Affordable Housing Construction Act

housing project-- ``(I) in the case of a new building, the eligible basis of such building shall be increased by the applicable percentage of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (E), (F), and (G), and ``(II) in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by the applicable percentage of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (E), (F), and (G). ``(ii) Applicable percentage.--For purposes of this subparagraph, the applicable percentage is 50 percent of the percentage of the energy utilized by such building which is from renewable energy (as so defined). ``(E) Increase in credit for buildings near public transportation.-- ``(i) In general.--In the case of any building which is located in a public transportation zone and 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-- ``(I) in the case of a new building, the eligible basis of such building shall be increased by 25 percent of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (D), (F), and (G), and ``(II) in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by 25 percent of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (D), (F), and (G). ``(ii) Public transportation zone.--For purposes of this subparagraph, a building is located in a public transportation zone if-- ``(I) the building is within one- half mile of an existing commuter rail, light rail, or subway station, ``(II) the building is within one- quarter mile of one or more existing public bus stops, or ``(III) the building is located in a census tract-- ``(aa) designated by the Administrator of the Environmental Protection Agency as having above average walkability, or ``(bb) which is adjacent to 2 or more such census tracts described in item (aa). ``(F) Increase in credit for buildings serving households with people with disabilities.-- ``(i) In general.--In the case of any building which has low-income units that meet the applicable design standards for occupancy by persons with mental, physical, sensory, or developmental disabilities, and 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-- ``(I) in the case of a new building, the eligible basis of such building shall be increased by the applicable percentage of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (D), (E), and (G), and ``(II) in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by the applicable percentage of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (D), (E), and (G). ``(ii) Design standards.--For purposes of clause (i), the term `applicable design standards' means the principles and standards of adaptable design as detailed in the Uniform Federal Accessibility Standards, or any successor standard designated by the Secretary. ``(iii) Applicable percentage.--For purposes of this subparagraph, the term `applicable percentage' means the number of percentage points (not to exceed 50 percentage points) by which-- ``(I) the ratio (expressed as a percentage and rounded to the nearest percent) of the number of low-income units in the building that meet the applicable design standards for occupancy by persons with mental, physical, sensory, or developmental disabilities bears to the total number of units in the building, exceeds ``(II) 5 percentage points. ``(G) Increase in credit for buildings serving extremely low-income families.-- ``(i) In general.--In the case of any building in which 20 percent of the units are occupied by extremely low-income families and 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-- ``(I) in the case of a new building, the eligible basis of such building shall be increased by 50 percent of such basis determined without regard to this subparagraph and subparagraphs (B), (C), (D), (E), and (F), and ``(II) in the case of an existing building, the rehabilitation expenditures taken into account under subsection (e) shall be increased by 50 percent of such expenditures determined without regard to this subparagraph and subparagraphs (B), (C), (D), (E), and (F). ``(ii) Extremely low-income families.--For purposes of this subparagraph, the term `extremely low-income families' means families whose annual incomes do not exceed 30 percent of the area median gross income, as determined in consultation with the Secretary of Health and Human Services. ``(H) Limitation.--Notwithstanding subparagraphs (B), (C), (D), (E), (F), and (G)-- ``(i) the eligible basis of any building shall not exceed an amount equal to 250 percent of such basis determined without regard to subparagraphs (B), (C), (D), (E), (F), and (G), and ``(ii) the rehabilitation expenditures taken into account under subsection (e) shall not exceed 250 percent of such expenditures determined without regard to subparagraphs (B), (C), (D), (E), (F), and (G).''. (2) Conforming amendments.--Section 42(d)(5)(B)(i) of such Code is amended-- (A) by striking ``shall be 130 percent of'' each place it appears in subclauses (I) and (II) and inserting ``shall be increased by 30 percent of'', and (B) by striking ``this subparagraph'' each place it appears in subclauses (I) and (II) and inserting ``this subparagraph and subparagraphs (B), (C), (D), (E), (F), and (G)''. (3) Effective date.--The amendments made by this subsection shall apply to buildings placed in service after the date of the enactment of this Act. (b) Set-Aside for Certain Projects.-- (1) In general.--Section 42(h) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: ``(9) Portion of state ceiling set-aside for certain projects.-- ``(A) In general.--Not more than two-thirds of the State housing credit ceiling for any State for any calendar year shall be allocated to projects other than qualified low-income housing projects described in subparagraphs (C), (D), (E), (F), and (G) of subsection (d)(5). ``(B) State may not override set-aside.--Nothing in subparagraph (F) of paragraph (3) shall be construed to permit a State not to comply with subparagraph (A) of this paragraph.''. (2) Effective date.--The amendments made by this subsection shall apply to calendar years beginning after the date of the enactment of this Act. SEC. 4. TAX-EXEMPT BOND FINANCING REQUIREMENT. (a) In General.--Section 42(h)(4) of the Internal Revenue Code of 1986 is amended-- (1) in subparagraph (B)(ii)(I)-- (A) by striking ``obligations described in subparagraph (A)'' and inserting ``qualified obligations'', and (B) by striking ``25 percent'' and inserting ``15 percent'', and (2) by adding at the end the following new subparagraph: ``(C) Qualified obligation.--For purposes of subparagraph (B)(ii), the term `qualified obligation' means an obligation which is described in subparagraph (A) and which is part of an issue the issue date of which is before January 1, 2028.''. (b) Effective Date.-- (1) In general.--The amendment made by this section shall apply to buildings placed in service in taxable years beginning after December 31, 2025. (2) Rehabilitation expenditures treated as separate new building.--In the case of any building with respect to which any expenditures are treated as a separate new building under section 42(e) of the Internal Revenue Code of 1986, for purposes of paragraph (1), both the existing building and the separate new building shall be treated as having been placed in service on the date such expenditures are treated as placed in service under section 42(e)(4) of such Code. SEC. 5. MODIFICATION OF EXTENDED USE PERIOD. (a) In General.--Section 42(h)(6)(D)(ii)(II) of the Internal Revenue Code of 1986 is amended by striking ``15 years'' and inserting ``35 years''. (b) Effective Date.--The amendment made by this section shall apply to agreements entered into in taxable years beginning after the date of the enactment of this Act. SEC. 6. REPEAL OF QUALIFIED CONTRACT OPTION. (a) Termination of Option for Certain Buildings.-- (1) In general.--Subclause (II) of section 42(h)(6)(E)(i) of the Internal Revenue Code of 1986 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)(6) of such Code 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, 2027, 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, 2027, 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)(6) of the Internal Revenue Code of 1986 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 (6) of section 42(h) of the Internal Revenue Code of 1986 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)(6)(E)(i) of such Code, 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)(6) of the Internal Revenue Code of 1986, as redesignated by 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)(6)(H) of the Internal Revenue Code of 1986, as redesignated by subsection (c), is submitted after the date of the enactment of this Act. <all>