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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3326 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3326

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.

_______________________________________________________________________

                   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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Job Creation and Affordable Housing 
Act of 2010''.

SEC. 2. GRANTS TO STATES FOR LOW-INCOME HOUSING PROJECTS IN LIEU OF 
              LOW-INCOME HOUSING CREDITS FOR BOND-SUBSIDIZED HOUSING 
              PROJECTS.

    (a) In General.--The Secretary of the Treasury shall make a grant 
to each State in an amount equal to such State's low-income bond-
subsidized housing election amount.
    (b) Low-Income Bond-Subsidized Housing Election Amount.--For 
purposes of this section--
            (1) In general.--The term ``low-income bond-subsidized 
        housing election amount'' means, with respect to any State, 
        such amount as the State may elect which does not exceed 85 
        percent of the State's bond-subsidized credit amount.
            (2) Bond-subsidized credit amount.--The term ``bond-
        subsidized credit amount'' means, with respect to any State, 
        the aggregate amount of low-income housing credits which the 
        State determines would, but for section 42(i)(9) of the 
        Internal Revenue Code of 1986, be awarded under section 
        42(h)(4)(B) of such Code times 10 with respect to qualified 
        low-income buildings receiving an allocation of qualified 
        residential rental project bonds of such State during 2010.
            (3) Qualified residential rental project bonds.--The term 
        ``qualified residential rental project bond'' means, with 
        respect to any State, any qualified bond (as defined in section 
        141(e) of the Internal Revenue Code of 1986) if such bond--
                    (A) is issued as part of an issue 95 percent or 
                more of the net proceeds of which are to be used to 
                provide qualified residential rental projects (within 
                the meaning of section 142 of such Code), and
                    (B) is taken into account under section 146 of such 
                Code with respect to the State ceiling applicable to 
                such State.
    (c) Subawards for Low-Income Buildings.--
            (1) In general.--A State receiving a grant under this 
        section shall use such grant to make subawards to finance the 
        construction or acquisition and rehabilitation of qualified 
        low-income buildings which have received the corresponding 
        allocation of qualified residential rental project bonds 
        referred to in subsection (b)(2).
            (2) Subawards subject to same requirements as low-income 
        housing credit allocations.--Any such subaward with respect to 
        any qualified low-income building may be in the form of a grant 
        or a loan of any duration and shall be made in the same manner 
        and shall be subject to the same limitations (including rent, 
        income, and use restrictions on such building) as an allocation 
        of housing credit dollar amount allocated by the State housing 
        credit agency of such State under section 42 of the Internal 
        Revenue Code of 1986, except that such subawards shall not be 
        limited by, or otherwise affect, the State housing credit 
        ceiling applicable to such agency.
            (3) Compliance and asset management.--A State receiving a 
        grant under this section shall perform asset management 
        functions to ensure compliance with section 42 of the Internal 
        Revenue Code of 1986 and the long-term viability of buildings 
        funded by any subaward under this section. A State may collect 
        reasonable fees from a subaward recipient to cover expenses 
        associated with the performance of its duties under this 
        paragraph, including the reasonable costs of administering such 
        subawards. A State may retain an agent or other private 
        contractor to satisfy the requirements of this paragraph.
            (4) Recapture.--A State receiving a grant under this 
        section shall impose conditions or restrictions, including a 
        requirement providing for recapture, on any subaward under this 
        section so as to assure that the building with respect to which 
        such subaward is made remains a qualified low-income building 
        during the compliance period. Any amounts of recapture shall be 
        proportional to the length of time of the noncompliance 
        compared to the 15-year compliance period and the percentage of 
        qualified basis out of compliance compared to the total 
        qualified basis. Any such recapture shall be payable to the 
        Secretary of the Treasury for deposit in the general fund of 
        the Treasury and may be enforced by means of liens or such 
        other methods as the Secretary of the Treasury determines 
        appropriate. A State housing credit agency may subordinate any 
        such lien (or other security interest) to other loans made by 
        third parties.
    (d) Reallocation of Bond Authority.--A State housing credit agency 
shall establish a process in which applicants that are allocated bonds 
and receive a subaward pursuant to subsection (c) are required to 
demonstrate good faith efforts to obtain purchasers for such bonds. If 
a subawardee is unable to obtain purchasers or if the State makes a 
determination that reallocation of bond authority will increase the 
total funds available to the State to build and rehabilitate affordable 
housing, a subawardee may return its bond allocation to the State 
without affecting its subaward under subsection (c) and the State may 
reallocate such bond authority only for qualified residential rental 
projects. Reallocated bonds shall not be taken into account for 
purposes of determining eligibility for low-income housing credits 
under section 42(h)(4) of the Internal Revenue Code of 1986 or for 
purposes of determining eligibility for grants under subsection (c).
    (e) Return of Unused Grant Funds.--Any grant funds not used to make 
subawards under this section before January 1, 2012, shall be returned 
to the Secretary of the Treasury on such date. The portion of any 
subaward which is not disbursed before such date shall be returned to 
the Secretary of the Treasury on such date unless the subawardee has 
paid or incurred before January 1, 2012, at least 30 percent of the 
subawardee's total adjusted basis in land and depreciable property that 
is reasonably expected to be part of the low-income housing building 
with respect to which such subaward is made. The portion of any 
subaward which is not disbursed before January 1, 2013, shall be 
returned to the Secretary of the Treasury on such date. Any subawards 
returned to the State housing credit agency on or after January 1, 
2012, shall be promptly returned to the Secretary of the Treasury. Any 
amounts returned to the Secretary of the Treasury under this subsection 
shall be deposited in the general fund of the Treasury.
    (f) Definitions.--Any term used in this section which is also used 
in section 42 of the Internal Revenue Code of 1986 shall have the same 
meaning for purposes of this section as when used in such section 42. 
Any reference in this section to the Secretary of the Treasury shall be 
treated as including the Secretary's delegate.
    (g) Appropriations.--There is hereby appropriated to the Secretary 
of the Treasury such sums as may be necessary to carry out this 
section.

SEC. 3. COORDINATION OF LOW-INCOME HOUSING CREDIT WITH LOW-INCOME 
              HOUSING GRANTS.

    (a) In General.--Paragraph (9) of section 42(i) of the Internal 
Revenue Code of 1986 is amended by redesignating subparagraph (B) as 
subparagraph (C) and by inserting after subparagraph (A) the following 
new subparagraphs:
                    ``(B) Denial of credit for bond-subsidized 
                buildings receiving subawards with 2010 grant funds.--
                No credit shall be determined under this section with 
                respect to any qualified low-income building to the 
                extent of the bond-subsidized credit amount determined 
                with respect to such building under section 2 of the 
                Job Creation and Affordable Housing Act of 2010 if any 
                subaward is made with respect to such building under 
                such section.''.
    (b) Grants and Loans Not To Reduce Basis.--Subparagraph (C) of 
section 42(i)(9) of such Code, as redesignated by this section, is 
amended by striking ``by the amount of any grant described in 
subparagraph (A)'' and inserting ``by reason of any grant or loan made 
under section 1602 of the American Recovery and Reinvestment Tax Act of 
2009 or section 2 of the Job Creation and Affordable Housing Act of 
2010''.
    (c) Exclusion of Grants From Gross Income.--Paragraph (9) of 
section 42(i) of such Code, as amended by this section, is amended by 
adding at the end the following new subparagraph:
                    ``(D) Exclusion of grants from gross income.--Any 
                grant made under section 1602 of the American Recovery 
                and Reinvestment Tax Act of 2009 or section 2 of the 
                Job Creation and Affordable Housing Act of 2010 shall 
                not be includible in the gross income or alternative 
                minimum taxable income of the taxpayer.''.
    (d) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years ending after December 31, 2009.
            (2) Exclusion of grants from gross income.--The amendment 
        made by subsection (c) shall apply to taxable years ending 
        after December 31, 2008.

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

    (a) In General.--Subsection (a) of section 39 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(4) 5-year carryback of low-income housing credit.--
                    ``(A) In general.--In the case of an applicable 
                low-income housing credit (within the meaning of 
                section 38(c)(6)(C))--
                            ``(i) this section shall be applied 
                        separately from the business credit (other than 
                        the low-income housing credit), and
                            ``(ii) paragraph (1) shall be applied by 
                        substituting `each of the 5 taxable years' for 
                        `the taxable year' in subparagraph (A) 
                        thereof.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007, and to carrybacks 
of credits from such taxable years.

SEC. 5. CARRYBACK OF NEW INVESTMENTS.

    (a) In General.--Section 42(f) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new paragraph:
            ``(6) Special rule for certain investments in 2010 and 
        2011.--
                    ``(A) In general.--In the case of a taxpayer who 
                enters into an agreement described in section 
                38(c)(6)(D)(i)(I) (without regard to the applicable 
                date), which satisfies the requirement of section 
                38(c)(6)(D)(i)(II), after December 31, 2009, and before 
                January 1, 2012, then solely for purposes of 
                determining the taxable year in which the low-income 
                housing credit under this section may be taken into 
                account for purposes of section 38, and the amount of 
                the credit so taken into account--
                            ``(i) the preceding paragraphs of this 
                        subsection shall not apply,
                            ``(ii) the credit period with respect to 
                        the housing credit dollar amount to be 
                        allocated under such agreement shall be the 1 
                        taxable year in which the taxpayer enters into 
                        such agreement,
                            ``(iii) subsections (b) and (c)(1) shall 
                        not apply, and
                            ``(iv) the amount of the credit under this 
                        section which is taken into account in the 
                        taxable year described in clause (ii) shall be 
                        the housing credit dollar amount to be 
                        allocated under such agreement.
                    ``(B) Requirements of section unaffected.--Except 
                as provided in subparagraph (A), the provisions of this 
                section shall apply to any building to which an 
                agreement described in subparagraph (A) applies as if 
                such subparagraph had not been enacted.
                    ``(C) Recapture of excess credit.--If, at the end 
                of the credit period with respect to any building 
                (without regard to subparagraph (A)), the amount of the 
                credit taken into account under subparagraph (A)(iv) 
                with respect to such building exceeds the total amount 
                of the credit which would have been allowed under this 
                section with respect to such building during such 
                credit period but for the application of subparagraph 
                (A), then the amount of such excess shall be recaptured 
                as if it were included in the credit recapture amount 
                under subsection (j).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.

SEC. 6. ALLOWING LOW-INCOME HOUSING CREDITS TO OFFSET 100 PERCENT OF 
              FEDERAL INCOME TAX LIABILITY.

    (a) In General.--Subsection (c) of section 38 is amended by adding 
at the end the following new paragraph:
            ``(6) Allowing low-income housing credit to offset 100 
        percent of federal income tax liability.--
                    ``(A) In general.--In the case of applicable low-
                income housing credits--
                            ``(i) this section shall be applied 
                        separately with respect to such credits,
                            ``(ii) in applying paragraph (1) to such 
                        credits--
                                    ``(I) the tentative minimum tax 
                                shall be treated as being zero, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be the net income tax (as 
                                defined in paragraph (1)) reduced by 
                                the credit allowed under subsection (a) 
                                for the taxable year (other than the 
                                applicable low-income housing credits), 
                                and
                            ``(iii) the excess credit for such taxable 
                        year shall, solely for purposes of determining 
                        the amount of such excess credit which may be 
                        carried back to a preceding taxable year, be 
                        increased by the amount of business credit 
                        carryforwards which are carried to such taxable 
                        year, to which this subparagraph applies, and 
                        which are not allowed for such taxable year by 
                        reason of the limitation under paragraph (1) 
                        (as modified by clause (ii)).
                    ``(B) Increase in limitation for taxable years to 
                which excess applicable low-income housing credits are 
                carried back.--
                            ``(i) In general.--Solely for purposes of 
                        determining the portion of any excess credit 
                        described in subparagraph (A)(iii) for which 
                        credit will be allowed under subsection (a)(3) 
                        for any preceding taxable year, except as 
                        provided in clause (ii), the limitation under 
                        paragraph (1) for such preceding taxable year 
                        shall be determined under rules similar to the 
                        rules described in subparagraph (A).
                            ``(ii) Ordering rule.--If the excess credit 
                        described in subparagraph (A)(iii) includes 
                        business credit carryforwards from preceding 
                        taxable years, such excess credit shall be 
                        treated as allowed for any preceding taxable 
                        year on a first-in first-out basis.
                    ``(C) Applicable low-income housing credits.--For 
                purposes of this subpart, the term `applicable low-
                income housing credits' means the credit determined 
                under section 42--
                            ``(i) to the extent attributable to 
                        buildings placed in service after the date of 
                        the enactment of this subparagraph, and
                            ``(ii) in the case of any other buildings, 
                        for taxable years beginning in 2008, 2009, and 
                        2010 (and to business credit carryforwards with 
                        respect to such buildings carried to such 
                        taxable years) to the extent provided in 
                        subparagraph (D).
                    ``(D) Previously placed in service buildings.--
                            ``(i) In general.--Subparagraph (C)(ii) 
                        shall apply to such credits for such a taxable 
                        year only--
                                    ``(I) if the taxpayer has entered 
                                into a binding commitment to invest 
                                equity not later than the applicable 
                                date, with respect to an investment in 
                                a future project (which is binding on 
                                the taxpayer and all successors in 
                                interest) which specifies the dollar 
                                amount of such investment, and
                                    ``(II) to the extent such credits 
                                do not exceed the dollar amount of such 
                                proposed investment.
                            ``(ii) Applicable date.--For purposes of 
                        this subparagraph, the applicable date is--
                                    ``(I) in the case of taxable years 
                                beginning in 2008 and 2009, September 
                                15, 2010, or
                                    ``(II) in the case of a taxable 
                                year beginning in 2010, the due date 
                                (including extensions of time) for 
                                filing the taxpayer's return for such 
                                taxable year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007, and to carrybacks 
of credits from such taxable years.
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