 1st day in the 
                        credit period on which such building is part of 
                        a qualified middle-income housing project, and
                            ``(ii) ending on the later of--
                                    ``(I) the date specified by such 
                                agency in such agreement, or
                                    ``(II) the date which is 15 years 
                                after the close of the credit period.
                    ``(E) Exceptions if foreclosure or if no buyer 
                willing to maintain middle-income status.--
                            ``(i) In general.--The extended use period 
                        for any building shall terminate on the date 
                        the building is acquired by foreclosure (or 
                        instrument in lieu of foreclosure) unless the 
                        Secretary determines that such acquisition is 
                        part of an arrangement with the taxpayer a 
                        purpose of which is to terminate such period.
                            ``(ii) Eviction, etc., of existing middle-
                        income tenants not permitted.--The termination 
                        of an extended use period under clause (i) 
                        shall not be construed to permit before the 
                        close of the 3-year period following such 
                        termination--
                                    ``(I) the eviction or the 
                                termination of tenancy (other than for 
                                good cause) of an existing tenant of 
                                any middle-income unit, or
                                    ``(II) any increase in the gross 
                                rent with respect to such unit not 
                                otherwise permitted under this section.
                    ``(F) Effect of noncompliance.--If, during a 
                taxable year, there is a determination that an extended 
                middle-income housing agreement was not in effect as of 
                the beginning of such year, such determination shall 
                not apply to any period before such year and 
                subparagraph (A) shall be applied without regard to 
                such determination if the failure is corrected within 1 
                year from the date of the determination.
                    ``(G) Projects which consist of more than 1 
                building.--The application of this paragraph to 
                projects which consist of more than 1 building shall be 
                made under regulations prescribed by the Secretary.
            ``(6) Special rules.--
                    ``(A) Building must be located within jurisdiction 
                of credit agency.--A housing credit agency may allocate 
                its aggregate housing credit dollar amount only to 
                buildings located in the jurisdiction of the 
                governmental unit of which such agency is a part.
                    ``(B) Agency allocations in excess of limit.--If 
                the aggregate housing credit dollar amounts allocated 
                by a housing credit agency for any calendar year exceed 
                the portion of the State housing credit ceiling 
                allocated to such agency for such calendar year, the 
                housing credit dollar amounts so allocated shall be 
                reduced (to the extent of such excess) for buildings in 
                the reverse of the order in which the allocations of 
                such amounts were made.
                    ``(C) Credit reduced if allocated credit dollar 
                amount is less than credit which would be allowable 
                without regard to placed in service convention, etc.--
                            ``(i) In general.--The amount of the credit 
                        determined under this section with respect to 
                        any building shall not exceed the clause (ii) 
                        percentage of the amount of the credit which 
                        would (but for this subparagraph) be determined 
                        under this section with respect to such 
                        building.
                            ``(ii) Determination of percentage.--For 
                        purposes of clause (i), the clause (ii) 
                        percentage with respect to any building is the 
                        percentage which--
                                    ``(I) the housing credit dollar 
                                amount allocated to such building, 
                                bears to
                                    ``(II) the credit amount determined 
                                in accordance with clause (iii).
                            ``(iii) Determination of credit amount.--
                        The credit amount determined in accordance with 
                        this clause is the amount of the credit which 
                        would (but for this subparagraph) be determined 
                        under this section with respect to the building 
                        if--
                                    ``(I) this section were applied 
                                without regard to paragraphs (2)(A) and 
                                (3)(B) of subsection (f), and
                                    ``(II) subsection (f)(3)(A) were 
                                applied without regard to `the 
                                percentage equal to \2/3\ of'.
                    ``(D) Housing credit agency to specify applicable 
                percentage and maximum qualified basis.--In allocating 
                a housing credit dollar amount to any building, the 
                housing credit agency shall specify the applicable 
                percentage and the maximum qualified basis which may be 
                taken into account under this section with respect to 
                such building. The applicable percentage and maximum 
                qualified basis so specified shall not exceed the 
                applicable percentage and qualified basis determined 
                under this section without regard to this subsection.
            ``(7) Increase in state ceiling dedicated to certain rural 
        development projects.--
                    ``(A) In general.--The State housing credit ceiling 
                for any calendar year shall be increased by an amount 
                equal to 5 percent of the amount determined under 
                paragraph (3)(C)(i).
                    ``(B) Use of increased amount.--The amount of the 
                increase under subparagraph (A) for any calendar year 
                may only be allocated to buildings located in a rural 
                area (as defined in section 42(d)(5)(B)(iii)(IV)).
            ``(8) Other definitions.--For purposes of this subsection--
                    ``(A) Housing credit agency.--The term `housing 
                credit agency' means any agency authorized to carry out 
                this subsection.
                    ``(B) Possessions treated as states.--The term 
                `State' includes a possession of the United States.
            ``(9) Credit for buildings financed by tax-exempt bonds 
        subject to volume cap not taken into account.--Rules similar to 
        the rules of subsections (h)(4), (m)(1)(D), and (m)(2)(D) of 
        section 42 shall apply for purposes of this subsection.
    ``(i) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Middle-income unit.--
                    ``(A) In general.--The term `middle-income unit' 
                means any unit in a building if--
                            ``(i) such unit is rent-restricted (as 
                        defined in subsection (g)(2)), and
                            ``(ii) the individuals occupying such unit 
                        meet the income limitation applicable under 
                        subsection (g)(1) to the project of which such 
                        building is a part.
                    ``(B) Exceptions.--
                            ``(i) Exclusion of low-income units.--A 
                        unit shall not be treated as a middle-income 
                        unit if such unit is a low-income unit (as 
                        defined under section 42(i)(3)).
                            ``(ii) Unit must be suitable for permanent 
                        occupancy.--
                                    ``(I) In general.--A unit shall not 
                                be treated as a middle-income unit 
                                unless the unit is suitable for 
                                occupancy and used other than on a 
                                transient basis.
                                    ``(II) Suitability for occupancy.--
                                For purposes of subclause (I), the 
                                suitability of a unit for occupancy 
                                shall be determined under regulations 
                                prescribed by the Secretary taking into 
                                account local health, safety, and 
                                building codes.
                                    ``(III) Single-room occupancy 
                                units.--For purposes of subclause (I), 
                                a single-room occupancy unit shall not 
                                be treated as used on a transient basis 
                                merely because it is rented on a month-
                                by-month basis.
                    ``(C) Special rule for buildings having 4 or fewer 
                units.--In the case of any building which has 4 or 
                fewer residential rental units, no unit in such 
                building shall be treated as a middle-income unit if 
                the units in such building are owned by--
                            ``(i) any individual who occupies a 
                        residential unit in such building, or
                            ``(ii) any person who is related (as 
                        defined in subsection (d)(2)(D)(ii)) to such 
                        individual.
                    ``(D) Rules relating to students.--
                            ``(i) In general.--A unit occupied solely 
                        by individuals who--
                                    ``(I) have not attained age 24, and
                                    ``(II) are enrolled in a full-time 
                                course of study at an institution of 
                                higher education (as defined in section 
                                3304(f)),
                        shall not be treated as a middle-income unit.
                            ``(ii) Exceptions.--Clause (i) shall not 
                        apply to a unit occupied by an individual who--
                                    ``(I) is married, if such 
                                individual's spouse also occupies the 
                                unit,
                                    ``(II) is a person with 
                                disabilities (as defined in section 
                                3(b)(3)(E) of the United States Housing 
                                Act of 1937),
                                    ``(III) is a veteran (as defined in 
                                section 101(2) of title 38, United 
                                States Code),
                                    ``(IV) has one or more qualifying 
                                children (as defined in section 
                                152(c)), if such children also occupy 
                                the unit, the individual is not a 
                                dependent (as defined in section 152, 
                                determined without regard to 
                                subsections (b)(1), (b)(2), and 
                                (d)(1)(B) thereof) of another 
                                individual, and such children are not 
                                claimed as dependents (as so defined) 
                                of another individual, or
                                    ``(V) is, or was immediately prior 
                                to attaining the age of majority--
                                            ``(aa) an emancipated minor 
                                        or in legal guardianship as 
                                        determined by a court of 
                                        competent jurisdiction in the 
                                        individual's State of legal 
                                        residence,
                                            ``(bb) under the care and 
                                        placement responsibility of the 
                                        State agency responsible for 
                                        administering a plan under part 
                                        B or part E of title IV of the 
                                        Social Security Act, or
                                            ``(cc) was an unaccompanied 
                                        youth (within the meaning of 
                                        section 725(6) of the McKinney-
                                        Vento Homeless Assistance Act 
                                        (42 U.S.C. 11434a(6))) or a 
                                        homeless child or youth (within 
                                        the meaning of section 725(2) 
                                        of such Act (42 U.S.C. 
                                        11434a(2))).
                    ``(E) Owner-occupied buildings having 4 or fewer 
                units eligible for credit where development plan.--
                            ``(i) In general.--Subparagraph (C) shall 
                        not apply to the acquisition or rehabilitation 
                        of a building pursuant to a development plan of 
                        action sponsored by a State or local government 
                        or a qualified nonprofit organization.
                            ``(ii) Limitation on credit.--In the case 
                        of a building to which clause (i) applies, the 
                        applicable fraction shall not exceed 80 percent 
                        of the unit fraction.
                            ``(iii) Certain unrented units treated as 
                        owner-occupied.--In the case of a building to 
                        which clause (i) applies, any unit which is not 
                        rented for 90 days or more shall be treated as 
                        occupied by the owner of the building as of the 
                        1st day it is not rented.
            ``(2) New building.--The term `new building' means a 
        building the original use of which begins with the taxpayer.
            ``(3) Existing building.--The term `existing building' 
        means any building which is not a new building.
            ``(4) Application to estates and trusts.--In the case of an 
        estate or trust, the amount of the credit determined under 
        subsection (a) shall be apportioned between the estate or trust 
        and the beneficiaries on the basis of the income of the estate 
        or trust allocable to each.
            ``(5) Impact of tenant's option to acquire property.--
                    ``(A) In general.--No Federal income tax benefit 
                shall fail to be allowable to the taxpayer with respect 
                to any qualified middle-income building merely by 
                reason of an option held by the tenants (in cooperative 
                form or otherwise) or resident management corporation 
                of such building or by a qualified nonprofit 
                organization or government agency to purchase 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 after 
                the close of the credit period for a price which is not 
                less than the minimum purchase price determined under 
                subparagraph (B).
                    ``(B) Minimum purchase price.--For purposes of 
                subparagraph (A), the minimum purchase price under this 
                subparagraph is an amount equal to 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). 
                In the case of a purchase of a partnership interest, 
                the minimum purchase price is an amount equal to such 
                interest's ratable share of the amount determined under 
                the preceding sentence.
            ``(6) Treatment of rural projects.--For purposes of this 
        section, in the case of any project for residential rental 
        property located in a rural area (as defined in section 520 of 
        the Housing Act of 1949), any income limitation measured by 
        reference to area median gross income shall be measured by 
        reference to the greater of area median gross income or 
        national non-metropolitan median income.
            ``(7) Determination of whether building is federally 
        subsidized.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, for purposes of this section, a project 
                shall be treated as Federally subsidized for any 
                taxable year if, at any time during such taxable year 
                or any prior taxable year, there is or was outstanding 
                any obligation the interest on which is exempt from tax 
                under section 103 the proceeds of which are or were 
                used (directly or indirectly) with respect to such 
                project or the operation thereof.
                    ``(B) Special rule for subsidized construction 
                financing.--Subparagraph (A) shall not apply to any 
                tax-exempt obligation used to provide construction 
                financing for any building if--
                            ``(i) such obligation (when issued) 
                        identified the building for which the proceeds 
                        of such obligation would be used, and
                            ``(ii) such obligation is redeemed before 
                        such building is placed in service.
            ``(8) Reduction in basis.--In the case of any building for 
        which a credit is allowable under this section and section 42, 
        the basis of the building shall be reduced by the amount of 
        such credit allowed under subsection (a).
    ``(j) Application of At-Risk Rules.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, rules similar to the rules of section 49(a)(1) 
        (other than subparagraphs (D)(ii)(II) and (D)(iv)(I) thereof), 
        section 49(a)(2), and section 49(b)(1) shall apply in 
        determining the qualified basis of any building in the same 
        manner as such sections apply in determining the credit base of 
        property.
            ``(2) Special rules for determining qualified person.--For 
        purposes of paragraph (1)--
                    ``(A) In general.--If the requirements of 
                subparagraphs (B), (C), and (D) are met with respect to 
                any financing borrowed from a qualified nonprofit 
                organization, the determination of whether such 
                financing is qualified commercial financing with 
                respect to any qualified middle-income building shall 
                be made without regard to whether such organization--
                            ``(i) is actively and regularly engaged in 
                        the business of lending money, or
                            ``(ii) is a person described in section 
                        49(a)(1)(D)(iv)(II).
                    ``(B) Financing secured by property.--The 
                requirements of this subparagraph are met with respect 
                to any financing if such financing is secured by the 
                qualified middle-income building, except that this 
                subparagraph shall not apply in the case of a federally 
                assisted building described in subsection (d)(5)(B) 
                if--
                            ``(i) a security interest in such building 
                        is not permitted by a Federal agency holding or 
                        insuring the mortgage secured by such building, 
                        and
                            ``(ii) the proceeds from the financing (if 
                        any) are applied to acquire or improve such 
                        building.
                    ``(C) Portion of building attributable to 
                financing.--The requirements of this subparagraph are 
                met with respect to any financing for any taxable year 
                in the credit period if, as of the close of such 
                taxable year, not more than 60 percent of the eligible 
                basis of the qualified middle-income building is 
                attributable to such financing (reduced by the 
                principal and interest of any governmental financing 
                which is part of a wrap-around mortgage involving such 
                financing).
                    ``(D) Repayment of principal and interest.--The 
                requirements of this subparagraph are met with respect 
                to any financing if such financing is fully repaid on 
                or before the earliest of--
                            ``(i) the date on which such financing 
                        matures,
                            ``(ii) the 90th day after the close of the 
                        credit period with respect to the qualified 
                        middle-income building, or
                            ``(iii) the date of its refinancing or the 
                        sale of the building to which such financing 
                        relates.
                In the case of a qualified nonprofit organization which 
                is not described in section 49(a)(1)(D)(iv)(II) with 
                respect to a building, clause (ii) of this subparagraph 
                shall be applied as if the date described therein were 
                the 90th day after the earlier of the date the building 
                ceases to be a qualified middle-income building or the 
                date which is 15 years after the close of a credit 
                period with respect thereto.
            ``(3) Present value of financing.--If the rate of interest 
        on any financing described in paragraph (2)(A) is less than the 
        rate which is 1 percentage point below the applicable Federal 
        rate as of the time such financing is incurred, then the 
        qualified basis (to which such financing relates) of the 
        qualified middle-income building shall be the present value of 
        the amount of such financing, using as the discount rate such 
        applicable Federal rate. For purposes of the preceding 
        sentence, the rate of interest on any financing shall be 
        determined by treating interest to the extent of government 
        subsidies as not payable.
            ``(4) Failure to fully repay.--
                    ``(A) In general.--To the extent that the 
                requirements of paragraph (2)(D) are not met, then the 
                taxpayer's tax under this chapter for the taxable year 
                in which such failure occurs shall be increased by an 
                amount equal to the applicable portion of the credit 
                under this section with respect to such building, 
                increased by an amount of interest for the period--
                            ``(i) beginning with the due date for the 
                        filing of the return of tax imposed by chapter 
                        1 for the 1st taxable year for which such 
                        credit was allowable, and
                            ``(ii) ending with the due date for the 
                        taxable year in which such failure occurs,
                determined by using the underpayment rate and method 
                under section 6621.
                    ``(B) Applicable portion.--For purposes of 
                subparagraph (A), the term `applicable portion' means 
                the aggregate decrease in the credits allowed to a 
                taxpayer under section 38 for all prior taxable years 
                which would have resulted if the eligible basis of the 
                building were reduced by the amount of financing which 
                does not meet requirements of paragraph (2)(D).
                    ``(C) Certain rules to apply.--Rules similar to the 
                rules of subparagraphs (A) and (D) of section 42(j)(4) 
                shall apply for purposes of this subsection.
    ``(k) 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 middle-income 
        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 taxable year, and calendar year, in which 
                such building was placed in service,
                    ``(B) the adjusted basis and eligible basis of such 
                building as of the close of the 1st year of the credit 
                period,
                    ``(C) the maximum applicable percentage and 
                qualified basis permitted to be taken into account by 
                the appropriate housing credit agency under subsection 
                (h), and
                    ``(D) 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 qualified basis for the taxable year of 
                each qualified middle-income building of the taxpayer,
                    ``(B) the information described in paragraph (1)(C) 
                for the taxable year, and
                    ``(C) 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 housing credit agencies.--Each 
        agency which allocates any housing credit amount to any 
        building 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--
                    ``(A) the amount of housing credit amount allocated 
                to each building for such year,
                    ``(B) sufficient information to identify each such 
                building and the taxpayer with respect thereto, and
                    ``(C) such other information as the Secretary may 
                require.
        The penalty under section 6652(j) shall apply to any failure to 
        submit the report required by the preceding sentence on the 
        date prescribed therefor.
    ``(l) Responsibilities of Housing Credit Agencies.--
            ``(1) Plans for allocation of credit among projects.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this section, the housing credit dollar 
                amount with respect to any building shall be zero 
                unless--
                            ``(i) such amount was allocated pursuant to 
                        a qualified allocation plan of the housing 
                        credit agency which is approved by the 
                        governmental unit (in accordance with rules 
                        similar to the rules of section 42(m)(1)) of 
                        which such agency is a part,
                            ``(ii) a comprehensive market study of the 
                        housing needs of middle-income individuals in 
                        the area to be served by the project is 
                        conducted before the credit allocation is made 
                        and at the developer's expense by a 
                        disinterested party who is approved by such 
                        agency, and
                            ``(iii) a written explanation is available 
                        to the general public for any allocation of a 
                        housing credit dollar amount which is not made 
                        in accordance with established priorities and 
                        selection criteria of the housing credit 
                        agency.
                    ``(B) Qualified allocation plan.--For purposes of 
                this paragraph, the term `qualified allocation plan' 
                means any plan--
                            ``(i) which sets forth selection criteria 
                        to be used to determine housing priorities of 
                        the housing credit agency which are appropriate 
                        to local conditions,
                            ``(ii) which also gives preference in 
                        allocating housing credit dollar amounts among 
                        selected projects to--
                                    ``(I) projects obligated to serve 
                                qualified tenants for the longest 
                                periods,
                                    ``(II) projects in areas where 
                                rents are unaffordable to median income 
                                households,
                                    ``(III) projects which target 
                                housing to tenants at a range of 
                                incomes between 60 and 100 percent of 
                                area median gross income, and
                                    ``(IV) projects located near 
                                transit hubs, and
                            ``(iii) which provides a procedure that the 
                        agency (or an agent or other private contractor 
                        of such agency) will follow in monitoring for 
                        noncompliance with the provisions of this 
                        section and in notifying the Internal Revenue 
                        Service of such noncompliance which such agency 
                        becomes aware of and in monitoring for 
                        noncompliance with habitability standards 
                        through regular site visits.
                    ``(C) Certain selection criteria must be used.--The 
                selection criteria set forth in a qualified allocation 
                plan must include--
                            ``(i) project location,
                            ``(ii) housing needs characteristics,
                            ``(iii) project characteristics, including 
                        whether the project includes the use of 
                        existing housing as part of a community 
                        revitalization plan,
                            ``(iv) sponsor characteristics,
                            ``(v) tenant populations with special 
                        housing needs,
                            ``(vi) tenant populations of individuals 
                        with children,
                            ``(vii) projects intended for eventual 
                        tenant ownership,
                            ``(viii) the energy efficiency of the 
                        project, and
                            ``(ix) the historic nature of the project.
                    ``(D) Certain selection criteria prohibited.--The 
                selection criteria set forth in a qualified allocation 
                plan shall not include a requirement of local approval 
                or local contributions, either as a threshold 
                qualification requirement or as part of a point system 
                to be considered for allocations of housing credit 
                dollar amount.
            ``(2) Credit allocated to building not to exceed amount 
        necessary to assure project feasibility.--
                    ``(A) In general.--The housing credit dollar amount 
                allocated to a project shall not exceed the amount the 
                housing credit agency determines is necessary for the 
                financial feasibility of the project and its viability 
                as a qualified middle-income housing project throughout 
                the credit period.
                    ``(B) Agency evaluation.--In making the 
                determination under subparagraph (A), the housing 
                credit agency shall consider--
                            ``(i) the sources and uses of funds and the 
                        total financing planned for the project,
                            ``(ii) any proceeds or receipts expected to 
                        be generated by reason of tax benefits,
                            ``(iii) the percentage of the housing 
                        credit dollar amount used for project costs 
                        other than the cost of intermediaries, and
                            ``(iv) the reasonableness of the 
                        developmental and operational costs of the 
                        project.
                Clause (iii) shall not be applied so as to impede the 
                development of projects in hard-to-develop areas. Such 
                a determination shall not be construed to be a 
                representation or warranty as to the feasibility or 
                viability of the project.
                    ``(C) Determination made when credit amount applied 
                for and when building placed in service.--
                            ``(i) In general.--A determination under 
                        subparagraph (A) shall be made as of each of 
                        the following times:
                                    ``(I) The application for the 
                                housing credit dollar amount.
                                    ``(II) The allocation of the 
                                housing credit dollar amount.
                                    ``(III) The date the building is 
                                placed in service.
                            ``(ii) Certification as to amount of other 
                        subsidies.--Prior to each determination under 
                        clause (i), the taxpayer shall certify to the 
                        housing credit agency the full extent of all 
                        Federal, State, and local subsidies which apply 
                        (or which the taxpayer expects to apply) with 
                        respect to the building.
    ``(m) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations--
            ``(1) dealing with--
                    ``(A) projects which include more than 1 building 
                or only a portion of a building, or
                    ``(B) buildings which are placed in service in 
                portions,
            ``(2) providing for the application of this section to 
        short taxable years,
            ``(3) preventing the avoidance of the rules of this 
        section, and
            ``(4) providing the opportunity for housing credit agencies 
        to correct administrative errors and omissions with respect to 
        allocations and record keeping within a reasonable period after 
        their discovery, taking into account the availability of 
        regulations and other administrative guidance from the 
        Secretary.''.
    (b) Treatment as Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 is amended by striking ``plus'' at 
the end of paragraph (40), by striking the period at the end of 
paragraph (41) and inserting ``, plus'', and by adding at the end the 
following new paragraph:
            ``(42) the middle-income housing credit determined under 
        section 42A(a).''.
    (c) Unused Allocations Carried Over to Low-Income Housing Credit.--
            (1) In general.--Clause (i) of section 42(h)(3)(C) of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``the unused'' and inserting ``the 
                sum of--
                                    ``(I) the unused'',
                    (B) by inserting ``plus'' after ``calendar year,'', 
                and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(II) the unused middle-income 
                                State housing credit (if any) of such 
                                State for the preceding calendar 
                                year,''.
            (2) Unused middle-income state housing credit.--The second 
        sentence of section 42(h)(3)(C) of such Code is amended by 
        inserting ``, and the unused middle-income State housing credit 
        for any calendar year is the excess (if any) of the amount 
        described in section 42A(h)(3)(C) (after application of section 
        42A(h)(7)) for such State over the aggregate amount of middle-
        income housing credit dollar amount allocated by such State 
        under section 42A for such year'' after ``for such year''.
            (3) Unused middle income state housing credit included in 
        carryover allocation.--Section 42(h)(3)(D)(ii) of such Code is 
        amended--
                    (A) by inserting ``the sum of'' after ``is the 
                excess (if any) of''; and
                    (B) by inserting ``plus the unused middle-income 
                State housing credit (as so defined)'' after ``as 
                defined in subparagraph (C)(i))''.
    (d) Reduction in Basis.--Section 1016(a) of the Internal Revenue 
Code of 1986 is amended--
            (1) by striking ``and'' at the end of paragraph (37);
            (2) by redesignating paragraph (38) as paragraph (39); and
            (3) by inserting after paragraph (37) the following new 
        paragraph:
            ``(38) to the extent provided in section 42A(i)(8), and''.
    (e) Treatment Under Base Erosion Minimum Tax.--Section 59A(b)(4) of 
he Internal Revenue Code of 1986 is amended by redesignating 
subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, 
and by inserting after subparagraphs (A) the following new 
subparagraph:
                    ``(B) the middle-income housing credit determined 
                under section 42A(a),''.
    (f) Conforming Amendments.--
            (1) Section 45L(e) of the Internal Revenue Code of 1986 is 
        amended by inserting ``or 42A'' after ``42''.
            (2) Section 50(c)(3)(C) of such Code is amended by 
        inserting ``or 42A'' after ``42''.
            (3) Section 55(c)(1) of such Code is amended by inserting 
        ``42A(j),'' before ``45(e)(11)(C)''.
            (4) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of 
        section 469 of such Code are each amended by inserting ``or 
        42A'' after ``42''.
            (5) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 42 the following new item:

``Sec. 42A. Middle-income housing credit.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2023, in 
taxable years ending after such date.

SEC. 214. NEIGHBORHOOD HOMES CREDIT.

    (a) Findings and Purpose.--
            (1) Findings.--Congress finds the following:
                    (A) Experts have determined that it could take 
                nearly a decade to address the housing shortage in the 
                United States, in large part due to increasing housing 
                prices and decreased housing inventory.
                    (B) The housing supply shortage disproportionately 
                impacts low-income and distressed communities.
                    (C) Homeownership is a primary source of household 
                wealth and neighborhood stability. Many distressed 
                communities have low rates of homeownership and lack 
                quality, affordable starter homes.
                    (D) Housing revitalization in distressed 
                communities is prevented by the value gap, the 
                difference between the price to rehabilitate a home and 
                the sale value of the home.
                    (E) The Neighborhood Homes Investment Act can 
                address the value gap to increase housing 
                rehabilitation in distressed communities.
                    (F) This section and the amendments made by this 
                section have the potential to generate 500,000 homes 
                over 10 years, $125,000,000,000 of total development 
                activity, over 800,000 jobs in construction and 
                construction-related industries, and over 
                $35,000,000,000 in Federal, state, and local tax 
                revenues.
            (2) Sense of congress.--It is the sense of Congress that 
        the neighborhood homes credit (as added under this section) 
        should be an activity administered in a manner which--
                    (A) is consistent with the Fair Housing Act of 1968 
                (42 U.S.C. 3601 et seq.);
                    (B) empowers residents in eligible communities; and
                    (C) revitalizes distressed neighborhoods.
    (b) Allowance of Credit.--Subpart D of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986, as amended by section 
213, is amended by inserting after section 42A the following new 
section:

``SEC. 42B. NEIGHBORHOOD HOMES CREDIT.

    ``(a) Allowance of Credit.--For purposes of section 38, the 
neighborhood homes credit determined under this section for the taxable 
year is, with respect to each qualified residence sold by the taxpayer 
during such taxable year in an affordable sale, the lesser of--
            ``(1) an amount equal to--
                    ``(A) the excess (if any) of--
                            ``(i) the reasonable development costs paid 
                        or incurred by the taxpayer with respect to 
                        such qualified residence, over
                            ``(ii) the sale price of such qualified 
                        residence (reduced by any reasonable expenses 
                        paid or incurred by the taxpayer in connection 
                        with such sale), or
                    ``(B) if the neighborhood homes credit agency 
                determines it is necessary to ensure financial 
                feasibility, an amount not to exceed 120 percent of the 
                amount under subparagraph (A),
            ``(2) 35 percent of the eligible development costs paid or 
        incurred by the taxpayer with respect to such qualified 
        residence, or
            ``(3) 28 percent of the national median sale price for new 
        homes (as determined pursuant to the most recent census data 
        available as of the date on which the neighborhood homes credit 
        agency makes an allocation for the qualified project).
    ``(b) Development Costs.--For purposes of this section--
            ``(1) Reasonable development costs.--
                    ``(A) In general.--The term `reasonable development 
                costs' means amounts paid or incurred for the 
                acquisition of buildings and land, construction, 
                substantial rehabilitation, demolition of structures, 
                or environmental remediation, to the extent that the 
                neighborhood homes credit agency determines that such 
                amounts meet the standards specified pursuant to 
                subsection (f)(1)(C) (as of the date on which 
                construction or substantial rehabilitation is 
                substantially complete, as determined by such agency) 
                and are necessary to ensure the financial feasibility 
                of such qualified residence.
                    ``(B) Considerations in making determination.--In 
                making the determination under subparagraph (A), the 
                neighborhood homes credit agency shall consider--
                            ``(i) the sources and uses of funds and the 
                        total financing,
                            ``(ii) any proceeds or receipts generated 
                        or expected to be generated by reason of tax 
                        benefits, and
                            ``(iii) the reasonableness of the 
                        developmental costs and fees.
            ``(2) Eligible development costs.--The term `eligible 
        development costs' means the amount which would be reasonable 
        development costs if the amounts taken into account as paid or 
        incurred for the acquisition of buildings and land did not 
        exceed 75 percent of such costs determined without regard to 
        any amount paid or incurred for the acquisition of buildings 
        and land.
            ``(3) Substantial rehabilitation.--The term `substantial 
        rehabilitation' means amounts paid or incurred for 
        rehabilitation of a qualified residence if such amounts exceed 
        the greater of--
                    ``(A) $20,000, or
                    ``(B) 20 percent of the amounts paid or incurred by 
                the taxpayer for the acquisition of buildings and land 
                with respect to such qualified residence.
            ``(4) Construction and rehabilitation only after allocation 
        taken into account.--
                    ``(A) In general.--The terms `reasonable 
                development costs' and `eligible development costs' 
                shall not include any amount paid or incurred before 
                the date on which an allocation is made to the taxpayer 
                under subsection (e) with respect to the qualified 
                project of which the qualified residence is part unless 
                such amount is paid or incurred for the acquisition of 
                buildings or land.
                    ``(B) Land and building acquisition costs.--Amounts 
                paid or incurred for the acquisition of buildings or 
                land shall be included under paragraph (A) only if paid 
                or incurred not more than 3 years before the date on 
                which the allocation referred to in subparagraph (A) is 
                made. If the taxpayer acquired any building or land 
                from an entity (or any related party to such entity) 
                that holds an ownership interest in the taxpayer, then 
                such entity must also have acquired such property 
                within such 3-year period, and the acquisition cost 
                included under subparagraph (A) with respect to the 
                taxpayer shall not exceed the amount such entity paid 
                or incurred to acquire such property.
    ``(c) Qualified Residence.--For purposes of this section--
            ``(1) In general.--The term `qualified residence' means a 
        residence that--
                    ``(A) is real property affixed on a permanent 
                foundation,
                    ``(B) is--
                            ``(i) a house which is comprised of 4 or 
                        fewer residential units,
                            ``(ii) a condominium unit, or
                            ``(iii) a house or an apartment owned by a 
                        cooperative housing corporation (as defined in 
                        section 216(b)),
                    ``(C) is part of a qualified project with respect 
                to which the neighborhood homes credit agency has made 
                an allocation under subsection (e), and
                    ``(D) is located in a qualified census tract 
                (determined as of the date of such allocation).
            ``(2) Qualified census tract.--
                    ``(A) In general.--The term `qualified census 
                tract' means a census tract--
                            ``(i) which--
                                    ``(I) has a median family income 
                                which does not exceed 80 percent of the 
                                median family income for the applicable 
                                area,
                                    ``(II) has a poverty rate that is 
                                not less than 130 percent of the 
                                poverty rate of the applicable area, 
                                and
                                    ``(III) has a median value for 
                                owner-occupied homes that does not 
                                exceed the median value for owner-
                                occupied homes in the applicable area,
                            ``(ii) which--
                                    ``(I) is located in a city which 
                                has a population of not less than 
                                50,000 and such city has a poverty rate 
                                that is not less than 150 percent of 
                                the poverty rate of the applicable 
                                area,
                                    ``(II) has a median family income 
                                which does not exceed the median family 
                                income for the applicable area, and
                                    ``(III) has a median value for 
                                owner-occupied homes that does not 
                                exceed 80 percent of the median value 
                                for owner-occupied homes in the 
                                applicable area,
                            ``(iii) which--
                                    ``(I) is located in a 
                                nonmetropolitan county,
                                    ``(II) has a median family income 
                                which does not exceed the median family 
                                income for the applicable area, and
                                    ``(III) has been designated by a 
                                neighborhood homes credit agency under 
                                this clause, or
                            ``(iv) which is not otherwise a qualified 
                        census tract and is located in a disaster area 
                        (as defined in section 7508A(d)(3)), but only 
                        with respect to credits allocated in any period 
                        during which the President of the United States 
                        has determined that such area warrants 
                        individual or individual and public assistance 
                        by the Federal Government under the Robert T. 
                        Stafford Disaster Relief and Emergency 
                        Assistance Act.
                    ``(B) Applicable area.--The term `applicable area' 
                means--
                            ``(i) in the case of a metropolitan census 
                        tract, the metropolitan area in which such 
                        census tract is located, and
                            ``(ii) in the case of a census tract other 
                        than a census tract described in clause (i), 
                        the State.
    ``(d) Affordable Sale.--For purposes of this section--
            ``(1) In general.--The term `affordable sale' means a sale 
        to a qualified homeowner of a qualified residence that the 
        neighborhood homes credit agency certifies as meeting the 
        standards promulgated under subsection (f)(1)(D) for a price 
        that does not exceed--
                    ``(A) in the case of any qualified residence not 
                described in subparagraph (B), (C), or (D), the amount 
                equal to the product of 4 multiplied by the median 
                family income for the applicable area (as determined 
                pursuant to the most recent census data available as of 
                the date of the contract for such sale),
                    ``(B) in the case of a house comprised of 2 
                residential units, 125 percent of the amount described 
                in subparagraph (A),
                    ``(C) in the case of a house comprised of 3 
                residential units, 150 percent of the amount described 
                in subparagraph (A), or
                    ``(D) in the case of a house comprised of 4 
                residential units, 175 percent of the amount described 
                in subparagraph (A).
            ``(2) Qualified homeowner.--The term `qualified homeowner' 
        means, with respect to a qualified residence, an individual--
                    ``(A) who owns and uses such qualified residence as 
                the principal residence of such individual, and
                    ``(B) whose family income (determined as of the 
                date that a binding contract for the affordable sale of 
                such residence is entered into) is 140 percent or less 
                of the median family income for the applicable area in 
                which the qualified residence is located.
    ``(e) Credit Ceiling and Allocations.--
            ``(1) Credit limited based on allocations to qualified 
        projects.--
                    ``(A) In general.--The credit allowed under 
                subsection (a) to any taxpayer for any taxable year 
                with respect to one or more qualified residences which 
                are part of the same qualified project shall not exceed 
                the excess (if any) of--
                            ``(i) the amount allocated by the 
                        neighborhood homes credit agency under this 
                        paragraph to such taxpayer with respect to such 
                        qualified project, over
                            ``(ii) the aggregate amount of credit 
                        allowed under subsection (a) to such taxpayer 
                        with respect to qualified residences which are 
                        a part of such qualified project for all prior 
                        taxable years.
                    ``(B) Deadline for completion.--No credit shall be 
                allowed under subsection (a) with respect to any 
                qualified residence unless the affordable sale of such 
                residence is during the 5-year period beginning on the 
                date of the allocation to the qualified project of 
                which such residence is a part (or, in the case of a 
                qualified residence to which subsection (i) applies, 
                the rehabilitation of such residence is completed 
                during such 5-year period).
            ``(2) Limitations on allocations to qualified projects.--
                    ``(A) Allocations limited by state neighborhood 
                homes credit ceiling.--The aggregate amount allocated 
                to taxpayers with respect to qualified projects by the 
                neighborhood homes credit agency of any State for any 
                calendar year shall not exceed the State neighborhood 
                homes credit amount of such State for such calendar 
                year.
                    ``(B) Set-aside for certain projects involving 
                qualified nonprofit organizations.--Rules similar to 
                the rules of section 42(h)(5) shall apply for purposes 
                of this section.
            ``(3) Determination of state neighborhood homes credit 
        ceiling.--
                    ``(A) In general.--The State neighborhood homes 
                credit amount for a State for a calendar year is an 
                amount equal to the sum of--
                            ``(i) the greater of--
                                    ``(I) the product of $7, multiplied 
                                by the State population (determined in 
                                accordance with section 146(j)), or
                                    ``(II) $9,000,000, and
                            ``(ii) any amount previously allocated to 
                        any taxpayer with respect to any qualified 
                        project by the neighborhood homes credit agency 
                        of such State which can no longer be allocated 
                        to any qualified residence because the 5-year 
                        period described in paragraph (1)(B) expires 
                        during calendar year.
                    ``(B) 3-year carryforward of unused limitation.--
                The State neighborhood homes credit amount for a State 
                for a calendar year shall be increased by the excess 
                (if any) of the State neighborhood homes credit amount 
                for such State for the preceding calendar year over the 
                aggregate amount allocated by the neighborhood homes 
                credit agency of such State during such preceding 
                calendar year. Any amount carried forward under the 
                preceding sentence shall not be carried past the third 
                calendar year after the calendar year in which such 
                credit amount originally arose, determined on a first-
                in, first-out basis.
    ``(f) Responsibilities of Neighborhood Homes Credit Agencies.--
            ``(1) In general.--Notwithstanding subsection (e), 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 amounts 
                allocated in the previous year (or for allocations made 
                in 2024, not more than 20 percent of the neighborhood 
                homes credit ceiling for such year) to projects with 
                respect to qualified residences which--
                            ``(i) are located in census tracts 
                        described in subsection (c)(2)(A)(iii), 
                        (c)(2)(A)(iv), (i)(5), or
                            ``(ii) are not located in a qualified 
                        census tract but meet the requirements of 
                        subsection (i)(8),
                    ``(C) promulgates standards with respect to 
                reasonable qualified development costs and fees,
                    ``(D) promulgates standards with respect to 
                construction quality,
                    ``(E) in the case of any neighborhood homes credit 
                agency which makes an allocation to a qualified project 
                which includes any qualified residence to which 
                subsection (i) applies, promulgates standards with 
                respect to protecting the owners of such residences, 
                including the capacity of such owners to pay 
                rehabilitation costs not covered by the credit provided 
                by this section and providing for the disclosure to 
                such owners of their rights and responsibilities with 
                respect to the rehabilitation of such residences,
                    ``(F) 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,
                            ``(ii) with respect to each qualified 
                        residence completed in the preceding calendar 
                        year--
                                    ``(I) the census tract in which 
                                such qualified residence is located,
                                    ``(II) with respect to the 
                                qualified project that includes such 
                                qualified residence, the year in which 
                                such project received an allocation 
                                under this section,
                                    ``(III) whether such qualified 
                                residence was new, substantially 
                                rehabilitated and sold to a qualified 
                                homeowner, or substantially 
                                rehabilitated pursuant to subsection 
                                (i),
                                    ``(IV) the eligible development 
                                costs of such qualified residence,
                                    ``(V) the amount of the 
                                neighborhood homes credit with respect 
                                to such qualified residence,
                                    ``(VI) the sales price of such 
                                qualified residence, if applicable, and
                                    ``(VII) the family income of the 
                                qualified homeowner (expressed as a 
                                percentage of the applicable area 
                                median family income for the location 
                                of the qualified residence), and
                            ``(iii) such other information as the 
                        Secretary may require, and
                    ``(G) makes available to the general public a 
                written explanation for any allocation of a 
                neighborhood homes credit dollar amount which is not 
                made in accordance with established priorities and 
                selection criteria of the neighborhood homes credit 
                agency.
        Subparagraph (B) shall be applied by substituting `40 percent' 
        for `20 percent' each place it appears in the case of any State 
        in which at least 45 percent of the State population resides 
        outside metropolitan statistical areas (within the meaning of 
        section 143(k)(2)(B)) and less than 20 percent of the census 
        tracts located in the State are described in subsection 
        (c)(2)(A)(i).
            ``(2) Qualified allocation plan.--For purposes of this 
        subsection, 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, including the impact on 
                        neighborhood residents,
                            ``(iii) the capability and prior 
                        performance of the project sponsor, and
                            ``(iv) the likelihood the project will 
                        result in long-term homeownership,
                    ``(B) has been made available for public comment, 
                and
                    ``(C) provides a procedure that the neighborhood 
                homes credit agency (or any agent or contractor of such 
                agency) shall follow for purposes of--
                            ``(i) identifying noncompliance with any 
                        provisions of this section, and
                            ``(ii) notifying the Internal Revenue 
                        Service of any such noncompliance of which the 
                        agency becomes aware.
    ``(g) Repayment.--
            ``(1) In general.--
                    ``(A) Sold during 5-year period.--If a qualified 
                residence is sold during the 5-year period beginning 
                immediately after the affordable sale of such qualified 
                residence referred to in subsection (a), the seller 
                shall transfer an amount equal to the repayment amount 
                to the relevant neighborhood homes credit agency.
                    ``(B) Use of repayments.--A neighborhood homes 
                credit agency shall use any amount received pursuant to 
                subparagraph (A) only for purposes of qualified 
                projects.
            ``(2) Repayment amount.--For purposes of paragraph (1)(A)--
                    ``(A) In general.--The repayment amount is an 
                amount equal to the applicable percentage of the gain 
                from the sale to which the repayment relates.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage is 50 
                percent, reduced by 10 percentage points for each year 
                of the 5-year period referred to in paragraph (1)(A) 
                which ends before the date of such sale.
            ``(3) Lien for repayment amount.--A neighborhood homes 
        credit agency receiving an allocation under this section shall 
        place a lien on each qualified residence that is built or 
        rehabilitated as part of a qualified project for an amount such 
        agency deems necessary to ensure potential repayment pursuant 
        to paragraph (1)(A).
            ``(4) Waiver.--
                    ``(A) In general.--The neighborhood homes credit 
                agency may waive the repayment required under paragraph 
                (1)(A) if the agency determines that making a repayment 
                would constitute a hardship to the seller.
                    ``(B) Hardship.--For purposes of subparagraph (A), 
                with respect to the seller, a hardship may include--
                            ``(i) divorce,
                            ``(ii) disability,
                            ``(iii) illness, or
                            ``(iv) any other hardship identified by the 
                        neighborhood homes credit agency for purposes 
                        of this paragraph.
    ``(h) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) 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.
            ``(2) Qualified project.--The term `qualified project' 
        means a project that a neighborhood homes credit agency 
        certifies will build or substantially rehabilitate one or more 
        qualified residences.
            ``(3) Determinations of family income.--Rules similar to 
        the rules of section 143(f)(2) shall apply for purposes of this 
        section.
            ``(4) Possessions treated as states.--The term `State' 
        includes the District of Columbia and the possessions of the 
        United States.
            ``(5) Special rules related to condominiums and cooperative 
        housing corporations.--
                    ``(A) Determination of development costs.--In the 
                case of a qualified residence described in clause (ii) 
                or (iii) of subsection (c)(1)(A), the reasonable 
                development costs and eligible development costs of 
                such qualified residence shall be an amount equal to 
                such costs, respectively, of the entire condominium or 
                cooperative housing property in which such qualified 
                residence is located, multiplied by a fraction--
                            ``(i) the numerator of which is the total 
                        floor space of such qualified residence, and
                            ``(ii) the denominator of which is the 
                        total floor space of all residences within such 
                        property.
                    ``(B) Tenant-stockholders of cooperative housing 
                corporations treated as owners.--In the case 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.
            ``(6) Related party sales not treated as affordable 
        sales.--
                    ``(A) In general.--A sale between related persons 
                shall not be treated as an affordable sale.
                    ``(B) Related persons.--For purposes of this 
                paragraph, a person (in this subparagraph 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'.
            ``(7) Inflation adjustment.--
                    ``(A) In general.--In the case of a calendar year 
                after 2023, the dollar amounts in subsections 
                (b)(3)(A), (e)(3)(A)(i)(I), (e)(3)(A)(i)(II), and 
                (i)(2)(C) 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 
                        2022' for `calendar year 2016' in subparagraph 
                        (A)(ii) thereof.
                    ``(B) Rounding.--
                            ``(i) In the case of the dollar amounts in 
                        subsection (b)(3)(A) and (i)(2)(C), any 
                        increase under paragraph (1) which is not a 
                        multiple of $1,000 shall be rounded to the 
                        nearest multiple of $1,000.
                            ``(ii) In the case of the dollar amount in 
                        subsection (e)(3)(A)(i)(I), any increase under 
                        paragraph (1) which is not a multiple of $0.01 
                        shall be rounded to the nearest multiple of 
                        $0.01.
                            ``(iii) In the case of the dollar amount in 
                        subsection (e)(3)(A)(i)(II), any increase under 
                        paragraph (1) which is not a multiple of 
                        $100,000 shall be rounded to the nearest 
                        multiple of $100,000.
            ``(8) Report.--
                    ``(A) In general.--The Secretary shall annually 
                issue a report, to be made available to the public, 
                which contains the information submitted pursuant to 
                subsection (f)(1)(F).
                    ``(B) De-identification.--The Secretary shall 
                ensure that any information made public pursuant to 
                subparagraph (A) excludes any information that would 
                allow for the identification of qualified homeowners.
            ``(9) List of qualified census tracts.--The Secretary of 
        Housing and Urban Development shall, for each year, make 
        publicly available a list of qualified census tracts under--
                    ``(A) on a combined basis, clauses (i) and (ii) of 
                subsection (c)(2)(A),
                    ``(B) clause (iii) of such subsection, and
                    ``(C) subsection (i)(5)(A).
            ``(10) Denial of deductions if converted to rental 
        housing.--If, during the 5-year period beginning immediately 
        after the affordable sale of a qualified residence referred to 
        in subsection (a), an individual who owns a qualified residence 
        (whether or not such individual was the purchaser in such 
        affordable sale) fails to use such qualified 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 qualified residence.
    ``(i) Application of Credit With Respect to Owner-Occupied 
Rehabilitations.--
            ``(1) In general.--In the case of a qualified 
        rehabilitation by the taxpayer of any qualified residence which 
        is owned (as of the date that the written binding contract 
        referred to in paragraph (3) is entered into) by a specified 
        homeowner, the rules of paragraphs (2) through (7) shall apply.
            ``(2) Alternative credit determination.--In the case of any 
        qualified residence described in paragraph (1), the 
        neighborhood homes credit determined under subsection (a) with 
        respect to such residence shall (in lieu of any credit 
        otherwise determined under subsection (a) with respect to such 
        residence) be allowed in the taxable year during which the 
        qualified rehabilitation is completed (as determined by the 
        neighborhood homes credit agency) and shall be equal to the 
        least of--
                    ``(A) the excess (if any) of--
                            ``(i) the amounts paid or incurred by the 
                        taxpayer for the qualified rehabilitation of 
                        the qualified residence to the extent that such 
                        amounts are certified by the neighborhood homes 
                        credit agency (at the time of the completion of 
                        such rehabilitation) as meeting the standards 
                        specified pursuant to subsection (f)(1)(C), 
                        over
                            ``(ii) any amounts paid to such taxpayer 
                        for such rehabilitation,
                    ``(B) 50 percent of the amounts described in 
                subparagraph (A)(i), or
                    ``(C) $50,000.
            ``(3) Qualified rehabilitation.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified rehabilitation' means a 
                rehabilitation or reconstruction performed pursuant to 
                a written binding contract between the taxpayer and the 
                specified homeowner if the amount paid or incurred by 
                the taxpayer in the performance of such rehabilitation 
                or reconstruction exceeds the dollar amount in effect 
                under subsection (b)(3)(A).
                    ``(B) Application of limitation to expenses paid or 
                incurred after allocation.--A rule similar to the rule 
                of section (b)(4) shall apply for purposes of this 
                subsection.
            ``(4) Specified homeowner.--For purposes of this 
        subsection, the term `qualified homeowner' means, with respect 
        to a qualified residence, an individual--
                    ``(A) who owns and uses such qualified residence as 
                the principal residence of such individual as of the 
                date that the written binding contract referred to in 
                paragraph (3) is entered into, and
                    ``(B) whose family income (determined as of such 
                date) does not exceed the median family income for the 
                applicable area (with respect to the census tract in 
                which the qualified residence is located).
            ``(5) Additional census tracts in which owner-occupied 
        residences may be located.--In the case of any qualified 
        residence described in paragraph (1), the term `qualified 
        census tract' includes any census tract which--
                    ``(A) meets the requirements of subsection 
                (c)(2)(A)(i) without regard to subclause (III) thereof, 
                and
                    ``(B) is designated by the neighborhood homes 
                credit agency for purposes of this paragraph.
            ``(6) Modification of repayment requirement.--In the case 
        of any qualified residence described in paragraph (1), 
        subsection (g) shall be applied by beginning the 5-year period 
        otherwise described therein on the date on which the qualified 
        homeowner acquired such residence.
            ``(7) Related parties.--Paragraph (1) shall not apply if 
        the taxpayer is the owner of the qualified residence described 
        in paragraph (1) or is related (within the meaning of 
        subsection (h)(6)(B)) to such owner.
            ``(8) Pyrrhotite remediation.--The requirement of 
        subsection (c)(1)(C) shall not apply to a qualified 
        rehabilitation under this subsection of a qualified residence 
        that is documented by an engineer's report and core testing to 
        have a foundation that is adversely impacted by pyrrhotite or 
        other iron sulfide minerals.
    ``(j) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations that prevent avoidance of the rules, and 
abuse of the purposes, of this section.''.
    (c) Credit Allowed as Part of General Business Credit.--Section 
38(b) of the Internal Revenue Code of 1986, as amended by section 213, 
is amended by striking ``plus'' at the end of paragraph (41), by 
striking the period at the end of paragraph (42) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(43) the neighborhood homes credit determined under 
        section 42B(a).''.
    (d) Credit Allowed Against Alternative Minimum Tax.--Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 is amended by 
redesignating clauses (iv) through (xii) as clauses (v) through (xiii), 
respectively, and by inserting after clause (iii) the following new 
clause:
                            ``(iv) the credit determined under section 
                        42B,''.
    (e) Basis Adjustments.--
            (1) Energy efficient home improvement credit.--Section 
        25C(g) of the Internal Revenue Code of 1986 is amended by 
        adding after the first sentence the following new sentence: 
        ``This subsection shall not apply for purposes of determining 
        the eligible development costs or adjusted basis of any 
        building under section 42B.''.
            (2) Residential clean energy credit.--Section 25D(f) of 
        such Code is amended by adding after the first sentence the 
        following new sentence: ``This subsection shall not apply for 
        purposes of determining the eligible development costs or 
        adjusted basis of any building under section 42B.''.
            (3) New energy efficient home credit.--Section 45L(e) of 
        such Code is amended by inserting ``or for purposes of 
        determining the eligible development costs or adjusted basis of 
        any building under section 42B'' after ``section 42''.
    (f) Exclusion From Gross Income.--Part III of subchapter B of 
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting 
before section 140 the following new section:

``SEC. 139J. STATE ENERGY SUBSIDIES FOR QUALIFIED RESIDENCES.

    ``(a) Exclusion From Gross Income.--Gross income shall not include 
the value of any subsidy provided to a taxpayer (whether directly or 
indirectly) by any State energy office (as defined in section 124(a) of 
the Energy Policy Act of 2005 (42 U.S.C. 15821(a))) for purposes of any 
energy improvements made to a qualified residence (as defined in 
section 42B(c)(1)).''.
    (g) Conforming Amendments.--
            (1) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of 
        section 469 of the Internal Revenue Code of 1986, as amended by 
        section 213, are each amended by striking ``or 42A'' and 
        inserting ``, 42A, or 42B''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code, as amended by section 
        213, is amended by inserting after the item relating to section 
        42A the following new item:

``Sec. 42B. Neighborhood homes credit.''.
            (3) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by inserting before the item 
        relating to section 140 the following new item:

``Sec. 139J. State energy subsidies for qualified residences.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2023.

SEC. 215. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.

    (a) In General.--Section 36 of the Internal Revenue Code of 1986 is 
amended to read as follows:

``SEC. 36. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual who is a 
first-time homebuyer of a principal residence in the United States 
during a taxable year, there shall be allowed as a credit against the 
tax imposed by this subtitle for such taxable year an amount equal to 
20 percent of the purchase price of the residence.
    ``(b) Limitations; Special Rules Based on Marital and Filing 
Status.--
            ``(1) Dollar limitation.--The credit allowed under 
        subsection (a) shall not exceed $15,000.
            ``(2) Limitation based on purchase price.--The amount 
        allowable as a credit under subsection (a) (determined without 
        regard to this paragraph and paragraph (3), and after the 
        application of paragraph (1)) for the taxable year shall be 
        reduced (but not below zero) by the amount which bears the same 
        ratio to the amount which is so allowable as--
                    ``(A) the excess (if any) of--
                            ``(i) the purchase price of the residence, 
                        over
                            ``(ii) an amount equal to 110 percent of 
                        the conforming loan limit applicable to the 
                        residence, bears to
                    ``(B) $100,000.
        For purposes of the preceding sentence, the term `conforming 
        loan limit' with respect to any residence means the applicable 
        limitation governing the maximum original principal obligation 
        for a mortgage secured by a residence of the same type, as 
        determined and adjusted annually under section 302(b)(2) of the 
        Federal National Mortgage Association Charter Act and section 
        305(a)(2) of the Federal Home Loan Mortgage Corporation Act.
            ``(3) Limitation based on modified adjusted gross income.--
                    ``(A) In general.--The amount allowable as a credit 
                under subsection (a) (determined without regard to this 
                paragraph and after the application of paragraphs (1) 
                and (2)) for the taxable year shall be reduced (but not 
                below zero) by the amount which bears the same ratio to 
                the amount which is so allowable as--
                            ``(i) the excess (if any) of--
                                    ``(I) the taxpayer's modified 
                                adjusted gross income for the preceding 
                                taxable year, over
                                    ``(II) the applicable threshold, 
                                bears to
                            ``(ii) $50,000.
                    ``(B) Modified adjusted gross income.--For purposes 
                of subparagraph (A), the term `modified adjusted gross 
                income' with respect to any taxable year means the 
                adjusted gross income of the taxpayer for such taxable 
                year increased by any amount excluded from gross income 
                under section 911, 931, or 933 for such taxable year.
                    ``(C) Applicable threshold.--For purposes of 
                subparagraph (A), the applicable threshold is--
                            ``(i) except as provided in clauses (ii) 
                        and (iii), $100,000,
                            ``(ii) an amount equal to 150 percent of 
                        the amount in effect under clause (i), in the 
                        case of a head of household (as defined in 
                        section 2(b)), and
                            ``(iii) an amount equal to 200 percent of 
                        the amount in effect under clause (i), in the 
                        case of a joint return.
            ``(4) Additional limitations.--No credit shall be allowed 
        under subsection (a) with respect to the purchase of any 
        residence for a taxable year--
                    ``(A) if the taxpayer is a nonresident alien, or
                    ``(B) if--
                            ``(i) the taxpayer has not attained age 18 
                        as of the date of such purchase, or
                            ``(ii) a deduction under section 151 with 
                        respect to the taxpayer is allowable to another 
                        taxpayer for the taxable year.
        In the case of a taxpayer who is married, the taxpayer shall be 
        treated as meeting the age requirement of subparagraph (B)(i) 
        if the taxpayer or the taxpayer's spouse meets such age 
        requirement.
            ``(5) Multiple purchasers.--If 2 or more individuals who 
        are not married purchase a principal residence, the amount of 
        the credit under subsection (a) shall be allocated among such 
        individuals in such manner as the Secretary may prescribe by 
        taking into account the requirements of paragraphs (2) and (3), 
        except that the total amount of the credits allowed to all such 
        individuals shall not exceed the limitation under paragraph (1) 
        (as modified by paragraph (7)).
            ``(6) Married couples must file joint return.--If an 
        individual is married at the close of the taxable year, the 
        credit shall be allowed under subsection (a) only if the 
        individual and the individual's spouse file a joint return for 
        the taxable year.
            ``(7) Adjustment for inflation.--In the case of any taxable 
        year beginning after December 31, 2024, each of the dollar 
        amounts in paragraphs (1), (2)(A)(ii), and (3)(C)(i) 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 the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2023' for `calendar year 2016' in 
                subparagraph (A)(ii) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the next lowest multiple of $50.
    ``(c) Definitions.--For purposes of this section--
            ``(1) First-time homebuyer.--
                    ``(A) In general.--The term `first-time homebuyer' 
                means any individual who acquires a principal residence 
                located in the United States by purchase if such 
                individual (and, if married, such individual's 
                spouse)--
                            ``(i) has not claimed any credit or 
                        deduction under this title for any previous 
                        taxable year with respect to the purchase or 
                        ownership of any residence or residential real 
                        estate (including for any expenditures relating 
                        to the placing in service of any property on, 
                        in connection with, or for use in such a 
                        residence or real estate), and
                            ``(ii) attests under penalty of perjury 
                        that--
                                    ``(I) the individual (and, if 
                                married, the individual's spouse) has 
                                not owned a principal residence at any 
                                time prior to the purchase of the 
                                principal residence to which this 
                                section applies, and
                                    ``(II) the principal residence to 
                                which this section applies was not 
                                acquired from a person related to such 
                                individual or spouse.
                    ``(B) Waiver in case of certain changes in 
                status.--The Secretary may, in such manner as the 
                Secretary may prescribe, waive the requirements of 
                subparagraph (A) for a taxable year in the case of an 
                individual who is not eligible to file a joint return 
                for the taxable year, and who was married at the time 
                the individual or the individual's former spouse 
                purchased a previous residence.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121.
            ``(3) Purchase.--
                    ``(A) In general.--The term `purchase' means any 
                acquisition, but only if--
                            ``(i) the property is not acquired from a 
                        person related to the person acquiring such 
                        property (or, if either such person is married, 
                        such individual's spouse), and
                            ``(ii) the basis of the property in the 
                        hands of the person acquiring such property is 
                        not determined--
                                    ``(I) in whole or in part by 
                                reference to the adjusted basis of such 
                                property in the hands of the person 
                                from whom acquired, or
                                    ``(II) under section 1014(a).
                    ``(B) Construction.--A residence which is 
                constructed by the taxpayer shall be treated as 
                purchased by the taxpayer on the date the taxpayer 
                first occupies such residence.
            ``(4) Purchase price.--The term `purchase price' means the 
        adjusted basis (without regard to any reduction under section 
        1016(a)(38)) of the principal residence on the date such 
        residence is purchased.
            ``(5) Related persons.--A person shall be treated as 
        related to another person if the relationship between such 
        persons would result in the disallowance of losses under 
        section 267 or 707(b) (but, in applying subsections (b) and (c) 
        of section 267 for purposes of this section, paragraph (4) of 
        section 267(c) shall be treated as providing that the family of 
        an individual shall include only the individual's spouse, 
        ancestors, lineal descendants, and spouse's ancestors and 
        lineal descendants).
            ``(6) Marital status.--An individual's marital status shall 
        be determined in accordance with section 7703.
    ``(d) Denial and Recapture Rules in Case of Disposal of Residence 
Within 6 Taxable Years.--
            ``(1) Denial of credit in case of disposal within taxable 
        year.--No credit under subsection (a) shall be allowed to any 
        taxpayer for any taxable year with respect to the purchase of a 
        residence if the taxpayer disposes of such residence (or such 
        residence ceases to be the principal residence of the taxpayer 
        (and, if married, the taxpayer's spouse)) before the close of 
        such taxable year.
            ``(2) Phased-out recapture.--
                    ``(A) In general.--Except as provided in 
                subparagraph (D), if the taxpayer disposes of the 
                residence with respect to which a credit was allowed 
                under subsection (a) (or such residence ceases to be 
                the principal residence of the taxpayer (and, if 
                married, the taxpayer's spouse)) during the 5-taxable-
                year period beginning with the taxable year immediately 
                following the credit year, the tax imposed by this 
                chapter for the taxable year in which such disposal (or 
                cessation) occurs shall be increased by an amount equal 
                to the recapture percentage of the amount of the credit 
                so allowed.
                    ``(B) Credit year.--For purposes of subparagraph 
                (A), the term `credit year' means the taxable year in 
                which the credit under subsection (a) was allowed.
                    ``(C) Recapture percentage.--For purposes of 
                subparagraph (A), the recapture percentage with respect 
                to any disposal or cessation described in such 
                subparagraph shall be determined in accordance with the 
                following table:

``If the disposal or                                      The recapture
 cessation occurs in:                                    percentage is:
        The 1st taxable year beginning after the           100 percent 
            credit year.
        The 2nd taxable year beginning after the            80 percent 
            credit year.
        The 3rd taxable year beginning after the            60 percent 
            credit year.
        The 4th taxable year beginning after the            40 percent 
            credit year.
        The 5th taxable year beginning after the            20 percent.
            credit year.

                    ``(D) Exceptions.--This paragraph shall not apply 
                in the case of a disposal or cessation described in 
                subparagraph (A) which occurs after or incident to any 
                of the following:
                            ``(i) Death of the taxpayer or the 
                        taxpayer's spouse.
                            ``(ii) Divorce of the taxpayer.
                            ``(iii) Involuntary conversion of the 
                        residence (within the meaning of section 
                        121(d)(5)(A)).
                            ``(iv) Relocation of duty station or 
                        qualified official extended duty (as defined in 
                        section 121(d)(9)(C)) of the taxpayer or the 
                        taxpayer's spouse who is a member of the 
                        uniformed services (as defined in section 
                        121(d)(9)(C)(ii)), a member of the Foreign 
                        Service of the United States (as defined in 
                        section 121(d)(9)(C)(iii)), or an employee of 
                        the intelligence community (as defined in 
                        section 121(d)(9)(C)(iv)).
                            ``(v) Change of employment of the taxpayer 
                        or the taxpayer's spouse which meets the 
                        conditions of section 217(c).
                            ``(vi) Loss of employment, health 
                        conditions, or such other unforeseen 
                        circumstances as may be specified by the 
                        Secretary.
    ``(e) Adjustment to Basis.--For purposes of this subtitle, if a 
credit is allowed under this section with respect to any property, the 
taxpayer's basis in such property shall be reduced by the amount of the 
credit so allowed.
    ``(f) Reporting.--
            ``(1) In general.--A credit shall be allowed under this 
        section only if the following are included on the return of 
        tax:
                    ``(A) The individual's (and, if married, the 
                individual's spouse's) social security number issued by 
                the Social Security Administration.
                    ``(B) The street address (not including a post 
                office box) of the principal residence purchased.
                    ``(C) The purchase price of the principal 
                residence.
                    ``(D) The date of purchase of the principal 
                residence.
                    ``(E) The closing disclosure relating to the 
                purchase (in the case of a purchase financed by a 
                mortgage).
            ``(2) Reporting of real estate transactions.--If the 
        Secretary requires information reporting under section 6045 by 
        a person described in subsection (e)(2) thereof to verify the 
        eligibility of taxpayers for the credit allowable by this 
        section, the exception provided by section 6045(e)(5) shall not 
        apply.''.
    (b) Conforming Amendment Relating to Basis Adjustment.--Subsection 
(a) of section 1016 of the Internal Revenue Code of 1986, as amended by 
section 213, is further amended--
            (1) by redesignating paragraphs (38) and (39) as paragraphs 
        (39) and (40), respectively; and
            (2) by inserting after paragraph (37) the following new 
        paragraph:
            ``(38) to the extent provided in section 36(e).''.
    (c) Conforming Amendment.--Section 26(b)(2) of the Internal Revenue 
Code of 1986 is amended by striking subparagraph (W) and by 
redesignating subparagraphs (X), (Y), and (Z) as subparagraphs (W), 
(X), and (Y), respectively.
    (d) Clerical Amendment.--The item relating to section 36 in 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 to read as follows:

``Sec. 36. First-time homebuyer refundable credit.''.
    (e) Authority To Treat Claim of Credit as Error, etc.--Subparagraph 
(N) of section 6213(g)(2) of the Internal Revenue Code of 1986 is 
amended to read as follows:
                    ``(N) in the case of a return claiming the credit 
                under section 36--
                            ``(i) the omission of a social security 
                        number required under section 36(f)(1)(A),
                            ``(ii) the inclusion of a social security 
                        number so required if--
                                    ``(I) the claim of the credit on 
                                the return reflects the treatment of 
                                such individual as being of an age 
                                different from the individual's age 
                                based on such social security number, 
                                or
                                    ``(II) except as provided in 
                                section 36(c)(1)(B), such social 
                                security number has been included 
                                (other than as a dependent for purposes 
                                of section 151) on a return for any 
                                previous taxable year claiming any 
                                credit or deduction described in 
                                section 36(c)(1)(A)(i),
                            ``(iii) the omission of any other required 
                        information or documentation described in 
                        section 36(f)(1), including the inclusion of a 
                        post office box instead of a street address for 
                        the purchased residence,
                            ``(iv) the inclusion of any information or 
                        documentation described in clause (iii) if such 
                        information or documentation does not support a 
                        valid claim for the credit, or
                            ``(v) a claim of such credit for a taxable 
                        year with respect to the purchase of a 
                        residence made after the last day of such 
                        taxable year,''.
    (f) IRS Recordkeeping.--Notwithstanding the limitations on 
assessment and collection under section 6501 of the Internal Revenue 
Code of 1986, the Commissioner of Internal Revenue shall maintain 
records of returns and return information (as defined in section 
6103(b)(2) of such Code) of any taxpayer claiming the credit under 
section 36 of such Code (as amended by this section) for the taxable 
year in which such credit is claimed and succeeding taxable years in 
the individual master files of the Internal Revenue Service.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2023.
                                 <all>
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