Just before Congress departed for its recess this week, and before this weekend’s tragic events that unfortunately highlighted our current political polarization, Republicans and Democrats in Congress came together to introduce a bipartisan bill that advances one of NAIOP’s top legislative priorities. The Downtown and Main Street Revitalization Act (H.R. 9002) was introduced last Thursday by 12 original co-sponsors (six Republicans and six Democrats, all members of the House Ways and Means Committee responsible for tax policy).
HR 9002 would encourage the conversion of underutilized commercial real estate to residential uses, helping to address historically high office vacancy rates resulting from hybrid work arrangements that emerged during the COVID-19 pandemic and have become a permanent feature of the labor market. At the same time, adaptive reuse of these buildings will help alleviate housing supply shortages, including affordable housing, in many areas. This welcome bipartisan representation underscores the importance of this issue, which has been a priority for NAIOP since last year.
The House effort is being led by Representatives Mike Carey (R-OH) of Columbus, Ohio, and Jimmy Gomez (D-CA) of Los Angeles, California. The original Republican co-sponsors of the bill were Representatives Mike Kelly (R-PA), ranking member of the House Ways and Means Committee, Brian Fitzpatrick (R-PA), David Kustoff (R-TN), Carol Miller (R-WV), and Claudia Tenney (R-NY). The original Democratic co-sponsors were Representatives Don Beyer (D-VA), Dan Kildee (D-MI), John Larson (D-CT), Jimmy Panetta (D-CA), and Terri Sewell (D-AL).
Carey's office became interested in the issue after NAIOP members from his district met with his tax staff during a NAIOP Chapter Leadership and Legislative Retreat. Gomez had introduced a similar bill in the last Congress, but the bill did not move forward. NAIOP, along with real estate industry allies, met with Reps. Carey and Gomez and their staff, as well as Republican and Democratic Tax Committee staff, to negotiate a bipartisan bill with members and staff.
Key features of the Downtown and Main Street Revitalization Act include:
Establishes a temporary 20% tax credit to offset eligible costs of converting underutilized commercial buildings into housing. Buildings must be at least 20 years old. A total of $15 billion in tax credits to be allocated by state housing finance agencies through December 31, 2027. Of the total tax credit amount, $12 billion will be allocated to states based on population, and the remaining $3 billion will be targeted to economically distressed areas. At least 20% of the resulting housing units must be set aside as affordable housing for people earning 80% or less of the area median income. The credit is designed to work with historic tax credits (HTC), low-income housing tax credits (LIHTC), and other tax incentives. The tax credit is transferable, so real estate investment trusts and entities with little or no taxable income can also use the credit, making it easier to obtain outside financing for projects. The Act provides bonus credits for certain HTC projects in rural areas, low-income census tracts, and legally defined difficult-to-develop areas.
Upon the introduction of the bill, NAIOP President and CEO Mark Servitelli congratulated Rep. Carey and Rep. Gomez, adding, “This bill will reach beyond urban centers to cities of all sizes across the country…The impact on local tax revenues will replace funds lost on underutilized and defaulted properties, and provide building owners with the opportunity to create more sustainable and energy-efficient spaces.” Servitelli wrote a letter to all members of the House of Representatives urging them to support the Carey-Gomez bill.
With little time left before the August recess and fall elections, Congress could still consider the bill during the lame-duck session. However, the issue will likely be part of the looming tax debate over the renewal of provisions of the Tax Cuts and Jobs Act (TCJA), which expire in 2025. Housing and community development incentives will be a key area of discussion for House Ways and Means Committee members during that debate. The Downtown and Main Street Revitalization Act will also be part of the debate, as it has had strong bipartisan support since its inception.
As HR 9002 makes its way through Congress, NAIOP’s government relations staff will be working with NAIOP’s local chapters, individual members, and the national real estate alliance during key moments in the bill’s discussion to ensure elected officials understand the importance of this issue to our communities and our industry.