I 
109TH CONGRESS 
2D SESSION 
H. R. 4873 
To amend the Internal Revenue Code of 1986 to encourage investment in 
affordable housing. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 2, 2006 
Mr. RAMSTAD 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 encourage 
investment in affordable housing. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. LOW-INCOME HOUSING CREDIT IMPROVE-
MENTS. 
(a) RENAMING THE LOW-INCOME HOUSING CREDIT 
AS THE AFFORDABLE HOUSING CREDIT.— 
(1) IN GENERAL.—The heading of section 42 of 
the Internal Revenue Code of 1986 (relating to low- 
income housing credit) is amended by striking 
‘‘LOW-INCOME’’ and inserting ‘‘AFFORDABLE’’. 
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(2) CONFORMING AMENDMENTS.— 
(A) Sections 38(b)(5), 42(a), 772(a)(7), 
and 772(d)(5) of such Code are each amended 
by striking ‘‘low-income’’ and inserting ‘‘afford-
able’’. 
(B) The headings of subparagraphs (3)(D) 
and (6)(B) of section 469(i) of such Code are 
each amended by striking ‘‘LOW-INCOME’’ and 
inserting ‘‘AFFORDABLE’’. 
(C) The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such 
Code is amended by striking the item relating 
to section 42 and inserting the following: 
‘‘Sec. 42. Affordable housing credit.’’. 
(b) MODIFICATION OF RULES FOR DETERMINING 
APPLICABLE PERCENTAGE.— 
(1) IN GENERAL.—Subsection (b) of section 42 
of the Internal Revenue Code of 1986 (relating to 
applicable percentage: 70 percent present value cred-
it for certain new buildings; 30 percent present value 
credit for certain other buildings) is amended to 
read as follows: 
‘‘(b) APPLICABLE PERCENTAGE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘applicable percentage’ means— 
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‘‘(A) 9 percent in the case of any building 
to which subparagraph (B) does not apply, and 
‘‘(B) 4 percent in the case of— 
‘‘(i) any existing building, and 
‘‘(ii) any new building if, at any time 
during the taxable year or any prior tax-
able year, there is or was outstanding any 
obligation— 
‘‘(I) not taken into account under 
section 146, 
‘‘(II) which is exempt from tax 
under section 103, and 
‘‘(III) the proceeds of which are 
or were used (directly or indirectly) 
with respect to such building or the 
operation thereof. 
‘‘(2) CROSS REFERENCES.— 
‘‘(A) For treatment of certain rehabilita-
tion expenditures as separate new buildings, see 
subsection (e). 
‘‘(B) For determination of applicable per-
centage for increases in qualified basis after the 
1st year of the credit period, see subsection 
(f)(3). 
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‘‘(C) For authority of housing credit agen-
cy to limit applicable percentage and qualified 
basis which may be taken into account under 
this section with respect to any building, see 
subsection (h)(7).’’. 
(2) MODIFICATION
OF
RULES
RELATED
TO 
FEDERAL
SUBSIDIES.—Paragraph (2) of section 
42(i) of such Code (relating to determination of 
whether building is Federally subsidized) is amended 
to read as follows: 
‘‘(2) EXCEPTIONS FOR CERTAIN NEW BUILD-
INGS OTHERWISE SUBJECT TO 4 PERCENT CREDIT 
LIMITATION.— 
‘‘(A) ELECTION
TO
REDUCE
ELIGIBLE 
BASIS BY PROCEEDS OF OBLIGATIONS.—A tax- 
exempt obligation shall not be taken into ac-
count under subsection (b)(1)(B)(ii) if the tax-
payer elects to exclude the proceeds of such ob-
ligation from the eligible basis of the building 
for purposes of subsection (d). 
‘‘(B) SPECIAL RULE FOR SUBSIDIZED CON-
STRUCTION FINANCING.—A tax-exempt obliga-
tion used to provide construction financing for 
any building shall not be taken into account 
under subsection (b)(1)(B)(ii) if— 
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‘‘(i) such obligation (when issued) 
identified the building for which the pro-
ceeds of such obligation would be used, 
and 
‘‘(ii) such obligation is redeemed be-
fore such building is placed in service.’’. 
(c) INCREASE IN CREDIT FOR BUILDINGS IN STATE 
DESIGNATED AREAS.— 
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
42(d)(5)(C) of the Internal Revenue Code of 1986 
(relating to increase in credit for buildings in high 
cost areas) is amended by striking ‘‘or difficult de-
velopment area’’ and inserting ‘‘, difficult develop-
ment area, or State designated project’’. 
(2) STATE
DESIGNATED
PROJECT.—Subpara-
graph (C) of section 42(d)(5) of such Code is 
amended by adding at the end the following new 
clause: 
‘‘(v) STATE DESIGNATED PROJECT.— 
For purposes of this subparagraph, the 
term ‘State designated project’ means any 
project designated by the housing credit 
agency as meeting such criteria for des-
ignation under this clause as the State in 
which such project is located may specify. 
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