Title: Affordable Housing Credit Improvement Act of 2019
Policy area: Taxation

Summary:
Affordable Housing Credit Improvement Act of 2019
This bill revises provisions of the low-income housing tax credit and renames it as the affordable housing credit.
The bill increases the per capita dollar amount of the credit and its minimum ceiling amount beginning in 2019 and extends the inflation adjustment for such amounts.
The bill modifies tenant income eligibility requirements and the average income formula for determining such income. It also revises rules for student occupancy of rental units and tenant voucher payments and prohibits any refusal to rent to victims of domestic abuse.
The bill further modifies the credit to
The bill also includes Indian and rural areas as difficult development areas and modifies other requirements relating to casualty losses, acquisition credits, and foreclosures.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1703 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  1st Session
                                S. 1703

  To amend the Internal Revenue Code of 1986 to reform the low-income 
                housing credit, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              June 4, 2019

   Ms. Cantwell (for herself, Mr. Young, Mr. Wyden, and Mr. Isakson) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to reform 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Affordable Housing 
Credit Improvement Act of 2019''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
              TITLE I--REFORM OF STATE ALLOCATION FORMULAS

Sec. 101. Increases in State allocations.
            TITLE II--REFORMS RELATING TO TENANT ELIGIBILITY

Sec. 201. Average income test applicability to exempt facility bonds.
Sec. 202. Codification of rules relating to increased tenant income.
Sec. 203. Modification of student occupancy rules.
Sec. 204. Tenant voucher payments taken into account as rent for 
                            certain purposes.
Sec. 205. Requirement that low-income housing credit-supported housing 
                            protect victims of domestic abuse.
Sec. 206. Clarification of general public use requirement relating to 
                            veterans, etc.
 TITLE III--CREDIT RATE AND OTHER RULES RELATING TO CREDIT ELIGIBILITY 
                           AND DETERMINATION

Sec. 301. Minimum credit rate.
Sec. 302. Reconstruction or replacement period after casualty loss.
Sec. 303. Modification and clarification of rights relating to building 
                            purchase.
Sec. 304. Modification of previous ownership rules; limitation on 
                            acquisition basis.
Sec. 305. Certain relocation costs taken into account as rehabilitation 
                            expenditures.
Sec. 306. Repeal of qualified census tract population cap.
Sec. 307. Determination of community revitalization plan to be made by 
                            housing credit agency.
Sec. 308. Prohibition of local approval and contribution requirements.
Sec. 309. Increase in credit for certain projects designated to serve 
                            extremely low-income households.
Sec. 310. Increase in credit for bond-financed projects designated by 
                            State agency.
Sec. 311. Elimination of basis reduction for low-income housing 
                            properties receiving certain energy 
                            benefits.
Sec. 312. Restriction of planned foreclosures.
Sec. 313. Increase of population cap for difficult development areas.
Sec. 314. Increased cost oversight and accountability.
        TITLE IV--REFORMS RELATING TO NATIVE AMERICAN ASSISTANCE

Sec. 401. Selection criteria under qualified allocation plans.
Sec. 402. Inclusion of Indian areas as difficult development areas for 
                            purposes of certain buildings.
             TITLE V--REFORMS RELATING TO RURAL ASSISTANCE

Sec. 501. Inclusion of rural areas as difficult development areas.
Sec. 502. Uniform income eligibility for rural projects.
                    TITLE VI--EXEMPT FACILITY BONDS

Sec. 601. Revision and clarification of the treatment of refunding 
                            issues.
                TITLE VII--AFFORDABLE HOUSING TAX CREDIT

Sec. 701. Affordable housing tax credit.

              TITLE I--REFORM OF STATE ALLOCATION FORMULAS

SEC. 101. INCREASES IN STATE ALLOCATIONS.

    (a) Phase-In of Increases.--
            (1) In general.--Clause (ii) of section 42(h)(3)(C) of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``$1.75'' in subclause (I) and 
                inserting ``the per capita dollar amount'', and
                    (B) by striking ``$2,000,000'' in subclause (II) 
                and inserting ``the minimum ceiling amount''.
            (2) Per capita dollar amount; minimum ceiling amount.--
        Subparagraph (I) of section 42(h)(3) of such Code is amended to 
        read as follows:
                    ``(I) Per capita dollar amount; minimum ceiling 
                amount.--For purposes of this paragraph--
                            ``(i) Per capita dollar amount.--The per 
                        capita dollar amount is--
                                    ``(I) for calendar year 2019, 
                                $2.76,
                                    ``(II) for calendar year 2020, 
                                $3.10,
                                    ``(III) for calendar year 2021, 
                                $3.49,
                                    ``(IV) for calendar year 2022, 
                                $3.93,
                                    ``(V) for calendar year 2023, 
                                $4.42, and
                                    ``(VI) $4.96 thereafter.
                            ``(ii) Minimum ceiling amount.--The minimum 
                        ceiling amount is--
                                    ``(I) for calendar year 2019, 
                                $3,166,875,
                                    ``(II) for calendar year 2020, 
                                $3,565,496,
                                    ``(III) for calendar year 2021, 
                                $4,010,213,
                                    ``(IV) for calendar year 2022, 
                                $4,510,487,
                                    ``(V) for calendar year 2023, 
                                $5,073,171, and
                                    ``(VI) $5,700,468 thereafter.''.
            (3) Modification of cost-of-living adjustment.--
        Subparagraph (H) of section 42(h)(3) of such Code is amended--
                    (A) by striking ``2002'' in clause (i) and 
                inserting ``2019'',
                    (B) by striking ``the $2,000,000 and $1.75 amounts 
                in subparagraph (C)'' in clause (i) and inserting ``the 
                dollar amounts applicable to such calendar year under 
                clauses (i) and (ii) of subparagraph (I)'',
                    (C) by striking ``2001'' in clause (i)(II) and 
                inserting ``2018'',
                    (D) by striking ``$2,000,000'' in clause (ii)(I) 
                and inserting ``minimum ceiling'', and
                    (E) by striking ``$1.75'' in clause (ii)(II) and 
                inserting ``per capita dollar''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to calendar years beginning after December 31, 
        2019.
    (b) Permanent Increases.--
            (1) In general.--Clause (ii) of section 42(h)(3)(C) of the 
        Internal Revenue Code of 1986, as amended by subsection (a)(1), 
        is amended--
                    (A) by striking ``the per capita dollar amount'' in 
                subclause (I) and inserting ``$4.96'', and
                    (B) by striking ``the minimum ceiling amount'' in 
                subclause (II) and inserting ``$5,700,468''.
            (2) Conforming amendment.--Paragraph (3) of section 42(h) 
        of such Code is amended by striking subparagraph (I), as 
        amended by subsection (a)(2).
            (3) Cost-of-living adjustment.--Subparagraph (H) of section 
        42(h)(3) of such Code, as amended by subsection (a)(3), is 
        amended--
                    (A) by striking ``the dollar amounts applicable to 
                such calendar year under clauses (i) and (ii) of 
                subparagraph (I)'' in clause (i) and inserting ``the 
                $5,700,468 and $4.96 amounts in subparagraph (C)'',
                    (B) by striking ``minimum ceiling'' in clause 
                (ii)(I) and inserting ``$5,700,468'', and
                    (C) by striking ``per capita dollar'' in clause 
                (ii)(II) and inserting ``$4.96''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to calendar years beginning after December 31, 
        2024.

            TITLE II--REFORMS RELATING TO TENANT ELIGIBILITY

SEC. 201. AVERAGE INCOME TEST APPLICABILITY TO EXEMPT FACILITY BONDS.

    (a) In General.--Paragraph (1) of section 142(d) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``(A) or (B)'' and inserting ``(A), (B), or 
        (C)'', and
            (2) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Average income test.--A project meets the 
                requirements of this subparagraph if it meets the 
                minimum requirements of section 42(g)(1)(C).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to elections made under section 142(d)(1) of the Internal Revenue 
Code of 1986 after March 23, 2018.

SEC. 202. CODIFICATION OF RULES RELATING TO INCREASED TENANT INCOME.

    (a) In General.--Clause (i) of section 42(g)(2)(D) of the Internal 
Revenue Code of 1986 is amended by striking ``clauses (ii), (iii), and 
(iv)'' and all that follows and inserting ``clauses (ii), (iii), (iv), 
and (vi), notwithstanding an increase in the income of the occupants 
above the income limitation applicable under paragraph (1)--
                                    ``(I) a low-income unit shall 
                                continue to be treated as a low-income 
                                unit if the income of such occupants 
                                initially was 60 percent or less of 
                                area median gross income and such unit 
                                continues to be rent-restricted, and
                                    ``(II) a unit to which, at the time 
                                of initial occupancy by such occupants, 
                                any Federal, State, or local government 
                                income restriction applied, and which 
                                subsequently becomes part of a building 
                                with respect to which rehabilitation 
                                expenditures are taken into account 
                                under subsection (e), shall be treated 
                                as a low-income unit if the income of 
                                such occupants initially was 60 percent 
                                or less of area median gross income and 
                                does not exceed 120 percent of area 
                                median gross income as of the date of 
                                acquisition of the property by the 
                                taxpayer.''.
    (b) Exception.--Subparagraph (D) of section 42(g)(2) of the 
Internal Revenue Code of 1986, as amended by this Act, is amended by 
adding at the end the following new clause:
                            ``(vi) Exception to rule relating to 
                        increased tenant income.--In the case of an 
                        occupant of a low-income unit who initially 
                        qualified to occupy such unit by reason of 
                        paragraph (1)(C) with an income in excess of 60 
                        percent of area median gross income but not in 
                        excess of 80 percent of area median gross 
                        income, clause (i) shall be applied for 
                        substituting `80 percent' for `60 percent' each 
                        place it appears.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2018.

SEC. 203. MODIFICATION OF STUDENT OCCUPANCY RULES.

    (a) In General.--Subparagraph (D) of section 42(i)(3) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                    ``(D) Rules relating to students.--
                            ``(i) In general.--A unit occupied solely 
                        by individuals who--
                                    ``(I) have not attained age 24, and
                                    ``(II) are enrolled in a full-time 
                                course of study at an institution of 
                                higher education (as defined in section 
                                3304(f)),
                        shall not be treated as a low-income unit.
                            ``(ii) Exception for certain federal 
                        programs.--In the case of a federally-assisted 
                        building (as defined in subsection 
                        (d)(6)(C)(i)), clause (i) shall not apply to a 
                        unit all of the occupants of which meet all 
                        applicable requirements under the housing 
                        program described in such subsection through 
                        which the building is assisted, financed, or 
                        operated.
                            ``(iii) Other exceptions.--An individual 
                        shall not be treated as described in clause (i) 
                        if the individual--
                                    ``(I) is married,
                                    ``(II) is a person with 
                                disabilities (as defined in section 
                                3(b)(3)(E) of the United States Housing 
                                Act of 1937),
                                    ``(III) is a veteran (as defined in 
                                section 101(2) of title 38, United 
                                States Code),
                                    ``(IV) has 1 or more qualifying 
                                children (as defined in section 
                                152(c)),
                                    ``(V) is or has been a victim or 
                                threatened victim of domestic violence, 
                                dating violence, sexual assault, or 
                                stalking (as defined in section 40002 
                                of the Violence Against Women Act of 
                                1994), or
                                    ``(VI) meets the income limitation 
                                applicable under subsection (g)(1) to 
                                the project of which the building is a 
                                part and is, or was immediately prior 
                                to attaining the age of majority--
                                            ``(aa) an emancipated minor 
                                        or in legal guardianship as 
                                        determined by a court of 
                                        competent jurisdiction in the 
                                        individual's State of legal 
                                        residence,
                                            ``(bb) under the care and 
                                        placement responsibility of the 
                                        State agency responsible for 
                                        administering a plan under part 
                                        B or part E of title IV of the 
                                        Social Security Act, or
                                            ``(cc) an unaccompanied 
                                        youth (within the meaning of 
                                        section 725(6) of the McKinney-
                                        Vento Homeless Assistance Act 
                                        (42 U.S.C. 11434a(6))) or a 
                                        homeless child or youth (within 
                                        the meaning of section 725(2) 
                                        of such Act (42 U.S.C. 
                                        11434a(2))).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2019.

SEC. 204. TENANT VOUCHER PAYMENTS TAKEN INTO ACCOUNT AS RENT FOR 
              CERTAIN PURPOSES.

    (a) In General.--Subparagraph (B) of section 42(g)(2) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new sentence: ``In the case of a project with respect to 
which the taxpayer elects the requirements of subparagraph (C) of 
paragraph (1), or the portion of a project to which subsection 
(d)(5)(C) applies, clause (i) shall not apply with respect to any 
tenant-based assistance (as defined in section 8(f)(7) of the United 
States Housing Act of 1937 (42 U.S.C. 1437f(f)(7))).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to rent paid in taxable years beginning after December 31, 2019.

SEC. 205. REQUIREMENT THAT LOW-INCOME HOUSING CREDIT-SUPPORTED HOUSING 
              PROTECT VICTIMS OF DOMESTIC ABUSE.

    (a) In General.--Subparagraph (B) of section 42(h)(6) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (v), by striking the period at the end of clause (vi) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(vii) which--
                                    ``(I) prohibits the refusal to 
                                lease to, or termination of a lease by, 
                                a person solely on the basis of 
                                criminal activity directly relating to 
                                domestic violence, dating violence, 
                                sexual assault, or stalking that is 
                                engaged in by a member of the household 
                                of the tenant or any guest or other 
                                person under the control of the tenant, 
                                if the tenant or an affiliated 
                                individual of the tenant is the victim 
                                or threatened victim of such domestic 
                                violence, dating violence, sexual 
                                assault, or stalking, and
                                    ``(II) allows prospective, present, 
                                or former occupants of the building the 
                                right to enforce in any State court the 
                                prohibition of subclause (I).''.
    (b) Bifurcation.--
            (1) In general.--Subparagraph (B) of section 42(h)(6) of 
        the Internal Revenue Code of 1986, as amended by subsection 
        (a), is amended by adding at the end the following new flush 
        sentence:
                ``For purposes of clause (vii)(I), rules similar to the 
                rules of section 41411(b)(3)(B) of the Violence Against 
                Women Act of 1994 shall apply with respect to the owner 
                or manager of a building.''.
            (2) Effect of bifurcation.--Paragraph (2) of section 42(g) 
        of such Code is amended by adding at the end the following new 
        subparagraph:
                    ``(F) Treatment of bifurcation in cases of domestic 
                violence.--In any case in which--
                            ``(i) an occupant is evicted or removed 
                        from a low-income unit because such occupant 
                        has engaged in criminal activity directly 
                        relating to domestic violence, dating violence, 
                        sexual assault, or stalking against an 
                        affiliated individual or other individual on 
                        the basis of criminal activity directly 
                        relating to domestic violence, dating violence, 
                        sexual assault, or stalking, and
                            ``(ii) the lease on such unit is bifurcated 
                        as provided in the last sentence of subsection 
                        (h)(6)(B),
                then the remaining occupants of such low-income unit 
                shall not be treated as a new tenant for purposes of 
                this section.''.
    (c) Clarification of General Public Use Requirement.--Paragraph (9) 
of section 42(g) of the Internal Revenue Code of 1986 is amended by 
striking ``or'' at the end of subparagraph (B), by striking the period 
at the end of subparagraph (C) and inserting ``, or'', and by adding at 
the end the following new subparagraph:
                    ``(D) who are victims or threatened victims of 
                criminal activity directly relating to domestic 
                violence, dating violence, sexual assault, or 
                stalking.''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to agreements 
        executed or modified on or after the date that is 30 days after 
        the date of the enactment of this Act.
            (2) Public use requirement.--The amendments made by 
        subsection (c) shall apply to buildings placed in service 
        before, on, or after the date of the enactment of this Act.

SEC. 206. CLARIFICATION OF GENERAL PUBLIC USE REQUIREMENT RELATING TO 
              VETERANS, ETC.

    (a) In General.--Paragraph (9) of section 42(g) of the Internal 
Revenue Code of 1986, as amended by section 205, is further amended by 
adding at the end the following flush language:
        ``Any veteran of the Armed Forces shall be treated as a member 
        of a specified group under a Federal program for purposes of 
        subparagraph (B).''.
    (b) Qualified Residential Rental Projects.--Paragraph (2) of 
section 142(d) of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subparagraph:
                    ``(F) Clarification of general public use 
                requirement.--A unit shall not fail to meet the general 
                public use requirement solely because of occupancy 
                restrictions or preferences, if such restrictions or 
                preferences meet the general public use requirement of 
                section 42.''.
    (c) Effective Dates.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to buildings placed in service before, on, or after the 
        date of the enactment of this Act.
            (2) Qualified residential rental projects.--The amendment 
        made by subsection (b) shall apply to bonds issued before, on, 
        or after the date of the enactment of this Act.

 TITLE III--CREDIT RATE AND OTHER RULES RELATING TO CREDIT ELIGIBILITY 
                           AND DETERMINATION

SEC. 301. MINIMUM CREDIT RATE.

    (a) In General.--Subsection (b) of section 42 of the Internal 
Revenue Code of 1986 is amended--
            (1) by redesignating paragraph (3) as paragraph (4), and
            (2) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) Minimum credit rate.--In the case of any new or 
        existing building to which paragraph (2) does not apply and 
        which is placed in service by the taxpayer after December 31, 
        2018, the applicable percentage shall not be less than 4 
        percent.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to buildings which receive allocations of housing credit dollar 
amount or, in the case of projects financed by tax-exempt bonds as 
described in section 42(h)(4) of the Internal Revenue Code of 1986, 
which receive a determination of housing credit dollar amount, after 
the date of the enactment of this Act.

SEC. 302. RECONSTRUCTION OR REPLACEMENT PERIOD AFTER CASUALTY LOSS.

    (a) In General.--Subparagraph (E) of section 42(j)(4) of the 
Internal Revenue Code of 1986 is amended by striking ``a reasonable 
period established by the Secretary'' and inserting ``a reasonable 
period established by the applicable housing credit agency (not to 
exceed 25 months from the date on which the casualty loss arises). The 
determination under paragraph (1) shall not be made with respect to a 
property the basis of which is affected by a casualty loss until the 
period described in the preceding sentence with respect to such 
property has expired.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to casualty losses arising after the date of the enactment of this Act.

SEC. 303. MODIFICATION AND CLARIFICATION OF RIGHTS RELATING TO BUILDING 
              PURCHASE.

    (a) Modification of Right of First Refusal.--Subparagraph (A) of 
section 42(i)(7) of the Internal Revenue Code of 1986 is amended by 
striking ``a right of 1st refusal'' and inserting ``an option''.
    (b) Clarification With Respect to Right of First Refusal and 
Purchase Options.--
            (1) Purchase of partnership interest.--
                    (A) In general.--Subparagraph (A) of section 
                42(i)(7) of the Internal Revenue Code of 1986, as 
                amended by subsection (a), is amended by striking ``the 
                property'' and inserting ``the property or all of the 
                partnership interests (other than interests of the 
                person exercising such option or a related party 
                thereto (within the meaning of section 267(b) or 
                707(b)(1)) relating to the property''.
                    (B) Conforming amendment.--Subparagraph (B) of 
                section 42(i)(7) of the Internal Revenue Code of 1986 
                is amended by adding at the end the following: ``In the 
                case of a purchase of a partnership interest, the 
                minimum purchase price is an amount not less than such 
                interest's ratable share of the amount determined under 
                the first sentence of this subparagraph.''.
            (2) Property includes assets relating to the building.--
        Paragraph (7) of section 42(i) of the Internal Revenue Code of 
        1986 is amended by adding at the end the following new 
        subparagraph:
                    ``(C) Property.--For purposes of subparagraph (A), 
                the term `property' may include all or any of the 
                assets held for the development, operation, or 
                maintenance of a building.''.
            (3) Exercise of right of first refusal and purchase 
        options.--Subparagraph (A) of section 42(i)(7) of the Internal 
        Revenue Code of 1986, as amended by subsection (a) and 
        paragraph (1)(A), is amended by adding at the end the 
        following: ``For purposes of determining whether an option, 
        including a right of first refusal, to purchase property is 
        described in the preceding sentence--
                            ``(i) such option or right of first refusal 
                        may be exercised with or without the approval 
                        of the taxpayer, and
                            ``(ii) a right of first refusal may be 
                        exercised in response to any offer to purchase 
                        the property, including an offer by a related 
                        party.''.
    (c) Effective Dates.--
            (1) Modification of right of first refusal.--The amendment 
        made by subsection (a) shall apply to agreements entered into 
        after the date of the enactment of this Act.
            (2) Clarification.--The amendments made by subsection (b) 
        shall apply to agreements among the owners of the project 
        (including partners, members, their affiliated organizations, 
        and designated entities described in subparagraph (A)) entered 
        into before, on, or after the date of the enactment of this 
        Act.
            (3) No effect on agreements.--No provision of this 
        amendment shall supercede the agreement among the parties as to 
        the manner of execution or terms of a right of first refusal or 
        option permitted by section 42(i)(7).

SEC. 304. MODIFICATION OF PREVIOUS OWNERSHIP RULES; LIMITATION ON 
              ACQUISITION BASIS.

    (a) In General.--Clause (ii) of section 42(d)(2)(B) of the Internal 
Revenue Code of 1986 is amended by inserting ``, or the taxpayer elects 
the application of subparagraph (C)(ii)'' after ``service''.
    (b) Limitation on Acquisition Basis.--Subparagraph (C) of section 
42(d)(2) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``For purposes of subparagraph (A), the 
        adjusted basis'' and inserting ``For purposes of subparagraph 
        (A)--
                            ``(i) In general.--The adjusted basis'', 
                        and
            (2) by adding at the end the following new clauses:
                            ``(ii) Buildings in service within previous 
                        10 years.--If the period between the date of 
                        acquisition of the building by the taxpayer and 
                        the date the building was last placed in 
                        service is less than 10 years, the taxpayer's 
                        basis attributable to the acquisition of the 
                        building which is taken into account in 
                        determining the adjusted basis shall not exceed 
                        the sum of--
                                    ``(I) the lowest amount paid for 
                                acquisition of the building by any 
                                person during the 10 years preceding 
                                the date of the acquisition of the 
                                building by the taxpayer, adjusted as 
                                provided in clause (iii), and
                                    ``(II) the value of any capital 
                                improvements made by the person who 
                                sells the building to the taxpayer 
                                which are reflected in such seller's 
                                basis.
                            ``(iii) Adjustment.--With respect to a 
                        basis determination made in any taxable year, 
                        the amount described in clause (ii)(I) shall be 
                        increased by an amount equal to--
                                    ``(I) such amount, multiplied by
                                    ``(II) a cost-of-living adjustment, 
                                determined in the same manner as under 
                                section 1(f)(3) for the calendar year 
                                in which the taxable year begins by 
                                taking into account the acquisition 
                                year in lieu of calendar year 1992.
                        For purposes of the preceding sentence, the 
                        acquisition year is the calendar year in which 
                        the lowest amount referenced in clause (ii)(I) 
                        was paid for the acquisition of the 
                        building.''.
    (c) Conforming Amendments.--Clause (i) of section 42(d)(2)(D) of 
the Internal Revenue Code of 1986 is amended--
            (1) by striking ``for subparagraph (b)'' in the heading, 
        and
            (2) by striking ``subparagraph (B)(ii)'' in the matter 
        preceding subclause (I) and inserting ``subparagraph (B)(ii) or 
        (C)(ii)''.
    (d) Modification of Placed in Service Rule.--Clause (iii) of 
section 42(d)(2)(B) of the Internal Revenue Code of 1986 is amended to 
read as follows:
                            ``(iii) the building was not owned by the 
                        taxpayer or by any person related (as of the 
                        date of acquisition by the taxpayer) to the 
                        taxpayer at any time during the 5-year period 
                        ending on the date of acquisition by the 
                        taxpayer, and''.
    (e) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2018.

SEC. 305. CERTAIN RELOCATION COSTS TAKEN INTO ACCOUNT AS REHABILITATION 
              EXPENDITURES.

    (a) In General.--Paragraph (2) of section 42(e) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(C) Certain relocation costs.--In the case of a 
                rehabilitation of a building to which section 280B does 
                not apply, costs relating to the relocation of 
                occupants, including--
                            ``(i) amounts paid to occupants,
                            ``(ii) amounts paid to third parties for 
                        services relating to such relocation, and
                            ``(iii) amounts paid for temporary housing 
                        for occupants,
                shall be treated as chargeable to capital account and 
                taken into account as rehabilitation expenditures.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after December 31, 2018.
    (c) No Inference.--Nothing in the amendment made by this section 
shall be construed to create any inference with respect to the 
treatment of relocation costs paid or incurred before December 31, 
2018.

SEC. 306. REPEAL OF QUALIFIED CENSUS TRACT POPULATION CAP.

    (a) In General.--Clause (ii) of section 42(d)(5)(B) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking subclauses (II) and (III), and
            (2) by striking ``Qualified census tract.--
                                    ``(I) In general.--The term'',
        and inserting ``Qualified census tract.--The term''.
    (b) Effective Date.--The amendments made by this section shall 
apply to designations of qualified census tracts under section 
42(d)(5)(B)(ii) of the Internal Revenue Code of 1986 after December 31, 
2019.

SEC. 307. DETERMINATION OF COMMUNITY REVITALIZATION PLAN TO BE MADE BY 
              HOUSING CREDIT AGENCY.

    (a) In General.--Subclause (III) of section 42(m)(1)(B)(ii) of the 
Internal Revenue Code of 1986 is amended by inserting ``, as determined 
by the housing credit agency according to criteria established by such 
agency,'' after ``(d)(5)(B)(ii)) and''.
    (b) Criteria.--Paragraph (1) of section 42(m) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(E) Criteria for determination relating to 
                concerted community revitalization plan.--For purposes 
                of subparagraph (B)(ii)(III), the criteria which shall 
                be established by a housing credit agency for 
                determining whether the development of a project 
                contributes to a concerted community development plan 
                shall take into account any factors the agency deems 
                appropriate, including the extent to which the proposed 
                plan--
                            ``(i) is geographically specific,
                            ``(ii) outlines a clear plan for 
                        implementation and goals for outcomes,
                            ``(iii) includes a strategy for applying 
                        for or obtaining commitments of public or 
                        private investment (or both) in nonhousing 
                        infrastructure, amenities, or services, and
                            ``(iv) demonstrates the need for community 
                        revitalization.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to allocations of housing credit dollar amounts made under 
qualified allocation plans (as defined in section 42(m)(1)(B) of the 
Internal Revenue Code of 1986) adopted after December 31, 2019.

SEC. 308. PROHIBITION OF LOCAL APPROVAL AND CONTRIBUTION REQUIREMENTS.

    (a) In General.--Paragraph (1) of section 42(m) of the Internal 
Revenue Code of 1986, as amended by section 307, is further amended--
            (1) by striking clause (ii) of subparagraph (A) and by 
        redesignating clauses (iii) and (iv) thereof as clauses (ii) 
        and (iii), and
            (2) by adding at the end the following new subparagraph:
                    ``(F) Local approval or contribution not taken into 
                account.--The selection criteria under a qualified 
                allocation plan shall not include consideration of--
                            ``(i) any support or opposition with 
                        respect to the project from local or elected 
                        officials, or
                            ``(ii) any local government contribution to 
                        the project, except to the extent such 
                        contribution is taken into account as part of a 
                        broader consideration of the project's ability 
                        to leverage outside funding sources, and is not 
                        prioritized over any other source of outside 
                        funding.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to allocations of housing credit dollar amounts made after 
December 31, 2019.

SEC. 309. INCREASE IN CREDIT FOR CERTAIN PROJECTS DESIGNATED TO SERVE 
              EXTREMELY LOW-INCOME HOUSEHOLDS.

    (a) In General.--Paragraph (5) of section 42(d) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(C) Increase in credit for projects designated to 
                serve extremely low-income households.--In the case of 
                any building--
                            ``(i) 20 percent or more of the residential 
                        units in which are designated by the taxpayer 
                        for occupancy by households the aggregate 
                        household income of which does not exceed the 
                        greater of--
                                    ``(I) 30 percent of area median 
                                gross income, or
                                    ``(II) 100 percent of an amount 
                                equal to the Federal poverty line 
                                (within the meaning of section 
                                36B(d)(3)), and
                            ``(ii) which is designated by the housing 
                        credit agency as requiring the increase in 
                        credit under this subparagraph in order for 
                        such building to be financially feasible as 
                        part of a qualified low-income housing project,
                subparagraph (B) shall not apply to the portion of such 
                building which is comprised of such units, and the 
                eligible basis of such portion of the building shall be 
                150 percent of such basis determined without regard to 
                this subparagraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to buildings which receive allocations of housing credit dollar amount 
or, in the case of projects financed by tax-exempt bonds as described 
in section 42(h)(4) of the Internal Revenue Code of 1986, which receive 
a determination of housing credit dollar amount, after the date of the 
enactment of this Act.

SEC. 310. INCREASE IN CREDIT FOR BOND-FINANCED PROJECTS DESIGNATED BY 
              STATE AGENCY.

    (a) In General.--Clause (v) of section 42(d)(5)(B) of the Internal 
Revenue Code of 1986 is amended by striking the second sentence.
    (b) Technical Amendment.--Clause (v) of section 42(d)(5)(B) of the 
Internal Revenue Code of 1986, as amended by subsection (a), is further 
amended--
            (1) by striking ``State'' in the heading, and
            (2) by striking ``State housing credit agency'' and 
        inserting ``housing credit agency''.
    (c) Effective Date.--The amendments made by this section shall 
apply to buildings which receive a determination of housing credit 
dollar amount after the date of the enactment of this Act.

SEC. 311. ELIMINATION OF BASIS REDUCTION FOR LOW-INCOME HOUSING 
              PROPERTIES RECEIVING CERTAIN ENERGY BENEFITS.

    (a) New Energy Efficient Home Credit.--Subsection (e) of section 
45L of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``Adjustment.--For purposes'' and inserting 
        ``Adjustment.--
            ``(1) In general.--For purposes'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception for affordable housing properties.--
        Paragraph (1) shall not apply for purposes of determining 
        eligible basis under section 42.''.
    (b) Energy Efficient Commercial Buildings Deduction.--Subsection 
(e) of section 179D of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``Reduction.--For purposes'' and inserting 
        ``Reduction.--
            ``(1) In general.--For purposes'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception for affordable housing properties.--
        Paragraph (1) shall not apply for purposes of determining 
        eligible basis under section 42.''.
    (c) Energy Credit.--Paragraph (3) of section 50(c) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``and'' at the end of subparagraph (A),
            (2) by striking the period at the end of subparagraph (B) 
        and inserting ``, and'', and
            (3) by adding at the end the following new subparagraph:
                    ``(C) paragraph (1) shall not apply for purposes of 
                determining eligible basis under section 42.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to buildings which receive allocations of housing credit dollar 
amount or, in the case of projects financed by tax-exempt bonds as 
described in section 42(h)(4) of the Internal Revenue Code of 1986, 
which receive a determination of housing credit dollar amount, after 
the date of the enactment of this Act.

SEC. 312. RESTRICTION OF PLANNED FORECLOSURES.

    (a) In General.--Subclause (I) of section 42(h)(6)(E)(i) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                                    ``(I) on the 61st day after the 
                                taxpayer (or a successor in interest) 
                                provides notice to the Secretary and 
                                the housing credit agency that the 
                                building has been acquired by 
                                foreclosure (or instrument in lieu of 
                                foreclosure) and that the taxpayer 
                                intends the termination of such period, 
                                unless, before such date, the Secretary 
                                or the housing credit agency determines 
                                that such acquisition is part of an 
                                arrangement with the taxpayer a purpose 
                                of which is to terminate such period, 
                                or''.
    (b) Conforming Amendment.--The second sentence of clause (i) of 
section 42(h)(6)(E) of the Internal Revenue Code of 1986 is amended by 
striking ``Subclause (II)'' and inserting ``Subclauses (I) and (II)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to acquisitions by foreclosure (or instrument in lieu of 
foreclosure) after December 31, 2018.

SEC. 313. INCREASE OF POPULATION CAP FOR DIFFICULT DEVELOPMENT AREAS.

    (a) In General.--Subclause (II) of section 42(d)(5)(B)(iii) of the 
Internal Revenue Code of 1986 is amended by striking ``20 percent'' and 
inserting ``30 percent''.
    (b) Effective Date.--The amendment made by this section shall apply 
to designations made under section 42(d)(5)(B)(iii) of the Internal 
Revenue Code of 1986 after December 31, 2019.

SEC. 314. INCREASED COST OVERSIGHT AND ACCOUNTABILITY.

    (a) In General.--Subparagraph (C) of section 42(m)(1) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (ix), by striking the period at the end of clause (x) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(xi) the reasonableness of the 
                        development costs of the project.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to allocations of credits under section 42 of the Internal 
Revenue Code of 1986 made after December 31, 2019.

        TITLE IV--REFORMS RELATING TO NATIVE AMERICAN ASSISTANCE

SEC. 401. SELECTION CRITERIA UNDER QUALIFIED ALLOCATION PLANS.

    (a) In General.--Subparagraph (C) of section 42(m)(1) of the 
Internal Revenue Code of 1986, as amended by section 314, is amended--
            (1) by striking ``and'' at the end of clause (x), by 
        striking the period at the end of clause (xi) and inserting ``, 
        and'', and by adding at the end the following new clause:
                            ``(xii) the affordable housing needs of 
                        individuals in the State who are enrolled 
                        members of a tribe with respect to an Indian 
                        tribal government.'', and
            (2) by adding at the end the following flush sentence:
                ``For purposes of clause (xii), the term `Indian tribal 
                government' includes any agencies or instrumentalities 
                of an Indian tribal government and any Alaska Native 
                regional or village corporation, as defined in, or 
                established pursuant to, the Alaska Native Claims 
                Settlement Act (43 U.S.C. 1601 et seq.).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to allocations of credits under section 42 of the Internal 
Revenue Code of 1986 made after December 31, 2019.

SEC. 402. INCLUSION OF INDIAN AREAS AS DIFFICULT DEVELOPMENT AREAS FOR 
              PURPOSES OF CERTAIN BUILDINGS.

    (a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the 
Internal Revenue Code of 1986 is amended by inserting before the period 
the following: ``, and any Indian area''.
    (b) Indian Area.--Clause (iii) of section 42(d)(5)(B) of the 
Internal Revenue Code of 1986 is amended by redesignating subclause 
(II) as subclause (III) and by inserting after subclause (I) the 
following new subclause:
                                    ``(II) Indian area.--For purposes 
                                of subclause (I), the term `Indian 
                                area' means any Indian area (as defined 
                                in section 4(11) of the Native American 
                                Housing Assistance and Self 
                                Determination Act of 1996 (25 U.S.C. 
                                4103(11))).''.
    (c) Eligible Buildings.--Clause (iii) of section 42(d)(5)(B) of the 
Internal Revenue Code of 1986, as amended by subsection (b), is amended 
by adding at the end the following new subclause:
                                    ``(IV) Special rule for buildings 
                                in indian areas.--In the case of an 
                                area which is a difficult development 
                                area solely because it is an Indian 
                                area, a building shall not be treated 
                                as located in such area unless such 
                                building is assisted or financed under 
                                the Native American Housing Assistance 
                                and Self Determination Act of 1996 (25 
                                U.S.C. 4101 et seq.) or the project 
                                sponsor is an Indian tribe (as defined 
                                in section 45A(c)(6)), a tribally 
                                designated housing entity (as defined 
                                in section 4(22) of such Act (25 U.S.C. 
                                4103(22))), or wholly owned or 
                                controlled by such an Indian tribe or 
                                tribally designated housing entity.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2019.

             TITLE V--REFORMS RELATING TO RURAL ASSISTANCE

SEC. 501. INCLUSION OF RURAL AREAS AS DIFFICULT DEVELOPMENT AREAS.

    (a) In General.--Subclause (I) of section 42(d)(5)(B)(iii) of the 
Internal Revenue Code of 1986, as amended by section 402, is amended by 
inserting ``, any rural area'' after ``median gross income''.
    (b) Rural Area.--Clause (iii) of section 42(d)(5)(B) of the 
Internal Revenue Code of 1986, as amended by section 402, is further 
amended by redesignating subclause (III) as subclause (IV) and by 
inserting after subclause (II) the following new subclause:
                                    ``(III) Rural area.--For purposes 
                                of subclause (I), the term `rural area' 
                                means any non-metropolitan area, or any 
                                rural area as defined by section 520 of 
                                the Housing Act of 1949, which is 
                                identified by the qualified allocation 
                                plan under subsection (m)(1)(B).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2019.

SEC. 502. UNIFORM INCOME ELIGIBILITY FOR RURAL PROJECTS.

    (a) In General.--Paragraph (8) of section 42(i) of the Internal 
Revenue Code of 1986 is amended by striking the second sentence.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2018.

                    TITLE VI--EXEMPT FACILITY BONDS

SEC. 601. REVISION AND CLARIFICATION OF THE TREATMENT OF REFUNDING 
              ISSUES.

    (a) In General.--Subparagraph (A) of section 146(i)(6) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                    ``(A) In general.--During the 12-month period 
                beginning on the date of a repayment of a loan financed 
                by an issue 95 percent or more of the net proceeds of 
                which are used to provide projects described in section 
                142(d), if such repayment is used to provide a new loan 
                for any project described in section 142(a)(7) or for 
                any purpose described in subsection (a)(2)(A) or (b) of 
                section 143, any bond which is issued to refinance such 
                issue shall be treated as a refunding issue. Any issue 
                treated as a refunding issue by reason of the preceding 
                sentence shall be so treated only to the extent the 
                principal amount of such refunding issue does not 
                exceed the principal amount of the bonds refunded.''.
    (b) Removal of One-Refunding Limit.--Subparagraph (B) of section 
146(i)(6) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``4 years'' in clause (i) and inserting 
        ``10 years'',
            (2) by striking ``was issued'' in clause (ii) and inserting 
        ``is issued'',
            (3) by redesignating clauses (i) (as so amended), (ii) (as 
        so amended), and (iii) as subclauses (I), (II), and (III), 
        respectively, and by moving such subclauses 2 ems to the right,
            (4) by striking ``Limitations.--Subparagraph (A) shall 
        apply to only one refunding of the original issue and'' and 
        inserting ``Limitations.--
                            ``(i) In general.--Subparagraph (A) shall 
                        apply to a bond'', and
            (5) by adding at the end the following new clause:
                            ``(ii) Source of loan repayment.--
                        Subparagraph (A) shall not apply to any 
                        repayment of a loan which is--
                                    ``(I) made by a repayment of 
                                another loan, or
                                    ``(II) financed by an issue treated 
                                as a refunding issue under subparagraph 
                                (A).''.
    (c) Conforming Amendment.--The heading of paragraph (6) of section 
146(i) of the Internal Revenue Code of 1986 is amended by striking 
``residential rental project bonds as refunding bonds irrespective of 
obligor'' and inserting ``bonds as refunding bonds''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by subsections (a) and 
        (c) shall apply to obligations issued on or after the date of 
        the enactment of this Act.
            (2) Removal of one-refunding limit.--The amendments made by 
        subsection (b) shall apply to repayments of loans received 
        after July 30, 2008.

                TITLE VII--AFFORDABLE HOUSING TAX CREDIT

SEC. 701. AFFORDABLE HOUSING TAX CREDIT.

    (a) In General.--The heading of section 42 of the Internal Revenue 
Code of 1986 is amended by striking ``low-income'' and inserting 
``affordable''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 42 of the Internal Revenue 
        Code of 1986 is amended by striking ``low-income'' and 
        inserting ``affordable''.
            (2) Paragraph (5) of section 38(b) of such Code is amended 
        by striking ``low-income'' and inserting ``affordable''.
            (3) The heading of subparagraph (D) of section 469(i)(3) of 
        such Code is amended by striking ``low-income'' and inserting 
        ``affordable''.
            (4) The heading of subparagraph (B) of section 469(i)(6) of 
        such Code is amended by striking ``low-income'' and inserting 
        ``affordable''.
            (5) Paragraph (7) of section 772(a) of such Code is amended 
        by striking ``low-income'' and inserting ``affordable''.
            (6) Paragraph (5) of section 772(d) of such Code is amended 
        by striking ``low-income'' and inserting ``affordable''.
    (c) Clerical Amendment.--The item relating to section 42 in the 
table of sections for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended to read as follows:

``Sec. 42. Affordable housing credit.''.
                                 <all>