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S. 2962 (114th): Affordable Housing Credit Improvement Act of 2016

The text of the bill below is as of May 19, 2016 (Introduced).


II

114th CONGRESS

2d Session

S. 2962

IN THE SENATE OF THE UNITED STATES

May 19, 2016

(for herself, Mr. Hatch, Mr. Schumer, and Mr. Wyden) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

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

1.

Short title

This Act may be cited as the Affordable Housing Credit Improvement Act of 2016.

2.

Increases in State allocations

(a)

Phase-In of increases

(1)

In general

Clause (ii) of section 42(h)(3)(C) of the Internal Revenue Code of 1986 is amended—

(A)

by striking $1.75 in subclause (I) and inserting the per capita dollar amount, and

(B)

by striking $2,000,000 in subclause (II) and inserting the minimum ceiling amount.

(2)

Per capita dollar amount; minimum ceiling amount

Subparagraph (I) of section 42(h)(3) of such Code is amended to read as follows:

(I)

Per capita dollar amount; minimum ceiling amount

For purposes of this paragraph—

(i)

Per capita dollar amount

The per capita dollar amount is—

(I)

for calendar year 2016, $2.35,

(II)

for calendar year 2017, $2.59,

(III)

for calendar year 2018, $2.82,

(IV)

for calendar year 2019, $3.06,

(V)

for calendar year 2020, $3.29, and

(VI)

$3.53 thereafter.

(ii)

Minimum ceiling amount

The minimum ceiling amount is—

(I)

for calendar year 2016, $2,690,000,

(II)

for calendar year 2017, $2,959,000,

(III)

for calendar year 2018, $3,228,000,

(IV)

for calendar year 2019, $3,497,000,

(V)

for calendar year 2020, $3,766,000, and

(VI)

$4,035,000 thereafter.

.

(3)

Modification of cost-of-living adjustment

Subparagraph (H) of section 42(h)(3) of such Code is amended—

(A)

by striking 2002 in clause (i) and inserting 2016,

(B)

by striking the $2,000,000 and $1.75 amounts in subparagraph (C) in clause (i) and inserting the dollar amounts applicable to such calendar year under clauses (i) and (ii) of subparagraph (I),

(C)

by striking 2001 in clause (i)(II) and inserting 2015,

(D)

by striking $2,000,000 in clause (ii)(I) and inserting minimum ceiling, and

(E)

by striking $1.75 in clause (ii)(II) and inserting per capita dollar.

(4)

Effective date

The amendments made by this subsection shall apply to calendar years beginning after December 31, 2016.

(b)

Permanent increases

(1)

In general

Clause (ii) of section 42(h)(3)(C) of the Internal Revenue Code of 1986, as amended by subsection (a)(1), is amended—

(A)

by striking the per capita dollar amount in subclause (I) and inserting $3.53, and

(B)

by striking the minimum ceiling amount in subclause (II) and inserting $4,035,000.

(2)

Conforming amendment

Paragraph (3) of section 42(h) of such Code is amended by striking subparagraph (I), as amended by subsection (a)(2).

(3)

Cost-of-living adjustment

Subparagraph (H) of section 42(h)(3) of such Code, as amended by subsection (a)(3), is amended—

(A)

by striking the dollar amounts applicable to such calendar year under clauses (i) and (ii) of subparagraph (I) in clause (i) and inserting the $4,035,000 and $3.53 amounts in subparagraph (C),

(B)

by striking minimum ceiling in clause (ii)(I) and inserting $4,035,000, and

(C)

by striking per capita dollar in clause (ii)(II) and inserting $3.53.

(4)

Effective date

The amendments made by this subsection shall apply to calendar years beginning after December 31, 2021.

3.

Average income test

(a)

In general

Paragraph (1) of section 42(g) of the Internal Revenue Code of 1986 is amended—

(1)

by striking subparagraph (A) or (B) and inserting subparagraph (A), (B), or (C), and

(2)

by inserting after subparagraph (B) the following new subparagraph:

(C)

Average income test

(i)

In general

The project meets the minimum requirements of this subparagraph if 40 percent or more (25 percent or more in the case of a project described in section 142(d)(6)) of the residential units in such project are both rent-restricted and occupied by individuals whose income does not exceed the imputed income limitation designated by the taxpayer with respect to the respective unit.

(ii)

Special rules relating to income limitation

For purposes of clause (i)—

(I)

Designation

The taxpayer shall designate the imputed income limitation of each unit taken into account under such clause.

(II)

Average test

The average of the imputed income limitations designated under subclause (I) shall not exceed 60 percent of area median gross income.

(III)

10-percent increments

The designated imputed income limitation of any unit under subclause (I) shall be 20 percent, 30 percent, 40 percent, 50 percent, 60 percent, 70 percent, or 80 percent of area median gross income.

.

(b)

Conforming amendments

Subparagraph (C) of section 42(g)(2) of the Internal Revenue Code of 1986 is amended—

(1)

by redesignating clauses (i) and (ii) as subclauses (I) and (II), respectively, and by moving such subclauses 2 ems to the right,

(2)

by moving the flush language 2 ems to the right,

(3)

by striking For purposes of this paragraph, the and inserting “For purposes of this paragraph—

(i)

General rule

Except as provided in clause (ii), the

, and

(4)

by adding at the end the following new clause:

(ii)

Special rule for average income test

In the case of a project with respect to which the taxpayer elects the requirements of subparagraph (C) of paragraph (1), the imputed income limitation applicable to a unit is the imputed income limitation designated with respect to such unit under paragraph (1)(C)(ii)(I).

.

(c)

Effective date

The amendments made by this section shall apply to elections made under section 42(g)(1) of the Internal Revenue Code of 1986 after the date of the enactment of this Act.

4.

Minimum credit rate

(a)

In general

Subsection (b) of section 42 of the Internal Revenue Code of 1986 is amended—

(1)

by redesignating paragraph (3) as paragraph (4), and

(2)

by inserting after paragraph (2) the following new paragraph:

(3)

Minimum credit rate

In the case of any new or existing building to which paragraph (2) does not apply and which is placed in service by the taxpayer after December 31, 2015, the applicable percentage shall not be less than 4 percent.

.

(b)

Effective date

The amendments made by this section shall apply to buildings placed in service after December 31, 2015.