,i #aaith ,,congress #ast ,session ,h4 ,r4 #ecg ,,in ,,the ,,house ,,of ,,representatives ,january #af1 #bjbe,ms4 ,sherrill introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committee on ,financial ,services1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide tax credits for the conversion of commercial buildings to residential units1 to provide support and technical assistance to ,state and local housing agencies to identify and advance housing conversion opportunities for underutilized commercial buildings1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,incentivizing ,new ,conversions to ,residential ,entities to ,accelerate ,supply and ,expand ,housing ,affordability ,act or the ,,increase ,housing ,affordability ,act4 #b4 ,commercial-to-residential credit 7a7 ,in general ,section #df of the ,internal ,revenue ,code of #aihf is amended by redesignating paragraph 7#g7 as paragraph 7#h71 by redesignating the paragraph 7#f7 relating to the advanced manufacturing investment credits as paragraph 7#g71 by striking and at the end of paragraph 7#g7 7as so redesignated71 by striking the period at the end of paragraph 7#h7 7as so redesignated7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#i7 the commercial-to-residential credit4 4 7b7 ,amount of credit ,subpart ,e of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #dh;,e the following new section3 #dh;,f4 ,commercial-to-residential credit 7a7 ,in general ,for purposes of section #df1 the commercial-to-residential credit for any taxable year is equal to #ae percent of the qualified conversion expenditures with respect to a qualified converted building4 7b7 ,limitation on credit amount ,the credit determined under subsection 7a7 may not exceed-- 7#a7 #bjj1jjj per new residential housing unit1 and 7#b7 #aj1jjj1jjj per qualified converted building4 7c7 ,when expenditures taken into account 7#a7 ,in general ,qualified conversion expenditures with respect to any qualified converted building shall be taken into account for the taxable year in which such qualified converted building is placed in service4 7#b7 ,coordination with subsection 7e7 ,the amount which would 7but for this subparagraph7 be taken into account under subparagraph 7,a7 with respect to any qualified converted building shall be reduced 7but not below zero7 by any amount of qualified conversion expenditures taken into account under subsection 7e7 by the taxpayer or a predecessor of the taxpayer 7or1 in the case of a sale and leaseback described in section #ej7;a77#b77;,c71 by the lessee71 to the extent any amount so taken into account has not been required to be recaptured under section #ej7;a74 7d7 ,bonus credits 7#a7 ,affordable housing bonus credit 7,a7 ,in general ,in the case of a qualified converted building which has been converted to a majority rental residential use and which satisfies the requirements under subparagraph 7,b71 the amount of the credit determined under subsection 7a7 7determined without regard to this subsection7 and the limitation on credit amount described in subsection 7b7 7determined without regard to this subsection7 with respect to such building shall each be increased by an amount equal to-- 7i7 in the case of a qualified converted building #be percent or more of the residential units of which are both rent-restricted and occupied by individuals whose income does not exceed #ajj percent of area median income1 #aj percent of such amounts1 7ii7 in the case of a qualified converted building #be percent or more of the residential units of which are both rent-restricted and occupied by individuals whose income does not exceed #hj percent of area median income1 #ae percent of such amounts1 and 7iii7 in the case of a qualified converted building #be percent or more of the residential units of which are both rent-restricted and occupied by individuals whose income does not exceed #fj percent of area median income1 #bj percent of such amounts4 7,b7 ,rent and income limitation ,for purposes of subparagraph 7,a71 rules similar to the rules of section #db7;g7 shall apply to determine whether a unit is rent-restricted1 treatment of units occupied by individuals whose incomes rise above the limit1 and treatment of units where ,federal rental assistance is reduced as tenant's income increases4 7#b7 ,prevailing wage bonus credit 7,a7 ,in general ,in the case of any qualified converted building with respect to which the taxpayer certifies to the ,secretary that the taxpayer satisfied the requirement of subparagraph 7,b7 with respect to the conversion process1 the amount of the credit determined under subsection 7a7 7determined without regard to this subsection7 and the limitation on the credit amount described in subsection 7b7 7determined without regard to this subsection7 with respect to such building shall each be increased by an amount equal to #ae percent of such amounts4 7,b7 ,prevailing wage requirement ,the requirement described in this subparagraph is satisfied with respect to any conversion if all laborers or mechanics employed by the taxpayer or any contractor or subcontractor of the taxpayer to carry out the conversion were paid wages at rates not less than the prevailing rates for construction1 alteration1 or repair of a similar character in the locality in which such project is located as most recently determined by the ,secretary of ,labor1 in accordance with subchapter ,,iv of chapter #ca of title #dj1 ,united ,states ,code4 7e7 ,definitions 7#a7 ,qualified converted building 7,a7 ,in general ,the term qualified converted building means any building 7and its structural components7 if-- 7i7 prior to conversion1 such building was nonresidential real property 7as defined in section #afh7 which was leased1 or available for lease1 to office tenants1 7ii7 such building has been substantially converted from an office use to a residential or residential-retail mixed use1 7iii7 such building was initially placed in service at least #ae years before the beginning of the conversion1 and 7iv7 depreciation 7or amortization in lieu of depreciation7 is allowable with respect to such building4 7,b7 ,substantially converted defined 7i7 ,in general ,for purposes of paragraph 7#a77;,a77ii71 a building shall be treated as having been substantially converted only if the qualified conversion expenditures during the #bd-month period selected by the taxpayer 7at the time and in the manner prescribed by regulation7 and ending with or within the taxable year exceed the greater of-- 7,i7 the adjusted basis of such building 7and its structural components71 or 7,,ii7 #ae1jjj4 ,the adjusted basis of the building 7and its structural components7 shall be determined as of the beginning of the #ast day of such #bd-month period1 or of the holding period of the building1 whichever is later4 ,for purposes of the preceding sentence1 the determination of the beginning of the holding period shall be made without regard to any reconstruction by the taxpayer in connection with the conversion4 7ii7 ,special rule for phased conversion ,in the case of any conversion which may reasonably be expected to be completed in phases set forth in architectural plans and specifications completed before the conversion begins1 clause 7i7 shall be applied by substituting #fj-month period for #bd-month period4 7iii7 ,lessees ,the ,secretary shall prescribe by regulation rules for applying this subparagraph to lessees4 7,c7 ,reconstruction ,conversion includes reconstruction4 7#b7 ,qualified conversion expenditures defined 7,a7 ,in general ,for purposes of subsection 7a71 the term qualified conversion expenditures means any amount properly chargeable to capital account-- 7i7 for property for which depreciation is allowable under section #afh and which is-- 7,i7 nonresidential real property 7as defined in section #afh71 7,,ii7 residential rental property 7as defined in section #afh71 or 7,,iii7 an addition or improvement to property described in clause 7i7 or 7ii71 and 7ii7 in connection with the conversion of a qualified converted building4 7,b7 ,certain expenditures not included ,the term qualified conversion expenditures does not include-- 7i7 ,straight line depreciation must be used ,any expenditure with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection 7c7 or 7g7 of section #afh4 ,the preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section #afh7;g7 applies to such expenditure by reason of subparagraph 7,b7 or 7,c7 of section #afh7;g77#a74 7ii7 ,cost of acquisition ,the cost of acquiring any building or interest therein4 7iii7 ,enlargements ,any expenditure attributable to the enlargement of an existing building4 7iv7 ,tax-exempt use property ,any expenditure in connection with the conversion of a building which is allocable to the portion of such property which is 7or may reasonably be expected to be7 tax-exempt use property 7within the meaning of section #afh7;h771 except that-- 7,i7 #ej percent shall be substituted for #ce percent in paragraph 7#a77;,b77iii7 thereof1 and 7,,ii7 an eligible educational institution 7as defined in section #ebi7;e77#e77 shall not be treated as a tax-exempt entity4 ,this clause shall not apply for purposes of determining whether a building has been substantially converted4 7v7 ,expenditures of lessee ,any expenditure of a lessee of a building if1 on the date the conversion is completed1 the remaining term of the lease 7determined without regard to any renewal periods7 is less than the recovery period determined under section #afh7;c74 7f7 ,progress expenditures 7#a7 ,in general ,in the case of any building to which this subsection applies1 except as provided in paragraph 7#c7-- 7,a7 if such building is self-converted property1 any qualified conversion expenditure with respect to such building shall be taken into account for the taxable year for which such expenditure is properly chargeable to capital account with respect to such building1 and 7,b7 if such building is not self-converted property1 any qualified conversion expenditure with respect to such building shall be taken into account for the taxable year in which paid4 7#b7 ,property to which subsection applies 7,a7 ,in general ,this subsection shall apply to any building which is being converted by or for the taxpayer if-- 7i7 the normal conversion period for such building is #b years or more1 and 7ii7 it is reasonable to expect that such building will be a qualified converted building in the hands of the taxpayer when it is placed in service4 ,clauses 7i7 and 7ii7 shall be applied on the basis of facts known as of the close of the taxable year of the taxpayer in which the conversion begins 7or1 if later1 at the close of the first taxable year to which an election under this subsection applies74 7,b7 ,normal conversion period ,for purposes of subparagraph 7,a71 the term normal conversion period means the period reasonably expected to be required for the conversion of the building-- 7i7 beginning with the date on which physical work on the conversion begins 7or1 if later1 the first day of the first taxable year to which an election under this subsection applies71 and 7ii7 ending on the date on which it is expected that the property will be available for placing in service4 7#c7 ,special rules for applying paragraph 7#a7 ,for purposes of paragraph 7#a7-- 7,a7 ,component parts1 etc ,property which is to be a component part of1 or is otherwise to be included in1 any building to which this subsection applies shall be taken into account-- 7i7 at a time not earlier than the time at which it becomes irrevocably devoted to use in the building1 and 7ii7 as if 7at the time referred to in clause 7i77 the taxpayer had expended an amount equal to that portion of the cost to the taxpayer of such component or other property which1 for purposes of this subpart1 is properly chargeable 7during such taxable year7 to capital account with respect to such building4 7,b7 ,certain borrowing disregarded ,any amount borrowed directly or indirectly by the taxpayer from the person converting the property for him shall not be treated as an amount expended for such conversion4 7,c7 ,limitation for buildings which are not self-converted 7i7 ,in general ,in the case of a building which is not self-converted1 the amount taken into account under paragraph 7#a77;,b7 for any taxable year shall not exceed the amount which represents the portion of the overall cost to the taxpayer of the conversion which is properly attributable to the portion of the conversion which is completed during such taxable year4 7ii7 ,carryover of certain amounts ,in the case of a building which is not a self-converted building1 if for the taxable year-- 7,i7 the amount which 7but for clause 7i77 would have been taken into account under paragraph 7#a77;,b7 exceeds the limitation of clause 7i71 then the amount of such excess shall be taken into account under paragraph 7#a77;,b7 for the succeeding taxable year1 or 7,,ii7 the limitation of clause 7i7 exceeds the amount taken into account under paragraph 7#a77;,b71 then the amount of such excess shall increase the limitation of clause 7i7 for the succeeding taxable year4 7,d7 ,determination of percentage of completion ,the determination under subparagraph 7,c77i7 of the portion of the overall cost to the taxpayer of the conversion which is properly attributable to conversion completed during any taxable year shall be made1 under regulations prescribed by the ,secretary1 on the basis of engineering or architectural estimates or on the basis of cost accounting records4 ,unless the taxpayer establishes otherwise by clear and convincing evidence1 the conversion shall be deemed to be completed not more rapidly than ratably over the normal conversion period4 7,e7 ,no progress expenditures for certain prior periods ,no qualified conversion expenditures shall be taken into account under this subsection for any period before the first day of the first taxable year to which an election under this subsection applies4 7,f7 ,no progress expenditures for property for year it is placed in service1 etc ,in the case of any building1 no qualified conversion expenditures shall be taken into account under this subsection for the earlier of-- 7i7 the taxable year in which the building is placed in service1 or 7ii7 the first taxable year for which recapture is required under section #ej7;a77#b7 with respect to such property1 or for any taxable year thereafter4 7#d7 ,self-converted building ,for purposes of this subsection1 the term self-converted building means any building if it is reasonable to believe that more than half of the qualified conversion expenditures for such building will be made directly by the taxpayer4 7#e7 ,election ,this subsection shall apply to any taxpayer only if such taxpayer has made an election under this paragraph4 ,such an election shall apply to the taxable year for which made and all subsequent taxable years4 ,such an election1 once made1 may be revoked only with the consent of the ,secretary4 7g7 ,denial of double benefit ,a credit shall not be allowed under this section for any qualified conversion expenditure for which a credit is allowed under section #db or #dg4 4 7c7 ,conforming amendments 7#a7 ,section #di7;a77#a77;,c7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of clause 7vii71 by striking the period at the end of clause 7viii7 and inserting 1 and1 and by adding after clause 7viii7 the following new clause3 7ix7 the portion of the basis of any qualified converted property attributable to qualified conversion expenditures under section #dh;,f4 4 7#b7 ,section #ej7;a77#b77;,e7 of such ,code is amended by striking or #dh;,e7e7 and inserting #dh;,e7e71 or #dh;,f7e74 7#c7 ,section #ej7;b77#b7 of such ,code is amended by striking and at the end of subparagraph 7,c71 by striking the period at the end of subparagraph 7,d7 and inserting 2 and1 and by adding after subparagraph 7,d7 the following new subparagraph3 7,e7 a qualified converted building to the extent of that portion of the basis which is attributable to qualified conversion expenditures4 4 7#d7 ,section #ej7;b77#c7 is amended by inserting 1 or1 solely with respect to the commercial-to-residential credit1 an eligible educational institution 7as defined in section #ebi7;e77#e77 after section #eba4 7#e7 ,the table of sections for subpart ,e of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by inserting after the item relating to section #dh;,e the following new item3 ,sec4 #dh;,f4 ,commercial-to-residential credit4 4 7d7 ,effective date ,the amendments made by this section shall apply to qualified conversion expenditures incurred after the date of enactment in taxable years ending after such date4 #c4 ,commercial to residential conversion advisory board 7a7 ,establishment ,not later than #a year after the date of the enactment of this ,act1 the ,secretary of ,housing and ,urban ,development shall establish an advisory board to carry out the duties described in subsection 7c74 7b7 ,membership ,the advisory board shall be composed of not less than #bj members1 appointed by the ,secretary4 7c7 ,duties ,the advisory board shall provide logistical support1 technical assistance1 best practices1 and training to ,state and local housing agencies with respect to-- 7#a7 identifying the best candidates for commercial to residential conversions that are financially and logistically feasible and meet demonstrated housing demand in localities within the ,state or locality2 7#b7 conducting floor plan and feasibility analyses for prospective commercial to residential conversions2 7#c7 expediting ,state or local regulatory processes and permitting processes to allow for faster approval and construction of commercial to residential conversions2 7#d7 reforming of local regulatory and zoning barriers to allow for more commercial to residential conversions2 and 7#e7 identifying ,federal and ,state funding sources that can be used by localities to provide financial assistance on commercial to residential conversion projects4 7d7 ,authorization of appropriations ,there is authorized to be appropriated to carry out this section #e1jjj1jjj for each of fiscal years #bjbe through #bjbi4