II 

111TH CONGRESS 

2D SESSION S. 3326 

To provide grants to States for low-income housing projects in lieu of lowincome housing credits, and to amend the Internal Revenue Code of 

1986 to allow a 5-year carryback of the low-income housing credit, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 6, 2010 

Ms. CANTWELL (for herself, Mr. KERRY, and Mrs. BOXER) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To provide grants to States for low-income housing projects 

in lieu of low-income housing credits, and to amend 

the Internal Revenue Code of 1986 to allow a 5-year 

carryback of the low-income housing 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 ‘‘Job Creation and Af5 fordable Housing Act of 2010’’. 


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

2 PROJECTS IN LIEU OF LOW-INCOME HOUS3 ING CREDITS FOR BOND-SUBSIDIZED HOUS4 ING PROJECTS. 

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

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

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

8 amount. 

9 (b) LOW-INCOME BOND-SUBSIDIZED HOUSING

10 ELECTION AMOUNT.—For purposes of this section— 

11 (1) IN GENERAL.—The term ‘‘low-income bond12 subsidized housing election amount’’ means, with re13 spect to any State, such amount as the State may 

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

15 bond-subsidized credit amount. 

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

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

18 respect to any State, the aggregate amount of low19 income housing credits which the State determines 

20 would, but for section 42(i)(9) of the Internal Rev21 enue Code of 1986, be awarded under section 

22 42(h)(4)(B) of such Code times 10 with respect to 

23 qualified low-income buildings receiving an allocation 

24 of qualified residential rental project bonds of such 

25 State during 2010. 


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1 (3) QUALIFIED RESIDENTIAL RENTAL PROJECT

2 BONDS.—The term ‘‘qualified residential rental 

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

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

5 Internal Revenue Code of 1986) if such bond— 

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

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

8 used to provide qualified residential rental 

9 projects (within the meaning of section 142 of 

10 such Code), and 

11 (B) is taken into account under section 

12 146 of such Code with respect to the State ceil13 ing applicable to such State. 

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

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

16 under this section shall use such grant to make sub17 awards to finance the construction or acquisition 

18 and rehabilitation of qualified low-income buildings 

19 which have received the corresponding allocation of 

20 qualified residential rental project bonds referred to 

21 in subsection (b)(2). 

22 (2) SUBAWARDS SUBJECT TO SAME REQUIRE23 MENTS AS LOW-INCOME HOUSING CREDIT ALLOCA24 TIONS.—Any such subaward with respect to any 

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


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

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

3 limitations (including rent, income, and use restric4 tions on such building) as an allocation of housing 

5 credit dollar amount allocated by the State housing 

6 credit agency of such State under section 42 of the 

7 Internal Revenue Code of 1986, except that such 

8 subawards shall not be limited by, or otherwise af9 fect, the State housing credit ceiling applicable to 

10 such agency. 

11 (3) COMPLIANCE AND ASSET MANAGEMENT.—A 

12 State receiving a grant under this section shall per13 form asset management functions to ensure compli14 ance with section 42 of the Internal Revenue Code 

15 of 1986 and the long-term viability of buildings 

16 funded by any subaward under this section. A State 

17 may collect reasonable fees from a subaward recipi18 ent to cover expenses associated with the perform19 ance of its duties under this paragraph, including 

20 the reasonable costs of administering such sub21 awards. A State may retain an agent or other pri22 vate contractor to satisfy the requirements of this 

23 paragraph. 

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

25 under this section shall impose conditions or restricVerDate Mar 15 2010 03:31 May 07, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3326.IS S3326

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1 tions, including a requirement providing for recap2 ture, on any subaward under this section so as to 

3 assure that the building with respect to which such 

4 subaward is made remains a qualified low-income 

5 building during the compliance period. Any amounts 

6 of recapture shall be proportional to the length of 

7 time of the noncompliance compared to the 15-year 

8 compliance period and the percentage of qualified 

9 basis out of compliance compared to the total quali10 fied basis. Any such recapture shall be payable to 

11 the Secretary of the Treasury for deposit in the gen12 eral fund of the Treasury and may be enforced by 

13 means of liens or such other methods as the Sec14 retary of the Treasury determines appropriate. A 

15 State housing credit agency may subordinate any 

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

17 made by third parties. 

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

19 housing credit agency shall establish a process in which 

20 applicants that are allocated bonds and receive a subaward 

21 pursuant to subsection (c) are required to demonstrate 

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

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

24 makes a determination that reallocation of bond authority 

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


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1 and rehabilitate affordable housing, a subawardee may re2 turn its bond allocation to the State without affecting its 

3 subaward under subsection (c) and the State may reallo4 cate such bond authority only for qualified residential 

5 rental projects. Reallocated bonds shall not be taken into 

6 account for purposes of determining eligibility for low-in7 come housing credits under section 42(h)(4) of the Inter8 nal Revenue Code of 1986 or for purposes of determining 

9 eligibility for grants under subsection (c). 

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

11 funds not used to make subawards under this section be12 fore January 1, 2012, shall be returned to the Secretary 

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

14 subaward which is not disbursed before such date shall 

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

16 unless the subawardee has paid or incurred before Janu17 ary 1, 2012, at least 30 percent of the subawardee’s total 

18 adjusted basis in land and depreciable property that is 

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

20 building with respect to which such subaward is made. 

21 The portion of any subaward which is not disbursed before 

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

23 the Treasury on such date. Any subawards returned to 

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

25 2012, shall be promptly returned to the Secretary of the 


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1 Treasury. Any amounts returned to the Secretary of the 

2 Treasury under this subsection shall be deposited in the 

3 general fund of the Treasury. 

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

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

6 Code of 1986 shall have the same meaning for purposes 

7 of this section as when used in such section 42. Any ref8 erence in this section to the Secretary of the Treasury 

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

10 (g) APPROPRIATIONS.—There is hereby appropriated 

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

12 necessary to carry out this section. 

13 SEC. 3. COORDINATION OF LOW-INCOME HOUSING CREDIT 

14 WITH LOW-INCOME HOUSING GRANTS. 

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

16 the Internal Revenue Code of 1986 is amended by redesig17 nating subparagraph (B) as subparagraph (C) and by in18 serting after subparagraph (A) the following new subpara19 graphs: 

20 ‘‘(B) DENIAL OF CREDIT FOR BOND-SUB21 SIDIZED BUILDINGS RECEIVING SUBAWARDS

22 WITH 2010 GRANT FUNDS.—No credit shall be 

23 determined under this section with respect to 

24 any qualified low-income building to the extent 

25 of the bond-subsidized credit amount deterVerDate Mar 15 2010 03:31 May 07, 2010 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3326.IS S3326

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1 mined with respect to such building under sec2 tion 2 of the Job Creation and Affordable 

3 Housing Act of 2010 if any subaward is made 

4 with respect to such building under such sec5 tion.’’. 

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

7 Subparagraph (C) of section 42(i)(9) of such Code, as re8 designated by this section, is amended by striking ‘‘by the 

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

10 inserting ‘‘by reason of any grant or loan made under sec11 tion 1602 of the American Recovery and Reinvestment 

12 Tax Act of 2009 or section 2 of the Job Creation and 

13 Affordable Housing Act of 2010’’. 

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

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

16 by this section, is amended by adding at the end the fol17 lowing new subparagraph: 

18 ‘‘(D) EXCLUSION OF GRANTS FROM GROSS

19 INCOME.—Any grant made under section 1602 

20 of the American Recovery and Reinvestment 

21 Tax Act of 2009 or section 2 of the Job Cre22 ation and Affordable Housing Act of 2010 shall 

23 not be includible in the gross income or alter24 native minimum taxable income of the tax25 payer.’’. 


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1 (d) EFFECTIVE DATE.— 

2 (1) IN GENERAL.—Except as otherwise pro3 vided in this subsection, the amendments made by 

4 this section shall apply to taxable years ending after 

5 December 31, 2009. 

6 (2) EXCLUSION OF GRANTS FROM GROSS IN7 COME.—The amendment made by subsection (c) 

8 shall apply to taxable years ending after December 

9 31, 2008. 

10 SEC. 4. FIVE-YEAR CARRYBACK OF LOW-INCOME HOUSING 

11 CREDIT. 

12 (a) IN GENERAL.—Subsection (a) of section 39 of the 

13 Internal Revenue Code of 1986 is amended by adding at 

14 the end the following new paragraph: 

15 ‘‘(4) 5-YEAR CARRYBACK OF LOW-INCOME

16 HOUSING CREDIT.— 

17 ‘‘(A) IN GENERAL.—In the case of an ap18 plicable low-income housing credit (within the 

19 meaning of section 38(c)(6)(C))— 

20 ‘‘(i) this section shall be applied sepa21 rately from the business credit (other than 

22 the low-income housing credit), and 

23 ‘‘(ii) paragraph (1) shall be applied by 

24 substituting ‘each of the 5 taxable years’ 


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1 for ‘the taxable year’ in subparagraph (A) 

2 thereof.’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2007, and to carrybacks of credits from 

6 such taxable years. 

7 SEC. 5. CARRYBACK OF NEW INVESTMENTS. 

8 (a) IN GENERAL.—Section 42(f) of the Internal Rev9 enue Code of 1986 is amended by adding at the end the 

10 following new paragraph: 

11 ‘‘(6) SPECIAL RULE FOR CERTAIN INVEST12 MENTS IN 2010 AND 2011.— 

13 ‘‘(A) IN GENERAL.—In the case of a tax14 payer who enters into an agreement described 

15 in section 38(c)(6)(D)(i)(I) (without regard to 

16 the applicable date), which satisfies the require17 ment of section 38(c)(6)(D)(i)(II), after Decem18 ber 31, 2009, and before January 1, 2012, then 

19 solely for purposes of determining the taxable 

20 year in which the low-income housing credit 

21 under this section may be taken into account 

22 for purposes of section 38, and the amount of 

23 the credit so taken into account— 

24 ‘‘(i) the preceding paragraphs of this 

25 subsection shall not apply, 


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1 ‘‘(ii) the credit period with respect to 

2 the housing credit dollar amount to be allo3 cated under such agreement shall be the 1 

4 taxable year in which the taxpayer enters 

5 into such agreement, 

6 ‘‘(iii) subsections (b) and (c)(1) shall 

7 not apply, and 

8 ‘‘(iv) the amount of the credit under 

9 this section which is taken into account in 

10 the taxable year described in clause (ii) 

11 shall be the housing credit dollar amount 

12 to be allocated under such agreement. 

13 ‘‘(B) REQUIREMENTS OF SECTION UNAF14 FECTED.—Except as provided in subparagraph 

15 (A), the provisions of this section shall apply to 

16 any building to which an agreement described 

17 in subparagraph (A) applies as if such subpara18 graph had not been enacted. 

19 ‘‘(C) RECAPTURE OF EXCESS CREDIT.—If, 

20 at the end of the credit period with respect to 

21 any building (without regard to subparagraph 

22 (A)), the amount of the credit taken into ac23 count under subparagraph (A)(iv) with respect 

24 to such building exceeds the total amount of the 

25 credit which would have been allowed under this 


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1 section with respect to such building during 

2 such credit period but for the application of 

3 subparagraph (A), then the amount of such ex4 cess shall be recaptured as if it were included 

5 in the credit recapture amount under subsection 

6 (j).’’. 

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

8 this section shall apply to taxable years beginning after 

9 December 31, 2009. 

10 SEC. 6. ALLOWING LOW-INCOME HOUSING CREDITS TO 

11 OFFSET 100 PERCENT OF FEDERAL INCOME 

12 TAX LIABILITY. 

13 (a) IN GENERAL.—Subsection (c) of section 38 is 

14 amended by adding at the end the following new para15 graph: 

16 ‘‘(6) ALLOWING LOW-INCOME HOUSING CREDIT

17 TO OFFSET 100 PERCENT OF FEDERAL INCOME TAX

18 LIABILITY.— 

19 ‘‘(A) IN GENERAL.—In the case of applica20 ble low-income housing credits— 

21 ‘‘(i) this section shall be applied sepa22 rately with respect to such credits, 

23 ‘‘(ii) in applying paragraph (1) to 

24 such credits— 


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1 ‘‘(I) the tentative minimum tax 

2 shall be treated as being zero, and 

3 ‘‘(II) the limitation under para4 graph (1) (as modified by subclause 

5 (I)) shall be the net income tax (as 

6 defined in paragraph (1)) reduced by 

7 the credit allowed under subsection 

8 (a) for the taxable year (other than 

9 the applicable low-income housing 

10 credits), and 

11 ‘‘(iii) the excess credit for such tax12 able year shall, solely for purposes of de13 termining the amount of such excess credit 

14 which may be carried back to a preceding 

15 taxable year, be increased by the amount 

16 of business credit carryforwards which are 

17 carried to such taxable year, to which this 

18 subparagraph applies, and which are not 

19 allowed for such taxable year by reason of 

20 the limitation under paragraph (1) (as 

21 modified by clause (ii)). 

22 ‘‘(B) INCREASE IN LIMITATION FOR TAX23 ABLE YEARS TO WHICH EXCESS APPLICABLE

24 LOW-INCOME HOUSING CREDITS ARE CARRIED

25 BACK.— 


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1 ‘‘(i) IN GENERAL.—Solely for pur2 poses of determining the portion of any ex3 cess credit described in subparagraph 

4 (A)(iii) for which credit will be allowed 

5 under subsection (a)(3) for any preceding 

6 taxable year, except as provided in clause 

7 (ii), the limitation under paragraph (1) for 

8 such preceding taxable year shall be deter9 mined under rules similar to the rules de10 scribed in subparagraph (A). 

11 ‘‘(ii) ORDERING RULE.—If the excess 

12 credit described in subparagraph (A)(iii) 

13 includes business credit carryforwards 

14 from preceding taxable years, such excess 

15 credit shall be treated as allowed for any 

16 preceding taxable year on a first-in first17 out basis. 

18 ‘‘(C) APPLICABLE LOW-INCOME HOUSING

19 CREDITS.—For purposes of this subpart, the 

20 term ‘applicable low-income housing credits’ 

21 means the credit determined under section 42— 

22 ‘‘(i) to the extent attributable to 

23 buildings placed in service after the date of 

24 the enactment of this subparagraph, and 


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1 ‘‘(ii) in the case of any other build2 ings, for taxable years beginning in 2008, 

3 2009, and 2010 (and to business credit 

4 carryforwards with respect to such build5 ings carried to such taxable years) to the 

6 extent provided in subparagraph (D). 

7 ‘‘(D) PREVIOUSLY PLACED IN SERVICE

8 BUILDINGS.— 

9 ‘‘(i) IN GENERAL.—Subparagraph 

10 (C)(ii) shall apply to such credits for such 

11 a taxable year only— 

12 ‘‘(I) if the taxpayer has entered 

13 into a binding commitment to invest 

14 equity not later than the applicable 

15 date, with respect to an investment in 

16 a future project (which is binding on 

17 the taxpayer and all successors in in18 terest) which specifies the dollar 

19 amount of such investment, and 

20 ‘‘(II) to the extent such credits 

21 do not exceed the dollar amount of 

22 such proposed investment. 

23 ‘‘(ii) APPLICABLE DATE.—For pur24 poses of this subparagraph, the applicable 

25 date is— 


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1 ‘‘(I) in the case of taxable years 

2 beginning in 2008 and 2009, Sep3 tember 15, 2010, or 

4 ‘‘(II) in the case of a taxable 

5 year beginning in 2010, the due date 

6 (including extensions of time) for fil7 ing the taxpayer’s return for such tax8 able year.’’. 

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2007, and to carrybacks of credits from 

12 such taxable years. 

Æ 


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