I 

111TH CONGRESS 

1ST SESSION H. R. 3715 

To amend the Internal Revenue Code of 1986 to expand the rehabilitation 

credit, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 1, 2009 

Ms. SCHWARTZ (for herself, Mr. TIBERI, Mr. CARNAHAN, Mr. GORDON of 

Tennessee, Ms. BERKLEY, Mr. WELCH, Mr. LARSON of Connecticut, Mr. 

HIGGINS, Mr. NEAL of Massachusetts, Mr. PASCRELL, Mr. DAVIS of Illinois, Mr. YARMUTH, Mr. LEWIS of Georgia, Mr. FATTAH, Mr. 

BLUMENAUER, Mr. LANGEVIN, Mr. CONNOLLY of Virginia, Mr. HOLT, 

Mr. DOYLE, Mr. TURNER, Mr. ALTMIRE, Mr. COURTNEY, Mr. PRICE of 

North Carolina, Mr. TONKO, Mr. ARCURI, Ms. KAPTUR, Ms. SHEA-PORTER, Ms. SUTTON, Mr. MCGOVERN, Mr. ETHERIDGE, Ms. DELAURO, Ms. 

SCHAKOWSKY, Mr. MICHAUD, Mr. COSTELLO, Mr. ABERCROMBIE, Mr. 

TIERNEY, Ms. TSONGAS, Mr. ANDREWS, Mr. BRADY of Pennsylvania, Mr. 

SERRANO, and Mr. SESTAK) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to expand 

the rehabilitation credit, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Community Restora5 tion and Revitalization Act of 2009’’. 


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1 SEC. 2. INCREASE IN THE REHABILITATION CREDIT FOR 

2 CERTAIN SMALLER PROJECTS. 

3 (a) IN GENERAL.—Section 47 of the Internal Rev4 enue Code of 1986 (relating to rehabilitation credit) is 

5 amended by adding at the end the following new sub6 section: 

7 ‘‘(e) SPECIAL RULE REGARDING CERTAIN SMALLER

8 PROJECTS.— 

9 ‘‘(1) IN GENERAL.—In the case of any qualified 

10 rehabilitated building or portion thereof— 

11 ‘‘(A) which is placed in service after the 

12 date of the enactment of this subsection, and 

13 ‘‘(B) which is a smaller project, 

14 subsection (a)(2) shall be applied by substituting ‘30 

15 percent’ for ‘20 percent’. 

16 ‘‘(2) MAXIMUM CREDIT.—The credit deter17 mined under this subsection with respect to any 

18 smaller project for all taxable years shall not exceed 

19 $1,500,000. 

20 ‘‘(3) SMALLER PROJECT DEFINED.— 

21 ‘‘(A) IN GENERAL.—For purposes of this 

22 subsection, the term ‘smaller project’ means 

23 any qualified rehabilitated building or portion 

24 thereof if— 

25 ‘‘(i) the qualified rehabilitation ex26 penditures taken into account for purposes 


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1 of this section (or would have been so 

2 taken into account if this subsection had 

3 been in effect for all prior periods) with re4 spect to the rehabilitation are not over 

5 $7,500,000, and 

6 ‘‘(ii) no credit was allowed under this 

7 section for either of the 2 prior taxable 

8 years with respect to such building. 

9 ‘‘(B) SPECIAL RULES.— 

10 ‘‘(i) ENERGY EFFICIENCY EXPENDI11 TURES NOT TAKEN INTO ACCOUNT.— 

12 Amounts that are qualified rehabilitation 

13 expenditures solely by reason of subsection 

14 (c)(2)(E) shall not be taken into account 

15 under subparagraph (A)(i). 

16 ‘‘(ii) PROGRESS EXPENDITURES.— 

17 Credit allowable by reason of subsection 

18 (d) shall not be taken into account under 

19 subparagraph (A)(ii).’’. 

20 (b) EFFECTIVE DATE.—The amendment made by 

21 this section shall apply to periods after the date of the 

22 enactment of this Act, under rules similar to the rules of 

23 section 48(m) of the Internal Revenue Code of 1986 (as 

24 in effect on the day before the date of the enactment of 

25 the Revenue Reconciliation Act of 1990). 


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1 SEC. 3. USE FOR LODGING NOT TO DISQUALIFY FOR REHA2 BILITATION CREDIT PROPERTY WHICH IS 

3 NOT A CERTIFIED HISTORIC STRUCTURE. 

4 (a) IN GENERAL.—Subparagraph (C) of section 

5 50(b)(2) of the Internal Revenue Code of 1986 (relating 

6 to property eligible for the investment credit) is amended 

7 by striking ‘‘certified historic structure’’ and inserting 

8 ‘‘qualified rehabilitated building’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to property placed in service after 

11 the date of the enactment of this Act. 

12 SEC. 4. DATE BY WHICH BUILDING MUST BE FIRST PLACED 

13 IN SERVICE. 

14 (a) IN GENERAL.—Subparagraph (B) of section 

15 47(c)(1) of the Internal Revenue Code of 1986 (relating 

16 to the date by which building must be first placed in serv17 ice) is amended— 

18 (1) by striking ‘‘BUILDING MUST BE FIRST

19 PLACED IN SERVICE BEFORE 1936’’ and inserting 

20 ‘‘DATE BY WHICH BUILDING MUST FIRST BE

21 PLACED IN SERVICE’’, and 

22 (2) by striking ‘‘before 1936’’ at the end of the 

23 subparagraph and inserting ‘‘no less than 50 years 

24 prior to the year in which qualified rehabilitation ex25 penditures are taken into account under subsection 

26 (b)(1)’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act. 

4 SEC. 5. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT 

5 USE PROPERTY. 

6 (a) IN GENERAL.—Clause (I) of section 

7 47(c)(2)(B)(v) of the Internal Revenue Code of 1986 (re8 lating to tax-exempt use property) is amended by inserting 

9 ‘‘and subclauses (I), (II), and (III) of section 

10 168(h)(1)(B)(ii) shall not apply’’ after ‘‘thereof’’. 

11 (b) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to property placed in service after 

13 the date of the enactment of this Act. 

14 SEC. 6. REHABILITATION CREDIT MAY BE TRANSFERRED. 

15 (a) IN GENERAL.—Subsection (b) of section 47 of the 

16 Internal Revenue Code of 1986 (relating to when expendi17 tures taken into account) is amended by adding at the 

18 end the following new paragraph: 

19 ‘‘(3) CREDIT MAY BE ASSIGNED.—The amount 

20 of qualified rehabilitation expenditures, not to exceed 

21 $5,000,000, which would (but for this paragraph) be 

22 taken into account under subsection (a) for any tax23 able year by any person (hereafter in this paragraph 

24 referred to as the ‘initial taxpayer’)— 


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1 ‘‘(A) may be taken into account by any 

2 other person to whom such expenditures are as3 signed by the initial taxpayer, and 

4 ‘‘(B) shall not be taken to account by the 

5 initial taxpayer. 

6 Any person to whom such expenditures are assigned 

7 under subparagraph (A) shall be treated for pur8 poses of this title as the taxpayer with respect to 

9 such expenditures.’’. 

10 (b) CONFORMING AMENDMENT.—The heading for 

11 such subsection (b) is amended by inserting ‘‘; ELIGI12 BILITY FOR CREDIT MAY BE ASSIGNED’’ after ‘‘AC13 COUNT’’. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply with respect to rehabilitations the 

16 physical work on which begins after the date of the enact17 ment of this Act. 

18 SEC. 7. CREDIT FOR MODERATE REHABILITATIONS. 

19 (a) IN GENERAL.—Subclause (I) of section 

20 47(c)(1)(C)(i) of the Internal Revenue Code of 1986 (de21 fining substantially rehabilitated) is amended by inserting 

22 ‘‘50 percent of’’ before ‘‘the adjusted basis’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 this section shall apply with respect to rehabilitations the 


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1 physical work on which begins after the date of the enact2 ment of this Act. 

3 SEC. 8. ADDITION OF ENERGY EFFICIENCY SUPPLEMENT 

4 TO REHABILITATION CREDIT. 

5 (a) IN GENERAL.—Subsection (a) of section 47 of the 

6 Internal Revenue Code of 1986 is amended by striking 

7 ‘‘and’’ at the end of paragraph (1), by striking the period 

8 at the end of paragraph (2) and inserting ‘‘, and’’, and 

9 by adding at the end the following new paragraph: 

10 ‘‘(3) in the case of a qualified rehabilitated 

11 building designed to achieve at least a 30 percent 

12 qualified energy use reduction as a result of being 

13 substantially rehabilitated (determined under sub14 section (e)), the energy efficiency supplement with 

15 respect to such building.’’. 

16 (b) ENERGY EFFICIENCY SUPPLEMENT.—Section 47 

17 of such Code is amended by adding at the end the fol18 lowing new subsection: 

19 ‘‘(e) ENERGY EFFICIENCY SUPPLEMENT.— 

20 ‘‘(1) IN GENERAL.—For purposes of subsection 

21 (a)(3), the energy efficiency supplement shall be de22 termined in accordance with the following table. 

The energy 

efficiency 

supplement 

‘‘If the achieved qualified per square foot 

energy use reduction is— of the building is— 

At least 30 percent but not over 35 percent .................... $2.00

Over 35 percent but not over 40 percent ......................... $2.67


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The energy 

efficiency 

supplement 

‘‘If the achieved qualified per square foot 

energy use reduction is— of the building is— 

Over 40 percent but not over 45 percent ......................... $3.42

Over 45 percent but not over 50 percent ......................... $4.18

Over 50 percent ................................................................ $5.00. 

1 ‘‘(2) LIMITATION.—In no event shall the energy 

2 efficiency supplement exceed 50 percent of the quali3 fied rehabilitation expenditures with respect to the 

4 qualified rehabilitated building. 

5 ‘‘(3) PARTIAL ALLOWANCE.— 

6 ‘‘(A) IN GENERAL.—In order to encourage 

7 implementation of building retrofits, the Sec8 retary shall prescribe by regulations the condi9 tions under which a taxpayer may receive a par10 tial energy efficiency supplement corresponding 

11 to the actual qualified energy use reduction 

12 achieved. 

13 ‘‘(B) TAXPAYER ELIGIBILITY.—This para14 graph shall apply to a taxpayer only if— 

15 ‘‘(i) the taxpayer certifies to the Sec16 retary that the rehabilitation was under17 taken as part of a plan to achieve a quali18 fied energy use reduction of at least 30 

19 percent, and 

20 ‘‘(ii) such reduction is not substan21 tiated under any certification process preVerDate Nov 24 2008 03:09 Oct 02, 2009 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3715.IH H3715

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1 scribed by the Secretary, but a qualified 

2 energy use reduction of at least 25 percent 

3 is so substantiated. 

4 ‘‘(C) MAXIMUM PARTIAL ALLOWANCE.— 

5 The energy efficiency supplement allowable by 

6 reason of this paragraph shall not exceed the 

7 product of— 

8 ‘‘(i) $2.00, and 

9 ‘‘(ii) a fraction— 

10 ‘‘(I) the numerator of which is 

11 the number of percentage points of 

12 the achieved qualified energy use re13 duction, and 

14 ‘‘(II) the denominator of which is 

15 30. 

16 ‘‘(4) QUALIFIED ENERGY USE REDUCTION.— 

17 For purposes of this subsection, the term ‘qualified 

18 energy use reduction’ means, for buildings or aggre19 gation of buildings, improvement in energy perform20 ance with reference to the energy consumption dur21 ing the previous year of the building or aggregation 

22 of buildings being rehabilitated, while adjusting for 

23 other relevant factors including prior vacancy, intro24 duction of modern technologies and systems, and 

25 changes in use and occupancy loads. 


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1 ‘‘(5) REGULATIONS.—The Secretary, after con2 sultation with the Administrator of the Environ3 mental Protection Agency and the Secretary of the 

4 Interior, shall promulgate such regulations as may 

5 be necessary or appropriate to carry out the pur6 poses of the energy efficiency supplement, including 

7 prescribing the manner and method for calculating, 

8 verifying, and certifying qualified energy use reduc9 tions. Such regulations shall provide that a qualified 

10 energy use reduction shall be determined by using 

11 an established energy benchmarking tool which shall, 

12 to the maximum extent feasible, take into account 

13 the requirements necessary to become a certified re14 habilitation and shall include an approach that de15 termines success in energy efficiency based on actual 

16 measured savings after a retrofit is complete. 

17 ‘‘(6) COORDINATION.—The Secretary shall des18 ignate processes for tracking the numbers and loca19 tions of buildings claiming the energy efficiency sup20 plement, with information on projected and actual 

21 savings of energy and its value over time in coordi22 nation with the Department of Energy.’’. 

23 (c) SUBSTANTIAL REHABILITATION REQUIREMENT

24 NOT TO APPLY TO ENERGY EFFICIENCY SUPPLEMENT.— 

25 Subparagraph (A) of section 47(c)(1) (defining qualified 


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1 rehabilitated building) is amended by adding at the end 

2 the following new flush sentence: 

3 ‘‘Clause (i) shall not apply to so much of the 

4 rehabilitation credit as is attributable to the en5 ergy efficiency supplement under subsection 

6 (a)(3).’’. 

7 (d) EFFECTIVE DATES.— 

8 (1) IN GENERAL.—Except as provided in para9 graph (2), the amendments made by this section 

10 shall apply to property placed in service after the 

11 date of the enactment of this Act. 

12 (2) WAIVER OF SUBSTANTIAL REHABILITATION

13 REQUIREMENT.—The amendment made by sub14 section (c) shall apply with respect to rehabilitations 

15 the physical work on which begins after the date of 

16 the enactment of this Act. 

17 SEC. 9. MODIFICATION TO DEFINITION OF QUALIFIED RE18 HABILITATION EXPENDITURE. 

19 (a) IN GENERAL.—Clause (i) of section 47(c)(2)(A) 

20 of the Internal Revenue Code of 1986 (relating to the defi21 nition of qualified rehabilitation expenditures) is amended 

22 by striking ‘‘or’’ at the end of subclause (III), by striking 

23 subclause (IV), and by inserting after subclause (III) the 

24 following new subclauses: 


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1 ‘‘(IV) rehabilitated building en2 ergy efficiency property, or 

3 ‘‘(V) an addition or improvement 

4 to property described in subclause (I), 

5 (II), (III), or (IV), and’’. 

6 (b) REHABILITATED BUILDING ENERGY EFFICIENCY

7 PROPERTY.—Section 47(c)(2) of such Code is amended by 

8 adding at the end the following new subparagraph: 

9 ‘‘(E) REHABILITATED BUILDING ENERGY

10 EFFICIENCY PROPERTY.— 

11 ‘‘(i) IN GENERAL.—For purposes of 

12 subparagraph (A), the term ‘rehabilitated 

13 building energy efficiency property’ means 

14 property which is certified as being— 

15 ‘‘(I) affixed to, adjacent to, or in16 tegral to the provision of renewable 

17 energy to a qualified rehabilitated 

18 building, or 

19 ‘‘(II) installed as part of a plan 

20 designed to achieve any qualified en21 ergy use reduction (as defined in sub22 section (e)(4)) or a reduction in water 

23 use. 


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1 Subparagraph (B)(i) shall not apply to re2 habilitated building energy efficiency prop3 erty. 

4 ‘‘(ii) CERTIFICATION.—The Secretary 

5 shall prescribe the manner and method for 

6 the making of certifications under clause 

7 (i).’’. 

8 (c) ENLARGEMENTS.—Clause (iii) of section 

9 47(c)(2)(B) of such Code is amended by adding at the 

10 end the following new sentence: ‘‘The preceding sentence 

11 shall not apply to any rehabilitated building energy effi12 ciency property which is an addition or improvement to 

13 a building.’’ 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to qualified rehabilitated buildings 

16 placed in service after the date of the enactment of this 

17 Act. 

18 SEC. 10. COORDINATION OF ENERGY CREDIT WITH REHA19 BILITATION CREDIT. 

20 (a) IN GENERAL.—Paragraph (2) of section 48(a) of 

21 the Internal Revenue Code of 1986 is amended by striking 

22 subparagraph (B). 

23 (b) BASIS REDUCTION.—Paragraph (3) of section 

24 50(c) of such Code is amended by adding at the end the 

25 following new flush sentence: 


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1 ‘‘In the case of property that qualifies for both the 

2 energy credit and the rehabilitation credit, the pre3 ceding sentence shall be applied by substituting 

4 ‘none’ for ‘only 50 percent’ each place it appears.’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to property placed in service after 

7 the date of the enactment of this Act. 

8 SEC. 11. SPECIAL RULES FOR DISPOSITIONS OF STATE HIS9 TORIC TAX CREDITS. 

10 (a) IN GENERAL.—Part III of subchapter B of chap11 ter 1 of the Internal Revenue Code of 1986 (relating to 

12 items specifically excluded from gross income) is amended 

13 by inserting after section 139C the following new section: 

14 ‘‘SEC. 139D. DISPOSITIONS OF STATE HISTORIC TAX CRED15 ITS. 

16 ‘‘(a) EXCLUSION FROM INCOME; BASIS REDUC17 TION.— 

18 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

19 who receives a State historic tax credit and transfers 

20 or disposes of such credit, or receives a refund of all 

21 or a portion of such credit— 

22 ‘‘(A) no portion of the net proceeds of such 

23 transfer or disposition or of such refund shall 

24 constitute income to such taxpayer under sec25 tion 61(a), and 


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1 ‘‘(B) the taxpayer’s adjusted basis in the 

2 property with respect to which the State his3 toric tax credit is allowed shall be reduced by 

4 an amount equal to such net proceeds or refund 

5 received by such taxpayer, 

6 unless the taxpayer makes an election under sub7 section (b). 

8 ‘‘(2) DETERMINATION OF REDUCTION IN

9 BASIS.—The reduction in basis under paragraph (1) 

10 shall be applied— 

11 ‘‘(A) first, against the basis in the land, 

12 ‘‘(B) second, against so much of the basis 

13 of any building or interest therein as was not 

14 treated as a qualified rehabilitation expenditure 

15 by reason of clause (ii) or (iii) of section 

16 47(c)(2)(B), and 

17 ‘‘(C) third, against the remaining basis in 

18 the property. 

19 ‘‘(D) ADJUSTMENT IN BASIS OF INTEREST

20 IN PARTNERSHIP OR S CORPORATION.—The ad21 justed basis of— 

22 ‘‘(i) a partner’s interest in a partner23 ship, or 

24 ‘‘(ii) stock in an S corporation (as de25 fined in section 1361(a)(1)), 


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1 shall be appropriately adjusted to take into ac2 count adjustments made under this subsection 

3 in the basis of property held by the partnership 

4 or S corporation (if any). 

5 ‘‘(b) ELECTION TO INCLUDE IN INCOME.— 

6 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

7 who elects to have this subsection apply, the net pro8 ceeds of the transfer or disposition or the refund de9 scribed in subsection (a) received by such taxpayer 

10 shall constitute income to such taxpayer under sec11 tion 61(a). 

12 ‘‘(2) MAKING OF ELECTION.—An election under 

13 this subsection shall be made at such time and in 

14 such manner as the Secretary of the Treasury may 

15 by regulation prescribe. Such election shall apply for 

16 the taxable year for which it is made and for all sub17 sequent taxable years and may be revoked only with 

18 the consent of the Secretary of the Treasury. 

19 ‘‘(c) EFFECT ON QUALIFIED REHABILITATION EX20 PENDITURES AND REHABILITATION CREDITS.—For pur21 poses of determining the rehabilitation credit allowable to 

22 a taxpayer under section 47, the transfer or disposition 

23 of State historic tax credits with respect to any property 

24 by a taxpayer shall not affect or reduce the amount of 

25 qualified rehabilitation expenditures (as defined in section 


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1 47(c)(2)) incurred in connection with such property, nor 

2 shall such transfer or disposition, nor any basis adjust3 ments under subsection (a), be treated as an early disposi4 tion of investment credit property for purposes of the re5 capture provisions of section 50. 

6 ‘‘(d) STATE HISTORIC TAX CREDITS DEFINED.—For 

7 purposes of this section, the term ‘State historic tax credit’ 

8 means any credit against State or local tax liabilities 

9 which— 

10 ‘‘(1) is allowable under the laws of any State or 

11 political subdivision thereof to a taxpayer with re12 spect to expenditures made for the rehabilitation of 

13 property identified by such laws, and 

14 ‘‘(2) is transferable or refundable under such 

15 laws.’’. 

16 (b) CLERICAL AMENDMENT.—The table of sections 

17 for such part III is amended by inserting after the item 

18 relating to section 139C the following new item: 

‘‘Sec. 139D. Dispositions of State historic tax credits.’’. 

19 (c) EFFECTIVE DATE.—This section shall apply to 

20 transfers or dispositions made, or refunds received, after 

21 the date of the enactment of this Act. 

Æ 


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