The proposed legislation, Substitute Bill No. 1263, establishes a tax credit program aimed at incentivizing the conversion of commercial properties into residential developments, effective July 1, 2025. The bill defines key terms such as "affordable housing," "commercial building," and "qualified conversion expenditures," and outlines the responsibilities of the Commissioner of Housing in administering the program. Owners of commercial buildings who wish to convert their properties must submit a detailed conversion plan and can apply for a tax credit voucher equal to ten percent of their qualified conversion expenditures, provided these exceed $15,000. The bill also stipulates that the total amount of tax credits reserved in any fiscal year cannot exceed three million dollars.

Additionally, the legislation specifies that tax credits for non-profit corporations converting commercial buildings into residential units can be as high as $50,000 per dwelling unit, while other owners may receive up to $30,000 per unit. The Commissioner of Revenue Services is tasked with granting these credits against state taxes, and any unused credits can be carried forward for up to four years. The bill also includes provisions for the development of standards for tax credit approval, ensuring that conversions contribute to affordable housing. Overall, the bill aims to facilitate the transformation of underutilized commercial spaces into much-needed residential units while providing financial incentives to property owners.