I 

116TH CONGRESS 

1ST SESSION H. R. 3316 

To amend the Internal Revenue Code of 1986 to allow a credit against 

tax for neighborhood revitalization, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 18, 2019 

Mr. HIGGINS of New York (for himself and Mr. KELLY of Pennsylvania) 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 allow a 

credit against tax for neighborhood revitalization, 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 ‘‘Neighborhood Homes 

5 Investment Act’’. 

6 SEC. 2. NEIGHBORHOOD HOMES CREDIT. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by inserting after section 42 the fol2 lowing new section: 

3 ‘‘SEC. 42A. NEIGHBORHOOD HOMES CREDIT. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec5 tion 38, the amount of the neighborhood homes credit de6 termined under this section for a taxable year for a quali7 fied project shall be, with respect to each qualified resi8 dence that is part of such qualified project and that expe9 riences a qualified completion event during such taxable 

10 year, an amount equal to— 

11 ‘‘(1) in the case of an affordable sale, with re12 spect to the seller, the excess of— 

13 ‘‘(A) the qualified development cost in14 curred by such seller for such residence, over 

15 ‘‘(B) the sale price of such residence, or 

16 ‘‘(2) in the case of any other qualified comple17 tion event, with respect to a taxpayer other than the 

18 owner of the residence (or a related person with re19 spect to such owner), the excess of— 

20 ‘‘(A) the development cost incurred by 

21 such taxpayer for such residence, over 

22 ‘‘(B) the amount received by such taxpayer 

23 as payment for such rehabilitation. 

24 ‘‘(b) LIMITATIONS.— 


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1 ‘‘(1) AMOUNT.—The amount determined under 

2 subsection (a) with respect to a residence shall not 

3 exceed 35 percent of the lesser of— 

4 ‘‘(A) the qualified development cost, or 

5 ‘‘(B) 80 percent of the national median 

6 sale price for new homes. 

7 ‘‘(2) ALLOCATIONS.— 

8 ‘‘(A) IN GENERAL.—The amount deter9 mined under subsection (a) with respect to a 

10 residence that is part of a qualified project and 

11 that experiences a qualified completion event 

12 shall not exceed the excess of— 

13 ‘‘(i) the amount determined under 

14 subparagraph (B), over 

15 ‘‘(ii) the amounts previously deter16 mined under subsection (a) with respect to 

17 such qualified project. 

18 ‘‘(B) ALLOCATION AMOUNT.—The amount 

19 determined under this paragraph with respect 

20 to a residence that is part of a qualified project 

21 and that experiences a qualified completion 

22 event is the least of— 

23 ‘‘(i) the amount allocated to such 

24 project by the neighborhood homes credit 

25 agency under this section, 


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1 ‘‘(ii) the amount such agency deter2 mines at the time of the qualified comple3 tion event is necessary to ensure the finan4 cial feasibility of the project given the 

5 sources and uses of funds and the total fi6 nancing (including local, State, and Fed7 eral subsidies) planned for the project, or 

8 ‘‘(iii) in the case of a qualified com9 pletion event that occurs after the 5-year 

10 period beginning on the date of the alloca11 tion referred to in clause (i), $0. 

12 ‘‘(c) QUALIFIED DEVELOPMENT COST.—For pur13 poses of this section— 

14 ‘‘(1) IN GENERAL.—The term ‘qualified devel15 opment cost’ means, with respect to a residence so 

16 much of the allowable development cost as the neigh17 borhood homes credit agency certifies, at the time of 

18 the completion event— 

19 ‘‘(A) meets the standards promulgated 

20 under subsection (h)(1)(C), and 

21 ‘‘(B) does not represent unreasonable fees 

22 by the taxpayer claiming the credit under sub23 section (a). 

24 ‘‘(2) ALLOWABLE DEVELOPMENT COST.—The 

25 term ‘allowable development cost’ means— 


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1 ‘‘(A) the cost of construction, substantial 

2 rehabilitation, demolition of any structure, and 

3 environmental remediation, and 

4 ‘‘(B) in the case of an affordable sale, so 

5 much of the cost of acquiring buildings and 

6 land as does not exceed an amount equal to 75 

7 percent of the costs described in subparagraph 

8 (A). 

9 ‘‘(3) PROPERTIES WITH MULTIPLE RESI10 DENCES.—The allowable development cost of any 

11 residence shall include on a pro-rata basis the allow12 able development cost with respect to common areas 

13 or other comparable amenities. 

14 ‘‘(d) QUALIFIED PROJECT.—For purposes of this 

15 section, the term ‘qualified project’ means a project that— 

16 ‘‘(1) a neighborhood homes credit agency cer17 tifies will build or substantially rehabilitate 1 or 

18 more qualified residences located in one or more 

19 qualified census tracts, and 

20 ‘‘(2) is designated by such agency as a qualified 

21 project under this section and is allocated (before 

22 such building or substantial rehabilitation begins) a 

23 portion of the amount allocated to such agency 

24 under subsection (g). 


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1 ‘‘(e) QUALIFIED CENSUS TRACT.—For purposes of 

2 this section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified census 

4 tract’ means a census tract— 

5 ‘‘(A) with— 

6 ‘‘(i) a median gross income which 

7 does not exceed 80 percent of the applica8 ble area median gross income, 

9 ‘‘(ii) a poverty rate that is not less 

10 than 130 percent of the applicable area 

11 poverty rate, and 

12 ‘‘(iii) a median value for owner-occu13 pied homes that does not exceed applicable 

14 area median value for owner-occupied 

15 homes, or 

16 ‘‘(B) that is— 

17 ‘‘(i) in a nonmetropolitan county, 

18 ‘‘(ii) with a median gross income 

19 which does not exceed the applicable area 

20 median gross income, and 

21 ‘‘(iii) designated by a neighborhood 

22 homes credit agency under this clause. 

23 ‘‘(2) ADDITIONAL CENSUS TRACTS FOR SUB24 STANTIAL REHABILITATION.—In the case of a resi25 dence that is intended for substantial rehabilitation 


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1 described in subsection (f)(5)(B), the term ‘qualified 

2 census tract’ includes a census tract that meets the 

3 requirements of paragraph (1)(A), without regard to 

4 clause (iii), and that is designated by the neighbor5 hood homes credit agency under this paragraph. 

6 ‘‘(3) LIST OF QUALIFIED CENSUS TRACTS.— 

7 The Secretary of Housing and Urban Development 

8 shall make publically available a list of qualified cen9 sus tracts under paragraph (1)(A), a list of qualified 

10 census tracts under paragraph (1)(B), and a list of 

11 qualified census tracts under paragraph (2) for each 

12 year. 

13 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec14 tion— 

15 ‘‘(1) QUALIFIED RESIDENCE.—The term ‘quali16 fied residence’ means a residence that consists of— 

17 ‘‘(A) a single-family home containing 4 or 

18 fewer residential units, 

19 ‘‘(B) a condominium, or 

20 ‘‘(C) a house or an apartment owned by a 

21 cooperative housing corporation (as defined in 

22 section 216(b)). 

23 ‘‘(2) AFFORDABLE SALE.— 

24 ‘‘(A) IN GENERAL.— 


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1 ‘‘(i) IN GENERAL.—The term ‘afford2 able sale’ means a sale to a qualified home3 owner of a residence that the neighborhood 

4 homes credit agency certifies as meeting 

5 the standards promulgated under sub6 section (h)(1)(D) for a price that does not 

7 exceed— 

8 ‘‘(I) in the case of any residence 

9 not described in subclause (II), (III), 

10 or (IV), the amount equal to the prod11 uct of 4 multiplied by the applicable 

12 area median gross income, 

13 ‘‘(II) in the case of a single-fam14 ily home containing two residential 

15 units, 125 percent of the amount de16 scribed in subclause (I), 

17 ‘‘(III) in the case of a single-fam18 ily home containing three residential 

19 units, 150 percent of the amount de20 scribed in subclause (I), or 

21 ‘‘(IV) in the case of a single-fam22 ily home containing four residential 

23 units, 175 percent of the amount de24 scribed in subclause (I). 

25 ‘‘(ii) RELATED PERSONS.— 


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1 ‘‘(I) IN GENERAL.—A sale be2 tween related persons shall not be 

3 treated as an affordable sale. 

4 ‘‘(II) DEFINITION.—For pur5 poses of this section, a person (in this 

6 clause referred to as the ‘related per7 son’) is related to any person if the 

8 related person bears a relationship to 

9 such person specified in section 

10 267(b) or 707(b)(1), or the related 

11 person and such person are engaged 

12 in trades or businesses under common 

13 control (within the meaning of sub14 sections (a) and (b) of section 52). 

15 For purposes of the preceding sen16 tence, in applying section 267(b) or 

17 707(b)(1), ‘10 percent’ shall be sub18 stituted for ‘50 percent’. 

19 ‘‘(3) APPLICABLE AREA.—The term ‘applicable 

20 area’ means— 

21 ‘‘(A) in the case of a metropolitan census 

22 tract, the metropolitan area in which such cen23 sus tract is located, and 


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1 ‘‘(B) in the case of a census tract other 

2 than a census tract described in subparagraph 

3 (A), the State. 

4 ‘‘(4) SUBSTANTIAL REHABILITATION.—The 

5 term ‘substantial rehabilitation’ means rehabilitation 

6 efforts involving qualified development costs that are 

7 not less than the greater of— 

8 ‘‘(A) $20,000, and 

9 ‘‘(B) 20 percent of the cost of acquiring 

10 buildings and land. 

11 ‘‘(5) QUALIFIED COMPLETION EVENT.—The 

12 term ‘qualified completion event’ means— 

13 ‘‘(A) in the case of a residence that is built 

14 or substantially rehabilitated as part of a quali15 fied project and sold, an affordable sale, or 

16 ‘‘(B) in the case of a residence that is sub17 stantially rehabilitated as part of a qualified 

18 project and owned by the same qualified home19 owner throughout such rehabilitation, the com20 pletion of such rehabilitation (as determined by 

21 the neighborhood homes credit agency) to the 

22 standards promulgated under subsection 

23 (h)(1)(D). 

24 ‘‘(6) QUALIFIED HOMEOWNER.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 homeowner’ means, with respect to a residence, 

3 an individual— 

4 ‘‘(i) who owns and uses such residence 

5 as the principal residence of such indi6 vidual, and 

7 ‘‘(ii) whose income is 140 percent or 

8 less of the applicable area median gross in9 come for the location of the residence. 

10 ‘‘(B) OWNERSHIP.—For purposes of a co11 operative housing corporation (as such term is 

12 defined in section 216(b)), a tenant-stockholder 

13 shall be treated as owning the house or apart14 ment which such person is entitled to occupy. 

15 ‘‘(C) INCOME.—For purposes of this para16 graph, income shall be a determined in accord17 ance with section 143(f)(2) and 143(f)(4). 

18 ‘‘(D) TIMING.—For purposes of this para19 graph, the income of a taxpayer shall be deter20 mined— 

21 ‘‘(i) in the case of a residence that is 

22 built or substantially rehabilitated as part 

23 of a qualified project and sold, at the time 

24 a binding contract for purchase is made, or 


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1 ‘‘(ii) in the case of a residence that is 

2 occupied by a qualified homeowner and in3 tended to be substantially rehabilitated as 

4 part of a qualified project, at the time a 

5 binding contract to undertake such reha6 bilitation is made. 

7 ‘‘(7) NEIGHBORHOOD HOMES CREDIT AGEN8 CY.—The term ‘neighborhood homes credit agency’ 

9 means the agency designated by the governor of a 

10 State as the neighborhood homes credit agency of 

11 the State. 

12 ‘‘(g) ALLOCATION.— 

13 ‘‘(1) STATE NEIGHBORHOOD HOMES CREDIT

14 CEILING.—The State neighborhood homes credit 

15 amount for a State for a calendar year is an amount 

16 equal to the sum of— 

17 ‘‘(A) the greater of— 

18 ‘‘(i) the product of $3, multiplied by 

19 the State population (determined in ac20 cordance with section 146(j)), or 

21 ‘‘(ii) $4,000,000, plus 

22 ‘‘(B) the converted private activity bond 

23 amount with respect to the State for the cal24 endar year. 


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1 ‘‘(2) UNUSED AMOUNT.—The State neighbor2 hood homes credit amount for a calendar year shall 

3 be increased by the sum of— 

4 ‘‘(A) any amount certified by the neighbor5 hood homes credit agency of the State as hav6 ing been previously allocated to a qualified 

7 project and not used during the 5-year period 

8 described in subsection (b)(2)(iii), plus 

9 ‘‘(B) sum of the amount by which the 

10 amount determined under paragraph (1) (with11 out application of this paragraph) exceeded the 

12 amount allocated to qualified projects in each of 

13 the three immediately preceding calendar years. 

14 ‘‘(3) CONVERTED PRIVATE ACTIVITY BOND

15 AMOUNT.— 

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

17 paragraph, the converted private activity bond 

18 amount with respect to any State for any cal19 endar year shall be 60 percent of the amount 

20 elected by— 

21 ‘‘(i) the State agency that is an issuer 

22 of qualified mortgage bonds (as defined in 

23 section 143) that is designated by the gov24 ernor of the State under this subparagraph 

25 for such year, or 


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1 ‘‘(ii) if no such agency exists, the 

2 neighborhood homes credit agency of the 

3 State. 

4 ‘‘(B) REDUCTION OF PRIVATE ACTIVITY

5 BOND CEILING.—The State ceiling under sec6 tion 146(d)(1) shall be reduced by the amount 

7 elected under subparagraph (A). 

8 ‘‘(4) PORTION OF STATE CREDIT CEILING FOR

9 CERTAIN PROJECTS INVOLVING QUALIFIED NON10 PROFIT ORGANIZATIONS.—Rules similar to the rules 

11 of section 42(h)(5) shall apply. 

12 ‘‘(h) RESPONSIBILITIES OF NEIGHBORHOOD HOMES

13 CREDIT AGENCIES.— 

14 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

15 (g), the State neighborhood homes credit dollar 

16 amount shall be zero for a calendar year unless the 

17 neighborhood homes credit agency of the State— 

18 ‘‘(A) allocates such amount pursuant to a 

19 qualified allocation plan of the neighborhood 

20 homes credit agency, 

21 ‘‘(B) allocates not more than 20 percent of 

22 such amount for the previous year to projects 

23 with respect to residences in census tracts 

24 under subsection (e)(1)(B) or (e)(2), 


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1 ‘‘(C) promulgates standards with respect 

2 to reasonable qualified development costs, 

3 ‘‘(D) promulgates standards with respect 

4 to construction quality, and 

5 ‘‘(E) submits to the Secretary (at such 

6 time and in such manner as the Secretary may 

7 prescribe) an annual report specifying— 

8 ‘‘(i) the amount of the neighborhood 

9 homes credits allocated to each qualified 

10 project for the previous year, and 

11 ‘‘(ii) such other information as the 

12 Secretary may require. 

13 ‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur14 poses of this paragraph, the term ‘qualified alloca15 tion plan’ means any plan which— 

16 ‘‘(A) sets forth the selection criteria to be 

17 used to prioritize qualified projects for alloca18 tions of State neighborhood homes credit dollar 

19 amounts, including— 

20 ‘‘(i) the need for new or substantially 

21 rehabilitated owner-occupied homes in the 

22 area addressed by the project, 

23 ‘‘(ii) the expected contribution of the 

24 project to neighborhood stability and revi25 talization, 


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1 ‘‘(iii) the capability of the project 

2 sponsor, and 

3 ‘‘(iv) the likelihood the project will re4 sult in long-term homeownership, and 

5 ‘‘(B) has been made available for public 

6 comment. 

7 ‘‘(i) POSSESSIONS TREATED AS STATES.—For pur8 poses of this section, the term ‘State’ includes the District 

9 of Columbia and a possession of the United States. 

10 ‘‘(j) REPAYMENT.— 

11 ‘‘(1) IN GENERAL.—If a residence is sold dur12 ing the 5-year period beginning on the date of the 

13 qualified completion event described in subsection 

14 (a) with respect to such residence, the seller shall 

15 transfer an amount equal to the repayment amount 

16 from the amount realized on such sale to the rel17 evant neighborhood homes credit agency to be used 

18 to stabilize or revitalize qualified census tracts (de19 termined without regard to paragraphs (1)(B) and 

20 (2) of subsection (e)). 

21 ‘‘(2) REPAYMENT AMOUNT.—For purposes of 

22 paragraph (1), the repayment amount is an amount 

23 equal to 50 percent of the gain from such resale, re24 duced by 20 percent for each year of the 5-year peVerDate Sep 11 2014 00:02 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H3316.IH H3316

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1 riod referred to in paragraph (1) which ends before 

2 the date of the sale referred to in paragraph (1). 

3 ‘‘(3) LIEN FOR REPAYMENT AMOUNT.—A 

4 neighborhood homes credit agency receiving an allo5 cation under this section shall place a lien on each 

6 residence that is built or rehabilitated as part of a 

7 qualified project for the greatest amount that could 

8 be required to be paid under this subsection to such 

9 agency. 

10 ‘‘(4) DENIAL OF DEDUCTIONS IF CONVERTED

11 TO RENTAL HOUSING.—If, during the 5-year period 

12 beginning on the date of the qualified completion 

13 event described in subsection (a), an individual who 

14 owns a residence fails to use such residence as such 

15 individual’s principal residence for any period of 

16 time, no deduction shall be allowed for expenses paid 

17 or incurred by such individual with respect to rent18 ing, during such period of time, such residence. 

19 ‘‘(5) WAIVER.—The neighborhood homes credit 

20 agency may waive the repayment required under 

21 paragraph (1) in the case of homeowner experi22 encing a hardship. 

23 ‘‘(k) INFLATION ADJUSTMENT.— 


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

2 year after 2020, the dollar amounts in this section 

3 shall be increased by an amount equal to— 

4 ‘‘(A) such dollar amount, multiplied by 

5 ‘‘(B) the cost-of-living adjustment deter6 mined under section 1(f)(3) for such calendar 

7 year by substituting ‘calendar year 2019’ for 

8 ‘calendar year 2016’ in subparagraph (A)(ii) 

9 thereof. 

10 ‘‘(2) ROUNDING.— 

11 ‘‘(A) SUBSTANTIAL REHABILITATION.—In 

12 the case of the dollar amount in subsection 

13 (f)(4), any increase under the preceding sen14 tence which is not a multiple of $1,000 shall be 

15 rounded to the nearest multiple of $1,000. 

16 ‘‘(B) In the case of the dollar amount in 

17 subsection (g)(1)(A)(i), any increase under the 

18 preceding sentence which is not a multiple of 

19 $0.01 shall be rounded to the nearest multiple 

20 of $0.01. 

21 ‘‘(C) In the case of the dollar amount in 

22 subsection (g)(1)(A)(ii), any increase under the 

23 preceding sentence which is not a multiple of 

24 $100,000 shall be rounded to the nearest mul25 tiple of $100,000.’’. 


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1 (b) CURRENT YEAR BUSINESS CREDIT CALCULA2 TION.—Section 38(b) (of the Internal Revenue Code of 

3 1986) is amended by redesignating paragraphs (6) 

4 through (37) as paragraphs (7) through (38), respectively, 

5 and by inserting after paragraph (5) the following new 

6 paragraph: 

7 ‘‘(6) the neighborhood homes credit determined 

8 under section 42A(a),’’. 

9 (c) LIMITATION ON CARRYBACK.—Section 39 of the 

10 Internal Revenue Code of 1986 is amended by adding at 

11 the end the following new section: 

12 ‘‘(e) NO CARRYBACK OF NEIGHBORHOOD HOMES

13 CREDIT BEFORE EFFECTIVE DATE.—No amount of the 

14 unused credit attributable to section 42A may be taken 

15 into account under section 38(a)(3) for any taxable year 

16 beginning before the date of the enactment of this Act.’’. 

17 (d) CANCELLATION OF INDEBTEDNESS.—Section 

18 108 of the Internal Revenue Code of 1986 is amended— 

19 (1) by striking ‘‘or’’ at the end of subsection 

20 (a)(1)(D), by striking the period at the end of sub21 section (a)(1)(E)(ii) and inserting ‘‘, or’’, and add22 ing at the end of subsection (a)(1) the following new 

23 subparagraph: 

24 ‘‘(F) if the discharge is qualified neighbor25 hood homes credit indebtedness.’’, and 


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1 (2) by adding at the end of subsection (b)(2) 

2 the following new subparagraph: 

3 ‘‘(H) SPECIAL RULES RELATING TO QUALI4 FIED NEIGHBORHOOD HOMES CREDIT INDEBT5 EDNESS.—For purposes of this section, the 

6 term ‘qualified neighborhood homes credit in7 debtedness’ means indebtedness arising in con8 nection with the development of a qualified resi9 dence under section 42A.’’. 

10 (e) CONFORMING AMENDMENTS.—Subsections 

11 (i)(3)(D), (i)(6)(B)(i), and (k)(1) of section 469 of the In12 ternal Revenue Code of 1986 are each amended by insert13 ing ‘‘or 42A’’ after ‘‘section 42’’. 

14 (f) CLERICAL AMENDMENT.—The table of sections 

15 for subpart D of part IV of subchapter A of chapter 1 

16 of the Internal Revenue Code of 1986 is amended by in17 serting after the item relating to section 42 the following: 

‘‘Sec. 42A. Neighborhood homes credit.’’ 

18 (g) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to calendar years beginning after 

20 December 31, 2019. 

Æ 


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