The passage of HB 9002 could significantly impact state laws surrounding housing development and fiscal incentives related to real estate. The newfound tax credit may facilitate an increase in affordable housing stock by encouraging developers to engage in conversions instead of new constructions. This action might help alleviate the pressing housing shortages observed in many urban areas, particularly if incentivized buildings are situated close to transportation and employment hubs. Additionally, it may stimulate local economies by revamping downtown areas and keeping real estate values stabilized.
Summary
House Bill 9002, known as the 'Revitalizing Downtowns and Main Streets Act', introduces amendments to the Internal Revenue Code to establish an investment credit for converting non-residential buildings into affordable housing. The bill provides a 20% credit on qualified conversion expenditures for taxpayers who place qualified affordable housing buildings into service, offering a financial incentive to repurpose existing structures to meet housing needs. This initiative aligns with broader efforts to tackle rising housing costs and promote urban regeneration.
Contention
However, the bill could lead to contentious debates regarding the effectiveness of such credits in genuinely enhancing affordable housing availability. Opponents may argue that reliance on tax credits could divert attention from broader systemic issues in housing policy and urban planning. Furthermore, there may be concerns regarding compliance and oversight, particularly around ensuring that created housing remains accessible and affordable over time, which requires robust monitoring and accountability measures to be put in place.
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.