HR2410-119

What This Bill Does

The Revitalizing Downtowns and Main Streets Act creates a new investment credit for converting older commercial buildings into affordable housing. The base credit equals 20 percent of qualified conversion expenditures for a qualified affordable housing building placed in service after enactment. Eligible buildings must be nonresidential real property originally placed in service at least 20 years before conversion begins, and conversion expenditures must exceed the greater of 50 percent of adjusted basis or $100,000. The building must reserve at least 20 percent of units as rent-restricted for households at 80 percent or less of area median income for 30 years. Credits are allocated by state housing credit agencies under approved conversion credit allocation plans, subject to a $12 billion national limitation, population-based state shares, $3 billion in additional designations for economically distressed areas, reallocation after December 31, 2028 from undersubscribed to oversubscribed states, binding allocation agreements, reporting to Treasury, recapture rules, and guidance. The bill increases the credit to 30 percent in qualified census tracts or difficult development areas with 20 percent of units for households at 60 percent of AMI, and to 35 percent for up to $2 million of rural historic preservation conversion expenditures.

Who Benefits and How

Affordable housing developers benefit from a 20 percent federal credit for qualifying commercial-to-residential conversions. Low-income renters benefit because qualified buildings must reserve rent-restricted units for 30 years. State housing credit agencies benefit from authority to allocate conversion credit dollars through state plans and binding agreements. Economically distressed downtowns benefit from the $3 billion designation pool and selection criteria tied to revitalization and small businesses. Rural historic preservation projects benefit from a possible 35 percent credit on up to $2 million of qualified conversion expenditures.

Who Bears the Burden and How

Treasury tax guidance staff must create designation rules, recapture rules, reporting rules, and implementation guidance for section 48F. Housing credit agencies must write allocation plans, monitor compliance, report allocations, and manage reallocation rules. Developers must satisfy 30-year rent restriction and income-reservation requirements or risk credit recapture. Federal taxpayers bear the cost of a $12 billion national credit limitation plus designated distressed-area allocations. Undersubscribed states lose unused allocation authority after December 31, 2028 when amounts are reallocated to oversubscribed states.

Key Provisions

• Creates a 20 percent affordable housing conversion credit for qualified conversion expenditures under new section 48F.
• Limits eligible conversions to 20-year-old nonresidential buildings converted into qualified affordable housing buildings.
• Requires at least 20 percent of units to be rent-restricted and reserved for households at or below 80 percent of area median income for 30 years.
• Establishes a $12 billion national credit limitation, state housing credit agency allocations, and $3 billion for economically distressed areas.
• Provides 30 percent treatment for qualified census tracts and difficult development areas and 35 percent treatment for certain rural historic preservation projects.
• Requires allocation plans, binding agreements, state reporting to Treasury, recapture rules, and guidance for compliance.