I

103D CONGRESS

1ST SESSION H. R. 1338

To provide assistance to distressed communities.

IN THE HOUSE OF REPRESENTATIVES

MARCH 15, 1993

Mr. UPTON introduced the following bill; which was referred jointly to the

Committees on Ways and Means, Banking, Finance and Urban Affairs,

Education and Labor, Energy and Commerce, the Judiciary, and Agriculture

A BILL

To provide assistance to distressed communities.

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; ETC.

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

5 ‘‘Enterprise Zone and Model Neighborhood Aid Act of

6 1993’’.

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 ment or repeal is expressed in terms of an amendment

10 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 (c) TABLE OF CONTENTS.—

Sec. 1. Short title; etc.

TITLE I—URBAN TAX ENTERPRISE ZONES AND RURAL

DEVELOPMENT INVESTMENT ZONES

Sec. 101. Statement of purpose.

Subtitle A—Designation and Tax Incentives

Sec. 102. Designation and treatment of urban tax enterprise zones and rural

development investment zones.

Sec. 103. Technical and conforming amendments.

Sec. 104. Effective date.

Subtitle B—Redevelopment Bonds for Tax Enterprise Zones

Sec. 111. Special rules for redevelopment bonds providing financing for tax enterprise zones.

Subtitle C—Expansion of Targeted Jobs Credit

Sec. 121. Economically disadvantaged zone residents included as members of

targeted group.

Subtitle D—Credit for Contributions to Certain Community Development

Corporations

Sec. 131. Credit for contributions to certain community development corporations.

Subtitle E—Authority for National Banks To Deal in Securities of

Corporations Located in Tax Enterprise Zones

Sec. 141. Authority for national banks to deal in securities of corporations located in tax enterprise zones.

Subtitle F—Report on Number of Areas Meeting Enterprise Zone Criteria

Sec. 151. Report.

TITLE II—ADDITIONAL ASSISTANCE TO ENTERPRISE ZONES AND

OTHER DISTRESSED COMMUNITIES

Sec. 201. Purpose.

Subtitle A—National Public-Private Partnership Program

Sec. 211. Sense of Congress.

Sec. 212. Authorization of appropriations.

Subtitle B—Coordinated and Comprehensive Neighborhood Aid for Tax

Enterprise Zones and Other Communities
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CHAPTER 1—ENTERPRISE COMMUNITY BLOCK GRANT DEMONSTRATION

PROGRAM

Sec. 221. Funding.

Sec. 222. Allocation of amounts among tax enterprise zones.

Sec. 223. Use of amounts.

CHAPTER 2—MODEL NEIGHBORHOOD AID PROGRAM

Sec. 231. Purpose.

Sec. 232. Single applications by local governments for funding under eligible

programs.

Sec. 233. Availability and use of amounts.

Sec. 234. Priority in funding.

Sec. 235. Treatment of previously approved weed and seed communities.

Sec. 236. One-time strategy implementation grants.

CHAPTER 3—ELIGIBLE PROGRAMS AND INTERAGENCY COUNCIL FOR

NEIGHBORHOOD AID

Sec. 241. Eligible programs.

Sec. 242. Interagency Council for Neighborhood Aid.

Sec. 243. Neighborhood aid plans.

Sec. 244. Definitions.

Sec. 245. Study and report.

Sec. 246. Regulations.

Subtitle C—Community Development Block Grant Program

Sec. 251. Increase of public services cap under community development block

grant program.

Sec. 252. Emergency community development loan guarantee authority.

Subtitle D—Young Adult Employment Demonstration Program

Sec. 261. Establishment of young adult employment demonstration program.

Subtitle E—National Community Economic Partnership

Sec. 271. Short title.

Sec. 272. Findings and purpose.

Sec. 273. Assistance to States.

Sec. 274. State assistance to community development corporations.

Sec. 275. State plans.

Sec. 276. Reports.

Sec. 277. Definitions.

Sec. 278. Prohibition.

Sec. 279. Effective date.

Subtitle F—Miscellaneous Programs

Sec. 281. Enterprise capital access fund.

Sec. 282. Access to jobs/reverse commuting demonstration program.
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1 TITLE I—URBAN TAX ENTER2 PRISE ZONES AND RURAL DE3 VELOPMENT INVESTMENT

4 ZONES

5 SEC. 101. STATEMENT OF PURPOSE.

6 It is the purpose of this title to establish a demonstra7 tion program of providing incentives for the creation of

8 tax enterprise zones in order—

9 (1) to revitalize economically and physically dis10 tressed areas, primarily by encouraging the forma11 tion of new businesses and the retention and expan12 sion of existing businesses,

13 (2) to promote meaningful employment for tax

14 enterprise zone residents, and

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

16 enterprise zones in which they are employed.

17 Subtitle A—Designation and Tax

18 Incentives

19 SEC. 102. DESIGNATION AND TREATMENT OF URBAN TAX

20 ENTERPRISE ZONES AND RURAL DEVELOP21 MENT INVESTMENT ZONES.

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

23 taxes and surtaxes) is amended by inserting after sub24 chapter T the following new subchapter:
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1 ‘‘Subchapter U—Designation and Treatment

2 of Tax Enterprise Zones

‘‘Part I. Designation of tax enterprise zones.

‘‘Part II. Incentives for tax enterprise zones.

3 ‘‘PART I—DESIGNATION OF TAX ENTERPRISE

4 ZONES

‘‘Sec. 1391. Designation procedure.

‘‘Sec. 1392. Eligibility and selection criteria.

‘‘Sec. 1393. Definitions and special rules.

5 ‘‘SEC. 1391. DESIGNATION PROCEDURE.

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

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

8 this part—

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

10 and the State in which it is located for designation

11 as a tax enterprise zone, and

12 ‘‘(2) designated by—

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

14 Development in the case of an urban tax enter15 prise zone, or

16 ‘‘(B) the Secretary of Agriculture, in con17 sultation with the Secretary of Commerce, in

18 the case of a rural development investment

19 zone.

20 ‘‘(b) NUMBER OF DESIGNATIONS.—

21 ‘‘(1) AGGREGATE LIMIT.—The appropriate Sec22 retaries may designate in the aggregate 100 nomi-
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1 nated areas as tax enterprise zones under this sec2 tion, subject to the availability of eligible nominated

3 areas. Not less than 33 large city zones shall be des4 ignated; not less than 33 other urban zones shall be

5 designated; and not less than 33 rural development

6 investment zones may be designated. Such designa7 tions may be made only during calendar years after

8 1992 and before 1997.

9 ‘‘(2) ANNUAL LIMITS.—

10 ‘‘(A) 1993.—During 1993, the number of

11 urban tax enterprise zones designated under

12 paragraph (1) shall not exceed 9, and the num13 ber of rural development investment zones des14 ignated under paragraph (1) shall not exceed 8.

15 ‘‘(B) AFTER 1993.—As of the close of each

16 calendar year after 1993, the number of urban

17 tax enterprise zones and rural development in18 vestment zones shall not exceed the numbers

19 determined in accordance with the following

20 table:

The maximium number is:

‘‘As of the close of: Urban tax enterprise zones

Rural development investment

zones

1993 9 8

1994 24 15

1995 39 22

1996 53 28

1997 67 33
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1 ‘‘(3) DEFINITIONS.—For purposes of this sub2 section—

3 ‘‘(A) LARGE CITY ZONE.—The term ‘large

4 city zone’ means any urban tax enterprise zone

5 located in a city having a population (as deter6 mined by the most recent census data available)

7 of at least 100,000.

8 ‘‘(B) OTHER URBAN ZONE.—The term

9 ‘other urban zone’ means any urban tax enter10 prise zone not located in a city described in

11 subparagraph (A).

12 ‘‘(4) ADVANCE DESIGNATIONS PERMITTED.—

13 For purposes of this subchapter, a designation dur14 ing any calendar year shall be treated as made on

15 January 1 of the following calendar year if the ap16 propriate Secretary, in making such designation,

17 specifies that such designation is effective as of such

18 January 1.

19 ‘‘(c) LIMITATIONS ON DESIGNATIONS.—The appro20 priate Secretary may not make any designation under sub21 section (a) unless—

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

23 which the nominated area is located have the au24 thority—
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1 ‘‘(A) to nominate the area for designation

2 as a tax enterprise zone, and

3 ‘‘(B) to provide assurances satisfactory to

4 the appropriate Secretary that the commit5 ments under section 1392(c) will be fulfilled,

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

7 within a reasonable time before the calendar year for

8 which designation as a tax enterprise zone is sought

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

10 enactment of this subchapter),

11 ‘‘(3) the appropriate Secretary determines that

12 any information furnished is reasonably accurate,

13 and

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

15 that no portion of the area nominated is already in16 cluded in a tax enterprise zone.

17 ‘‘(d) PERIOD FOR WHICH DESIGNATION IS IN

18 EFFECT.—

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

20 as a tax enterprise zone shall remain in effect during

21 the period beginning on the date of the designation

22 and ending on the earliest of—

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

24 year following the calendar year in which such

25 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) in the case of a large city, does

24 not include any portion of a central busi25 ness district (as such term is used for pur-
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1 poses of the most recent Census of Retail

2 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) located entirely within

14 the nominated 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)(I) does not exceed 10,000 square

7 miles, or

8 ‘‘(II) consists of areas within not

9 more than 4 contiguous counties,

10 ‘‘(ii) has a boundary which is continu11 ous, or consists of not more than 3 non12 contiguous parcels, and

13 ‘‘(iii) 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 ‘‘(c) REQUIRED STATE AND LOCAL COURSE OF

13 ACTION.—

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

15 designated as a tax enterprise zone unless the local

16 government and the State in which it is located

17 agree in writing that, during any period during

18 which the area is a tax enterprise zone, the govern19 ments will follow a specified course of action de20 signed to reduce the various burdens borne by em21 ployers or employees in the area.

22 ‘‘(2) COURSE OF ACTION.—The course of action

23 under paragraph (1) may be implemented by both

24 governments and private nongovernmental entities,

25 may not be funded from proceeds of any Federal
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1 program (other than discretionary proceeds), and

2 may include—

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

4 commissioner (or similar State official) that

5 basic commercial property insurance of a type

6 comparable to that insurance generally in force

7 in urban or rural areas, whichever is applicable,

8 throughout the State is available to businesses

9 within the tax enterprise zone,

10 ‘‘(B) a reduction of tax rates or fees apply11 ing within the tax enterprise zone,

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

13 of delivery, of local public services within the

14 tax enterprise zone,

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

16 or streamline government paperwork require17 ments applicable within the tax enterprise zone,

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

19 public authorities or private entities, organiza20 tions, neighborhood associations, and commu21 nity groups, particularly those within the nomi22 nated area, including a written commitment to

23 provide jobs and job training for, and technical,

24 financial, or other assistance to, employers, em25 ployees, and residents of the nominated area,
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1 ‘‘(F) the giving of special preference to

2 contractors owned and operated by members of

3 any socially and economically disadvantaged

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

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

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

7 value) of surplus land in the tax enterprise zone

8 to neighborhood organizations agreeing to oper9 ate a business on the land,

10 ‘‘(H) the establishment of a program

11 under which employers within the tax enterprise

12 zone may purchase health insurance for their

13 employees on a pooled basis,

14 ‘‘(I) the establishment of a program to en15 courage local financial institutions to satisfy

16 their obligations under the Community Rein17 vestment Act of 1977 (12 U.S.C. 2901 et seq.)

18 by making loans to enterprise zone businesses,

19 with emphasis on startup and other small-busi20 ness concerns (as defined in section 3(a) of the

21 Small Business Act (15 U.S.C. 632(a)),

22 ‘‘(J) the giving of special preference to

23 qualified low-income housing projects located in

24 tax enterprise zones, in the allocation of the
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1 State housing credit ceiling applicable under

2 section 42, and

3 ‘‘(K) the giving of special preference to fa4 cilities located in tax enterprise zones, in the al5 location of the State ceiling on private activity

6 bonds applicable under section 146.

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

8 evaluating courses of action agreed to by any State

9 or local government, the appropriate Secretary shall

10 take into account the past efforts of the State or

11 local government in reducing the various burdens

12 borne by employers and employees in the area in13 volved.

14 ‘‘(4) PROHIBITION OF ASSISTANCE FOR BUSI15 NESS RELOCATIONS.—

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

17 implemented under paragraph (1) may not in18 clude any action to assist any establishment in

19 relocating from 1 area to another area.

20 ‘‘(B) EXCEPTION.—The limitation estab21 lished in subparagraph (A) shall not be con22 strued to prohibit assistance for the expansion

23 of an existing business entity through the estab24 lishment of a new branch, affiliate, or subsidi25 ary if—
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1 ‘‘(i) the establishment of the new

2 branch, affiliate, or subsidiary will not re3 sult in an increase in unemployment in the

4 area of original location or in any other

5 area where the existing business entity

6 conducts business operations, and

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

8 the new branch, affiliate, or subsidiary is

9 being established with the intention of clos10 ing down the operations of the existing

11 business entity in the area of its original

12 location or in any other area where the ex13 isting business entity conducts business op14 erations.

15 ‘‘(d) SELECTION CRITERIA.—From among the nomi16 nated areas eligible for designation under subsection (b)

17 by the appropriate Secretary, such appropriate Secretary

18 shall make designations of tax enterprise zones on the

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

20 equal weight):

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

22 strength and quality of the commitments which have

23 been promised as part of the course of action rel24 ative to the fiscal ability of the nominating State

25 and local governments.
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1 ‘‘(2) IMPLEMENTATION OF COURSE OF AC2 TION.—The effectiveness and enforceability of the

3 guarantees that the course of action will actually be

4 carried out, including the specificity with which the

5 commitments under paragraph (1) are described in

6 order that the applicable Secretary will be better

7 able to determine annually under section

8 1391(d)(2)(A)(ii) whether the commitments are

9 being carried out.

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

11 commitments by private entities of additional re12 sources and contributions to the economy of the

13 nominated area, including the creation of new or ex14 panded business activities.

15 ‘‘(4) AVERAGE RANKINGS.—The average rank16 ing with respect to—

17 ‘‘(A) the criteria set forth in subpara18 graphs (D) and (E) of subsection (b)(1), in the

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

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

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

22 ranking, in the case of a rural area.

23 ‘‘(5) REVITALIZATION POTENTIAL.—The poten24 tial for the revitalization of the nominated area as

25 a result of zone designation, taking into account
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1 particularly the number of jobs to be created and

2 retained.

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

4 ‘‘For purposes of this subchapter—

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

6 term ‘urban tax enterprise zone’ means a tax enter7 prise zone which meets the requirements of section

8 1392(b)(1).

9 ‘‘(2) RURAL DEVELOPMENT INVESTMENT

10 ZONE.—The term ‘rural development investment

11 zone’ means a tax enterprise zone which meets the

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

13 ‘‘(3) GOVERNMENTS.—If more than 1 local gov14 ernment seeks to nominate an area as a tax enter15 prise zone, any reference to, or requirement of, this

16 subchapter shall apply to all such governments.

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

18 government’ means—

19 ‘‘(A) any county, city, town, township, par20 ish, village, or other general purpose political

21 subdivision of a State, and

22 ‘‘(B) any combination of political subdivi23 sions described in subparagraph (A) recognized

24 by the appropriate Secretary.
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1 ‘‘(5) NOMINATED AREA.—The term ‘nominated

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

3 more local governments and the State in which it is

4 located for designation as a tax enterprise zone

5 under this subchapter.

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

7 means any area which is—

8 ‘‘(A) outside of a metropolitan statistical

9 area (within the meaning of section

10 143(k)(2)(B)), or

11 ‘‘(B) determined by the Secretary of Agri12 culture, after consultation with the Secretary of

13 Commerce, to be a rural area.

14 ‘‘(7) APPROPRIATE SECRETARY.—The term ‘ap15 propriate Secretary’ means—

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

17 Development in the case of urban tax enterprise

18 zones, and

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

20 case of rural development investment zones.

21 ‘‘(8) STATE-CHARTERED DEVELOPMENT COR22 PORATIONS.—An area shall be treated as nominated

23 by a State and a local government if it is nominated

24 by—
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1 ‘‘(A) an economic development corporation

2 chartered by the State, or

3 ‘‘(B) a community development corpora4 tion—

5 ‘‘(i) which is described in section

6 501(c)(3) and exempt from tax under sec7 tion 501(a), and

8 ‘‘(ii) the principal purposes of which

9 include promoting employment of, and

10 business opportunities for, low-income indi11 viduals who are residents of its operational

12 area.

13 ‘‘PART II—INCENTIVES FOR TAX ENTERPRISE

14 ZONES

‘‘SUBPART A. Enterprise zone employment credit.

‘‘SUBPART B. Investment incentives.

‘‘SUBPART C. Regulations.

15 ‘‘Subpart A—Enterprise Zone Employment Credit

‘‘Sec. 1394. Enterprise zone employment credit.

‘‘Sec. 1394A. Credit to qualified zone employees of tax-exempt organizations.

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

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

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

18 38, the amount of the enterprise zone employment credit

19 determined under this section with respect to any em20 ployer for any taxable year is 15 percent of the qualified

21 zone wages paid or incurred during such taxable year.
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1 ‘‘(b) QUALIFIED ZONE WAGES.—

2 ‘‘(1) IN GENERAL.—For purposes of this sec3 tion, the term ‘qualified zone wages’ means any

4 wages paid or incurred by an employer for services

5 performed by an employee while such employee is a

6 qualified zone employee.

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

8 TAKEN INTO ACCOUNT.—With respect to each quali9 fied zone employee, the amount of qualified zone

10 wages which may be taken into account for the tax11 able year shall not exceed $20,000.

12 ‘‘(3) COORDINATION WITH TARGETED JOBS

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

14 include wages attributable to service rendered during

15 the 1-year period beginning with the day the individ16 ual begins work for the employer if any portion of

17 such wages is taken into account in determining the

18 credit under section 51.

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

20 this section—

21 ‘‘(1) IN GENERAL.—Except as otherwise pro22 vided in this subsection, the term ‘qualified zone em23 ployee’ means, with respect to any period, any em24 ployee of an employer if—
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1 ‘‘(A) substantially all of the services per2 formed during such period by such employee for

3 such employer are performed within a tax en4 terprise zone in a trade or business of the em5 ployer, and

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

7 employee while performing such services is

8 within such tax enterprise zone.

9 ‘‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE.—

10 The term ‘qualified zone employee’ shall not in11 clude—

12 ‘‘(A) any individual described in subpara13 graph (A), (B), or (C) of section 51(i)(1),

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

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

16 ‘‘(C) any individual employed by the em17 ployer at any facility described in section

18 144(c)(6)(B), and

19 ‘‘(D) any individual employed by the em20 ployer in a trade or business the principal activ21 ity of which is farming (within the meaning of

22 subparagraphs (A) or (B) of section

23 2032A(e)(5)), but only if, as of the close of the

24 taxable year, the sum of—
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1 ‘‘(i) the aggregate unadjusted bases

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

3 the assets owned by the employer which

4 are used in such a trade or business, and

5 ‘‘(ii) the aggregate value of assets

6 leased by the employer which are used in

7 such a trade or business (as determined

8 under regulations prescribed by the Sec9 retary),

10 exceeds $500,000.

11 ‘‘(d) EARLY TERMINATION OF EMPLOYMENT BY EM12 PLOYER.—

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

14 employee is terminated by the taxpayer before the

15 day 1 year after the day on which such employee

16 began work for the employer—

17 ‘‘(A) no wages with respect to such em18 ployee shall be taken into account under sub19 section (a) for the taxable year in which such

20 employment is terminated, and

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

22 taxable year in which such employment is ter23 minated shall be increased by the aggregate

24 credits (if any) allowed under section 38(a) for
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1 prior taxable years by reason of wages taken

2 into account with respect to such employee.

3 ‘‘(2) CARRYBACKS AND CARRYOVERS AD4 JUSTED.—In the case of any termination of employ5 ment to which paragraph (1) applies, the carrybacks

6 and carryovers under section 39 shall be properly

7 adjusted.

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

9 CASES.—

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

11 not apply to—

12 ‘‘(i) a termination of employment of

13 an employee who voluntarily leaves the em14 ployment of the taxpayer,

15 ‘‘(ii) a termination of employment of

16 an individual who before the close of the

17 period referred to in paragraph (1) be18 comes disabled to perform the services of

19 such employment unless such disability is

20 removed before the close of such period

21 and the taxpayer fails to offer reemploy22 ment to such individual, or

23 ‘‘(iii) a termination of employment of

24 an individual if it is determined under the

25 applicable State unemployment compensa-
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1 tion law that the termination was due to

2 the misconduct of such individual.

3 ‘‘(B) CHANGES IN FORM OF BUSINESS.—

4 For purposes of paragraph (1), the employment

5 relationship between the taxpayer and an em6 ployee shall not be treated as terminated—

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

8 381(a) applies if the employee continues to

9 be employed by the acquiring corporation,

10 or

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

12 the form of conducting the trade or busi13 ness of the taxpayer if the employee con14 tinues to be employed in such trade or

15 business and the taxpayer retains a sub16 stantial interest in such trade or business.

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

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

19 imposed by this chapter for purposes of—

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

21 allowable under this chapter, and

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

23 imposed by section 55.
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1 ‘‘SEC. 1394A. CREDIT TO QUALIFIED ZONE EMPLOYEES OF

2 TAX-EXEMPT ORGANIZATIONS.

3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a

4 qualified zone employee who received qualified zone wages

5 during the taxable year from any tax-exempt employer,

6 there shall be allowed as a credit against the tax imposed

7 by this chapter for such taxable year an amount equal to

8 15 percent of the qualified zone wages received by such

9 employee from such employer during such taxable year.

10 ‘‘(b) ONLY FIRST $20,000 OF WAGES PER YEAR

11 TAKEN INTO ACCOUNT.—With respect to each qualified

12 zone employee, the amount of qualified zone wages which

13 may be taken into account for the taxable year shall not

14 exceed $20,000.

15 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—For

16 purposes of this title, the credit allowed under this section

17 shall be treated as allowed under subpart A of part IV

18 of subchapter A of this chapter (relating to nonrefundable

19 personal credits).

20 ‘‘(d) TAX-EXEMPT EMPLOYER.—For purposes of this

21 section, the term ‘tax-exempt employer’ means any em22 ployer who is exempt from tax under this subtitle. Such

23 term shall not include the Federal Government, any State

24 or local government or political subdivision thereof, or any

25 agency or instrumentality of any of the foregoing.

26 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—
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1 ‘‘(1) DEFINITIONS.—Terms used in this section

2 which are also used in section 1394 shall have the

3 respective meanings given such terms in section

4 1394.

5 ‘‘(2) SPECIAL RULES.—Rules similar to the

6 rules of section 1394(d) shall apply for purposes of

7 this section.

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

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

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

11 51.

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

13 subpart—

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

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

16 treated as a single employer for purposes of this

17 subpart, and

18 ‘‘(2) the credit (if any) determined under sec19 tion 1394 with respect to each such employer shall

20 be its proportionate share of the wages giving rise

21 to such credit.

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

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

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

25 52 shall apply.
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1 ‘‘(d) NOTICE OF AVAILABILITY OF ADVANCE PAY2 MENT OF EARNED INCOME CREDIT.—Each employer

3 shall take reasonable steps to notify all qualified zone em4 ployees of the availability to eligible individuals of receiv5 ing advanced payments of the credit under section 32 (re6 lating to the earned income credit).

7 ‘‘Subpart B—Investment Incentives

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

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

‘‘Sec. 1397A. Other incentives.

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

‘‘Sec. 1397C. Other definitions.

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

9 ZONE STOCK.

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

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

12 50 percent of the aggregate amount paid in cash by the

13 taxpayer during the taxable year for the purchase of enter14 prise zone stock.

15 ‘‘(b) LIMITATION.—

16 ‘‘(1) IN GENERAL.—The maximum amount al17 lowed as a deduction under subsection (a) to a tax18 payer for the taxable year shall not exceed the lesser

19 of—

20 ‘‘(A) $25,000, or

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

22 amount allowed as a deduction under this sec23 tion to the taxpayer for all prior taxable years.
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1 ‘‘(2) EXCESS AMOUNTS.—If the amount other2 wise deductible by any person under subsection (a)

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

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

5 treated as an amount paid to which subsection

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

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

8 year shall be allocated proportionately among

9 the enterprise zone stock purchased by such

10 person on the basis of the respective purchase

11 prices per share.

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

13 The taxpayer and members of the taxpayer’s family

14 shall be treated as one person for purposes of para15 graph (1), and the limitations contained in such

16 paragraph shall be allocated among the taxpayer and

17 such members in accordance with their respective

18 purchases of enterprise zone stock. For purposes of

19 this paragraph, an individual’s family includes only

20 such individual’s spouse and minor children.

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

22 this section—

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

24 stock’ means stock of a corporation if—
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1 ‘‘(A) such stock is acquired on original

2 issue from the corporation, and

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

4 issue, a qualified enterprise zone issuer.

5 ‘‘(2) PROCEEDS MUST BE INVESTED IN QUALI6 FIED ENTERPRISE ZONE PROPERTY.—

7 ‘‘(A) IN GENERAL.—Such term shall in8 clude such stock only to the extent that the pro9 ceeds of such issuance are used by such issuer

10 during the 12-month period beginning on the

11 date of issuance to purchase (as defined in

12 section 179(d)(2)) qualified enterprise zone

13 property.

14 ‘‘(B) QUALIFIED ENTERPRISE ZONE PROP15 ERTY.—For purposes of this section, the term

16 ‘qualified enterprise zone property’ means prop17 erty to which section 168 applies—

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

19 enterprise zone commences with the issuer,

20 and

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

22 which is in a tax enterprise zone.

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

24 zone stock’ shall not include any stock acquired from

25 a corporation which made a substantial stock re-
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1 demption or distribution (without a bona fide busi2 ness purpose therefor) in an attempt to avoid the

3 purposes of this section.

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

5 purposes of this section, the term ‘qualified enterprise

6 zone issuer’ means any domestic C corporation if—

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

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

9 corporation is being organized for purposes of being

10 an enterprise zone business,

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

12 one class of stock,

13 ‘‘(3) the sum of—

14 ‘‘(A) the money,

15 ‘‘(B) the aggregate unadjusted bases of

16 property owned by such corporation, and

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

18 corporation (as determined under regulations

19 prescribed by the Secretary),

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

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

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

23 stock of such corporation is owned directly by indi24 viduals or estates or indirectly by individuals

25 through partnerships or trusts.
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1 The determination under paragraph (3) shall be made as

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

3 include amounts received for such stock.

4 ‘‘(e) DISPOSITIONS OF STOCK.—

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

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

7 reduced by the amount of the deduction allowed

8 under this section with respect to such stock.

9 ‘‘(2) DEDUCTION RECAPTURED AS ORDINARY

10 INCOME.—For purposes of section 1245—

11 ‘‘(A) any stock the basis of which is re12 duced under paragraph (1) (and any other

13 property the basis of which is determined in

14 whole or in part by reference to the adjusted

15 basis of such stock) shall be treated as section

16 1245 property, and

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

18 shall be treated as a deduction allowed for de19 preciation.

20 If an exchange of any stock described in paragraph

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

22 356(a), the amount of gain recognized under section

23 1245 by reason of this paragraph shall not exceed

24 the amount of gain recognized in the exchange (de25 termined without regard to this paragraph).
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1 ‘‘(3) CERTAIN EVENTS TREATED AS DISPOSI2 TIONS.—For purposes of determining the amount

3 treated as ordinary income under section 1245 by

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

5 1245(b) (relating to certain tax-free transactions)

6 shall not apply.

7 ‘‘(4) INTEREST CHARGED IF DISPOSITION

8 WITHIN 5 YEARS OF PURCHASE.—

9 ‘‘(A) IN GENERAL.—If—

10 ‘‘(i) a taxpayer disposes of any enter11 prise zone stock with respect to which a

12 deduction was allowed under subsection (a)

13 (or any other property the basis of which

14 is determined in whole or in part by ref15 erence to the adjusted basis of such stock)

16 before the end of the 5-year period begin17 ning on the date such stock was purchased

18 by the taxpayer, and

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

20 disposition by reason of paragraph (2),

21 then the tax imposed by this chapter for the

22 taxable year in which such disposition occurs

23 shall be increased by the amount determined

24 under subparagraph (B).
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1 ‘‘(B) ADDITIONAL AMOUNT.—For purposes

2 of subparagraph (A), the additional amount

3 shall be equal to the amount of interest (deter4 mined at the rate applicable under section

5 6621(a)(2)) that would accrue—

6 ‘‘(i) during the period beginning on

7 the date the stock was purchased by the

8 taxpayer and ending on the date of such

9 disposition by the taxpayer,

10 ‘‘(ii) on an amount equal to the aggre11 gate decrease in tax of the taxpayer result12 ing from the deduction allowed under this

13 subsection (a) with respect to such stock.

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

15 under subparagraph (A) shall not be treated as

16 a tax imposed by this chapter for purposes of—

17 ‘‘(i) determining the amount of any

18 credit allowable under this chapter, and

19 ‘‘(ii) determining the amount of the

20 tax imposed by section 55.

21 ‘‘(f) DISQUALIFICATION.—

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

23 the 10-year period beginning on the date enterprise

24 zone stock was purchased by the taxpayer, the issuer

25 of such stock ceases to be a qualified enterprise zone
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1 issuer (determined without regard to subsection

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

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

4 be treated for purposes of subsection (e) as dispos5 ing of such stock (and any other property the basis

6 of which is determined in whole or in part by ref7 erence to the adjusted basis of such stock) during

8 the taxable year during which such cessation occurs

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

10 taxable year.

11 ‘‘(2) CESSATION OF ENTERPRISE ZONE STATUS

12 NOT TO CAUSE RECAPTURE.—A corporation shall

13 not fail to be treated as a qualified enterprise zone

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

15 of the termination or revocation of a tax enterprise

16 zone designation.

17 ‘‘(g) OTHER SPECIAL RULES.—

18 ‘‘(1) APPLICATION OF LIMITS TO PARTNER19 SHIPS AND S CORPORATIONS.—In the case of a part20 nership or an S corporation, the limitations under

21 subsection (b) shall apply at the partner and share22 holder level and shall not apply at the partnership

23 or corporation level.
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1 ‘‘(2) DEDUCTION NOT ALLOWED TO ESTATES

2 AND TRUSTS.—Estates and trusts shall not be treat3 ed as individuals for purposes of this section.

4 ‘‘SEC. 1397. NONRECOGNITION OF GAIN FROM NEW ZONE

5 INVESTMENTS.

6 ‘‘(a) GENERAL RULE.—At the election of an individ7 ual, qualified capital gain (as defined in section 1397C)

8 from the sale or exchange of a qualified zone asset shall

9 be recognized only to the extent that—

10 ‘‘(1) the amount realized from such sale or ex11 change, exceeds

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

13 under this subsection) of any qualified zone asset

14 purchased directly by the taxpayer during the rein15 vestment period.

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

17 section—

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

19 asset’ has the meaning given such term by section

20 1397C.

21 ‘‘(2) TIME FOR TESTING.—

22 ‘‘(A) SALES.—In the case of a sale or ex23 change of property, the determination of wheth24 er such property is a qualified zone asset shall

25 be made as of the time of the sale or exchange.
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1 ‘‘(B) PURCHASES.—In the case of a pur2 chase of property, the determination of whether

3 such property is a qualified zone asset shall be

4 made as of the time of such purchase.

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

6 section—

7 ‘‘(1) REINVESTMENT PERIOD.—The term ‘rein8 vestment period’ means, with respect to any sale or

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

10 of such sale or exchange.

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

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

13 ‘‘(d) BUSINESS OR PROPERTY CEASES TO QUAL14 IFY.—

15 ‘‘(1) IN GENERAL.—If, during the 10-year pe16 riod beginning on the date any qualified zone re17 placement asset was purchased by the taxpayer,

18 such asset ceases to be a qualified zone asset, not19 withstanding any provision of this subtitle other

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

21 disposing of such asset during the taxable year dur22 ing which such cessation occurs at its fair market

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

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

25 amount of gain recognized pursuant to paragraph
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1 (1) with respect to any asset shall not exceed the

2 lesser of—

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

4 recognized under subsection (a) by the reason

5 of the purchase of such asset, or

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

7 referred to in paragraph (1) over the adjusted

8 basis of such asset.

9 ‘‘(3) CESSATION OF ENTERPRISE ZONE STATUS

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

11 to be treated as a qualified zone asset for purposes

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

13 of a tax enterprise zone designation.

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

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

16 zone replacement asset’ means any qualified zone

17 asset the purchase of which resulted in the non18 recognition of gain under subsection (a) with respect

19 to any other property.

20 ‘‘(e) BASIS OF QUALIFIED ZONE REPLACEMENT

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

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

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

24 of any qualified zone replacement asset (as defined in sub25 section (d)(4)) purchased during the reinvestment period.
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1 ‘‘(f) COORDINATION WITH INSTALLMENT METHOD

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

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

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

5 ‘‘(g) STATUTE OF LIMITATIONS.—If any gain is real6 ized by the taxpayer on any sale or exchange to which

7 an election under this section applies, then—

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

9 any deficiency with respect to such gain shall not ex10 pire before the expiration of 3 years from the date

11 the Secretary is notified by the taxpayer (in such

12 manner as the Secretary may by regulations pre13 scribe) of—

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

15 qualified zone replacement asset,

16 ‘‘(B) the taxpayer’s intention not to pur17 chase qualified zone replacement asset within

18 the reinvestment period, or

19 ‘‘(C) a failure to make such purchase with20 in the reinvestment period, and

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

22 expiration of such 3-year period notwithstanding the

23 provisions of any law or rule of law which would oth24 erwise prevent such assessment.
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1 ‘‘(h) CERTAIN BUSINESSES TREATED AS NOT

2 QUALIFIED BUSINESSES.—For purposes of this section,

3 the term ‘enterprise zone business’ has the meaning given

4 such term by section 1397B except that, in applying sec5 tion 1397B for such purposes, the term ‘qualified busi6 ness’ shall not include any trade or business of producing

7 property of a character subject to the allowance for deple8 tion under section 611.

9 ‘‘SEC. 1397A. ADDITIONAL INCENTIVES.

10 ‘‘(a) INCREASE IN EXPENSING UNDER SECTION

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

12 179(b)(1) shall be applied by substituting ‘$20,000’ for

13 ‘$10,000’.

14 ‘‘(b) ORDINARY LOSS TREATMENT FOR CERTAIN

15 PROPERTY.—

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

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

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

19 shall be treated as an ordinary loss.

20 ‘‘(2) REAL PROPERTY.—For purposes of para21 graph (1), the term ‘real property’ means any prop22 erty which is section 1250 property (as defined in

23 section 1250(c)).

24 ‘‘(3) SPECIAL RULES.—
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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 (a)(6), (b)(3), (c),

7 (d), and (e) of section 1397C.

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 ‘‘(c) ADDITIONS TO RESERVES FOR BAD DEBTS

13 WITH RESPECT TO LOANS TO ENTERPRISE ZONE BUSI14 NESSES.—

15 ‘‘(1) IN GENERAL.—For purposes of section

16 585(a)—

17 ‘‘(A) the deduction for a reasonable addi18 tion to a reserve for bad debts shall be com19 puted separately with respect to qualified enter20 prise zone loans, and

21 ‘‘(B) section 585(c) shall not apply to the

22 deduction computed under this subsection for a

23 reasonable addition to a reserve for bad debts

24 with respect to qualified enterprise zone loans.
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1 ‘‘(2) ADDITION TO RESERVE FOR BAD

2 DEBTS.—For purposes of section 585(a), the reason3 able addition to the reserve for bad debts of any fi4 nancial institution to which section 585 applies

5 (after the application of paragraph (1)) shall be an

6 amount determined by the taxpayer which shall not

7 exceed the addition to the reserve for losses on quali8 fied enterprise zone loans under the percentage

9 method as provided by paragraph (3).

10 ‘‘(3) PERCENTAGE METHOD.—The amount de11 termined under this paragraph for any taxable year

12 shall be the amount necessary to increase the bal13 ance of the reserve for losses on loans (at the close

14 of the taxable year) to 10 percent of qualified enter15 prise zone loans outstanding at such time.

16 ‘‘(4) BANKS USING EXPERIENCE METHOD.—In

17 the case of a bank to which section 585(a) applies

18 (determined without regard to this subsection), the

19 amount determined under paragraph (3) of this sub20 section for any taxable year shall in no event be less

21 than the amount determined under section 585(b)

22 for such taxable year with respect to qualified enter23 prise zone loans.

24 ‘‘(5) QUALIFIED ENTERPRISE ZONE LOANS.—

25 For purposes of this subsection, the term ‘qualified
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1 enterprise zone loan’ means any loan made to an en2 terprise zone business for use in the conduct of a

3 qualified business within a tax enterprise zone.

4 ‘‘SEC. 1397B. ENTERPRISE ZONE BUSINESS DEFINED.

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

6 term ‘enterprise zone business’ means—

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

8 ‘‘(2) any qualified proprietorship.

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

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

11 with respect to any taxable year, any corporation or part12 nership if for such year—

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

14 is the active conduct of a qualified business within

15 a tax enterprise zone, and

16 ‘‘(B) at least 80 percent of the total gross in17 come of such entity is derived from the active con18 duct of such business,

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

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

21 within a tax enterprise zone,

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

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

24 the active conduct of any such business,
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1 ‘‘(4) substantially all of the services performed

2 for such entity by its employees are performed in a

3 tax enterprise zone,

‘‘(5) at least 1 4 ⁄3 of its employees are residents

5 of a tax enterprise zone,

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

7 aggregate unadjusted bases of the property of such

8 entity is attributable to collectibles (as defined in

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

10 held primarily for sale to customers in the ordinary

11 course of such business, and

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

13 aggregate unadjusted bases of the property of such

14 entity is attributable to nonqualified financial prop15 erty.

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

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

18 with respect to any taxable year, any qualified business

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

20 year—

21 ‘‘(1) at least 80 percent of the total gross in22 come of such individual from such business is de23 rived from the active conduct of such business in a

24 tax enterprise zone,
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1 ‘‘(2) substantially all of the use of the tangible

2 property of such individual in such business (wheth3 er owned or leased) is within a tax enterprise zone,

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

5 of such business is used in, and exclusively related

6 to, the active conduct of such business,

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

8 for such individual in such business by employees of

9 such business are performed in a tax enterprise

10 zone,

‘‘(5) at least 1 11 ⁄3 of such employees are residents

12 of a tax enterprise zone,

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

14 aggregate unadjusted bases of the property of such

15 individual which is used in such business is attrib16 utable to collectibles (as defined in section

17 408(m)(2)) other than collectibles that are held pri18 marily for sale to customers in the ordinary course

19 of such business, and

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

21 aggregate unadjusted bases of the property of such

22 individual which is used in such business is attrib23 utable to nonqualified financial property.

24 For purposes of this subsection, the term ‘employee’ in25 cludes the proprietor.
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1 ‘‘(d) QUALIFIED BUSINESS.—For purposes of this

2 section—

3 ‘‘(1) IN GENERAL.—Except as otherwise pro4 vided in this subsection, the term ‘qualified business’

5 means any trade or business.

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

7 to others of real property located in a tax enterprise

8 zone shall be treated as a qualified business if and

9 only if—

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

11 not residential rental property (as defined in

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

13 zone business, or

14 ‘‘(B) in the case of residential rental prop15 erty (as so defined)—

16 ‘‘(i) such property was originally

17 placed in service after the date the tax en18 terprise zone was designated, or

19 ‘‘(ii) such property is rehabilitated

20 after such date in a rehabilitation which

21 meets requirements based on the principles

22 of section 42(e)(3).

23 ‘‘(3) RENTAL OF TANGIBLE PERSONAL PROP24 ERTY.—The rental to others of tangible personal

25 property shall be treated as a qualified business if
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1 and only if substantially all of the rental of such

2 property is by enterprise zone businesses or by resi3 dents of a tax enterprise zone.

4 ‘‘(4) TREATMENT OF BUSINESS HOLDING IN5 TANGIBLES.—The term ‘qualified business’ shall not

6 include any trade or business consisting predomi7 nantly of the development or holding of intangibles

8 for sale or license.

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

10 term ‘qualified business’ shall not include—

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

12 the operation of any facility described in section

13 144(c)(6)(B), and

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

15 activity of which is farming (within the meaning

16 of subparagraphs (A) or (B) of section

17 2032A(e)(5)), but only if, as of the close of the

18 preceding taxable year, the sum of—

19 ‘‘(i) the aggregate unadjusted bases

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

21 the assets owned by the taxpayer which are

22 used in such a trade or business, and

23 ‘‘(ii) the aggregate value of assets

24 leased by the taxpayer which are used in

25 such a trade or business,
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1 exceeds $500,000.

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

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

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

5 purposes of this section, the term ‘nonqualified financial

6 property’ means debt, stock, partnership interests, op7 tions, futures contracts, forward contracts, warrants, no8 tional principal contracts, annuities, and other similar

9 property specified in regulations; except that such term

10 shall not include—

11 ‘‘(1) reasonable amounts of working capital

12 held in cash, cash equivalents, or debt instruments

13 with a term of 18 months or less, or

14 ‘‘(2) debt instruments described in section

15 1221(4).

16 ‘‘SEC. 1397C. OTHER DEFINITIONS.

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

18 subpart—

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.
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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
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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)
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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 1397B(c)).

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

24 means any interest in a partnership if—
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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
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1 be treated as meeting the requirements of such

2 paragraph; except that the amount of gain which is

3 qualified capital gain 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 ‘‘(b) 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-
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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 ‘‘(c) 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 qualified capital gain to the extent such gain is at13 tributable to amounts which would be qualified cap14 ital gain on qualified zone assets (determined as if

15 such assets had been sold on the date of the sale or

16 exchange) held by such entity for more than 5 years

17 and throughout the period the taxpayer held such in18 terest. A rule similar to the rule of paragraph (2)(C)

19 shall apply for purposes of the preceding sentence.

20 ‘‘(2) INCOME INCLUSIONS.—

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

22 in income by reason of holding an interest in a

23 pass-thru entity (other than an entity which

24 was an enterprise zone business during substan25 tially all of the period the taxpayer held the in-
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1 terest to which such inclusion relates) shall be

2 treated as qualified capital gain if such amount

3 meets the requirements of subparagraph (B).

4 ‘‘(B) REQUIREMENTS.—An amount meets

5 the requirements of this subparagraph if—

6 ‘‘(i) such amount is attributable to

7 qualified capital gain recognized on the

8 sale or exchange by the pass-thru entity of

9 property which is a qualified zone asset in

10 the hands of such entity and which was

11 held by such entity for the period required

12 under subsection (a), and

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

14 gross income of the taxpayer by reason of

15 the holding of an interest in such entity

16 which was held by the taxpayer on the date

17 on which such pass-thru entity acquired

18 such asset and at all times thereafter be19 fore the disposition of such asset by such

20 pass-thru entity.

21 ‘‘(C) LIMITATION BASED ON INTEREST

22 ORIGINALLY HELD BY TAXPAYER.—Subpara23 graph (A) shall not apply to any amount to the

24 extent such amount exceeds the amount to

25 which subparagraph (A) would have applied if
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1 such amount were determined by reference to

2 the interest the taxpayer held in the pass-thru

3 entity on the date the qualified zone asset was

4 acquired.

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

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

7 ‘‘(A) any partnership,

8 ‘‘(B) any S corporation,

9 ‘‘(C) any regulated investment company,

10 and

11 ‘‘(D) any common trust fund.

12 ‘‘(d) SALES AND EXCHANGES OF INTERESTS IN

13 PARTNERSHIPS AND S CORPORATIONS WHICH ARE

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

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

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

17 during substantially all of the period the taxpayer held

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

19 shall be determined without regard to—

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

21 an integral part of any qualified business (as defined

22 in section 1397B(b)), and

23 ‘‘(2) gain attributable to periods before the des24 ignation of an area as a tax enterprise zone.
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1 ‘‘(e) CERTAIN TAX-FREE AND OTHER TRANS2 FERS.—For purposes of this section—

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

4 a qualified zone asset to which this subsection ap5 plies, the transferee shall be treated as—

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

7 same manner as the transferor, and

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

9 continuous period immediately preceding the

10 transfer during which it was held (or treated as

11 held under this subsection) by the transferor.

12 ‘‘(2) TRANSFERS TO WHICH SUBSECTION AP13 PLIES.—This subsection shall apply to any trans14 fer—

15 ‘‘(A) by gift,

16 ‘‘(B) at death, or

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

18 thereof of a qualified zone asset with respect to

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

20 met at the time of the transfer (without regard

21 to the 5-year holding requirement).

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

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

24 apply for purposes of this section.
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1 ‘‘Subpart C—Regulations

‘‘Sec. 1397D. Regulations.

2 ‘‘SEC. 1397D. 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) Subsection (c) of section 381 (relating to

19 carryovers in certain corporate acquisitions) is

20 amended by adding at the end the following new

21 paragraph:

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

23 acquiring corporation shall take into account (to the

24 extent proper to carry out the purposes of this sec25 tion and subchapter U, and under such regulations
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1 as may be prescribed by the Secretary) the items re2 quired to be taken into account for purposes of sub3 chapter U in respect of the distributor or transferor

4 corporation.’’

5 (2) Paragraph (1) of section 1371(d) (relating

6 to coordination with investment credit recapture) is

7 amended by inserting before the period at the end

8 the following ‘‘and for purposes of section

9 1394(d)(3)’’.

10 (3) Subsection (a) of section 1016 (relating to

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

12 at the end of paragraph (25), by striking the period

13 at the end of paragraph (26) and inserting a semi14 colon, and by adding at the end thereof the following

15 new paragraphs:

16 ‘‘(27) in the case of stock with respect to which

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

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

19 ‘‘(28) in the case of property the acquisition of

20 which resulted under section 1397A in the non21 recognition of any part of the gain realized on the

22 sale or exchange of other property, to the extent pro23 vided in section 1397A(e).’’

24 (4) Section 1223 (relating to holding period of

25 property) is amended by redesignating paragraph
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1 (15) as paragraph (16) and by inserting after para2 graph (14) the following new paragraph:

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

4 taxpayer has held property the acquisition of which

5 resulted under section 1397A in the nonrecognition

6 of any part of the gain realized on the sale or ex7 change of any qualified zone asset (as defined in sec8 tion 1397C(b)), there shall be included the period

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

10 of such sale or exchange.’’

11 SEC. 104. EFFECTIVE DATE.

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

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

14 this Act.

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

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

17 the appropriate Secretaries shall issue rules—

18 (1) establishing the procedures for nominating

19 areas for designation as tax enterprise zones,

20 (2) establishing a method for comparing the

21 factors listed in section 1392(d) of the Internal Rev22 enue Code of 1986 (as added by this subtitle), and

23 (3) providing that State and local governments

24 shall have at least 30 days after such rules are pub25 lished to file applications for nominated areas before
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1 such applications are evaluated and compared and

2 any area designated as a tax enterprise zone.

3 Subtitle B—Redevelopment Bonds

4 for Tax Enterprise Zones

5 SEC. 111. SPECIAL RULES FOR REDEVELOPMENT BONDS

6 PROVIDING FINANCING FOR TAX ENTER7 PRISE ZONES.

8 (a) IN GENERAL.—Subsection (c) of section 144 (re9 lating to qualified redevelopment bonds) is amended by

10 adding at the end thereof the following new paragraph:

11 ‘‘(9) SPECIAL RULES FOR TAX ENTERPRISE

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

13 of bonds issued during the 60-month period begin14 ning on the date a tax enterprise zone is des15 ignated—

16 ‘‘(A) TREATMENT AS A DESIGNATED

17 BLIGHTED AREA.—Such tax enterprise zone

18 shall be treated as a designated blighted area

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

20 period such designation is in effect). Any area

21 designated by reason of the preceding sentence

22 shall not be taken into account in applying

23 paragraph (4)(C).

24 ‘‘(B) SECURITY FOR BONDS.—The require25 ments of paragraph (2)(B) shall be treated as
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1 met with respect to a financed area that is

2 within a tax enterprise zone if the general pur3 pose governmental unit guarantees the payment

4 of principal and interest on the issue either di5 rectly or through insurance, a letter of credit,

6 or a similar agreement but only if the cost

7 thereof is financed other than with proceeds of

8 any tax-exempt private activity bond or earn9 ings on such proceeds.

10 ‘‘(C) EXPANSION OF REDEVELOPMENT

11 PURPOSES.—

12 ‘‘(i) IN GENERAL.—The term ‘redevel13 opment purposes’ includes the making of

14 loans to any enterprise zone business (as

15 defined in section 1397B) for—

16 ‘‘(I) the acquisition of land with17 in the tax enterprise zone for use in

18 such business, or

19 ‘‘(II) the acquisition, construc20 tion, reconstruction, or improvement

21 by such business of land, or property

22 of a character subject to the allowance

23 for depreciation, for use in such busi24 ness.
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1 ‘‘(ii) $5,000,000 LIMITATION.—Clause

2 (i) shall apply to loans made to any enter3 prise zone business only if the aggregate

4 principal amount of such loans (whether or

5 not financed by the same issue) does not

6 exceed $5,000,000. For purposes of the

7 preceding sentence, all persons treated as a

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

9 of section 52 shall be treated as 1 person.

10 ‘‘(iii) LOANS MUST BE MADE WITHIN

11 18 MONTHS AFTER BONDS ISSUED; REPAY12 MENTS MUST BE USED FOR REDEMP13 TIONS.—Clause (i) shall apply only to

14 loans—

15 ‘‘(I) made during the 18-month

16 period beginning on the date of issu17 ance of the issue financing such loan,

18 ‘‘(II) repayments of principal on

19 which are used not later than the

20 close of the 1st semiannual period be21 ginning after the date the repayment

22 is received to redeem bonds which are

23 part of such issue, and

24 ‘‘(III) the effective rate of inter25 est on which does not exceed the yield
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1 on the issue by more than 0.125 per2 centage points.

3 In determining the effective rate of interest

4 for purposes of subclause (III), there shall

5 be taken into account all fees, charges, and

6 other amounts (other than amounts for

7 any credit report) borne by the borrower

8 which are attributable to the loan or the

9 bond issue.

10 ‘‘(iv) HOUSING LOANS EXCLUDED.—

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

12 used directly or indirectly to provide resi13 dential real property.

14 ‘‘(v) COORDINATION WITH RESTRIC15 TIONS ON USE OF PROCEEDS.—Paragraphs

16 (6) and (8) shall apply notwithstanding

17 clause (i); except that in applying para18 graph (6), subsection (a)(8) shall be treat19 ed as not including a reference to a facility

20 the primary purpose of which is retail food

21 services.

22 ‘‘(D) ISSUER TO DESIGNATE AMOUNT OF

23 ISSUE TO BE USED FOR LOANS.—Subparagraph

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

25 unless the issuer designates before the date of
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1 issuance the amount of the proceeds of such

2 issue which is to be used for loans to which

3 subparagraph (C)(i) applies. If such amount ex4 ceeds the principal amount of loans to which

5 subparagraph (C)(i) applies, an amount of pro6 ceeds equal to such excess shall be used not

7 later than the close of the 1st semiannual pe8 riod beginning after the close of the 18-month

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

10 redeem bonds which are part of such issue.

11 ‘‘(E) DE MINIMIS REDEMPTIONS NOT RE12 QUIRED.—Subparagraphs (C)(iii) and (D) shall

13 not be construed to require amounts of less

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

15 Secretary may by regulation treat related issues

16 as 1 issue for purposes of the preceding sen17 tence.

18 ‘‘(F) PENALTY.—

19 ‘‘(i) IN GENERAL.—In the case of

20 property with respect to which financing

21 was provided under this paragraph, if at

22 any time during the 10-period beginning

23 on the date such financing was provided—
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1 ‘‘(I) such property ceases to be in

2 use in an enterprise zone business (as

3 defined in section 1397B), or

4 ‘‘(II) substantially all of the use

5 of such property ceases to be in a tax

6 enterprise zone,

7 there is hereby imposed on the trade or

8 business to which such financing was pro9 vided a penalty equal to 1.25 percent of so

10 much of the face amount of all financing

11 provided (whether or not from the same

12 issue and whether or not such issue is out13 standing) before such cessation to the

14 trade or business using such property.

15 ‘‘(ii) NO PENALTY BY REASON OF

16 ZONE TERMINATION.—No penalty shall be

17 imposed under clause (i) solely by reason

18 of the termination or revocation of a tax

19 enterprise zone designation.

20 ‘‘(iii) EXCEPTION FOR BANK21 RUPTCY.—Clause (i) shall not apply to any

22 cessation resulting from bankruptcy.’’

23 (b) VOLUME CAP ONLY CHARGED WITH 50 PER24 CENT OF TAX ENTERPRISE ZONE REDEVELOPMENT

25 BONDS.—Subsection (g) of section 146 is amended by
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1 striking ‘‘and’’ at the end of paragraph (3), by striking

2 the period at the end of paragraph (4) and inserting

3 ‘‘, and’’, and by adding at the end thereof the following

4 new paragraph:

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

6 bond issued—

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

8 more of the net proceeds of which are to be

9 used for 1 or more redevelopment purposes (as

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

11 zone, and

12 ‘‘(B) during the 60-month period begin13 ning on the date of the designation of such

14 zone.’’

15 (c) PENALTIES FOR LOANS MADE TO BUSINESSES

16 THAT CEASE TO BE ENTERPRISE ZONE BUSINESSES,

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

18 at the end thereof the following new paragraph:

19 ‘‘(6) ENTERPRISE ZONE REDEVELOPMENT

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

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

22 reason of section 144(c)(9)—

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

24 allowed under this chapter for interest on such

25 financing which accrues during the period be-
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1 ginning on the first day of the calendar year

2 which includes the date on which—

3 ‘‘(i) the trade or business to which the

4 financing was provided ceases to be an en5 terprise zone business (as defined in sec6 tion 1397B), or

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

8 property (determined in accordance with

9 subchapter U) with respect to which the fi10 nancing was provided ceases to be in a tax

11 enterprise zone.

12 The preceding sentence shall not apply solely by

13 reason of the termination or revocation of a tax

14 enterprise zone designation.

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

16 paragraph shall not apply to any cessation re17 sulting from bankruptcy.’’

18 Subtitle C—Expansion of Targeted

19 Jobs Credit

20 SEC. 121. ECONOMICALLY DISADVANTAGED ZONE RESI21 DENTS INCLUDED AS MEMBERS OF TAR22 GETED GROUP.

23 (a) ALLOWANCE OF CREDIT FOR HIRING TAX EN24 TERPRISE ZONE RESIDENTS.—Paragraph (1) of section

25 51(d) (defining members of targeted groups) is amended
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1 by striking ‘‘or’’ at the end of subparagraph (I), by strik2 ing the period at the end of subparagraph (J) and insert3 ing ‘‘, or’’, and by adding at the end the following new

4 subparagraph:

5 ‘‘(K) an economically disadvantaged tax enter6 prise zone resident.’’

7 (b) ECONOMICALLY DISADVANTAGED TAX ENTER8 PRISE ZONE RESIDENT.—Section 51(d) is amended by

9 adding at the end thereof the following new paragraph:

10 ‘‘(17) ECONOMICALLY DISADVANTAGED TAX

11 ENTERPRISE ZONE RESIDENT.—

12 ‘‘(A) IN GENERAL.—The term ‘economi13 cally disadvantaged tax enterprise zone resi14 dent’ means an individual—

15 ‘‘(i) whose principal place of abode

16 while performing services for the employer

17 is within a tax enterprise zone (as defined

18 in section 1391(a)), and

19 ‘‘(ii) who is certified by the designated

20 local agency as being a member of an eco21 nomically disadvantaged family (as deter22 mined under paragraph (11)).

23 ‘‘(B) SPECIAL RULE FOR DETERMINING

24 AMOUNT OF CREDIT.—For purposes of applying

25 this subpart to wages paid or incurred to any
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1 economically disadvantaged tax enterprise zone

2 resident, subsection (a) shall be applied by sub3 stituting ‘30 percent’ for ‘40 percent’.’’

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to individuals who begin work for

6 the employer after the date of the enactment of this Act.

7 Subtitle D—Credit for Contribu8 tions to Certain Community De9 velopment Corporations

10 SEC. 131. CREDIT FOR CONTRIBUTIONS TO CERTAIN COM11 MUNITY DEVELOPMENT CORPORATIONS.

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

13 Internal Revenue Code of 1986, the current year business

14 credit shall include the credit determined under this sec15 tion.

16 (b) DETERMINATION OF CREDIT.—The credit deter17 mined under this section for each taxable year in the credit

18 period with respect to any qualified CDC contribution

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

20 of such contribution.

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

22 the credit period with respect to any qualified CDC con23 tribution is the period of 10 taxable years beginning with

24 the taxable year during which such contribution was made.
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1 (d) QUALIFIED CDC CONTRIBUTION.—For purposes

2 of this section—

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

4 contribution’’ means any transfer of cash—

5 (A) which is made to a selected community

6 development corporation during the 5-year pe7 riod beginning on the date such corporation was

8 selected for purposes of this section,

9 (B) the amount of which is available for

10 use by such corporation for at least 10 years,

11 (C) which is to be used by such corpora12 tion for qualified low-income assistance within

13 its operational area, and

14 (D) which is designated by such corpora15 tion for purposes of this section.

16 (2) LIMITATIONS ON AMOUNT DESIGNATED.—

17 The aggregate amount of contributions to a selected

18 community development corporation which may be

19 designated by such corporation shall not exceed

20 $2,000,000.

21 (e) SELECTED COMMUNITY DEVELOPMENT COR22 PORATIONS.—

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

24 the term ‘‘selected community development corpora25 tion’’ means any corporation—
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1 (A) which is described in section 501(c)(3)

2 of such Code and exempt from tax under sec3 tion 501(a) of such Code,

4 (B) the principal purposes of which include

5 promoting employment of, and business oppor6 tunities for, low-income individuals who are

7 residents of the operational area, and

8 (C) which is selected by the Secretary of

9 Housing and Urban Development for purposes

10 of this section.

11 (2) ONLY 10 CORPORATIONS MAY BE SE12 LECTED.—

13 (A) IN GENERAL.—The Secretary of Hous14 ing and Urban Development may select 10 cor15 porations for purposes of this section, subject to

16 the availability of eligible corporations. Such se17 lections may be made only before January 1,

18 1994. At least 4 of the operational areas of the

19 corporations selected must be rural areas (as

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

21 (B) PRIORITY OF DESIGNATIONS.—In se22 lecting corporations for purposes of this section,

23 such Secretary shall give priority to corpora24 tions with a demonstrated record of perform25 ance in administering community development
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1 programs which target at least 75 percent of

2 the jobs emanating from their investment funds

3 to low income or unemployed individuals.

4 (3) OPERATIONAL AREAS MUST HAVE CERTAIN

5 CHARACTERISTICS.—A corporation may be selected

6 for purposes of this section only if its operational

7 area meets the following criteria:

8 (A) The area meets the size requirements

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

10 1391(b) which would apply if such area were to

11 be designated as a tax enterprise zone.

12 (B) The unemployment rate (as deter13 mined by the appropriate available data) is not

14 less than the national unemployment rate.

15 (C) The median family income of residents

16 of such area does not exceed 80 percent of the

17 median gross income of residents of the juris18 diction of the local government which includes

19 such area.

20 (f) QUALIFIED LOW-INCOME ASSISTANCE.—For pur21 poses of this section, the term ‘‘qualified low-income as22 sistance’’ means assistance—

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

24 and business opportunities for, low-income individ-
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1 uals who are residents of the operational area of the

2 community development corporation, and

3 (2) which is approved by the Secretary of Hous4 ing and Urban Development.

5 Subtitle E—Authority for National

6 Banks To Deal in Securities of

7 Corporations Located in Tax

8 Enterprise Zones

9 SEC. 141. AUTHORITY FOR NATIONAL BANKS TO DEAL IN

10 SECURITIES OF CORPORATIONS LOCATED IN

11 TAX ENTERPRISE ZONES.

12 The clause designated the ‘‘Seventh’’ of section 5136

13 of the Revised Statutes (12 U.S.C. 24) is amended by add14 ing at the end thereof the following new sentence: ‘‘Any

15 national bank meeting minimum capital requirements

16 which is located in (or maintains a branch located in) a

17 tax enterprise zone (as defined in section 1391 of the In18 ternal Revenue Code of 1986) may deal in securities is19 sued by any corporation whose office is located in such

20 zone and may underwrite the securities of any corporation

21 headquartered in such zone.’’
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1 Subtitle F—Report on Number of

2 Areas Meeting Enterprise Zone

3 Criteria

4 SEC. 151. REPORT.

5 (a) IN GENERAL.—The Secretary of the Treasury, in

6 consultation with the Secretary of Housing and Urban De7 velopment and the Secretary of Agriculture, shall conduct

8 a study to determine—

9 (1) the number of areas in the United States

10 which satisfy the tax enterprise zone eligibility cri11 teria specified in section 1391(b) of the Internal

12 Revenue Code of 1986, and

13 (2) the estimated additional cost to the Federal

14 Government by reason of this title and title II if all

15 such areas were designated as tax enterprise zones.

16 (b) REPORT.—The report of the study required by

17 subsection (a) shall be submitted to the Congress not later

18 than 1 year after the date of the enactment of this Act.

19 TITLE II—ADDITIONAL ASSIST20 ANCE TO ENTERPRISE ZONES

21 AND OTHER DISTRESSED

22 COMMUNITIES

23 SEC. 201. PURPOSE.

24 The purpose of this title is to implement initiatives

25 to improve the quality of life and expand economic oppor-
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1 tunity by providing assistance to States, units of general

2 local government, and other entities for implementing ac3 tivities to rejuvenate neighborhoods and promote economic

4 opportunity.

5 Subtitle A—National Public-Private

6 Partnership Program

7 SEC. 211. SENSE OF CONGRESS.

8 It is the sense of Congress that public-private part9 nerships between government and community-based orga10 nizations offer an opportunity to empower residents of

11 low-income distressed communities and to forge innovative

12 solutions to the challenges confronting these communities,

13 and that increased resources should be invested in such

14 partnerships.

15 SEC. 212. AUTHORIZATION OF APPROPRIATIONS.

16 (a) IN GENERAL.—To promote national public-pri17 vate partnerships, there are authorized to be appro18 priated—

19 (1) for grants under section 236 for implemen20 tation of the Model Neighborhood Aid Program es21 tablished under chapter 2 of subtitle B of this Act—

22 (A) $40,000,000 for fiscal year 1993;

23 (B) $126,000,000 for fiscal year 1994;

24 (C) $132,000,000 for fiscal year 1995;

25 (D) $138,000,000 for fiscal year 1996;
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1 (E) $147,000,000 for fiscal year 1997;

2 (F) $153,000,000 for fiscal year 1998;

3 (G) $162,000,000 for fiscal year 1999;

4 (H) $168,000,000 for fiscal year 2000;

5 (I) $227,000,000 for fiscal year 2001; and

6 (J) $236,000,000 for fiscal year 2002;

7 (2) for the National Community Economic

8 Partnership program established under subtitle E of

9 this title—

10 (A) $40,000,000 for fiscal year 1993;

11 (B) $126,000,000 for fiscal year 1994;

12 (C) $132,000,000 for fiscal year 1995;

13 (D) $138,000,000 for fiscal year 1996;

14 (E) $147,000,000 for fiscal year 1997;

15 (F) $153,000,000 for fiscal year 1998;

16 (G) $162,000,000 for fiscal year 1999;

17 (H) $168,000,000 for fiscal year 2000;

18 (I) $227,000,000 for fiscal year 2001; and

19 (J) $236,000,000 for fiscal year 2002; and

20 (3) for the Enterprise Capital Access Fund

21 Demonstration Program established under section

22 281 of this Act—

23 (A) $20,000,000 for fiscal year 1993;

24 (B) $63,000,000 for fiscal year 1994;

25 (C) $66,000,000 for fiscal year 1995;
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•HR 1338 IH

1 (D) $68,000,000 for fiscal year 1996;

2 (E) $72,000,000 for fiscal year 1997;

3 (F) $78,000,000 for fiscal year 1998;

4 (G) $81,000,000 for fiscal year 1999;

5 (H) $84,000,000 for fiscal year 2000;

6 (I) $115,000,000 for fiscal year 2001; and

7 (J) $118,000,000 for fiscal year 2002.

8 (b) AVAILABILITY OF AMOUNTS.—Notwithstanding

9 any other provision of this Act, of the amounts appro10 priated for programs pursuant to paragraphs (2) and (3)

11 of subsection (a), not less than 50 percent shall be avail12 able only for projects or activities that directly and prin13 cipally benefit the residents of tax enterprise zones des14 ignated pursuant to section 1391 of the Internal Revenue

15 Code of 1986.

16 (c) TREATMENT OF APPROPRIATED AMOUNTS.—

17 Notwithstanding the provisions of title XII of Public Law

18 102–368 (106 Stat. 1160–1161) and the programs re19 ferred to in such title, the National Public/Private Part20 nership Program under such title shall consist of the eligi21 ble programs, projects, and activities under the programs

22 under the provisions of this subtitle, chapter 2 of subtitle

23 B, subtitle E, and section 281 and such provisions shall

24 be considered the National Public/Private Partnership
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1 Program for which amounts are available under title XII

2 of Public Law 102–368.

3 Subtitle B—Coordinated and Com4 prehensive Neighborhood Aid

5 for Tax Enterprise Zones and

6 Other Communities

7 CHAPTER 1—ENTERPRISE COMMUNITY

8 BLOCK GRANT DEMONSTRATION PRO9 GRAM

10 SEC. 221. FUNDING.

11 (a) AUTHORIZATION OF APPROPRIATIONS.—There

12 are authorized to be appropriated for assistance under sec13 tion 222, $400,000,000 for fiscal year 1993,

14 $1,260,000,000 for fiscal year 1994, $1,320,000,000 for

15 fiscal year 1995, $1,380,000,000 for fiscal year 1996,

16 $1,470,000,000 for fiscal year 1997, and such sums as

17 may be necessary for each of the fiscal years 1998 through

18 2002, except that amounts authorized under this section

19 for each of the fiscal years 1998 through 2002 shall not

20 be less than twice the amount of the revenue loss estimates

21 to result as a result of enterprise zone tax preferences

22 under section 1391 of the Internal Revenue Code of 1986

23 less the sum of the amounts authorized by section 212(a)

24 of this Act.
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1 (b) TREATMENT OF APPROPRIATED AMOUNTS.—The

2 program for providing assistance under this chapter shall

3 be considered the Enterprise Community Block Grant

4 Demonstration Program for which amounts are available

5 under title XII of Public Law 102–368 (106 Stat. 1160).

6 SEC. 222. ALLOCATION OF AMOUNTS AMONG TAX ENTER7 PRISE ZONES.

8 (a) IN GENERAL.—The Interagency Council estab9 lished under section 242 of this Act shall make any

10 amounts available pursuant to section 221 (and not set

11 aside under section 222(d)) available under this chapter

12 to provide assistance on behalf of each tax enterprise zone

13 designated under section 1391 of the Internal Revenue

14 Code of 1986 for which a neighborhood aid plan under

15 section 243 of this Act has been submitted and approved

16 by the Interagency Council.

17 (b) ALLOCATION BETWEEN URBAN AND RURAL

18 ZONES.—Of the amounts available for each fiscal year

19 under this chapter for tax enterprise zones, 80 percent

20 shall be available for urban tax enterprise zones and 20

21 percent shall be available for rural development investment

22 zones.

23 (c) DIVISION AMONG URBAN AND RURAL ZONES.—

24 (1) URBAN ZONES.—The amounts available for

25 each fiscal year under this chapter for urban tax en-
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1 terprise zones shall be allocated so as to reserve an

2 equal amount for each urban zone that may be des3 ignated prior to the end of the calendar year begin4 ning during the fiscal year for which such amounts

5 were made available, pursuant to the annual limits

6 on zones specified in section 1391 of the Internal

7 Revenue Code of 1986.

8 (2) RURAL ZONES.—The amounts available for

9 each fiscal year under this chapter for rural develop10 ment investment zones shall be allocated so as to re11 serve an equal amount for each rural development

12 investment zone that may be designated prior to the

13 end of the calendar year beginning during the fiscal

14 year for which such amounts were made available,

15 pursuant to the annual limits on zones specified in

16 section 1391 of the Internal Revenue Code of 1986.

17 (d) SET ASIDE.—Of the amounts available pursuant

18 to subsection (a) for fiscal year 1993, the Interagency

19 Council established under section 242 shall make not less

20 than $5,000,000 available for the access to jobs/reverse

21 commuting demonstration program under section 282.

22 (e) AVAILABILITY.—Notwithstanding any other pro23 vision of law, amounts available pursuant to authoriza24 tions under this chapter shall remain available until the
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1 end of the fiscal year following the year for which such

2 amounts are appropriated.

3 SEC. 223. USE OF AMOUNTS.

4 (a) IN GENERAL.—The assistance allocated for a fis5 cal year under section 222 on behalf of each tax enterprise

6 zone shall be available only for carrying out selected pro7 grams within the tax enterprise zone, in accordance with

8 the neighborhood aid plan of the tax enterprise zone for

9 the fiscal year approved under section 243 and subject to

10 the provisions of this section.

11 (b) ALLOCATION AMONG PROGRAM CATEGORIES.—

12 (1) IN GENERAL.—Except as provided in para13 graph (2), of the total amount of assistance provided

14 under this chapter on behalf of a tax enterprise zone

15 for any fiscal year, the sum of the amounts used to

16 carry out selected programs referred to under any

17 one of paragraphs (1) through (6) of section 241

18 may not exceed 20 percent of such total amount.

19 (2) WAIVER OF CAPS.—Pursuant to a request

20 contained in an neighborhood aid plan under section

21 243, the interagency council may provide that the

22 requirement under paragraph (1) shall not apply

23 with respect to amounts for the fiscal year involved

24 that are used to carry out selected programs under

25 the plan, except that of the total amount of assist-
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1 ance provided under this chapter on behalf of such

2 tax enterprise zone for the fiscal year, the sum of

3 the amounts used to carry out selected programs re4 ferred to under any single paragraph under section

5 241 may not exceed 30 percent of such total amount

6 and may not be less than 5 percent of such total

7 amount.

8 (c) PROVISION OF ASSISTANCE.—Upon the approval

9 of a neighborhood aid plan under section 243 for a tax

10 enterprise zone, the appropriate Federal agency head for

11 each selected program under the approved plan shall make

12 available on behalf of the enterprise zone (under such pro13 gram and through the appropriate eligible entity), from

14 amounts available on behalf of such zone pursuant to sec15 tion 222 for the fiscal year involved, the amount of assist16 ance determined in accordance with the approved plan.

17 (d) SUPPLEMENTATION REQUIREMENT.—Any

18 amounts provided under this chapter shall be in supple19 ment to, and shall not supplant, any Federal, State, local,

20 or private funds from other sources already used, or com21 mitted for use, for programs, projects, activities, and serv22 ices assisted under this chapter or comparable to such pro23 grams, projects, activities, and services. No appropriate

24 Federal agency head may reduce the usual allocations with

25 respect to any jurisdiction under any eligible program be-
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1 cause such jurisdiction allocates funds under this chapter

2 to any of such programs.

3 CHAPTER 2—MODEL NEIGHBORHOOD AID

4 PROGRAM

5 SEC. 231. PURPOSE.

6 The purposes of this chapter are—

7 (1) to encourage communities to develop coordi8 nated and comprehensive neighborhood aid plans,

9 with the participation of various governmental, com10 munity, neighborhood, law enforcement, business,

11 school and other representatives, that target the de12 livery of Federal, State, local, and private assistance

13 to the community in an effective and coordinated

14 manner; and

15 (2) to provide for communities to request fund16 ing under various Federal assistance programs by

17 submission of the single comprehensive plan, to bet18 ter coordinate the provision of assistance under such

19 programs.

20 SEC. 232. SINGLE APPLICATIONS BY LOCAL GOVERNMENTS

21 FOR FUNDING UNDER ELIGIBLE PROGRAMS.

22 (a) IN GENERAL.—The Interagency Council estab23 lished under section 242 shall carry out a program under

24 this subtitle to make assistance for each fiscal year under

25 the eligible programs referred to in section 241 available
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1 to entities eligible to receive and administer such assist2 ance in the fiscal year, pursuant to the submission and

3 approval of a single coordinated and comprehensive neigh4 borhood aid plan under section 243 for such year on behalf

5 of such entities by a unit of general local government.

6 (b) TREATMENT OF NEIGHBORHOOD AID PLAN.—

7 Except as provided in section 234, each appropriate Fed8 eral agency head for each selected program under a neigh9 borhood aid plan submitted in accordance with the re10 quirements of this chapter and chapter 3 shall treat the

11 plan as an application for assistance under the selected

12 program for the fiscal year submitted in full compliance

13 with the requirements for requesting or applying for as14 sistance under the program.

15 SEC. 233. AVAILABILITY AND USE OF AMOUNTS.

16 (a) AVAILABILITY.—Any amounts made available for

17 a fiscal year to carry out the eligible programs may be

18 made available pursuant to an approved plan for such

19 year, except that the amounts made available in accord20 ance with section 221 may be made available only as pro21 vided in this subtitle.

22 (b) USE.—Any assistance provided on behalf of a

23 unit of general local government pursuant to an approved

24 plan for the fiscal year shall be available only for carrying
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1 out the selected programs under the plan in the amounts

2 and manner provided in the plan.

3 (c) PROVISION OF ASSISTANCE.—Upon the approval

4 of a neighborhood aid plan under section 243 for a unit

5 of general local government, the appropriate Federal agen6 cy head for each selected program under the approved

7 plan shall make available on behalf of the unit of general

8 local government (under such program and through the

9 appropriate eligible entity) the amount of assistance for

10 the fiscal year involved that is approved under the plan

11 by the Interagency Council.

12 (d) WAIVER OF PROGRAM REQUIREMENTS.—The

13 Interagency Council may waive the applicability of any

14 Federal laws and regulations relating to the eligible pro15 grams to the extent necessary to facilitate providing as16 sistance under eligible programs pursuant to plans for as17 sistance under this chapter.

18 SEC. 234. PRIORITY IN FUNDING.

19 In allocating any amounts made available for a fiscal

20 year to carry out each eligible program (that is not allo21 cated based on a formula), the appropriate Federal agency

22 head shall give priority to providing such amounts pursu23 ant to any neighborhood aid plan for the fiscal year sub24 mitted under this chapter that (1) is approved by the
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1 Interagency Council with respect to such program, and (2)

2 under which such program is a selected program.

3 SEC. 235. TREATMENT OF PREVIOUSLY APPROVED WEED

4 AND SEED COMMUNITIES.

5 (a) TREATMENT.—Any strategy under subsection (b)

6 shall be considered to be a neighborhood aid plan submit7 ted in accordance with the requirements of this chapter

8 and chapter 3, except to the extent that the Interagency

9 Council for Neighborhood Aid established under section

10 242 requires the unit of general local government submit11 ting the strategy to amend the strategy for purposes of

12 including any information necessary to facilitate the provi13 sion of assistance under this chapter. If any such unit of

14 general government submits the additional information re15 quired by such Interagency Council, the strategy shall be

16 considered to be a neighborhood aid plan approved under

17 section 243, except that the Interagency Council may exer18 cise any authority under section 243(f)(2)(B) with respect

19 to such strategy.

20 (b) IDENTIFICATION OF PREVIOUSLY APPROVED

21 WEED AND SEED STRATEGIES.—A strategy referred to

22 in subsection (a) is any comprehensive neighborhood aid

23 strategy of any unit of general local government approved,

24 before the date of the enactment of this Act, by the inter25 agency council responsible for coordinating the weed and
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1 seed program activities in connection with amounts made

2 available for the Executive Office of Weed and Seed by

3 Public Law 102–395 (106 Stat. 1830), and shall include

4 any such strategy submitted by a unit of general local gov5 ernment and approved by such interagency council but not

6 funded with the amounts made available by such Act.

7 SEC. 236. ONE-TIME STRATEGY IMPLEMENTATION GRANTS.

8 To the extent amounts are available to carry out this

9 section, the Interagency Council shall make grants to

10 units of general local government for which neighborhood

11 aid plans have been approved pursuant to this chapter,

12 subject to the following requirements:

13 (1) USE.—Amounts from a grant under this

14 section shall be used by the unit of general local gov15 ernment or the eligible entities referred to in the ap16 proved plan only for the following purposes:

17 (A) LOCAL COORDINATING BOARD.—To es18 tablish a permanent local coordinating board

19 under section 243(c), which shall carry out the

20 functions required under such section and ad21 vise the local government and such entities re22 garding implementation of any approved plans

23 of the local government pursuant to this

24 chapter.
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1 (B) UNIQUE OR ESSENTIAL ACTIVITIES.—

2 To the extent that such use is authorized in the

3 approved plan of the unit of general local gov4 ernment, to carry out any unique or essential

5 aspect of the approved plan of the unit of gen6 eral local government for which funding is not

7 available under the selected programs for which

8 funding is provided under the approved plan.

9 (C) SUPPLEMENTATION OF SELECTED

10 PROGRAMS.—To the extent that such use is not

11 prohibited by the Interagency Council in the ap12 proved plan of the unit of general local govern13 ment, to supplement amounts provided under

14 the approved plan for carrying out activities

15 under selected programs.

16 (2) ONE-TIME GRANTS.—No community may be

17 awarded more than 1 grant under this section.

18 (3) GRANT LIMIT.—No grant awarded under

19 this section may exceed $1,000,000.

20 (4) DISBURSEMENT.—The Interagency Council

21 may disburse the amounts of any grant awarded

22 under this section to the unit of general local gov23 ernment in increments over a reasonable period of

24 time, as determined by the Council, beginning upon

25 the availability of such grant amounts.
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1 CHAPTER 3—ELIGIBLE PROGRAMS AND

2 INTERAGENCY COUNCIL FOR NEIGH3 BORHOOD AID

4 SEC. 241. ELIGIBLE PROGRAMS.

5 Assistance may be provided under chapters 1 and 2

6 for carrying out the following activities, projects, and pro7 grams:

8 (1) CRIME AND CRIMINAL JUSTICE.—

9 (A) Community policing projects and ac10 tivities under the Edward Byrne Memorial

11 State and Local Law Enforcement Assistance

12 Program under part E of title I of the Omnibus

13 Crime Control and Safe Streets Act of 1968

14 (42 U.S.C. 3751 et seq.).

15 (B) Chapter B of subpart 2 of part E of

16 title I of the Omnibus Crime Control and Safe

17 Streets Act of 1968.

18 (C) Projects and activities under chapter 1

19 of subtitle B of title III of the Anti-Drug Abuse

20 Act of 1988 (42 U.S.C. 11801 et seq.).

21 (2) JOB TRAINING.—

22 (A) The Young Adult Employment Dem23 onstration program under part K of title IV of

24 the Job Training Partnership Act (as added by

25 section 241 of this Act).
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1 (B) The Job Corps program under part B

2 of title IV of the Job Training Partnership Act

3 (29 U.S.C. 1692 et seq.).

4 (C) Title II of the Job Training Partner5 ship Act (29 U.S.C. 1601 et seq.).

6 (D) The American Conservation and Youth

7 Corps program under subtitle C of title I of the

8 National and Community Service Act of 1990

9 (42 U.S.C. 12541 et seq.).

10 (E) The Access to Jobs/Reverse Commut11 ing Demonstration Program established under

12 section 286 of this Act.

13 (3) EDUCATION.—

14 (A) The Head Start program under the

15 Head Start Act (42 U.S.C. 9831 et seq.).

16 (B) The programs under the Carl D. Per17 kins Vocational Educational and Applied Tech18 nology Education Act (20 U.S.C. 2301 et seq.).

19 (C) Projects under the Comprehensive

20 Child Development Act (42 U.S.C. 9881 et

21 seq.).

22 (D) Activities under the Child Care and

23 Development Block Grant Act of 1990 (42

24 U.S.C. 9858 et seq.).
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1 (E) The programs under chapter 1 of title

2 I of the Elementary and Secondary Education

3 Act of 1965.

4 (F) The TRIO programs under part A of

5 title IV of the Higher Education Act of 1965

6 (20 U.S.C. 1070 et seq.).

7 (G) The programs under the Adult Edu8 cation Act (20 U.S.C. 1201 et seq.).

9 (H) Literacy activities authorized under

10 the National Literacy Act of 1991.

11 (4) HEALTH, NUTRITION AND FAMILY ASSIST12 ANCE.—

13 (A) The special supplemental food program

14 for women, infants, and children under section

15 17 of the Child Nutrition Act of 1966.

16 (B) The following programs under the

17 Public Health Service Act (42 U.S.C. 201 et

18 seq.):

19 (i) Capacity expansion of substance

20 abuse treatment facilities.

21 (ii) Substance abuse treatment for in22 dividuals under criminal justice super23 vision.

24 (iii) Substance abuse treatment for

25 pregnant and postpartum women.
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1 (iv) Community prevention grants re2 garding substance abuse.

3 (v) Substance abuse treatment im4 provement grants.

5 (vi) The programs under sections 329,

6 330, 340 and 340A of such Act (42 U.S.C.

7 254c).

8 (C) The programs under title XXVI of the

9 Public Health Service Act (42 U.S.C. 300ff–21

10 et seq.).

11 (D) The family support programs under

12 subtitle F of title VII of the Stewart B. McKin13 ney Homeless Assistance Act (42 U.S.C. 1148

14 et seq.).

15 (E) Projects for high risk youth under title

16 V of the Public Health Service Act (42 U.S.C.

17 290aa et seq.).

18 (F) Emergency child protective service

19 grants under section 107 of the Child Abuse

20 Prevention and Treatment Act (42 U.S.C.

21 5106a).

22 (G) Family support centers and family re23 source and support programs under sections

24 933 and 934(d) of the Augustus F. Hawkins
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1 Human Services Reauthorization Act of 1990

2 (Public Law 101–501).

3 (5) HOUSING AND COMMUNITY DEVELOP4 MENT.—

5 (A) The community development block

6 grant program under title I of the Housing and

7 Community Development Act of 1974 (42

8 U.S.C. 5301 et seq.).

9 (B) The public and Indian housing mod10 ernization program under section 14 of the

11 United States Housing Act of 1937 (42 U.S.C.

12 14371).

13 (C) The public and assisted housing drug

14 elimination program under chapter 2 of subtitle

15 C of title V of the Anti-Drug Abuse Act of

16 1988 (42 U.S.C. 11901 et seq.).

17 (D) Contracts for rental assistance at18 tached to structures pursuant to paragraph (2)

19 of section 8 of the United States Housing Act

20 of 1937 (42 U.S.C. 1437f).

21 (E) The HOME investment partnership

22 program under title II of the Cranston-Gon23 zalez National Affordable Housing Act (42

24 U.S.C. 12721 et seq.).
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1 (F) The self-help housing technical assist2 ance grant program under section 523 of the

3 Housing Act of 1949 (42 U.S.C. 1490c).

4 (G) Rural housing preservation grants

5 under section 533 of the Housing Act of 1949

6 (42 U.S.C. 1490m).

7 (H) Rural rental housing loans under sec8 tion 515 of the Housing Act of 1949 (42

9 U.S.C. 1485).

10 (I) Rural rental housing assistance pay11 ments under section 521(a)(2) of the Housing

12 Act of 1949 (42 U.S.C. 1490a).

13 (J) Rural water and waste disposal grants

14 pursuant to paragraphs (2) and (6) of section

15 306(a) of the Consolidated Farm and Rural

16 Development Act (7 U.S.C. 1926(a)) and water

17 and waste facility loans and grants under sec18 tion 306C of such Act.

19 (K) Private business enterprise grants

20 under section 310B(c) of the Consolidated

21 Farm and Rural Development Act (7 U.S.C.

22 1926).

23 (L) Loan guarantees under section 108 of

24 the Housing and Community Development Act

25 (as amended by section 232 of this Act).
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1 (M) Outreach and assistance for socially

2 disadvantaged farmers and ranchers under sec3 tion 2501 of the Food, Agriculture, and Trade

4 Act of 1990 (7 U.S.C. 2279).

5 (N) Public Housing Family Investment

6 Centers under section 22 of the United States

7 Housing Act of 1937 (42 U.S.C. 1437t).

8 (O) The Youthbuild program under sub9 title D of title IV of the Cranston-Gonzalez Na10 tional Affordable Housing Act (42 U.S.C.

11 12899 et seq.).

12 (P) The Neighborhood Reinvestment Cor13 poration under title VI of the Housing and

14 Community Development Amendments of 1978

15 (42 U.S.C. 8101 et seq.).

16 (6) OTHERS.—Any other activities, projects,

17 and programs authorized in law that are consistent

18 with the purposes of this subtitle, as the Interagency

19 Council may provide.

20 SEC. 242. INTERAGENCY COUNCIL FOR NEIGHBORHOOD

21 AID.

22 (a) ESTABLISHMENT.—There is hereby established

23 an interagency council to be known as the Interagency

24 Council for Neighborhood Aid.
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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

8 National and Community Service.

9 (c) DUTIES.—The Interagency Council shall—

10 (1) review and approve neighborhood aid plans

11 for assistance under chapters 1 and 2 submitted

12 pursuant to section 243;

13 (2) direct the appropriate Federal agency head

14 to provide assistance under the selected programs

15 under approved plans in the amount approved, pur16 suant to the provisions of chapters 1 and 2; and

17 (3) carry out any other responsibilities of the

18 Council as provided under this subtitle.

19 SEC. 243. NEIGHBORHOOD AID PLANS.

20 (a) ESTABLISHMENT OF APPLICATION PROCE21 DURE.—The Interagency Council shall establish, by regu22 lation, a procedure for submission and approval of a single

23 comprehensive neighborhood aid plan for a fiscal year as

24 an application under this section for receiving assistance

25 for the fiscal year under chapter 1 or 2.
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1 (b) REQUIREMENTS.—The Interagency Council shall

2 provide for the form and manner of submission of neigh3 borhood aid plans and shall require that the plan be sub4 mitted—

5 (1) in the case of a plan for assistance under

6 chapter 1, by the State, unit of local government, or

7 economic or community development corporation,

8 that submitted the nomination for designation of the

9 area designated as a tax enterprise zone, and

10 promptly after such designation; and

11 (2) in the case of a plan for assistance under

12 chapter 2, by a unit of general local government.

13 (c) LOCAL COORDINATION.—

14 (1) PURPOSES.—Each neighborhood aid plan

15 submitted under this section shall be developed in

16 coordination and consultation with a local coordinat17 ing board under paragraph (2). The local coordinat18 ing board shall ensure that the programs, projects,

19 activities, and services under section 241(1) carried

20 out with amounts provided pursuant to an approved

21 plan are sufficiently coordinated with the other pro22 grams, projects, activities, and services carried out

23 pursuant to the plan, and that all such programs,

24 projects, activities, and services are coordinated with

25 law enforcement efforts within the area nominated
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1 for designation as a tax enterprise zone or the area

2 served under the plan submitted by the unit of gen3 eral local government, as appropriate.

4 (2) MEMBERSHIP.—The local coordinating

5 board referred to in paragraph (1) shall include rep6 resentatives of units of local government within such

7 area, representatives of law enforcement agencies

8 having jurisdiction within such area, residents of the

9 area, and community leaders (including local busi10 ness persons, bankers, architects or planners, rep11 resentatives of school boards, and representatives of

12 nonprofit community-based organizations such as

13 community development corporations, community ac14 tion agencies, community health centers, Head Start

15 agencies, agencies or organizations establishing Job

16 Corps centers, and local Neighborhood Housing

17 Services organizations).

18 (d) CONTENTS.—Each neighborhood aid plan for a

19 fiscal year shall include the following information:

20 (1) A list of the eligible programs for which

21 funding is requested for the fiscal year and a general

22 description of the types of activities to be carried out

23 with such assistance.

24 (2) A statement of—
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1 (A) in the case of a plan for assistance

2 under chapter 1 for a tax enterprise zone, the

3 percentage of the total amount of any funding

4 received for the fiscal year under chapter 1 that

5 will be used for each selected program; and

6 (B) in the case of a plan for assistance

7 under chapter 2 on behalf of a unit of general

8 local government, the amount of funding re9 quested for the fiscal year for each selected pro10 gram.

11 (3) A statement documenting the entities that

12 will receive any assistance provided for the selected

13 programs on behalf of the tax enterprise zone or

14 unit of general local government, as appropriate, and

15 the entities’ eligibility for such assistance.

16 (4) A statement documenting the membership

17 of the local coordinating board organized pursuant

18 to subsection (c) and describing the coordination be19 tween the programs, projects, activities, and services

20 assisted pursuant to the plan and local law enforce21 ment efforts in the tax enterprise zone or unit of

22 general local government, as appropriate.

23 (5) In the case of a plan for assistance under

24 chapter 1, a request for any waiver of the require25 ment under section 223(b)(1) (as authorized in
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1 paragraph (2) of such section) for the fiscal year

2 and a statement documenting the rationale for such

3 waiver.

4 (6) A statement documenting other Federal,

5 State, and local resources for the fiscal year for the

6 community in which the tax enterprise zone or unit

7 of general local government is located, as appro8 priate, that will be dedicated to the types of pro9 grams, projects, activities, and services to be as10 sisted pursuant to the plan.

11 (7) A statement documenting a strong commit12 ment by nonprofit community-based organizations in

13 the tax enterprise zone or unit of general local gov14 ernment, as appropriate, for carrying out the se15 lected programs and similar programs, projects, ac16 tivities, and services.

17 (8) A statement documenting private sector re18 sources, including corporate contributions and indi19 vidual commitments, to supplement assistance pro20 vided pursuant to the plan.

21 (9) A statement documenting the efforts made

22 by the local jurisdiction containing the tax enterprise

23 zone or the unit of general local government, as ap24 propriate, to encourage local financial institutions to

25 satisfy their obligations under the Community Rein-
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1 vestment Act of 1977 by making loans to enterprise

2 zone businesses with emphasis on startup and other

3 small business concerns (as defined in section 3(a)

4 of the Small Business Act and the commitments

5 made by local financial institutions in response to

6 these efforts.

7 (10) A coordinated and comprehensive strategy

8 for the delivery of Federal, State, and local re9 sources and assistance for the tax enterprise zone or

10 unit of general local government, as appropriate,

11 that addresses public safety, includes drug and

12 crime prevention, improves health, education and

13 other social services, and promotes neighborhood re14 vitalization through strategies to create jobs and

15 other economic opportunities which assist families to

16 become self sufficient. The strategy may include im17 provements in infrastructure, public facilities, and

18 affordable housing opportunities embodying good

19 urban design and neighborhood planning principles

20 that contribute to the creation of wholesome and at21 tractive social, economic, and physical environments,

22 and any other appropriate activities.

23 (11) A statement demonstrating that any

24 amounts requested under the plan for selected pro25 grams are part of an integrated and comprehensive
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1 plan for the use of Federal, State, local, and private

2 resources to accomplish specific goals and measur3 able outcomes for neighborhood revitalization.

4 (12) In the case of a plan for assistance under

5 chapter 2 on behalf of unit of general local govern6 ment, a statement requesting any approval of au7 thority necessary under section 236(1)(B) to use

8 grant amounts provided to the unit of general local

9 government to carry out a unique or essential aspect

10 of the plan.

11 (13) In the case of a plan for assistance under

12 chapter 2 on behalf of unit of general local govern13 ment, a statement of the extent to which any grant

14 amounts provided to the unit of general local govern15 ment under section 236 will be used under section

16 236(1)(C) to supplement amounts for the selected

17 programs provided pursuant to the approved plan.

18 (e) REVIEW.—In reviewing each neighborhood aid

19 plan submitted under this section, each member of the

20 Interagency Council shall review the portion of the plan

21 concerning any request or eligibility for assistance under

22 any selected program under the jurisdiction of such mem23 ber to determine whether providing assistance pursuant

24 to such plan for the fiscal year involved would comply with
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1 the laws and regulations applicable to such program (and

2 not waived under section 233(d)).

3 (f) APPROVAL AND DISAPPROVAL.—

4 (1) TIMING.—The Interagency Council shall re5 view each neighborhood aid plan promptly upon re6 ceipt and shall approve or disapprove each plan not

7 later than the expiration of the 30-day period begin8 ning upon receipt.

9 (2) STANDARDS FOR APPROVAL.—

10 (A) IN GENERAL.—Subject to the require11 ments under subparagraph (B), the Council

12 shall approve a plan if the Council determines

13 that—

14 (i) the information, documentation, or

15 evidence required under subsection (d) is

16 accurate and sufficient;

17 (ii) the assistance requested for the

18 selected programs under the plan will as19 sist in the economic development of the tax

20 enterprise zone or unit of general local

21 government, as appropriate;

22 (iii) the eligible entities identified in

23 the plan are capable and qualified to re24 ceive and administer the assistance pursu25 ant to the plan; and
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1 (iv) the appropriate Federal agency

2 head has determined that providing assist3 ance pursuant to the plan for the fiscal

4 year involved would comply with the laws

5 and regulations applicable to the selected

6 programs (and not waived under section

7 233(d)).

8 (B) PLANS OF UNITS OF GENERAL LOCAL

9 GOVERNMENT.—In approving and disapproving

10 plans for assistance under chapter 2, the Coun11 cil shall take into consideration any factors re12 lating to determining the appropriate amount of

13 assistance to provide for the fiscal year involved

14 for each selected program under the plan. The

15 Council may, in approving any plan under chap16 ter 2, approve assistance for only certain se17 lected programs under the plan and disapprove

18 assistance for other selected programs, and may

19 approve assistance for certain selected pro20 grams in amounts different from the amount of

21 funding requested.

22 (3) DISAPPROVAL.—If, pursuant to review

23 under this section, the Council determines that any

24 plan is incomplete or unsatisfactory, the council

25 shall, before the expiration of the period referred to
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1 in paragraph (1), notify the entity submitting the

2 plan of the reasons for the failure to approve the

3 plan and that the plan may be resubmitted during

4 the period referred to in paragraph (4).

5 (4) REVIEW OF RESUBMITTED PLAN.—The

6 Council shall permit any entity that submitted a

7 plan that (A) was disapproved, or (B) was approved

8 in a form different from the form in which the plan

9 was submitted, to resubmit a corrected or amended

10 plan during the 30-day period beginning on notifica11 tion of such disapproval or approval. The Council

12 shall approve or disapprove any plan resubmitted

13 under this paragraph before the expiration of the

14 15-day period beginning upon such resubmission.

15 Any plan resubmitted under this paragraph that is

16 disapproved may be resubmitted before the expira17 tion of the 15-day period beginning upon such dis18 approval and shall be subject to review under the

19 provisions of this paragraph.

20 (5) EFFECT OF DISAPPROVED PLAN.—Dis21 approval of a plan submitted under chapter 2 shall

22 not affect the ability or eligibility of any unit of gen23 eral local government or entity to apply for assist24 ance under any eligible program in any manner

25 other than under this subtitle.
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1 (g) PUBLIC COMMENT.—Any entity submitting a

2 plan under this section, in conjunction with the relevant

3 local coordinating board, shall ensure that there are ade4 quate opportunities for public comment concerning the

5 plan, including—

6 (1) furnishing citizens with information con7 cerning the availability of funds pursuant to chap8 ters 1 and 2 and the range of activities that may be

9 undertaken with such funds;

10 (2) holding one or more public hearings to ob11 tain the views of citizens on community needs; and

12 (3) providing citizens with reasonable access to

13 a copy of any plan filed pursuant to this section and

14 to records regarding the use of funds received pursu15 ant to the plan.

16 SEC. 244. DEFINITIONS.

17 For purposes of this subtitle:

18 (1) The term ‘‘appropriate Federal agency

19 head’’ means, with respect to an eligible program,

20 the head of the Federal agency or other Federal offi21 cial responsible for administering such program.

22 (2) The term ‘‘approved plan’’ means a neigh23 borhood aid plan under section 243 for assistance

24 under chapter 1 or 2 that is approved by the Inter-
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1 agency Council and meets the public comment re2 quirements under section 243(g).

3 (3) The term ‘‘eligible entity’’ means, with re4 spect to a selected program under a neighborhood

5 aid plan under section 243, an entity in the tax en6 terprise zone or area to be served by the plan sub7 mitted by the unit of general local government, as

8 appropriate, that is eligible to receive and administer

9 amounts under the program and is designated under

10 the plan to receive and administer amounts provided

11 for the program pursuant to approval of the plan.

12 (4) The term ‘‘eligible program’’ means a pro13 gram referred to in section 241.

14 (5) The terms ‘‘Interagency Council’’ and

15 ‘‘Council’’ mean the Interagency Council for Neigh16 borhood Aid established under section 242.

17 (6) The terms ‘‘neighborhood aid plan’’ and

18 ‘‘plan’’ mean a neighborhood aid plan under section

19 243 for assistance under chapter 1 or 2.

20 (7) The term ‘‘selected program’’ means, with

21 respect to a neighborhood aid plan, any of the pro22 grams identified in the plan for which funding is re23 quested pursuant to the plan.

24 (8) The term ‘‘State’’ means the States of the

25 United States, the District of Columbia, the Com-
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1 monwealth of Puerto Rico, the Commonwealth of the

2 Northern Mariana Islands, Guam, the Virgin Is3 lands, American Samoa, the Trust Territory of the

4 Pacific Islands, and any other territory or possession

5 of the United States.

6 (9) The term ‘‘tax enterprise zone’’ means an

7 urban tax enterprise zone or a rural development in8 vestment zone designated under section 1391 of the

9 Internal Revenue Code of 1986.

10 (10) The term ‘‘unit of general local govern11 ment means any city, town, township, county, par12 ish, village, or other general purpose political sub13 division of a State.

14 SEC. 245. STUDY AND REPORT.

15 (a) GENERAL STUDY.—The Interagency Council

16 shall conduct a study to identify—

17 (1) any alternative methods or systems for allo18 cation of amounts made available pursuant to this

19 subtitle among tax enterprise zones and units of

20 general local government; and

21 (2) any problems experienced in the implemen22 tation and administration of the provisions of this

23 subtitle, including identification of any provisions of

24 law or regulations relating to eligible programs for
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1 which a waiver would facilitate carrying out the pur2 poses of this subtitle.

3 (b) REPORT.—Not later than the expiration of the

4 1-year period beginning on the date of the enactment of

5 this Act, the Interagency Council shall submit to the Con6 gress a report regarding the study conducted under sub7 section (a), which shall include any recommendations for

8 improving the program for assistance under this subtitle.

9 SEC. 246. REGULATIONS.

10 The Interagency Council shall issue any regulations

11 necessary to carry out this subtitle not later than the expi12 ration of the 60-day period beginning on the date of the

13 enactment of this Act.

14 Subtitle C—Community

15 Development Block Grant Program

16 SEC. 251. INCREASE OF PUBLIC SERVICES CAP UNDER

17 COMMUNITY DEVELOPMENT BLOCK GRANT

18 PROGRAM.

19 Section 105(a)(8) of the Housing and Community

20 Development Act of 1974 (42 U.S.C. 5305(a)) is amend21 ed—

22 (1) by inserting ‘‘(A)’’ before ‘‘except that not

23 more than’’;

24 (2) by inserting ‘‘(i)’’ after ‘‘unless such unit of

25 local government’’; and
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1 (3) by striking ‘‘higher amount, and’’ and in2 serting the following: ‘‘higher amount, or (ii) is lo3 cated within or contains a tax enterprise zone (as

4 designated under section 1391 of the Internal Reve5 nue Code of 1986), in which case such unit of gen6 eral local government may use, in addition to such

7 15 percent of the amount of any assistance provided

8 to the unit (or in the case of nonentitled commu9 nities, 15 percent statewide) under this title, includ10 ing program income, an additional 15 percent of

11 such amount of assistance for activities under this

12 paragraph within such enterprise zone, and (B)’’.

13 SEC. 252. EMERGENCY COMMUNITY DEVELOPMENT LOAN

14 GUARANTEE AUTHORITY.

15 Section 108 of the Housing and Community Develop16 ment Act of 1974 is amended by adding at the end the

17 following new subsection:

18 ‘‘(q) In addition to amounts provided under sub19 section (a), the Secretary may enter into commitments

20 during each of the fiscal years 1993 through 1997 to guar21 antee notes and obligations with an aggregate principal

22 amount in each fiscal year of $2,000,000,000. The guar23 antee authority under this subsection shall be effective

24 only to the extent approved or provided for in appropria25 tions Acts, subject only to the absence of qualified appli-
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1 cants or proposed activities and the provisions of this Act,

2 except that the provisions of subsection (k) shall not apply

3 with respect to any guarantees and commitments to guar4 antee pursuant to authority provided under this sub5 section.’’.

6 Subtitle D—Young Adult Employ7 ment Demonstration Program

8 SEC. 261. ESTABLISHMENT OF YOUNG ADULT EMPLOY9 MENT DEMONSTRATION PROGRAM.

10 (a) IN GENERAL.—Title IV of the Job Training Part11 nership Act (29 U.S.C. 1671 et seq.) is amended by add12 ing at the end the following new part:

13 ‘‘PART K—YOUNG ADULT EMPLOYMENT

14 DEMONSTRATION PROGRAM

15 ‘‘SEC. 499I. STATEMENT OF PURPOSE.

16 ‘‘It is the purpose of the Young Adult Employment

17 Demonstration program under this part to—

18 ‘‘(1) ensure access to education and job train19 ing assistance for youth and young adults residing

20 in tax enterprise zones;

21 ‘‘(2) make provisions for a comprehensive range

22 of education, training, and employment services to

23 disadvantaged youth and young adults in tax enter24 prise zones who are not currently served or are un-
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1 derserved by Federal education and job training pro2 grams;

3 ‘‘(3) enable communities located in or contain4 ing tax enterprise zones to establish and meet goals

5 for improving the opportunities available to youth

6 and young adults within the tax enterprise zone; and

7 ‘‘(4) facilitate the coordination of comprehen8 sive services to serve such youth and young adults.

9 ‘‘SEC. 499J. PROGRAM AUTHORIZED.

10 ‘‘(a) ESTABLISHMENT OF PROGRAM.—The Secretary

11 is authorized to establish a program of Young Adult Em12 ployment Demonstration grants to provide comprehensive

13 services to youth and young adults living in tax enterprise

14 zones.

15 ‘‘(b) ELIGIBILITY FOR GRANTS.—

16 ‘‘(1) RECIPIENTS.—The Secretary may only

17 award grants under this part to—

18 ‘‘(A) the participating community for a

19 target area that is located within a service de20 livery area; or

21 ‘‘(B) grantees designated under sections

22 401 and 402, or a consortium of such grantees

23 and the State, when the target area is located

24 in an Indian reservation, Alaskan Native vil-
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1 lage, or migrant or seasonal farmworker

2 community.

3 ‘‘(2) NUMBER OF GRANTS.—The Secretary may

4 award not more than 25 grants during the first fis5 cal year the program is authorized.

6 ‘‘(c) RENEWABILITY OF GRANTS.—Grants awarded

7 under this part shall be for a 1-year period and shall be

8 renewable for each of the 2 succeeding fiscal years if the

9 Secretary determines the grant recipient complied with

10 conditions of the grant during the previous fiscal year.

11 ‘‘(d) FACTORS FOR AWARDS.—In awarding grants

12 under this part, the Secretary shall consider the quality

13 of the proposed project, the goals to be achieved, the likeli14 hood of the project’s successful implementation, the extent

15 of community support and other Federal and non-Federal

16 funds available for similar purposes, and the new State,

17 local, or private resources.

18 ‘‘(e) SELECTION REQUIREMENTS.—In awarding

19 grants under subsection (b), the Secretary shall not ap20 prove an application unless the application contains assur21 ances that the applicant will use funds from a grant to

22 provide job training, education, services, stipends (only to

23 individuals age 17 to 30), and needs-related payments in

24 accordance with sections 499K and 499L.
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1 ‘‘SEC. 499K. APPLICATION.

2 ‘‘(a) ELIGIBILITY TO APPLY.—Participating commu3 nities shall be eligible to apply for a Young Adult Employ4 ment Demonstration grant under this part.

5 ‘‘(b) CONTENTS OF APPLICATION.—Each participat6 ing community desiring a grant under this part shall,

7 through the individuals described in subsection (c), submit

8 an application to the Secretary at such time in such man9 ner and accompanied by such information as the Secretary

10 may reasonably require. Each such application shall—

11 ‘‘(1) include a comprehensive plan for the

12 Young Adult Employment Demonstration initiative

13 designed to achieve identifiable goals for youth and

14 young adults in the target area;

15 ‘‘(2) set forth measurable program goals and

16 outcomes, which may include increasing the propor17 tion of—

18 ‘‘(A) youth completing high school or its

19 equivalent;

20 ‘‘(B) youth and young adults entering into

21 postsecondary institutions, apprenticeships, or

22 other advanced training programs;

23 ‘‘(C) youth and young adults placed in

24 jobs; or
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1 ‘‘(D) eligible youth and young adults par2 ticipating in education, training, and employ3 ment services;

4 ‘‘(3) include supporting goals for the target

5 area such as increasing security and safety, or re6 ducing the number of drug-related arrests;

7 ‘‘(4) provide assurances that the conditions set

8 forth in section 499L will be met;

9 ‘‘(5) demonstrate how the participating commu10 nity will make use of the resources, expertise, and

11 commitment of institutions of higher education, edu12 cational agencies, and vocational and technical

13 schools and institutes;

14 ‘‘(6) attempt to ensure that all youth and

15 young adults in the target areas have access to a co16 ordinated and comprehensive range of education and

17 training opportunities which serve the broadest

18 range of interests and needs of youth and young

19 adults and simultaneously mobilize the diverse range

20 of education and training provided in the participat21 ing community;

22 ‘‘(7) include support services necessary for suc23 cessful participation by eligible youth and young

24 adults, including child care, transportation, and as25 sistance in resolving personal or family crises such
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1 as those related to substance abuse, homelessness,

2 migration, and family violence;

3 ‘‘(8) include a system of common intake, indi4 vidualized assessment, and case management;

5 ‘‘(9) include an estimate of the expected num6 ber of youth and young adults in the target area to

7 be served;

8 ‘‘(10) include a description of the resources

9 available in the participating community from pri10 vate, local government, State and Federal sources

11 which will be used to achieve the goals of the pro12 gram;

13 ‘‘(11) provide evidence of support for accom14 plishing the stated goals of the participating commu15 nity from—

16 ‘‘(A) local elected officials,

17 ‘‘(B) the local school system,

18 ‘‘(C) postsecondary education and training

19 institutions,

20 ‘‘(D) the applicable private industry

21 council,

22 ‘‘(E) local community leaders,

23 ‘‘(F) business,

24 ‘‘(G) labor organizations, and

25 ‘‘(H) other appropriate organizations; and
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1 ‘‘(12) provide assurances that the target area

2 includes, to the maximum extent possible, the poor3 est neighborhoods in the community, such as those

4 with substantial numbers of public housing facilities.

5 ‘‘(c) SUBMISSION OF APPLICATION.—The application

6 for funds for a participating community may only be sub7 mitted to the Secretary by—

8 ‘‘(1) the mayor of a city or the chief elected of9 ficial in a metropolitan statistical area, after the

10 Governor of the State has had an opportunity to

11 comment on the application;

12 ‘‘(2) the chief elected official of a non13 metropolitan county or the designated chief elected

14 official of contiguous nonmetropolitan counties, after

15 the Governor of the State has had an opportunity to

16 comment on the application; or

17 ‘‘(3) the grantee designated under section 401

18 or 402, or jointly by the grantee and the Governor

19 of the State in which such grantee is located, in ap20 plications for Native American or migrant or sea21 sonal worker communities.

22 ‘‘SEC. 499L. GRANT AGREEMENT.

23 ‘‘Each grant recipient under this part shall enter into

24 an agreement with the Secretary. Each such agreement

25 shall describe how—
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1 ‘‘(1) the recipient will designate a target area

2 that will be the focus of the demonstration project

3 and which shall have a population of not more than

4 25,000 (or upon approval of the Secretary, a popu5 lation of not more than 75,000), except that in the

6 event that the population of an area from which a

7 high school draws a substantial portion of its

8 enrollment exceeds this limit, the target area may

9 encompass such boundary;

10 ‘‘(2) funds provided under this part will be used

11 to support education, training, and supportive activi12 ties selected from a set of youth program models

13 designated by the Secretary or from alternative mod14 els described in the application and approved by the

15 Secretary, such as—

16 ‘‘(A) nonresidential learning centers;

17 ‘‘(B) alternative schools;

18 ‘‘(C) combined summer remediation, work

19 experience and work readiness training, and

20 school-to-work/apprenticeship/post-secondary

21 education program;

22 ‘‘(D) teen parent programs;

23 ‘‘(E) special programs administered by

24 community colleges;

25 ‘‘(F) youth centers;
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1 ‘‘(G) initiatives aimed at increased rural

2 student enrollment in post-secondary institu3 tions;

4 ‘‘(H) public-private collaborations to en5 sure private sector employment and continued

6 learning opportunities for youth; and

7 ‘‘(I) initiatives that combine community

8 and youth service opportunities with education

9 and training activities;

10 ‘‘(3) funds received under this section will be

11 used for services to youth and young adults age 14

12 to 30 at the time of enrollment;

13 ‘‘(4) the local educational agency and any other

14 educational agency which operates secondary schools

15 in the target area provide activities and resources to

16 promote the educational goals specified in the appli17 cation;

18 ‘‘(5) the participating community will provide

19 activities and local resources to promote the goals

20 specified in the application;

21 ‘‘(6) the participating community shall under22 take outreach and recruitment efforts in the target

23 area to encourage, to the maximum extent possible,

24 participation by those disadvantaged youth and

25 young adults who are currently unserved or under-
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1 served by education and training programs, includ2 ing targeted measures specifically designed to enlist

3 the participation of minority youth and young

4 adults, particularly those under the jurisdiction of

5 the child welfare, juvenile justice, and criminal jus6 tice systems;

7 ‘‘(7) the participating community will carry out

8 special efforts to establish coordination with Federal,

9 State, or local programs that serve the target popu10 lation; and

11 ‘‘(8) funds provided under this part shall be

12 used to pay stipends for participant support in paid

13 work experience and classroom training programs

14 when such programs are combined with other edu15 cation and training activities.

16 ‘‘SEC. 499M. JOB GUARANTEES.

17 ‘‘(a) PROGRAM AUTHORITY.—The Secretary shall

18 permit a number of the grant recipients under this part

19 to enter into an agreement to provide, in accordance with

20 this section, a job guarantee program to youth meeting

21 prior school attendance and performance standards.

22 ‘‘(b) GUARANTEE AGREEMENTS.—A grant recipient

23 providing a job guarantee program shall enter into an

24 agreement with the Secretary. Such agreement shall—
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1 ‘‘(1) provide that the program be available to

2 youth aged 16 to 19 who undertake a commitment

3 to continue and complete their high school edu4 cation;

5 ‘‘(2) require the grant recipient to guarantee

6 employment to each youth undertaking that commit7 ment if such youth meets school attendance and per8 formance standards for the previous school semester,

9 as established by the Secretary in consultation with

10 the Secretary of Education;

11 ‘‘(3) provide that the grant recipient will make

12 additional services available to support the undertak13 ing of any such youth, which shall include counsel14 ing, job development and placement, and support

15 services (including child care and transportation);

16 ‘‘(4) specify the conditions under which funds

17 provided under this part may be used to provide

18 wage subsidies of up to 50 percent through employ19 ers, which shall—

20 ‘‘(A) encourage subsidies to employers who

21 provide advanced or specialized training, or who

22 provide a structured and integrated learning ex23 perience involving the school and employer; and

24 ‘‘(B) limit the duration of such subsidies to

25 not more than 1 year;
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1 ‘‘(5) require that the employment provided to

2 any such youth shall not exceed 15 hours per week

3 during the school year;

4 ‘‘(6) permit employment to continue through

5 the summer following high school graduation, or

6 until the youth reaches age 19, whichever is later;

7 and

8 ‘‘(7) contain such other terms and conditions as

9 the Secretary requires by regulation.

10 ‘‘(c) SELECTION OF GRANT RECIPIENTS.—In deter11 mining which grant recipients to permit to enter into an

12 agreement under this section, the Secretary shall seek to

13 target funds to high poverty areas.

14 ‘‘(d) YOUTH ELIGIBILITY.—All youth age 16 to 19,

15 regardless of income, residing in the eligible high poverty

16 area shall be eligible to participate in the job guarantee.

17 ‘‘(e) PRIVATE FUNDS.—Nothing in this section shall

18 be construed to prohibit the grant recipient from raising

19 funds to augment such grant if such funds are utilized

20 under the conditions of this grant, except that such funds

21 shall not be used for administration purposes.

22 ‘‘SEC. 499N. PAYMENTS AND MATCHING REQUIREMENT.

23 ‘‘(a) PAYMENTS.—In any fiscal year, the grant

24 awarded under this part to a grant recipient shall be de25 termined according to the amount to be provided for the
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1 program pursuant to designation of the program as a se2 lected program under an application made on behalf of

3 a tax enterprise zone under section 215 of the Enterprise

4 Zone Community Development Act of 1993, and shall be

5 of sufficient size and scope to carry out an effective pro6 gram.

7 ‘‘(b) MATCHING REQUIREMENT.—A grant recipient

8 shall provide non-Federal funds in an amount equal to 10

9 percent of the funds from such grant, an in-kind contribu10 tion equivalent to such percent (as determined by the Sec11 retary), or a combination thereof.

12 ‘‘SEC. 499O. REPORTING.

13 ‘‘The Secretary is authorized to establish such report14 ing procedures as necessary to carry out the purposes of

15 this part.

16 ‘‘SEC. 499P. FEDERAL RESPONSIBILITIES.

17 ‘‘(a) ASSISTANCE IN IMPLEMENTATION.—The Sec18 retary shall provide technical assistance in the implemen19 tation of this project in participating communities.

20 ‘‘(b) INDEPENDENT EVALUATION.—The Secretary

21 shall provide for a thorough, independent evaluation of the

22 activities assisted under this part. Such evaluation shall

23 include an assessment of—

24 ‘‘(1) the impact on youth and young adults re25 siding in target areas, including their rates of school
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1 completion, enrollment in advanced education or

2 training, and employment;

3 ‘‘(2) the extent to which participating commu4 nities fulfilled the goal of guaranteeing access to ap5 propriate education, training, and supportive serv6 ices to all eligible youth and young adults residing

7 in target areas who seek to participate;

8 ‘‘(3) the effectiveness of guaranteed access to

9 comprehensive services combined with outreach and

10 recruitment efforts in enlisting the participation of

11 previously unserved or underserved youth and young

12 adults residing in target areas; and

13 ‘‘(4) the effectiveness of efforts to integrate

14 service delivery in target areas, including systems of

15 common intake, assessment, and case management.

16 ‘‘(c) REPORT.—The Secretary shall prepare a report

17 describing the results of the independent evaluation con18 ducted pursuant to subsection (b).

19 ‘‘(d) RESERVATION OF FUNDS.—The Secretary may

20 reserve not more than 5 percent of the amounts to be used

21 for assistance under this part in each fiscal year to carry

22 out the provisions of this section.

23 ‘‘SEC. 499Q. DEFINITIONS.

24 ‘‘For the purposes of this part—
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1 ‘‘(1) The term ‘participating community’

2 means—

3 ‘‘(A) a city, when referring to an urban

4 area that is located within or contains a tax en5 terprise zone;

6 ‘‘(B) a nonmetropolitan county, or contig7 uous nonmetropolitan counties, that is located

8 within or contains a tax enterprise zone; and

9 ‘‘(C) a section 401 or 402 grantee, or con10 sortia of the State and section 401 or 402

11 grantee, when referring to Indian reservation,

12 Alaska Native village, and migrant or seasonal

13 farmworker community, that are located within

14 or contain a tax enterprise zone.

15 ‘‘(2) The term ‘high poverty area’ means (A) an

16 urban census tract, a nonmetropolitan county, an

17 Indian reservation, or an Alaskan Native village,

18 with a poverty rate of 30 percent or more as deter19 mined by the Secretary based on the latest Bureau

20 of the Census estimates, or (B) a migrant or sea21 sonal farmworker community.

22 ‘‘(3) The term ‘target area’ means a high pov23 erty area (or portion thereof), or set of contiguous

24 high poverty areas, that is located within a tax en-
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1 terprise zone and will be the focus of the program

2 under this part in a participating community.

3 ‘‘(4) The term ‘tax enterprise zone’ has the

4 meaning given the term in section 217 of the Enter5 prise Zone Community Development Act of 1993.’’.

6 (b) TECHNICAL AMENDMENTS.—The Job Training

7 Reform Amendments of 1992 (Public Law 102–367) is

8 amended—

9 (1) in section 406, by striking ‘‘adding at the

10 end’’ and inserting ‘‘inserting after part G’’;

11 (2) in section 407, by striking ‘‘adding at the

12 end’’ and inserting ‘‘inserting after part H’’; and

13 (3) in section 408, by striking ‘‘adding at the

14 end’’ and inserting ‘‘inserting after part I’’.

15 Subtitle E—National Community

16 Economic Partnership

17 SEC. 271. SHORT TITLE.

18 This subtitle may be cited as the ‘‘National Commu19 nity Economic Partnership Act of 1993’’.

20 SEC. 272. FINDINGS AND PURPOSE.

21 (a) FINDINGS.—Congress finds that—

22 (1) the cities, towns, small communities and

23 rural areas throughout the United States face criti24 cal social and economic problems arising in part
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1 from a lack of economic growth in community based

2 economies;

3 (2) the crisis facing local economies has re4 sulted in—

5 (A) a growing percentage of the work force

6 earning poverty level wages, even though they

7 work full time and year round;

8 (B) the percentage of the labor force living

9 below the poverty line increasing from 25.7 per10 cent in 1979 to 31.5 percent in 1987;

11 (C) population losses, rising unemployment

12 and a decline of the farm sector and of many

13 other rural industries (such as timber, oil, gas,

14 and mining) contribute to the decline of rural

15 economies;

16 (D) with respect to rural areas, 31.9 per17 cent of the work force falling below the poverty

18 line in 1979, with that percentage rising to

19 42.1 percent in 1987; and

20 (E) with respect to urban areas, 23.4 per21 cent of the work force falling below the poverty

22 line in 1979, with that percentage rising to

23 28.9 percent in 1987;

24 (3) the future well-being of the United States

25 and the well-being of its citizens depends on the es-
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1 tablishment and maintenance of viable community

2 development enterprises;

3 (4) meeting the goal of establishing and main4 taining viable community development enterprises

5 requires—

6 (A) increased public and private invest7 ment in business development activities, espe8 cially in the small business sector, which gen9 erates the majority of new jobs, as evidenced by

10 the fact that between 1980 and 1986 enter11 prises with less than 100 employees accounted

12 for more than 50 percent of the jobs created in

13 the United States;

14 (B) increased investment and technical as15 sistance to existing community based enter16 prises, as evidenced by the fact that during the

17 first half of the 1980’s more than 75 percent of

18 the total net new jobs in the United States

19 came from the expansion of existing businesses;

20 (C) a substantial expansion and greater

21 continuity in the scope of Federal programs

22 that support community based economic devel23 opment strategies;

24 (D) the continuing efforts at Federal,

25 State and local levels to coordinate the plan-
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1 ning, implementation and evaluation of commu2 nity economic development efforts; and

3 (E) the formation of a national commis4 sion, as an independent agency, to administer

5 the various community development programs

6 and serve as a focal point for Federal efforts to

7 promote community based economic develop8 ment; and

9 (5) community development corporations, due

10 to their proven capacity and achievements in both

11 the field of community based housing and economic

12 development, are appropriate vehicles through which

13 to advance a national community economic develop14 ment program because—

15 (A) there are currently over 2000 commu16 nity development corporations throughout the

17 United States, operating projects that promote

18 community based housing and economic devel19 opment;

20 (B) community development corporations

21 operate in every State and in virtually every

22 major city in the United States, and account

23 for many of the existing efforts undertaken to

24 meet the needs of low-income persons in both

25 urban and rural communities;
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1 (C) community development corporations

2 have developed some 225,000 units of housing,

3 with over 90 percent of these units for use by

4 low-income occupants;

5 (D) community development corporations

6 have developed over 17,400,000 square feet of

7 retail space, offices, industrial parks and other

8 industrial developments in economically dis9 tressed communities;

10 (E) community development corporations

11 have made loans to over 3000 enterprises, eq12 uity investments in 242 ventures and own and

13 operate 427 businesses; and

14 (F) community development corporations

15 commercial, industrial and business enterprise

16 development activities have accounted for the

17 creation and retention of nearly 90,000 jobs in

18 the last 5 years.

19 (b) PURPOSE.—It is the purpose of this subtitle to

20 provide assistance to States to carry out plans developed

21 by the States—

22 (1) to stimulate enterprise development and em23 ployment opportunities in economically distressed

24 urban and rural areas through public and private
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1 partnerships facilitated by community development

2 corporations;

3 (2) to increase private investment in distressed

4 local communities and to build and expand the ca5 pacity of local institutions to better serve the eco6 nomic needs of local residents, through the provision

7 of assistance to community development corpora8 tions; and

9 (3) to increase the community economic devel10 opment activities of community development cor11 porations by assisting such corporations in upgrad12 ing their management and operating capacity and

13 enhancing the resources available to such corpora14 tions.

15 SEC. 273. ASSISTANCE TO STATES.

16 To the extent amounts are available to carry out this

17 subtitle, the Secretary of Health and Human Services

18 shall provide assistance to States to carry out State plans

19 under section 275 for assistance to community develop20 ment corporations.

21 SEC. 274. STATE ASSISTANCE TO COMMUNITY DEVELOP22 MENT CORPORATIONS.

23 States may provide assistance with amounts received

24 under this subtitle to community development corpora25 tions only as provided in the State plan of the State ap-
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1 proved by the Secretary under section 275. Such assist2 ance may be in the form of—

3 (1) nonrefundable lines of credit to community

4 development corporations to establish, maintain, or

5 expand revolving loan funds used to finance eco6 nomic development projects, to defray administrative

7 costs related to the establishment of such revolving

8 loan funds, or to provide training or technical assist9 ance to private business enterprises and for the

10 planning, development, and management of eco11 nomic development projects;

12 (2) grants to community development corpora13 tions for acquisition of training and technical assist14 ance to increase the business management and de15 velopment skills of the individuals who manage such

16 corporations to enable such corporations to seek the

17 public and private resources necessary to develop

18 community economic development projects;

19 (3) grants to community development corpora20 tions to enable such corporations—

21 (A) to conduct evaluations of the feasibility

22 of potential low-income community economic de23 velopment projects that address identified needs

24 in low-income communities;
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1 (B) to develop business plans related to

2 such projects; or

3 (C) to mobilize resources to be contributed

4 to planned low-income community economic de5 velopment projects or strategies;

6 (4) grants to emerging community development

7 corporations to enable such corporations to establish,

8 maintain or expand revolving loan funds, to make or

9 guarantee loans, or to make capital investments in

10 new or expanding local businesses;

11 (5) grants to community development corpora12 tions, institutions of higher education, or nonprofit

13 organizations to enable such grantees to conduct re14 search, testing, studies, or demonstrations related to

15 community economic development; and

16 (6) any other assistance designed to carry out

17 the purposes of this subtitle under section 272(b).

18 SEC. 275. STATE PLANS.

19 (a) REQUIREMENT.—The Secretary may provide as20 sistance under this subtitle only to States that have sub21 mitted a State plan under this section that is approved

22 by the Secretary under subsection (c), and have entered

23 into an agreement with the Secretary to provide assistance

24 to community development corporations, with amounts
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1 provided under this subtitle, in accordance with the provi2 sions of the approved plan.

3 (b) CONTENTS.—Each State plan under this section

4 shall specify—

5 (1) the kinds and amounts of assistance to be

6 provided by the State with assistance under this

7 subtitle;

8 (2) the terms of such assistance;

9 (3) the communities for which such assistance

10 will be used and the extent to which such assistance

11 will be targeted to low-income communities, under12 employed and unemployed individuals, population13 losing communities, and very low-income commu14 nities;

15 (4) the extent and manner by which local and

16 private sector contributions will be leveraged with

17 assistance under this subtitle;

18 (5) the extent to which assistance under this

19 subtitle will improve or provide employment opportu20 nities for low-income individuals;

21 (6) requirements for community development

22 corporations and other entities receiving assistance

23 from amounts provided under this subtitle to report

24 to the State regarding the use and results of such

25 assistance; and
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1 (7) any other information the Secretary consid2 ers appropriate to ensure that assistance under this

3 subtitle is used for the purposes under section

4 272(b).

5 (c) APPROVAL.—The Secretary may approve a State

6 plan under this section only if the Secretary determines,

7 on the basis of the State plan, that—

8 (1) the State has the capacity and capability to

9 carry out the State plan;

10 (2) the State plan ensures that such assistance

11 will be used to carry out the purposes of this subtitle

12 under section 272(b); and

13 (3) the State plan provides that a significant

14 portion of such assistance will be used by community

15 development corporations to serve the economic

16 needs of low-income communities.

17 SEC. 276. REPORTS.

18 Each State receiving assistance under this subtitle

19 shall submit a report under this section to the Secretary

20 not later than the expiration of the 18-month period begin21 ning upon the first receipt of assistance under this subtitle

22 by the State. The report shall describe the use of any as23 sistance provided to the State under this subtitle, the

24 number of jobs created or retained through such use, and
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1 any other information that the Secretary considers appro2 priate.

3 SEC. 277. DEFINITIONS.

4 For purposes of this subtitle:

5 (1) COMMUNITY DEVELOPMENT CORPORA6 TION.—The term ‘‘community development corpora7 tion’’ means a private, nonprofit corporation whose

8 board of directors is comprised of business, civic and

9 community leaders, and whose principal purpose in10 cludes providing economic or community develop11 ment projects that improve or provide job or employ12 ment opportunities to low-income individuals or low13 income communities.

14 (2) LOW-INCOME COMMUNITY.—The term ‘‘low15 income community’’ means a community in which

16 the median income of the residents of such commu17 nity does not exceed 80 percent of the median in18 come of the area, as determined by the Secretary.

19 (3) POPULATION-LOSING COMMUNITY.—The

20 term ‘‘population-losing community’’ means a county

21 in which the net population loss is at least 7 percent

22 from April 1, 1980 to April 1, 1990, as reported by

23 the Bureau of the Census.

24 (4) SECRETARY.—The term ‘‘Secretary’’ means

25 the Secretary of Health and Human Services.
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1 (5) STATE.—The term ‘‘State’’ means the

2 States of the United States, the District of Colum3 bia, the Commonwealth of Puerto Rico, the Com4 monwealth of the Northern Mariana Islands, Guam,

5 the Virgin Islands, American Samoa, the Trust Ter6 ritory of the Pacific Islands, and any other territory

7 or possession of the United States.

8 (6) VERY LOW-INCOME COMMUNITY.—The term

9 ‘‘very low-income community’’ means a community

10 in which the median income of the residents of such

11 community does not exceed 50 percent of the median

12 income of the area, as determined by the Secretary.

13 SEC. 278. PROHIBITION.

14 Amounts provided to States under this subtitle may

15 not be used to finance the construction of housing.

16 SEC. 279. EFFECTIVE DATE.

17 This subtitle shall take effect as if included in the

18 Omnibus Budget Reconciliation Act of 1990.

19 Subtitle F—Miscellaneous

20 Programs

21 SEC. 281. ENTERPRISE CAPITAL ACCESS FUND.

22 (a) SHORT TITLE.—This section may be cited as the

23 ‘‘Enterprise Capital Access Fund Demonstration Pro24 gram’’.

25 (b) FINDINGS AND PURPOSE.—
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1 (1) FINDINGS.—The Congress finds that—

2 (A) the Nation’s urban and rural commu3 nities face critical social and economic problems

4 stemming from lack of economic opportunity

5 among low-income persons and persons living in

6 poverty;

7 (B) the numbers of low-income persons

8 and persons living in poverty has grown signifi9 cantly over the last decade;

10 (C) lack of access to credit and other

11 forms of capital is a significant factor in the

12 disinvestment and decline of low-income and

13 minority neighborhoods;

14 (D) changes in the banking system and fi15 nancial markets have made access to credit in

16 low-income and distressed communities increas17 ingly more difficult to obtain as decision mak18 ing on credit has been removed from local com19 munities;

20 (E) the restoration and maintenance of

21 viable local economies will require improved ac22 cess to credit, as well as public and private in23 vestment in economic and community develop24 ment activities, business development, and low25 income housing;
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1 (F) indigenous community-based financial

2 institutions can play a significant role in identi3 fying and responding to community needs;

4 (G) the Federal Government needs to de5 velop new models and institutions for facilitat6 ing local revitalization efforts and improving ac7 cess to credit; and

8 (H) nonprofit financial intermediaries have

9 proven effective in meeting the credit and other

10 capital needs in low-income and distressed com11 munities.

12 (2) PURPOSE.—The purpose of this section is

13 to establish a demonstration program to assist

14 States in promoting reinvestment in low-income and

15 chronically distressed neighborhoods through com16 munity-based nonprofit financial institutions that

17 work cooperatively with residents and State and

18 local government.

19 (c) AUTHORITY.—The Secretary shall carry out a

20 demonstration program in accordance with this section to

21 make grants to States to provide assistance to eligible

22 intermediaries to finance business and employment oppor23 tunities, housing opportunities affordable to low-income

24 persons, and neighborhood revitalization projects by using

25 such grant amounts to—
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1 (1) increase the capital available for loans, loan

2 guarantees, interest rate reduction activities, and

3 other activities that promote housing affordable to

4 low-income persons and economic and community

5 development activities that benefit low-income per6 sons; or

7 (2) provide technical assistance to borrowers.

8 (d) APPLICATIONS.—The Secretary shall make

9 grants only to States that submit an application to the

10 Secretary, in the form and manner as the Secretary shall

11 require, that is approved by the Secretary, and enter into

12 an agreement with the Secretary that assistance under

13 this section will be used as provided in the approved appli14 cation. The Secretary may approve only applications pro15 viding that—

16 (1) assistance under this section will be pro17 vided only to eligible intermediaries capable of carry18 ing out the purposes of this section;

19 (2) eligible intermediaries will contribute for ac20 tivities under subsection (c) not less than an amount

21 equal to any assistance under this section received

22 by the eligible intermediary;

23 (3) not less than 70 percent of loans to individ24 ual borrowers made using assistance provided under
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1 this section are to low-income persons and who are

2 residents of the targeted geographic area served;

3 (4) all loans made to nonprofit or for-profit or4 ganizations provide a direct benefit to persons who

5 are residents of the targeted geographic area served;

6 and

7 (5) assistance will be used only as provided in

8 this section.

9 (e) REPORT.—The Secretary shall submit a report to

10 the Congress annually containing a summary of the activi11 ties carried out under this section and the findings and

12 conclusions drawn from such activities.

13 (f) DEFINITIONS.—For purposes of this section:

14 (1) ELIGIBLE INTERMEDIARY.—The term ‘‘eli15 gible intermediary’’ means a nonprofit organization

16 that—

17 (A) is organized under Federal, State or

18 local laws;

19 (B) has no part of its net earnings inuring

20 to the benefit of any member, founder, contrib21 utor, or other person;

22 (C) complies with standards of financial

23 accountability acceptable to the Secretary;
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1 (D) controls, operates or is affiliated with

2 an entity that provides credit or investment

3 capital in a targeted geographic area;

4 (E) has as its primary purpose the revital5 ization of low-income and chronically distressed

6 neighborhoods or communities; and

7 (F) 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) STATE.—The term ‘‘State’’ means the

16 States of the United States, the District of Colum17 bia, the Commonwealth of Puerto Rico, the Com18 monwealth of the Northern Mariana Islands, Guam,

19 the Virgin Islands, American Samoa, the Trust Ter20 ritory of the Pacific Islands, and any other territory

21 or possession of the United States.

22 (5) TARGETED GEOGRAPHIC AREA.—The term

23 ‘‘targeted geographic area’’ means a geographically

24 contiguous area of chronic economic distress as

25 measured by unemployment, growth lag, the extent
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1 of poverty, per capita income, extent of blight and

2 disinvestment, fiscal distress, or other indicators

3 deemed appropriate by the Secretary, that has been

4 identified by an eligible intermediary as an area to

5 be served by it.

6 SEC. 282. ACCESS TO JOBS/REVERSE COMMUTING DEM7 ONSTRATION PROGRAM.

8 (a) PURPOSE.—It is the purpose of this section to—

9 (1) improve employment rates and earnings in

10 inner-city areas by improving access to job sites for

11 inner-city residents;

12 (2) improve the viability of businesses in tax en13 terprise zones and other communities as a result of

14 the increased incomes and purchasing power of zone

15 residents; and

16 (3) test differing approaches to achieving these

17 goals and determine their effects.

18 (b) ESTABLISHMENT OF PROGRAM.—

19 (1) IN GENERAL.—The Secretary of Labor, in

20 consultation with the Secretary of Transportation,

21 shall establish a Reverse Commuting Demonstration

22 Program to test the effects of assisting residents of

23 poor inner-city areas to commute to job sites in

24 other areas of the city or surrounding suburbs.
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1 (2) NEIGHBORHOOD AID PLAN.—Any urban tax

2 enterprise zone or unit of general local government

3 submitting a neighborhood aid plan for assistance

4 under subtitle B of this Act may include the pro5 gram under this section as a selected program. As6 sistance may be made available for the program

7 under this section only if the plan includes informa8 tion meeting the criteria in subsection (c), as ap9 proved by the Secretary of Labor, in consultation

10 with the Secretary of Transportation.

11 (3) USE OF SET-ASIDE FUNDS.—The funds set

12 aside under section 222(d) for the program under

13 this section shall be used to fund not more than 6

14 demonstration projects under this section utilizing

15 the program models described in subsection (d) that

16 are carried out by units of general local government

17 pursuant to approved neighborhood aid plans sub18 mitted under chapter 2 of subtitle B. The Secretary

19 of Labor, in consultation with the Secretary of

20 Transportation, shall select the projects on a com21 petitive basis from neighborhood aid plans meeting

22 the requirements of subsection (c) of this section

23 that are submitted under such chapter.

24 (c) REQUIRED INFORMATION.—The information re25 quired under subsection (b)(2) to be included in a neigh-
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1 borhood aid plan shall be such information as may be

2 specified by the Secretary of Labor, in consultation with

3 the Secretary of Transportation, that is sufficient to sat4 isfy the Secretary that—

5 (1) the geographic area whose residents would

6 be served by the program established under this sec7 tion pursuant to the neighborhood aid plan is a low8 income area;

9 (2) one of the three program models described

10 in subsection (d) will be used by the urban tax en11 terprise zone or unit of general local government;

12 (3) the data collection procedures that will be

13 established by the urban tax enterprise zone or unit

14 of general local government will be sufficient to en15 able the Secretary of Labor, in consultation with the

16 Secretary of Transportation, to conduct an evalua17 tion in accordance with subsection (e); and

18 (4) the urban tax enterprise zone or unit of

19 general local government has the capability to per20 form adequately with respect to the program estab21 lished and to meet such other criteria as the Sec22 retary of Labor may prescribe.

23 (d) PROGRAM MODELS.—A program under this sec24 tion shall be carried out utilizing one of the following pro25 gram models:
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1 (1) ADDING TRANSPORTATION SERVICES TO EX2 ISTING JOB TRAINING AND PLACEMENT PRO3 GRAMS.—Under this model an urban tax enterprise

4 zone or unit of general local government shall sup5 plement existing training and placement programs

6 through the establishment of new transportation

7 services that are designed to—

8 (A) transport inner-city residents to job lo9 cations (such as van service between the zones

10 and business parks or major employers, with

11 the service being provided by a public agency,

12 a private vendor, or a neighborhood organiza13 tion);

14 (B) provide transportation counseling and

15 assistance (such as the creation of car pools

16 and provision of education on public transit

17 routes); or

18 (C) provide a direct subsidy of public tran19 sit fares or private automobile expenses.

20 (2) IMPROVING PUBLIC TRANSIT SYSTEMS TO

21 FACILITATE ACCESS TO JOBS/REVERSE COMMUT22 ING.—Under this model an urban tax enterprise

23 zone or unit of general local government may—

24 (A) work with the relevant transit operator

25 or agency to modify public transit routes and
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1 schedules to increase the accessibility of resi2 dents of inner-city areas to job locations (such

3 as through the provision of express bus service

4 to business parks at times coinciding with labor

5 shifts or the provision of new connecting serv6 ices to fill gaps that impede commuting from

7 inner-city areas to jobs sites); or

8 (B) reimburse public transit operators for

9 the costs of providing reduced fare programs to

10 increase the access of inner city residents to

11 employment opportunities.

12 An urban tax enterprise zone or unit of general local

13 government under subparagraph (A) may request

14 suburban employers to contribute to the costs of im15 plementing such transit services.

16 (3) ESTABLISHING REGIONAL COALITIONS TO

17 IMPROVE INNER-CITY ACCESS TO JOBS.—Under this

18 model an urban tax enterprise zone or unit of gen19 eral local government shall establish a regional coali20 tion, which may include neighborhood organizations,

21 employers and employers associations, transpor22 tation providers, and similar entities, to implement

23 comprehensive strategies to improve the access of

24 residents of inner-cities to jobs through modifica25 tions in job training and placement services, support
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1 services such as child care, and transportation serv2 ices. An urban tax enterprise zone or unit of general

3 local government under this model shall attempt to

4 link job training program participants with job op5 portunities throughout as much of the metropolitan

6 area as practicable, and transportation barriers be7 tween inner-city areas and job locations shall be

8 identified and transportation services implemented

9 to address these problems.

10 (e) EVALUATION.—The Secretary of Labor, in con11 sultation with the Secretary of Transportation, shall con12 duct a thorough evaluation of the program established

13 under this section. Such evaluation shall include an assess14 ment of—

15 (1) with respect to urban tax enterprise zones

16 or units of general local government adding trans17 portation services to job training programs, the ef18 fect of the addition of such transportation services

19 on employment rates, job retention, and earnings

20 among residents of the demonstration project areas;

21 (2) with respect to urban tax enterprise zones

22 or units of general local government improving pub23 lic transit systems, the effect of the improvements,

24 on employment rates, job retention, and earnings;
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1 (3) with respect to urban tax enterprise zones

2 or units of general local government establishing re3 gional coalitions and implementing comprehensive

4 strategies, the effects of such strategies on employ5 ment rates, job retention, and earnings; and

6 (4) the manner in which the adoption of such

7 comprehensive strategies affect employment and

8 earnings in urban tax enterprise zones and units of

9 general local government, compared to other urban

10 tax enterprise zones and units of general local gov11 ernment not initiating programs to improve inner12 city access to suburban job locations.

13 (f) OTHER FUNDING SOURCES.—Nothing in this sec14 tion shall be construed to prevent an urban tax enterprise

15 zone or unit of general local government from raising

16 funds for any program established under the application

17 from other sources to augment the funds available under

18 this Act.

19 (g) DEFINITION.—As used in this section, the term

20 ‘‘urban tax enterprise zone’’ means an area designated

21 under section 1391 of the Internal Revenue Code of 1986

22 as an urban tax enterprise zone.

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