S1511-119

1. Short title; table of contents This Act may be cited as the Affordable Housing Bond Enhancement Act. Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. The table of contents for this Act is as follows:

2. Reporting requirements for bond usage Section 146 is amended by adding at the end the following: Not later than December 31 of each calendar year, the Secretary shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate, the Committee on Financial Services of the House of Representatives, the Committee on Ways and Means of the House of Representatives, and the Committee on Finance of the Senate, containing information, as provided to the Secretary by State and local issuing authorities, which specifies for each State— the State ceiling of the State for the preceding calendar year, the aggregate amount of carryforwards available to all issuing authorities in the State available as of the first day of such preceding calendar year, the total bond authority for such State for such preceding calendar year, as represented by the sum of the amounts reported under paragraphs (1) and (2), the aggregate amount of private activity bonds issued by issuing authorities in the State during such preceding calendar year for each purpose described in subsection (f)(5), including— the amount of such bonds that were subject to the volume cap, and the amount of such bonds that were issued pursuant to a carryforward under subsection (f), the aggregate amount of carryforwards described in paragraph (2) that expired after the last day of the preceding calendar year, and total amount of any excess amounts described in paragraph (1) of subsection (f) for the preceding calendar year which issuing authorities in the State did not elect to treat as a carryforward under such subsection. Section 149(e) is amended by adding at the end the following new paragraph: Any statement required under paragraph (2) shall be submitted electronically. Section 6103(f) is amended by adding at the end the following new paragraph: The Secretary may disclose to the committees described in section 146(o) the information required under such section. The amendment made by this section shall apply to calendar years beginning after the date of enactment of this Act. (o)ReportingNot later than December 31 of each calendar year, the Secretary shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate, the Committee on Financial Services of the House of Representatives, the Committee on Ways and Means of the House of Representatives, and the Committee on Finance of the Senate, containing information, as provided to the Secretary by State and local issuing authorities, which specifies for each State— (1)the State ceiling of the State for the preceding calendar year, (2)the aggregate amount of carryforwards available to all issuing authorities in the State available as of the first day of such preceding calendar year, (3)the total bond authority for such State for such preceding calendar year, as represented by the sum of the amounts reported under paragraphs (1) and (2), (4)the aggregate amount of private activity bonds issued by issuing authorities in the State during such preceding calendar year for each purpose described in subsection (f)(5), including— (A)the amount of such bonds that were subject to the volume cap, and (B)the amount of such bonds that were issued pursuant to a carryforward under subsection (f), (5)the aggregate amount of carryforwards described in paragraph (2) that expired after the last day of the preceding calendar year, and (6)total amount of any excess amounts described in paragraph (1) of subsection (f) for the preceding calendar year which issuing authorities in the State did not elect to treat as a carryforward under such subsection.. (4)Electronic reportingAny statement required under paragraph (2) shall be submitted electronically.. (6)Volume cap reportingThe Secretary may disclose to the committees described in section 146(o) the information required under such section..

3. Use of carryforward bond authority Paragraph (3) of section 146(f) is amended— by striking subparagraph (A) and inserting the following: If any issuing authority— elects a carryforward under paragraph (1) with respect to any carryforward purpose, receives a carryforward under paragraph (4)(B)(i) with respect to any carryforward purpose, or redesignates a carryforward under paragraph (4)(B)(ii) for any carryforward purpose, in subparagraph (B), by inserting , or received or redesignated for, after with respect to. Paragraph (4) of section 146(f) is amended to read as follows: Except as provided in subparagraph (B), any election under this subsection (and any identification or specification contained therein), once made, shall be irrevocable. In the case of any carryforward elected under paragraph (1) by an issuing authority with respect to any carryforward purpose, during the period described in paragraph (3)(A) with respect to such carryforward, such issuing authority may transfer such carryforward to any issuing authority within the same State that is authorized to issue qualified mortgage bonds or exempt facility bonds described in section 142(a)(7). In the case of any carryforward— elected under paragraph (1) by an issuing authority with respect to any carryforward purpose which has not been transferred pursuant to clause (i), or received by an issuing authority pursuant to clause (i) with respect to any carryforward purpose, In the case of a State which has enacted a law described in subsection (e)(1), such State may, by law, prohibit, limit, require, or otherwise direct transfer or redesignation by issuing authorities within such State (except in the case of a constitutional home rule city) pursuant to this subparagraph. The amendments made by this section shall apply to elections made under section 146(f) of the Internal Revenue Code of 1986 after December 31, 2025. (A)In generalIf any issuing authority— (i)elects a carryforward under paragraph (1) with respect to any carryforward purpose, (ii)receives a carryforward under paragraph (4)(B)(i) with respect to any carryforward purpose, or (iii)redesignates a carryforward under paragraph (4)(B)(ii) for any carryforward purpose,any private activity bonds issued by such authority with respect to such purpose at any time during the 3 calendar years following the calendar year in which the carryforward arose shall not be taken into account under subsection (a) to the extent the amount of such bonds issued at or prior to such time does not exceed the amount of the carryforward elected, received, or redesignated for such purpose, as reduced by any amount subsequently transferred to another issuing authority or redesignated for another purpose pursuant to paragraph (4)(B)., and (4)Election (A)In generalExcept as provided in subparagraph (B), any election under this subsection (and any identification or specification contained therein), once made, shall be irrevocable. (B)Exception for housing (i)TransferIn the case of any carryforward elected under paragraph (1) by an issuing authority with respect to any carryforward purpose, during the period described in paragraph (3)(A) with respect to such carryforward, such issuing authority may transfer such carryforward to any issuing authority within the same State that is authorized to issue qualified mortgage bonds or exempt facility bonds described in section 142(a)(7). (ii)RedesignationIn the case of any carryforward— (I)elected under paragraph (1) by an issuing authority with respect to any carryforward purpose which has not been transferred pursuant to clause (i), or (II)received by an issuing authority pursuant to clause (i) with respect to any carryforward purpose,during the period described in paragraph (3)(A) with respect to such carryforward, such issuing authority may redesignate such carryforward to be for the purpose of issuing qualified mortgage bonds or mortgage credit certificates, or for the purpose of issuing exempt facility bonds described in section 142(a)(7). (iii)State directionIn the case of a State which has enacted a law described in subsection (e)(1), such State may, by law, prohibit, limit, require, or otherwise direct transfer or redesignation by issuing authorities within such State (except in the case of a constitutional home rule city) pursuant to this subparagraph..

4. Elimination of refinancing limitation for mortgage revenue bonds Section 143(i)(1) is amended by adding at the end the following: The refinancing of a mortgage on a residence of a mortgagor who, as of the date of such refinancing, satisfies the principal residence requirements under subsection (c)(1) and the income requirements under subsection (f) shall not be treated as the acquisition or replacement of an existing mortgage for purposes of subparagraph (A). In applying clause (i) to any refinancing— subsection (d) shall not apply, and subsection (e) shall be applied by using the market value of the residence at the time of refinancing in lieu of the acquisition cost. The amendment made by this section shall apply to refinancing loans made on or after the date of enactment of this Act. (D)Exception for refinancing for certain mortgagors (i)In generalThe refinancing of a mortgage on a residence of a mortgagor who, as of the date of such refinancing, satisfies the principal residence requirements under subsection (c)(1) and the income requirements under subsection (f) shall not be treated as the acquisition or replacement of an existing mortgage for purposes of subparagraph (A). (ii)Special ruleIn applying clause (i) to any refinancing— (I)subsection (d) shall not apply, and (II)subsection (e) shall be applied by using the market value of the residence at the time of refinancing in lieu of the acquisition cost..

6. Revision of recapture tax for mortgage revenue bonds Subparagraph (C) of section 143(m)(4) is amended to read as follows: The term holding period percentage means the percentage determined in accordance with the following table: If the Federally-subsidized indebtedness is completely repaid during any year of the 4-year period beginning on the testing date, the holding period percentage for succeeding years shall be zero. Section 143(m)(2)(B) is amended by striking 9 years and inserting 5 years. Section 143(m)(7)(B)(ii) is amended by striking 9-year period and inserting 5-year period. The amendments made by this section shall apply to taxable years beginning after December 31, 2025. (C)Holding period percentage (i)In generalThe term holding period percentage means the percentage determined in accordance with the following table: If the disposition occurs during a year after the testing date which is:The holding period percentage is: The 1st such year20 The 2nd such year40 The 3rd such year60 The 4th such year80 The 5th such year100 (ii)Retirements of indebtednessIf the Federally-subsidized indebtedness is completely repaid during any year of the 4-year period beginning on the testing date, the holding period percentage for succeeding years shall be zero..

7. Modifying calculation of credit for interest paid on certified indebtedness Section 25 is amended— in subsection (a)— in paragraph (1), by striking subparagraph (B) and inserting the following: the certified indebtedness amount on which interest was paid or accrued by the taxpayer during the taxable year. in paragraph (2)— in the heading, by striking where credit rate exceeds 20 percent, and in subparagraph (A), by striking If the certificate credit rate exceeds 20 percent, the and inserting The, and in subsection (d)— by striking paragraph (1) and inserting the following: The certificate credit rate specified in any mortgage credit certificate shall not be less than 1 percent or more than 5 percent. With respect to any mortgage credit certificate, the issuing authority may elect to specify a different annual certificate credit rate for each year of the term of the mortgage. in paragraph (2)— in the heading, by striking certificate credit rates and inserting amount of credit certificates, and in subparagraph (A)(ii), by inserting average annual before certificate credit rate. The amendments made by this section shall apply to mortgage credit certificates issued on or after the first day of the second calendar year that begins after the date of the enactment of this Act. (B)the certified indebtedness amount on which interest was paid or accrued by the taxpayer during the taxable year., and (1)In general (A)Certificate credit rateThe certificate credit rate specified in any mortgage credit certificate shall not be less than 1 percent or more than 5 percent. (B)Annual rateWith respect to any mortgage credit certificate, the issuing authority may elect to specify a different annual certificate credit rate for each year of the term of the mortgage., and

8. Extension of period for mortgage credit certificate to be in effect Section 25(e)(3)(B) is amended by striking second and inserting fourth. The amendments made by this section shall apply to mortgage credit certificates with respect to which the limitation under section 25(d)(2)(A) of the Internal Revenue Code of 1986 is determined by reference to nonissued bond amounts (a defined in section 25(d)(2)(B) of such Code) relating to calendar years after December 31, 2025.

9. Extension of period to revoke election to issue mortgage credit certificates Section 25(c)(2) is amended by adding at the end the following: For purposes of any election made by an issuing authority under subparagraph (A)(ii) during any calendar year, such issuing authority may subsequently elect to reduce the nonissued bond amount (as defined in subsection (d)(2)(B)) for such calendar year, provided that such election is made not later than the end of the succeeding calendar year. Under rules established by the Secretary, nothing in clause (i) shall be construed to permit an issuing authority to issue bonds under section 146(f)(3) for a calendar year after the close of the period prescribed for issuing such bonds under such section. The amendment made by this section shall apply to elections made by an issuing authority under section 25(c)(2)(A)(ii) of the Internal Revenue Code of 1986 after December 31, 2025. (C)Revocation of election to issue mortgage credit certificates (i)In generalFor purposes of any election made by an issuing authority under subparagraph (A)(ii) during any calendar year, such issuing authority may subsequently elect to reduce the nonissued bond amount (as defined in subsection (d)(2)(B)) for such calendar year, provided that such election is made not later than the end of the succeeding calendar year. (ii)Coordination with private activity bond carryforward limitationUnder rules established by the Secretary, nothing in clause (i) shall be construed to permit an issuing authority to issue bonds under section 146(f)(3) for a calendar year after the close of the period prescribed for issuing such bonds under such section..

10. Adjustment of public notice requirement Section 25(e)(5) is amended by striking 90 days and inserting 30 days. The amendments made by this section shall apply to notices provided after December 31, 2025.

11. Elimination of lender reporting requirement Section 25(g) is amended— by striking each person who makes a loan which is a certified indebtedness amount under any mortgage credit certificate and inserting each person who issues a mortgage credit certificate, and by striking the second sentence thereof. Section 6709(c) is amended by striking In the case of any report required under the second sentence of section 25(g), the and inserting The. The amendments made by this section shall take effect on the date of enactment of this Act.