II

103D CONGRESS

1ST SESSION S. 100

To provide tax incentives for the establishment of tax enterprise zones, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 21 (legislative day, JANUARY 5), 1993

Mr. RIEGLE (for himself, Mr. KENNEDY, Mr. KERRY, and Mr. BIDEN) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To provide tax incentives for the establishment of tax

enterprise zones, 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 This Act may be cited as the ‘‘Enhanced Enterprise

5 Zones Act of 1993’’.
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1 TITLE I—URBAN TAX ENTER2 PRISE ZONES AND RURAL DE3 VELOPMENT INVESTMENT

4 ZONES

5 SEC. 100. AMENDMENT OF 1986 CODE.

6 Except as otherwise expressly provided, whenever in

7 this title an amendment to or repeal is expressed in terms

8 of an amendment to, or repeal of, a section or other provi9 sion, the reference shall be considered to be made to sec10 tion or other provision of the Internal Revenue Code of

11 1986.

12 SEC. 101. STATEMENT OF PURPOSE.

13 It is the purpose of this title to establish a demonstra14 tion program of providing incentives for the creation of

15 tax enterprise zones in order—

16 (1) to revitalize economically and physically dis17 tressed areas, primarily by encouraging the forma18 tion of new businesses and the retention and expan19 sion of existing businesses,

20 (2) to promote meaningful employment for tax

21 enterprise zone residents, and

22 (3) to encourage individuals to reside in the tax

23 enterprise zones in which they are employed.
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1 Subtitle A—Designation and Tax

2 Incentives

3 SEC. 102. DESIGNATION AND TREATMENT OF URBAN TAX

4 ENTERPRISE ZONES AND RURAL DEVELOP5 MENT INVESTMENT ZONES.

6 (a) IN GENERAL.—Chapter 1 (relating to normal

7 taxes and surtaxes) is amended by inserting after sub8 chapter T the following new subchapter:

9 ‘‘Subchapter U—Designation and Treatment

10 of Tax Enterprise Zones

‘‘Part I. Designation of tax enterprise zones.

‘‘Part II. Incentives for tax enterprise zones.

11 ‘‘PART I—DESIGNATION OF TAX ENTERPRISE

12 ZONES

‘‘Sec. 1391. Designation procedure.

‘‘Sec. 1392. Eligibility and selection criteria.

‘‘Sec. 1393. Definitions and special rules.

13 ‘‘SEC. 1391. DESIGNATION PROCEDURE.

14 ‘‘(a) IN GENERAL.—For purposes of this title, the

15 term ‘tax enterprise zone’ means any area which is, under

16 this part—

17 ‘‘(1) nominated by 1 or more local governments

18 and the State in which it is located for designation

19 as a tax enterprise zone, and

20 ‘‘(2) designated by—
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1 ‘‘(A) the Secretary of Housing and Urban

2 Development in the case of an urban tax enter3 prise zone, or

4 ‘‘(B) the Secretary of Agriculture, in con5 sultation with the Secretary of Commerce, in

6 the case of a rural development investment

7 zone.

8 ‘‘(b) NUMBER OF DESIGNATIONS.—

9 ‘‘(1) AGGREGATE LIMIT.—The appropriate Sec10 retaries may designate in the aggregate 50 nomi11 nated areas as tax enterprise zones under this sec12 tion, subject to the availability of eligible nominated

13 areas. Not more than 25 urban tax enterprise zones

14 may be designated and not more than 25 rural de15 velopment investment zones may be designated.

16 Such designations may be made only during cal17 endar years after 1992 and before 1997.

18 ‘‘(2) ANNUAL LIMITS.—

19 ‘‘(A) URBAN TAX ENTERPRISE ZONES.—

20 The number of urban tax enterprise zones des21 ignated under paragraph (1)—

22 ‘‘(i) before 1994 shall not exceed 8,

23 ‘‘(ii) before 1995 shall not exceed 15,

24 and

25 ‘‘(iii) before 1996 shall not exceed 21.
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1 ‘‘(B) RURAL DEVELOPMENT INVESTMENT

2 ZONES.—The number of rural development in3 vestment zones designated under paragraph

4 (1)—

5 ‘‘(i) before 1994 shall not exceed 8,

6 ‘‘(ii) before 1995 shall not exceed 15,

7 and

8 ‘‘(iii) before 1996 shall not exceed 21.

9 ‘‘(3) ADVANCE DESIGNATIONS PERMITTED.—

10 For purposes of this subchapter, a designation dur11 ing any calendar year shall be treated as made on

12 January 1 of the following calendar year if the ap13 propriate Secretary, in making such designation,

14 specifies that such designation is effective as

15 of such January 1.

16 ‘‘(c) LIMITATIONS ON DESIGNATIONS.—The appro17 priate Secretary may not make any designation under sub18 section (a) unless—

19 ‘‘(1) the local governments and the State in

20 which the nominated area is located have the au21 thority—

22 ‘‘(A) to nominate the area for designation

23 as a tax enterprise zone, and
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1 ‘‘(B) to provide assurances satisfactory to

2 the appropriate Secretary that the commit3 ments under section 1392(c) will be fulfilled,

4 ‘‘(2) a nomination of the area is submitted

5 within a reasonable time before the calendar year for

6 which designation as a tax enterprise zone is sought

7 (or, if later, a reasonable time after the date of the

8 enactment of this subchapter),

9 ‘‘(3) the appropriate Secretary determines that

10 any information furnished is reasonably accurate,

11 and

12 ‘‘(4) the State and local governments certify

13 that no portion of the area nominated is already in14 cluded in a tax enterprise zone or in an area other15 wise nominated to be a tax enterprise zone.

16 ‘‘(d) PERIOD FOR WHICH DESIGNATION IS IN EF17 FECT.—

18 ‘‘(1) IN GENERAL.—Any designation of an area

19 as a tax enterprise zone shall remain in effect during

20 the period beginning on the date of the designation

21 and ending on the earliest of—

22 ‘‘(A) December 31 of the 15th calendar

23 year following the calendar year in which such

24 date occurs,
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1 ‘‘(B) the termination date designated by

2 the State and local governments as provided for

3 in their nomination, or

4 ‘‘(C) the date the appropriate Secretary re5 vokes the designation under paragraph (2).

6 ‘‘(2) REVOCATION OF DESIGNATION.—

7 ‘‘(A) IN GENERAL.—The appropriate Sec8 retary shall revoke the designation of an area

9 as a tax enterprise zone if such Secretary deter10 mines that the local government or the State in

11 which it is located—

12 ‘‘(i) has modified the boundaries of

13 the area, or

14 ‘‘(ii) is not complying substantially

15 with the State and local commitments pur16 suant to section 1392(c).

17 ‘‘(B) APPLICABLE PROCEDURES.—A des18 ignation may be revoked by the appropriate

19 Secretary under subparagraph (A) only after a

20 hearing on the record involving officials of the

21 State or local government involved.

22 ‘‘SEC. 1392. ELIGIBILITY AND SELECTION CRITERIA.

23 ‘‘(a) IN GENERAL.—The appropriate Secretary may

24 make a designation of any nominated area under section
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1 1391 only on the basis of the eligibility and selection cri2 teria set forth in this section.

3 ‘‘(b) ELIGIBILITY CRITERIA.—

4 ‘‘(1) URBAN TAX ENTERPRISE ZONES.—A nom5 inated area which is not a rural area shall be eligible

6 for designation under section 1391 only if it meets

7 the following criteria:

8 ‘‘(A) POPULATION.—The nominated area

9 has a population (as determined by the most re10 cent census data available) of not less than

11 4,000.

12 ‘‘(B) DISTRESS.—The nominated area is

13 one of pervasive poverty, unemployment, and

14 general distress.

15 ‘‘(C) SIZE.—The nominated area—

16 ‘‘(i) does not exceed 20 square miles,

17 ‘‘(ii) has a boundary which is continu18 ous, or consists of not more than 3 non19 contiguous parcels within the same metro20 politan area,

21 ‘‘(iii) is located entirely within 1

22 State, and

23 ‘‘(iv) does not include any portion of

24 a central business district (as such term is
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1 used for purposes of the most recent Cen2 sus of Retail Trade).

3 ‘‘(D) UNEMPLOYMENT RATE.—The unem4 ployment rate (as determined by the appro5 priate available data) is not less than 1.5 times

6 the national unemployment rate.

7 ‘‘(E) POVERTY RATE.—The poverty rate

8 (as determined by the most recent census data

9 available) for not less than 90 percent of the

10 population census tracts (or where not tracted,

11 the equivalent county divisions as defined by

12 the Bureau of the Census for the purposes of

13 defining poverty areas) within the nominated

14 area is not less than 20 percent.

15 ‘‘(F) COURSE OF ACTION.—There has been

16 adopted for the nominated area a course of ac17 tion which meets the requirements of subsection

18 (c).

19 ‘‘(2) RURAL DEVELOPMENT INVESTMENT

20 ZONES.—A nominated area which is a rural area

21 shall be eligible for designation under section 1391

22 only if it meets the following criteria:

23 ‘‘(A) POPULATION.—The nominated area

24 has a population (as determined by the most re-
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1 cent census data available) of not less than

2 1,000.

3 ‘‘(B) DISTRESS.—The nominated area is

4 one of general distress.

5 ‘‘(C) SIZE.—The nominated area—

6 ‘‘(i) does not exceed 10,000 square

7 miles,

8 ‘‘(ii) consists of areas within not more

9 than 4 contiguous counties,

10 ‘‘(iii) has a boundary which is contin11 uous, or consists of not more than 3 non12 contiguous parcels, and

13 ‘‘(iv) is located entirely within 1

14 State.

15 ‘‘(D) ADDITIONAL CRITERIA.—Not less

16 than 2 of the following criteria:

17 ‘‘(i) UNEMPLOYMENT RATE.—The cri18 terion set forth in paragraph (1)(D).

19 ‘‘(ii) POVERTY RATE.—The criterion

20 set forth in paragraph (1)(E).

21 ‘‘(iii) JOB LOSS.—The amount of

22 wages attributable to employment in the

23 area, and subject to tax under section

24 3301 during the preceding calendar year,
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1 is not more than 95 percent of such wages

2 during the 5th preceding calendar year.

3 ‘‘(iv) OUT-MIGRATION.—The popu4 lation of the area decreased (as determined

5 by the most recent census data available)

6 by 10 percent or more between 1980 and

7 1990.

8 ‘‘(E) COURSE OF ACTION.—There has been

9 adopted for the nominated area a course of ac10 tion which meets the requirements of subsection

11 (c).

12 ‘‘(3) AREAS WITHIN INDIAN RESERVATIONS IN13 ELIGIBLE.—A nominated area shall not be eligible

14 for designation under section 1391 if any portion of

15 such area is within an Indian reservation.

16 ‘‘(c) REQUIRED STATE AND LOCAL COURSE OF AC17 TION.—

18 ‘‘(1) IN GENERAL.—No nominated area may be

19 designated as a tax enterprise zone unless the local

20 government and the State in which it is located

21 agree in writing that, during any period during

22 which the area is a tax enterprise zone, the govern23 ments will follow a specified course of action de24 signed to reduce the various burdens borne by em25 ployers or employees in the area.
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1 ‘‘(2) COURSE OF ACTION.—The course of action

2 under paragraph (1) may be implemented by both

3 governments and private nongovernmental entities,

4 may not be funded from proceeds of any Federal

5 program (other than discretionary proceeds), and

6 may include—

7 ‘‘(A) a certification by the State insurance

8 commissioner (or similar State official) that

9 basic commercial property insurance of a type

10 comparable to that insurance generally in force

11 in urban or rural areas, whichever is applicable,

12 throughout the State is available to businesses

13 within the tax enterprise zone,

14 ‘‘(B) a reduction of tax rates or fees apply15 ing within the tax enterprise zone,

16 ‘‘(C) an increase in the level, or efficiency

17 of delivery, of local public services within the

18 tax enterprise zone,

19 ‘‘(D) actions to reduce, remove, simplify,

20 or streamline government paperwork require21 ments applicable within the tax enterprise zone,

22 ‘‘(E) the involvement in the program by

23 public authorities or private entities, organiza24 tions, neighborhood associations, and commu25 nity groups, particularly those within the nomi-
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1 nated area, including a written commitment to

2 provide jobs and job training for, and technical,

3 financial, or other assistance to, employers, em4 ployees, and residents of the nominated area,

5 ‘‘(F) the giving of special preference to

6 contractors owned and operated by members of

7 any socially and economically disadvantaged

8 group (within the meaning of section 8(a) of

9 the Small Business Act (15 U.S.C. 637(a)),

10 ‘‘(G) the gift (or sale at below fair market

11 value) of surplus land in the tax enterprise zone

12 to neighborhood organizations agreeing to oper13 ate a business on the land,

14 ‘‘(H) the establishment of a program

15 under which employers within the tax enterprise

16 zone may purchase health insurance for their

17 employees on a pooled basis,

18 ‘‘(I) the establishment of a program to en19 courage local financial institutions to satisfy

20 their obligations under the Community Rein21 vestment Act of 1977 (12 U.S.C. 2901 et seq.)

22 by making loans to enterprise zone businesses,

23 with emphasis on startup and other small-busi24 ness concerns (as defined in section 3(a) of the

25 Small Business Act (15 U.S.C. 632(a)),
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1 ‘‘(J) the giving of special preference to

2 qualified low-income housing projects located in

3 tax enterprise zones, in the allocation of the

4 State housing credit ceiling applicable under

5 section 42, and

6 ‘‘(K) the giving of special preference to fa7 cilities located in tax enterprise zones, in the al8 location of the State ceiling on private activity

9 bonds applicable under section 146.

10 ‘‘(3) RECOGNITION OF PAST EFFORTS.—In

11 evaluating courses of action agreed to by any State

12 or local government, the appropriate Secretary shall

13 take into account the past efforts of the State or

14 local government in reducing the various burdens

15 borne by employers and employees in the area in16 volved.

17 ‘‘(4) PROHIBITION OF ASSISTANCE FOR BUSI18 NESS RELOCATIONS.—

19 ‘‘(A) IN GENERAL.—The course of action

20 implemented under paragraph (1) may not in21 clude any action to assist any establishment in

22 relocating from 1 area to another area.

23 ‘‘(B) EXCEPTION.—The limitation estab24 lished in subparagraph (A) shall not be con25 strued to prohibit assistance for the expansion
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1 of an existing business entity through the estab2 lishment of a new branch, affiliate, or subsidi3 ary if—

4 ‘‘(i) the establishment of the new

5 branch, affiliate, or subsidiary will not re6 sult in an increase in unemployment in the

7 area of original location or in any other

8 area where the existing business entity

9 conducts business operations, and

10 ‘‘(ii) there is no reason to believe that

11 the new branch, affiliate, or subsidiary is

12 being established with the intention of clos13 ing down the operations of the existing

14 business entity in the area of its original

15 location or in any other area where the ex16 isting business entity conducts business op17 erations.

18 ‘‘(d) SELECTION CRITERIA.—From among the nomi19 nated areas eligible for designation under subsection (b)

20 by the appropriate Secretary, such appropriate Secretary

21 shall make designations of tax enterprise zones on the

22 basis of the following factors (each of which is to be given

23 equal weight):

24 ‘‘(1) STATE AND LOCAL COMMITMENTS.—The

25 strength and quality of the commitments which have
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1 been promised as part of the course of action rel2 ative to the fiscal ability of the nominating State

3 and local governments.

4 ‘‘(2) IMPLEMENTATION OF COURSE OF AC5 TION.—The effectiveness and enforceability of the

6 guarantees that the course of action will actually be

7 carried out, including the specificity with which the

8 commitments under paragraph (1) are described in

9 order that the applicable Secretary will be better

10 able to determine annually under section

11 1391(d)(2)(A)(ii) whether the commitments are

12 being carried out.

13 ‘‘(3) PRIVATE COMMITMENTS.—The level of

14 commitments by private entities of additional re15 sources and contributions to the economy of the

16 nominated area, including the creation of new or ex17 panded business activities.

18 ‘‘(4) AVERAGE RANKINGS.—The average rank19 ing with respect to—

20 ‘‘(A) the criteria set forth in subpara21 graphs (D) and (E) of subsection (b)(1), in the

22 case of an area which is not a rural area, or

23 ‘‘(B) the 2 criteria set forth in subsection

24 (b)(2)(D) that give the area a higher average

25 ranking, in the case of a rural area.
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1 ‘‘(5) REVITALIZATION POTENTIAL.—The poten2 tial for the revitalization of the nominated area as

3 a result of zone designation, taking into account

4 particularly the number of jobs to be created and re5 tained.

6 ‘‘SEC. 1393. DEFINITIONS AND SPECIAL RULES.

7 For purposes of this subchapter—

8 ‘‘(1) URBAN TAX ENTERPRISE ZONE.—The

9 term ‘urban tax enterprise zone’ means a tax enter10 prise zone which meets the requirements of section

11 1392(b)(1).

12 ‘‘(2) RURAL DEVELOPMENT INVESTMENT

13 ZONE.—The term ‘rural development investment

14 zone’ means a tax enterprise zone which meets the

15 requirements of section 1392(b)(2).

16 ‘‘(3) GOVERNMENTS.—If more than 1 local gov17 ernment seeks to nominate an area as a tax enter18 prise zone, any reference to, or requirement of, this

19 subchapter shall apply to all such governments.

20 ‘‘(4) LOCAL GOVERNMENT.—The term ‘local

21 government’ means—

22 ‘‘(A) any county, city, town, township, par23 ish, village, or other general purpose political

24 subdivision of a State, and
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1 ‘‘(B) any combination of political subdivi2 sions described in subparagraph (A) recognized

3 by the appropriate Secretary.

4 ‘‘(5) NOMINATED AREA.—The term ‘nominated

5 area’ means an area which is nominated by 1 or

6 more local governments and the State in which it is

7 located for designation as a tax enterprise zone

8 under this subchapter.

9 ‘‘(6) RURAL AREA.—The term ‘rural area’

10 means any area which is—

11 ‘‘(A) outside of a metropolitan statistical

12 area (within the meaning of section

13 143(k)(2)(B)), or

14 ‘‘(B) determined by the Secretary of Agri15 culture, after consultation with the Secretary of

16 Commerce, to be a rural area.

17 ‘‘(7) APPROPRIATE SECRETARY.—The term ‘ap18 propriate Secretary’ means—

19 ‘‘(A) the Secretary of Housing and Urban

20 Development in the case of urban tax enterprise

21 zones, and

22 ‘‘(B) the Secretary of Agriculture in the

23 case of rural development investment zones.

24 ‘‘(8) STATE-CHARTERED DEVELOPMENT COR25 PORATIONS.—An area shall be treated as nominated
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1 by a State and a local government if it is nominated

2 by an economic development corporation chartered

3 by the State.

4 ‘‘PART II—INCENTIVES FOR TAX ENTERPRISE

5 ZONES

‘‘Subpart A. Enterprise zone employment credit.

‘‘Subpart B. Investment incentives.

‘‘Subpart C. Regulations.

6 ‘‘Subpart A—Enterprise Zone Employment Credit

‘‘Sec. 1394. Enterprise zone employment credit.

‘‘Sec. 1395. Other definitions and special rules.

7 ‘‘SEC. 1394. ENTERPRISE ZONE EMPLOYMENT CREDIT.

8 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section

9 38, the amount of the enterprise zone employment credit

10 determined under this section with respect to any em11 ployer for any taxable year is 15 percent of the qualified

12 zone wages paid or incurred during such taxable year.

13 ‘‘(b) QUALIFIED ZONE WAGES.—

14 ‘‘(1) IN GENERAL.—For purposes of this sec15 tion, the term ‘qualified zone wages’ means any

16 wages paid or incurred by an employer for services

17 performed by an employee while such employee is a

18 qualified zone employee.

19 ‘‘(2) ONLY FIRST $20,000 OF WAGES PER YEAR

20 TAKEN INTO ACCOUNT.—With respect to each quali21 fied zone employee, the amount of qualified zone
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1 wages which may be taken into account for the tax2 able year shall not exceed $20,000.

3 ‘‘(3) COORDINATION WITH TARGETED JOBS

4 CREDIT.—The term ‘qualified zone wages’ shall not

5 include wages attributable to service rendered during

6 the 1-year period beginning with the day the individ7 ual begins work for the employer if any portion of

8 such wages is taken into account in determining the

9 credit under section 51.

10 ‘‘(c) QUALIFIED ZONE EMPLOYEE.—For purposes of

11 this section—

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the term ‘qualified zone em14 ployee’ means, with respect to any period, any em15 ployee of an employer if—

16 ‘‘(A) substantially all of the services per17 formed during such period by such employee for

18 such employer are performed within a tax en19 terprise zone in a trade or business of the em20 ployer, and

21 ‘‘(B) the principal place of abode of such

22 employee while performing such services is

23 within such tax enterprise zone.
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1 ‘‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE.—

2 The term ‘qualified zone employee’ shall not in3 clude—

4 ‘‘(A) any individual described in subpara5 graph (A), (B), or (C) of section 51(i)(1),

6 ‘‘(B) any 5-percent owner (as defined in

7 section 416(i)(1)(B)),

8 ‘‘(C) any individual employed by the em9 ployer at any facility described in section

10 144(c)(6)(B), and

11 ‘‘(D) any individual employed by the em12 ployer in a trade or business the principal activ13 ity of which is farming (within the meaning of

14 subparagraphs (A) or (B) of section

15 2032A(e)(5)), but only if, as of the close of the

16 taxable year, the sum of—

17 ‘‘(i) the aggregate unadjusted bases

18 (or, if greater, the fair market value) of

19 the assets owned by the employer which

20 are used in such a trade or business, and

21 ‘‘(ii) the aggregate value of assets

22 leased by the employer which are used in

23 such a trade or business (as determined

24 under regulations prescribed by the Sec25 retary),
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1 exceeds $500,000.

2 ‘‘(d) EARLY TERMINATION OF EMPLOYMENT BY EM3 PLOYER.—

4 ‘‘(1) IN GENERAL.—If the employment of any

5 employee is terminated by the taxpayer before the

6 day 1 year after the day on which such employee

7 began work for the employer—

8 ‘‘(A) no wages with respect to such em9 ployee shall be taken into account under sub10 section (a) for the taxable year in which such

11 employment is terminated, and

12 ‘‘(B) the tax under this chapter for the

13 taxable year in which such employment is ter14 minated shall be increased by the aggregate

15 credits (if any) allowed under section 38(a) for

16 prior taxable years by reason of wages taken

17 into account with respect to such employee.

18 ‘‘(2) CARRYBACKS AND CARRYOVERS AD19 JUSTED.—In the case of any termination of employ20 ment to which paragraph (1) applies, the carrybacks

21 and carryovers under section 39 shall be properly

22 adjusted.

23 ‘‘(3) SUBSECTION NOT TO APPLY IN CERTAIN

24 CASES.—
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1 ‘‘(A) IN GENERAL.—Paragraph (1) shall

2 not apply to—

3 ‘‘(i) a termination of employment of

4 an employee who voluntarily leaves the em5 ployment of the taxpayer,

6 ‘‘(ii) a termination of employment of

7 an individual who before the close of the

8 period referred to in paragraph (1) be9 comes disabled to perform the services of

10 such employment unless such disability is

11 removed before the close of such period

12 and the taxpayer fails to offer reemploy13 ment to such individual, or

14 ‘‘(iii) a termination of employment of

15 an individual if it is determined under the

16 applicable State unemployment compensa17 tion law that the termination was due to

18 the misconduct of such individual.

19 ‘‘(B) CHANGES IN FORM OF BUSINESS.—

20 For purposes of paragraph (1), the employment

21 relationship between the taxpayer and an em22 ployee shall not be treated as terminated—

23 ‘‘(i) by a transaction to which section

24 381(a) applies if the employee continues to
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1 be employed by the acquiring corporation,

2 or

3 ‘‘(ii) by reason of a mere change in

4 the form of conducting the trade or busi5 ness of the taxpayer if the employee con6 tinues to be employed in such trade or

7 business and the taxpayer retains a sub8 stantial interest in such trade or business.

9 ‘‘(4) SPECIAL RULE.—Any increase in tax

10 under paragraph (1) shall not be treated as a tax

11 imposed by this chapter for purposes of—

12 ‘‘(A) determining the amount of any credit

13 allowable under this chapter, and

14 ‘‘(B) determining the amount of the tax

15 imposed by section 55.

16 ‘‘SEC. 1395. OTHER DEFINITIONS AND SPECIAL RULES.

17 ‘‘(a) WAGES.—For purposes of this subpart, the term

18 ‘wages’ has the same meaning as when used in section

19 51.

20 ‘‘(b) CONTROLLED GROUPS.—For purposes of this

21 subpart—

22 ‘‘(1) all employers treated as a single employer

23 under subsection (a) or (b) of section 52 shall be

24 treated as a single employer for purposes of this

25 subpart, and
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1 ‘‘(2) the credit (if any) determined under sec2 tion 1394 with respect to each such employer shall

3 be its proportionate share of the wages giving rise

4 to such credit.

5 ‘‘(c) CERTAIN OTHER RULES MADE APPLICABLE.—

6 For purposes of this subpart, rules similar to the rules

7 of section 51(k) and subsections (c), (d), and (e) of section

8 52 shall apply.

9 ‘‘(d) NOTICE OF AVAILABILITY OF ADVANCE PAY10 MENT OF EARNED INCOME CREDIT.—Each employer

11 shall take reasonable steps to notify all qualified zone em12 ployees of the availability to eligible individuals of receiv13 ing advanced payments of the credit under section 32 (re14 lating to the earned income credit).

15 ‘‘Subpart B—Investment Incentives

‘‘Sec. 1396. Deduction for purchase of enterprise zone stock.

‘‘Sec. 1397. 50 percent exclusion for gain from new zone investments.

‘‘Sec. 1397A. Nonrecognition of gain from new zone investments.

‘‘Sec. 1397B. Additional incentives.

‘‘Sec. 1397C. Enterprise zone business defined.

16 ‘‘SEC. 1396. DEDUCTION FOR PURCHASE OF ENTERPRISE

17 ZONE STOCK.

18 ‘‘(a) GENERAL RULE.—In the case of an individual,

19 there shall be allowed as a deduction an amount equal to

20 50 percent of the aggregate amount paid in cash by the

21 taxpayer during the taxable year for the purchase of enter22 prise zone stock.
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1 ‘‘(b) LIMITATION.—

2 ‘‘(1) IN GENERAL.—The maximum amount al3 lowed as a deduction under subsection (a) to a tax4 payer for the taxable year shall not exceed the lesser

5 of—

6 ‘‘(A) $25,000, or

7 ‘‘(B) the excess of $250,000 over the

8 amount allowed as a deduction under this sec9 tion to the taxpayer for all prior taxable years.

10 ‘‘(2) EXCESS AMOUNTS.—If the amount other11 wise deductible by any person under subsection (a)

12 exceeds the limitation under paragraph (1)(A)—

13 ‘‘(A) the amount of such excess shall be

14 treated as an amount paid to which subsection

15 (a) applies during the next taxable year, and

16 ‘‘(B) the deduction allowed for any taxable

17 year shall be allocated proportionately among

18 the enterprise zone stock purchased by such

19 person on the basis of the respective purchase

20 prices per share.

21 ‘‘(3) AGGREGATION WITH FAMILY MEMBERS.—

22 The taxpayer and members of the taxpayer’s family

23 shall be treated as one person for purposes of para24 graph (1), and the limitations contained in such

25 paragraph shall be allocated among the taxpayer and
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1 such members in accordance with their respective

2 purchases of enterprise zone stock. For purposes of

3 this paragraph, an individual’s family includes only

4 such individual’s spouse and minor children.

5 ‘‘(c) ENTERPRISE ZONE STOCK.—For purposes of

6 this section—

7 ‘‘(1) IN GENERAL.—The term ‘enterprise zone

8 stock’ means stock of a corporation if—

9 ‘‘(A) such stock is acquired on original

10 issue from the corporation, and

11 ‘‘(B) such corporation is, at the time of

12 issue, a qualified enterprise zone issuer.

13 ‘‘(2) PROCEEDS MUST BE INVESTED IN QUALI14 FIED ENTERPRISE ZONE PROPERTY.—

15 ‘‘(A) IN GENERAL.—Such term shall in16 clude such stock only to the extent that the pro17 ceeds of such issuance are used by such issuer

18 during the 12-month period beginning on the

19 date of issuance to purchase (as defined in sec20 tion 179(d)(2)) qualified enterprise zone prop21 erty.

22 ‘‘(B) QUALIFIED ENTERPRISE ZONE PROP23 ERTY.—For purposes of this section, the term

24 ‘qualified enterprise zone property’ means prop25 erty to which section 168 applies—
28

•S 100 IS

1 ‘‘(i) the original use of which in a tax

2 enterprise zone commences with the issuer,

3 and

4 ‘‘(ii) substantially all of the use of

5 which is in a tax enterprise zone.

6 ‘‘(3) REDEMPTIONS.—The term ‘enterprise

7 zone stock’ shall not include any stock acquired from

8 a corporation which made a substantial stock re9 demption or distribution (without a bona fide busi10 ness purpose therefor) in an attempt to avoid the

11 purposes of this section.

12 ‘‘(d) QUALIFIED ENTERPRISE ZONE ISSUER.—For

13 purposes of this section, the term ‘qualified enterprise

14 zone issuer’ means any domestic C corporation if—

15 ‘‘(1) such corporation is an enterprise zone

16 business or, in the case of a new corporation, such

17 corporation is being organized for purposes of being

18 an enterprise zone business,

19 ‘‘(2) such corporation does not have more than

20 one class of stock,

21 ‘‘(3) the sum of—

22 ‘‘(A) the money,

23 ‘‘(B) the aggregate unadjusted bases of

24 property owned by such corporation, and
29

•S 100 IS

1 ‘‘(C) the value of property leased to the

2 corporation (as determined under regulations

3 prescribed by the Secretary),

4 does not exceed $5,000,000, and

5 ‘‘(4) more than 20 percent of the total voting

6 power, and 20 percent of the total value, of the

7 stock of such corporation is owned directly by indi8 viduals or estates or indirectly by individuals

9 through partnerships or trusts.

10 The determination under paragraph (3) shall be made as

11 of the time of issuance of the stock in question but shall

12 include amounts received for such stock.

13 ‘‘(e) DISPOSITIONS OF STOCK.—

14 ‘‘(1) BASIS REDUCTION.—For purposes of this

15 title, the basis of any enterprise zone stock shall be

16 reduced by the amount of the deduction allowed

17 under this section with respect to such stock.

18 ‘‘(2) DEDUCTION RECAPTURED AS ORDINARY

19 INCOME.—For purposes of section 1245—

20 ‘‘(A) any stock the basis of which is re21 duced under paragraph (1) (and any other

22 property the basis of which is determined in

23 whole or in part by reference to the adjusted

24 basis of such stock) shall be treated as section

25 1245 property, and
30

•S 100 IS

1 ‘‘(B) any reduction under paragraph (1)

2 shall be treated as a deduction allowed for de3 preciation.

4 If an exchange of any stock described in paragraph

5 (1) qualifies under section 354(a), 355(a), or

6 356(a), the amount of gain recognized under section

7 1245 by reason of this paragraph shall not exceed

8 the amount of gain recognized in the exchange (de9 termined without regard to this paragraph).

10 ‘‘(3) CERTAIN EVENTS TREATED AS DISPOSI11 TIONS.—For purposes of determining the amount

12 treated as ordinary income under section 1245 by

13 reason of paragraph (2), paragraph (3) of section

14 1245(b) (relating to certain tax-free transactions)

15 shall not apply.

16 ‘‘(4) INTEREST CHARGED IF DISPOSITION

17 WITHIN 5 YEARS OF PURCHASE.—

18 ‘‘(A) IN GENERAL.—If—

19 ‘‘(i) a taxpayer disposes of any enter20 prise zone stock with respect to which a

21 deduction was allowed under subsection (a)

22 (or any other property the basis of which

23 is determined in whole or in part by ref24 erence to the adjusted basis of such stock)

25 before the end of the 5-year period begin-
31

•S 100 IS

1 ning on the date such stock was purchased

2 by the taxpayer, and

3 ‘‘(ii) section 1245(a) applies to such

4 disposition by reason of paragraph (2),

5 then the tax imposed by this chapter for the

6 taxable year in which such disposition occurs

7 shall be increased by the amount determined

8 under subparagraph (B).

9 ‘‘(B) ADDITIONAL AMOUNT.—For purposes

10 of subparagraph (A), the additional amount

11 shall be equal to the amount of interest (deter12 mined at the rate applicable under section

13 6621(a)(2)) that would accrue—

14 ‘‘(i) during the period beginning on

15 the date the stock was purchased by the

16 taxpayer and ending on the date of such

17 disposition by the taxpayer,

18 ‘‘(ii) on an amount equal to the aggre19 gate decrease in tax of the taxpayer result20 ing from the deduction allowed under this

21 subsection (a) with respect to such stock.

22 ‘‘(C) SPECIAL RULE.—Any increase in tax

23 under subparagraph (A) shall not be treated as

24 a tax imposed by this chapter for purposes of—
32

•S 100 IS

1 ‘‘(i) determining the amount of any

2 credit allowable under this chapter, and

3 ‘‘(ii) determining the amount of the

4 tax imposed by section 55.

5 ‘‘(f) DISQUALIFICATION.—

6 ‘‘(1) ISSUER CEASES TO QUALIFY.—If, during

7 the 10-year period beginning on the date enterprise

8 zone stock was purchased by the taxpayer, the issuer

9 of such stock ceases to be a qualified enterprise zone

10 issuer (determined without regard to subsection

11 (d)(3)), then notwithstanding any provision of this

12 subtitle other than paragraph (2), the taxpayer shall

13 be treated for purposes of subsection (e) as dispos14 ing of such stock (and any other property the basis

15 of which is determined in whole or in part by ref16 erence to the adjusted basis of such stock) during

17 the taxable year during which such cessation occurs

18 at its fair market value as of the 1st day of such

19 taxable year.

20 ‘‘(2) CESSATION OF ENTERPRISE ZONE STATUS

21 NOT TO CAUSE RECAPTURE.—A corporation shall

22 not fail to be treated as a qualified enterprise zone

23 issuer for purposes of paragraph (1) solely by reason

24 of the termination or revocation of a tax enterprise

25 zone designation.
33

•S 100 IS

1 ‘‘(g) OTHER SPECIAL RULES.—

2 ‘‘(1) APPLICATION OF LIMITS TO PARTNER3 SHIPS AND S CORPORATIONS.—In the case of a part4 nership or an S corporation, the limitations under

5 subsection (b) shall apply at the partner and share6 holder level and shall not apply at the partnership

7 or corporation level.

8 ‘‘(2) DEDUCTION NOT ALLOWED TO ESTATES

9 AND TRUSTS.—Estates and trusts shall not be treat10 ed as individuals for purposes of this section.

11 ‘‘SEC. 1397. 50 PERCENT EXCLUSION FOR GAIN FROM NEW

12 ZONE INVESTMENTS.

13 ‘‘(a) GENERAL RULE.—In the case of an individual,

14 gross income shall not include 50 percent of any qualified

15 capital gain recognized on the sale or exchange of a quali16 fied zone asset held for more than 5 years.

17 ‘‘(b) QUALIFIED ZONE ASSET.—For purposes of this

18 section—

19 ‘‘(1) IN GENERAL.—The term ‘qualified zone

20 asset’ means—

21 ‘‘(A) any qualified zone stock,

22 ‘‘(B) any qualified zone business property,

23 and

24 ‘‘(C) any qualified zone partnership inter25 est.
34

•S 100 IS

1 ‘‘(2) QUALIFIED ZONE STOCK.—

2 ‘‘(A) IN GENERAL.—Except as provided in

3 subparagraph (B), the term ‘qualified zone

4 stock’ means any stock in a domestic corpora5 tion if—

6 ‘‘(i) such stock is acquired by the tax7 payer on original issue from the corpora8 tion solely in exchange for cash,

9 ‘‘(ii) as of the time such stock was is10 sued, such corporation was an enterprise

11 zone business (or, in the case of a new cor12 poration, such corporation was being orga13 nized for purposes of being an enterprise

14 zone business), and

15 ‘‘(iii) during substantially all of the

16 taxpayer’s holding period for such stock,

17 such corporation qualified as an enterprise

18 zone business.

19 ‘‘(B) EXCLUSION OF STOCK FOR WHICH

20 DEDUCTION UNDER SECTION 1396 ALLOWED.—

21 The term ‘qualified zone stock’ shall not include

22 any stock the basis of which is reduced under

23 section 1396(e)(1).

24 ‘‘(C) REDEMPTIONS.—The term ‘qualified

25 zone stock’ shall not include any stock acquired
35

•S 100 IS

1 from a corporation which made a substantial

2 stock redemption or distribution (without a

3 bona fide business purpose therefor) in an at4 tempt to avoid the purposes of this section.

5 ‘‘(3) QUALIFIED ZONE BUSINESS PROPERTY.—

6 ‘‘(A) IN GENERAL.—The term ‘qualified

7 zone business property’ means tangible property

8 if—

9 ‘‘(i) such property was acquired by

10 the taxpayer by purchase (as defined in

11 section 179(d)(2)) after the date on which

12 the designation of the tax enterprise zone

13 took effect,

14 ‘‘(ii) the original use of such property

15 in a tax enterprise zone commences with

16 the taxpayer, and

17 ‘‘(iii) during substantially all of the

18 taxpayer’s holding period for such prop19 erty, substantially all of the use of such

20 property was in a tax enterprise zone and

21 in an enterprise zone business of the tax22 payer.

23 ‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM24 PROVEMENTS.—The requirements of clauses (i)
36

•S 100 IS

1 and (ii) of subparagraph (A) shall be treated as

2 satisfied with respect to—

3 ‘‘(i) property which is substantially

4 improved by the taxpayer, and

5 ‘‘(ii) any land on which such property

6 is located.

7 For purposes of the preceding sentence, prop8 erty shall be treated as substantially improved

9 by the taxpayer if, during any 24-month period

10 beginning after the date on which the designa11 tion of the tax enterprise zone took effect, addi12 tions to basis with respect to such property in

13 the hands of the taxpayer exceed the greater of

14 (i) an amount equal to the adjusted basis at the

15 beginning of such 24-month period in the hands

16 of the taxpayer, or (ii) $5,000.

17 ‘‘(C) LIMITATION ON LAND.—The term

18 ‘qualified zone business property’ shall not in19 clude land which is not an integral part of a

20 qualified business (as defined in section

21 1397C(c)).

22 ‘‘(4) QUALIFIED ZONE PARTNERSHIP INTER23 EST.—The term ‘qualified zone partnership interest’

24 means any interest in a partnership if—
37

•S 100 IS

1 ‘‘(A) such interest is acquired by the tax2 payer from the partnership solely in exchange

3 for cash,

4 ‘‘(B) as of the time such interest was ac5 quired, such partnership was an enterprise zone

6 business (or, in the case of a new partnership,

7 such partnership was being organized for pur8 poses of being an enterprise zone business), and

9 ‘‘(C) during substantially all of the tax10 payer’s holding period for such interest, such

11 partnership qualified as an enterprise zone

12 business.

13 A rule similar to the rule of paragraph (2)(C) shall

14 apply for purposes of this paragraph.

15 ‘‘(5) TREATMENT OF SUBSEQUENT PUR16 CHASERS.—The term ‘qualified zone asset’ includes

17 any property which would be a qualified zone asset

18 but for paragraph (2)(A)(i), (3)(A)(ii), or (4)(A) in

19 the hands of the taxpayer if such property was a

20 qualified zone asset in the hands of any prior holder.

21 ‘‘(6) 10-YEAR SAFE HARBOR.—If any property

22 ceases to be a qualified zone asset by reason of para23 graph (2)(A)(iii), (3)(A)(iii), or (4)(C) after the 10-

24 year period beginning on the date the taxpayer ac25 quired such property, such property shall continue to
38

•S 100 IS

1 be treated as meeting the requirements of such

2 paragraph; except that the amount of gain to which

3 subsection (a) applies on any sale or exchange of

4 such property shall not exceed the amount which

5 would be qualified capital gain had such property

6 been sold on the date of such cessation.

7 ‘‘(7) TREATMENT OF ZONE TERMINATIONS.—

8 The termination of any designation of an area as a

9 tax enterprise zone shall be disregarded for purposes

10 of determining whether any property is a qualified

11 zone asset.

12 ‘‘(c) OTHER DEFINITIONS AND SPECIAL RULES.—

13 For purposes of this section—

14 ‘‘(1) QUALIFIED CAPITAL GAIN.—Except as

15 otherwise provided in this subsection, the term

16 ‘qualified capital gain’ means any long-term capital

17 gain.

18 ‘‘(2) CERTAIN GAIN ON REAL PROPERTY NOT

19 QUALIFIED.—The term ‘qualified capital gain’ shall

20 not include any gain which would be treated as ordi21 nary income under section 1250 if section 1250 ap22 plied to all depreciation rather than the additional

23 depreciation.

24 ‘‘(3) GAIN ATTRIBUTABLE TO PERIODS AFTER

25 TERMINATION OF ZONE DESIGNATION NOT QUALI-
39

•S 100 IS

1 FIED.—The term ‘qualified capital gain’ shall not in2 clude any gain attributable to periods after the ter3 mination of any designation of an area as a tax en4 terprise zone.

5 ‘‘(d) TREATMENT OF PASS-THRU ENTITIES.—

6 ‘‘(1) SALES AND EXCHANGES.—Gain on the

7 sale or exchange of an interest in a pass-thru entity

8 held by the taxpayer (other than an interest in an

9 entity which was an enterprise zone business during

10 substantially all of the period the taxpayer held such

11 interest) for more than 5 years shall be treated as

12 gain described in subsection (a) to the extent such

13 gain is attributable to amounts which would be

14 qualified capital gain on qualified zone assets (deter15 mined as if such assets had been sold on the date

16 of the sale or exchange) held by such entity for more

17 than 5 years and throughout the period the taxpayer

18 held such interest. A rule similar to the rule of para19 graph (2)(C) shall apply for purposes of the preced20 ing sentence.

21 ‘‘(2) INCOME INCLUSIONS.—

22 ‘‘(A) IN GENERAL.—Any amount included

23 in income by reason of holding an interest in a

24 pass-thru entity (other than an entity which

25 was an enterprise zone business during substan-
40

•S 100 IS

1 tially all of the period the taxpayer held the in2 terest to which such inclusion relates) shall be

3 treated as gain described in subsection (a) if

4 such amount meets the requirements of sub5 paragraph (B).

6 ‘‘(B) REQUIREMENTS.—An amount meets

7 the requirements of this subparagraph if—

8 ‘‘(i) such amount is attributable to

9 qualified capital gain recognized on the

10 sale or exchange by the pass-thru entity of

11 property which is a qualified zone asset in

12 the hands of such entity and which was

13 held by such entity for the period required

14 under subsection (a), and

15 ‘‘(ii) such amount is includible in the

16 gross income of the taxpayer by reason of

17 the holding of an interest in such entity

18 which was held by the taxpayer on the date

19 on which such pass-thru entity acquired

20 such asset and at all times thereafter be21 fore the disposition of such asset by such

22 pass-thru entity.

23 ‘‘(C) LIMITATION BASED ON INTEREST

24 ORIGINALLY HELD BY TAXPAYER.—Subpara25 graph (A) shall not apply to any amount to the
41

•S 100 IS

1 extent such amount exceeds the amount to

2 which subparagraph (A) would have applied if

3 such amount were determined by reference to

4 the interest the taxpayer held in the pass-thru

5 entity on the date the qualified zone asset was

6 acquired.

7 ‘‘(3) PASS-THRU ENTITY.—For purposes of this

8 subsection, the term ‘pass-thru entity’ means—

9 ‘‘(A) any partnership,

10 ‘‘(B) any S corporation,

11 ‘‘(C) any regulated investment company,

12 and

13 ‘‘(D) any common trust fund.

14 ‘‘(e) SALES AND EXCHANGES OF INTERESTS IN

15 PARTNERSHIPS AND S CORPORATIONS WHICH ARE

16 QUALIFIED ZONE BUSINESSES.—In the case of the sale

17 or exchange of an interest in a partnership, or of stock

18 in an S corporation, which was an enterprise zone business

19 during substantially all of the period the taxpayer held

20 such interest or stock, the amount of qualified capital gain

21 shall be determined without regard to—

22 ‘‘(1) any intangible, and any land, which is not

23 an integral part of any qualified business (as defined

24 in section 1397C(b)), and
42

•S 100 IS

1 ‘‘(2) gain attributable to periods before the des2 ignation of an area as a tax enterprise zone.

3 ‘‘(f) CERTAIN TAX-FREE AND OTHER TRANSFERS.—

4 For purposes of this section—

5 ‘‘(1) IN GENERAL.—In the case of a transfer of

6 a qualified zone asset to which this subsection ap7 plies, the transferee shall be treated as—

8 ‘‘(A) having acquired such asset in the

9 same manner as the transferor, and

10 ‘‘(B) having held such asset during any

11 continuous period immediately preceding the

12 transfer during which it was held (or treated as

13 held under this subsection) by the transferor.

14 ‘‘(2) TRANSFERS TO WHICH SUBSECTION AP15 PLIES.—This subsection shall apply to any trans16 fer—

17 ‘‘(A) by gift,

18 ‘‘(B) at death, or

19 ‘‘(C) from a partnership to a partner

20 thereof of a qualified zone asset with respect to

21 which the requirements of subsection (d)(2) are

22 met at the time of the transfer (without regard

23 to the 5-year holding requirement).
43

•S 100 IS

1 ‘‘(3) CERTAIN RULES MADE APPLICABLE.—

2 Rules similar to the rules of section 1244(d)(2) shall

3 apply for purposes of this section.

4 ‘‘(g) CERTAIN BUSINESSES TREATED AS NOT

5 QUALIFIED BUSINESSES.—For purposes of this section

6 and section 1397A, the term ‘enterprise zone business’ has

7 the meaning given such term by section 1397C except

8 that, in applying section 1397C for such purposes, the

9 term ‘qualified business’ shall not include any trade or

10 business of producing property of a character subject to

11 the allowance for depletion under section 611.

12 ‘‘SEC. 1397A. NONRECOGNITION OF GAIN FROM NEW ZONE

13 INVESTMENTS.

14 ‘‘(a) GENERAL RULE.—At the election of an individ15 ual, qualified capital gain (within the meaning of section

16 1397) from the sale or exchange of a qualified zone asset

17 shall be recognized only to the extent that—

18 ‘‘(1) the amount realized from such sale or ex19 change, exceeds

20 ‘‘(2) the cost (not heretofore taken into account

21 under this subsection) of any qualified zone asset

22 purchased directly by the taxpayer during the rein23 vestment period.

24 ‘‘(b) QUALIFIED ZONE ASSET.—For purposes of this

25 section—
44

•S 100 IS

1 ‘‘(1) IN GENERAL.—The term ‘qualified zone

2 asset’ has the meaning given such term by section

3 1397.

4 ‘‘(2) TIME FOR TESTING.—

5 ‘‘(A) SALES.—In the case of a sale or ex6 change of property, the determination of wheth7 er such property is a qualified zone asset shall

8 be made as of the time of the sale or exchange.

9 ‘‘(B) PURCHASES.—In the case of a pur10 chase of property, the determination of whether

11 such property is a qualified zone asset shall be

12 made as of the time of such purchase.

13 ‘‘(c) OTHER DEFINITIONS.—For purposes of this

14 section—

15 ‘‘(1) REINVESTMENT PERIOD.—The term ‘rein16 vestment period’ means, with respect to any sale or

17 exchange, the 6-month period beginning on the date

18 of such sale or exchange.

19 ‘‘(2) PURCHASE.—The term ‘purchase’ has the

20 meaning given to such term by section 179(d)(2).

21 ‘‘(d) BUSINESS OR PROPERTY CEASES TO QUAL22 IFY.—

23 ‘‘(1) IN GENERAL.—If, during the 10-year pe24 riod beginning on the date any qualified zone re25 placement asset was purchased by the taxpayer,
45

•S 100 IS

1 such asset ceases to be a qualified zone asset, not2 withstanding any provision of this subtitle other

3 than paragraph (3), the taxpayer shall be treated as

4 disposing of such asset during the taxable year dur5 ing which such cessation occurs at its fair market

6 value as of the 1st day of such taxable year.

7 ‘‘(2) LIMITATION ON GAIN RECOGNIZED.—The

8 amount of gain recognized pursuant to paragraph

9 (1) with respect to any asset shall not exceed the

10 lesser of—

11 ‘‘(A) the amount of gain which was not

12 recognized under subsection (a) by the reason

13 of the purchase of such asset, or

14 ‘‘(B) the excess of the fair market value

15 referred to in paragraph (1) over the adjusted

16 basis of such asset.

17 ‘‘(3) CESSATION OF ENTERPRISE ZONE STATUS

18 NOT TO CAUSE RECAPTURE.—An asset shall not fail

19 to be treated as a qualified zone asset for purposes

20 of paragraph (1) solely by reason of the termination

21 of a tax enterprise zone designation.

22 ‘‘(4) QUALIFIED ZONE REPLACEMENT ASSET.—

23 For purposes of paragraph (1), the term ‘qualified

24 zone replacement asset’ means any qualified zone

25 asset the purchase of which resulted in the non-
46

•S 100 IS

1 recognition of gain under subsection (a) with respect

2 to any other property.

3 ‘‘(e) BASIS OF QUALIFIED ZONE REPLACEMENT

4 ASSET.—If gain from the sale or exchange of any property

5 is not recognized by reason of subsection (a), such gain

6 shall be applied to reduce (in the order acquired) the basis

7 of any qualified zone replacement asset (as defined in sub8 section (d)(4)) purchased during the reinvestment period.

9 ‘‘(f) COORDINATION WITH INSTALLMENT METHOD

10 REPORTING.—This section shall not apply to any gain

11 from any installment sale (as defined in section 453(b))

12 if section 453(a) applies to such sale.

13 ‘‘(g) STATUTE OF LIMITATIONS.—If any gain is real14 ized by the taxpayer on any sale or exchange to which

15 an election under this section applies, then—

16 ‘‘(1) the statutory period for the assessment of

17 any deficiency with respect to such gain shall not ex18 pire before the expiration of 3 years from the date

19 the Secretary is notified by the taxpayer (in such

20 manner as the Secretary may by regulations pre21 scribe) of—

22 ‘‘(A) the taxpayer’s cost of purchasing any

23 qualified zone replacement asset,
47

•S 100 IS

1 ‘‘(B) the taxpayer’s intention not to pur2 chase qualified zone replacement asset within

3 the reinvestment period, or

4 ‘‘(C) a failure to make such purchase with5 in the reinvestment period, and

6 ‘‘(2) such deficiency may be assessed before the

7 expiration of such 3-year period notwithstanding the

8 provisions of any law or rule of law which would oth9 erwise prevent such assessment.

10 ‘‘SEC. 1397B. ADDITIONAL INCENTIVES.

11 ‘‘(a) INCREASE IN EXPENSING UNDER SECTION

12 179.—In the case of an enterprise zone business, section

13 179(b)(1) shall be applied by substituting ‘$20,000’ for

14 ‘$10,000’.

15 ‘‘(b) ORDINARY LOSS TREATMENT FOR CERTAIN

16 PROPERTY.—

17 ‘‘(1) IN GENERAL.—Loss on any qualified zone

18 asset (as defined in section 1397(b)) held for more

19 than 2 years (5 years in the case of real property)

20 shall be treated as an ordinary loss.

21 ‘‘(2) REAL PROPERTY.—For purposes of para22 graph (1), the term ‘real property’ means any prop23 erty which is section 1250 property (as defined in

24 section 1250(c)).

25 ‘‘(3) SPECIAL RULES.—
48

•S 100 IS

1 ‘‘(A) CERTAIN RULES MADE APPLICA2 BLE.—For purposes of this subsection, rules

3 similar to the following rules shall apply:

4 ‘‘(i) Paragraphs (1), (2), and (3) of

5 section 1244(d).

6 ‘‘(ii) Subsections (b)(6), (c)(3), (d),

7 (e), and (f) of section 1397.

8 ‘‘(B) COORDINATION WITH SECTION

9 1231.—Losses treated as ordinary losses by rea10 son of this subsection shall not be taken into

11 account in applying section 1231.

12 ‘‘SEC. 1397C. ENTERPRISE ZONE BUSINESS DEFINED.

13 ‘‘(a) IN GENERAL.—For purposes of this subpart, the

14 term ‘enterprise zone business’ means—

15 ‘‘(1) any qualified business entity, and

16 ‘‘(2) any qualified proprietorship.

17 ‘‘(b) QUALIFIED BUSINESS ENTITY.—For purposes

18 of this section, the term ‘qualified business entity’ means,

19 with respect to any taxable year, any corporation or part20 nership if for such year—

21 ‘‘(1)(A) every trade or business of such entity

22 is the active conduct of a qualified business within

23 a tax enterprise zone, and
49

•S 100 IS

1 ‘‘(B) at least 80 percent of the total gross in2 come of such entity is derived from the active con3 duct of such business,

4 ‘‘(2) substantially all of the use of the tangible

5 property of such entity (whether owned or leased) is

6 within a tax enterprise zone,

7 ‘‘(3) substantially all of the intangible property

8 of such entity is used in, and exclusively related to,

9 the active conduct of any such business,

10 ‘‘(4) substantially all of the services performed

11 for such entity by its employees are performed in a

12 tax enterprise zone,

‘‘(5) at least 1 13 ⁄3 of its employees are residents

14 of a tax enterprise zone,

15 ‘‘(6) less than 5 percent of the average of the

16 aggregate unadjusted bases of the property of such

17 entity is attributable to collectibles (as defined in

18 section 408(m)(2)) other than collectibles that are

19 held primarily for sale to customers in the ordinary

20 course of such business, and

21 ‘‘(7) less than 5 percent of the average of the

22 aggregate unadjusted bases of the property of such

23 entity is attributable to nonqualified financial prop24 erty.
50

•S 100 IS

1 ‘‘(c) QUALIFIED PROPRIETORSHIP.—For purposes of

2 this section, the term ‘qualified proprietorship’ means,

3 with respect to any taxable year, any qualified business

4 carried on by an individual as a proprietorship if for such

5 year—

6 ‘‘(1) at least 80 percent of the total gross in7 come of such individual from such business is de8 rived from the active conduct of such business in a

9 tax enterprise zone,

10 ‘‘(2) substantially all of the use of the tangible

11 property of such individual in such business (wheth12 er owned or leased) is within a tax enterprise zone,

13 ‘‘(3) substantially all of the intangible property

14 of such business is used in, and exclusively related

15 to, the active conduct of such business,

16 ‘‘(4) substantially all of the services performed

17 for such individual in such business by employees of

18 such business are performed in a tax enterprise

19 zone,

‘‘(5) at least 1 20 ⁄3 of such employees are residents

21 of a tax enterprise zone,

22 ‘‘(6) less than 5 percent of the average of the

23 aggregate unadjusted bases of the property of such

24 individual which is used in such business is attrib25 utable to collectibles (as defined in section
51

•S 100 IS

1 408(m)(2)) other than collectibles that are held pri2 marily for sale to customers in the ordinary course

3 of such business, and

4 ‘‘(7) less than 5 percent of the average of the

5 aggregate unadjusted bases of the property of such

6 individual which is used in such business is attrib7 utable to nonqualified financial property.

8 For purposes of this subsection, the term ‘employee’ in9 cludes the proprietor.

10 ‘‘(d) QUALIFIED BUSINESS.—For purposes of this

11 section—

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the term ‘qualified business’

14 means any trade or business.

15 ‘‘(2) RENTAL OF REAL PROPERTY.—The rental

16 to others of real property located in a tax enterprise

17 zone shall be treated as a qualified business if and

18 only if—

19 ‘‘(A) in the case of real property which is

20 not residential rental property (as defined in

21 section 168(e)(2)), the lessee is an enterprise

22 zone business, or

23 ‘‘(B) in the case of residential rental prop24 erty (as so defined)—
52

•S 100 IS

1 ‘‘(i) such property was originally

2 placed in service after the date the tax en3 terprise zone was designated, or

4 ‘‘(ii) such property is rehabilitated

5 after such date in a rehabilitation which

6 meets requirements based on the principles

7 of section 42(e)(3).

8 ‘‘(3) RENTAL OF TANGIBLE PERSONAL PROP9 ERTY.—The rental to others of tangible personal

10 property shall be treated as a qualified business if

11 and only if substantially all of the rental of such

12 property is by enterprise zone businesses or by resi13 dents of a tax enterprise zone.

14 ‘‘(4) TREATMENT OF BUSINESS HOLDING IN15 TANGIBLES.—The term ‘qualified business’ shall not

16 include any trade or business consisting predomi17 nantly of the development or holding of intangibles

18 for sale or license.

19 ‘‘(5) CERTAIN BUSINESSES EXCLUDED.—The

20 term ‘qualified business’ shall not include—

21 ‘‘(A) any trade or business consisting of

22 the operation of any facility described in section

23 144(c)(6)(B), and

24 ‘‘(B) any trade or business the principal

25 activity of which is farming (within the meaning
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1 of subparagraphs (A) or (B) of section

2 2032A(e)(5)), but only if, as of the close of the

3 preceding taxable year, the sum of—

4 ‘‘(i) the aggregate unadjusted bases

5 (or, if greater, the fair market value) of

6 the assets owned by the taxpayer which are

7 used in such a trade or business, and

8 ‘‘(ii) the aggregate value of assets

9 leased by the taxpayer which are used in

10 such a trade or business,

11 exceeds $500,000.

12 For purposes of subparagraph (B), rules similar to

13 the rules of section 1395(b) shall apply.

14 ‘‘(e) NONQUALIFIED FINANCIAL PROPERTY.—For

15 purposes of this section, the term ‘nonqualified financial

16 property’ means debt, stock, partnership interests, op17 tions, futures contracts, forward contracts, warrants, no18 tional principal contracts, annuities, and other similar

19 property specified in regulations; except that such term

20 shall not include—

21 ‘‘(1) reasonable amounts of working capital

22 held in cash, cash equivalents, or debt instruments

23 with a term of 18 months or less, or

24 ‘‘(2) debt instruments described in section

25 1221(4).
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1 ‘‘Subpart C—Regulations

‘‘Sec. 1397C. Regulations.

2 ‘‘SEC. 1397C. REGULATIONS.

3 ‘‘The Secretary shall prescribe such regulations as

4 may be necessary or appropriate to carry out the purposes

5 of this part, including—

6 ‘‘(1) regulations limiting the benefit of this part

7 in circumstances where such benefits, in combination

8 with benefits provided under other Federal pro9 grams, would result in an activity being 100 percent

10 or more subsidized by the Federal Government,

11 ‘‘(2) regulations preventing abuse of the provi12 sions of this part, and

13 ‘‘(3) regulations dealing with inadvertent fail14 ures of entities to be qualified zone businesses.’’

15 (b) CLERICAL AMENDMENT.—The table of sub16 chapters for chapter 1 is amended by inserting after the

17 item relating to subchapter T the following new item:

‘‘Subchapter U. Designation and treatment of tax enterprise

zones.’’

18 SEC. 103. TECHNICAL AND CONFORMING AMENDMENTS.

19 (a) ENTERPRISE ZONE EMPLOYMENT CREDIT PART

20 OF GENERAL BUSINESS CREDIT.—

21 (1) Subsection (b) of section 38 (relating to

22 current year business credit) is amended by striking

23 ‘‘plus’’ at the end of paragraph (7), by striking the
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1 period at the end of paragraph (8) and inserting ‘‘,

2 plus’’, and by adding at the end the following new

3 paragraph:

4 ‘‘(9) the enterprise zone employment credit de5 termined under section 1394(a).’’

6 (2) Subsection (d) of section 39 is amended by

7 adding at the end thereof the following new para8 graph:

9 ‘‘(4) NO CARRYBACK OF SECTION 1394 CREDIT

10 BEFORE ENACTMENT.—No portion of the unused

11 business credit for any taxable year which is attrib12 utable to the enterprise zone employment credit de13 termined under section 1394 may be carried to a

14 taxable year ending before the date of the enactment

15 of section 1394.’’

16 (b) NONITEMIZERS ALLOWED DEDUCTION FOR EN17 TERPRISE ZONE STOCK.—Subsection (a) of section 62 is

18 amended by adding at the end thereof the following new

19 paragraph:

20 ‘‘(15) ENTERPRISE ZONE STOCK.—The deduc21 tion allowed by section 1396.’’

22 (c) DENIAL OF DEDUCTION FOR PORTION OF WAGES

23 EQUAL TO ENTERPRISE ZONE EMPLOYMENT CREDIT.—

24 (1) Subsection (a) of section 280C (relating to

25 rule for targeted jobs credit) is amended—
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1 (A) by striking ‘‘the amount of the credit

2 determined for the taxable year under section

3 51(a)’’ and inserting ‘‘the sum of the credits

4 determined for the taxable year under sections

5 51(a) and 1394(a)’’, and

6 (B) by striking ‘‘TARGETED JOBS CRED7 IT’’ in the subsection heading and inserting

8 ‘‘EMPLOYMENT CREDITS’’.

9 (2) Subsection (c) of section 196 (relating to

10 deduction for certain unused business credits) is

11 amended by striking ‘‘and’’ at the end of paragraph

12 (4), by striking the period at the end of paragraph

13 (5) and inserting ‘‘, and’’, and by adding at the end

14 the following new paragraph:

15 ‘‘(6) the enterprise zone employment credit de16 termined under section 1394(a).’’

17 (d) OTHER AMENDMENTS.—

18 (1)(A) Section 172(d)(2) (relating to modifica19 tions with respect to net operating loss deduction) is

20 amended to read as follows:

21 ‘‘(2) CAPITAL GAINS AND LOSSES OF TAX22 PAYERS OTHER THAN CORPORATIONS.—In the case

23 of a taxpayer other than a corporation—

24 ‘‘(A) the amount deductible on account of

25 losses from sales or exchanges of capital assets
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1 shall not exceed the amount includable on ac2 count of gains from sales or exchanges of cap3 ital assets; and

4 ‘‘(B) the exclusion provided by section

5 1397 shall not be allowed.’’

6 (B) Subparagraph (B) of section 172(d)(4) is

7 amended by inserting ‘‘, (2)(B),’’ after ‘‘paragraph

8 (1)’’.

9 (2) Subsection (c) of section 381 (relating to

10 carryovers in certain corporate acquisitions) is

11 amended by adding at the end the following new

12 paragraph:

13 ‘‘(26) ENTERPRISE ZONE PROVISIONS.—The

14 acquiring corporation shall take into account (to the

15 extent proper to carry out the purposes of this sec16 tion and subchapter U, and under such regulations

17 as may be prescribed by the Secretary) the items re18 quired to be taken into account for purposes of sub19 chapter U in respect of the distributor or transferor

20 corporation.’’

21 (3) Paragraph (4) of section 642(c) is amended

22 to read as follows:

23 ‘‘(4) ADJUSTMENTS.—To the extent that the

24 amount otherwise allowable as a deduction under

25 this subsection consists of gain described in section
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1 1397(a), proper adjustment shall be made for any

2 exclusion allowable to the estate or trust under sec3 tion 1397. In the case of a trust, the deduction al4 lowed by this subsection shall be subject to section

5 681 (relating to unrelated business income).’’

6 (4) Paragraph (3) of section 643(a) is amended

7 by adding at the end thereof the following new sen8 tence: ‘‘The exclusion under section 1397 shall not

9 be taken into account.’’

10 (5) Paragraph (4) of section 691(c) is amended

11 by striking ‘‘1201, and 1211’’ and inserting ‘‘1201,

12 1397, and 1211’’.

13 (6) The second sentence of paragraph (2) of

14 section 871(a) is amended by inserting ‘‘such gains

15 and losses shall be determined without regard to sec16 tion 1397 and’’ after ‘‘except that’’.

17 (7) Paragraph (1) of section 1371(d) (relating

18 to coordination with investment credit recapture) is

19 amended by inserting before the period at the end

20 the following ‘‘and for purposes of section

21 1394(d)(3)’’.

22 (8) Subsection (a) of section 1016 (relating to

23 adjustments to basis) is amended by striking ‘‘and’’

24 at the end of paragraph (23), by striking the period

25 at the end of paragraph (24) and inserting a semi-
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1 colon, and by adding at the end thereof the following

2 new paragraphs:

3 ‘‘(25) in the case of stock with respect to which

4 a deduction was allowed under section 1396(a), to

5 the extent provided in section 1396(e); and

6 ‘‘(26) in the case of property the acquisition of

7 which resulted under section 1397A in the non8 recognition of any part of the gain realized on the

9 sale or exchange of other property, to the extent pro10 vided in section 1397A(e).’’

11 (9) Section 1223 (relating to holding period of

12 property) is amended by redesignating paragraph

13 (15) as paragraph (16) and by inserting after para14 graph (14) the following new paragraph:

15 ‘‘(15) In determining the period for which the

16 taxpayer has held property the acquisition of which

17 resulted under section 1397A in the nonrecognition

18 of any part of the gain realized on the sale or ex19 change of any qualified zone asset (as defined in sec20 tion 1397A(b)), there shall be included the period

21 for which such asset had been held as of the date

22 of such sale or exchange.’’
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1 SEC. 104. EFFECTIVE DATE.

2 (a) GENERAL RULE.—The amendments made by this

3 subtitle shall take effect on the date of the enactment of

4 this Act.

5 (b) REQUIREMENT FOR RULES.—Not later than the

6 date 4 months after the date of the enactment of this Act,

7 the appropriate Secretaries shall issue rules—

8 (1) establishing the procedures for nominating

9 areas for designation as tax enterprise zones,

10 (2) establishing a method for comparing the

11 factors listed in section 1392(d) of the Internal Rev12 enue Code of 1986 (as added by this subtitle),

13 (3) establishing recordkeeping requirements

14 necessary or appropriate to assist the studies re15 quired by subtitle E, and

16 (4) providing that State and local governments

17 shall have at least 30 days after such rules are pub18 lished to file applications for nominated areas before

19 such applications are evaluated and compared and

20 any area designated as a tax enterprise zone.
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1 Subtitle B—Redevelopment Bonds

2 for Tax Enterprise Zones

3 SEC. 111. SPECIAL RULES FOR REDEVELOPMENT BONDS

4 PROVIDING FINANCING FOR TAX ENTER5 PRISE ZONES.

6 (a) IN GENERAL.—Subsection (c) of section 144 (re7 lating to qualified redevelopment bonds) is amended by

8 adding at the end thereof the following new paragraph:

9 ‘‘(9) SPECIAL RULES FOR TAX ENTERPRISE

10 ZONES.—For purposes of this subsection, in the case

11 of bonds issued during the 60-month period begin12 ning on the date a tax enterprise zone is des13 ignated—

14 ‘‘(A) TREATMENT AS DESIGNATED

15 BLIGHTED AREA.—Such tax enterprise zone

16 shall be treated as a designated blighted area

17 during such 60-month period (or, if shorter, the

18 period such designation is in effect). Any area

19 designated by reason of the preceding sentence

20 shall not be taken into account in applying

21 paragraph (4)(C).

22 ‘‘(B) SECURITY FOR BONDS.—The require23 ments of paragraph (2)(B) shall be treated as

24 met with respect to a financed area that is

25 within a tax enterprise zone if the general pur-
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1 pose governmental unit guarantees the payment

2 of principal and interest on the issue either di3 rectly or through insurance, a letter of credit,

4 or a similar agreement but only if the cost

5 thereof is financed other than with proceeds of

6 any tax-exempt private activity bond or earn7 ings on such proceeds.

8 ‘‘(C) EXPANSION OF REDEVELOPMENT

9 PURPOSES.—

10 ‘‘(i) IN GENERAL.—The term ‘redevel11 opment purposes’ includes the making of

12 loans to any enterprise zone business (as

13 defined in section 1397B) for—

14 ‘‘(I) the acquisition of land with15 in the tax enterprise zone for use in

16 such business, or

17 ‘‘(II) the acquisition, construc18 tion, reconstruction, or improvement

19 by such business of land, or property

20 of a character subject to the allowance

21 for depreciation, for use in such busi22 ness.

23 ‘‘(ii) $2,500,000 LIMITATION.—Clause

24 (i) shall apply to loans made to any enter25 prise zone business only if the aggregate
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1 principal amount of such loans (whether or

2 not financed by the same issue) does not

3 exceed $2,500,000. For purposes of the

4 preceding sentence, all persons treated as a

5 single employer under subsection (a) or (b)

6 of section 52 shall be treated as 1 person.

7 ‘‘(iii) LOANS MUST BE MADE WITHIN

8 18 MONTHS AFTER BONDS ISSUED; REPAY9 MENTS MUST BE USED FOR REDEMP10 TIONS.—Clause (i) shall apply only to

11 loans—

12 ‘‘(I) made during the 18-month

13 period beginning on the date of issu14 ance of the issue financing such loan,

15 ‘‘(II) repayments of principal on

16 which are used not later than the

17 close of the 1st semiannual period be18 ginning after the date the repayment

19 is received to redeem bonds which are

20 part of such issue, and

21 ‘‘(III) the effective rate of inter22 est on which does not exceed the yield

23 on the issue by more than 0.125 per24 centage points.
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1 In determining the effective rate of interest

2 for purposes of subclause (III), there shall

3 be taken into account all fees, charges, and

4 other amounts (other than amounts for

5 any credit report) borne by the borrower

6 which are attributable to the loan or the

7 bond issue.

8 ‘‘(iv) HOUSING LOANS EXCLUDED.—

9 Clause (i) shall not apply to any loan to be

10 used directly or indirectly to provide resi11 dential real property.

12 ‘‘(v) COORDINATION WITH RESTRIC13 TIONS ON USE OF PROCEEDS.—Paragraphs

14 (6) and (8) shall apply notwithstanding

15 clause (i); except that in applying para16 graph (6), subsection (a)(8) shall be treat17 ed as not including a reference to a facility

18 the primary purpose of which is retail food

19 services.

20 ‘‘(D) ISSUER TO DESIGNATE AMOUNT OF

21 ISSUE TO BE USED FOR LOANS.—Subparagraph

22 (C) shall not apply with respect to any issue

23 unless the issuer designates before the date of

24 issuance the amount of the proceeds of such

25 issue which is to be used for loans to which
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1 subparagraph (C)(i) applies. If such amount ex2 ceeds the principal amount of loans to which

3 subparagraph (C)(i) applies, an amount of pro4 ceeds equal to such excess shall be used not

5 later than the close of the 1st semiannual pe6 riod beginning after the close of the 18-month

7 period referred to in subparagraph (C)(iii) to

8 redeem bonds which are part of such issue.

9 ‘‘(E) DE MINIMIS REDEMPTIONS NOT RE10 QUIRED.—Subparagraphs (C)(iii) and (D) shall

11 not be construed to require amounts of less

12 than $250,000 to be used to redeem bonds. The

13 Secretary may by regulation treat related issues

14 as 1 issue for purposes of the preceding sen15 tence.

16 ‘‘(F) PENALTY.—

17 ‘‘(i) IN GENERAL.—In the case of

18 property with respect to which financing

19 was provided under this paragraph, if at

20 any time during the 10-period beginning

21 on the date such financing was provided—

22 ‘‘(I) such property ceases to be in

23 use in an enterprise zone business (as

24 defined in section 1397B), or
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1 ‘‘(II) substantially all of the use

2 of such property ceases to be in a tax

3 enterprise zone,

4 there is hereby imposed on the trade or

5 business to which such financing was pro6 vided a penalty equal to 1.25 percent of so

7 much of the face amount of all financing

8 provided (whether or not from the same

9 issue and whether or not such issue is out10 standing) before such cessation to the

11 trade or business using such property.

12 ‘‘(ii) NO PENALTY BY REASON OF

13 ZONE TERMINATION.—No penalty shall be

14 imposed under clause (i) solely by reason

15 of the termination or revocation of a tax

16 enterprise zone designation.

17 ‘‘(iii) EXCEPTION FOR BANK18 RUPTCY.—Clause (i) shall not apply to any

19 cessation resulting from bankruptcy.’’

20 (b) VOLUME CAP ONLY CHARGED WITH 50 PER21 CENT OF TAX ENTERPRISE ZONE REDEVELOPMENT

22 BONDS.—Subsection (g) of section 146 is amended by

23 striking ‘‘and’’ at the end of paragraph (3), by striking

24 the period at the end of paragraph (4) and inserting ‘‘,
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1 and’’, and by adding at the end thereof the following new

2 paragraph:

3 ‘‘(5) 50 percent of any qualified redevelopment

4 bond issued—

5 ‘‘(A) as part of an issue 95 percent or

6 more of the net proceeds of which are to be

7 used for 1 or more redevelopment purposes (as

8 defined in section 144(c)) in a tax enterprise

9 zone, and

10 ‘‘(B) during the 60-month period begin11 ning on the date of the designation of such

12 zone.’’

13 (c) PENALTIES FOR LOANS MADE TO BUSINESSES

14 THAT CEASE TO BE ENTERPRISE ZONE BUSINESSES,

15 ETC.—Subsection (b) of section 150 is amended by adding

16 at the end thereof the following new paragraph:

17 ‘‘(6) ENTERPRISE ZONE REDEVELOPMENT

18 BONDS.—In the case of any financing provided by

19 an issue the interest on which is exempt from tax by

20 reason of section 144(c)(9)—

21 ‘‘(A) IN GENERAL.—No deduction shall be

22 allowed under this chapter for interest on such

23 financing which accrues during the period be24 ginning on the first day of the calendar year

25 which includes the date on which—
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1 ‘‘(i) the trade or business to which the

2 financing was provided ceases to be an en3 terprise zone business (as defined in sec4 tion 1397B), or

5 ‘‘(ii) substantially all of the use of the

6 property (determined in accordance with

7 subchapter U) with respect to which the fi8 nancing was provided ceases to be in a tax

9 enterprise zone.

10 The preceding sentence shall not apply solely by

11 reason of the termination or revocation of a tax

12 enterprise zone designation.

13 ‘‘(B) EXCEPTION FOR BANKRUPTCY.—This

14 paragraph shall not apply to any cessation re15 sulting from bankruptcy.’’

16 Subtitle C—Credit for Contribu17 tions to Certain Community De18 velopment Corporations

19 SEC. 121. CREDIT FOR CONTRIBUTIONS TO CERTAIN COM20 MUNITY DEVELOPMENT CORPORATIONS.

21 (a) IN GENERAL.—For purposes of section 38 of the

22 Internal Revenue Code of 1986, the current year business

23 credit shall include the credit determined under this sec24 tion.
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1 (b) DETERMINATION OF CREDIT.—The credit deter2 mined under this section for each taxable year in the credit

3 period with respect to any qualified CDC contribution

4 made by the taxpayer is an amount equal to 5 percent

5 of such contribution.

6 (c) CREDIT PERIOD.—For purposes of this section,

7 the credit period with respect to any qualified CDC con8 tribution is the period of 10 taxable years beginning with

9 the taxable year during which such contribution was made.

10 (d) QUALIFIED CDC CONTRIBUTION.—For purposes

11 of this section—

12 (1) IN GENERAL.—The term ‘‘qualified CDC

13 contribution’’ means any transfer of cash—

14 (A) which is made to a selected community

15 development corporation during the 5-year pe16 riod beginning on the date such corporation was

17 selected for purposes of this section,

18 (B) the amount of which is available for

19 use by such corporation for at least 10 years,

20 (C) which is to be used by such corpora21 tion for qualified low-income assistance within

22 its operational area, and

23 (D) which is designated by such corpora24 tion for purposes of this section.
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1 (2) LIMITATIONS ON AMOUNT DESIGNATED.—

2 The aggregate amount of contributions to a selected

3 community development corporation which may be

4 designated by such corporation shall not exceed

5 $2,000,000.

6 (e) SELECTED COMMUNITY DEVELOPMENT COR7 PORATIONS.—

8 (1) IN GENERAL.—For purposes of this section,

9 the term ‘‘selected community development corpora10 tion’’ means any corporation—

11 (A) which is described in section 501(c)(3)

12 of such Code and exempt from tax under sec13 tion 501(a) of such Code,

14 (B) the principal purposes of which include

15 promoting employment of, and business oppor16 tunities for, low-income individuals who are

17 residents of the operational area, and

18 (C) which is selected by the Secretary of

19 Housing and Urban Development for purposes

20 of this section.

21 (2) ONLY 10 CORPORATIONS MAY BE SE22 LECTED.—

23 (A) IN GENERAL.—The Secretary of Hous24 ing and Urban Development may select 10 cor25 porations for purposes of this section, subject to
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1 the availability of eligible corporations. Such se2 lections may be made only before January 1,

3 1994. At least 4 of the operational areas of the

4 corporations selected must be rural areas (as

5 defined by section 1393(6) of such Code).

6 (B) PRIORITY OF DESIGNATIONS.—In se7 lecting corporations for purposes of this section,

8 such Secretary shall give priority to corpora9 tions with a demonstrated record of perform10 ance in administering community development

11 programs which target at least 75 percent of

12 the jobs emanating from their investment funds

13 to low income or unemployed individuals.

14 (3) OPERATIONAL AREAS MUST HAVE CERTAIN

15 CHARACTERISTICS.—A corporation may be selected

16 for purposes of this section only if its operational

17 area meets the following criteria:

18 (A) The area meets the size requirements

19 under paragraph (1)(C) or (2)(C) of section

20 1391(b) which would apply if such area were to

21 be designated as a tax enterprise zone.

22 (B) The unemployment rate (as deter23 mined by the appropriate available data) is not

24 less than the national unemployment rate.
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1 (C) The median family income of residents

2 of such area does not exceed 80 percent of the

3 median gross income of residents of the juris4 diction of the local government which includes

5 such area.

6 (f) QUALIFIED LOW-INCOME ASSISTANCE.—For pur7 poses of this section, the term ‘‘qualified low-income as8 sistance’’ means assistance—

9 (1) which is designed to provide employment of,

10 and business opportunities for, low-income individ11 uals who are residents of the operational area of the

12 community development corporation, and

13 (2) which is approved by the Secretary of Hous14 ing and Urban Development.

15 Subtitle D—Indian Employment

16 and Investment

17 SEC. 131. INVESTMENT TAX CREDIT FOR PROPERTY ON IN18 DIAN RESERVATIONS.

19 (a) ALLOWANCE OF INDIAN RESERVATION CRED20 IT.—Section 46 (relating to investment credits) is amend21 ed by striking ‘‘and’’ at the end of paragraph (2), by strik22 ing the period at the end of paragraph (3) and inserting

23 ‘‘, and’’, and by adding after paragraph (3) the following

24 new paragraph:

25 ‘‘(4) the Indian reservation credit.’’
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1 (b) AMOUNT OF INDIAN RESERVATION CREDIT.—

2 (1) IN GENERAL.—Section 48 (relating to the

3 energy credit and the reforestation credit) is amend4 ed by adding after subsection (b) the following new

5 subsection:

6 ‘‘(c) INDIAN RESERVATION CREDIT.—

7 ‘‘(1) IN GENERAL.—For purposes of section 46,

8 the Indian reservation credit for any taxable year is

9 the Indian reservation percentage of the qualified in10 vestment in qualified Indian reservation property

11 placed in service during such taxable year, deter12 mined in accordance with the following table:

‘‘In the case of qualified

Indian reservation property The Indian reservation

which is: percentage is:

Reservation personal property ............................... 10

New reservation construction property ................. 15

Reservation infrastructure investment .................. 15.

13 ‘‘(2) QUALIFIED INVESTMENT IN QUALIFIED

14 INDIAN RESERVATION PROPERTY DEFINED.—For

15 purposes of this subpart—

16 ‘‘(A) IN GENERAL.—The term ‘qualified

17 Indian reservation property’ means property—

18 ‘‘(i) which is—

19 ‘‘(I) reservation personal prop20 erty,

21 ‘‘(II) new reservation construc22 tion property, or
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1 ‘‘(III) reservation infrastructure

2 investment, and

3 ‘‘(ii) not acquired (directly or indi4 rectly) by the taxpayer from a person who

5 is related to the taxpayer (within the

6 meaning of section 465(b)(3)(C)).

7 The term ‘qualified Indian reservation property’

8 does not include any property (or any portion

9 thereof) placed in service for purposes of con10 ducting or housing class I, II, or III gaming (as

11 defined in section 4 of the Indian Regulatory

12 Act (25 U.S.C. 2703)).

13 ‘‘(B) QUALIFIED INVESTMENT.—The term

14 ‘qualified investment’ means—

15 ‘‘(i) in the case of reservation infra16 structure investment, the amount expended

17 by the taxpayer for the acquisition or con18 struction of the reservation infrastructure

19 investment; and

20 ‘‘(ii) in the case of all other qualified

21 Indian reservation property, the tax22 payer’s basis for such property.

23 ‘‘(C) RESERVATION PERSONAL PROP24 ERTY.—The term ‘reservation personal prop25 erty’ means qualified personal property which is
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1 used by the taxpayer predominantly in the ac2 tive conduct of a trade or business within an

3 Indian reservation. Property shall not be treat4 ed as ‘reservation personal property’ if it is

5 used or located outside the Indian reservation

6 on a regular basis.

7 ‘‘(D) QUALIFIED PERSONAL PROPERTY.—

8 The term ‘qualified personal property’ means

9 property—

10 ‘‘(i) for which depreciation is allow11 able under section 168,

12 ‘‘(ii) which is not—

13 ‘‘(I) nonresidential real property,

14 ‘‘(II) residential rental property,

15 or

16 ‘‘(III) real property which is not

17 described in (I) or (II) and which has

18 a class life of more than 12.5 years.

19 For purposes of this subparagraph, the terms

20 ‘nonresidential real property’, ‘residential rental

21 property’, and ‘class life’ have the respective

22 meanings given such terms by section 168.

23 ‘‘(E) NEW RESERVATION CONSTRUCTION

24 PROPERTY.—The term ‘new reservation con-
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1 struction property’ means qualified real prop2 erty—

3 ‘‘(i) which is located in an Indian res4 ervation,

5 ‘‘(ii) which is used by the taxpayer

6 predominantly in the active conduct of a

7 trade or business within an Indian reserva8 tion, and

9 ‘‘(iii) which is originally placed in

10 service by the taxpayer.

11 ‘‘(F) QUALIFIED REAL PROPERTY.—The

12 term ‘qualified real property’ means property

13 for which depreciation is allowable under sec14 tion 168 and which is described in clause (I),

15 (II), or (III) of subparagraph (D)(ii).

16 ‘‘(G) RESERVATION INFRASTRUCTURE IN17 VESTMENT.—

18 ‘‘(i) IN GENERAL.—The term ‘reserva19 tion infrastructure investment’ means

20 qualified personal property or qualified real

21 property which—

22 ‘‘(I) benefits the tribal infrastruc23 ture,

24 ‘‘(II) is available to the general

25 public, and
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1 ‘‘(III) is placed in service in con2 nection with the taxpayer’s active con3 duct of a trade or business within an

4 Indian reservation.

5 ‘‘(ii) PROPERTY MAY BE LOCATED

6 OUTSIDE THE RESERVATION.—Qualified

7 personal property and qualified real prop8 erty used or located outside an Indian res9 ervation shall be reservation infrastructure

10 investment only if its purpose is to connect

11 to existing tribal infrastructure in the res12 ervation, and shall include, but not be lim13 ited to, roads, power lines, water systems,

14 railroad spurs, and communications facili15 ties.

16 ‘‘(H) COORDINATION WITH OTHER CRED17 ITS.—The term ‘qualified Indian reservation

18 property’ shall not include any property with re19 spect to which the energy credit or the rehabili20 tation credit is allowed.

21 ‘‘(3) REAL ESTATE RENTALS.—For purposes of

22 this section, the rental to others of real property lo23 cated within an Indian reservation shall be treated

24 as the active conduct of a trade or business in an

25 Indian reservation.
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1 ‘‘(4) INDIAN RESERVATION DEFINED.—For

2 purposes of this subpart, the term ‘Indian reserva3 tion’ means a reservation, as defined in—

4 ‘‘(A) section 3(d) of the Indian Financing

5 Act of 1974 (25 U.S.C. 1452(d)), or

6 ‘‘(B) section 4(10) of the Indian Child

7 Welfare Act of 1978 (25 U.S.C. 1903(10)).

8 ‘‘(5) LIMITATION BASED ON UNEMPLOY9 MENT.—

10 ‘‘(A) GENERAL RULE.—The Indian res11 ervation credit allowed under section 46 for any

12 taxable year shall equal—

13 ‘‘(i) if the Indian unemployment rate

14 on the applicable Indian reservation for

15 which the credit is sought exceeds 300 per16 cent of the national average unemployment

17 rate at any time during the calendar year

18 in which the property is placed in service

19 or during the immediately preceding 2 cal20 endar years, 100 percent of such credit,

21 ‘‘(ii) if such Indian unemployment

22 rate exceeds 150 percent but not 300 per23 cent, 50 percent of such credit, and
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1 ‘‘(iii) if such Indian unemployment

2 rate does not exceed 150 percent, 0 per3 cent of such credit.

4 ‘‘(B) SPECIAL RULE FOR LARGE

5 PROJECTS.—In the case of a qualified Indian

6 reservation property which has (or is a compo7 nent of a project which has) a projected con8 struction period of more than 2 years or a cost

9 of more than $1,000,000, subparagraph (A)

10 shall apply by substituting ‘during the earlier of

11 the calendar year in which the taxpayer enters

12 into a binding agreement to make a qualified

13 investment or the first calendar year in which

14 the taxpayer has expended at least 10 percent

15 of the taxpayer’s qualified investment, or the

16 preceding calendar year’ for ‘during the cal17 endar year in which the property is placed in

18 service or during the immediately preceding 2

19 calendar years’.

20 ‘‘(C) DETERMINATION OF INDIAN UNEM21 PLOYMENT.—For purposes of this paragraph,

22 with respect to any Indian reservation, the In23 dian unemployment rate shall be based upon

24 Indians unemployed and able to work, and shall

25 be certified by the Secretary of the Interior.
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1 ‘‘(6) COORDINATION WITH NONREVENUE

2 LAWS.—Any reference in this subsection to a provi3 sion not contained in this title shall be treated for

4 purposes of this subsection as a reference to such

5 provision as in effect on the date of the enactment

6 of this paragraph.’’

7 (2) LODGING TO QUALIFY.—Paragraph (2) of

8 section 50(b) (relating to property used for lodging)

9 is amended—

10 (A) by striking ‘‘and’’ at the end of sub11 paragraph (C),

12 (B) by striking the period at the end of

13 subparagraph (D) and inserting ‘‘; and’’ and

14 (C) by adding at the end thereof the fol15 lowing subparagraph:

16 ‘‘(E) new reservation construction prop17 erty.’’

18 (c) RECAPTURE.—Subsection (a) of section 50 (relat19 ing to recapture in case of dispositions, etc.), is amended

20 by adding at the end thereof the following new paragraph:

21 ‘‘(6) SPECIAL RULES FOR INDIAN RESERVATION

22 PROPERTY.—

23 ‘‘(A) IN GENERAL.—If, during any taxable

24 year, property with respect to which the tax25 payer claimed an Indian reservation credit—
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1 ‘‘(i) is disposed of, or

2 ‘‘(ii) in the case of reservation per3 sonal property—

4 ‘‘(I) otherwise ceases to be in5 vestment credit property with respect

6 to the taxpayer, or

7 ‘‘(II) is removed from the Indian

8 reservation, converted or otherwise

9 ceases to be Indian reservation prop10 erty,

11 the tax under this chapter for such taxable year

12 shall be increased by the amount described in

13 subparagraph (B).

14 ‘‘(B) AMOUNT OF INCREASE.—The in15 crease in tax under subparagraph (A) shall

16 equal the aggregate decrease in the credits al17 lowed under section 38 by reason of section

18 48(c) for all prior taxable years which would

19 have resulted had the qualified investment

20 taken into account with respect to the property

21 been limited to an amount which bears the

22 same ratio to the qualified investment with re23 spect to such property as the period such prop24 erty was held by the taxpayer bears to the ap25 plicable recovery period under section 168(g).
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1 ‘‘(C) COORDINATION WITH OTHER RECAP2 TURE PROVISIONS.—In the case of property to

3 which this paragraph applies, paragraph (1)

4 shall not apply and the rules of paragraphs (3),

5 (4), and (5) shall apply.’’

6 (d) BASIS ADJUSTMENT TO REFLECT INVESTMENT

7 CREDIT.—Paragraph (3) of section 50(c) (relating to

8 basis adjustment to investment credit property) is amend9 ed by striking ‘‘energy credit or reforestation credit’’ and

10 inserting ‘‘energy credit, reforestation credit, or Indian

11 reservation credit other than with respect to any expendi12 ture for new reservation construction property’’.

13 (e) CERTAIN GOVERNMENTAL USE PROPERTY TO

14 QUALIFY.—Paragraph (4) of section 50(b) (relating to

15 property used by governmental units or foreign persons

16 or entities) is amended by redesignating subparagraphs

17 (D) and (E) as subparagraphs (E) and (F), respectively,

18 and inserting after subparagraph (C) the following new

19 subparagraph:

20 ‘‘(D) EXCEPTION FOR RESERVATION IN21 FRASTRUCTURE INVESTMENT.—This paragraph

22 shall not apply for purposes of determining the

23 Indian reservation credit with respect to res24 ervation infrastructure investment.’’
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1 (f) APPLICATION OF AT-RISK RULES.—Subpara2 graph (C) of section 49(a)(1) is amended by striking

3 ‘‘and’’ at the end of clause (ii), by striking the period at

4 the end of clause (iii) and inserting ‘‘, and’’, and by adding

5 at the end the following new clause:

6 ‘‘(iv) the qualified investment in quali7 fied Indian reservation property.’’

8 (g) CLERICAL AMENDMENTS.—

9 (1) The caption of section 48 is amended by de10 leting the period at the end thereof and adding ‘‘;

11 INDIAN RESERVATION CREDIT.’’

12 (2) The table of sections for subpart E of part

13 IV of subchapter A of chapter 1 is amended by

14 striking out the item relating to section 48 and in15 serting the following:

‘‘Sec. 48. Energy credit; reforestation credit; Indian reservation

credit.’’

16 (h) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to property placed in service after

18 December 31, 1992.

19 SEC. 132. INDIAN EMPLOYMENT CREDIT.

20 (a) ALLOWANCE OF INDIAN EMPLOYMENT CRED21 IT.—Section 38(b) (relating to general business credits),

22 as amended by section 103, is amended by striking ‘‘plus’’

23 at the end of paragraph (8), by striking the period at the
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1 end of paragraph (9) and inserting ‘‘, plus’’, and by add2 ing after paragraph (9) the following new paragraph:

3 ‘‘(10) the Indian employment credit as deter4 mined under section 45A.’’

5 (b) AMOUNT OF INDIAN EMPLOYMENT CREDIT.—

6 Subpart D of Part IV of subchapter A of chapter 1 (relat7 ing to business related credits) is amended by adding at

8 the end thereof the following new section:

9 ‘‘SEC. 45A. INDIAN EMPLOYMENT CREDIT.

10 ‘‘(a) AMOUNT OF CREDIT.—

11 ‘‘(1) IN GENERAL.—For purposes of section 38,

12 the amount of the Indian employment credit deter13 mined under this section with respect to any em14 ployer for any taxable year is 10 percent (30 percent

15 in the case of an employer with at least 85 percent

16 Indian employees throughout the taxable year) of

17 the sum of—

18 ‘‘(A) the qualified wages paid or incurred

19 during such taxable year, plus

20 ‘‘(B) qualified employee health insurance

21 costs paid or incurred during such taxable year.

22 In no event shall the amount of the Indian employ23 ment credit for any taxable year exceed the credit

24 limitation amount determined under subsection (e)

25 for such taxable year.
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1 ‘‘(2) INDIAN EMPLOYEE.—For purposes of

2 paragraph (1), the term ‘Indian employee’ means an

3 employee who is an enrolled member of an Indian

4 tribe or the spouse of such a member.

5 ‘‘(b) QUALIFIED WAGES; QUALIFIED EMPLOYEE

6 HEALTH INSURANCE COSTS.—For purposes of this sec7 tion—

8 ‘‘(1) QUALIFIED WAGES.—

9 ‘‘(A) IN GENERAL.—The term ‘qualified

10 wages’ means any wages paid or incurred by an

11 employer for services performed by an employee

12 while such employee is a qualified employee.

13 ‘‘(B) COORDINATION WITH TARGETED

14 JOBS CREDIT.—The term ‘qualified wages’ shall

15 not include wages attributable to service ren16 dered during the 1-year period beginning with

17 the day the individual begins work for the em18 ployer if any portion of such wages is taken

19 into account in determining the credit under

20 section 51.

21 ‘‘(2) QUALIFIED EMPLOYEE HEALTH INSUR22 ANCE COSTS.—

23 ‘‘(A) IN GENERAL.—The term ‘qualified

24 employee health insurance costs’ means any

25 amount paid or incurred by an employer for
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1 health insurance to the extent such amount is

2 attributable to coverage provided to any em3 ployee while such employee is a qualified em4 ployee.

5 ‘‘(B) EXCEPTION FOR AMOUNTS PAID

6 UNDER SALARY REDUCTION ARRANGEMENTS.—

7 No amount paid or incurred for health insur8 ance pursuant to a salary reduction arrange9 ment shall be taken into account under sub10 paragraph (A).

11 ‘‘(c) QUALIFIED EMPLOYEE.—For purposes of this

12 section—

13 ‘‘(1) IN GENERAL.—Except as otherwise pro14 vided in this subsection, the term ‘qualified em15 ployee’ means, with respect to any period, any em16 ployee of an employer if—

17 ‘‘(A) substantially all of the services per18 formed during such period by such employee for

19 such employer are performed within an Indian

20 reservation,

21 ‘‘(B) the principal place of abode of such

22 employee while performing such services is on

23 or near the reservation in which the services are

24 performed, and
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1 ‘‘(C) the employee began work for such

2 employer on or after January 1, 1993.

3 ‘‘(2) CREDIT ALLOWED ONLY FOR FIRST 7

4 YEARS.—An employee shall not be treated as a

5 qualified employee for any period after the date 7

6 years after the day on which such employee first

7 began work for the employer.

8 ‘‘(3) INDIVIDUALS RECEIVING WAGES IN EX9 CESS OF $30,000 NOT ELIGIBLE.—An employee shall

10 not be treated as a qualified employee for any tax11 able year of the employer if the total amount of the

12 wages paid or incurred by such employer to such

13 employee during such taxable year (whether or not

14 for services within an Indian reservation) exceeds

15 the amount determined at an annual rate of

16 $30,000. The Secretary shall adjust the $30,000

17 amount contained in the preceding sentence for

18 years beginning after 1992 at the same time and in

19 the same manner as under section 415(d).

20 ‘‘(4) EMPLOYMENT MUST BE TRADE OR BUSI21 NESS EMPLOYMENT.—An employee shall be treated

22 as a qualified employee for any taxable year of the

23 employer only if more than 50 percent of the wages

24 paid or incurred by the employer to such employee

25 during such taxable year are for services performed
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1 in a trade or business of the employer. Any deter2 mination as to whether the preceding sentence ap3 plies with respect to any employee for any taxable

4 year shall be made without regard to subsection

5 (f)(2).

6 ‘‘(5) CERTAIN EMPLOYEES NOT ELIGIBLE.—

7 The term ‘qualified employee’ shall not include—

8 ‘‘(A) any individual described in subpara9 graph (A), (B), or (C) of section 51(i)(1),

10 ‘‘(B) any 5-percent owner (as defined in

11 section 416(i)(1)(B)),

12 ‘‘(C) any individual who is neither an en13 rolled member of an Indian tribe nor the spouse

14 of an enrolled member of an Indian tribe, and

15 ‘‘(D) any individual if the services per16 formed by such individual for the employer in17 volve the conduct of class I, II, or III gaming

18 as defined in section 4 of the Indian Gaming

19 Regulatory Act (25 U.S.C. 2703), or are per20 formed in a building housing such gaming ac21 tivity.

22 ‘‘(6) INDIAN TRIBE DEFINED.—The term ‘In23 dian tribe’ means any Indian tribe, band, nation,

24 pueblo, or other organized group or community, in25 cluding any Alaska Native village, or regional or vil-
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1 lage corporation, as defined in, or established pursu2 ant to, the Alaska Native Claims Settlement Act (43

3 U.S.C. 1601 et seq.) which is recognized as eligible

4 for the special programs and services provided by

5 the United States to Indians because of their status

6 as Indians.

7 ‘‘(7) INDIAN RESERVATION DEFINED.—The

8 term ‘Indian reservation’ means a reservation, as de9 fined in—

10 ‘‘(A) section 3(d) of the Indian Financing

11 Act of 1974 (25 U.S.C. 1452(d)), or

12 ‘‘(B) section 4(10) of the Indian Child

13 Welfare Act of 1978 (25 U.S.C. 1903 (10)).

14 ‘‘(d) EARLY TERMINATION OF EMPLOYMENT BY EM15 PLOYER.—

16 ‘‘(1) IN GENERAL.—If the employment of any

17 employee is terminated by the taxpayer before the

18 day 1 year after the day on which such employee

19 began work for the employer—

20 ‘‘(A) no wages (or qualified employee

21 health insurance costs) with respect to such em22 ployee shall be taken into account under sub23 section (a) for the taxable year in which such

24 employment is terminated, and
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1 ‘‘(B) the tax under this chapter for the

2 taxable year in which such employment is ter3 minated shall be increased by the aggregate

4 credits (if any) allowed under section 38(a) for

5 prior taxable years by reason of wages (or

6 qualified employee health insurance costs) taken

7 into account with respect to such employee.

8 ‘‘(2) CARRYBACKS AND CARRYOVERS AD9 JUSTED.—In the case of any termination of employ10 ment to which paragraph (1) applies, the carrybacks

11 and carryovers under section 39 shall be properly

12 adjusted.

13 ‘‘(3) SUBSECTION NOT TO APPLY IN CERTAIN

14 CASES.—

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

16 not apply to—

17 ‘‘(i) a termination of employment of

18 an employee who voluntarily leaves the em19 ployment of the taxpayer,

20 ‘‘(ii) a termination of employment of

21 an individual who before the close of the

22 period referred to in paragraph (1) be23 comes disabled to perform the services of

24 such employment unless such disability is

25 removed before the close of such period
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1 and the taxpayer fails to offer reemploy2 ment to such individual, or

3 ‘‘(iii) a termination of employment

4 of an individual if it is determined under

5 the applicable State unemployment com6 pensation law that the termination was due

7 to the misconduct of such individual.

8 ‘‘(B) CHANGES IN FORM OF BUSINESS.—

9 For purposes of paragraph (1), the employment

10 relationship between the taxpayer and an em11 ployee shall not be treated as terminated—

12 ‘‘(i) by a transaction to which section

13 381(a) applies if the employee continues to

14 be employed by the acquiring corporation,

15 or

16 ‘‘(ii) by reason of a mere change in

17 the form of conducting the trade or busi18 ness of the taxpayer if the employee con19 tinues to be employed in such trade or

20 business and the taxpayer retains a sub21 stantial interest in such trade or business.

22 ‘‘(4) SPECIAL RULE.—Any increase in tax

23 under paragraph (1) shall not be treated as a tax

24 imposed by this chapter for purposes of—
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1 ‘‘(A) determining the amount of any credit

2 allowable under this chapter, and

3 ‘‘(B) determining the amount of the tax

4 imposed by section 55.

5 ‘‘(e) CREDIT LIMITATION AMOUNT.—For purposes of

6 this section—

7 ‘‘(1) CREDIT LIMITATION AMOUNT.—The credit

8 limitation amount for a taxable year shall be an

9 amount equal to the credit rate (10 or 30 percent

10 as determined under subsection (a)) multiplied by

11 the increased credit base.

12 ‘‘(2) INCREASED CREDIT BASE.—The increased

13 credit base for a taxable year shall be the excess

14 of—

15 ‘‘(A) the sum of any qualified wages and

16 qualified employee health insurance costs paid

17 or incurred by the employer during the taxable

18 year with respect to employees whose wages

19 (paid or incurred by the employer) during the

20 taxable year do not exceed the amount deter21 mined under paragraph (3) of subsection (c),

22 over

23 ‘‘(B) the sum of any qualified wages and

24 qualified employee health insurance costs paid

25 or incurred by the employer (or any prede-
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1 cessor) during calendar year 1992 with respect

2 to employees whose wages (paid or incurred by

3 the employer or any predecessor) during 1992

4 did not exceed $30,000.

5 ‘‘(3) SPECIAL RULE FOR SHORT TAXABLE

6 YEARS.—For any taxable year having less than 12

7 months—

8 ‘‘(A) the amounts paid or incurred by the

9 employer shall be annualized for purposes of de10 termining the increased credit base, and

11 ‘‘(B) the credit limitation amount shall be

12 multiplied by a fraction, the numerator of which

13 is the number of days in the taxable year and

14 the denominator of which is 365.

15 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—

16 For purposes of this section—

17 ‘‘(1) WAGES.—The term ‘wages’ has the same

18 meaning given to such term in section 51.

19 ‘‘(2) CONTROLLED GROUPS.—

20 ‘‘(A) All employers treated as a single em21 ployer under section (a) or (b) of section 52

22 shall be treated as a single employer for pur23 poses of this section.

24 ‘‘(B) The credit (if any) determined under

25 this section with respect to each such employer
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1 shall be its proportionate share of the wages

2 and qualified employee health insurance costs

3 giving rise to such credit.

4 ‘‘(3) CERTAIN OTHER RULES MADE APPLICA5 BLE.—Rules similar to the rules of section 51(k)

6 and subsections (c), (d), and (e) of section 52 shall

7 apply.

8 ‘‘(4) COORDINATION WITH NONREVENUE

9 LAWS.—Any reference in this section to a provision

10 not contained in this title shall be treated for pur11 poses of this section as a reference to such provision

12 as in effect on the date of the enactment of this

13 paragraph.’’

14 (c) DENIAL OF DEDUCTION FOR PORTION OF WAGES

15 EQUAL TO INDIAN EMPLOYMENT CREDIT.—

16 (1) Subsection (a) of section 280C (relating to

17 rule for targeted jobs credit) is amended by striking

18 ‘‘51(a)’’ and inserting ‘‘45A(a), 51(a), and’’.

19 (2) Subsection (c) of section 196 (relating to

20 deduction for certain unused business credits) is

21 amended by striking ‘‘and’’ at the end of paragraph

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

23 (6) and inserting ‘‘, and’’, and by adding at the end

24 the following new paragraph:
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1 ‘‘(7) the Indian employment credit determined

2 under section 45A(a).’’

3 (d) DENIAL OF CARRYBACKS TO PREENACTMENT

4 YEARS.—Subsection (d) of section 39 is amended by add5 ing at the end thereof the following new paragraph:

6 ‘‘(5) NO CARRYBACK OF SECTION 45 CREDIT

7 BEFORE ENACTMENT.—No portion of the unused

8 business credit for any taxable year which is attrib9 utable to the Indian employment credit determined

10 under section 45 may be carried to a taxable year

11 ending before the date of the enactment of section

12 45A.’’

13 (e) CLERICAL AMENDMENT.—The table of sections

14 for subpart D of part IV of subchapter A of chapter 1

15 is amended by adding at the end thereof the following:

‘‘Sec. 45A. Indian employment credit.’’

16 (f) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to wages paid or incurred after

18 December 31, 1992.

19 Subtitle E—Study

20 SEC. 141. STUDY OF EFFECTIVENESS OF TAX ENTERPRISE

21 ZONE INCENTIVES.

22 (a) IN GENERAL.—The Secretary of the Treasury, in

23 consultation with the appropriate Secretary (as defined in

24 section 1393(7) of the Internal Revenue Code of 1986,
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1 as added by this title), shall contract within 3 months of

2 the date of the enactment of this Act, with the National

3 Academy of Sciences (hereafter in this section referred to

4 as the ‘‘Academy’’) to conduct a study of the relative effec5 tiveness of the incentives provided by this Act in achieving

6 the purposes of such subtitles in tax enterprise zones.

7 (b) CONDUCT OF STUDY.—If the Academy contracts

8 for the conduct of the study described in subsection (a),

9 the Academy shall develop a study methodology and shall

10 oversee and manage the conduct of such study.

11 (c) REPORTS.—The Academy shall submit to the

12 Committee on Ways and Means of the House of Rep13 resentatives and the Committee on Finance of the Sen14 ate—

15 (1) not later than July 1, 1997, an interim re16 port setting forth the findings as a result of such

17 study, and

18 (2) not later than July 1, 2002, a final report

19 setting forth the findings as a result of such study.
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1 TITLE II—AUTHORIZATION FOR

2 ADDITIONAL ASSISTANCE TO

3 DISTRESSED COMMUNITIES

4 Subtitle A—National Public-Private

5 Partnership Programs

6 SEC. 201. NATIONAL PUBLIC-PRIVATE PARTNERSHIP PRO7 GRAMS.

8 (a) SENSE OF CONGRESS.—It is the sense of Con9 gress that public-private partnerships between government

10 and community-based organizations offer an opportunity

11 to empower residents of low-income distressed commu12 nities and to forge innovative solutions to the challenges

13 confronting these communities, and that increased re14 sources should be invested in such partnerships.

15 (b) AUTHORIZATION OF APPROPRIATIONS.—To pro16 mote national public-private partnerships, there are au17 thorized to be appropriated—

18 (1) with respect to the Head Start program

19 under the Head Start Act (42 U.S.C. 9831 et

20 seq.)—

21 (A) $40,000,000 for fiscal year 1993;

22 (B) $42,000,000 for fiscal year 1994;

23 (C) $44,000,000 for fiscal year 1995;

24 (D) $46,000,000 for fiscal year 1996;

25 (E) $49,000,000 for fiscal year 1997;
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1 (F) $51,000,000 for fiscal year 1998;

2 (G) $54,000,000 for fiscal year 1999;

3 (H) $56,000,000 for fiscal year 2000;

4 (I) $59,000,000 for fiscal year 2001; and

5 (J) $62,000,000 for fiscal year 2002;

6 (2) with respect to the community health cen7 ters program under sections 329, 330, 340 and

8 340A of the Public Health Service Act (42 U.S.C.

9 254c)—

10 (A) $20,000,000 for fiscal year 1993;

11 (B) $21,000,000 for fiscal year 1994;

12 (C) $22,000,000 for fiscal year 1995;

13 (D) $23,000,000 for fiscal year 1996;

14 (E) $24,000,000 for fiscal year 1997;

15 (F) $26,000,000 for fiscal year 1998;

16 (G) $27,000,000 for fiscal year 1999;

17 (H) $28,000,000 for fiscal year 2000;

18 (I) $30,000,000 for fiscal year 2001; and

19 (J) $31,000,000 for fiscal year 2002;

20 (3) with respect to the National Community

21 Economic Partnership program established under

22 chapter 3 of subtitle C—

23 (A) $40,000,000 for fiscal year 1993;

24 (B) $42,000,000 for fiscal year 1994;

25 (C) $44,000,000 for fiscal year 1995;
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1 (D) $46,000,000 for fiscal year 1996;

2 (E) $49,000,000 for fiscal year 1997;

3 (F) $51,000,000 for fiscal year 1998;

4 (G) $54,000,000 for fiscal year 1999;

5 (H) $56,000,000 for fiscal year 2000;

6 (I) $59,000,000 for fiscal year 2001; and

7 (J) $62,000,000 for fiscal year 2002;

8 (4) with respect to the Job Corps program

9 under part B of title IV of the Job Training Part10 nership Act (29 U.S.C. 1692 et seq.)—

11 (A) $40,000,000 for fiscal year 1993;

12 (B) $42,000,000 for fiscal year 1994;

13 (C) $44,000,000 for fiscal year 1995;

14 (D) $46,000,000 for fiscal year 1996;

15 (E) $49,000,000 for fiscal year 1997;

16 (F) $51,000,000 for fiscal year 1998;

17 (G) $54,000,000 for fiscal year 1999;

18 (H) $56,000,000 for fiscal year 2000;

19 (I) $59,000,000 for fiscal year 2001; and

20 (J) $62,000,000 for fiscal year 2002;

21 (5) with respect to the Enterprise Capital Ac22 cess Fund Demonstration Program established

23 under section 271—

24 (A) $20,000,000 for fiscal year 1993;

25 (B) $21,000,000 for fiscal year 1994;
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1 (C) $22,000,000 for fiscal year 1995;

2 (D) $23,000,000 for fiscal year 1996;

3 (E) $24,000,000 for fiscal year 1997;

4 (F) $26,000,000 for fiscal year 1998;

5 (G) $27,000,000 for fiscal year 1999;

6 (H) $28,000,000 for fiscal year 2000;

7 (I) $30,000,000 for fiscal year 2001; and

8 (J) $31,000,000 for fiscal year 2002;

9 (6) with respect to the Youthbuild program

10 under subtitle D of title IV of the Cranston-Gon11 zalez National Affordable Housing Act—

12 (A) $10,000,000 for fiscal year 1993;

13 (B) $11,000,000 for fiscal year 1994;

14 (C) $11,000,000 for fiscal year 1995;

15 (D) $12,000,000 for fiscal year 1996;

16 (E) $12,000,000 for fiscal year 1997;

17 (F) $13,000,000 for fiscal year 1998;

18 (G) $13,000,000 for fiscal year 1999;

19 (H) $14,000,000 for fiscal year 2000;

20 (I) $15,000,000 for fiscal year 2001; and

21 (J) $16,000,000 for fiscal year 2002; and

22 (7) with respect to the Neighborhood Reinvest23 ment Corporation established under title VI of the

24 Housing and Community Development Act of

25 1978—
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1 (A) $10,000,000 for fiscal year 1993;

2 (B) $11,000,000 for fiscal year 1994;

3 (C) $11,000,000 for fiscal year 1995;

4 (D) $12,000,000 for fiscal year 1996;

5 (E) $12,000,000 for fiscal year 1997;

6 (F) $13,000,000 for fiscal year 1998;

7 (G) $13,000,000 for fiscal year 1999;

8 (H) $14,000,000 for fiscal year 2000;

9 (I) $15,000,000 for fiscal year 2001; and

10 (J) $16,000,000 for fiscal year 2002.

11 (c) AVAILABILITY OF AMOUNTS.—The amounts ap12 propriated for programs pursuant to paragraphs (1), (2),

13 (4), (6), and (7) of subsection (b) shall be available only

14 for projects or activities that directly and principally bene15 fit the residents of tax enterprise zones designated pursu16 ant to section 1391 of the Internal Revenue Code of 1986.

17 Of the amounts appropriated for programs pursuant to

18 paragraphs (3) and (5) of subsection (b), 50 percent shall

19 be available only for projects or activities that directly and

20 principally benefit the residents of such zones.

21 Subtitle B—Block Grant Funding

22 for Eligible Programs

23 SEC. 211. AUTHORIZATION OF APPROPRIATIONS.

24 There are authorized to be appropriated for assist25 ance under section 212, $320,000,000 for fiscal year
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1 1993, $325,000,000 for fiscal year 1994, $332,000,000

2 for fiscal year 1995, $337,000,000 for fiscal year 1996,

3 $341,000,000 for fiscal year 1997, and such sums as may

4 be necessary for each of the fiscal years 1998 through

5 2002, except that amounts authorized under this sub6 section for each of the fiscal years 1998 through 2002

7 shall not be less than the amount of the revenue loss esti8 mates to result as a result of enterprise zone tax pref9 erences under section 1391 of the Internal Revenue Code

10 of 1986 less the amounts authorized by section 211(b).

11 SEC. 212. ALLOCATION OF AMOUNTS AMONG TAX ENTER12 PRISE ZONES.

13 (a) IN GENERAL.—Except as provided in subsection

14 (d), the interagency council established under section 216

15 of this Act shall make any amounts appropriated pursuant

16 to section 211(a) available under this subtitle to provide

17 assistance on behalf of each tax enterprise zone designated

18 under section 1391 of the Internal Revenue Code of 1986

19 for which an application under section 215 of this Act has

20 been approved by the interagency council.

21 (b) ALLOCATION BETWEEN URBAN AND RURAL

22 ZONES.—Of the amounts available each fiscal year under

23 this title for tax enterprise zones, 70 percent shall be avail24 able for urban tax enterprise zones and 30 percent shall

25 be available for rural development investment zones.
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1 (c) DIVISION AMONG URBAN AND RURAL ZONES.—

2 (1) URBAN ZONES.—The amounts available

3 each fiscal year under this title for urban tax enter4 prise zones shall be allocated so as to reserve an

5 equal amount for each urban zone that may be des6 ignated prior to the end of the calendar year begin7 ning during the fiscal year for which such amounts

8 were made available, pursuant to the annual limits

9 on zones specified in section 1391 of the Internal

10 Revenue Code of 1986.

11 (2) RURAL ZONES.—The amounts available

12 each fiscal year under this title for rural develop13 ment investment zones shall be allocated so as to re14 serve an equal amount for each rural development

15 investment zone that may be designated prior to the

16 end of the calendar year beginning during the fiscal

17 year for which such amounts were made available,

18 pursuant to the annual limits on zones specified in

19 section 1391 of the Internal Revenue Code of 1986.

20 (d) SET-ASIDE.—Of the amounts appropriated pur21 suant to section 211 for fiscal year 1993, not less than

22 $5,000,000 shall be made available by the Interagency

23 Council for the Access to Jobs/Reverse Community Dem24 onstration Program authorized under section 272.
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1 (e) AVAILABILITY.—Notwithstanding any other pro2 vision of law, amounts appropriated pursuant to author3 izations under this title shall remain available until the

4 end of the fiscal year following the year for which such

5 amounts are appropriated.

6 SEC. 213. USE OF AMOUNTS.

7 (a) IN GENERAL.—The assistance allocated under

8 section 212 on behalf of each tax enterprise zone (as de9 fined in section 1391 of the Internal Revenue Code of

10 1986) shall be available only for carrying out selected pro11 grams within the tax enterprise zone, in accordance with

12 the application of the tax enterprise zone approved under

13 section 215 and subject to the provisions of this section.

14 (b) ALLOCATION AMONG PROGRAM CATEGORIES.—

15 (1) IN GENERAL.—Except as provided in para16 graph (2), of the total amount of assistance provided

17 under this subtitle on behalf of a tax enterprise zone

18 for any fiscal year, the sum of the amounts used to

19 carry out selected programs referred to under any

20 one of paragraphs (1) through (5) of section 214

21 may not exceed 20 percent of such total amount.

22 (2) WAIVER OF CAPS.—Pursuant to a request

23 contained in an application under section 215, the

24 interagency council may provide that the require25 ment under paragraph (1) shall not apply with re-
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1 spect to amounts used to carry out selected pro2 grams under the application, except that of the total

3 amount of assistance provided under this subtitle on

4 behalf of such tax enterprise zone for any fiscal

5 year, the sum of the amounts used to carry out se6 lected programs referred to under any single para7 graph under section 214 may not exceed 30 percent

8 of such total amount and may not be less than 5

9 percent of such total amount.

10 (c) ALLOCATION AMONG JOB TRAINING PRO11 GRAMS.—In any fiscal year, of the sum of the amounts

12 of assistance provided under this subtitle on behalf of a

13 tax enterprise zone that are used to carry out any of the

14 job training programs under section 214(2), not less than

15 25 percent shall be used for assistance under the Young

16 Adult Employment Demonstration program referred to in

17 section 214(2)(A) of this Act.

18 (d) PROVISION OF ASSISTANCE.—Upon the approval

19 of an application under section 215 for a tax enterprise

20 zone, the appropriate Federal agency head for each se21 lected program under the approved application shall make

22 available on behalf of the enterprise zone (under such pro23 gram and through the appropriate eligible entity), from

24 amounts available on behalf of such zone pursuant to sec-
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1 tion 212, the amount of assistance determined in accord2 ance with the approved application.

3 (e) SUPPLEMENTATION REQUIREMENT.—Any

4 amounts provided under this subtitle shall be in supple5 ment to, and shall not supplant, any Federal, State, local,

6 or private funds from other sources already used, or com7 mitted for use, for programs, projects, activities, and serv8 ices assisted under this subtitle or comparable to such pro9 grams, projects, activities, and services. Federal agency

10 heads shall not reduce the usual allocations with respect

11 to any jurisdiction under any of the eligible programs de12 scribed in section 214 because such jurisdiction allocates

13 funds under this title to any of such programs.

14 SEC. 214. ELIGIBLE PROGRAMS.

15 Assistance may be provided under this subtitle for

16 carrying out the following activities, projects, and pro17 grams:

18 (1) CRIME AND CRIMINAL JUSTICE.—

19 (A) Community policing projects and ac20 tivities under the Edward Byrne Memorial

21 State and Local Law Enforcement Assistance

22 Program under part E of title I of the Omnibus

23 Crime Control and Safe Streets Act of 1968

24 (42 U.S.C. 3751 et seq.).
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1 (B) Chapter B of subpart 2 of part E of

2 title I of the Omnibus Crime Control and Safe

3 Streets Act of 1968.

4 (C) Projects and activities under chapter 1

5 of subtitle B of title III of the Anti-Drug Abuse

6 Act of 1988 (42 U.S.C. 11801 et seq.).

7 (2) JOB TRAINING.—

8 (A) The Young Adult Employment Dem9 onstration program under part K of title IV of

10 the Job Training Partnership Act (as added by

11 section 231 of this Act).

12 (B) The Job Corps program under part B

13 of title IV of the Job Training Partnership Act

14 (29 U.S.C. 1691 et seq.).

15 (C) Title II of the Job Training Partner16 ship Act (29 U.S.C. 1601 et seq.).

17 (D) The American Conservation and Youth

18 Corps program under subtitle C of title I of the

19 National and Community Service Act of 1990

20 (42 U.S.C. 12541 et seq.).

21 (E) The Access to Jobs/Reverse Commut22 ing Demonstration Program established under

23 section 272.

24 (3) EDUCATION.—
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1 (A) The programs under the Carl D. Per2 kins Vocational Educational and Applied Tech3 nology Education Act (20 U.S.C. 2301 et seq.).

4 (B) Projects under the Comprehensive

5 Child Development Act (42 U.S.C. 9881 et

6 seq.).

7 (C) Activities under the Child Care and

8 Development Block Grant Act (42 U.S.C. 9858

9 et seq.).

10 (D) The programs under chapter 1 of title

11 I of the Elementary and Secondary Education

12 Act of 1965.

13 (E) The TRIO programs under part A of

14 title IV of the Higher Education Act of 1965

15 (20 U.S.C. 1070 et seq.).

16 (F) The programs under the Adult Edu17 cation Act (20 U.S.C. 1201 et seq.).

18 (G) Literacy activities authorized under

19 the National Literacy Act of 1991.

20 (4) HEALTH, NUTRITION AND FAMILY ASSIST21 ANCE.—

22 (A) The special supplemental food program

23 for women, infants, and children under section

24 17 of the Child Nutrition Act of 1966.
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1 (B) The following programs under the

2 Public Health Service Act (42 U.S.C. 201 et

3 seq.):

4 (i) Capacity expansion of substance

5 abuse treatment facilities.

6 (ii) Substance abuse treatment for in7 dividuals under criminal justice super8 vision.

9 (iii) Substance abuse treatment for

10 pregnant and postpartum women.

11 (iv) Community prevention grants re12 garding substance abuse.

13 (v) Substance abuse treatment im14 provement grants.

15 (C) The programs under title XXVI of the

16 Public Health Service Act (42 U.S.C. 300ff–21

17 et seq.).

18 (D) The family support programs under

19 subtitle F of title VII of the Stewart B. McKin20 ney Homeless Assistance Act (42 U.S.C. 1148

21 et seq.).

22 (E) Projects for high risk youth under sec23 tion 517 of the Public Health Service Act (42

24 U.S.C. 290bb–23).
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1 (F) Emergency child protective service

2 grants under section 107 of the Child Abuse

3 Prevention and Treatment Act (42 U.S.C.

4 5106a).

5 (G) Family support centers and family re6 source and support programs under sections

7 933 and 934(d) of the Augustus F. Hawkins

8 Human Services Reauthorization Act of 1990

9 (Public Law 101–501).

10 (5) HOUSING AND COMMUNITY DEVELOP11 MENT.—

12 (A) The community development block

13 grant program under title I of the Housing and

14 Community Development Act of 1974 (42

15 U.S.C. 5301 et seq.).

16 (B) The public and Indian housing mod17 ernization program under section 14 of the

18 United States Housing Act of 1937 (42 U.S.C.

19 14371).

20 (C) The public and assisted housing drug

21 elimination program under chapter 2 of subtitle

22 C of title V of the Anti-Drug Abuse Act of

23 1988 (42 U.S.C. 11901 et seq.).

24 (D) Contracts for rental assistance at25 tached to structures pursuant to paragraph (2)
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1 of section 8 of the United States Housing Act

2 of 1937 (42 U.S.C. 1437f).

3 (E) The HOME investment partnership

4 program under title II of the Cranston-Gon5 zalez National Affordable Housing Act (42

6 U.S.C. 12721 et seq.).

7 (F) The self-help housing technical assist8 ance grant program under section 523 of the

9 Housing Act of 1949 (42 U.S.C. 1490c).

10 (G) Rural housing preservation grants

11 under section 533 of the Housing Act of 1949

12 (42 U.S.C. 1490m).

13 (H) Rural rental housing loans under sec14 tion 515 of the Housing Act of 1949 (42

15 U.S.C. 1485).

16 (I) Rural rental housing assistance pay17 ments under section 521(a)(2) of the Housing

18 Act of 1949 (42 U.S.C. 1490a).

19 (J) Rural water and waste disposal grants

20 pursuant to paragraphs (2) and (6) of section

21 306(a) of the Consolidated Farm and Rural

22 Development Act (7 U.S.C. 1926(a)) and water

23 and waste facility loans and grants under sec24 tion 306C of such Act.
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1 (K) Private business enterprise grants

2 under section 310B(c) of the Consolidated

3 Farm and Rural Development Act (7 U.S.C.

4 1926).

5 (L) Loan guarantees under section 108 of

6 the Housing and Community Development Act

7 (as amended by section 222 of this Act).

8 (M) Outreach and assistance for socially

9 disadvantaged farmers and ranchers under sec10 tion 2501 of the Food, Agriculture, and Trade

11 Act of 1990.

12 (N) Public Housing Family Investment

13 Centers under section 22 of the United States

14 Housing Act of 1937 (42 U.S.C. 1437t).

15 SEC. 215. APPLICATION FOR FUNDING.

16 (a) ESTABLISHMENT OF APPLICATION PROCESS.—

17 The interagency council shall establish, by regulation, a

18 procedure for a single comprehensive application to be

19 submitted to the council for each tax enterprise zone des20 ignated under section 1391 of the Internal Revenue Code

21 of 1986 for the purpose of making amounts available

22 under this subtitle on behalf of such tax enterprise zones.

23 The interagency council shall provide for the form and

24 manner of such applications, and shall require the applica25 tions to be made by the State, unit of local government,
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1 or economic development agency chartered by the State

2 that submitted the nomination for designation of the area

3 designated as a tax enterprise zone and submitted prompt4 ly after such designation.

5 (b) LOCAL COORDINATION.—

6 (1) PURPOSES.—The interagency council shall

7 provide that each application under this section shall

8 be developed in coordination and consultation with a

9 local coordinating board under paragraph (2), which

10 shall ensure that the programs, projects, activities,

11 and services under section 214(1) carried out with

12 amounts provided under this subtitle are sufficiently

13 coordinated with the other programs, projects, ac14 tivities, and services assisted under this title, and

15 that all such programs, projects, activities, and serv16 ices are coordinated with law enforcement efforts

17 within the area nominated for designation as a tax

18 enterprise zone.

19 (2) MEMBERSHIP.—The local coordinating

20 board referred to in paragraph (1) shall include rep21 resentatives of units of local government within such

22 area, representatives of law enforcement agencies

23 having jurisdiction within such area, residents of the

24 area, community leaders, including local business

25 persons, bankers, architects and planners, represent-
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1 atives of school boards, and representatives of non2 profit community-based organizations such as com3 munity development corporations and community ac4 tion agencies.

5 (c) CONTENTS.—Each application under the proce6 dure established under this section shall contain the fol7 lowing information:

8 (1) A list of the programs referred to under

9 section 214 for which funding is requested and a

10 general description of the types of activities to be

11 carried out with such assistance as well as a list of

12 activities to be carried out through programs receiv13 ing funding under section 201.

14 (2) A statement documenting the percentage of

15 the total amount of any funding received under this

16 subtitle that will be used for each selected program

17 and the total amount of funding that will be used

18 for activities to be carried out through programs re19 ceiving funding under section 201.

20 (3) A statement documenting the entities that

21 will receive any assistance provided for the selected

22 programs on behalf of the tax enterprise zone and

23 the entities’ eligibility for such assistance.

24 (4) A statement documenting the membership

25 of the local coordinating board organized pursuant
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1 to the requirement under subsection (b) and describ2 ing the coordination between the programs, projects,

3 activities, and services assisted under this title and

4 local law enforcement efforts in the tax enterprise

5 zone.

6 (5) A request for any waiver of the requirement

7 under section 213(b)(1) and a statement document8 ing the rationale for such waiver.

9 (6) A statement documenting any other Fed10 eral, State, and local resources for the community in

11 which the tax enterprise zone is located that will be

12 dedicated to the types of programs, projects, activi13 ties, and services to be assisted under this title.

14 (7) A statement documenting a strong commit15 ment by community-based organizations in the tax

16 enterprise zone for carrying out the selected pro17 grams and similar programs, projects, activities, and

18 services.

19 (8) A statement documenting any private sector

20 resources, including corporate contributions and in21 dividual commitments, to supplement assistance pro22 vided under this title.

23 (9) A statement documenting the efforts made

24 by the local jurisdiction containing the tax enterprise

25 zone to encourage local financial institutions to sat-
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1 isfy their obligations under the Community Reinvest2 ment Act of 1977 (12 U.S.C. 2901 et seq.) by mak3 ing loans to enterprise zone businesses with empha4 sis on startup and other small business concerns (as

5 defined in section 3(a) of the Small Business Act

6 (15 U.S.C. 632(a)) and the commitments made by

7 local financial institutions in response to these ef8 forts.

9 (10) A statement demonstrating a balanced,

10 comprehensive plan for the tax enterprise zone, that

11 addresses removing violent offenders from the neigh12 borhood streets, supports drug and crime prevention,

13 improves health, education and other social services,

14 and promotes neighborhood revitalization through

15 strategies to create jobs and other economic oppor16 tunities which assist families to become self suffi17 cient. Such strategies shall include improvements in

18 infrastructure, public facilities, and affordable hous19 ing opportunities embodying good urban design and

20 neighborhood planning principles that contribute to

21 the creation of wholesome and attractive social, eco22 nomic, and physical environments.

23 (11) A statement demonstrating that any

24 amounts requested for selected programs are part of

25 an integrated and comprehensive plan for the use of
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1 Federal, State, local, and private resources to ac2 complish specific goals and measurable outcomes for

3 neighborhood revitalization.

4 (d) REVIEW.—In reviewing each application submit5 ted under this section, each member of the council shall

6 review the portion of the application concerning any re7 quest or eligibility for assistance under any selected pro8 gram under the jurisdiction of such member to determine

9 whether providing assistance under this subtitle pursuant

10 to such application will comply with the laws and regula11 tions applicable to such program.

12 (e) APPROVAL AND DISAPPROVAL.—

13 (1) TIMING.—The council shall review each ap14 plication promptly upon receipt and shall approve or

15 disapprove the application not later than the expira16 tion of the 30-day period beginning upon such re17 ceipt.

18 (2) STANDARDS FOR APPROVAL.—The council

19 shall approve an application if the council deter20 mines that the assistance requested for the selected

21 programs under the application will assist in the eco22 nomic development of the tax enterprise zone, that

23 the eligible entities identified in the application are

24 capable and qualified to receive and administer the

25 assistance pursuant to the application, and that the
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1 information, documentation, or evidence required

2 under subsection (c) is sufficient in the determina3 tion of the council.

4 (3) DISAPPROVAL AND RESUBMISSION.—If,

5 pursuant to review under this section, the council

6 determines that the application of a tax enterprise

7 zone is incomplete or unsatisfactory, the council

8 shall, before the expiration of the period referred to

9 in paragraph (1)—

10 (A) notify the entity submitting the appli11 cation of the reasons for the failure to approve

12 the application;

13 (B) notify the entity submitting the appli14 cation that the application may be resubmitted

15 during the period referred to in subparagraph

16 (C); and

17 (C) permit such entity to resubmit a cor18 rected or amended application during the 30-

19 day period beginning on notification under this

20 paragraph.

21 (4) REVIEW OF RESUBMITTED APPLICATION.—

22 The council shall review and approve or disapprove

23 any application resubmitted under paragraph (3) be24 fore the expiration of the 15-day period beginning

25 upon such resubmission. Any application resubmit-
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1 ted under paragraph (3) that is disapproved may be

2 resubmitted before the expiration of the 15-day pe3 riod beginning upon such disapproval and shall be

4 subject to review under the provisions of this para5 graph.

6 (f) PUBLIC COMMENT.—An applicant under this sec7 tion, in conjunction with the relevant local coordinating

8 board, shall ensure that there are adequate opportunities

9 for public comment concerning the application submitted

10 under this section, including—

11 (1) furnishing citizens with information con12 cerning the amount of funds available pursuant to

13 this subtitle and the range of activities that may be

14 undertaken with such funds;

15 (2) holding one or more public hearings to ob16 tain the views of citizens on community needs; and

17 (3) providing citizens with reasonable access to

18 any application filed pursuant to this section and to

19 records regarding the use of funds received pursuant

20 to this subtitle.

21 SEC. 216. INTERAGENCY COUNCIL.

22 (a) ESTABLISHMENT.—There is hereby established

23 an interagency council to provide assistance under this

24 subtitle.
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1 (b) MEMBERSHIP.—The members of the council shall

2 be the Secretary of Agriculture, the Secretary of Edu3 cation, the Secretary of Health and Human Services, the

4 Secretary of Housing and Urban Development, the Sec5 retary of Labor, the Director of the Office of National

6 Drug Control Policy, the Attorney General of the United

7 States and the Chairperson of the Commission on Na8 tional and Community Service.

9 (c) DUTIES.—The council shall—

10 (1) review and approve applications submitted

11 under section 215;

12 (2) direct the appropriate Federal agency head

13 to provide assistance under the selected programs

14 under approved applications using amounts available

15 pursuant to this subtitle; and

16 (3) carry out any other responsibilities of the

17 council as provided under this subtitle.

18 SEC. 217. DEFINITIONS.

19 For purposes of this subtitle:

20 (1) The term ‘‘appropriate Federal agency

21 head’’ means, with respect to each program referred

22 to in section 214, the head of the Federal agency or

23 other Federal official responsible for administering

24 such program.
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1 (2) The term ‘‘approved application’’ means an

2 application under section 215 for assistance provided

3 under this subtitle that is approved by the inter4 agency council and which meets the public comment

5 requirements under section 215(f).

6 (3) The term ‘‘eligible entity’’ means, with re7 spect to a selected program under an application

8 under section 215, an entity in the tax enterprise

9 zone that is eligible to receive and administer

10 amounts under the program and is designated under

11 the application to receive and administer amounts

12 provided for the program pursuant to this subtitle.

13 (4) The terms ‘‘interagency council’’ and ‘‘coun14 cil’’ mean the interagency council established under

15 section 216.

16 (5) The term ‘‘selected program’’ means, with

17 respect to a tax enterprise zone, any of the programs

18 identified in an application under section 215 for

19 which funding under this subtitle is requested.

20 (6) The term ‘‘tax enterprise zone’’ means an

21 urban tax enterprise zone, a rural development in22 vestment zone designated under section 1391 of the

23 Internal Revenue Code of 1986.
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1 SEC. 218. STUDY AND REPORT.

2 (a) GENERAL STUDY.—The council shall conduct a

3 study to identify—

4 (1) any alternative methods or systems for allo5 cation of amounts made available pursuant to this

6 subtitle among tax enterprise zones; and

7 (2) any problems experienced in the implemen8 tation and administration of the provisions of this

9 subtitle, including identification of any provisions of

10 law or regulations relating to the programs referred

11 to in section 214 for which a waiver would facilitate

12 carrying out the purposes of this subtitle.

13 (b) REPORT.—Not later than the expiration of the

14 1-year period beginning on the date of the enactment of

15 this Act, the council shall submit to the Congress a report

16 regarding the study conducted under subsection (a), which

17 shall include any recommendations for improving the pro18 gram for assistance under this subtitle.

19 SEC. 219. REGULATIONS.

20 The council shall issue any regulations necessary to

21 carry out this subtitle not later than the expiration of the

22 60-day period beginning on the date of the enactment of

23 this Act.
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1 Subtitle C—Other Programs

2 CHAPTER 1—COMMUNITY DEVELOPMENT

3 BLOCK GRANT PROGRAM

4 SEC. 221. WAIVER OF PUBLIC SERVICES CAP UNDER COM5 MUNITY DEVELOPMENT BLOCK GRANT PRO6 GRAM.

7 Section 105(a)(8) of the Housing and Community

8 Development Act of 1974 (42 U.S.C. 5305(a)) is amend9 ed—

10 (1) by inserting ‘‘(A)’’ before ‘‘unless such

11 unit’’; and

12 (2) by inserting before the semicolon at the end

13 the following: ‘‘, or (B) unless unit of general local

14 government is located within or contains a tax enter15 prise zone (as designated under section 1391 of the

16 Internal Revenue Code of 1986), in which case such

17 unit of general local government may use, in addi18 tion to such 15 percent of the amount of any assist19 ance provided to the unit (or in the case of

20 nonentitled communities, 15 percent statewide)

21 under this title, including program income, an addi22 tional 15 percent of such amount of assistance for

23 activities under this paragraph within such enter24 prise zone’’.
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1 SEC. 222. EMERGENCY COMMUNITY DEVELOPMENT LOAN

2 GUARANTEE AUTHORITY.

3 Section 108 of the Housing and Community Develop4 ment Act of 1974 is amended by adding at the end thereof

5 the following new subsection:

6 ‘‘(q) In addition to amounts provided under sub7 section (a), the Secretary may enter into commitments

8 during each of the fiscal years 1993 through 1997 to guar9 antee notes and obligations with an aggregate principal

10 amount in each fiscal year of $2,000,000,000. The guar11 antee authority under this subsection shall be effective

12 only to the extent approved or provided for in appropria13 tions Acts, subject only to the absence of qualified appli14 cants or proposed activities and the provisions of this Act,

15 except that the provisions of subsection (k) shall not apply

16 with respect to any guarantees and commitments to guar17 antee pursuant to authority provided under this sub18 section.’’.

19 CHAPTER 2—YOUNG ADULT EMPLOY20 MENT DEMONSTRATION PROGRAM

21 SEC. 231. ESTABLISHMENT OF YOUNG ADULT EMPLOY22 MENT DEMONSTRATION PROGRAM.

23 (a) IN GENERAL.—Title IV of the Job Training Part24 nership Act (29 U.S.C. 1671 et seq.) is amended by add25 ing at the end the following new part:
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1 ‘‘PART K—YOUNG ADULT EMPLOYMENT

2 DEMONSTRATION PROGRAM

3 ‘‘SEC. 499I. STATEMENT OF PURPOSE.

4 ‘‘It is the purpose of the Young Adult Employment

5 Demonstration program under this part to—

6 ‘‘(1) ensure access to education and job train7 ing assistance for youth and young adults residing

8 in tax enterprise zones;

9 ‘‘(2) make provisions for a comprehensive range

10 of education, training, and employment services to

11 disadvantaged youth and young adults in tax enter12 prise zones who are not currently served or are un13 derserved by Federal education and job training pro14 grams;

15 ‘‘(3) enable communities located in or contain16 ing tax enterprise zones to establish and meet goals

17 for improving the opportunities available to youth

18 and young adults within the tax enterprise zone; and

19 ‘‘(4) facilitate the coordination of comprehen20 sive services to serve such youth and young adults.

21 ‘‘SEC. 499J. PROGRAM AUTHORIZED.

22 ‘‘(a) ESTABLISHMENT OF PROGRAM.—The Secretary

23 is authorized to establish a program of Young Adult Em24 ployment Demonstration grants to provide comprehensive

25 services to youth and young adults living in tax enterprise

26 zones.
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1 ‘‘(b) ELIGIBILITY FOR GRANTS.—

2 ‘‘(1) RECIPIENTS.—The Secretary may only

3 award grants under this part to—

4 ‘‘(A) the participating community for a

5 target area that is located within a service de6 livery area; or

7 ‘‘(B) grantees designated under sections

8 401 and 402, or a consortium of such grantees

9 and the State, when the target area is located

10 in an Indian reservation, Alaskan Native vil11 lage, or migrant or seasonal farmworker

12 community.

13 ‘‘(2) NUMBER OF GRANTS.—The Secretary may

14 award not more than 25 grants during the first fis15 cal year the program is authorized.

16 ‘‘(c) RENEWABILITY OF GRANTS.—Grants awarded

17 under this part shall be for a 1-year period and shall be

18 renewable for each of the 2 succeeding fiscal years if the

19 Secretary determines the grant recipient complied with

20 conditions of the grant during the previous fiscal year.

21 ‘‘(d) FACTORS FOR AWARDS.—In awarding grants

22 under this part, the Secretary shall consider the quality

23 of the proposed project, the goals to be achieved, the likeli24 hood of the project’s successful implementation, the extent

25 of community support and other Federal and non-Federal
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1 funds available for similar purposes, and the new State,

2 local, or private resources.

3 ‘‘(e) SELECTION REQUIREMENTS.—In awarding

4 grants under subsection (b), the Secretary shall not ap5 prove an application unless the application contains assur6 ances that the applicant will use funds from a grant to

7 provide job training, education, services, stipends (only to

8 individuals age 17 to 30), and needs-related payments in

9 accordance with sections 499K and 499L.

10 ‘‘SEC. 499K. APPLICATION.

11 ‘‘(a) ELIGIBILITY TO APPLY.—Participating commu12 nities shall be eligible to apply for a Young Adult Employ13 ment Demonstration grant under this part.

14 ‘‘(b) CONTENTS OF APPLICATION.—Each participat15 ing community desiring a grant under this part shall,

16 through the individuals described in subsection (c), submit

17 an application to the Secretary at such time in such man18 ner and accompanied by such information as the Secretary

19 may reasonably require. Each such application shall—

20 ‘‘(1) include a comprehensive plan for the

21 Young Adult Employment Demonstration initiative

22 designed to achieve identifiable goals for youth and

23 young adults in the target area;
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1 ‘‘(2) set forth measurable program goals and

2 outcomes, which may include increasing the propor3 tion of—

4 ‘‘(A) youth completing high school or its

5 equivalent;

6 ‘‘(B) youth and young adults entering into

7 postsecondary institutions, apprenticeships, or

8 other advanced training programs;

9 ‘‘(C) youth and young adults placed in

10 jobs; or

11 ‘‘(D) eligible youth and young adults par12 ticipating in education, training, and employ13 ment services;

14 ‘‘(3) include supporting goals for the target

15 area such as increasing security and safety, or re16 ducing the number of drug-related arrests;

17 ‘‘(4) provide assurances that the conditions set

18 forth in section 499L will be met;

19 ‘‘(5) demonstrate how the participating commu20 nity will make use of the resources, expertise, and

21 commitment of institutions of higher education, edu22 cational agencies, and vocational and technical

23 schools and institutes;

24 ‘‘(6) attempt to ensure that all youth and

25 young adults in the target areas have access to a co-
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1 ordinated and comprehensive range of education and

2 training opportunities which serve the broadest

3 range of interests and needs of youth and young

4 adults and simultaneously mobilize the diverse range

5 of education and training providers in the participat6 ing community;

7 ‘‘(7) include support services necessary for suc8 cessful participation by eligible youth and young

9 adults, including child care, transportation, and as10 sistance in resolving personal or family crises such

11 as those related to substance abuse, homelessness,

12 migration, and family violence;

13 ‘‘(8) include a system of common intake, indi14 vidualized assessment, and case management;

15 ‘‘(9) include an estimate of the expected num16 ber of youth and young adults in the target area to

17 be served;

18 ‘‘(10) include a description of the resources

19 available in the participating community from pri20 vate, local government, State and Federal sources

21 which will be used to achieve the goals of the pro22 gram;

23 ‘‘(11) provide evidence of support for accom24 plishing the stated goals of the participating commu25 nity from—
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1 ‘‘(A) local elected officials,

2 ‘‘(B) the local school system,

3 ‘‘(C) postsecondary education and training

4 institutions,

5 ‘‘(D) the applicable private industry coun6 cil,

7 ‘‘(E) local community leaders,

8 ‘‘(F) business,

9 ‘‘(G) labor organizations, and

10 ‘‘(H) other appropriate organizations; and

11 ‘‘(12) provide assurances that the target area

12 includes, to the maximum extent possible, the poor13 est neighborhoods in the community, such as those

14 with substantial numbers of public housing facilities.

15 ‘‘(c) SUBMISSION OF APPLICATION.—The application

16 for funds for a participating community may only be sub17 mitted to the Secretary by—

18 ‘‘(1) the mayor of a city or the chief elected of19 ficial in a metropolitan statistical area, after the

20 Governor of the State has had an opportunity to

21 comment on the application;

22 ‘‘(2) the chief elected official of a

23 nonmetropolitan county or the designated chief elect24 ed official of contiguous nonmetropolitan counties,
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1 after the Governor of the State has had an oppor2 tunity to comment on the application; or

3 ‘‘(3) the grantee designated under sections 401

4 or 402, or jointly by the grantee and the Governor

5 of the State in which such grantee is located, in ap6 plications for Native American or migrant or sea7 sonal worker communities.

8 ‘‘SEC. 499L. GRANT AGREEMENT.

9 ‘‘Each grant recipient under this part shall enter into

10 an agreement with the Secretary. Each such agreement

11 shall describe how—

12 ‘‘(1) the recipient will designate a target area

13 that will be the focus of the demonstration project

14 and which shall have a population of not more than

15 25,000 (or upon approval of the Secretary, a popu16 lation of not more than 75,000), except that in the

17 event that the population of an area from which a

18 high school draws a substantial portion of its

19 enrollment exceeds this limit, the target area may

20 encompass such boundary;

21 ‘‘(2) funds provided under this part will be used

22 to support education, training, and supportive activi23 ties selected from a set of youth program models

24 designated by the Secretary or from alternative mod-
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1 els described in the application and approved by the

2 Secretary, such as—

3 ‘‘(A) nonresidential learning centers;

4 ‘‘(B) alternative schools;

5 ‘‘(C) combined summer remediation, work

6 experience and work readiness training, and

7 school-to-work/apprenticeship/post-secondary

8 education program;

9 ‘‘(D) teen parent programs;

10 ‘‘(E) special programs administered by

11 community colleges;

12 ‘‘(F) youth centers;

13 ‘‘(G) initiatives aimed at increased rural

14 student enrollment in post-secondary institu15 tions;

16 ‘‘(H) public-private collaborations to en17 sure private sector employment and continued

18 learning opportunities for youth; and

19 ‘‘(I) initiatives that combine community

20 and youth service opportunities with education

21 and training activities;

22 ‘‘(3) funds received under this section will be

23 used for services to youth and young adults age 14

24 to 30 at the time of enrollment;
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1 ‘‘(4) the local educational agency and any other

2 educational agency which operates secondary schools

3 in the target area provide activities and resources to

4 promote the educational goals specified in the appli5 cation;

6 ‘‘(5) the participating community will provide

7 activities and local resources to promote the goals

8 specified in the application;

9 ‘‘(6) the participating community shall under10 take outreach and recruitment efforts in the target

11 area to encourage, to the maximum extent possible,

12 participation by those disadvantaged youth and

13 young adults who are currently unserved or under14 served by education and training programs, includ15 ing targeted measures specifically designed to enlist

16 the participation of minority youth and young

17 adults, particularly those under the jurisdiction of

18 the child welfare, juvenile justice, and criminal jus19 tice systems;

20 ‘‘(7) the participating community will carry out

21 special efforts to establish coordination with Federal,

22 State, or local programs that serve the target popu23 lation; and

24 ‘‘(8) funds provided under this part shall be

25 used to pay stipends for participant support in paid
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1 work experience and classroom training programs

2 when such programs are combined with other edu3 cation and training activities.

4 ‘‘SEC. 499M. JOB GUARANTEES.

5 ‘‘(a) PROGRAM AUTHORITY.—The Secretary shall

6 permit a number of the grant recipients under this part

7 to enter into an agreement to provide, in accordance with

8 this section, a job guarantee program to youth meeting

9 prior school attendance and performance standards.

10 ‘‘(b) GUARANTEE AGREEMENTS.—A grant recipient

11 providing a job guarantee program shall enter into an

12 agreement with the Secretary. Such agreement shall—

13 ‘‘(1) provide that the program be available to

14 youth aged 16 to 19 who undertake a commitment

15 to continue and complete their high school edu16 cation;

17 ‘‘(2) require the grant recipient to guarantee

18 employment to each youth undertaking that commit19 ment if such youth meets school attendance and per20 formance standards for the previous school semester,

21 as established by the Secretary in consultation with

22 the Secretary of Education;

23 ‘‘(3) provide that the grant recipient will make

24 additional services available to support the undertak25 ing of any such youth, which shall include counsel-
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1 ing, job development and placement, and support

2 services (including child care and transportation);

3 ‘‘(4) specify the conditions under which funds

4 provided under this part may be used to provide

5 wage subsidies of up to 50 percent through employ6 ers, which shall—

7 ‘‘(A) encourage subsidies to employers who

8 provide advanced or specialized training, or who

9 provide a structured and integrated learning ex10 perience involving the school and employer; and

11 ‘‘(B) limit the duration of such subsidies to

12 not more than 1 year;

13 ‘‘(5) require that the employment provided to

14 any such youth shall not exceed 15 hours per week

15 during the school year;

16 ‘‘(6) permit employment to continue through

17 the summer following high school graduation, or

18 until the youth reaches age 19, whichever is later;

19 and

20 ‘‘(7) contain such other terms and conditions as

21 the Secretary requires by regulation.

22 ‘‘(c) SELECTION OF GRANT RECIPIENTS.—In deter23 mining which grant recipients to permit to enter into an

24 agreement under this section, the Secretary shall seek to

25 target funds to high poverty areas.
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1 ‘‘(d) YOUTH ELIGIBILITY.—All youth age 16 to 19,

2 regardless of income, residing in the eligible high poverty

3 area shall be eligible to participate in the job guarantee.

4 ‘‘(e) PRIVATE FUNDS.—Nothing in this section shall

5 be construed to prohibit the grant recipient from raising

6 funds to augment such grant if such funds are utilized

7 under the conditions of this grant, except that such funds

8 shall not be used for administration purposes.

9 ‘‘SEC. 499N. PAYMENTS AND MATCHING REQUIREMENT.

10 ‘‘(a) PAYMENTS.—In any fiscal year, the grant

11 awarded under this part to a grant recipient shall be de12 termined according to the amount to be provided for the

13 program pursuant to designation of the program as a se14 lected program under an application made on behalf of

15 a tax enterprise zone under section 105 of the Revenue

16 Act of 1992, and shall be of sufficient size and scope to

17 carry out an effective program.

18 ‘‘(b) MATCHING REQUIREMENT.—A grant recipient

19 shall provide non-Federal funds in an amount equal to 10

20 percent of the funds from such grant, an in-kind contribu21 tion equivalent to such percent (as determined by the Sec22 retary), or a combination thereof.
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1 ‘‘SEC. 499O. REPORTING.

2 ‘‘The Secretary is authorized to establish such report3 ing procedures as necessary to carry out the purposes of

4 this part.

5 ‘‘SEC. 499P. FEDERAL RESPONSIBILITIES.

6 ‘‘(a) ASSISTANCE IN IMPLEMENTATION.—The Sec7 retary shall provide technical assistance in the implemen8 tation of this project in participating communities.

9 ‘‘(b) INDEPENDENT EVALUATION.—The Secretary

10 shall provide for a thorough, independent evaluation of the

11 activities assisted under this part. Such evaluation shall

12 include an assessment of—

13 ‘‘(1) the impact on youth and young adults re14 siding in target areas, including their rates of school

15 completion, enrollment in advanced education or

16 training, and employment;

17 ‘‘(2) the extent to which participating commu18 nities fulfilled the goal of guaranteeing access to ap19 propriate education, training, and supportive serv20 ices to all eligible youth and young adults residing

21 in target areas who seek to participate;

22 ‘‘(3) the effectiveness of guaranteed access to

23 comprehensive services combined with outreach and

24 recruitment efforts in enlisting the participation of

25 previously unserved or underserved youth and young

26 adults residing in target areas; and
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1 ‘‘(4) the effectiveness of efforts to integrate

2 service delivery in target areas, including systems of

3 common intake, assessment, and case management.

4 ‘‘(c) REPORT.—The Secretary shall prepare a report

5 describing the results of the independent evaluation con6 ducted pursuant to subsection (b).

7 ‘‘(d) RESERVATION OF FUNDS.—The Secretary may

8 reserve not more than 5 percent of the amounts to be used

9 for assistance under this part in each fiscal year to carry

10 out the provisions of this section.

11 ‘‘SEC. 499Q. DEFINITIONS.

12 ‘‘For the purposes of this part—

13 ‘‘(1) The term ‘participating community’

14 means—

15 ‘‘(A) a city, when referring to an urban

16 area that is located within or contains a tax en17 terprise zone;

18 ‘‘(B) a nonmetropolitan county, or contig19 uous nonmetropolitan counties, that is located

20 within or contains a tax enterprise zone; and

21 ‘‘(C) a section 401 or 402 grantee, or con22 sortia of the State and section 401 or 402

23 grantee, when referring to Indian reservation,

24 Alaska Native village, and migrant or seasonal
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1 farmworker community, that are located within

2 or contain a tax enterprise zone.

3 ‘‘(2) The term ‘high poverty area’ means (A) an

4 urban census tract, a nonmetropolitan county, an

5 Indian reservation, or an Alaskan Native village,

6 with a poverty rate of 30 percent or more as deter7 mined by the Secretary based on the latest Bureau

8 of the Census estimates, or (B) a migrant or sea9 sonal farmworker community.

10 ‘‘(3) The term ‘target area’ means a high pov11 erty area (or portion thereof), or set of contiguous

12 high poverty areas, that is located within a tax en13 terprise zone and will be the focus of the program

14 under this part in a participating community.

15 ‘‘(4) The term ‘tax enterprise zone’ has the

16 meaning given the term in section 107 of the Reve17 nue Act of 1992.’’.

18 (b) TECHNICAL AMENDMENTS.—The Job Training

19 Reform Amendments of 1992 (Public Law 102–367) is

20 amended—

21 (1) in section 406, by striking ‘‘adding at the

22 end’’ and inserting ‘‘inserting after part G’’;

23 (2) in section 407, by striking ‘‘adding at the

24 end’’ and inserting ‘‘inserting after part H’’; and
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1 (3) in section 408, by striking ‘‘adding at the

2 end’’ and inserting ‘‘inserting after part I’’.

3 CHAPTER 3—NATIONAL COMMUNITY

4 ECONOMIC PARTNERSHIP

5 SEC. 241. SHORT TITLE; FINDINGS AND PURPOSE.

6 (a) SHORT TITLE.—This chapter may be cited as the

7 ‘‘National Community Economic Partnership Act of

8 1992’’.

9 (b) FINDINGS.—Congress finds that—

10 (1) the cities, towns, small communities and

11 rural areas throughout the United States face criti12 cal social and economic problems arising in part

13 from a lack of economic growth in community based

14 economies;

15 (2) the crisis facing local economies has re16 sulted in—

17 (A) a growing percentage of the workforce

18 earning poverty level wages, even though they

19 work full time and year round;

20 (B) the percentage of the labor force living

21 below the poverty line increasing from 25.7 per22 cent in 1979 to 31.5 percent in 1987;

23 (C) population losses, rising unemployment

24 and a decline of the farm sector and of many

25 other rural industries (such as timber, oil, gas,
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1 and mining) contribute to the decline of rural

2 economies;

3 (D) with respect to rural areas, 31.9 per4 cent of the workforce falling below the poverty

5 line in 1979, with that percentage rising to

6 42.1 percent in 1987;

7 (E) with respect to urban areas, 23.4 per8 cent of the workforce falling below the poverty

9 line in 1979, with that percentage rising to

10 28.9 percent in 1987; and

11 (F) the average wage and salary income of

12 the 90 percent of the population with the lowest

13 incomes, between 1977 and 1988, falling 3.5

14 percent in contrast to the richest 1 percent of

15 the population whose incomes more than dou16 bled in that time period.

17 (3) the future well-being of the United States

18 and the well-being of its citizens depends on the es19 tablishment and maintenance of viable community

20 development enterprises;

21 (4) meeting the goal of establishing and main22 taining viable community development enterprises

23 requires—

24 (A) increased public and private invest25 ment in business development activities, espe-
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1 cially in the small business sector which gen2 erates the majority of new jobs as evidenced by

3 the fact that between 1980 and 1986, enter4 prises with less than 100 employees accounted

5 for more than 50 percent of the jobs created in

6 the United States;

7 (B) increased investment and technical as8 sistance to existing community based enter9 prises as evidenced by the fact that during the

10 first half of the 1980’s, more than 75 percent

11 of the total net new jobs in the United States

12 came from the expansion of existing businesses;

13 (C) a substantial expansion and greater

14 continuity in the scope of Federal programs

15 that support community based economic devel16 opment strategies;

17 (D) the continuing efforts at Federal,

18 State and local levels to coordinate the plan19 ning, implementation and evaluation of commu20 nity economic development efforts; and

21 (E) the formation of a national commis22 sion, as an independent agency, to administer

23 the various community development programs

24 and serve as a focal point for Federal efforts to
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1 promote community based economic develop2 ment; and

3 (5) community development corporations, due

4 to their proven capacity and achievements in both

5 the field of community based housing and economic

6 development, are appropriate vehicles through which

7 to advance a national community economic develop8 ment program because—

9 (A) there are currently over 2000 commu10 nity development corporations throughout the

11 United States, operating projects that promote

12 community based housing and economic devel13 opment;

14 (B) community development corporations

15 operate in every State and in virtually every

16 major city in the United States, and account

17 for many of the existing efforts undertaken to

18 meet the needs of low income persons in both

19 urban and rural communities;

20 (C) community development corporations

21 have developed some 300,000 units of housing,

22 with over 90 percent of these units for use by

23 low income occupants;

24 (D) community development corporations

25 have developed over 19,000,000 square feet of
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1 retail space, offices, industrial parks and other

2 industrial developments in economically dis3 tressed communities;

4 (E) community development corporations

5 have made loans to over 3000 enterprises, eq6 uity investments in 242 ventures and own and

7 operate 427 businesses; and

8 (F) community development corporations

9 commercial, industrial and business enterprise

10 development activities have accounted for the

11 creation and retention of nearly 90,000 jobs in

12 the last five years.

13 (c) PURPOSE.—It is the purpose of this chapter to

14 stimulate enterprise development in economically dis15 tressed urban and rural areas through public and private

16 partnerships facilitated by community development cor17 porations.

18 PART I—COMMUNITY ECONOMIC

19 PARTNERSHIP INVESTMENT FUNDS

20 SEC. 245. PURPOSE.

21 It is the purpose of this part to increase private in22 vestment in distressed local communities and to build and

23 expand the capacity of local institutions to better serve

24 the economic needs of local residents through the provision
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1 of financial and technical assistance to community devel2 opment corporations.

3 SEC. 246. PROVISION OF ASSISTANCE.

4 (a) AUTHORITY.—The Secretary of Health and

5 Human Services (hereafter referred to in this chapter as

6 the ‘‘Secretary’’) is authorized, in accordance with this

7 part, to provide nonrefundable lines of credit to commu8 nity development corporations for the establishment,

9 maintenance or expansion of revolving loan funds to be

10 utilized to finance projects intended to provide business

11 and employment opportunities for low-income, unem12 ployed, or underemployed individuals and to improve the

13 quality of life in urban and rural areas.

14 (b) REVOLVING LOAN FUNDS.—

15 (1) COMPETITIVE ASSESSMENT OF APPLICA16 TIONS.—In providing assistance under subsection

17 (a), the Secretary shall establish and implement a

18 competitive process for the solicitation and consider19 ation of applications from eligible entities for lines of

20 credit for the capitalization of revolving funds.

21 (2) ELIGIBLE ENTITIES.—To be eligible to re22 ceive a line of credit under this part an applicant

23 shall—

24 (A) be a community development corpora25 tion;
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1 (B) prepare and submit an application to

2 the Secretary that shall include a strategic in3 vestment plan that identifies and describes the

4 economic characteristics of the target area to be

5 served, the types of business to be assisted and

6 the impact of such assistance on low-income,

7 underemployed, and unemployed individuals in

8 the target area;

9 (C) demonstrate previous experience in the

10 development of low-income housing or commu11 nity or business development projects in a low12 income community and provide a record of

13 achievement with respect to such projects; and

14 (D) have secured one or more commit15 ments from local sources for contributions (ei16 ther in cash or in kind, letters of credit or let17 ters of commitment) in an amount that is at

18 least equal to the amount requested in the ap19 plication submitted under subparagraph (B).

20 (3) EXCEPTION.—Notwithstanding the provi21 sions of paragraph (2)(D), the Secretary may reduce

22 local contributions to not less than 25 percent of the

23 amount of the line of credit requested by the com24 munity development corporation if the Secretary de-
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1 termines such to be appropriate in accordance with

2 section 250.

3 SEC. 247. APPROVAL OF APPLICATIONS.

4 (a) IN GENERAL.—In evaluating applications submit5 ted under section 246(b)(2)(B), the Secretary shall ensure

6 that—

7 (1) the residents of the target area to be served

8 (as identified under the strategic development plan)

9 would have an income that is less than the median

10 income for the area (as determined by the Sec11 retary);

12 (2) the applicant community development cor13 poration possesses the technical and managerial ca14 pability necessary to administer a revolving loan

15 fund and has past experience in the development

16 and management of housing, community and eco17 nomic development programs;

18 (3) the applicant community development cor19 poration has provided sufficient evidence of the ex20 istence of good working relationships with—

21 (A) local businesses and financial institu22 tions, as well as with the community the cor23 poration proposes to serve; and

24 (B) local and regional job training pro25 grams;
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1 (4) the applicant community development cor2 poration will target job opportunities that arise from

3 revolving loan fund investments under this part so

4 that 75 percent of the jobs retained or created under

5 such investments are provided to—

6 (A) individuals with—

7 (i) incomes that do not exceed the

8 Federal poverty line; or

9 (ii) incomes that do not exceed 80

10 percent of the median income of the area;

11 (B) individuals who are unemployed or un12 deremployed;

13 (C) individuals who are participating or

14 have participated in job training programs au15 thorized under the Job Training Partnership

16 Act (29 U.S.C. 1501 et seq.) or the Family

17 Support Act of 1988 (Public Law 100–485);

18 (D) individuals whose jobs may be retained

19 as a result of the provision of financing avail20 able under this part; or

21 (E) individuals who have historically been

22 underrepresented in the local economy; and

23 (5) a representative cross section of applicants

24 are approved, including large and small community

25 development corporations, urban and rural commu-
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1 nity development corporations and community devel2 opment corporations representing diverse popu3 lations.

4 (b) PRIORITY.—In determining which application to

5 approve under this part the Secretary shall give priority

6 to those applicants proposing to serve a target area—

7 (1) with a median income that does not exceed

8 80 percent of the median for the area (as deter9 mined by the Secretary); and

10 (2) with a high rate of unemployment, as deter11 mined by the Secretary or in which the population

12 loss is at least 7 percent from April 1, 1980, to

13 April 1, 1990, as reported by the Bureau of the

14 Census.

15 SEC. 248. AVAILABILITY OF LINES OF CREDIT AND USE.

16 (a) APPROVAL OF APPLICATION.—The Secretary

17 shall provide a community development corporation that

18 has an application approved under section 247 with a line

19 of credit in an amount determined appropriate by the Sec20 retary, subject to the limitations contained in subsection

21 (b).

22 (b) LIMITATIONS ON AVAILABILITY OF AMOUNTS.—

23 (1) MAXIMUM AMOUNT.—The Secretary shall

24 not provide in excess of $2,000,000 in lines of credit

25 under this part to a single applicant.
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1 (2) PERIOD OF AVAILABILITY.—A line of credit

2 provided under this part shall remain available over

3 a period of time established by the Secretary, but in

4 no event shall any such period of time be in excess

5 of 3 years from the date on which such line of credit

6 is made available.

7 (3) EXCEPTION.—Notwithstanding paragraphs

8 (1) and (2), if a recipient of a line of credit under

9 this part has made full and productive use of such

10 line of credit, can demonstrate the need and demand

11 for additional assistance, and can meet the require12 ments of section 246(b)(2), the amount of such line

13 of credit may be increased by not more than

14 $1,500,000.

15 (c) AMOUNTS DRAWN FROM LINE OF CREDIT.—

16 Amounts drawn from each line of credit under this part

17 shall be used solely for the purposes described in section

18 245 and shall only be drawn down as needed to provide

19 loans, investments, or to defray administrative costs relat20 ed to the establishment of a revolving loan fund.

21 (d) USE OF REVOLVING LOAN FUNDS.—Revolving

22 loan funds established with lines of credit provided under

23 this part may be used to provide technical assistance to

24 private business enterprises and to provide financial as25 sistance in the form of loans, loan guarantees, interest re-
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1 duction assistance, equity shares, and other such forms

2 of assistance to business enterprises in target areas and

3 who are in compliance with section 247(a)(4).

4 SEC. 249. LIMITATIONS ON USE OF FUNDS.

5 (a) MATCHING REQUIREMENT.—Not to exceed 50

6 percent of the total amount to be invested by an entity

7 under this part may be derived from funds made available

8 from a line of credit under this part.

9 (b) TECHNICAL ASSISTANCE AND ADMINISTRA10 TION.—Not to exceed 10 percent of the amounts available

11 from a line of credit under this part shall be used for the

12 provision of training or technical assistance and for the

13 planning, development, and management of economic de14 velopment projects. Community development corporations

15 shall be encouraged by the Secretary to seek technical as16 sistance from other community development corporations,

17 with expertise in the planning, development and manage18 ment of economic development projects. The Secretary

19 shall assist in the identification and facilitation of such

20 technical assistance.

21 (c) LOCAL AND PRIVATE SECTOR CONTRIBUTIONS.—

22 To receive funds available under a line of credit provided

23 under this part, an entity, using procedures established

24 by the Secretary, shall demonstrate to the community de25 velopment corporation that such entity agrees to provide
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1 local and private sector contributions in accordance with

2 section 246(b)(2)(D), will participate with such commu3 nity development corporation in a loan, guarantee or in4 vestment program for a designated business enterprise,

5 and that the total financial commitment to be provided

6 by such entity is at least equal to the amount to be drawn

7 from the line of credit.

8 (d) USE OF PROCEEDS FROM INVESTMENTS.—Pro9 ceeds derived from investments made using funds made

10 available under this part may be used only for the pur11 poses described in section 245 and shall be reinvested in

12 the community in which they were generated.

13 SEC. 250. PROGRAM PRIORITY FOR SPECIAL EMPHASIS

14 PROGRAMS.

15 (a) IN GENERAL.—The Secretary shall give priority

16 in providing lines of credit under this part to community

17 development corporations that propose to undertake eco18 nomic development activities in distressed communities

19 that target women, Native Americans, at risk youth, farm20 workers, population-losing communities, very low-income

21 communities, single mothers, veterans, and refugees; or

22 that expand employee ownership of private enterprises and

23 small businesses, and to programs providing loans of not

24 more than $35,000 to very small business enterprises.
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1 (b) RESERVATION OF FUNDS.—Not less than 5 per2 cent of the amounts made available under section

3 267(a)(2)(A) may be reserved to carry out the activities

4 described in subsection (a).

5 PART II—EMERGING COMMUNITY

6 DEVELOPMENT CORPORATIONS

7 SEC. 255. COMMUNITY DEVELOPMENT CORPORATION IM8 PROVEMENT GRANTS.

9 (a) PURPOSE.—It is the purpose of this section to

10 provide assistance to community development corporations

11 to upgrade the management and operating capacity of

12 such corporations and to enhance the resources available

13 to enable such corporations to increase their community

14 economic development activities.

15 (b) SKILL ENHANCEMENT GRANTS.—

16 (1) IN GENERAL.—The Secretary shall award

17 grants to community development corporations to

18 enable such corporations to attain or enhance the

19 business management and development skills of the

20 individuals that manage such corporations to enable

21 such corporations to seek the public and private re22 sources necessary to develop community economic

23 development projects.
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1 (2) USE OF FUNDS.—A recipient of a grant

2 under paragraph (1) may use amounts received

3 under such grant—

4 (A) to acquire training and technical as5 sistance from agencies or institutions that have

6 extensive experience in the development and

7 management of low-income community eco8 nomic development projects; or

9 (B) to acquire such assistance from other

10 highly successful community development cor11 porations.

12 (c) OPERATING GRANTS.—

13 (1) IN GENERAL.—The Secretary shall award

14 grants to community development corporations to

15 enable such corporations to support an administra16 tive capacity for the planning, development, and

17 management of low-income community economic de18 velopment projects.

19 (2) USE OF FUNDS.—A recipient of a grant

20 under paragraph (1) may use amounts received

21 under such grant—

22 (A) to conduct evaluations of the feasibility

23 of potential low-income community economic de24 velopment projects that address identified needs

25 in the low-income community and that conform
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1 to those projects and activities permitted under

2 part I;

3 (B) to develop a business plan related to

4 such a potential project; or

5 (C) to mobilize resources to be contributed

6 to a planned low-income community economic

7 development project or strategy.

8 (d) APPLICATIONS.—A community development cor9 poration that desires to receive a grant under this section

10 shall prepare and submit to the Secretary an application

11 at such time, in such manner, and containing such infor12 mation as the Secretary may require.

13 (e) AMOUNT AVAILABLE FOR A COMMUNITY DEVEL14 OPMENT CORPORATION.—Amounts provided under this

15 section to a community development corporation shall not

16 exceed $75,000 per year. Such corporations may apply for

17 grants under this section for up to 3 consecutive years,

18 except that such corporations shall be required to submit

19 a new application for each grant for which such corpora20 tion desires to receive and compete on the basis of such

21 applications in the selection process.

22 SEC. 256. EMERGING COMMUNITY DEVELOPMENT COR23 PORATION REVOLVING LOAN FUNDS.

24 (a) AUTHORITY.—The Secretary is authorized to

25 award grants to emerging community development cor-
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1 porations to enable such corporations to establish, main2 tain or expand revolving loan funds, to make or guarantee

3 loans, or to make capital investments in new or expanding

4 local businesses.

5 (b) ELIGIBILITY.—To be eligible to receive a grant

6 under subsection (a), an entity shall—

7 (1) be a community development corporation;

8 (2) have completed not less than one nor more

9 than two community economic development projects

10 or related projects that improve or provide job and

11 employment opportunities to low-income individuals;

12 (3) prepare and submit to the Secretary an ap13 plication at such time, in such manner, and contain14 ing such information as the Secretary may require,

15 including a strategic investment plan that identifies

16 and describes the economic characteristics of the

17 target area to be served, the types of business to be

18 assisted using amounts received under the grant and

19 the impact of such assistance on low-income individ20 uals; and

21 (4) have secured one or more commitments

22 from local sources for contributions (either in cash

23 or in kind, letters of credit, or letters of commit24 ment) in an amount that is equal to at least 10 per-
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1 cent of the amounts requested in the application

2 submitted under paragraph (2).

3 (c) USE OF THE REVOLVING LOAN FUND.—

4 (1) IN GENERAL.—A revolving loan fund estab5 lished or maintained with amounts received under

6 this section may be utilized to provide financial and

7 technical assistance, loans, loan guarantees or in8 vestments to private business enterprises to—

9 (A) finance projects intended to provide

10 business and employment opportunities for low11 income individuals and to improve the quality of

12 life in urban and rural areas; and

13 (B) build and expand the capacity of

14 emerging community development corporations

15 and serve the economic needs of local residents.

16 (2) TECHNICAL ASSISTANCE.—The Secretary

17 shall encourage emerging community development

18 corporations that receive grants under this section to

19 seek technical assistance from established commu20 nity development corporations, with expertise in the

21 planning, development and management of economic

22 development projects and shall facilitate the receipt

23 of such assistance.

24 (3) LIMITATION.—Not to exceed 10 percent of

25 the amounts received under this section by a grantee
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1 shall be used for training, technical assistance and

2 administrative purposes.

3 (d) USE OF PROCEEDS FROM INVESTMENTS.—Pro4 ceeds derived from investments made with amounts pro5 vided under this section may be utilized only for the pur6 poses described in this subchapter and shall be reinvested

7 in the community in which they were generated.

8 (e) AMOUNTS AVAILABLE.—Amounts provided under

9 this section to a community development corporation shall

10 not exceed $500,000 per year.

11 PART III—RESEARCH AND

12 DEMONSTRATION

13 SEC. 261. RESEARCH AND DEMONSTRATION.

14 (a) GRANTS.—The Secretary shall award grants to

15 organizations to enable such organizations to undertake

16 programs involving research, testing, studies or dem17 onstrations related to community economic development.

18 (b) ELIGIBLE ORGANIZATIONS.—To be eligible to re19 ceive a grant under this section, an entity shall—

20 (1) be a community development corporation,

21 university, fiscal intermediary or a nonprofit organi22 zation involved in community-based economic devel23 opment activities; and

24 (2) prepare and submit to the Secretary an ap25 plication at such time, in such manner and contain-
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1 ing such information as the Secretary determines

2 appropriate.

3 (c) USE OF FUNDS.—Amounts received under a

4 grant awarded under this section shall be made available

5 for studies, reports, tests or demonstration projects that—

6 (1) identify current problems facing both urban

7 and rural low-income communities or specific popu8 lation groups within low-income communities and

9 population-losing communities;

10 (2) identify solutions to the problems facing

11 both urban and rural low-income communities or

12 specific population groups within low-income com13 munities;

14 (3) examine or critique current strategies being

15 implemented to address economic issues facing low16 income communities; and

17 (4) relate to any other matters determined ap18 propriate by the Secretary.

19 (d) MAXIMUM AMOUNT OF GRANT.—A grant award20 ed under this section shall not exceed $50,000.

21 PART IV—MISCELLANEOUS PROVISIONS

22 SEC. 265. JOINT PROGRAMS.

23 The Secretary shall develop and promulgate, in con24 sultation with the heads of other Federal agencies, regula25 tions designed to permit, where appropriate, the operation
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1 of joint programs under which activities supported with

2 assistance provided under this chapter are coordinated

3 with community development activities supported with as4 sistance provided under other programs administered by

5 the Secretary and those administered by the heads of such

6 agencies.

7 SEC. 266. REPORTS.

8 (a) COMMUNITY DEVELOPMENT CORPORATIONS.—

9 Not later than 2 years after the date on which assistance

10 is provided to a community development corporation under

11 part I or II, every 2 years thereafter, the community devel12 opment corporation shall prepare and submit to the Sec13 retary a report under this section. Such report shall in14 clude—

15 (1) the amount of funds received by the com16 munity development corporation;

17 (2) a summary of the uses of such funds;

18 (3) the number of jobs created or retained by

19 the corporation;

20 (4) the number and type of new businesses

21 started, including micro-businesses;

22 (5) the number of jobs created or retained for

23 individuals identified in section 247(a)(4);

24 (6) in the case of funds made available under

25 part I, the source and amount of matching funds;
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1 (7) in the case of revolving loan funds made

2 available under part II, the amount of funds lever3 aged; and

4 (8) related human services and facilities pro5 vided as result of assistance provided under this

6 chapter.

7 (b) SECRETARY.—Not later than 3 years after the

8 date on which assistance is first provided under part I or

9 II, and annually thereafter, the Secretary shall prepare

10 and submit to the Committee on Labor and Human Re11 sources of the Senate and the Committee on Education

12 and Labor of the House of Representatives a report con13 taining a summary of the reports received by the Secretary

14 under subsection (a) for the period in which the report

15 of the Secretary is submitted.

16 SEC. 267. DEFINITIONS.

17 As used in this chapter:

18 (1) COMMUNITY DEVELOPMENT CORPORA19 TION.—The term ‘‘community development corpora20 tion’’ means a private, nonprofit corporation whose

21 board of directors is comprised of business, civic and

22 community leaders, and whose principal purpose in23 cludes the provision of low-income housing or com24 munity economic development projects that primarily

25 benefit low-income individuals and communities.
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1 (2) LOCAL AND PRIVATE SECTOR CONTRIBU2 TION.—The term ‘‘local and private sector contribu3 tion’’ means the funds available at the local level (by

4 private financial institutions, State and local govern5 ments) or by any private philanthropic organization

6 and private, nonprofit organizations that will be

7 committed and used solely for the purpose of financ8 ing private business enterprises in conjunction with

9 amounts provided under this chapter.

10 (3) POPULATION-LOSING COMMUNITY.—The

11 term ‘‘population-losing community’’ means any

12 county in which the net population loss is at least

13 7 percent from April 1, 1980 to April 1, 1990, as

14 reported by the Bureau of the Census.

15 (4) PRIVATE BUSINESS ENTERPRISE.—The

16 term ‘‘private business enterprise’’ means any busi17 ness enterprise that is engaged in the manufacture

18 of a product, provision of a service, construction or

19 development of a facility, or that is involved in some

20 other commercial, manufacturing or industrial activ21 ity, and that agrees to target job opportunities stem22 ming from investments authorized under this chap23 ter to certain individuals.

24 (5) TARGET AREA.—The term ‘‘target area’’

25 means any area defined in an application for assist-
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1 ance under this chapter that has a population whose

2 income does not exceed the median for the area

3 within which the target area is located.

4 (6) VERY LOW-INCOME COMMUNITY.—The term

5 ‘‘very low-income community’’ means a community

6 in which the median income of the residents of such

7 community does not exceed 50 percent of the median

8 income of the area.

9 SEC. 268. AUTHORIZATION OF APPROPRIATIONS.

10 (a) COMMUNITY ECONOMIC PARTNERSHIP INVEST11 MENT FUNDS AND EMERGING COMMUNITY DEVELOP12 MENT CORPORATIONS.—

13 (1) IN GENERAL.—There are authorized to be

14 appropriated to carry out parts I and II,

15 $40,000,000 for fiscal year 1993, $100,000,000 for

16 fiscal year 1994, and $125,000,000 for fiscal year

17 1995.

18 (2) EARMARKS.—Of the aggregate amount ap19 propriated under paragraph (1) for each fiscal

20 year—

21 (A) 60 percent shall be available to carry

22 out part I; and

23 (B) 40 percent shall be available to carry

24 out part II.
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1 (3) AMOUNTS.—Amounts appropriated under

2 paragraph (1) shall remain available for expenditure

3 without fiscal year limitation.

4 (b) RESEARCH AND DEMONSTRATION.—There are

5 authorized to be appropriated to carry out part III such

6 sums as may be necessary for each of the fiscal years 1993

7 through 1995.

8 SEC. 269. PROHIBITION.

9 None of the funds authorized under this chapter shall

10 be used to finance the construction of housing.

11 SEC. 270. EFFECTIVE DATE.

12 This chapter shall take effect as if included in the

13 Omnibus Budget Reconciliation Act of 1990.

14 CHAPTER 4—MISCELLANEOUS PROGRAMS

15 SEC. 271. ESTABLISHMENT OF ENTERPRISE CAPITAL AC16 CESS FUND.

17 (a) SHORT TITLE.—This section may be cited as the

18 ‘‘Enterprise Capital Access Fund Demonstration Pro19 gram’’.

20 (b) FINDINGS AND PURPOSE.—

21 (1) FINDINGS.—The Congress finds that—

22 (A) the Nation’s urban and rural commu23 nities face critical social and economic problems

24 stemming from lack of economic opportunity
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1 among low-income persons and persons living in

2 poverty;

3 (B) the numbers of low-income persons

4 and persons living in poverty has grown signifi5 cantly over the last decade;

6 (C) lack of access to credit and other

7 forms of capital is a significant factor in the

8 disinvestment and decline of low-income and

9 minority neighborhoods;

10 (D) changes in the banking system and fi11 nancial markets have made access to credit in

12 low-income and distressed communities increas13 ingly more difficult to obtain as decisionmaking

14 on credit has been removed from local commu15 nities;

16 (E) the restoration and maintenance of

17 viable local economies will require improved ac18 cess to credit, as well as public and private in19 vestment in economic and community develop20 ment activities, business development, and low21 income housing;

22 (F) indigenous community-based financial

23 institutions can play a significant role in identi24 fying and responding to community needs;
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1 (G) the Federal Government needs to de2 velop new models and institutions for facilitat3 ing local revitalization efforts and improving ac4 cess to credit; and

5 (H) nonprofit financial intermediaries have

6 proven effective in meeting the credit and other

7 capital needs in low-income and distressed com8 munities.

9 (2) PURPOSE.—The purpose of this section is

10 to establish a demonstration program to promote re11 investment in low-income and chronically distressed

12 neighborhoods through community-based nonprofit

13 financial institutions that work cooperatively with

14 residents and State and local government.

15 (c) DEFINITIONS.—For the purpose of this section,

16 the following definitions shall apply:

17 (1) ELIGIBLE INTERMEDIARY.—The term ‘‘eli18 gible intermediary’’ means a nonprofit organization

19 that—

20 (A) is organized under Federal, State or

21 local laws;

22 (B) complies with standards of financial

23 accountability acceptable to the Secretary;
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1 (C) controls, operates or is affiliated with

2 an entity that provides credit or investment

3 capital in a targeted geographic area;

4 (D) has as its primary mission the revital5 ization of low-income and chronically distressed

6 neighborhoods or communities; and

7 (E) maintains, through significant rep8 resentation on its governing board and other9 wise, accountability to community residents.

10 (2) LOW-INCOME PERSONS.—The term ‘‘low-in11 come persons’’ means persons whose incomes do not

12 exceed 80 percent of the median for the area.

13 (3) SECRETARY.—The term ‘‘Secretary’’ means

14 the Secretary of Housing and Urban Development.

15 (4) TARGETED GEOGRAPHIC AREA.—The term

16 ‘‘targeted geographic area’’ means a geographically

17 contiguous area of chronic economic distress as

18 measured by unemployment, growth lag, the extent

19 of poverty, per capita income, extent of blight and

20 disinvestment, fiscal distress, or other indicators

21 deemed appropriate by the Secretary, that has been

22 identified by an eligible intermediary as an area to

23 be served by it.

24 (d) AUTHORITY.—The Secretary shall carry out, in

25 accordance with this section, a demonstration program to
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1 provide assistance in the form of capital and technical as2 sistance grants to nonprofit financial intermediaries for

3 the establishment, maintenance, and expansion of such in4 stitutions, to be utilized to finance business and employ5 ment opportunities, housing opportunities affordable to

6 low-income persons, and neighborhood revitalization

7 projects.

8 (e) APPLICATIONS.—The Secretary shall establish

9 and implement a competitive process for the solicitation

10 and consideration of applications from eligible

11 intermediaries.

12 (f) SELECTION CRITERIA.—

13 (1) IN GENERAL.—Not later than 12 months

14 after the date of enactment of this section, the Sec15 retary shall select eligible intermediaries to partici16 pate in the demonstration program, based on—

17 (A) the capacity of the eligible

18 intermediary to carry out the purposes of this

19 title;

20 (B) the financial capacity of the eligible

21 intermediary based on evaluations provided by a

22 certified public accountant and criteria to be

23 determined by the Secretary;
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1 (C) the extent of need in the targeted geo2 graphic area identified by the eligible

3 intermediary as the area it serves;

4 (D) the extent to which the lending serv5 ices of the eligible intermediary are coordinated

6 with other revitalization activities in the tar7 geted geographic area;

8 (E) the previous experience and achieve9 ments of the eligible intermediary in the financ10 ing or development of low-income housing, in

11 development of businesses and other employ12 ment opportunities, or in neighborhood revital13 ization activities;

14 (F) the extent to which the eligible

15 intermediary has firm commitments from local

16 sources to provide matching funds in an

17 amount that is at least equal to the amount re18 quested in the application;

19 (G) an appropriate geographic distribution

20 of intermediaries among regions in the United

21 States;

22 (H) the extent to which the eligible

23 intermediary demonstrates a commitment to

24 serve minority individuals and communities;

25 and
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1 (K) other criteria deemed appropriate by

2 the Secretary.

3 (g) CAPITAL GRANTS.—

4 (1) IN GENERAL.—The Secretary shall make

5 capital grants to eligible intermediaries.

6 (2) USE OF GRANTS.—Capital grants may be

7 used by eligible intermediaries to increase the capital

8 available for loans, loan guarantees, interest rate re9 duction activities, and other activities deemed appro10 priate by the Secretary that promote housing afford11 able to low-income persons and economic and com12 munity development activities that benefit low-in13 come persons.

14 (3) AMOUNT.—The maximum amount of Fed15 eral assistance an eligible intermediary can receive

16 per fiscal year under this section is $1,000,000.

17 (h) TECHNICAL ASSISTANCE.—The Secretary is au18 thorized to make grants to eligible intermediaries to pro19 vide technical assistance to borrowers.

20 (i) TRAINING PROGRAM.—The Secretary shall estab21 lish, or contract to establish, an ongoing training program

22 to assist eligible intermediaries and their staffs in develop23 ing the capacity to carry out the purposes of this title.

24 (j) REPORT.—The Secretary shall annually prepare

25 and submit to Congress a report containing a summary
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1 of the activities carried out under this section and the

2 findings and conclusions drawn from such activities.

3 (k) DUTIES OF ELIGIBLE INTERMEDIARIES.—An eli4 gible intermediary receiving assistance pursuant to this

5 section shall—

6 (1) match any assistance awarded by the Sec7 retary dollar-for-dollar with non-Federal sources of

8 funds;

9 (2) ensure that not less than 70 percent of

10 loans to individual borrowers are to persons whose

11 incomes are at or below 80 percent of the area me12 dian income and are residents of the targeted geo13 graphic area served; and

14 (3) ensure that all loans made to nonprofit or

15 for-profit organizations provide a direct benefit to

16 persons who are residents of the targeted geographic

17 area served.

18 (l) OFFICE OF COMMUNITY BANKING.—There is es19 tablished within the Department of Housing and Urban

20 Development an Office of Community Banking which is

21 responsible for the implementation of this section.

22 (m) AUTHORIZATION OF APPROPRIATIONS.—There

23 are authorized to be appropriated to carry out this section,

24 $100,000,000 for fiscal year 1993 and $200,000,000 for
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1 fiscal year 1994. Any amounts appropriated pursuant to

2 this paragraph shall remain available until expended.

3 SEC. 272. ACCESS TO JOBS/REVERSE COMMUTING DEM4 ONSTRATION PROGRAM.

5 (a) PURPOSE.—It is the purpose of this section to—

6 (1) improve employment rates and earnings in

7 inner-city areas by improving access to job sites for

8 inner-city residents;

9 (2) improve the viability of businesses in enter10 prise zones as a result of the increased incomes and

11 purchasing power of zone residents; and

12 (3) test differing approaches to achieving these

13 goals and determine their effects.

14 (b) ESTABLISHMENT OF PROGRAM.—

15 (1) IN GENERAL.—The Secretary of Transpor16 tation, in consultation with the Secretary of Labor,

17 shall establish a Reverse Commuting Demonstration

18 Program to test the effects of assisting residents of

19 poor inner-city areas to commute to job sites in

20 other areas of the city or surrounding suburbs.

21 (2) USE OF NON SET-ASIDE FUNDS.—Any ap22 plicant eligible for block grant funding under section

23 215 of this Act that submits an application that

24 meets the criteria in subsection (c) shall be approved

25 by the Secretary of Transportation, in consultation
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1 with the Secretary of Labor, to utilize funds it re2 ceives under this title to carry out a program estab3 lished under this section.

4 (3) USE OF SET-ASIDE FUNDS.—The funds set5 aside under section 212(d) for the program under

6 this section shall be used by the Secretary of Trans7 portation, in consultation with the Secretary of

8 Labor, to fund not more than six demonstration

9 projects utilizing the program models described in

10 subsection (d). Projects shall be selected on a com11 petitive basis from applications that meet the re12 quirements of subsection (c) that are submitted by

13 applicants eligible for block grant funding under sec14 tion 215 of this Act.

15 (c) APPLICATION AND APPROVAL CRITERIA.—An ap16 plication under this section shall provide information spec17 ified by the Secretary of Transportation, in consultation

18 with the Secretary of Labor, that is sufficient to satisfy

19 the Secretary that—

20 (1) the geographic area whose residents would

21 be served by the program established by the appli22 cant under this section is a low-income area that

23 consists in whole or substantial part of an urban en24 terprise zone;
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1 (2) one of the three program models described

2 in subsection (d) will be used by the applicant;

3 (3) the data collection procedures that will be

4 established by the applicant will be sufficient to en5 able the Secretary of Transportation, in consultation

6 with the Secretary of Labor, to conduct an evalua7 tion in accordance with subsection (e); and

8 (4) the applicant has the capability to perform

9 adequately with respect to the program established

10 and to meet such other criteria as the Secretary of

11 Labor may prescribe.

12 (d) PROGRAM MODELS.—Applications approved

13 under this section shall utilize one of the following pro14 gram models:

15 (1) ADDING TRANSPORTATION SERVICES TO EX16 ISTING JOB TRAINING AND PLACEMENT PRO17 GRAMS.—Under this model an applicant shall sup18 plement existing training and placement programs

19 through the establishment of new transportation

20 services that are designed to—

21 (A) transport inner-city residents to job lo22 cations (such as van service between the zones

23 and business parks or major employers, with

24 the service being provided by a public agency,
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1 a private vendor, or a neighborhood organiza2 tion);

3 (B) provide transportation counseling and

4 assistance (such as the creation of car pools

5 and provision of education on public transit

6 routes); or

7 (C) provide a direct subsidy of public tran8 sit fares or private automobile expenses.

9 (2) IMPROVING PUBLIC TRANSIT SYSTEMS TO

10 FACILITATE ACCESS TO JOBS/REVERSE COMMUT11 ING.—Under this model an applicant may—

12 (A) work with the relevant transit operator

13 or agency to modify public transit routes and

14 schedules to increase the accessibility of resi15 dents of inner-city areas to job locations (such

16 as through the provision of express bus service

17 to business parks at times coinciding with labor

18 shifts or the provision of new connecting serv19 ices to fill gaps that impede commuting from

20 inner-city areas to jobs sites); or

21 (B) reimburse public transit operators for

22 the costs of providing reduced fare programs to

23 increase the access of inner city residents to

24 employment opportunities.
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1 An applicant under subparagraph (A) may request

2 suburban employers to contribute to the costs of im3 plementing such transit services.

4 (3) ESTABLISHING REGIONAL COALITIONS TO

5 IMPROVE INNER-CITY ACCESS TO JOBS.—Under this

6 model an applicant shall establish a regional coali7 tion, which may include neighborhood organizations,

8 employers and employers associations, transpor9 tation providers, and similar entities, to implement

10 comprehensive strategies to improve the access

11 of residents of inner-cities to jobs through modi12 fications in job training and placement services, sup13 port services such as child care, and transportation

14 services. An applicant under this model shall at15 tempt to link job training program participants with

16 job opportunities throughout as much of the metro17 politan area as practicable, and transportation bar18 riers between inner-city areas and job locations shall

19 be identified and transportation services imple20 mented to address these problems.

21 (e) EVALUATION.—The Secretary of Transportation,

22 in consultation with the Secretary of Labor, shall conduct

23 a thorough evaluation of the program established under

24 this section. Such evaluation shall include an assessment

25 of—
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1 (1) with respect to applicants adding transpor2 tation services to job training programs, the effect of

3 the addition of such transportation services on em4 ployment rates, job retention, and earnings among

5 residents of the demonstration project areas;

6 (2) with respect to applicants improving public

7 transit systems, the effect of the improvements on

8 employment rates, job retention, and earnings;

9 (3) with respect to applicants establishing re10 gional coalitions and implementing comprehensive

11 strategies, the effects of such strategies on employ12 ment rates, job retention, and earnings; and

13 (4) the manner in which the adoption of such

14 comprehensive strategies affect employment and

15 earnings in urban enterprise zones, compared to

16 other urban enterprise zones not initiating programs

17 to improve inner-city access to suburban job loca18 tions.

19 (f) OTHER FUNDING SOURCES.—Nothing in this sec20 tion shall be construed to prevent an approved applicant

21 from raising funds for any program established under the

22 application from other sources to augment the funds avail23 able under this Act.
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1 (g) DEFINITION.—As used in this section, the term

2 ‘‘urban enterprise zone’’ means an area designated under

3 section 1391 of the Internal Revenue Code of 1986.

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