If enacted, HB2410 is expected to have significant implications for state housing laws and urban development policies. The bill stipulates that the conversion must adhere to specific criteria, including maintaining at least 20% of units as rent-restricted for individuals earning 80% or less of the area median income. This framework not only promotes affordable living conditions but also incentivizes private sector involvement in housing solutions. Furthermore, the bill may lead to an increase in governmental oversight regarding housing credit allocations and compliance monitoring.
Summary
House Bill 2410, titled the Revitalizing Downtowns and Main Streets Act, seeks to address the growing need for affordable housing by offering an investment credit for the conversion of non-residential buildings into affordable housing units. The bill proposes a 20% tax credit for qualified conversion expenditures incurred by taxpayers who successfully transform eligible commercial buildings into qualified affordable housing. This initiative aims to leverage unused commercial space in urban areas, thereby enhancing housing supply in regions facing affordability crises.
Contention
Despite its intentions, the bill could face contention regarding its exclusion of certain expenditures and the impacts it may have on local property markets. Critics may argue that the bill does not provide sufficient protections against gentrification in communities, as increased development could drive up property values and taxes, displacing current residents. Additionally, the two-year limitation on conversion expenditures and the exclusion of acquisition costs may be points of concern for potential investors and developers aiming for a feasible economic return.
Revitalizing Downtowns Act This bill expands the investment tax credit to add a qualified office conversion credit. The amount of such credit is 20% of the qualified conversion expenditures with respect to a qualified converted building. The bill defines qualified converted building as any building if (1) prior to conversion, the building was nonresidential real property which was leased, or available for lease, to office tenants; (2) the building has been substantially converted from an office use to a residential, retail, or other commercial use; (3) the building was initially placed in service at least 25 years prior to the beginning of the conversion, and (4) straight line depreciation is allowable with respect to the building.