Manufactured Housing Community Sustainability Act of 2022
Bill: S.4475 | Sponsor: Sen. Shaheen, Jeanne (D-NH)
Policy area: Taxation

Summary:
Manufactured Housing Community Sustainability Act of 2022
This bill allows a new tax credit equal to 75% of the gain from the sale or exchange of real property to a qualified manufactured home community cooperative or corporation if  (1) the property is acquired for use as a manufactured home community, (2) the seller (or any related person) owned the property for the entire two-year period before the sale or exchange, and (3) the property is transferred subject to a binding covenant that the property will be used as a manufactured home community for at least 50 years or the maximum permissible term under state laws that restrict such covenants to a lesser term.
The bill defines manufactured home community as a community comprised primarily of manufactured homes used solely for residential purposes and owned by a manufactured home community cooperative or corporation.

To amend the Internal Revenue Code of 1986 to allow a business credit 
for gain from the sale of real property for use as a manufactured home 
                   community, 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 ``Manufactured Housing Community 
Sustainability Act of 2022''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) more than 22,000,000 people live in HUD-code 
        manufactured homes;
            (2) there are approximately 6,700,000 occupied manufactured 
        homes in the United States, representing about 6 percent of the 
        Nation's housing stock, 9 percent of the single-family housing 
        stock, and more than 12 percent of all new single-family homes 
        sold in 2021;
            (3) owners of manufactured homes are disproportionately 
        low-income households, and in 2016, the median annual household 
        income for living in manufactured housing was $28,400;
            (4) over one-quarter of manufactured homeowners earn less 
        than $20,000 annually, and two-thirds earn less than $50,000 
        annually;
            (5) more than half of all manufactured homes are located in 
        rural areas around the country, and manufactured homes make up 
        13 percent of all occupied homes in rural and small-town 
        communities;
            (6) the average sales price of a new manufactured home 
        (excluding land) in 2019 was $81,700, and as of December 2021, 
        that average sales price had increased to $123,200, an increase 
        of 37 percent over the preceding 12 months;
            (7) despite this sharp increase, the average manufactured 
        home costs roughly half the price per square foot of the 
        average site-built home;
            (8) manufactured home communities provide critical 
        affordable housing, but receive very little Federal, State, or 
        local funds to subsidize the cost of manufactured homes;
            (9) an estimated 380,000 manufactured home communities, 
        also referred to as ``mobile home parks'', exist throughout the 
        United States;
            (10) owners of manufactured homes in such communities may 
        own the home, but they do not own the land under the home, 
        which leaves the homeowners vulnerable to rent increases, dis-
        investment, changes in land use, and community closure;
            (11) an eviction or closure of a manufactured home 
        community is very disruptive and can be financially devastating 
        to a homeowner who may be unable to pay the thousands of 
        dollars it takes to move the manufactured home or find a new 
        location for the manufactured home;
            (12) manufactured housing where the consumer does not own 
        the land generally does not promote wealth-building via 
        homeownership;
            (13) for more than a decade, in an effort to preserve a 
        crucial source of affordable housing and aid low-income 
        homeowners, a national network of housing providers has helped 
        residents purchase and own the land under the manufactured home 
        community, and manage the manufactured home community as 
        limited equity cooperatives;
            (14) nationwide, there are more than 1,000 cooperative 
        manufactured home communities, of which more than 300, located 
        in more than 20 States, are permanently preserved as affordable 
        communities through limited equity cooperative or nonprofit 
        ownership;
            (15) members of manufactured home community cooperatives 
        continue to own such homes individually, own an equal share of 
        the land beneath the entire manufactured home community, 
        participate in the governing of the community, and elect a 
        board of directors who make major decisions within the 
        manufactured home community by a democratic vote;
            (16) site fee increases in limited equity resident-owned 
        communities average just 0.9 percent per year, compared to 3.9 
        percent per year in commercially owned communities;
            (17) in New Hampshire, more than 30 percent of manufactured 
        home communities are owned by residents;
            (18) resident-owned cooperatives and nonprofit owned 
        communities have also flourished in Colorado, Vermont, 
        Massachusetts, Rhode Island, Washington, Oregon, and Minnesota;
            (19) nationwide, only 2.4 percent of all manufactured home 
        communities are resident or nonprofit-owned;
            (20) 19 States have adopted some protection when a 
        community is sold, and 4 States have strong notification and 
        resident purchase opportunities, which provide homeowners in 
        those States an opportunity to purchase the manufactured home 
        community when it is put up for sale; and
            (21) in order to preserve manufactured home communities and 
        help low-income homeowners live securely, safely, and build 
        wealth through homeownership in the future, a Federal tax 
        benefit should be established to induce manufactured home 
        community owners to sell such properties to the residents when 
        those residents or a nonprofit commits to preserving the 
        community long-term.

SEC. 3. TAX CREDIT FOR MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR 
              NONPROFIT ENTITY.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45U. MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR NONPROFIT 
              ENTITY.

    ``(a) Allowance of Credit.--For purposes of section 38, the 
manufactured home community sale credit determined under this section 
for any taxable year is an amount equal to 75 percent of the qualified 
gain received by the taxpayer during the taxable year.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified gain.--The term `qualified gain' means gain 
        from the sale or exchange of real property to a qualified 
        manufactured home community cooperative or corporation if--
                    ``(A) the real property is acquired for use as a 
                manufactured home community,
                    ``(B) the seller (or any related person) owned the 
                property for the entire 2-year period ending on the day 
                before the sale or exchange, and
                    ``(C) the property is transferred subject to a 
                binding covenant that the property will be used as a 
                manufactured home community for not less than 50 years 
                (or, in the case of a manufactured home community 
                located in a State the laws of which restrict such 
                covenant to a lesser term, the maximum permissible term 
                allowed under such State laws).
            ``(2) Manufactured home community.--The term `manufactured 
        home community' means a community comprised primarily of 
        manufactured homes used solely for residential purposes and 
        owned by a manufactured home community cooperative or 
        corporation.
            ``(3) Qualified manufactured home community cooperative or 
        corporation.--
                    ``(A) In general.--The term `qualified manufactured 
                home community cooperative or corporation' means a 
                cooperative or a nonprofit corporation established 
                pursuant to the laws of the State in which the property 
                used as a manufactured home community is located, and 
                which--
                            ``(i) in the case of a community owned by a 
                        nonprofit corporation whose membership 
                        interests are sold on a nonappreciating basis, 
                        has only 1 class of membership and such class 
                        consists solely of residents, and
                            ``(ii) in the case of a community owned by 
                        a cooperative, has not more than 2 classes of 
                        membership, and such classes consist solely of 
                        residents and a tax-exempt organization.
                    ``(B) Governance.--An entity shall not be treated 
                as a qualified manufactured home community cooperative 
                or corporation unless governance of the entity is 
                carried out by members elected to a board of directors 
                with voting structured equitably among all members.
                    ``(C) Member.--The term `member' means--
                            ``(i) an individual who--
                                    ``(I) has attained the age of 18,
                                    ``(II) is entitled to be a member 
                                by reason of--
                                            ``(aa) the membership 
                                        interest of the individual to 
                                        execute an occupancy agreement 
                                        with the manufactured home 
                                        community cooperative nonprofit 
                                        with respect to a site in the 
                                        manufactured home community in 
                                        order to establish a 
                                        manufactured home which is 
                                        owned by the individual, or
                                            ``(bb) permission from the 
                                        manufactured community 
                                        cooperative or corporation, the 
                                        member's trust, or other 
                                        entity, and
                                    ``(III) is a resident of the 
                                manufactured home community, and
                            ``(ii) a tax exempt organization.
            ``(4) Membership interest.--The term `membership interest' 
        means--
                    ``(A) an ownership interest in a manufactured home 
                community cooperative or corporation, or
                    ``(B) a membership interest in a manufactured home 
                community nonprofit corporation.
            ``(5) Manufactured home.--The term `manufactured home' 
        means a structure which is transportable in one or more 
        sections, which--
                    ``(A) in traveling mode, is 8 body feet or more in 
                width and 40 body feet or more in length, or, when 
                erected on site, is 320 square feet or more,
                    ``(B) is built on a permanent chassis and designed 
                to be used as a dwelling (with or without a permanent 
                foundation when connected to required utilities) and 
                includes plumbing, heating, and electrical heating 
                systems, and
                    ``(C) in the case of a structure manufactured after 
                June 15, 1976, is certified as meeting the Manufactured 
                Home Construction and Safety Standards issued under the 
                National Manufactured Housing Construction and Safety 
                Standards Act of 1974 (42 U.S.C. 5401 et seq.) by the 
                Department of Housing and Urban Development and 
                displays a label of such certification on the exterior 
                of each transportable section.
    ``(c) Special Rules.--
            ``(1) Related person.--For purposes of subsection 
        (b)(1)(B), a person is related to the seller if--
                    ``(A) such person bears a relationship to the 
                seller as specified in section 267(b) or 707(b)(1), or
                    ``(B) such person and the seller are engaged in 
                trades or businesses under common control within the 
                meanings of subsections (a) and (b) of section 52.
            ``(2) Election by both seller and buyer.--The credit is 
        allowable under this section only if--
                    ``(A) both the seller and the purchaser of the real 
                property execute an affidavit representing that the 
                sale meets the requirements of subsection (b)(1), and 
                the purchaser acknowledges liability for the recapture 
                of the credit under subsection (d) in case of any 
                violation described in such subsection,
                    ``(B) the purchaser of the real property records 
                the affidavit, and
                    ``(C) the affidavit is referenced in the deed to 
                the real property.
            ``(3) Requirement.--The seller shall include a copy of the 
        affidavit representing the sale with the return of tax.
    ``(d) Tax Upon Violation of Covenant.--There is imposed a tax on 
the buyer for a violation of the covenant specified in subsection 
(b)(1)(C). The amount of such tax shall be 20 percent of the net 
proceeds after settlement for the sale or exchange of the real property 
referred to in subsection (b)(1). For purposes of section 501(a), the 
tax imposed by this subsection shall not be treated as a tax imposed by 
this subtitle.
    ``(e) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary to carry out this section, including 
the recapture under subsection (d).''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``plus'' at the end of paragraph (32);
            (2) by striking the period at the end of paragraph (33) and 
        inserting ``, plus''; and
            (3) by adding at the end the following new paragraph:
            ``(34) the manufactured home community sale credit 
        determined under section 45U(a).''.
    (c) Conforming Amendments.--
            (1) Subsection (c) of section 196 of the Internal Revenue 
        Code of 1986 is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (13);
                    (B) by striking the period at the end of paragraph 
                (14) and inserting ``, and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(15) the manufactured home community sale credit 
        determined under section 45U(a).''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such the Internal Revenue Code of 
        1986 is amended by adding at the end the following new item:

``Sec. 45U. Manufactured home community sale to residents or nonprofit 
                            entity.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2022.
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