Revitalizing Downtowns and Main Streets Act

This bill creates a federal tax credit to help turn older, non-residential buildings into affordable homes. Owners who do these projects can get a credit equal to 20% of their qualified conversion costs. To qualify, the building must be at least 20 years old and previously non‑residential; the project must spend at least $100,000 or half of the building’s value, whichever is more; and at least 20% of the apartments must be rent‑restricted and set aside for people earning 80% of the area median income or less for 30 years. Cleanup costs for qualified brownfield sites can count. In general, only costs from the two years before the building opens are eligible, unless the Treasury allows a longer timeline for big projects.

States get a share of a $12 billion national pool to award these credits, and up to $3 billion more can be designated for projects in distressed areas. If a state doesn’t use its share by December 31, 2028, those credits are reallocated to states with more demand. State housing agencies must follow an approved plan that considers need, how much affordable housing a project creates, location near jobs and transit, local support, readiness, and small‑business and neighborhood benefits. The Treasury Department will set rules and can take back the credit if a building later stops meeting the affordability rules.

• Who is affected: Property owners and developers who convert older non‑residential buildings; state housing credit agencies; renters who need affordable homes; communities, including rural and distressed areas.
• What changes:
  • Base credit: 20% of conversion costs.
  • In some federally designated high‑need areas, the credit rises to 30% if at least 20% of units are reserved for households at 60% of area median income or less.
  • In rural historic preservation projects, the credit can be 35% for up to $2 million of costs.
  • A project’s credit cannot be larger than the amount the state allocates to it.
  • States may require affordability to last longer than 30 years.
  • Brownfield cleanup costs can qualify.
  • Most eligible costs must occur within two years before the homes open; longer timelines can be allowed if the conversion is expected to take more than two years.
• When:
  • Treasury must set the designation program for distressed‑area amounts within 120 days after enactment.
  • Unused credits in certain states stop after December 31, 2028 and are reallocated.