HomeStart Financial Incentives Act of 2001
Bill 14-183

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A BILL IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

Councilmember David A. Catania, Chairman Linda W. Cropp, and Councilmembers Jack Evans and Carol Schwartz introduced the following bill, which was referred to the Committee on .

To amend Title 47 of the District of Columbia Code to freeze real property tax assessments when Qualified Improvements are made to Residential Real Property in Revitalization Zones and to reduce the tax liability owed on such property in proportion to the cost of the Qualified Improvements; to abate real property taxes for owners of multifamily property who make renovations of at least $10,000 to each unit and to owners of multifamily property who renew their Section 8 contracts with the United States Department of Housing and Urban Development; to grant an income tax credit to an individual in a Revitalization Zone who qualifies for the first-time homebuyer credit under section 1400C of the Internal Revenue Code of 1986; to establish an Employer Homeownership Assistance Program; and to direct the Mayor to establish a HomeStart Homeownership Counseling Program.

TABLE OF CONTENTS

TITLE I. HOMESTART FINANCIAL INCENTIVES ACT.
Sec. 101. Definitions.
TITLE II. REAL PROPERTY TAX ABATEMENT.
Sec. 201. Qualified Improvements to Residential Real Property.
Sec. 202. Affordable Multifamily Housing Property.
TITLE III. INCOME TAX CREDIT.
Sec. 301. First-time Homebuyer.
Sec. 302. Employer Homeownership Assistance Program.
TITLE IV. HOMESTART HOMEOWNERSHIP COUNSELING.
Sec. 401. HomeStart Homeownership Counseling Program.
TITLE V. IMPLEMENTATION.
Sec. 501. Rulemaking.
Sec. 502. Fiscal impact statement.
Sec. 503. Effective date.

BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act may be cited as the "HomeStart Financial Incentives Act of 2001".

TITLE I. HOMESTART FINANCIAL INCENTIVES ACT.

Sec. 101. Title 47 of the District of Columbia Code is amended as follows:

(a) The table of contents for Chapter 8 is amended by adding the section designation "47-804. Definitions for the HomeStart Financial Incentives Act.".

(b) A new section 47-804 is added to read as follows:

"§ 47-804. Definitions for the HomeStart Financial Incentives Act.

"For the purposes of this chapter, the term:

"(1) "Dwelling unit" means any room or group of rooms forming a single unit which is used, or intended to be used, for living, sleeping, and the preparation and eating of meals.

"(2) "Qualified Improvements" means physical improvements that are performed to the exterior or the interior of Residential Real Property which are intended to improve the physical appearance of the Residential Real Property and to provide continued safe, decent, and sanitary living space for human beings.

"(3) "Residential Real Property" means improved real property in the District of Columbia in a Revitalization Zone which contains not more than 4 dwelling units.

"(4) "Revitalization Zone" means any of the Priority Development Areas as defined in section 21 of the National Capital Revitalization Corporation Act, effective September 11, 1998 (D.C. Law 12-144; D.C. Code § 1-2295.20).".

TITLE II. REAL PROPERTY TAX ABATEMENT.

Sec. 201. Title 47 of the District of Columbia Code is amended as follows:

(a) Section 47-829 is amended by adding a new subsection (e-1) to read as follows:

"(e-1) Notwithstanding any other provision of this section, effective for taxable years beginning after December 31, 2001, when an owner who occupies Residential Real Property, as defined in § 47-804(3), makes Qualified Improvements, as defined in § 47-804(2), equal to at least 10% of the estimated assessed value of the Residential Real Property to his or her Residential Real Property after the effective date of the HomeStart Financial Incentives Act of 2001, the assessed estimated value of the Residential Real Property shall not be increased for 5 years following the making of the Qualified Improvements.".

(b)(1) The table of contents for Chapter 8 is amended by adding the section designation "47-864. Reduced Tax Liability for Qualified Improvements.".

(2) A new section 47-864 is added to read as follows:

"§ 47-864. Reduced tax liability for qualified improvements.

"(a) Effective for taxable years beginning after December 31, 2001, an owner who occupies Residential Real Property, as defined § 47-804(3), and is subject to District of Columbia income taxation, and who performs Qualified Improvements, as defined in § 47-804(2), to the Residential Real Property after the effective date of the HomeStart Financial Incentives Act of 2001 shall be entitled to a real property tax reduction as specified in this section.

"(b) For each $1,000 of Qualified Improvements that an owner makes to his or her Residential Real Property, the owner shall be entitled to a reduction of $50 from the tax imposed by this chapter. The amount of the reduction shall not exceed 50% of the tax imposed during the immediate preceding year.

"(c) If the amount of the reduction exceeds 50% of the tax imposed during the immediate preceding year, the unused amount of the reduction may be carried forward for 5 taxable years.".

Sec. 202. Title 47 of the District of Columbia Code is amended as follows:

(a) The table of contents for Chapter 8 is amended by adding the section designation "47-865. Affordable Multifamily Housing Property Tax Abatement.".

(b) A new section 47-865 is added to read as follows:

"§ 47-865. Affordable multifamily housing property tax abatement.

"(a) Definitions. For purpose of this section, the term:

"(1) "Affordable Multifamily Housing Property" means any multifamily property, consisting of 5 or more dwelling units, as defined in § 47-804(1), if, as the result of use restrictions or other restrictive covenants, at least 20% of the dwelling units are occupied by residents earning 40% or less of the area median income as promulgated by the Secretary.

"(2) "HAP Contract" means a project-based Housing Assistance Payment Contract executed pursuant to section 8 of the United States Housing Act of 1937, approved August 22, 1974 (88 Stat. 662; 42 U.S.C. § 1437f), by and between the owner of an Affordable Multifamily Housing Property and the Secretary or a public housing agency pursuant to an annual contributions contract with the Secretary and regulated by the Secretary pursuant to Chapter VII of Title 24 of the Code of Federal Regulations.

"(3) "Qualified Renovations" means physical improvements totalling at least $10,000 per dwelling unit that are made to a Qualified Multifamily Property

"(4) "Qualified Multifamily Property" means an Affordable Multifamily Housing Property to which Qualified Renovations have been made.

"(5) "Secretary" means the Secretary of the United States Department of Housing and Urban Development.

"(b)(1) Effective for taxable years beginning after December 31, 2001, the owner of a Qualified Multifamily Property shall not pay annual real property taxes for 5 years beginning with the year in which all of the units within the Qualified Multifamily Property are ready for occupancy.

"(2) The real property tax abatement provided in paragraph (1) of this subsection shall be allowed only if the owner has made Qualified Renovations to all of the dwelling units within the Qualified Multifamily Property.

"(c)(1) Effective for taxable years beginning after December 31, 2001, if the owner of an Affordable Multifamily Housing Property that receives assistance pursuant to a HAP Contract elects to renew the expiring contract with the Secretary, the owner shall receive an annual real property tax abatement as described in paragraph (2) of this subsection.

"(2)(A) If the expiring HAP Contract is renewed for one year, the owner shall receive a tax abatement equal to 50% of the tax imposed by this chapter for the taxable year in which the contract is renewed.

"(B) If an expiring HAP Contract is renewed for 5 years, the owner shall receive a tax abatement equal to 75% of the tax imposed by this chapter for the taxable year in which the contract is renewed and for each of the 4 taxable years thereafter.

"(C) If an expiring HAP Contract is renewed for at least 10 years, the owner shall receive a tax abatement equal to 100% of the tax imposed by this chapter for the taxable year in which the contract is renewed and for each of the 9 taxable years thereafter.".

TITLE III. INCOME TAX CREDIT.

Sec. 301. Section 47-1806.4 of the District of Columbia Code is amended by adding a new subsection (g) to read as follows:

"(g)(1) Effective for taxable years beginning after December 31, 2001, an individual who is allowed the District of Columbia First-time Homebuyer Credit under section 1400C of the Internal Revenue Code of 1986 shall be allowed a credit against the tax imposed by this chapter in an amount equal to the lesser of the purchase price of the property or $5,000; provided, that:

"(A) The property is:

"(i) Residential Real Property, as defined in § 47-804(3); and

"(ii) Purchased after December 31, 2001; and

"(B) The individual permanently resides in the Residential Real Property.

"(2) For the purposes of this subsection:

"(A) In the case of a married couple who purchases Residential Real Property, the credit under paragraph (1) of this subsection shall be allowed provided; that:

"(i) Both individuals meet the requirement of paragraph (1)(B) of this subsection; and

"(ii) In the case of a married individual filing a separate return, the amount of the credit shall be the lesser of the purchase price of the property or $2,500; or

"(B) If 2 or more individuals who are not married purchase Residential Real Property, the amount of the credit allowed under paragraph (1) of this subsection shall be allocated equally among the individuals who meet the requirement of paragraph (1)(B) of this subsection.

"(3) If the credit under paragraph (1) of this subsection exceeds the tax imposed by this chapter, the excess may be carried forward for one taxable year.

Sec. 302. Title 47 of the District of Columbia Code is amended as follows:

(a) The table of contents for Chapter 18 is amended by adding the subchapter designation "Subchapter XVIII. Employer Homeownership Assistance Program.

"47-1818.1 Employer-Assisted Affordable Housing Tax Credit.".

(b) A new section 47-1818.1 is added to read as follows:

"§ 47-1818.1. Employer-Assisted Affordable Housing Tax Credit.".

"(a) Definitions. For the purposes of this section, the term:

"(1) "Eligible Employee" means an employee who:

"(A) Is a natural person;

"(B) Has been employed by the employer for at least the prior 12 months;

"(C) Is not self-employed;

"(D) Is not a member of the Board of Directors of the Employer; and

"(E) Does not own, directly or indirectly, a majority of the stock of the Employer.

"(2) "Employer" means any natural person, corporation, partnership, limited liability company, or other entity that:

"(A) Must pay an income or franchise tax to the District of Columbia under this chapter; and

"(B) Has one or more employees.

"(3) "First-time Homebuyer" means an employee (and, if married, the employee's spouse) who did not own a principal residence in the District during the previous 12 months.

"(4) "Homeownership Assistance" means any sum of money provided to an Eligible Employee by an Employer for the down payment or other acquisition costs for the purchase of Residential Real Property, as defined in §47-804(3), used by the Eligible Employee as the employee's principal residence.

"(b) An Employer may establish an Affordable Homeownership Assistance Program under which the Employer provides Eligible Employees with Homeownership Assistance; provided, that:

"(1) The Eligible Employee is a First-time Homebuyer;

"(2) The Eligible Employee has not been a First-time Homebuyer with respect to any other principal residence; and

"(3) If the Homeownership Assistance consists of providing a loan and then discharging all or a portion of the loan upon completion of a required period of employment, the Homeownership Assistance shall be treated as provided at the time that the loan, or portion thereof, is discharged.

"(c) Effective for taxable years beginning after December 31, 2001, the gross income of an Eligible Employee shall not include amounts paid or incurred by the Employer of the Eligible Employee for Homeownership Assistance provided under an Affordable Homeownership Assistance Program.

"(d)(1) Effective for taxable years beginning after December 31, 2001, an Employer may reduce its annual income or franchise tax obligation to the District of Columbia by an amount equal to the Homeownership Assistance provided by the Employer to its Eligible Employees during the taxable year. The reduction shall not exceed $5,000 for each Eligible Employee who receives Homeownership Assistance.

"(2) To claim the tax reduction described in this subsection, the Employer shall attach to its tax return:

"(A) An original affidavit certifying that:

"(i) The employee is an Eligible Employee of the Employer;

"(ii) The Employer provided Homeownership Assistance to the Eligible Employee pursuant to the Employer's Affordable Homeownership Assistance Program;

"(iii) The amount of the Homeownership Assistance;

"(iv) The Eligible Employee used the Homeownership Assistance to purchase Residential Real Property, as defined in § 47-804(3);

"(v) The address of the Residential Real Property; and

"(vi) The Eligible Employee intends to reside in the Residential Real Property for at least 5 years; and

"(B) A copy of the Employer's Affordable Homeownership Assistance Program under which the Homeownership Assistance was provided.".

TITLE IV. HOMESTART HOMEOWNERSHIP COUNSELING.

Sec. 401. HomeStart homeownership counseling program.

The Mayor shall establish within the District government a HomeStart Homeownership Counseling Program ("Program") for residents of the District of Columbia. The Program shall include:

(1) Information concerning credit ratings and credit management;

(2) Warnings regarding predatory lending practices;

(3) Information on how to purchase a home;

(4) Information concerning financial resources available to first-time homebuyers in the District;

(5) Information concerning financial planning after purchasing a home; and

(6) A compilation of all federal and District tax provisions and public and private programs providing homeownership assistance.

TITLE V. IMPLEMENTATION.

Sec. 501. The Mayor, pursuant to title 1 of the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1204; D.C. Code § 1-1501 et seq.), shall issue rules to implement the provisions of this act.

Sec. 502. Fiscal impact statement.

The Council adopts the fiscal impact statement in the Committee Report as the fiscal impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Code § 1-233(c)(3)).

Sec. 503. Effective date.

This act shall take effect following approval by the Mayor (or in the event of veto by the Mayor, action by the Council to override the veto), approval by the Financial Responsibility and Management Assistance Authority as provided in section 203(a) of the District of Columbia Financial Responsibility and Management Assistance Act of 1995, approved April 17, 1995 (109 Stat. 116; D.C. Code § 47-392.3(a)), a 30-day period of Congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 831; D.C. Code § 1-233(c)(1)), and publication in the District of Columbia Register.