Sponsors (5)
Introduced January 16, 2025 by Mikie Sherrill · Last progress January 16, 2025
The bill incentivizes reuse of vacant commercial buildings to produce more housing—including affordable units—by pairing a federal tax credit with technical assistance, but it raises federal costs, adds administrative complexity, and may favor larger developers over smaller ones.
Owners and developers converting vacant office/commercial buildings receive a nonrefundable tax credit equal to 15% of qualified conversion expenditures (with additional bonus percentages for meeting prevailing wage and affordable-unit targets), lowering project costs and making more conversion projects financially viable.
Low- and moderate-income renters are more likely to gain affordable rental units because the credit increases (by about 10–20%) when at least 25% of units are rent‑restricted at specified AMI levels, incentivizing inclusion of below‑market housing in conversions.
Local governments, housing agencies, and developers receive technical assistance, guidance (floor plans and feasibility analyses), and identification of federal/state financing sources, which speeds and de‑risks conversions and increases the chances vacant commercial space will be reused as housing.
The tax credit and authorized program funding reduce federal revenue and increase federal spending (including a $5 million/year authorization through 2029), which may widen the deficit or require offsets.
Complex eligibility rules, certification and recapture provisions, and coordination with other tax credits increase compliance costs for owners and administrative burden for the IRS and local governments.
Smaller developers or owners who cannot meet prevailing wage or rent‑restriction requirements may be effectively excluded from the bonus increases, concentrating benefits with larger firms or better‑capitalized developers.
Based on analysis of 3 sections of legislative text.
Creates a 15% tax credit for converting commercial buildings to rental housing, with per-unit/building caps and bonuses for affordable units and prevailing wages.
Creates a new federal tax credit to encourage converting commercial buildings into rental housing and adds bonuses for projects that include affordable units or pay prevailing wages. It also directs the Department of Housing and Urban Development to form an advisory board to help state and local agencies speed conversions and find funding, and authorizes $5 million per year for that board from 2025–2029.