The proposed legislation, Substitute Bill No. 1263, aims to establish a tax credit program for 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 into residential units can apply for tax credit vouchers equal to ten percent of their qualified conversion expenditures, provided they meet certain criteria, including a minimum expenditure threshold of $15,000. The bill also stipulates that the total amount of tax credits reserved in any fiscal year shall not exceed three million dollars.

Additionally, the bill includes provisions for the approval process of conversion plans, requiring owners to submit detailed plans and estimates to the Commissioner for evaluation. Tax credits are structured differently for nonprofit corporations, allowing them to claim up to $50,000 per dwelling unit, while other owners can claim up to $30,000. The legislation also allows for the carryover of unused tax credits for up to four years and mandates that the Commissioner of Housing develop regulations to implement the program. Overall, the bill seeks to incentivize the conversion of underutilized commercial properties into affordable housing, thereby addressing housing shortages in the state.