A BILL TO BE ENTITLED
AN ACT To Restore funding for low‑income housing.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 3E of Chapter 105 of the General Statutes, with the exception of G.S. 105‑129.41, is reenacted as it existed immediately before its expiration and reads as rewritten:
"Article 3E.
"Low‑Income Housing Tax Credits.
"§ 105‑129.40.  Definitions.
	
	Definitions. – The definitions in section 42 of the Code and the following definitions apply in this Article:
(1)	Housing Finance Agency. – The North Carolina Housing Finance Agency established in G.S. 122A‑4.
(2)	Pass‑through entity. – Defined in G.S. 105‑228.90.
…
"§ 105‑129.42.  Funding mechanism for low‑income housing awarded a federal credit allocation on or after January 1, 2003.
(a)	Definitions. – The following definitions apply in this section:
(1)	Qualified Allocation Plan. – The plan governing the allocation of federal low‑income housing tax credits for a particular year, as approved by the Governor after a public hearing and publication in the North Carolina Register.
(2)	Qualified North Carolina low‑income housing development. – A qualified low‑income project or building that is allocated a federal tax credit under section 42(h)(1) of the Code and is described in subsection (c) of this section.
(3)	Qualified residential unit. – A housing unit that meets the requirements of section 42 of the Code.
(b)	Credit. – A taxpayer who is allocated a federal low‑income housing tax credit under section 42 of the Code to construct or substantially rehabilitate a qualified North Carolina low‑income housing development is allowed a credit equal to a percentage of the development's qualified basis, as determined pursuant to section 42 of the Code. For the purpose of this section, qualified basis is calculated based on the information contained in the carryover allocation and is not recalculated to reflect subsequent increases or decreases. No credit is allowed for a development that uses tax‑exempt bond financing.
(c)	Developments and Amounts. – The following table sets out the housing developments that are qualified North Carolina low‑income housing developments and are allowed a credit under this section. The table also sets out the percentage of the development's qualified basis for which a credit is allowed. The designation of a county or city as Low Income, Moderate Income, or High Income and determinations of affordability are made by the Housing Finance Agency in accordance with the Qualified Allocation Plan in effect as of the time the federal credit is allocated. A change in the income designation of a county or city after a federal credit is allocated does not affect the percentage of the developer's qualified basis for which a credit is allowed. The affordability requirements set out in the chart apply for the duration of the federal tax credit compliance period.
	Percentage of
	Basis for
	Type of Development	Which Credit
	is Allowed
Forty percent (40%) of the qualified residential units
are affordable to households whose income is fifty	Thirty percent
percent (50%) or less of area median income and the	(30%)
units are in a Low‑Income county or city.

Fifty percent (50%) of the qualified residential units
are affordable to households whose income is fifty	Twenty percent
percent (50%) or less of the area median income and	(20%)
the units are in a Moderate‑Income county or city.

Fifty percent (50%) of the qualified residential units
are affordable to households whose income is forty	Ten percent
percent (40%) or less of the area median income and	(10%)
the units are in a High‑Income county or city.

Twenty‑five percent (25%) of the qualified residential
units are affordable to households whose income is	Ten percent
thirty percent (30%) or less of the area median income	(10%)
and the units are in a High‑Income county or city.

(d)	Loan Generated. – When a taxpayer to whom a federal low‑income housing credit is allocated submits to the Housing Finance Agency a request to receive a carryover allocation for that credit, the taxpayer must receive the credit in the form of a loan generated by transferring the credit to the Housing Finance Agency. A loan received as the result of the transfer of the credit is not considered taxable income under this Chapter.

The terms of the loan are specified by the Housing Finance Agency in accordance with the Qualified Allocation Plan.
(e)	Exception When No Carryover. – If a taxpayer does not submit to the Housing Finance Agency a request to receive a carryover allocation, the taxpayer to whom this subsection applies claims the credit for the taxable year in which the taxpayer submits federal Form 8609.
(f)	Pass‑Through Entity. – Notwithstanding the provisions of G.S. 105‑131.8 and G.S. 105‑269.15, a pass‑through entity that qualifies for the credit provided in this Article does not distribute the credit among any of its owners. The pass‑through entity is considered the taxpayer for purposes of claiming the credit allowed by this Article. If a return filed by a pass‑through entity indicates that the entity is paying tax on behalf of the owners of the entity, the credit allowed under this Article does not affect the entity's payment of tax on behalf of its owners.
(g)	Return and Payment. – A taxpayer may claim the credit allowed by this section on a return filed for the taxable year in which the taxpayer receives a carryover allocation of a federal low‑income housing credit. The return must state the name and location of the qualified low‑income housing development for which the credit is claimed.
The Secretary must transfer to the Housing Finance Agency the amount of credit allowed the taxpayer. The Agency must loan the taxpayer the amount of the credit on terms consistent with the Qualified Allocation Plan. The Housing Finance Agency is not required to make a loan to a qualified North Carolina low‑income housing development until the Secretary transfers the credit amount to the Agency.

	

	
	
"§ 105‑129.43.  Substantiation.
A taxpayer allowed a credit under this Article must maintain and make available for inspection any information or records required by the Secretary of Revenue or the Housing Finance Agency. The burden of proving eligibility for a credit and the amount of the credit rests upon the taxpayer.
"§ 105‑129.44.  Report.
The Department must include in the economic incentives report required by G.S. 105‑256 the following information itemized by taxpayer:
(1)	The number of taxpayers that took the credit allowed in this Article.
(2)	The location of each qualified North Carolina low‑income building or housing development for which a credit was taken.
(3)	The total cost to the General Fund of the credits taken.
"§ 105‑129.46. Reserved for future codification purposes.
"§ 105‑129.47. Reserved for future codification purposes.
"§ 105‑129.48. Reserved for future codification purposes.
"§ 105‑129.49. Reserved for future codification purposes."
SECTION 2.  This act is effective for taxable years beginning on or after January 1, 2022.