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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2779 Introduced in Senate (IS)]

106th CONGRESS
  2d Session
                                S. 2779

 To provide for the designation of renewal communities and to provide 
tax incentives relating to such communities, to provide a tax credit to 
 taxpayers investing in entities seeking to provide capital to create 
     new markets in low-income communities, and to provide for the 
establishment of Individual Development Accounts (IDAs), and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 22, 2000

 Mr. Santorum (for himself, Mr. Lieberman, Mr. Abraham, Mr. Kohl, Mr. 
  Hutchinson, Mr. Torricelli, and Mr. Kerry) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To provide for the designation of renewal communities and to provide 
tax incentives relating to such communities, to provide a tax credit to 
 taxpayers investing in entities seeking to provide capital to create 
     new markets in low-income communities, and to provide for the 
establishment of Individual Development Accounts (IDAs), and for other 
                               purposes.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``American Community 
Renewal and New Markets Empowerment Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; etc.
                  TITLE I--AMERICAN COMMUNITY RENEWAL

Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Extension of expensing of environmental remediation costs to 
                            renewal communities; extension of 
                            termination date for renewal communities 
                            and empowerment zones.
Sec. 103. Work opportunity credit for hiring youth residing in renewal 
                            communities.
Sec. 104. Evaluation and reporting requirements.
Sec. 105. Exclusion of effects of this title from paygo scorecard.
                  TITLE II--NEW MILLENNIUM CLASSROOMS

Sec. 201. Credit for computer donations to schools, senior centers, 
                            public libraries, and other training 
                            centers.
 TITLE III--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES

Sec. 301. Authority to designate 9 additional empowerment zones.
Sec. 302. Extension of enterprise zone treatment through 2009.
Sec. 303. 20 percent employment credit for all empowerment zones.
Sec. 304. Increased expensing under section 179.
Sec. 305. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 306. Nonrecognition of gain on rollover of empowerment zone 
                            investments.
Sec. 307. Increased exclusion of gain on sale of empowerment zone 
                            investments.
Sec. 308. Funding entitlement for Round II empowerment zones.
Sec. 309. Custom user fees.
            TITLE IV--FAITH BASED SUBSTANCE ABUSE TREATMENT

Sec. 401. Prevention and treatment of substance abuse; services 
                            provided through religious organizations.
                         TITLE V--HOMEOWNERSHIP

Sec. 501. Transfer of unoccupied and substandard HUD-held housing to 
                            local governments and community development 
                            corporations.
Sec. 502. Transfer of HUD assets in revitalization areas.
Sec. 503. Risk-sharing demonstration.
            TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES

Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Definitions.
Sec. 604. Authorization.
Sec. 605. Selection of APICs.
Sec. 606. Operations of APICs.
Sec. 607. Credit enhancement by the Federal Government.
Sec. 608. APIC requests for guarantee actions.
Sec. 609. Examination and monitoring of APICs.
Sec. 610. Penalties.
Sec. 611. Effective date.
Sec. 612. Sunset.
                   TITLE VII--NEW MARKETS TAX CREDIT

Sec. 701. New markets tax credit.
         TITLE VIII--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL

Sec. 800. Short title.
            Subtitle A--New Markets Venture Capital Program

Sec. 801. New Markets Venture Capital Program.
Sec. 802. Bankruptcy exemption for NMVC companies.
Sec. 803. Federal savings associations.
      Subtitle B--Community Development Venture Capital Assistance

Sec. 811. Findings and purposes.
Sec. 812. Community development venture capital activities.
                       Subtitle C--Business LINC

Sec. 821. Grants authorized.
Sec. 822. Regulations.
   TITLE IX--BOND VOLUME CAP AND LOW-INCOME HOUSING CREDIT INCREASES

Sec. 901. Increase in State ceiling on private activity bonds.
Sec. 902. Increase in State ceiling on low-income housing credit.
                TITLE X--INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 1001. Findings.
Sec. 1002. Purposes.
Sec. 1003. Definitions.
   Subtitle A--Individual Development Accounts for Low-Income Workers

Sec. 1011. Structure and administration of qualified individual 
                            development account programs.
Sec. 1012. Procedures for opening an Individual Development Account and 
                            qualifying for matching funds.
Sec. 1013. Contributions to Individual Development Accounts.
Sec. 1014. Deposits by qualified individual development account 
                            programs.
Sec. 1015. Withdrawal procedures.
Sec. 1016. Certification and termination of qualified individual 
                            development account programs.
Sec. 1017. Reporting, monitoring, and evaluation.
Sec. 1018. Certain account funds of program participants disregarded 
                            for purposes of certain means-tested 
                            Federal programs.
Subtitle B--Qualified Individual Development Account Program Investment 
                                Credits

Sec. 1021. Qualified individual development account program investment 
                            credits.
Sec. 1022. CRA credit treatment for qualified individual development 
                            account program investments.
Sec. 1023. Designation of earned income tax credit payments for deposit 
                            to Individual Development Accounts.
                 TITLE XI--CHARITABLE CHOICE EXPANSION

Sec. 1101. Provision of assistance under government programs by 
                            religious organizations.

                  TITLE I--AMERICAN COMMUNITY RENEWAL

SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES.

    (a) In General.--Chapter 1 is amended by adding at the end the 
following new subchapter:

                  ``Subchapter X--Renewal Communities

                              ``Part I.   Designation.
                              ``Part II.  Renewal community capital 
                                        gain; renewal community 
                                        business.
                              ``Part III.  Additional incentives.

                         ``PART I--DESIGNATION

                              ``Sec. 1400E. Designation of renewal 
                                        communities.

``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

    ``(a) Designation.--
            ``(1) Definitions.--For purposes of this title, the term 
        `renewal community' means any area--
                    ``(A) which is nominated by one or more local 
                governments and the State or States in which it is 
                located for designation as a renewal community 
                (hereinafter in this section referred to as a 
                `nominated area'), and
                    ``(B) which the Secretary of Housing and Urban 
                Development designates as a renewal community, after 
                consultation with--
                            ``(i) the Secretaries of Agriculture, 
                        Commerce, Labor, and the Treasury; the Director 
                        of the Office of Management and Budget, and the 
                        Administrator of the Small Business 
                        Administration, and
                            ``(ii) in the case of an area on an Indian 
                        reservation, the Secretary of the Interior.
            ``(2) Number of designations.--
                    ``(A) In general.--The Secretary of Housing and 
                Urban Development may designate not more than 1 
                nominated area as a renewal community in each State.
                    ``(B) Minimum designation in rural areas.--Of the 
                areas designated under paragraph (1), at least 20 
                percent must be areas--
                            ``(i) which are within a local government 
                        jurisdiction or jurisdictions with a population 
                        of less than 50,000,
                            ``(ii) which are outside of a metropolitan 
                        statistical area (within the meaning of section 
                        143(k)(2)(B)), or
                            ``(iii) which are determined by the 
                        Secretary of Housing and Urban Development, 
                        after consultation with the Secretary of 
                        Commerce, to be rural areas.
            ``(3) Areas designated based on degree of poverty, etc.--
                    ``(A) In general.--Except as otherwise provided in 
                this section, the nominated areas designated as renewal 
                communities under this subsection shall be those 
                nominated areas with the highest average ranking with 
                respect to the criteria described in subparagraphs (B), 
                (C), and (D) of subsection (c)(3). For purposes of the 
                preceding sentence, an area shall be ranked within each 
                such criterion on the basis of the amount by which the 
                area exceeds such criterion, with the area which 
                exceeds such criterion by the greatest amount given the 
                highest ranking.
                    ``(B) Exception where inadequate course of action, 
                etc.--An area shall not be designated under 
                subparagraph (A) if the Secretary of Housing and Urban 
                Development determines that the course of action 
                described in subsection (d)(2) with respect to such 
                area is inadequate.
            ``(4) Limitation on designations.--
                    ``(A) Publication of regulations.--The Secretary of 
                Housing and Urban Development shall prescribe by 
                regulation no later than 4 months after the date of the 
                enactment of this section, after consultation with the 
                officials described in paragraph (1)(B)--
                            ``(i) the procedures for nominating an area 
                        under paragraph (1)(A),
                            ``(ii) the parameters relating to the size 
                        and population characteristics of a renewal 
                        community, and
                            ``(iii) the manner in which nominated areas 
                        will be evaluated based on the criteria 
                        specified in subsection (d).
                    ``(B) Time limitations.--The Secretary of Housing 
                and Urban Development may designate nominated areas as 
                renewal communities only during the 24-month period 
                beginning on the first day of the first month following 
                the month in which the regulations described in 
                subparagraph (A) are prescribed.
                    ``(C) Procedural rules.--The Secretary of Housing 
                and Urban Development shall not make any designation of 
                a nominated area as a renewal community under paragraph 
                (2) unless--
                            ``(i) the local governments and the States 
                        in which the nominated area is located have the 
                        authority--
                                    ``(I) to nominate such area for 
                                designation as a renewal community,
                                    ``(II) to make the State and local 
                                commitments described in subsection 
                                (d), and
                                    ``(III) to provide assurances 
                                satisfactory to the Secretary of 
                                Housing and Urban Development that such 
                                commitments will be fulfilled,
                            ``(ii) a nomination regarding such area is 
                        submitted in such a manner and in such form, 
                        and contains such information, as the Secretary 
                        of Housing and Urban Development shall by 
                        regulation prescribe, and
                            ``(iii) the Secretary of Housing and Urban 
                        Development determines that any information 
                        furnished is reasonably accurate.
            ``(5) Nomination process for indian reservations.--For 
        purposes of this subchapter, in the case of a nominated area on 
        an Indian reservation, the reservation governing body (as 
        determined by the Secretary of the Interior) shall be treated 
        as being both the State and local governments with respect to 
        such area.
    ``(b) Period for Which Designation Is in Effect.--
            ``(1) In general.--Any designation of an area as a renewal 
        community shall remain in effect during the period beginning on 
        January 1, 2001, and ending on the earliest of--
                    ``(A) December 31, 2009,
                    ``(B) the termination date designated by the State 
                and local governments in their nomination, or
                    ``(C) the date the Secretary of Housing and Urban 
                Development revokes such designation.
            ``(2) Revocation of designation.--The Secretary of Housing 
        and Urban Development may revoke the designation under this 
        section of an area if such Secretary determines that the local 
        government or the State in which the area is located--
                    ``(A) has modified the boundaries of the area, or
                    ``(B) is not complying substantially with, or fails 
                to make progress in achieving, the State or local 
                commitments, respectively, described in subsection (d).
    ``(c) Area and Eligibility Requirements.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate a nominated area as a renewal 
        community under subsection (a) only if the area meets the 
        requirements of paragraphs (2) and (3) of this subsection.
            ``(2) Area requirements.--A nominated area meets the 
        requirements of this paragraph if--
                    ``(A) the area is within the jurisdiction of one or 
                more local governments,
                    ``(B) the boundary of the area is continuous, and
                    ``(C) the area--
                            ``(i) has a population, of at least--
                                    ``(I) 4,000 if any portion of such 
                                area (other than a rural area described 
                                in subsection (a)(2)(B)(i)) is located 
                                within a metropolitan statistical area 
                                (within the meaning of section 
                                143(k)(2)(B)) which has a population of 
                                50,000 or greater, or
                                    ``(II) 1,000 in any other case, or
                            ``(ii) is entirely within an Indian 
                        reservation (as determined by the Secretary of 
                        the Interior).
            ``(3) Eligibility requirements.--A nominated area meets the 
        requirements of this paragraph if the State and the local 
        governments in which it is located certify (and the Secretary 
        of Housing and Urban Development, after such review of 
        supporting data as he deems appropriate, accepts such 
        certification) that--
                    ``(A) the area is one of pervasive poverty, 
                unemployment, and general distress,
                    ``(B) the unemployment rate in the area, as 
                determined by the most recent available data, was at 
                least 1\1/2\ times the national unemployment rate for 
                the period to which such data relate,
                    ``(C) the poverty rate for each population census 
                tract within the nominated area is at least 20 percent, 
                and
                    ``(D) in the case of an urban area, at least 70 
                percent of the households living in the area have 
                incomes below 80 percent of the median income of 
                households within the jurisdiction of the local 
                government (determined in the same manner as under 
                section 119(b)(2) of the Housing and Community 
                Development Act of 1974).
            ``(4) Consideration of high incidence of crime.--The 
        Secretary of Housing and Urban Development shall take into 
        account, in selecting nominated areas for designation as 
        renewal communities under this section, the extent to which 
        such areas have a high incidence of crime.
            ``(5) Consideration of communities identified in gao 
        study.--The Secretary of Housing and Urban Development shall 
        take into account, in selecting nominated areas for designation 
        as renewal communities under this section, if the area has 
        census tracts identified in the May 12, 1998, report of the 
        Government Accounting Office regarding the identification of 
        economically distressed areas.
    ``(d) Required State and Local Commitments.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate any nominated area as a renewal 
        community under subsection (a) only if--
                    ``(A) the local government and the State in which 
                the area is located agree in writing that, during any 
                period during which the area is a renewal community, 
                such governments will follow a specified course of 
                action which meets the requirements of paragraph (2) 
                and is designed to reduce the various burdens borne by 
                employers or employees in such area, and
                    ``(B) the economic growth promotion requirements of 
                paragraph (3) are met.
            ``(2) Course of action.--
                    ``(A) In general.--A course of action meets the 
                requirements of this paragraph if such course of action 
                is a written document, signed by a State (or local 
                government) and neighborhood organizations, which 
                evidences a partnership between such State or 
                government and community-based organizations and which 
                commits each signatory to specific and measurable 
                goals, actions, and timetables. Such course of action 
                shall include at least 4 of the following:
                            ``(i) A reduction of tax rates or fees 
                        applying within the renewal community.
                            ``(ii) An increase in the level of 
                        efficiency of local services within the renewal 
                        community.
                            ``(iii) Crime reduction strategies, such as 
                        crime prevention (including the provision of 
                        such services by nongovernmental entities).
                            ``(iv) Actions to reduce, remove, simplify, 
                        or streamline governmental requirements 
                        applying within the renewal community.
                            ``(v) Involvement in the program by private 
                        entities, organizations, neighborhood 
                        organizations, and community groups, 
                        particularly those in the renewal community, 
                        including a commitment from such private 
                        entities to provide jobs and job training for, 
                        and technical, financial, or other assistance 
                        to, employers, employees, and residents from 
                        the renewal community.
                            ``(vi) The gift (or sale at below fair 
                        market value) of surplus real property (such as 
                        land, homes, and commercial or industrial 
                        structures) in the renewal community to 
                        neighborhood organizations, community 
                        development corporations, or private companies.
                    ``(B) Recognition of past efforts.--For purposes of 
                this section, in evaluating the course of action agreed 
                to by any State or local government, the Secretary of 
                Housing and Urban Development shall take into account 
                the past efforts of such State or local government in 
                reducing the various burdens borne by employers and 
                employees in the area involved.
            ``(3) Economic growth promotion requirements.--The economic 
        growth promotion requirements of this paragraph are met with 
        respect to a nominated area if the local government and the 
        State in which such area is located certify in writing that 
such government and State (respectively) have repealed, will not 
enforce, or will reduce within the area at least 4 of the following if 
such area is designated as a renewal community:
                    ``(A) Licensing requirements for occupations that 
                do not ordinarily require a professional degree.
                    ``(B) Zoning restrictions on home-based businesses 
                which do not create a public nuisance.
                    ``(C) Permit requirements for street vendors who do 
                not create a public nuisance.
                    ``(D) Zoning or other restrictions that impede the 
                formation of schools or child care centers.
                    ``(E) Franchises or other restrictions on 
                competition for businesses providing public services, 
                including taxicabs, jitneys, cable television, or trash 
                hauling.
        This paragraph shall not apply to the extent that such 
        regulation of businesses and occupations is necessary for and 
        well-tailored to the protection of health and safety.
    ``(e) Coordination With Treatment of Empowerment Zones and 
Enterprise Communities.--
            ``(1) In general.--For purposes of this title, the 
        designation under section 1391 of any area as an empowerment 
        zone or enterprise community shall cease to be in effect as of 
        the date that any portion of such area is designated as a 
        renewal community.
            ``(2) Special rule for wage credit.--For purposes of 
        section 1400H (relating to renewal community employment 
        credit)--
                    ``(A) there shall not be taken into account wages 
                taken into account under section 1396 (without regard 
                to section 1400H), and
                    ``(B) the $15,000 amount in section 1396(c) shall 
                (in applying section 1400H) be reduced for any calendar 
                year by the amount of wages paid or incurred during 
                such year which are taken into account in determining 
                the credit under section 1396 (without regard to 
                section 1400H).
    ``(f) Definitions and Special Rules.--For purposes of this 
subchapter--
            ``(1) Governments.--If more than one government seeks to 
        nominate an area as a renewal community, any reference to, or 
        requirement of, this section shall apply to all such 
        governments.
            ``(2) Local government.--The term `local government' 
        means--
                    ``(A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State, and
                    ``(B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the 
                Secretary of Housing and Urban Development.
            ``(3) State.--The term `State' means the several States.
            ``(4) Application of rules relating to census tracts.--The 
        rules of sections 1392(b)(4) shall apply.
            ``(5) Census data.--Population and poverty rate shall be 
        determined by using 1990 census data.

 ``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

                              ``Sec. 1400F. Renewal community capital 
                                        gain.
                              ``Sec. 1400G. Renewal community business 
                                        defined.

``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

    ``(a) General Rule.--Gross income does not include any qualified 
capital gain recognized on the sale or exchange of a qualified 
community asset held for more than 5 years.
    ``(b) Qualified Community Asset.--For purposes of this section--
            ``(1) In general.--The term `qualified community asset' 
        means--
                    ``(A) any qualified community stock,
                    ``(B) any qualified community partnership interest, 
                and
                    ``(C) any qualified community business property.
            ``(2) Qualified community stock.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified community stock' 
                means any stock in a domestic corporation if--
                            ``(i) such stock is acquired by the 
                        taxpayer after December 31, 2000, and before 
                        January 1, 2010, at its original issue 
                        (directly or through an underwriter) from the 
                        corporation solely in exchange for cash,
                            ``(ii) as of the time such stock was 
                        issued, such corporation was a renewal 
                        community business (or, in the case of a new 
                        corporation, such corporation was being 
                        organized for purposes of being a renewal 
                        community business), and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such stock, such 
                        corporation qualified as a renewal community 
                        business.
                    ``(B) Redemptions.--A rule similar to the rule of 
                section 1202(c)(3) shall apply for purposes of this 
                paragraph.
            ``(3) Qualified community partnership interest.--The term 
        `qualified community partnership interest' means any capital or 
        profits interest in a domestic partnership if--
                    ``(A) such interest is acquired by the taxpayer 
                after December 31, 2000, and before January 1, 2010, 
                from the partnership solely in exchange for cash,
                    ``(B) as of the time such interest was acquired, 
                such partnership was a renewal community business (or, 
                in the case of a new partnership, such partnership was 
                being organized for purposes of being a renewal 
                community business), and
                    ``(C) during substantially all of the taxpayer's 
                holding period for such interest, such partnership 
                qualified as a renewal community business.
        A rule similar to the rule of paragraph (2)(B) shall apply for 
        purposes of this paragraph.
            ``(4) Qualified community business property.--
                    ``(A) In general.--The term `qualified community 
                business property' means tangible property if--
                            ``(i) such property was acquired by the 
                        taxpayer by purchase (as defined in section 
                        179(d)(2)) after December 31, 2000, and before 
                        January 1, 2010,
                            ``(ii) the original use of such property in 
                        the renewal community commences with the 
                        taxpayer, and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such property, 
                        substantially all of the use of such property 
                        was in a renewal community business of the 
                        taxpayer.
                    ``(B) Special rule for substantial improvements.--
                The requirements of clauses (i) and (ii) of 
                subparagraph (A) shall be treated as satisfied with 
                respect to--
                            ``(i) property which is substantially 
                        improved by the taxpayer before January 1, 
                        2010, and
                            ``(ii) any land on which such property is 
                        located.
                The determination of whether a property is 
                substantially improved shall be made under clause (ii) 
                of section 1400B(b)(4)(B), except that `December 31, 
                2000' shall be substituted for `December 31, 1997' in 
                such clause.
    ``(c) Qualified Capital Gain.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `qualified capital gain` means any gain 
        recognized on the sale or exchange of--
                    ``(A) a capital asset, or
                    ``(B) property used in the trade or business (as 
                defined in section 1231(b).
            ``(2) Gain before 2001 or after 2014 not qualified.--The 
        term `qualified capital gain' shall not include any gain 
        attributable to periods before January 1, 2001, or after 
        December 31, 2014.
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (3), (4), and (5) of section 1400B(e) shall apply 
        for purposes of this subsection.
    ``(d) Certain Rules To Apply.--For purposes of this section, rules 
similar to the rules of paragraphs (5), (6), and (7) of subsection (b), 
and subsections (f) and (g), of section 1400B shall apply; except that 
for such purposes section 1400B(g)(2) shall be applied by substituting 
`January 1, 2001' for `January 1, 1998' and `December 31, 2014' for 
`December 31, 2007'.

``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

    ``For purposes of this subchapter, the term `renewal community 
business' means any entity or proprietorship which would be a qualified 
business entity or qualified proprietorship under section 1397C if 
references to renewal communities were substituted for references to 
empowerment zones in such section.

                   ``PART III--ADDITIONAL INCENTIVES

                              ``Sec. 1400H. Renewal community 
                                        employment credit.
                              ``Sec. 1400I. Commercial revitalization 
                                        deduction.
                              ``Sec. 1400J. Increase in expensing under 
                                        section 179.

``SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

    ``(a) In General.--Subject to the modification in subsection (b), a 
renewal community shall be treated as an empowerment zone for purposes 
of section 1396.
    ``(b) Modification.--In applying section 1396 with respect to 
renewal communities, the applicable percentage shall be--
            ``(1) 15 percent in the case of calendar years 2001, 2002, 
        2003, or 2004, and
            ``(2) 20 percent in the case of calendar years after 2004 
        and before 2010.

``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

    ``(a) General Rule.--At the election of the taxpayer, either--
            ``(1) one-half of any qualified revitalization expenditures 
        chargeable to capital account with respect to any qualified 
        revitalization building shall be allowable as a deduction for 
        the taxable year in which the building is placed in service, or
            ``(2) a deduction for all such expenditures shall be 
        allowable ratably over the 120-month period beginning with the 
        month in which the building is placed in service.
    ``(b) Qualified Revitalization Buildings and Expenditures.--For 
purposes of this section--
            ``(1) Qualified revitalization building.--The term 
        `qualified revitalization building' means any building (and its 
        structural components) if--
                    ``(A) such building is located in a renewal 
                community and is placed in service after December 31, 
                2000,
                    ``(B) a commercial revitalization deduction amount 
                is allocated to the building under subsection (d), and
                    ``(C) depreciation is allowable with respect to the 
                building (without regard to this section).
            ``(2) Qualified revitalization expenditure.--
                    ``(A) In general.--The term `qualified 
                revitalization expenditure' means any amount properly 
                chargeable to capital account--
                            ``(i) for property for which depreciation 
                        is allowable under section 168 (without regard 
                        to this section) and which is--
                                    ``(I) nonresidential real property, 
                                or
                                    ``(II) an addition or improvement 
                                to property described in subclause (I),
                            ``(ii) in connection with the construction 
                        of any qualified revitalization building which 
                        was not previously placed in service or in 
                        connection with the substantial rehabilitation 
                        (within the meaning of section 47(c)(1)(C)) of 
                        a building which was placed in service before 
                        the beginning of such rehabilitation, and
                            ``(iii) for land (including land which is 
                        functionally related to such property and 
                        subordinate thereto).
                    ``(B) Dollar limitation.--The aggregate amount 
                which may be treated as qualified revitalization 
                expenditures with respect to any qualified 
                revitalization building for any taxable year shall not 
                exceed the excess of--
                            ``(i) $10,000,000, reduced by
                            ``(ii) any such expenditures with respect 
                        to the building taken into account by the 
                        taxpayer or any predecessor in determining the 
                        amount of the deduction under this section for 
                        all preceding taxable years.
                    ``(C) Certain expenditures not included.--The term 
                `qualified revitalization expenditure' does not 
                include--
                            ``(i) Acquisition costs.--The costs of 
                        acquiring any building or interest therein and 
                        any land in connection with such building to 
                        the extent that such costs exceed 30 percent of 
                        the qualified revitalization expenditures 
                        determined without regard to this clause.
                            ``(ii) Credits.--Any expenditure which the 
                        taxpayer may take into account in computing any 
                        credit allowable under this title unless the 
                        taxpayer elects to take the expenditure into 
                        account only for purposes of this section.
    ``(c) Limitation on Aggregate Expenditures Allowable With Respect 
to Buildings Located in a State.--
            ``(1) In general.--The aggregate qualified revitalization 
        expenditures chargeable to capital account with respect to any 
        building which may be taken into account in determining the 
        deduction under this section with respect to such building 
        shall not exceed the commercial revitalization expenditure 
        amount allocated to such building under this subsection by the 
        commercial revitalization agency. Such allocation shall be made 
        at the same time and in the same manner as under paragraphs (1) 
        and (7) of section 42(h).
            ``(2) Commercial revitalization expenditure amount for 
        agencies.--
                    ``(A) In general.--The aggregate commercial 
                revitalization expenditure amount which a commercial 
                revitalization agency may allocate for any calendar 
                year is the amount of the State commercial 
                revitalization expenditure ceiling determined under 
                this paragraph for such calendar year for such agency.
                    ``(B) State commercial revitalization expenditure 
                ceiling.--The State commercial revitalization 
                expenditure ceiling applicable to any State--
                            ``(i) for each calendar year after 2000 and 
                        before 2010 is $12,000,000 for each renewal 
                        community in the State, and
                            ``(ii) for each calendar year thereafter is 
                        zero.
                    ``(C) Commercial revitalization agency.--For 
                purposes of this section, the term `commercial 
                revitalization agency' means any agency authorized by a 
                State to carry out this section.
    ``(d) Responsibilities of Commercial Revitalization Agencies.--
            ``(1) Plans for allocation.--Notwithstanding any other 
        provision of this section, the commercial revitalization 
        deduction amount with respect to any building shall be zero 
        unless--
                    ``(A) such amount was allocated pursuant to a 
                qualified allocation plan of the commercial 
                revitalization agency which is approved (in accordance 
                with rules similar to the rules of section 147(f)(2) 
                (other than subparagraph (B)(ii) thereof)) by the 
                governmental unit of which such agency is a part, and
                    ``(B) such agency notifies the chief executive 
                officer (or its equivalent) of the local jurisdiction 
                within which the building is located of such allocation 
                and provides such individual a reasonable opportunity 
                to comment on the allocation.
            ``(2) Qualified allocation plan.--For purposes of this 
        subsection, the term `qualified allocation plan' means any 
        plan--
                    ``(A) which sets forth selection criteria to be 
                used to determine priorities of the commercial 
                revitalization agency which are appropriate to local 
                conditions,
                    ``(B) which considers--
                            ``(i) the degree to which a project 
                        contributes to the implementation of a 
                        strategic plan that is devised for a renewal 
                        community through a citizen participation 
                        process,
                            ``(ii) the amount of any increase in 
                        permanent, full-time employment by reason of 
                        any project, and
                            ``(iii) the active involvement of residents 
                        and nonprofit groups within the renewal 
                        community, and
                    ``(C) which provides a procedure that the agency 
                (or its agent) will follow in monitoring compliance 
                with this section.
    ``(e) Special Rules.--
            ``(1) Deduction in lieu of depreciation.--The deduction 
        provided by this section for qualified revitalization 
        expenditures shall--
                    ``(A) with respect to the deduction determined 
                under subsection (a)(1), be in lieu of any depreciation 
                deduction otherwise allowable on account of \1/2\ of 
                such expenditures, and
                    ``(B) with respect to the deduction determined 
                under subsection (a)(2), be in lieu of any depreciation 
                deduction otherwise allowable on account of all of such 
                expenditures.
            ``(2) Basis adjustment, etc.--For purposes of sections 1016 
        and 1250, the deduction under this section shall be treated in 
the same manner as a depreciation deduction.
            ``(3) Substantial rehabilitations treated as separate 
        buildings.--A substantial rehabilitation (within the meaning of 
        section 47(c)(1)(C)) of a building shall be treated as a 
        separate building for purposes of subsection (a).
            ``(4) Clarification of allowance of deduction under minimum 
        tax.--Notwithstanding section 56(a)(1), the deduction under 
        this section shall be allowed in determining alternative 
        minimum taxable income under section 55.
    ``(f) Regulations.--For purposes of this section, the Secretary 
shall, by regulations, provide for the application of rules similar to 
the rules of section 49 and subsections (a) and (b) of section 50.
    ``(g) Termination.--This section shall not apply to any building 
placed in service after December 31, 2009.

``SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

    ``(a) In General.--For purposes of section 1397A--
            ``(1) a renewal community shall be treated as an 
        empowerment zone,
            ``(2) a renewal community business shall be treated as an 
        empowerment zone business, and
            ``(3) qualified renewal property shall be treated as 
        enterprise zone property.
    ``(b) Qualified Renewal Property.--For purposes of this section--
            ``(1) In general.--The term `qualified renewal property' 
        means any property to which section 168 applies (or would apply 
        but for section 179) if--
                    ``(A) such property was acquired by the taxpayer by 
                purchase (as defined in section 179(d)(2)) after 
                December 31, 2000, and before January 1, 2010, and
                    ``(B) such property would be qualified zone 
                property (as defined in section 1397D) if references to 
                renewal communities were substituted for references to 
                empowerment zones in section 1397D.
            ``(2) Certain rules to apply.--The rules of subsections 
        (a)(2) and (b) of section 1397D shall apply for purposes of 
        this section.''.
    (b) Exception for Commercial Revitalization Deduction From Passive 
Loss Rules.--
            (1) Paragraph (3) of section 469(i) is amended by 
        redesignating subparagraphs (C), (D), and (E) as subparagraphs 
        (D), (E), and (F), respectively, and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) Exception for commercial revitalization 
                deduction.--Subparagraph (A) shall not apply to any 
                portion of the passive activity loss for any taxable 
                year which is attributable to the commercial 
                revitalization deduction under section 1400I.''.
            (2) Subparagraph (E) of section 469(i)(3), as redesignated 
        by subparagraph (A), is amended to read as follows:
                    ``(E) Ordering rules to reflect exceptions and 
                separate phase-outs.--If subparagraph (B), (C), or (D) 
                applies for a taxable year, paragraph (1) shall be 
                applied--
                            ``(i) first to the portion of the passive 
                        activity loss to which subparagraph (C) does 
                        not apply,
                            ``(ii) second to the portion of the passive 
                        activity credit to which subparagraph (B) or 
                        (D) does not apply,
                            ``(iii) third to the portion of such credit 
                        to which subparagraph (B) applies,
                            ``(iv) fourth to the portion of such loss 
                        to which subparagraph (C) applies, and
                            ``(v) then to the portion of such credit to 
                        which subparagraph (D) applies.''.
            (3)(A) Subparagraph (B) of section 469(i)(6) is amended by 
        striking ``or'' at the end of clause (i), by striking the 
        period at the end of clause (ii) and inserting ``, or'', and by 
        adding at the end the following new clause:
                            ``(iii) any deduction under section 1400I 
                        (relating to commercial revitalization 
                        deduction).''.
            (B) The heading for such subparagraph (B) is amended by 
        striking ``or rehabilitation credit'' and inserting ``, 
        rehabilitation credit, or commercial revitalization 
        deduction''.
    (c) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

                ``Subchapter X. Renewal Communities.''.

SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO 
              RENEWAL COMMUNITIES; EXTENSION OF TERMINATION DATE FOR 
              RENEWAL COMMUNITIES AND EMPOWERMENT ZONES.

    (a) Extension.--
            (1) In general.--Subparagraph (A) of section 198(c)(2) 
        (defining targeted area) is amended by striking ``and'' at the 
        end of clause (iii), by striking the period at the end of 
        clause (iv) and inserting
        ``, and'', and by adding at the end the following new clause:
                            ``(v) any renewal community (as defined in 
                        section 1400E).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to expenditures paid or incurred after December 31, 
        2000.
    (b) Extension of Termination Date.--Subsection (h) of section 198 
is amended by inserting before the period ``(December 31, 2009, in the 
case of an empowerment zone or renewal community)''.

SEC. 103. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING IN RENEWAL 
              COMMUNITIES.

    (a) High-Risk Youth.--Subparagraphs (A)(ii) and (B) of section 
51(d)(5) are each amended by striking ``empowerment zone or enterprise 
community'' and inserting ``empowerment zone, enterprise community, or 
renewal community''.
    (b) Qualified Summer Youth Employee.--Clause (iv) of section 
51(d)(7)(A) is amended by striking ``empowerment zone or enterprise 
community'' and inserting ``empowerment zone, enterprise community, or 
renewal community''.
    (c) Headings.--Paragraphs (5)(B) and (7)(C) of section 51(d) are 
each amended by inserting ``or community'' in the heading after 
``zone''.
    (d) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after December 31, 
2000.

SEC. 104. EVALUATION AND REPORTING REQUIREMENTS.

    Not later than the close of the fourth calendar year after the year 
in which the Secretary of Housing and Urban Development first 
designates an area as a renewal community under section 1400E of the 
Internal Revenue Code of 1986, and at the close of each fourth calendar 
year thereafter, such Secretary shall prepare and submit to the 
Congress a report on the effects of such designations in stimulating 
the creation of new jobs, particularly for disadvantaged workers and 
long-term unemployed individuals, and promoting the revitalization of 
economically distressed areas.

SEC. 105. EXCLUSION OF EFFECTS OF THIS TITLE FROM PAYGO SCORECARD.

    Upon the enactment of this title, the Director of the Office of 
Management and Budget shall not make any estimates of changes in 
receipts under section 252(d) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 resulting from the enactment of this title.

                  TITLE II--NEW MILLENNIUM CLASSROOMS

SEC. 201. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR CENTERS, 
              PUBLIC LIBRARIES, AND OTHER TRAINING CENTERS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by adding at the end 
the following new section:

``SEC. 48D. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR CENTERS, 
              PUBLIC LIBRARIES, AND OTHER TRAINING CENTERS.

    ``(a) General Rule.--For purposes of section 38, the computer 
donation credit determined under this section is an amount equal to 50 
percent of the qualified computer contributions made by the taxpayer 
during the taxable year as determined after the application of section 
170(e)(6)(A) to any entity located in--
            ``(1) a renewal community designated under section 1400E,
            ``(2) an empowerment zone or enterprise community 
        designated under section 1391,
            ``(3) an Indian reservation (as defined in section 
        168(j)(6)), or
            ``(4) a low-income community (as defined in subsection (c).
    ``(b) Qualified Computer Contribution.--For purposes of this 
section, the term `qualified computer contribution' has the meaning 
given the term `qualified elementary or secondary educational 
contribution' by section 170(e)(6)(B), except that--
            ``(1) clause (ii) thereof shall be applied--
                    ``(A) by substituting `3 years' for `2 years',
                    ``(B) by inserting `or reacquired' after 
                `acquired', and
                    ``(C) by inserting `for the taxpayer's own use' 
                after `constructed by the taxpayer',
            ``(2) clause (iii) thereof shall be applied by inserting `, 
        the person from whom the donor reacquires the property,' after 
        `the donor',
            ``(3) such term shall include the contribution of a 
        computer (as defined in section 168(i)(2)(B)(ii)) only if 
        computer software (as defined in section 197(e)(3)(B)) that 
        serves as a computer operating system has been lawfully 
        installed in such computer,
            ``(4) notwithstanding clauses (i) and (iv) of section 
        170(e)(6)(B), such term shall include the contribution of 
        computer technology or equipment to--
                    ``(A) multipurpose senior centers (as defined in 
                section 102(35) of the Older Americans Act of 1965 (42 
                U.S.C. 3002(35), as in effect on the date of the 
                enactment of the American Community Renewal and New 
                Markets Empowerment Act) described in section 501(c)(3) 
                and exempt from tax under section 501(a) to be used by 
                individuals who have attained 60 years of age to 
                improve job skills in computers,
                    ``(B) a public library (within the meaning of 
                section 213(2)(A) of the Library Services and 
                Technology Act (20 U.S.C. 9122(2)(A), as in effect on 
                the date of the enactment of the American Community 
                Renewal and New Markets Empowerment Act) established 
                and maintained by an entity described in section 
                170(c)(1), or
                    ``(C) an organization exempt from tax under section 
                501(a) which provides employment, vocational, and job-
                training services to individuals with barriers to 
                employment, including welfare recipients and 
                individuals with disabilities, and
            ``(5) such term shall only include contributions which meet 
        the minimum standards prescribed by the Secretary by 
        regulation, after consultation, at the option of the Secretary, 
        with the National Telecommunications and Information Agency and 
        any other Federal agency with expertise in computer technology.
    ``(c) Low-Income Community.--For purposes of this section--
            ``(1) In general.--The term `low-income community' means 
        any population census tract if--
                    ``(A)(i) the poverty rate for such tract is at 
                least 20 percent, or
                    ``(ii)(I) in the case of a tract not located within 
                a metropolitan area, the median family income for such 
                tract does not exceed 80 percent of statewide median 
                family income, or
                    ``(II) in the case of a tract located within a 
                metropolitan area, the median family income for such 
                tract does not exceed 80 percent of the greater of 
                statewide median family income or the metropolitan area 
                median family income, and
                    ``(B) the unemployment rate for such tract, as 
                determined by the most recent available data, was at 
                least 1\1/2\ times the national unemployment rate for 
                the period to which such data relate.
            ``(2) Areas not within census tracts.--In the case of an 
        area which is not tracted for population census tracts, the 
        equivalent county divisions (as defined by the Bureau of the 
        Census for purposes of defining poverty areas) shall be used 
        for purposes of determining poverty rates, median family 
        income, and unemployment rates.
    ``(d) Certain Rules Made Applicable.--For purposes of this section, 
rules similar to the rules of paragraphs (1) and (2) of section 41(f) 
shall apply.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2009.''.
    (b) Current Year Business Credit Calculation.--Section 38(b) 
(relating to current year business credit) is amended by striking 
``plus'' at the end of paragraph (11), by striking the period at the 
end of paragraph (12) and inserting ``, plus'', and by adding at the 
end the following:
            ``(13) the computer donation credit determined under 
        section 45D(a).''.
    (c) Disallowance of Deduction by Amount of Credit.--Section 280C 
(relating to certain expenses for which credits are allowable) is 
amended by adding at the end the following:
    ``(d) Credit for Computer Donations.--No deduction shall be allowed 
for that portion of the qualified computer contributions (as defined in 
section 45D(b)) made during the taxable year that is equal to the 
amount of credit determined for the taxable year under section 45D(a). 
In the case of a corporation which is a member of a controlled group of 
corporations (within the meaning of section 52(a)) or a trade or 
business which is treated as being under common control with other 
trades or businesses (within the meaning of section 52(b)), this 
subsection shall be applied under rules prescribed by the Secretary 
similar to the rules applicable under subsections (a) and (b) of 
section 52.''.
    (d) Limitation on Carryback.--Subsection (d) of section 39 
(relating to carryback and carryforward of unused credits) is amended 
by adding at the end the following:
            ``(9) No carryback of computer donation credit before 
        effective date.--No amount of unused business credit available 
        under section 45D may be carried back to a taxable year 
        beginning on or before the date of the enactment of this 
        paragraph.''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 45C the following:

                              ``Sec. 45D. Credit for computer donations 
                                        to schools, senior centers, 
                                        public libraries, and other 
                                        training centers.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2000.

 TITLE III--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES

SEC. 301. ADDITIONAL EMPOWERMENT ZONE DESIGNATIONS.

    Section 1391 is amended by adding at the end the following new 
subsection:
    ``(h) Additional Designations Permitted.--
            ``(1) In general.--In addition to the areas designated 
        under subsections (a) and (g), the appropriate Secretaries may 
        designate in the aggregate an additional 9 nominated areas as 
        empowerment zones under this section, subject to the 
        availability of eligible nominated areas. Of that number, not 
        more than 7 may be designated in urban areas and not more than 
        2 may be designated in rural areas.
            ``(2) Period designations may be made and take effect.--A 
        designation may be made under this subsection after the date of 
        the enactment of this subsection and before January 1, 2001. 
        Subject to subparagraphs (B) and (C) of subsection (d)(1), such 
        designations shall remain in effect during the period beginning 
        on January 1, 2001, and ending on December 31, 2009.
            ``(3) Modifications to eligibility criteria, etc.--The 
        rules of subsection (g)(3) shall apply to designations under 
        this subsection.
            ``(4) Empowerment zones which become renewal communities.--
        The number of areas which may be designated as empowerment 
        zones under this subsection shall be increased by 1 for each 
        area which ceases to be an empowerment zone by reason of 
        section 1400E(e). Each additional area designated by reason of 
        the preceding sentence shall have the same urban or rural 
        character as the area it is replacing.''.

SEC. 302. EXTENSION OF ENTERPRISE ZONE TREATMENT THROUGH 2009.

    Subparagraph (A) of section 1391(d)(1) (relating to period for 
which designation is in effect) is amended to read as follows:
                    ``(A) December 31, 2009,''.

SEC. 303. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT ZONES.

    (a) 20 Percent Credit.--Subsection (b) of section 1396 (relating to 
empowerment zone employment credit) is amended to read as follows:
    ``(b) Applicable Percentage.--For purposes of this section, the 
applicable percentage is 20 percent.''.
    (b) All Empowerment Zones Eligible for Credit.--Section 1396 is 
amended by striking subsection (e).
    (c) Conforming Amendment.--Subsection (d) of section 1400 is 
amended to read as follows:
    ``(d) Special Rule for Application of Employment Credit.--With 
respect to the DC Zone, section 1396(d)(1)(B) (relating to empowerment 
zone employment credit) shall be applied by substituting `the District 
of Columbia' for `such empowerment zone'.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to wages paid or incurred after December 31, 2000.

SEC. 304. INCREASED EXPENSING UNDER SECTION 179.

    (a) In General.--Subparagraph (A) of section 1397A(a)(1) is amended 
by striking ``$20,000'' and inserting ``$35,000''.
    (b) Expensing for Property Used in Developable Sites.--Section 
1397A is amended by striking subsection (c).
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 305. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE FACILITY BONDS.

    (a) In General.--Paragraph (3) of section 1394(f) (relating to 
bonds for empowerment zones designated under section 1391(g)) is 
amended to read as follows:
            ``(3) Empowerment zone facility bond.--For purposes of this 
        subsection, the term `empowerment zone facility bond' means any 
        bond which would be described in subsection (a) if only 
        empowerment zones were taken into account under sections 1397C 
        and 1397D.'' .
    (b) Conforming Amendments.--
            (1) Subsection (f) of section 1394 is amended by striking 
        ``new empowerment zone facility bond'' each place it appears 
        and inserting ``empowerment zone facility bond''.
            (2) The heading for such subsection is amended to read as 
        follows:
    ``(f) Bonds for Empowerment Zones.--''.
            (3) Paragraph (1) of section 1394(c) is amended--
                    (A) by striking ``empowerment zone or'' in 
                subparagraph (A), and
                    (B) by striking ``empowerment zones and'' in 
                subparagraph (B).
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2000.

SEC. 306. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE 
              INVESTMENTS.

    (a) In General.--Part III of subchapter U of chapter 1 is amended--
            (1) by redesignating subpart C as subpart D,
            (2) by redesignating sections 1397B and 1397C as sections 
        1397C and 1397D, respectively, and
            (3) by inserting after subpart B the following new subpart:

  ``Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone 
                              Investments

                              ``Sec. 1397B. Nonrecognition of Gain on 
                                        Rollover of Empowerment Zone 
                                        Investments.

``SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE 
              INVESTMENTS.

    ``(a) Nonrecognition of Gain.--In the case of any sale of a 
qualified empowerment zone asset held by the taxpayer for more than 1 
year and with respect to which such taxpayer elects the application of 
this section, gain from such sale shall be recognized only to the 
extent that the amount realized on such sale exceeds--
            ``(1) the cost of any qualified empowerment zone asset 
        (with respect to the same zone as the asset sold) purchased by 
        the taxpayer during the 60-day period beginning on the date of 
        such sale, reduced by
            ``(2) any portion of such cost previously taken into 
        account under this section.
This section shall apply only to gain which is qualified capital gain.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified empowerment zone asset.--
                    ``(A) In general.--The term `qualified empowerment 
                zone asset' means any property which would be a 
                qualified community asset (as defined in section 1400F) 
                if in section 1400F--
                            ``(i) references to empowerment zones were 
                        substituted for references to renewal 
                        communities, and
                            ``(ii) references to enterprise zone 
                        businesses (as defined in section 1397C) were 
                        substituted for references to renewal community 
                        businesses.
                    ``(B) Treatment of dc zone.--

                                For termination of rollover with 
respect to the District of Columbia Enterprise Zone for property 
acquired after December 31, 2002, see section 1400(f).
            ``(2) Qualified capital gain.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the term `qualified capital gain` means 
                any gain from the sale or exchange of--
                            ``(i) a capital asset, or
                            ``(ii) property used in the trade or 
                        business (as defined in section 1231(b)).
                    ``(B) Certain rules to apply.--Rules similar to the 
                rules of paragraphs (3) and (4) of section 1400B(e) 
                shall apply for purposes of this subsection.
            ``(3) Purchase.--A taxpayer shall be treated as having 
        purchased any property if, but for paragraph (4), the 
        unadjusted basis of such property in the hands of the taxpayer 
        would be its cost (within the meaning of section 1012).
            ``(4) Basis adjustments.--If gain from any sale is not 
        recognized by reason of subsection (a), such gain shall be 
        applied to reduce (in the order acquired) the basis for 
        determining gain or loss of any qualified empowerment zone 
        asset which is purchased by the taxpayer during the 60-day 
        period described in subsection (a). This paragraph shall not 
        apply for purposes of section 1202.
            ``(5) Holding period.--For purposes of determining whether 
        the nonrecognition of gain under subsection (a) applies to any 
        qualified empowerment zone asset which is sold--
                    ``(A) the taxpayer's holding period for such asset 
                and the asset referred to in subsection (a)(1) shall be 
                determined without regard to section 1223, and
                    ``(B) only the first year of the taxpayer's holding 
                period for the asset referred to in subsection (a)(1) 
                shall be taken into account for purposes of paragraphs 
                (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 
                1400F(b).''
    (b) Conforming Amendments.--
            (1) Paragraph (23) of section 1016(a) is amended--
                    (A) by striking ``or 1045'' and inserting ``1045, 
                or 1397B'', and
                    (B) by striking ``or 1045(b)(4)'' and inserting 
                ``1045(b)(4), or 1397B(b)(4)''.
            (2) Paragraph (15) of section 1223 is amended to read as 
        follows:
            ``(15) Except for purposes of sections 1202(a)(2), 
        1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the 
        period for which the taxpayer has held property the acquisition 
        of which resulted under section 1045 or 1397B in the 
        nonrecognition of any part of the gain realized on the sale of 
        other property, there shall be included the period for which 
        such other property has been held as of the date of such 
        sale.''
            (3) Paragraph (2) of section 1394(b) is amended--
                    (A) by striking ``section 1397C'' and inserting 
                ``section 1397D'', and
                    (B) by striking ``section 1397C(a)(2)'' and 
                inserting ``section 1397D(a)(2)''.
            (4) Paragraph (3) of section 1394(b) is amended--
                    (A) by striking ``section 1397B'' each place it 
                appears and inserting ``section 1397C'', and
                    (B) by striking ``section 1397B(d)'' and inserting 
                ``section 1397C(d)''.
            (5) Sections 1400(e) and 1400B(c) are each amended by 
        striking ``section 1397B'' each place it appears and inserting 
        ``section 1397C''.
            (6) The table of subparts for part III of subchapter U of 
        chapter 1 is amended by striking the last item and inserting 
        the following new items:

                              ``Subpart C. Nonrecognition of gain on 
                                        rollover of empowerment zone 
                                        investments.
                              ``Subpart D. General provisions.''
            (7) The table of sections for subpart D of such part III is 
        amended to read as follows:

                              ``Sec. 1397C. Enterprise zone business 
                                        defined.
                              ``Sec. 1397D. Qualified zone property 
                                        defined.''
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified empowerment zone assets acquired after December 31, 
2000.

SEC. 307. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT ZONE 
              STOCK.

    (a) In General.--Subsection (a) of section 1202 is amended to read 
as follows:
    ``(a) Exclusion.--
            ``(1) In general.--In the case of a taxpayer other than a 
        corporation, gross income shall not include 50 percent of any 
        gain from the sale or exchange of qualified small business 
        stock held for more than 5 years.
            ``(2) Empowerment zone businesses.--
                    ``(A) In general.--In the case of qualified small 
                business stock acquired after the date of the enactment 
                of this paragraph in a corporation which is a qualified 
                business entity (as defined in section 1397C(b)) during 
                substantially all of the taxpayer's holding period for 
                such stock, paragraph (1) shall be applied by 
                substituting `60 percent' for `50 percent'.
                    ``(B) Certain rules to apply.--Rules similar to the 
                rules of paragraphs (5) and (7) of section 1400B(b) 
                shall apply for purposes of this paragraph.
                    ``(C) Gain after 2014 not qualified.--Subparagraph 
                (A) shall not apply to gain attributable to periods 
                after December 31, 2014.''.
    (b) Conforming Amendment.--Paragraph (8) of section 1(h) is amended 
by striking ``means'' and all that follows and inserting ``means the 
excess of--
                    ``(A) the gain which would be excluded from gross 
                income under section 1202 but for the percentage 
                limitation in section 1202(a), over
                    ``(B) the gain excluded from gross income under 
                section 1202.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to stock acquired after December 31, 2000.

SEC. 308. FUNDING ENTITLEMENT FOR ROUND II EMPOWERMENT ZONES.

    (a) In General.--
            (1) Entitlement.--Section 2007(a)(1) of the Social Security 
        Act (42 U.S.C. 1397f(a)(1)) is amended--
                    (A) in subparagraph (A), by striking ``in the 
                State; and'' and inserting ``that is in the State and 
                is designated pursuant to section 1391(b) of the 
                Internal Revenue Code of 1986;'';
                    (B) by adding after subparagraph (B) the following:
                    ``(C)(i) 8 grants under this section for each 
                qualified empowerment zone that is in an urban area in 
                the State and is designated pursuant to section 1391(g) 
                of such Code; and
                    ``(ii) 8 grants under this section for each 
                qualified empowerment zone that is in a rural area in 
                the State and is designated pursuant to section 1391(g) 
                of such Code;
                    ``(D) 8 grants under this section for each 
                qualified enterprise community that is in the State and 
                is designated pursuant to section 766 of the 
                Agriculture, Rural Development, Food and Drug 
                Administration, and Related Agencies Appropriations 
                Act, 1999; and
                    ``(E) 1 grant under this section for each strategic 
                planning community.''.
            (2) Amount of grants.--Section 2007(a)(2) of such Act (42 
        U.S.C. 1397f(a)(2)) is amended--
                    (A) in the heading of subparagraph (A), by 
                inserting ``Original'' before ``Empowerment'';
                    (B) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``referred to in paragraph 
                (1)(A)'' after ``empowerment zone'';
                    (C) by redesignating subparagraph (C) as 
                subparagraph (F); and
                    (D) by inserting after subparagraph (B) the 
                following:
                    ``(C) Additional empowerment grants.--The amount of 
                the grant to a State under this section for a qualified 
                empowerment zone referred to in paragraph (1)(C) shall 
                be--
                            ``(i) if the zone is in an urban area, 
                        $11,675,000 for each of fiscal years 2001 
                        through 2008; or
                            ``(ii) if the zone is in a rural area, 
                        $4,600,000 for each of fiscal years 2001 
                        through 2008,
                multiplied by the proportion of the population of the 
                zone that resides in the State.
                    ``(D) Additional enterprise community grants.--The 
                amount of the grant to a State under this section for a 
                qualified enterprise community referred to in paragraph 
                (1)(D) shall be $2,750,000, multiplied by the 
                proportion of the population of the community that 
                resides in the State.
                    ``(E) Strategic planning community grants.--The 
                amount of the grant to a State under this section for a 
                strategic planning community shall be $3,000,000, 
                multiplied by the proportion of the population of the 
                community that resides in the State.''.
            (3) Timing of grants.--Section 2007(a)(3) of such Act (42 
        U.S.C. 1397f(a)(3)) is amended--
                    (A) in the heading of subparagraph (A), by 
                inserting ``Original'' before ``Qualified'';
                    (B) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``referred to in paragraph 
                (1)(A)'' after ``empowerment zone''; and
                    (C) by adding after subparagraph (B) the following:
                    ``(C) Additional qualified empowerment zones.--With 
                respect to each qualified empowerment zone referred to 
                in paragraph (1)(C), the Secretary shall make 1 grant 
                under this section to the State in which the zone lies, 
                on the first day of fiscal year 2001 and of each of the 
                7 succeeding fiscal years.
                    ``(D) Additional qualified enterprise 
                communities.--With respect to each qualified enterprise 
                community referred to in paragraph (1)(D), the 
                Secretary shall make 1 grant under this section to the 
                State in which the community lies on the first day of 
                fiscal year 2001 and of each of the 7 succeeding fiscal 
                years.
                    ``(E) Strategic planning communities.--With respect 
                to each strategic planning community, the Secretary 
                shall make 1 grant under this section to the State in 
                which the community is located, on October 1, 2001.''.
            (4) Funding.--Section 2007(a)(4) of such Act (42 U.S.C. 
        1397f(a)(4)) is amended--
                    (A) by striking ``(4) Funding.--$1,000,000'' and 
                inserting the following:
            ``(4) Funding.--
                    ``(A) Original grants.--$1,000,000'';
                    (B) by inserting ``for empowerment zones and 
                enterprise communities described in subparagraphs (A) 
                and (B) of paragraph (1)'' before the period; and
                    (C) by adding after and below the end the 
                following:
                    ``(B) Additional empowerment zone grants.--
                $1,585,000,000 shall be made available to the Secretary 
                for grants under this section for empowerment zones 
                referred to in paragraph (1)(C).
                    ``(C) Additional enterprise community grants.--
                $55,000,000 shall be made available to the Secretary 
                for grants under this section for enterprise 
                communities referred to in paragraph (1)(D).
                    ``(D) Strategic planning community grants.--
                $45,000,000 shall be made available to the Secretary 
                for grants under this section for strategic planning 
                communities.''.
            (5) Direct funding for indian tribes.--Section 2007(a) of 
        such Act (42 U.S.C. 1397f(a)) is amended by adding at the end 
        the following:
            ``(5) Direct funding for indian tribes.--
                    ``(A) In general.--The Secretary may make a grant 
                under this section directly to the governing body of an 
                Indian tribe if--
                            ``(i) the tribe is identified in the 
                        strategic plan of a qualified empowerment zone 
                        or qualified enterprise community as the entity 
                        that assumes sole or primary responsibility for 
                        carrying out activities and projects under the 
                        grant; and
                            ``(ii) the grant is to be used for 
                        activities and projects that are--
                                    ``(I) included in the strategic 
                                plan of the qualified empowerment zone 
                                or qualified enterprise community, 
                                consistent with this section; and
                                    ``(II) approved by the Secretary of 
                                Agriculture, in the case of a qualified 
                                empowerment zone or qualified 
                                enterprise community in a rural area, 
                                or the Secretary of Housing and Urban 
                                Development, in the case of a qualified 
                                empowerment zone or qualified 
                                enterprise community in an urban area.
                    ``(B) Rules of interpretation.--
                            ``(i) If grant under this section is made 
                        directly to the governing body of an Indian 
                        tribe under subparagraph (A), the tribe shall 
                        be considered a State for purposes of this 
                        section.
                            ``(ii) This subparagraph shall not be 
                        construed as making applicable to this section 
                        the provisions of the Indian Self-Determination 
                        and Education Assistance Act.''.
            (6) Definitions.--
                    (A) Qualified enterprise community.--Section 
                2007(f)(2)(A) of such Act (42 U.S.C. 1397f(f)(2)(A)) is 
                amended by inserting ``or pursuant to section 766 of 
                the Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act, 1999'' before 
the semicolon.
                    (B) Strategic plan.--Section 2007(f)(3) of such Act 
                (42 U.S.C. 1397f(f)(3)) is amended by inserting ``or 
                under section 766 of the Agriculture, Rural 
                Development, Food and Drug Administration, and Related 
                Agencies Appropriations Act, 1999'' before the period.
                    (C) Strategic planning community.--Section 2007(f) 
                of such Act (42 U.S.C. 1397f(f)) is amended by adding 
                at the end the following:
            ``(7) Strategic planning community.--The term `strategic 
        planning community' means a respondent to the Notice Inviting 
        Applications at 63 Federal Register 19162 (April 16, 1998) 
        whose application was ranked 16th through 30th in the 
        competition that concluded in December 1998.''.
                    (D) Indian tribe.--Section 2007(f) of such Act (42 
                U.S.C. 1397f(f)), as amended by subparagraph (C), is 
                amended by adding at the end the following:
            ``(8) Indian tribe.--The term `Indian tribe' means any 
        Indian tribe, band, nation, or other organized group or 
        community, including any Alaska Native village or regional or 
        village corporation as defined in or established pursuant to 
        the Alaska Native Claims Settlement Act, which is recognized as 
        eligible for the special programs and services provided by the 
        United States to Indians because of their status as Indians.''.
    (b) Use of Grant Funds.--
            (1) Revolving loan activities.--Section 2007(b) of the 
        Social Security Act (42 U.S.C. 1397f(b)) is amended by adding 
        at the end the following:
            ``(5) Revolving loan activities.--
                    ``(A) In general.--In order to assist disadvantaged 
                adults and youths in achieving and maintaining economic 
                self-support, a State may use amounts paid under this 
                section to fund revolving loan funds or similar 
                arrangements for the purpose of making loans to 
                residents, institutions, organizations, or businesses 
                that hire disadvantaged adults and youths.
                    ``(B) Rules for disbursement.--Amounts to be used 
                as described in subparagraph (A) shall be disbursed by 
                the Secretary, consistent with the provisions of the 
                Cash Management Improvement Act and its implementing 
                rules, regulations, and procedures issued by the 
                Secretary of the Treasury--
                            ``(i) in the case of a grant to a revolving 
                        loan fund--
                                    ``(I) pursuant to a written 
                                irrevocable grant commitment; and
                                    ``(II) at such time or times as the 
                                Secretary determines that the funds are 
                                needed to meet the purposes of such 
                                commitment; or
                            ``(ii) in the case of a grant for purposes 
                        of capitalizing an insured depository 
                        institution (as defined in section 3 of the 
                        Federal Deposit Insurance Act (12 U.S.C. 1813)) 
                        or an insured credit union (as defined in 
                        section 101 of the Federal Credit Union Act (12 
                        U.S.C. 1742)), at such time or times as the 
                        Secretary determines that funds are needed for 
                        such capitalization.''.
            (2) Use as non-federal share.--Section 2007(b) of such Act 
        (42 U.S.C. 1397f(b)), as amended by paragraph (1), is amended 
        by adding at the end the following:
            ``(6) A State may use amounts received from a grant under 
        this section to pay all or part of the non-Federal share of 
        expenditures under any other Federal grant to a local public or 
        nonprofit private agency or organization for activities 
        consistent with the purposes of this section, unless the 
        statutory authority for such other grant expressly prohibits 
        counting of Federal grant funds as such non-Federal share.''.
    (c) Environmental Review.--Section 2007 of the Social Security Act 
(42 U.S.C. 1397f) is amended--
            (1) by redesignating subsection (f) as subsection (g); and
            (2) by inserting after subsection (e) the following:
    ``(f) Environmental Review.--
            ``(1) Execution of responsibility by the secretary of 
        housing and urban development and the secretary of 
        agriculture.--
                    ``(A) Applicability.--This subsection shall apply 
                to grants under this section in connection with 
                empowerment zones, enterprise communities, and 
                strategic planning communities (as defined in 
                subsection (g)).
                    ``(B) Execution of responsibility.--With respect to 
                grants described in subparagraph (A), the Secretary of 
                Housing and Urban Development and the Secretary of 
                Agriculture, as appropriate, shall execute the 
                responsibilities under the National Environmental 
                Policy Act of 1969 and other provisions of law that 
                further the purposes of such Act (as specified in 
                regulations issued by each such Secretary under 
                paragraph (2)(B)) that would otherwise apply to the 
                Secretary of Health and Human Services, and may provide 
                for the assumption of such responsibilities in 
                accordance with paragraphs (2) through (5).
                    ``(C) Definition of secretary.--Except as otherwise 
                specified, in this subsection, the term `Secretary' 
                means the Secretary of Housing and Urban Development 
                for purposes of grants under this section with respect 
                to qualified empowerment zones and qualified enterprise 
                communities in urban areas, and strategic planning 
                areas, and the Secretary of Agriculture for purposes of 
                grants under this section with respect to qualified 
                empowerment zones and qualified enterprise communities 
in rural areas.
            ``(2) Assumption of responsibility by states, units of 
        general local government, and indian tribes.--
                    ``(A) Release of funds.--In order to assure that 
                the policies of the National Environmental Policy Act 
                of 1969 and other provisions of law that further the 
                purposes of such Act (as specified in regulations 
                issued by the Secretary under subparagraph (B)) are 
                most effectively implemented in connection with the 
                expenditure of funds under this section, and to assure 
                to the public undiminished protection of the 
                environment, the Secretary may, under such regulations, 
                in lieu of the environmental protection procedures 
                otherwise applicable, provide for the release of funds 
                for particular projects to recipients of assistance 
                under this section if the State, unit of general local 
                government, or Indian tribe, as designated by the 
                Secretary in accordance with regulations issued by the 
                Secretary under subparagraph (B), assumes all of the 
                responsibilities for environmental review, 
                decisionmaking, and action pursuant to such Act, and 
                such other provisions of law as the regulations of the 
                Secretary specify, that would otherwise apply to the 
                Secretary were the Secretary to undertake such projects 
                as Federal projects.
                    ``(B) Implementation.--The Secretary of Housing and 
                Urban Development and the Secretary of Agriculture 
                shall each issue regulations to carry out this 
                subsection only after consultation with the Council on 
                Environmental Quality. Such regulations shall--
                            ``(i) specify any other provisions of law 
                        that further the purposes of the National 
                        Environmental Policy Act of 1969 and to which 
                        the assumption of responsibility as provided in 
                        this subsection applies;
                            ``(ii) provide eligibility criteria and 
                        procedures for the designation of a State, unit 
                        of general local government, or Indian tribe to 
                        assume all of the responsibilities described in 
                        subparagraph (A);
                            ``(iii) specify the purposes for which 
                        funds may be committed without regard to the 
                        procedure established under paragraph (3);
                            ``(iv) provide for monitoring of the 
                        performance of environmental reviews under this 
                        subsection;
                            ``(v) in the discretion of the Secretary, 
                        provide for the provision or facilitation of 
                        training for such performance; and
                            ``(vi) subject to the discretion of the 
                        Secretary, provide for suspension or 
                        termination by the Secretary of the assumption 
                        under subparagraph (A).
                    ``(C) Responsibilities of state, unit of general 
                local government, or indian tribe.--The Secretary's 
                duty under subparagraph (B) shall not be construed to 
                limit any responsibility assumed by a State, unit of 
                general local government, or Indian tribe with respect 
                to any particular release of funds under subparagraph 
                (A).
            ``(3) Procedure.--The Secretary shall approve the release 
        of funds for projects subject to the procedures authorized by 
        this subsection only if, not less than 15 days prior to such 
        approval and prior to any commitment of funds to such projects 
        (except for such purposes specified in the regulations issued 
        under paragraph (2)(B)), the recipient submits to the Secretary 
        a request for such release accompanied by a certification of 
        the State, unit of general local government, or Indian tribe 
        that meets the requirements of paragraph (4). The approval by 
        the Secretary of any such certification shall be deemed to 
        satisfy the Secretary's responsibilities pursuant to paragraph 
        (1) under the National Environmental Policy Act of 1969 and 
        such other provisions of law as the regulations of the 
        Secretary specify insofar as those responsibilities relate to 
        the releases of funds for projects to be carried out pursuant 
        thereto that are covered by such certification.
            ``(4) Certification.--A certification under the procedures 
        authorized by this subsection shall--
                    ``(A) be in a form acceptable to the Secretary;
                    ``(B) be executed by the chief executive officer or 
                other officer of the State, unit of general local 
                government, or Indian tribe who qualifies under 
                regulations of the Secretary;
                    ``(C) specify that the State, unit of general local 
                government, or Indian tribe under this subsection has 
fully carried out its responsibilities as described under paragraph 
(2); and
                    ``(D) specify that the certifying officer--
                            ``(i) consents to assume the status of a 
                        responsible Federal official under the National 
                        Environmental Policy Act of 1969 and each 
                        provision of law specified in regulations 
                        issued by the Secretary insofar as the 
                        provisions of such Act or other such provisions 
                        of law apply pursuant to paragraph (2); and
                            ``(ii) is authorized and consents on behalf 
                        of the State, unit of general local government, 
                        or Indian tribe and himself or herself to 
                        accept the jurisdiction of the Federal courts 
                        for the purpose of enforcement of the 
                        responsibilities as such an official.
            ``(5) Approval by states.--In cases in which a unit of 
        general local government carries out the responsibilities 
        described in paragraph (2), the Secretary may permit the State 
        to perform those actions of the Secretary described in 
        paragraph (3). The performance of such actions by the State, 
        where permitted, shall be deemed to satisfy the 
        responsibilities referred to in the second sentence of 
        paragraph (3).''.

SEC. 309. CUSTOMS USER FEES.

    Section 13031(j)(3) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking 
``2003'' and inserting ``2008''.

            TITLE IV--FAITH BASED SUBSTANCE ABUSE TREATMENT

SEC. 401. PREVENTION AND TREATMENT OF SUBSTANCE ABUSE; SERVICES 
              PROVIDED THROUGH RELIGIOUS ORGANIZATIONS.

    Title V of the Public Health Service Act (42 U.S.C. 290aa et seq.) 
is amended by adding at the end the following part:

      ``Part G--Services Provided Through Religious Organizations

``SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.

    ``(a) Designated Programs.--Subject to subsection (b), this part 
applies to discretionary and formula grant programs administered by the 
Substance Abuse and Mental Health Services Administration that make 
awards of Federal financial assistance to public or private entities 
for the purpose of carrying out activities to prevent or treat 
substance abuse (in this part referred to as a `designated program'). 
Designated programs include the program under subpart II of part B of 
title XIX (relating to formula grants to the States).
    ``(b) Limitation.--This part does not apply to any award of Federal 
financial assistance under a designated program for a purpose other 
than the purpose specified in subsection (a).
    ``(c) Definitions.--For purposes of this part (and subject to 
subsection (b)):
            ``(1) The term `designated award recipient' means a public 
        or private entity that has received an award of financial 
        assistance under a designated program (whether the award is a 
        designated direct award or a designated subaward).
            ``(2) The term `designated direct award' means an award of 
        financial assistance under a designated program that is 
        received directly from the Federal Government.
            ``(3) The term `designated subaward' means an award of 
        financial assistance made by a non-Federal entity, which award 
        consists in whole or in part of Federal financial assistance 
        provided through an award under a designated program.
            ``(4) The term `designated program' has the meaning given 
        such term in subsection (a).
            ``(5) The term `financial assistance' means a grant, 
        cooperative agreement, contract, or voucherized assistance.
            ``(6) The term `program beneficiary' means an individual 
        who receives program services.
            ``(7) The term `program participant' has the meaning given 
        such term in section 582(a)(2).
            ``(8) The term `program services' means treatment for 
        substance abuse, or preventive services regarding such abuse, 
        provided pursuant to an award of financial assistance under a 
        designated program.
            ``(9) The term `religious organization' means a nonprofit 
        religious organization.
            ``(10) The term `voucherized assistance' means--
                    ``(A) a system of selecting and reimbursing program 
                services in which--
                            ``(i) the beneficiary is given a document 
                        or other authorization that may be used to pay 
                        for program services;
                            ``(ii) the beneficiary chooses the 
                        organization that will provide services to him 
                        or her according to rules specified by the 
                        designated award recipient; and
                            ``(iii) the organization selected by the 
                        beneficiary is reimbursed by the designated 
                        award recipient for program services provided; 
                        or
                    ``(B) any other mode of financial assistance to pay 
                for program services in which the program beneficiary 
                determines the allocation of program funds through his 
                or her selection of one service provider from among 
                alternatives.

``SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PARTICIPANTS.

    ``(a) In General.--
            ``(1) Scope of authority.--Notwithstanding any other 
        provision of law, a religious organization--
                    ``(A) may be a designated award recipient;
                    ``(B) may make designated subawards to other public 
                or nonprofit private entities (including other 
                religious organizations);
                    ``(C) may provide for the provision of program 
                services to program beneficiaries through the use of 
                voucherized assistance; and
                    ``(D) may be a provider of services under a 
                designated program, including a provider that accepts 
                voucherized assistance.
            ``(2) Definition of program participant.--For purposes of 
        this part, the term `program participant' means a public or 
        private entity that has received a designated direct award, or 
        a designated subaward, regardless of whether the entity 
        provides program services. Such term includes an entity whose 
        only participation in a designated program is to provide 
        program services pursuant to the acceptance of voucherized 
        assistance.
    ``(b) Religious Organizations.--The purpose of this section is to 
allow religious organizations to be program participants on the same 
basis as any other nonprofit private provider without impairing the 
religious character of such organizations, and without diminishing the 
religious freedom of program beneficiaries.
    ``(c) Nondiscrimination Against Religious Organizations.--
            ``(1) Eligibility as program participants.--Religious 
        organizations are eligible to be program participants on the 
        same basis as any other nonprofit private organization as long 
        as the programs are implemented consistent with the 
        Establishment Clause of the First Amendment to the United 
        States Constitution. The Federal Government may under the 
        preceding sentence apply to religious organizations the same 
        eligibility conditions in designated programs as are applied to 
        any nonprofit private organization as long as the conditions 
        are consistent with the Free Exercise Clause of the First 
        Amendment.
            ``(2) Nondiscrimination.--Neither the Federal Government 
        nor a State receiving funds under such programs shall 
        discriminate against an organization that is or applies to be a 
        program participant on the basis that the organization has a 
        religious character.
    ``(d) Religious Character and Freedom.--
            ``(1) Religious organizations.--Except as provided in this 
        section, any religious organization that is a program 
        participant shall retain its independence from Federal, State, 
        and local government, including such organization's control 
        over the definition, development, practice, and expression of 
        its religious beliefs.
            ``(2) Additional safeguards.--Neither the Federal 
        Government nor a State shall require a religious organization 
        to--
                    ``(A) alter its form of internal governance; or
                    ``(B) remove religious art, icons, scripture, or 
                other symbols;
        in order to be a program participant.
    ``(e) Employment Practices.--A religious organization's exemption 
provided under section 702 of the Civil Rights Act of 1964 regarding 
employment practices shall not be affected by its participation in, or 
receipt of funds from, a designated program.
    ``(f) Rights of Program Beneficiaries.--
            ``(1) In general.--With respect to an individual who is a 
        program beneficiary or a prospective program beneficiary, if 
        the individual objects to a program participant on the basis 
        that the participant is a religious organization, the following 
        applies:
                    ``(A) If the organization received a designated 
                direct award, the organization shall refer the 
                individual to an alternative entity that provides 
                program services and shall, to the extent practicable, 
                provide appropriate follow-up services.
                    ``(B) If the organization received a designated 
                subaward, the non-Federal entity that made the subaward 
                shall refer the individual to an alternative entity 
                that provides program services and shall, to the extent 
                practicable, provide appropriate follow-up services.
                    ``(C) If the organization is providing services 
                pursuant to voucherized assistance, the designated 
                award recipient that operates the voucherized 
                assistance program shall refer the individual to an 
                alternative entity that provides program services and 
                shall, to the extent practicable, provide appropriate 
                follow-up services.
                    ``(D) If the local government involved makes 
                available a list of entities in the geographic area 
                that provide program services, the program participant 
                with the responsibility for making the referral under 
                subparagraph (A), (B), or (C), as the case may be, 
                shall obtain a copy of such list and consider the list 
                in making the referral (except that this subparagraph 
                does not apply if the program participant is the local 
                government or the State).
                    ``(E) Referrals under any of subparagraphs (A) 
                through (C) shall be made to alternative entities that 
                will provide program services the monetary value of 
                which is not less than the monetary value of the 
                program services that the individual would have 
                received from the religious organization involved.
            ``(2) Nondiscrimination.--Except as otherwise provided in 
        law, a religious organization that is a program participant 
        shall not in providing program services discriminate against a 
        program beneficiary on the basis of religion or religious 
        belief.
    ``(g) Fiscal Accountability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        religious organization that is a program participant shall be 
        subject to the same regulations as other recipients of awards 
        of Federal financial assistance to account, in accordance with 
        generally accepted auditing principles, for the use of the 
        funds provided under such awards.
            ``(2) Limited audit.--With respect to the award involved, 
        if a religious organization that is a program participant 
        maintains the Federal funds in a separate account from non-
        Federal funds, then only the Federal funds shall be subject to 
        audit.
    ``(h) Compliance.--With respect to compliance with this section by 
an agency, a religious organization may obtain judicial review of 
agency action in accordance with chapter 7 of title 5, United States 
Code.

``SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.

    ``(a) In General.--Except as provided in subsection (b), no funds 
provided directly to an entity under a designated program shall be 
expended for sectarian worship or instruction.
    ``(b) Exception.--Subsection (a) shall not apply to assistance 
provided to or on behalf of a program beneficiary if the beneficiary 
may choose where such assistance is redeemed or allocated.

``SEC. 584. FINANCIAL ASSISTANCE NOT AID TO INSTITUTIONS.

    ``Financial assistance under a designated program is aid to the 
beneficiary, not to the organization providing program services.

``SEC. 585. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG TREATMENT 
              PROGRAMS.

    ``(a) Findings.--The Congress finds that--
            ``(1) establishing formal educational qualification for 
        counselors and other personnel in drug treatment programs may 
        undermine the effectiveness of such programs; and
            ``(2) such formal educational requirements for counselors 
        and other personnel may hinder or prevent the provision of 
        needed drug treatment services.
    ``(b) Limitation on Educational Requirements of Personnel.--
            ``(1) Treatment of religious education.--
                    ``(A) In general.--If any State or local government 
                that is a program participant imposes formal 
                educational qualifications on providers of program 
                services, including religious organizations, such State 
                or local government shall treat religious education and 
                training of personnel as having a critical and positive 
                role in the delivery of program services.
                    ``(B) Education and training on prevention and 
                treatment of substance abuse.--In applying to religious 
                organizations educational qualifications for personnel 
                of such organizations who provide program services, a 
                State or local government that is a program participant 
                shall, with respect to education and training on 
                preventing and treating substance abuse, give credit 
                for such education and training that is provided by 
                religious organizations equivalent to credit given for 
                secular course work that provides such education and 
                training.
                    ``(C) General educational requirements.--In 
                applying to religious organizations educational 
                qualifications for personnel of such organizations who 
                provide program services, a State or local government 
                that is a program participant shall, if such 
                qualifications include course work that does not relate 
                specifically to preventing or treating substance abuse, 
                give credit for religious education equivalent to 
                credit given for secular course work.
            ``(2) Restriction of discrimination requirements..--
                    ``(A) In general.--Subject to paragraph (1), a 
                State or local government that is a program participant 
                may establish formal educational qualifications for 
                personnel in organizations providing program services 
                that contribute to success in reducing drug use among 
                program beneficiaries.
                    ``(B) Exception.--The Secretary shall waive the 
                application of any educational qualification imposed 
                under subparagraph (A) for an individual religious 
                organization, if the Secretary determines that--
                            ``(i) the religious organization has a 
                        record of prior successful drug treatment for 
                        at least the preceding three years;
                            ``(ii) the educational qualifications have 
                        effectively barred such religious organization 
                        from becoming a program provider;
                            ``(iii) the organization has applied to the 
                        Secretary to waive the qualifications; and
                            ``(iv) the State or local government has 
                        failed to demonstrate empirically that the 
                        educational qualifications in question are 
                        necessary to the successful operation of a drug 
                        treatment program.''.

                         TITLE V--HOMEOWNERSHIP

SEC. 501. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD HOUSING TO 
              LOCAL GOVERNMENTS AND COMMUNITY DEVELOPMENT CORPORATIONS.

    Section 204 of the Departments of Veterans Affairs and Housing and 
Urban Development, and Independent Agencies Appropriations Act, 1997 
(12 U.S.C. 1715z-11a) is amended--
            (1) by striking ``Flexible Authority.--'' and inserting 
        ``Disposition of HUD-Owned Properties. (a) Flexible Authority 
        for Multifamily Projects.--''; and
            (2) by adding at the end the following new subsection:
    ``(b) Transfer of Unoccupied and Substandard Housing to Local 
Governments and Community Development Corporations.--
            ``(1) Transfer authority.--Notwithstanding the authority 
        under subsection (a) and the last sentence of section 204(g) of 
        the National Housing Act (12 U.S.C. 1710(g)), the Secretary of 
        Housing and Urban Development shall transfer ownership of any 
        qualified HUD property, subject to the requirements of this 
        section, to a unit of general local government having 
        jurisdiction for the area in which the property is located or 
        to a community development corporation which operates within 
        such a unit of general local government in accordance with this 
        subsection, but only to the extent that units of general local 
        government and community development corporations consent to 
        transfer and the Secretary determines that such transfer is 
        practicable.
            ``(2) Qualified hud properties.--For purposes of this 
        subsection, the term `qualified HUD property' means any 
        property for which, as of the date that notification of the 
        property is first made under paragraph (3)(B), not less than 6 
        months have elapsed since the later of the date that the 
property was acquired by the Secretary or the date that the property 
was determined to be unoccupied or substandard, that is owned by the 
Secretary and is--
                    ``(A) an unoccupied multifamily housing project;
                    ``(B) a substandard multifamily housing project; or
                    ``(C) an unoccupied single family property that--
                            ``(i) has been determined by the Secretary 
                        not to be an eligible asset under section 
                        204(h) of the National Housing Act (12 U.S.C. 
                        1710(h)); or
                            ``(ii) is an eligible asset under such 
                        section 204(h), but--
                                    ``(I) is not subject to a specific 
                                sale agreement under such section; and
                                    ``(II) has been determined by the 
                                Secretary to be inappropriate for 
                                continued inclusion in the program 
                                under such section 204(h) pursuant to 
                                paragraph (10) of such section.
            ``(3) Timing.--The Secretary shall establish procedures 
        that provide for--
                    ``(A) time deadlines for transfers under this 
                subsection;
                    ``(B) notification to units of general local 
                government and community development corporations of 
                qualified HUD properties in their jurisdictions;
                    ``(C) such units and corporations to express 
                interest in the transfer under this subsection of such 
                properties;
                    ``(D) a right of first refusal for transfer of 
                qualified HUD properties to units of general local 
                government and community development corporations, 
                under which--
                            ``(i) the Secretary shall establish a 
                        period during which the Secretary may not 
                        transfer such properties except to such units 
                        and corporations;
                            ``(ii) the Secretary shall offer qualified 
                        HUD properties that are single family 
                        properties for purchase by units of general 
                        local government at a cost of $1 for each 
                        property, but only to the extent that the costs 
                        to the Federal Government of disposal at such 
                        price do not exceed the costs to the Federal 
                        Government of disposing of property subject to 
                        the procedures for single family property 
                        established by the Secretary pursuant to the 
                        authority under the last sentence of section 
                        204(g) of the National Housing Act (12 U.S.C. 
                        1710(g));
                            ``(iii) the Secretary may accept an offer 
                        to purchase a property made by a community 
                        development corporation only if the offer 
                        provides for purchase on a cost recovery basis; 
                        and
                            ``(iv) the Secretary shall accept an offer 
                        to purchase such a property that is made during 
                        such period by such a unit or corporation and 
                        that complies with the requirements of this 
                        paragraph;
                    ``(E) a written explanation, to any unit of general 
                local government or community development corporation 
                making an offer to purchase a qualified HUD property 
                under this subsection that is not accepted, of the 
                reason that such offer was not acceptable.
            ``(4) Other disposition.--With respect to any qualified HUD 
        property, if the Secretary does not receive an acceptable offer 
        to purchase the property pursuant to the procedure established 
        under paragraph (3), the Secretary shall dispose of the 
        property to the unit of general local government in which 
        property is located or to community development corporations 
        located in such unit of general local government on a 
        negotiated, competitive bid, or other basis, on such terms as 
        the Secretary deems appropriate.
            ``(5) Satisfaction of indebtedness.--Before transferring 
        ownership of any qualified HUD property pursuant to this 
        subsection, the Secretary shall satisfy any indebtedness 
        incurred in connection with the property to be transferred, by 
        canceling the indebtedness.
            ``(6) Determination of status of properties.--To ensure 
        compliance with the requirements of this subsection, the 
        Secretary shall take the following actions:
                    ``(A) Upon enactment.--Upon the enactment of this 
                subsection, the Secretary shall promptly assess each 
                residential property owned by the Secretary to 
                determine whether such property is a qualified HUD 
                property.
                    ``(B) Upon acquisition.--Upon acquiring any 
                residential property, the Secretary shall promptly 
                determine whether the property is a qualified HUD 
                property.
                    ``(C) Updates.--The Secretary shall periodically 
                reassess the residential properties owned by the 
                Secretary to determine whether any such properties have 
                become qualified HUD properties.
            ``(7) Tenant leases.--This subsection shall not affect the 
        terms or the enforceability of any contract or lease entered 
        into with respect to any residential property before the date 
        that such property becomes a qualified HUD property.
            ``(8) Use of property.--Property transferred under this 
        subsection shall be used only for appropriate neighborhood 
        revitalization efforts, including homeownership, rental units, 
        commercial space, and parks, consistent with local zoning 
        regulations, local building codes, and subdivision regulations 
        and restrictions of record.
            ``(9) Inapplicability to properties made available for 
        homeless.--Notwithstanding any other provision of this 
        subsection, this subsection shall not apply to any properties 
        that the Secretary determines are to be made available for use 
by the homeless pursuant to subpart E of part 291 of title 24, Code of 
Federal Regulations, during the period that the properties are so 
available.
            ``(10) Protection of existing contracts.--This subsection 
        may not be construed to alter, affect, or annul any legally 
        binding obligations entered into with respect to a qualified 
        HUD property before the property becomes a qualified HUD 
        property.
            ``(11) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Community development corporation.--The term 
                `community development corporation' means a nonprofit 
                organization whose primary purpose is to promote 
                community development by providing housing 
                opportunities for low-income families.
                    ``(B) Cost recovery basis.--The term `cost recovery 
                basis' means, with respect to any sale of a residential 
                property by the Secretary, that the purchase price paid 
                by the purchaser is equal to or greater than the sum of 
                (i) the appraised value of the property, as determined 
                in accordance with such requirements as the Secretary 
                shall establish, and (ii) the costs incurred by the 
                Secretary in connection with such property during the 
                period beginning on the date on which the Secretary 
                acquires title to the property and ending on the date 
                on which the sale is consummated.
                    ``(C) Multifamily housing project.--The term 
                `multifamily housing project' has the meaning given the 
                term in section 203 of the Housing and Community 
                Development Amendments of 1978.
                    ``(D) Residential property.--The term `residential 
                property' means a property that is a multifamily 
                housing project or a single family property.
                    ``(E) Secretary.--The term `Secretary' means the 
                Secretary of Housing and Urban Development.
                    ``(F) Severe physical problems.--The term `severe 
                physical problems' means, with respect to a dwelling 
                unit, that the unit--
                            ``(i) lacks hot or cold piped water, a 
                        flush toilet, or both a bathtub and a shower in 
                        the unit, for the exclusive use of that unit;
                            ``(ii) on not less than three separate 
                        occasions during the preceding winter months, 
                        was uncomfortably cold for a period of more 
                        than 6 consecutive hours due to a malfunction 
                        of the heating system for the unit;
                            ``(iii) has no functioning electrical 
                        service, exposed wiring, any room in which 
                        there is not a functioning electrical outlet, 
                        or has experienced three or more blown fuses or 
                        tripped circuit breakers during the preceding 
                        90-day period;
                            ``(iv) is accessible through a public 
                        hallway in which there are no working light 
                        fixtures, loose or missing steps or railings, 
                        and no elevator; or
                            ``(v) has severe maintenance problems, 
                        including water leaks involving the roof, 
                        windows, doors, basement, or pipes or plumbing 
                        fixtures, holes or open cracks in walls or 
                        ceilings, severe paint peeling or broken 
                        plaster, and signs of rodent infestation.
                    ``(G) Single family property.--The term `single 
                family property' means a 1- to 4-family residence.
                    ``(H) Substandard.--The term `substandard' means, 
                with respect to a multifamily housing project, that 25 
                percent or more of the dwelling units in the project 
                have severe physical problems.
                    ``(I) Unit of general local government.--The term 
                `unit of general local government' has the meaning 
                given such term in section 102(a) of the Housing and 
                Community Development Act of 1974.
                    ``(J) Unoccupied.--The term `unoccupied' means, 
                with respect to a residential property, that the unit 
                of general local government having jurisdiction over 
                the area in which the project is located has certified 
                in writing that the property is not inhabited.
            ``(12) Regulations.--
                    ``(A) Interim.--Not later than 30 days after the 
                date of the enactment of this subsection, the Secretary 
                shall issue such interim regulations as are necessary 
                to carry out this subsection.
                    ``(B) Final.--Not later than 60 days after the date 
                of the enactment of this subsection, the Secretary 
                shall issue such final regulations as are necessary to 
                carry out this subsection.''.

SEC. 502. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.

    In carrying out the program under section 204(h) of the National 
Housing Act (12 U.S.C. 1710(h)), upon the request of the chief 
executive officer of a county or the government of appropriate 
jurisdiction and not later than 60 days after such request is made, the 
Secretary of Housing and Urban Development shall designate as a 
revitalization area all portions of such county that meet the criteria 
for such designation under paragraph (3) of such section.

SEC. 503. RISK-SHARING DEMONSTRATION.

    Section 249 of the National Housing Act (12 U.S.C. 1715z-14) is 
amended--
            (1) by striking the section heading and inserting the 
        following:

                    ``risk-sharing demonstration'';

            (2) by striking ``reinsurance'' each place such term 
        appears and insert ``risk-sharing'';
            (3) in subsection (a)--
                    (A) in the first sentence, by inserting ``and 
                insured community development financial institutions'' 
                after ``private mortgage insurers'';
                    (B) in the second sentence--
                            (i) by striking ``two'' and inserting 
                        ``4''; and
                            (ii) by striking ``March 15, 1988'' and 
                        inserting ``the expiration of the 5-year period 
                        beginning on the date of the enactment of the 
                        American Community Renewal and New Markets 
                        Empowerment Act''; and
                    (C) in the last sentence, by striking ``10 
                percent'' and inserting ``20 percent'';
            (4) in subsection (b)--
                    (A) in the first sentence, by inserting ``and with 
                insured community development financial institutions'' 
                before the period at the end;
                    (B) in the first sentence, by striking ``which have 
                been determined to be qualified insurers under section 
                302(b)(2)(C)'';
                    (C) in the second sentence, by inserting ``and 
                insured community development financial institutions'' 
                after ``private mortgage insurance companies'';
                    (D) by striking paragraph (1) and inserting the 
                following new paragraph:
            ``(1) assume the first loss on any mortgage insured 
        pursuant to section 203(b), 234, or 245 that covers a one- to 
        four-family dwelling and is included in the program under this 
        section, up to the percentage of loss that is set forth in the 
        risk-sharing contract;''; and
                    (E) in paragraph (2)--
                            (i) by striking ``carry out (under 
                        appropriate delegation) such'' and inserting 
                        ``delegate underwriting,''; and
                            (ii) by striking ``function'' and inserting 
                        ``functions'';
            (5) in subsection (c)--
                    (A) in the first sentence--
                            (i) by striking ``of'' the first place it 
                        appears and insert ``for'';
                            (ii) by striking ``insurance reserves'' and 
                        inserting ``loss reserves''; and
                            (iii) by striking ``such insurance'' and 
                        inserting ``such reserves''; and
                    (B) in the second sentence, by inserting ``or 
                insured community development financial institution'' 
                after ``private mortgage insurance company'';
            (6) in subsection (d), by inserting ``or insured community 
        development financial institution'' after ``private mortgage 
        insurance company''; and
            (7) by adding at the end the following new subsection:
    ``(e) Insured Community Development Financial Institutions.--For 
purposes of this section, the term `insured community development 
financial institution' means a community development financial 
institution, as such term is defined in section 103 of Reigle Community 
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702) 
that is an insured depository institution (as such term is defined in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or an 
insured credit union (as such term is defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752)).''.

            TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES

SEC. 601. SHORT TITLE.

    This title may be cited as the ``America's Private Investment 
Companies Act''.

SEC. 602. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) people living in distressed areas, both urban and 
        rural, that are characterized by high levels of joblessness, 
        poverty, and low incomes have not benefited adequately from the 
        economic expansion experienced by the Nation as a whole;
            (2) unequal access to economic opportunities continues to 
        make the social costs of joblessness and poverty to our Nation 
        very high; and
            (3) there are significant untapped markets in our Nation, 
        and many of these are in areas that are underserved by 
        institutions that can make equity and credit investments.
    (b) Purposes.--The purposes of this title are to--
            (1) license private for profit community development 
        entities that will focus on making equity and credit 
        investments for large-scale business developments that benefit 
        low-income communities;
            (2) provide credit enhancement for those entities for use 
        in low-income communities; and
            (3) provide a vehicle under which the economic and social 
        returns on financial investments made pursuant to this title 
        may be available both to the investors in these entities and to 
        the residents of the low-income communities.

SEC. 603. DEFINITIONS.

    As used in this title:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Small Business Administration.
            (2) Agency.--The term ``agency'' has the meaning given such 
        term in section 551(1) of title 5, United States Code.
            (3) APIC.--The term ``APIC'' means a business entity that 
        has been licensed under the terms of this title as an America's 
        Private Investment Company, and the license of which has not 
        been revoked.
            (4) Community development entity.--The term ``community 
        development entity'' means an entity the primary mission of 
        which is serving or providing investment capital for low-income 
        communities or low-income persons and which maintains 
        accountability to residents of low-income communities.
            (5) HUD.--The term ``HUD'' means the Secretary of Housing 
        and Urban Development or the Department of Housing and Urban 
        Development, as the context requires.
            (6) License.--The term ``license'' means a license issued 
        by HUD as provided in section 604.
            (7) Low-income community.--The term ``low-income 
        community'' means--
                    (A) a census tract or tracts that have--
                            (i) a poverty rate of 20 percent or 
                        greater, based on the most recent census data; 
                        or
                            (ii) a median family income that does not 
                        exceed 80 percent of the greater of (I) the 
                        median family income for the metropolitan area 
                        in which such census tract or tracts are 
                        located, or (II) the median family income for 
                        the State in which such census tract or tracts 
                        are located; or
                    (B) a property that was located on a military 
                installation that was closed or realigned pursuant to 
                title II of the Defense Authorization Amendments and 
                Base Closure and Realignment Act (Public Law 100-526; 
                10 U.S.C. 2687 note), the Defense Base Closure and 
                Realignment Act of 1990 (part A of title XXIX of Public 
                Law 101-510; 10 U.S.C. 2687 note), section 2687 of 
                title 10, United States Code, or any other similar law 
                enacted after the date of the enactment of this Act 
                that provides for closure or realignment of military 
                installations.
            (8) Low-income person.--The term ``low-income person'' 
        means a person who is a member of a low-income family, as such 
        term is defined in section 104 of the Cranston-Gonzalez 
        National Affordable Housing Act (42 U.S.C. 12704).
            (9) Private equity capital.--
                    (A) In general.--The term ``private equity 
                capital''--
                            (i) in the case of a corporate entity, the 
                        paid-in capital and paid-in surplus of the 
                        corporate entity;
                            (ii) in the case of a partnership entity, 
                        the contributed capital of the partners of the 
                        partnership entity;
                            (iii) in the case of a limited liability 
                        company entity, the equity investment of the 
                        members of the limited liability company 
                        entity; and
                            (iv) earnings from investments of the 
                        entity that are not distributed to investors 
                        and are available for reinvestment by the 
                        entity.
                    (B) Exclusions.--Such term does not include any--
                            (i) funds borrowed by an entity from any 
                        source or obtained through the issuance of 
                        leverage; except that this clause may not be 
                        construed to exclude amounts evidenced by a 
                        legally binding and irrevocable investment 
                        commitment in the entity, or the use by an 
                        entity of a pledge of such investment 
                        commitment to obtain bridge financing from a 
                        private lender to fund the entity's activities 
                        on an interim basis; or
                            (ii) funds obtained directly or indirectly 
                        from any Federal, State, or local government or 
                        any government agency, except for--
                                    (I) funds invested by an employee 
                                welfare benefit plan or pension plan; 
                                and
                                    (II) credits against any Federal, 
                                State, or local taxes.
            (10) Qualified active business.--The term ``qualified 
        active business'' means a business or trade--
                    (A) that, at the time that an investment is made in 
                the business or trade, is deriving at least 50 percent 
                of its gross income from the conduct of trade or 
                business activities in low-income communities;
                    (B) a substantial portion of the use of the 
                tangible property of which is used within low-income 
                communities;
                    (C) a substantial portion of the services that the 
                employees of which perform are performed in low-income 
                communities; and
                    (D) less than 5 percent of the aggregate unadjusted 
                bases of the property of which is attributable to 
                certain financial property, as the Secretary shall set 
                forth in regulations, or in collectibles, other than 
                collectibles held primarily for sale to customers.
            (11) Qualified debenture.--The term ``qualified debenture'' 
        means a debt instrument having terms that meet the requirements 
        established pursuant to section 606(c)(1).
            (12) Qualified low-income community investment.--The term 
        ``qualified low-income community investment'' mean an equity 
        investment in, or a loan to, a qualified active business.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development, unless otherwise specified in 
        this title.

SEC. 604. AUTHORIZATION.

    (a) Licenses.--The Secretary is authorized to license community 
development entities as America's Private Investment Companies, in 
accordance with the terms of this title.
    (b) Regulations.--The Secretary shall regulate APICs for compliance 
with sound financial management practices, and the program and 
procedural goals of this title and other related Acts, and other 
purposes as required or authorized by this title, or determined by the 
Secretary. The Secretary shall issue such regulations as are necessary 
to carry out the licensing and regulatory and other duties under this 
title, and may issue notices and other guidance or directives as the 
Secretary determines are appropriate to carry out such duties.
    (c) Use of Credit Subsidy for Licenses.--
            (1) Number of licenses.--The number of APICs licensed at 
        any one time may not exceed--
                    (A) the number that may be supported by the amount 
                of budget authority appropriated in accordance with 
                section 504(b) of the Federal Credit Reform Act of 1990 
                (2 U.S.C. 661c) for the cost (as such term is defined 
in section 502 of such Act) of the subsidy and the investment 
strategies of such APICs; or
                    (B) to the extent the limitation under section 
                605(e)(1) applies, the number authorized under such 
                section.
            (2) Use of additional credit subsidy.--Subject to the 
        limitation under paragraph (1), the Secretary may use any 
        budget authority available after credit subsidy has been 
        allocated for the APICs initially licensed pursuant to section 
        605 as follows:
                    (A) Additional licenses.--To license additional 
                APICs.
                    (B) Credit subsidy increases.--To increase the 
                credit subsidy allocated to an APIC as an award for 
                high performance under this title, except that such 
                increases may be made only in accordance with the 
                following requirements and limitations:
                            (i) Timing.--An increase may only be 
                        provided for an APIC that has been licensed for 
                        a period of not less than 2 years.
                            (ii) Competition.--An increase may only be 
                        provided for a fiscal year pursuant to a 
                        competition for such fiscal year among APICs 
                        eligible for, and requesting, such an increase. 
                        The competition shall be based upon criteria 
                        that the Secretary shall establish, which shall 
                        include the financial soundness and performance 
                        of the APICs, as measured by achievement of the 
                        public performance goals included in the APICs 
                        statements required under section 605(a)(6) and 
                        audits conducted under section 609(b)(2). Among 
                        the criteria established by the Secretary to 
                        determine priority for selection under this 
                        section, the Secretary shall include making 
                        investments in and loans to qualified active 
                        businesses in urban or rural areas that have 
                        been designated under subchapter U of Chapter 1 
                        of the Internal Revenue Code of 1986 as 
                        empowerment zones or enterprise communities.
    (d) Cooperation and Coordination.--
            (1) Program policies.--The Secretary is authorized to 
        coordinate and cooperate, through memoranda of understanding, 
        an APIC liaison committee, or otherwise, with the 
        Administrator, the Secretary of the Treasury, and other 
        agencies in the discretion of the Secretary, on implementation 
        of this title, including regulation, examination, and 
        monitoring of APICs under this title.
            (2) Financial soundness requirements.--The Secretary shall 
        consult with the Administrator and the Secretary of the 
        Treasury, and may consult with such other heads of agencies as 
        the Secretary may consider appropriate, in establishing any 
        regulations, requirements, guidelines, or standards for 
        financial soundness or management practices of APICs or 
        entities applying for licensing as APICs. In implementing and 
        monitoring compliance with any such regulations, requirements, 
        guidelines, and standards, the Secretary shall enter into such 
        agreements and memoranda of understanding with the 
        Administrator and the Secretary of the Treasury as may be 
        appropriate to provide for such officials to provide any 
        assistance that may be agreed to.
            (3) Operations.--The Secretary may carry out this title--
                    (A) directly, through agreements with other Federal 
                entities under section 1535 of title 31, United States 
                Code, or otherwise, or
                    (B) indirectly, under contracts or agreements, as 
                the Secretary shall determine.
    (e) Fees and Charges for Administrative Costs.--To the extent 
provided in appropriations Acts, the Secretary is authorized to impose 
fees and charges for application, review, licensing, and regulation, or 
other actions under this title, and to pay for the costs of such 
activities from the fees and charges collected.
    (f) Guarantee Fees.--The Secretary is authorized to set and collect 
fees for loan guarantee commitments and loan guarantees that the 
Secretary makes under this title.
    (g) Funding.--
            (1) Authorization of appropriations for loan guarantee 
        commitments.--For each of fiscal years 2000, 2001, 2002, 2003, 
        and 2004, there is authorized to be appropriated up to 
        $36,000,000 for the cost (as such term is defined in section 
        502(5) of the Federal Credit Reform Act of 1990) of annual loan 
        guarantee commitments under this title. Amounts appropriated 
        under this paragraph shall remain available until expended.
            (2) Aggregate loan guarantee commitment limitation.--The 
        Secretary may make commitments to guarantee loans only to the 
        extent that the total loan principal, any part of which is 
        guaranteed, will not exceed $1,000,000,000, unless another such 
        amount is specified in appropriation Acts for any fiscal year.
            (3) Authorization of appropriations for administrative 
        expenses.--For each of the fiscal years 2000, 2001, 2002, 2003, 
        and 2004, there is authorized to be appropriated $1,000,000 for 
        administrative expenses for carrying out this title. The 
        Secretary may transfer amounts appropriated under this 
        paragraph to any appropriation account of HUD or another 
        agency, to carry out the program under this title. Any agency 
        to which the Secretary may transfer amounts under this title is 
        authorized to accept such transferred amounts in any 
        appropriation account of such agency.

SEC. 605. SELECTION OF APICS.

    (a) Eligible Applicants.--An entity shall be eligible to be 
selected for licensing under section 604 as an APIC only if the entity 
submits an application in compliance with the requirements established 
pursuant to subsection (b) and the entity meets or complies with the 
following requirements:
            (1) Organization.--The entity shall be a private, for-
        profit entity that qualifies as a community development entity 
        for the purposes of the New Markets Tax Credits, to the extent 
        such credits are established under Federal law.
            (2) Minimum private equity capital.--The amount of private 
        equity capital reasonably available to the entity, as 
        determined by the Secretary, at the time that a license is 
        approved may not be less than $25,000,000.
            (3) Qualified management.--The management of the entity 
        shall, in the determination of the Secretary, meet such 
        standards as the Secretary shall establish to ensure that the 
        management of the APIC is qualified, and has the financial 
        expertise, knowledge, experience, and capability necessary, to 
        make investments for community and economic development in low-
        income communities.
            (4) Conflict of interest.--The entity shall demonstrate 
        that, in accordance with sound financial management practices, 
        the entity is structured to preclude financial conflict of 
        interest between the APIC and a manager or investor.
            (5) Investment strategy.--The entity shall prepare and 
        submit to the Secretary an investment strategy that includes 
        benchmarks for evaluation of its progress, that includes an 
        analysis of existing locally owned businesses in the 
        communities in which the investments under the strategy will be 
made, that prioritizes such businesses for investment opportunities, 
and that fulfills the specific public purpose goals of the entity.
            (6) Statement of public purpose goals.--The entity shall 
        prepare and submit to the Secretary a statement of the public 
        purpose goals of the entity, which shall--
                    (A) set forth goals that shall promote community 
                and economic development, which shall include--
                            (i) making investments in low-income 
                        communities that further economic development 
                        objectives by targeting such investments in 
                        businesses or trades that comply with the 
                        requirements under subparagraphs (A) through 
                        (C) of section 603(10) relating to low-income 
                        communities in a manner that benefits low-
                        income persons;
                            (ii) creating jobs in low-income 
                        communities for residents of such communities;
                            (iii) involving community-based 
                        organizations and residents in community 
                        development activities;
                            (iv) such other goals as the Secretary 
                        shall specify; and
                            (v) such elements as the entity may set 
                        forth to achieve specific public purpose goals;
                    (B) include such other elements as the Secretary 
                shall specify; and
                    (C) include proposed measurements and strategies 
                for meeting the goals.
            (7) Compliance with laws.--The entity shall agree to comply 
        with applicable laws, including Federal executive orders, 
        Office of Management and Budget circulars, and requirements of 
        the Department of the Treasury, and such operating and 
        regulatory requirements as the Secretary may impose from time 
        to time.
            (8) Other.--The entity shall satisfy any other application 
        requirements that the Secretary may impose by regulation or 
        Federal Register notice.
    (b) Competitions.--The Secretary shall select eligible entities 
under subsection (a) to be licensed under section 604 as APICs on the 
basis of competitions. The Secretary shall announce each such 
competition by causing a notice to be published in the Federal Register 
that invites applications for licenses and sets forth the requirements 
for application and such other terms of the competition not otherwise 
provided for, as determined by the Secretary.
    (c) Selection.--In competitions under subsection (b), the Secretary 
shall select eligible entities under subsection (a) for licensing as 
APICs on the basis of--
            (1) the extent to which the entity is expected to achieve 
        the goals of this title by meeting or exceeding criteria 
        established under subsection (d); and
            (2) to the extent practicable and subject to the existence 
        of approvable applications, ensuring geographical diversity 
        among the applicants selected and diversity of APICs investment 
        strategies, so that urban and rural communities are both 
        served, in the determination of the Secretary, by the program 
        under this title.
    (d) Selection Criteria.--The Secretary shall establish selection 
criteria for competitions under subsection (b), which shall include the 
following criteria:
            (1) Capacity.--
                    (A) Management.--The extent to which the entity's 
                management has the quality, experience, and expertise 
                to make and manage successful investments for community 
                and economic development in low-income communities.
                    (B) State and local cooperation.--The extent to 
                which the entity demonstrates a capacity to cooperate 
                with States or units of general local government and 
                with community-based organizations and residents of 
                low-income communities.
            (2) Investment strategy.--The quality of the entity's 
        investment strategy submitted in accordance with subsection 
        (a)(5) and the extent to which the investment strategy furthers 
        the goals of this title pursuant to paragraph (3) of this 
        subsection.
            (3) Public purpose goals.--With respect to the statement of 
        public purpose goals of the entity submitted in accordance with 
        subsection (a)(6), and the strategy and measurements included 
        therein--
                    (A) the extent to which such goals promote 
                community and economic development;
                    (B) the extent to which such goals provide for 
                making qualified investments in low-income communities 
                that further economic development objectives, such as--
                            (i) creating, within 2 years of the 
                        completion of the initial such investment, job 
                        opportunities, opportunities for ownership, and 
                        other economic opportunities within a low-
                        income community, both short-term and of a 
                        longer duration;
                            (ii) improving the economic vitality of a 
                        low-income community, including stimulating 
                        other business development;
                            (iii) bringing new income into a low-income 
                        community and assisting in the revitalization 
                        of such community;
                            (iv) converting real property for the 
                        purpose of creating a site for business 
                        incubation and location, or business district 
                        revitalization;
                            (v) enhancing economic competition, 
                        including the advancement of technology;
                            (vi) rural development;
                            (vii) mitigating, rehabilitating, and 
                        reusing real property considered subject to the 
                        Solid Waste Disposal Act (42 U.S.C. 6901 et 
                        seq.; commonly referred to as the Resource 
                        Conservation and Recovery Act) or restoring 
                        coal mine-scarred land;
                            (viii) creation of local wealth through 
                        investments in employee stock ownership 
                        companies or resident-owned ventures; and
                            (ix) any other objective that the Secretary 
                        may establish to further the purposes of this 
                        title;
                    (C) the quality of jobs to be created for residents 
                of low-income communities, taking into consideration 
                such factors as the payment of higher wages, job 
                security, employment benefits, opportunity for 
                advancement, and personal asset building;
                    (D) the extent to which achievement of such goals 
                will involve community-based organizations and 
                residents in community development activities; and
                    (E) the extent to which the investments referred to 
                in subparagraph (B) are likely to benefit existing 
                small business in low-income communities or will 
                encourage the growth of small business in such 
                communities.
            (4) Other.--Any other criteria that the Secretary may 
        establish to carry out the purposes of this title.
    (e) First Year Requirements.--
            (1) Numerical limitation.--The number of APICs may not, at 
        any time during the 1-year period that begins upon the 
        Secretary awarding the first license for an APIC under this 
        title, exceed 15.
            (2) Limitation on allocation of available credit subsidy.--
        Of the amount of budget authority initially made available for 
        allocation under this title for APICs, the amount allocated for 
        any single APIC may not exceed 20 percent.
            (3) Native american private investment company.--Subject 
        only to the absence of an approvable application from an 
        entity, during the 1-year period referred to in paragraph (1), 
        of the entities selected and licensed by the Secretary as 
        APICs, at least one shall be an entity that has as its primary 
        purpose the making of qualified low-income community 
        investments in areas that are within Indian country (as such 
        term is defined in section 1151 of title 18, United States 
        Code) or within lands that have status as Hawaiian home land 
        under section 204 of the Hawaiian Homes Commission Act, 1920 
        (42 Stat. 108) or are acquired pursuant to such Act. The 
        Secretary may establish specific selection criteria for 
        applicants under this paragraph.
    (f) Communications Between HUD and Applicants.--
            (1) In general.--The Secretary shall set forth in 
        regulations the procedures under which HUD and applicants for 
        APIC licenses, and others, may communicate. Such regulations 
        shall--
                    (A) specify by position the HUD officers and 
                employees who may communicate with such applicants and 
                others;
                    (B) permit HUD officers and employees to request 
                and discuss with the applicant and others (such as 
                banks or other credit or business references, or 
                potential investors, that the applicant specifies in 
                writing) any more detailed information that may be 
                desirable to facilitate HUD's review of the applicant's 
                application;
                    (C) restrict HUD officers and employees from 
                revealing to any applicant--
                            (i) the fact or chances of award of a 
                        license to such applicant, unless there has 
                        been a public announcement of the results of 
                        the competition; and
                            (ii) any information with respect to any 
                        other applicant; and
                    (D) set forth requirements for making and keeping 
                records of any communications conducted under this 
                subsection, including requirements for making such 
                records available to the public after the award of 
                licenses under an initial or subsequent notice, as 
                appropriate, under subsection (a).
            (2) Timing.--Regulations under this subsection may be 
        issued as interim rules for effect on or before the date of 
        publication of the first notice under subsection (a), and shall 
        apply only with respect to applications under such notice. 
        Regulations to implement this subsection with respect to any 
        notice after the first such notice shall be subject to notice 
        and comment rulemaking.
            (3) Inapplicability of department of hud act provision.--
        Section 12(e)(2) of the Department of Housing and Urban 
        Development Act (42 U.S.C. 3537a(e)(2)) is amended by inserting 
        before the period at the end the following: ``or any license 
        provided under the America's Private Investment Companies 
        Act''.

SEC. 606. OPERATIONS OF APICS.

    (a) Powers and Authorities.--
            (1) In general.--An APIC shall have any powers or 
        authorities that--
                    (A) the APIC derives from the jurisdiction in which 
                it is organized, or that the APIC otherwise has;
                    (B) may be conferred by a license under this title; 
                and
                    (C) the Secretary may prescribe by regulation.
            (2) New market assistance.--Nothing in this title shall 
        preclude an APIC or its investors from receiving an allocation 
        of New Market Tax Credits (to the extent such credits are 
        established under Federal law) if the APIC satisfies any 
        applicable terms and conditions under the Internal Revenue Code 
        of 1986.
    (b) Investment Limitations.--
            (1) Qualified low-income community investments.--
        Substantially all investments that an APIC makes shall be 
        qualified low-income community investments if the investments 
        are financed with--
                    (A) amounts available from the proceeds of the 
                issuance of an APIC's qualified debenture guaranteed 
                under this title;
                    (B) proceeds of the sale of obligations described 
                under subsection (c)(3)(C)(iii); or
                    (C) the use of private equity capital, as 
                determined by the Secretary, in an amount specified in 
                the APIC's license.
            (2) Single business investments.--An APIC shall not, as a 
        matter of sound financial practice, invest in any one business 
        an amount that exceeds an amount equal to 35 percent of the sum 
        of--
                    (A) the APIC's private equity capital; plus
                    (B) an amount equal to the percentage limit that 
                the Secretary determines that an APIC may have 
                outstanding at any one time, under subsection 
                (c)(2)(A).
    (c) Borrowing Powers; Qualified Debentures.--
            (1) Issuance.--An APIC may issue qualified debentures. The 
        Secretary shall, by regulation, specify the terms and 
        requirements for debentures to be considered qualified 
        debentures for purposes of this title, except that the term to 
        maturity of any qualified debenture may not exceed 21 years and 
        each qualified debenture shall bear interest during all or any 
        part of that time period at a rate or rates approved by the 
        Secretary.
            (2) Leverage limits.--In general, as a matter of sound 
        financial management practices--
                    (A) the total amount of qualified debentures that 
                an APIC issues under this title that an APIC may have 
                outstanding at any one time shall not exceed an amount 
                equal to 200 percent of the private equity capital of 
                the APIC, as determined by the Secretary; and
                    (B) an APIC shall not have more than $300,000,000 
                in face value of qualified debentures issued under this 
                title outstanding at any one time.
            (3) Repayment.--
                    (A) Condition of business wind-up.--An APIC shall 
                have repaid, or have otherwise been relieved of 
                indebtedness, with respect to any interest or principal 
                amounts of borrowings under this subsection no less 
                than 2 years before the APIC may dissolve or otherwise 
                complete the wind-up of its business.
                    (B) Timing.--An APIC may repay any interest or 
                principal amounts of borrowings under this subsection 
                at any time: Provided, That the repayment of such 
                amounts shall not relieve an APIC of any duty otherwise 
                applicable to the APIC under this title, unless the 
                Secretary orders such relief.
                    (C) Use of investment proceeds before repayment.--
                Until an APIC has repaid all interest and principal 
                amounts on APIC borrowings under this subsection, an 
                APIC may use the proceeds of investments, in accordance 
                with regulations issued by the Secretary, only to--
                            (i) pay for proper costs and expenses the 
                        APIC incurs in connection with such 
                        investments;
                            (ii) pay for the reasonable administrative 
                        expenses of the APIC;
                            (iii) purchase Treasury securities;
                            (iv) repay interest and principal amounts 
                        on APIC borrowings under this subsection;
                            (v) make interest, dividend, or other 
                        distributions to or on behalf of an investor; 
                        or
                            (vi) undertake such other purposes as the 
                        Secretary may approve.
                    (D) Use of investment proceeds after repayment.--
                After an APIC has repaid all interest and principal 
                amounts on APIC borrowings under this subsection, and 
                subject to continuing compliance with subsection (a), 
                the APIC may use the proceeds from investments to make 
                interest, dividend, or other distributions to or on 
                behalf of investors in the nature of returns on 
                capital, or the withdrawal of private equity capital, 
                without regard to subparagraph (C) but in conformity 
                with the APIC's investment strategy and statement of 
                public purpose goals.
    (d) Reuse of Qualified Debenture Proceeds.--An APIC may use the 
proceeds of sale of Treasury securities purchased under subsection 
(c)(3)(C)(iii) to make qualified low-income community investments, 
subject to the Secretary's approval. In making the request for the 
Secretary's approval, the APIC shall follow the procedures applicable 
to an APIC's request for HUD guarantee action, as the Secretary may 
modify such procedures for implementation of this subsection. Such 
procedures shall include the description and certifications that an 
APIC must include in all requests for guarantee action, and the 
environmental certification applicable to initial expenditures for a 
project or activity.
    (e) Antipirating.--Notwithstanding any other provision of law, an 
APIC may not use any private equity capital required to be contributed 
under this title, or the proceeds from the sale of any qualified 
debenture under this title, to make an investment, as determined by the 
Secretary, to assist directly in the relocation of any industrial or 
commercial plant, facility, or operation, from 1 area to another area, 
if the relocation is likely to result in a significant loss of 
employment in the labor market area from which the relocation occurs.
    (f) Exclusion of APIC From Definition of Debtor Under Bankruptcy 
Provisions.--Section 109(b)(2) of title 11, United States Code, is 
amended by inserting before ``credit union'' the following: ``America's 
Private Investment Company licensed under the America's Private 
Investment Companies Act,''.

SEC. 607. CREDIT ENHANCEMENT BY THE FEDERAL GOVERNMENT.

    (a) Issuance and Guarantee of Qualified Debentures.--
            (1) Authority.--To the extent consistent with the Federal 
        Credit Reform Act of 1990, the Secretary is authorized to make 
        commitments to guarantee and guarantee the timely payment of 
        all principal and interest as scheduled on qualified debentures 
        issued by APICs. Such commitments and guarantees may only be 
        made in accordance with the terms and conditions established 
        under paragraph (2).
            (2) Terms and conditions.--The Secretary shall establish 
        such terms and conditions as the Secretary determines to be 
        appropriate for commitments and guarantees under this 
        subsection, including terms and conditions relating to amounts, 
        expiration, number, priorities of repayment, security, 
        collateral, amortization, payment of interest (including the 
        timing thereof), and fees and charges. The terms and conditions 
        applicable to any particular commitment or guarantee may be 
        established in documents that the Secretary approves for such 
        commitment or guarantee.
            (3) Seniority.--Notwithstanding any other provision of 
        Federal law or any law or the constitution of any State, 
        qualified debentures guaranteed under this subsection by the 
        Secretary shall be senior to any other debt obligation, equity 
        contribution or earnings, or the distribution of dividends, 
        interest, or other amounts, of an APIC.
    (b) Issuance of Trust Certificates.--The Secretary, or an agent or 
entity selected by the Secretary, is authorized to issue trust 
certificates representing ownership of all or a fractional part of 
guaranteed qualified debentures issued by APICs and held in trust.
    (c) Guarantee of Trust Certificates.--
            (1) In general.--The Secretary is authorized, upon such 
        terms and conditions as the Secretary determines to be 
        appropriate, to guarantee the timely payment of the principal 
        of and interest on trust certificates issued by the Secretary, 
        or an agent or other entity, for purposes of this section. Such 
        guarantee shall be limited to the extent of principal and 
        interest on the guaranteed qualified debentures which compose 
        the trust.
            (2) Substitution option.--The Secretary shall have the 
        option to replace in the corpus of the trust any prepaid or 
        defaulted qualified debenture with a debenture, another full 
        faith and credit instrument, or any obligations of the United 
        States, that may reasonably substitute for such prepaid or 
        defaulted qualified debenture.
            (3) Proportionate reduction option.--In the event that the 
        Secretary elects not to exercise the option under paragraph 
        (2), and a qualified debenture in such trust is prepaid, or in 
        the event of default of a qualified debenture, the guarantee of 
        timely payment of principal and interest on the trust 
        certificate shall be reduced in proportion to the amount of 
        principal and interest that such prepaid qualified debenture 
        represents in the trust. Interest on prepaid or defaulted 
        qualified debentures shall accrue and be guaranteed by the 
        Secretary only through the date of payment of the guarantee. 
        During the term of a trust certificate, it may be called for 
        redemption due to prepayment or default of all qualified 
        debentures that are in the corpus of the trust.
    (d) Full Faith and Credit Backing of Guarantees.--The full faith 
and credit of the United States is pledged to the timely payment of all 
amounts which may be required to be paid under any guarantee by the 
Secretary pursuant to this section.
    (e) Subrogation and Liens.--
            (1) Subrogation.--In the event the Secretary pays a claim 
        under a guarantee issued under this section, the Secretary 
        shall be subrogated fully to the rights satisfied by such 
        payment.
            (2) Priority of liens.--No State or local law, and no 
        Federal law, shall preclude or limit the exercise by the 
        Secretary of its ownership rights in the debentures in the 
        corpus of a trust under this section.
    (f) Registration.--
            (1) In general.--The Secretary shall provide for a central 
        registration of all trust certificates issued pursuant to this 
        section.
            (2) Agents.--The Secretary may contract with an agent or 
        agents to carry out on behalf of the Secretary the pooling and 
        the central registration functions of this section 
        notwithstanding any other provision of law, including 
        maintenance on behalf of and under the direction of the 
        Secretary, such commercial bank accounts or investments in 
        obligations of the United States as may be necessary to 
        facilitate trusts backed by qualified debentures guaranteed 
        under this title and the issuance of trust certificates to 
        facilitate formation of the corpus of the trusts. The Secretary 
        may require such agent or agents to provide a fidelity bond or 
        insurance in such amounts as the Secretary determines to be 
        necessary to protect the interests of the Government.
            (3) Form.--Book-entry or other electronic forms of 
        registration for trust certificates under this title are 
        authorized.
    (g) Timing of Issuance of Guarantees of Qualified Debentures and 
Trust Certificates.--The Secretary may, from time to time in the 
Secretary's discretion, exercise the authority to issue guarantees of 
qualified debentures under this title or trust certificates under this 
title.

SEC. 608. APIC REQUESTS FOR GUARANTEE ACTIONS.

    (a) In General.--The Secretary may issue a guarantee under this 
title for a qualified debenture that an APIC intends to issue only 
pursuant to a request to the Secretary by the APIC for such guarantee 
that is made in accordance with regulations governing the content and 
procedures for such requests, that the Secretary shall prescribe. Such 
regulations shall provide that each such request shall include--
            (1) a description of the manner in which the APIC intends 
        to use the proceeds from the qualified debenture;
            (2) a certification by the APIC that the APIC is in 
        substantial compliance with--
                    (A) this title and other applicable laws, including 
                any requirements established under this title by the 
                Secretary;
                    (B) all terms and conditions of its license, any 
                cease-and-desist order issued under section 610, and of 
                any penalty or condition that may have arisen from 
                examination or monitoring by the Secretary or 
                otherwise, including the satisfaction of any financial 
                audit exception that may have been outstanding; and
                    (C) all requirements relating to the allocation and 
                use of New Markets Tax Credits, to the extent such 
                credits are established under Federal law; and
            (3) any other information or certification that the 
        Secretary considers appropriate.
    (b) Requests for Guarantee of Qualified Debentures That Include 
Funding for Initial Expenditure for a Project or Activity.--In addition 
to the description and certification that an APIC is required to supply 
in all requests for guarantee action under subsection (a), in the case 
of an APIC's request for a guarantee that includes a qualified 
debenture, the proceeds of which the APIC expects to be used as its 
initial expenditure for a project or activity in which the APIC intends 
to invest, and the expenditure for which would require an environmental 
assessment under the National Environmental Policy Act of 1969 and 
other related laws that further the purposes of such Act, such request 
for guarantee action shall include evidence satisfactory to 
the Secretary of the certification of the completion of environmental 
review of the project or activity required of the cognizant State or 
local government under subsection (c). If the environmental review 
responsibility for the project or activity has not been assumed by a 
State or local government under subsection (c), then the Secretary 
shall be responsible for carrying out the applicable responsibilities 
under the National Environmental Policy Act of 1969 and other 
provisions of law that further the purposes of such Act that relate to 
the project or activity, and the Secretary shall execute such 
responsibilities before acting on the APIC's request for the guarantee 
that is covered by this subsection.
    (c) Responsibility for Environmental Reviews.--
            (1) Execution of responsibility by the secretary.--This 
        subsection shall apply to guarantees by the Secretary of 
        qualified debentures under this title, the proceeds of which 
        would be used in connection with qualified low-income community 
        investments of APICs under this title.
            (2) Assumption of responsibility by cognizant unit of 
        general government.--
                    (A) Guarantee of qualified debentures.--In order to 
                assure that the policies of the National Environmental 
                Policy Act of 1969 and other provisions of law that 
                further the purposes of such Act (as specified in 
                regulations issued by the Secretary) are most 
                effectively implemented in connection with the 
                expenditure of funds under this title, and to assure to 
                the public undiminished protection of the environment, 
                the Secretary may, under such regulations, in lieu of 
                the environmental protection procedures otherwise 
                applicable, provide for the guarantee of qualified 
                debentures, any part of the proceeds of which are to 
                fund particular qualified low-income community 
                investments of APICs under this title, if a State or 
                unit of general local government, as designated by the 
                Secretary in accordance with regulations issued by the 
                Secretary, assumes all of the responsibilities for 
                environmental review, decisionmaking, and action 
                pursuant to the National Environmental Policy Act of 
                1969 and such other provisions of law that further such 
                Act as the regulations of the Secretary specify, that 
                would otherwise apply to the Secretary were the 
                Secretary to undertake the funding of such investments 
                as a Federal action.
                    (B) Implementation.--The Secretary shall issue 
                regulations to carry out this subsection only after 
                consultation with the Council on Environmental Quality. 
                Such regulations shall--
                            (i) specify any other provisions of law 
                        which further the purposes of the National 
                        Environmental Policy Act of 1969 and to which 
                        the assumption of responsibility as provided in 
                        this subsection applies;
                            (ii) provide eligibility criteria and 
                        procedures for the designation of a State or 
                        unit of general local government to assume all 
                        of the responsibilities in this subsection;
                            (iii) specify the purposes for which funds 
                        may be committed without regard to the 
                        procedure established under paragraph (3);
                            (iv) provide for monitoring of the 
                        performance of environmental reviews under this 
                        subsection;
                            (v) in the discretion of the Secretary, 
                        provide for the provision or facilitation of 
                        training for such performance; and
                            (vi) subject to the discretion of the 
                        Secretary, provide for suspension or 
                        termination by the Secretary of the assumption 
                        under subparagraph (A).
                    (C) Responsibilities of states and units of general 
                local government.--The Secretary's duty under 
                subparagraph (B) shall not be construed to limit any 
                responsibility assumed by a State or unit of general 
                local government with respect to any particular request 
                for guarantee under subparagraph (A), or the use of 
                funds for a qualified investment.
            (3) Procedure.--Subject to compliance by the APIC with the 
        requirements of this title, the Secretary shall approve the 
        request for guarantee of a qualified debenture, any part of the 
        proceeds of which is to fund particular qualified low-income 
        community investments of an APIC under this title, that is 
        subject to the procedures authorized by this subsection only 
        if, not less than 15 days prior to such approval and prior to 
        any commitment of funds to such investment (except for such 
        purposes specified in the regulations issued under paragraph 
        (2)(B)), the APIC submits to the Secretary a request for 
        guarantee of a qualified debenture that is accompanied by 
        evidence of a certification of the State or unit of general 
        local government which meets the requirements of paragraph (4). 
        The approval by the Secretary of any such certification shall 
        be deemed to satisfy the Secretary's responsibilities pursuant 
        to paragraph (1) under the National Environmental Policy Act of 
        1969 and such other provisions of law as the regulations of the 
        Secretary specify insofar as those responsibilities relate to 
        the guarantees of qualified debentures, any parts of the 
        proceeds of which are to fund such investments, which are 
        covered by such certification.
            (4) Certification.--A certification under the procedures 
        authorized by this subsection shall--
                    (A) be in a form acceptable to the Secretary;
                    (B) be executed by the chief executive officer or 
                other officer of the State or unit of general local 
                government who qualifies under regulations of the 
                Secretary;
                    (C) specify that the State or unit of general local 
                government under this subsection has fully carried out 
                its responsibilities as described under paragraph (2); 
                and
                    (D) specify that the certifying officer--
                            (i) consents to assume the status of a 
                        responsible Federal official under the National 
                        Environmental Policy Act of 1969 and each 
                        provision of law specified in regulations 
                        issued by the Secretary insofar as the 
                        provisions of such Act or other such provision 
                        of law apply pursuant to paragraph (2); and
                            (ii) is authorized and consents on behalf 
                        of the State or unit of general local 
                        government and himself or herself to accept the 
                        jurisdiction of the Federal courts for the 
                        purpose of enforcement of the responsibilities 
                        as such an official.

SEC. 609. EXAMINATION AND MONITORING OF APICS.

    (a) In General.--The Secretary shall, under regulations, through 
audits, performance agreements, license conditions, or otherwise, 
examine and monitor the operations and activities of APICs for 
compliance with sound financial management practices, and for 
satisfaction of the program and procedural goals of this title and 
other related Acts. The Secretary may undertake any responsibility 
under this section in cooperation with an APIC liaison committee, or 
any agency that is a member of such a committee, or other agency.
    (b) Monitoring, Updating, and Program Review.--
            (1) Reporting and updating.--The Secretary shall establish 
        such annual or more frequent reporting requirements for APICs, 
        and such requirements for the updating of the statement of 
        public purpose goals, investment strategy (including the 
        benchmarks in such strategy), and other documents that may have 
        been used in the license application process under this title, 
        as the Secretary determines necessary to assist the Secretary 
        in monitoring the compliance and performance of APICs.
            (2) Annual audits.--The Secretary shall require each APIC 
        to have an independent audit conducted annually of the 
        operations of the APIC. The Secretary, in consultation with the 
        Administrator and the Secretary of the Treasury, shall 
        establish requirements and standards for such audits, including 
        requirements that such audits be conducted in accordance with 
        generally accepted accounting principles, that the APIC submit 
        the results of the audit to Secretary, and that specify the 
        information to be submitted.
            (3) Examinations.--The Secretary shall, no less often than 
        once every 2 years, examine the operations and portfolio of 
        each APIC licensed under this title for compliance with sound 
        financial management practices, and for compliance with this 
        title.
            (4) Examination standards.--
                    (A) Sound financial management practices.--The 
                Secretary shall examine each APIC to ensure, as a 
                matter of sound financial management practices, 
                substantial compliance with this and other applicable 
                laws, including Federal executive orders, Department of 
                Treasury and Office of Management and Budget guidance, 
                circulars, and application and licensing requirements 
                on a continuing basis. The Secretary may, by 
                regulation, establish any additional standards for 
                sound financial management practices, including 
                standards that address solvency and financial exposure.
                    (B) Performance and other examinations.--The 
                Secretary shall monitor each APIC's progress in meeting 
                the goals in the APIC's statement of public purpose 
                goals, executing the APIC's investment strategy, and 
                other matters.
    (c) Inspector General Responsibility.--In carrying out monitoring 
of HUD's responsibilities under this title and for purposes of ensuring 
that the program under this title is operated in accordance with sound 
financial management practices, the Inspector General of the Department 
of Housing and Urban Development shall consult with the Inspector 
General of the Department of the Treasury and the Inspector General of 
the Small Business Administration, as appropriate, and may enter into 
such agreements and memoranda of understanding as may be necessary to 
obtain the cooperation of the Inspectors General of the Department of 
the Treasury and the Small Business Administration in carrying out such 
function.
    (d) Annual Report By Secretary.--The Secretary shall submit a 
report to the Congress annually regarding the operations, activities, 
financial health, and achievements of the APIC program under this 
title. The report shall list each investment made by an APIC and 
include a summary of the examinations conducted under subsection 
(b)(3), the guarantee actions of HUD, and any regulatory or policy 
actions taken by HUD. The report shall distinguish recently licensed 
APICs from APICs that have held licenses for a longer period for 
purposes of indicating program activities and performance.
    (e) GAO Report.--
            (1) Requirement.--Not later than 2 years after the date of 
        the enactment of this Act, the Comptroller General of the 
        United States shall submit a report to the Congress regarding 
        the operation of the program under this title for licensing and 
        guarantees for APICs.
            (2) Contents.--The report shall include--
                    (A) an analysis of the operations and monitoring by 
                HUD of the APIC program under this title;
                    (B) the administrative and capacity needs of HUD 
                required to ensure the integrity of the program;
                    (C) the extent and adequacy of any credit subsidy 
                appropriated for the program; and
                    (D) the management of financial risk and liability 
                of the Federal Government under the program.

SEC. 610. PENALTIES.

    (a) Violations Subject to Penalty.--The Secretary may impose a 
penalty under this subsection on any APIC or manager of an APIC that, 
by any act, practice, or failure to act, engages in fraud, 
mismanagement, or noncompliance with this title, the regulations under 
this title, or a condition of the APIC's license under this title. The 
Secretary shall, by regulation, identify, by generic description of a 
role or responsibilities, any manager of an APIC that is subject to a 
penalty under this section.
    (b) Penalties Requiring Notice and an Opportunity to Respond.--If, 
after notice in writing to an APIC or the manager of an APIC that the 
APIC or manager has engaged in any action, practice, or failure to act 
that, under subsection (a), is subject to a penalty, and after an 
opportunity for the APIC or manager to respond to the notice, the 
Secretary determines that the APIC or manager engaged in such action or 
failure to act, the Secretary may, in addition to other penalties 
imposed--
            (1) assess a civil money penalty, except than any civil 
        money penalty under this subsection shall be in an amount not 
        exceeding $10,000;
            (2) issue an order to cease and desist with respect to such 
        action, practice, or failure to act of the APIC or manager;
            (3) suspend, or condition the use of, the APIC's license, 
        including deferring, for the period of the suspension, any 
        commitment to guarantee any new qualified debenture of the 
        APIC, except that any suspension or condition under this 
        paragraph may not exceed 90 days; and
            (4) impose any other penalty that the Secretary determines 
        to be less burdensome to the APIC than a penalty under 
        subsection (c).
    (c) Penalties Requiring Notice and Hearing.--If, after notice in 
writing to an APIC or the manager of an APIC that an APIC or manager 
has engaged in any action, practice, or failure to act that, under 
subsection (a), is subject to a penalty, and after an opportunity for 
administrative hearing, the Secretary determines that the APIC or 
manager engaged in such action or failure to act, the Secretary may--
            (1) assess a civil money penalty against the APIC or a 
        manager in any amount;
            (2) require the APIC to divest any interest in an 
        investment, on such terms and conditions as the Secretary may 
        impose; or
            (3) revoke the APIC's license.
    (d) Effective Date of Penalties.--
            (1) Prior notice requirement.--Except as provided in 
        paragraph (2) of this subsection, a penalty under subsection 
        (b) or (c) shall not be due and payable and shall not otherwise 
        take effect or be subject to enforcement by an order of a 
        court, before notice of the penalty is published in the Federal 
        Register.
            (2) Cease-and-desist orders and suspension or conditioning 
        of license.--In the case of a cease-and-desist order under 
        subsection (b)(2) or the suspension or conditioning of an 
        APIC's license under subsection (b)(3), the following 
        procedures shall apply:
                    (A) Action without published notice.--The Secretary 
                may order an APIC or manager to cease and desist from 
                an action, practice, or failure to act or may suspend 
                or condition an APIC's license, for not more than 45 
                days without prior publication of notice in the Federal 
                Register, but such cease-and-desist order or suspension 
                or conditioning shall take effect only after the 
                Secretary has issued a written notice (which may 
                include a writing in electronic form) of such action to 
                the APIC. Notwithstanding subsection (b), such written 
                notice shall be effective without regard to whether the 
                APIC has been accorded an opportunity to respond. Upon 
                such notice, such cease-and-desist order or suspension 
                or conditioning shall be subject to enforcement by an 
                order of a court.
                    (B) Publication of notice of suspension or 
                conditioning of license.--Upon a suspension or 
                conditioning of a license taking effect pursuant to 
                subparagraph (A), the Secretary shall promptly cause a 
                notice of suspension or conditioning of such license 
                for a period of not more than 90 days to be published 
                in the Federal Register. The Secretary shall provide 
                the APIC an opportunity to respond to such notice. For 
                purposes of the determining the duration of the period 
                of any suspension or conditioning under this 
                subparagraph, the first day of such period shall be the 
                day of issuance of the written notice under this 
                paragraph of the suspension or conditioning.
                    (C) Revocation of license.--During the period of 
                the suspension or conditioning of an APIC's license, 
                the Secretary may take action under subsection (c)(3) 
                to revoke the license of the APIC, in accordance with 
                the procedures applicable to such subsection. 
                Notwithstanding any other provision of this section, if 
                the Secretary takes such action, the Secretary may 
                extend the suspension or conditioning of the APIC's 
                license, for one or more periods of not more than 90 
                days each, by causing notice of such action to be 
                published in the Federal Register--
                            (i) for the first such extension, before 
                        the expiration of the period under subparagraph 
                        (B); and
                            (ii) for any subsequent extension, before 
                        the expiration of the preceding extension 
                        period under this subparagraph.
            (D) Term of effectiveness.--A cease-and-desist order or the 
        suspension or conditioning of an APIC's license by the 
        Secretary under this paragraph shall remain in effect in 
        accordance with the terms of the order, suspension, or 
        conditioning until final adjudication in any action undertaken 
        to challenge the order, or the suspension or conditioning, or 
        the revocation, of an APIC's license.

SEC. 611. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this title 
shall take effect upon the expiration of the 6-month period beginning 
on the date of the enactment of this Act.
    (b) Issuance of Regulations and Guidelines.--Any authority under 
this title of the Secretary, the Administrator, and the Secretary of 
the Treasury to issue regulations, standards, guidelines, or licensing 
requirements, and any authority of such officials to consult or enter 
into agreements or memoranda of understanding regarding such issuance, 
shall take effect on the date of the enactment of this Act.

SEC. 612. SUNSET.

    After the expiration of the 5-year period beginning upon the date 
that the Secretary awards the first license for an APIC under this 
title--
            (1) the Secretary may not license any APIC; and
            (2) no amount may be appropriated for the costs (as such 
        term is defined in section 502 of the Federal Credit Reform Act 
        of 1990 (2 U.S.C. 661c)) of any guarantee under this title for 
        any debenture issued by an APIC.
This section may not be construed to prohibit, limit, or affect the 
award, allocation, or use of any budget authority for the costs of such 
guarantees that is appropriated before the expiration of such period.

                   TITLE VII--NEW MARKETS TAX CREDIT

SEC. 701. NEW MARKETS TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits), as amended by section 201(a), 
is amended by adding at the end the following new section:

``SEC. 45E. NEW MARKETS TAX CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, in the case 
        of a taxpayer who holds a qualified equity investment on a 
        credit allowance date of such investment which occurs during 
        the taxable year, the new markets tax credit determined under 
        this section for such taxable year is an amount equal to the 
        applicable percentage of the amount paid to the qualified 
        community development entity for such investment at its 
        original issue.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage is--
                    ``(A) 5 percent with respect to the first 3 credit 
                allowance dates, and
                    ``(B) 6 percent with respect to the remainder of 
                the credit allowance dates.
            ``(3) Credit allowance date.--For purposes of paragraph 
        (1), the term `credit allowance date' means, with respect to 
        any qualified equity investment--
                    ``(A) the date on which such investment is 
                initially made, and
                    ``(B) each of the 6 anniversary dates of such date 
                thereafter.
    ``(b) Qualified Equity Investment.--For purposes of this section--
            ``(1) In general.--The term `qualified equity investment' 
        means any equity investment in a qualified community 
        development entity if--
                    ``(A) such investment is acquired by the taxpayer 
                at its original issue (directly or through an 
                underwriter) solely in exchange for cash,
                    ``(B) substantially all of the proceeds from such 
                investment is used by the qualified community 
                development entity to make qualified low-income 
                community investments, and
                    ``(C) such investment is designated for purposes of 
                this section by the qualified community development 
                entity.
        Such term shall not include any equity investment issued by a 
        qualified community development entity more than 5 years after 
        the date that such entity receives an allocation under 
        subsection (f). Any allocation not used within such 5-year 
        period may be reallocated by the Secretary under subsection 
        (f).
            ``(2) Limitation.--The maximum amount of equity investments 
        issued by a qualified community development entity which may be 
        designated under paragraph (1)(C) by such entity shall not 
        exceed the portion of the limitation amount allocated under 
        subsection (f) to such entity.
            ``(3) Safe harbor for determining use of cash.--The 
        requirement of paragraph (1)(B) shall be treated as met if at 
        least 85 percent of the aggregate gross assets of the qualified 
        community development entity are invested in qualified low-
        income community investments.
            ``(4) Treatment of subsequent purchasers.--The term 
        `qualified equity investment' includes any equity investment 
        which would (but for paragraph (1)(A)) be a qualified equity 
        investment in the hands of the taxpayer if such investment was 
        a qualified equity investment in the hands of a prior holder.
            ``(5) Redemptions.--A rule similar to the rule of section 
        1202(c)(3) shall apply for purposes of this subsection.
            ``(6) Equity investment.--The term `equity investment' 
        means--
                    ``(A) any stock in a qualified community 
                development entity which is a corporation, and
                    ``(B) any capital interest in a qualified community 
                development entity which is a partnership.
    ``(c) Qualified Community Development Entity.--For purposes of this 
section--
            ``(1) In general.--The term `qualified community 
        development entity' means any domestic corporation or 
        partnership if--
                    ``(A) the primary mission of the entity is serving, 
                or providing investment capital for, low-income 
                communities or low-income persons,
                    ``(B) the entity maintains accountability to 
                residents of low-income communities through 
                representation on governing or advisory boards or 
                otherwise, and
                    ``(C) the entity is certified by the Secretary for 
                purposes of this section as being a qualified community 
                development entity.
            ``(2) Special rules for certain organizations.--The 
        requirements of paragraph (1) shall be treated as met by--
                    ``(A) any specialized small business investment 
                company (as defined in section 1044(c)(3)), and
                    ``(B) any community development financial 
                institution (as defined in section 103 of the Community 
                Development Banking and Financial Institutions Act of 
                1994 (12 U.S.C. 4702)).
    ``(d) Qualified Low-Income Community Investments.--For purposes of 
this section--
            ``(1) In general.--The term `qualified low-income community 
        investment' means--
                    ``(A) any equity investment in, or loan to, any 
                qualified active low-income community business,
                    ``(B) the purchase from another community 
                development entity of any loan made by such entity 
                which is a qualified low-income community investment if 
                the amount received by such other entity from such 
                purchase is used by such other entity to make qualified 
                low-income community investments,
                    ``(C) financial counseling and other services 
                specified in regulations prescribed by the Secretary to 
                businesses located in, and residents of, low-income 
                communities, and
                    ``(D) any equity investment in, or loan to, any 
                qualified community development entity if substantially 
                all of the investment or loan is used by such entity to 
                make qualified low-income community investments 
                described in subparagraphs (A), (B), and (C).
            ``(2) Qualified active low-income community business.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `qualified active low-income community 
                business' means, with respect to any taxable year, any 
                corporation or partnership if for such year--
                            ``(i) at least 50 percent of the total 
                        gross income of such entity is derived from the 
                        active conduct of a qualified business within 
                        any low-income community,
                            ``(ii) a substantial portion of the use of 
                        the tangible property of such entity (whether 
                        owned or leased) is within any low-income 
                        community,
                            ``(iii) a substantial portion of the 
                        services performed for such entity by its 
                        employees are performed in any low-income 
                        community,
                            ``(iv) less than 5 percent of the average 
                        of the aggregate unadjusted bases of the 
                        property of such entity is attributable to 
                        collectibles (as defined in section 408(m)(2)) 
                        other than collectibles that are held primarily 
                        for sale to customers in the ordinary course of 
                        such business, and
                            ``(v) less than 5 percent of the average of 
                        the aggregate unadjusted bases of the property 
                        of such entity is attributable to nonqualified 
                        financial property (as defined in section 
                        1397C(e)).
                    ``(B) Proprietorship.--Such term shall include any 
                business carried on by an individual as a proprietor if 
                such business would meet the requirements of 
                subparagraph (A) were it incorporated.
                    ``(C) Portions of business may be qualified active 
                low-income community business.--The term `qualified 
                active low-income community business' includes any 
                trades or businesses which would qualify as a qualified 
                active low-income community business if such trades or 
                businesses were separately incorporated.
            ``(3) Qualified business.--For purposes of this subsection, 
        the term `qualified business' has the meaning given to such 
        term by section 1397C(d); except that--
                    ``(A) in lieu of applying paragraph (2)(B) thereof, 
                the rental to others of real property located in any 
                low-income community shall be treated as a qualified 
                business if there are substantial improvements located 
                on such property,
                    ``(B) paragraph (3) thereof shall not apply, and
                    ``(C) such term shall not include any business if a 
                significant portion of the equity interests in such 
                business are held by any person who holds a significant 
                portion of the equity investments in the community 
                development entity.
    ``(e) Low-Income Community.--For purposes of this section--
            ``(1) In general.--The term `low-income community' means 
        any population census tract if--
                    ``(A) the poverty rate for such tract is at least 
                20 percent,
                    ``(B)(i) in the case of a tract not located within 
                a metropolitan area, the median family income for such 
                tract does not exceed 80 percent of statewide median 
                family income, or
                    ``(ii) in the case of a tract located within a 
                metropolitan area, the median family income for such 
                tract does not exceed 80 percent of the greater of 
                statewide median family income or the metropolitan area 
                median family income, or
                    ``(C) as determined by the Secretary based on 
                objective criteria, a substantial population of low-
                income individuals reside in such tract, an inadequate 
                access to investment capital exists in such tract, or 
                other indications of economic distress exist in such 
                tract.
            ``(2) Areas not within census tracts.--In the case of an 
        area which is not tracted for population census tracts, the 
        equivalent county divisions (as defined by the Bureau of the 
        Census for purposes of defining poverty areas) shall be used 
        for purposes of determining poverty rates and median family 
        income.
    ``(f) National Limitation on Amount of Investments Designated.--
            ``(1) In general.--There is a new markets tax credit 
        limitation for each calendar year. Such limitation is--
                    ``(A) $500,000,000 for 2001,
                    ``(B) $1,500,000,000 for 2002 and 2003,
                    ``(C) $2,500,000,000 for 2004 and 2005,
                    ``(D) $3,000,000,000 for 2006,
                    ``(E) $3,500,000,000 for 2007.
            ``(2) Allocation of limitation.--The limitation under 
        paragraph (1) shall be allocated by the Secretary among 
        qualified community development entities selected by the 
        Secretary. In making allocations under the preceding sentence, 
        the Secretary shall give priority to entities with records of 
        having successfully provided capital or technical assistance to 
        disadvantaged businesses or communities.
            ``(3) Carryover of unused limitation.--If the new markets 
        tax credit limitation for any calendar year exceeds the 
        aggregate amount allocated under paragraph (2) for such year, 
        such limitation for the succeeding calendar year shall be 
        increased by the amount of such excess.
    ``(g) Recapture of Credit in Certain Cases.--
            ``(1) In general.--If, at any time during the 7-year period 
        beginning on the date of the original issue of a qualified 
        equity investment in a qualified community development entity, 
        there is a recapture event with respect to such investment, 
        then the tax imposed by this chapter for the taxable year in 
        which such event occurs shall be increased by the credit 
        recapture amount.
            ``(2) Credit recapture amount.--For purposes of paragraph 
        (1), the credit recapture amount is an amount equal to the sum 
        of--
                    ``(A) the aggregate decrease in the credits allowed 
                to the taxpayer under section 38 for all prior taxable 
                years which would have resulted if no credit had been 
                determined under this section with respect to such 
                investment, plus
                    ``(B) interest at the overpayment rate established 
                under section 6621 on the amount determined under 
                subparagraph (A) for each prior taxable year for the 
                period beginning on the due date for filing the return 
                for the prior taxable year involved.
        No deduction shall be allowed under this chapter for interest 
        described in subparagraph (B).
            ``(3) Recapture event.--For purposes of paragraph (1), 
        there is a recapture event with respect to an equity investment 
        in a qualified community development entity if--
                    ``(A) such entity ceases to be a qualified 
                community development entity,
                    ``(B) the proceeds of the investment cease to be 
                used as required of subsection (b)(1)(B), or
                    ``(C) such investment is redeemed by such entity.
            ``(4) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under this subsection shall not be treated as a tax 
                imposed by this chapter for purposes of determining the 
                amount of any credit under this chapter or for purposes 
                of section 55.
    ``(h) Basis Reduction.--The basis of any qualified equity 
investment shall be reduced by the amount of any credit determined 
under this section with respect to such investment.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including 
regulations--
            ``(1) which limit the credit for investments which are 
        directly or indirectly subsidized by other Federal benefits 
        (including the credit under section 42 and the exclusion from 
        gross income under section 103),
            ``(2) which prevent the abuse of the provisions of this 
        section through the use of related parties,
            ``(3) which impose appropriate reporting requirements, and
            ``(4) which apply the provisions of this section to newly 
        formed entities.''.
    (b) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38, as amended 
        by section 201(b), is amended by striking ``plus'' at the end 
        of paragraph (12), by striking the period at the end of 
        paragraph (13) and inserting ``, plus'', and by adding at the 
        end the following new paragraph:
            ``(14) the new markets tax credit determined under section 
        45E(a).''.
            (2) Limitation on carryback.--Subsection (d) of section 39, 
        as amended by section 201(d), is amended by adding at the end 
        the following new paragraph:
            ``(10) No carryback of new markets tax credit before 
        january 1, 2001.--No portion of the unused business credit for 
        any taxable year which is attributable to the credit under 
        section 45E may be carried back to a taxable year ending before 
        January 1, 2001.''.
    (c) Deduction for Unused Credit.--Subsection (c) of section 196 is 
amended by striking ``and'' at the end of paragraph (7), by striking 
the period at the end of paragraph (8) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(9) the new markets tax credit determined under section 
        45E(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by section 201(e), is 
amended by adding at the end the following new item:

                              ``Sec. 45E. New markets tax credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2000.
    (f) Regulations on Allocation of National Limitation.--Not later 
than 90 days after the date of the enactment of this Act, the Secretary 
of the Treasury or the Secretary's delegate shall prescribe regulations 
which specify objective criteria to be used in making the allocations 
under section 45E(f)(2) of the Internal Revenue Code of 1986, as added 
by this section.

         TITLE VIII--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL

SEC. 800. SHORT TITLE.

    This title may be cited as the ``Community Development and Venture 
Capital Act of 2000''.

            Subtitle A--New Markets Venture Capital Program

SEC. 801. NEW MARKETS VENTURE CAPITAL PROGRAM.

    (a) In General.--Title III of the Small Business Investment Act of 
1958 (15 U.S.C. 681 et seq.) is amended--
            (1) by striking the title designation and heading and 
        inserting the following:

               ``TITLE III--INVESTMENT DIVISION PROGRAMS

            ``PART A--SMALL BUSINESS INVESTMENT COMPANIES'';

        and
            (2) by adding at the end the following:

             ``PART B--NEW MARKETS VENTURE CAPITAL PROGRAM

``SEC. 351. DEFINITIONS.

    ``In this part--
            ``(1) the term `eligible company' means a company that--
                    ``(A) is a newly formed for-profit entity, which 
                may be a newly formed for-profit subsidiary of an 
                existing entity; and
                    ``(B) has a management team with experience in 
                community development financing or relevant venture 
                capital financing;
            ``(2) the term `low-income individual' means an individual 
        whose income (adjusted for family size) does not exceed--
                    ``(A) for metropolitan areas, 80 percent of the 
                area median income; and
                    ``(B) for nonmetropolitan areas, the greater of--
                            ``(i) 80 percent of the area median income; 
                        or
                            ``(ii) 80 percent of the statewide 
                        nonmetropolitan area median income;
            ``(3) the term `low- or moderate-income geographic area' 
        means--
                    ``(A) any population census tract (or in the case 
                of an area that is not tracted for population census 
                tracts, the equivalent county division, as defined by 
                the Bureau of the Census of the Department of Commerce 
                for purposes of defining poverty areas) if--
                            ``(i) the poverty rate for such census 
                        tract is not less than 20 percent;
                            ``(ii)(I) in the case of a tract located 
                        within a metropolitan area, the median family 
                        income for such tract does not exceed the 
                        greater of 80 percent of the statewide median 
                        family income or 80 percent of the metropolitan 
                        area median family income; or
                            ``(II) in the case of a tract not located 
                        within a metropolitan area, the median family 
                        income for such tract does not exceed 80 
                        percent of the statewide median family income; 
                        or
                            ``(iii) as determined by the Administrator 
                        based on objective criteria, a substantial 
                        population of low-income individuals reside, an 
                        inadequate access to investment capital exists, 
                        or other indications of economic distress 
                        exist; or
                    ``(B) any area located within--
                            ``(i) a HUBZone (as defined in section 3(p) 
                        of the Small Business Act and the implementing 
                        regulations issued under that section);
                            ``(ii) an urban empowerment zone or urban 
                        enterprise community (as designated by the 
                        Secretary of Housing and Urban Development); or
                            ``(iii) a rural empowerment zone or rural 
                        enterprise community (as designated by the 
                        Secretary of Agriculture);
            ``(4) the terms `new markets venture capital company' and 
        `NMVC company' mean a company that has been designated as a new 
        markets venture capital company by the Administrator under 
        section 354(d);
            ``(5) the term `participation agreement' means an 
        agreement, between the Administrator and a company granted 
        final approval under section 354(e), that--
                    ``(A) details the company's operating plan and 
                investment criteria; and
                    ``(B) requires the company to make investments in 
                smaller enterprises at least 80 percent of which are 
                located in low- or moderate-income geographic areas; 
                and
            ``(6) the term `specialized small business investment 
        company' means any small business investment company that--
                    ``(A) invests solely in small business concerns 
                that contribute to a well-balanced national economy by 
                facilitating ownership in such concerns by persons 
                whose participation in the free enterprise system is 
                hampered because of social or economic disadvantages;
                    ``(B) is organized or chartered under State 
                business or nonprofit corporations statutes, or formed 
                as a limited partnership; and
                    ``(C) was licensed under section 301(d), as in 
                effect before September 30, 1996.

``SEC. 352. PURPOSES.

    ``The purposes of this part are--
            ``(1) to encourage venture capital investment in smaller 
        enterprises located within urban and rural areas;
            ``(2) to promote the creation of wealth, economic 
        development, and job opportunities in low- and moderate-income 
        geographic areas; and
            ``(3) to establish a venture capital program, which shall 
        be administered by the Administrator--
                    ``(A) to make grants to NMVC companies for the 
                purpose of providing marketing, management, and 
                technical assistance to smaller enterprises financed, 
                or expected to be financed, by such companies; and
                    ``(B) to guarantee debentures issued by NMVC 
                companies to enable such companies to make venture 
                capital investments in smaller enterprises within urban 
                and rural areas.

``SEC. 353. PROGRAM ESTABLISHMENT.

    ``There is established a New Markets Venture Capital Program, under 
which the Administrator is authorized to--
            ``(1) make grants to NMVC companies, as provided in section 
        355; and
            ``(2) guarantee debentures issued by NMVC companies, as 
        provided in section 356.

``SEC. 354. SELECTION OF NMVC COMPANIES.

    ``(a) Applications.--In order to be eligible to participate in the 
program under this part as an NMVC company, an eligible company shall 
submit to the Administrator an application, within such period of time 
as the Administrator shall establish, which shall include--
            ``(1) a business plan that describes the manner and 
        geographic areas in which the applicant will make successful 
        venture capital investments in smaller enterprises described in 
        subparagraphs (A) and (B) of section 351(5) and provide 
        marketing, management, and technical assistance to those 
        enterprises;
            ``(2) the qualifications and general business reputation of 
        the management of the applicant, specifically addressing--
                    ``(A) the experience of the management in making 
                venture capital investments in smaller enterprises 
                described in subparagraphs (A) and (B) of section 
                351(5); and
                    ``(B) the success of those investments in terms of 
                business growth, jobs created, and such other factors 
as the Administrator may require; and
            ``(3) a description of the manner in which the applicant 
        will interface with community organizations;
            ``(4) a proposal describing the manner in which grant 
        amounts made available under this part would provide marketing, 
        management, and technical assistance to smaller enterprises 
        expected to be financed by the applicant;
            ``(5) proposed criteria by which to evaluate the 
        performance of the applicant in meeting program objectives;
            ``(6) the management and financial strength of any parent 
        or affiliated firm, or any firm essential to the success of the 
        business plan of the applicant;
            ``(7) with respect to binding commitments to be made to the 
        company under this part, an estimate of the ratio of cash to 
        in-kind contributions; and
            ``(8) such other information as the Administrator may 
        require.
    ``(b) Criteria for Conditional Approval.--
            ``(1) In general.--Upon receipt of an application submitted 
        under subsection (a), the Administrator shall review the 
        application and make a determination regarding whether to grant 
        conditional approval to the applicant to operate as an NMVC 
        company during the time period described in subsection (c), 
        based on--
                    ``(A) the geographic area and employment 
                characteristics of the smaller enterprises in which the 
                proposed investments of the NMVC company will be made 
                (in order to promote investment nationwide);
                    ``(B) the likelihood that the applicant will meet 
                the goals of the business plan of the applicant;
                    ``(C) the experience and background of the 
                company's management team;
                    ``(D) the need for equity or equity-type 
                investments within the proposed investment areas;
                    ``(E) the extent to which the applicant will 
                concentrate its activities on serving its investment 
                areas;
                    ``(F) the likelihood that the applicant will be 
                able to satisfy the requirements of subsection (c);
                    ``(G) the extent to which the proposed activities 
                will expand economic opportunities within the 
                investment areas; and
                    ``(H) such other factors as the Administrator 
                determines to be appropriate.
            ``(2) Nationwide distribution.--The Administrator shall 
        select companies under paragraph (1) in such a way that 
        promotes investment nationwide.
    ``(c) Requirements for Final Approval.--
            ``(1) In general.--Subject to paragraph (2), each applicant 
        that is granted conditional approval by the Administrator to 
        operate as an NMVC company under subsection (b), shall, before 
        the expiration of a time period established by the 
        Administrator not to exceed 24 months, beginning on the date on 
        which such conditional approval is granted--
                    ``(A) raise not less than $5,000,000 of contributed 
                capital or binding capital commitments from 1 or more 
                investors (other than an agency of the Federal 
                Government) that meet criteria established by the 
                Administrator; and
                    ``(B) in order to provide marketing, management, 
                and technical assistance, have--
                            ``(i) cash or binding commitments for 
                        contributions (in cash or in-kind) from 1 or 
                        more sources other than the Administration that 
                        meet criteria established by the Administrator, 
                        payable or available over a multiyear period 
                        acceptable to the Administrator (not to exceed 
                        10 years), in an amount equal to 30 percent of 
                        the capital and commitments raised under 
                        subparagraph (A);
                            ``(ii) purchased an annuity from an 
                        insurance company acceptable to the 
                        Administrator, using amounts (other than the 
                        amounts raised to satisfy the requirements of 
                        subparagraph (A)) from any source other than 
                        the Administration, that would yield cash 
                        payments over a multiyear period acceptable to 
                        the Administrator (not to exceed 10 years), in 
                        an amount equal to 30 percent of the capital 
                        and commitments raised under subparagraph (A); 
                        or
                            ``(iii) cash or binding commitments for 
                        contributions (in cash or in-kind) of the type 
                        described in clause (i) and have purchased an 
                        annuity of the type described in clause (ii), 
                        that in the aggregate make available, over a 
                        multiyear period acceptable to the 
                        Administrator (not to exceed 10 years), an 
                        amount equal to 30 percent of the capital and 
                        commitments raised under subparagraph (A).
            ``(2) Exception.--The Administrator may, in the discretion 
        of the Administrator and based upon a showing of special 
        circumstances and good cause, consider an applicant to have 
        satisfied the requirements of paragraph (1)(B) if the applicant 
        has--
                    ``(A) a viable plan that reasonably projects the 
                capacity of the applicant to raise the amount (in cash 
                or in-kind) required under paragraph (1)(B); and
                    ``(B) binding commitments in an amount not less 
                than 20 percent of the total amount required under 
                paragraph (1)(B).
    ``(d) Grant of Final Approval; Designation.--The Administrator 
shall, with respect to each applicant conditionally approved to operate 
as an NMVC company under subsection (b), either--
            ``(1) grant final approval to the applicant to operate as 
        an NMVC company under this part and designate the applicant as 
an NMVC company, if the applicant--
                    ``(A) satisfies the requirements of subsection (c) 
                on or before the expiration of the time period 
                described in that subsection; and
                    ``(B) enters into a participation agreement with 
                the Administrator; or
            ``(2) if the applicant fails to satisfy the requirements of 
        subsection (c) on or before the expiration of the time period 
        described in that subsection, revoke the conditional approval 
        granted under that subsection.

``SEC. 355. TECHNICAL ASSISTANCE GRANTS.

    ``(a) Grants.--
            ``(1) In general.--The Administrator, in accordance with 
        such terms and conditions as the Administrator may require, is 
        authorized to award 1 or more grants to each NMVC company or to 
        any other entity, as authorized by this part, which shall be 
        used to provide marketing, management, and technical assistance 
        for the benefit of smaller enterprises financed, or expected to 
        be financed, by the NMVC company or other authorized entity.
            ``(2) Multiyear grants.--Amounts from a grant awarded under 
        this section shall be paid upon the direction of the 
        Administrator over a multiyear period of not to exceed 10 
        years.
            ``(3) Grants to specialized small business investment 
        companies.--
                    ``(A) Authority.--In accordance with this section, 
                the Administrator may make grants to specialized small 
                business investment companies to provide marketing, 
                management, and technical assistance to smaller 
                enterprises financed, or expected to be financed, by 
                such companies after the effective date of the 
                Community Development and Venture Capital Act of 2000.
                    ``(B) Use of funds.--The proceeds of a grant made 
                under this paragraph may be used by the company 
                receiving such grant only to provide marketing, 
                management, and technical assistance in connection with 
                an equity or equity-type investment (made with capital 
                raised after the effective date of the Community 
                Development and Venture Capital Act of 2000) in a 
                business located in a low- or moderate-income 
                geographic area.
                    ``(C) Submission of plans.--A specialized small 
                business investment company shall be eligible for a 
                grant under this section only if the company submits to 
                the Administrator, in such form and manner as the 
                Administrator may require, a plan for use of the grant.
            ``(4) Grant amount.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                amount of a grant awarded to an NMVC company or other 
                authorized entity under this subsection shall be equal 
                to 30 percent of the amount of capital and commitments 
                raised under section 354(c)(1)(A).
                    ``(B) Matching requirement.--In order to receive 
                funds under a grant awarded under this subsection, an 
                NMVC company or other authorized entity shall provide a 
                matching contribution (in cash or in-kind) from sources 
                other than the Administration, in an amount equal to 
                the funds to received.
            ``(5) Pro rata reductions.--If the amount made available to 
        carry out this section for a fiscal year is insufficient for 
        the Administrator to award grants in the amounts required under 
        paragraph (4), the Administrator shall make pro rata reductions 
        in the amounts otherwise payable to each NMVC company or other 
        authorized entity under that paragraph.
    ``(b) Supplemental Grants.--
            ``(1) In general.--In addition to any grant under 
        subsection (a), the Administrator, in accordance with such 
        terms and conditions as the Administrator may require, may make 
        1 or more supplemental grants to an NMVC company or other 
        authorized entity, which shall be used to provide additional 
        marketing, management, and technical assistance for the benefit 
        of smaller enterprises financed, or expected to be financed, by 
        the NMVC company or other authorized entity.
            ``(2) Matching requirement.--The Administrator may require, 
        as a condition of any supplemental grant made under this 
        subsection, that the NMVC company provide a matching 
        contribution (in cash or in-kind) from 1 or more sources other 
        than the Administrator in an amount equal to the amount of the 
        supplemental grant.
    ``(c) Limitation.--No part of any grant made available under this 
section may be used for any purpose other than to provide direct 
technical and financial assistance to smaller enterprises financed, or 
expected to be financed, by the NMVC companies or other authorized 
entities.

``SEC. 356. DEBENTURES.

    ``(a) In General.--The Administrator is authorized to guarantee the 
timely payment of principal and interest as scheduled on debentures 
issued by NMVC companies, in accordance with such terms and conditions 
the Administrator determines to be appropriate.
    ``(b) Full Faith and Credit.--The full faith and credit of the 
United States is pledged to the payment of all amounts that may be 
required to be paid under any guarantee under this section.
    ``(c) Debenture Requirements.--A debenture guaranteed under this 
section--
            ``(1) may be issued for a term of not to exceed 15 years;
            ``(2) shall bear interest at a rate approved by the 
        Administrator; and
            ``(3) shall contain such other terms and conditions as the 
        Administrator may require.
    ``(d) Total Face Value.--The total face amount of debentures issued 
by an NMVC company and guaranteed under this section that may be 
outstanding at any 1 time shall not exceed 150 percent of the 
contributed capital of the NMVC company, as determined by the 
Administrator. For purposes of this subsection, the contributed capital 
of an NMVC company includes capital that is deemed to be Federal funds 
contributed by an investor other than an agency of the Federal 
Government.

``SEC. 357. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.

    ``(a) In General.--The Administrator (or an agent of the 
Administrator) is authorized to issue trust certificates representing 
ownership of all or a fractional part of debentures guaranteed by the 
Administrator under section 356, if such trust certificates are based 
on and backed by a trust or pool approved by the Administrator and 
composed solely of debentures guaranteed under section 356.
    ``(b) Guarantee Authority.--
            ``(1) In general.--The Administrator is authorized to, upon 
        such terms and conditions as the Administrator determines to be 
        appropriate, guarantee the timely payment of the principal of 
        and interest on any trust certificate issued under this 
        section.
            ``(2) Limitation.--A guarantee under this subsection shall 
        be limited to the extent of the principal of and interest on 
        the guaranteed debentures that compose the trust or pool 
        described in subsection (a).
            ``(3) Reduction.--If a debenture in a trust or pool 
        described in subsection (a) is prepaid, or in the event of 
        default of a debenture, the guarantee of timely payment of 
        principal and interest on the related trust certificate issued 
        under this section shall be reduced in proportion to the amount 
        of principal and interest that such prepaid debenture 
        represents in that trust or pool.
            ``(4) Accrual of interest.--Interest on prepaid or 
        defaulted debentures shall accrue and be guaranteed by the 
        Administrator only through the date of payment of the 
        guarantee.
            ``(5) Redemption of trust certificates.--During the term of 
        any trust certificate issued under this subsection, the trust 
        certificate may be called for redemption due to prepayment or 
        default of all debentures in the trust or pool.
    ``(c) Full Faith and Credit.--The full faith and credit of the 
United States is pledged to the payment of all amounts that may be 
required to be paid under any guarantee of a trust certificate issued 
under this section.
    ``(d) Fees.--The Administrator shall not collect a fee for any 
guarantee of a trust certificate issued under this section, except that 
nothing in this subsection may be construed to preclude an agent of the 
Administrator from collecting a fee approved by the Administrator for 
the functions described in subsection (f)(2).
    ``(e) Subrogation.--
            ``(1) In general.--If the Administrator pays a claim under 
        a guarantee issued under this section, the Administration shall 
        be subrogated fully to the rights satisfied by such payment.
            ``(2) Ownership rights.--No Federal, State, or local law 
        shall preclude or limit the exercise by the Administrator of 
        the ownership rights of the Administrator in the debentures 
        residing in a trust or pool against which trust certificates 
        are issued under this section.
    ``(f) Central Registration.--
            ``(1) In general.--The Administrator may provide for a 
        central registration of all trust certificates issued under 
        this section.
            ``(2) Contracting of functions.--
                    ``(A) In general.--The Administrator may contract 
                with an agent or agents to carry out on behalf of the 
                Administrator the pooling and the central registration 
                functions of this section including, notwithstanding 
                any other provision of law--
                            ``(i) maintenance on behalf of and under 
                        the direction of the Administrator of such 
                        commercial bank accounts or investments in 
                        obligations of the United States as may be 
                        necessary to facilitate trusts or pools backed 
                        by debentures guaranteed under this part; and
                            ``(ii) the issuance of trust certificates 
                        to facilitate such poolings.
                    ``(B) Fidelity bond or insurance required.--An 
                agent contracting with the Administrator under this 
                paragraph shall be required to provide a fidelity bond 
                or insurance in such amounts as the Administrator 
                determines to be necessary to fully protect the 
                interests of the Government.
            ``(3) Regulation of brokers and dealers.--Notwithstanding 
        section 3(a)(42) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)(42)), the Administrator may regulate brokers and 
        dealers in trust certificates issued under this section.
            ``(4) Electronic registration.--Nothing in this subsection 
        may be construed to prohibit the use of a book-entry or other 
        electronic form of registration for trust certificates issued 
        under this section.

``SEC. 358. FEES.

    ``Except as provided under section 357(d), the Administrator may 
charge such fees as the Administrator determines to be appropriate with 
respect to any guarantee issued or grant awarded under this part.

``SEC. 359. BANK PARTICIPATION.

    ``Any national bank, or any member bank of the Federal Reserve 
System or nonmember insured bank to the extent permitted under 
applicable State law, may invest in any 1 or more NMVC companies, or in 
any entity established to invest solely in NMVC companies, except that 
in no event shall the total amount of such investments of any such bank 
exceed 5 percent of the total capital and surplus of the bank.

``SEC. 360. FEDERAL FINANCING BANK.

    ``Section 318 shall not apply to any debenture issued by a NMVC 
company under this part.

``SEC. 361. REPORTING REQUIREMENTS.

    ``Each NMVC company shall provide to the Administrator such 
information as the Administrator may request, including--
            ``(1) information related to the measurement criteria that 
        the NMVC company proposed in the application submitted under 
        section 354(a);
            ``(2) documentation on the use of technical assistance 
        grants under this part; and
            ``(3) in each case in which the company under this part 
        makes an investment in, or a loan or grant to, a business that 
is not located in a low- or moderate-income geographic area, a report 
on the number and percentage of employees of the business who reside in 
such areas.

``SEC. 362. EXAMINATIONS.

    ``(a) In General.--Each NMVC company shall be subject to 
examinations made at the direction of the Investment Division of the 
Administration, which may be conducted with the assistance of a private 
sector entity that has both the qualifications to conduct and the 
expertise in conducting such examinations.
    ``(b) Assessment of Costs.--The cost of such examinations, 
including the compensation of the examiners, may in the discretion of 
the Administrator be assessed against the company examined and when so 
assessed shall be paid by such company.
    ``(c) Deposit of Fees.--Fees collected under this section shall be 
deposited in the account for salaries and expenses of the 
Administration.

``SEC. 363. INJUNCTIONS AND OTHER ORDERS.

    ``(a) In General.--If, in the judgment of the Administrator, an 
NMVC company or any other person has engaged or is about to engage in 
any act or practice that constitutes or will constitute a violation of 
any provision of this title (or any rule, regulation, or order issued 
under this title) or of a participation agreement entered into under 
this part--
            ``(1) the Administrator may make application to the proper 
        district court of the United States or a United States court of 
        any place subject to the jurisdiction of the United States for 
        an order enjoining such act or practice, or for an order 
        enforcing compliance with such provision; and
            ``(2) such court shall--
                    ``(A) have jurisdiction over such application and 
                any ensuing proceedings; and
                    ``(B) upon a showing by the Administrator that such 
                NMVC company or other person has engaged or is about to 
                engage in any such act or practice, grant without bond 
                a permanent or temporary injunction, restraining order, 
                or other appropriate order.
    ``(b) Powers of Court.--In any proceeding under subsection (a)--
            ``(1) the court as a court of equity may, to such extent as 
        the court determines to be necessary, take exclusive 
        jurisdiction of the NMVC company and the assets thereof, 
        wherever located; and
            ``(2) the court shall have jurisdiction in any such 
        proceeding to appoint a trustee or receiver to hold or 
        administer under the direction of the court the assets so 
        possessed.
    ``(c) Trustee or Receiver.--The Administrator is authorized to act 
as trustee or receiver of the NMVC company. Upon request by the 
Administrator, the court may appoint the Administrator to act in such 
capacity unless the court determines such appointment to be inequitable 
or otherwise inappropriate based on the special circumstances at issue.

``SEC. 364. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS, DIRECTORS, 
              EMPLOYEES, OR AGENTS; BREACH OF FIDUCIARY DUTY.

    ``(a) In General.--If an NMVC company violates any provision of 
this title (or any rule or regulation issued under this title), or of a 
participation agreement entered into under this part, by failing to 
comply with the terms thereof or by engaging in any act or practice 
that constitutes or will constitute a violation thereof, such violation 
shall be deemed to be also a violation and an unlawful act on the part 
of any person who, directly or indirectly, authorizes, orders, 
participates in, or causes, brings about, counsels, aids, or abets in 
the commission of any act, practice, or transaction that constitutes or 
will constitute, in whole or in part, such violation.
    ``(b) Breach of Fiduciary Duty.--It shall be unlawful for any 
officer, director, employee, agent, or other participant in the 
management or conduct of the affairs of an NMVC company to engage in 
any act or practice, or to omit any act, in breach of the fiduciary 
duty of such officer, director, employee, agent, or participant, if, as 
a result thereof, the NMVC company has suffered or is in imminent 
danger of suffering financial loss or other damage.
    ``(c) Other Prohibitions.--Except with the written consent of the 
Administrator, it shall be unlawful--
            ``(1) for any person to take office as an officer, 
        director, or employee of an NMVC company, or to become an agent 
        or participant in the conduct of the affairs or management of 
        an NMVC company, if that person--
                    ``(A) has been convicted of a felony, or any other 
                criminal offense involving dishonesty or breach of 
                trust; or
                    ``(B) has been found civilly liable in damages, or 
                has been permanently or temporarily enjoined by order, 
                judgment, or decree of a court of competent 
                jurisdiction, by reason of any act or practice 
                involving fraud or breach of trust; or
            ``(2) for any person to continue to serve in any of the 
        above-described capacities, if that person is subsequently--
                    ``(A) convicted of a felony, or any other criminal 
                offense involving dishonesty or breach of trust; or
                    ``(B) found civilly liable in damages, or is 
                permanently or temporarily enjoined by an order, 
                judgment, or decree of a court of competent 
                jurisdiction, by reason of any act or practice 
                involving fraud or breach of trust.
    ``(d) Notice.--The Administrator may serve upon any officer, 
director, employee, or other participant in the conduct of the 
management or other affairs of an NMVC company a written notice of the 
intention of the Administrator to remove that person from his or her 
position whenever, in the opinion of the Administrator, that person--
            ``(1) has willfully committed any substantial violation 
        of--
                    ``(A) this title (or any rule, regulation, or order 
                issued under this title); or
                    ``(B) a participation agreement entered into under 
                this part; or
                    ``(C) a cease-and-desist order that has become 
                final; or
            ``(2) has willfully committed or engaged in any act, 
        omission, or practice that constitutes a substantial breach of 
        fiduciary duty, and that such violation or such breach of 
        fiduciary duty is one involving personal dishonesty on the part 
        of such person.
    ``(e) Suspension or Removal.--The Administrator may suspend or 
remove from office any person upon whom the Administrator has served a 
notice under subsection (d), in accordance with the procedures set 
forth in section 313.

``SEC. 365. REGULATIONS.

    ``The Administrator may promulgate such regulations as the 
Administrator determines to be necessary to carry out this part.

``SEC. 366. AUTHORIZATIONS.

    ``(a) In General.--For fiscal years 2000 through 2005, the 
Administration is authorized to be appropriated, to remain available 
until expended--
            ``(1) such subsidy budget authority as may be necessary to 
        guarantee $150,000,000 of debentures under this part; and
            ``(2) $30,000,000 to make grants under this part.
    ``(b) Funds Collected for Examinations.--Funds deposited under 
section 362(c) are authorized to be appropriated only for the costs of 
examinations under section 362 and for the costs of other oversight 
activities with respect to the program established under this part.''.
    (b) Conforming Amendment.--Section 20(e)(1)(C) of the Small 
Business Act (15 U.S.C. 631 note) is amended by inserting ``part A of'' 
before ``title III''.

SEC. 802. BANKRUPTCY EXEMPTION FOR NMVC COMPANIES.

    Section 109(b)(2) of title 11, United States Code, is amended by 
inserting after ``homestead association,'' the following: ``a new 
markets venture capital company (as defined in section 351 of the Small 
Business Investment Act of 1958),''.

SEC. 803. FEDERAL SAVINGS ASSOCIATIONS.

    Section 5(c)(4) of the Home Owners' Loan Act (12 U.S.C. 1464(c)(4)) 
is amended by adding at the end the following:
                    ``(F) New markets venture capital companies.--A 
                Federal savings association may invest in stock, 
                obligations, or other securities of any new markets 
                venture capital company (as defined in section 351 of 
                the Small Business Investment Act of 1958). A Federal 
                savings association may not make any investment under 
                this subparagraph if its aggregate outstanding 
                investment under this subparagraph would exceed 5 
                percent of the capital and surplus of such savings 
                association.''.

      Subtitle B--Community Development Venture Capital Assistance

SEC. 811. FINDINGS.

    Congress finds that--
            (1) there is a need for the development and expansion of 
        organizations that provide private equity capital to smaller 
        businesses in areas in which equity-type capital is scarce, 
        such as inner cities and rural areas, in order to create and 
        retain jobs for low-income residents of those areas;
            (2) to invest successfully in smaller businesses, 
        particularly in inner cities and rural areas, requires highly 
        specialized investment and management skills;
            (3) there is a shortage of professionals who possess such 
        skills and there are few training grounds for individuals to 
        obtain those skills;
            (4) providing assistance to organizations that provide 
        specialized technical assistance and training to individuals 
        and organizations seeking to enter or expand in this segment of 
        the market would stimulate small business development and 
        entrepreneurship in economically distressed communities; and
            (5) assistance from the Federal Government could act as a 
        catalyst to attract investment from the private sector and 
        would help to develop a specialized venture capital industry 
        focused on creating jobs, increasing business ownership, and 
        generating wealth in low-income communities.

SEC. 812. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.

    (a) In General.--The Small Business Act (15 U.S.C. 631 et seq.) is 
amended--
            (1) by redesignating section 34 as section 35; and
            (2) by inserting after section 33 the following:

``SEC. 34. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.

    ``(a) Definitions.--In this section:
            ``(1) Community development venture capital organization.--
        The term `community development venture capital organization' 
        means a privately-controlled organization that--
                    ``(A) has a primary mission of promoting community 
                development in low-income communities, as defined by 
                the Administrator, through investment in private 
                business enterprises; or
                    ``(B) administers or is in the process of 
                establishing a community development venture capital 
                fund for the purpose of making equity investments in 
                private business enterprises in such communities.
            ``(2) Developmental organization.--The term `developmental 
        organization'--
                    ``(A) means a public or private entity, including a 
                college or university, that provides technical 
                assistance to community development venture capital 
                organizations or that conducts research or training in 
                community development venture capital investment; and
                    ``(B) may include an intermediary organization.
            ``(3) Intermediary organization.--The term `intermediary 
        organization'--
                    ``(A) means a private, nonprofit entity that has--
                            ``(i) a primary mission of promoting 
                        community development through investment in 
                        private businesses in low-income communities; 
                        and
                            ``(ii) significant prior experience in 
                        providing technical assistance or financial 
                        assistance to community development venture 
                        capital organizations;
                    ``(B) may include community development venture 
                capital organizations.
    ``(b) Authority.--In order to promote the development of community 
development venture capital organizations, the Administrator, may--
            ``(1) enter into contracts with 1 or more developmental 
        organizations to carry out training and research activities 
        under subsection (c); and
            ``(2) make grants in accordance with this section--
                    ``(A) to developmental organizations to carry out 
                training and research activities under subsection (c); 
                and
                    ``(B) to intermediary organizations to provide 
                intensive marketing, management, and technical 
                assistance and training to community development 
                venture capital organizations under subsection (d).
    ``(c) Training and Research Activities.--
            ``(1) In general.--Subject to paragraph (2), a 
        developmental organization that receives a grant under 
        subsection (b) shall use the funds made available through the 
        grant for 1 or more of the following training and research 
        activities:
                    ``(A) Strengthening professional skills.--Creating 
                and operating training programs to enhance the 
                professional skills for individuals in community 
                development venture capital organizations or operating 
                private community development venture capital funds.
                    ``(B) Increasing interest in community development 
                venture capital.--Creating and operating a program to 
                select and place students and recent graduates from 
                business and related professional schools as interns 
                with community development venture capital 
                organizations and intermediary organizations for a 
                period of up to 1 year, and to provide stipends for 
                such interns during the internship period.
                    ``(C) Promoting `best practices'.--Organizing an 
                annual national conference for community development 
                venture capital organizations to discuss and share 
                information on the best practices regarding issues 
                relevant to the creation and operation of community 
                development venture capital organizations.
                    ``(D) Mobilizing academic resources.--Encouraging 
                the formation of 1 or more centers for the study of 
                community development venture capital at graduate 
                schools of business and management, providing funding 
                for the development of materials for courses on topics 
                in this area, and providing funding for research on 
                economic, operational, and policy issues relating to 
                community development venture capital.
            ``(2) Limitation.--The Administrator shall ensure that not 
        more than 25 percent of the amount made available to carry out 
        this section is used for activities described in paragraph (1).
    ``(d) Intensive Marketing, Management, and Technical Assistance and 
Training.--An intermediary organization that receives a grant under 
subsection (b) shall use the funds made available through the grant to 
provide intensive marketing, management, and technical assistance and 
training to promote the development of community development venture 
capital organizations, which assistance may include grants to community 
development venture capital organizations for the start up costs and 
operating support of those organizations.
    ``(e) Matching Contribution Requirement.--The Administrator shall 
require, as a condition of any grant made to an intermediary 
organization under this section, that a matching contribution equal to 
the amount of such grant be provided from sources other than the 
Federal Government.
    ``(f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $20,000,000 for fiscal years 
2000 through 2003, to remain available until expended.''.
    (b) Requirements.--The Administrator of the Small Business 
Administration may promulgate such regulations as may be necessary to 
carry out section 34 of the Small Business Act, as amended by this 
section, which regulations may take effect upon issuance.

                       Subtitle C--Business LINC

SEC. 821. GRANTS AUTHORIZED.

    Section 8 of the Small Business Act (15 U.S.C. 637) is amended by 
adding at the end the following:
    ``(m) Business LINC Grants.--
            ``(1) In general.--The Administrator may make grants to and 
        enter into cooperative agreements with any coalition of private 
        or public sector participants that--
                    ``(A) expand business-to-business relationships 
                between large and small businesses; and
                    ``(B) provide businesses, directly or indirectly, 
                with online information and a database of companies 
                that are interested in mentor-protegee programs or 
                community-based, state-wide, or local business 
                development programs.
            ``(2) Matching requirements.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Administrator may make grants to and enter into 
                cooperative agreements with any coalition of private or 
                public sector participants if the coalition provides a 
                matching amount, either in-kind or in cash, equal to 
                the grant amount.
                    ``(B) Waiver.--In the best interests of the 
                program, the Administrator may waive the requirements 
                for matching funds to be provided by the coalition.
            ``(3) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $6,600,000 for 
        each of fiscal years 2000 through 2003, to remain available 
        until expended.''.

SEC. 822. REGULATIONS.

    The Administrator of the Small Business Administration may 
promulgate such regulations as the Administration determines to be 
necessary to carry out this title and the amendment made by this title.

   TITLE IX--BOND VOLUME CAP AND LOW-INCOME HOUSING CREDIT INCREASES

SEC. 901. INCREASE IN STATE CEILING ON PRIVATE ACTIVITY BONDS.

    (a) In General.--Paragraphs (1) and (2) of section 146(d) (relating 
to State ceiling) are amended to read as follows:
            ``(1) In general.--The State ceiling applicable to any 
        State for any calendar year shall be the greater of--
                    ``(A) an amount equal to $75 multiplied by the 
                State population, or
                    ``(B) $225,000,000.
        Subparagraph (B) shall not apply to any possession of the 
        United States.
            ``(2) Inflation adjustment.--In the case of a calendar year 
        after 2001, each of the dollar amounts contained in paragraph 
(1) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 2000' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any increase determined under the preceding sentence is not 
        a multiple of $1 ($250 in the case of the dollar amount in 
        paragraph (1)(B), such increase shall be rounded to the nearest 
        multiple thereof.''
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years after 2000.

SEC. 902. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING CREDIT.

    (a) In General.--Clause (i) of section 42(h)(3)(C) (relating to 
State housing credit ceiling) is amended by striking ``$1.25'' and 
inserting ``$1.75''.
    (b) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) (relating to housing credit dollar 
amount for agencies) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2001, the dollar amount 
                        contained in subparagraph (C)(i) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 2000' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If any increase under 
                        clause (i) is not a multiple of 5 cents, such 
                        increase shall be rounded to the next lowest 
                        multiple of 5 cents.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years after 2000.

                TITLE X--INDIVIDUAL DEVELOPMENT ACCOUNTS

SEC. 1001. FINDINGS.

    Congress makes the following findings:
            (1) One-third of all Americans have no assets available for 
        investment, and another 20 percent have only negligible assets. 
        The household savings rate of the United States lags far behind 
        other industrial nations, presenting a barrier to national 
        economic growth and preventing many Americans from entering the 
        economic mainstream by buying a house, obtaining an adequate 
        education, or starting a business.
            (2) By building assets, Americans can improve their 
        economic independence and stability, stimulate the development 
        of human and other capital, and work toward a viable and 
        hopeful future for themselves and their children. Thus, 
        economic well-being does not come solely from income, spending, 
        and consumption, but also requires savings, investment, and 
        accumulation of assets.
            (3) Traditional public assistance programs based on income 
        and consumption have rarely been successful in promoting and 
        supporting the transition to increased economic self-
        sufficiency. Income-based social policies that meet consumption 
        needs (including food, child care, rent, clothing, and health 
        care) should be complemented by asset-based policies that can 
        provide the means to achieve long-term independence and 
        economic well-being.
            (4) Individual Development Accounts (IDAs) can provide 
        working Americans with strong incentives to build assets, basic 
        financial management training, and access to secure and 
        relatively inexpensive banking services.
            (5) There is reason to believe that Individual Development 
        Accounts would also foster greater participation in electric 
        fund transfers (EFT), generate financial returns, including 
        increased income, tax revenue, and decreased welfare cash 
        assistance, that will far exceed the cost of public investment 
        in the program.

SEC. 1002. PURPOSES.

    The purposes of this title are to provide for the establishment of 
individual development account programs that will--
            (1) provide individuals and families with limited means an 
        opportunity to accumulate assets and to enter the financial 
        mainstream;
            (2) promote education, homeownership, and the development 
        of small businesses;
            (3) stabilize families and build communities; and
            (4) support continued United States economic expansion.

SEC. 1003. DEFINITIONS.

    As used in this title:
            (1) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means an individual who--
                            (i) has attained the age of 18 years;
                            (ii) is a citizen or legal resident of the 
                        United States; and
                            (iii) is a member of a household the gross 
                        income of which does not exceed 80 percent of 
                        the median family income for the area in which 
                        such individual resides (as published by the 
                        Department of Housing and Urban Affairs).
                    (B) Household.--The term ``household'' means all 
                individuals who share use of a dwelling unit as primary 
                quarters for living and eating separate from other 
                individuals.
            (2) Individual development account.--The term ``Individual 
        Development Account'' means an account established for an 
        eligible individual as part of a qualified individual 
        development account program, but only if the written governing 
        instrument creating the account meets the following 
        requirements:
                    (A) The sole owner of the account is the eligible 
                individual.
                    (B) No contribution will be accepted unless it is 
                in cash, by check, by electronic fund transfer, or by 
                electronic money order.
                    (C) The holder of the account is a qualified 
                financial institution, a qualified nonprofit 
                organization, or an Indian tribe.
                    (D) The assets of the account will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    (E) Except as provided in section 1015(b), any 
                amount in the account may be paid out only for the 
                purpose of paying the qualified expenses of the 
                eligible individual.
            (3) Parallel account.--The term ``parallel account'' means 
        a separate, parallel individual or pooled account for all 
        matching funds and earnings dedicated to an eligible individual 
        as part of a qualified individual account program, the sole 
        owner of which is a qualified financial institution, a 
        qualified nonprofit organization, or an Indian tribe.
            (4) Qualified financial institution.--
                    (A) In general.--The term ``qualified financial 
                institution'' means any person authorized to be a 
                trustee of any individual retirement account under 
                section 408(a)(2).
                    (B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a person 
                described in subparagraph (A) from collaborating with 1 
                or more qualified nonprofit organizations or Indian 
                tribes to carry out an individual development account 
                program established under section 1011.
            (5) Qualified nonprofit organization.--The term ``qualified 
        nonprofit organization'' means--
                    (A)(i) any organization described in section 
                501(c)(3) of the Internal Revenue Code of 1986 and 
                exempt from taxation under section 501(a) of such Code;
                    (ii) any community development financial 
                institution as certified by the Community Development 
                Financial Institution Fund; or
                    (iii) any credit union certified by the National 
                Credit Union Administration,
        that meets standards for financial management and fiduciary 
        responsibility as defined by the Secretary or an organization 
        designated by the Secretary.
            (6) Indian tribe.--The term ``Indian tribe'' means any 
        Indian tribe as defined in section 4(12) of the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4103(12), and includes any tribal subsidiary, 
        subdivision, or other wholly owned tribal entity.
            (7) Qualified individual development account program.--The 
        term ``qualified individual development program'' means a 
        program established under section 1011 under which--
                    (A) individual development accounts and parallel 
                accounts are held by a qualified financial institution, 
                a qualified nonprofit organization, or an Indian tribe; 
                and
                    (B) additional activities determined by the 
                Secretary, or an organization designated by the 
                Secretary, as necessary to responsibly develop and 
                administer accounts, including recruiting, providing 
                financial education and other training to account 
                holders, and regular program monitoring, are carried 
                out by such qualified financial institution, qualified 
                nonprofit organization, or Indian tribe.
            (8) Qualified expense distribution.--
                    (A) In general.--The term ``qualified expense 
                distribution'' means any amount paid (including through 
                electronic payments) or distributed out of an 
                Individual Development Account and a parallel account 
                established for an eligible individual if such amount--
                            (i) is used exclusively to pay the 
                        qualified expenses of such individual or such 
                        individual's spouse or dependents,
                            (ii) is paid by the qualified financial 
                        institution, qualified nonprofit organization, 
                        or Indian tribe directly to the person to whom 
                        the amount is due or to another Individual 
                        Development Account, and
                            (iii) is paid after the holder of the 
                        Individual Development Account has completed a 
                        financial education course as required under 
                        section 1012(b).
                    (B) Qualified expenses.--
                            (i) In general.--The term ``qualified 
                        expenses'' means any of the following:
                                    (I) Qualified higher education 
                                expenses.
                                    (II) Qualified first-time homebuyer 
                                costs.
                                    (III) Qualified business 
                                capitalization or expansion costs.
                                    (IV) Qualified rollovers.
                            (ii) Qualified higher education expenses.--
                                    (I) In general.--The term 
                                ``qualified higher education expenses'' 
                                has the meaning given such term by 
                                section 72(t)(7) of the Internal 
                                Revenue Code of 1986, determined by 
                                treating postsecondary vocational 
                                educational schools as eligible 
                                educational institutions.
                                    (II) Postsecondary vocational 
                                education school.--The term 
                                ``postsecondary vocational educational 
                                school'' means an area vocational 
                                education school (as defined in 
                                subparagraph (C) or (D) of section 
                                521(4) of the Carl D. Perkins 
                                Vocational and Applied Technology 
                                Education Act (20 U.S.C. 2471(4))) 
                                which is in any State (as defined 
in section 521(33) of such Act), as such sections are in effect on the 
date of enactment of this Act.
                                    (III) Coordination with other 
                                benefits.--The amount of qualified 
                                higher education expenses for any 
                                taxable year shall be reduced as 
                                provided in section 25A(g)(2) of such 
                                Code and by the amount of such expenses 
                                for which a credit or exclusion is 
                                allowed under chapter 1 of such Code 
                                for such taxable year.
                            (iii) Qualified first-time homebuyer 
                        costs.--The term ``qualified first-time 
                        homebuyer costs'' means qualified acquisition 
                        costs (as defined in section 72(t)(8) of such 
                        Code without regard to subparagraph (B) 
                        thereof) with respect to a principal residence 
                        (within the meaning of section 121 of such 
                        Code) for a qualified first-time homebuyer (as 
                        defined in section 72(t)(8) of such Code).
                            (iv) Qualified business capitalization or 
                        expansion costs.--
                                    (I) In general.--The term 
                                ``qualified business capitalization or 
                                expansion costs'' means qualified 
                                expenditures for the capitalization or 
                                expansion of a qualified business 
                                pursuant to a qualified business plan.
                                    (II) Qualified expenditures.--The 
                                term ``qualified expenditures'' means 
                                expenditures included in a qualified 
                                business plan, including capital, 
                                plant, equipment, working capital, 
                                inventory expenses, attorney and 
                                accounting fees, and other costs 
                                normally associated with starting or 
                                expanding a business.
                                    (III) Qualified business.--The term 
                                ``qualified business'' means any 
                                business that does not contravene any 
                                law.
                                    (IV) Qualified business plan.--The 
                                term ``qualified business plan'' means 
                                a business plan which meets such 
                                requirements as the Secretary or an 
                                organization designated by the 
                                Secretary may specify.
                            (v) Qualified rollovers.--The term 
                        ``qualified rollover'' means, with respect to 
                        any distribution from an Individual Development 
                        Account, the payment, within 120 days of such 
                        distribution, of all or a portion of such 
                        distribution to such account or to another 
                        Individual Development Account established in 
                        another qualified financial institution, 
                        qualified nonprofit organization, or Indian 
                        tribe for the benefit of the eligible 
                        individual. Rules similar to the rules of 
                        section 408(d)(3) of such Code (other than 
                        subparagraph (C) thereof) shall apply for 
                        purposes of this clause.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

   Subtitle A--Individual Development Accounts for Low-Income Workers

SEC. 1011. STRUCTURE AND ADMINISTRATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Establishment of Qualified Individual Development Account 
Programs.--Any qualified financial institution, qualified nonprofit 
organization, or Indian tribe may establish 1 or more qualified 
individual development account programs which meet the requirements of 
this title.
    (b) Basic Program Structure.--
            (1) In general.--All qualified individual development 
        account programs shall consist of the following 2 components:
                    (A) An Individual Development Account to which an 
                eligible individual may contribute money in accordance 
                with section 1013.
                    (B) A parallel account to which all matching funds 
                shall be deposited in accordance with section 1014.
            (2) Tailored ida programs.--A qualified financial 
        institution, qualified nonprofit organization, or Indian tribe 
        may tailor its qualified individual development account program 
        to allow matching funds to be spent on 1 or more of the 
        categories of qualified expenses.
    (c) Account Population Distribution Requirement.--An individual 
development account program shall be treated as qualified under this 
title only if not less than one third of the Individual Development 
Accounts under such program are owned by eligible individuals each of 
whom is a member of a household the gross income of which does not 
exceed 50 percent of the median family income for the area in which 
such individuals reside (as published by the Department of Housing and 
Urban Affairs).
    (d) Tax Treatment of Accounts.--Any account described in 
subparagraph (B) of subsection (b)(1) is exempt from taxation under the 
Internal Revenue Code of 1986 unless such account has ceased to be such 
an account by reason of section 1015(c) or the termination of the 
qualified individual development account program under section 1016(b).

SEC. 1012. PROCEDURES FOR OPENING AN INDIVIDUAL DEVELOPMENT ACCOUNT AND 
              QUALIFYING FOR MATCHING FUNDS.

    (a) Opening an Account.--An eligible individual must open an 
Individual Development Account with a qualified financial institution, 
qualified nonprofit organization, or Indian tribe and contribute money 
in accordance with section 1013 to qualify for matching funds in a 
parallel account.
    (b) Required Completion of Financial Education Course.--
            (1) In general.--Before becoming eligible to withdraw 
        matching funds to pay for qualified expenses, holders of 
        Individual Development Accounts must complete a financial 
        education course offered by a qualified financial institution, 
        a qualified nonprofit organization, an Indian tribe, or a 
        government entity.
            (2) Standard and applicability of course.--The Secretary or 
        an organization designated by the Secretary, in consultation 
        with representatives of qualified individual development 
        account programs and financial educators, shall establish 
        minimum performance standards for financial education courses 
        offered under paragraph (1) and a protocol to exempt eligible 
        individuals from the requirement under paragraph (1) because of 
        hardship or lack of need.

SEC. 1013. CONTRIBUTIONS TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

    (a) In General.--Except in the case of a qualified rollover, 
individual contributions to an Individual Development Account will not 
be accepted for the taxable year in excess of the lesser of--
            (1) $2,000; or
            (2) an amount equal to the sum of--
                    (A) the compensation (as defined in section 
                219(f)(1) of the Internal Revenue Code of 1986) 
includible in the individual's gross income for such taxable year; and
                    (B) in the case of an eligible individual who has 
                attained age 65 or retired on disability (within the 
                meaning of section 22 of the Internal Revenue Code of 
                1986) before the close of the taxable year, any amount 
                received as a pension or annuity or as a disability 
                benefit and excluded from the individual's gross income 
                for such taxable year.
    (b) Proof of Compensation and Status as an Eligible Individual.--
Federal W-2 forms and other forms specified by the Secretary proving 
the eligible individual's wages and other compensation (including 
amounts described in subsection (a)(2)(B)) and the status of the 
individual as an eligible individual shall be presented at the time of 
the establishment of the Individual Development Account and at least 
once annually thereafter.
    (c) Time When Contributions Deemed Made.--For purposes of this 
section, a taxpayer shall be deemed to have made a contribution to an 
Individual Development Account on the last day of the preceding taxable 
year if the contribution is made on account of such taxable year and is 
made not later than the time prescribed by law for filing the Federal 
income tax return for such taxable year (not including extensions 
thereof).
    (d) Deemed Withdrawals of Excess Contributions.--If the individual 
for whose benefit an Individual Development Account is established 
contributes an amount in excess of the amount allowed under subsection 
(a) and fails to withdraw the excess contribution plus the amount of 
net income attributable to such excess contribution on or before the 
day prescribed by law (including extensions of time) for filing such 
individual's return of tax for the taxable year, such excess 
contribution and net income shall be deemed to have been withdrawn on 
such day by such individual for purposes other than to pay qualified 
expenses.
    (e) Cross Reference.--

                                For designation of earned income tax 
credit payments for deposit to an Individual Development Account, see 
section 32(o) of the Internal Revenue Code of 1986.

SEC. 1014. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT 
              PROGRAMS.

    (a) Parallel Accounts.--The qualified financial institution, 
qualified nonprofit organization, or Indian tribe shall deposit all 
matching funds for each Individual Development Account into a parallel 
account at a qualified financial institution, qualified nonprofit 
organization, or Indian tribe.
    (b) Regular Deposits of Matching Funds.--
            (1) In general.--Subject to paragraph (2), the qualified 
        financial institution, qualified nonprofit organization, or 
        Indian tribe shall not less than annually deposit into the 
        parallel account with respect to each eligible individual the 
        following:
                    (A) A dollar-for-dollar match for the first $500 
                contributed by the eligible individual into an 
                Individual Development Account with respect to any 
                taxable year.
                    (B) Any matching funds provided by State, local, or 
                private sources in accordance to the matching ratio set 
                by those sources.
            (2) Cross reference.--

                                For allowance of tax credit for 
Individual Development Account subsidies, including matching funds, see 
section 30B of the Internal Revenue Code of 1986.
    (c) Forfeiture of Matching Funds.--Matching funds that are 
forfeited under section 1015(b) shall be used by the qualified 
financial institution, qualified nonprofit organization, or Indian 
tribe to pay matches for other Individual Development Account 
contributions by eligible individuals.
    (d) Uniform Accounting Regulations.--The Secretary shall prescribe 
regulations with respect to accounting for matching funds from all 
possible sources in the parallel accounts.
    (e) Regular Reporting of Accounts.--Any qualified financial 
institution, qualified nonprofit organization, or Indian tribe shall 
report the balances in any Individual Development Account and parallel 
account of an eligible individual on not less than an annual basis.

SEC. 1015. WITHDRAWAL PROCEDURES.

    (a) Withdrawals for Qualified Expenses.--To withdraw money from an 
eligible individual's Individual Development Account to pay qualified 
expenses of such individual or such individual's spouse or dependents, 
the qualified financial institution, qualified nonprofit organization, 
or Indian tribe shall directly transfer such funds from the Individual 
Development Account, and, if applicable, from the parallel account 
electronically to the vendor or other Individual Development Account. 
If the vendor is not equipped to receive funds electronically, the 
qualified financial institution, qualified nonprofit organization, or 
Indian tribe may issue such funds by paper check to the vendor.
    (b) Withdrawals for Nonqualified Expenses.--An Individual 
Development Account holder may unilaterally withdraw funds from the 
Individual Development Account for purposes other than to pay qualified 
expenses, but shall forfeit the corresponding matching funds and 
interest earned on the matching funds by doing so, unless such 
withdrawn funds are recontributed to such Account by September 30 
following the withdrawal.
    (c) Deemed Withdrawals From Accounts of Noneligible Individuals.--
If the individual for whose benefit an Individual Development Account 
is established ceases to be an eligible individual, such account shall 
cease to be an Individual Development Account as of the first day of 
the taxable year of such individual and any balance in such account 
shall be deemed to have been withdrawn on such first day by such 
individual for purposes other than to pay qualified expenses.
    (d) Tax Treatment of Matching Funds.--Any amount withdrawn from a 
parallel account shall not be includible in an eligible individual's 
gross income.

SEC. 1016. CERTIFICATION AND TERMINATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Certification Procedures.--Upon establishing a qualified 
individual development account program under section 1011, a qualified 
financial institution, qualified nonprofit organization, or Indian 
tribe shall certify to the Secretary, or an organization designated by 
the Secretary, on forms prescribed by the Secretary or 
such organization and accompanied by any documentation required by the 
Secretary or such organization, that--
            (1) the accounts described in subparagraphs (A) and (B) of 
        section 1011(b)(1) are operating pursuant to all the provisions 
        of this title; and
            (2) the qualified financial institution, qualified 
        nonprofit organization, or Indian tribe agrees to implement an 
        information system necessary to monitor the cost and outcomes 
        of the qualified individual development account program.
    (b) Authority To Terminate Qualified IDA Program.--If the 
Secretary, or an organization designated by the Secretary, determines 
that a qualified financial institution, qualified nonprofit 
organization, or Indian tribe under this title is not operating a 
qualified individual development account program in accordance with the 
requirements of this title (and has not implemented any corrective 
recommendations directed by the Secretary or such organization), the 
Secretary or such organization shall terminate such institution's, 
nonprofit organization's, or Indian tribe's authority to conduct the 
program. If the Secretary, or an organization designated by the 
Secretary, is unable to identify a qualified financial institution, 
qualified nonprofit organization, or Indian tribe to assume the 
authority to conduct such program, then any account established for the 
benefit of any eligible individual under such program shall cease to be 
an Individual Development Account as of the first day of such 
termination and any balance in such account shall be deemed to have 
been withdrawn on such first day by such individual for purposes other 
than to pay qualified expenses.

SEC. 1017. REPORTING, MONITORING, AND EVALUATION.

    (a) Responsibilities of Qualified Financial Institutions, Qualified 
Nonprofit Organizations, and Indian Tribes.--Each qualified financial 
institution, qualified nonprofit organization, or Indian tribe that 
establishes a qualified individual development account program under 
section 1011 shall report annually to the Secretary, directly or 
through an organization designated by the Secretary, within 90 days 
after the end of each calendar year on--
            (1) the number of eligible individuals making contributions 
        into Individual Development Accounts;
            (2) the amounts contributed into Individual Development 
        Accounts and deposited into parallel accounts for matching 
        funds;
            (3) the amounts withdrawn from Individual Development 
        Accounts and parallel accounts, and the purposes for which such 
        amounts were withdrawn;
            (4) the balances remaining in Individual Development 
        Accounts and parallel accounts; and
            (5) such other information needed to help the Secretary, or 
        an organization designated by the Secretary, monitor the cost 
        and outcomes of the qualified individual development account 
        program.
    (b) Responsibilities of the Secretary or Designated Organization.--
            (1) Monitoring protocol.--Not later than 12 months after 
        the date of enactment of this Act, the Secretary, or an 
        organization designated by the Secretary, shall develop and 
        implement a protocol and process to monitor the cost and 
        outcomes of the qualified individual development account 
        programs established under section 1011.
            (2) Annual reports.--In each year after the date of 
        enactment of this Act, the Secretary, or an organization 
        designated by the Secretary, shall issue a progress report on 
        the status of such qualified individual development account 
        programs. Such report shall include from a representative 
        sample of qualified financial institutions, qualified nonprofit 
        organizations, and Indian tribes a report on--
                    (A) the characteristics of participants, including 
                age, gender, race or ethnicity, marital status, number 
                of children, employment status, and monthly income;
                    (B) individual level data on deposits, withdrawals, 
                balances, uses of Individual Development Accounts, and 
                participant characteristics;
                    (C) the characteristics of qualified individual 
                development account programs, including match rate, 
                economic education requirements, permissible uses of 
                accounts, staffing of programs in full time employees, 
                and the total costs of programs; and
                    (D) process information on program implementation 
                and administration, especially on problems encountered 
                and how problems were solved.
            (3) Appropriations for monitoring.--There is authorized to 
        be appropriated $5,000,000 for the purposes of monitoring 
        qualified individual development account programs established 
        under section 1011, to remain available until expended.

SEC. 1018. CERTAIN ACCOUNT FUNDS OF PROGRAM PARTICIPANTS DISREGARDED 
              FOR PURPOSES OF CERTAIN MEANS-TESTED FEDERAL PROGRAMS.

    Notwithstanding any provision of the Internal Revenue Code of 1986 
or the Social Security Act that requires consideration of 1 or more 
financial circumstances of an individual, for the purposes of 
determining eligibility to receive, or the amount of, any assistance or 
benefit authorized by such provision to be provided to or for the 
benefit of such individual, the sum of--
            (1) the lesser of--
                    (A) the sum of all contributions by an eligible 
                individual (including earnings thereon) to any 
                Individual Development Account; or
                    (B) $10,000; plus
            (2) the sum of the matching deposits made on behalf of such 
        individual (including earnings thereon) in any parallel 
        account,
shall be disregarded for such purpose with respect to any period during 
which the individual participates in a qualified individual development 
account program established under section 1011.

Subtitle B--Qualified Individual Development Account Program Investment 
                                Credits

SEC. 1021. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT 
              CREDITS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to other credits) is amended by inserting after section 30A 
the following:

``SEC. 30B. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT 
              CREDIT.

    ``(a) Determination of Amount.--There shall be allowed as a credit 
against the applicable tax for the taxable year an amount equal to the 
qualified individual development account program investment provided by 
a taxpayer during the taxable year under a qualified individual 
development account program established under section 1011 of the 
American Community Renewal and New Markets Empowerment Act.
    ``(b) Applicable Tax.--For the purposes of this section, the term 
`applicable tax' means the excess (if any) of--
            ``(1) the tax imposed under this chapter (other than the 
        taxes imposed under the provisions described in subparagraphs 
        (C) through (Q) of section 26(b)(2)), over
            ``(2) the credits allowable under subpart B (other than 
        this section) and subpart D of this part.
    ``(c) Qualified Individual Development Account Program 
Investment.--For purposes of this section, the term `qualified 
individual development account program investment' means an amount 
equal to--
            ``(1) in the case of a taxpayer which is a qualified 
        financial institution, the sum of--
                    ``(A) the lesser of--
                            ``(i) 90 percent of the aggregate amount of 
                        dollar-for-dollar matches under any qualified 
                        individual development account program by such 
                        taxpayer under section 1014 of the American 
                        Community Renewal and New Markets Empowerment 
                        Act for such taxable year, or
                            ``(ii) $90,000,000, plus
                    ``(B) the lesser of--
                            ``(i) 50 percent of the aggregate costs 
                        paid or incurred under such program by the 
                        taxpayer during such taxable year--
                                    ``(I) to provide financial 
                                education courses to Individual 
                                Development Account holders under 
                                section 1012(b) of such Act, and
                                    ``(II) to underwrite program 
                                activities described in section 
                                503(6)(B) of such Act), or
                            ``(ii) $1,500,000, and
            ``(2) in the case of a taxpayer which is not a qualified 
        financial institution and which meets the requirement described 
        in paragraph (2) of subsection (d), the lesser of--
                    ``(A) the sum of--
                            ``(i) 50 percent of the aggregate amount of 
                        such dollar-for-dollar matches by such taxpayer 
                        for such taxable year, plus
                            ``(ii) 50 percent of the aggregate costs 
                        described in paragraph (1)(B)(i) paid under 
                        such program by the taxpayer during such 
                        taxable year, or
                    ``(B) $5,000,000.
    ``(d) Definitions and Special Rules.--
            ``(1) In general.--For purposes of this section, the terms 
        `Individual Development Account' , `qualified individual 
        development account program', and `qualified financial 
        institution' have the meanings given such terms by section 1003 
        of the American Community Renewal and New Markets Empowerment 
        Act.
            ``(2) Requirement for taxpayers which are not qualified 
        financial institutions.--The requirement described in this 
        paragraph with respect to any taxpayer which is not a qualified 
        financial institution is the requirement that at least 70 
        percent of the expenditures by such taxpayer with respect to 
        any qualified individual development account program for any 
        taxable year are described in subsection (c)(2)(A).
            ``(3) Certain rules made applicable.--Rules similar to the 
        rules of paragraphs (1) and (2) of section 41(f) shall apply 
        for purposes of this section.
            ``(4) Denial of Double Benefit.--No deduction or credit 
        under any other provision of this chapter shall be allowed with 
        respect to qualified individual development account program 
        investments taken into account under subsection (a).
    ``(e) Regulations.--The Secretary may prescribe such regulations as 
may be necessary or appropriate to carry out this section, including 
regulations providing for a reduction of the credit allowed under this 
section for any taxable year by the amount of any forfeiture under 
section 1015(b) of the American Community Renewal and New Markets 
Empowerment Act in such taxable year of any amount which was taken into 
account in determining the amount of such credit in a preceding taxable 
year.
    ``(f) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2006.''.
    (b) Conforming Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 30A the following:

``Sec. 30B. Qualified individual development account program investment 
                            credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 1022. CRA CREDIT TREATMENT FOR QUALIFIED INDIVIDUAL DEVELOPMENT 
              ACCOUNT PROGRAM INVESTMENTS.

    Qualified financial institutions which establish qualified 
individual development account programs under section 1011 shall not 
receive credit for funding, administration, and education expenses 
under any test contained in regulations for the Community Reinvestment 
Act of 1977 for those activities and expenses related to such programs 
and taken into account for purposes of the tax credit allowed under 
section 30B of the Internal Revenue Code of 1986.

SEC. 1023. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR DEPOSIT 
              TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

    (a) In General.--Section 32 (relating to earned income credit) is 
amended by adding at the end the following:
    ``(o) Designation of Credit for Deposit to Individual Development 
Account.--
            ``(1) In general.--With respect to the return of any 
        eligible individual (as defined in section 1003(1) of the 
        American Community Renewal and New Markets Empowerment Act) for 
        the taxable year of the tax imposed by this chapter, such 
        individual may designate that a specified portion (not less 
        than $1) of any overpayment of tax for such taxable year which 
        is attributable to the credit allowed under this section shall 
        be deposited by the Secretary into an Individual Development 
        Account (as defined in section 1003(2) of such Act) of such 
        individual. The Secretary shall so deposit such portion 
        designated under this paragraph.
            ``(2) Manner and time of designation.--A designation under 
        paragraph (1) may be made with respect to any taxable year--
                    ``(A) at the time of filing the return of the tax 
                imposed by this chapter for such taxable year, or
                    ``(B) at any other time (after the time of filing 
                the return of the tax imposed by this chapter for such 
                taxable year) specified in regulations prescribed by 
                the Secretary.
        Such designation shall be made in such manner as the Secretary 
        prescribes by regulations.
            ``(3) Portion attributable to earned income tax credit.--
        For purposes of paragraph (1), an overpayment for any taxable 
        year shall be treated as attributable to the credit allowed 
        under this section for such taxable year to the extent that 
        such overpayment does not exceed the credit so allowed.
            ``(4) Overpayments treated as refunded.--For purposes of 
        this title, any portion of an overpayment of tax designated 
        under paragraph (1) shall be treated as being refunded to the 
        taxpayer as of the last date prescribed for filing the return 
        of tax imposed by this chapter (determined without regard to 
        extensions) or, if later, the date the return is filed.
            ``(5) Termination.--This subsection shall not apply to any 
        taxable year beginning after December 31, 2006.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2001.

                 TITLE XI--CHARITABLE CHOICE EXPANSION

SEC. 1101. PROVISION OF ASSISTANCE UNDER GOVERNMENT PROGRAMS BY 
              RELIGIOUS ORGANIZATIONS.

    Title XXIV of the Revised Statutes is amended by inserting after 
section 1990 (42 U.S.C. 1994) the following:

``SEC. 1994A. CHARITABLE CHOICE.

    ``(a) Short Title.--This section may be cited as the `Charitable 
Choice Expansion Act of 2000'.
    ``(b) Purpose.--The purposes of this section are--
            ``(1) to prohibit discrimination against nongovernmental 
        organizations and certain individuals on the basis of religion 
        in the distribution of government funds to provide government 
        assistance and distribution of such assistance, under 
        government programs described in subsection (c); and
            ``(2) to allow such organizations to accept such funds to 
        provide such assistance to such individuals without impairing 
        the religious character of such organizations or the religious 
        freedom of such individuals.
    ``(c) Religious Organizations Included as Nongovernmental 
Providers.--For any program carried out by the Federal Government, or 
by a State or local government with Federal funds, in which the 
Federal, State, or local government is authorized to use 
nongovernmental organizations, through contracts, grants, certificates, 
vouchers, or other forms of disbursement, to provide assistance to 
beneficiaries under the program, the government shall consider, on the 
same basis as other nongovernmental organizations, religious 
organizations to provide the assistance under the program, so long as 
the program is implemented in a manner consistent with the 
Establishment Clause of the first amendment to the Constitution. 
Neither the Federal Government nor a State or local government 
receiving funds under such program shall discriminate against an 
organization that provides assistance under, or applies to provide 
assistance under, such program, on the basis that the organization has 
a religious character.
    ``(d) Exclusions.--As used in subsection (c), the term `program' 
does not include activities carried out under--
            ``(1) Federal programs providing education to children 
        eligible to attend elementary schools or secondary schools, as 
        defined in section 14101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 8801) (except for activities 
        to assist students in obtaining the recognized equivalents of 
        secondary school diplomas);
            ``(2) the Higher Education Act of 1965 (20 U.S.C. 1001 et 
        seq.);
            ``(3) the Head Start Act (42 U.S.C. 9831 et seq.); or
            ``(4) the Child Care and Development Block Grant Act of 
        1990 (42 U.S.C. 9858 et seq.).
    ``(e) Religious Character and Independence.--
            ``(1) In general.--A religious organization that provides 
        assistance under a program described in subsection (c) shall 
        retain its independence from Federal, State, and local 
        governments, including such organization's control over the 
        definition, development, practice, and expression of its 
        religious beliefs.
            ``(2) Additional safeguards.--Neither the Federal 
        Government nor a State or local government shall require a 
        religious organization--
                    ``(A) to alter its form of internal governance; or
                    ``(B) to remove religious art, icons, scripture, or 
                other symbols;
        in order to be eligible to provide assistance under a program 
        described in subsection (c).
    ``(f) Employment Practices.--
            ``(1) Tenets and teachings.--A religious organization that 
        provides assistance under a program described in subsection (c) 
        may require that its employees providing assistance under such 
        program adhere to the religious tenets and teachings of such 
        organization, and such organization may require that those 
        employees adhere to rules forbidding the use of drugs or 
        alcohol.
            ``(2) Title vii exemption.--The exemption of a religious 
        organization provided under section 702 or 703(e)(2) of the 
        Civil Rights Act of 1964 (42 U.S.C. 2000e-1, 2000e-2(e)(2)) 
        regarding employment practices shall not be affected by the 
        religious organization's provision of assistance under, or 
receipt of funds from, a program described in subsection (c).
    ``(g) Rights of Beneficiaries of Assistance.--
            ``(1) In general.--If an individual described in paragraph 
        (3) has an objection to the religious character of the 
        organization from which the individual receives, or would 
        receive, assistance funded under any program described in 
        subsection (c), the appropriate Federal, State, or local 
        governmental entity shall provide to such individual (if 
        otherwise eligible for such assistance) within a reasonable 
        period of time after the date of such objection, assistance 
        that--
                    ``(A) is from an alternative organization that is 
                accessible to the individual; and
                    ``(B) has a value that is not less than the value 
                of the assistance that the individual would have 
                received from such organization.
            ``(2) Notice.--The appropriate Federal, State, or local 
        governmental entity shall ensure that notice is provided to 
        individuals described in paragraph (3) of the rights of such 
        individuals under this section.
            ``(3) Individual described.--An individual described in 
        this paragraph is an individual who receives or applies for 
        assistance under a program described in subsection (c).
    ``(h) Nondiscrimination Against Beneficiaries.--
            ``(1) Grants and contracts.--A religious organization 
        providing assistance through a grant or contract under a 
        program described in subsection (c) shall not discriminate, in 
        carrying out the program, against an individual described in 
        subsection (g)(3) on the basis of religion, a religious belief, 
        a refusal to hold a religious belief, or a refusal to actively 
        participate in a religious practice.
            ``(2) Indirect forms of disbursement.--A religious 
        organization providing assistance through a voucher, 
        certificate, or other form of indirect disbursement under a 
        program described in subsection (c) shall not deny an 
        individual described in subsection (g)(3) admission into such 
        program on the basis of religion, a religious belief, or a 
        refusal to hold a religious belief.
    ``(i) Fiscal Accountability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        religious organization providing assistance under any program 
        described in subsection (c) shall be subject to the same 
        regulations as other nongovernmental organizations to account 
        in accord with generally accepted accounting principles for the 
        use of such funds provided under such program.
            ``(2) Limited audit.--Such organization shall segregate 
        government funds provided under such program into a separate 
        account. Only the government funds shall be subject to audit by 
        the government.
    ``(j) Compliance.--A party alleging that the rights of the party 
under this section have been violated by a State or local government 
may bring a civil action pursuant to section 1979 against the official 
or government agency that has allegedly committed such violation. A 
party alleging that the rights of the party under this section have 
been violated by the Federal Government may bring a civil action for 
appropriate relief in an appropriate Federal district court against the 
official or government agency that has allegedly committed such 
violation.
    ``(k) Limitations on Use of Funds for Certain Purposes.--No funds 
provided through a grant or contract to a religious organization to 
provide assistance under any program described in subsection (c) shall 
be expended for sectarian worship, instruction, or proselytization.
    ``(l) Effect on State and Local Funds.--If a State or local 
government contributes State or local funds to carry out a program 
described in subsection (c), the State or local government may 
segregate the State or local funds from the Federal funds provided to 
carry out the program or may commingle the State or local funds with 
the Federal funds. If the State or local government commingles the 
State or local funds, the provisions of this section shall apply to the 
commingled funds in the same manner, and to the same extent, as the 
provisions apply to the Federal funds.
    ``(m) Treatment of Intermediate Contractors.--If a nongovernmental 
organization (referred to in this subsection as an `intermediate 
organization'), acting under a contract or other agreement with the 
Federal Government or a State or local government, is given the 
authority under the contract or agreement to select nongovernmental 
organizations to provide assistance under the programs described in 
subsection (c), the intermediate organization shall have the same 
duties under this section as the government but shall retain all other 
rights of a nongovernmental organization under this section.''.
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