H.R. 2410: Revitalizing Downtowns and Main Streets Act

HR2410 creates a new federal tax credit equal to 20% of qualified conversion expenditures for a qualified affordable housing building placed in service after enactment. To qualify, the project must convert an eligible commercial building, and the spending must exceed the greater of 50% of the building’s adjusted basis right before conversion or $100,000. The building also has to be old enough: it must have been placed in service at least 20 years before the conversion began and must have been nonresidential real property immediately before conversion.

The affordable housing requirement is strict and long-lasting. For 30 years, at least 20% of the units in the converted residential building must be rent-restricted and reserved for people with income at or below 80% of area median income. In qualified census tracts and difficult development areas, the bill tightens that standard further, requiring the income threshold to be 60% or less of area median income. That means the most distressed or high-need areas would have deeper affordability attached to the credit.

The bill caps the national allocation at $12,000,000,000, with up to $3,000,000,000 that the Treasury Secretary may specially designate for buildings in economically distressed areas. States would allocate the credits under plans approved by local government and based on criteria including financial feasibility, affordable housing creation, proximity to transit or jobs, support for small businesses, local government backing, and project readiness. Allocations generally must be made by the close of the calendar year the building is placed in service, unless there is a binding commitment. After December 31, 2028, unused credits from undersubscribed States would be reallocated to oversubscribed States based on population ratios.

The bill also includes targeted incentives and guardrails. In rural areas, as defined by section 1393(a)(2), taxpayers could elect a 35% credit instead of 20% for up to $2,000,000 in expenditures for certified historic structures. Cleanup costs for qualifying brownfield property are allowed even if they do not meet the normal depreciation rule. But projects cannot count costs incurred outside the 2-year period ending on the placed-in-service date, and they cannot include building acquisition costs. If the same expenditures are used for the rehabilitation credit under section 47, the amount eligible here is cut by 50%. The Treasury Secretary must also issue recapture rules if a building stops meeting the affordable-housing rules during the 30-year compliance period.