I 

110TH CONGRESS 

1ST SESSION H. R. 2578 

To amend the Internal Revenue Code of 1986 to extend and expand the 

benefits for businesses operating in empowerment zones, enterprise communities, or renewal communities, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 6, 2007 

Mr. DAVIS of Alabama (for himself, Mr. ALEXANDER, Mr. RODRIGUEZ, Mr. 

HIGGINS, Mr. WALSH of New York, Mrs. JONES of Ohio, Ms. CORRINE

BROWN of Florida, Mr. KILDEE, Mr. MICHAUD, Mr. RYAN of Ohio, Mr. 

BOREN, Mr. CLAY, Mr. COHEN, Mr. RAHALL, Mr. MARSHALL, Mr. 

BONNER, Mr. JINDAL, and Mr. BOUSTANY) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to extend 

and expand the benefits for businesses operating in empowerment zones, enterprise communities, or renewal 

communities, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Empowerment Zone and Renewal Community Enhance6 ment Act of 2007’’. 


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1 (b) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this Act an amend3 ment or repeal is expressed in terms of an amendment 

4 to, or repeal of, a section or other provision, the reference 

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986. 

7 SEC. 2. EXTENSION OF BENEFITS. 

8 (a) EMPOWERMENT ZONES.— 

9 (1) ROUNDS I AND II DESIGNATIONS.—Section 

10 1391(d)(1) is amended by striking ‘‘December 31, 

11 2009’’ in subparagraph (A)(i) and inserting ‘‘De12 cember 31, 2015’’. 

13 (2) ROUND III DESIGNATIONS.—Section 

14 1391(h)(2) is amended by striking ‘‘December 31, 

15 2009’’ and inserting ‘‘December 31, 2015’’. 

16 (b) RURAL ENTERPRISE COMMUNITIES.—Section 

17 1391(d)(1)(A) is amended by striking clause (ii) and in18 serting the following new clauses: 

19 ‘‘(ii) in the case of an enterprise commu20 nity designated in an urban area, the close of 

21 the 10th calendar year beginning on or after 

22 such date of designation, or 

23 ‘‘(iii) in the case of an enterprise commu24 nity designated in a rural area, December 31, 

25 2015,’’. 


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1 (c) RENEWAL COMMUNITIES.— 

2 (1) Sections 1400E(b) and 1400I(g) are each 

3 amended by striking ‘‘December 31, 2009’’ each 

4 place it occurs and inserting ‘‘December 31, 2015’’. 

5 (2) Sections 1400E(b)(3), 1400F(b), and 

6 1400J(b) are each amended by striking ‘‘January 1, 

7 2010’’ and inserting ‘‘January 1, 2016’’. 

8 (3) Section 1400F(d) is amended by striking 

9 ‘‘December 31, 2014’’ and inserting ‘‘December 31, 

10 2020’’. 

11 (4) Section 1400I(d)(2)(A) is amended by strik12 ing ‘‘2010’’ and inserting ‘‘2016’’. 

13 SEC. 3. REVISION OF BENEFITS. 

14 (a) SAFE HARBOR FOR MEETING REQUIREMENT

15 THAT 35 PERCENT OF EMPLOYEES BE RESIDENTS OF

16 ZONE.— 

17 (1) IN GENERAL.—Section 1397C (defining en18 terprise zone business) is amended by adding at the 

19 end the following new subsection: 

20 ‘‘(g) ADDITIONAL SAFE HARBOR FOR MEETING RE21 QUIREMENT THAT 35 PERCENT OF EMPLOYEES BE RESI22 DENTS OF ZONE.—The requirements of subsections (b)(6) 

23 and (c)(5) shall not fail to be treated as met for any period 

24 with respect to a qualified business if— 


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1 ‘‘(1) as of the date of issuance of an issue, the 

2 date property is placed in service, or the date of the 

3 sale of an asset, it is reasonably expected that within 

4 3 years after such date the business will increase 

5 employment by at least the lesser of— 

6 ‘‘(A) in the case of— 

7 ‘‘(i) a business located in a renewal 

8 community or in a rural area (as defined 

9 in section 1393(a)(2)) in an empowerment 

10 zone or enterprise community, 500 full11 time employees, or 

12 ‘‘(ii) a business located outside a rural 

13 area (as so defined) in an empowerment 

14 zone or enterprise community, 1,000 full15 time employees, or 

16 ‘‘(B) 10 percent of the number of full-time 

17 employees estimated to have been employed in 

18 such zone or community on the date of its des19 ignation, 

20 ‘‘(2) as of the date of issuance of the issue, it 

21 is reasonably expected that as a result of the bonds 

22 the business will increase employment by at least 

23 one job for each $150,000 in face amount of the 

24 issue, 


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1 ‘‘(3) at any time within 3 years after the date 

2 of the issuance of an issue, the date property is 

3 placed in service, or the date of the sale of an asset, 

4 the requirements of such subsections are met, or 

5 ‘‘(4) the business enters into a binding agree6 ment with the appropriate local government employ7 ment agency to apply a first source rule to advertise 

8 and prioritize employment opportunities with such 

9 business for qualified residents of such zone or com10 munity.’’. 

11 (2) EFFECTIVE DATE.—The amendment made 

12 by this subsection shall take effect on the date of the 

13 enactment of this Act, except that in the case of ob14 ligations which are outstanding on such date, such 

15 date shall be deemed the date of issuance for such 

16 obligations. 

17 (b) ELIGIBILITY OF BUSINESSES DEVELOPING OR

18 HOLDING INTANGIBLES.— 

19 (1) IN GENERAL.—Paragraph (4) of section 

20 1397C(d) is amended by inserting before the period 

21 ‘‘unless the intangibles are developed within the em22 powerment zone’’. 

23 (2) EFFECTIVE DATE.—The amendment made 

24 by this subsection shall apply to taxable years begin25 ning after the date of the enactment of this Act. 


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1 (c) REDUCED WAGE CREDIT ALLOWABLE FOR ZONE

2 RESIDENTS EMPLOYED OUTSIDE THE ZONE; EMPLOYEES

3 NEED NOT BE RESIDENTS OF ZONE IN WHICH EM4 PLOYED.— 

5 (1) IN GENERAL.—Subsection (b) of section 

6 1396 is amended to read as follows: 

7 ‘‘(b) APPLICABLE PERCENTAGE.— 

8 ‘‘(1) QUALIFIED ZONE EMPLOYEES WHO PER9 FORM SUBSTANTIALLY ALL OF THEIR SERVICES IN

10 AN EMPOWERMENT ZONE.—The applicable percent11 age is 20 percent with respect to qualified zone em12 ployees who would meet the requirement of sub13 section (d)(1) if only services performed within an 

14 empowerment zone were taken into account. 

15 ‘‘(2) OTHER QUALIFIED ZONE EMPLOYEES.— 

16 ‘‘(A) IN GENERAL.—The applicable per17 centage is— 

18 ‘‘(i) 20 percent in the case of des19 ignated qualified zone employees of em20 ployers which are enterprise zone busi21 nesses, and 

22 ‘‘(ii) 10 percent in the case of any 

23 other designated qualified zone employee. 

24 ‘‘(B) LIMITATIONS ON NUMBER OF DES25 IGNATED EMPLOYEES.— 


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1 ‘‘(i) IN GENERAL.—For purposes of 

2 subparagraph (A), the term ‘designated 

3 qualified zone employee’ means a qualified 

4 zone employee— 

5 ‘‘(I) to whom paragraph (1) does 

6 not apply, and 

7 ‘‘(II) who is designated under 

8 this subparagraph. 

9 ‘‘(ii) MANNER OF DESIGNATIONS.— 

10 Designations under this subparagraph 

11 shall be made by the local government or 

12 governments which nominated the area to 

13 be an empowerment zone. 

14 ‘‘(iii) LIMITATION ON DESIGNA15 TIONS.—The number of employees for 

16 whom a designation under this subpara17 graph is in effect at any one time with re18 spect to each empowerment zone shall not 

19 exceed— 

20 ‘‘(I) 500 for purposes of subpara21 graph (A)(i), and 

22 ‘‘(II) 2,000 for purposes of sub23 paragraph (A)(ii).’’. 

24 (2) QUALIFIED ZONE EMPLOYEE.—Paragraph 

25 (1) of section 1396(d) is amended— 


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1 (A) by striking ‘‘within an empowerment 

2 zone’’ in subparagraph (A), and 

3 (B) by striking ‘‘such empowerment zone’’ 

4 in subparagraph (B) and inserting ‘‘an em5 powerment zone’’. 

6 (3) EFFECTIVE DATE.—The amendments made 

7 by this subsection shall apply to taxable years begin8 ning after the date of the enactment of this Act. 

9 (d) CARRYFORWARD OF UNALLOCATED STATE COM10 MERCIAL REVITALIZATION EXPENDITURE CEILING.— 

11 (1) IN GENERAL.—Paragraph (1) of section 

12 1400I(d) is amended to read as follows: 

13 ‘‘(1) IN GENERAL.—The aggregate commercial 

14 revitalization expenditure amount which a commer15 cial revitalization agency may allocate for any cal16 endar year is the amount equal to the sum of— 

17 ‘‘(A) the amount of the State commercial 

18 revitalization expenditure ceiling determined 

19 under this paragraph for such calendar year for 

20 such agency (determined without regard to sub21 paragraph (B)), and 

22 ‘‘(B) the aggregate of the unused State 

23 commercial revitalization expenditure ceilings 

24 determined under this paragraph for such agen25 cy for each of the 2 preceding calendar years. 


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1 For purposes of subparagraph (B), amounts of ex2 penditure ceiling shall be treated as allocated by an 

3 agency first from unused amounts for the second 

4 preceding calendar year, then from unused amounts 

5 for the 1st preceding calendar year, and then from 

6 amounts from the current year State allocation.’’. 

7 (2) EFFECTIVE DATE.—The amendment made 

8 by this subsection shall apply to calendar years be9 ginning after the date of the enactment of this Act. 

10 (e) COMMERCIAL REVITALIZATION DEDUCTION FOR

11 BUILDING EXPANSIONS.— 

12 (1) IN GENERAL.—Section 1400I(b)(1) is 

13 amended— 

14 (A) by striking ‘‘any building (and its 

15 structural components) if’’, 

16 (B) by inserting ‘‘any building (and its 

17 structural components) if’’ before ‘‘the building 

18 is placed’’ in subparagraph (A), 

19 (C) by striking ‘‘or’’ at the end of subpara20 graph (A), 

21 (D) by striking ‘‘such building not de22 scribed in subparagraph (A),’’ in subparagraph 

23 (B) and inserting ‘‘any building (and its struc24 tural components) not described in subpara25 graph (A) if’’, 


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1 (E) by striking the period at the end of 

2 subparagraph (B)(ii) and inserting ‘‘, or’’, and 

3 (F) by adding at the end the following new 

4 subparagraph: 

5 ‘‘(C) in the case of any expansion of a 

6 building not described in subparagraph (A) or 

7 (B), such expansion if— 

8 ‘‘(i) such expansion is made to a 

9 building owned by the taxpayer, 

10 ‘‘(ii) the taxpayer provides a detailed 

11 accounting of the distinct capital costs at12 tributable to such expansion, and 

13 ‘‘(iii) such expansion is placed in serv14 ice by the taxpayer in a renewal commu15 nity and the original use of such expansion 

16 begins with the taxpayer.’’. 

17 (2) EFFECTIVE DATE.—The amendments made 

18 by this subsection shall apply to property placed in 

19 service after the date of the enactment of this Act. 

20 (f) AUTHORITY TO EXPAND BOUNDARIES OF ZONES

21 AND COMMUNITIES.— 

22 (1) EMPOWERMENT ZONES AND ENTERPRISE

23 COMMUNITIES.—Section 1391 is amended by adding 

24 at the end the following new subsection: 


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1 ‘‘(i) AUTHORITY TO EXPAND BOUNDARIES OF DES2 IGNATED AREAS.— 

3 ‘‘(1) IN GENERAL.—At the request of all gov4 ernments which nominated an area as an empower5 ment zone or enterprise community, the appropriate 

6 Secretary may expand the area of such zone or com7 munity to include 1 or more noncontiguous areas if 

8 such governments establish to the satisfaction of the 

9 appropriate Secretary that such expansion furthers 

10 the purposes of the designation of the initial area as 

11 such a zone or community. 

12 ‘‘(2) RURAL AREAS.—With respect to any em13 powerment zone or enterprise community located in 

14 a rural area, at the request of the nominating local 

15 government, the appropriate Secretary shall expand 

16 the area of such zone or community to include the 

17 entire area of such nominating local government, but 

18 only if— 

19 ‘‘(A) either— 

20 ‘‘(i) the poverty rate and the unem21 ployment rate for such entire area as de22 termined by the 2000 decennial census 

23 data was at least 110 percent of such rate 

24 for the United States, or 


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1 ‘‘(ii) during the period beginning with 

2 the 1990 decennial census and ending with 

3 the 2000 decennial census, such entire 

4 area has a net out migration of inhabitants 

5 of at least 10 percent of the population of 

6 such area, and 

7 ‘‘(B) such entire area meets 1 or more of 

8 the following criteria determined by the 2000 

9 decennial census data: 

10 ‘‘(i) Median household income is not 

11 more than 70 percent of such income for 

12 the United States. 

13 ‘‘(ii) Per capita income is not more 

14 than 75 percent of such income for the 

15 United States. 

16 ‘‘(iii) The percentage of such area’s 

17 population which is disabled is at least 130 

18 percent of such percentage for the United 

19 States.’’. 

20 (2) RENEWAL COMMUNITIES.—Section 1400E 

21 is amended by adding at the end the following new 

22 subsection: 

23 ‘‘(h) AUTHORITY TO EXPAND BOUNDARIES OF DES24 IGNATED AREAS.— 


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1 ‘‘(1) IN GENERAL.—At the request of all gov2 ernments which nominated an area as a renewal 

3 community, the Secretary of Housing and Urban 

4 Development may expand the area of such commu5 nity to include 1 or more noncontiguous areas if 

6 such governments establish to the satisfaction of 

7 such Secretary that such expansion furthers the pur8 poses of the designation of the initial area as a re9 newal community. 

10 ‘‘(2) RURAL AREAS.—With respect to any re11 newal community located in a rural area, at the re12 quest of the nominating local government, the Sec13 retary of Housing and Urban Development shall ex14 pand the area of such community to include the en15 tire area of such nominating local government, but 

16 only if— 

17 ‘‘(A) either— 

18 ‘‘(i) the poverty rate and the unem19 ployment rate for such entire area as de20 termined by the 2000 decennial census 

21 data was at least 110 percent of such rate 

22 for the United States, or 

23 ‘‘(ii) during the period beginning with 

24 the 1990 decennial census and ending with 

25 the 2000 decennial census, such entire 


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1 area has a net out migration of inhabitants 

2 of at least 10 percent of the population of 

3 such area, and 

4 ‘‘(B) such entire area meets 1 or more of 

5 the following criteria determined by the 2000 

6 decennial census data: 

7 ‘‘(i) Median household income is not 

8 more than 70 percent of such income for 

9 the United States. 

10 ‘‘(ii) Per capita income is not more 

11 than 75 percent of such income for the 

12 United States. 

13 ‘‘(iii) The percentage of such area’s 

14 population which is disabled is at least 130 

15 percent of such percentage for the United 

16 States.’’. 

17 (3) EFFECTIVE DATE.—The amendments made 

18 by this subsection shall take effect on the date of the 

19 enactment of this Act. 

20 (g) MODIFICATION OF REQUIREMENT FOR EXPAND21 ING DESIGNATED AREA BASED ON 2000 CENSUS.— 

22 (1) IN GENERAL.—Clause (ii) of section 

23 1400E(g)(1)(A) is amended to read as follows: 

24 ‘‘(ii) such tract has a poverty rate 

25 using 2000 census data— 


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1 ‘‘(I) which is at least 20 percent, 

2 or 

3 ‘‘(II) which exceeds the poverty 

4 rate for such tract using 1990 census 

5 data.’’. 

6 (2) EFFECTIVE DATE.—The amendment made 

7 by this subsection shall take effect on the date of the 

8 enactment of this Act. 

9 (h) REPEAL OF EXCLUSION OF CENTRAL BUSINESS

10 DISTRICT FROM ELIGIBILITY AS DESIGNATED AREA.— 

11 (1) IN GENERAL.—Paragraph (3) of section 

12 1392(a) is amended by adding ‘‘and’’ at the end of 

13 subparagraph (B), by striking ‘‘, and’’ at the end of 

14 subparagraph (C) and inserting a period, and by 

15 striking subparagraph (D). 

16 (2) EFFECTIVE DATE.—The amendments made 

17 by this subsection shall take effect on the date of the 

18 enactment of this Act. 

19 (i) CARRYOVER OF UNUSED INCREASED SECTION

20 179 EXPENSING LIMIT.— 

21 (1) IN GENERAL.—Subparagraph (A) of section 

22 1397A(a)(1) is amended to read as follows: 

23 ‘‘(A) the sum of— 

24 ‘‘(i) $35,000, and 


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1 ‘‘(ii) the aggregate of the unused in2 creased limitations for each of the 2 pre3 ceding taxable years, or’’. 

4 (2) UNUSED INCREASED LIMITATION.—Section 

5 1397A is amended by adding at the end the fol6 lowing new subsection: 

7 ‘‘(c) UNUSED INCREASED LIMITATION.—For pur8 poses of subsection (a)(1)(A)— 

9 ‘‘(1) IN GENERAL.—The unused increased limi10 tation for any taxable year is the excess (but not 

11 more than $35,000) of the limitation under section 

12 179(b)(1) as increased under subsection (a) over the 

13 cost of section 179 property which is qualified zone 

14 property placed in service during the taxable year. 

15 ‘‘(2) ORDERING RULE.—The limitation under 

16 section 179(b)(1) as increased under subsection (a) 

17 shall be treated as used first from unused limitation 

18 for the second preceding calendar year, then from 

19 unused limitation for the 1st preceding calendar 

20 year, and then from such limitation for the current 

21 year.’’. 

22 (3) EFFECTIVE DATE.—The amendments made 

23 by this subsection shall apply to taxable years begin24 ning after the date of the enactment of this Act. 


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1 (j) ELECTION OF FINANCING ARRANGEMENT IN

2 LIEU OF TAX BENEFITS.— 

3 (1) IN GENERAL.—Section 1396 is amended by 

4 adding at the end the following new subsection: 

5 ‘‘(e) ELECTION OF FINANCING ARRANGEMENT IN

6 LIEU OF TAX BENEFITS.— 

7 ‘‘(1) IN GENERAL.—At the election of any sig8 nificant empowerment zone business, for the pay9 ment period of the debt obligation designated in 

10 such election by such business— 

11 ‘‘(A) such business— 

12 ‘‘(i) shall not be allowed an empower13 ment zone employment credit described in 

14 subsection (a), and 

15 ‘‘(ii) shall not be allowed any deduc16 tion for depreciation under section 168 

17 with respect to qualified zone property, 

18 and 

19 ‘‘(B) the Secretary shall make the pay20 ments described in paragraph (2) to the holder 

21 of such debt obligation (or in the event that 

22 there is more than 1 holder, to such trustee 

23 designated by the electing business to accept 

24 such payments on behalf of such holders). 

25 ‘‘(2) PAYMENTS.— 


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1 ‘‘(A) IN GENERAL.—At the beginning of 

2 each year of the payment period, the Secretary 

3 shall pay (out of any money in the Treasury not 

4 otherwise appropriated) to the holder of the 

5 debt obligation designated by such business an 

6 amount equal to— 

7 ‘‘(i) the empowerment zone employ8 ment credit computed each year under this 

9 section as if the election was not made 

10 under this subsection, and 

11 ‘‘(ii) the cost recovery benefit de12 scribed in subparagraph (B), 

13 paid in equal installments (or as adjusted pur14 suant to paragraph (4(A)) over the payment pe15 riod described in subparagraph (C). 

16 ‘‘(B) COST RECOVERY BENEFIT.—For pur17 poses of subparagraph (A), the cost recovery 

18 benefit shall be an amount equal to 25 percent 

19 of— 

20 ‘‘(i) the cost of any tangible property 

21 which is qualified zone property (including 

22 improvements to such tangible property) 

23 incurred by the significant empowerment 

24 zone business, and 


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1 ‘‘(ii) any such cost for which a bind2 ing contract for financing the acquisition 

3 of such tangible property (including im4 provements to such tangible property) has 

5 been made by such business and which 

6 under the terms of the financing is to be 

7 incurred within the first 5 full calendar 

8 years beginning after the date of the elec9 tion made under this subsection. 

10 ‘‘(C) PAYMENT PERIOD.—The payment pe11 riod is the period of 15 calendar years begin12 ning with the earlier of— 

13 ‘‘(i) the calendar year specified (be14 fore the beginning of such year) by the sig15 nificant empowerment zone business as the 

16 1st year of the payment period without re17 gard to the date the property is placed in 

18 service, or 

19 ‘‘(ii) the 5th calendar year beginning 

20 after the date that the election under this 

21 subsection is made. 

22 ‘‘(3) SIGNIFICANT EMPOWERMENT ZONE BUSI23 NESS.—For purposes of this subsection, the term 

24 ‘significant empowerment zone business’ means any 


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1 trade or business operating in an empowerment zone 

2 if— 

3 ‘‘(A) such business is nominated by the 

4 chief executive or the legislative body of the 

5 State or a local government in which the zone 

6 property is located, and 

7 ‘‘(B) the Secretary of Housing and Urban 

8 Development determines that— 

9 ‘‘(i) it is a facility for qualified re10 search as defined in section 41(d) which is 

11 reasonably anticipated to make at least 

12 $50,000,000 of capital expenditures within 

13 the first 3 years of the payment period, or 

14 ‘‘(ii) with respect to any other busi15 ness, it is reasonably anticipated that such 

16 business will increase employment in such 

17 zone by the end of the first 3 years of the 

18 payment period by at least the lesser of— 

19 ‘‘(I) 1,000 full-time employees or 

20 equivalents, or 

21 ‘‘(II) 10 percent of the number 

22 of full-time employees estimated to 

23 have been employed in such zone on 

24 the date of its designation. 

25 ‘‘(4) SPECIAL RULES.— 


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1 ‘‘(A) ADJUSTMENT TO COST RECOVERY

2 BENEFIT.—In the event that the significant em3 powerment zone business does not incur a cost 

4 within the period described in paragraph (2)(B) 

5 and for which a cost recovery benefit payment 

6 is made under this subsection, the Secretary 

7 shall reduce future recovery benefit payments to 

8 recover 110 percent of the overpayments in 

9 equal installments over the remaining payment 

10 period. 

11 ‘‘(B) BASIS ADJUSTMENT.—For purposes 

12 of this subtitle, if a cost recovery payment is 

13 made under this subsection with respect to any 

14 property, the basis of such property shall be re15 duced by the amount of such payment. 

16 ‘‘(5) TREATMENT OF PAYMENTS.—Any pay17 ment made under this subsection shall not be treat18 ed as a Federal Government guarantee for purposes 

19 of section 149(b).’’. 

20 (2) CONFORMING AMENDMENT.—Section 

21 1016(a) is amended by striking ‘‘and’’ at the end of 

22 paragraph (36), by striking the period at the end of 

23 paragraph (37) and inserting ‘‘, and’’, and by add24 ing at the end the following new paragraph: 


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1 ‘‘(38) to the extent provided in section 

2 1396(e)(4)(B).’’. 

3 (3) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall apply to taxable years begin5 ning after the date of the enactment of this Act. 

6 (k) CERTAIN FEDERALLY GUARANTEED BONDS

7 ISSUED TO PROVIDE INVESTMENTS IN EMPOWERMENT

8 ZONES AND RENEWAL COMMUNITIES PERMITTED TO BE

9 TAX-EXEMPT, ETC.— 

10 (1) IN GENERAL.—Subparagraph (A) of section 

11 149(b)(3) is amended by striking ‘‘or’’ at the end of 

12 clause (ii), by striking the period at the end of 

13 clause (iii) and inserting ‘‘, or’’, and by adding at 

14 the end the following new clause: 

15 ‘‘(iv) any guarantee by a Federal 

16 Home Loan Bank for a bond 95 percent or 

17 more of the net proceeds of which are to 

18 be used to provide property in an em19 powerment zone or renewal community.’’. 

20 (2) EFFECTIVE DATE.—The amendments made 

21 by this subsection shall apply to bonds issued after 

22 the date of the enactment of this Act. 

23 (l) TAX-EXEMPT INTEREST OF FINANCIAL INSTITU24 TIONS ON ZONE FACILITY BONDS NOT SUBJECT TO IN25 TEREST DISALLOWANCE.— 


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1 (1) IN GENERAL.—Subparagraph (B) of section 

2 265(b)(3) (defining qualified bond) is amended by 

3 adding at the end the following new clause: 

4 ‘‘(iii) ENTERPRISE ZONE FACILITY

5 BONDS.—The term ‘qualified tax-exempt 

6 obligation’ includes any obligation which is 

7 treated as an exempt facility bond by sec8 tion 1394.’’. 

9 (2) EFFECTIVE DATE.—The amendment made 

10 by this subsection shall apply to taxable years begin11 ning after the date of the enactment of this Act. 

12 (m) DEVELOPABLE SITES POPULATION CLARIFICA13 TION.— 

14 (1) IN GENERAL.—Subparagraph (C) of section 

15 1391(g)(3) (relating to modifications to eligibility 

16 criteria, etc.) is amended to read as follows: 

17 ‘‘(C) POPULATION LIMITATION.— 

18 ‘‘(i) AGGREGATE POPULATION LIMITA19 TION.—The aggregate population limita20 tion under the last sentence of subsection 

21 (b)(2) shall not apply to a designation 

22 under paragraph (1). 

23 ‘‘(ii) EXCEPTION FOR DEVELOPABLE

24 SITES.—The parcels described in subpara25 graph (A)(iii) shall not be taken into acVerDate Aug 31 2005 23:11 Jun 08, 2007 Jkt 059196 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\H2578.IH H2578

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1 count in determining whether the require2 ment of section 1392(a)(1)(A) is met.’’. 

3 (2) EFFECTIVE DATE.—The amendment made 

4 by this subsection shall take effect on the date of the 

5 enactment of this Act. 

6 (n) REPORTING.—The Secretary of the Treasury (or 

7 the Secretary’s delegate) shall annually submit to the 

8 Committee on Ways and Means of the House of Rep9 resentatives and the Committee on Finance of the Senate 

10 a report detailing for each empowerment zone, enterprise 

11 community, and renewal community the amount and type 

12 of claimed tax benefits. 

13 SEC. 4. ADDITIONAL ACCESS TO CAPITAL BY RURAL EN14 TERPRISE COMMUNITIES. 

15 Section 1394 (relating to tax-exempt enterprise zone 

16 facility bonds) is amended by adding at the end the fol17 lowing new subsection: 

18 ‘‘(g) BONDS FOR RURAL ENTERPRISE COMMU19 NITIES.— 

20 ‘‘(1) IN GENERAL.—In the case of a rural en21 terprise community bond— 

22 ‘‘(A) such bond shall not be treated as a 

23 private activity bond for purposes of section 

24 146, and 


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1 ‘‘(B) subsections (c) and (f)(2) of this sec2 tion shall not apply. 

3 ‘‘(2) LIMITATION OF AMOUNT OF BONDS.— 

4 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

5 apply to a rural enterprise community bond 

6 only if such bond is designated for purposes of 

7 this subsection by the Secretary of Agriculture 

8 for the area to which such bond relates. 

9 ‘‘(B) LIMITATION ON BONDS DES10 IGNATED.—The aggregate face amount of 

11 bonds which may be designated under subpara12 graph (A) with respect to all rural enterprise 

13 communities shall not exceed $200,000,000. 

14 ‘‘(C) SPECIAL RULES.— 

15 ‘‘(i) COORDINATION WITH OTHER LIM16 ITATIONS.—Bonds to which paragraph (1) 

17 applies shall not be taken into account in 

18 applying the limitation of subsection (c) or 

19 (f)(2) to other bonds. 

20 ‘‘(ii) CURRENT REFUNDING NOT

21 TAKEN INTO ACCOUNT.—In the case of a 

22 refunding (or series of refundings) of a 

23 bond designated under this paragraph, the 

24 refunding obligation shall be treated as 

25 designated under this paragraph (and shall 


rwilkins on PROD1PC63 with BILLS
26 

•HR 2578 IH

1 not be taken into account in applying sub2 paragraph (B)) if— 

3 ‘‘(I) the amount of the refunding 

4 bond does not exceed the outstanding 

5 amount of the refunded bond, and 

6 ‘‘(II) the refunded bond is re7 deemed not later than 90 days after 

8 the date of issuance of the refunding 

9 bond. 

10 ‘‘(3) RURAL ENTERPRISE COMMUNITY BOND.— 

11 For purposes of this subsection, the term ‘rural en12 terprise community bond’ means any bond which 

13 would be described in subsection (a) if all rural en14 terprise communities were taken into account under 

15 sections 1397C and 1397D. 

16 ‘‘(4) DESIGNATION PROCEDURE.—The Sec17 retary of Agriculture shall establish within 90 days 

18 after the date of the enactment of this subsection, 

19 the procedure for the nomination and selection of 

20 rural enterprise communities with respect to the des21 ignation of rural enterprise community bonds.’’. 

Æ 


rwilkins on PROD1PC63 with BILLS