I

103D CONGRESS

1ST SESSION H. R. 15

To amend the Internal Revenue Code of 1986 to provide tax incentives

to encourage community development in enterprise zones, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

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

Committees on Ways and Means, Education and Labor, Energy and

Commerce, and Banking, Finance and Urban Affairs

A BILL

To amend the Internal Revenue Code of 1986 to provide

tax incentives to encourage community development in

enterprise zones, and for other purposes.

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

3 SECTION 1. SHORT TITLE; ETC.

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

5 ‘‘Enterprise Zone Community Development Act of 1993’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 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

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

Sec. 141. Report.

TITLE II—AUTHORIZATION FOR ADDITIONAL ASSISTANCE TO

DISTRESSED COMMUNITIES

Subtitle A—National Public-Private Partnership Programs

Sec. 201. National public-private partnership programs.

Subtitle B—Block Grant Funding for Eligible Programs

Sec. 211. Authorization of appropriations.

Sec. 212. Allocation of amounts among tax enterprise zones.

Sec. 213. Use of amounts.

Sec. 214. Eligible programs.

Sec. 215. Application for funding.

Sec. 216. Interagency Council.

Sec. 217. Definitions.

Sec. 218. Study and report.

Sec. 219. Regulations.

Subtitle C—Other Programs

CHAPTER 1—COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
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Sec. 231. Waiver of public services cap under community development block

grant program.

Sec. 232. Emergency community development loan guarantee authority.

CHAPTER 2—YOUNG ADULT EMPLOYMENT DEMONSTRATION PROGRAM

Sec. 241. Establishment of young adult employment demonstration program.

CHAPTER 3—NATIONAL COMMUNITY ECONOMIC PARTNERSHIP

Sec. 251. Short title; findings and purpose.

PART I—COMMUNITY ECONOMIC PARTNERSHIP

INVESTMENT FUNDS

Sec. 255. Purpose.

Sec. 256. Provision of assistance.

Sec. 257. Approval of applications.

Sec. 259. Limitations on use of funds.

Sec. 260. Program priority for special emphasis programs.

PART II—EMERGING COMMUNITY DEVELOPMENT

CORPORATIONS

Sec. 265. Community development corporation improvement grants.

Sec. 266. Emerging community development corporation revolving loan funds.

PART III—RESEARCH AND DEMONSTRATION

Sec. 271. Research and demonstration.

PART IV—MISCELLANEOUS PROVISIONS

Sec. 275. Joint programs.

Sec. 276. Reports.

Sec. 277. Definitions.

Sec. 278. Authorization of appropriations.

Sec. 279. Prohibition.

Sec. 280. Effective date.

CHAPTER 4—MISCELLANEOUS PROGRAMS

Sec. 285. Establishment of enterprise capital access fund.

Sec. 286. Access to jobs/reverse commuting demonstration program.

Sec. 287. Study of insurance availability in central cities and distressed urban

areas.
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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 150 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 more than 50 large city zones may be

4 designated; not more than 50 other urban zones may

5 be designated; and not more than 50 rural develop6 ment investment zones may be designated. Such des7 ignations may be made only during calendar years

8 after 1992 and before 1999.

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 8, 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

16 each calendar year after 1993, the number of

17 urban tax enterprise zones and rural develop18 ment investment zones shall not exceed the

19 numbers determined in accordance with the fol20 lowing table:

‘‘As of the close of:

The maximium number is:

Urban tax enterprise zones

Rural development investment

zones

1993 9 8

1994 19 9

1995 19 9

1996 18 8

1997 18 8
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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 600,000.

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 clause (i).

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 EF18 FECT.—

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) does not include any portion of

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

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

6 the national unemployment rate.

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

8 (as determined by the most recent census data

9 available) for not less than 90 percent of the

10 population census tracts (or where not tracted,

11 the equivalent county divisions as defined by

12 the Bureau of the Census for the purposes of

13 defining poverty areas) within the nominated

14 area is not less than 20 percent.

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

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

18 (c).

19 ‘‘(2) RURAL DEVELOPMENT INVESTMENT

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

21 shall be eligible for designation under section 1391

22 only if it meets the following criteria:

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

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

2 1,000.

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

4 one of general distress.

5 ‘‘(C) SIZE.—The nominated area—

6 ‘‘(i)(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 AC13 TION.—

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 re2 tained.

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 sec12 tion 179(d)(2)) qualified enterprise zone prop13 erty.

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—Report on Number of

6 Areas Meeting Enterprise Zone

7 Criteria

8 SEC. 141. REPORT.

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

10 consultation with the Secretary of Housing and Urban De11 velopment and the Secretary of Agriculture, shall conduct

12 a study to determine—

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

14 which satisfy the tax enterprise zone eligibility cri15 teria specified in section 1391(b) of the Internal

16 Revenue Code of 1986, and

17 (2) the estimated additional cost to the Federal

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

19 such areas were designated as tax enterprise zones.

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

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

22 than 1 year after the date of the enactment of this Act.
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1 TITLE II—AUTHORIZATION FOR

2 ADDITIONAL ASSISTANCE TO

3 DISTRESSED COMMUNITIES

4 Subtitle A—National Public-Private

5 Partnership Programs

6 SEC. 201. NATIONAL PUBLIC-PRIVATE PARTNERSHIP PRO7 GRAMS.

8 (a) SENSE OF CONGRESS.—It is the sense of Con9 gress that public-private partnerships between government

10 and community-based organizations offer an opportunity

11 to empower residents of low-income distressed commu12 nities and to forge innovative solutions to the challenges

13 confronting these communities, and that increased re14 sources should be invested in such partnerships.

15 (b) AUTHORIZATION OF APPROPRIATIONS.—To pro16 mote national public-private partnerships, there are au17 thorized to be appropriated—

18 (1) with respect to the Head Start program

19 under the Head Start Act (42 U.S.C. 9831 et

20 seq.)—

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

22 (B) $252,000,000 for fiscal year 1994;

23 (C) $264,000,000 for fiscal year 1995;

24 (D) $276,000,000 for fiscal year 1996;

25 (E) $294,000,000 for fiscal year 1997;
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1 (F) $306,000,000 for fiscal year 1998;

2 (G) $324,000,000 for fiscal year 1999;

3 (H) $336,000,000 for fiscal year 2000;

4 (I) $454,000,000 for fiscal year 2001; and

5 (J) $472,000,000 for fiscal year 2002;

6 (2) with respect to the programs under sections

7 329, 330, 340 and 340A of the Public Health Serv8 ice Act (42 U.S.C. 254c)—

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

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

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

12 (D) $136,000,000 for fiscal year 1996;

13 (E) $144,000,000 for fiscal year 1997;

14 (F) $156,000,000 for fiscal year 1998;

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

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

17 (I) $230,000,000 for fiscal year 2001; and

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

19 (3) with respect to the National Community

20 Economic Partnership program established under

21 chapter 3 of subtitle C of this title—

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

23 (B) $252,000,000 for fiscal year 1994;

24 (C) $264,000,000 for fiscal year 1995;

25 (D) $276,000,000 for fiscal year 1996;
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1 (E) $294,000,000 for fiscal year 1997;

2 (F) $306,000,000 for fiscal year 1998;

3 (G) $324,000,000 for fiscal year 1999;

4 (H) $336,000,000 for fiscal year 2000;

5 (I) $454,000,000 for fiscal year 2001; and

6 (J) $472,000,000 for fiscal year 2002;

7 (4) with respect to the Job Corps program

8 under part B of title IV of the Job Training Part9 nership Act (29 U.S.C. 1692 et seq.)—

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

11 (B) $252,000,000 for fiscal year 1994;

12 (C) $264,000,000 for fiscal year 1995;

13 (D) $276,000,000 for fiscal year 1996;

14 (E) $294,000,000 for fiscal year 1997;

15 (F) $306,000,000 for fiscal year 1998;

16 (G) $324,000,000 for fiscal year 1999;

17 (H) $336,000,000 for fiscal year 2000;

18 (I) $454,000,000 for fiscal year 2001; and

19 (J) $472,000,000 for fiscal year 2002;

20 (5) with respect to the Enterprise Capital Ac21 cess Fund Demonstration Program established

22 under section 285 of this Act—

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

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

25 (C) $132,000,000 for fiscal year 1995;
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1 (D) $136,000,000 for fiscal year 1996;

2 (E) $144,000,000 for fiscal year 1997;

3 (F) $156,000,000 for fiscal year 1998;

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

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

6 (I) $230,000,000 for fiscal year 2001; and

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

8 (6) with respect to the Youthbuild program

9 under subtitle D of title IV of the Cranston10 Gonzalez National Affordable Housing Act—

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

12 (B) $66,000,000 for fiscal year 1994;

13 (C) $66,000,000 for fiscal year 1995;

14 (D) $72,000,000 for fiscal year 1996;

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

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

17 (G) $78,000,000 for fiscal year 1999;

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

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

20 (J) $121,000,000 for fiscal year 2002; and

21 (7) with respect to the Neighborhood Reinvest22 ment Corporation established under title VI of the

23 Housing and Community Development Amendments

24 of 1978—

25 (A) $10,000,000 for fiscal year 1993;
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1 (B) $66,000,000 for fiscal year 1994;

2 (C) $66,000,000 for fiscal year 1995;

3 (D) $72,000,000 for fiscal year 1996;

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

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

6 (G) $78,000,000 for fiscal year 1999;

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

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

9 (J) $121,000,000 for fiscal year 2002.

10 (c) AVAILABILITY OF AMOUNTS.—The amounts ap11 propriated for programs pursuant to paragraphs (1), (2),

12 (4), (6), and (7) of subsection (b) shall be available only

13 for projects or activities that directly and principally bene14 fit the residents of tax enterprise zones designated pursu15 ant to section 1391 of the Internal Revenue Code of 1986.

16 Of the amounts appropriated for programs pursuant to

17 paragraphs (3) and (5) of subsection (b), not less than

18 50 percent shall be available only for projects or activities

19 that directly and principally benefit the residents of such

20 zones.

21 Subtitle B—Block Grant Funding

22 for Eligible Programs

23 SEC. 211. AUTHORIZATION OF APPROPRIATIONS.

24 There are authorized to be appropriated for assist25 ance under section 212, $320,000,000 for fiscal year
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1 1993, $1,950,000,000 for fiscal year 1994,

2 $1,992,000,000 for fiscal year 1995, $2,022,000,000 for

3 fiscal year 1996, $2,460,000,000 for fiscal year 1997, and

4 such sums as may be necessary for each of the fiscal years

5 1998 through 2002, except that amounts authorized under

6 this section for each of the fiscal years 1998 through 2002

7 shall not be less than twice the amount of the revenue

8 loss estimates to result as a result of enterprise zone tax

9 preferences under section 1391 of the Internal Revenue

10 Code of 1986 less the amounts authorized by section

11 201(b) of this Act.

12 SEC. 212. ALLOCATION OF AMOUNTS AMONG TAX ENTER13 PRISE ZONES.

14 (a) IN GENERAL.—Except as provided in subsection

15 (d), the interagency council established under section 216

16 of this Act shall make any amounts appropriated pursuant

17 to section 211 available under this subtitle to provide as18 sistance on behalf of each tax enterprise zone designated

19 under section 1391 of the Internal Revenue Code of 1986

20 for which an application under section 215 of this Act has

21 been approved by the interagency council.

22 (b) ALLOCATION BETWEEN URBAN AND RURAL

23 ZONES.—Of the amounts available each fiscal year under

24 this title for tax enterprise zones, 80 percent shall be avail-
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1 able for urban tax enterprise zones and 20 percent shall

2 be available for rural development investment zones.

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

4 (1) URBAN ZONES.—The amounts available

5 each fiscal year under this title for urban tax enter6 prise zones shall be allocated so as to reserve an

7 equal amount for each urban zone that may be des8 ignated prior to the end of the calendar year begin9 ning during the fiscal year for which such amounts

10 were made available, pursuant to the annual limits

11 on zones specified in section 1391 of the Internal

12 Revenue Code of 1986.

13 (2) RURAL ZONES.—The amounts available

14 each fiscal year under this title for rural develop15 ment investment zones shall be allocated so as to re16 serve an equal amount for each rural development

17 investment zone that may be designated prior to the

18 end of the calendar year beginning during the fiscal

19 year for which such amounts were made available,

20 pursuant to the annual limits on zones specified in

21 section 1391 of the Internal Revenue Code of 1986.

22 (d) SET-ASIDE.—Of the amounts appropriated pur23 suant to section 211 for fiscal year 1993, not less than

24 $5,000,000 shall be made available by the Interagency
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1 Council for the Access to Jobs/Reverse Community Dem2 onstration Program authorized under section 286.

3 (e) AVAILABILITY.—Notwithstanding any other pro4 vision of law, amounts appropriated pursuant to author5 izations under this subtitle shall remain available until the

6 end of the fiscal year following the year for which such

7 amounts are appropriated.

8 SEC. 213. USE OF AMOUNTS.

9 (a) IN GENERAL.—The assistance allocated under

10 section 212 on behalf of each tax enterprise zone (as de11 fined in section 1391 of the Internal Revenue Code of

12 1986) shall be available only for carrying out selected pro13 grams within the tax enterprise zone, in accordance with

14 the application of the tax enterprise zone approved under

15 section 215 and subject to the provisions of this section.

16 (b) ALLOCATION AMONG PROGRAM CATEGORIES.—

17 (1) IN GENERAL.—Except as provided in para18 graph (2), of the total amount of assistance provided

19 under this subtitle on behalf of a tax enterprise zone

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

21 carry out selected programs referred to under any

22 one of paragraphs (1) through (5) of section 214

23 may not exceed 20 percent of such total amount.

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

25 contained in an application under section 215, the
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1 interagency council may provide that the require2 ment under paragraph (1) shall not apply with re3 spect to amounts used to carry out selected pro4 grams under the application, except that of the total

5 amount of assistance provided under this subtitle on

6 behalf of such tax enterprise zone for any fiscal

7 year, the sum of the amounts used to carry out se8 lected programs referred to under any single para9 graph under section 214 may not exceed 30 percent

10 of such total amount and may not be less than 5

11 percent of such total amount.

12 (c) ALLOCATION AMONG JOB TRAINING PRO13 GRAMS.—In any fiscal year, of the sum of the amounts

14 of assistance provided under this subtitle on behalf of a

15 tax enterprise zone that are used to carry out any of the

16 job training programs under section 214(2), not less than

17 25 percent shall be used for assistance under the Young

18 Adult Employment Demonstration program referred to in

19 section 214(2)(A) of this Act.

20 (d) PROVISION OF ASSISTANCE.—Upon the approval

21 of an application under section 215 for a tax enterprise

22 zone, the appropriate Federal agency head for each se23 lected program under the approved application shall make

24 available on behalf of the enterprise zone (under such pro25 gram and through the appropriate eligible entity), from
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1 amounts available on behalf of such zone pursuant to sec2 tion 212, the amount of assistance determined in accord3 ance with the approved application.

4 (e) SUPPLEMENTATION REQUIREMENT.—Any

5 amounts provided under this subtitle shall be in supple6 ment to, and shall not supplant, any Federal, State, local,

7 or private funds from other sources already used, or com8 mitted for use, for programs, projects, activities, and serv9 ices assisted under this subtitle or comparable to such pro10 grams, projects, activities, and services. Federal agency

11 heads shall not reduce the usual allocations with respect

12 to any jurisdiction under any of the eligible programs de13 scribed in section 214 because such jurisdiction allocates

14 funds under this title to any of such programs.

15 SEC. 214. ELIGIBLE PROGRAMS.

16 Assistance may be provided under this subtitle for

17 carrying out the following activities, projects, and pro18 grams:

19 (1) CRIME AND CRIMINAL JUSTICE.—

20 (A) Community policing projects and ac21 tivities under the Edward Byrne Memorial

22 State and Local Law Enforcement Assistance

23 Program under part E of title I of the Omnibus

24 Crime Control and Safe Streets Act of 1968

25 (42 U.S.C. 3751 et seq.).
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1 (B) Chapter B of subpart 2 of part E of

2 title I of the Omnibus Crime Control and Safe

3 Streets Act of 1968.

4 (C) Projects and activities under chapter 1

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

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

7 (2) JOB TRAINING.—

8 (A) The Young Adult Employment Dem9 onstration program under part K of title IV of

10 the Job Training Partnership Act (as added by

11 section 241 of this Act).

12 (B) The Job Corps program under part B

13 of title IV of the Job Training Partnership Act

14 (29 U.S.C. 1692 et seq.).

15 (C) Title II of the Job Training Partner16 ship Act (29 U.S.C. 1601 et seq.).

17 (D) The American Conservation and Youth

18 Corps program under subtitle C of title I of the

19 National and Community Service Act of 1990

20 (42 U.S.C. 12541 et seq.).

21 (E) The Access to Jobs/Reverse Commut22 ing Demonstration Program established under

23 section 286 of this Act.

24 (3) EDUCATION.—
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1 (A) The programs under the Carl D. Per2 kins Vocational Educational and Applied Tech3 nology Education Act (20 U.S.C. 2301 et seq.).

4 (B) Projects under the Comprehensive

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

6 seq.).

7 (C) Activities under the Child Care and

8 Development Block Grant Act of 1990 (42

9 U.S.C. 9858 et seq.).

10 (D) The programs under chapter 1 of title

11 I of the Elementary and Secondary Education

12 Act of 1965.

13 (E) The TRIO programs under part A of

14 title IV of the Higher Education Act of 1965

15 (20 U.S.C. 1070 et seq.).

16 (F) The programs under the Adult Edu17 cation Act (20 U.S.C. 1201 et seq.).

18 (G) Literacy activities authorized under

19 the National Literacy Act of 1991.

20 (4) HEALTH, NUTRITION AND FAMILY ASSIST21 ANCE.—

22 (A) The special supplemental food program

23 for women, infants, and children under section

24 17 of the Child Nutrition Act of 1966.
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1 (B) The following programs under the

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

3 seq.):

4 (i) Capacity expansion of substance

5 abuse treatment facilities.

6 (ii) Substance abuse treatment for in7 dividuals under criminal justice super8 vision.

9 (iii) Substance abuse treatment for

10 pregnant and postpartum women.

11 (iv) Community prevention grants re12 garding substance abuse.

13 (v) Substance abuse treatment im14 provement grants.

15 (C) The programs under title XXVI of the

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

17 et seq.).

18 (D) The family support programs under

19 subtitle F of title VII of the Stewart B. McKin20 ney Homeless Assistance Act (42 U.S.C. 1148

21 et seq.).

22 (E) Projects for high risk youth under title

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

24 290aa et seq.).
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1 (F) Emergency child protective service

2 grants under section 107 of the Child Abuse

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

4 5106a).

5 (G) Family support centers and family re6 source and support programs under sections

7 933 and 934(d) of the Augustus F. Hawkins

8 Human Services Reauthorization Act of 1990

9 (Public Law 101–501).

10 (5) HOUSING AND COMMUNITY DEVELOP11 MENT.—

12 (A) The community development block

13 grant program under title I of the Housing and

14 Community Development Act of 1974 (42

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

16 (B) The public and Indian housing mod17 ernization program under section 14 of the

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

19 14371).

20 (C) The public and assisted housing drug

21 elimination program under chapter 2 of subtitle

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

23 1988 (42 U.S.C. 11901 et seq.).

24 (D) Contracts for rental assistance at25 tached to structures pursuant to paragraph (2)
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1 of section 8 of the United States Housing Act

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

3 (E) The HOME investment partnership

4 program under title II of the Cranston-Gon5 zalez National Affordable Housing Act (42

6 U.S.C. 12721 et seq.).

7 (F) The self-help housing technical assist8 ance grant program under section 523 of the

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

10 (G) Rural housing preservation grants

11 under section 533 of the Housing Act of 1949

12 (42 U.S.C. 1490m).

13 (H) Rural rental housing loans under sec14 tion 515 of the Housing Act of 1949 (42

15 U.S.C. 1485).

16 (I) Rural rental housing assistance pay17 ments under section 521(a)(2) of the Housing

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

19 (J) Rural water and waste disposal grants

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

21 306(a) of the Consolidated Farm and Rural

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

23 and waste facility loans and grants under sec24 tion 306C of such Act.
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1 (K) Private business enterprise grants

2 under section 310B(c) of the Consolidated

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

4 1926).

5 (L) Loan guarantees under section 108 of

6 the Housing and Community Development Act

7 (as amended by section 232 of this Act).

8 (M) Outreach and assistance for socially

9 disadvantaged farmers and ranchers under sec10 tion 2501 of the Food, Agriculture, and Trade

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

12 (N) Public Housing Family Investment

13 Centers under section 22 of the United States

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

15 SEC. 215. APPLICATION FOR FUNDING.

16 (a) ESTABLISHMENT OF APPLICATION PROCESS.—

17 The interagency council shall establish, by regulation, a

18 procedure for a single comprehensive application to be

19 submitted to the council for each tax enterprise zone des20 ignated under section 1391 of the Internal Revenue Code

21 of 1986 for the purpose of making amounts available

22 under this subtitle on behalf of such tax enterprise zones.

23 The interagency council shall provide for the form and

24 manner of such applications, and shall require the applica25 tions to be made by the State, the unit of local govern-
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1 ment, or the economic or community development corpora2 tion, that submitted the nomination for designation of the

3 area designated as a tax enterprise zone and submitted

4 promptly after such designation.

5 (b) LOCAL COORDINATION.—

6 (1) PURPOSES.—The interagency council shall

7 provide that each application under this section shall

8 be developed in coordination and consultation with a

9 local coordinating board under paragraph (2), which

10 shall ensure that the programs, projects, activities,

11 and services under section 214(1) carried out with

12 amounts provided under this subtitle are sufficiently

13 coordinated with the other programs, projects, ac14 tivities, and services assisted under this subtitle, and

15 that all such programs, projects, activities, and serv16 ices are coordinated with law enforcement efforts

17 within the area nominated for designation as a tax

18 enterprise zone.

19 (2) MEMBERSHIP.—The local coordinating

20 board referred to in paragraph (1) shall include rep21 resentatives of units of local government within such

22 area, representatives of law enforcement agencies

23 having jurisdiction within such area, residents of the

24 area, community leaders, including local business

25 persons, bankers, architects and planners, represent-
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1 atives of school boards, and representatives of non2 profit community-based organizations such as com3 munity development corporations and community ac4 tion agencies.

5 (c) CONTENTS.—Each application under the proce6 dure established under this section shall contain the fol7 lowing information:

8 (1) A list of the programs referred to under

9 section 214 for which funding is requested and a

10 general description of the types of activities to be

11 carried out with such assistance.

12 (2) A statement documenting the percentage of

13 the total amount of any funding received under this

14 subtitle that will be used for each selected program.

15 (3) A statement documenting the entities that

16 will receive any assistance provided for the selected

17 programs on behalf of the tax enterprise zone and

18 the entities’ eligibility for such assistance.

19 (4) A statement documenting the membership

20 of the local coordinating board organized pursuant

21 to the requirement under subsection (b) and describ22 ing the coordination between the programs, projects,

23 activities, and services assisted under this title and

24 local law enforcement efforts in the tax enterprise

25 zone.
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1 (5) A request for any waiver of the requirement

2 under section 213(b)(1) and a statement document3 ing the rationale for such waiver.

4 (6) A statement documenting any other Fed5 eral, State, and local resources for the community in

6 which the tax enterprise zone is located that will be

7 dedicated to the types of programs, projects, activi8 ties, and services to be assisted under this subtitle.

9 (7) A statement documenting a strong commit10 ment by nonprofit community-based organizations in

11 the tax enterprise zone for carrying out the selected

12 programs and similar programs, projects, activities,

13 and services.

14 (8) A statement documenting any private sector

15 resources, including corporate contributions and in16 dividual commitments, to supplement assistance pro17 vided under this subtitle.

18 (9) A statement documenting the efforts made

19 by the local jurisdiction containing the tax enterprise

20 zone to encourage local financial institutions to sat21 isfy their obligations under the Community Reinvest22 ment Act of 1977 (12 U.S.C. 2901 et seq.) by mak23 ing loans to enterprise zone businesses with empha24 sis on startup and other small business concerns (as

25 defined in section 3(a) of the Small Business Act
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1 (15 U.S.C. 632(a)) and the commitments made by

2 local financial institutions in response to these ef3 forts.

4 (10) A statement demonstrating a balanced,

5 comprehensive plan for the tax enterprise zone, that

6 addresses public safety, supports drug and crime

7 prevention, improves health, education and other so8 cial services, and promotes neighborhood revitaliza9 tion through strategies to create jobs and other eco10 nomic opportunities which assist families to become

11 self sufficient. Such strategies shall include improve12 ments in infrastructure, public facilities, and afford13 able housing opportunities embodying good urban

14 design and neighborhood planning principles that

15 contribute to the creation of wholesome and attrac16 tive social, economic, and physical environments.

17 (11) A statement demonstrating that any

18 amounts requested for selected programs are part of

19 an integrated and comprehensive plan for the use of

20 Federal, State, local, and private resources to ac21 complish specific goals and measurable outcomes for

22 neighborhood revitalization.

23 (d) REVIEW.—In reviewing each application submit24 ted under this section, each member of the council shall

25 review the portion of the application concerning any re-
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1 quest or eligibility for assistance under any selected pro2 gram under the jurisdiction of such member to determine

3 whether providing assistance under this subtitle pursuant

4 to such application will comply with the laws and regula5 tions applicable to such program.

6 (e) APPROVAL AND DISAPPROVAL.—

7 (1) TIMING.—The council shall review each ap8 plication promptly upon receipt and shall approve or

9 disapprove the application not later than the expira10 tion of the 30-day period beginning upon such

11 receipt.

12 (2) STANDARDS FOR APPROVAL.—The council

13 shall approve an application if the council deter14 mines that the assistance requested for the selected

15 programs under the application will assist in the eco16 nomic development of the tax enterprise zone, that

17 the eligible entities identified in the application are

18 capable and qualified to receive and administer the

19 assistance pursuant to the application, and that the

20 information, documentation, or evidence required

21 under subsection (c) is sufficient in the determina22 tion of the council.

23 (3) DISAPPROVAL AND RESUBMISSION.—If,

24 pursuant to review under this section, the council

25 determines that the application of a tax enterprise
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1 zone is incomplete or unsatisfactory, the council

2 shall, before the expiration of the period referred to

3 in paragraph (1)—

4 (A) notify the entity submitting the appli5 cation of the reasons for the failure to approve

6 the application;

7 (B) notify the entity submitting the appli8 cation that the application may be resubmitted

9 during the period referred to in subparagraph

10 (C); and

11 (C) permit such entity to resubmit a cor12 rected or amended application during the 30-

13 day period beginning on notification under this

14 paragraph.

15 (4) REVIEW OF RESUBMITTED APPLICATION.—

16 The council shall review and approve or disapprove

17 any application resubmitted under paragraph (3) be18 fore the expiration of the 15-day period beginning

19 upon such resubmission. Any application resubmit20 ted under paragraph (3) that is disapproved may be

21 resubmitted before the expiration of the 15-day pe22 riod beginning upon such disapproval and shall be

23 subject to review under the provisions of this para24 graph.
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1 (f) PUBLIC COMMENT.—An applicant under this sec2 tion, in conjunction with the relevant local coordinating

3 board, shall ensure that there are adequate opportunities

4 for public comment concerning the application submitted

5 under this section, including—

6 (1) furnishing citizens with information con7 cerning the amount of funds available pursuant to

8 this subtitle 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 any application filed pursuant to this section and to

14 records regarding the use of funds received pursuant

15 to this subtitle.

16 SEC. 216. INTERAGENCY COUNCIL.

17 (a) ESTABLISHMENT.—There is hereby established

18 an interagency council to provide assistance under this

19 subtitle.

20 (b) MEMBERSHIP.—The members of the council shall

21 be the Secretary of Agriculture, the Secretary of Edu22 cation, the Secretary of Health and Human Services, the

23 Secretary of Housing and Urban Development, the Sec24 retary of Labor, the Director of the Office of National

25 Drug Control Policy, the Attorney General of the United
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1 States and the Chairperson of the Commission on

2 National and Community Service.

3 (c) DUTIES.—The council shall—

4 (1) review and approve applications submitted

5 under section 215;

6 (2) direct the appropriate Federal agency head

7 to provide assistance under the selected programs

8 under approved applications using amounts available

9 pursuant to this subtitle; and

10 (3) carry out any other responsibilities of the

11 council as provided under this subtitle.

12 SEC. 217. DEFINITIONS.

13 For purposes of this subtitle:

14 (1) The term ‘‘appropriate Federal agency

15 head’’ means, with respect to each program referred

16 to in section 214, the head of the Federal agency or

17 other Federal official responsible for administering

18 such program.

19 (2) The term ‘‘approved application’’ means an

20 application under section 215 for assistance provided

21 under this subtitle that is approved by the inter22 agency council and which meets the public comment

23 requirements under section 215(f).

24 (3) The term ‘‘eligible entity’’ means, with re25 spect to a selected program under an application
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1 under section 215, an entity in the tax enterprise

2 zone that is eligible to receive and administer

3 amounts under the program and is designated under

4 the application to receive and administer amounts

5 provided for the program pursuant to this subtitle.

6 (4) The terms ‘‘interagency council’’ and ‘‘coun7 cil’’ mean the interagency council established under

8 section 216.

9 (5) The term ‘‘selected program’’ means, with

10 respect to a tax enterprise zone, any of the programs

11 identified in an application under section 215 for

12 which funding under this subtitle is requested.

13 (6) The term ‘‘tax enterprise zone’’ means an

14 urban tax enterprise zone or a rural development in15 vestment zone designated under section 1391 of the

16 Internal Revenue Code of 1986.

17 SEC. 218. STUDY AND REPORT.

18 (a) GENERAL STUDY.—The council shall conduct a

19 study to identify—

20 (1) any alternative methods or systems for allo21 cation of amounts made available pursuant to this

22 subtitle among tax enterprise zones; and

23 (2) any problems experienced in the implemen24 tation and administration of the provisions of this

25 subtitle, including identification of any provisions of
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1 law or regulations relating to the programs referred

2 to in section 214 for which a waiver would facilitate

3 carrying out the purposes of this subtitle.

4 (b) REPORT.—Not later than the expiration of the

5 1-year period beginning on the date of the enactment of

6 this Act, the council shall submit to the Congress a report

7 regarding the study conducted under subsection (a), which

8 shall include any recommendations for improving the pro9 gram for assistance under this subtitle.

10 SEC. 219. REGULATIONS.

11 The council shall issue any regulations necessary to

12 carry out this subtitle not later than the expiration of the

13 60-day period beginning on the date of the enactment of

14 this Act.

15 Subtitle C—Other Programs

16 CHAPTER 1—COMMUNITY DEVELOPMENT

17 BLOCK GRANT PROGRAM

18 SEC. 231. WAIVER OF PUBLIC SERVICES CAP UNDER COM19 MUNITY DEVELOPMENT BLOCK GRANT PRO20 GRAM.

21 Section 105(a)(8) of the Housing and Community

22 Development Act of 1974 (42 U.S.C. 5305(a)) is amend23 ed—

24 (1) by inserting ‘‘(A)’’ before ‘‘except that not

25 more than’’;
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1 (2) by inserting ‘‘(i)’’ after ‘‘unless such unit of

2 local government’’; and

3 (3) by striking ‘‘higher amount, and’’ and in4 serting the following: ‘‘higher amount, or (ii) is lo5 cated within or contains a tax enterprise zone (as

6 designated under section 1391 of the Internal Reve7 nue Code of 1986), in which case such unit of gen8 eral local government may use, in addition to such

9 15 percent of the amount of any assistance provided

10 to the unit (or in the case of nonentitled commu11 nities, 15 percent statewide) under this title, includ12 ing program income, an additional 15 percent of

13 such amount of assistance for activities under this

14 paragraph within such enterprise zone, and (B)’’.

15 SEC. 232. EMERGENCY COMMUNITY DEVELOPMENT LOAN

16 GUARANTEE AUTHORITY.

17 Section 108 of the Housing and Community Develop18 ment Act of 1974 is amended by adding at the end the

19 following new subsection:

20 ‘‘(q) In addition to amounts provided under sub21 section (a), the Secretary may enter into commitments

22 during each of the fiscal years 1993 through 1997 to guar23 antee notes and obligations with an aggregate principal

24 amount in each fiscal year of $2,000,000,000. The guar25 antee authority under this subsection shall be effective
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1 only to the extent approved or provided for in appropria2 tions Acts, subject only to the absence of qualified appli3 cants or proposed activities and the provisions of this Act,

4 except that the provisions of subsection (k) shall not apply

5 with respect to any guarantees and commitments to guar6 antee pursuant to authority provided under this sub7 section.’’

8 CHAPTER 2—YOUNG ADULT EMPLOY9 MENT DEMONSTRATION PROGRAM

10 SEC. 241. ESTABLISHMENT OF YOUNG ADULT EMPLOY11 MENT DEMONSTRATION PROGRAM.

12 (a) IN GENERAL.—Title IV of the Job Training Part13 nership Act (29 U.S.C. 1671 et seq.) is amended by add14 ing at the end the following new part:

15 ‘‘PART K—YOUNG ADULT EMPLOYMENT

16 DEMONSTRATION PROGRAM

17 ‘‘SEC. 499I. STATEMENT OF PURPOSE.

18 ‘‘It is the purpose of the Young Adult Employment

19 Demonstration program under this part to—

20 ‘‘(1) ensure access to education and job train21 ing assistance for youth and young adults residing

22 in tax enterprise zones;

23 ‘‘(2) make provisions for a comprehensive range

24 of education, training, and employment services to

25 disadvantaged youth and young adults in tax enter-
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1 prise zones who are not currently served or are un2 derserved by Federal education and job training pro3 grams;

4 ‘‘(3) enable communities located in or contain5 ing tax enterprise zones to establish and meet goals

6 for improving the opportunities available to youth

7 and young adults within the tax enterprise zone; and

8 ‘‘(4) facilitate the coordination of comprehen9 sive services to serve such youth and young adults.

10 ‘‘SEC. 499J. PROGRAM AUTHORIZED.

11 ‘‘(a) ESTABLISHMENT OF PROGRAM.—The Secretary

12 is authorized to establish a program of Young Adult Em13 ployment Demonstration grants to provide comprehensive

14 services to youth and young adults living in tax enterprise

15 zones.

16 ‘‘(b) ELIGIBILITY FOR GRANTS.—

17 ‘‘(1) RECIPIENTS.—The Secretary may only

18 award grants under this part to—

19 ‘‘(A) the participating community for a

20 target area that is located within a service de21 livery area; or

22 ‘‘(B) grantees designated under sections

23 401 and 402, or a consortium of such grantees

24 and the State, when the target area is located

25 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 CHAPTER 3—NATIONAL COMMUNITY

16 ECONOMIC PARTNERSHIP

17 SEC. 251. SHORT TITLE; FINDINGS AND PURPOSE.

18 (a) SHORT TITLE.—This chapter may be cited as the

19 ‘‘National Community Economic Partnership Act of

20 1993’’.

21 (b) 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 workforce

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 workforce falling below the poverty

18 line in 1979, with that percentage rising to

19 42.1 percent in 1987;

20 (E) with respect to urban areas, 23.4 per21 cent of the workforce falling below the poverty

22 line in 1979, with that percentage rising to

23 28.9 percent in 1987; and

24 (F) the average wage and salary income of

25 the 90 percent of the population with the lowest
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1 incomes, between 1977 and 1988, falling 3.5

2 percent in contrast to the richest 1 percent of

3 the population whose incomes more than dou4 bled in that time period.

5 (3) the future well-being of the United States

6 and the well-being of its citizens depends on the es7 tablishment and maintenance of viable community

8 development enterprises;

9 (4) meeting the goal of establishing and main10 taining viable community development enterprises

11 requires—

12 (A) increased public and private invest13 ment in business development activities, espe14 cially in the small business sector which gen15 erates the majority of new jobs as evidenced by

16 the fact that between 1980 and 1986, enter17 prises with less than 100 employees accounted

18 for more than 50 percent of the jobs created in

19 the United States;

20 (B) increased investment and technical as21 sistance to existing community based enter22 prises as evidenced by the fact that during the

23 first half of the 1980’s, more than 75 percent

24 of the total net new jobs in the United States

25 came from the expansion of existing businesses;
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1 (C) a substantial expansion and greater

2 continuity in the scope of Federal programs

3 that support community based economic devel4 opment strategies;

5 (D) the continuing efforts at Federal,

6 State and local levels to coordinate the plan7 ning, implementation and evaluation of commu8 nity economic development efforts; and

9 (E) the formation of a national commis10 sion, as an independent agency, to administer

11 the various community development programs

12 and serve as a focal point for Federal efforts to

13 promote community based economic develop14 ment; and

15 (5) community development corporations, due

16 to their proven capacity and achievements in both

17 the field of community based housing and economic

18 development, are appropriate vehicles through which

19 to advance a national community economic develop20 ment program because—

21 (A) there are currently over 2000 commu22 nity development corporations throughout the

23 United States, operating projects that promote

24 community based housing and economic devel25 opment;
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1 (B) community development corporations

2 operate in every State and in virtually every

3 major city in the United States, and account

4 for many of the existing efforts undertaken to

5 meet the needs of low income persons in both

6 urban and rural communities;

7 (C) community development corporations

8 have developed some 225,000 units of housing,

9 with over 90 percent of these units for use by

10 low income occupants;

11 (D) community development corporations

12 have developed over 17,400,000 square feet of

13 retail space, offices, industrial parks and other

14 industrial developments in economically dis15 tressed communities;

16 (E) community development corporations

17 have made loans to over 3000 enterprises, eq18 uity investments in 242 ventures and own and

19 operate 427 businesses; and

20 (F) community development corporations

21 commercial, industrial and business enterprise

22 development activities have accounted for the

23 creation and retention of nearly 90,000 jobs in

24 the last 5 years.
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1 (c) PURPOSE.—It is the purpose of this chapter to

2 stimulate enterprise development in economically dis3 tressed urban and rural areas through public and private

4 partnerships facilitated by community development cor5 porations.

6 PART I—COMMUNITY ECONOMIC

7 PARTNERSHIP INVESTMENT FUNDS

8 SEC. 255. PURPOSE.

9 It is the purpose of this part to increase private in10 vestment in distressed local communities and to build and

11 expand the capacity of local institutions to better serve

12 the economic needs of local residents through the provision

13 of financial and technical assistance to community devel14 opment corporations.

15 SEC. 256. PROVISION OF ASSISTANCE.

16 (a) AUTHORITY.—The Secretary of Health and

17 Human Services (hereafter referred to in this chapter as

18 the ‘‘Secretary’’) is authorized, in accordance with this

19 part, to provide nonrefundable lines of credit to commu20 nity development corporations for the establishment,

21 maintenance or expansion of revolving loan funds to be

22 utilized to finance projects intended to provide business

23 and employment opportunities for low-income, unem24 ployed, or underemployed individuals and to improve the

25 quality of life in urban and rural areas.
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1 (b) REVOLVING LOAN FUNDS.—

2 (1) COMPETITIVE ASSESSMENT OF APPLICA3 TIONS.—In providing assistance under subsection

4 (a), the Secretary shall establish and implement a

5 competitive process for the solicitation and consider6 ation of applications from eligible entities for lines of

7 credit for the capitalization of revolving funds.

8 (2) ELIGIBLE ENTITIES.—To be eligible to re9 ceive a line of credit under this part an applicant

10 shall—

11 (A) be a community development corpora12 tion;

13 (B) prepare and submit an application to

14 the Secretary that shall include a strategic in15 vestment plan that identifies and describes the

16 economic characteristics of the target area to be

17 served, the types of business to be assisted and

18 the impact of such assistance on low-income,

19 underemployed, and unemployed individuals in

20 the target area;

21 (C) demonstrate previous experience in the

22 development of low-income housing or commu23 nity or business development projects in a low24 income community and provide a record of

25 achievement with respect to such projects; and
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1 (D) have secured one or more commit2 ments from local sources for contributions (ei3 ther in cash or in kind, letters of credit or let4 ters of commitment) in an amount that is at

5 least equal to the amount requested in the ap6 plication submitted under subparagraph (B).

7 (3) EXCEPTION.—Notwithstanding the provi8 sions of paragraph (2)(D), the Secretary may reduce

9 local contributions to not less than 25 percent of the

10 amount of the line of credit requested by the com11 munity development corporation if the Secretary de12 termines such to be appropriate in accordance with

13 section 260.

14 SEC. 257. APPROVAL OF APPLICATIONS.

15 (a) IN GENERAL.—In evaluating applications submit16 ted under section 256(b)(2)(B), the Secretary shall ensure

17 that—

18 (1) the residents of the target area to be served

19 (as identified under the strategic development plan)

20 would have an income that is less than the median

21 income for the area (as determined by the Sec22 retary);

23 (2) the applicant community development cor24 poration possesses the technical and managerial ca25 pability necessary to administer a revolving loan
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1 fund and has past experience in the development

2 and management of housing, community and eco3 nomic development programs;

4 (3) the applicant community development cor5 poration has provided sufficient evidence of the ex6 istence of good working relationships with—

7 (A) local businesses and financial institu8 tions, as well as with the community the cor9 poration proposes to serve; and

10 (B) local and regional job training pro11 grams;

12 (4) the applicant community development cor13 poration will target job opportunities that arise from

14 revolving loan fund investments under this part so

15 that 75 percent of the jobs retained or created under

16 such investments are provided to—

17 (A) individuals with—

18 (i) incomes that do not exceed the

19 Federal poverty line; or

20 (ii) incomes that do not exceed 80

21 percent of the median income of the area;

22 (B) individuals who are unemployed or un23 deremployed;

24 (C) individuals who are participating or

25 have participated in job training programs au-
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1 thorized under the Job Training Partnership

2 Act (29 U.S.C. 1501 et seq.) or the Family

3 Support Act of 1988 (Public Law 100–485);

4 (D) individuals whose jobs may be retained

5 as a result of the provision of financing avail6 able under this part; or

7 (E) individuals who have historically been

8 underrepresented in the local economy; and

9 (5) a representative cross section of applicants

10 are approved, including large and small community

11 development corporations, urban and rural commu12 nity development corporations and community devel13 opment corporations representing diverse popu14 lations.

15 (b) PRIORITY.—In determining which application to

16 approve under this part the Secretary shall give priority

17 to those applicants proposing to serve a target area—

18 (1) with a median income that does not exceed

19 80 percent of the median for the area (as deter20 mined by the Secretary); and

21 (2) with a high rate of unemployment, as deter22 mined by the Secretary or in which the population

23 loss is at least 7 percent from April 1, 1980, to

24 April 1, 1990, as reported by the Bureau of the

25 Census.
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1 SEC. 258. AVAILABILITY OF LINES OF CREDIT AND USE.

2 (a) APPROVAL OF APPLICATION.—The Secretary

3 shall provide a community development corporation that

4 has an application approved under section 257 with a line

5 of credit in an amount determined appropriate by the Sec6 retary, subject to the limitations contained in subsection

7 (b).

8 (b) LIMITATIONS ON AVAILABILITY OF AMOUNTS.—

9 (1) MAXIMUM AMOUNT.—The Secretary shall

10 not provide in excess of $2,000,000 in lines of credit

11 under this part to a single applicant.

12 (2) PERIOD OF AVAILABILITY.—A line of credit

13 provided under this part shall remain available over

14 a period of time established by the Secretary, but in

15 no event shall any such period of time be in excess

16 of 3 years from the date on which such line of credit

17 is made available.

18 (3) EXCEPTION.—Notwithstanding paragraphs

19 (1) and (2), if a recipient of a line of credit under

20 this part has made full and productive use of such

21 line of credit, can demonstrate the need and demand

22 for additional assistance, and can meet the require23 ments of section 256(b)(2), the amount of such line

24 of credit may be increased by not more than

25 $1,500,000.
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1 (c) AMOUNTS DRAWN FROM LINE OF CREDIT.—

2 Amounts drawn from each line of credit under this part

3 shall be used solely for the purposes described in section

4 255 and shall only be drawn down as needed to provide

5 loans, investments, or to defray administrative costs relat6 ed to the establishment of a revolving loan fund.

7 (d) USE OF REVOLVING LOAN FUNDS.—Revolving

8 loan funds established with lines of credit provided under

9 this part may be used to provide technical assistance to

10 private business enterprises and to provide financial as11 sistance in the form of loans, loan guarantees, interest re12 duction assistance, equity shares, and other such forms

13 of assistance to business enterprises in target areas and

14 who are in compliance with section 257(a)(4).

15 SEC. 259. LIMITATIONS ON USE OF FUNDS.

16 (a) MATCHING REQUIREMENT.—Not to exceed 50

17 percent of the total amount to be invested by an entity

18 under this part may be derived from funds made available

19 from a line of credit under this part.

20 (b) TECHNICAL ASSISTANCE AND ADMINISTRA21 TION.—Not to exceed 10 percent of the amounts available

22 from a line of credit under this part shall be used for the

23 provision of training or technical assistance and for the

24 planning, development, and management of economic de25 velopment projects. Community development corporations
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1 shall be encouraged by the Secretary to seek technical as2 sistance from other community development corporations,

3 with expertise in the planning, development and manage4 ment of economic development projects. The Secretary

5 shall assist in the identification and facilitation of such

6 technical assistance.

7 (c) LOCAL AND PRIVATE SECTOR CONTRIBUTIONS.—

8 To receive funds available under a line of credit provided

9 under this part, an entity, using procedures established

10 by the Secretary, shall demonstrate to the community de11 velopment corporation that such entity agrees to provide

12 local and private sector contributions in accordance with

13 section 256(b)(2)(D), will participate with such commu14 nity development corporation in a loan, guarantee or in15 vestment program for a designated business enterprise,

16 and that the total financial commitment to be provided

17 by such entity is at least equal to the amount to be drawn

18 from the line of credit.

19 (d) USE OF PROCEEDS FROM INVESTMENTS.—Pro20 ceeds derived from investments made using funds made

21 available under this part may be used only for the pur22 poses described in section 255 and shall be reinvested in

23 the community in which they were generated.
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1 SEC. 260. PROGRAM PRIORITY FOR SPECIAL EMPHASIS

2 PROGRAMS.

3 (a) IN GENERAL.—The Secretary shall give priority

4 in providing lines of credit under this part to community

5 development corporations that propose to undertake eco6 nomic development activities in distressed communities

7 that target women, Native Americans, at risk youth, farm8 workers, population-losing communities, very low-income

9 communities, single mothers, veterans, and refugees; or

10 that expand employee ownership of private enterprises and

11 small businesses, and to programs providing loans of not

12 more than $35,000 to very small business enterprises.

13 (b) RESERVATION OF FUNDS.—Not less than 5 per14 cent of the amounts made available under section

15 278(a)(2)(A) may be reserved to carry out the activities

16 described in subsection (a).

17 PART II—EMERGING COMMUNITY

18 DEVELOPMENT CORPORATIONS

19 SEC. 265. COMMUNITY DEVELOPMENT CORPORATION IM20 PROVEMENT GRANTS.

21 (a) PURPOSE.—It is the purpose of this section to

22 provide assistance to community development corporations

23 to upgrade the management and operating capacity of

24 such corporations and to enhance the resources available

25 to enable such corporations to increase their community

26 economic development activities.
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1 (b) SKILL ENHANCEMENT GRANTS.—

2 (1) IN GENERAL.—The Secretary shall award

3 grants to community development corporations to

4 enable such corporations to attain or enhance the

5 business management and development skills of the

6 individuals that manage such corporations to enable

7 such corporations to seek the public and private re8 sources necessary to develop community economic

9 development projects.

10 (2) USE OF FUNDS.—A recipient of a grant

11 under paragraph (1) may use amounts received

12 under such grant—

13 (A) to acquire training and technical as14 sistance from agencies or institutions that have

15 extensive experience in the development and

16 management of low-income community eco17 nomic development projects; or

18 (B) to acquire such assistance from other

19 highly successful community development cor20 porations.

21 (c) OPERATING GRANTS.—

22 (1) IN GENERAL.—The Secretary shall award

23 grants to community development corporations to

24 enable such corporations to support an administra25 tive capacity for the planning, development, and
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1 management of low-income community economic de2 velopment projects.

3 (2) USE OF FUNDS.—A recipient of a grant

4 under paragraph (1) may use amounts received

5 under such grant—

6 (A) to conduct evaluations of the feasibility

7 of potential low-income community economic de8 velopment projects that address identified needs

9 in the low-income community and that conform

10 to those projects and activities permitted under

11 part I;

12 (B) to develop a business plan related to

13 such a potential project; or

14 (C) to mobilize resources to be contributed

15 to a planned low-income community economic

16 development project or strategy.

17 (d) APPLICATIONS.—A community development cor18 poration that desires to receive a grant under this section

19 shall prepare and submit to the Secretary an application

20 at such time, in such manner, and containing such infor21 mation as the Secretary may require.

22 (e) AMOUNT AVAILABLE FOR A COMMUNITY DEVEL23 OPMENT CORPORATION.—Amounts provided under this

24 section to a community development corporation shall not

25 exceed $75,000 per year. Such corporations may apply for
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1 grants under this section for up to 3 consecutive years,

2 except that such corporations shall be required to submit

3 a new application for each grant for which such corpora4 tion desires to receive and compete on the basis of such

5 applications in the selection process.

6 SEC. 266. EMERGING COMMUNITY DEVELOPMENT COR7 PORATION REVOLVING LOAN FUNDS.

8 (a) AUTHORITY.—The Secretary is authorized to

9 award grants to emerging community development cor10 porations to enable such corporations to establish, main11 tain or expand revolving loan funds, to make or guarantee

12 loans, or to make capital investments in new or expanding

13 local businesses.

14 (b) ELIGIBILITY.—To be eligible to receive a grant

15 under subsection (a), an entity shall—

16 (1) be a community development corporation;

17 (2) have completed not less than 1 nor more

18 than 2 community economic development projects or

19 related projects that improve or provide job and em20 ployment opportunities to low-income individuals;

21 (3) prepare and submit to the Secretary an ap22 plication at such time, in such manner, and contain23 ing such information as the Secretary may require,

24 including a strategic investment plan that identifies

25 and describes the economic characteristics of the
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1 target area to be served, the types of business to be

2 assisted using amounts received under the grant and

3 the impact of such assistance on low-income individ4 uals; and

5 (4) have secured one or more commitments

6 from local sources for contributions (either in cash

7 or in kind, letters of credit, or letters of commit8 ment) in an amount that is equal to at least 10 per9 cent of the amounts requested in the application

10 submitted under paragraph (2).

11 (c) USE OF THE REVOLVING LOAN FUND.—

12 (1) IN GENERAL.—A revolving loan fund estab13 lished or maintained with amounts received under

14 this section may be utilized to provide financial and

15 technical assistance, loans, loan guarantees or in16 vestments to private business enterprises to—

17 (A) finance projects intended to provide

18 business and employment opportunities for low19 income individuals and to improve the quality of

20 life in urban and rural areas; and

21 (B) build and expand the capacity of

22 emerging community development corporations

23 and serve the economic needs of local residents.

24 (2) TECHNICAL ASSISTANCE.—The Secretary

25 shall encourage emerging community development
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1 corporations that receive grants under this section to

2 seek technical assistance from established commu3 nity development corporations, with expertise in the

4 planning, development and management of economic

5 development projects and shall facilitate the receipt

6 of such assistance.

7 (3) LIMITATION.—Not to exceed 10 percent of

8 the amounts received under this section by a grantee

9 shall be used for training, technical assistance and

10 administrative purposes.

11 (d) USE OF PROCEEDS FROM INVESTMENTS.—Pro12 ceeds derived from investments made with amounts pro13 vided under this section may be utilized only for the pur14 poses described in this subchapter and shall be reinvested

15 in the community in which they were generated.

16 (e) AMOUNTS AVAILABLE.—Amounts provided under

17 this section to a community development corporation shall

18 not exceed $500,000 per year.

19 PART III—RESEARCH AND

20 DEMONSTRATION

21 SEC. 271. RESEARCH AND DEMONSTRATION.

22 (a) GRANTS.—The Secretary shall award grants to

23 organizations to enable such organizations to undertake

24 programs involving research, testing, studies or dem25 onstrations related to community economic development.
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1 (b) ELIGIBLE ORGANIZATIONS.—To be eligible to re2 ceive a grant under this section, an entity shall—

3 (1) be a community development corporation,

4 university, fiscal intermediary or a nonprofit organi5 zation involved in community-based economic devel6 opment activities; and

7 (2) prepare and submit to the Secretary an ap8 plication at such time, in such manner and contain9 ing such information as the Secretary determines

10 appropriate.

11 (c) USE OF FUNDS.—Amounts received under a

12 grant awarded under this section shall be made available

13 for studies, reports, tests or demonstration projects that—

14 (1) identify current problems facing both urban

15 and rural low-income communities or specific popu16 lation groups within low-income communities and

17 population-losing communities;

18 (2) identify solutions to the problems facing

19 both urban and rural low-income communities or

20 specific population groups within low-income com21 munities;

22 (3) examine or critique current strategies being

23 implemented to address economic issues facing low24 income communities; and
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1 (4) relate to any other matters determined ap2 propriate by the Secretary.

3 (d) MAXIMUM AMOUNT OF GRANT.—A grant award4 ed under this section shall not exceed $50,000.

5 PART IV—MISCELLANEOUS PROVISIONS

6 SEC. 275. JOINT PROGRAMS.

7 The Secretary shall develop and promulgate, in con8 sultation with the heads of other Federal agencies, regula9 tions designed to permit, where appropriate, the operation

10 of joint programs under which activities supported with

11 assistance provided under this chapter are coordinated

12 with community development activities supported with as13 sistance provided under other programs administered by

14 the Secretary and those administered by the heads of such

15 agencies.

16 SEC. 276. REPORTS.

17 (a) COMMUNITY DEVELOPMENT CORPORATIONS.—

18 Not later than 2 years after the date on which assistance

19 is provided to a community development corporation under

20 part I or II, every 2 years thereafter, the community devel21 opment corporation shall prepare and submit to the Sec22 retary a report under this section. Such report shall in23 clude—

24 (1) the amount of funds received by the com25 munity development corporation;
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1 (2) a summary of the uses of such funds;

2 (3) the number of jobs created or retained by

3 the corporation;

4 (4) the number and type of new businesses

5 started, including micro-businesses;

6 (5) the number of jobs created or retained for

7 individuals identified in section 257(a)(4);

8 (6) in the case of funds made available under

9 part I, the source and amount of matching funds;

10 (7) in the case of revolving loan funds made

11 available under part II, the amount of funds lever12 aged; and

13 (8) related human services and facilities pro14 vided as result of assistance provided under this

15 chapter.

16 (b) SECRETARY.—Not later than 3 years after the

17 date on which assistance is first provided under part I or

18 II, and annually thereafter, the Secretary shall prepare

19 and submit to the Committee on Labor and Human Re20 sources of the Senate and the Committee on Education

21 and Labor of the House of Representatives a report con22 taining a summary of the reports received by the Secretary

23 under subsection (a) for the period in which the report

24 of the Secretary is submitted.
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1 SEC. 277. DEFINITIONS.

2 As used in this chapter:

3 (1) COMMUNITY DEVELOPMENT CORPORA4 TION.—The term ‘‘community development corpora5 tion’’ means a private, nonprofit corporation whose

6 board of directors is comprised of business, civic and

7 community leaders, and whose principal purpose in8 cludes the provision of low-income housing or com9 munity economic development projects that primarily

10 benefit low-income individuals and communities.

11 (2) LOCAL AND PRIVATE SECTOR CONTRIBU12 TION.—The term ‘‘local and private sector contribu13 tion’’ means the funds available at the local level (by

14 private financial institutions, State and local govern15 ments) or by any private philanthropic organization

16 and private, nonprofit organizations that will be

17 committed and used solely for the purpose of financ18 ing private business enterprises in conjunction with

19 amounts provided under this chapter.

20 (3) POPULATION-LOSING COMMUNITY.—The

21 term ‘‘population-losing community’’ means any

22 county in which the net population loss is at least

23 7 percent from April 1, 1980 to April 1, 1990, as

24 reported by the Bureau of the Census.

25 (4) PRIVATE BUSINESS ENTERPRISE.—The

26 term ‘‘private business enterprise’’ means any busi-
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1 ness enterprise that is engaged in the manufacture

2 of a product, provision of a service, construction or

3 development of a facility, or that is involved in some

4 other commercial, manufacturing or industrial activ5 ity, and that agrees to target job opportunities stem6 ming from investments authorized under this chap7 ter to certain individuals.

8 (5) TARGET AREA.—The term ‘‘target area’’

9 means any area defined in an application for assist10 ance under this chapter that has a population whose

11 income does not exceed the median for the area

12 within which the target area is located.

13 (6) VERY LOW-INCOME COMMUNITY.—The term

14 ‘‘very low-income community’’ means a community

15 in which the median income of the residents of such

16 community does not exceed 50 percent of the median

17 income of the area.

18 SEC. 278. AUTHORIZATION OF APPROPRIATIONS.

19 (a) COMMUNITY ECONOMIC PARTNERSHIP INVEST20 MENT FUNDS AND EMERGING COMMUNITY DEVELOP21 MENT CORPORATIONS.—

22 (1) IN GENERAL.—There are authorized to be

23 appropriated to carry out parts I and II,

24 $40,000,000 for fiscal year 1993, $100,000,000 for
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1 fiscal year 1994, and $125,000,000 for fiscal year

2 1995.

3 (2) EARMARKS.—Of the aggregate amount ap4 propriated under paragraph (1) for each fiscal

5 year—

6 (A) 60 percent shall be available to carry

7 out part I; and

8 (B) 40 percent shall be available to carry

9 out part II.

10 (3) AMOUNTS.—Amounts appropriated under

11 paragraph (1) shall remain available for expenditure

12 without fiscal year limitation.

13 (b) RESEARCH AND DEMONSTRATION.—There are

14 authorized to be appropriated to carry out part III such

15 sums as may be necessary for each of the fiscal years 1993

16 through 1995.

17 SEC. 279. PROHIBITION.

18 None of the funds authorized under this chapter shall

19 be used to finance the construction of housing.

20 SEC. 280. EFFECTIVE DATE.

21 This chapter shall take effect as if included in the

22 Omnibus Budget Reconciliation Act of 1990.
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1 CHAPTER 4—MISCELLANEOUS PROGRAMS

2 SEC. 285. ESTABLISHMENT OF ENTERPRISE CAPITAL AC3 CESS FUND.

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

5 ‘‘Enterprise Capital Access Fund Demonstration Pro6 gram’’.

7 (b) FINDINGS AND PURPOSE.—

8 (1) FINDINGS.—The Congress finds that—

9 (A) the Nation’s urban and rural commu10 nities face critical social and economic problems

11 stemming from lack of economic opportunity

12 among low-income persons and persons living in

13 poverty;

14 (B) the numbers of low-income persons

15 and persons living in poverty has grown signifi16 cantly over the last decade;

17 (C) lack of access to credit and other

18 forms of capital is a significant factor in the

19 disinvestment and decline of low-income and

20 minority neighborhoods;

21 (D) changes in the banking system and fi22 nancial markets have made access to credit in

23 low-income and distressed communities increas24 ingly more difficult to obtain as decisionmaking
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1 on credit has been removed from local commu2 nities;

3 (E) the restoration and maintenance of

4 viable local economies will require improved ac5 cess to credit, as well as public and private in6 vestment in economic and community develop7 ment activities, business development, and low8 income housing;

9 (F) indigenous community-based financial

10 institutions can play a significant role in identi11 fying and responding to community needs;

12 (G) the Federal Government needs to de13 velop new models and institutions for facilitat14 ing local revitalization efforts and improving ac15 cess to credit; and

16 (H) nonprofit financial intermediaries have

17 proven effective in meeting the credit and other

18 capital needs in low-income and distressed com19 munities.

20 (2) PURPOSE.—The purpose of this section is

21 to establish a demonstration program to promote re22 investment in low-income and chronically distressed

23 neighborhoods through community-based nonprofit

24 financial institutions that work cooperatively with

25 residents and State and local government.
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1 (c) DEFINITIONS.—For purposes of this section:

2 (1) ELIGIBLE INTERMEDIARY.—The term ‘‘eli3 gible intermediary’’ means a nonprofit organization

4 that—

5 (A) is organized under Federal, State or

6 local laws;

7 (B) has no part of its net earnings inuring

8 to the benefit of any member, founder, contrib9 utor, or other person;

10 (C) complies with standards of financial

11 accountability acceptable to the Secretary;

12 (D) controls, operates or is affiliated with

13 an entity that provides credit or investment

14 capital in a targeted geographic area;

15 (E) has as its primary mission the revital16 ization of low-income and chronically distressed

17 neighborhoods or communities; and

18 (F) maintains, through significant rep19 resentation on its governing board and other20 wise, accountability to community residents.

21 (2) LOW-INCOME PERSONS.—The term ‘‘low-in22 come persons’’ means persons whose incomes do not

23 exceed 80 percent of the median for the area.

24 (3) SECRETARY.—The term ‘‘Secretary’’ means

25 the Secretary of Housing and Urban Development.
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1 (4) TARGETED GEOGRAPHIC AREA.—The term

2 ‘‘targeted geographic area’’ means a geographically

3 contiguous area of chronic economic distress as

4 measured by unemployment, growth lag, the extent

5 of poverty, per capita income, extent of blight and

6 disinvestment, fiscal distress, or other indicators

7 deemed appropriate by the Secretary, that has been

8 identified by an eligible intermediary as an area to

9 be served by it.

10 (d) AUTHORITY.—The Secretary shall carry out, in

11 accordance with this section, a demonstration program to

12 provide assistance in the form of capital and technical as13 sistance grants to nonprofit financial intermediaries for

14 the establishment, maintenance, and expansion of such in15 stitutions, to be utilized to finance business and employ16 ment opportunities, housing opportunities affordable to

17 low-income persons, and neighborhood revitalization

18 projects.

19 (e) APPLICATIONS.—The Secretary shall establish

20 and implement a competitive process for the solicitation

21 and consideration of applications from eligible

22 intermediaries.

23 (f) SELECTION CRITERIA.—

24 (1) IN GENERAL.—Not later than 12 months

25 after the date of enactment of this section, the Sec-
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1 retary shall select eligible intermediaries to partici2 pate in the demonstration program, based on—

3 (A) the capacity of the eligible

4 intermediary to carry out the purposes of this

5 title;

6 (B) the financial capacity of the eligible

7 intermediary based on evaluations provided by a

8 certified public accountant and criteria to be

9 determined by the Secretary;

10 (C) the extent of need in the targeted geo11 graphic area identified by the eligible

12 intermediary as the area it serves;

13 (D) the extent to which the lending serv14 ices of the eligible intermediary are coordinated

15 with other revitalization activities in the tar16 geted geographic area;

17 (E) the previous experience and achieve18 ments of the eligible intermediary in the financ19 ing or development of low-income housing, in

20 development of businesses and other employ21 ment opportunities, or in neighborhood revital22 ization activities;

23 (F) the extent to which the eligible

24 intermediary has firm commitments from local

25 sources to provide matching funds in an
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1 amount that is at least equal to the amount re2 quested in the application;

3 (G) an appropriate geographic distribution

4 of intermediaries among regions in the United

5 States;

6 (H) the extent to which the eligible

7 intermediary demonstrates a commitment to

8 serve minority individuals and communities;

9 and

10 (K) other criteria deemed appropriate by

11 the Secretary.

12 (g) CAPITAL GRANTS.—

13 (1) IN GENERAL.—The Secretary shall make

14 capital grants to eligible intermediaries.

15 (2) USE OF GRANTS.—Capital grants may be

16 used by eligible intermediaries to increase the capital

17 available for loans, loan guarantees, interest rate re18 duction activities, and other activities deemed appro19 priate by the Secretary that promote housing afford20 able to low-income persons and economic and com21 munity development activities that benefit low-in22 come persons.

23 (3) AMOUNT.—The maximum amount of Fed24 eral assistance an eligible intermediary can receive

25 per fiscal year under this section is $1,000,000.
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1 (h) TECHNICAL ASSISTANCE.—The Secretary is au2 thorized to make grants to eligible intermediaries to pro3 vide technical assistance to borrowers.

4 (i) TRAINING PROGRAM.—The Secretary shall estab5 lish, or contract to establish, an ongoing training program

6 to assist eligible intermediaries and their staffs in develop7 ing the capacity to carry out the purposes of this section.

8 (j) REPORT.—The Secretary shall annually prepare

9 and submit to Congress a report containing a summary

10 of the activities carried out under this section and the

11 findings and conclusions drawn from such activities.

12 (k) DUTIES OF ELIGIBLE INTERMEDIARIES.—An eli13 gible intermediary receiving assistance pursuant to this

14 section shall—

15 (1) match any assistance awarded by the Sec16 retary dollar-for-dollar with non-Federal sources of

17 funds;

18 (2) ensure that not less than 70 percent of

19 loans to individual borrowers are to persons whose

20 incomes are at or below 80 percent of the area me21 dian income and are residents of the targeted geo22 graphic area served; and

23 (3) ensure that all loans made to nonprofit or

24 for-profit organizations provide a direct benefit to
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1 persons who are residents of the targeted geographic

2 area served.

3 (l) OFFICE OF COMMUNITY BANKING.—There is es4 tablished within the Department of Housing and Urban

5 Development an Office of Community Banking which is

6 responsible for the implementation of this section.

7 (m) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated to carry out this section,

9 $100,000,000 for fiscal year 1993 and $200,000,000 for

10 fiscal year 1994. Any amounts appropriated pursuant to

11 this paragraph shall remain available until expended.

12 SEC. 286. ACCESS TO JOBS/REVERSE COMMUTING DEM13 ONSTRATION PROGRAM.

14 (a) PURPOSE.—It is the purpose of this section to—

15 (1) improve employment rates and earnings in

16 inner-city areas by improving access to job sites for

17 inner-city residents;

18 (2) improve the viability of businesses in tax en19 terprise zones as a result of the increased incomes

20 and purchasing power of zone residents; and

21 (3) test differing approaches to achieving these

22 goals and determine their effects.

23 (b) ESTABLISHMENT OF PROGRAM.—

24 (1) IN GENERAL.—The Secretary of Labor, in

25 consultation with the Secretary of Transportation,
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1 shall establish a Reverse Commuting Demonstration

2 Program to test the effects of assisting residents of

3 poor inner-city areas to commute to job sites in

4 other areas of the city or surrounding suburbs.

5 (2) USE OF NON SET-ASIDE FUNDS.—Any ap6 plicant eligible for block grant funding under section

7 215 of this Act that submits an application that

8 meets the criteria in subsection (c) shall be approved

9 by the Secretary of Labor, in consultation with the

10 Secretary of Transportation, to utilize funds it re11 ceives under this title to carry out a program estab12 lished under this section.

13 (3) USE OF SET-ASIDE FUNDS.—The funds set14 aside under section 212(d) for the program under

15 this section shall be used by the Secretary of Labor,

16 in consultation with the Secretary of Transportation,

17 to fund not more than six demonstration projects

18 utilizing the program models described in subsection

19 (d). Projects shall be selected on a competitive basis

20 from applications that meet the requirements of sub21 section (c) that are submitted by applicants eligible

22 for block grant funding under section 215 of this

23 Act.

24 (c) APPLICATION AND APPROVAL CRITERIA.—An ap25 plication under this section shall provide information spec-
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1 ified by the Secretary of Labor, in consultation with the

2 Secretary of Transportation, that is sufficient to satisfy

3 the Secretary that—

4 (1) the geographic area whose residents would

5 be served by the program established by the appli6 cant under this section is a low-income area that

7 consists in whole or substantial part of an urban tax

8 enterprise zone;

9 (2) one of the three program models described

10 in subsection (d) will be used by the applicant;

11 (3) the data collection procedures that will be

12 established by the applicant will be sufficient to en13 able the Secretary of Labor, in consultation with the

14 Secretary of Transportation, to conduct an evalua15 tion in accordance with subsection (e); and

16 (4) the applicant has the capability to perform

17 adequately with respect to the program established

18 and to meet such other criteria as the Secretary of

19 Labor may prescribe.

20 (d) PROGRAM MODELS.—Applications approved

21 under this section shall utilize one of the following pro22 gram models:

23 (1) ADDING TRANSPORTATION SERVICES TO EX24 ISTING JOB TRAINING AND PLACEMENT PRO25 GRAMS.—Under this model an applicant shall sup-
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1 plement existing training and placement programs

2 through the establishment of new transportation

3 services that are designed to—

4 (A) transport inner-city residents to job lo5 cations (such as van service between the zones

6 and business parks or major employers, with

7 the service being provided by a public agency,

8 a private vendor, or a neighborhood organiza9 tion);

10 (B) provide transportation counseling and

11 assistance (such as the creation of car pools

12 and provision of education on public transit

13 routes); or

14 (C) provide a direct subsidy of public tran15 sit fares or private automobile expenses.

16 (2) IMPROVING PUBLIC TRANSIT SYSTEMS TO

17 FACILITATE ACCESS TO JOBS/REVERSE COMMUT18 ING.—Under this model an applicant may—

19 (A) work with the relevant transit operator

20 or agency to modify public transit routes and

21 schedules to increase the accessibility of resi22 dents of inner-city areas to job locations (such

23 as through the provision of express bus service

24 to business parks at times coinciding with labor

25 shifts or the provision of new connecting serv-
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1 ices to fill gaps that impede commuting from

2 inner-city areas to jobs sites); or

3 (B) reimburse public transit operators for

4 the costs of providing reduced fare programs to

5 increase the access of inner city residents to

6 employment opportunities.

7 An applicant under subparagraph (A) may request

8 suburban employers to contribute to the costs of im9 plementing such transit services.

10 (3) ESTABLISHING REGIONAL COALITIONS TO

11 IMPROVE INNER-CITY ACCESS TO JOBS.—Under this

12 model an applicant shall establish a regional coali13 tion, which may include neighborhood organizations,

14 employers and employers associations, transpor15 tation providers, and similar entities, to implement

16 comprehensive strategies to improve the access

17 of residents of inner-cities to jobs through modi18 fications in job training and placement services, sup19 port services such as child care, and transportation

20 services. An applicant under this model shall at21 tempt to link job training program participants with

22 job opportunities throughout as much of the metro23 politan area as practicable, and transportation bar24 riers between inner-city areas and job locations shall
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1 be identified and transportation services imple2 mented to address these problems.

3 (e) EVALUATION.—The Secretary of Labor, in con4 sultation with the Secretary of Transportation, shall con5 duct a thorough evaluation of the program established

6 under this section. Such evaluation shall include an assess7 ment of—

8 (1) with respect to applicants adding transpor9 tation services to job training programs, the effect of

10 the addition of such transportation services on em11 ployment rates, job retention, and earnings among

12 residents of the demonstration project areas;

13 (2) with respect to applicants improving public

14 transit systems, the effect of the improvements, on

15 employment rates, job retention, and earnings;

16 (3) with respect to applicants establishing re17 gional coalitions and implementing comprehensive

18 strategies, the effects of such strategies on employ19 ment rates, job retention, and earnings; and

20 (4) the manner in which the adoption of such

21 comprehensive strategies affect employment and

22 earnings in urban tax enterprise zones, compared to

23 other urban tax enterprise zones not initiating pro24 grams to improve inner-city access to suburban job

25 locations.
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1 (f) OTHER FUNDING SOURCES.—Nothing in this sec2 tion shall be construed to prevent an approved applicant

3 from raising funds for any program established under the

4 application from other sources to augment the funds avail5 able under this Act.

6 (g) DEFINITION.—As used in this section, the term

7 ‘‘urban tax enterprise zone’’ means an area designated

8 under section 1391 of the Internal Revenue Code of 1986

9 as an urban tax enterprise zone.

10 SEC. 287. STUDY OF INSURANCE AVAILABILITY IN

11 CENTRAL CITIES AND DISTRESSED URBAN

12 AREAS.

13 (a) IN GENERAL.—Not later than 24 months after

14 the date of enactment of this Act, the Comptroller General

15 shall prepare and submit to Congress a report assessing

16 the market availability of insurance (including insurance

17 against crime, civil disorders and related perils) for busi18 nesses and residences located in central cities and dis19 tressed urban areas and the impact of the availability of

20 such insurance on the economic development or redevelop21 ment of such areas.

22 (b) DETAIL OF CONTENTS.—The report required

23 under subsection (a) shall consider—

24 (1) whether insurance (including insurance

25 against crime, civil disorders, and related perils) is
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1 available at affordable rates in central cities and dis2 tressed urban areas either through the private insur3 ance market or through a suitable program adopted

4 under Federal or State law;

5 (2) whether reinsurance (including reinsurance

6 against crime, civil disorders, and related perils) is

7 available at affordable rates in central cities and

8 other distressed urban areas either through the pri9 vate reinsurance market or through a suitable pro10 gram adopted under State law;

11 (3) the factors most likely to explain any defi12 ciencies in the availability of such insurance or rein13 surance;

14 (4) whether any deficiencies in the availability

15 of such insurance or reinsurance act as a deterrent

16 or barrier to the economic development or redevelop17 ment of central cities and distressed urban areas;

18 (5) whether the Federal Crime Insurance Pro19 gram operated pursuant to part C of title XII of the

20 National Housing Act (12 U.S.C. 1749bbb et seq.)

21 adequately promotes the availability of insurance in

22 central cities and distressed urban areas and wheth23 er the program should be modified to more effec24 tively advance that goal;
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1 (6) whether those State Fair Access to Insur2 ance (FAIR) Plans that were established pursuant

3 to section 1211 of title XII of the National Housing

4 Act or other programs adopted by State govern5 ments effectively promote the availability of insur6 ance in central cities and distressed urban areas;

7 (7) whether reenactment of a Federal Riot Re8 insurance Program to promote the availability of in9 surance (including insurance against crime, civil dis10 orders, and related perils) would effectively promote

11 the availability of insurance in central cities and dis12 tressed urban areas;

13 (8) whether other action by the Federal Gov14 ernment would be advisable to promote the availabil15 ity of insurance (including insurance against crime,

16 civil disorders, and related perils) in central cities

17 and distressed urban areas in order to enhance the

18 prospects for the economic development or redevelop19 ment of such areas; and

20 (9) such other issues related to the availability

21 of insurance in central cities and other distressed

22 urban areas and the relationship of the availability

23 of such insurance to the economic development or

24 redevelopment of such areas as the Comptroller Gen25 eral considers appropriate.
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1 (c) DEFINITIONS.—As used in this section:

2 (1) The term ‘‘affordable rates’’ shall have the

3 meaning determined by the Comptroller General tak4 ing into consideration factors such as the nature and

5 degree of risks involved, the protective devices em6 ployed, the extent of anticipated losses, the prevail7 ing rates for similar coverages in adjacent or com8 parable areas, the economic importance of the var9 ious individual coverages, the type of property in10 volved, and the relative abilities of the particular

11 classes and types of insureds to pay the costs of cov12 erages.

13 (2) The term ‘‘central city’’ means any political

14 subdivision designated as a central city from time to

15 time by the Office of Management and Budget.

16 (3) The term ‘‘distressed urban area’’ means an

17 urban tax enterprise zone designated pursuant to

18 section 1391 of the Internal Revenue Code of 1986

19 or any other urban area that has a high level of pov20 erty, unemployment, or minority population share,

21 as determined by the Comptroller General.

22 (d) REFERRAL.—The report required under sub23 section (a) shall, upon transmission to Congress, be re24 ferred in the Senate to the Committee on Banking, Hous25 ing, and Urban Affairs, and the Committee on Finance,
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1 and in the House of Representatives to the Committee on

2 Banking, Finance and Urban Affairs.

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