H.R. 537 — INCREASE Housing Affordability Act

This section establishes a new commercial-to-residential investment tax credit under new IRC §48F equal to 15% of qualified conversion expenditures for a qualified converted building (i.e., a depreciable building previously used as nonresidential real property leased or available for lease to office tenants, placed in service at least 15 years before conversion, and substantially converted to residential or residential-retail mixed use, with such expenditures during a 24-month period exceeding the greater of the building's adjusted basis or $15,000). The credit is capped at $200,000 per new residential housing unit and $10,000,000 per building, with expenditures taken into account in the year the building is placed in service (reduced by certain prior expenditures not recaptured). It provides bonus credits increasing the credit percentage and caps by (1) 10%, 15%, or 20% for affordable housing conversions where 25% or more of residential units are rent-restricted (per rules similar to IRC §42(g)) and occupied by tenants at or below 100%, 80%, or 60% of area median income, respectively, if converted to majority rental use; and (2) 15% for prevailing wage requirements (i.e., laborers and mechanics paid at Department of Labor-determined prevailing rates under 40 U.S.C. §§3141 et seq.).

This section directs the Secretary of Housing and Urban Development to establish, not later than one year after enactment, a commercial to residential conversion advisory board composed of at least 20 members appointed by the Secretary. The board must provide logistical support, technical assistance, best practices, and training to state and local housing agencies with respect to (1) identifying feasible commercial-to-residential conversion candidates that meet local housing demand; (2) conducting floor plan and feasibility analyses; (3) expediting state and local regulatory and permitting processes; (4) reforming local regulatory and zoning barriers; and (5) identifying federal and state funding for such projects. It authorizes $5 million for each of FY2025 through FY2029.