S. 2638 — Energy Efficiency for Affordable Housing Act

This section increases rehabilitation expenditures taken into account under the low-income housing tax credit (LIHTC) for existing buildings achieving enhanced energy performance to 130% of such expenditures (from 100%). Enhanced energy performance requires meeting an advanced building construction standard promulgated by the Secretary of Energy within 180 days of enactment or, if elected, a qualified retrofit plan certified by a qualified professional (i.e., licensed architect or engineer) that reduces the building's site energy usage intensity by 50% or more compared to its baseline (i.e., measured over the prior 24 months in British thermal units per square foot per year). For such buildings in high-cost areas qualifying under current LIHTC rules, the increase is to 160% of expenditures (from 100%), overriding the existing high-cost area limitation. The changes apply to housing credit dollar amounts allocated after December 31, 2025, and to bond-financed projects with issues dated after that date. (Thus, developers receive a larger LIHTC qualified basis—and therefore larger credits—for energy-efficient rehabilitations of existing affordable rental housing.)