text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Low Income Community Development Tax 
  Credit Act of 1995''.
  
  SEC. 2. CREDIT FOR NONRESIDENTIAL BUILDINGS CONSTRUCTED OR RENOVATED IN 
                DISTRESSED AREAS.
  
      (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
  of the Internal Revenue Code of 1986 (relating to business related 
  credits) is amended by adding at the end the following new section:
  
  ``SEC. 45C. CREDIT FOR NONRESIDENTIAL BUILDINGS IN DISTRESSED AREAS.
  
      ``(a) In General.--For purposes of section 38, the amount of the 
  distressed area building credit determined under this section for any 
  taxable year in the credit period shall be an amount equal to--
              ``(1) the applicable percentage of
              ``(2) the eligible basis of each qualified distressed area 
          building.
      ``(b) Applicable Percentage: 70 Percent Present Value Credit for 
  Certain New Buildings; 30 Percent Present Value Credit for Certain 
  Other Buildings.--For purposes of this section--
              ``(1) In general.--The term `applicable percentage' means 
          the appropriate percentage prescribed by the Secretary for the 
          earlier of--
                      ``(A) the month in which such building is placed in 
                  service, or
                      ``(B) at the election of the taxpayer--
                              ``(i) the month in which the taxpayer and 
                          the credit allocating agency enter into an 
                          agreement with respect to such building (which 
                          is binding on such agency, the taxpayer, and 
                          all successors in interest) as to the building 
                          credit dollar amount to be allocated to such 
                          building, or
                              ``(ii) in the case of any building to which 
                          the rules of section 42(h)(4)(B) apply, the 
                          month in which the tax-exempt obligations are 
                          issued.
          A month may be elected under clause (ii) only if the election 
          is made not later than the 5th day after the close of such 
          month. Such an election, once made, shall be irrevocable.
              ``(2) Method of prescribing percentages.--
                      ``(A) In general.--The percentages prescribed by 
                  the Secretary for any month shall be percentages which 
                  will yield over a 10-year period amounts of credit 
                  under subsection (a) which have a present value equal 
                  to--
                              ``(i) 70 percent of the eligible basis of a 
                          new building, and
                              ``(ii) 30 percent of the eligible basis of 
                          an existing building.
                      ``(B) Increased credit for buildings in more 
                  distressed areas.--In the case of buildings located in 
                  a census tract which would be a distressed area if `50 
                  percent' were substituted for `80 percent' in 
                  subsection (c)(2), subparagraph (A) shall be applied by 
                  substituting `75 percent' for `70 percent' and `35 
                  percent' for `30 percent'.
      ``(c) Qualified Distressed Area Building; Distressed Area.--For 
  purposes of this section--
              ``(1) Qualified distressed area building.--The term 
          `qualified distressed area building' means any building (other 
          than residential rental property) which, when placed in 
          service, is located in a distressed area.
              ``(2) Distressed area.--The term `distressed area' means 
          any census tract in which, for the most recent year for which 
          census data are available on household income in such tract, 70 
          percent or more of the households have an income which is 80 
          percent or less of the area median gross income (within the 
          meaning of section 142(d)) for such year.
      ``(d) Eligible basis.--For purposes of this section, the eligible 
  basis of any building shall be determined under the rules of paragraphs 
  (1) and (2) of section 42(d).
      ``(e) Rehabilitation expenditures treated as separate new 
  building.--
              ``(1) In general.--Rehabilitation expenditures paid or 
          incurred by the taxpayer with respect to any building shall be 
          treated for purposes of this section as a separate new 
          building.
              ``(2) Rehabilitation expenditures.--For purposes of 
          paragraph (1)--
                      ``(A) In general.--The term `rehabilitation 
                  expenditures' means amounts chargeable to capital 
                  account and incurred for property (or additions or 
                  improvements to property) of a character subject to the 
                  allowance for depreciation in connection with the 
                  rehabilitation of a building.
                      ``(B) Cost of acquisition, etc., not included.--
                  Such term does not include the cost of acquiring any 
                  building (or interest therein).
              ``(3) Minimum expenditures to qualify.--
                      ``(A) In general.--Paragraph (1) shall apply to 
                  rehabilitation expenditures with respect to any 
                  building only if the amount of such expenditures during 
                  any 24-month period is not less than 10 percent of the 
                  adjusted basis of the building (determined as of the 
                  1st day of such period and without regard to paragraphs 
                  (2) and (3) of section 1016(a)).
                      ``(B) Date of determination.--The determination 
                  under subparagraph (A) shall be made as of the close of 
                  the 1st taxable year in the credit period with respect 
                  to such expenditures.
              ``(4) Special rules.--Rules similar to the rules of 
          paragraph (4)(A) and (5) of section 42(e) shall apply for 
          purposes of this subsection.
      ``(f) Definition and Special Rules Relating to Credit Period.--
              ``(1) Credit period defined.--For purposes of this section, 
          the term `credit period' means, with respect to any building, 
          the period of 10 taxable years beginning with--
                      ``(A) the taxable year in which the building is 
                  placed in service, or
                      ``(B) at the election of the taxpayer, the 
                  succeeding taxable year,
          but only if the building is a qualified distressed area 
          building as of the close of the 1st year of such period. The 
          election under subparagraph (B), once made, shall be 
          irrevocable.
              ``(2) Special rules.--Rules similar to the rules of 
          paragraphs (3), (4), and (5) of section 42(f) shall apply for 
          purposes of this subsection.
      ``(g) Limitation on Aggregate Credit Allowable With Respect To 
  Buildings Located in a State.--
              ``(1) Credit may not exceed credit amount allocated to 
          building.--
                      ``(A) In general.--The amount of the credit 
                  determined under this section for any taxable year with 
                  respect to any building shall not exceed the distressed 
                  area building credit dollar amount allocated to such 
                  building under this subsection.
                      ``(B) Time for making allocation.--Rules similar to 
                  the rules of subparagraphs (B) through (F) of section 
                  42(h)(1) shall apply for purposes of this paragraph.
              ``(2) Allocated credit amount to apply to all taxable years 
          ending during or after credit allocation year.--Any distressed 
          area building credit dollar amount allocated to any building 
          for any calendar year--
                      ``(A) shall apply to such building for all taxable 
                  years in the credit period ending during or after such 
                  calendar year, and
                      ``(B) shall reduce the aggregate distressed area 
                  building credit dollar amount of the credit allocating 
                  agency only for such calendar year.
              ``(3) Distress area building credit dollar amount for 
          agencies.--
                      ``(A) In general.--The aggregate distressed area 
                  building credit dollar amount which a credit agency may 
                  allocate for any calendar year is the portion of the 
                  State distressed area building credit ceiling allocated 
                  under this paragraph for such calendar year to such 
                  agency.
                      ``(B) State ceiling initially allocated to State 
                  housing credit agencies.--The State distressed area 
                  building credit ceiling for each calendar year shall be 
                  allocated to the housing credit agency of such State. 
                  If there is more than 1 housing credit agency of a 
                  State, all such agencies shall be treated as a single 
                  agency.
                      ``(C) State distressed area building credit 
                  ceiling.--The State distressed area building credit 
                  ceiling applicable to any State for any calendar year 
                  shall be an amount equal to the sum of--
                              ``(i) $1.25 multiplied by the State 
                          population,
                              ``(ii) the unused State distressed area 
                          building credit ceiling (if any) of such State 
                          for the preceding calendar year,
                              ``(iii) the amount of State distressed area 
                          building credit ceiling returned in the 
                          calendar year, plus
                              ``(iv) the amount (if any) allocated under 
                          subparagraph (D) to such State by the 
                          Secretary.
                  For purposes of clause (ii), the unused State 
                  distressed area building credit ceiling for any 
                  calendar year is the excess (if any) of the sum of the 
                  amounts described in clauses (i) and (iii) over the 
                  aggregate distressed area building credit dollar amount 
                  allocated for such year.
                      ``(D) Unused credit carryovers allocated among 
                  certain states.--Rules similar to the rules of section 
                  42(h)(2)(D) shall apply for purposes of this paragraph.
              ``(4) Other rules to apply.--Rules similar to the rules of 
          subparagraphs (E), (F), and (G) of section 42(h)(2), and 
          paragraphs (4), (5), and (7) of section 42(h), shall apply for 
          purposes of this subsection.
              ``(5) Definitions.--For purposes of this subsection--
                      ``(A) Credit allocating agency.--The term `credit 
                  allocating agency' means any agency authorized to carry 
                  out this subsection.
                      ``(B) Possessions treated as states.--The term 
                  `State' includes a possession of the United States.
      ``(h) Definitions and special rules.--For purposes of this section 
  --
              ``(1) New building.--The term `new building' means a 
          building the original use of which begins with the taxpayer.
              ``(2) Existing building.--The term `existing building' 
          means any building which is not a new building.
              ``(3) Application to estates and trusts.--In the case of an 
          estate or trust, the amount of the credit determined under 
          subsection (a) shall be apportioned between the estate or trust 
          and the beneficiaries on the basis of the income of the estate 
          or trust allocable to each.
      ``(i) Application of At-Risk Rules.--Rules similar to the rules of 
  section 42(j) shall apply for purposes of this section.
      ``(j) Certifications and Other Reports to Secretary.--
              ``(1) Certification with respect to 1st year of credit 
          period.--Following the close of the 1st taxable year in the 
          credit period with respect to any qualified distressed area 
          building, the taxpayer shall certify to the Secretary (at such 
          time and in such form and in such manner as the Secretary 
          prescribes)--
                      ``(A) the taxable year, and calendar year, in which 
                  such building was placed in service,
                      ``(B) the adjusted basis and eligible basis of such 
                  building as of the close of the 1st year of the credit 
                  period,
                      ``(C) the maximum applicable percentage and 
                  eligible basis permitted to be taken into account by 
                  the appropriate credit allocating agency, and
                      ``(D) such other information as the Secretary may 
                  require.
          In the case of a failure to make the certification required by 
          the preceding sentence on the date prescribed therefor, unless 
          it is shown that such failure is due to reasonable cause and 
          not to willful neglect, no credit shall be allowable by reason 
          of subsection (a) with respect to such building for any taxable 
          year ending before such certification is made.
              ``(2) Reports to the secretary.--The Secretary may require 
          taxpayers and credit allocating agencies to submit such reports 
          as the Secretary determines necessary or appropriate to carry 
          out the purposes of this section.
      ``(k) Credit Allocated to Building Not to Exceed Amount Necessary 
  To Assure Project Feasibility.--
              ``(1) In general.--The distressed area building credit 
          dollar amount allocated to a building shall not exceed the 
          amount the credit allocating agency determines is necessary for 
          the financial feasibility of the building throughout the credit 
          period.
              ``(2) Agency evaluation.--In making the determination under 
          paragraph (1), the credit allocating agency shall consider--
                      ``(A) the sources and uses of funds and the total 
                  financing planned for the building,
                      ``(B) any proceeds or receipts expected to be 
                  generated by reason of tax benefits, and
                      ``(C) the percentage of the distressed area 
                  building credit dollar amount used for building costs 
                  other than the cost of intermediaries.
          Subparagraph (C) shall not be applied so as to impede the 
          development of buildings in hard-to-develop areas. Such a 
          determination shall not be construed to be a representation or 
          warranty as to the feasibility or viability of the building.
              ``(3) Determination made when credit amount applied for and 
          when building placed in service.--
                      ``(A) In general.--A determination under paragraph 
                  (1) shall be made as of each of the following times:
                              ``(i) The application for the distressed 
                          area building credit dollar amount.
                              ``(ii) The allocation of the distressed 
                          area building credit dollar amount.
                              ``(iii) The date the building is placed in 
                          service.
                      ``(B) Certification as to amount of other 
                  subsidies.--Prior to each determination under 
                  subparagraph (A), the taxpayer shall certify to the 
                  credit allocating agency the full extent of all 
                  Federal, State, and local subsidies which apply (or 
                  which the taxpayer expects to apply) with respect to 
                  the building.
      ``(l) Regulations.--The Secretary shall prescribe such regulations 
  as may be necessary or appropriate to carry out the purposes of this 
  section.''
      (b) Credit To Be Part of General Business Credit.--
              (1) Subsection (b) of section 38 of such Code is amended by 
          striking ``plus'' at the end of paragraph (10), by striking the 
          period at the end of paragraph (11) and inserting ``, plus'', 
          and by adding at the end the following new paragraph:
              ``(12) the distressed area building credit determined under 
          section 45C(a).''
              (2) Subsection (d) of section 39 of such Code is amended by 
          adding at the end the following new paragraph:
              ``(7) Distressed area building credit.--No portion of the 
          unused business credit which is attributable to the credit 
          determined under section 45C (relating to distressed area 
          building credit) may be carried to any taxable year ending 
          before January 1, 1996.''
              (3) Subsection (c) of section 196 of such Code (relating to 
          deduction for certain unused business credits) is amended by 
          striking ``and'' at the end of paragraph (6), by striking the 
          period at the end of paragraph (7) and inserting ``, and'', and 
          by adding at the end the following new paragraph:
              ``(8) the distressed area building credit determined under 
          section 45C(a).''
      (c) Clerical Amendment.--The table of sections for subpart D of 
  part IV of subchapter A of chapter 1 of such Code is amended by adding 
  at the end the following new item:
  
                                ``Sec. 45C. Credit for nonresidential 
                                          buildings in distressed 
                                          areas.''
      (d) Effective Date.--The amendments made by this section shall 
  apply to property placed in service after December 31, 1995.
target: Low Income Community Development Tax Credit Act of 1995 - Amends the Internal Revenue Code to allow, as part of the general business credit, a tax credit (equal to a percentage of its basis) for placing a nonresidential building in service in a distressed area, with a greater credit allowed for a new building than an existing building. Provides for calculation of the basis of such buildings according to the rules governing the low-income housing credit. 
  Defines a distressed area as one in which at least 70 percent of the households have an income that is no more than 80 percent of the area median gross income.  Increases the credit with respect to buildings in areas in which income is lower. 
  Treats rehabilitation expenditures, provided they are above a certain threshold, as a separate new building. 
  Imposes an annual State distressed area building credit ceiling.
feat_title: Low Income Community Development Tax Credit Act of 1995