I 

111TH CONGRESS 

2D SESSION H. R. 4687 

To provide grants to States for low-income housing projects in lieu of lowincome housing credits. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 24, 2010 

Ms. LINDA T. SA ́NCHEZ of California introduced the following bill; which was 

referred to the Committee on Financial Services, and in addition to the 

Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

To provide grants to States for low-income housing projects 

in lieu of low-income housing credits. 

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 ‘‘Low Income Housing 

5 Tax Credit Exchange Expansion and Job Creation Act of 

6 2010’’. 


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1 SEC. 2. GRANTS TO STATES FOR LOW-INCOME HOUSING 

2 PROJECTS IN LIEU OF LOW-INCOME HOUS3 ING CREDIT ALLOCATIONS FOR 2010. 

4 (a) IN GENERAL.—The Secretary of the Treasury 

5 shall make a grant to the housing credit agency of each 

6 State in an amount equal to such State’s low-income hous7 ing credit allocation election amount. 

8 (b) LOW-INCOME HOUSING CREDIT ALLOCATION

9 ELECTION AMOUNT.—For purposes of this section, the 

10 term ‘‘low-income housing credit allocation election 

11 amount’’ means, with respect to any State, such amount 

12 as the State may elect which does not exceed 85 percent 

13 of the product of— 

14 (1) the sum of— 

15 (A) 100 percent of the State housing credit 

16 ceiling for 2010 which is attributable to 

17 amounts described in clauses (i) and (iii) of sec18 tion 42(h)(3)(C) of the Internal Revenue Code 

19 of 1986, plus 

20 (B) 40 percent of the State housing credit 

21 ceiling for 2010 which is attributable to 

22 amounts described in clauses (ii) and (iv) of 

23 such section, multiplied by 

24 (2) 10. 

25 (c) SUBAWARDS FOR LOW-INCOME BUILDINGS.— 


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1 (1) IN GENERAL.—A State housing credit agen2 cy receiving a grant under this section shall use such 

3 grant to make subawards to finance the construction 

4 or acquisition and rehabilitation of qualified low-in5 come buildings. A subaward under this section may 

6 be made to finance a qualified low-income building 

7 with or without an allocation under section 42 of the 

8 Internal Revenue Code of 1986, except that a State 

9 housing credit agency may make subawards to fi10 nance qualified low-income buildings without an allo11 cation only if it makes a determination that such use 

12 will increase the total funds available to the State to 

13 build and rehabilitate affordable housing. In com14 plying with such determination requirement, a State 

15 housing credit agency shall establish a process in 

16 which applicants that are allocated credits are re17 quired to demonstrate good faith efforts to obtain 

18 investment commitments for such credits before the 

19 agency makes such subawards. 

20 (2) SUBAWARDS SUBJECT TO SAME REQUIRE21 MENTS AS LOW-INCOME HOUSING CREDIT ALLOCA22 TIONS.—Any such subaward with respect to any 

23 qualified low-income building may be in the form of 

24 a grant or a loan of any duration and shall be made 

25 in the same manner and shall be subject to the same 


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1 limitations (including rent, income, and use restric2 tions on such building) as an allocation of housing 

3 credit dollar amount allocated by such State housing 

4 credit agency under section 42 of the Internal Rev5 enue Code of 1986, except that such subawards shall 

6 not be limited by, or otherwise affect (except as pro7 vided in subsection (i)(9) of such section), the State 

8 housing credit ceiling applicable to such agency. 

9 (3) COMPLIANCE AND ASSET MANAGEMENT.— 

10 The State housing credit agency shall perform asset 

11 management functions to ensure compliance with 

12 section 42 of the Internal Revenue Code of 1986 

13 and the long-term viability of buildings funded by 

14 any subaward under this section. The State housing 

15 credit agency may collect reasonable fees from a 

16 subaward recipient to cover expenses associated with 

17 the performance of its duties under this paragraph, 

18 including the reasonable costs of administering such 

19 subawards. The State housing credit agency may re20 tain an agent or other private contractor to satisfy 

21 the requirements of this paragraph. 

22 (4) RECAPTURE.—The State housing credit 

23 agency shall impose conditions or restrictions, in24 cluding a requirement providing for recapture, on 

25 any subaward under this section so as to assure that 


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1 the building with respect to which such subaward is 

2 made remains a qualified low-income building during 

3 the compliance period. Any amounts of recapture 

4 shall be proportional to the length of time of the 

5 noncompliance compared to the 15-year compliance 

6 period and the percentage of qualified basis out of 

7 compliance compared to the total qualified basis. 

8 Any such recapture shall be payable to the Secretary 

9 of the Treasury for deposit in the general fund of 

10 the Treasury and may be enforced by means of liens 

11 or such other methods as the Secretary of the Treas12 ury determines appropriate. A State housing credit 

13 agency may subordinate any such lien (or other se14 curity interest) to other loans made by third parties. 

15 (d) RETURN OF UNUSED GRANT FUNDS.—Any grant 

16 funds not used to make subawards under this section be17 fore January 1, 2012, shall be returned to the Secretary 

18 of the Treasury on such date. The portion of any 

19 subaward which is not disbursed before such date shall 

20 be returned to the Secretary of the Treasury on such date 

21 unless the subawardee has paid or incurred before Janu22 ary 1, 2012, at least 30 percent of the subawardee’s total 

23 adjusted basis in land and depreciable property that is 

24 reasonably expected to be part of the low-income housing 

25 building with respect to which such subaward is made. 


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1 The portion of any subaward which is not disbursed before 

2 January 1, 2013, shall be returned to the Secretary of 

3 the Treasury on such date. Any subawards returned to 

4 the State housing credit agency on or after January 1, 

5 2012, shall be promptly returned to the Secretary of the 

6 Treasury. Any amounts returned to the Secretary of the 

7 Treasury under this subsection shall be deposited in the 

8 general fund of the Treasury. 

9 (e) DEFINITIONS.—Any term used in this section 

10 which is also used in section 42 of the Internal Revenue 

11 Code of 1986 shall have the same meaning for purposes 

12 of this section as when used in such section 42. Any ref13 erence in this section to the Secretary of the Treasury 

14 shall be treated as including the Secretary’s delegate. 

15 (f) APPROPRIATIONS.—There is hereby appropriated 

16 to the Secretary of the Treasury such sums as may be 

17 necessary to carry out this section. 

18 SEC. 3. GRANTS TO STATES FOR LOW-INCOME HOUSING 

19 PROJECTS IN LIEU OF LOW-INCOME HOUS20 ING CREDITS FOR BOND-SUBSIDIZED HOUS21 ING PROJECTS. 

22 (a) IN GENERAL.—The Secretary of the Treasury 

23 shall make a grant to each State in an amount equal to 

24 such State’s low-income bond-subsidized housing election 

25 amount. 


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1 (b) LOW-INCOME BOND-SUBSIDIZED HOUSING

2 ELECTION AMOUNT.—For purposes of this section— 

3 (1) IN GENERAL.—The term ‘‘low-income bond4 subsidized housing election amount’’ means, with re5 spect to any State, such amount as the State may 

6 elect which does not exceed 85 percent of the State’s 

7 bond-subsidized credit amount. 

8 (2) BOND-SUBSIDIZED CREDIT AMOUNT.—The 

9 term ‘‘bond-subsidized credit amount’’ means, with 

10 respect to any State, the aggregate amount of low11 income housing credits which the State determines 

12 would, but for section 42(i)(9) of the Internal Rev13 enue Code of 1986, be awarded under section 

14 42(h)(4)(B) of such Code times 10 with respect to 

15 qualified low-income buildings receiving an allocation 

16 of qualified residential rental project bonds of such 

17 State during 2010. 

18 (3) QUALIFIED RESIDENTIAL RENTAL PROJECT

19 BONDS.—The term ‘‘qualified residential rental 

20 project bond’’ means, with respect to any State, any 

21 qualified bond (as defined in section 141(e) of the 

22 Internal Revenue Code of 1986) if such bond— 

23 (A) is issued as part of an issue 95 percent 

24 or more of the net proceeds of which are to be 

25 used to provide qualified residential rental 


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1 projects (within the meaning of section 142 of 

2 such Code), and 

3 (B) is taken into account under section 

4 146 of such Code with respect to the State ceil5 ing applicable to such State. 

6 (c) SUBAWARDS FOR LOW-INCOME BUILDINGS.— 

7 (1) IN GENERAL.—A State receiving a grant 

8 under this section shall use such grant to make sub9 awards to finance the construction or acquisition 

10 and rehabilitation of qualified low-income buildings 

11 which have received the corresponding allocation of 

12 qualified residential rental project bonds referred to 

13 in subsection (b)(2). 

14 (2) SUBAWARDS SUBJECT TO SAME REQUIRE15 MENTS AS LOW-INCOME HOUSING CREDIT ALLOCA16 TIONS.—Any such subaward with respect to any 

17 qualified low-income building may be in the form of 

18 a grant or a loan of any duration and shall be made 

19 in the same manner and shall be subject to the same 

20 limitations (including rent, income, and use restric21 tions on such building) as an allocation of housing 

22 credit dollar amount allocated by the State housing 

23 credit agency of such State under section 42 of the 

24 Internal Revenue Code of 1986, except that such 

25 subawards shall not be limited by, or otherwise afVerDate Nov 24 2008 02:44 Feb 25, 2010 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4687.IH H4687

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1 fect, the State housing credit ceiling applicable to 

2 such agency. 

3 (3) COMPLIANCE AND ASSET MANAGEMENT.—A 

4 State receiving a grant under this section shall per5 form asset management functions to ensure compli6 ance with section 42 of the Internal Revenue Code 

7 of 1986 and the long-term viability of buildings 

8 funded by any subaward under this section. A State 

9 may collect reasonable fees from a subaward recipi10 ent to cover expenses associated with the perform11 ance of its duties under this paragraph, including 

12 the reasonable costs of administering such sub13 awards. A State may retain an agent or other pri14 vate contractor to satisfy the requirements of this 

15 paragraph. 

16 (4) RECAPTURE.—A State receiving a grant 

17 under this section shall impose conditions or restric18 tions, including a requirement providing for recap19 ture, on any subaward under this section so as to 

20 assure that the building with respect to which such 

21 subaward is made remains a qualified low-income 

22 building during the compliance period. Any amounts 

23 of recapture shall be proportional to the length of 

24 time of the noncompliance compared to the 15-year 

25 compliance period and the percentage of qualified 


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1 basis out of compliance compared to the total quali2 fied basis. Any such recapture shall be payable to 

3 the Secretary of the Treasury for deposit in the gen4 eral fund of the Treasury and may be enforced by 

5 means of liens or such other methods as the Sec6 retary of the Treasury determines appropriate. A 

7 State housing credit agency may subordinate any 

8 such lien (or other security interest) to other loans 

9 made by third parties. 

10 (d) REALLOCATION OF BOND AUTHORITY.—A State 

11 housing credit agency shall establish a process in which 

12 applicants that are allocated bonds and receive a subaward 

13 pursuant to subsection (c) are required to demonstrate 

14 good faith efforts to obtain purchasers for such bonds. If 

15 a subawardee is unable to obtain purchasers or if the State 

16 makes a determination that reallocation of bond authority 

17 will increase the total funds available to the State to build 

18 and rehabilitate affordable housing, a subawardee may re19 turn its bond allocation to the State without affecting its 

20 subaward under subsection (c) and the State may reallo21 cate such bond authority only for qualified residential 

22 rental projects. Reallocated bonds shall not be taken into 

23 account for purposes of determining eligibility for low-in24 come housing credits under section 42(h)(4) of the InterVerDate Nov 24 2008 02:44 Feb 25, 2010 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4687.IH H4687

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1 nal Revenue Code of 1986 or for purposes of determining 

2 eligibility for grants under subsection (c). 

3 (e) RETURN OF UNUSED GRANT FUNDS.—Any grant 

4 funds not used to make subawards under this section be5 fore January 1, 2012, shall be returned to the Secretary 

6 of the Treasury on such date. The portion of any 

7 subaward which is not disbursed before such date shall 

8 be returned to the Secretary of the Treasury on such date 

9 unless the subawardee has paid or incurred before Janu10 ary 1, 2012, at least 30 percent of the subawardee’s total 

11 adjusted basis in land and depreciable property that is 

12 reasonably expected to be part of the low-income housing 

13 building with respect to which such subaward is made. 

14 The portion of any subaward which is not disbursed before 

15 January 1, 2013, shall be returned to the Secretary of 

16 the Treasury on such date. Any subawards returned to 

17 the State housing credit agency on or after January 1, 

18 2012, shall be promptly returned to the Secretary of the 

19 Treasury. Any amounts returned to the Secretary of the 

20 Treasury under this subsection shall be deposited in the 

21 general fund of the Treasury. 

22 (f) DEFINITIONS.—Any term used in this section 

23 which is also used in section 42 of the Internal Revenue 

24 Code of 1986 shall have the same meaning for purposes 

25 of this section as when used in such section 42. Any refVerDate Nov 24 2008 02:44 Feb 25, 2010 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4687.IH H4687

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1 erence in this section to the Secretary of the Treasury 

2 shall be treated as including the Secretary’s delegate. 

3 (g) APPROPRIATIONS.—There is hereby appropriated 

4 to the Secretary of the Treasury such sums as may be 

5 necessary to carry out this section. 

6 SEC. 4. COORDINATION OF LOW-INCOME HOUSING CREDIT 

7 WITH LOW-INCOME HOUSING GRANTS. 

8 (a) IN GENERAL.—Paragraph (9) of section 42(i) of 

9 the Internal Revenue Code of 1986 is amended by redesig10 nating subparagraph (B) as subparagraph (D) and by in11 serting after subparagraph (A) the following new subpara12 graphs: 

13 ‘‘(B) REDUCTION IN STATE HOUSING

14 CREDIT CEILING FOR LOW-INCOME HOUSING

15 GRANTS RECEIVED IN 2010.—For purposes of 

16 this section, the amounts described in clauses 

17 (i) through (iv) of subsection (h)(3)(C) with re18 spect to any State for 2010 shall each be re19 duced by so much of such amount as is taken 

20 into account in determining the amount of any 

21 grant to such State under section 2 of the Low 

22 Income Housing Tax Credit Exchange Expan23 sion and Job Creation Act of 2010. 

24 ‘‘(C) DENIAL OF CREDIT FOR BOND-SUB25 SIDIZED BUILDINGS RECEIVING SUBAWARDS


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1 WITH 2010 GRANT FUNDS.—No credit shall be 

2 determined under this section with respect to 

3 any qualified low-income building to the extent 

4 of the bond-subsidized credit amount deter5 mined with respect to such building under sec6 tion 3 of the Low Income Housing Tax Credit 

7 Exchange Expansion and Job Creation Act of 

8 2010 if any subaward is made with respect to 

9 such building under such section.’’. 

10 (b) GRANTS AND LOANS NOT TO REDUCE BASIS.— 

11 Subparagraph (D) of section 42(i)(9) of such Code, as re12 designated by this section, is amended by striking ‘‘by the 

13 amount of any grant described in subparagraph (A)’’ and 

14 inserting ‘‘by reason of any grant or loan made under sec15 tion 1602 of the American Recovery and Reinvestment 

16 Tax Act of 2009 or section 2 or 3 of the Low Income 

17 Housing Tax Credit Exchange Expansion and Job Cre18 ation Act of 2010’’. 

19 (c) EXCLUSION OF GRANTS FROM GROSS INCOME.— 

20 Paragraph (9) of section 42(i) of such Code, as amended 

21 by this section, is amended by adding at the end the fol22 lowing new subparagraph: 

23 ‘‘(E) EXCLUSION OF GRANTS FROM GROSS

24 INCOME.—Any grant made under section 1602 

25 of the American Recovery and Reinvestment 


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1 Tax Act of 2009 or section 2 or 3 of the Low 

2 Income Housing Tax Credit Exchange Exten3 sion Act of 2009 shall not be includible in the 

4 gross income or alternative minimum taxable 

5 income of the taxpayer.’’. 

6 (d) EFFECTIVE DATE.— 

7 (1) IN GENERAL.—Except as otherwise pro8 vided in this subsection, the amendments made by 

9 this section shall apply to taxable years ending after 

10 December 31, 2009. 

11 (2) REDUCTIONS IN STATE HOUSING CREDIT

12 CEILING.—Subparagraph (B) of section 42(i)(9) of 

13 the Internal Revenue Code of 1986, as amended by 

14 subsection (a), shall apply to determinations of State 

15 housing credit ceiling for calendar years after 2009. 

16 (3) EXCLUSION OF GRANTS FROM GROSS IN17 COME.—The amendment made by subsection (c) 

18 shall apply to taxable years ending after December 

19 31, 2008. 

Æ 


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