H.R. 6970

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6970 Introduced in House (IH)]

<DOC>

118th CONGRESS
2d Session
H. R. 6970

To provide rental vouchers for the homeless, and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

January 11, 2024

Ms. Hoyle of Oregon (for herself and Mr. Carbajal) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Financial Services, for a period to 
be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
committee concerned

_______________________________________________________________________

A BILL

To provide rental vouchers for the homeless, 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 ``Decent, 
Affordable, Safe Housing for All Act'' or the ``DASH Act''.
(b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
TITLE I--HOUSING ASSISTANCE

Subtitle A--General Housing Assistance

Sec. 111. Rental vouchers for the homeless.
Sec. 112. Land acquisition and construction.
Sec. 113. Modular construction pilot program.
Sec. 114. Supporting pro-housing development.
Sec. 115. Permanent authorization of appropriations for McKinney-Vento 
Homeless Assistance Act grants.
Subtitle B--Rural Housing Assistance

Sec. 121. Rural housing reinvestment.
Sec. 122. Permanent establishment of housing preservation and 
revitalization program.
Sec. 123. Eligibility for rural housing vouchers.
Sec. 124. Amount of voucher assistance.
Sec. 125. Use of available rental assistance.
Sec. 126. Funding for multifamily technical improvements.
Sec. 127. Plan for preserving affordability of rental projects.
TITLE II--REVENUE PROVISIONS

Sec. 201. Tax-exempt bond financing requirement.
Sec. 202. Increases in State allocations.
Sec. 203. Buildings designated to serve extremely low-income 
households.
Sec. 204. Inclusion of Indian areas as difficult development areas for 
purposes of certain buildings.
Sec. 205. Inclusion of rural areas as difficult development areas.
Sec. 206. Increase in credit for bond-financed projects designated by 
housing credit agency.
Sec. 207. Repeal of qualified contract option.
Sec. 208. Modification and clarification of rights relating to building 
purchase.
Sec. 209. Prohibition of local approval and contribution requirements.
Sec. 210. Increase in credit for low-income housing supportive 
services.
Sec. 211. Study of tax incentives for the conversion of commercial 
property to affordable housing.
Sec. 212. Renters credit.
Sec. 213. Middle-income housing tax credit.
Sec. 214. Neighborhood homes credit.
Sec. 215. First-time homebuyer refundable credit.

TITLE I--HOUSING ASSISTANCE

Subtitle A--General Housing Assistance

SEC. 111. RENTAL VOUCHERS FOR THE HOMELESS.

(a) In General.--Section 8(o) of the United States Housing Act of 
1937 (42 U.S.C. 1437f(o)) is amended by adding at the end the 
following:
``(22) Rental vouchers for the homeless.--
``(A) Definitions.--In this paragraph:
``(i) At risk of homelessness.--The term 
`at risk of homelessness' has the meaning given 
the term in section 401(1) of the McKinney-
Vento Homeless Assistance Act (42 U.S.C. 
11360), except that `50 percent' shall be 
substituted for `30 percent' in subparagraph 
(A) of that section.
``(ii) Capacity-building period.--The term 
`capacity-building period' means the 2-year 
period beginning on the date on which the 
formula is established under subparagraph 
(E)(ii).
``(iii) Continuum of care.--The term 
`continuum of care' has the meaning given the 
term in section 578.3 of title 24, Code of 
Federal Regulations, or any successor 
regulation.
``(iv) Eligible public housing agency.--The 
term `eligible public housing agency' means a 
public housing agency that--
``(I) administers assistance under 
this subsection through a contract for 
annual contributions entered into with 
the Secretary;
``(II) has a partnership with a 
public child welfare agency and a 
continuum of care that--
``(aa) has a system for 
identifying and referring 
eligible recipients for 
assistance under this paragraph 
from the public housing agency, 
including by providing a 
written certification that the 
eligible recipient is eligible 
to receive the assistance; and
``(bb) will, to the 
greatest extent practicable, 
provide or facilitate the 
provision of supportive 
services to those eligible 
recipients; and
``(III) submits to the Secretary a 
statement describing--
``(aa) how the public 
housing agency will connect 
eligible recipients with local 
community resources, to the 
extent available; and
``(bb) the plan for use of 
capacity-building funding under 
subparagraph (E), including--

``(AA) a timeline 
for the use of that 
funding within the 
capacity-building 
period;

``(BB) hiring and 
personnel needs;

``(CC) physical 
infrastructure needs; 
and

``(DD) 
technological 
infrastructure needs, 
including upgrades to 
the HMIS, and any other 
capacity-related 
investments that are 
necessary to administer 
assistance under this 
paragraph.

``(v) Eligible recipient.--The term 
`eligible recipient' means any individual or 
family experiencing homelessness or at risk of 
homelessness with an income that is less than 
50 percent of the area median income.
``(vi) Experiencing homelessness; 
homeless.--The terms `experiencing 
homelessness' and `homeless' means an 
individual or family who is--
``(I) living in a place not meant 
for human habitation or in an emergency 
shelter;
``(II) living in transitional 
housing for homeless persons and was 
homeless before entering transitional 
housing or an emergency shelter;
``(III) fleeing domestic violence; 
or
``(IV) at risk of homelessness.
``(vii) HMIS.--The term `HMIS' means the 
community-wide homeless management information 
system described in section 402(f)(3)(D) of the 
McKinney-Vento Homeless Assistance Act (42 
U.S.C. 11360a(f)(3)(D)).
``(viii) Public housing agency.--The term 
`public housing agency' includes a tribally 
designated housing entity.
``(ix) Referral.--The term `referral' means 
an affirmative connection between the voucher 
recipient and the organization providing 
services to the voucher recipient.
``(x) Service coordinator.--The term 
`service coordinator' means an individual 
employed directly by a public housing agency 
who provides general case management and 
referral services to each voucher recipient 
served by the public housing agency, which 
shall include--
``(I) an individual intake 
screening of each voucher recipient to 
evaluate the voucher recipient's need 
for supportive services; and
``(II) referral to outside 
services, including cooperation and 
collaboration with a continuum of care.
``(xi) Source of income.--The term `source 
of income' means income from any lawful source, 
including--
``(I) income from any legal 
employment; and
``(II) any assistance, benefit, or 
subsidy through any Federal, State, or 
local program, whether the program is 
administered by a governmental or 
nongovernmental entity.
``(xii) Tribally designated housing 
entity.--The term `tribally designated housing 
entity' has the meaning given the term in 
section 4 of the Native American Housing 
Assistance and Self-Determination Act of 1996 
(25 U.S.C. 4103).
``(xiii) Voucher recipient.--The term 
`voucher recipient' means an individual or 
family receiving a voucher under this 
paragraph.
``(xiv) Youth.--The term `youth' means an 
individual under the age of 25.
``(B) Vouchers.--
``(i) Provision of vouchers.--
``(I) In general.--The Secretary 
shall provide vouchers for rental 
assistance on behalf of each eligible 
recipient in accordance with this 
paragraph.
``(II) Direct appropriation.--
Subject to subclause (III), there is 
appropriated, out of any money in the 
Treasury not otherwise appropriated, 
for providing rental voucher assistance 
under this paragraph for fiscal year 
2023 and each fiscal year thereafter--
``(aa) the amount necessary 
to fund the provision of a 
voucher for rental assistance 
under this paragraph on behalf 
of each eligible recipient;
``(bb) the amount necessary 
to provide administrative fees 
under clause (ii) in connection 
to each voucher for rental 
assistance provided under this 
paragraph; and
``(cc) the amount necessary 
to fund annual renewals of the 
vouchers provided under this 
paragraph.
``(III) Number of vouchers.--The 
Secretary shall provide--
``(aa) 250,000 vouchers 
under this paragraph in fiscal 
year 2023; and
``(bb) 400,000 vouchers 
under this paragraph in each 
fiscal year thereafter until 
the Secretary determines that a 
smaller number of vouchers is 
sufficient to provide all 
eligible recipients with 
vouchers.
``(ii) Administrative fee for ancillary 
costs.--The Secretary shall provide a public 
housing agency that requests a voucher under 
this paragraph an administrative fee sufficient 
to provide assistance to the voucher recipient 
for security deposits, moving costs, first or 
last month's rent, or other significant 
barriers to establishing use of the voucher and 
a lease, in an amount that is not more than 3 
months' rent for the voucher recipient.
``(iii) Payment standard.--The payment 
standard for a voucher provided under this 
paragraph may not exceed 125 percent of the 
fair market rental in the jurisdiction in which 
the voucher is administered.
``(iv) Supplemental voucher payment.--
``(I) In general.--An eligible 
public housing agency may supplement 
the amount of a voucher provided under 
this paragraph in any case in which--
``(aa) the amount of the 
voucher is insufficient to 
cover the cost of a dwelling 
unit within the jurisdiction of 
the eligible public housing 
agency and that insufficiency 
may result in a voucher 
recipient losing housing and 
becoming homeless or doubled 
up; or
``(bb) the eligible public 
housing agency submits to the 
Secretary a waiver request for 
recalculation of the small area 
fair market rent applicable to 
the dwelling unit, which the 
Secretary shall approve or deny 
within 45 days of submission of 
the request.
``(II) Payment upon denial.--An 
eligible public housing agency may 
supplement the amount of a voucher 
under subclause (I) even if the 
Secretary denies the request submitted 
under subclause (I)(aa), provided that 
the supplementation of the voucher 
amount is necessary to maintain housing 
for the voucher recipient.
``(v) Conditions on assistance.--
Notwithstanding any other provision of law, the 
Secretary--
``(I) may not condition receipt of 
a voucher under this paragraph on--
``(aa) participation in any 
service or program; or
``(bb) the sobriety or lack 
thereof of an eligible 
recipient;
``(II) except as provided in 
subclause (III), may not prohibit 
receipt of a voucher under this 
paragraph by an otherwise eligible 
recipient due to any criminal 
conviction or history of interaction 
with the criminal justice system; and
``(III) shall prohibit receipt of a 
voucher under this paragraph by 
individuals subject to a lifetime 
registration requirement under any 
State sex offender registration 
program.
``(vi) Verification of statement made by 
eligible public housing agencies.--
``(I) In general.--Not later than 
30 days after the date on which an 
eligible public housing agency submits 
the statement required under 
subparagraph (A)(iv)(III), the 
Secretary shall verify the statement.
``(II) Unsatisfactory statement.--
If, upon verification of a statement 
under subclause (I), the Secretary 
determines that the statement is 
unsatisfactory, the Secretary shall 
inform the eligible public housing 
agency of that determination and the 
manner in which the eligible public 
housing agency may re-submit the 
statement.
``(vii) Identification of eligible 
recipients.--A public housing agency shall 
partner with continuums of care, public child 
welfare agencies, street outreach providers, 
health care providers, and other similar 
organizations in the State in which the public 
housing agency operates to identify eligible 
recipients.
``(viii) Requirements for eligible public 
housing agencies.--
``(I) In general.--Each eligible 
public housing agency providing 
assistance under this paragraph shall--
``(aa) on an annual basis 
and in conjunction with income 
reviews for purposes of 
determining income eligibility 
for assistance under this 
paragraph, verify the 
compliance of the eligible 
public housing agency with the 
eligibility requirements under 
this paragraph; and
``(bb) to the greatest 
extent possible--

``(AA) work with 
continuums of care to 
ensure continuity of 
data collection under 
this paragraph; and

``(BB) utilize the 
HMIS to collect and 
main the information 
required to be 
collected under this 
paragraph.

``(II) Priority.--In providing 
vouchers under this paragraph, an 
eligible public housing agency--
``(aa) shall prioritize the 
first vouchers made available 
under this section for eligible 
recipients who are--

``(AA) 
unaccompanied homeless 
youth;

``(BB) homeless 
youth with minor 
children; or

``(CC) families 
with minor children 
experiencing 
homelessness;

``(bb) to the extent 
possible considering when the 
Secretary disburses funds under 
this paragraph, shall provide 
vouchers to the eligible 
recipients described in item 
(aa) not later than 1 year 
after the end of the capacity-
building period; and
``(cc) may not issue 
vouchers to eligible recipients 
not described in item (aa) 
until the eligible public 
housing agency has issued 
vouchers to all eligible 
recipients described in that 
item.
``(ix) Use of voucher upon exit.--An 
eligible public housing agency that issued a 
voucher to an eligible recipient that is no 
longer in use by the eligible recipient may 
provide the voucher to any other tenant 
eligible for tenant-based assistance under this 
subsection.
``(C) Data collection.--
``(i) In general.--The Secretary shall 
submit to Congress an annual report on 
assistance providing under this paragraph, 
which shall include--
``(I) an assessment of the progress 
of States toward housing--
``(aa) eligible recipients 
in the State; and
``(bb) the total population 
of people experiencing 
homelessness in the State; and
``(II) the information provided 
under clause (ii).
``(ii) Information from public housing 
agencies.--Each eligible public housing agency 
administering assistance under this paragraph 
shall submit to the Secretary and to the State 
in which the public housing agency is located 
an annual report for each fiscal year that 
includes--
``(I) the number of voucher 
recipients, including aggregated 
demographic information on the age, 
sex, gender identity, sexual 
orientation, race, ethnicity, and 
disability status of each such 
recipient in a manner that does not 
reveal the personally identifiable 
information of each such recipient;
``(II) the number of eligible 
recipients who applied during the 
fiscal year for assistance under this 
paragraph, but were not provided 
assistance;
``(III) a brief identification in 
each instance described in subclause 
(II) of the reason why the eligible 
public housing agency was unable to 
provide the assistance; and
``(IV) a description of how the 
eligible public housing agency 
communicated or collaborated with 
public child welfare agencies and 
continuums of care to collect the data 
described in subclauses (I) and (II).
``(D) Supportive services.--
``(i) Administrative fee.--
``(I) In general.--The Secretary 
shall establish a fee under subsection 
(q) for the costs incurred by public 
housing agencies in administering 
vouchers under this paragraph.
``(II) Costs.--In establishing the 
fee described in subclause (I), the 
Secretary shall include the costs to 
public housing agencies of employing 
full-time or full-time-equivalent 
service coordinators.
``(III) Authorization of 
appropriations.--There is authorized to 
be appropriated $300,000,000 for each 
of fiscal years 2023 through 2028 for 
the fee described in subclause (I).
``(ii) Hiring of service coordinators.--
``(I) In general.--An eligible 
public housing agency shall hire the 
appropriate number of service 
coordinators to administer supportive 
services under this paragraph in 
partnership with the public child 
welfare agency or continuum of care in 
a jurisdiction.
``(II) Insufficient funds.--If an 
eligible public housing agency is 
unable to hire an appropriate number of 
service coordinators under subclause 
(I) using the fee described in clause 
(i)(I)--
``(aa) the public housing 
agency may request an increased 
administrative fee from the 
Secretary; and
``(bb) the Secretary shall 
approve or deny a request 
received under item (aa) within 
45 days.
``(III) Report to congress.--
Beginning in the first full fiscal year 
after the date of enactment of this 
paragraph, the Secretary shall submit 
an annual report to Congress on 
requests for increased administrative 
fees received from public housing 
agencies under subclause (II).
``(IV) Appropriate number 
defined.--For purposes of this clause, 
the term `appropriate number', with 
respect to service coordinators, means 
enough service coordinators so that 
each household provided a voucher by a 
public housing agency under this 
paragraph is able to access a service 
coordinator for not less than 30 
minutes each week.
``(iii) Provision of services.--Upon intake 
of an eligible recipient, a public housing 
agency or a public child welfare agency or 
continuum of care with which the public housing 
agency has partnered shall--
``(I) assign the voucher recipient 
a case manager or service coordinator; 
and
``(II) provide or secure the 
provision of supportive services to 
contribute to the housing stability of 
the voucher recipient, including--
``(aa) any supportive 
service, as defined in section 
401 of the McKinney-Vento 
Homeless Assistance Act (42 
U.S.C. 11360);
``(bb) referrals to health 
care providers, including 
mental health care providers, 
dental health care providers, 
and vision health care 
providers;
``(cc) referrals to 
substance use disorder 
treatment, including recovery, 
treatment, 12-step programs, 
relapse prevention, or 
medication-assisted treatment;
``(dd) assistance relating 
to enrollment in the Medicare 
or Medicaid programs under 
titles XVIII and XIX of the 
Social Security Act (42 U.S.C. 
1395 et seq., 1396 et seq.), 
respectively, and referrals to 
other services, including--

``(AA) the 
supplemental nutrition 
assistance program 
under the Food and 
Nutrition Act of 2008 
(7 U.S.C. 2011 et seq.) 
(commonly known as the 
`SNAP Program'); and

``(BB) the program 
of block grants for 
States for temporary 
assistance for needy 
families established 
under part A of title 
IV of the Social 
Security Act (42 U.S.C. 
601 et seq.) (commonly 
known as the `TANF 
Program');

``(ee) advising on 
eligibility for the family 
self-sufficiency program 
established, credit counseling, 
and housing counseling 
programs;
``(ff) referrals to 
education services, including 
general educational development 
(commonly known as `GED') 
preparation and testing, 
enrollment in postsecondary 
education programs, and credit 
recovery; and
``(gg) facilitation of 
transportation assistance to 
any of the supportive services 
described in this subparagraph.
``(iv) Eligibility of private nonprofit 
organizations and faith-based organizations.--
``(I) Definitions.--In this clause, 
the terms `eligible entity' and 
`private nonprofit organization' have 
the meanings given those terms in 
section 401 of the McKinney-Vento 
Homeless Assistance Act (42 U.S.C. 
11360).
``(II) Eligibility.--
Notwithstanding any other provision of 
law--
``(aa) the Secretary shall 
provide that private nonprofit 
organizations that are eligible 
entities, including faith-based 
private nonprofit organizations 
that are eligible entities, 
shall be eligible to--

``(AA) provide 
services described in 
clause (iii); and

``(BB) receive 
amounts made available 
to carry out clause 
(iii); and

``(bb) in determining 
eligibility for amounts made 
available to carry out clause 
(iii), the status of an entity 
as faith-based or the 
possibility that an entity may 
be faith-based may not be a 
basis for any discrimination 
against such entity in any 
manner or for any purpose.
``(v) Access.--Services provided under this 
subparagraph shall be available to voucher 
recipients with low-to-no barrier access.
``(vi) Evaluation.--An eligible public 
housing agency, public child welfare agency, or 
continuum of care described in clause (iii) 
shall evaluate each voucher recipient for 
individual case management needs under this 
subparagraph.
``(E) Capacity building.--
``(i) Authorization of appropriations.--
There is authorized to be appropriated to the 
Secretary $500,000,000 for each of fiscal years 
2023 and 2024 to provide funding for capacity 
building to eligible public housing agencies.
``(ii) Funding formula.--Not later than 45 
days after the date of enactment of this 
paragraph, the Secretary shall establish a 
formula for allocating the funding authorized 
under clause (i) that takes into account--
``(I) the ratio of individuals in 
the State in which the eligible public 
housing agency operates who are 
homeless to the overall population of 
the State;
``(II) the proportion of families 
in each State with children 
experiencing unsheltered homelessness, 
as reported in the State's most recent 
point-in-time count, to the total 
number of unsheltered homeless families 
in the State as reported in the same 
point-in-time count; and
``(III) the rate of unsheltered 
homelessness in each State compared to 
each other State, as reported in each 
State's most recent point-in-time 
count.
``(iii) Disbursement.--Not later than 30 
days after an eligible public housing agency 
submits an acceptable statement under 
subparagraph (A)(iv)(III), the Secretary shall 
disburse amounts authorized under clause (i) of 
this subparagraph in accordance with the 
formula established under clause (ii) of this 
subparagraph.
``(iv) Minimum and maximum allocation.--The 
Secretary shall ensure that--
``(I) each eligible public housing 
agency does not receive more than 10 
percent of the amount authorized under 
clause (i); and
``(II) each State in which an 
eligible public housing agency receives 
funds under clause (i) does not receive 
more than 25 percent of the total 
amount authorized under that clause.
``(v) Eligible activities.--A recipient of 
funds authorized under clause (i) may only use 
the funds for--
``(I) hiring and personnel needs, 
such as case managers and housing 
placement advisory;
``(II) physical infrastructure--
``(aa) including increased 
office space or facilities for 
the provision of supportive 
services; and
``(bb) not including 
residential housing;
``(III) technological 
infrastructure needs, including 
upgrades to the HMIS; and
``(IV) any other capacity-related 
investments that are necessary for the 
public housing agency to--
``(aa) develop, acquire, or 
rehabilitate housing that is 
affordable to extremely low-
income families, to be made 
available to people 
experiencing homelessness; or
``(bb) support the 
successful administration of 
the vouchers under this 
paragraph.
``(vi) Requirement for expenditure of 
funds.--Each eligible public housing agency 
that receives funds under clause (i) shall 
expend not less than 60 percent of the funding 
during the 2-year period following receipt of 
the funding.
``(F) State accountability.--
``(i) In general.--Each eligible public 
housing agency providing assistance under this 
paragraph shall--
``(I) on a monthly basis, report 
caseload and voucher administration 
statistics to the State in which the 
agency operates; and
``(II) twice annually, submit to 
the State in which the agency operates 
a report on the progress toward issuing 
a voucher under this paragraph to all 
eligible recipients, based on--
``(aa) the percentage 
reduction in the number of 
families with children and 
youth that are experiencing 
homelessness in the area in 
which the agency care operates, 
as determined by comparing the 
most recent point-in-time count 
with the point-in-time count 
conducted 1 year prior; and
``(bb) the percentage 
reduction in the number of 
children experiencing 
homelessness in the State, as 
documented under the 
requirements of the program 
authorized under subtitle B of 
title VII of the McKinney-Vento 
Homeless Assistance Act (42 
U.S.C. 11431 et seq.).
``(ii) Benchmarks.--Each year, each State 
shall meet the benchmarks described in this 
clause, based equally on the percentage 
reduction in reported population of children 
and families experiencing homelessness in the 
following year's point-in-time count and the 
percentage reduction in population of students 
experiencing homelessness:
``(I) Annual report.--Each State 
shall submit an annual report to the 
Secretary that contains--
``(aa) data collected from 
schools pursuant to the program 
authorized under subtitle B of 
title VII of the McKinney-Vento 
Homeless Assistance Act (42 
U.S.C. 11431 et seq.), 
including the number of 
students--

``(AA) experiencing 
unsheltered 
homelessness;

``(BB) living in 
shelters;

``(CC) living in 
motels, hotels, or 
campgrounds;

``(DD) living in a 
car or other motor 
vehicle; or

``(EE) sharing the 
housing of other 
persons due to loss of 
housing, economic 
hardship, or similar 
reasoning; and

``(bb) the information 
received from each public 
housing agency in the State 
under clause (i)(II).
``(II) Issuance of vouchers for 
smaller states.--Each State with a rate 
of homelessness that is not higher than 
10 people per 10,000 shall--
``(aa) not later than 2 
years after the end of the 
capacity-building period--

``(AA) issue 
vouchers under this 
paragraph to not less 
than 50 percent of the 
population of people 
experiencing 
homelessness in the 
State, using data from 
the most recent point-
in-time count; and

``(BB) to the 
greatest extent 
possible, prioritize 
the issuance of those 
vouchers to eligible 
youth and families;

``(bb) not later than 3 
years after the end of the 
capacity-building period--

``(AA) issue 
vouchers under this 
paragraph to not less 
than 70 percent of the 
population of people 
experiencing 
homelessness in the 
State, using data from 
the most recent point-
in-time count; and

``(BB) to the 
greatest extent 
possible, prioritize 
the issuance of those 
vouchers to eligible 
youth and families; and

``(cc) not later than 4 
years after the end of the 
capacity-building period, issue 
vouchers under this paragraph 
to all people experiencing 
homelessness in the State.
``(III) Issuance of vouchers for 
larger states.--Each State with a rate 
of homelessness that is higher than 10 
people per 10,000 shall--
``(aa) not later than 2 
years after the end of the 
capacity-building period--

``(AA) issue 
vouchers under this 
paragraph to not less 
than 40 percent of the 
population of people 
experiencing 
homelessness in the 
State, using data from 
the most recent point-
in-time count; and

``(BB) to the 
greatest extent 
possible, prioritize 
the issuance of those 
vouchers to eligible 
youth and families;

``(bb) not later than 3 
years after the end of the 
capacity-building period--

``(AA) issue 
vouchers under this 
paragraph to not less 
than 60 percent of the 
population of people 
experiencing 
homelessness in the 
State, using data from 
the most recent point-
in-time count; and

``(BB) to the 
greatest extent 
possible, prioritize 
the issuance of those 
vouchers to eligible 
youth and families; and

``(cc) not later than 4 
years after the end of the 
capacity-building period, issue 
vouchers under this paragraph 
to all people experiencing 
homelessness in the State.
``(iii) Penalties.--
``(I) Warning.--Except as provided 
in clause (v), if a State does not meet 
the applicable benchmarks described in 
clause (ii), the Secretary shall 
publicly warn the State of the failure 
of the State to meet the benchmark and 
remind the State of the applicable 
penalties.
``(II) Reduction in federal highway 
funds.--If a State does not meet the 
applicable benchmarks described in 
clause (ii)--
``(aa) by the date that is 
180 days after the warning by 
the Secretary under subclause 
(I) of this clause, the Federal 
share payable for Federal-aid 
highway projects under section 
120 of title 23, United States 
Code, shall be reduced by 5 
percent; or
``(bb) by the date that is 
180 days after a reduction made 
under item (aa) of this 
subclause, the Federal share 
payable for Federal-aid highway 
projects under section 120 of 
title 23, United States Code, 
shall be further reduced by 5 
percent.
``(iv) Condition on compliance.--Beginning 
in the first Notice of Funding Availability 
cycle beginning after the date of enactment of 
this paragraph, and every Notice of Funding 
Availability cycle thereafter, the Secretary 
shall condition the awarding of all funding for 
vouchers under this paragraph by the Secretary 
to a public housing authority in a State on 
that State's compliance with the benchmarks 
described in clause (ii).
``(v) Unemployment rate.--If the quarterly 
unemployment rate of the population of a State 
is not less than 6 percent--
``(I) the State shall not be 
penalized under clause (iii) for 
failure to meet the benchmarks 
described in clause (ii); and
``(II) the State shall be required 
to meet the benchmarks described in 
clause (ii) not later than 180 days 
after the date on which the quarterly 
unemployment rate descends beneath 6 
percent.
``(G) Administrative needs of hud.--
``(i) Authorization of appropriations.--
There is authorized to be appropriated 
$15,000,000 for each of fiscal years 2023 
through 2027 to the Secretary for the 
administrative needs of the Department of 
Housing and Urban Development and regional 
offices of the Department in carrying out the 
voucher program under this paragraph.
``(ii) Prohibition.--None of the funds made 
available under this subparagraph may be used 
to provide raises or bonuses to any employee of 
the Department of Housing and Urban Development 
in an amount that is more than 10 percent of 
the annual gross salary of the employee.''.
(b) Technical and Conforming Amendment.--Effective on December 29, 
2024, paragraph (22) of section 8(o) of the United States Housing Act 
of 1937 (42 U.S.C. 1437f(o)), as added by subsection (a), is 
redesignated as paragraph (23) and shall appear after paragraph (22), 
as added by section 601(a)(2)(B) of division AA of Consolidated 
Appropriations Act, 2023 (Public Law 117-328).

SEC. 112. LAND ACQUISITION AND CONSTRUCTION.

(a) Definitions.--In this section--
(1) the term ``at risk of homelessness'' has the meaning 
given the term in section 401(1) of the McKinney-Vento Homeless 
Assistance Act (42 U.S.C. 11360), except that ``50 percent'' 
shall be substituted for ``30 percent'' in subparagraph (A) of 
that section;
(2) the terms ``extremely low-income'' and ``very low-
income'' have the meanings given those terms in section 1303 of 
the Federal Housing Enterprises Financial Safety and Soundness 
Act of 1992 (12 U.S.C. 4502);
(3) the term ``homeless'' means an individual or family who 
is--
(A) living in a place not meant for human 
habitation or in an emergency shelter;
(B) living in transitional housing for homeless 
persons and was homeless before entering transitional 
housing or an emergency shelter;
(C) fleeing domestic violence; or
(D) at risk of homelessness; and
(4) the term ``Secretary'' means the Secretary of Housing 
and Urban Development.
(b) Authorizations of Appropriations.--
(1) In general.--There is authorized to be appropriated to 
the Housing Trust Fund established under section 1338 of the 
Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 (12 U.S.C. 4568) $10,000,000,000 for each of fiscal 
years 2023 through 2033 for allocation to States in accordance 
with subsection (c) of such section 1338, subject to 
subsections (c) through (f) of this section.
(2) Administrative needs of states.--
(A) Authorization of appropriations.--There is 
authorized to be appropriated to the Secretary 
$65,000,000 for each of fiscal years 2023 through 2028 
for the administrative needs of States under this 
section, in accordance with subparagraph (C).
(B) Allocation.--Of amounts authorized to be 
appropriated under subparagraph (A) for each fiscal 
year--
(i) $15,000,000 shall be allocated to the 
Commonwealth of the Northern Mariana Islands, 
Guam, American Samoa, and the Virgin Islands; 
and
(ii) the remainder shall be allocated to 
States pursuant to the formula established 
under paragraph (22)(E)(ii) of section 8(o) of 
the United States Housing Act of 1937 (42 
U.S.C. 1437f(o)), as added by section 111 of 
this Act.
(C) Eligible activities.--A State that receives 
funds authorized to be appropriated under subparagraph 
(A) may only use the funds for capacity-related 
investments that are necessary for the State to 
successfully allocate funds made available under 
paragraph (1) of this subsection.
(D) Prohibition.--None of the funds made available 
under this paragraph may be used to provide raises or 
bonuses to any official of the executive branch of a 
State.
(c) Revision of Funding Formula.--
(1) In general.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall report to Congress 
proposed changes to the funding formula under section 
1338(c)(3) of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4568(c)(3)) in order to 
ensure that the funding formula takes into account the economic 
status of the people of the United States, including the 
economic impact of the COVID-19 pandemic.
(2) Contents.--The revised formula proposed under paragraph 
(1) shall address the following concerns:
(A) The COVID-19 pandemic and its impacts on the 
economic security and housing stability of very low-
income and extremely low-income people of the United 
States.
(B) The impacts of differing vacancy rates across 
various housing markets in the United States.
(C) The rate of unsheltered homelessness in various 
housing markets across the United States.
(D) The impact of differing rates of poverty and 
extreme poverty across various States.
(E) The gap between demand for and supply of rental 
units that are affordable and available to very low-
income and extremely low-income renters in a State.
(d) Eligible Households.--Housing that is assisted using amounts 
made available under subsection (b) may only be used for the benefit of 
very low-income or extremely low-income households.
(e) Eligible Activities.--A recipient of funds authorized under 
subsection (b)--
(1) may only use the funds for land acquisition and the 
acquisition, rehabilitation, or development of rental housing 
that is affordable for very low-income or extremely low-income 
households; and
(2) shall take all possible measures to expedite 
construction of housing described in paragraph (1).
(f) Priority for Occupancy in Dwelling Units.--
(1) First 2 fiscal years.--During the first 2 fiscal years 
for which amounts are made available to carry out this section, 
the Secretary shall ensure that priority for occupancy in a 
dwelling unit that receives assistance under this section is 
given to a homeless family or homeless youth.
(2) Subsequent 3 fiscal years.--During the third, fourth, 
and fifth fiscal years for which amounts are made available to 
carry out this section, the Secretary shall ensure that 
priority for occupancy in a dwelling unit that receives 
assistance under this section is given to a homeless family or 
homeless individual.

SEC. 113. MODULAR CONSTRUCTION PILOT PROGRAM.

(a) Definitions.--In this section:
(1) Eligible entity.--The term ``eligible entity'' means a 
public housing agency, a tribally designated housing entity (as 
defined in section 4 of the Native American Housing Assistance 
and Self Determination Act of 1996 (25 U.S.C. 4103)), a 
nonprofit entity, a company, a religious entity, or a unit of 
local or Tribal government.
(2) Modular construction.--The term ``modular 
construction'' means the method of residential construction by 
which building modules are constructed off of the future site 
of a building, then brought together on the building site to 
form a larger residential building, in an effort to reduce 
construction costs.
(3) Secretary.--The term ``Secretary'' means the Secretary 
of Housing and Urban Development.
(b) Establishment of Program.--
(1) In general.--The Secretary shall establish a pilot 
program to provide grants to eligible entities to promote the 
construction of affordable housing using modular construction.
(2) Affordability requirement.--To be eligible to receive a 
grant under paragraph (1), an eligible entity shall be required 
to guarantee affordability for a period of more than 20 years.
(3) Priority.--In awarding grants under paragraph (1), the 
Secretary shall give priority to an eligible entity that 
fulfills not fewer than two of the following requirements:
(A) The eligible entity--
(i) will construct the housing in groups of 
more than 50 units; or
(ii) provides confirmation from the 
jurisdiction with land use control over the 
site proposed by the eligible entity that--
(I) construction will be completed 
within 18 months; and
(II) the housing will be 
constructed in groups of more than 30 
units.
(B) The eligible entity partners with a public 
housing agency or unit of local government that will 
issue rental assistance to residents of the affordable 
housing through vouchers or grants.
(C) The eligible entity will provide supportive 
services (as described in paragraph (21)(D)(iii)(II) of 
section 8(o) of the United States Housing Act of 1937 
(42 U.S.C. 1437f(o)), as added by section 3 of this 
Act) to residents at no charge, or has secured the 
provision of publicly or privately administered 
supportive services (as so defined) to residents at no 
charge.
(c) Matching Requirement.--The Federal share of a project funded 
under this section shall be not more than 75 percent of the cost of the 
project.
(d) Authorization of Appropriations.--There is authorized to be 
appropriated to the Secretary $2,000,000 for each of fiscal years 2023 
through 2028 to carry out this section.

SEC. 114. SUPPORTING PRO-HOUSING DEVELOPMENT.

(a) Definitions.--In this section:
(1) Duplex.--The term ``duplex'' means a residential 
building divided into 2 units, each of which has a separate 
entrance.
(2) Eligible activity.--The term ``eligible activity'' 
means an activity authorized under section 105(a) of the 
Housing and Community Development Act of 1974 (42 U.S.C. 
5305(a)).
(3) Eligible entity.--The term ``eligible entity'' means a 
jurisdiction that adopts a zoning and community planning method 
described in subsection (d)(4) after the date of enactment of 
this Act.
(4) Floor area ratio.--The term ``floor area ratio'' means 
the measurement of the floor area of a building in relation to 
the size of the unit of land on which the building is located.
(5) Jurisdiction.--The term ``jurisdiction'' has the 
meaning given the term in section 91.5 of title 24, Code of 
Federal Regulations, or any successor regulation.
(6) Low-income.--The term ``low-income'' has the meaning 
given the term in section 1303 of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4502).
(7) Mixed-use housing.--The term ``mixed use housing'' 
means a building with--
(A) retail or other business, public service, or 
nonprofit establishments at the ground level or a lower 
level; and
(B) not less than 1 story of residential units 
above the establishments described in subparagraph (A).
(8) Quadplex.--The term ``quadplex'' means a residential 
building divided into 4 units, each of which has a separate 
entrance.
(9) Secretary.--The term ``Secretary'' means the Secretary 
of Housing and Urban Development.
(10) Triplex.--The term ``triplex'' means a residential 
building divided into 3 units, each of which has a separate 
entrance.
(11) Multifamily housing.--The term ``multifamily 
housing''--
(A) means housing accommodations that--
(i) are designed principally for 
residential use;
(ii) conform to standards satisfactory to 
the Secretary; and
(iii) consist of not less than 5 rental 
units on a site; and
(B) includes units that are detached, semidetached, 
row house, or multifamily structures.
(b) Zoning Information Reporting Requirement.--
(1) In general.--The Secretary shall require a jurisdiction 
that receives, directly or indirectly, any funding from the 
Secretary to submit to the Secretary a report containing 
information about the zoning and community planning methods of 
the jurisdiction, unless the jurisdiction already reports such 
information.
(2) Additional information.--Upon receiving a report 
described in paragraph (1) from a jurisdiction, the Secretary 
may request additional information, at the discretion of the 
Secretary.
(c) Prohibited Zoning Methods.--
(1) In general.--On and after the date that is 180 days 
after the date of enactment of this Act, a jurisdiction that 
uses a zoning and community planning method described in 
paragraph (2) may not receive, directly or indirectly, amounts 
from a grant awarded under subsection (d).
(2) Prohibited methods.--The methods referred to in 
paragraph (1) are the following:
(A) Prohibiting or discouraging duplexes in areas 
zoned for single-family homes.
(B) Prohibiting or discouraging single-room 
occupancy development in areas zoned for multifamily 
homes.
(C) In areas within one half-mile of a multimodal 
transit stop, maintaining requirements of more than 1 
parking spot for a resident's car per residential unit.
(D) Prohibiting or discouraging accessory dwelling 
units (commonly known as an ``ADU'' or ``granny flat'') 
on the premises of single-family homes.
(E) Prohibiting or discouraging the conversion of 
commercial property into residential property.
(F) Prohibiting or discouraging the development of 
multifamily housing or mixed-use housing in commercial 
areas.
(3) Exception.--A jurisdiction shall not be penalized under 
paragraph (1) based on the use of a zoning and community 
planning method described in paragraph (2) over which the 
jurisdiction does not have control.
(d) Grant Program.--
(1) Establishment.--The Secretary shall establish a program 
under which the Secretary awards competitive grants to eligible 
entities to use for eligible activities.
(2) Priority.--In awarding grants under paragraph (1), the 
Secretary--
(A) shall give priority to an eligible entity that 
adopt more than one of the zoning and community 
planning methods described in paragraph (4); and
(B) in giving priority to an eligible entity under 
subparagraph (A) of this paragraph, shall base the 
degree of priority given on the number of such methods 
that the eligible entity has adopted, relative to the 
number of such methods that each other eligible entity 
has adopted.
(3) Amount of grant.--
(A) In general.--The amount of a grant awarded to 
an eligible entity under paragraph (1) shall be not 
less than--
(i) $5,000,000 for an eligible entity with 
a population of less than 80,000;
(ii) $20,000,000 for an eligible entity 
with a population of less than 100,000;
(iii) $40,000,000 for an eligible entity 
with a population of less than 500,000;
(iv) $100,000,000 for an eligible entity 
with a population of less than 1,000,000; and
(v) $125,000,000 for an eligible entity 
with a population of not less than 1,000,000.
(B) Population calculation.--The Secretary shall 
calculate the population of an eligible entity for 
purposes of subparagraph (A) using the most recently 
available data from the Bureau of the Census.
(4) Encouraged zoning and community planning methods.--The 
zoning and community planning methods described in this 
paragraph are the following:
(A) Allowing--
(i) duplexes, triplexes, and quadplexes, or 
other multifamily housing, in areas zoned for 
single-family homes;
(ii) the subdivision of existing single-
family homes into multiple units; and
(iii) waivers to permitting or zoning 
requirements to incentivize the construction 
of--
(I) accessory dwelling units;
(II) additions to existing single-
family homes to create duplexes, 
triplexes, or quadplexes; or
(III) other additions that do not 
require demolition of an existing home 
on a given unit of land.
(B) Incentivizing the development of single-room 
occupancy multifamily housing and accessory dwelling 
units through expedited permitting, reduced fees, or 
other incentives.
(C) Not imposing a minimum lot size or minimum unit 
square-foot requirements.
(D) Incentivizing the development of commercial 
property into residential housing.
(E) Eliminating or lowering requirements for per-
unit parking spots.
(F) Allowing increased floor area ratios.
(G) Eliminating or raising height limits on 
development to encourage building vertically rather 
than horizontally.
(H) Waiving or eliminating fees or permits for 
development in exchange for the development of a larger 
number of units that are affordable to low-income 
people.
(5) Regulations.--The Secretary may promulgate any 
regulations necessary to carry out this subsection.
(6) Authorization of appropriations.--There are authorized 
to be appropriated to carry out this subsection $4,000,000,000 
for each of fiscal years 2023 through 2028.

SEC. 115. PERMANENT AUTHORIZATION OF APPROPRIATIONS FOR MCKINNEY-VENTO 
HOMELESS ASSISTANCE ACT GRANTS.

Section 408 of the McKinney-Vento Homeless Assistance Act (42 
U.S.C. 11364) is amended to read as follows:

``SEC. 408. AUTHORIZATION OF APPROPRIATIONS.

``There are authorized to be appropriated to carry out this title 
such sums as may be necessary for each fiscal year.''.

Subtitle B--Rural Housing Assistance

SEC. 121. RURAL HOUSING REINVESTMENT.

(a) Definitions.--In this section:
(1) Broad-based nonprofit organization.--The term ``broad-
based nonprofit organization'' means a nonprofit organization 
that has a membership that reflects a variety of interests in 
the area in which housing assisted under this section will be 
located.
(2) Covered program.--The term ``covered program'' means--
(A) the Very Low-Income Housing Repair Loans and 
Grants Program under section 504 of the Housing Act of 
1949 (42 U.S.C. 1474);
(B) the Farm Labor Housing loan program under 
section 514 of the Housing Act of 1949 (42 U.S.C. 
1484);
(C) the Rural Rental Housing Loan program under 
section 515 of the Housing Act of 1949 (42 U.S.C. 
1485);
(D) the Farm Labor Housing grant program under 
section 516 of the Housing Act of 1949 (42 U.S.C. 
1486); and
(E) the Rural Rental Assistance program under 
section 521 of the Housing Act of 1949 (42 U.S.C. 
1490a).
(3) Domestic farm laborer.--The term ``domestic farm 
laborer'' means an individual who receives a substantial 
portion of the individual's income from the primary production 
of processed or unprocessed agricultural or aquacultural 
commodities or other farm labor employment.
(4) Eligible entity.--The term ``eligible entity'' means--
(A) a broad-based nonprofit organization;
(B) a nonprofit organization with experience in 
developing affordable housing, rural housing, or 
housing for domestic farm laborers;
(C) a nonprofit organization of domestic farm 
laborers;
(D) a federally recognized Indian Tribe;
(E) a community organization;
(F) an agency of a State or of a political 
subdivision of a State; or
(G) a limited partnership with a nonprofit general 
partner.
(5) Green building certification.--The term ``green 
building certification'' means--
(A) a certification from the Residential New 
Construction Program of the Energy Star program 
established by section 324A of the Energy Policy and 
Conservation Act (42 U.S.C. 6294a);
(B) a certification from the Zero Energy Ready Home 
program of the Department of Energy; and
(C) a certification or accreditation that is 
substantially similar to a certification described in 
subparagraph (A) or (B) that requires the housing 
project to be at least 10 percent more efficient than 
homes built to the building code standards of the 
applicable State.
(6) Low-income.--The term ``low-income'' has the meaning 
given the term in section 1303 of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4502).
(7) Secretary.--The term ``Secretary'' means the Secretary 
of Agriculture.
(b) Assistance.--
(1) Loans and grants.--
(A) In general.--The Secretary shall award 
additional loans and grants, including zero-percent 
interest loans, under the covered programs to eligible 
entities that construct or preserve off-farm affordable 
housing, including multifamily housing, for domestic 
farm laborers or multifamily housing for low-income 
individuals living in rural areas to increase and 
preserve the supply of available and affordable rental 
housing for--
(i) low-income individuals living in rural 
areas; and
(ii) domestic farm laborers.
(B) Timeline.--
(i) Notice of funding availability.--Not 
later than 180 days after the date of enactment 
of this Act, the Secretary shall publish a 
notice of funding availability to solicit 
applications for loans and grants to be awarded 
under subparagraph (A).
(ii) Awards.--Not later than 1 year after 
the date of enactment of this Act, the 
Secretary shall award loans and grants, 
including zero-percent interest loans, to 
eligible entities under subparagraph (A).
(C) Local contribution for grants.--
(i) In general.--An eligible entity that 
receives a grant under this section shall 
contribute not less than 10 percent of the 
total project cost from sources other than the 
grant.
(ii) Timing of availability.--An eligible 
entity may not receive a grant under this 
section unless the funds required under clause 
(i) are available to the eligible entity as of 
the date on which the grant is awarded.
(iii) Sources.--An eligible entity may use 
amounts from a loan financed by the Rural 
Housing Service or the Federal Housing 
Administration to satisfy the requirement under 
clause (i).
(2) Rental assistance for off-farm affordable housing and 
multifamily housing.--
(A) In general.--In addition to loans and grants 
under paragraph (1), the Secretary, acting through the 
Under Secretary for Rural Development, shall provide 
rental assistance to--
(i) owners of off-farm affordable housing 
for domestic farm laborers that is assisted by 
a loan or grant under paragraph (1); and
(ii) owners of affordable multifamily 
housing for low-income individuals living in 
rural areas that is assisted by a loan or grant 
under paragraph (1).
(B) Amount of rent.--In providing rental assistance 
under subparagraph (A), the Secretary shall make 
assistance payments to the owners of housing described 
in that subparagraph in order to make available to low-
income occupants of such housing rentals at rates 
commensurate to income and not exceeding the highest 
of--
(i) 30 percent of adjusted income (as 
defined in section 3(b)(5) of the United States 
Housing Act of 1937 (42 U.S.C. 1437a(b)(5)), 
except that the amount shall be calculated on a 
monthly basis);
(ii) 10 percent of monthly income; or
(iii) if the person or family is receiving 
payments for welfare assistance from a public 
agency, the portion (if any) of the payments 
that is specifically designated by the agency 
to meet the housing costs of the person or 
family.
(C) Cap on rent increases.--The rent or 
contribution to rent paid by any recipient of 
assistance under this paragraph shall not increase as a 
result of this section or any other provision of 
Federal law or regulation by more than 10 percent 
during any 12-month period, unless the increase above 
10 percent is attributable to increases in income that 
are unrelated to this subsection or the other provision 
of Federal law or regulation.
(D) Amount of assistance.--The amount of an 
assistance payment made on behalf of a tenant under 
this paragraph shall be equal to the difference 
between--
(i) the monthly contribution of the tenant, 
which shall be the applicable amount under 
subparagraph (B); and
(ii) the fair market rental for the 
jurisdiction in which the property is located, 
as established by the Secretary under section 
8(c) of the United States Housing Act of 1937 
(42 U.S.C. 1437a(c)).
(E) Regulations.--The Secretary may promulgate any 
regulation that is necessary and proper to carry out 
this paragraph.
(3) Priority.--In awarding assistance for farm labor 
housing and multi-family housing under paragraphs (1) and (2), 
the Secretary shall give priority to an applicant seeking 
assistance for a housing project that--
(A) as determined by the Secretary, is energy 
efficient and generates energy, such as through geo-
exchange systems, ground-source heat pumps, wind 
turbines, and solar energy systems; or
(B) has a green building certification.
(c) Funding.--
(1) Farm labor housing loans and grants programs.--There is 
authorized to be appropriated to the Secretary $78,000,000 for 
each of fiscal years 2023 through 2033 to award loans and 
grants under subsection (b)(1)(A) through the Farm Labor 
Housing loan program and Farm Labor Housing grant program under 
sections 514 and 516, respectively, of the Housing Act of 1949 
(42 U.S.C. 1484, 1486).
(2) Rural rental housing loan program.--There is authorized 
to be appropriated to the Secretary $100,000,000 for each of 
fiscal years 2023 through 2033 to award loans under subsection 
(b)(1)(A) through the Rural Rental Housing Loan program under 
section 515 of the Housing Act of 1949 (42 U.S.C. 1485).
(3) Rural rental assistance program.--There is authorized 
to be appropriated to the Secretary $2,500,000,000 for each of 
fiscal years 2023 through 2033 to award loans under subsection 
(b)(1)(A) through the Rural Rental Assistance program under 
section 521 of the Housing Act of 1949 (42 U.S.C. 1490a).
(4) Rental assistance under (b)(2) of this section.--There 
is authorized to be appropriated to the Secretary $250,000,000 
for each of fiscal years 2023 through 2033 for rental 
assistance payments under subsection (b)(2).

SEC. 122. PERMANENT ESTABLISHMENT OF HOUSING PRESERVATION AND 
REVITALIZATION PROGRAM.

Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) is 
amended by adding at the end the following:

``SEC. 545. HOUSING PRESERVATION AND REVITALIZATION PROGRAM.

``(a) Establishment.--The Secretary shall carry out a program under 
this section for the preservation and revitalization of multifamily 
rental housing projects financed under section 515 or both sections 514 
and 516.
``(b) Notice of Maturing Loans.--
``(1) To owners.--On an annual basis, the Secretary shall 
provide written notice to each owner of a property financed 
under section 515 or both sections 514 and 516 that will mature 
within the 4-year period beginning upon the provision of such 
notice, setting forth the options and financial incentives that 
are available to facilitate the extension of the loan term or 
the option to decouple a rental assistance contract pursuant to 
subsection (f).
``(2) To tenants.--
``(A) In general.--For each property financed under 
section 515 or both sections 514 and 516, not later 
than the date that is 2 years before the date that such 
loan will mature, the Secretary shall provide written 
notice to each household residing in such property that 
informs them of the date of the loan maturity, the 
possible actions that may happen with respect to the 
property upon such maturity, and how to protect their 
right to reside in federally assisted housing after 
such maturity.
``(B) Language.--Notice under this paragraph shall 
be provided in plain English and shall be translated 
into other languages in the case of any property 
located in an area in which a significant number of 
residents speak such other languages.
``(c) Loan Restructuring.--Under the program under this section, 
the Secretary may restructure such existing housing loans, as the 
Secretary considers appropriate, for the purpose of ensuring that such 
projects have sufficient resources to preserve the projects to provide 
safe and affordable housing for low-income residents and farm laborers, 
by--
``(1) reducing or eliminating interest;
``(2) deferring loan payments;
``(3) subordinating, reducing, or reamortizing loan debt; 
and
``(4) providing other financial assistance, including 
advances, payments, and incentives (including the ability of 
owners to obtain reasonable returns on investment) required by 
the Secretary.
``(d) Renewal of Rental Assistance.--When the Secretary offers to 
restructure a loan pursuant to subsection (c), the Secretary shall 
offer to renew the rental assistance contract under section 521(a)(2) 
for a 20-year term that is subject to annual appropriations, provided 
that the owner agrees to bring the property up to such standards that 
will ensure its maintenance as decent, safe, and sanitary housing for 
the full term of the rental assistance contract.
``(e) Restrictive Use Agreements.--
``(1) Requirement.--As part of the preservation and 
revitalization agreement for a project, the Secretary shall 
obtain a restrictive use agreement that obligates the owner to 
operate the project in accordance with this title.
``(2) Term.--
``(A) No extension of rental assistance contract.--
Except when the Secretary enters into a 20-year 
extension of the rental assistance contract for the 
project, the term of the restrictive use agreement for 
the project shall be consistent with the term of the 
restructured loan for the project.
``(B) Extension of rental assistance contract.--If 
the Secretary enters into a 20-year extension of the 
rental assistance contract for a project, the term of 
the restrictive use agreement for the project shall be 
for 20 years.
``(C) Termination.--The Secretary may terminate the 
20-year use restrictive use agreement for a project 
prior to the end of its term if the 20-year rental 
assistance contract for the project with the owner is 
terminated at any time for reasons outside the owner's 
control.
``(f) Decoupling of Rental Assistance.--
``(1) Renewal of rental assistance contract.--If the 
Secretary determines that a maturing loan for a project cannot 
reasonably be restructured in accordance with subsection (c) 
and the project was operating with rental assistance under 
section 521, the Secretary may renew the rental assistance 
contract, notwithstanding any provision of section 521, for a 
term, subject to annual appropriations, of at least 10 years 
but not more than 20 years.
``(2) Rents.--Any agreement to extend the term of the 
rental assistance contract under section 521 for a project 
shall obligate the owner to continue to maintain the project as 
decent, safe, and sanitary housing and to operate the 
development in accordance with this title, except that rents 
shall be based on the lesser of--
``(A) the budget-based needs of the project; or
``(B) the operating cost adjustment factor as a 
payment standard as provided under section 524 of the 
Multifamily Assisted Housing Reform and Affordability 
Act of 1997 (42 U.S.C. 1437 note).
``(g) Multifamily Housing Transfer Technical Assistance.--Under the 
program under this section, the Secretary may provide grants to 
qualified nonprofit organizations and public housing agencies to 
provide technical assistance, including financial and legal services, 
to borrowers under loans under this title for multifamily housing to 
facilitate the acquisition of such multifamily housing properties in 
areas where the Secretary determines there is a risk of loss of 
affordable housing.
``(h) Transfer of Rental Assistance.--After the loan or loans for a 
rental project originally financed under section 515 or both sections 
514 and 516 have matured or have been prepaid and the owner has chosen 
not to restructure the loan pursuant to subsection (c), a tenant 
residing in such project shall have 18 months prior to loan maturation 
or prepayment to transfer the rental assistance assigned to the 
tenant's unit to another rental project originally financed under 
section 515 or both sections 514 and 516, and the owner of the initial 
project may rent the tenant's previous unit to a new tenant without 
income restrictions.
``(i) Administrative Expenses.--Of any amounts made available for 
the program under this section for any fiscal year, the Secretary may 
use not more than $1,000,000 for administrative expenses for carrying 
out such program.
``(j) Authorization of Appropriations.--There is authorized to be 
appropriated for the program under this section $200,000,000 for each 
of fiscal years 2023 through 2028.''.

SEC. 123. ELIGIBILITY FOR RURAL HOUSING VOUCHERS.

Section 542 of the Housing Act of 1949 (42 U.S.C. 1490r) is amended 
by adding at the end the following:
``(c) Eligibility of Households in Sections 514, 515, and 516 
Projects.--The Secretary may provide rural housing vouchers under this 
section for any low-income household (including those not receiving 
rental assistance) residing in a property financed with a loan made or 
insured under section 514 or 515 (42 U.S.C. 1484, 1485) which has been 
prepaid, has been foreclosed, or has matured after September 30, 2005, 
or residing in a property assisted under section 514 or 516 that is 
owned by a nonprofit organization or public agency.''.

SEC. 124. AMOUNT OF VOUCHER ASSISTANCE.

Notwithstanding any other provision of law, in the case of any 
rural housing voucher provided pursuant to section 542 of the Housing 
Act of 1949 (42 U.S.C. 1490r), the amount of the monthly assistance 
payment for the household on whose behalf such assistance is provided 
shall be determined as provided in subsection (a) of such section 542.

SEC. 125. USE OF AVAILABLE RENTAL ASSISTANCE.

Section 521(d) of the Housing Act of 1949 (42 U.S.C. 1490a(d)) is 
amended by adding at the end the following:
``(3) In the case of any rental assistance contract authority that 
becomes available because of the termination of assistance on behalf of 
an assisted family--
``(A) at the option of the owner of the rental project, the 
Secretary shall provide the owner a period of 6 months before 
such assistance is made available pursuant to subparagraph (B) 
during which the owner may use such assistance authority to 
provide assistance on behalf of an eligible unassisted family 
that--
``(i) is residing in the same rental project that 
the assisted family resided in prior to such 
termination; or
``(ii) newly occupies a dwelling unit in such 
rental project during such period; and
``(B) except for assistance used as provided in 
subparagraph (A), the Secretary shall use such remaining 
authority to provide such assistance on behalf of eligible 
families residing in other rental projects originally financed 
under section 515 or both sections 514 and 516.''.

SEC. 126. FUNDING FOR MULTIFAMILY TECHNICAL IMPROVEMENTS.

There is authorized to be appropriated to the Secretary of 
Agriculture $50,000,000 for fiscal year 2023 for improving the 
technology of the Department of Agriculture used to process loans for 
multifamily housing and otherwise managing such housing. Such 
improvements shall be made within the 5-year period beginning upon the 
appropriation of such amounts and such amount shall remain available 
until the expiration of such 5-year period.

SEC. 127. PLAN FOR PRESERVING AFFORDABILITY OF RENTAL PROJECTS.

(a) Plan.--Not later than 180 days after the date of enactment of 
this Act, the Secretary of Agriculture (in this section referred to as 
the ``Secretary'') shall submit a written plan to Congress for 
preserving the affordability for low-income families of rental projects 
for which loans were made under section 515 of the Housing Act of 1949 
(42 U.S.C. 1485) or made to nonprofit or public agencies under section 
514 of that Act (42 U.S.C. 1484) and avoiding the displacement of 
tenant households, which shall--
(1) set forth specific performance goals and measures;
(2) set forth the specific actions and mechanisms by which 
such goals will be achieved;
(3) set forth specific measurements by which progress 
towards achievement of each goal can be measured;
(4) provide for detailed reporting on outcomes; and
(5) include any legislative recommendations to assist in 
achievement of the goals under the plan.
(b) Advisory Committee.--
(1) Establishment; purpose.--The Secretary shall establish 
an advisory committee whose purpose shall be to assist the 
Secretary--
(A) in preserving properties assisted under section 
514 or 515 of the Housing Act of 1949 (42 U.S.C. 1484, 
1485) that are owned by nonprofit or public agencies 
through the multifamily housing preservation and 
revitalization program under section 545 of that Act 
(as added by this subtitle); and
(B) implementing the plan required under subsection 
(a) of this section.
(2) Member.--The advisory committee shall consist of 14 
members, appointed by the Secretary, as follows:
(A) A State Director of Rural Development for the 
Department of Agriculture.
(B) The Administrator for Rural Housing Service of 
the Department of Agriculture.
(C) Two representatives of for-profit developers or 
owners of multifamily rural rental housing.
(D) Two representatives of nonprofit developers or 
owners of multifamily rural rental housing.
(E) Two representatives of State housing finance 
agencies.
(F) Two representatives of tenants of multifamily 
rural rental housing.
(G) One representative of a community development 
financial institution that is involved in preserving 
the affordability of housing assisted under sections 
514, 515, and 516 of the Housing Act of 1949 (42 U.S.C. 
1484, 1485, 1486).
(H) One representative of a nonprofit organization 
that operates nationally and has actively participated 
in the preservation of housing assisted by the Rural 
Housing Service by conducting research regarding, and 
providing financing and technical assistance for, 
preserving the affordability of such housing.
(I) One representative of low-income housing tax 
credit investors.
(J) One representative of regulated financial 
institutions that finance affordable multifamily rural 
rental housing developments.
(3) Meetings.--The advisory committee shall meet not less 
often than once each calendar quarter.
(4) Functions.--In providing assistance to the Secretary to 
carry out its purpose, the advisory committee shall carry out 
the following functions:
(A) Assisting the Rural Housing Service of the 
Department of Agriculture to improve estimates of the 
size, scope, and condition of rental housing portfolio 
of the Service, including the time frames for maturity 
of mortgages and costs for preserving the portfolio as 
affordable housing.
(B) Reviewing current policies and procedures of 
the Rural Housing Service regarding preservation of 
affordable rental housing financed under sections 514, 
515, 516, and 538 of the Housing Act of 1949 (42 U.S.C. 
1484, 1485, 1486, 1490p-2), the Multifamily 
Preservation and Revitalization Demonstration program 
(commonly known as the ``MPR''), and the Rural Rental 
Assistance program under section 521 of the Housing Act 
of 1949 (42 U.S.C. 1490a) and making recommendations 
regarding improvements and modifications to such 
policies and procedures.
(C) Providing ongoing review of Rural Housing 
Service program results.
(D) Providing reports to Congress and the public on 
meetings, recommendations, and other findings of the 
advisory committee.

TITLE II--REVENUE PROVISIONS

SEC. 201. TAX-EXEMPT BOND FINANCING REQUIREMENT.

(a) In General.--Section 42(h)(4)(B) of the Internal Revenue Code 
of 1986 is amended to read as follows:
``(B) Special rule where a required percent of 
buildings is financed with tax-exempt bonds subject to 
volume cap.--For purposes of subparagraph (A), 
paragraph (1) shall not apply to any portion of the 
credit allowable under subsection (a) with respect to a 
building if--
``(i) 50 percent or more of the aggregate 
basis of any such building and the land on 
which the building is located is financed by 
any obligation described in subparagraph (A), 
or
``(ii) 25 percent or more of the aggregate 
basis of such building and the land on which 
the building is located is financed by any 
obligation which is described in subparagraph 
(A) and issued in calendar year 2024, 2025, 
2026, 2027, or 2028.''.
(b) Effective Date.--The amendment made by this section shall apply 
to any building some portion of which, or of the land on which the 
building is located, is financed by an obligation which is described in 
section 42(h)(4)(A) and which is part of an issue the issue date of 
which is after December 31, 2023.

SEC. 202. INCREASES IN STATE ALLOCATIONS.

(a) In General.--Clause (ii) of section 42(h)(3)(C) of the Internal 
Revenue Code is amended--
(1) by striking ``$1.75'' in subclause (I) and inserting 
``the per capita amount'', and
(2) by striking ``$2,000,000'' in subclause (II) and 
inserting ``the minimum amount''.
(b) Per Capita Amount; Minimum Amount.--Section 42(h)(3) of the 
Internal Revenue Code of 1986 is amended by striking subparagraphs (H) 
and (I) and inserting the following:
``(H) Per capita amount.--For purposes of 
subparagraph (C)(ii)(I), the per capita amount shall be 
determined as follows:
``(i) Calendar year 2023.--For calendar 
year, 2023, the per capita amount is $3.90.
``(ii) Calendar year 2024.--For calendar 
year 2024, the per capita amount is the product 
of--
``(I) 1.25, and
``(II) the dollar amount under 
clause (i) increased by an amount equal 
to--
``(aa) such dollar amount, 
multiplied by
``(bb) the cost-of-living 
adjustment determined under 
section 1(f)(3) for such 
calendar year, determined by 
substituting `calendar year 
2022' for `calendar year 2016' 
in subparagraph (A)(ii) 
thereof.
If the amount determined after application of the 
preceding sentence is not a multiple of $5,000, such 
amount shall be rounded to the next lowest multiple of 
$5,000.
``(iii) Calendar years after 2024.--In the 
case of any calendar year after 2024, the per 
capita amount is the dollar amount determined 
under clause (ii) increased by an amount equal 
to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for such calendar year, 
determined by substituting `calendar 
year 2023' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
Any amount increased under the preceding 
sentence which is not a multiple of 5 cents 
shall be rounded to the next lowest multiple of 
5 cents.
``(I) Minimum amount.--For purposes of subparagraph 
(C)(ii)(II), the minimum amount shall be determined as 
follows:
``(i) Calendar year 2023.--For calendar 
year, 2023, the minimum amount is $4,495,000.
``(ii) Calendar year 2024.--For calendar 
year 2024, the minimum amount is the product 
of--
``(I) 1.25, and
``(II) the dollar amount under 
clause (i) increased by an amount equal 
to--
``(aa) such dollar amount, 
multiplied by
``(bb) the cost-of-living 
adjustment determined under 
section 1(f)(3) for such 
calendar year, determined by 
substituting `calendar year 
2022' for `calendar year 2016' 
in subparagraph (A)(ii) 
thereof.
If the amount determined after application of 
the preceding sentence is not a multiple of 5 
cents, such amount shall be rounded to the next 
lowest multiple of 5 cents.
``(iii) Calendar years after 2024.--In the 
case of any calendar year after 2024, the 
minimum amount is the dollar amount determined 
under clause (ii) increased by an amount equal 
to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for such calendar year, 
determined by substituting `calendar 
year 2023' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
Any amount increased under the preceding 
sentence which is not a multiple of $5,000 
shall be rounded to the next lowest multiple of 
$5,000.''.
(c) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after December 31, 2022.

SEC. 203. BUILDINGS DESIGNATED TO SERVE EXTREMELY LOW-INCOME 
HOUSEHOLDS.

(a) Reserved State Allocation.--
(1) In general.--Section 42(h) of the Internal Revenue Code 
of 1986 is amended--
(A) by redesignating paragraphs (6), (7), and (8) 
as paragraphs (7), (8), and (9), respectively, and
(B) by inserting after paragraph (5) the following 
new paragraph:
``(6) Portion of state ceiling set-aside for projects 
designated to serve extremely low-income households.--
``(A) In general.--Not more than 92 percent of the 
portion of the State housing credit ceiling amount 
described in paragraph (3)(C)(ii) for any State for any 
calendar year shall be allocated to buildings other 
than buildings described in subparagraph (B).
``(B) Buildings described.--A building is described 
in this subparagraph if 20 percent or more of the 
residential units in such building are rent-restricted 
(determined as if the imputed income limitation 
applicable to such units were 30 percent of area median 
gross income) and 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)).
``(C) Exception.--A building shall not be treated 
as described in subparagraph (B) if such building is a 
part of a qualified low-income housing project with 
respect to which the taxpayer elects the requirements 
of subsection (g)(1)(C).''.
(2) Conforming amendment.--Section 42(b)(4)(C) of such Code 
is amended by striking ``(h)(7)'' and inserting ``(h)(8)''.
(b) Increase in Credit.--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 buildings designated 
to serve extremely low-income households.--
``(i) In general.--In the case of any 
building--
``(I) which is described in 
subsection (h)(6)(B), 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 
residential units described in subsection 
(h)(6)(B) (determined in a manner similar to 
the unit fraction under subsection (c)(1)(C)), 
and the eligible basis of such portion of the 
building shall be 150 percent of such basis 
determined without regard to this subparagraph.
``(ii) Allocation rules applicable to 
projects to which clause (i) applies.--
``(I) State housing credit 
ceiling.--For any calendar year, no 
more than 13 percent of the portion of 
the State housing credit ceiling 
described in subsection (h)(3)(C)(ii) 
shall be allocated to buildings to 
which clause (i) applies.
``(II) Application to projects 
financed with tax-exempt bonds.--In the 
case of any building which is financed 
by an obligation described in 
subsection (h)(4), clause (i) shall not 
apply unless--
``(aa) the State in which 
the issuing authority issuing 
such obligation is located 
designates such obligation as 
an obligation to which this 
subparagraph applies, and
``(bb) the aggregate face 
amount of obligations 
designated under item (aa) by 
such State in the calendar year 
during which such obligation is 
issued does not exceed 8 
percent of the State ceiling of 
such State under section 
146(d)(1) for such year.''.
(c) Effective Date.--The amendments made by this section shall 
apply to allocations of housing credit dollar amount after December 31, 
2023, and to buildings that are described in section 42(h)(4)(B) taking 
into account only obligations that are part of an issue the issue date 
of which is after December 31, 2023.

SEC. 204. 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 (IV) and by inserting after subclause (I) the 
following new subclauses:
``(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))).
``(III) 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.''.
(c) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2023.

SEC. 205. 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 204, is further 
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 204, is further 
amended by redesignating subclause (IV) as subclause (V) and by 
inserting after subclause (III) the following new subclause:
``(IV) 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, 2023.

SEC. 206. INCREASE IN CREDIT FOR BOND-FINANCED PROJECTS DESIGNATED BY 
HOUSING CREDIT 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 Amendments.--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.--
(1) In general.--The amendment made by subsection (a) shall 
apply to a building if--
(A) any portion of such building is financed by an 
obligation described in paragraph (2), or
(B) the land on which the building is located is 
financed by an obligation described in paragraph (2).
(2) Obligation described.--An obligation is described in 
this paragraph if such obligation--
(A) is described in section 42(h)(4)(A) of the 
Internal Revenue Code of 1986, and
(B) is issued after December 31, 2023.

SEC. 207. REPEAL OF QUALIFIED CONTRACT OPTION.

(a) Termination of Option for Certain Buildings.--
(1) In general.--Subclause (II) of section 42(h)(7)(E)(i) 
of the Internal Revenue Code of 1986, as redesignated by 
section 203, is amended by inserting ``in the case of a 
building described in clause (iii),'' before ``on the last 
day''.
(2) Buildings described.--Subparagraph (E) of section 
42(h)(7) of such Code, as so redesignated, is amended by adding 
at the end the following new clause:
``(iii) Buildings described.--A building 
described in this clause is a building--
``(I) which received its allocation 
of housing credit dollar amount before 
January 1, 2024, or
``(II) in the case of a building 
any portion of which is financed as 
described in paragraph (4), and which 
received before January 1, 2024, under 
the rules of paragraphs (1) and (2) of 
subsection (m), a determination from 
the issuer of the tax-exempt bonds or 
the housing credit agency that the 
building would be eligible under the 
qualified allocation plan to receive an 
allocation of housing credit dollar 
amount or that the credits to be earned 
are necessary for financial feasibility 
of the project and its viability as a 
qualified low-income housing project 
throughout the credit period.''.
(b) Rules Relating to Existing Projects.--Subparagraph (F) of 
section 42(h)(7) of the Internal Revenue Code of 1986, as redesignated 
by section 203, is amended by striking ``the nonlow-income portion'' 
and all that follows and inserting ``the nonlow-income portion and the 
low-income portion of the building for fair market value (determined by 
the housing credit agency by taking into account the rent restrictions 
required for the low-income portion of the building to continue to meet 
the standards of paragraphs (1) and (2) of subsection (g)). The 
Secretary shall prescribe such regulations as may be necessary or 
appropriate to carry out this paragraph.''.
(c) Conforming Amendments.--
(1) Paragraph (7) of section 42(h) of the Internal Revenue 
Code of 1986, as redesignated by section 203, is amended by 
striking subparagraph (G) and by redesignating subparagraphs 
(H), (I), (J), and (K) as subparagraphs (G), (H), (I), and (J), 
respectively.
(2) Subclause (II) of section 42(h)(7)(E)(i) of such Code, 
as so redesignated and as amended by subsection (a), is further 
amended by striking ``subparagraph (I)'' and inserting 
``subparagraph (H)''.
(d) Technical Amendment.--Subparagraph (I) of section 42(h)(7) of 
the Internal Revenue Code of 1986, as redesignated by section 203 and 
subsection (c), is amended by striking ``agreement'' and inserting 
``commitment''.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the 
amendments made by this section shall take effect on the date 
of the enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (b) 
shall apply to buildings with respect to which a written 
request described in section 42(h)(7)(H) of the Internal 
Revenue Code of 1986, as redesignated by section 203 and 
subsection (c), is submitted after the date of the enactment of 
this Act.

SEC. 208. MODIFICATION AND CLARIFICATION OF RIGHTS RELATING TO BUILDING 
PURCHASE.

(a) Modification of Right of First Refusal.--
(1) In general.--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''.
(2) Conforming amendment.--The heading of paragraph (7) of 
section 42(i) of such Code is amended by striking ``right of 
1st refusal'' and inserting ``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) Application to S corporations and other pass-
through entities.--Subparagraph (A) of section 42(i)(7) 
of such Code is amended by adding at the end the 
following: ``Except as provided by the Secretary, the 
rules of this paragraph shall apply to S corporations 
and other pass-through entities in the same manner as 
such rules apply to partnerships.''.
(C) Conforming amendment.--Subparagraph (B) of 
section 42(i)(7) of such Code is amended by adding at 
the end the following: ``In the case of a purchase of 
all of the partnership interests, the minimum purchase 
price under this subparagraph shall be an amount not 
less than the sum of the interests' shares of the 
amount which would be determined with respect to the 
property under this subparagraph without regard to this 
sentence.''.
(2) Property includes assets relating to the building.--
Paragraph (7) of section 42(i) of such Code 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 such Code, 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 or all of the partnership interests holding 
(directly or indirectly) such property is described in the 
preceding sentence--
``(i) such option or right of first refusal 
shall be exercisable with or without the 
approval of any owner of the project (including 
any partner, member, or affiliated organization 
of such an owner), and
``(ii) a right of first refusal shall be 
exercisable in response to any offer to 
purchase the property or all of the partnership 
interests, including an offer by a related 
party.''.
(c) Other Conforming Amendment.--Subparagraph (B) of section 
42(i)(7) of the Internal Revenue Code of 1986, as amended by subsection 
(b), is amended by striking ``the sum of'' and all that follows through 
``application of clause (ii).'' and inserting the following: ``the 
principal amount of outstanding indebtedness secured by the building 
(other than indebtedness incurred within the 5-year period ending on 
the date of the sale to the tenants).''.
(d) Effective Dates.--
(1) Modification of right of first refusal.--The amendments 
made by subsections (a) and (c) shall apply to agreements 
entered into or amended 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, and their affiliated 
organizations) and persons described in section 42(i)(7)(A) of 
the Internal Revenue Code of 1986 entered into before, on, or 
after the date of the enactment of this Act.
(3) No effect on agreements.--None of the amendments made 
by this section is intended to supersede express language in 
any agreement with respect to the terms of a right of first 
refusal or option permitted by section 42(i)(7) of the Internal 
Revenue Code of 1986 in effect on the date of the enactment of 
this Act.

SEC. 209. PROHIBITION OF LOCAL APPROVAL AND CONTRIBUTION REQUIREMENTS.

(a) In General.--Paragraph (1) of section 42(m) of the Internal 
Revenue Code of 1986 is amended--
(1) by striking clause (ii) of subparagraph (A) and by 
redesignating clauses (iii) and (iv) thereof as clauses (ii) 
and (iii), respectively; and
(2) by adding at the end the following new subparagraph:
``(E) 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, 2023.

SEC. 210. INCREASE IN CREDIT FOR LOW-INCOME HOUSING SUPPORTIVE 
SERVICES.

(a) In General.--Paragraph (5) of section 42(d) of the Internal 
Revenue Code of 1986, as amended by section 203, is further amended by 
adding at the end the following new subparagraphs:
``(D) Increase in credit for providing supportive 
services.--
``(i) In general.--In the case of any 
building which includes common areas, or 
property used therein, dedicated to the 
provision of on-site qualified supportive 
services, except as provided in subparagraphs 
(E) and (F), the eligible basis of the portion 
of the building which is comprised of such 
areas or property (after the application of 
subparagraphs (A) and (B)) shall be increased 
by an amount equal to 50 percent of such basis 
determined without regard to this subparagraph 
and subparagraphs (B) and (C).
``(ii) Qualified supportive services.--For 
purposes of clause (i), the term `qualified 
supportive services' means services--
``(I) provided by the owner of a 
building (directly or through contracts 
with third-party service providers) 
primarily to tenants of the building,
``(II) which are intended to 
promote economic self-sufficiency and 
physical and mental health and well-
being in pursuit of retaining permanent 
housing, including childcare or 
eldercare services, health services, 
coordination of tenant benefits, job 
training, financial counseling, 
resident engagement services, or such 
other similar services as may be 
defined by the allocating agency in the 
qualified allocation plan,
``(III) which are provided to 
tenants and other beneficiaries as may 
be specified by the housing credit 
agency, including specifications as to 
which services may be provided to non-
tenants,
``(IV) which are provided at no 
cost to beneficiaries other than any 
fee, copay, or coinsurance customarily 
charged by service providers for 
similar services, and
``(V) usage of or participation in 
which is not a condition of tenancy in 
the building.
Such term includes reasonable and necessary 
measures for the provision of such services, 
including measures to engage tenants and other 
beneficiaries in and coordinate such services, 
and measures required to obtain the 
certification described in subparagraph 
(E)(ii)(III).
``(E) Extended supportive services commitment.--
``(i) In general.--Subparagraph (D)(i) 
shall not apply to a building for any taxable 
year unless an extended supportive services 
commitment is in effect for such taxable year.
``(ii) Extended supportive services 
commitment.--The term `extended supportive 
services commitment' means any agreement 
between the owner of a building and the housing 
credit agency which--
``(I) provides estimates of the 
amounts to be spent, updated at least 
once every 5 years, on the provision of 
qualified supportive services to 
tenants of such building and other 
beneficiaries for each taxable year 
remaining in the credit period,
``(II) requires the designation of 
one or more individuals to engage 
tenants regarding, and coordinate 
delivery of, qualified supportive 
services,
``(III) requires the maintenance of 
an appropriate certification, as 
determined by the Secretary in 
consultation with the housing credit 
agencies, for qualified supportive 
services, subject to recertification at 
least once every 5 years,
``(IV) requires appropriate annual 
reporting to the housing credit agency 
on expenditures and outcomes, as 
determined by such agency, and
``(V) is binding on all successors 
in ownership of such building.
``(iii) Exceptions if foreclosure or if no 
buyer willing to maintain services.--The 
requirement of clause (ii)(V) for any building 
shall terminate on the date the building is 
acquired by foreclosure (or instrument in lieu 
of foreclosure) unless the housing credit 
agency determines that such acquisition is part 
of an arrangement with the taxpayer a purpose 
of which is to terminate such requirement.
``(iv) Effect of noncompliance.--If, during 
a taxable year, there is a determination by the 
housing credit agency that an extended 
supportive services commitment was not in 
effect as of the beginning of such year or that 
there is evidence of other noncompliance as 
determined by the housing credit agency 
(including failure to provide qualified 
supportive services)--
``(I) such determination shall not 
apply to any period before such year 
and subparagraph (D)(i) shall apply to 
such taxable year without regard to 
such determination if the failure is 
corrected within 1 year from the date 
of the determination, and
``(II) in the case of any year to 
which such determination does apply, if 
the failure is not corrected within 1 
year from the date of the 
determination, the credit recapture 
amount under subsection (j)(1) for the 
year in which such 1 year period 
expires shall be increased by the 
amount of any increase in the credit 
under this section by reason of 
subparagraph (D)(i) for the year to 
which the determination applies.
``(v) Projects which consist of more than 1 
building.--Rules similar to the rules of 
subsection (h)(7)(J) shall apply.
``(F) Responsibilities of housing credit agency.--
Subparagraph (D)(i) shall not apply to a building for 
any taxable year unless--
``(i) the housing credit agency sets forth 
criteria--
``(I) to determine appropriate, 
evidence-based supportive services,
``(II) for the selection of 
appropriate and competent service 
providers, and
``(III) which common areas or 
property described in subparagraph 
(D)(i) shall meet in order to qualify 
for the increase in credit under 
subparagraph (D),
``(ii) the housing credit agency provides a 
procedure that the agency (or an agent or other 
private contractor of such agency) shall follow 
in monitoring for noncompliance with the 
provisions of this subparagraph and 
subparagraphs (D) and (E) and in reporting such 
noncompliance to the Secretary, and
``(iii) appropriate books and records for 
expenditures with respect to the qualified 
supportive services are maintained on an annual 
basis, and are available for inspection upon 
request by the housing credit agency.''.
(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 obligations as 
described in section 42(h)(4) of the Internal Revenue Code of 1986, 
which are first taken into account under section 146 of such Code, 
after the date of the enactment of this Act.

SEC. 211. STUDY OF TAX INCENTIVES FOR THE CONVERSION OF COMMERCIAL 
PROPERTY TO AFFORDABLE HOUSING.

Within 6 months of the date of the enactment of this Act, the 
Secretary of the Treasury, the Secretary of Housing and Urban 
Development, the Deputy Under Secretary for Rural Development of the 
Department of Agriculture, and the Director of the Office of Management 
and Budget shall collaborate to produce a cost-benefit analysis of 
providing tax incentives, including the non-recognition of capital 
gains, to the owners of vacant or under-utilized commercial real estate 
in exchange for selling these properties to State, local, or tribal 
housing finance agencies for conversion to affordable rental housing 
for low-income residents, including shelters for the homeless.

SEC. 212. RENTERS CREDIT.

(a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. RENTERS CREDIT.

``(a) Allowance of Credit.--
``(1) In general.--There shall be allowed as a credit 
against the tax imposed by this subtitle for any taxable year 
an amount equal to the sum of the amounts determined under 
paragraph (2) for all qualified buildings with a credit period 
which includes months occurring during the taxable year.
``(2) Qualified building amount.--The amount determined 
under this paragraph with respect to any qualified building for 
any taxable year shall be an amount equal to the lesser of--
``(A) the aggregate qualified rental reduction 
amounts for all eligible units within such building for 
months occurring during the taxable year which are 
within the credit period for such building, or
``(B) the rental reduction credit amount allocated 
to such building for such months.
``(3) Qualified building.--For purposes of this section--
``(A) In general.--The term `qualified building' 
means any building which is residential rental property 
(as defined in section 168(e)(2)(A)) of the taxpayer 
with respect to which--
``(i) a rental reduction credit amount has 
been allocated by a rental reduction credit 
agency of a State, and
``(ii) a qualified rental reduction 
agreement is in effect.
``(B) Building not disqualified by other 
assistance.--A building shall not fail to be treated as 
a qualified building merely because--
``(i) a credit was allowed under section 42 
with respect to such building or there was any 
other Federal assistance in the construction or 
rehabilitation of such building,
``(ii) the rehabilitation credit determined 
under section 47 was allowed under section 38 
with respect to such building, or
``(iii) Federal rental assistance was 
provided for such building during any period 
preceding the credit period.
``(b) Qualified Rental Reduction Amount.--For purposes of this 
section--
``(1) In general.--The term `qualified rental reduction 
amount' means, with respect to any eligible unit for any month, 
an amount equal to the applicable percentage (as determined 
under subsection (e)(1)) of the excess of--
``(A) the applicable rent for such unit, over
``(B) the family rental payment required for such 
unit.
``(2) Applicable rent.--
``(A) In general.--The term `applicable rent' 
means, with respect to any eligible unit for any month, 
the lesser of--
``(i) the amount of rent which would be 
charged for a substantially similar unit with 
the same number of bedrooms in the same 
building which is not an eligible unit, or
``(ii) an amount equal to the market rent 
standard for such unit.
``(B) Market rent standard.--
``(i) In general.--The market rent standard 
with respect to any eligible unit is--
``(I) the small area fair market 
rent determined by the Secretary of 
Housing and Urban Development for units 
with the same number of bedrooms in the 
same zip code tabulation area, or
``(II) if there is no rent 
described in subclause (I) for such 
area, the fair market rent determined 
by such Secretary for units with the 
same number of bedrooms in the same 
county.
``(ii) State option.--A State may in its 
rental reduction allocation plan provide that 
the market rent standard for all (or any part) 
of a zip code tabulation area or county within 
the State shall be equal to a percentage (not 
less than 75 nor more than 125) of the amount 
determined under clause (i) (after application 
of clause (iii)) for such area or county.
``(iii) Minimum amount.--Notwithstanding 
clause (i), the market rent standard with 
respect to any eligible unit for any year in 
the credit period after the first year in the 
credit period for such unit shall not be less 
than the market rent standard determined for 
such first year.
``(3) Family rental payment requirements.--
``(A) In general.--Each qualified rental reduction 
agreement with respect to any qualified building shall 
require that the family rental payment for an eligible 
unit within such building for any month shall be equal 
to the lesser of--
``(i) 30 percent of the monthly family 
income of the residents of the unit (as 
determined under subsection (e)(5)), or
``(ii) the applicable rent for such unit.
``(B) Utility costs.--Any utility allowance 
(determined by the Secretary in the same manner as 
under section 42(g)(2)(B)(ii)) paid by residents of an 
eligible unit shall be taken into account as rent in 
determining the family rental payment for such unit for 
purposes of this paragraph.
``(c) Rental Reduction Credit Amount.--For purposes of this 
section--
``(1) Determination of amount.--
``(A) In general.--The term `rental reduction 
credit amount' means, with respect to any qualified 
building, the dollar amount which is allocated to such 
building (and to eligible units within such building) 
under this subsection. Such dollar amount shall be 
allocated to months in the credit period with respect 
to such building (and such units) on the basis of the 
estimates described in paragraph (2)(B).
``(B) Allocation on project basis.--In the case of 
a project which includes (or will include) more than 1 
building, the rental reduction credit amount shall be 
the dollar amount which is allocated to such project 
for all buildings included in such project. Subject to 
the limitation under subsection (e)(3)(B), such amount 
shall be allocated among such buildings in the manner 
specified by the taxpayer unless the qualified rental 
reduction agreement with respect to such project 
provides for such allocation.
``(2) State allocation.--
``(A) In general.--Except as provided in 
subparagraph (C), each rental reduction credit agency 
of a State shall each calendar year allocate its 
portion of the State rental reduction credit ceiling to 
qualified buildings (and to eligible units within each 
such building) in accordance with the State rental 
reduction allocation plan.
``(B) Allocations to each building.--The rental 
reduction credit amount allocated to any qualified 
building shall not exceed the aggregate qualified 
rental reduction amounts which such agency estimates 
will occur over the credit period for eligible units 
within such building, based on reasonable estimates of 
rents, family incomes, and vacancies in accordance with 
procedures established by the State as part of its 
State rental reduction allocation plan.
``(C) Specific allocations.--
``(i) Nonprofit organizations.--At least 25 
percent of the State rental reduction credit 
ceiling for any State for any calendar year 
shall be allocated to qualified buildings in 
which a qualified nonprofit organization (as 
defined in section 42(h)(5)(C)) owns (directly 
or through 1 or more partnerships) an interest 
and materially participates (within the meaning 
of section 469(h)) in the operation of the 
building throughout the credit period. A State 
may waive or lower the requirement under this 
clause for any calendar year if it determines 
that meeting such requirement is not feasible.
``(ii) Rural areas.--
``(I) In general.--The State rental 
reduction credit ceiling for any State 
for any calendar year shall be 
allocated to buildings in rural areas 
(as defined in section 520 of the 
Housing Act of 1949) in an amount 
which, as determined by the Secretary 
of Housing and Urban Development, bears 
the same ratio to such ceiling as the 
number of extremely low-income 
households with severe rent burdens in 
such rural areas bears to the total 
number of such households in the State.
``(II) Alternative 5-year testing 
period.--In the case of the 5-calendar 
year period beginning in 2023, a State 
shall not be treated as failing to meet 
the requirements of subclause (I) for 
any calendar year in such period if, as 
determined by the Secretary, the 
average annual amount allocated to such 
rural areas during such period meets 
such requirements.
``(3) Application of allocated credit amount.--
``(A) Amount available to taxpayer for all months 
in credit period.--Any rental reduction credit amount 
allocated to any qualified building out of the State 
rental reduction credit ceiling for any calendar year 
shall apply to such building for all months in the 
credit period ending during or after such calendar 
year.
``(B) Ceiling for allocation year reduced by entire 
credit amount.--Any rental reduction credit amount 
allocated to any qualified building out of an 
allocating agency's State rental reduction credit 
ceiling for any calendar year shall reduce such ceiling 
for such calendar year by the entire amount so 
allocated for all months in the credit period (as 
determined on the basis of the estimates under 
paragraph (2)(B)) and no reduction shall be made in 
such agency's State rental reduction credit ceiling for 
any subsequent calendar year by reason of such 
allocation.
``(4) State rental reduction credit ceiling.--
``(A) In general.--The State rental reduction 
credit ceiling applicable to any State for any calendar 
year shall be an amount equal to the sum of--
``(i) the greater of--
``(I) the per capita dollar amount 
multiplied by the State population, or
``(II) the minimum ceiling amount, 
plus
``(ii) the amount of the State rental 
reduction credit ceiling returned in the 
calendar year.
``(B) Return of state ceiling amounts.--For 
purposes of subparagraph (A)(ii), except as provided in 
subsection (d)(2), the amount of the State rental 
reduction credit ceiling returned in a calendar year 
equals the amount of the rental reduction credit amount 
allocated to any building which, after the close of the 
calendar year for which the allocation is made--
``(i) is canceled by mutual consent of the 
rental reduction credit agency and the taxpayer 
because the estimates made under paragraph 
(2)(B) were substantially incorrect, or
``(ii) is canceled by the rental reduction 
credit agency because the taxpayer violates the 
qualified rental reduction agreement and, under 
the terms of the agreement, the rental 
reduction credit agency is authorized to cancel 
all (or any portion) of the allocation by 
reason of the violation.
``(C) 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 2023, 
$12.30,
``(II) for calendar year 2024, 
$24.50, and
``(III) for calendar years 2025 and 
thereafter, $36.75.
``(ii) Minimum ceiling amount.--The minimum 
ceiling amount is--
``(I) for calendar year 2023, 
$14,000,000,
``(II) for calendar year 2024, 
$28,000,000, and
``(III) for calendar years 2025 and 
thereafter, $42,000,000.
``(iii) Cost-of-living adjustment.--In the 
case of a calendar year beginning after 2025, 
the $36.75 and $42,000,000 amounts in clauses 
(i)(III) and (ii)(III) shall each be increased 
by an amount equal to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for such calendar year by 
substituting `calendar year 2024' for 
`calendar year 2016' in subparagraph 
(A)(ii) thereof.
In the case of the $42,000,000 amount, any 
increase under this clause which is not a 
multiple of $5,000 shall be rounded to the next 
lowest multiple of $5,000 and in the case of 
the $36.75 amount, any increase under this 
clause which is not a multiple of 5 cents shall 
be rounded to the next lowest multiple of 5 
cents.
``(D) Population.--For purposes of this paragraph, 
population shall be determined in accordance with 
section 146(j).
``(E) Unused rental reduction credit allocated 
among certain states.--
``(i) In general.--The unused rental 
reduction credit of a State for any calendar 
year shall be assigned to the Secretary for 
allocation among qualified States for the 
succeeding calendar year.
``(ii) Unused rental reduction credit.--For 
purposes of this subparagraph, the unused 
rental reduction credit of a State for any 
calendar year is the excess (if any) of--
``(I) the State rental reduction 
credit ceiling for the year preceding 
such year, over
``(II) the aggregate rental 
reduction credit amounts allocated for 
such year.
``(iii) Formula for allocation of unused 
credit among qualified states.--The amount 
allocated under this subparagraph to a 
qualified State for any calendar year shall be 
the amount determined by the Secretary to bear 
the same ratio to the aggregate unused rental 
reduction credits of all States for the 
preceding calendar year as such State's 
population for the calendar year bears to the 
population of all qualified States for the 
calendar year. For purposes of the preceding 
sentence, population shall be determined in 
accordance with section 146(j).
``(iv) Qualified state.--For purposes of 
this subparagraph, the term `qualified State' 
means, with respect to a calendar year, any 
State--
``(I) which allocated its entire 
State rental reduction credit ceiling 
for the preceding calendar year, and
``(II) for which a request is made 
(at such time and in such manner as the 
Secretary may prescribe) to receive an 
allocation under clause (iii).
``(5) Other definitions.--For purposes of this section--
``(A) Rental reduction credit agency.--The term 
`rental reduction credit agency' means any agency 
authorized by a State to carry out this section. Such 
authorization shall include the jurisdictions within 
the State where the agency may allocate rental 
reduction credit amounts.
``(B) Possessions treated as states.--The term 
`State' includes a possession of the United States.
``(C) Family.--The term `family' has the same 
meaning as when used in the United States Housing Act 
of 1937.
``(d) Modifications To Correct Inaccurate Amounts Due to Incorrect 
Estimates.--
``(1) Establishment of reserves.--
``(A) In general.--Each rental reduction credit 
agency of a State shall establish a reserve for the 
transfer and reallocation of amounts pursuant to this 
paragraph, and notwithstanding any other provision of 
this section, the rental reduction credit amount 
allocated to any building by such agency shall be zero 
unless such agency has in effect such a reserve at the 
time of the allocation of such credit amount.
``(B) Transfers to reserve.--
``(i) In general.--If, for any taxable 
year, a taxpayer would (but for this 
subparagraph) not be able to use the entire 
rental reduction credit amount allocated to a 
qualified building by a rental reduction credit 
agency of a State for the taxable year because 
of a rental reduction shortfall, then the 
taxpayer shall for the taxable year transfer to 
the reserve established by such agency under 
subparagraph (A) an amount equal to such rental 
reduction shortfall.
``(ii) Rental reduction shortfall.--For 
purposes of this subparagraph, the rental 
reduction shortfall for any qualified building 
for any taxable year is the amount by which the 
aggregate amount of the excesses determined 
under subsection (b)(1) for all eligible units 
within such building are less than such 
aggregate amount estimated under subsection 
(c)(2)(B) for the taxable year.
``(iii) Treatment of transferred amount.--
For purposes of subsection (a)(2)(A), the 
aggregate qualified rental reduction amounts 
for all eligible units within a qualified 
building with respect to which clause (i) 
applies for any taxable year shall be increased 
by an amount equal to the applicable percentage 
(determined under subsection (e)(1) for the 
building) of the amount of the transfer to the 
reserve under clause (i) with respect to such 
building for such taxable year.
``(C) Reallocation of amounts transferred.--
``(i) In general.--If, for any taxable 
year--
``(I) the aggregate qualified 
rental reduction amounts for all 
eligible units within a qualified 
building for the taxable year, exceed
``(II) the rental reduction credit 
amount allocated to such building by a 
rental reduction credit agency of a 
State for the taxable year (determined 
after any increase under paragraph 
(2)),
the rental reduction credit agency shall, upon 
application of the taxpayer, pay to the 
taxpayer from the reserve established by such 
agency under subparagraph (A) the amount which, 
when multiplied by the applicable percentage 
(determined under subsection (e)(1) for the 
building), equals such excess. If the amount in 
the reserve is less than the amounts requested 
by all taxpayers for taxable years ending 
within the same calendar year, the agency shall 
ratably reduce the amount of each payment 
otherwise required to be made.
``(ii) Excess reserve amounts.--If a rental 
reduction credit agency of a State determines 
that the balance in its reserve is in excess of 
the amounts reasonably needed over the 
following 5 calendar years to make payments 
under clause (i), the agency may withdraw such 
excess but only to--
``(I) reduce the rental payments of 
eligible tenants in a qualified 
building in units other than eligible 
units, or of eligible tenants in units 
in a building other than a qualified 
building, to amounts no higher than the 
sum of rental payments required for 
eligible tenants in qualified buildings 
under subsection (b)(3) and any rental 
charges to such tenants in excess of 
the market rent standard; or
``(II) address maintenance and 
repair needs in qualified buildings 
that cannot reasonably be met using 
other resources available to the owners 
of such buildings.
``(D) Administration.--Each rental reduction credit 
agency of a State shall establish procedures for the 
timing and manner of transfers and payments made under 
this paragraph.
``(E) Special rule for projects.--In the case of a 
rental reduction credit allocated to a project 
consisting of more than 1 qualified building, a 
taxpayer may elect to have this paragraph apply as if 
all such buildings were 1 qualified building if the 
applicable percentage for each such building is the 
same.
``(F) Alternative methods of transfer and 
reallocation.--Upon request to, and approval by, the 
Secretary, a State may establish an alternative method 
for the transfer and reallocation of amounts otherwise 
required to be transferred to, and allocated from, a 
reserve under this paragraph. Any State adopting an 
alternative method under this subparagraph shall, at 
such time and in such manner as the Secretary 
prescribes, provide to the Secretary and the Secretary 
of Housing and Urban Development detailed reports on 
the operation of such method, including providing such 
information as such Secretaries may require.
``(2) Allocation of returned state ceiling amounts.--In the 
case of any rental reduction credit amount allocated to a 
qualified building which is canceled as provided in subsection 
(c)(4)(B)(i), the rental reduction credit agency may, in lieu 
of treating such allocation as a returned credit amount under 
subsection (c)(4)(A)(ii), elect to allocate, upon the request 
of the taxpayer, such amount to any other qualified building 
for which the credit amount allocated in any preceding calendar 
year was too small because the estimates made under subsection 
(c)(2)(B) were substantially incorrect.
``(3) Renting to noneligible tenants.--If, after the 
application of paragraphs (1)(C) (or any similar reallocation 
under paragraph (1)(F)) and (2), a rental reduction credit 
agency of a State determines that, because of the incorrect 
estimates under subsection (c)(2)(B), the aggregate qualified 
rental reduction amounts for all eligible units within a 
qualified building will (on an ongoing basis) exceed the rental 
reduction credit amount allocated to such building, a taxpayer 
may elect, subject to subsection (g)(2) and only to the extent 
necessary to eliminate such excess, rent vacant eligible units 
without regard to the requirements that such units be rented 
only to eligible tenants and at the rental rate determined 
under subsection (b)(3).
``(e) Terms Relating to Rental Reduction Credit and Requirements.--
For purposes of this section--
``(1) Applicable percentage.--
``(A) In general.--The term `applicable percentage' 
means, with respect to any qualified building, the 
percentage (not greater than 110 percent) set by the 
rental reduction credit agency at the time it allocates 
the rental reduction dollar amount to such building.
``(B) Higher percentage for high-opportunity 
areas.--The rental reduction credit agency may set a 
percentage under subparagraph (A) up to 120 percent for 
any qualified building which--
``(i) targets its eligible units for rental 
to families with children, and
``(ii) is located in a neighborhood which 
has a poverty rate of no more than 10 percent.
``(2) Credit period.--
``(A) In general.--The term `credit period' means, 
with respect to any qualified building, the 15-year 
period beginning with the first month for which the 
qualified rental reduction agreement is in effect with 
respect to such building.
``(B) State option to reduce period.--A rental 
reduction credit agency may provide a credit period for 
any qualified building which is less than 15 years.
``(3) Eligible unit.--
``(A) In general.--The term `eligible unit' means, 
with respect to any qualified building, a unit--
``(i) which is occupied by an eligible 
tenant,
``(ii) the rent of which for any month 
equals 30 percent of the monthly family income 
of the residents of such unit (as determined 
under paragraph (5)),
``(iii) with respect to which the tenant is 
not concurrently receiving rental assistance 
under any other Federal program, and
``(iv) which is certified to the rental 
reduction credit agency as an eligible unit for 
purposes of this section and the qualified 
rental reduction agreement.
Notwithstanding clause (iii), a State may provide in 
its State rental reduction allocation plan that an 
eligible unit shall also not include a unit with 
respect to which any resident is receiving rental 
assistance under a State or local program.
``(B) Limitation on number of units.--
``(i) In general.--The number of units 
which may be certified as eligible units with 
respect to any qualified building under 
subparagraph (A)(iv) at any time shall not 
exceed the greater of--
``(I) 40 percent of the total units 
in such building, or
``(II) 25 units.
In the case of an allocation to a project under 
subsection (c)(1)(B), the limitation under the 
preceding sentence shall be applied on a 
project basis and the certification of such 
eligible units shall be allocated to each 
building in the project, except that if 
buildings in such project are on non-contiguous 
tracts of land, buildings on each such tract 
shall be treated as a separate project for 
purposes of applying this sentence.
``(ii) Buildings receiving previous federal 
rental assistance.--If, at any time prior to 
the entering into of a qualified rental 
reduction agreement with respect to a qualified 
building, tenants in units within such building 
had been receiving project-based rental 
assistance under any other Federal program, 
then, notwithstanding clause (i), the maximum 
number of units which may be certified as 
eligible units with respect to the building 
under subparagraph (A)(iv) shall not be less 
than the sum of--
``(I) the maximum number of units 
in the building previously receiving 
such assistance at any time before the 
agreement takes effect, plus
``(II) the amount determined under 
clause (i) without taking into account 
the units described in subclause (I).
``(4) Eligible tenant.--
``(A) In general.--The term `eligible tenant' means 
any individual if the individual's family income does 
not exceed the greater of--
``(i) 30 percent of the area median gross 
income (as determined under section 42(g)(1)), 
or
``(ii) the applicable poverty line for a 
family of the size involved.
``(B) Treatment of individuals whose incomes rise 
above limit.--
``(i) In general.--Notwithstanding an 
increase in the family income of residents of a 
unit above the income limitation applicable 
under subparagraph (A), such residents shall 
continue to be treated as eligible tenants if 
the family income of such residents initially 
met such income limitation and such unit 
continues to be certified as an eligible unit 
under this section.
``(ii) No rental reduction for at least 2 
years.--A qualified rental reduction agreement 
with respect to a qualified building shall 
provide that if, by reason of an increase in 
family income described in clause (i), there is 
no qualified rental reduction amount with 
respect to the dwelling unit for 2 consecutive 
years, the taxpayer shall rent the next 
available unit to an eligible tenant (without 
regard to whether such unit is an eligible unit 
under this section).
``(C) Applicable poverty line.--The term 
`applicable poverty line' means the most recently 
published poverty line (within the meaning of section 
2110(c)(5) of the Social Security Act (42 U.S.C. 
1397jj(c)(5))) as of the time of the determination as 
to whether an individual is an eligible tenant.
``(5) Family income.--
``(A) In general.--Family income shall be 
determined in the same manner as under section 8 of the 
United States Housing Act of 1937.
``(B) Time for determining income.--
``(i) In general.--Except as provided in 
this subparagraph, family income shall be 
determined at least annually on the basis of 
income for the preceding calendar year.
``(ii) Families on fixed income.--If at 
least 90 percent of the family income of the 
residents of a unit at the time of any 
determination under clause (i) is derived from 
payments under title II or XVI of the Social 
Security Act (or any similar fixed income 
amounts specified by the Secretary), the 
taxpayer may elect to treat such payments (or 
amounts) as the family income of such residents 
for the year of the determination and the 2 
succeeding years, except that the taxpayer 
shall, in such manner as the Secretary may 
prescribe, adjust such amount for increases in 
the cost of living.
``(iii) Initial income.--The Secretary may 
allow a State to provide that the family income 
of residents at the time such residents first 
rent a unit in a qualified building may be 
determined on the basis of current or 
anticipated income.
``(iv) Special rules where family income is 
reduced.--If residents of a unit establish (in 
such manner as the rental reduction credit 
agency provides) that their family income has 
been reduced by at least 10 percent below such 
income for the determination year--
``(I) such residents may elect, at 
such time and in such manner as such 
agency may prescribe, to have their 
family income redetermined, and
``(II) clause (ii) shall not apply 
to any of the 2 succeeding years 
described in such clause which are 
specified in the election.
``(f) State Rental Reduction Allocation Plan.--
``(1) Adoption of plan required.--
``(A) In general.--For purposes of this section--
``(i) each State shall, before the 
allocation of its State rental reduction credit 
ceiling, establish and have in effect a State 
rental reduction allocation plan, and
``(ii) notwithstanding any other provision 
of this section, the rental reduction credit 
amount allocated to any building shall be zero 
unless such amount was allocated pursuant to a 
State rental reduction allocation plan.
Such plan shall only be adopted after such plan is made 
public and at least 60 days has been allowed for public 
comment.
``(B) State rental reduction allocation plan.--For 
purposes of this section, the term `State rental 
reduction allocation plan' means, with respect to any 
State, any plan of the State meeting the requirements 
of paragraphs (2) and (3).
``(2) General plan requirements.--A plan shall meet the 
requirements of this paragraph only if--
``(A) the plan sets forth the criteria and 
priorities which a rental reduction credit agency of 
the State shall use in allocating the State rental 
reduction credit ceiling to eligible units within a 
building,
``(B) the plan provides that no credit allocation 
shall be made which is not in accordance with the 
criteria and priorities set forth under subparagraph 
(A) unless such agency provides a written explanation 
to the general public for any credit allocation which 
is not so made and the reasons why such allocation is 
necessary, and
``(C) the plan provides that such agency is 
required to prioritize the renewal of existing credit 
allocations at the time of the expiration of the 
qualified rental reduction agreement with respect to 
the allocation, including, where appropriate, a 
commitment within a qualified rental reduction 
agreement that the credit allocation will be renewed if 
the terms of the agreement have been met and sufficient 
new credit authority is available.
``(3) Specific requirements.--A plan shall meet the 
requirements of this paragraph only if--
``(A) the plan provides methods for determining--
``(i) the amount of rent which would be 
charged for a substantially similar unit in the 
same building which is not an eligible unit for 
purposes of subsection (b)(2)(A)(i), including 
whether such determination may be made by self-
certification or by undertaking rent 
reasonableness assessments similar to 
assessments required under section 8(o)(10) of 
the United States Housing Act of 1937 (42 
U.S.C. 1437f(o)(10)),
``(ii) the qualified rental reduction 
amounts under subsection (c)(2)(B), and
``(iii) the applicable percentage under 
subsection (e)(1),
``(B) the plan provides a procedure that the rental 
reduction credit agency (or an agent or other private 
contractor of such agency) will follow in monitoring 
for--
``(i) noncompliance with the provisions of 
this section and the qualified rental reduction 
agreement and in notifying the Internal Revenue 
Service of any such noncompliance of which such 
agency becomes aware, and
``(ii) noncompliance with habitability 
standards through regular site visits,
``(C) the plan requires a person receiving a credit 
allocation to report to the rental reduction credit 
agency such information as is necessary to ensure 
compliance with the provisions of this section and the 
qualified rental reduction agreement, and
``(D) the plan provides methods by which any excess 
reserve amounts which become available under subsection 
(d)(1)(C)(ii) will be used to reduce rental payments of 
eligible tenants or to address maintenance and repair 
needs in qualified buildings, including how such 
assistance will be allocated among eligible tenants and 
qualified buildings.
``(g) Qualified Rental Reduction Agreement.--For purposes of this 
section--
``(1) In general.--The term `qualified rental reduction 
agreement' means, with respect to any building which is 
residential rental property (as defined in section 
168(e)(2)(A)), a written, binding agreement between a rental 
reduction credit agency and the taxpayer which specifies--
``(A) the number of eligible units within such 
building for which a rental reduction credit amount is 
being allocated,
``(B) the credit period for such building,
``(C) the rental reduction credit amount allocated 
to such building (and dwelling units within such 
building) and the portion of such amount allocated to 
each month within the credit period under subsection 
(c)(2)(B),
``(D) the applicable percentage to be used in 
computing the qualified rental reduction amounts with 
respect to the building,
``(E) the method for determining the amount of rent 
which may be charged for eligible units within the 
building, and
``(F) whether--
``(i) the agency commits to entering into a 
new agreement with the taxpayer if the terms of 
the agreement have been met and sufficient new 
credit authority is available for such new 
agreement, and
``(ii) the taxpayer is required to accept 
such new agreement.
``(2) Tenant protections.--A qualified rental reduction 
agreement shall provide the following:
``(A) Non-displacement of non-eligible tenants.--A 
taxpayer receiving a rental reduction credit amount may 
not refuse to renew the lease of or evict (other than 
for good cause) a tenant of a unit who is not an 
eligible tenant at any time during the credit period 
and such unit shall not be treated as an eligible unit 
while such tenant resides there.
``(B) Only good cause evictions of eligible 
tenants.--A taxpayer receiving a rental reduction 
credit amount may not refuse to renew the lease of or 
evict (other than for good cause) an eligible tenant of 
an eligible unit.
``(C) Mobility.--A taxpayer receiving a rental 
reduction credit amount shall--
``(i) give priority to rent any available 
unit of suitable size to tenants who are 
eligible tenants who are moving from another 
qualified building where such tenants had lived 
at least 1 year and were in good standing, and
``(ii) inform eligible tenants within the 
building of their right to move after 1 year 
and provide a list maintained by the State of 
qualified buildings where such tenants might 
move.
``(iii) Fair housing and civil rights.--If 
a taxpayer receives a rental reduction credit 
amount--
``(I) such taxpayer shall comply 
with the Fair Housing Act with respect 
to the building, and
``(II) the receipt of such amount 
shall be treated as the receipt of 
Federal financial assistance for 
purposes of applying any Federal civil 
rights laws.
``(iv) Admissions preferences.--A taxpayer 
receiving a rental reduction credit amount 
shall comply with any admissions preferences 
established by the State for tenants within 
particular demographic groups eligible for 
health or social services.
``(3) Compliance requirements.--A qualified rental 
reduction agreement shall provide that a taxpayer receiving a 
rental reduction credit amount shall comply with all reporting 
and other procedures established by the State to ensure 
compliance with this section and such agreement.
``(4) Projects.--In the case of a rental reduction credit 
allocated to a project consisting of more than 1 building, the 
rental reduction credit agency may provide for a single 
qualified rental reduction agreement which applies to all 
buildings which are part of such project.
``(h) Certifications and Other Reports to Secretary.--
``(1) Certification with respect to 1st year of credit 
period.--Following the close of the 1st taxable year in the 
credit period with respect to any qualified building, the 
taxpayer shall certify to the Secretary (at such time and in 
such form and in such manner as the Secretary prescribes)--
``(A) the information described in subsection 
(g)(1) required to be contained in the qualified rental 
reduction agreement with respect to the building, and
``(B) such other information as the Secretary may 
require.
In the case of a failure to make the certification required by 
the preceding sentence on the date prescribed therefor, unless 
it is shown that such failure is due to reasonable cause and 
not to willful neglect, no credit shall be allowable by reason 
of subsection (a) with respect to such building for any taxable 
year ending before such certification is made.
``(2) Annual reports to the secretary.--The Secretary may 
require taxpayers to submit an information return (at such time 
and in such form and manner as the Secretary prescribes) for 
each taxable year setting forth--
``(A) the information described in paragraph (1)(A) 
for the taxable year, and
``(B) such other information as the Secretary may 
require.
The penalty under section 6652(j) shall apply to any failure to 
submit the return required by the Secretary under the preceding 
sentence on the date prescribed therefor.
``(3) Annual reports from rental reduction credit agency.--
``(A) Reports.--Each rental reduction credit agency 
which allocates any rental reduction credit amount to 1 
or more buildings for any calendar year shall submit to 
the Secretary (at such time and in such manner as the 
Secretary shall prescribe) an annual report 
specifying--
``(i) the amount of rental reduction credit 
amounts allocated to each such building for 
such year,
``(ii) sufficient information to identify 
each such building and the taxpayer with 
respect thereto,
``(iii) information as to the demographic 
and income characteristics of eligible tenants 
of all such buildings to which such amounts 
were allocated, and
``(iv) such other information as the 
Secretary may require.
``(B) Penalty.--The penalty under section 6652(j) 
shall apply to any failure to submit the report 
required by subparagraph (A) on the date prescribed 
therefor.
``(C) Information made public.--The Secretary 
shall, in consultation with Secretary of Housing and 
Urban Development, make information reported under this 
paragraph for each qualified building available to the 
public annually to the greatest degree possible without 
disclosing personal information about individual 
tenants.
``(i) Special Rule for Payments to Partnerships and S 
Corporations.--For purposes of this subtitle, in the case of any 
qualified building directly held by any partnership or S corporation, 
the payment under section 6434 shall be made in lieu of the credit 
determined under this section with respect to such building.
``(j) Regulations and Guidance.--The Secretary shall prescribe such 
regulations or guidance as may be necessary to carry out the purposes 
of this section, including--
``(1) providing necessary forms and instructions, and
``(2) providing for proper treatment of projects for which 
a credit is allowed both under this section and section 42.''.
(b) Payment to Partnerships and S Corporations in Lieu of Credit.--
(1) In general.--Subchapter B of chapter 65 of the Internal 
Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 6434. PAYMENTS IN LIEU OF RENTERS CREDIT FOR PARTNERSHIPS AND S 
CORPORATIONS.

``(a) In General.--In the case of any qualified building (as 
defined in section 36C(a)(3)) directly held by any partnership or S 
corporation, the Secretary shall pay to such partnership or S 
corporation for any taxable year an amount equal to the amount of the 
credit which, but for section 36C(i), would be allowed under section 
36C with respect to such building.
``(b) Regulatory Authority.--The Secretary shall prescribe such 
regulations, rules, and guidance as may be necessary to carry out 
section 36C(i), section 92, and this section, including regulations, 
rules, and guidance providing for--
``(1) the application of the rules under section 36C with 
respect to payments under this section in the same manner as 
such rules apply for purposes of the credit under section 36C,
``(2) the time and manner of payments under subsection (a), 
and
``(3) the determination of a partner's distributive share, 
or an S corporation shareholder's pro rata share, of any 
payment under subsection (a).''.
(2) Conforming amendment.--The table of sections for 
subchapter B of chapter 65 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new item:

``Sec. 6434. Payments in lieu of renters credit for partnerships and S 
corporations.''.
(c) Credit Includible in Gross Income.--
(1) In general.--Part II of subchapter B of chapter 1 of 
the Internal Revenue Code of 1986 is amended by adding at the 
end the following new section:

``SEC. 92. INCLUSION IN INCOME OF RENTERS CREDIT AND PAYMENTS.

``Gross income includes the amount of the credit allowed to the 
taxpayer under section 36C for the taxable year and the amount of any 
payment in lieu of such credit under section 6434.''.
(2) Income disregarded for alternative minimum taxable 
income.--Section 56(a) of such Code is amended by adding at the 
end the following:
``(8) Section 92 not applicable.--Section 92 (relating to 
inclusion in income of renters credit) shall not apply.''.
(3) Conforming amendment.--The table of sections for part 
II of subchapter B of chapter 1 of such Code is amended by 
adding at the end the following new item:

``Sec. 92. Inclusion in income of renters credit and payments.''.
(d) Administrative Fees.--No provision of, or amendment made by, 
this Act shall be construed to prevent a rental reduction credit agency 
of a State from imposing fees to cover its costs or from levying any 
such fee on a taxpayer applying for or receiving a rental reduction 
credit amount.
(e) Other Conforming Amendments.--
(1) Section 6211(b)(4) of the Internal Revenue Code of 1986 
is amended by inserting ``36C (including any related payment 
under section 6434),'' after ``36B,''.
(2) Paragraph (2) of section 1324(b) of title 31, United 
States Code, is amended by inserting ``36C (including any 
related payment under section 6434),'' after ``36B,''.
(3) The table of sections for subpart C of part IV of 
subchapter A of chapter 1 of the Internal Revenue Code of 1986 
is amended by inserting after the item relating to section 36B 
the following new item:

``Sec. 36C. Renters credit.''.
(f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2022.

SEC. 213. MIDDLE-INCOME HOUSING TAX CREDIT.

(a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 42 the following new section:

``SEC. 42A. MIDDLE-INCOME HOUSING CREDIT.

``(a) In General.--For purposes of section 38, the amount of the 
middle-income housing credit determined under this section for any 
taxable year in the credit period shall be an amount equal to--
``(1) the applicable percentage, of
``(2) the qualified basis of each qualified middle-income 
building.
``(b) Applicable Percentage.--
``(1) Determination of applicable percentage.--For purposes 
of this section--
``(A) In general.--The term `applicable percentage' 
means, with respect to any building, the appropriate 
percentage prescribed by the Secretary for the earlier 
of--
``(i) the month in which such building is 
placed in service, or
``(ii) at the election of the taxpayer, the 
month in which the taxpayer and the housing 
credit agency enter into an agreement with 
respect to such building (which is binding on 
such agency, the taxpayer, and all successors 
in interest) as to the housing credit dollar 
amount to be allocated to such building.
A month may be elected under clause (ii) only if the 
election is made not later than the 5th day after the 
close of such month. Such an election, once made, shall 
be irrevocable.
``(B) Method of prescribing percentages.--The 
percentages prescribed by the Secretary for any month 
shall be percentages which will yield over a 15-year 
period amounts of credit under subsection (a) which 
have a present value equal to--
``(i) 50 percent of the qualified basis of 
a new building which is not Federally 
subsidized for the taxable year, and
``(ii) 20 percent of the qualified basis of 
a building not described in clause (i).
``(C) Method of discounting.--The present value 
under subparagraph (B) shall be determined--
``(i) as of the last day of the 1st year of 
the 15-year period referred to in subparagraph 
(B),
``(ii) by using a discount rate equal to 72 
percent of the average of the annual Federal 
mid-term rate and the annual Federal long-term 
rate applicable under section 1274(d)(1) to the 
month applicable under clause (i) or (ii) of 
subparagraph (A) and compounded annually, and
``(iii) by assuming that the credit 
allowable under this section for any year is 
received on the last day of such year.
``(2) Minimum credit rate.--
``(A) In general.--The applicable percentage for 
any building which is not Federally subsidized for the 
taxable year shall not be less than 5 percent.
``(B) Minimum credit rate for federally subsidized 
buildings.--In the case of any building to which 
subparagraph (A) does not apply, except as provided in 
paragraph (3), the applicable percentage shall not be 
less than 2 percent.
``(3) Exception for certain federally subsidized 
buildings.--In the case of any building to which paragraph 
(2)(A) does not apply, the applicable percentage is zero 
unless--
``(A) a credit is allowed under section 42 with 
respect to such building for the taxable year, and
``(B) such building is financed by tax-exempt bonds 
as described in section 42(h)(4).
``(4) Cross references.--
``(A) For treatment of certain rehabilitation 
expenditures as separate new buildings, see subsection 
(e).
``(B) For determination of applicable percentage 
for increases in qualified basis after the 1st year of 
the credit period, see subsection (f)(3).
``(C) For authority of housing credit agency to 
limit applicable percentage and qualified basis which 
may be taken into account under this section with 
respect to any building, see subsection (h)(6).
``(c) Qualified Basis; Qualified Middle-Income Building.--For 
purposes of this section--
``(1) Qualified basis.--
``(A) Determination.--The qualified basis of any 
qualified middle-income building for any taxable year 
is an amount equal to--
``(i) the applicable fraction (determined 
as of the close of such taxable year) of
``(ii) the eligible basis of such building 
(determined under subsection (d)).
``(B) Applicable fraction.--For purposes of 
subparagraph (A), the term `applicable fraction' means 
the smaller of the unit fraction or the floor space 
fraction.
``(C) Unit fraction.--For purposes of subparagraph 
(B), the term `unit fraction' means the fraction--
``(i) the numerator of which is the number 
of middle-income units in the building, and
``(ii) the denominator of which is the 
number of residential rental units (whether or 
not occupied) in such building.
``(D) Floor space fraction.--For purposes of 
subparagraph (B), the term `floor space fraction' means 
the fraction--
``(i) the numerator of which is the total 
floor space of the middle-income units in such 
building, and
``(ii) the denominator of which is the 
total floor space of the residential rental 
units (whether or not occupied) in such 
building.
``(2) Qualified middle-income building.--The term 
`qualified middle-income building' means any building which is 
part of a qualified middle-income housing project at all times 
during the period--
``(A) beginning on the 1st day in the credit period 
on which such building is part of such a project, and
``(B) ending on the last day of the credit period 
with respect to such building.
``(d) Eligible Basis.--For purposes of this section--
``(1) New buildings.--The eligible basis of a new building 
is its adjusted basis as of the close of the 1st taxable year 
of the credit period.
``(2) Existing buildings.--
``(A) In general.--The eligible basis of an 
existing building is--
``(i) in the case of a building which meets 
the requirements of subparagraph (B), its 
adjusted basis as of the close of the 1st 
taxable year of the credit period, and
``(ii) zero in any other case.
``(B) Requirements.--A building meets the 
requirements of this subparagraph if--
``(i) the building is acquired by purchase 
(as defined in section 179(d)(2)),
``(ii) there is a period of at least 10 
years between the date of its acquisition by 
the taxpayer and the date the building was last 
placed in service,
``(iii) the building was not previously 
placed in service by the taxpayer or by any 
person who was a related person with respect to 
the taxpayer as of the time previously placed 
in service, and
``(iv) except as provided in subsection 
(f)(5), a credit is allowable under subsection 
(a) by reason of subsection (e) with respect to 
the building.
``(C) Adjusted basis.--For purposes of subparagraph 
(A), the adjusted basis of any building shall not 
include so much of the basis of such building as is 
determined by reference to the basis of other property 
held at any time by the person acquiring the building.
``(D) Special rules.--
``(i) Special rules for certain 
transfers.--For purposes of determining under 
subparagraph (B)(ii) when a building was last 
placed in service, there shall not be taken 
into account any placement in service--
``(I) in connection with the 
acquisition of the building in a 
transaction in which the basis of the 
building in the hands of the person 
acquiring it is determined in whole or 
in part by reference to the adjusted 
basis of such building in the hands of 
the person from whom acquired,
``(II) by a person whose basis in 
such building is determined under 
section 1014(a) (relating to property 
acquired from a decedent),
``(III) by any governmental unit or 
qualified nonprofit organization if the 
requirements of subparagraph (B)(ii) 
are met with respect to the placement 
in service by such unit or organization 
and all the income from such property 
is exempt from Federal income taxation,
``(IV) by any person who acquired 
such building by foreclosure (or by 
instrument in lieu of foreclosure) of 
any purchase-money security interest 
held by such person if the requirements 
of subparagraph (B)(ii) are met with 
respect to the placement in service by 
such person and such building is resold 
within 12 months after the date such 
building is placed in service by such 
person after such foreclosure, or
``(V) of a single-family residence 
by any individual who owned and used 
such residence for no other purpose 
than as his principal residence.
``(ii) Related person.--For purposes of 
subparagraph (B)(iii), a person (hereinafter in 
this subclause referred to as the `related 
person') is related to any person if the 
related person bears a relationship to such 
person specified in section 267(b) or 
707(b)(1), or the related person and such 
person are engaged in trades or businesses 
under common control (within the meaning of 
subsections (a) and (b) of section 52).
``(3) Special rules relating to determination of adjusted 
basis.--For purposes of this subsection--
``(A) In general.--Except as provided in 
subparagraph (B), the adjusted basis of any building 
shall be determined without regard to the adjusted 
basis of any property which is not residential rental 
property.
``(B) Basis of property in common areas, etc., 
included.--
``(i) In general.--Except as provided in 
clause (ii), the adjusted basis of any building 
shall be determined by taking into account the 
adjusted basis of property (of a character 
subject to the allowance for depreciation) used 
in common areas or provided as comparable 
amenities to all residential rental units in 
such building.
``(ii) Special rule.--In the case of any 
building for which the low-income housing tax 
credit is allowable under section 42, the 
adjusted basis of the building under this 
section shall be determined without regard to 
property used in common areas or provided as 
comparable amenities to all residential rental 
units in such building.
``(C) No reduction for depreciation.--The adjusted 
basis of any building shall be determined without 
regard to paragraphs (2) and (3) of section 1016(a).
``(4) Federal grants not taken into account in determining 
eligible basis.--The eligible basis of a building shall not 
include any costs financed with the proceeds of a Federally 
funded grant.
``(5) Credit allowable for certain buildings acquired 
during 10-year period.--On application by the taxpayer, the 
Secretary may waive paragraph (2)(B)(ii) with respect to any 
building acquired from an insured depository institution in 
default (as defined in section 3 of the Federal Deposit 
Insurance Act) or from a receiver or conservator of such an 
institution.
``(6) Acquisition of building before end of prior credit 
period.--
``(A) In general.--Under regulations prescribed by 
the Secretary, in the case of a building described in 
subparagraph (B) (or interest therein) which is 
acquired by the taxpayer--
``(i) paragraph (2)(B) shall not apply, but
``(ii) the credit allowable by reason of 
subsection (a) to the taxpayer for any period 
after such acquisition shall be equal to the 
amount of credit which would have been 
allowable under subsection (a) for such period 
to the prior owner referred to in subparagraph 
(B) had such owner not disposed of the 
building.
``(B) Description of building.--A building is 
described in this subparagraph if--
``(i) a credit was allowed by reason of 
subsection (a) to any prior owner of such 
building, and
``(ii) the taxpayer acquired such building 
before the end of the credit period for such 
building with respect to such prior owner 
(determined without regard to any disposition 
by such prior owner).
``(e) Rehabilitation Expenditures Treated as Separate New 
Building.--
``(1) In general.--Rehabilitation expenditures paid or 
incurred by the taxpayer with respect to any building shall be 
treated for purposes of this section as a separate new 
building.
``(2) Rehabilitation expenditures.--For purposes of 
paragraph (1)--
``(A) In general.--The term `rehabilitation 
expenditures' means amounts chargeable to capital 
account and incurred for property (or additions or 
improvements to property) of a character subject to the 
allowance for depreciation in connection with the 
rehabilitation of a building.
``(B) Cost of acquisition, etc., not included.--
Such term does not include the cost of acquiring any 
building (or interest therein) or any amount not 
permitted to be taken into account under paragraph (3) 
of subsection (d).
``(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.
``(3) Minimum expenditures to qualify.--
``(A) In general.--Paragraph (1) shall apply to 
rehabilitation expenditures with respect to any 
building only if--
``(i) the expenditures are allocable to 1 
or more middle-income units or substantially 
benefit such units, and
``(ii) the amount of such expenditures 
during any 24-month period meets the 
requirements of whichever of the following 
subclauses requires the greater amount of such 
expenditures:
``(I) The requirement of this 
subclause is met if such amount is not 
less than 20 percent of the adjusted 
basis of the building (determined as of 
the 1st day of such period and without 
regard to paragraphs (2) and (3) of 
section 1016(a)).
``(II) The requirement of this 
subclause is met if the qualified basis 
attributable to such amount, when 
divided by the number of middle-income 
units in the building, is equal to or 
greater than the dollar amount in 
effect under section 
42(e)(3)(A)(ii)(II) for the calendar 
year in which such expenditures are 
treated as placed in service under 
paragraph (4).
``(B) Date of determination.--The determination 
under subparagraph (A) shall be made as of the close of 
the 1st taxable year in the credit period with respect 
to such expenditures.
``(4) Special rules.--For purposes of applying this section 
with respect to expenditures which are treated as a separate 
building by reason of this subsection--
``(A) such expenditures shall be treated as placed 
in service at the close of the 24-month period referred 
to in paragraph (3)(A), and
``(B) the applicable fraction under subsection 
(c)(1) shall be the applicable fraction for the 
building (without regard to paragraph (1)) with respect 
to which the expenditures were incurred.
Nothing in subsection (d)(2) shall prevent a credit from being 
allowed by reason of this subsection.
``(5) No double counting.--Rehabilitation expenditures may, 
at the election of the taxpayer, be taken into account under 
this subsection or subsection (d)(2)(A)(i) but not under both 
such subsections.
``(6) Regulations to apply subsection with respect to group 
of units in building.--The Secretary may prescribe regulations, 
consistent with the purposes of this subsection, treating a 
group of units with respect to which rehabilitation 
expenditures are incurred as a separate new building.
``(f) Definition and Special Rules Relating to Credit Period.--
``(1) Credit period defined.--For purposes of this section, 
the term `credit period' means, with respect to any building, 
the period of 15 taxable years beginning with--
``(A) the taxable year in which the building is 
placed in service, or
``(B) at the election of the taxpayer, the 
succeeding taxable year,
but only if the building is a qualified middle-income building 
as of the close of the 1st year of such period. The election 
under subparagraph (B), once made, shall be irrevocable.
``(2) Special rule for 1st year of credit period.--
``(A) In general.--The credit allowable under 
subsection (a) with respect to any building for the 1st 
taxable year of the credit period shall be determined 
by substituting for the applicable fraction under 
subsection (c)(1) the fraction--
``(i) the numerator of which is the sum of 
the applicable fractions determined under 
subsection (c)(1) as of the close of each full 
month of such year during which such building 
was in service, and
``(ii) the denominator of which is 12.
``(B) Disallowed 1st-year credit allowed in 16th 
year.--Any reduction by reason of subparagraph (A) in 
the credit allowable (without regard to subparagraph 
(A)) for the 1st taxable year of the credit period 
shall be allowable under subsection (a) for the 1st 
taxable year following the credit period.
``(3) Determination of applicable percentage with respect 
to increases in qualified basis after 1st year of credit 
period.--
``(A) In general.--In the case of any building 
which was a qualified middle-income building as of the 
close of the 1st year of the credit period, if--
``(i) as of the close of any taxable year 
in the credit period (after the 1st year of 
such period) the qualified basis of such 
building, exceeds
``(ii) the qualified basis of such building 
as of the close of the 1st year of the credit 
period,
the applicable percentage which shall apply under 
subsection (a) for the taxable year to such excess 
shall be the percentage equal to \2/3\ of the 
applicable percentage which (after the application of 
subsection (h)) would but for this paragraph apply to 
such basis.
``(B) 1st year computation applies.--A rule similar 
to the rule of paragraph (2)(A) shall apply to any 
increase in qualified basis to which subparagraph (A) 
applies for the 1st year of such increase.
``(4) Dispositions of property.--If a building (or an 
interest therein) is disposed of during any year for which 
credit is allowable under subsection (a), such credit shall be 
allocated between the parties on the basis of the number of 
days during such year the building (or interest) was held by 
each.
``(5) Credit period for existing buildings not to begin 
before rehabilitation credit allowed.--
``(A) In general.--The credit period for an 
existing building shall not begin before the 1st 
taxable year of the credit period for rehabilitation 
expenditures with respect to the building.
``(B) Acquisition credit allowed for certain 
buildings not allowed a rehabilitation credit.--
``(i) In general.--In the case of a 
building described in clause (ii)--
``(I) subsection (d)(2)(B)(iv) 
shall not apply, and
``(II) the credit period for such 
building shall not begin before the 
taxable year which would be the 1st 
taxable year of the credit period for 
rehabilitation expenditures with 
respect to the building under the 
modifications described in clause 
(ii)(II).
``(ii) Building described.--A building is 
described in this clause if--
``(I) a waiver is granted under 
subsection (d)(4) with respect to the 
acquisition of the building, and
``(II) a credit would be allowed 
for rehabilitation expenditures with 
respect to such building if subsection 
(e)(3)(A)(ii)(I) did not apply and if 
the dollar amount in effect under 
subsection (e)(3)(A)(ii)(II) were two-
thirds of such amount.
``(g) Qualified Middle-Income Housing Project.--For purposes of 
this section--
``(1) In general.--The term `qualified middle-income 
housing project' means any project for residential rental 
property if 60 percent or more of the residential units in such 
project are both rent-restricted and occupied by individuals 
whose income is 100 percent or less of area median gross 
income. For purposes of the preceding sentence, residential 
units in a building which is not a qualified middle-income 
building by reason of subsection (c)(2)(B) shall not be taken 
into account.
``(2) Rent-restricted units.--
``(A) In general.--For purposes of paragraph (1), a 
residential unit is rent-restricted if the gross rent 
with respect to such unit does not exceed 30 percent of 
the imputed income limitation applicable to such unit. 
For purposes of the preceding sentence, the amount of 
the income limitation under paragraph (1) applicable 
for any period shall not be less than such limitation 
applicable for the earliest period the building (which 
contains the unit) was included in the determination of 
whether the project is a qualified middle-income 
housing project.
``(B) Gross rent.--For purposes of subparagraph 
(A), gross rent--
``(i) includes any utility allowance 
determined by the Secretary after taking into 
account such determinations under section 8 of 
the United States Housing Act of 1937,
``(ii) does not include any fee for a 
supportive service which is paid to the owner 
of the unit (on the basis of the middle-income 
status of the tenant of the unit) by any 
governmental program of assistance (or by an 
organization described in section 501(c)(3) and 
exempt from tax under section 501(a)) if such 
program (or organization) provides assistance 
for rent and the amount of assistance provided 
for rent is not separable from the amount of 
assistance provided for supportive services, 
and
``(iii) does not include any rental payment 
to the owner of the unit to the extent such 
owner pays an equivalent amount to the Farmers' 
Home Administration under section 515 of the 
Housing Act of 1949.
For purposes of clause (ii), the term `supportive 
service' means any service provided under a planned 
program of services designed to enable residents of a 
residential rental property to remain independent and 
avoid placement in a hospital, nursing home, or 
intermediate care facility for the mentally or 
physically handicapped.
``(C) Imputed income limitation applicable to 
unit.--For purposes of this paragraph, the imputed 
income limitation applicable to a unit is the income 
limitation which would apply under paragraph (1) to 
individuals occupying the unit if the number of 
individuals occupying the unit were as follows:
``(i) In the case of a unit which does not 
have a separate bedroom, 1 individual.
``(ii) In the case of a unit which has 1 or 
more separate bedrooms, 1.5 individuals for 
each separate bedroom.
In the case of a project with respect to which a credit 
is allowable by reason of this section and for which 
financing is provided by a bond described in section 
142(a)(7), the imputed income limitation shall apply in 
lieu of the otherwise applicable income limitation for 
purposes of applying section 142(d)(4)(B)(ii).
``(D) Treatment of units occupied by individuals 
whose incomes rise above limit.--
``(i) In general.--Except as provided in 
clause (ii), notwithstanding an increase in the 
income of the occupants of a middle-income unit 
above the income limitation applicable under 
paragraph (1), such unit shall continue to be 
treated as a middle-income unit if the income 
of such occupants initially met such income 
limitation and such unit continues to be rent-
restricted.
``(ii) Next available unit must be rented 
to middle-income tenant if income rises above 
140 percent of income limit.--If the income of 
the occupants of the unit increases above 140 
percent of the income limitation applicable 
under paragraph (1), clause (i) shall cease to 
apply to such unit if any residential rental 
unit in the building (of a size comparable to, 
or smaller than, such unit) is occupied by a 
new resident whose income exceeds such income 
limitation.
``(3) Date for meeting requirements.--
``(A) In general.--Except as otherwise provided in 
this paragraph, a building shall be treated as a 
qualified middle-income building only if the project 
(of which such building is a part) meets the 
requirements of paragraph (1) not later than the close 
of the 1st year of the credit period for such building.
``(B) Buildings which rely on later buildings for 
qualification.--
``(i) In general.--In determining whether a 
building (hereinafter in this subparagraph 
referred to as the `prior building') is a 
qualified middle-income building, the taxpayer 
may take into account 1 or more additional 
buildings placed in service during the 12-month 
period described in subparagraph (A) with 
respect to the prior building only if the 
taxpayer elects to apply clause (ii) with 
respect to each additional building taken into 
account.
``(ii) Treatment of elected buildings.--In 
the case of a building which the taxpayer 
elects to take into account under clause (i), 
the period under subparagraph (A) for such 
building shall end at the close of the 12-month 
period applicable to the prior building.
``(iii) Date prior building is treated as 
placed in service.--For purposes of determining 
the credit period for the prior building, the 
prior building shall be treated for purposes of 
this section as placed in service on the most 
recent date any additional building elected by 
the taxpayer (with respect to such prior 
building) was placed in service.
``(C) Special rule.--A building--
``(i) other than the 1st building placed in 
service as part of a project, and
``(ii) other than a building which is 
placed in service during the 12-month period 
described in subparagraph (A) with respect to a 
prior building which becomes a qualified 
middle-income building,
shall in no event be treated as a qualified middle-
income building unless the project is a qualified 
middle-income housing project (without regard to such 
building) on the date such building is placed in 
service.
``(D) Projects with more than 1 building must be 
identified.--For purposes of this section, a project 
shall be treated as consisting of only 1 building 
unless, before the close of the 1st calendar year in 
the project period (as defined in subsection 
(h)(1)(F)(ii)), each building which is (or will be) 
part of such project is identified in such form and 
manner as the Secretary may provide.
``(4) Certain rules made applicable.--Paragraphs (2) (other 
than subparagraph (A) thereof), (3), and (7) of section 142(d), 
and section 6652(j), shall apply for purposes of determining 
whether any project is a qualified middle-income housing 
project and whether any unit is a middle-income unit; except 
that, in applying such provisions for such purposes--
``(A) the term `gross rent' shall have the meaning 
given such term by paragraph (2)(B) of this subsection, 
and
``(B) the term `applicable income limit' means the 
limitation under paragraph (1) of this subsection.
``(5) Election to treat building after credit period as not 
part of a project.--For purposes of this section, the taxpayer 
may elect to treat any building as not part of a qualified 
middle-income housing project for any period beginning after 
the credit period for such building.
``(6) Special rule where de minimis equity contribution.--
Property shall not be treated as failing to be residential 
rental property for purposes of this section merely because the 
occupant of a residential unit in the project pays (on a 
voluntary basis) to the lessor a de minimis amount to be held 
toward the purchase by such occupant of a residential unit in 
such project if--
``(A) all amounts so paid are refunded to the 
occupant on the cessation of his occupancy of a unit in 
the project, and
``(B) the purchase of the unit is not permitted 
until after the close of the credit period with respect 
to the building in which the unit is located.
Any amount paid to the lessor as described in the preceding 
sentence shall be included in gross rent under paragraph (2) 
for purposes of determining whether the unit is rent-
restricted.
``(7) Scattered site projects.--Buildings which would (but 
for their lack of proximity) be treated as a project for 
purposes of this section shall be so treated if all of the 
dwelling units in each of the buildings are rent-restricted 
(within the meaning of paragraph (2)) residential rental units.
``(8) Waiver of certain recertifications.--On application 
by the taxpayer, the Secretary may waive any annual 
recertification of tenant income for purposes of this 
subsection, if the entire building is occupied by middle-income 
tenants.
``(9) Clarification of general public use requirement.--A 
project does not fail to meet the general public use 
requirement solely because of occupancy restrictions or 
preferences that favor tenants--
``(A) with special needs, or
``(B) who are members of a specified group under a 
Federal program or State program or policy that 
supports housing for such a specified group.
``(h) Limitation on Aggregate Credit Allowable With Respect to 
Projects Located in a State.--
``(1) Credit may not exceed credit amount allocated to 
building.--
``(A) In general.--The amount of the credit 
determined under this section for any taxable year with 
respect to any building shall not exceed the housing 
credit dollar amount allocated to such building under 
this subsection.
``(B) Time for making allocation.--Except in the 
case of an allocation which meets the requirements of 
subparagraph (C), (D), (E), or (F), an allocation shall 
be taken into account under subparagraph (A) only if it 
is made not later than the close of the calendar year 
in which the building is placed in service.
``(C) Exception where binding commitment.--An 
allocation meets the requirements of this subparagraph 
if there is a binding commitment (not later than the 
close of the calendar year in which the building is 
placed in service) by the housing credit agency to 
allocate a specified housing credit dollar amount to 
such building beginning in a specified later taxable 
year.
``(D) Exception where increase in qualified 
basis.--
``(i) In general.--An allocation meets the 
requirements of this subparagraph if such 
allocation is made not later than the close of 
the calendar year in which ends the taxable 
year to which it will 1st apply but only to the 
extent the amount of such allocation does not 
exceed the limitation under clause (ii).
``(ii) Limitation.--The limitation under 
this clause is the amount of credit allowable 
under this section (without regard to this 
subsection) for a taxable year with respect to 
an increase in the qualified basis of the 
building equal to the excess of--
``(I) the qualified basis of such 
building as of the close of the 1st 
taxable year to which such allocation 
will apply, over
``(II) the qualified basis of such 
building as of the close of the 1st 
taxable year to which the most recent 
prior housing credit allocation with 
respect to such building applied.
``(iii) Housing credit dollar amount 
reduced by full allocation.--Notwithstanding 
clause (i), the full amount of the allocation 
shall be taken into account under paragraph 
(2).
``(E) Exception where 10 percent of cost 
incurred.--
``(i) In general.--An allocation meets the 
requirements of this subparagraph if such 
allocation is made with respect to a qualified 
building which is placed in service not later 
than the close of the second calendar year 
following the calendar year in which the 
allocation is made.
``(ii) Qualified building.--For purposes of 
clause (i), the term `qualified building' means 
any building which is part of a project if the 
taxpayer's basis in such project (as of the 
date which is 1 year after the date that the 
allocation was made) is more than 10 percent of 
the taxpayer's reasonably expected basis in 
such project (as of the close of the second 
calendar year referred to in clause (i)). Such 
term does not include any existing building 
unless a credit is allowable under subsection 
(e) for rehabilitation expenditures paid or 
incurred by the taxpayer with respect to such 
building for a taxable year ending during the 
second calendar year referred to in clause (i) 
or the prior taxable year.
``(F) Allocation of credit on a project basis.--
``(i) In general.--In the case of a project 
which includes (or will include) more than 1 
building, an allocation meets the requirements 
of this subparagraph if--
``(I) the allocation is made to the 
project for a calendar year during the 
project period,
``(II) the allocation only applies 
to buildings placed in service during 
or after the calendar year for which 
the allocation is made, and
``(III) the portion of such 
allocation which is allocated to any 
building in such project is specified 
not later than the close of the 
calendar year in which the building is 
placed in service.
``(ii) Project period.--For purposes of 
clause (i), the term `project period' means the 
period--
``(I) beginning with the 1st 
calendar year for which an allocation 
may be made for the 1st building placed 
in service as part of such project, and
``(II) ending with the calendar 
year the last building is placed in 
service as part of such project.
``(2) Allocated credit amount to apply to all taxable years 
ending during or after credit allocation year.--Any housing 
credit dollar amount allocated to any building for any calendar 
year--
``(A) shall apply to such building for all taxable 
years in the credit period ending during or after such 
calendar year, and
``(B) shall reduce the aggregate housing credit 
dollar amount of the allocating agency only for such 
calendar year.
``(3) Housing credit dollar amount for agencies.--
``(A) In general.--The aggregate housing credit 
dollar amount which a housing credit agency may 
allocate for any calendar year is the portion of the 
State housing credit ceiling allocated under this 
paragraph for such calendar year to such agency.
``(B) State ceiling initially allocated to state 
housing credit agencies.--Except as provided in 
subparagraph (D), the State housing credit ceiling for 
each calendar year shall be allocated to the housing 
credit agency of such State. If there is more than 1 
housing credit agency of a State, all such agencies 
shall be treated as a single agency.
``(C) State housing credit ceiling.--The State 
housing credit ceiling applicable to any State for any 
calendar year shall be an amount equal to the sum of--
``(i) the greater of--
``(I) $1.00 multiplied by the State 
population, or
``(II) $1,140,000, plus
``(ii) the amount of State housing credit 
ceiling returned in the calendar year.
For purposes of clause (ii), the amount of State 
housing credit ceiling returned in the calendar year 
equals the housing credit dollar amount previously 
allocated within the State to any project which fails 
to meet the 10 percent test under paragraph (1)(E)(ii) 
on a date after the close of the calendar year in which 
the allocation was made or which does not become a 
qualified middle-income housing project within the 
period required by this section or the terms of the 
allocation or to any project with respect to which an 
allocation is cancelled by mutual consent of the 
housing credit agency and the allocation recipient.
``(D) State may provide for different allocation.--
Rules similar to the rules of section 146(e) (other 
than paragraph (2)(B) thereof) shall apply for purposes 
of this paragraph.
``(E) Population.--For purposes of this paragraph, 
population shall be determined in accordance with 
section 146(j).
``(F) Cost-of-living adjustment.--
``(i) In general.--In the case of a 
calendar year after 2024, the $1,140,000 and 
$1.00 amounts in subparagraph (C) shall each be 
increased by an amount equal to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for such calendar year by 
substituting `calendar year 2023' for 
`calendar year 2016' in subparagraph 
(A)(ii) thereof.
``(ii) Rounding.--
``(I) In the case of the $1,140,000 
amount, any increase under clause (i) 
which is not a multiple of $5,000 shall 
be rounded to the next lowest multiple 
of $5,000.
``(II) In the case of the $1.00 
amount, any increase under clause (i) 
which is not a multiple of 5 cents 
shall be rounded to the next lowest 
multiple of 5 cents.
``(4) Portion of state ceiling set-aside for certain 
projects involving qualified nonprofit organizations.--
``(A) In general.--Not more than 90 percent of the 
State housing credit ceiling (determined without regard 
to paragraph (7)) for any State for any calendar year 
shall be allocated to projects other than qualified 
middle-income housing projects described in 
subparagraph (B).
``(B) Projects involving qualified nonprofit 
organizations.--For purposes of subparagraph (A), a 
qualified middle-income housing project is described in 
this subparagraph if a qualified nonprofit organization 
is to own an interest in the project (directly or 
through a partnership) and materially participate 
(within the meaning of section 469(h)) in the 
development and operation of the project throughout the 
credit period.
``(C) Qualified nonprofit organization.--For 
purposes of this paragraph, the term `qualified 
nonprofit organization' means any organization if--
``(i) such organization is described in 
paragraph (3) or (4) of section 501(c) and is 
exempt from tax under section 501(a),
``(ii) such organization is determined by 
the State housing credit agency not to be 
affiliated with or controlled by a for-profit 
organization; and
``(iii) one of the exempt purposes of such 
organization includes the fostering of middle-
income housing.
``(D) Treatment of certain subsidiaries.--
``(i) In general.--For purposes of this 
paragraph, a qualified nonprofit organization 
shall be treated as satisfying the ownership 
and material participation test of subparagraph 
(B) if any qualified corporation in which such 
organization holds stock satisfies such test.
``(ii) Qualified corporation.--For purposes 
of clause (i), the term `qualified corporation' 
means any corporation if 100 percent of the 
stock of such corporation is held by 1 or more 
qualified nonprofit organizations at all times 
during the period such corporation is in 
existence.
``(E) State may not override set-aside.--Nothing in 
subparagraph (E) of paragraph (3) shall be construed to 
permit a State not to comply with subparagraph (A) of 
this paragraph.
``(5) Buildings eligible for credit only if minimum long-
term commitment to middle-income housing.--
``(A) In general.--No credit shall be allowed by 
reason of this section with respect to any building for 
the taxable year unless an extended middle-income 
housing commitment is in effect as of the end of such 
taxable year.
``(B) Extended middle-income housing commitment.--
For purposes of this paragraph, the term `extended 
middle-income housing commitment' means any agreement 
between the taxpayer and the housing credit agency--
``(i) which requires that the applicable 
fraction (as defined in subsection (c)(1)) for 
the building for each taxable year in the 
extended use period will not be less than the 
applicable fraction specified in such agreement 
and which prohibits the actions described in 
subclauses (I) and (II) of subparagraph 
(E)(ii),
``(ii) which allows individuals who meet 
the income limitation applicable to the 
building under subsection (g) (whether 
prospective, present, or former occupants of 
the building) the right to enforce in any State 
court the requirement and prohibitions of 
clause (i),
``(iii) which prohibits the disposition to 
any person of any portion of the building to 
which such agreement applies unless all of the 
building to which such agreement applies is 
disposed of to such person,
``(iv) which prohibits the refusal to lease 
to a holder of a voucher or certificate of 
eligibility under section 8 of the United 
States Housing Act of 1937 because of the 
status of the prospective tenant as such a 
holder,
``(v) which is binding on all successors of 
the taxpayer, and
``(vi) which, with respect to the property, 
is recorded pursuant to State law as a 
restrictive covenant.
``(C) Allocation of credit may not exceed amount 
necessary to support commitment.--The housing credit 
dollar amount allocated to any building may not exceed 
the amount necessary to support the applicable fraction 
specified in the extended middle-income housing 
commitment for such building, including any increase in 
such fraction pursuant to the application of subsection 
(f)(3) if such increase is reflected in an amended 
middle-income housing commitment.
``(D) Extended use period.--For purposes of this 
paragraph, the term `extended use period' means the 
period--
``(i) beginning on the 1st day in the 
credit period on which such building is part of 
a qualified middle-income housing project, and
``(ii) ending on the later of--
``(I) the date specified by such 
agency in such agreement, or
``(II) the date which is 15 years 
after the close of the credit period.
``(E) Exceptions if foreclosure or if no buyer 
willing to maintain middle-income status.--
``(i) In general.--The extended use period 
for any building shall terminate on the date 
the building is acquired by foreclosure (or 
instrument in lieu of foreclosure) unless the 
Secretary determines that such acquisition is 
part of an arrangement with the taxpayer a 
purpose of which is to terminate such period.
``(ii) Eviction, etc., of existing middle-
income tenants not permitted.--The termination 
of an extended use period under clause (i) 
shall not be construed to permit before the 
close of the 3-year period following such 
termination--
``(I) the eviction or the 
termination of tenancy (other than for 
good cause) of an existing tenant of 
any middle-income unit, or
``(II) any increase in the gross 
rent with respect to such unit not 
otherwise permitted under this section.
``(F) Effect of noncompliance.--If, during a 
taxable year, there is a determination that an extended 
middle-income housing agreement was not in effect as of 
the beginning of such year, such determination shall 
not apply to any period before such year and 
subparagraph (A) shall be applied without regard to 
such determination if the failure is corrected within 1 
year from the date of the determination.
``(G) Projects which consist of more than 1 
building.--The application of this paragraph to 
projects which consist of more than 1 building shall be 
made under regulations prescribed by the Secretary.
``(6) Special rules.--
``(A) Building must be located within jurisdiction 
of credit agency.--A housing credit agency may allocate 
its aggregate housing credit dollar amount only to 
buildings located in the jurisdiction of the 
governmental unit of which such agency is a part.
``(B) Agency allocations in excess of limit.--If 
the aggregate housing credit dollar amounts allocated 
by a housing credit agency for any calendar year exceed 
the portion of the State housing credit ceiling 
allocated to such agency for such calendar year, the 
housing credit dollar amounts so allocated shall be 
reduced (to the extent of such excess) for buildings in 
the reverse of the order in which the allocations of 
such amounts were made.
``(C) Credit reduced if allocated credit dollar 
amount is less than credit which would be allowable 
without regard to placed in service convention, etc.--
``(i) In general.--The amount of the credit 
determined under this section with respect to 
any building shall not exceed the clause (ii) 
percentage of the amount of the credit which 
would (but for this subparagraph) be determined 
under this section with respect to such 
building.
``(ii) Determination of percentage.--For 
purposes of clause (i), the clause (ii) 
percentage with respect to any building is the 
percentage which--
``(I) the housing credit dollar 
amount allocated to such building, 
bears to
``(II) the credit amount determined 
in accordance with clause (iii).
``(iii) Determination of credit amount.--
The credit amount determined in accordance with 
this clause is the amount of the credit which 
would (but for this subparagraph) be determined 
under this section with respect to the building 
if--
``(I) this section were applied 
without regard to paragraphs (2)(A) and 
(3)(B) of subsection (f), and
``(II) subsection (f)(3)(A) were 
applied without regard to `the 
percentage equal to \2/3\ of'.
``(D) Housing credit agency to specify applicable 
percentage and maximum qualified basis.--In allocating 
a housing credit dollar amount to any building, the 
housing credit agency shall specify the applicable 
percentage and the maximum qualified basis which may be 
taken into account under this section with respect to 
such building. The applicable percentage and maximum 
qualified basis so specified shall not exceed the 
applicable percentage and qualified basis determined 
under this section without regard to this subsection.
``(7) Increase in state ceiling dedicated to certain rural 
development projects.--
``(A) In general.--The State housing credit ceiling 
for any calendar year shall be increased by an amount 
equal to 5 percent of the amount determined under 
paragraph (3)(C)(i).
``(B) Use of increased amount.--The amount of the 
increase under subparagraph (A) for any calendar year 
may only be allocated to buildings located in a rural 
area (as defined in section 42(d)(5)(B)(iii)(IV)).
``(8) Other definitions.--For purposes of this subsection--
``(A) Housing credit agency.--The term `housing 
credit agency' means any agency authorized to carry out 
this subsection.
``(B) Possessions treated as states.--The term 
`State' includes a possession of the United States.
``(9) Credit for buildings financed by tax-exempt bonds 
subject to volume cap not taken into account.--Rules similar to 
the rules of subsections (h)(4), (m)(1)(D), and (m)(2)(D) of 
section 42 shall apply for purposes of this subsection.
``(i) Definitions and Special Rules.--For purposes of this 
section--
``(1) Middle-income unit.--
``(A) In general.--The term `middle-income unit' 
means any unit in a building if--
``(i) such unit is rent-restricted (as 
defined in subsection (g)(2)), and
``(ii) the individuals occupying such unit 
meet the income limitation applicable under 
subsection (g)(1) to the project of which such 
building is a part.
``(B) Exceptions.--
``(i) Exclusion of low-income units.--A 
unit shall not be treated as a middle-income 
unit if such unit is a low-income unit (as 
defined under section 42(i)(3)).
``(ii) Unit must be suitable for permanent 
occupancy.--
``(I) In general.--A unit shall not 
be treated as a middle-income unit 
unless the unit is suitable for 
occupancy and used other than on a 
transient basis.
``(II) Suitability for occupancy.--
For purposes of subclause (I), the 
suitability of a unit for occupancy 
shall be determined under regulations 
prescribed by the Secretary taking into 
account local health, safety, and 
building codes.
``(III) Single-room occupancy 
units.--For purposes of subclause (I), 
a single-room occupancy unit shall not 
be treated as used on a transient basis 
merely because it is rented on a month-
by-month basis.
``(C) Special rule for buildings having 4 or fewer 
units.--In the case of any building which has 4 or 
fewer residential rental units, no unit in such 
building shall be treated as a middle-income unit if 
the units in such building are owned by--
``(i) any individual who occupies a 
residential unit in such building, or
``(ii) any person who is related (as 
defined in subsection (d)(2)(D)(ii)) to such 
individual.
``(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 middle-income unit.
``(ii) Exceptions.--Clause (i) shall not 
apply to a unit occupied by an individual who--
``(I) is married, if such 
individual's spouse also occupies the 
unit,
``(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 one or more qualifying 
children (as defined in section 
152(c)), if such children also occupy 
the unit, the individual is not a 
dependent (as defined in section 152, 
determined without regard to 
subsections (b)(1), (b)(2), and 
(d)(1)(B) thereof) of another 
individual, and such children are not 
claimed as dependents (as so defined) 
of another individual, or
``(V) 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) was 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))).
``(E) Owner-occupied buildings having 4 or fewer 
units eligible for credit where development plan.--
``(i) In general.--Subparagraph (C) shall 
not apply to the acquisition or rehabilitation 
of a building pursuant to a development plan of 
action sponsored by a State or local government 
or a qualified nonprofit organization.
``(ii) Limitation on credit.--In the case 
of a building to which clause (i) applies, the 
applicable fraction shall not exceed 80 percent 
of the unit fraction.
``(iii) Certain unrented units treated as 
owner-occupied.--In the case of a building to 
which clause (i) applies, any unit which is not 
rented for 90 days or more shall be treated as 
occupied by the owner of the building as of the 
1st day it is not rented.
``(2) New building.--The term `new building' means a 
building the original use of which begins with the taxpayer.
``(3) Existing building.--The term `existing building' 
means any building which is not a new building.
``(4) Application to estates and trusts.--In the case of an 
estate or trust, the amount of the credit determined under 
subsection (a) shall be apportioned between the estate or trust 
and the beneficiaries on the basis of the income of the estate 
or trust allocable to each.
``(5) Impact of tenant's option to acquire property.--
``(A) In general.--No Federal income tax benefit 
shall fail to be allowable to the taxpayer with respect 
to any qualified middle-income building merely by 
reason of an option held by the tenants (in cooperative 
form or otherwise) or resident management corporation 
of such building or by a qualified nonprofit 
organization or government agency to purchase 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 after 
the close of the credit period for a price which is not 
less than the minimum purchase price determined under 
subparagraph (B).
``(B) Minimum purchase price.--For purposes of 
subparagraph (A), the minimum purchase price under this 
subparagraph is an amount equal to the principal amount 
of outstanding indebtedness secured by the building 
(other than indebtedness incurred within the 5-year 
period ending on the date of the sale to the tenants). 
In the case of a purchase of a partnership interest, 
the minimum purchase price is an amount equal to such 
interest's ratable share of the amount determined under 
the preceding sentence.
``(6) Treatment of rural projects.--For purposes of this 
section, in the case of any project for residential rental 
property located in a rural area (as defined in section 520 of 
the Housing Act of 1949), any income limitation measured by 
reference to area median gross income shall be measured by 
reference to the greater of area median gross income or 
national non-metropolitan median income.
``(7) Determination of whether building is federally 
subsidized.--
``(A) In general.--Except as otherwise provided in 
this paragraph, for purposes of this section, a project 
shall be treated as Federally subsidized for any 
taxable year if, at any time during such taxable year 
or any prior taxable year, there is or was outstanding 
any obligation the interest on which is exempt from tax 
under section 103 the proceeds of which are or were 
used (directly or indirectly) with respect to such 
project or the operation thereof.
``(B) Special rule for subsidized construction 
financing.--Subparagraph (A) shall not apply to any 
tax-exempt obligation used to provide construction 
financing for any building if--
``(i) such obligation (when issued) 
identified the building for which the proceeds 
of such obligation would be used, and
``(ii) such obligation is redeemed before 
such building is placed in service.
``(8) Reduction in basis.--In the case of any building for 
which a credit is allowable under this section and section 42, 
the basis of the building shall be reduced by the amount of 
such credit allowed under subsection (a).
``(j) Application of At-Risk Rules.--For purposes of this section--
``(1) In general.--Except as otherwise provided in this 
subsection, rules similar to the rules of section 49(a)(1) 
(other than subparagraphs (D)(ii)(II) and (D)(iv)(I) thereof), 
section 49(a)(2), and section 49(b)(1) shall apply in 
determining the qualified basis of any building in the same 
manner as such sections apply in determining the credit base of 
property.
``(2) Special rules for determining qualified person.--For 
purposes of paragraph (1)--
``(A) In general.--If the requirements of 
subparagraphs (B), (C), and (D) are met with respect to 
any financing borrowed from a qualified nonprofit 
organization, the determination of whether such 
financing is qualified commercial financing with 
respect to any qualified middle-income building shall 
be made without regard to whether such organization--
``(i) is actively and regularly engaged in 
the business of lending money, or
``(ii) is a person described in section 
49(a)(1)(D)(iv)(II).
``(B) Financing secured by property.--The 
requirements of this subparagraph are met with respect 
to any financing if such financing is secured by the 
qualified middle-income building, except that this 
subparagraph shall not apply in the case of a federally 
assisted building described in subsection (d)(5)(B) 
if--
``(i) a security interest in such building 
is not permitted by a Federal agency holding or 
insuring the mortgage secured by such building, 
and
``(ii) the proceeds from the financing (if 
any) are applied to acquire or improve such 
building.
``(C) Portion of building attributable to 
financing.--The requirements of this subparagraph are 
met with respect to any financing for any taxable year 
in the credit period if, as of the close of such 
taxable year, not more than 60 percent of the eligible 
basis of the qualified middle-income building is 
attributable to such financing (reduced by the 
principal and interest of any governmental financing 
which is part of a wrap-around mortgage involving such 
financing).
``(D) Repayment of principal and interest.--The 
requirements of this subparagraph are met with respect 
to any financing if such financing is fully repaid on 
or before the earliest of--
``(i) the date on which such financing 
matures,
``(ii) the 90th day after the close of the 
credit period with respect to the qualified 
middle-income building, or
``(iii) the date of its refinancing or the 
sale of the building to which such financing 
relates.
In the case of a qualified nonprofit organization which 
is not described in section 49(a)(1)(D)(iv)(II) with 
respect to a building, clause (ii) of this subparagraph 
shall be applied as if the date described therein were 
the 90th day after the earlier of the date the building 
ceases to be a qualified middle-income building or the 
date which is 15 years after the close of a credit 
period with respect thereto.
``(3) Present value of financing.--If the rate of interest 
on any financing described in paragraph (2)(A) is less than the 
rate which is 1 percentage point below the applicable Federal 
rate as of the time such financing is incurred, then the 
qualified basis (to which such financing relates) of the 
qualified middle-income building shall be the present value of 
the amount of such financing, using as the discount rate such 
applicable Federal rate. For purposes of the preceding 
sentence, the rate of interest on any financing shall be 
determined by treating interest to the extent of government 
subsidies as not payable.
``(4) Failure to fully repay.--
``(A) In general.--To the extent that the 
requirements of paragraph (2)(D) are not met, then the 
taxpayer's tax under this chapter for the taxable year 
in which such failure occurs shall be increased by an 
amount equal to the applicable portion of the credit 
under this section with respect to such building, 
increased by an amount of interest for the period--
``(i) beginning with the due date for the 
filing of the return of tax imposed by chapter 
1 for the 1st taxable year for which such 
credit was allowable, and
``(ii) ending with the due date for the 
taxable year in which such failure occurs,
determined by using the underpayment rate and method 
under section 6621.
``(B) Applicable portion.--For purposes of 
subparagraph (A), the term `applicable portion' means 
the aggregate decrease in the credits allowed to a 
taxpayer under section 38 for all prior taxable years 
which would have resulted if the eligible basis of the 
building were reduced by the amount of financing which 
does not meet requirements of paragraph (2)(D).
``(C) Certain rules to apply.--Rules similar to the 
rules of subparagraphs (A) and (D) of section 42(j)(4) 
shall apply for purposes of this subsection.
``(k) Certifications and Other Reports to Secretary.--
``(1) Certification with respect to 1st year of credit 
period.--Following the close of the 1st taxable year in the 
credit period with respect to any qualified middle-income 
building, the taxpayer shall certify to the Secretary (at such 
time and in such form and in such manner as the Secretary 
prescribes)--
``(A) the taxable year, and calendar year, in which 
such building was placed in service,
``(B) the adjusted basis and eligible basis of such 
building as of the close of the 1st year of the credit 
period,
``(C) the maximum applicable percentage and 
qualified basis permitted to be taken into account by 
the appropriate housing credit agency under subsection 
(h), and
``(D) such other information as the Secretary may 
require.
In the case of a failure to make the certification required by 
the preceding sentence on the date prescribed therefor, unless 
it is shown that such failure is due to reasonable cause and 
not to willful neglect, no credit shall be allowable by reason 
of subsection (a) with respect to such building for any taxable 
year ending before such certification is made.
``(2) Annual reports to the secretary.--The Secretary may 
require taxpayers to submit an information return (at such time 
and in such form and manner as the Secretary prescribes) for 
each taxable year setting forth--
``(A) the qualified basis for the taxable year of 
each qualified middle-income building of the taxpayer,
``(B) the information described in paragraph (1)(C) 
for the taxable year, and
``(C) such other information as the Secretary may 
require.
The penalty under section 6652(j) shall apply to any failure to 
submit the return required by the Secretary under the preceding 
sentence on the date prescribed therefor.
``(3) Annual reports from housing credit agencies.--Each 
agency which allocates any housing credit amount to any 
building for any calendar year shall submit to the Secretary 
(at such time and in such manner as the Secretary shall 
prescribe) an annual report specifying--
``(A) the amount of housing credit amount allocated 
to each building for such year,
``(B) sufficient information to identify each such 
building and the taxpayer with respect thereto, and
``(C) such other information as the Secretary may 
require.
The penalty under section 6652(j) shall apply to any failure to 
submit the report required by the preceding sentence on the 
date prescribed therefor.
``(l) Responsibilities of Housing Credit Agencies.--
``(1) Plans for allocation of credit among projects.--
``(A) In general.--Notwithstanding any other 
provision of this section, the housing credit dollar 
amount with respect to any building shall be zero 
unless--
``(i) such amount was allocated pursuant to 
a qualified allocation plan of the housing 
credit agency which is approved by the 
governmental unit (in accordance with rules 
similar to the rules of section 42(m)(1)) of 
which such agency is a part,
``(ii) a comprehensive market study of the 
housing needs of middle-income individuals in 
the area to be served by the project is 
conducted before the credit allocation is made 
and at the developer's expense by a 
disinterested party who is approved by such 
agency, and
``(iii) a written explanation is available 
to the general public for any allocation of a 
housing credit dollar amount which is not made 
in accordance with established priorities and 
selection criteria of the housing credit 
agency.
``(B) Qualified allocation plan.--For purposes of 
this paragraph, the term `qualified allocation plan' 
means any plan--
``(i) which sets forth selection criteria 
to be used to determine housing priorities of 
the housing credit agency which are appropriate 
to local conditions,
``(ii) which also gives preference in 
allocating housing credit dollar amounts among 
selected projects to--
``(I) projects obligated to serve 
qualified tenants for the longest 
periods,
``(II) projects in areas where 
rents are unaffordable to median income 
households,
``(III) projects which target 
housing to tenants at a range of 
incomes between 60 and 100 percent of 
area median gross income, and
``(IV) projects located near 
transit hubs, and
``(iii) which provides a procedure that the 
agency (or an agent or other private contractor 
of such agency) will follow in monitoring for 
noncompliance with the provisions of this 
section and in notifying the Internal Revenue 
Service of such noncompliance which such agency 
becomes aware of and in monitoring for 
noncompliance with habitability standards 
through regular site visits.
``(C) Certain selection criteria must be used.--The 
selection criteria set forth in a qualified allocation 
plan must include--
``(i) project location,
``(ii) housing needs characteristics,
``(iii) project characteristics, including 
whether the project includes the use of 
existing housing as part of a community 
revitalization plan,
``(iv) sponsor characteristics,
``(v) tenant populations with special 
housing needs,
``(vi) tenant populations of individuals 
with children,
``(vii) projects intended for eventual 
tenant ownership,
``(viii) the energy efficiency of the 
project, and
``(ix) the historic nature of the project.
``(D) Certain selection criteria prohibited.--The 
selection criteria set forth in a qualified allocation 
plan shall not include a requirement of local approval 
or local contributions, either as a threshold 
qualification requirement or as part of a point system 
to be considered for allocations of housing credit 
dollar amount.
``(2) Credit allocated to building not to exceed amount 
necessary to assure project feasibility.--
``(A) In general.--The housing credit dollar amount 
allocated to a project shall not exceed the amount the 
housing credit agency determines is necessary for the 
financial feasibility of the project and its viability 
as a qualified middle-income housing project throughout 
the credit period.
``(B) Agency evaluation.--In making the 
determination under subparagraph (A), the housing 
credit agency shall consider--
``(i) the sources and uses of funds and the 
total financing planned for the project,
``(ii) any proceeds or receipts expected to 
be generated by reason of tax benefits,
``(iii) the percentage of the housing 
credit dollar amount used for project costs 
other than the cost of intermediaries, and
``(iv) the reasonableness of the 
developmental and operational costs of the 
project.
Clause (iii) shall not be applied so as to impede the 
development of projects in hard-to-develop areas. Such 
a determination shall not be construed to be a 
representation or warranty as to the feasibility or 
viability of the project.
``(C) Determination made when credit amount applied 
for and when building placed in service.--
``(i) In general.--A determination under 
subparagraph (A) shall be made as of each of 
the following times:
``(I) The application for the 
housing credit dollar amount.
``(II) The allocation of the 
housing credit dollar amount.
``(III) The date the building is 
placed in service.
``(ii) Certification as to amount of other 
subsidies.--Prior to each determination under 
clause (i), the taxpayer shall certify to the 
housing credit agency the full extent of all 
Federal, State, and local subsidies which apply 
(or which the taxpayer expects to apply) with 
respect to the building.
``(m) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations--
``(1) dealing with--
``(A) projects which include more than 1 building 
or only a portion of a building, or
``(B) buildings which are placed in service in 
portions,
``(2) providing for the application of this section to 
short taxable years,
``(3) preventing the avoidance of the rules of this 
section, and
``(4) providing the opportunity for housing credit agencies 
to correct administrative errors and omissions with respect to 
allocations and record keeping within a reasonable period after 
their discovery, taking into account the availability of 
regulations and other administrative guidance from the 
Secretary.''.
(b) Treatment as Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 is amended by striking ``plus'' at 
the end of paragraph (40), by striking the period at the end of 
paragraph (41) and inserting ``, plus'', and by adding at the end the 
following new paragraph:
``(42) the middle-income housing credit determined under 
section 42A(a).''.
(c) Unused Allocations Carried Over to Low-Income Housing Credit.--
(1) In general.--Clause (i) of section 42(h)(3)(C) of the 
Internal Revenue Code of 1986 is amended--
(A) by striking ``the unused'' and inserting ``the 
sum of--
``(I) the unused'',
(B) by inserting ``plus'' after ``calendar year,'', 
and
(C) by adding at the end the following new 
subclause:
``(II) the unused middle-income 
State housing credit (if any) of such 
State for the preceding calendar 
year,''.
(2) Unused middle-income state housing credit.--The second 
sentence of section 42(h)(3)(C) of such Code is amended by 
inserting ``, and the unused middle-income State housing credit 
for any calendar year is the excess (if any) of the amount 
described in section 42A(h)(3)(C) (after application of section 
42A(h)(7)) for such State over the aggregate amount of middle-
income housing credit dollar amount allocated by such State 
under section 42A for such year'' after ``for such year''.
(3) Unused middle income state housing credit included in 
carryover allocation.--Section 42(h)(3)(D)(ii) of such Code is 
amended--
(A) by inserting ``the sum of'' after ``is the 
excess (if any) of''; and
(B) by inserting ``plus the unused middle-income 
State housing credit (as so defined)'' after ``as 
defined in subparagraph (C)(i))''.
(d) Reduction in Basis.--Section 1016(a) of the Internal Revenue 
Code of 1986 is amended--
(1) by striking ``and'' at the end of paragraph (37);
(2) by redesignating paragraph (38) as paragraph (39); and
(3) by inserting after paragraph (37) the following new 
paragraph:
``(38) to the extent provided in section 42A(i)(8), and''.
(e) Treatment Under Base Erosion Minimum Tax.--Section 59A(b)(4) of 
he Internal Revenue Code of 1986 is amended by redesignating 
subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, 
and by inserting after subparagraphs (A) the following new 
subparagraph:
``(B) the middle-income housing credit determined 
under section 42A(a),''.
(f) Conforming Amendments.--
(1) Section 45L(e) of the Internal Revenue Code of 1986 is 
amended by inserting ``or 42A'' after ``42''.
(2) Section 50(c)(3)(C) of such Code is amended by 
inserting ``or 42A'' after ``42''.
(3) Section 55(c)(1) of such Code is amended by inserting 
``42A(j),'' before ``45(e)(11)(C)''.
(4) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of 
section 469 of such Code are each amended by inserting ``or 
42A'' after ``42''.
(5) The table of sections for subpart D of part IV of 
subchapter A of chapter 1 of such Code is amended by inserting 
after the item relating to section 42 the following new item:

``Sec. 42A. Middle-income housing credit.''.
(g) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after December 31, 2023, in 
taxable years ending after such date.

SEC. 214. NEIGHBORHOOD HOMES CREDIT.

(a) Findings and Purpose.--
(1) Findings.--Congress finds the following:
(A) Experts have determined that it could take 
nearly a decade to address the housing shortage in the 
United States, in large part due to increasing housing 
prices and decreased housing inventory.
(B) The housing supply shortage disproportionately 
impacts low-income and distressed communities.
(C) Homeownership is a primary source of household 
wealth and neighborhood stability. Many distressed 
communities have low rates of homeownership and lack 
quality, affordable starter homes.
(D) Housing revitalization in distressed 
communities is prevented by the value gap, the 
difference between the price to rehabilitate a home and 
the sale value of the home.
(E) The Neighborhood Homes Investment Act can 
address the value gap to increase housing 
rehabilitation in distressed communities.
(F) This section and the amendments made by this 
section have the potential to generate 500,000 homes 
over 10 years, $125,000,000,000 of total development 
activity, over 800,000 jobs in construction and 
construction-related industries, and over 
$35,000,000,000 in Federal, state, and local tax 
revenues.
(2) Sense of congress.--It is the sense of Congress that 
the neighborhood homes credit (as added under this section) 
should be an activity administered in a manner which--
(A) is consistent with the Fair Housing Act of 1968 
(42 U.S.C. 3601 et seq.);
(B) empowers residents in eligible communities; and
(C) revitalizes distressed neighborhoods.
(b) Allowance of Credit.--Subpart D of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986, as amended by section 
213, is amended by inserting after section 42A the following new 
section:

``SEC. 42B. NEIGHBORHOOD HOMES CREDIT.

``(a) Allowance of Credit.--For purposes of section 38, the 
neighborhood homes credit determined under this section for the taxable 
year is, with respect to each qualified residence sold by the taxpayer 
during such taxable year in an affordable sale, the lesser of--
``(1) an amount equal to--
``(A) the excess (if any) of--
``(i) the reasonable development costs paid 
or incurred by the taxpayer with respect to 
such qualified residence, over
``(ii) the sale price of such qualified 
residence (reduced by any reasonable expenses 
paid or incurred by the taxpayer in connection 
with such sale), or
``(B) if the neighborhood homes credit agency 
determines it is necessary to ensure financial 
feasibility, an amount not to exceed 120 percent of the 
amount under subparagraph (A),
``(2) 35 percent of the eligible development costs paid or 
incurred by the taxpayer with respect to such qualified 
residence, or
``(3) 28 percent of the national median sale price for new 
homes (as determined pursuant to the most recent census data 
available as of the date on which the neighborhood homes credit 
agency makes an allocation for the qualified project).
``(b) Development Costs.--For purposes of this section--
``(1) Reasonable development costs.--
``(A) In general.--The term `reasonable development 
costs' means amounts paid or incurred for the 
acquisition of buildings and land, construction, 
substantial rehabilitation, demolition of structures, 
or environmental remediation, to the extent that the 
neighborhood homes credit agency determines that such 
amounts meet the standards specified pursuant to 
subsection (f)(1)(C) (as of the date on which 
construction or substantial rehabilitation is 
substantially complete, as determined by such agency) 
and are necessary to ensure the financial feasibility 
of such qualified residence.
``(B) Considerations in making determination.--In 
making the determination under subparagraph (A), the 
neighborhood homes credit agency shall consider--
``(i) the sources and uses of funds and the 
total financing,
``(ii) any proceeds or receipts generated 
or expected to be generated by reason of tax 
benefits, and
``(iii) the reasonableness of the 
developmental costs and fees.
``(2) Eligible development costs.--The term `eligible 
development costs' means the amount which would be reasonable 
development costs if the amounts taken into account as paid or 
incurred for the acquisition of buildings and land did not 
exceed 75 percent of such costs determined without regard to 
any amount paid or incurred for the acquisition of buildings 
and land.
``(3) Substantial rehabilitation.--The term `substantial 
rehabilitation' means amounts paid or incurred for 
rehabilitation of a qualified residence if such amounts exceed 
the greater of--
``(A) $20,000, or
``(B) 20 percent of the amounts paid or incurred by 
the taxpayer for the acquisition of buildings and land 
with respect to such qualified residence.
``(4) Construction and rehabilitation only after allocation 
taken into account.--
``(A) In general.--The terms `reasonable 
development costs' and `eligible development costs' 
shall not include any amount paid or incurred before 
the date on which an allocation is made to the taxpayer 
under subsection (e) with respect to the qualified 
project of which the qualified residence is part unless 
such amount is paid or incurred for the acquisition of 
buildings or land.
``(B) Land and building acquisition costs.--Amounts 
paid or incurred for the acquisition of buildings or 
land shall be included under paragraph (A) only if paid 
or incurred not more than 3 years before the date on 
which the allocation referred to in subparagraph (A) is 
made. If the taxpayer acquired any building or land 
from an entity (or any related party to such entity) 
that holds an ownership interest in the taxpayer, then 
such entity must also have acquired such property 
within such 3-year period, and the acquisition cost 
included under subparagraph (A) with respect to the 
taxpayer shall not exceed the amount such entity paid 
or incurred to acquire such property.
``(c) Qualified Residence.--For purposes of this section--
``(1) In general.--The term `qualified residence' means a 
residence that--
``(A) is real property affixed on a permanent 
foundation,
``(B) is--
``(i) a house which is comprised of 4 or 
fewer residential units,
``(ii) a condominium unit, or
``(iii) a house or an apartment owned by a 
cooperative housing corporation (as defined in 
section 216(b)),
``(C) is part of a qualified project with respect 
to which the neighborhood homes credit agency has made 
an allocation under subsection (e), and
``(D) is located in a qualified census tract 
(determined as of the date of such allocation).
``(2) Qualified census tract.--
``(A) In general.--The term `qualified census 
tract' means a census tract--
``(i) which--
``(I) has a median family income 
which does not exceed 80 percent of the 
median family income for the applicable 
area,
``(II) has a poverty rate that is 
not less than 130 percent of the 
poverty rate of the applicable area, 
and
``(III) has a median value for 
owner-occupied homes that does not 
exceed the median value for owner-
occupied homes in the applicable area,
``(ii) which--
``(I) is located in a city which 
has a population of not less than 
50,000 and such city has a poverty rate 
that is not less than 150 percent of 
the poverty rate of the applicable 
area,
``(II) has a median family income 
which does not exceed the median family 
income for the applicable area, and
``(III) has a median value for 
owner-occupied homes that does not 
exceed 80 percent of the median value 
for owner-occupied homes in the 
applicable area,
``(iii) which--
``(I) is located in a 
nonmetropolitan county,
``(II) has a median family income 
which does not exceed the median family 
income for the applicable area, and
``(III) has been designated by a 
neighborhood homes credit agency under 
this clause, or
``(iv) which is not otherwise a qualified 
census tract and is located in a disaster area 
(as defined in section 7508A(d)(3)), but only 
with respect to credits allocated in any period 
during which the President of the United States 
has determined that such area warrants 
individual or individual and public assistance 
by the Federal Government under the Robert T. 
Stafford Disaster Relief and Emergency 
Assistance Act.
``(B) Applicable area.--The term `applicable area' 
means--
``(i) in the case of a metropolitan census 
tract, the metropolitan area in which such 
census tract is located, and
``(ii) in the case of a census tract other 
than a census tract described in clause (i), 
the State.
``(d) Affordable Sale.--For purposes of this section--
``(1) In general.--The term `affordable sale' means a sale 
to a qualified homeowner of a qualified residence that the 
neighborhood homes credit agency certifies as meeting the 
standards promulgated under subsection (f)(1)(D) for a price 
that does not exceed--
``(A) in the case of any qualified residence not 
described in subparagraph (B), (C), or (D), the amount 
equal to the product of 4 multiplied by the median 
family income for the applicable area (as determined 
pursuant to the most recent census data available as of 
the date of the contract for such sale),
``(B) in the case of a house comprised of 2 
residential units, 125 percent of the amount described 
in subparagraph (A),
``(C) in the case of a house comprised of 3 
residential units, 150 percent of the amount described 
in subparagraph (A), or
``(D) in the case of a house comprised of 4 
residential units, 175 percent of the amount described 
in subparagraph (A).
``(2) Qualified homeowner.--The term `qualified homeowner' 
means, with respect to a qualified residence, an individual--
``(A) who owns and uses such qualified residence as 
the principal residence of such individual, and
``(B) whose family income (determined as of the 
date that a binding contract for the affordable sale of 
such residence is entered into) is 140 percent or less 
of the median family income for the applicable area in 
which the qualified residence is located.
``(e) Credit Ceiling and Allocations.--
``(1) Credit limited based on allocations to qualified 
projects.--
``(A) In general.--The credit allowed under 
subsection (a) to any taxpayer for any taxable year 
with respect to one or more qualified residences which 
are part of the same qualified project shall not exceed 
the excess (if any) of--
``(i) the amount allocated by the 
neighborhood homes credit agency under this 
paragraph to such taxpayer with respect to such 
qualified project, over
``(ii) the aggregate amount of credit 
allowed under subsection (a) to such taxpayer 
with respect to qualified residences which are 
a part of such qualified project for all prior 
taxable years.
``(B) Deadline for completion.--No credit shall be 
allowed under subsection (a) with respect to any 
qualified residence unless the affordable sale of such 
residence is during the 5-year period beginning on the 
date of the allocation to the qualified project of 
which such residence is a part (or, in the case of a 
qualified residence to which subsection (i) applies, 
the rehabilitation of such residence is completed 
during such 5-year period).
``(2) Limitations on allocations to qualified projects.--
``(A) Allocations limited by state neighborhood 
homes credit ceiling.--The aggregate amount allocated 
to taxpayers with respect to qualified projects by the 
neighborhood homes credit agency of any State for any 
calendar year shall not exceed the State neighborhood 
homes credit amount of such State for such calendar 
year.
``(B) Set-aside for certain projects involving 
qualified nonprofit organizations.--Rules similar to 
the rules of section 42(h)(5) shall apply for purposes 
of this section.
``(3) Determination of state neighborhood homes credit 
ceiling.--
``(A) In general.--The State neighborhood homes 
credit amount for a State for a calendar year is an 
amount equal to the sum of--
``(i) the greater of--
``(I) the product of $7, multiplied 
by the State population (determined in 
accordance with section 146(j)), or
``(II) $9,000,000, and
``(ii) any amount previously allocated to 
any taxpayer with respect to any qualified 
project by the neighborhood homes credit agency 
of such State which can no longer be allocated 
to any qualified residence because the 5-year 
period described in paragraph (1)(B) expires 
during calendar year.
``(B) 3-year carryforward of unused limitation.--
The State neighborhood homes credit amount for a State 
for a calendar year shall be increased by the excess 
(if any) of the State neighborhood homes credit amount 
for such State for the preceding calendar year over the 
aggregate amount allocated by the neighborhood homes 
credit agency of such State during such preceding 
calendar year. Any amount carried forward under the 
preceding sentence shall not be carried past the third 
calendar year after the calendar year in which such 
credit amount originally arose, determined on a first-
in, first-out basis.
``(f) Responsibilities of Neighborhood Homes Credit Agencies.--
``(1) In general.--Notwithstanding subsection (e), the 
State neighborhood homes credit dollar amount shall be zero for 
a calendar year unless the neighborhood homes credit agency of 
the State--
``(A) allocates such amount pursuant to a qualified 
allocation plan of the neighborhood homes credit 
agency,
``(B) allocates not more than 20 percent of amounts 
allocated in the previous year (or for allocations made 
in 2024, not more than 20 percent of the neighborhood 
homes credit ceiling for such year) to projects with 
respect to qualified residences which--
``(i) are located in census tracts 
described in subsection (c)(2)(A)(iii), 
(c)(2)(A)(iv), (i)(5), or
``(ii) are not located in a qualified 
census tract but meet the requirements of 
subsection (i)(8),
``(C) promulgates standards with respect to 
reasonable qualified development costs and fees,
``(D) promulgates standards with respect to 
construction quality,
``(E) in the case of any neighborhood homes credit 
agency which makes an allocation to a qualified project 
which includes any qualified residence to which 
subsection (i) applies, promulgates standards with 
respect to protecting the owners of such residences, 
including the capacity of such owners to pay 
rehabilitation costs not covered by the credit provided 
by this section and providing for the disclosure to 
such owners of their rights and responsibilities with 
respect to the rehabilitation of such residences,
``(F) submits to the Secretary (at such time and in 
such manner as the Secretary may prescribe) an annual 
report specifying--
``(i) the amount of the neighborhood homes 
credits allocated to each qualified project for 
the previous year,
``(ii) with respect to each qualified 
residence completed in the preceding calendar 
year--
``(I) the census tract in which 
such qualified residence is located,
``(II) with respect to the 
qualified project that includes such 
qualified residence, the year in which 
such project received an allocation 
under this section,
``(III) whether such qualified 
residence was new, substantially 
rehabilitated and sold to a qualified 
homeowner, or substantially 
rehabilitated pursuant to subsection 
(i),
``(IV) the eligible development 
costs of such qualified residence,
``(V) the amount of the 
neighborhood homes credit with respect 
to such qualified residence,
``(VI) the sales price of such 
qualified residence, if applicable, and
``(VII) the family income of the 
qualified homeowner (expressed as a 
percentage of the applicable area 
median family income for the location 
of the qualified residence), and
``(iii) such other information as the 
Secretary may require, and
``(G) makes available to the general public a 
written explanation for any allocation of a 
neighborhood homes credit dollar amount which is not 
made in accordance with established priorities and 
selection criteria of the neighborhood homes credit 
agency.
Subparagraph (B) shall be applied by substituting `40 percent' 
for `20 percent' each place it appears in the case of any State 
in which at least 45 percent of the State population resides 
outside metropolitan statistical areas (within the meaning of 
section 143(k)(2)(B)) and less than 20 percent of the census 
tracts located in the State are described in subsection 
(c)(2)(A)(i).
``(2) Qualified allocation plan.--For purposes of this 
subsection, the term `qualified allocation plan' means any plan 
which--
``(A) sets forth the selection criteria to be used 
to prioritize qualified projects for allocations of 
State neighborhood homes credit dollar amounts, 
including--
``(i) the need for new or substantially 
rehabilitated owner-occupied homes in the area 
addressed by the project,
``(ii) the expected contribution of the 
project to neighborhood stability and 
revitalization, including the impact on 
neighborhood residents,
``(iii) the capability and prior 
performance of the project sponsor, and
``(iv) the likelihood the project will 
result in long-term homeownership,
``(B) has been made available for public comment, 
and
``(C) provides a procedure that the neighborhood 
homes credit agency (or any agent or contractor of such 
agency) shall follow for purposes of--
``(i) identifying noncompliance with any 
provisions of this section, and
``(ii) notifying the Internal Revenue 
Service of any such noncompliance of which the 
agency becomes aware.
``(g) Repayment.--
``(1) In general.--
``(A) Sold during 5-year period.--If a qualified 
residence is sold during the 5-year period beginning 
immediately after the affordable sale of such qualified 
residence referred to in subsection (a), the seller 
shall transfer an amount equal to the repayment amount 
to the relevant neighborhood homes credit agency.
``(B) Use of repayments.--A neighborhood homes 
credit agency shall use any amount received pursuant to 
subparagraph (A) only for purposes of qualified 
projects.
``(2) Repayment amount.--For purposes of paragraph (1)(A)--
``(A) In general.--The repayment amount is an 
amount equal to the applicable percentage of the gain 
from the sale to which the repayment relates.
``(B) Applicable percentage.--For purposes of 
subparagraph (A), the applicable percentage is 50 
percent, reduced by 10 percentage points for each year 
of the 5-year period referred to in paragraph (1)(A) 
which ends before the date of such sale.
``(3) Lien for repayment amount.--A neighborhood homes 
credit agency receiving an allocation under this section shall 
place a lien on each qualified residence that is built or 
rehabilitated as part of a qualified project for an amount such 
agency deems necessary to ensure potential repayment pursuant 
to paragraph (1)(A).
``(4) Waiver.--
``(A) In general.--The neighborhood homes credit 
agency may waive the repayment required under paragraph 
(1)(A) if the agency determines that making a repayment 
would constitute a hardship to the seller.
``(B) Hardship.--For purposes of subparagraph (A), 
with respect to the seller, a hardship may include--
``(i) divorce,
``(ii) disability,
``(iii) illness, or
``(iv) any other hardship identified by the 
neighborhood homes credit agency for purposes 
of this paragraph.
``(h) Other Definitions and Special Rules.--For purposes of this 
section--
``(1) Neighborhood homes credit agency.--The term 
`neighborhood homes credit agency' means the agency designated 
by the governor of a State as the neighborhood homes credit 
agency of the State.
``(2) Qualified project.--The term `qualified project' 
means a project that a neighborhood homes credit agency 
certifies will build or substantially rehabilitate one or more 
qualified residences.
``(3) Determinations of family income.--Rules similar to 
the rules of section 143(f)(2) shall apply for purposes of this 
section.
``(4) Possessions treated as states.--The term `State' 
includes the District of Columbia and the possessions of the 
United States.
``(5) Special rules related to condominiums and cooperative 
housing corporations.--
``(A) Determination of development costs.--In the 
case of a qualified residence described in clause (ii) 
or (iii) of subsection (c)(1)(A), the reasonable 
development costs and eligible development costs of 
such qualified residence shall be an amount equal to 
such costs, respectively, of the entire condominium or 
cooperative housing property in which such qualified 
residence is located, multiplied by a fraction--
``(i) the numerator of which is the total 
floor space of such qualified residence, and
``(ii) the denominator of which is the 
total floor space of all residences within such 
property.
``(B) Tenant-stockholders of cooperative housing 
corporations treated as owners.--In the case of a 
cooperative housing corporation (as such term is 
defined in section 216(b)), a tenant-stockholder shall 
be treated as owning the house or apartment which such 
person is entitled to occupy.
``(6) Related party sales not treated as affordable 
sales.--
``(A) In general.--A sale between related persons 
shall not be treated as an affordable sale.
``(B) Related persons.--For purposes of this 
paragraph, a person (in this subparagraph referred to 
as the `related person') is related to any person if 
the related person bears a relationship to such person 
specified in section 267(b) or 707(b)(1), or the 
related person and such person are engaged in trades or 
businesses under common control (within the meaning of 
subsections (a) and (b) of section 52). For purposes of 
the preceding sentence, in applying section 267(b) or 
707(b)(1), `10 percent' shall be substituted for `50 
percent'.
``(7) Inflation adjustment.--
``(A) In general.--In the case of a calendar year 
after 2023, the dollar amounts in subsections 
(b)(3)(A), (e)(3)(A)(i)(I), (e)(3)(A)(i)(II), and 
(i)(2)(C) shall each be increased by an amount equal 
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment 
determined under section 1(f)(3) for such 
calendar year by substituting `calendar year 
2022' for `calendar year 2016' in subparagraph 
(A)(ii) thereof.
``(B) Rounding.--
``(i) In the case of the dollar amounts in 
subsections (b)(3)(A) and (i)(2)(C), any 
increase under paragraph (1) which is not a 
multiple of $1,000 shall be rounded to the 
nearest multiple of $1,000.
``(ii) In the case of the dollar amount in 
subsection (e)(3)(A)(i)(I), any increase under 
paragraph (1) which is not a multiple of $0.01 
shall be rounded to the nearest multiple of 
$0.01.
``(iii) In the case of the dollar amount in 
subsection (e)(3)(A)(i)(II), any increase under 
paragraph (1) which is not a multiple of 
$100,000 shall be rounded to the nearest 
multiple of $100,000.
``(8) Report.--
``(A) In general.--The Secretary shall annually 
issue a report, to be made available to the public, 
which contains the information submitted pursuant to 
subsection (f)(1)(F).
``(B) De-identification.--The Secretary shall 
ensure that any information made public pursuant to 
subparagraph (A) excludes any information that would 
allow for the identification of qualified homeowners.
``(9) List of qualified census tracts.--The Secretary of 
Housing and Urban Development shall, for each year, make 
publicly available a list of qualified census tracts under--
``(A) on a combined basis, clauses (i) and (ii) of 
subsection (c)(2)(A),
``(B) clause (iii) of such subsection, and
``(C) subsection (i)(5)(A).
``(10) Denial of deductions if converted to rental 
housing.--If, during the 5-year period beginning immediately 
after the affordable sale of a qualified residence referred to 
in subsection (a), an individual who owns a qualified residence 
(whether or not such individual was the purchaser in such 
affordable sale) fails to use such qualified residence as such 
individual's principal residence for any period of time, no 
deduction shall be allowed for expenses paid or incurred by 
such individual with respect to renting, during such period of 
time, such qualified residence.
``(i) Application of Credit With Respect to Owner-Occupied 
Rehabilitations.--
``(1) In general.--In the case of a qualified 
rehabilitation by the taxpayer of any qualified residence which 
is owned (as of the date that the written binding contract 
referred to in paragraph (3) is entered into) by a specified 
homeowner, the rules of paragraphs (2) through (7) shall apply.
``(2) Alternative credit determination.--In the case of any 
qualified residence described in paragraph (1), the 
neighborhood homes credit determined under subsection (a) with 
respect to such residence shall (in lieu of any credit 
otherwise determined under subsection (a) with respect to such 
residence) be allowed in the taxable year during which the 
qualified rehabilitation is completed (as determined by the 
neighborhood homes credit agency) and shall be equal to the 
least of--
``(A) the excess (if any) of--
``(i) the amounts paid or incurred by the 
taxpayer for the qualified rehabilitation of 
the qualified residence to the extent that such 
amounts are certified by the neighborhood homes 
credit agency (at the time of the completion of 
such rehabilitation) as meeting the standards 
specified pursuant to subsection (f)(1)(C), 
over
``(ii) any amounts paid to such taxpayer 
for such rehabilitation,
``(B) 50 percent of the amounts described in 
subparagraph (A)(i), or
``(C) $50,000.
``(3) Qualified rehabilitation.--
``(A) In general.--For purposes of this subsection, 
the term `qualified rehabilitation' means a 
rehabilitation or reconstruction performed pursuant to 
a written binding contract between the taxpayer and the 
specified homeowner if the amount paid or incurred by 
the taxpayer in the performance of such rehabilitation 
or reconstruction exceeds the dollar amount in effect 
under subsection (b)(3)(A).
``(B) Application of limitation to expenses paid or 
incurred after allocation.--A rule similar to the rule 
of section (b)(4) shall apply for purposes of this 
subsection.
``(4) Specified homeowner.--For purposes of this 
subsection, the term `qualified homeowner' means, with respect 
to a qualified residence, an individual--
``(A) who owns and uses such qualified residence as 
the principal residence of such individual as of the 
date that the written binding contract referred to in 
paragraph (3) is entered into, and
``(B) whose family income (determined as of such 
date) does not exceed the median family income for the 
applicable area (with respect to the census tract in 
which the qualified residence is located).
``(5) Additional census tracts in which owner-occupied 
residences may be located.--In the case of any qualified 
residence described in paragraph (1), the term `qualified 
census tract' includes any census tract which--
``(A) meets the requirements of subsection 
(c)(2)(A)(i) without regard to subclause (III) thereof, 
and
``(B) is designated by the neighborhood homes 
credit agency for purposes of this paragraph.
``(6) Modification of repayment requirement.--In the case 
of any qualified residence described in paragraph (1), 
subsection (g) shall be applied by beginning the 5-year period 
otherwise described therein on the date on which the qualified 
homeowner acquired such residence.
``(7) Related parties.--Paragraph (1) shall not apply if 
the taxpayer is the owner of the qualified residence described 
in paragraph (1) or is related (within the meaning of 
subsection (h)(6)(B)) to such owner.
``(8) Pyrrhotite remediation.--The requirement of 
subsection (c)(1)(C) shall not apply to a qualified 
rehabilitation under this subsection of a qualified residence 
that is documented by an engineer's report and core testing to 
have a foundation that is adversely impacted by pyrrhotite or 
other iron sulfide minerals.
``(j) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations that prevent avoidance of the rules, and 
abuse of the purposes, of this section.''.
(c) Credit Allowed as Part of General Business Credit.--Section 
38(b) of the Internal Revenue Code of 1986, as amended by section 213, 
is amended by striking ``plus'' at the end of paragraph (41), by 
striking the period at the end of paragraph (42) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
``(43) the neighborhood homes credit determined under 
section 42B(a).''.
(d) Credit Allowed Against Alternative Minimum Tax.--Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 is amended by 
redesignating clauses (iv) through (xii) as clauses (v) through (xiii), 
respectively, and by inserting after clause (iii) the following new 
clause:
``(iv) the credit determined under section 
42B,''.
(e) Basis Adjustments.--
(1) Energy efficient home improvement credit.--Section 
25C(g) of the Internal Revenue Code of 1986 is amended by 
adding after the first sentence the following new sentence: 
``This subsection shall not apply for purposes of determining 
the eligible development costs or adjusted basis of any 
building under section 42B.''.
(2) Residential clean energy credit.--Section 25D(f) of 
such Code is amended by adding after the first sentence the 
following new sentence: ``This subsection shall not apply for 
purposes of determining the eligible development costs or 
adjusted basis of any building under section 42B.''.
(3) New energy efficient home credit.--Section 45L(e) of 
such Code is amended by inserting ``or for purposes of 
determining the eligible development costs or adjusted basis of 
any building under section 42B'' after ``section 42''.
(f) Exclusion From Gross Income.--Part III of subchapter B of 
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting 
before section 140 the following new section:

``SEC. 139J. STATE ENERGY SUBSIDIES FOR QUALIFIED RESIDENCES.

``(a) Exclusion From Gross Income.--Gross income shall not include 
the value of any subsidy provided to a taxpayer (whether directly or 
indirectly) by any State energy office (as defined in section 124(a) of 
the Energy Policy Act of 2005 (42 U.S.C. 15821(a))) for purposes of any 
energy improvements made to a qualified residence (as defined in 
section 42B(c)(1)).''.
(g) Conforming Amendments.--
(1) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of 
section 469 of the Internal Revenue Code of 1986, as amended by 
section 213, are each amended by striking ``or 42A'' and 
inserting ``, 42A, or 42B''.
(2) The table of sections for subpart D of part IV of 
subchapter A of chapter 1 of such Code, as amended by section 
213, is amended by inserting after the item relating to section 
42A the following new item:

``Sec. 42B. Neighborhood homes credit.''.
(3) The table of sections for part III of subchapter B of 
chapter 1 of such Code is amended by inserting before the item 
relating to section 140 the following new item:

``Sec. 139J. State energy subsidies for qualified residences.''.
(h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2023.

SEC. 215. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.

(a) In General.--Section 36 of the Internal Revenue Code of 1986 is 
amended to read as follows:

``SEC. 36. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.

``(a) Allowance of Credit.--In the case of an individual who is a 
first-time homebuyer of a principal residence in the United States 
during a taxable year, there shall be allowed as a credit against the 
tax imposed by this subtitle for such taxable year an amount equal to 
20 percent of the purchase price of the residence.
``(b) Limitations; Special Rules Based on Marital and Filing 
Status.--
``(1) Dollar limitation.--The credit allowed under 
subsection (a) shall not exceed $15,000.
``(2) Limitation based on purchase price.--The amount 
allowable as a credit under subsection (a) (determined without 
regard to this paragraph and paragraph (3), and after the 
application of paragraph (1)) for the taxable year shall be 
reduced (but not below zero) by the amount which bears the same 
ratio to the amount which is so allowable as--
``(A) the excess (if any) of--
``(i) the purchase price of the residence, 
over
``(ii) an amount equal to 110 percent of 
the conforming loan limit applicable to the 
residence, bears to
``(B) $100,000.
For purposes of the preceding sentence, the term `conforming 
loan limit' with respect to any residence means the applicable 
limitation governing the maximum original principal obligation 
for a mortgage secured by a residence of the same type, as 
determined and adjusted annually under section 302(b)(2) of the 
Federal National Mortgage Association Charter Act and section 
305(a)(2) of the Federal Home Loan Mortgage Corporation Act.
``(3) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount allowable as a credit 
under subsection (a) (determined without regard to this 
paragraph and after the application of paragraphs (1) 
and (2)) for the taxable year shall be reduced (but not 
below zero) by the amount which bears the same ratio to 
the amount which is so allowable as--
``(i) the excess (if any) of--
``(I) the taxpayer's modified 
adjusted gross income for the preceding 
taxable year, over
``(II) the applicable threshold, 
bears to
``(ii) $50,000.
``(B) Modified adjusted gross income.--For purposes 
of subparagraph (A), the term `modified adjusted gross 
income' with respect to any taxable year means the 
adjusted gross income of the taxpayer for such taxable 
year increased by any amount excluded from gross income 
under section 911, 931, or 933 for such taxable year.
``(C) Applicable threshold.--For purposes of 
subparagraph (A), the applicable threshold is--
``(i) except as provided in clauses (ii) 
and (iii), $100,000,
``(ii) an amount equal to 150 percent of 
the amount in effect under clause (i), in the 
case of a head of household (as defined in 
section 2(b)), and
``(iii) an amount equal to 200 percent of 
the amount in effect under clause (i), in the 
case of a joint return.
``(4) Additional limitations.--No credit shall be allowed 
under subsection (a) with respect to the purchase of any 
residence for a taxable year--
``(A) if the taxpayer is a nonresident alien, or
``(B) if--
``(i) the taxpayer has not attained age 18 
as of the date of such purchase, or
``(ii) a deduction under section 151 with 
respect to the taxpayer is allowable to another 
taxpayer for the taxable year.
In the case of a taxpayer who is married, the taxpayer shall be 
treated as meeting the age requirement of subparagraph (B)(i) 
if the taxpayer or the taxpayer's spouse meets such age 
requirement.
``(5) Multiple purchasers.--If 2 or more individuals who 
are not married purchase a principal residence, the amount of 
the credit under subsection (a) shall be allocated among such 
individuals in such manner as the Secretary may prescribe by 
taking into account the requirements of paragraphs (2) and (3), 
except that the total amount of the credits allowed to all such 
individuals shall not exceed the limitation under paragraph (1) 
(as modified by paragraph (7)).
``(6) Married couples must file joint return.--If an 
individual is married at the close of the taxable year, the 
credit shall be allowed under subsection (a) only if the 
individual and the individual's spouse file a joint return for 
the taxable year.
``(7) Adjustment for inflation.--In the case of any taxable 
year beginning after December 31, 2024, each of the dollar 
amounts in paragraphs (1), (2)(A)(ii), and (3)(C)(i) shall be 
increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by substituting 
`calendar year 2023' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be 
rounded to the next lowest multiple of $50.
``(c) Definitions.--For purposes of this section--
``(1) First-time homebuyer.--
``(A) In general.--The term `first-time homebuyer' 
means any individual who acquires a principal residence 
located in the United States by purchase if such 
individual (and, if married, such individual's 
spouse)--
``(i) has not claimed any credit or 
deduction under this title for any previous 
taxable year with respect to the purchase or 
ownership of any residence or residential real 
estate (including for any expenditures relating 
to the placing in service of any property on, 
in connection with, or for use in such a 
residence or real estate), and
``(ii) attests under penalty of perjury 
that--
``(I) the individual (and, if 
married, the individual's spouse) has 
not owned a principal residence at any 
time prior to the purchase of the 
principal residence to which this 
section applies, and
``(II) the principal residence to 
which this section applies was not 
acquired from a person related to such 
individual or spouse.
``(B) Waiver in case of certain changes in 
status.--The Secretary may, in such manner as the 
Secretary may prescribe, waive the requirements of 
subparagraph (A) for a taxable year in the case of an 
individual who is not eligible to file a joint return 
for the taxable year, and who was married at the time 
the individual or the individual's former spouse 
purchased a previous residence.
``(2) Principal residence.--The term `principal residence' 
has the same meaning as when used in section 121.
``(3) Purchase.--
``(A) In general.--The term `purchase' means any 
acquisition, but only if--
``(i) the property is not acquired from a 
person related to the person acquiring such 
property (or, if either such person is married, 
such individual's spouse), and
``(ii) the basis of the property in the 
hands of the person acquiring such property is 
not determined--
``(I) in whole or in part by 
reference to the adjusted basis of such 
property in the hands of the person 
from whom acquired, or
``(II) under section 1014(a).
``(B) Construction.--A residence which is 
constructed by the taxpayer shall be treated as 
purchased by the taxpayer on the date the taxpayer 
first occupies such residence.
``(4) Purchase price.--The term `purchase price' means the 
adjusted basis (without regard to any reduction under section 
1016(a)(38)) of the principal residence on the date such 
residence is purchased.
``(5) Related persons.--A person shall be treated as 
related to another person if the relationship between such 
persons would result in the disallowance of losses under 
section 267 or 707(b) (but, in applying subsections (b) and (c) 
of section 267 for purposes of this section, paragraph (4) of 
section 267(c) shall be treated as providing that the family of 
an individual shall include only the individual's spouse, 
ancestors, lineal descendants, and spouse's ancestors and 
lineal descendants).
``(6) Marital status.--An individual's marital status shall 
be determined in accordance with section 7703.
``(d) Denial and Recapture Rules in Case of Disposal of Residence 
Within 6 Taxable Years.--
``(1) Denial of credit in case of disposal within taxable 
year.--No credit under subsection (a) shall be allowed to any 
taxpayer for any taxable year with respect to the purchase of a 
residence if the taxpayer disposes of such residence (or such 
residence ceases to be the principal residence of the taxpayer 
(and, if married, the taxpayer's spouse)) before the close of 
such taxable year.
``(2) Phased-out recapture.--
``(A) In general.--Except as provided in 
subparagraph (D), if the taxpayer disposes of the 
residence with respect to which a credit was allowed 
under subsection (a) (or such residence ceases to be 
the principal residence of the taxpayer (and, if 
married, the taxpayer's spouse)) during the 5-taxable-
year period beginning with the taxable year immediately 
following the credit year, the tax imposed by this 
chapter for the taxable year in which such disposal (or 
cessation) occurs shall be increased by an amount equal 
to the recapture percentage of the amount of the credit 
so allowed.
``(B) Credit year.--For purposes of subparagraph 
(A), the term `credit year' means the taxable year in 
which the credit under subsection (a) was allowed.
``(C) Recapture percentage.--For purposes of 
subparagraph (A), the recapture percentage with respect 
to any disposal or cessation described in such 
subparagraph shall be determined in accordance with the 
following table:

``If the disposal or The recapture
cessation occurs in: percentage is:
The 1st taxable year beginning after the 100 percent 
credit year.
The 2nd taxable year beginning after the 80 percent 
credit year.
The 3rd taxable year beginning after the 60 percent 
credit year.
The 4th taxable year beginning after the 40 percent 
credit year.
The 5th taxable year beginning after the 20 percent.
credit year.

``(D) Exceptions.--This paragraph shall not apply 
in the case of a disposal or cessation described in 
subparagraph (A) which occurs after or incident to any 
of the following:
``(i) Death of the taxpayer or the 
taxpayer's spouse.
``(ii) Divorce of the taxpayer.
``(iii) Involuntary conversion of the 
residence (within the meaning of section 
121(d)(5)(A)).
``(iv) Relocation of duty station or 
qualified official extended duty (as defined in 
section 121(d)(9)(C)) of the taxpayer or the 
taxpayer's spouse who is a member of the 
uniformed services (as defined in section 
121(d)(9)(C)(ii)), a member of the Foreign 
Service of the United States (as defined in 
section 121(d)(9)(C)(iii)), or an employee of 
the intelligence community (as defined in 
section 121(d)(9)(C)(iv)).
``(v) Change of employment of the taxpayer 
or the taxpayer's spouse which meets the 
conditions of section 217(c).
``(vi) Loss of employment, health 
conditions, or such other unforeseen 
circumstances as may be specified by the 
Secretary.
``(e) Adjustment to Basis.--For purposes of this subtitle, if a 
credit is allowed under this section with respect to any property, the 
taxpayer's basis in such property shall be reduced by the amount of the 
credit so allowed.
``(f) Reporting.--
``(1) In general.--A credit shall be allowed under this 
section only if the following are included on the return of 
tax:
``(A) The individual's (and, if married, the 
individual's spouse's) social security number issued by 
the Social Security Administration.
``(B) The street address (not including a post 
office box) of the principal residence purchased.
``(C) The purchase price of the principal 
residence.
``(D) The date of purchase of the principal 
residence.
``(E) The closing disclosure relating to the 
purchase (in the case of a purchase financed by a 
mortgage).
``(2) Reporting of real estate transactions.--If the 
Secretary requires information reporting under section 6045 by 
a person described in subsection (e)(2) thereof to verify the 
eligibility of taxpayers for the credit allowable by this 
section, the exception provided by section 6045(e)(5) shall not 
apply.''.
(b) Conforming Amendment Relating to Basis Adjustment.--Subsection 
(a) of section 1016 of the Internal Revenue Code of 1986, as amended by 
section 213, is further amended--
(1) by redesignating paragraphs (38) and (39) as paragraphs 
(39) and (40), respectively; and
(2) by inserting after paragraph (37) the following new 
paragraph:
``(38) to the extent provided in section 36(e).''.
(c) Conforming Amendment.--Section 26(b)(2) of the Internal Revenue 
Code of 1986 is amended by striking subparagraph (W) and by 
redesignating subparagraphs (X), (Y), and (Z) as subparagraphs (W), 
(X), and (Y), respectively.
(d) Clerical Amendment.--The item relating to section 36 in the 
table of sections for subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended to read as follows:

``Sec. 36. First-time homebuyer refundable credit.''.
(e) Authority To Treat Claim of Credit as Error, etc.--Subparagraph 
(N) of section 6213(g)(2) of the Internal Revenue Code of 1986 is 
amended to read as follows:
``(N) in the case of a return claiming the credit 
under section 36--
``(i) the omission of a social security 
number required under section 36(f)(1)(A),
``(ii) the inclusion of a social security 
number so required if--
``(I) the claim of the credit on 
the return reflects the treatment of 
such individual as being of an age 
different from the individual's age 
based on such social security number, 
or
``(II) except as provided in 
section 36(c)(1)(B), such social 
security number has been included 
(other than as a dependent for purposes 
of section 151) on a return for any 
previous taxable year claiming any 
credit or deduction described in 
section 36(c)(1)(A)(i),
``(iii) the omission of any other required 
information or documentation described in 
section 36(f)(1), including the inclusion of a 
post office box instead of a street address for 
the purchased residence,
``(iv) the inclusion of any information or 
documentation described in clause (iii) if such 
information or documentation does not support a 
valid claim for the credit, or
``(v) a claim of such credit for a taxable 
year with respect to the purchase of a 
residence made after the last day of such 
taxable year,''.
(f) IRS Recordkeeping.--Notwithstanding the limitations on 
assessment and collection under section 6501 of the Internal Revenue 
Code of 1986, the Commissioner of Internal Revenue shall maintain 
records of returns and return information (as defined in section 
6103(b)(2) of such Code) of any taxpayer claiming the credit under 
section 36 of such Code (as amended by this section) for the taxable 
year in which such credit is claimed and succeeding taxable years in 
the individual master files of the Internal Revenue Service.
(g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2023.
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