II

106TH CONGRESS

2D SESSION S. 2936

To provide incentives for new markets and community development, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 26, 2000

Mr. ROBB (for himself, Mr. DASCHLE, Mr. BAUCUS, Mr. BREAUX, Mr. DODD,

Mr. DORGAN, Mr. JOHNSON, Mr. KENNEDY, Mr. KERREY, Mr. KERRY,

Mr. LEAHY, Mr. LIEBERMAN, Mrs. LINCOLN, Mr. REID, Mr. ROCKEFELLER, Mr. SCHUMER, Mr. TORRICELLI, Mr. HARKIN, and Mr. BAYH)

introduced the following bill; which was read twice and referred to the

Committee on Finance

A BILL

To provide incentives for new markets and community

development, and for other purposes.

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

3 SECTION 1. SHORT TITLE; ETC.

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

5 ‘‘Creating New Markets and Empowering America Act of

6 2000’’.

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

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

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986.

5 (c) TABLE OF CONTENTS.—

Sec. 1. Short title; etc.

TITLE I—NEW MARKETS TAX CREDIT

Sec. 101. New markets tax credit.

TITLE II—AMERICA’S PRIVATE INVESTMENT COMPANIES

Sec. 201. Definitions.

Sec. 202. Authorization.

Sec. 203. Selection of APIC’s.

Sec. 204. Operations of APIC’s.

Sec. 205. Credit enhancement by the Federal government.

Sec. 206. APIC requests for guarantee actions.

Sec. 207. Examination and monitoring of APIC’s.

Sec. 208. Penalties.

Sec. 209. Effective date.

Sec. 210. Sunset.

TITLE III—COMMUNITY DEVELOPMENT AND VENTURE CAPITAL

Subtitle A—New Markets Venture Capital Program

Sec. 301. New markets venture capital program.

Sec. 302. Bankruptcy exemption for NMVC companies.

Sec. 303. Federal savings associations.

Subtitle B—Community Development Venture Capital Assistance

Sec. 311. Findings.

Sec. 312. Community development venture capital activities.

Subtitle C—Business LINC

Sec. 321. Grants authorized.

Sec. 322. Regulations.

TITLE IV—EXPANSION AND EXTENSION OF EMPOWERMENT

ZONE TAX INCENTIVES

Sec. 401. Additional empowerment zone designations.

Sec. 402. Extension of enterprise zone treatment through 2009.

Sec. 403. 20 percent employment credit for all empowerment zones.

Sec. 404. Increased expensing under section 179.

Sec. 405. Higher limits on tax-exempt empowerment zone facility bonds.

Sec. 406. Nonrecognition of gain on rollover of empowerment zone investments.

Sec. 407. Increased exclusion of gain on sale of empowerment zone stock.
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Sec. 408. Treatment of intangibles.

Sec. 409. Application of developable site opportunities to round I empowerment

zones and enterprise communities.

Sec. 410. Funding entitlement for round II empowerment zones.

Sec. 411. Extension of termination date for expensing of environmental remediation costs; extension to renewal communities.

TITLE V—AMERICAN COMMUNITY RENEWAL

Sec. 501. Designation of and tax incentives for renewal communities.

Sec. 502. Work opportunity credit for hiring youth residing in renewal communities.

Sec. 503. Evaluation and reporting requirements.

TITLE VI—HOMEOWNERSHIP AND REVITALIZATION

Sec. 601. Increase in State ceiling on low-income housing credit.

Sec. 602. Additional modifications to low-income housing credit.

Sec. 603. Increase in State ceiling on private activity bonds.

Sec. 604. Home ownership tax credit.

Sec. 605. Tax credit for renovating historic homes.

Sec. 606. Transfer of unoccupied and substandard HUD-held housing to local

governments and community development corporations.

Sec. 607. Transfer of HUD assets in revitalization areas.

Sec. 608. Risk-sharing demonstration.

TITLE VII—TRADE-AFFECTED COMMUNITIES RELIEF

Sec. 701. Definitions.

Sec. 702. Petitions and determinations.

Sec. 703. Grants for economic development.

Sec. 704. Provide incentives for new investments for trade-affected communities.

Sec. 705. Central clearinghouse for economic development.

Sec. 706. Appropriations.

Sec. 707. Supplement not supplant.

Sec. 708. Regulations.

TITLE VIII—DELTA REGIONAL AUTHORITY

Sec. 801. Delta Regional Authority.

TITLE IX—FEDERAL GRANT PROGRAM PARTICIPATION

EXPANSION

Sec. 901. Equal opportunity for religious and other community organizations to

participate in Federal grant programs.

TITLE X—NEW MILLENNIUM CLASSROOMS

Sec. 1001. Credit for computer donations to schools, senior centers, public libraries, and other training centers.
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1 TITLE I—NEW MARKETS TAX

2 CREDIT

3 SEC. 101. NEW MARKETS TAX CREDIT.

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 (relating to business-related cred6 its) is amended by adding at the end the following new

7 section:

8 ‘‘SEC. 45D. NEW MARKETS TAX CREDIT.

9 ‘‘(a) ALLOWANCE OF CREDIT.—

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

11 in the case of a taxpayer who holds a qualified eq12 uity investment on a credit allowance date of such

13 investment which occurs during the taxable year, the

14 new markets tax credit determined under this sec15 tion for such taxable year is an amount equal to the

16 applicable percentage of the amount paid to the

17 qualified community development entity for such in18 vestment at its original issue.

19 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

20 of paragraph (1), the applicable percentage is—

21 ‘‘(A) 5 percent with respect to the first 3

22 credit allowance dates, and

23 ‘‘(B) 6 percent with respect to the remain24 der of the credit allowance dates.
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1 ‘‘(3) CREDIT ALLOWANCE DATE.—For purposes

2 of paragraph (1), the term ‘credit allowance date’

3 means, with respect to any qualified equity

4 investment—

5 ‘‘(A) the date on which such investment is

6 initially made, and

7 ‘‘(B) each of the 6 anniversary dates of

8 such date thereafter.

9 ‘‘(b) QUALIFIED EQUITY INVESTMENT.—For pur10 poses of this section—

11 ‘‘(1) IN GENERAL.—The term ‘qualified equity

12 investment’ means any equity investment in a quali13 fied community development entity if—

14 ‘‘(A) such investment is acquired by the

15 taxpayer at its original issue (directly or

16 through an underwriter) solely in exchange for

17 cash,

18 ‘‘(B) substantially all of such cash is used

19 by the qualified community development entity

20 to make qualified low-income community invest21 ments, and

22 ‘‘(C) such investment is designated for

23 purposes of this section by the qualified com24 munity development entity.
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1 Such term shall not include any equity investment

2 issued by a qualified community development entity

3 more than 7 years after the date that such entity re4 ceives an allocation under subsection (f). Any alloca5 tion not used within such 7-year period may be re6 allocated by the Secretary under subsection (f).

7 ‘‘(2) LIMITATION.—The maximum amount of

8 equity investments issued by a qualified community

9 development entity which may be designated under

10 paragraph (1)(C) by such entity shall not exceed the

11 portion of the limitation amount allocated under

12 subsection (f) to such entity.

13 ‘‘(3) SAFE HARBOR FOR DETERMINING USE OF

14 CASH.—The requirement of paragraph (1)(B) shall

15 be treated as met if at least 85 percent of the aggre16 gate gross assets of the qualified community devel17 opment entity are invested in qualified low-income

18 community investments.

19 ‘‘(4) TREATMENT OF SUBSEQUENT PUR20 CHASERS.—The term ‘qualified equity investment’

21 includes any equity investment which would (but for

22 paragraph (1)(A)) be a qualified equity investment

23 in the hands of the taxpayer if such investment was

24 a qualified equity investment in the hands of a prior

25 holder.
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1 ‘‘(5) REDEMPTIONS.—A rule similar to the rule

2 of section 1202(c)(3) shall apply for purposes of this

3 subsection.

4 ‘‘(6) EQUITY INVESTMENT.—The term ‘equity

5 investment’ means—

6 ‘‘(A) any stock (other than nonqualified

7 preferred stock as defined in section 351(g)(2))

8 in an entity which is a corporation, and

9 ‘‘(B) any capital interest in an entity

10 which is a partnership.

11 ‘‘(c) QUALIFIED COMMUNITY DEVELOPMENT ENTI12 TY.—For purposes of this section—

13 ‘‘(1) IN GENERAL.—The term ‘qualified com14 munity development entity’ means any corporation

15 or partnership if—

16 ‘‘(A) the primary mission of the entity is

17 serving, or providing investment capital for,

18 low-income communities or low-income persons,

19 ‘‘(B) the entity maintains accountability to

20 residents of low-income communities through

21 representation on governing or advisory boards

22 or otherwise, (This requirement may be met by

23 an entity that controls the community develop24 ment entity applying for a credit allocation.)

25 and
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1 ‘‘(C) the entity is certified by the Secretary

2 for purposes of this section as being a qualified

3 community development entity.

4 ‘‘(2) SPECIAL RULES FOR CERTAIN ORGANIZA5 TIONS.—The requirements of paragraph (1) shall be

6 treated as met by—

7 ‘‘(A) any specialized small business invest8 ment company (as defined in section

9 1044(c)(3)), and

10 ‘‘(B) any community development financial

11 institution (as defined in section 103 of the

12 Community Development Banking and Finan13 cial Institutions Act of 1994 (12 U.S.C. 4702)).

14 ‘‘(d) QUALIFIED LOW-INCOME COMMUNITY INVEST15 MENTS.—For purposes of this section—

16 ‘‘(1) IN GENERAL.—The term ‘qualified low-in17 come community investment’ means—

18 ‘‘(A) any equity investment in, or loan to,

19 any qualified active low-income community busi20 ness,

21 ‘‘(B) the purchase from another commu22 nity development entity of any loan made by

23 such entity which is a qualified low-income com24 munity investment if the amount received by

25 such other entity from such purchase is used by
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1 such other entity to make qualified low-income

2 community investments,

3 ‘‘(C) financial counseling and other serv4 ices specified in regulations prescribed by the

5 Secretary to businesses located in, and resi6 dents of, low-income communities, and

7 ‘‘(D) any equity investment in, or loan to,

8 any qualified community development entity if

9 substantially all of the investment or loan is

10 used by such entity to make qualified low-in11 come community investments described in sub12 paragraphs (A), (B), and (C).

13 ‘‘(2) QUALIFIED ACTIVE LOW-INCOME COMMU14 NITY BUSINESS.—

15 ‘‘(A) IN GENERAL.—For purposes of para16 graph (1), the term ‘qualified active low-income

17 community business’ means, with respect to any

18 taxable year, any corporation (including a non19 profit corporation) or partnership if for such

20 year—

21 ‘‘(i) at least 50 percent of the total

22 gross income of such entity is derived from

23 the active conduct of a qualified business

24 within any low-income community,
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1 ‘‘(ii) a substantial portion of the use

2 of the tangible property of such entity

3 (whether owned or leased) is within any

4 low-income community,

5 ‘‘(iii) a substantial portion of the serv6 ices performed for such entity by its em7 ployees are performed in any low-income

8 community,

9 ‘‘(iv) less than 5 percent of the aver10 age of the aggregate unadjusted bases of

11 the property of such entity is attributable

12 to collectibles (as defined in section

13 408(m)(2)) other than collectibles that are

14 held primarily for sale to customers in the

15 ordinary course of such business, and

16 ‘‘(v) less than 5 percent of the aver17 age of the aggregate unadjusted bases of

18 the property of such entity is attributable

19 to nonqualified financial property (as de20 fined in section 1397C(e)). The determina21 tion of whether an investment made by a

22 community development entity constitutes

23 a qualified low-income community invest24 ment is made at the time that the entity
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1 makes the loan to, or purchases equity in2 terests in a qualified business.

3 ‘‘(B) PROPRIETORSHIP.—Such term shall

4 include any business carried on by an individual

5 as a proprietor if such business would meet the

6 requirements of subparagraph (A) were it incor7 porated.

8 ‘‘(C) PORTIONS OF BUSINESS MAY BE

9 QUALIFIED ACTIVE LOW-INCOME COMMUNITY

10 BUSINESS.—The term ‘qualified active low-in11 come community business’ includes any trades

12 or businesses which would qualify as a qualified

13 active low-income community business if such

14 trades or businesses were separately incor15 porated.

16 ‘‘(3) QUALIFIED BUSINESS.—For purposes of

17 this subsection, the term ‘qualified business’ has the

18 meaning given to such term by section 1397C(d); ex19 cept that—

20 ‘‘(A) in lieu of applying paragraph (2)(B)

21 thereof, the rental to others of real property lo22 cated in any low-income community shall be

23 treated as a qualified business if there are sub24 stantial improvements located on such property,
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1 ‘‘(B) paragraph (3) thereof shall not apply,

2 and

3 ‘‘(C) such term shall not include any busi4 ness if a significant portion of the equity inter5 ests in such business are held by any person

6 who otherwise holds a significant portion of the

7 equity investments in the community develop8 ment entity.

9 ‘‘(e) LOW-INCOME COMMUNITY.—For purposes of

10 this section—

11 ‘‘(1) IN GENERAL.—The term ‘low-income com12 munity’ means any population census tract (includ13 ing tracts in U.S. territories or possessions) if—

14 ‘‘(A) the poverty rate for such tract is at

15 least 20 percent,

16 ‘‘(B)(i) in the case of a tract not located

17 within a metropolitan area, the median family

18 income for such tract does not exceed 80 per19 cent of statewide (or if in a U.S. territory, ter20 ritory-wide) median family income, or

21 ‘‘(ii) in the case of a tract located within

22 a metropolitan area, the median family income

23 for such tract does not exceed 80 percent of the

24 greater of statewide (or if in a U.S. territory,
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1 territory-wide) median family income or the

2 metropolitan area median family income.

3 ‘‘(2) AREAS NOT WITHIN CENSUS TRACTS.—In

4 the case of an area which is not tracted for popu5 lation census tracts, the equivalent county divisions

6 (as defined by the Bureau of the Census for pur7 poses of defining poverty areas) shall be used for

8 purposes of determining poverty rates and median

9 family income.

10 ‘‘(3) TARGETED POPULATION.—The Secretary

11 may prescribe regulations under which 1 or more

12 targeted populations (within the meaning of section

13 3(20) of the Riegle Community Development and

14 Regulatory Improvement Act of 1974 (12 U.S.C.

15 4702(20))) may be treated as low-income commu16 nities. Such regulations shall include procedures for

17 identifying the area covered by any such community

18 for purposes of determining entities which are quali19 fied active low-income community businesses with re20 spect to such community.

21 ‘‘(f) NATIONAL LIMITATION ON AMOUNT OF INVEST22 MENTS DESIGNATED.—

23 ‘‘(1) IN GENERAL.—There is a new markets tax

24 credit limitation for each calendar year. Such limita25 tion is—
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1 ‘‘(A) $1,000,000,000 for 2001,

2 ‘‘(B) $1,500,000,000 for 2002 and 2003,

3 ‘‘(C) $2,000,000,000 for 2004 and 2005,

4 ‘‘(D) $3,500,000,000 for 2006 and 2007.

5 ‘‘(2) ALLOCATION OF LIMITATION.—The limita6 tion under paragraph (1) shall be allocated by the

7 Secretary among qualified community development

8 entities selected by the Secretary. In making alloca9 tions under the preceding sentence, the Secretary

10 shall give priority to community development entities

11 with records of having successfully provided capital

12 or technical assistance to disadvantaged businesses

13 or communities and to entities whose controlling

14 parents have such records.

15 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If

16 the new markets tax credit limitation for any cal17 endar year exceeds the aggregate amount allocated

18 under paragraph (2) for such year, such limitation

19 for the succeeding calendar year shall be increased

20 by the amount of such excess.

21 ‘‘(g) RECAPTURE OF CREDIT IN CERTAIN CASES.—

22 ‘‘(1) IN GENERAL.—If, at any time during the

23 7-year period beginning on the date of the original

24 issue of a qualified equity investment in a qualified

25 community development entity, there is a recapture
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1 event with respect to such investment, then the tax

2 imposed by this chapter for the taxable year in

3 which such event occurs shall be increased by the

4 credit recapture amount.

5 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur6 poses of paragraph (1), the credit recapture amount

7 is an amount equal to the sum of—

8 ‘‘(A) the aggregate decrease in the credits

9 allowed to the taxpayer under section 38 for all

10 prior taxable years which would have resulted if

11 no credit had been determined under this sec12 tion with respect to such investment, plus

13 ‘‘(B) interest at the overpayment rate es14 tablished under section 6621 on the amount de15 termined under subparagraph (A) for each

16 prior taxable year for the period beginning on

17 the due date for filing the return for the prior

18 taxable year involved.

19 No deduction shall be allowed under this chapter for

20 interest described in subparagraph (B).

21 ‘‘(3) RECAPTURE EVENT.—For purposes of

22 paragraph (1), there is a recapture event with re23 spect to an equity investment in a qualified commu24 nity development entity if—
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1 ‘‘(A) such entity ceases to be a qualified

2 community development entity,

3 ‘‘(B) the proceeds of the investment cease

4 to be used as required of subsection (b)(1)(B),

5 or

6 ‘‘(C) such investment is redeemed by such

7 entity.

8 If the original community development entity no

9 longer exists, a successor entity can continue to meet

10 the requirements of a community development entity

11 without triggering recapture. A recapture event oc12 curs only if the entity fails to make a good faith ef13 fort to ensure that the proceeds of the investment as

14 required by subsection (b)(1)(B).

15 ‘‘(4) SPECIAL RULES.—

16 ‘‘(A) TAX BENEFIT RULE.—The tax for

17 the taxable year shall be increased under para18 graph (1) only with respect to credits allowed

19 by reason of this section which were used to re20 duce tax liability. In the case of credits not so

21 used to reduce tax liability, the carryforwards

22 and carrybacks under section 39 shall be appro23 priately adjusted.

24 ‘‘(B) NO CREDITS AGAINST TAX.—Any in25 crease in tax under this subsection shall not be
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1 treated as a tax imposed by this chapter for

2 purposes of determining the amount of any

3 credit under this chapter or for purposes of sec4 tion 55.

5 ‘‘(h) BASIS REDUCTION.—The basis of any qualified

6 equity investment shall be reduced by the amount of any

7 credit determined under this section with respect to such

8 investment. This subsection shall not apply for purposes

9 of sections 1202, 1400B, and 1400F.

10 ‘‘(i) REGULATIONS.—The Secretary shall prescribe

11 such regulations as may be appropriate to carry out this

12 section, including regulations—

13 ‘‘(1) which limit the credit for investments

14 which are directly or indirectly subsidized by other

15 Federal benefits (including the credit under section

16 42 and the exclusion from gross income under sec17 tion 103),

18 ‘‘(2) which prevent the abuse of the provisions

19 of this section through the use of related parties,

20 ‘‘(3) which provide rules for determining wheth21 er the requirement of subsection (b)(1)(B) is treated

22 as met,

23 ‘‘(4) which impose appropriate reporting re24 quirements, and
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1 ‘‘(5) which apply the provisions of this section

2 to newly formed entities.’’.

3 (b) CREDIT MADE PART OF GENERAL BUSINESS

4 CREDIT.—

5 (1) IN GENERAL.—Subsection (b) of section 38

6 is amended by striking ‘‘plus’’ at the end of para7 graph (11), by striking the period at the end of

8 paragraph (12) and inserting ‘‘, plus’’, and by add9 ing at the end the following new paragraph:

10 ‘‘(13) the new markets tax credit determined

11 under section 45D(a).’’.

12 (2) LIMITATION ON CARRYBACK.—Subsection

13 (d) of section 39 is amended by adding at the end

14 the following new paragraph:

15 ‘‘(9) NO CARRYBACK OF NEW MARKETS TAX

16 CREDIT BEFORE JANUARY 1, 2001.—No portion of

17 the unused business credit for any taxable year

18 which is attributable to the credit under section 45D

19 may be carried back to a taxable year ending before

20 January 1, 2001.’’.

21 (c) DEDUCTION FOR UNUSED CREDIT.—Subsection

22 (c) of section 196 is amended by striking ‘‘and’’ at the

23 end of paragraph (7), by striking the period at the end

24 of paragraph (8) and inserting ‘‘, and’’, and by adding

25 at the end the following new paragraph:
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1 ‘‘(9) the new markets tax credit determined

2 under section 45D(a).’’.

3 (d) CLERICAL AMENDMENT.—The table of sections

4 for subpart D of part IV of subchapter A of chapter 1

5 is amended by adding at the end the following new item:

‘‘Sec. 45D. New markets tax credit.’’.

6 (e) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to investments made after Decem8 ber 31, 2000.

9 (f) REGULATIONS ON ALLOCATION OF NATIONAL

10 LIMITATION.—Not later than 60 days after the date of

11 the enactment of this Act, the Secretary of the Treasury

12 or the Secretary’s delegate shall prescribe regulations

13 which specify—

14 (1) how entities shall apply for an allocation

15 under section 45D(f)(2) of the Internal Revenue

16 Code of 1986, as added by this section,

17 (2) the competitive procedure through which

18 such allocations are made, and

19 (3) the actions that such Secretary or delegate

20 shall take to ensure that such allocations are prop21 erly made to appropriate entities.

22 TITLE II—AMERICA’S PRIVATE

23 INVESTMENT COMPANIES

24 SEC. 201. DEFINITIONS.

25 As used in this title:
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1 (1) ADMINISTRATOR.—The term ‘‘Adminis2 trator’’ means the Administrator of the Small Busi3 ness Administration.

4 (2) AGENCY.—The term ‘‘agency’’ has the

5 meaning given such term in section 551(1) of title

6 5, United States Code.

7 (3) APIC.—The term ‘‘APIC’’ means a busi8 ness entity that has been licensed under the terms

9 of this title as an America’s Private Investment

10 Company, and the license of which has not been re11 voked.

12 (4) COMMUNITY DEVELOPMENT ENTITY.—The

13 term ‘‘community development entity’’ means an en14 tity the primary mission of which is serving or pro15 viding investment capital for low-income commu16 nities or low-income persons, and which maintains

17 accountability to residents of low-income commu18 nities.

19 (5) HUD.—The term ‘‘HUD’’ means the Sec20 retary of Housing and Urban Development or the

21 Department of Housing and Urban Development, as

22 the context requires.

23 (6) LICENSE.—The term ‘license’ means a li24 cense issued by HUD as provided in section 202.
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1 (7) LOW-INCOME COMMUNITY.—The term ‘‘low2 income community’’ means—

3 (A) a census tract or tracts that have—

4 (i) a poverty rate of 20 percent or

5 greater, based on the most recent census

6 data; or

7 (ii) a median family income that does

8 not exceed 80 percent of the greater of—

9 (I) the median family income for

10 the metropolitan area in which such

11 census tract or tracts are located, or

12 (II) the median family income for

13 the State in which such census tract

14 or tracts are located;

15 (B) a property that was located on a mili16 tary installation that was closed or realigned

17 pursuant to title II of the Defense Authoriza18 tion Amendments and Base Closure and Re19 alignment Act (Public Law 100-526; 10 U.S.C.

20 2687 note), the Defense Base Closure and Re21 alignment Act of 1990 (part A of title XXIX of

22 Public Law 101–510; 10 U.S.C. 2687 note),

23 section 2687 of title 10, United States Code,

24 or any other similar law enacted after the date

25 of the enactment of this Act that provides for
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1 closure or realignment of military installations;

2 or

3 (C) an area designated by the Secretary of

4 the Treasury as eligible for new markets tax

5 credits under section 45D of the Internal Rev6 enue Code of 1986 (as added by section 101).

7 (8) LOW-INCOME PERSON.—The term ‘‘low-in8 come person’’ means a person who is a member of

9 a low-income family, as such term is defined in sec10 tion 104 of the Cranston-Gonzalez National Afford11 able Housing Act (42 U.S.C. 12704).

12 (9) PRIVATE EQUITY CAPITAL.—

13 (A) IN GENERAL.—The term ‘‘private eq14 uity capital’’ means—

15 (i) in the case of a corporate entity,

16 the paid-in capital and paid-in surplus of

17 the corporate entity;

18 (ii) in the case of a partnership entity,

19 the contributed capital of the partners of

20 the partnership entity;

21 (iii) in the case of a limited liability

22 company entity, the equity investment of

23 the members of the limited liability com24 pany entity; and
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1 (iv) earnings from investments of the

2 entity that are not distributed to investors

3 and are available for reinvestment by the

4 entity.

5 (B) EXCLUSIONS.—Such term does not in6 clude any—

7 (i) funds borrowed by an entity from

8 any source or obtained through the

9 issuance of leverage; except that this clause

10 may not be construed to exclude amounts

11 evidenced by a legally binding and irrev12 ocable investment commitment in the enti13 ty, or the use by an entity of a pledge of

14 such investment commitment to obtain

15 bridge financing from a private lender to

16 fund the entity’s activities on an interim

17 basis; or

18 (ii) funds obtained directly or indi19 rectly from any Federal, State, or local

20 government or any government agency, ex21 cept for—

22 (I) funds invested by an employee

23 welfare benefit plan or pension plan;

24 and
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1 (II) credits against any Federal,

2 State, or local taxes.

3 (10) QUALIFIED ACTIVE BUSINESS.—The term

4 ‘‘qualified active business’’ means a business or

5 trade—

6 (A) that, at the time that an investment is

7 made in the business or trade, or within one

8 year of the time the investment is made, is de9 riving at least 50 percent of its gross income

10 from the conduct of trade or business activities

11 in low-income communities;

12 (B) a substantial portion of the use of the

13 tangible property of which is used within low14 income communities;

15 (C) a substantial portion of the services

16 that the employees of which perform are per17 formed in low-income communities; and

18 (D) less than 5 percent of the aggregate

19 unadjusted bases of the property of which is at20 tributable to certain financial property, as the

21 Secretary shall set forth in regulations, or in

22 collectibles, other than collectibles held pri23 marily for sale to customers.

24 (11) QUALIFIED DEBENTURE.—The term

25 ‘‘qualified debenture’’ means a debt instrument hav-
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1 ing terms that meet the requirements established

2 pursuant to section 204(c)(1).

3 (12) QUALIFIED LOW-INCOME COMMUNITY IN4 VESTMENT.—The term ‘‘qualified low-income com5 munity investment’’ means—

6 (A) an equity investment in, or a loan to,

7 a qualified active business;

8 (B) the purchase from another community

9 development entity of any loan made by such

10 entity which is a qualified low-income commu11 nity investment if the amount received by such

12 other entity from such purchase is used by such

13 other entity to make qualified low-income com14 munity investments;

15 (C) financial counseling and other services

16 specified in regulations prescribed by the Sec17 retary to businesses located in, and residents of,

18 low-income communities; and

19 (D) any equity investment in, or loan to,

20 any qualified community development entity if

21 substantially all of the investment or loan is

22 used by such entity to make qualified low-in23 come community investments described in sub24 paragraphs (A), (B), and (C).
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1 (13) ‘‘Secretary’’ means the Secretary of Hous2 ing and Urban Development, unless otherwise speci3 fied in this title.

4 SEC. 202. AUTHORIZATION.

5 (a) LICENSES.—The Secretary is authorized to li6 cense community development entities as America’s Pri7 vate Investment Companies, in accordance with the terms

8 of this title.

9 (b) REGULATIONS.—The Secretary shall regulate

10 APICs for compliance with sound financial management

11 practices, and the program and procedural goals of this

12 title and other related Acts, and other purposes as re13 quired or authorized by this title, or determined by the

14 Secretary. The Secretary shall issue such regulations as

15 are necessary to carry out the licensing and regulatory and

16 other duties under this title, and may issue notices and

17 other guidance or directives as the Secretary determines

18 are appropriate to carry out such duties.

19 (c) USE OF CREDIT SUBSIDY FOR LICENSES.—

20 (1) NUMBER OF LICENSES.—The number of

21 APICs licensed at any one time may not exceed—

22 (A) the number that may be supported by

23 the amount of budget authority appropriated in

24 accordance with section 504(b) of the Federal

25 Credit Reform Act of 1990 (2 U.S.C. 661c) for
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1 the cost (as such term is defined in section 502

2 of such Act) of the subsidy and the investment

3 strategies of such APICs; or

4 (B) to the extent the limitation under sec5 tion 203(e)(1) applies, the number authorized

6 under such section.

7 (2) USE OF ADDITIONAL CREDIT SUBSIDY.—

8 Subject to the limitation under paragraph (1), the

9 Secretary may use any budget authority available

10 after credit subsidy has been allocated for the APICs

11 initially licensed pursuant to section 203 as follows:

12 (A) ADDITIONAL LICENSES.—To license

13 additional APICs.

14 (B) CREDIT SUBSIDY INCREASES.—To in15 crease the credit subsidy allocated to an APIC

16 as an award for high performance under this

17 title, except that such increases may be made

18 only in accordance with the following require19 ments and limitations:

20 (i) TIMING.—An increase may only be

21 provided for an APIC that has been li22 censed for a period of not less than 2

23 years.

24 (ii) COMPETITION.—An increase may

25 only be provided for a fiscal year pursuant
28

•S 2936 IS

1 to a competition for such fiscal year among

2 APICs eligible for, and requesting, such an

3 increase. The competition shall be based

4 upon criteria that the Secretary shall es5 tablish, which shall include the financial

6 soundness and performance of the APICs,

7 as measured by achievement of the public

8 performance goals included in the APICs

9 statements required under section

10 203(a)(6) and audits conducted under sec11 tion 207(b)(2). Among the criteria estab12 lished by the Secretary to determine pri13 ority for selection under this section, the

14 Secretary shall include making investments

15 in and loans to qualified active businesses

16 in urban or rural areas that have been des17 ignated under subchapter U of chapter 1

18 of the Internal Revenue Code of 1986 as

19 empowerment zones or enterprise commu20 nities.

21 (d) COOPERATION AND COORDINATION.—

22 (1) PROGRAM POLICIES.—The Secretary is au23 thorized to coordinate and cooperate, through memo24 randa of understanding, an APIC liaison committee,

25 or otherwise, with the Administrator, the Secretary
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1 of the Treasury, and other agencies in the discretion

2 of the Secretary, on implementation of this title, in3 cluding regulation, examination, and monitoring of

4 APICs under this title.

5 (2) FINANCIAL SOUNDNESS REQUIREMENTS.—

6 The Secretary shall consult with the Administrator

7 and the Secretary of the Treasury, and may consult

8 with such other heads of agencies as the Secretary

9 may consider appropriate, in establishing any regu10 lations, requirements, guidelines, or standards for fi11 nancial soundness or management practices of

12 APICs or entities applying for licensing as APICs.

13 In implementing and monitoring compliance with

14 any such regulations, requirements, guidelines, and

15 standards, the Secretary shall enter into such agree16 ments and memoranda of understanding with the

17 Administrator and the Secretary of the Treasury as

18 may be appropriate to provide for such officials to

19 provide any assistance that may be agreed to.

20 (3) OPERATIONS.—The Secretary may carry

21 out this title—

22 (A) directly, through agreements with

23 other Federal entities under section 1535 of

24 title 31, United States Code, or otherwise, or
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1 (B) indirectly, under contracts or agree2 ments, as the Secretary shall determine.

3 (e) FEES AND CHARGES FOR ADMINISTRATIVE

4 COSTS.—To the extent provided in appropriations Acts,

5 the Secretary is authorized to impose fees and charges for

6 application, review, licensing, and regulation, or other ac7 tions under this title, and to pay for the costs of such

8 activities from the fees and charges collected.

9 (f) GUARANTEE FEES.—The Secretary is authorized

10 to set and collect fees for loan guarantee commitments and

11 loan guarantees that the Secretary makes under this title.

12 (g) FUNDING.—

13 (1) AUTHORIZATION OF APPROPRIATIONS FOR

14 LOAN GUARANTEE COMMITMENTS.—For each of fis15 cal years 2000, 2001, 2002, 2003, and 2004, there

16 is authorized to be appropriated up to $36,000,000

17 for the cost (as such term is defined in section

18 502(5) of the Federal Credit Reform Act of 1990)

19 of annual loan guarantee commitments under this

20 title. Amounts appropriated under this paragraph

21 shall remain available for until expended.

22 (2) AGGREGATE LOAN GUARANTEE COMMIT23 MENT LIMITATION.—The Secretary may make com24 mitments to guarantee loans only to the extent that

25 the total loan principal, any part of which is guaran-
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1 teed, will not exceed $1,000,000,000, unless another

2 such amount is specified in appropriation Acts for

3 any fiscal year.

4 (3) AUTHORIZATION FOR APPROPRIATION OF

5 ADMINISTRATIVE EXPENSES.—For each of the fiscal

6 years 2000, 2001, 2002, 2003, and 2004, there is

7 authorized to be appropriated $1,000,000 for admin8 istrative expenses for carrying out this title. The

9 Secretary may transfer amounts appropriated under

10 this paragraph to any appropriation account of

11 HUD or another agency, to carry out the program

12 under this title. Any agency to which the Secretary

13 may transfer amounts under this title is authorized

14 to accept such transferred amounts in any appro15 priation account of such agency.

16 (h) PERSONNEL.—

17 (1) OFFICE PERSONNEL.—The Secretary may

18 appoint and fix the compensation of such officers

19 and employees who staff the APIC program at HUD

20 as the Secretary considers necessary to carry out the

21 functions of this title. Such officers and employees

22 may be paid without regard to the provisions of

23 chapter 51 and subchapter III of chapter 53 of title

24 5, United States Code, relating to classification and

25 General Schedule pay rates.
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1 (2) COMPARABILITY OF COMPENSATION WITH

2 FEDERAL BANKING AGENCIES.—In fixing and direct3 ing compensation under paragraph (1), the Sec4 retary shall consult with, and maintain com5 parability with the compensation of, officers and em6 ployees of the Office of the Comptroller of the Cur7 rency, the Board of Governors of the Federal Re8 serve System, the Federal Deposit Insurance Cor9 poration, and the Office of Thrift Supervision.

10 (3) OUTSIDE EXPERTS AND CONSULTANTS.—

11 Notwithstanding any provision of law limiting pay or

12 compensation, the Secretary may appoint and com13 pensate such outside experts and consultants as the

14 Secretary determines necessary to assist in the im15 plementation of this title.

16 (i) BANK PARTICIPATION.—Any national bank, or

17 any member bank of the Federal Reserve System or non18 member insured bank to the extent permitted under appli19 cable State law, may invest in any 1 or more APICs, or

20 in any entity established to invest solely in APICs, except

21 that in no event shall the total amount of such investments

22 of any such bank exceed 5 percent of the total capital and

23 surplus of the bank.
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1 SEC. 203. SELECTION OF APIC’S.

2 (a) ELIGIBLE APPLICANTS.—An entity shall be eligi3 ble to be selected for licensing under section 202 as an

4 APIC only if the entity submits an application in compli5 ance with the requirements established pursuant to sub6 section (b) and the entity meets or complies with the fol7 lowing requirements:

8 (1) ORGANIZATION.—The entity shall be a pri9 vate, for-profit entity that qualifies as a community

10 development entity, as determined by the Secretary,

11 for the purposes of the new markets tax credits

12 under section 45D of the Internal Revenue Code of

13 1986 (as added by section 101).

14 (2) MINIMUM PRIVATE EQUITY CAPITAL.—The

15 amount of private equity capital reasonably available

16 to the entity, as determined by the Secretary, at the

17 time that a license is approved may not be less than

18 $25,000,000.

19 (3) QUALIFIED MANAGEMENT.—The manage20 ment of the entity shall, in the determination of the

21 Secretary, meet such standards as the Secretary

22 shall establish to ensure that the management of the

23 APIC is qualified, and has the financial expertise,

24 knowledge, experience, and capability necessary, to

25 make investments for community and economic de26 velopment in low-income communities.
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1 (4) CONFLICT OF INTEREST.—The entity shall

2 demonstrate that, in accordance with sound financial

3 management practices, the entity is structured to

4 preclude financial conflict of interest between the

5 APIC and a manager or investor.

6 (5) INVESTMENT STRATEGY.—The entity shall

7 prepare and submit to the Secretary an investment

8 strategy that includes benchmarks for evaluation of

9 its progress, that includes an analysis of existing lo10 cally owned businesses in the communities in which

11 the investments under the strategy will be made,

12 that prioritizes such businesses for investment op13 portunities, and that fulfills the specific public pur14 pose goals of the entity.

15 (6) STATEMENT OF PUBLIC PURPOSE GOALS.—

16 The entity shall prepare and submit to the Secretary

17 a statement of the public purpose goals of the entity,

18 which shall—

19 (A) set forth goals that shall promote com20 munity and economic development, which shall

21 include—

22 (i) making investments in low-income

23 communities that further economic devel24 opment objectives by targeting such invest25 ments in businesses or trades that comply
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•S 2936 IS

1 with the requirements under subpara2 graphs (A) through (C) of section 201(10)

3 relating to low-income communities in a

4 manner that benefits low-income persons;

5 (ii) creating jobs in low-income com6 munities for residents of such commu7 nities;

8 (iii) involving community-based orga9 nizations and residents in community de10 velopment activities;

11 (iv) such other goals as the Secretary

12 shall specify; and

13 (v) such elements as the entity may

14 set forth to achieve specific public purpose

15 goals;

16 (B) include such other elements as the

17 Secretary shall specify; and

18 (C) include proposed measurements and

19 strategies for meeting the goals.

20 (7) COMPLIANCE WITH LAWS.—The entity shall

21 agree to comply with applicable laws, including Fed22 eral executive orders, Office of Management and

23 Budget circulars, and requirements of the Depart24 ment of the Treasury, and such additional operating
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•S 2936 IS

1 and regulatory requirements as the Secretary may

2 impose from time to time.

3 (8) OTHER.—The entity shall satisfy any other

4 application requirements that the Secretary may im5 pose by regulation or Federal Register notice.

6 (b) COMPETITIONS.—The Secretary shall select eligi7 ble entities under subsection (a) to be licensed under sec8 tion 202 as APICs on the basis of competitions. The Sec9 retary shall announce each such competition by causing

10 a notice to be published in the Federal Register that in11 vites applications for licenses and sets forth the require12 ments for application and such other terms of the competi13 tion not otherwise provided for, as determined by the Sec14 retary.

15 (c) SELECTION.—In competitions under subsection

16 (b), the Secretary shall select eligible entities under sub17 section (a) for licensing as APICs on the basis of—

18 (1) the extent to which the entity is expected to

19 achieve the goals of this title by meeting or exceed20 ing criteria established under subsection (d); and

21 (2) to the extent practicable and subject to the

22 existence of approvable applications, ensuring geo23 graphical diversity among the applicants selected

24 and diversity of APICs investment strategies, so that

25 urban and rural communities are both served, in the
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1 determination of the Secretary, by the program

2 under this title.

3 (d) SELECTION CRITERIA.—The Secretary shall es4 tablish selection criteria for competitions under subsection

5 (b), which shall include the following criteria:

6 (1) CAPACITY.—

7 (A) MANAGEMENT.—The extent to which

8 the entity’s management has the quality, expe9 rience, and expertise to make and manage suc10 cessful investments for community and eco11 nomic development in low-income communities.

12 (B) STATE AND LOCAL COOPERATION.—

13 The extent to which the entity demonstrates a

14 capacity to cooperate with States or units of

15 general local government and with community16 based organizations and residents of low-income

17 communities.

18 (2) INVESTMENT STRATEGY.—The quality of

19 the entity’s investment strategy submitted in accord20 ance with subsection (a)(5) and the extent to which

21 the investment strategy furthers the goals of this

22 title pursuant to paragraph (3) of this subsection.

23 (3) PUBLIC PURPOSE GOALS.—With respect to

24 the statement of public purpose goals of the entity
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•S 2936 IS

1 submitted in accordance with subsection (a)(6), and

2 the strategy and measurements included therein—

3 (A) the extent to which such goals promote

4 community and economic development;

5 (B) the extent to which such goals provide

6 for making qualified investments in low-income

7 communities that further economic development

8 objectives, such as—

9 (i) creating, within 2 years of the

10 completion of the initial such investment,

11 job opportunities, opportunities for owner12 ship, and other economic opportunities

13 within a low-income community, both

14 short-term and of a longer duration;

15 (ii) improving the economic vitality of

16 a low-income community, including stimu17 lating other business development;

18 (iii) bringing new income into a low19 income community and assisting in the re20 vitalization of such community;

21 (iv) converting real property for the

22 purpose of creating a site for business in23 cubation and location, or business district

24 revitalization;
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•S 2936 IS

1 (v) enhancing economic competition,

2 including the advancement of technology;

3 (vi) rural development;

4 (vii) mitigating, rehabilitating, and

5 reusing real property considered subject to

6 the Solid Waste Disposal Act (42 U.S.C.

7 6901 et seq.; commonly referred to as the

8 Resource Conservation and Recovery Act)

9 or restoring coal mine-scarred land;

10 (viii) creation of local wealth through

11 investments in employee stock ownership

12 companies or resident-owned ventures; and

13 (ix) any other objective that the Sec14 retary may establish to further the pur15 poses of this title;

16 (C) the quality of jobs to be created for

17 residents of low-income communities, taking

18 into consideration such factors as the payment

19 of higher wages, job security, employment bene20 fits, opportunity for advancement, and personal

21 asset building;

22 (D) the extent to which achievement of

23 such goals will involve community-based organi24 zations and residents in community develop25 ment activities; and
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1 (E) the extent to which the investments re2 ferred to in subparagraph (B) are likely to ben3 efit existing small business in low-income com4 munities or will encourage the growth of small

5 business in such communities.

6 (4) OTHER.—Any other criteria that the Sec7 retary may establish to carry out the purposes of

8 this title.

9 (e) FIRST YEAR REQUIREMENTS.—

10 (1) NUMERICAL LIMITATION.—The number of

11 APICs may not, at any time during the 1-year pe12 riod that begins upon the Secretary awarding the

13 first license for an APIC under this title, exceed 15.

14 (2) LIMITATION ON ALLOCATION OF AVAILABLE

15 CREDIT SUBSIDY.—Of the amount of budget author16 ity initially made available for allocation under this

17 title for APICs, the amount allocated for any single

18 APIC may not exceed 20 percent.

19 (3) NATIVE AMERICAN PRIVATE INVESTMENT

20 COMPANY.—Subject only to the absence of an ap21 provable application from an entity, during the 1-

22 year period referred to in paragraph (1), of the enti23 ties selected and licensed by the Secretary as APICs,

24 at least one shall be an entity that has as its pri25 mary purpose the making of qualified low-income
41

•S 2936 IS

1 community investments in areas that are within In2 dian country (as such term is defined in section

3 1151 of title 18, United States Code) or within

4 lands that have status as Hawaiian home land under

5 section 204 of the Hawaiian Homes Commission

6 Act, 1920 (42 Stat. 108) or are acquired pursuant

7 to such Act. The Secretary may establish specific se8 lection criteria for applicants under this paragraph.

9 (f) COMMUNICATIONS BETWEEN HUD AND APPLI10 CANTS.—

11 (1) IN GENERAL.—The Secretary shall set forth

12 in regulations the procedures under which HUD and

13 applicants for APIC licenses, and others, may com14 municate. Such regulations shall—

15 (A) specify by position the HUD officers

16 and employees who may communicate with such

17 applicants and others;

18 (B) permit HUD officers and employees to

19 request and discuss with the applicant and oth20 ers (such as banks or other credit or business

21 references, or potential investors) any more de22 tailed information that may be desirable to fa23 cilitate HUD’s review of the applicant’s applica24 tion;
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•S 2936 IS

1 (C) restrict HUD officers and employees

2 from revealing to any applicant the fact or

3 chances of award of a license to such applicant

4 or any other applicant, unless there has been a

5 public announcement of the results of the com6 petition; and

7 (D) set forth requirements for making and

8 keeping records of any communications con9 ducted under this subsection, including require10 ments for making such records available to the

11 public after the award of licenses under an ini12 tial or subsequent notice, as appropriate, under

13 subsection (a).

14 (2) TIMING.—Regulations under this subsection

15 may be issued as interim rules for effect on or be16 fore the date of publication of the first notice under

17 subsection (a), and shall apply only with respect to

18 applications under such notice. Regulations to imple19 ment this subsection with respect to any notice after

20 the first such notice shall be subject to notice and

21 comment rulemaking.

22 (3) INAPPLICABILITY OF DEPARTMENT OF HUD

23 ACT PROVISION.—Section 12(e)(2) of the Depart24 ment of Housing and Urban Development Act (42

25 U.S.C. 3537a(e)(2)) is amended by inserting before
43

•S 2936 IS

1 the period at the end the following: ‘‘or any license

2 provided under title II of the Creating New Markets

3 and Empowering America Act of 2000’’.

4 SEC. 204. OPERATIONS OF APIC’S.

5 (a) POWERS AND AUTHORITIES.—

6 (1) IN GENERAL.—An APIC shall have any

7 powers or authorities that—

8 (A) the APIC derives from the jurisdiction

9 in which it is organized, or that the APIC oth10 erwise has;

11 (B) may be conferred by a license under

12 this title; and

13 (C) the Secretary may prescribe by regula14 tion.

15 (2) NEW MARKET ASSISTANCE.—Nothing in

16 this title shall preclude an APIC or its investors

17 from receiving an allocation of new markets tax

18 credits if the APIC satisfies the applicable terms

19 and conditions under the Internal Revenue Code of

20 1986.

21 (b) INVESTMENT LIMITATIONS.—

22 (1) QUALIFIED LOW-INCOME COMMUNITY IN23 VESTMENTS.—Substantially all investments that an

24 APIC makes shall be qualified low-income commu-
44

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1 nity investments if the investments are financed

2 with—

3 (A) amounts available from the proceeds of

4 the issuance of an APIC’s qualified debenture

5 guaranteed under this title;

6 (B) proceeds of the sale of obligations de7 scribed under subsection (c)(3)(C)(iii); or

8 (C) the use of private equity capital, as de9 termined by the Secretary, in an amount speci10 fied in the APIC’s license.

11 (2) SINGLE BUSINESS INVESTMENTS.—An

12 APIC shall not, as a matter of sound financial prac13 tice, invest in any one business, an amount that ex14 ceeds an amount equal to 35 percent of the sum

15 of—

16 (A) the APIC’s private equity capital, plus

17 (B) an amount equal to the percentage

18 limit that the Secretary determines that APIC

19 may have outstanding at any one time, under

20 subsection (c)(2)(A).

21 (c) BORROWING POWERS; QUALIFIED DEBEN22 TURES.—

23 (1) ISSUANCE.—An APIC may issue qualified

24 debentures. The Secretary shall, by regulation, speci25 fy the terms and requirements for debentures to be
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1 considered qualified debentures for purposes of this

2 title, except that the term to maturity of any quali3 fied debenture may not exceed 21 years and each

4 qualified debenture shall bear interest during all or

5 any part of that time period at a rate or rates ap6 proved by the Secretary.

7 (2) LEVERAGE LIMITS.—In general, as a mat8 ter of sound financial management practices—

9 (A) the total amount of qualified deben10 tures that an APIC issues under this title that

11 an APIC may have outstanding at any one time

12 shall not exceed an amount equal to 200 per13 cent of the private equity capital of the APIC,

14 as determined by the Secretary; and

15 (B) an APIC shall not have more than

16 $300,000,000 in face value of qualified deben17 tures issued under this title outstanding at any

18 one time.

19 (3) REPAYMENT.—

20 (A) CONDITION OF BUSINESS WIND-UP.—

21 An APIC must have repaid, or have otherwise

22 been relieved of indebtedness, with respect to

23 any interest or principal amounts of borrowings

24 under this subsection no less than 2 years be-
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1 fore the APIC may dissolve or otherwise com2 plete the wind-up of its business.

3 (B) TIMING.—An APIC may repay any in4 terest or principal amounts of borrowings under

5 this subsection at any time, except that the re6 payment of such amounts shall not relieve an

7 APIC of any duty otherwise applicable to the

8 APIC under this title, unless the Secretary or9 ders such relief.

10 (C) USE OF INVESTMENT PROCEEDS BE11 FORE REPAYMENT.—Until an APIC has repaid

12 all interest and principal amounts on APIC bor13 rowings under this subsection, an APIC may

14 use the proceeds of investments in accordance

15 with regulations issued by the Secretary only

16 to—

17 (i) pay for proper costs and expenses

18 the APIC incurs in connection with such

19 investments;

20 (ii) pay for the reasonable administra21 tive expenses of the APIC;

22 (iii) purchase Treasury securities;

23 (iv) repay interest and principal

24 amounts on APIC borrowings under this

25 subsection;
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•S 2936 IS

1 (v) make interest, dividend, or other

2 distributions to or on behalf of an investor;

3 or

4 (vi) undertake such other purposes as

5 the Secretary may approve.

6 (D) USE OF INVESTMENT PROCEEDS

7 AFTER REPAYMENT.—After an APIC has re8 paid all interest and principal amounts on

9 APIC borrowings under this subsection, and

10 subject to continuing compliance with sub11 section (a), the APIC may use the proceeds

12 from investments to make interest, dividend, or

13 other distributions to or on behalf of investors

14 in the nature of returns on capital, or the with15 drawal of private equity capital, without regard

16 to subparagraph (C) but in conformity with the

17 APIC’s investment strategy and statement of

18 public purpose goals.

19 (d) REUSE OF QUALIFIED DEBENTURE PRO20 CEEDS.—An APIC may use the proceeds of sale of Treas21 ury securities purchased under subsection (c)(3)(C)(iii) to

22 make qualified low-income community investments, sub23 ject to the Secretary’s approval. In making the request

24 for the Secretary’s approval, the APIC shall follow the

25 procedures applicable to an APIC’s request for HUD
48

•S 2936 IS

1 guarantee action, as the Secretary may modify such proce2 dures for implementation of this subsection. Such proce3 dures shall include the description and certifications that

4 an APIC must include in all requests for guarantee action,

5 and the environmental certification applicable to initial ex6 penditures for a project or activity.

7 (e) ANTIPIRATING.—Notwithstanding any other pro8 vision of law, an APIC may not use any private equity

9 capital required to be contributed under this title, or the

10 proceeds from the sale of any qualified debenture under

11 this title, to make an investment, as determined by the

12 Secretary, to assist directly in the relocation of any indus13 trial or commercial plant, facility, or operation, from 1

14 area to another area, if the relocation is likely to result

15 in a significant loss of employment in the labor market

16 area from which the relocation occurs.

17 (f) EXCLUSION OF APIC FROM DEFINITION OF

18 DEBTOR UNDER BANKRUPTCY PROVISIONS.—Section

19 109(b)(2) of title 11 of the United States Code is amended

20 by inserting before ‘‘credit union’’ the following: ‘‘Amer21 ica’s Private Investment Company licensed under title II

22 of the Creating New Markets and Empowering America

23 Act of 2000,’’.
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1 SEC. 205. CREDIT ENHANCEMENT BY THE FEDERAL GOV2 ERNMENT.

3 (a) ISSUANCE AND GUARANTEE OF QUALIFIED DE4 BENTURES.—

5 (1) AUTHORITY.—To the extent consistent with

6 the Federal Credit Reform Act of 1990, the Sec7 retary is authorized to make commitments to fully

8 and unconditionally guarantee the timely payment of

9 all principal and interest on, qualified debentures

10 issued by APICs. Such commitments or guarantees

11 may only be made in accordance with the terms and

12 conditions established under paragraph (2).

13 (2) TERMS AND CONDITIONS.—The Secretary

14 shall establish such terms and conditions as the Sec15 retary determines to be appropriate for commit16 ments and guarantees under this subsection, includ17 ing terms and conditions relating to amounts, expi18 ration, number, priorities of repayment, security,

19 collateral, amortization, payment of interest (includ20 ing the timing thereof), and fees and charges. The

21 terms and conditions applicable to any particular

22 commitment or guarantee may be established in doc23 uments that the Secretary approves for such com24 mitment or guarantee.

25 (3) SENIORITY.—Notwithstanding any other

26 provision of Federal law or any law or the constitu-
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•S 2936 IS

1 tion of any State, qualified debentures guaranteed

2 under this subsection by the Secretary shall be sen3 ior to any other debt obligation, equity contribution

4 or earnings, or the distribution of dividends, inter5 est, or other amounts, of an APIC.

6 (b) ISSUANCE OF TRUST CERTIFICATES.—The Sec7 retary, or an agent or entity selected by the Secretary,

8 is authorized to cause a trust to issue trust certificates

9 representing ownership of all or a fractional part of guar10 anteed qualified debentures issued by APICs and held in

11 trust.

12 (c) GUARANTEE OF TRUST CERTIFICATES.—

13 (1) IN GENERAL.—The Secretary is authorized,

14 upon such terms and conditions as the Secretary de15 termines to be appropriate, to fully and uncondition16 ally guarantee the timely payment of the principal of

17 and interest on any trust certificate issued under

18 this section.

19 (2) SUBSTITUTION OPTION.—The Secretary

20 shall have the option to replace in the corpus of the

21 trust any prepaid or defaulted qualified debenture

22 with a debenture, another full faith and credit in23 strument, or any obligations of the United States,

24 that may reasonably substitute for such prepaid or

25 defaulted qualified debenture.
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•S 2936 IS

1 (3) PROPORTIONATE REDUCTION OPTION.—In

2 the event that the Secretary elects not to exercise

3 the option under paragraph (2), and a qualified de4 benture in such trust is prepaid, or in the event of

5 default of a qualified debenture, the guarantee of

6 timely payment of principal and interest on the trust

7 certificate shall be reduced in proportion to the

8 amount of principal and interest that such prepaid

9 qualified debenture represents in the trust, provided

10 that the guarantee of timely payment of principal of

11 and interest on the trust certificates remains full

12 and unconditional. Interest on prepaid or defaulted

13 qualified debentures shall accrue and be guaranteed

14 by the Secretary only through the date of payment

15 of the guarantee. During the term of a trust certifi16 cate, it may be called for redemption due to prepay17 ment or default of all qualified debentures that are

18 in the corpus of the trust.

19 (d) FULL FAITH AND CREDIT BACKING OF GUARAN20 TEES.—The full faith and credit of the United States is

21 pledged to the timely payment of all amounts which may

22 be required to be paid under any guarantee by the Sec23 retary pursuant to this section.

24 (e) SUBROGATION AND LIENS.—
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1 (1) SUBROGATION.—In the event the Secretary

2 pays a claim under a guarantee issued under this

3 section, the Secretary shall be subrogated fully to

4 the rights satisfied by such payment.

5 (2) PRIORITY OF LIENS.—No State or local

6 law, and no Federal law, shall preclude or limit the

7 exercise by the Secretary of its ownership rights in

8 the debentures in the corpus of a trust under this

9 section.

10 (f) REGISTRATION.—

11 (1) IN GENERAL.—The Secretary shall provide

12 for a central registration of all trust certificates

13 issued pursuant to this section.

14 (2) AGENTS.—The Secretary may contract with

15 an agent or agents to carry out on behalf of the Sec16 retary the pooling and the central registrations func17 tions of this section notwithstanding any other provi18 sions of law, including maintenance on behalf of and

19 under the direction of the Secretary, such commer20 cial bank accounts or investments in obligations of

21 the United States as may be necessary to facilitate

22 trusts backed by qualified debentures guaranteed

23 under this title and the issuance of trust certificates

24 to facilitate formation of the corpus of the trusts.

25 The Secretary may require such agent or agents to
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•S 2936 IS

1 provide a fidelity bond or insurance in such amounts

2 as the Secretary determines to be necessary to pro3 tect the interests of the Government.

4 (3) FORM.—Book-entry or other electronic

5 forms of registration for trust certificates under this

6 title are authorized.

7 (g) TIMING OF ISSUANCE OF GUARANTEES OF

8 QUALIFIED DEBENTURES AND TRUST CERTIFICATES.—

9 The Secretary may, from time to time in the Secretary’s

10 discretion, exercise the authority to issue guarantees of

11 qualified debentures under this title or trust certificates

12 under this title.

13 (h) CONFORMING AMENDMENT.—Section 514(c)(6)

14 of the Internal Revenue Code of 1986 is amended by in15 serting ‘‘or a debenture issued by an America’s Private

16 Investment Company (APIC), to the extent it is guaran17 teed by the Secretary of Housing and Urban Develop18 ment’’ before the period at the end.

19 SEC. 206. APIC REQUESTS FOR GUARANTEE ACTIONS.

20 (a) IN GENERAL.—The Secretary may issue a guar21 antee under this title for a qualified debenture that an

22 APIC intends to issue only pursuant to a request to the

23 Secretary by the APIC for such guarantee that is made

24 in accordance with regulations governing the content and

25 procedures for such requests, that the Secretary shall pre-
54

•S 2936 IS

1 scribe. Such regulations shall provide that each such re2 quest shall include—

3 (1) a description of the manner in which the

4 APIC intends to use the proceeds from the qualified

5 debenture;

6 (2) a certification by the APIC that the APIC

7 is in substantial compliance with—

8 (A) this title and other applicable laws, in9 cluding any requirements established under this

10 title by the Secretary;

11 (B) all terms and conditions of its license,

12 any cease-and-desist order issued under section

13 210, and of any penalty or condition that may

14 have arisen from examination or monitoring by

15 the Secretary or otherwise, including the satis16 faction of any financial audit exception that

17 may have been outstanding; and

18 (C) all requirements relating to the alloca19 tion and use of new markets tax credits under

20 section 45D of the Internal Revenue Code of

21 1986 (as added by section 101); and

22 (3) any other information or certification that

23 the Secretary considers appropriate.

24 (b) REQUESTS FOR GUARANTEE OF QUALIFIED DE25 BENTURES THAT INCLUDE FUNDING FOR INITIAL EX-
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•S 2936 IS

1 PENDITURE FOR A PROJECT OR ACTIVITY.—In addition

2 to the description and certification that an APIC is re3 quired to supply in all requests for guarantee action under

4 subsection (a), in the case of an APIC’s request for a

5 guarantee that includes a qualified debenture, the pro6 ceeds of which the APIC expects to be used as its initial

7 expenditure for a project or activity in which the APIC

8 intends to invest, and the expenditure for which would re9 quire an environmental assessment under the National

10 Environmental Policy Act of 1969 and other related laws

11 that further the purposes of such Act, such request for

12 guarantee action must include evidence satisfactory to the

13 Secretary of the certification of the completion of environ14 mental review of the project or activity required of the cog15 nizant State or local government under subsection (c). If

16 the environmental review responsibility for the project or

17 activity has not been assumed by a State or local govern18 ment under subsection (c), then the Secretary shall be re19 sponsible for carrying out the applicable responsibilities

20 under the National Environmental Policy Act of 1969 and

21 other provisions of law that further the purposes of such

22 Act that relate to the project or activity, and the Secretary

23 shall execute such responsibilities before acting on the

24 APIC’s request for the guarantee that is covered by this

25 subsection.
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1 (c) RESPONSIBILITY FOR ENVIRONMENTAL RE2 VIEWS.—

3 (1) EXECUTION OF RESPONSIBILITY BY THE

4 SECRETARY.—This subsection shall apply to guaran5 tees by the Secretary of qualified debentures under

6 this title, the proceeds of which would be used in

7 connection with qualified low-income community in8 vestments of APICs under this title.

9 (2) ASSUMPTION OF RESPONSIBILITY BY COG10 NIZANT UNIT OF GENERAL GOVERNMENT.—

11 (A) GUARANTEE OF QUALIFIED DEBEN12 TURES.—In order to assure that the policies of

13 the National Environmental Policy Act of 1969

14 and other provisions of law that further the

15 purposes of such Act (as specified in regula16 tions issued by the Secretary) are most effec17 tively implemented in connection with the ex18 penditure of funds under this title, and to as19 sure to the public undiminished protection of

20 the environment, the Secretary may, under such

21 regulations, in lieu of the environmental protec22 tion procedures otherwise applicable, provide for

23 the guarantee of qualified debentures, any part

24 of the proceeds of which are to fund particular

25 qualified low-income community investments of
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•S 2936 IS

1 APICs under this title, if a State or unit of

2 general local government, as designated by the

3 Secretary in accordance with regulations issued

4 by the Secretary, assumes all of the responsibil5 ities for environmental review, decision making,

6 and action pursuant to the National Environ7 mental Policy Act of 1969 and such other pro8 visions of law that further such Act as the reg9 ulations of the Secretary specify, that would

10 otherwise apply to the Secretary were the Sec11 retary to undertake the funding of such invest12 ments as a Federal action.

13 (B) IMPLEMENTATION.—The Secretary

14 shall issue regulations to carry out this sub15 section only after consultation with the Council

16 on Environmental Quality. Such regulations

17 shall—

18 (i) specify any other provisions of law

19 which further the purposes of the National

20 Environmental Policy Act of 1969 and to

21 which the assumption of responsibility as

22 provided in this subsection applies;

23 (ii) provide eligibility criteria and pro24 cedures for the designation of a State or
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•S 2936 IS

1 unit of general local government to assume

2 all of the responsibilities in this subsection;

3 (iii) specify the purposes for which

4 funds may be committed without regard to

5 the procedure established under paragraph

6 (3);

7 (iv) provide for monitoring of the per8 formance of environmental reviews under

9 this subsection;

10 (v) in the discretion of the Secretary,

11 provide for the provision or facilitation of

12 training for such performance; and

13 (vi) subject to the discretion of the

14 Secretary, provide for suspension or termi15 nation by the Secretary of the assumption

16 under subparagraph (A).

17 (C) RESPONSIBILITIES OF STATES AND

18 UNITS OF GENERAL LOCAL GOVERNMENT.—The

19 Secretary’s duty under subparagraph (B) shall

20 not be construed to limit any responsibility as21 sumed by a State or unit of general local gov22 ernment with respect to any particular request

23 for guarantee under subparagraph (A), or the

24 use of funds for a qualified investment.
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•S 2936 IS

1 (3) PROCEDURE.—Subject to compliance by the

2 APIC with the requirements of this title, the Sec3 retary shall approve the request for guarantee of a

4 qualified debenture, any part of the proceeds of

5 which is to fund particular qualified low-income

6 community investments of APICs under this title,

7 that is subject to the procedures authorized by this

8 subsection only if, not less than 15 days prior to

9 such approval and prior to any commitment of funds

10 to such investment (except for such purposes speci11 fied in the regulations issued under paragraph

12 (2)(B)), the APIC submits to the Secretary a re13 quest for guarantee of a qualified debenture that is

14 accompanied by evidence of a certification of the

15 State or unit of general local government which

16 meets the requirements of paragraph (4). The ap17 proval by the Secretary of any such certification

18 shall be deemed to satisfy the Secretary’s respon19 sibilities pursuant to paragraph (1) under the Na20 tional Environmental Policy Act of 1969 and such

21 other provisions of law as the regulations of the Sec22 retary specify insofar as those responsibilities relate

23 to the guarantees of qualified debentures, any parts

24 of the proceeds of which are to fund such invest25 ments, which are covered by such certification.
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1 (4) CERTIFICATION.—A certification under the

2 procedures authorized by this subsection shall—

3 (A) be in a form acceptable to the Sec4 retary;

5 (B) be executed by the chief executive offi6 cer or other officer of the State or unit of gen7 eral local government who qualifies under regu8 lations of the Secretary;

9 (C) specify that the State or unit of gen10 eral local government under this subsection has

11 fully carried out its responsibilities as described

12 under paragraph (2); and

13 (D) specify that the certifying officer—

14 (i) consents to assume the status of a

15 responsible Federal official under the Na16 tional Environmental Policy Act of 1969

17 and each provision of law specified in regu18 lations issued by the Secretary insofar as

19 the provisions of such Act or other such

20 provision of law apply pursuant to para21 graph (2); and

22 (ii) is authorized and consents on be23 half of the State or unit of general local

24 government and himself or herself to ac25 cept the jurisdiction of the Federal courts
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•S 2936 IS

1 for the purpose of enforcement of the re2 sponsibilities of such an official.

3 SEC. 207. EXAMINATION AND MONITORING OF APIC’S.

4 (a) IN GENERAL.—The Secretary shall, under regula5 tions, through audits, performance agreements, license

6 conditions, or otherwise, examine and monitor the oper7 ations and activities of APICs for compliance with sound

8 financial management practices, and for satisfaction of the

9 program and procedural goals of this title and other re10 lated Acts. The Secretary may undertake any responsi11 bility under this section in cooperation with an APIC liai12 son committee, or any agency that is a member of such

13 a committee, or other agency.

14 (b) MONITORING, UPDATING, AND PROGRAM RE15 VIEW.—

16 (1) REPORTING AND UPDATING.—The Sec17 retary shall establish such annual or more frequent

18 reporting requirements for APICs, and such require19 ments for the updating of the statement of public

20 purpose goals, investment strategy (including the

21 benchmarks in such strategy), and other documents

22 that may have been used in the license application

23 process under this title, as the Secretary determines

24 necessary to assist the Secretary in monitoring the

25 compliance and performance of APICs.
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1 (2) ANNUAL AUDITS.—The Secretary shall re2 quire each APIC to have an independent audit con3 ducted annually of the operations of the APIC. The

4 Secretary, in consultation with the Administrator

5 and the Secretary of the Treasury, shall establish re6 quirements and standards for such audits, including

7 requirements that such audits be conducted in ac8 cordance with generally accepted accounting prin9 ciples, that the APIC submit the results of the audit

10 to Secretary, and that specify the information to be

11 submitted.

12 (3) EXAMINATIONS.—The Secretary shall, no

13 less often than once every 2 years, examine the oper14 ations and portfolio of each APIC licensed under

15 this title for compliance with sound financial man16 agement practices, and for compliance with this title.

17 (4) EXAMINATION STANDARDS.—

18 (A) SOUND FINANCIAL MANAGEMENT

19 PRACTICES.—The Secretary shall examine each

20 APIC to ensure, as a matter of sound financial

21 management practices, substantial compliance

22 with this and other applicable laws, including

23 Federal executive orders, Department of Treas24 ury and Office of Management and Budget

25 guidance, circulars, and application and licens-
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•S 2936 IS

1 ing requirements on a continuing basis. The

2 Secretary may, by regulation, establish any ad3 ditional standards for sound financial manage4 ment practices, including standards that ad5 dress solvency and financial exposure.

6 (B) PERFORMANCE AND OTHER EXAMINA7 TIONS.—The Secretary shall monitor each

8 APIC’s progress in meeting the goals in the

9 APIC’s statement of public purpose goals, exe10 cuting the APIC’s investment strategy, and

11 other matters.

12 (c) INSPECTOR GENERAL RESPONSIBILITY.—In car13 rying out monitoring of HUD’s responsibilities under this

14 title and for purposes of ensuring that the program under

15 this title is operated in accordance with sound financial

16 management practices, the Inspector General of the De17 partment of Housing and Urban Development shall con18 sult with the Inspector General of the Department of the

19 Treasury and the Inspector General of the Small Business

20 Administration, as appropriate, and may enter into such

21 agreements and memoranda of understanding as may be

22 necessary to obtain the cooperation of the Inspectors Gen23 eral of the Department of the Treasury and the Small

24 Business Administration in carrying out such function.
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1 (d) ANNUAL REPORT BY SECRETARY.—The Sec2 retary shall submit a report to the Congress annually re3 garding the operations, activities, financial health, and

4 achievements of the APIC program under this title. The

5 report shall list each investment made by an APIC and

6 include a summary of the examinations conducted under

7 subsection (b)(3), the guarantee actions of HUD, and any

8 regulatory or policy actions taken by HUD. The report

9 shall distinguish recently licensed APICs from APICs that

10 have held licenses for a longer period for purposes of indi11 cating program activities and performance.

12 (e) GAO REPORT.—

13 (1) REQUIREMENT.—Not later than 2 years

14 after the date of the enactment of this Act, the

15 Comptroller General of the United States shall sub16 mit a report to the Congress regarding the operation

17 of the program under this title for licensing and

18 guarantees for APICs.

19 (2) CONTENTS.—The report shall include—

20 (A) an analysis of the operations and mon21 itoring by HUD of the APIC program under

22 this title;

23 (B) the administrative and capacity needs

24 of HUD required to ensure the integrity of the

25 program;
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•S 2936 IS

1 (C) the extent and adequacy of any credit

2 subsidy appropriated for the program; and

3 (D) the management of financial risk and

4 liability of the Federal Government under the

5 program.

6 SEC. 208. PENALTIES.

7 (a) VIOLATIONS SUBJECT TO PENALTY.—The Sec8 retary may impose a penalty under this subsection on any

9 APIC or manager of an APIC that, by any act, practice,

10 or failure to act, engages in fraud, mismanagement, or

11 noncompliance with this title, the regulations under this

12 title, or a condition of the APIC’s license under this title.

13 The Secretary shall, by regulation, identify, by generic de14 scription of a role or responsibilities, any manager of an

15 APIC that is subject to a penalty under this section.

16 (b) PENALTIES REQUIRING NOTICE AND AN OPPOR17 TUNITY TO RESPOND.—If, after notice in writing to an

18 APIC or the manager of an APIC that the APIC or man19 ager has engaged in any action, practice, or failure to act

20 that, under subsection (a), is subject to a penalty, and

21 after an opportunity for the APIC or manager to respond

22 to the notice, the Secretary determines that the APIC or

23 manager engaged in such action or failure to act, the Sec24 retary may, in addition to other penalties imposed—
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1 (1) assess a civil money penalty, except than

2 any civil money penalty under this subsection shall

3 be in an amount not exceeding $10,000;

4 (2) issue an order to cease and desist with re5 spect to such action, practice, or failure to act of the

6 APIC or manager;

7 (3) suspend, or condition the use of, the APIC’s

8 license, including deferring, for the period of the

9 suspension, any commitment to guarantee any new

10 qualified debenture of the APIC, except that any

11 suspension or condition under this paragraph may

12 not exceed 90 days; and

13 (4) impose any other penalty that the Secretary

14 determines to be less burdensome to the APIC than

15 a penalty under subsection (c).

16 (c) PENALTIES REQUIRING NOTICE AND HEAR17 ING.—If, after notice in writing to an APIC or the man18 ager of an APIC that an APIC or manager has engaged

19 in any action, practice, or failure to act that, under sub20 section (a), is subject to a penalty, and after an oppor21 tunity for administrative hearing, the Secretary deter22 mines that the APIC or manager engaged in such action

23 or failure to act, the Secretary may—

24 (1) assess a civil money penalty against the

25 APIC or a manager in any amount;
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•S 2936 IS

1 (2) require the APIC to divest any interest in

2 an investment, on such terms and conditions as the

3 Secretary may impose; or

4 (3) revoke the APIC’s license.

5 (d) EFFECTIVE DATE OF PENALTIES.—

6 (1) PRIOR NOTICE REQUIREMENT.—Except as

7 provided in paragraph (2) of this subsection, a pen8 alty under subsection (b) or (c) shall not be due and

9 payable and shall not otherwise take effect or be

10 subject to enforcement by an order of a court, before

11 notice of the penalty is published in the Federal

12 Register.

13 (2) CEASE-AND-DESIST ORDERS AND SUSPEN14 SION OR CONDITIONING OF LICENSE.—In the case of

15 a cease-and-desist order under subsection (b)(2) or

16 the suspension or conditioning of an APIC’s license

17 under subsection (b)(3), the following procedures

18 shall apply:

19 (A) ACTION WITHOUT PUBLISHED NO20 TICE.—The Secretary may order an APIC or

21 manager to cease and desist from an action,

22 practice, or failure to act or may suspend or

23 condition an APIC’s license, for not more than

24 45 days without prior publication of notice in

25 the Federal Register, but such cease-and-desist
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1 order or suspension or conditioning shall take

2 effect only after the Secretary has issued a

3 written notice (which may include a writing in

4 electronic form) of such action to the APIC.

5 Notwithstanding subsection (b), such written

6 notice shall be effective without regard to

7 whether the APIC has been accorded an oppor8 tunity to respond. Upon such notice, such

9 cease-and-desist order or suspension or condi10 tioning shall be subject to enforcement by an

11 order of a court.

12 (B) PUBLICATION OF NOTICE OF SUSPEN13 SION OR CONDITIONING OF LICENSE.—Upon a

14 suspension or conditioning of a license taking

15 effect pursuant to subparagraph (A), the Sec16 retary shall promptly cause a notice of suspen17 sion or conditioning of such license for a period

18 of not more than 90 days to be published in the

19 Federal Register. The Secretary shall provide

20 the APIC an opportunity to respond to such no21 tice. For purposes of the determining the dura22 tion of the period of any suspension or condi23 tioning under this subparagraph, the first day

24 of such period shall be the day of issuance of
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•S 2936 IS

1 the written notice under this paragraph of the

2 suspension or conditioning.

3 (C) REVOCATION OF LICENSE.—During

4 the period of the suspension or conditioning of

5 an APIC’s license, the Secretary may take ac6 tion under subsection (c)(3) to revoke the li7 cense of the APIC, in accordance with the pro8 cedures applicable to such subsection. Notwith9 standing any other provision of this section, if

10 the Secretary takes such action, the Secretary

11 may extend the suspension or conditioning of

12 the APIC’s license, for one or more periods of

13 not more than 90 days each, by causing notice

14 of such action to be published in the Federal

15 Register—

16 (i) for the first such extension, before

17 the expiration of the period under subpara18 graph (B); and

19 (ii) for any subsequent extension, be20 fore the expiration of the preceding exten21 sion period under this subparagraph.

22 (D) TERM OF EFFECTIVENESS.—A cease23 and-desist order or the suspension or condi24 tioning of an APIC’s license by the Secretary

25 under this paragraph shall remain in effect in
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1 accordance with the terms of the order, suspen2 sion, or conditioning until final adjudication in

3 any action undertaken to challenge the order,

4 or the suspension or conditioning, or the rev5 ocation, of an APIC’s license.

6 SEC. 209. EFFECTIVE DATE.

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

8 (b), this title shall take effect upon the expiration of the

9 6-month period beginning on the date of the enactment

10 of this Act.

11 (b) ISSUANCE OF REGULATIONS AND GUIDELINES.—

12 Any authority under this title of the Secretary, the Admin13 istrator, and the Secretary of the Treasury to issue regula14 tions, standards, guidelines, or licensing requirements,

15 and any authority of such officials to consult or enter into

16 agreements or memoranda of understanding regarding

17 such issuance, shall take effect on the date of the enact18 ment of this Act.

19 SEC. 210. SUNSET.

20 (a) IN GENERAL.—After the expiration of the 5-year

21 period beginning upon the date that the Secretary awards

22 the first license for an APIC under this title—

23 (1) the Secretary may not license any APIC;

24 and
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1 (2) no amount may be appropriated for the

2 costs (as such term is defined in section 502 of the

3 Federal Credit Reform Act of 1990 (2 U.S.C. 661c)

4 of any guarantee under this title for any debenture

5 issued by an APIC.

6 (b) CONSTRUCTION.—This section may not be con7 strued to prohibit, limit, or affect the award, allocation,

8 or use of any budget authority for the costs of such guar9 antees that is appropriated before the expiration of such

10 5-year period.

11 TITLE III—COMMUNITY DEVEL12 OPMENT AND VENTURE CAP13 ITAL

14 Subtitle A—New Markets Venture

15 Capital Program

16 SEC. 301. NEW MARKETS VENTURE CAPITAL PROGRAM.

17 (a) IN GENERAL.—Title III of the Small Business

18 Investment Act of 1958 (15 U.S.C. 681 et seq.) is

19 amended—

20 (1) by striking the title designation and heading

21 and inserting the following:
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1 ‘‘TITLE III—INVESTMENT

2 DIVISION PROGRAMS

3 ‘‘Subtitle A—Small Business

4 Investment Companies’’;

5 and

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

7 ‘‘Subtitle B—New Markets Venture

8 Capital Program

9 ‘‘SEC. 351. DEFINITIONS.

10 ‘‘In this subtitle—

11 ‘‘(1) the term ‘eligible company’ means a com12 pany that—

13 ‘‘(A) is a newly formed for-profit entity,

14 which may be a newly formed for-profit sub15 sidiary of an existing entity; and

16 ‘‘(B) has a management team with experi17 ence in community development financing or

18 relevant venture capital financing;

19 ‘‘(2) the term ‘low-income individual’ means an

20 individual whose income (adjusted for family size)

21 does not exceed—

22 ‘‘(A) for metropolitan areas, 80 percent of

23 the area median income; and

24 ‘‘(B) for nonmetropolitan areas, the great25 er of—
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1 ‘‘(i) 80 percent of the area median in2 come; or

3 ‘‘(ii) 80 percent of the statewide (or,

4 in the case of a U.S. territory, territory5 wide) nonmetropolitan area median in6 come;

7 ‘‘(3) the term ‘low- or moderate-income geo8 graphic area’ means—

9 ‘‘(A) any population census tract (or in the

10 case of an area that is not tracted for popu11 lation census tracts, the equivalent county divi12 sion, as defined by the Bureau of the Census of

13 the Department of Commerce for purposes of

14 defining poverty areas), if—

15 ‘‘(i) the poverty rate for such census

16 tract is not less than 20 percent;

17 ‘‘(ii) in the case of a tract—

18 ‘‘(I) that is located within a met19 ropolitan area, the median family in20 come for such tract does not exceed

21 the greater of 80 percent of the state22 wide (or in the case of a U.S. terri23 tory, territory-wide) median family in24 come or 80 percent of the metropoli25 tan area median family income; or
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•S 2936 IS

1 ‘‘(II) that is not located within a

2 metropolitan area, the median family

3 income for such tract does not exceed

4 80 percent of the statewide (or, in

5 case of a U.S. territory, territory6 wide) median family income; or

7 ‘‘(iii) as determined by the Adminis8 trator based on objective criteria, a sub9 stantial population of low-income individ10 uals reside, an inadequate access to invest11 ment capital exists, or other indications of

12 economic distress exist in that census

13 tract; or

14 ‘‘(B) any area located within—

15 ‘‘(i) a HUBZone (as defined in sec16 tion 3(p) of the Small Business Act and

17 the implementing regulations issued under

18 that section);

19 ‘‘(ii) an urban empowerment zone or

20 urban enterprise community (as designated

21 by the Secretary of Housing and Urban

22 Development); or

23 ‘‘(iii) a rural empowerment zone or

24 rural enterprise community (as designated

25 by the Secretary of Agriculture);
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•S 2936 IS

1 ‘‘(C) any other area designated by the Sec2 retary of the Treasury, as a low-income commu3 nity for the purposes of the New Markets Tax

4 Credit;

5 ‘‘(4) the terms ‘new markets venture capital

6 company’ and ‘NMVC company’ mean a company

7 that has been designated as a new markets venture

8 capital company by the Administrator under section

9 354(d);

10 ‘‘(5) the term ‘participation agreement’ means

11 an agreement between the Administrator and a com12 pany granted final approval under section 354(d)

13 that—

14 ‘‘(A) details the operating plan and invest15 ment criteria of the company; and

16 ‘‘(B) requires the company to make invest17 ments in smaller enterprises, at least 80 per18 cent of which are located in low- or moderate19 income geographic areas; and

20 ‘‘(6) the term ‘specialized small business invest21 ment company’ means any small business investment

22 company that—

23 ‘‘(A) invests solely in small business con24 cerns that contribute to a well-balanced na25 tional economy by facilitating ownership in such
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1 concerns by persons whose participation in the

2 free enterprise system is hampered because of

3 social or economic disadvantages;

4 ‘‘(B) is organized or chartered under State

5 business or nonprofit corporations statutes, or

6 formed as a limited partnership; and

7 ‘‘(C) was licensed under section 301(d), as

8 in effect before September 30, 1996.

9 ‘‘SEC. 352. PURPOSES.

10 ‘‘The purposes of this subtitle are—

11 ‘‘(1) to encourage venture capital investment in

12 smaller enterprises located within urban and rural

13 areas;

14 ‘‘(2) to promote the creation of wealth, eco15 nomic development, and job opportunities in low16 and moderate-income geographic areas; and

17 ‘‘(3) to establish a venture capital program,

18 which shall be administered by the Administrator—

19 ‘‘(A) to make grants to NMVC companies

20 for the purpose of providing marketing, man21 agement, and technical assistance to smaller en22 terprises financed, or expected to be financed,

23 by such companies; and

24 ‘‘(B) to guarantee debentures issued by

25 NMVC companies to enable such companies to
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1 make venture capital investments in smaller en2 terprises within urban and rural areas.

3 ‘‘SEC. 353. PROGRAM ESTABLISHMENT.

4 ‘‘There is established a New Markets Venture Capital

5 Program, under which the Administrator is authorized

6 to—

7 ‘‘(1) make grants to NMVC companies, as pro8 vided in section 355; and

9 ‘‘(2) guarantee debentures issued by NMVC

10 companies, as provided in section 356.

11 ‘‘SEC. 354. SELECTION OF NMVC COMPANIES.

12 ‘‘(a) APPLICATIONS.—In order to be eligible to par13 ticipate in the program under this subtitle as an NMVC

14 company, an eligible company shall submit to the Adminis15 trator an application, within such period of time as the

16 Administrator shall establish, which shall include—

17 ‘‘(1) a business plan that—

18 ‘‘(A) includes the information referred to

19 in subparagraph (A) of section 351(5); and

20 ‘‘(B) describes the manner and geographic

21 areas in which the applicant will—

22 ‘‘(i) make successful venture capital

23 investments in smaller enterprises de24 scribed in subparagraph (B) of section

25 351(5); and
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1 ‘‘(ii) provide marketing, management,

2 and technical assistance to those enter3 prises;

4 ‘‘(2) the qualifications and general business

5 reputation of the management of the applicant, spe6 cifically addressing—

7 ‘‘(A) the experience of the management in

8 making venture capital investments in smaller

9 enterprises described in section 351(5)(B); and

10 ‘‘(B) the success of those investments in

11 terms of business growth, jobs created, and

12 such other factors as the Administrator may re13 quire;

14 ‘‘(3) a description of the manner in which the

15 applicant will interface with community organiza16 tions;

17 ‘‘(4) a proposal describing the manner in which

18 grant amounts made available under this subtitle

19 would provide marketing, management, and tech20 nical assistance to smaller enterprises expected to be

21 financed by the applicant;

22 ‘‘(5) proposed criteria by which to evaluate the

23 performance of the applicant in meeting program ob24 jectives;
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1 ‘‘(6) the management and financial strength of

2 any parent or affiliated firm, or any firm essential

3 to the success of the business plan of the applicant;

4 ‘‘(7) with respect to binding commitments to be

5 made to the company under this subtitle, an esti6 mate of the ratio of cash to in-kind contributions;

7 and

8 ‘‘(8) such other information as the Adminis9 trator may require.

10 ‘‘(b) CRITERIA FOR CONDITIONAL APPROVAL.—

11 ‘‘(1) IN GENERAL.—Upon receipt of an applica12 tion submitted under subsection (a), the Adminis13 trator shall review the application and make a deter14 mination regarding whether to grant conditional ap15 proval to the applicant to operate as an NMVC com16 pany during the time period described in subsection

17 (c), based on—

18 ‘‘(A) the geographic area and employment

19 characteristics of the smaller enterprises in

20 which the proposed investments of the NMVC

21 company will be made (in order to promote in22 vestment nationwide);

23 ‘‘(B) the likelihood that the applicant will

24 meet the goals of the business plan of the appli25 cant;
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1 ‘‘(C) the experience and background of the

2 management team of the company;

3 ‘‘(D) the need for equity or equity-type in4 vestments within the proposed investment

5 areas;

6 ‘‘(E) the extent to which the applicant will

7 concentrate its activities on serving its invest8 ment areas;

9 ‘‘(F) the likelihood that the applicant will

10 be able to satisfy the requirements of subsection

11 (c);

12 ‘‘(G) the extent to which the proposed ac13 tivities will expand economic opportunities with14 in the investment areas; and

15 ‘‘(H) such other factors as the Adminis16 trator determines to be appropriate.

17 ‘‘(2) NATIONWIDE DISTRIBUTION.—The Admin18 istrator shall select companies under paragraph (1)

19 in such a way that promotes investment nationwide.

20 ‘‘(c) REQUIREMENTS FOR FINAL APPROVAL.—

21 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

22 each applicant that is granted conditional approval

23 by the Administrator to operate as an NMVC com24 pany under subsection (b) shall, before the expira25 tion of a time period established by the Adminis-
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•S 2936 IS

1 trator, not to exceed 24 months, beginning on the

2 date on which such conditional approval is

3 granted—

4 ‘‘(A) raise not less than $5,000,000 of con5 tributed capital or binding capital commitments

6 from 1 or more investors (other than an agency

7 of the Federal Government) that meet criteria

8 established by the Administrator; and

9 ‘‘(B) in order to provide marketing, man10 agement, and technical assistance, have—

11 ‘‘(i) cash or binding commitments for

12 contributions (in cash or in-kind) from 1

13 or more sources other than the Adminis14 tration that meet criteria established by

15 the Administrator, payable or available

16 over a multiyear period acceptable to the

17 Administrator (not to exceed 10 years), in

18 an amount equal to 30 percent of the cap19 ital and commitments raised under sub20 paragraph (A);

21 ‘‘(ii) purchased an annuity from an

22 insurance company acceptable to the Ad23 ministrator, using amounts (other than the

24 amounts raised to satisfy the requirements

25 of subparagraph (A)) from any source
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•S 2936 IS

1 other than the Administration, that would

2 yield cash payments over a multiyear pe3 riod acceptable to the Administrator (not

4 to exceed 10 years), in an amount equal to

5 30 percent of the capital and commitments

6 raised under subparagraph (A); or

7 ‘‘(iii) cash or binding commitments

8 for contributions (in cash or in-kind) of the

9 type described in clause (i) and have pur10 chased an annuity of the type described in

11 clause (ii), that in the aggregate make

12 available, over a multiyear period accept13 able to the Administrator (not to exceed 10

14 years), an amount equal to 30 percent of

15 the capital and commitments raised under

16 subparagraph (A).

17 ‘‘(2) EXCEPTION.—The Administrator may, in

18 the discretion of the Administrator and based upon

19 a showing of special circumstances and good cause,

20 consider an applicant to have satisfied the require21 ments of paragraph (1)(B) if the applicant has—

22 ‘‘(A) a viable plan that reasonably projects

23 the capacity of the applicant to raise the

24 amount (in cash or in-kind) required under

25 paragraph (1)(B); and
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•S 2936 IS

1 ‘‘(B) binding commitments in an amount

2 equal to not less than 20 percent of the total

3 amount required under paragraph (1)(B).

4 ‘‘(d) GRANT OF FINAL APPROVAL; DESIGNATION.—

5 The Administrator shall, with respect to each applicant

6 conditionally approved to operate as an NMVC company

7 under subsection (b), either—

8 ‘‘(1) grant final approval to the applicant to op9 erate as an NMVC company under this subtitle and

10 designate the applicant as an NMVC company, if

11 the applicant—

12 ‘‘(A) satisfies the requirements of sub13 section (c) on or before the expiration of the

14 time period described in that subsection; and

15 ‘‘(B) enters into a participation agreement

16 with the Administrator; or

17 ‘‘(2) if the applicant fails to satisfy the require18 ments of subsection (c) on or before the expiration

19 of the time period described in that subsection, re20 voke the conditional approval granted under sub21 section (b).

22 ‘‘SEC. 355. TECHNICAL ASSISTANCE GRANTS.

23 ‘‘(a) GRANTS.—

24 ‘‘(1) GRANTS TO NMVC’S.—
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•S 2936 IS

1 ‘‘(A) IN GENERAL.—The Administrator, in

2 accordance with such terms and conditions as

3 the Administrator may require, is authorized to

4 award 1 or more grants to each NMVC com5 pany, which shall be used to provide marketing,

6 management, and technical assistance for the

7 benefit of smaller enterprises financed, or ex8 pected to be financed, by the NMVC company.

9 ‘‘(B) GRANT AMOUNT.—Subject to sub10 paragraph (C), the amount of a grant awarded

11 to an NMVC company under this subsection

12 shall be equal to 30 percent of the amount of

13 capital and commitments raised under section

14 354(c)(1)(A).

15 ‘‘(C) MATCHING REQUIREMENT.—In order

16 to receive funds under a grant awarded under

17 this subsection, an NMVC company shall pro18 vide a matching contribution (in cash or in19 kind) from sources other than the Administra20 tion, in an amount equal to the funds to be re21 ceived.

22 ‘‘(2) GRANTS TO SPECIALIZED SMALL BUSINESS

23 INVESTMENT COMPANIES.—

24 ‘‘(A) AUTHORITY.—In accordance with

25 this section, the Administrator may make
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•S 2936 IS

1 grants to specialized small business investment

2 companies to provide marketing, management,

3 and technical assistance to smaller enterprises,

4 if the smaller enterprise is financed, or expected

5 to be financed, by such companies after the ef6 fective date of the Creating New Markets and

7 Empowering America Act of 2000.

8 ‘‘(B) USE OF FUNDS.—The proceeds of a

9 grant made under this paragraph may be used

10 by the company receiving such grant only to

11 provide marketing, management, and technical

12 assistance in connection with one or more eq13 uity or equity-type investments (made with cap14 ital raised after the effective date of the Cre15 ating New Markets and Empowering America

16 Act of 2000) in one or more smaller enterprises

17 located in low- or moderate-income geographic

18 areas.

19 ‘‘(C) SUBMISSION OF PLANS.—A special20 ized small business investment company shall

21 be eligible for a grant under this section only if

22 the company submits to the Administrator, in

23 such form and manner as the Administrator

24 may require, a plan for use of the grant.
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•S 2936 IS

1 ‘‘(D) GRANT AMOUNT.—Subject to sub2 paragraph (E), the amount of a grant awarded

3 to a specialized small business investment com4 pany under this subsection shall be equal to not

5 more than 30 percent of the investments of the

6 specialized small business investment company

7 described in subparagraph (B).

8 ‘‘(E) MATCHING REQUIREMENT.—In order

9 to receive funds under a grant awarded under

10 this subsection, a specialized small business in11 vestment company shall provide a matching

12 contribution (in cash or in-kind) from sources

13 other than the Administration, in an amount

14 equal to the funds to be received.

15 ‘‘(3) MULTIYEAR GRANTS.—Amounts from a

16 grant awarded under this section shall be paid upon

17 the direction of the Administrator over a multiyear

18 period of not to exceed 10 years.

19 ‘‘(4) PRO RATA REDUCTIONS.—If the amount

20 made available to carry out this section for a fiscal

21 year is insufficient for the Administrator to award

22 grants in the amounts required under paragraphs

23 (1) and (2), the Administrator may make pro rata

24 reductions in the amounts otherwise payable to each
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•S 2936 IS

1 NMVC company or specialized small business invest2 ment company under those paragraphs.

3 ‘‘(b) SUPPLEMENTAL GRANTS.—

4 ‘‘(1) IN GENERAL.—In addition to any grant

5 under subsection (a), the Administrator, in accord6 ance with such terms and conditions as the Adminis7 trator may require, may make 1 or more supple8 mental grants to an NMVC company or specialized

9 small business investment company, which shall be

10 used to provide additional marketing, management,

11 and technical assistance for the benefit of smaller

12 enterprises financed, or expected to be financed, by

13 the NMVC company or the specialized small busi14 ness investment company, as applicable.

15 ‘‘(2) MATCHING REQUIREMENT.—The Adminis16 trator may require, as a condition of any supple17 mental grant made under this subsection, that the

18 NMVC company or the specialized small business in19 vestment company, as applicable, provide a matching

20 contribution (in cash or in-kind) from 1 or more

21 sources other than the Administration in an amount

22 equal to the amount of the supplemental grant.

23 ‘‘(c) LIMITATION.—No part of any grant made avail24 able under this section may be used for any purpose other

25 than to provide marketing, management, and technical as-
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•S 2936 IS

1 sistance to smaller enterprises financed, or expected to be

2 financed, by an NMVC company or a specialized small

3 business investment company, as applicable.

4 ‘‘SEC. 356. DEBENTURES.

5 ‘‘(a) IN GENERAL.—The Administrator is authorized

6 to fully and unconditionally guarantee the timely payment

7 of principal and interest as scheduled on debentures issued

8 by NMVC companies, in accordance with such terms and

9 conditions as the Administrator determines to be appro10 priate.

11 ‘‘(b) FULL FAITH AND CREDIT.—The full faith and

12 credit of the United States is pledged to the payment of

13 all amounts that may be required to be paid under any

14 guarantee under this section.

15 ‘‘(c) DEBENTURE REQUIREMENTS.—A debenture

16 guaranteed under this section—

17 ‘‘(1) may be issued for a term of not to exceed

18 15 years;

19 ‘‘(2) shall bear interest at a rate approved by

20 the Administrator; and

21 ‘‘(3) shall contain such other terms and condi22 tions as the Administrator may require.

23 ‘‘(d) TOTAL FACE VALUE.—

24 ‘‘(1) IN GENERAL.—The total face amount of

25 debentures issued by an NMVC company and guar-
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•S 2936 IS

1 anteed under this section that may be outstanding

2 at any one time shall not exceed 150 percent of the

3 contributed capital of the NMVC company, as deter4 mined by the Administrator.

5 ‘‘(2) CONTRIBUTED CAPITAL.—For purposes of

6 this subsection, the contributed capital of an NMVC

7 company includes capital that is deemed to be Fed8 eral funds contributed by an investor other than an

9 agency of the Federal Government.

10 ‘‘SEC. 357. ISSUANCE AND GUARANTEE OF TRUST CERTIFI11 CATES.

12 ‘‘(a) IN GENERAL.—The Administrator (or an agent

13 of the Administrator) is authorized to cause a trust to

14 issue trust certificates representing ownership of all or a

15 fractional part of debentures guaranteed by the Adminis16 trator under section 356, if such trust certificates are

17 based on and backed by a trust or pool approved by the

18 Administrator and composed solely of debentures guaran19 teed under section 356.

20 ‘‘(b) GUARANTEE AUTHORITY.—

21 ‘‘(1) IN GENERAL.—The Administrator is au22 thorized, upon such terms and conditions as the Ad23 ministrator determines to be appropriate, to fully

24 and unconditionally guarantee the timely payment of
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1 the principal of and interest on any trust certificate

2 issued under this section.

3 ‘‘(2) REDUCTION.—If a debenture in a trust or

4 pool described in subsection (a) is prepaid, or in the

5 event of default of a debenture, the guarantee of

6 timely payment of principal and interest on the re7 lated trust certificate issued under this section shall

8 be reduced in proportion to the corresponding pay9 ment amount of principal and interest on the trust

10 certificates, provided that the guarantee of timely

11 payment of principal and interest on the trust cer12 tificates after such reduction shall remain full and

13 unconditional.

14 ‘‘(3) ACCRUAL OF INTEREST.—Interest on pre15 paid or defaulted debentures shall accrue and be

16 guaranteed by the Administrator only through the

17 date of payment of the guarantee.

18 ‘‘(4) REDEMPTION OF TRUST CERTIFICATES.—

19 During the term of any trust certificate issued under

20 this subsection, the trust certificate may be called

21 for redemption due to prepayment or default of all

22 debentures in the trust or pool.

23 ‘‘(c) FULL FAITH AND CREDIT.—The full faith and

24 credit of the United States is pledged to the payment of
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•S 2936 IS

1 all amounts that may be required to be paid under any

2 guarantee of a trust certificate issued under this section.

3 ‘‘(d) FEES.—The Administrator shall not collect a fee

4 for any guarantee of a trust certificate issued under this

5 section, except that nothing in this subsection may be con6 strued to preclude an agent of the Administrator from col7 lecting a fee approved by the Administrator for the func8 tions described in subsection (f)(2).

9 ‘‘(e) SUBROGATION.—

10 ‘‘(1) IN GENERAL.—If the Administrator pays a

11 claim under a guarantee issued under this section,

12 the Administration shall be subrogated fully to the

13 rights satisfied by such payment.

14 ‘‘(2) OWNERSHIP RIGHTS.—No Federal, State,

15 or local law shall preclude or limit the exercise by

16 the Administrator of the ownership rights of the Ad17 ministrator in the debentures residing in a trust or

18 pool against which trust certificates are issued under

19 this section.

20 ‘‘(f) CENTRAL REGISTRATION.—

21 ‘‘(1) IN GENERAL.—The Administrator may

22 provide for a central registration of all trust certifi23 cates issued under this section.

24 ‘‘(2) CONTRACTING OF FUNCTIONS.—
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•S 2936 IS

1 ‘‘(A) IN GENERAL.—The Administrator

2 may contract with an agent or agents to carry

3 out on behalf of the Administrator the pooling

4 and the central registration functions referred

5 to in this section, including, notwithstanding

6 any other provision of law—

7 ‘‘(i) maintenance on behalf of and

8 under the direction of the Administrator of

9 such commercial bank accounts or invest10 ments in obligations of the United States

11 as may be necessary to facilitate trusts or

12 pools backed by debentures guaranteed

13 under this subtitle; and

14 ‘‘(ii) the issuance of trust certificates

15 to facilitate such poolings.

16 ‘‘(B) FIDELITY BOND OR INSURANCE RE17 QUIRED.—An agent contracting with the Ad18 ministrator under this paragraph shall be re19 quired to provide a fidelity bond or insurance in

20 such amounts as the Administrator determines

21 to be necessary to fully protect the interests of

22 the Government.

23 ‘‘(3) REGULATION OF BROKERS AND DEAL24 ERS.—The Administrator may regulate brokers and

25 dealers in trust certificates issued under this section.
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•S 2936 IS

1 ‘‘(4) ELECTRONIC REGISTRATION.—Nothing in

2 this subsection may be construed to prohibit the use

3 of a book-entry or other electronic form of registra4 tion for trust certificates issued under this section.

5 ‘‘SEC. 358. FEES.

6 ‘‘Except as provided under section 357(d), the Ad7 ministrator may charge such fees as the Administrator de8 termines to be appropriate with respect to any guarantee

9 issued or grant awarded under this subtitle.

10 ‘‘SEC. 359. BANK PARTICIPATION.

11 ‘‘Any national bank, or any member bank of the Fed12 eral Reserve System or nonmember insured bank, to the

13 extent permitted under applicable State law, may invest

14 in any 1 or more NMVC companies, or in any entity estab15 lished to invest solely in NMVC companies, except that

16 in no event shall the total amount of such investments of

17 any such bank exceed 5 percent of the total capital and

18 surplus of the bank.

19 ‘‘SEC. 360. FEDERAL FINANCING BANK.

20 ‘‘Section 318 shall not apply to any debenture issued

21 by a NMVC company under this subtitle.

22 ‘‘SEC. 361. REPORTING REQUIREMENTS.

23 ‘‘Each NMVC company shall provide to the Adminis24 trator such information as the Administrator may request,

25 including—
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•S 2936 IS

1 ‘‘(1) information related to the measurement

2 criteria that the NMVC company proposed in the

3 application submitted under section 354(a);

4 ‘‘(2) documentation on the use of technical as5 sistance grants under this subtitle; and

6 ‘‘(3) in each case in which the company under

7 this subtitle makes an investment in, or a loan or

8 grant to, a business that is not located in a low- or

9 moderate-income geographic area, a report on the

10 number and percentage of employees of the business

11 who reside in such areas.

12 ‘‘SEC. 362. EXAMINATIONS.

13 ‘‘(a) IN GENERAL.—Each NMVC company shall be

14 subject to examinations made at the direction of the In15 vestment Division of the Administration, which may be

16 conducted with the assistance of a private sector entity

17 that has both the qualifications to conduct and the exper18 tise in conducting such examinations.

19 ‘‘(b) ASSESSMENT OF COSTS.—The cost of examina20 tions under subsection (a), including the compensation of

21 the examiners, may, in the discretion of the Administrator,

22 be assessed against the company examined, and when so

23 assessed shall be paid by such company.
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1 ‘‘(c) DEPOSIT OF FEES.—Fees collected under this

2 section shall be deposited in the account for salaries and

3 expenses of the Administration.

4 ‘‘SEC. 363. INJUNCTIONS AND OTHER ORDERS.

5 ‘‘(a) IN GENERAL.—If, in the judgment of the Ad6 ministrator, an NMVC company or any other person has

7 engaged or is about to engage in any act or practice that

8 constitutes or will constitute a violation of any provision

9 of this subtitle (or any rule, regulation, or order issued

10 under this subtitle) or of a participation agreement en11 tered into under this subtitle—

12 ‘‘(1) the Administrator may make application to

13 the proper district court of the United States or a

14 United States court of any place subject to the juris15 diction of the United States for an order enjoining

16 such act or practice, or for an order enforcing com17 pliance with such provision; and

18 ‘‘(2) such court shall—

19 ‘‘(A) have jurisdiction over such applica20 tion and any ensuing proceedings; and

21 ‘‘(B) upon a showing by the Administrator

22 that such NMVC company or other person has

23 engaged or is about to engage in any such act

24 or practice, grant without bond a permanent or
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•S 2936 IS

1 temporary injunction, restraining order, or

2 other appropriate order.

3 ‘‘(b) POWERS OF COURT.—In any proceeding under

4 subsection (a)—

5 ‘‘(1) the court as a court of equity may, to such

6 extent as the court determines to be necessary, take

7 exclusive jurisdiction of the NMVC company and the

8 assets thereof, wherever located; and

9 ‘‘(2) the court shall have jurisdiction in any

10 such proceeding to appoint a trustee or receiver to

11 hold or administer under the direction of the court

12 the assets so possessed.

13 ‘‘(c) TRUSTEE OR RECEIVER.—The Administrator is

14 authorized to act as trustee or receiver of the NMVC com15 pany referred to in subsection (a). Upon request by the

16 Administrator, the court may appoint the Administrator

17 to act in such capacity, unless the court determines such

18 appointment to be inequitable or otherwise inappropriate

19 based on the special circumstances at issue.

20 ‘‘SEC. 364. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS,

21 DIRECTORS, EMPLOYEES, OR AGENTS;

22 BREACH OF FIDUCIARY DUTY.

23 ‘‘(a) IN GENERAL.—If an NMVC company violates

24 any provision of this subtitle (or any rule or regulation

25 issued under this subtitle), or of a participation agreement
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•S 2936 IS

1 entered into under this subtitle, by failing to comply with

2 the terms thereof or by engaging in any act or practice

3 that constitutes or will constitute a violation thereof, such

4 violation shall be deemed to be also a violation and an

5 unlawful act on the part of any person who, directly or

6 indirectly, authorizes, orders, participates in, or causes,

7 brings about, counsels, aids, or abets in the commission

8 of any act, practice, or transaction that constitutes or will

9 constitute, in whole or in part, such violation.

10 ‘‘(b) BREACH OF FIDUCIARY DUTY.—It shall be un11 lawful for any officer, director, employee, agent, or other

12 participant in the management or conduct of the affairs

13 of an NMVC company to engage in any act or practice,

14 or to omit any act, in breach of the fiduciary duty of such

15 officer, director, employee, agent, or participant, if, as a

16 result thereof, the NMVC company has suffered or is in

17 imminent danger of suffering financial loss or other dam18 age.

19 ‘‘(c) OTHER PROHIBITIONS.—Except with the writ20 ten consent of the Administrator, it shall be unlawful—

21 ‘‘(1) for any person to take office as an officer,

22 director, or employee of an NMVC company, or to

23 become an agent or participant in the conduct of the

24 affairs or management of an NMVC company, if

25 that person—
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1 ‘‘(A) has been convicted of a felony, or any

2 other criminal offense involving dishonesty or

3 breach of trust; or

4 ‘‘(B) has been found civilly liable in dam5 ages, or has been permanently or temporarily

6 enjoined by order, judgment, or decree of a

7 court of competent jurisdiction, by reason of

8 any act or practice involving fraud or breach of

9 trust; or

10 ‘‘(2) for any person to continue to serve in any

11 of the capacities described in paragraph (1), if that

12 person is subsequently—

13 ‘‘(A) convicted of a felony, or any other

14 criminal offense involving dishonesty or breach

15 of trust; or

16 ‘‘(B) found civilly liable in damages, or is

17 permanently or temporarily enjoined by an

18 order, judgment, or decree of a court of com19 petent jurisdiction, by reason of any act or

20 practice involving fraud or breach of trust.

21 ‘‘(d) NOTICE.—The Administrator may serve upon

22 any officer, director, employee, or other participant in the

23 conduct of the management or other affairs of an NMVC

24 company a written notice of the intention of the Adminis25 trator to remove that person from his or her position
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•S 2936 IS

1 whenever, in the opinion of the Administrator, that

2 person—

3 ‘‘(1) has willfully committed any substantial

4 violation of—

5 ‘‘(A) this subtitle (or any rule, regulation,

6 or order issued under this subtitle); or

7 ‘‘(B) a participation agreement entered

8 into under this subtitle; or

9 ‘‘(C) a cease-and-desist order that has be10 come final; or

11 ‘‘(2) has willfully committed or engaged in any

12 act, omission, or practice that constitutes a substan13 tial breach of fiduciary duty, and that such violation

14 or such breach of fiduciary duty is one involving per15 sonal dishonesty on the part of such person.

16 ‘‘(e) SUSPENSION OR REMOVAL.—The Administrator

17 may suspend or remove from office any person upon whom

18 the Administrator has served a notice under subsection

19 (d), in accordance with the procedures set forth in section

20 313.

21 ‘‘SEC. 365. REGULATIONS.

22 ‘‘The Administrator may promulgate such regula23 tions as the Administrator determines to be necessary to

24 carry out this subtitle.
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1 ‘‘SEC. 366. AUTHORIZATIONS.

2 ‘‘(a) IN GENERAL.—There is authorized to be appro3 priated to the Administration, for fiscal years 2000

4 through 2005, to remain available until expended—

5 ‘‘(1) such subsidy budget authority as may be

6 necessary to guarantee $150,000,000 of debentures

7 under this subtitle; and

8 ‘‘(2) $30,000,000 to make grants under this

9 subtitle.

10 ‘‘(b) FUNDS COLLECTED FOR EXAMINATIONS.—

11 Funds deposited under section 362(c) may be used only

12 for the costs of examinations under section 362 and for

13 the costs of other oversight activities with respect to the

14 program established under this subtitle.’’.

15 (b) CONFORMING AMENDMENT.—Section

16 20(e)(1)(C) of the Small Business Act (15 U.S.C. 631

17 note) is amended by inserting ‘‘subtitle A of’’ before ‘‘title

18 III’’.

19 (c) CLERICAL AMENDMENT.—Subtitle A of title III

20 of the Small Business Investment Company Act of 1958

21 (15 U.S.C. 681 et seq.), as so designated by this title,

22 is amended by striking ‘‘this title’’ each place that term

23 appears and inserting ‘‘this subtitle’’.
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1 SEC. 302. BANKRUPTCY EXEMPTION FOR NMVC COMPA2 NIES.

3 Section 109(b)(2) of title 11, United States Code, is

4 amended by inserting after ‘‘homestead association,’’ the

5 following: ‘‘a new markets venture capital company (as de6 fined in section 351 of the Small Business Investment Act

7 of 1958),’’.

8 SEC. 303. FEDERAL SAVINGS ASSOCIATIONS.

9 Section 5(c)(4) of the Home Owners’ Loan Act (12

10 U.S.C. 1464(c)(4)) is amended by adding at the end the

11 following:

12 ‘‘(F) NEW MARKETS VENTURE CAPITAL

13 COMPANIES.—A Federal savings association

14 may invest in stock, obligations, or other securi15 ties of any new markets venture capital com16 pany (as defined in section 351 of the Small

17 Business Investment Act of 1958). A Federal

18 savings association may not make any invest19 ment under this subparagraph if its aggregate

20 outstanding investment under this subpara21 graph would exceed 5 percent of the capital and

22 surplus of such savings association.’’.
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1 Subtitle B—Community Develop2 ment Venture Capital Assist3 ance

4 SEC. 311. FINDINGS.

5 Congress finds that—

6 (1) there is a need for the development and ex7 pansion of organizations that provide private equity

8 capital to smaller businesses in areas in which eq9 uity-type capital is scarce, such as inner cities and

10 rural areas, in order to create and retain jobs for

11 low-income residents of those areas;

12 (2) to invest successfully in smaller businesses,

13 particularly in inner cities and rural areas, requires

14 highly specialized investment and management skills;

15 (3) there is a shortage of professionals who pos16 sess such skills and there are few training grounds

17 for individuals to obtain those skills;

18 (4) providing assistance to organizations that

19 provide specialized technical assistance and training

20 to individuals and organizations seeking to enter or

21 expand in this segment of the market would stimu22 late small business development and entrepreneur23 ship in economically distressed communities; and

24 (5) assistance from the Federal Government

25 could act as a catalyst to attract investment from
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1 the private sector and would help to develop a spe2 cialized venture capital industry focused on creating

3 jobs, increasing business ownership, and generating

4 wealth in low-income communities.

5 SEC. 312. COMMUNITY DEVELOPMENT VENTURE CAPITAL

6 ACTIVITIES.

7 (a) IN GENERAL.—The Small Business Act (15

8 U.S.C. 631 et seq.) is amended—

9 (1) by redesignating section 34 as section 35;

10 and

11 (2) by inserting after section 33 the following:

12 ‘‘SEC. 34. COMMUNITY DEVELOPMENT VENTURE CAPITAL

13 ACTIVITIES.

14 ‘‘(a) DEFINITIONS.—In this section, the following

15 definitions shall apply:

16 ‘‘(1) COMMUNITY DEVELOPMENT VENTURE

17 CAPITAL ORGANIZATION.—The term ‘community de18 velopment venture capital organization’ means a pri19 vately-controlled organization that—

20 ‘‘(A) has a primary mission of promoting

21 community development in low-income commu22 nities, as defined by the Administrator, through

23 investment in private business enterprises; or

24 ‘‘(B) administers or is in the process of es25 tablishing a community development venture
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1 capital fund for the purpose of making equity

2 investments in private business enterprises in

3 such communities.

4 ‘‘(2) DEVELOPMENTAL ORGANIZATION.—The

5 term ‘developmental organization’—

6 ‘‘(A) means a public or private entity, in7 cluding a college or university, that provides

8 technical assistance to community development

9 venture capital organizations or that conducts

10 research or training in community development

11 venture capital investment; and

12 ‘‘(B) may include an intermediary organi13 zation.

14 ‘‘(3) INTERMEDIARY ORGANIZATION.—The term

15 ‘intermediary organization’—

16 ‘‘(A) means a private, nonprofit entity that

17 has—

18 ‘‘(i) a primary mission of promoting

19 community development through invest20 ment in private businesses in low-income

21 communities; and

22 ‘‘(ii) significant prior experience in

23 providing technical assistance or financial

24 assistance to community development ven25 ture capital organizations; and
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1 ‘‘(B) may include community development

2 venture capital organizations.

3 ‘‘(b) AUTHORITY.—In order to promote the develop4 ment of community development venture capital organiza5 tions, the Administrator may—

6 ‘‘(1) enter into contracts with 1 or more devel7 opmental organizations to carry out training and re8 search activities under subsection (c); and

9 ‘‘(2) make grants in accordance with this

10 section—

11 ‘‘(A) to developmental organizations to

12 carry out training and research activities under

13 subsection (c); and

14 ‘‘(B) to intermediary organizations to pro15 vide intensive marketing, management, and

16 technical assistance and training to community

17 development venture capital organizations

18 under subsection (d).

19 ‘‘(c) TRAINING AND RESEARCH ACTIVITIES.—

20 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a

21 developmental organization that receives a grant

22 under subsection (b) shall use the funds made avail23 able through the grant for 1 or more of the following

24 training and research activities:
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1 ‘‘(A) STRENGTHENING PROFESSIONAL

2 SKILLS.—Creating and operating training pro3 grams to enhance the professional skills for in4 dividuals in community development venture

5 capital organizations or operating private com6 munity development venture capital funds.

7 ‘‘(B) INCREASING INTEREST IN COMMU8 NITY DEVELOPMENT VENTURE CAPITAL.—Cre9 ating and operating a program to select and

10 place students and recent graduates from busi11 ness and related professional schools as interns

12 with community development venture capital or13 ganizations and intermediary organizations for

14 a period of up to 1 year, and to provide sti15 pends for such interns during the internship pe16 riod.

17 ‘‘(C) PROMOTING ‘BEST PRACTICES’.—Or18 ganizing an annual national conference for com19 munity development venture capital organiza20 tions to discuss and share information on the

21 best practices regarding issues relevant to the

22 creation and operation of community develop23 ment venture capital organizations.

24 ‘‘(D) MOBILIZING ACADEMIC RE25 SOURCES.—Encouraging the formation of 1 or
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1 more centers for the study of community devel2 opment venture capital at graduate schools of

3 business and management, providing funding

4 for the development of materials for courses on

5 topics in this area, and providing funding for

6 research on economic, operational, and policy

7 issues relating to community development ven8 ture capital.

9 ‘‘(2) LIMITATION.—The Administrator shall en10 sure that not more than 25 percent of the amount

11 made available to carry out this section is used for

12 the activities described in paragraph (1).

13 ‘‘(d) INTENSIVE MARKETING, MANAGEMENT, AND

14 TECHNICAL ASSISTANCE AND TRAINING.—An inter15 mediary organization that receives a grant under sub16 section (b) shall use the funds made available through the

17 grant to provide intensive marketing, management, and

18 technical assistance and training to promote the develop19 ment of community development venture capital organiza20 tions, which assistance may include grants to community

21 development venture capital organizations for the start up

22 costs and operating support of those organizations.

23 ‘‘(e) MATCHING CONTRIBUTION REQUIREMENT.—

24 The Administrator shall require, as a condition of any

25 grant made to an intermediary organization under this
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1 section, that a matching contribution equal to the amount

2 of such grant be provided from sources other than the

3 Federal Government.

4 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

5 is authorized to be appropriated to carry out this section

6 $20,000,000 for fiscal years 2000 through 2003, to re7 main available until expended.’’.

8 (b) REQUIREMENTS.—The Administrator of the

9 Small Business Administration may promulgate such reg10 ulations as may be necessary to carry out section 34 of

11 the Small Business Act, as added by this section, which

12 regulations may take effect upon issuance.

13 Subtitle C—Business LINC

14 SEC. 321. GRANTS AUTHORIZED.

15 Section 8 of the Small Business Act (15 U.S.C. 637)

16 is amended by adding at the end the following:

17 ‘‘(m) BUSINESS LINC GRANTS.—

18 ‘‘(1) IN GENERAL.—The Administrator may

19 make grants to and enter into cooperative agree20 ments with any coalition of private or public sector

21 participants that—

22 ‘‘(A) expand business-to-business relation23 ships between large and small businesses; and

24 ‘‘(B) provide businesses, directly or indi25 rectly, with online information and a database
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1 of companies that are interested in mentor-pro2 tegee programs or community-based, state-wide,

3 or local business development programs.

4 ‘‘(2) MATCHING REQUIREMENTS.—

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B), the Administrator may make grants

7 to and enter into cooperative agreements with

8 any coalition of private or public sector partici9 pants if the coalition provides a matching

10 amount, either in-kind or in cash, equal to the

11 grant amount.

12 ‘‘(B) WAIVER.—In the best interests of the

13 program established under this subsection, the

14 Administrator may waive the requirements for

15 matching funds to be provided by the coalition

16 under subparagraph (A).

17 ‘‘(3) AUTHORIZATION OF APPROPRIATIONS.—

18 There is authorized to be appropriated to carry out

19 this subsection $6,600,000 for each of fiscal years

20 2000 through 2005, to remain available until ex21 pended.’’.

22 SEC. 322. REGULATIONS.

23 The Administrator of the Small Business Administra24 tion may promulgate such regulations as the Adminis-
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1 trator determines to be necessary to carry out this subtitle

2 and the amendment made by this subtitle.

3 TITLE IV—EXPANSION AND EX4 TENSION OF EMPOWERMENT

5 ZONE TAX INCENTIVES

6 SEC. 401. ADDITIONAL EMPOWERMENT ZONE DESIGNA7 TIONS.

8 Section 1391 is amended by adding at the end the

9 following new subsections:

10 ‘‘(h) ADDITIONAL DESIGNATIONS PERMITTED.—

11 ‘‘(1) IN GENERAL.—In addition to the areas

12 designated under subsections (a) and (g), the appro13 priate Secretaries may designate in the aggregate an

14 additional 9 nominated areas as empowerment zones

15 under this section, subject to the availability of eligi16 ble nominated areas. Of that number, up to 7 may

17 be designated in urban areas and at least 2 may

18 be designated in rural areas.

19 ‘‘(2) PERIOD DESIGNATIONS MAY BE MADE AND

20 TAKE EFFECT.—A designation may be made under

21 this subsection after the date of the enactment of

22 this subsection and before January 1, 2001. Subject

23 to subparagraphs (B) and (C) of subsection (d)(1),

24 such designations shall remain in effect during the
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1 period beginning on January 1, 2001, and ending on

2 December 31, 2009.

3 ‘‘(3) MODIFICATIONS TO ELIGIBILITY CRITERIA,

4 ETC.—

5 ‘‘(A) IN GENERAL.—The rules of sub6 section (g)(3) shall apply to designations under

7 this subsection, and with respect to the criteria

8 for any designation, an additional eligibility cri9 teria shall be the consideration that the nomi10 nated area is a strategic planning community

11 and with respect to the criteria for the designa12 tion of any rural area, an additional eligibility

13 criteria shall be the existence of outmigration

14 from such area.

15 ‘‘(B) STRATEGIC PLANNING COMMU16 NITY.—The term ‘strategic planning commu17 nity’ means a respondent to the Notice Inviting

18 Applications at 63 Federal Register 19162

19 (April 16, 1998) whose application was ranked

20 16th through 30th in the competition that con21 cluded in December 1998.

22 ‘‘(4) EMPOWERMENT ZONES WHICH BECOME

23 RENEWAL COMMUNITIES.—The number of areas

24 which may be designated as empowerment zones

25 under this subsection shall be increased by 1 for
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1 each area which ceases to be an empowerment zone

2 by reason of section 1400E(e). Each additional area

3 designated by reason of the preceding sentence shall

4 have the same urban or rural character as the area

5 it is replacing.

6 ‘‘(i) TRANSFER OF ENTERPRISE COMMUNITY DES7 IGNATION.—

8 ‘‘(1) PROHIBITION OF DUAL DESIGNATION.—

9 ‘‘(A) IN GENERAL.—No area may retain

10 dual designation as an enterprise community

11 and an empowerment zone or renewal commu12 nity. The subsequent designation as an em13 powerment zone or a renewal community of any

14 area previously designated under subsection

15 (b)(1) as an enterprise community shall cause

16 that area to forfeit its designation as an enter17 prise community.

18 ‘‘(B) RULES FOR INCLUSION IN EMPOWER19 MENT ZONE.—In the case of any enterprise

20 community which is later designated pursuant

21 to subsection (g) or (h) as an empowerment

22 zone, all census tracts included in such enter23 prise community shall be included in such em24 powerment zone without regard to the limita-
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1 tions on population or size imposed by para2 graphs (1) and (3) of section 1392(a).

3 ‘‘(2) REDESIGNATIONS.—

4 ‘‘(A) IN GENERAL.—Any enterprise com5 munity designation that is forfeited pursuant to

6 this paragraph shall be available for transfer by

7 the appropriate Secretary.

8 ‘‘(B) RULES OF REDESIGNATION.—To the

9 extent that enterprise community designations

10 become available for transfer pursuant to sub11 paragraph (A) and for the period that such des12 ignations remain in effect pursuant to sub13 section (d), the appropriate Secretaries may

14 designate the highest ranking areas nominated

15 for designation as empowerment zones pursuant

16 to subsection (g) or (h) which were not so des17 ignated and which continue to meet appropriate

18 eligibility criteria, as enterprise communities.

19 Except as set forth in subparagraph (C), areas

20 designated as enterprise communities pursuant

21 to this paragraph shall be subject to all other

22 limitations and shall be accorded all remaining

23 benefits otherwise applicable to enterprise com24 munities designated pursuant to subsection

25 (b)(1).
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1 ‘‘(C) SPECIAL RULES.—Any area nomi2 nated for designation as an enterprise commu3 nity pursuant to this paragraph which is lo4 cated in Alaska or Hawaii shall be treated as

5 meeting the requirements of paragraphs (2),

6 (3), and (4) of section 1392(a) if for each cen7 sus tract or block group within such area 20

8 percent or more of the families have income

9 which is 50 percent or less of the statewide me10 dian family income (as determined under sec11 tion 143).’’.

12 SEC. 402. EXTENSION OF ENTERPRISE ZONE TREATMENT

13 THROUGH 2009.

14 (a) IN GENERAL.—Subparagraph (A) of section

15 1391(d)(1) (relating to period for which designation is in

16 effect) is amended to read as follows:

17 ‘‘(A) December 31, 2009,’’.

18 (b) DISTRICT OF COLUMBIA.—Section 1400(f) (relat19 ing to time for which designation applicable) is amended

20 by striking ‘‘2002’’ both places it appears and inserting

21 ‘‘2009’’.
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1 SEC. 403. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EM2 POWERMENT ZONES.

3 (a) 20 PERCENT CREDIT.—Subsection (b) of section

4 1396 (relating to empowerment zone employment credit)

5 is amended to read as follows:

6 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

7 this section, the applicable percentage is 20 percent.’’.

8 (b) ALL EMPOWERMENT ZONES ELIGIBLE FOR

9 CREDIT.—Section 1396 is amended by striking subsection

10 (e).

11 (c) CONFORMING AMENDMENT.—Subsection (d) of

12 section 1400 is amended to read as follows:

13 ‘‘(d) SPECIAL RULE FOR APPLICATION OF EMPLOY14 MENT CREDIT.—With respect to the DC Zone, section

15 1396(d)(1)(B) (relating to empowerment zone employ16 ment credit) shall be applied by substituting ‘the District

17 of Columbia’ for ‘such empowerment zone’.’’.

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to wages paid or incurred after

20 December 31, 2000.

21 SEC. 404. INCREASED EXPENSING UNDER SECTION 179.

22 (a) IN GENERAL.—Subparagraph (A) of section

23 1397A(a)(1) is amended by striking ‘‘$20,000’’ and in24 serting ‘‘$35,000’’.
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1 (b) EXPENSING FOR PROPERTY USED IN DEVELOP2 ABLE SITES.—Section 1397A is amended by striking sub3 section (c).

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

5 subsection (a) shall apply to taxable years beginning after

6 December 31, 2000.

7 SEC. 405. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT

8 ZONE FACILITY BONDS.

9 (a) IN GENERAL.—Paragraph (3) of section 1394(f)

10 (relating to bonds for empowerment zones designated

11 under section 1391(g)) is amended to read as follows:

12 ‘‘(3) EMPOWERMENT ZONE FACILITY BOND.—

13 For purposes of this subsection, the term ‘empower14 ment zone facility bond’ means any bond which

15 would be described in subsection (a) if only em16 powerment zones were taken into account under sec17 tions 1397C and 1397D.’’ .

18 (b) CONFORMING AMENDMENTS.—

19 (1) Subsection (f) of section 1394 is amended

20 by striking ‘‘new empowerment zone facility bond’’

21 each place it appears and inserting ‘‘empowerment

22 zone facility bond’’.

23 (2) The heading for such subsection is amended

24 to read as follows:

25 ‘‘(f) BONDS FOR EMPOWERMENT ZONES.—’’.
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1 (3) Paragraph (1) of section 1394(c) is

2 amended—

3 (A) by striking ‘‘empowerment zone or’’ in

4 subparagraph (A), and

5 (B) by striking ‘‘empowerment zones and’’

6 in subparagraph (B).

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

8 this section shall apply to obligations issued after Decem9 ber 31, 2000.

10 SEC. 406. NONRECOGNITION OF GAIN ON ROLLOVER OF

11 EMPOWERMENT ZONE INVESTMENTS.

12 (a) IN GENERAL.—Part III of subchapter U of chap13 ter 1 is amended—

14 (1) by redesignating subpart C as subpart D,

15 (2) by redesignating sections 1397B and 1397C

16 as sections 1397C and 1397D, respectively, and

17 (3) by inserting after subpart B the following

18 new subpart:

19 ‘‘Subpart C—Nonrecognition of Gain on Rollover of

20 Empowerment Zone Investments

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

21 ‘‘SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF

22 EMPOWERMENT ZONE INVESTMENTS.

23 ‘‘(a) NONRECOGNITION OF GAIN.—In the case of any

24 sale of a qualified empowerment zone asset held by the
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1 taxpayer for more than 1 year and with respect to which

2 such taxpayer elects the application of this section, gain

3 from such sale shall be recognized only to the extent that

4 the amount realized on such sale exceeds—

5 ‘‘(1) the cost of any qualified empowerment

6 zone asset (with respect to the same zone as the

7 asset sold) purchased by the taxpayer during the 60-

8 day period beginning on the date of such sale, re9 duced by

10 ‘‘(2) any portion of such cost previously taken

11 into account under this section.

12 This section shall apply only to gain which is qualified cap13 ital gain.

14 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur15 poses of this section—

16 ‘‘(1) QUALIFIED EMPOWERMENT ZONE

17 ASSET.—

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

19 empowerment zone asset’ means any property

20 which would be a qualified community asset (as

21 defined in section 1400F) if in section 1400F—

22 ‘‘(i) references to empowerment zones

23 were substituted for references to renewal

24 communities, and
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1 ‘‘(ii) references to enterprise zone

2 businesses (as defined in section 1397C)

3 were substituted for references to renewal

4 community businesses.

5 ‘‘(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).

6 ‘‘(2) QUALIFIED CAPITAL GAIN.—

7 ‘‘(A) IN GENERAL.—Except as otherwise

8 provided in this paragraph, the term ‘qualified

9 capital gain’ means any gain from the sale or

10 exchange of—

11 ‘‘(i) a capital asset, or

12 ‘‘(ii) property used in the trade or

13 business (as defined in section 1231(b)).

14 ‘‘(B) CERTAIN RULES TO APPLY.—Rules

15 similar to the rules of paragraphs (3) and (4)

16 of section 1400B(e) shall apply for purposes of

17 this subsection.

18 ‘‘(3) PURCHASE.—A taxpayer shall be treated

19 as having purchased any property if, but for para20 graph (4), the unadjusted basis of such property in

21 the hands of the taxpayer would be its cost (within

22 the meaning of section 1012).
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1 ‘‘(4) BASIS ADJUSTMENTS.—If gain from any

2 sale is not recognized by reason of subsection (a),

3 such gain shall be applied to reduce (in the order ac4 quired) the basis for determining gain or loss of any

5 qualified empowerment zone asset which is pur6 chased by the taxpayer during the 60-day period de7 scribed in subsection (a). This paragraph shall not

8 apply for purposes of section 1202.

9 ‘‘(5) HOLDING PERIOD.—For purposes of deter10 mining whether the nonrecognition of gain under

11 subsection (a) applies to any qualified empowerment

12 zone asset which is sold—

13 ‘‘(A) the taxpayer’s holding period for such

14 asset and the asset referred to in subsection

15 (a)(1) shall be determined without regard to

16 section 1223, and

17 ‘‘(B) only the first year of the taxpayer’s

18 holding period for the asset referred to in sub19 section (a)(1) shall be taken into account for

20 purposes of paragraphs (2)(A)(iii), (3)(C), and

21 (4)(A)(iii) of section 1400F(b).’’

22 (b) CONFORMING AMENDMENTS.—

23 (1) Paragraph (23) of section 1016(a) is

24 amended—
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1 (A) by striking ‘‘or 1045’’ and inserting

2 ‘‘1045, or 1397B’’, and

3 (B) by striking ‘‘or 1045(b)(4)’’ and in4 serting ‘‘1045(b)(4), or 1397B(b)(4)’’.

5 (2) Paragraph (15) of section 1223 is amended

6 to read as follows:

7 ‘‘(15) Except for purposes of sections

8 1202(a)(2), 1202(c)(2)(A), 1400B(b), and

9 1400F(b), in determining the period for which the

10 taxpayer has held property the acquisition of which

11 resulted under section 1045 or 1397B in the non12 recognition of any part of the gain realized on the

13 sale of other property, there shall be included the pe14 riod for which such other property has been held as

15 of the date of such sale.’’

16 (3) Paragraph (2) of section 1394(b) is

17 amended—

18 (A) by striking ‘‘section 1397C’’ and in19 serting ‘‘section 1397D’’, and

20 (B) by striking ‘‘section 1397C(a)(2)’’ and

21 inserting ‘‘section 1397D(a)(2)’’.

22 (4) Paragraph (3) of section 1394(b) is

23 amended—

24 (A) by striking ‘‘section 1397B’’ each place

25 it appears and inserting ‘‘section 1397C’’, and
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1 (B) by striking ‘‘section 1397B(d)’’ and in2 serting ‘‘section 1397C(d)’’.

3 (5) Sections 1400(e) and 1400B(c) are each

4 amended by striking ‘‘section 1397B’’ each place it

5 appears and inserting ‘‘section 1397C’’.

6 (6) The table of subparts for part III of sub7 chapter U of chapter 1 is amended by striking the

8 last item and inserting the following new items:

‘‘Subpart C. Nonrecognition of gain on rollover of empowerment

zone investments.

‘‘Subpart D. General provisions.’’

9 (7) The table of sections for subpart D of such

10 part III is amended to read as follows:

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

‘‘Sec. 1397D. Qualified zone property defined.’’

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

12 this section shall apply to qualified empowerment zone as13 sets acquired after December 31, 2000.

14 SEC. 407. INCREASED EXCLUSION OF GAIN ON SALE OF EM15 POWERMENT ZONE STOCK.

16 (a) IN GENERAL.—Subsection (a) of section 1202 is

17 amended to read as follows:

18 ‘‘(a) EXCLUSION.—

19 ‘‘(1) IN GENERAL.—In the case of a taxpayer

20 other than a corporation, gross income shall not in21 clude 50 percent of any gain from the sale or ex-
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1 change of qualified small business stock held for

2 more than 5 years.

3 ‘‘(2) EMPOWERMENT ZONE BUSINESSES.—

4 ‘‘(A) IN GENERAL.—In the case of quali5 fied small business stock acquired after the date

6 of the enactment of this paragraph in a cor7 poration which is a qualified business entity (as

8 defined in section 1397C(b)) during substan9 tially all of the taxpayer’s holding period for

10 such stock, paragraph (1) shall be applied by

11 substituting ‘60 percent’ for ‘50 percent’.

12 ‘‘(B) CERTAIN RULES TO APPLY.—Rules

13 similar to the rules of paragraphs (5) and (7)

14 of section 1400B(b) shall apply for purposes of

15 this paragraph.

16 ‘‘(C) GAIN AFTER 2014 NOT QUALIFIED.—

17 Subparagraph (A) shall not apply to gain at18 tributable to periods after December 31,

19 2014.’’.

20 (b) CONFORMING AMENDMENT.—Paragraph (8) of

21 section 1(h) is amended by striking ‘‘means’’ and all that

22 follows and inserting ‘‘means the excess of—

23 ‘‘(A) the gain which would be excluded

24 from gross income under section 1202 but for
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1 the percentage limitation in section 1202(a),

2 over

3 ‘‘(B) the gain excluded from gross income

4 under section 1202.’’.

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

6 this section shall apply to stock acquired after December

7 31, 2000.

8 SEC. 408. TREATMENT OF INTANGIBLES.

9 (a) IN GENERAL.—Section 1397C(d)(4) (relating to

10 treatment of business holding intangibles) is amended—

11 (1) by striking ‘‘development or’’, and

12 (2) by inserting ‘‘unless a substantial portion of

13 the development with respect to such intangibles oc14 curs within any empowerment zone’’ after ‘‘license’’.

15 (b) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to taxable years beginning after

17 the date of the enactment of this Act.

18 SEC. 409. APPLICATION OF DEVELOPABLE SITE OPPORTU19 NITIES TO ROUND I EMPOWERMENT ZONES

20 AND ENTERPRISE COMMUNITIES.

21 (a) IN GENERAL.—Section 1392(a)(4) (relating to

22 poverty rate) is amended—

23 (1) by redesignating subparagraphs (A), (B),

24 and (C) as clauses (i), (ii), and (iii), respectively,
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1 (2) by striking ‘‘The poverty rate—’’ and in2 serting the following:

3 ‘‘(A) IN GENERAL.—The poverty rate—’’,

4 and

5 (3) by adding at the end the following:

6 ‘‘(B) EXCEPTION FOR DEVELOPABLE

7 SITES.—Subparagraph (A) shall not apply to

8 up to 3 noncontiguous parcels in a nominated

9 area which may be developed for commercial or

10 industrial purposes. The aggregate area of non11 contiguous parcels to which the preceding sen12 tence applies with respect to any nominated

13 area shall not exceed 2,000 acres.’’.

14 (b) CONFORMING AMENDMENTS.—Section

15 1391(g)(3)(A) is amended by striking clause (iii) and by

16 redesignating clauses (iv) and (v) as clauses (iii) and (iv),

17 respectively.

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

19 this section shall take effect with respect to designations

20 made before, on, and after the date of the enactment of

21 this Act.

22 SEC. 410. FUNDING ENTITLEMENT FOR ROUND II EM23 POWERMENT ZONES.

24 (a) IN GENERAL.—
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1 (1) ENTITLEMENT.—Section 2007(a)(1) of the

2 Social Security Act (42 U.S.C. 1397f(a)(1)) is

3 amended—

4 (A) in subparagraph (A), by striking ‘‘in

5 the State; and’’ and inserting ‘‘that is in the

6 State and is designated pursuant to section

7 1391(b) of the Internal Revenue Code of

8 1986;’’;

9 (B) by adding after subparagraph (B) the

10 following:

11 ‘‘(C)(i) 9 grants under this section for

12 each qualified empowerment zone that is in an

13 urban area in the State and is designated pur14 suant to section 1391(g) of such Code; and

15 ‘‘(ii) 9 grants under this section for each

16 qualified empowerment zone that is in a rural

17 area in the State and is designated pursuant to

18 section 1391(g) of such Code; and

19 ‘‘(D) 8 grants under this section for each

20 qualified enterprise community that is in the

21 State and is designated pursuant to section 766

22 of the Agriculture, Rural Development, Food

23 and Drug Administration, and Related Agencies

24 Appropriations Act, 1999.’’.
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1 (2) AMOUNT OF GRANTS.—Section 2007(a)(2)

2 of such Act (42 U.S.C. 1397f(a)(2)) is amended—

3 (A) in the heading of subparagraph (A), by

4 inserting ‘‘ORIGINAL’’ before ‘‘EMPOWER5 MENT’’;

6 (B) in subparagraph (A), in the matter

7 preceding clause (i), by inserting ‘‘referred to in

8 paragraph (1)(A)’’ after ‘‘empowerment zone’’;

9 (C) by redesignating subparagraph (C) as

10 subparagraph (F); and

11 (D) by inserting after subparagraph (B)

12 the following:

13 ‘‘(C) ADDITIONAL EMPOWERMENT

14 GRANTS.—The amount of the grant to a State

15 under this section for a qualified empowerment

16 zone referred to in paragraph (1)(C) shall be—

17 ‘‘(i) if the zone is in an urban area,

18 $10,000,000 for each of fiscal years 2001

19 through 2008 and $13,300,000 for fiscal

20 year 2009; or

21 ‘‘(ii) if the zone is in a rural area,

22 $3,000,000 for each of fiscal years 2001

23 through 2009,

24 multiplied by the proportion of the population

25 of the zone that resides in the State.
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1 ‘‘(D) ADDITIONAL ENTERPRISE COMMU2 NITY GRANTS.—The amount of the grant to a

3 State under this section for a qualified enter4 prise community referred to in paragraph

5 (1)(D) shall be $250,000, multiplied by the pro6 portion of the population of the community that

7 resides in the State, for each of fiscal years

8 2001 through 2008.’’.

9 (3) TIMING OF GRANTS.—Section 2007(a)(3) of

10 such Act (42 U.S.C. 1397f(a)(3)) is amended—

11 (A) in the heading of subparagraph (A), by

12 inserting ‘‘ORIGINAL’’ before ‘‘QUALIFIED’’;

13 (B) in subparagraph (A), in the matter

14 preceding clause (i), by inserting ‘‘referred to in

15 paragraph (1)(A)’’ after ‘‘empowerment zone’’;

16 and

17 (C) by adding after subparagraph (B) the

18 following:

19 ‘‘(C) ADDITIONAL QUALIFIED EMPOWER20 MENT ZONES.—With respect to each qualified

21 empowerment zone referred to in paragraph

22 (1)(C), the Secretary shall make 1 grant under

23 this section to the State in which the zone is lo24 cated, on the first day of fiscal year 2001 and

25 of each of the 8 succeeding fiscal years.
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1 ‘‘(D) ADDITIONAL QUALIFIED ENTERPRISE

2 COMMUNITIES.—With respect to each qualified

3 enterprise community referred to in paragraph

4 (1)(D), the Secretary shall make 1 grant under

5 this section to the State in which the commu6 nity is located on the first day of fiscal year

7 2001 and each of the 7 succeeding fiscal

8 years.’’.

9 (4) FUNDING.—Section 2007(a)(4) of such Act

10 (42 U.S.C. 1397f(a)(4)) is amended—

11 (A) by striking ‘‘(4) FUNDING.—

12 $1,000,000,000’’ and inserting the following:

13 ‘‘(4) FUNDING.—

14 ‘‘(A) ORIGINAL GRANTS.—

15 $1,000,000,000’’;

16 (B) by inserting ‘‘for empowerment zones

17 and enterprise communities described in sub18 paragraphs (A) and (B) of paragraph (1)’’ be19 fore the period; and

20 (C) by adding after and below the end the

21 following:

22 ‘‘(B) ADDITIONAL EMPOWERMENT ZONE

23 GRANTS.—$1,535,000,000 shall be made avail24 able to the Secretary for grants under this sec-
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•S 2936 IS

1 tion for empowerment zones referred to in para2 graph (1)(C).

3 ‘‘(C) ADDITIONAL ENTERPRISE COMMU4 NITY GRANTS.—$40,000,000 shall be made

5 available to the Secretary for grants under this

6 section for enterprise communities referred to

7 in paragraph (1)(D).’’.

8 (5) DIRECT FUNDING FOR INDIAN TRIBES.—

9 Section 2007(a) of such Act (42 U.S.C. 1397f(a)) is

10 amended by adding at the end the following:

11 ‘‘(5) DIRECT FUNDING FOR INDIAN TRIBES.—

12 ‘‘(A) IN GENERAL.—The Secretary may

13 make a grant under this section directly to the

14 governing body of an Indian tribe if—

15 ‘‘(i) the tribe is identified in the stra16 tegic plan of a qualified empowerment zone

17 or qualified enterprise community as the

18 entity that assumes sole or primary re19 sponsibility for carrying out activities and

20 projects under the grant; and

21 ‘‘(ii) the grant is to be used for activi22 ties and projects that are—

23 ‘‘(I) included in the strategic

24 plan of the qualified empowerment
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1 zone or qualified enterprise commu2 nity, consistent with this section; and

3 ‘‘(II) approved by the Secretary

4 of Agriculture, in the case of a quali5 fied empowerment zone or qualified

6 enterprise community in a rural area,

7 or the Secretary of Housing and

8 Urban Development, in the case of a

9 qualified empowerment zone or quali10 fied enterprise community in an urban

11 area.

12 ‘‘(B) RULES OF INTERPRETATION.—

13 ‘‘(i) If grant under this section is

14 made directly to the governing body of an

15 Indian tribe under subparagraph (A), the

16 tribe shall be considered a State for pur17 poses of this section.

18 ‘‘(ii) This subparagraph shall not be

19 construed as making applicable to this sec20 tion the provisions of the Indian Self-De21 termination and Education Assistance

22 Act.’’.

23 (6) DEFINITIONS.—

24 (A) QUALIFIED ENTERPRISE COMMU25 NITY.—Section 2007(f)(2)(A) of such Act (42
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•S 2936 IS

1 U.S.C. 1397f(f)(2)(A)) is amended by inserting

2 ‘‘or pursuant to section 766 of the Agriculture,

3 Rural Development, Food and Drug Adminis4 tration, and Related Agencies Appropriations

5 Act, 1999’’ before the semicolon.

6 (B) STRATEGIC PLAN.—Section 2007(f)(3)

7 of such Act (42 U.S.C. 1397f(f)(3)) is amended

8 by inserting ‘‘or under section 766 of the Agri9 culture, Rural Development, Food and Drug

10 Administration, and Related Agencies Appro11 priations Act, 1999’’ before the period.

12 (C) INDIAN TRIBE.—Section 2007(f) of

13 such Act (42 U.S.C. 1397f(f)), as amended by

14 subparagraph (C), is amended by adding at the

15 end the following:

16 ‘‘(8) INDIAN TRIBE.—The term ‘Indian tribe’

17 means any Indian tribe, band, nation, or other orga18 nized group or community, including any Alaska Na19 tive village or regional or village corporation as de20 fined in or established pursuant to the Alaska Na21 tive Claims Settlement Act, which is recognized as

22 eligible for the special programs and services pro23 vided by the United States to Indians because of

24 their status as Indians.’’.

25 (b) USE OF GRANT FUNDS.—
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1 (1) REVOLVING LOAN ACTIVITIES.—Section

2 2007(b) of the Social Security Act (42 U.S.C.

3 1397f(b)) is amended by adding at the end the fol4 lowing:

5 ‘‘(5) REVOLVING LOAN ACTIVITIES.—

6 ‘‘(A) IN GENERAL.—In order to assist dis7 advantaged adults and youths in achieving and

8 maintaining economic self-support, a State may

9 use amounts paid under this section to fund re10 volving loan funds or similar arrangements for

11 the purpose of making loans to residents, insti12 tutions, organizations, or businesses.

13 ‘‘(B) RULES FOR DISBURSEMENT.—

14 Amounts to be used as described in subpara15 graph (A) shall be disbursed by the Secretary,

16 consistent with the provisions of the Cash Man17 agement Improvement Act and its implementing

18 rules, regulations, and procedures issued by the

19 Secretary of the Treasury—

20 ‘‘(i) in the case of a grant to a revolv21 ing loan fund—

22 ‘‘(I) pursuant to a written irrev23 ocable grant commitment; and

24 ‘‘(II) at such time or times as the

25 Secretary determines that the funds
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•S 2936 IS

1 are needed to meet the purposes of

2 such commitment; or

3 ‘‘(ii) in the case of a grant for pur4 poses of capitalizing an insured depository

5 institution (as defined in section 3 of the

6 Federal Deposit Insurance Act (12 U.S.C.

7 1813)) or an insured credit union (as de8 fined in section 101 of the Federal Credit

9 Union Act (12 U.S.C. 1742)), at such time

10 or times as the Secretary determines that

11 funds are needed for such capitalization.’’.

12 (2) USE AS NON-FEDERAL SHARE.—Section

13 2007(b) of such Act (42 U.S.C. 1397f(b)), as

14 amended by paragraph (1), is amended by adding at

15 the end the following:

16 ‘‘(6) A State may use amounts received from a

17 grant under this section to pay all or part of the

18 non-Federal share of expenditures under any other

19 Federal grant to a local public or nonprofit private

20 agency or organization for activities consistent with

21 the purposes of this section, unless the statutory au22 thority for such other grant expressly prohibits

23 counting of Federal grant funds as such non-Federal

24 share.’’.
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1 (c) ENVIRONMENTAL REVIEW.—Section 2007 of the

2 Social Security Act (42 U.S.C. 1397f) is amended—

3 (1) by redesignating subsection (f) as sub4 section (g); and

5 (2) by inserting after subsection (e) the fol6 lowing:

7 ‘‘(f) ENVIRONMENTAL REVIEW.—

8 ‘‘(1) EXECUTION OF RESPONSIBILITY BY THE

9 SECRETARY OF HOUSING AND URBAN DEVELOPMENT

10 AND THE SECRETARY OF AGRICULTURE.—

11 ‘‘(A) APPLICABILITY.—This subsection

12 shall apply to grants under this section in con13 nection with empowerment zones and enterprise

14 communities.

15 ‘‘(B) EXECUTION OF RESPONSIBILITY.—

16 With respect to grants described in subpara17 graph (A), the Secretary of Housing and Urban

18 Development and the Secretary of Agriculture,

19 as appropriate, shall execute the responsibilities

20 under the National Environmental Policy Act of

21 1969 and other provisions of law that further

22 the purposes of such Act (as specified in regula23 tions issued by each such Secretary under para24 graph (2)(B)) that would otherwise apply to the

25 Secretary of Health and Human Services, and
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•S 2936 IS

1 may provide for the assumption of such respon2 sibilities in accordance with paragraphs (2)

3 through (5).

4 ‘‘(C) DEFINITION OF SECRETARY.—Except

5 as otherwise specified, in this subsection, the

6 term ‘Secretary’ means the Secretary of Hous7 ing and Urban Development for purposes of

8 grants under this section with respect to quali9 fied empowerment zones and qualified enter10 prise communities in urban areas, and the Sec11 retary of Agriculture for purposes of grants

12 under this section with respect to qualified em13 powerment zones and qualified enterprise com14 munities in rural areas.

15 ‘‘(2) ASSUMPTION OF RESPONSIBILITY BY

16 STATES, UNITS OF GENERAL LOCAL GOVERNMENT,

17 AND INDIAN TRIBES.—

18 ‘‘(A) RELEASE OF FUNDS.—In order to as19 sure that the policies of the National Environ20 mental Policy Act of 1969 and other provisions

21 of law that further the purposes of such Act (as

22 specified in regulations issued by the Secretary

23 under subparagraph (B)) are most effectively

24 implemented in connection with the expenditure

25 of funds under this section, and to assure to the
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•S 2936 IS

1 public undiminished protection of the environ2 ment, the Secretary may, under such regula3 tions, in lieu of the environmental protection

4 procedures otherwise applicable, provide for the

5 release of funds for particular projects to recipi6 ents of assistance under this section if the

7 State, unit of general local government, or In8 dian tribe, as designated by the Secretary in ac9 cordance with regulations issued by the Sec10 retary under subparagraph (B), assumes all of

11 the responsibilities for environmental review,

12 decisionmaking, and action pursuant to such

13 Act, and such other provisions of law as the

14 regulations of the Secretary specify, that would

15 otherwise apply to the Secretary were the Sec16 retary to undertake such projects as Federal

17 projects.

18 ‘‘(B) IMPLEMENTATION.—The Secretary of

19 Housing and Urban Development and the Sec20 retary of Agriculture shall each issue regula21 tions to carry out this subsection only after con22 sultation with the Council on Environmental

23 Quality. Such regulations shall—

24 ‘‘(i) specify any other provisions of

25 law that further the purposes of the Na-
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•S 2936 IS

1 tional Environmental Policy Act of 1969

2 and to which the assumption of responsi3 bility as provided in this subsection ap4 plies;

5 ‘‘(ii) provide eligibility criteria and

6 procedures for the designation of a State,

7 unit of general local government, or Indian

8 tribe to assume all of the responsibilities

9 described in subparagraph (A);

10 ‘‘(iii) specify the purposes for which

11 funds may be committed without regard to

12 the procedure established under paragraph

13 (3);

14 ‘‘(iv) provide for monitoring of the

15 performance of environmental reviews

16 under this subsection;

17 ‘‘(v) in the discretion of the Secretary,

18 provide for the provision or facilitation of

19 training for such performance; and

20 ‘‘(vi) subject to the discretion of the

21 Secretary, provide for suspension or termi22 nation by the Secretary of the assumption

23 under subparagraph (A).

24 ‘‘(C) RESPONSIBILITIES OF STATE, UNIT

25 OF GENERAL LOCAL GOVERNMENT, OR INDIAN
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•S 2936 IS

1 TRIBE.—The Secretary’s duty under subpara2 graph (B) shall not be construed to limit any

3 responsibility assumed by a State, unit of gen4 eral local government, or Indian tribe with re5 spect to any particular release of funds under

6 subparagraph (A).

7 ‘‘(3) PROCEDURE.—The Secretary shall ap8 prove the release of funds for projects subject to the

9 procedures authorized by this subsection only if, not

10 less than 15 days prior to such approval and prior

11 to any commitment of funds to such projects (except

12 for such purposes specified in the regulations issued

13 under paragraph (2)(B)), the recipient submits to

14 the Secretary a request for such release accompanied

15 by a certification of the State, unit of general local

16 government, or Indian tribe that meets the require17 ments of paragraph (4). The approval by the Sec18 retary of any such certification shall be deemed to

19 satisfy the Secretary’s responsibilities pursuant to

20 paragraph (1) under the National Environmental

21 Policy Act of 1969 and such other provisions of law

22 as the regulations of the Secretary specify insofar as

23 those responsibilities relate to the releases of funds

24 for projects to be carried out pursuant thereto that

25 are covered by such certification.
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1 ‘‘(4) CERTIFICATION.—A certification under the

2 procedures authorized by this subsection shall—

3 ‘‘(A) be in a form acceptable to the Sec4 retary;

5 ‘‘(B) be executed by the chief executive of6 ficer or other officer of the State, unit of gen7 eral local government, or Indian tribe who

8 qualifies under regulations of the Secretary;

9 ‘‘(C) specify that the State, unit of general

10 local government, or Indian tribe under this

11 subsection has fully carried out its responsibil12 ities as described under paragraph (2); and

13 ‘‘(D) specify that the certifying officer—

14 ‘‘(i) consents to assume the status of

15 a responsible Federal official under the

16 National Environmental Policy Act of

17 1969 and each provision of law specified in

18 regulations issued by the Secretary insofar

19 as the provisions of such Act or other such

20 provisions of law apply pursuant to para21 graph (2); and

22 ‘‘(ii) is authorized and consents on be23 half of the State, unit of general local gov24 ernment, or Indian tribe and himself or

25 herself to accept the jurisdiction of the
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•S 2936 IS

1 Federal courts for the purpose of enforce2 ment of the responsibilities as such an offi3 cial.

4 ‘‘(5) APPROVAL BY STATES.—In cases in which

5 a unit of general local government carries out the re6 sponsibilities described in paragraph (2), the Sec7 retary may permit the State to perform those ac8 tions of the Secretary described in paragraph (3).

9 The performance of such actions by the State, where

10 permitted, shall be deemed to satisfy the responsibil11 ities referred to in the second sentence of paragraph

12 (3).’’.

13 SEC. 411. EXTENSION OF TERMINATION DATE FOR EXPENS14 ING OF ENVIRONMENTAL REMEDIATION

15 COSTS; EXTENSION TO RENEWAL COMMU16 NITIES.

17 (a) EXTENSION OF TERMINATION DATE.—Sub18 section (h) of section 198 is amended by inserting before

19 the period ‘‘(December 31, 2009, in the case of an em20 powerment zone or renewal community)’’.

21 (b) EXTENSION.—

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

23 198(c)(2) (defining targeted area) is amended by

24 striking ‘‘and’’ at the end of clause (iii), by striking

25 the period at the end of clause (iv) and inserting ‘‘,
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•S 2936 IS

1 and’’, and by adding at the end the following new

2 clause:

3 ‘‘(v) any renewal community (as de4 fined in section 1400E).’’.

5 (2) EFFECTIVE DATE.—The amendment made

6 by paragraph (1) shall apply to expenditures paid or

7 incurred after December 31, 2000.

8 TITLE V—AMERICAN

9 COMMUNITY RENEWAL

10 SEC. 501. DESIGNATION OF AND TAX INCENTIVES FOR RE11 NEWAL COMMUNITIES.

12 (a) IN GENERAL.—Chapter 1 is amended by adding

13 at the end the following new subchapter:

14 ‘‘Subchapter X—Renewal Communities

‘‘Part I. Designation.

‘‘Part II. Renewal community capital gain; renewal community

business.

‘‘Part III. Additional incentives.

15 ‘‘PART I—DESIGNATION

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

16 ‘‘SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

17 ‘‘(a) DESIGNATION.—

18 ‘‘(1) DEFINITIONS.—For purposes of this title,

19 the term ‘renewal community’ means any area—

20 ‘‘(A) which is nominated by one or more

21 local governments and the State or States in

22 which it is located for designation as a renewal
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•S 2936 IS

1 community (hereinafter in this section referred

2 to as a ‘nominated area’), and

3 ‘‘(B) which the Secretary of Housing and

4 Urban Development designates as a renewal

5 community, after consultation with—

6 ‘‘(i) the Secretaries of Agriculture,

7 Commerce, Labor, and the Treasury; the

8 Director of the Office of Management and

9 Budget, and the Administrator of the

10 Small Business Administration, and

11 ‘‘(ii) in the case of an area on an In12 dian reservation, the Secretary of the Inte13 rior.

14 ‘‘(2) NUMBER OF DESIGNATIONS.—

15 ‘‘(A) IN GENERAL.—The Secretary of

16 Housing and Urban Development may des17 ignate not more than 40 nominated areas as re18 newal communities.

19 ‘‘(B) MINIMUM DESIGNATION IN RURAL

20 AREAS.—Of the areas designated under para21 graph (1), at least 20 percent must be areas—

22 ‘‘(i) which are within a local govern23 ment jurisdiction or jurisdictions with a

24 population of less than 50,000,
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1 ‘‘(ii) which are outside of a metropoli2 tan statistical area (within the meaning of

3 section 143(k)(2)(B)), or

4 ‘‘(iii) which are determined by the

5 Secretary of Housing and Urban Develop6 ment, after consultation with the Secretary

7 of Commerce, to be rural areas.

8 ‘‘(3) AREAS DESIGNATED BASED ON DEGREE

9 OF POVERTY, ETC.—

10 ‘‘(A) IN GENERAL.—Except as otherwise

11 provided in this section, the nominated areas

12 designated as renewal communities under this

13 subsection shall be those nominated areas with

14 the highest average ranking with respect to the

15 criteria described in subparagraphs (B), (C),

16 and (D) of subsection (c)(3). For purposes of

17 the preceding sentence, an area shall be ranked

18 within each such criterion on the basis of the

19 amount by which the area exceeds such cri20 terion, with the area which exceeds such cri21 terion by the greatest amount given the highest

22 ranking.

23 ‘‘(B) EXCEPTION WHERE INADEQUATE

24 COURSE OF ACTION, ETC.—An area shall not be

25 designated under subparagraph (A) if the Sec-
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1 retary of Housing and Urban Development de2 termines that the course of action described in

3 subsection (d)(2) with respect to such area is

4 inadequate.

5 ‘‘(4) LIMITATION ON DESIGNATIONS.—

6 ‘‘(A) PUBLICATION OF REGULATIONS.—

7 The Secretary of Housing and Urban Develop8 ment shall prescribe by regulation no later than

9 4 months after the date of the enactment of

10 this section, after consultation with the officials

11 described in paragraph (1)(B)—

12 ‘‘(i) the procedures for nominating an

13 area under paragraph (1)(A),

14 ‘‘(ii) the parameters relating to the

15 size and population characteristics of a re16 newal community, and

17 ‘‘(iii) the manner in which nominated

18 areas will be evaluated based on the cri19 teria specified in subsection (d).

20 ‘‘(B) TIME LIMITATIONS.—The Secretary

21 of Housing and Urban Development may des22 ignate nominated areas as renewal communities

23 only during the 24-month period beginning on

24 the first day of the first month following the
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1 month in which the regulations described in

2 subparagraph (A) are prescribed.

3 ‘‘(C) PROCEDURAL RULES.—The Secretary

4 of Housing and Urban Development shall not

5 make any designation of a nominated area as a

6 renewal community under paragraph (2)

7 unless—

8 ‘‘(i) the local governments and the

9 States in which the nominated area is lo10 cated have the authority—

11 ‘‘(I) to nominate such area for

12 designation as a renewal community,

13 ‘‘(II) to make the State and local

14 commitments described in subsection

15 (d), and

16 ‘‘(III) to provide assurances sat17 isfactory to the Secretary of Housing

18 and Urban Development that such

19 commitments will be fulfilled,

20 ‘‘(ii) a nomination regarding such

21 area is submitted in such a manner and in

22 such form, and contains such information,

23 as the Secretary of Housing and Urban

24 Development shall by regulation prescribe,

25 and
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1 ‘‘(iii) the Secretary of Housing and

2 Urban Development determines that any

3 information furnished is reasonably accu4 rate.

5 ‘‘(5) NOMINATION PROCESS FOR INDIAN RES6 ERVATIONS.—For purposes of this subchapter, in

7 the case of a nominated area on an Indian reserva8 tion, the reservation governing body (as determined

9 by the Secretary of the Interior) shall be treated as

10 being both the State and local governments with re11 spect to such area.

12 ‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF13 FECT.—

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

15 as a renewal community shall remain in effect dur16 ing the period beginning on January 1, 2001, and

17 ending on the earliest of—

18 ‘‘(A) December 31, 2009,

19 ‘‘(B) the termination date designated by

20 the State and local governments in their nomi21 nation, or

22 ‘‘(C) the date the Secretary of Housing

23 and Urban Development revokes such designa24 tion.
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1 ‘‘(2) REVOCATION OF DESIGNATION.—The Sec2 retary of Housing and Urban Development may re3 voke the designation under this section of an area if

4 such Secretary determines that the local government

5 or the State in which the area is located—

6 ‘‘(A) has modified the boundaries of the

7 area, or

8 ‘‘(B) is not complying substantially with,

9 or fails to make progress in achieving, the State

10 or local commitments, respectively, described in

11 subsection (d).

12 ‘‘(3) EARLIER TERMINATION OF ENVIRON13 MENTAL REMEDIATION EXPENSING IF EARLIER TER14 MINATION OF DESIGNATION.—If the designation of

15 an area as a renewal community terminates before

16 December 31, 2009, the date of such termination

17 shall be substituted for ‘December 31, 2009’ in sec18 tion 198(h) with respect to such area.

19 ‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—

20 ‘‘(1) IN GENERAL.—The Secretary of Housing

21 and Urban Development may designate a nominated

22 area as a renewal community under subsection (a)

23 only if the area meets the requirements of para24 graphs (2) and (3) of this subsection.
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1 ‘‘(2) AREA REQUIREMENTS.—A nominated area

2 meets the requirements of this paragraph if—

3 ‘‘(A) the area is within the jurisdiction of

4 one or more local governments,

5 ‘‘(B) the boundary of the area is contin6 uous, and

7 ‘‘(C) the area—

8 ‘‘(i) has a population, of at least—

9 ‘‘(I) 4,000 if any portion of such

10 area (other than a rural area de11 scribed in subsection (a)(2)(B)(i)) is

12 located within a metropolitan statis13 tical area (within the meaning of sec14 tion 143(k)(2)(B)) which has a popu15 lation of 50,000 or greater, or

16 ‘‘(II) 1,000 in any other case, or

17 ‘‘(ii) is entirely within an Indian res18 ervation (as determined by the Secretary of

19 the Interior).

20 ‘‘(3) ELIGIBILITY REQUIREMENTS.—A nomi21 nated area meets the requirements of this paragraph

22 if the State and the local governments in which it

23 is located certify (and the Secretary of Housing and

24 Urban Development, after such review of supporting
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•S 2936 IS

1 data as he deems appropriate, accepts such certifi2 cation) that—

3 ‘‘(A) the area is one of pervasive poverty

4 and general distress,

5 ‘‘(B) the poverty rate for each population

6 census tract within the nominated area is at

7 least 20 percent, and

8 ‘‘(C) in the case of an urban area, at least

9 70 percent of the households living in the area

10 have incomes below 80 percent of the median

11 income of households within the jurisdiction of

12 the local government (determined in the same

13 manner as under section 119(b)(2) of the

14 Housing and Community Development Act of

15 1974).

16 ‘‘(4) CONSIDERATION OF HIGH INCIDENCE OF

17 CRIME.—The Secretary of Housing and Urban De18 velopment shall take into account, in selecting nomi19 nated areas for designation as renewal communities

20 under this section, the extent to which such areas

21 have a high incidence of crime.

22 ‘‘(5) CONSIDERATION OF COMMUNITIES IDENTI23 FIED IN GAO STUDY.—The Secretary of Housing

24 and Urban Development shall take into account, in

25 selecting nominated areas for designation as renewal
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1 communities under this section, if the area has cen2 sus tracts identified in the May 12, 1998, report of

3 the Government Accounting Office regarding the

4 identification of economically distressed areas.

5 ‘‘(d) REQUIRED STATE AND LOCAL COMMIT6 MENTS.—

7 ‘‘(1) IN GENERAL.—The Secretary of Housing

8 and Urban Development may designate any nomi9 nated area as a renewal community under subsection

10 (a) only if—

11 ‘‘(A) the local government and the State in

12 which the area is located agree in writing that,

13 during any period during which the area is a

14 renewal community, such governments will fol15 low a specified course of action which meets the

16 requirements of paragraph (2) and is designed

17 to reduce the various burdens borne by employ18 ers or employees in such area, and

19 ‘‘(B) the economic growth promotion re20 quirements of paragraph (3) are met.

21 ‘‘(2) COURSE OF ACTION.—

22 ‘‘(A) IN GENERAL.—A course of action

23 meets the requirements of this paragraph if

24 such course of action is a written document,

25 signed by a State (or local government) and
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1 neighborhood organizations, which evidences a

2 partnership between such State or government

3 and community-based organizations and which

4 commits each signatory to specific and measur5 able goals, actions, and timetables. Such course

6 of action shall include at least 4 of the fol7 lowing:

8 ‘‘(i) A reduction of tax rates or fees

9 applying within the renewal community.

10 ‘‘(ii) An increase in the level of effi11 ciency of local services within the renewal

12 community.

13 ‘‘(iii) Crime reduction strategies, such

14 as crime prevention (including the provi15 sion of such services by nongovernmental

16 entities).

17 ‘‘(iv) Actions to reduce, remove, sim18 plify, or streamline governmental require19 ments applying within the renewal commu20 nity.

21 ‘‘(v) Involvement in the program by

22 private entities, organizations, neighbor23 hood organizations, and community

24 groups, particularly those in the renewal

25 community, including a commitment from
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1 such private entities to provide jobs and

2 job training for, and technical, financial, or

3 other assistance to, employers, employees,

4 and residents from the renewal community.

5 ‘‘(vi) The gift (or sale at below fair

6 market value) of surplus real property

7 (such as land, homes, and commercial or

8 industrial structures) in the renewal com9 munity to neighborhood organizations,

10 community development corporations, or

11 private companies.

12 ‘‘(B) RECOGNITION OF PAST EFFORTS.—

13 For purposes of this section, in evaluating the

14 course of action agreed to by any State or local

15 government, the Secretary of Housing and

16 Urban Development shall take into account the

17 past efforts of such State or local government

18 in reducing the various burdens borne by em19 ployers and employees in the area involved.

20 ‘‘(3) ECONOMIC GROWTH PROMOTION REQUIRE21 MENTS.—The economic growth promotion require22 ments of this paragraph are met with respect to a

23 nominated area if the local government and the

24 State in which such area is located certify in writing

25 that such government and State (respectively) have
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1 repealed, will not enforce, or will reduce within the

2 area at least 4 of the following if such area is des3 ignated as a renewal community:

4 ‘‘(A) Licensing requirements for occupa5 tions that do not ordinarily require a profes6 sional degree.

7 ‘‘(B) Zoning restrictions on home-based

8 businesses which do not create a public nui9 sance.

10 ‘‘(C) Permit requirements for street ven11 dors who do not create a public nuisance.

12 ‘‘(D) Zoning or other restrictions that im13 pede the formation of schools or child care cen14 ters.

15 ‘‘(E) Franchises or other restrictions on

16 competition for businesses providing public

17 services, including taxicabs, jitneys, cable tele18 vision, or trash hauling.

19 This paragraph shall not apply to the extent that

20 such regulation of businesses and occupations is nec21 essary for and well-tailored to the protection of

22 health and safety.

23 ‘‘(e) COORDINATION WITH TREATMENT OF EM24 POWERMENT ZONES AND ENTERPRISE COMMUNITIES.—
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1 ‘‘(1) IN GENERAL.—For purposes of this title,

2 the designation under section 1391 of any area as

3 an empowerment zone or enterprise community shall

4 cease to be in effect as of the date that any portion

5 of such area is designated as a renewal community.

6 ‘‘(2) SPECIAL RULE FOR WAGE CREDIT.—For

7 purposes of section 1400H (relating to renewal com8 munity employment credit)—

9 ‘‘(A) there shall not be taken into account

10 wages taken into account under section 1396

11 (without regard to section 1400H), and

12 ‘‘(B) the $15,000 amount in section

13 1396(c) shall (in applying section 1400H) be

14 reduced for any calendar year by the amount of

15 wages paid or incurred during such year which

16 are taken into account in determining the credit

17 under section 1396 (without regard to section

18 1400H).

19 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur20 poses of this subchapter—

21 ‘‘(1) GOVERNMENTS.—If more than one govern22 ment seeks to nominate an area as a renewal com23 munity, any reference to, or requirement of, this sec24 tion shall apply to all such governments.
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1 ‘‘(2) LOCAL GOVERNMENT.—The term ‘local

2 government’ means—

3 ‘‘(A) any county, city, town, township, par4 ish, village, or other general purpose political

5 subdivision of a State, and

6 ‘‘(B) any combination of political subdivi7 sions described in subparagraph (A) recognized

8 by the Secretary of Housing and Urban Devel9 opment.

10 ‘‘(3) STATE.—The term ‘State’ means the sev11 eral States.

12 ‘‘(4) APPLICATION OF RULES RELATING TO

13 CENSUS TRACTS.—The rules of sections 1392(b)(4)

14 shall apply.

15 ‘‘(5) CENSUS DATA.—Population and poverty

16 rate shall be determined by using 1990 census data.

17 ‘‘PART II—RENEWAL COMMUNITY CAPITAL GAIN;

18 RENEWAL COMMUNITY BUSINESS

‘‘Sec. 1400F. Renewal community capital gain.

‘‘Sec. 1400G. Renewal community business defined.

19 ‘‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

20 ‘‘(a) GENERAL RULE.—Gross income does not in21 clude any qualified capital gain recognized on the sale or

22 exchange of a qualified community asset held for more

23 than 5 years.
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1 ‘‘(b) QUALIFIED COMMUNITY ASSET.—For purposes

2 of this section—

3 ‘‘(1) IN GENERAL.—The term ‘qualified com4 munity asset’ means—

5 ‘‘(A) any qualified community stock,

6 ‘‘(B) any qualified community partnership

7 interest, and

8 ‘‘(C) any qualified community business

9 property.

10 ‘‘(2) QUALIFIED COMMUNITY STOCK.—

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

12 subparagraph (B), the term ‘qualified commu13 nity stock’ means any stock in a domestic cor14 poration if—

15 ‘‘(i) such stock is acquired by the tax16 payer after December 31, 2000, and before

17 January 1, 2010, at its original issue (di18 rectly or through an underwriter) from the

19 corporation solely in exchange for cash,

20 ‘‘(ii) as of the time such stock was

21 issued, such corporation was a renewal

22 community business (or, in the case of a

23 new corporation, such corporation was

24 being organized for purposes of being a re25 newal community business), and
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1 ‘‘(iii) during substantially all of the

2 taxpayer’s holding period for such stock,

3 such corporation qualified as a renewal

4 community business.

5 ‘‘(B) REDEMPTIONS.—A rule similar to

6 the rule of section 1202(c)(3) shall apply for

7 purposes of this paragraph.

8 ‘‘(3) QUALIFIED COMMUNITY PARTNERSHIP IN9 TEREST.—The term ‘qualified community partner10 ship interest’ means any capital or profits interest in

11 a domestic partnership if—

12 ‘‘(A) such interest is acquired by the tax13 payer after December 31, 2000, and before

14 January 1, 2010, from the partnership solely in

15 exchange for cash,

16 ‘‘(B) as of the time such interest was ac17 quired, such partnership was a renewal commu18 nity business (or, in the case of a new partner19 ship, such partnership was being organized for

20 purposes of being a renewal community busi21 ness), and

22 ‘‘(C) during substantially all of the tax23 payer’s holding period for such interest, such

24 partnership qualified as a renewal community

25 business.
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•S 2936 IS

1 A rule similar to the rule of paragraph (2)(B) shall

2 apply for purposes of this paragraph.

3 ‘‘(4) QUALIFIED COMMUNITY BUSINESS PROP4 ERTY.—

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

6 community business property’ means tangible

7 property if—

8 ‘‘(i) such property was acquired by

9 the taxpayer by purchase (as defined in

10 section 179(d)(2)) after December 31,

11 2000, and before January 1, 2010,

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

13 in the renewal community commences with

14 the taxpayer, and

15 ‘‘(iii) during substantially all of the

16 taxpayer’s holding period for such prop17 erty, substantially all of the use of such

18 property was in a renewal community busi19 ness of the taxpayer.

20 ‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM21 PROVEMENTS.—The requirements of clauses (i)

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

23 satisfied with respect to—
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•S 2936 IS

1 ‘‘(i) property which is substantially

2 improved by the taxpayer before January

3 1, 2010, and

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

5 is located.

6 The determination of whether a property is sub7 stantially improved shall be made under clause

8 (ii) of section 1400B(b)(4)(B), except that ‘De9 cember 31, 2000’ shall be substituted for ‘De10 cember 31, 1997’ in such clause.

11 ‘‘(c) QUALIFIED CAPITAL GAIN.—For purposes of

12 this section—

13 ‘‘(1) IN GENERAL.—Except as otherwise pro14 vided in this subsection, the term ‘qualified capital

15 gain’ means any gain recognized on the sale or ex16 change of—

17 ‘‘(A) a capital asset, or

18 ‘‘(B) property used in the trade or busi19 ness (as defined in section 1231(b).

20 ‘‘(2) GAIN BEFORE 2001 OR AFTER 2014 NOT

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

22 not include any gain attributable to periods before

23 January 1, 2001, or after December 31, 2014.

24 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar

25 to the rules of paragraphs (3), (4), and (5) of sec-
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•S 2936 IS

1 tion 1400B(e) shall apply for purposes of this sub2 section.

3 ‘‘(d) CERTAIN RULES TO APPLY.—For purposes of

4 this section, rules similar to the rules of paragraphs (5),

5 (6), and (7) of subsection (b), and subsections (f ) and

6 (g), of section 1400B shall apply; except that for such pur7 poses section 1400B(g)(2) shall be applied by substituting

8 ‘January 1, 2001’ for ‘January 1, 1998’ and ‘December

9 31, 2014’ for ‘December 31, 2007’.

10 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

11 such regulations as may be appropriate to carry out the

12 purposes of this section, including regulations to prevent

13 the avoidance of the purposes of this section.

14 ‘‘SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

15 ‘‘For purposes of this subchapter, the term ‘renewal

16 community business’ means any entity or proprietorship

17 which would be a qualified business entity or qualified pro18 prietorship under section 1397C if references to renewal

19 communities were substituted for references to empower20 ment zones in such section.

21 ‘‘PART III—ADDITIONAL INCENTIVES

‘‘Sec. 1400H. Renewal community employment credit.

‘‘Sec. 1400I. Commercial revitalization deduction.

‘‘Sec. 1400J. Increase in expensing under section 179.

22 ‘‘SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

23 ‘‘(a) IN GENERAL.—Subject to the modification in

24 subsection (b), a renewal community shall be treated as
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1 an empowerment zone for purposes of section 1396 with

2 respect to wages paid or incurred after December 31,

3 2000.

4 ‘‘(b) MODIFICATION.—In applying section 1396 with

5 respect to renewal communities—

6 ‘‘(1) the applicable percentage shall be 15 per7 cent, and

8 ‘‘(2) subsection (c) thereof shall be applied by

9 substituting ‘$10,000’ for ‘$15,000’ each place it ap10 pears.

11 ‘‘SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

12 ‘‘(a) GENERAL RULE.—At the election of the tax13 payer, either—

14 ‘‘(1) one-half of any qualified revitalization ex15 penditures chargeable to capital account with respect

16 to any qualified revitalization building shall be allow17 able as a deduction for the taxable year in which the

18 building is placed in service, or

19 ‘‘(2) a deduction for all such expenditures shall

20 be allowable ratably over the 120-month period be21 ginning with the month in which the building is

22 placed in service.

23 ‘‘(b) QUALIFIED REVITALIZATION BUILDINGS AND

24 EXPENDITURES.—For purposes of this section—
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•S 2936 IS

1 ‘‘(1) QUALIFIED REVITALIZATION BUILDING.—

2 The term ‘qualified revitalization building’ means

3 any building (and its structural components) if—

4 ‘‘(A) such building is located in a renewal

5 community and is placed in service after De6 cember 31, 2000,

7 ‘‘(B) a commercial revitalization deduction

8 amount is allocated to the building under sub9 section (d), and

10 ‘‘(C) depreciation is allowable with respect

11 to the building (without regard to this section).

12 ‘‘(2) QUALIFIED REVITALIZATION EXPENDI13 TURE.—

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

15 revitalization expenditure’ means any amount

16 properly chargeable to capital account—

17 ‘‘(i) for property for which deprecia18 tion is allowable under section 168 (with19 out regard to this section) and which is—

20 ‘‘(I) nonresidential real property,

21 or

22 ‘‘(II) an addition or improvement

23 to property described in subclause (I),

24 ‘‘(ii) in connection with the construc25 tion of any qualified revitalization building
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•S 2936 IS

1 which was not previously placed in service

2 or in connection with the substantial reha3 bilitation (within the meaning of section

4 47(c)(1)(C)) of a building which was

5 placed in service before the beginning of

6 such rehabilitation, and

7 ‘‘(iii) for land (including land which is

8 functionally related to such property and

9 subordinate thereto).

10 ‘‘(B) DOLLAR LIMITATION.—The aggre11 gate amount which may be treated as qualified

12 revitalization expenditures with respect to any

13 qualified revitalization building for any taxable

14 year shall not exceed the excess of—

15 ‘‘(i) $10,000,000, reduced by

16 ‘‘(ii) any such expenditures with re17 spect to the building taken into account by

18 the taxpayer or any predecessor in deter19 mining the amount of the deduction under

20 this section for all preceding taxable years.

21 ‘‘(C) CERTAIN EXPENDITURES NOT IN22 CLUDED.—The term ‘qualified revitalization ex23 penditure’ does not include—

24 ‘‘(i) ACQUISITION COSTS.—The costs

25 of acquiring any building or interest there-
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1 in and any land in connection with such

2 building to the extent that such costs ex3 ceed 30 percent of the qualified revitaliza4 tion expenditures determined without re5 gard to this clause.

6 ‘‘(ii) CREDITS.—Any expenditure

7 which the taxpayer may take into account

8 in computing any credit allowable under

9 this title unless the taxpayer elects to take

10 the expenditure into account only for pur11 poses of this section.

12 ‘‘(c) LIMITATION ON AGGREGATE EXPENDITURES

13 ALLOWABLE WITH RESPECT TO BUILDINGS LOCATED IN

14 A STATE.—

15 ‘‘(1) IN GENERAL.—The aggregate qualified re16 vitalization expenditures chargeable to capital ac17 count with respect to any building which may be

18 taken into account in determining the deduction

19 under this section with respect to such building shall

20 not exceed the commercial revitalization expenditure

21 amount allocated to such building under this sub22 section by the commercial revitalization agency.

23 Such allocation shall be made at the same time and

24 in the same manner as under paragraphs (1) and

25 (7) of section 42(h).
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1 ‘‘(2) COMMERCIAL REVITALIZATION EXPENDI2 TURE AMOUNT FOR AGENCIES.—

3 ‘‘(A) IN GENERAL.—The aggregate com4 mercial revitalization expenditure amount which

5 a commercial revitalization agency may allocate

6 for any calendar year is the amount of the

7 State commercial revitalization expenditure ceil8 ing determined under this paragraph for such

9 calendar year for such agency.

10 ‘‘(B) STATE COMMERCIAL REVITALIZATION

11 EXPENDITURE CEILING.—The State commercial

12 revitalization expenditure ceiling applicable to

13 any State—

14 ‘‘(i) for each calendar year after 2000

15 and before 2010 is $12,000,000 for each

16 renewal community in the State, and

17 ‘‘(ii) for each calendar year thereafter

18 is zero.

19 ‘‘(C) COMMERCIAL REVITALIZATION AGEN20 CY.—For purposes of this section, the term

21 ‘commercial revitalization agency’ means any

22 agency authorized by a State to carry out this

23 section.

24 ‘‘(d) RESPONSIBILITIES OF COMMERCIAL REVITAL25 IZATION AGENCIES.—
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1 ‘‘(1) PLANS FOR ALLOCATION.—Notwith2 standing any other provision of this section, the

3 commercial revitalization deduction amount with re4 spect to any building shall be zero unless—

5 ‘‘(A) such amount was allocated pursuant

6 to a qualified allocation plan of the commercial

7 revitalization agency which is approved (in ac8 cordance with rules similar to the rules of sec9 tion 147(f)(2) (other than subparagraph (B)(ii)

10 thereof)) by the governmental unit of which

11 such agency is a part, and

12 ‘‘(B) such agency notifies the chief execu13 tive officer (or its equivalent) of the local juris14 diction within which the building is located of

15 such allocation and provides such individual a

16 reasonable opportunity to comment on the allo17 cation.

18 ‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur19 poses of this subsection, the term ‘qualified alloca20 tion plan’ means any plan—

21 ‘‘(A) which sets forth selection criteria to

22 be used to determine priorities of the commer23 cial revitalization agency which are appropriate

24 to local conditions,

25 ‘‘(B) which considers—
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•S 2936 IS

1 ‘‘(i) the degree to which a project con2 tributes to the implementation of a stra3 tegic plan that is devised for a renewal

4 community through a citizen participation

5 process,

6 ‘‘(ii) the amount of any increase in

7 permanent, full-time employment by reason

8 of any project, and

9 ‘‘(iii) the active involvement of resi10 dents and nonprofit groups within the re11 newal community, and

12 ‘‘(C) which provides a procedure that the

13 agency (or its agent) will follow in monitoring

14 compliance with this section.

15 ‘‘(e) SPECIAL RULES.—

16 ‘‘(1) DEDUCTION IN LIEU OF DEPRECIATION.—

17 The deduction provided by this section for qualified

18 revitalization expenditures shall—

19 ‘‘(A) with respect to the deduction deter20 mined under subsection (a)(1), be in lieu of any

21 depreciation deduction otherwise allowable on

account of 1 22 ⁄2 of such expenditures, and

23 ‘‘(B) with respect to the deduction deter24 mined under subsection (a)(2), be in lieu of any
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•S 2936 IS

1 depreciation deduction otherwise allowable on

2 account of all of such expenditures.

3 ‘‘(2) BASIS ADJUSTMENT, ETC.—For purposes

4 of sections 1016 and 1250, the deduction under this

5 section shall be treated in the same manner as a de6 preciation deduction. For purposes of section

7 1250(b)(5), the straight line method of adjustment

8 shall be determined without regard to this section.

9 ‘‘(3) SUBSTANTIAL REHABILITATIONS TREATED

10 AS SEPARATE BUILDINGS.—A substantial rehabilita11 tion (within the meaning of section 47(c)(1)(C)) of

12 a building shall be treated as a separate building for

13 purposes of subsection (a).

14 ‘‘(4) CLARIFICATION OF ALLOWANCE OF DE15 DUCTION UNDER MINIMUM TAX.—Notwithstanding

16 section 56(a)(1), the deduction under this section

17 shall be allowed in determining alternative minimum

18 taxable income under section 55.

19 ‘‘(f) REGULATIONS.—For purposes of this section,

20 the Secretary shall, by regulations, provide for the applica21 tion of rules similar to the rules of section 49 and sub22 sections (a) and (b) of section 50.

23 ‘‘(g) TERMINATION.—This section shall not apply to

24 any building placed in service after December 31, 2009.
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1 ‘‘SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

2 ‘‘(a) IN GENERAL.—For purposes of section

3 1397A—

4 ‘‘(1) a renewal community shall be treated as

5 an empowerment zone,

6 ‘‘(2) a renewal community business shall be

7 treated as an empowerment zone business, and

8 ‘‘(3) qualified renewal property shall be treated

9 as enterprise zone property.

10 ‘‘(b) QUALIFIED RENEWAL PROPERTY.—For pur11 poses of this section—

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

13 property’ means any property to which section 168

14 applies (or would apply but for section 179) if—

15 ‘‘(A) such property was acquired by the

16 taxpayer by purchase (as defined in section

17 179(d)(2)) after December 31, 2000, and be18 fore January 1, 2010, and

19 ‘‘(B) such property would be qualified zone

20 property (as defined in section 1397D) if ref21 erences to renewal communities were sub22 stituted for references to empowerment zones in

23 section 1397D.

24 ‘‘(2) CERTAIN RULES TO APPLY.—The rules of

25 subsections (a)(2) and (b) of section 1397D shall

26 apply for purposes of this section.’’.
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1 (b) EXCEPTION FOR COMMERCIAL REVITALIZATION

2 DEDUCTION FROM PASSIVE LOSS RULES.—

3 (1) Paragraph (3) of section 469(i) is amended

4 by redesignating subparagraphs (C), (D), and (E) as

5 subparagraphs (D), (E), and (F), respectively, and

6 by inserting after subparagraph (B) the following

7 new subparagraph:

8 ‘‘(C) EXCEPTION FOR COMMERCIAL REVI9 TALIZATION DEDUCTION.—Subparagraph (A)

10 shall not apply to any portion of the passive ac11 tivity loss for any taxable year which is attrib12 utable to the commercial revitalization deduc13 tion under section 1400I.’’.

14 (2) Subparagraph (E) of section 469(i)(3), as

15 redesignated by subparagraph (A), is amended to

16 read as follows:

17 ‘‘(E) ORDERING RULES TO REFLECT EX18 CEPTIONS AND SEPARATE PHASE-OUTS.—If

19 subparagraph (B), (C), or (D) applies for a tax20 able year, paragraph (1) shall be applied—

21 ‘‘(i) first to the portion of the passive

22 activity loss to which subparagraph (C)

23 does not apply,
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1 ‘‘(ii) second to the portion of the pas2 sive activity credit to which subparagraph

3 (B) or (D) does not apply,

4 ‘‘(iii) third to the portion of such

5 credit to which subparagraph (B) applies,

6 ‘‘(iv) fourth to the portion of such loss

7 to which subparagraph (C) applies, and

8 ‘‘(v) then to the portion of such credit

9 to which subparagraph (D) applies.’’.

10 (3)(A) Subparagraph (B) of section 469(i)(6) is

11 amended by striking ‘‘or’’ at the end of clause (i),

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

13 inserting ‘‘, or’’, and by adding at the end the fol14 lowing new clause:

15 ‘‘(iii) any deduction under section

16 1400I (relating to commercial revitaliza17 tion deduction).’’.

18 (B) The heading for such subparagraph (B) is

19 amended by striking ‘‘OR REHABILITATION CREDIT’’

20 and inserting ‘‘, REHABILITATION CREDIT, OR COM21 MERCIAL REVITALIZATION DEDUCTION’’.

22 (c) CLERICAL AMENDMENT.—The table of sub23 chapters for chapter 1 is amended by adding at the end

24 the following new item:

‘‘Subchapter X. Renewal Communities.’’.
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1 SEC. 502. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH

2 RESIDING IN RENEWAL COMMUNITIES.

3 (a) HIGH-RISK YOUTH.—Subparagraphs (A)(ii) and

4 (B) of section 51(d)(5) are each amended by striking ‘‘em5 powerment zone or enterprise community’’ and inserting

6 ‘‘empowerment zone, enterprise community, or renewal

7 community’’.

8 (b) QUALIFIED SUMMER YOUTH EMPLOYEE.—

9 Clause (iv) of section 51(d)(7)(A) is amended by striking

10 ‘‘empowerment zone or enterprise community’’ and insert11 ing ‘‘empowerment zone, enterprise community, or re12 newal community’’.

13 (c) HEADINGS.—Paragraphs (5)(B) and (7)(C) of

14 section 51(d) are each amended by inserting ‘‘OR COMMU15 NITY’’ in the heading after ‘‘ZONE’’.

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

17 this section shall apply to individuals who begin work for

18 the employer after December 31, 2000.

19 SEC. 503. EVALUATION AND REPORTING REQUIREMENTS.

20 Not later than the close of the fourth calendar year

21 after the year in which the Secretary of Housing and

22 Urban Development first designates an area as a renewal

23 community under section 1400E of the Internal Revenue

24 Code of 1986, and at the close of each fourth calendar

25 year thereafter, such Secretary shall prepare and submit

26 to the Congress a report on the effects of such designa-
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1 tions in stimulating the creation of new jobs, particularly

2 for disadvantaged workers and long-term unemployed in3 dividuals, and promoting the revitalization of economically

4 distressed areas.

5 TITLE VI—HOMEOWNERSHIP

6 AND REVITALIZATION

7 SEC. 601. INCREASE IN STATE CEILING ON LOW-INCOME

8 HOUSING CREDIT.

9 (a) IN GENERAL.—Clause (i) of section 42(h)(3)(C)

10 (relating to State housing credit ceiling) is amended by

11 striking ‘‘$1.25’’ and inserting ‘‘$1.75’’.

12 (b) ADJUSTMENT OF STATE CEILING FOR IN13 CREASES IN COST-OF-LIVING.—Paragraph (3) of section

14 42(h) (relating to housing credit dollar amount for agen15 cies) is amended by adding at the end the following new

16 subparagraph:

17 ‘‘(H) COST-OF-LIVING ADJUSTMENT.—

18 ‘‘(i) IN GENERAL.—In the case of a

19 calendar year after 2001, the dollar

20 amount contained in subparagraph (C)(i)

21 shall be increased by an amount equal to—

22 ‘‘(I) such dollar amount, multi23 plied by

24 ‘‘(II) the cost-of-living adjust25 ment determined under section 1(f)(3)
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1 for such calendar year by substituting

2 ‘calendar year 2000’ for ‘calendar

3 year 1992’ in subparagraph (B) there4 of.

5 ‘‘(ii) ROUNDING.—If any increase

6 under clause (i) is not a multiple of 5

7 cents, such increase shall be rounded to

8 the next lowest multiple of 5 cents.’’.

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

10 this section shall apply to calendar years after 2000.

11 SEC. 602. ADDITIONAL MODIFICATIONS TO LOW-INCOME

12 HOUSING CREDIT.

13 (a) MODIFICATION OF CRITERIA FOR ALLOCATING

14 HOUSING CREDITS AMONG PROJECTS.—

15 (1) SELECTION CRITERIA.—Subparagraph (C)

16 of section 42(m)(1) (relating to certain selection cri17 teria must be used) is amended—

18 (A) by inserting ‘‘, including whether the

19 project includes the use of existing housing as

20 part of a community revitalization plan’’ before

21 the comma at the end of clause (iii), and

22 (B) by striking clauses (v), (vi), and (vii)

23 and inserting the following new clauses:

24 ‘‘(v) tenant populations with special

25 housing needs,
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•S 2936 IS

1 ‘‘(vi) public housing waiting lists,

2 ‘‘(vii) tenant populations of individ3 uals with children,

4 ‘‘(viii) projects intended for eventual

5 tenant ownership, and

6 ‘‘(ix) the accessibility of jobs, includ7 ing lower skilled jobs, to the project.’’

8 (2) PREFERENCE FOR COMMUNITY REVITALIZA9 TION PROJECTS LOCATED IN QUALIFIED CENSUS

10 TRACTS.—Clause (ii) of section 42(m)(1)(B) is

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

12 (I), by adding ‘‘and’’ at the end of subclause (II),

13 and by inserting after subclause (II) the following

14 new subclause:

15 ‘‘(III) projects which are located

16 in qualified census tracts (as defined

17 in subsection (d)(5)(C)) and the devel18 opment of which contributes to a con19 certed community revitalization

20 plan,’’.

21 (b) ADDITIONAL RESPONSIBILITIES OF HOUSING

22 CREDIT AGENCIES.—

23 (1) MARKET STUDY; PUBLIC DISCLOSURE OF

24 RATIONALE FOR NOT FOLLOWING CREDIT ALLOCA25 TION PRIORITIES.—Subparagraph (A) of section
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•S 2936 IS

1 42(m)(1) (relating to responsibilities of housing

2 credit agencies) is amended by striking ‘‘and’’ at the

3 end of clause (i), by striking the period at the end

4 of clause (ii) and inserting a comma, and by adding

5 at the end the following new clauses:

6 ‘‘(iii) a comprehensive market study

7 of the housing needs of low-income individ8 uals in the area to be served by the build9 ing is conducted before the credit alloca10 tion is made and at the developer’s expense

11 by a disinterested party who is approved

12 by such agency, and

13 ‘‘(iv) a written explanation is available

14 to the general public for any allocation of

15 a housing credit dollar amount which is

16 not made in accordance with established

17 priorities and selection criteria of the hous18 ing credit agency.’’.

19 (2) SITE VISITS.—Clause (iii) of section

20 42(m)(1)(B) (relating to qualified allocation plan) is

21 amended by inserting before the period ‘‘and in

22 monitoring for noncompliance with habitability

23 standards through regular site visits’’.

24 (c) OTHER MODIFICATIONS.—
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1 (1) ADJUSTED BASIS TO INCLUDE PORTION OF

2 CERTAIN BUILDINGS USED BY LOW-INCOME INDIVID3 UALS WHO ARE NOT TENANTS AND BY PROJECT EM4 PLOYEES.—Paragraph (4) of section 42(d) (relating

5 to special rules relating to determination of adjusted

6 basis) is amended—

7 (A) by striking ‘‘subparagraph (B)’’ in

8 subparagraph (A) and inserting ‘‘subpara9 graphs (B) and (C)’’,

10 (B) by redesignating subparagraph (C) as

11 subparagraph (D), and

12 (C) by inserting after subparagraph (B)

13 the following new subparagraph:

14 ‘‘(C) INCLUSION OF BASIS OF PROPERTY

15 USED TO PROVIDE SERVICES FOR CERTAIN

16 NONTENANTS.—

17 ‘‘(i) IN GENERAL.—The adjusted

18 basis of any building located in a qualified

19 census tract (as defined in paragraph

20 (5)(C)) shall be determined by taking into

21 account the adjusted basis of property (of

22 a character subject to the allowance for de23 preciation and not otherwise taken into ac24 count) used throughout the taxable year in

25 providing any community service facility.
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•S 2936 IS

1 ‘‘(ii) LIMITATION.—The increase in

2 the adjusted basis of any building which is

3 taken into account by reason of clause (i)

4 shall not exceed 20 percent of the eligible

5 basis of the qualified low-income housing

6 project of which it is a part. For purposes

7 of the preceding sentence, all community

8 service facilities which are part of the same

9 qualified low-income housing project shall

10 be treated as 1 facility.

11 ‘‘(iii) COMMUNITY SERVICE FACIL12 ITY.—For purposes of this subparagraph,

13 the term ‘community service facility’

14 means any facility designed to serve pri15 marily individuals whose income is 60 per16 cent or less of area median income (within

17 the meaning of subsection (g)(1)(B)).’’.

18 (2) ALLOCATION OF CREDIT LIMIT TO CERTAIN

19 BUILDINGS.—

20 (A) The first sentence of section

21 42(h)(1)(E)(ii) is amended by striking ‘‘(as of’’

22 the first place it appears and inserting ‘‘(as of

23 the later of the date which is 6 months after

24 the date that the allocation was made or’’.
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1 (B) The last sentence of section

2 42(h)(3)(C) is amended by striking ‘‘project

3 which’’ and inserting ‘‘project which fails to

4 meet the 10 percent test under paragraph

5 (1)(E)(ii) on a date after the close of the cal6 endar year in which the allocation was made or

7 which’’.

8 (3) DETERMINATION OF WHETHER BUILDINGS

9 ARE LOCATED IN HIGH COST AREAS.—The first sen10 tence of section 42(d)(5)(C)(ii)(I) is amended—

11 (A) by inserting ‘‘either’’ before ‘‘in which

12 50 percent’’, and

13 (B) by inserting before the period ‘‘ or

14 which has a poverty rate of at least 25 per15 cent’’.

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

17 this section shall apply to—

18 (1) housing credit dollar amounts allocated

19 after December 31, 2000, and

20 (2) buildings placed in service after December

21 31, 2000, to the extent paragraph (1) of section

22 42(h) of the Internal Revenue Code of 1986 does

23 not apply to any building by reason of paragraph (4)

24 thereof, but only with respect to bonds issued after

25 December 31, 2000.
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1 SEC. 603. INCREASE IN STATE CEILING ON PRIVATE ACTIV2 ITY BONDS.

3 (a) IN GENERAL.—Paragraphs (1) and (2) of section

4 146(d) (relating to State ceiling) are amended to read as

5 follows:

6 ‘‘(1) IN GENERAL.—The State ceiling applicable

7 to any State for any calendar year shall be the

8 greater of—

9 ‘‘(A) an amount equal to $75 multiplied by

10 the State population, or

11 ‘‘(B) $225,000,000.

12 Subparagraph (B) shall not apply to any possession

13 of the United States.

14 ‘‘(2) INFLATION ADJUSTMENT.—In the case of

15 a calendar year after 2001, each of the dollar

16 amounts contained in paragraph (1) shall be in17 creased by an amount equal to—

18 ‘‘(A) such dollar amount, multiplied by

19 ‘‘(B) the cost-of-living adjustment deter20 mined under section 1(f)(3) for such calendar

21 year by substituting ‘calendar year 2000’ for

22 ‘calendar year 1992’ in subparagraph (B)

23 thereof.

24 If any increase determined under the preceding sen25 tence is not a multiple of $1 ($250 in the case of

26 the dollar amount in paragraph (1)(B), such in-
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•S 2936 IS

1 crease shall be rounded to the nearest multiple

2 thereof.’’

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

4 this section shall apply to calendar years after 2000.

5 SEC. 604. HOME OWNERSHIP TAX CREDIT.

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 (relating to business related cred8 its), as amended by section 101(a), is amended by adding

9 at the end the following:

10 ‘‘SEC. 45E. HOME OWNERSHIP TAX CREDIT.

11 ‘‘(a) ALLOWANCE OF CREDIT.—

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

13 the amount of the home ownership tax credit deter14 mined under this section for any taxable year in the

15 credit period shall be an amount equal to the appli16 cable percentage of the home ownership tax credit

17 amount allocated such taxpayer by a State housing

18 finance agency in the credit allocation year under

19 subsection (b).

20 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

21 of this section, the Secretary shall prescribe the ap22 plicable percentage for any year in which the tax23 payer is a qualified lender. Such percentage with re24 spect to any month in the credit period with respect

25 to such taxpayer shall be percentages which will
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•S 2936 IS

1 yield over such period amounts of credit under para2 graph (1) which have a present value equal to 100

3 percent of the home ownership tax credit amount al4 located such taxpayer under subsection (b).

5 ‘‘(3) METHOD OF DISCOUNTING.—The present

6 value under paragraph (2) shall be determined in

7 the same manner as the low-income housing credit

8 under section 42(b)(2)(C).

9 ‘‘(b) ALLOCATION OF HOME OWNERSHIP TAX CRED10 IT AMOUNTS.—

11 ‘‘(1) AMOUNT OF CREDIT.—Each qualified

12 State shall receive a home ownership tax credit dol13 lar amount for each calendar year in an amount

14 equal to the sum of—

15 ‘‘(A) an amount equal to—

16 ‘‘(i) 40 cents multiplied by the State

17 population, multiplied by

18 ‘‘(ii) 10, plus

19 ‘‘(B) the unused home ownership tax credit

20 dollar amount (if any) of such State for the

21 preceding year.

22 ‘‘(2) QUALIFIED STATE.—For purposes of this

23 section—

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

25 State’ means a State with an approved alloca-
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•S 2936 IS

1 tion plan to allocate home ownership tax credits

2 to qualified lenders through the State housing

3 finance agency.

4 ‘‘(B) APPROVED ALLOCATION PLAN.—For

5 purposes of this paragraph, the term ‘approved

6 allocation plan’ means a written plan, certified

7 by the Secretary, which includes—

8 ‘‘(i) selection criteria for the allocation

9 of credits to qualified lenders—

10 ‘‘(I) based on a process in which

11 lenders submit bids for the value of

12 the credit, and

13 ‘‘(II) which gives priority to

14 qualified lenders with qualified home

15 ownership tax credit loans which are

16 prepaid during a calendar year, for

17 credit allocations in the succeeding

18 calendar year,

19 ‘‘(ii) an assurance that the State will

20 not allocate in excess of 10 percent of the

21 home ownership tax credit amount for the

22 calendar year for qualified home ownership

23 tax credit loans which are neighborhood re24 vitalization project loans,
185

•S 2936 IS

1 ‘‘(iii) a procedure that the agency (or

2 an agent or other private contractor of

3 such agency) will follow in monitoring for

4 noncompliance with the provisions of this

5 section and in notifying the Internal Rev6 enue Service of such noncompliance with

7 respect to which such agency becomes

8 aware, and

9 ‘‘(iv) such other assurances as the

10 Secretary may require.

11 ‘‘(3) QUALIFIED LENDER.—For purposes of

12 this section, the term ‘qualified lender’ means a

13 lender which—

14 ‘‘(A) is an insured depository institution

15 (as defined in section 3 of the Federal Deposit

16 Insurance Act), insured credit union (as defined

17 in section 101 of the Federal Credit Union

18 Act), community development financial institu19 tion (as defined in section 103 of the Commu20 nity Development Banking and Financial Insti21 tutions Act of 1994 (12 U.S.C. 4702)), or non22 profit community development corporation (as

23 defined in section 613 of the Community Eco24 nomic Development Act of 1981 (42 U.S.C.

25 9802)),
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•S 2936 IS

1 ‘‘(B) makes available, through such lender

2 or the lender’s designee, pre-purchase home3 ownership counseling for mortgagors, and

4 ‘‘(C) during the 1-year period beginning on

5 the date of the credit allocation, originates not

6 less than 100 qualified home ownership tax

7 credit loans in an aggregate amount not less

8 than the amount of the bid of such lender for

9 such credit allocation.

10 ‘‘(4) CARRYOVER OF CREDIT.—A home owner11 ship tax credit amount received by a State for any

12 calendar year and not allocated in such year shall

13 remain available to be allocated in the succeeding

14 calendar year.

15 ‘‘(5) POPULATION.—For purposes of this sec16 tion, population shall be determined in accordance

17 with section 146(j).

18 ‘‘(6) COST-OF-LIVING ADJUSTMENT.—

19 ‘‘(A) IN GENERAL.—In the case of a cal20 endar year after 2000, the 40 cent amount con21 tained in paragraph (1)(A)(i) shall be increased

22 by an amount equal to—

23 ‘‘(i) such amount, multiplied by

24 ‘‘(ii) the cost-of-living adjustment de25 termined under section 1(f)(3) for such
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•S 2936 IS

1 calendar year by substituting ‘calendar

2 year 1999’ for ‘calendar year 1992’ in sub3 paragraph (B) thereof.

4 ‘‘(B) ROUNDING.—If any amount as ad5 justed under subparagraph (A) is not a multiple

6 of 5 cents, such amount shall be rounded to the

7 next lowest multiple of 5 cents.

8 ‘‘(c) QUALIFIED HOME OWNERSHIP TAX CREDIT

9 LOAN DEFINED.—For purposes of this section—

10 ‘‘(1) IN GENERAL.—The term ‘qualified home

11 ownership tax credit loan’ means a loan originated

12 and funded by a qualified lender which is secured by

13 a second lien on a residence, but only if—

14 ‘‘(A) the requirements of subsections (d),

15 (e), and (f) are met,

16 ‘‘(B) subject to subparagraphs (F), (H),

17 and (I), the proceeds from such loan are ap18 plied exclusively—

19 ‘‘(i) to acquire such residence, or

20 ‘‘(ii) to substantially improve such

21 residence in connection with a neighbor22 hood revitalization project,

23 ‘‘(C) the principal amount of the loan is

24 equal to an amount which is—
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•S 2936 IS

1 ‘‘(i) not less than 18 percent of the

2 purchase price of the residence securing

3 the loan, and

4 ‘‘(ii) not more than the lesser of—

5 ‘‘(I) 22 percent of such purchase

6 price, or

7 ‘‘(II) $25,000,

8 ‘‘(D) in the case of a neighborhood revital9 ization project loan, subparagraph (C) is ap10 plied by substituting—

11 ‘‘(i) ‘purchase price or appraised

12 value’ for ‘purchase price’, and

13 ‘‘(ii) ‘$40,000’ for ‘$25,000’,

14 ‘‘(E) the loan is—

15 ‘‘(i) amortized over a period of not

16 more than 30 years (or any lesser period

17 of time as determined by the lender or the

18 State housing finance agency (as applica19 ble)), or

20 ‘‘(ii) described in paragraph (2),

21 ‘‘(F) the proceeds of such loan are not

22 used for settlement or other closing costs of the

23 transaction in an amount in excess of 4 percent

24 of the purchase price of the residence securing

25 the loan,
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•S 2936 IS

1 ‘‘(G) the rate of interest of the loan does

2 not exceed the greater of—

3 ‘‘(i) the excess of—

4 ‘‘(I) the prime lending rate in ef5 fect as of the date on which the loan

6 is originated, over

7 ‘‘(II) 5.5 percent, or

8 ‘‘(ii) 3 percent,

9 ‘‘(H) the origination fee paid with respect

10 to the loan does not cause the aggregate

11 amount of origination fees paid with respect to

12 any loans secured by the residence—

13 ‘‘(i) in the case of a neighborhood re14 vitalization project loan, to exceed 1 per15 cent of the appraised value of the residence

16 which secures the loan, and

17 ‘‘(ii) in the case of any other loan, to

18 exceed 2 percent of the appraised value of

19 such residence, and

20 ‘‘(I) the servicing fees of such loan—

21 ‘‘(i) are allocated from interest pay22 ments made with respect to the loan, and

23 ‘‘(ii) may not—
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•S 2936 IS

1 ‘‘(I) in the case of a neighbor2 hood revitalization project loan, ex3 ceed a total of 38 basis points, and

4 ‘‘(II) in the case of any other

5 loan, when added to such fees of any

6 other loan secured by the residence,

7 exceed a total of 63 basis points.

8 ‘‘(2) BALLOON PAYMENT LOAN.—

9 ‘‘(A) IN GENERAL.—A loan is described in

10 this paragraph if such loan—

11 ‘‘(i) meets the requirements of sub12 paragraphs (B) and (C),

13 ‘‘(ii) is for a period of 25 years and,

14 except as provided in clause (iv), no pay15 ment is due on such loan until the sooner

16 of—

17 ‘‘(I) the end of such period, or

18 ‘‘(II) the date on which the resi19 dence which secures the loan is dis20 posed of,

21 ‘‘(iii) does not prohibit early repay22 ment of such loan, and

23 ‘‘(iv) requires payment on such loan if

24 the mortgagor receives any portion of the

25 equity of such residence as part of a refi-
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•S 2936 IS

1 nancing of any loan secured by such resi2 dence.

3 ‘‘(B) INTEREST.—Notwithstanding para4 graph (1)(G), the rate of interest of the loan is

5 zero percent.

6 ‘‘(C) SERVICING FEES.—Notwithstanding

7 paragraph (1)(I), there shall be no servicing

8 fees in connection with the loan.

9 ‘‘(3) INDEX OF AMOUNT.—

10 ‘‘(A) IN GENERAL.—In the case of a cal11 endar year after 2000, the amounts under sub12 paragraphs (C) and (D) of paragraph (1) shall

13 be increased by an amount equal to—

14 ‘‘(i) such amount, multiplied by

15 ‘‘(ii) the housing price adjustment for

16 such calendar year.

17 ‘‘(B) HOUSING PRICE ADJUSTMENT.—For

18 purposes of subparagraph (A), the housing

19 price adjustment for any calendar year is the

20 percentage (if any) by which—

21 ‘‘(i) the housing price index for the

22 preceding calendar year, exceeds

23 ‘‘(ii) the housing price index for cal24 endar year 2000.
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•S 2936 IS

1 ‘‘(C) HOUSING PRICE INDEX.—For pur2 poses of subparagraph (B), the housing price

3 index means the housing price index published

4 by the Federal Housing Finance Board (as es5 tablished in section 2A of the Federal Home

6 Loan Bank Act (12 U.S.C. 1422a)) for the cal7 endar year.

8 ‘‘(d) MORTGAGOR.—

9 ‘‘(1) IN GENERAL.—A loan meets the require10 ments of this subsection if it is made to a

11 mortgagor—

12 ‘‘(A) whose family income for the year in

13 which the mortgagor applies for the loan is 80

14 percent or less of the area median gross income

15 for the area in which the residence which se16 cures the mortgage is located,

17 ‘‘(B) for whom the loan would not result in

18 a housing debt-to-income ratio, with respect to

19 the residence securing the loan, or total debt-to20 income ratio which is greater than the guide21 lines set by the Federal Housing Administra22 tion (or any other ratio as determined by the

23 State housing finance agency or lender if such

24 ratio is less than such guidelines), and
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•S 2936 IS

1 ‘‘(C) who attends pre-purchase home2 ownership counseling provided by the qualified

3 lender or the lender’s designee.

4 ‘‘(2) DETERMINATION OF FAMILY INCOME.—

5 For purposes of this subsection and subsection (h),

6 the family income of a mortgagor and area median

7 gross income shall be determined in accordance with

8 section 143(f)(2).

9 ‘‘(e) RESIDENCE REQUIREMENTS.—A loan meets the

10 requirements of this subsection if it is secured by a resi11 dence that is—

12 ‘‘(1) a single-family residence (including a man13 ufactured home (within the meaning of section

14 25(e)(10))) which is the principal residence (within

15 the meaning of section 121) of the mortgagor, or

16 can reasonably be expected to become the principal

17 residence of the mortgagor within a reasonable time

18 after the financing is provided,

19 ‘‘(2) purchased by the mortgagor with a down

20 payment in an amount not less than the lesser of—

21 ‘‘(A) 2 percent of the purchase price, or

22 ‘‘(B) $1,000, and

23 ‘‘(3) in the case of a mortgagor with a family

24 income greater than 50 percent of the area median

25 gross income, as determined under subsection
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•S 2936 IS

1 (d)(1)(A), not financed in connection with a quali2 fied mortgage issued under section 143.

3 ‘‘(f) DEFINITION AND SPECIAL RULES RELATING TO

4 CREDIT PERIOD.—

5 ‘‘(1) CREDIT PERIOD DEFINED.—For purposes

6 of this section, the term ‘credit period’ means the

7 period of 10 taxable years beginning with the tax8 able year in which a home ownership tax credit

9 amount is allocated to the taxpayer.

10 ‘‘(2) SPECIAL RULE FOR 1ST YEAR OF CREDIT

11 PERIOD.—

12 ‘‘(A) IN GENERAL.—The credit allowable

13 under subsection (a) with respect to any tax14 payer for the 1st taxable year of the credit pe15 riod shall be determined by substituting for the

16 applicable percentage under subsection (a)(2)

17 the fraction—

18 ‘‘(i) the numerator of which is the

19 sum of the applicable percentages deter20 mined under subsection (a)(2) as of the

21 close of each full month of such year, dur22 ing which the taxpayer was a qualified

23 lender, and

24 ‘‘(ii) the denominator of which is 12.
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•S 2936 IS

1 ‘‘(B) DISALLOWED 1ST YEAR CREDIT AL2 LOWED IN 11TH YEAR.—Any reduction by rea3 son of subparagraph (A) in the credit allowable

4 (without regard to subparagraph (A)) for the

5 1st taxable year of the credit period shall be al6 lowable under subsection (a) for the 1st taxable

7 year following the credit period.

8 ‘‘(3) DISPOSITION OF HOME OWNERSHIP TAX

9 CREDIT LOANS.—If a qualified home ownership tax

10 credit loan is disposed of during any year for which

11 a credit is allowable under subsection (a), such cred12 it shall be allocated between the parties on the basis

13 of the number of days during such year the mort14 gage was held by each and the portion of the total

15 credit allocated to the qualified lender which is at16 tributable to such mortgage.

17 ‘‘(g) LOSS OF CREDIT.—If, during the taxable year,

18 a qualified home ownership tax credit loan is repaid prior

19 to the expiration of the credit period with respect to such

20 loan, the amount of the home ownership tax credit attrib21 utable to such loan is no longer available under subsection

22 (a). For purposes of the preceding sentence, the tax credit

23 is allowable for the portion of the year in which such re24 payment occurs for which the loan is outstanding, deter-
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•S 2936 IS

1 mined in the same manner as provided in subsection

2 (f)(2)(A).

3 ‘‘(h) RECAPTURE OF PORTION OF FEDERAL SUBSIDY

4 FROM HOME-OWNER.—

5 ‘‘(1) IN GENERAL.—If, during the taxable year,

6 any taxpayer described in paragraph (3) disposes of

7 an interest in a residence with respect to which a

8 home ownership tax credit amount applies, then the

9 taxpayer’s tax imposed by this chapter for such tax10 able year shall be increased by 50 percent of the

11 gain (if any) on the disposition of such interest.

12 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

13 apply to any disposition—

14 ‘‘(A) by reason of death,

15 ‘‘(B) which is made on a date that is more

16 than 10 years after the date on which the quali17 fied home ownership tax credit loan secured by

18 such residence was made, or

19 ‘‘(C) in which the purchaser of the resi20 dence assumes the qualified home ownership

21 tax credit loan secured by the residence.

22 ‘‘(3) INCOME LIMITATION.—A taxpayer is de23 scribed in this paragraph if, on the date of the dis24 position, the family income of the mortgagor is 115

25 percent or more of the area median gross income as
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•S 2936 IS

1 determined under subsection (d)(1)(A) for the year

2 in which the disposition occurs.

3 ‘‘(4) SPECIAL RULES RELATING TO LIMITATION

4 ON RECAPTURE AMOUNT BASED ON GAIN REAL5 IZED.—For purposes of this subsection, rules similar

6 to the rules of section 143(m)(6) shall apply.

7 ‘‘(5) LENDER TO INFORM MORTGAGOR OF PO8 TENTIAL RECAPTURE.—The qualified lender which

9 makes a qualified home ownership tax credit loan to

10 a mortgagor shall, at the time of settlement, provide

11 a written statement informing the mortgagor of the

12 potential recapture under this subsection.

13 ‘‘(6) SPECIAL RULES.—For purposes of this

14 subsection, rules similar to the rules of section

15 143(m)(8) shall apply.

16 ‘‘(i) OTHER DEFINITIONS.—

17 ‘‘(1) NEIGHBORHOOD REVITALIZATION

18 PROJECT LOAN.—

19 ‘‘(A) IN GENERAL.—The term ‘neighbor20 hood revitalization project loan’ means a loan

21 secured by a second lien on a residence, the

22 proceeds of which are used to substantially im23 prove such residence in connection with a

24 neighborhood revitalization project.
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•S 2936 IS

1 ‘‘(B) NEIGHBORHOOD REVITALIZATION

2 PROJECT.—The term ‘neighborhood revitaliza3 tion project’ means a project of sufficient size

4 and scope to alleviate physical deterioration and

5 stimulate investment in—

6 ‘‘(i) a geographic location within the

7 jurisdiction of a unit of local government

8 (but not the entire jurisdiction) designated

9 in comprehensive plans, ordinances, or

10 other documents as a neighborhood, vil11 lage, or similar geographic designation, or

12 ‘‘(ii) the entire jurisdiction of a unit

13 of local government if the population of

14 such jurisdiction is not in excess of 25,000.

15 ‘‘(2) STATE.—The term ‘State’ includes a pos16 session of the United States.

17 ‘‘(3) STATE HOUSING FINANCE AGENCY.—The

18 term ‘State housing finance agency’ means the pub19 lic agency, authority, corporation, or other instru20 mentality of a State that has the authority to pro21 vide residential mortgage loan financing throughout

22 the State.

23 ‘‘(j) CERTIFICATION AND OTHER REPORTS TO THE

24 SECRETARY.—
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•S 2936 IS

1 ‘‘(1) CERTIFICATION WITH RESPECT TO STATE

2 ALLOCATION OF HOME OWNERSHIP TAX CREDITS.—

3 The Secretary may, upon a finding of noncompli4 ance, revoke the certification of a qualified State and

5 revoke any qualified home ownership tax credit

6 amounts allocated to such State or allocated by such

7 State to a qualified lender.

8 ‘‘(2) ANNUAL REPORT FROM HOUSING FINANCE

9 AGENCIES.—Each State housing finance agency

10 which allocates any home ownership tax credit

11 amount to any qualified lender for any calendar year

12 shall submit to the Secretary (at such time and in

13 such manner as the Secretary shall prescribe) an an14 nual report specifying—

15 ‘‘(A) the home ownership tax credit

16 amount allocated to each qualified lender for

17 such year, and

18 ‘‘(B) with respect to each qualified

19 lender—

20 ‘‘(i) the principal amount of the ag21 gregate qualified home ownership tax cred22 it loans made by such lender in such year

23 and the outstanding amount of such loans

24 in such year, and
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•S 2936 IS

1 ‘‘(ii) the number of qualified home

2 ownership tax credit loans made by such

3 lender in such year.

4 The penalty under section 6652(j) shall apply to any

5 failure to submit the report required by this para6 graph on the date prescribed therefore.

7 ‘‘(k) REGULATIONS.—The Secretary shall prescribe

8 such regulations as may be necessary or appropriate to

9 carry out the purposes of this section.’’.

10 (b) LIMITATION ON CARRYBACK OF UNUSED CRED11 IT.—Subsection (d) of section 39 (relating to carryback

12 and carryforward of unused credits), as amended by sec13 tion 101(b)(2) is amended by adding at the end the fol14 lowing:

15 ‘‘(10) NO CARRYBACK OF HOME OWNERSHIP

16 TAX CREDITS BEFORE EFFECTIVE DATE.—No por17 tion of the unused business credit for any taxable

18 year which is attributable to the home ownership tax

19 credit determined under section 45E may be carried

20 back to a taxable year ending before the date of the

21 enactment of section 45E.’’.

22 (c) CONFORMING AMENDMENTS.—

23 (1) Section 38(b), as amended by section

24 101(b)(1), is amended—
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•S 2936 IS

1 (A) by striking ‘‘plus’’ at the end of para2 graph (12),

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

4 paragraph (13), and inserting ‘‘, plus’’, and

5 (C) by adding at the end the following:

6 ‘‘(14) the home ownership tax credit determined

7 under section 45E.’’

8 (2) The table of sections for subpart D of part

9 IV of subchapter A of chapter 1, as amended by sec10 tion 101(d), is amended by adding at the end the

11 following:

‘‘Sec. 45E. Home ownership tax credit.’’

12 (d) EFFECTIVE DATE.—The amendments made by

13 this section apply to calendar years after 2000.

14 SEC. 605. TAX CREDIT FOR RENOVATING HISTORIC HOMES.

15 (a) IN GENERAL.—Subpart A of part IV of sub16 chapter A of chapter 1 (relating to nonrefundable personal

17 credits) is amended by inserting after section 25A the fol18 lowing new section:

19 ‘‘SEC. 25B. HISTORIC HOMEOWNERSHIP REHABILITATION

20 CREDIT.

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

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

23 by this chapter for the taxable year an amount equal to

24 20 percent of the qualified rehabilitation expenditures
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•S 2936 IS

1 made by the taxpayer with respect to a qualified historic

2 home.

3 ‘‘(b) DOLLAR LIMITATION.—The credit allowed by

4 subsection (a) with respect to any residence of a taxpayer

5 shall not exceed $20,000 ($10,000 in the case of a married

6 individual filing a separate return).

7 ‘‘(c) QUALIFIED REHABILITATION EXPENDITURE.—

8 For purposes of this section—

9 ‘‘(1) IN GENERAL.—The term ‘qualified reha10 bilitation expenditure’ means any amount properly

11 chargeable to capital account—

12 ‘‘(A) in connection with the certified reha13 bilitation of a qualified historic home, and

14 ‘‘(B) for property for which depreciation

15 would be allowable under section 168 if the

16 qualified historic home were used in a trade or

17 business.

18 ‘‘(2) CERTAIN EXPENDITURES NOT IN19 CLUDED.—

20 ‘‘(A) EXTERIOR.—Such term shall not in21 clude any expenditure in connection with the re22 habilitation of a building unless at least 5 per23 cent of the total expenditures made in the reha24 bilitation process are allocable to the rehabilita25 tion of the exterior of such building.
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•S 2936 IS

1 ‘‘(B) OTHER RULES TO APPLY.—Rules

2 similar to the rules of clauses (ii) and (iii) of

3 section 47(c)(2)(B) shall apply.

4 ‘‘(3) MIXED USE OR MULTIFAMILY BUILDING.—

5 If only a portion of a building is used as the prin6 cipal residence of the taxpayer, only qualified reha7 bilitation expenditures which are properly allocable

8 to such portion shall be taken into account under

9 this section.

10 ‘‘(d) CERTIFIED REHABILITATION.—For purposes of

11 this section:

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the term ‘certified rehabili14 tation’ has the meaning given such term by section

15 47(c)(2)(C).

16 ‘‘(2) FACTORS TO BE CONSIDERED IN THE

17 CASE OF TARGETED AREA RESIDENCES, ETC.—

18 ‘‘(A) IN GENERAL.—For purposes of ap19 plying section 47(c)(2)(C) under this section

20 with respect to the rehabilitation of a building

21 to which this paragraph applies, consideration

22 shall be given to—

23 ‘‘(i) the feasibility of preserving exist24 ing architectural and design elements of

25 the interior of such building,
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•S 2936 IS

1 ‘‘(ii) the risk of further deterioration

2 or demolition of such building in the event

3 that certification is denied because of the

4 failure to preserve such interior elements,

5 and

6 ‘‘(iii) the effects of such deterioration

7 or demolition on neighboring historic prop8 erties.

9 ‘‘(B) BUILDINGS TO WHICH THIS PARA10 GRAPH APPLIES.—This paragraph shall apply

11 with respect to any building—

12 ‘‘(i) any part of which is a targeted

13 area residence within the meaning of sec14 tion 143(j)(1), or

15 ‘‘(ii) which is located within an enter16 prise community or empowerment zone as

17 designated under section 1391,

18 but shall not apply with respect to any building

19 which is listed in the National Register.

20 ‘‘(3) APPROVED STATE PROGRAM.—The term

21 ‘certified rehabilitation’ includes a certification made

22 by—

23 ‘‘(A) a State Historic Preservation Officer

24 who administers a State Historic Preservation

25 Program approved by the Secretary of the Inte-
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•S 2936 IS

1 rior pursuant to section 101(b)(1) of the Na2 tional Historic Preservation Act, as in effect on

3 the date of the enactment of this section, or

4 ‘‘(B) a local government, certified pursuant

5 to section 101(c)(1) of the National Historic

6 Preservation Act, as in effect on the date of the

7 enactment of this section, and authorized by a

8 State Historic Preservation Officer, or the Sec9 retary of the Interior where there is no ap10 proved State program),

11 subject to such terms and conditions as may be

12 specified by the Secretary of the Interior for the re13 habilitation of buildings within the jurisdiction of

14 such officer (or local government) for purposes of

15 this section.

16 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur17 poses of this section—

18 ‘‘(1) QUALIFIED HISTORIC HOME.—The term

19 ‘qualified historic home’ means a certified historic

20 structure—

21 ‘‘(A) which has been substantially rehabili22 tated, and

23 ‘‘(B) which (or any portion of which)—

24 ‘‘(i) is owned by the taxpayer, and
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•S 2936 IS

1 ‘‘(ii) is used (or will, within a reason2 able period, be used) by such taxpayer as

3 his principal residence.

4 ‘‘(2) SUBSTANTIALLY REHABILITATED.—The

5 term ‘substantially rehabilitated’ has the meaning

6 given such term by section 47(c)(1)(C); except that,

7 in the case of any building described in subsection

8 (d)(2), clause (i)(I) thereof shall not apply.

9 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin10 cipal residence’ has the same meaning as when used

11 in section 121.

12 ‘‘(4) CERTIFIED HISTORIC STRUCTURE.—

13 ‘‘(A) IN GENERAL.—The term ‘certified

14 historic structure’ means any building (and its

15 structural components) which—

16 ‘‘(i) is listed in the National Register,

17 or

18 ‘‘(ii) is located in a registered historic

19 district (as defined in section 47(c)(3)(B))

20 within which only qualified census tracts

21 (or portions thereof) are located, and is

22 certified by the Secretary of the Interior to

23 the Secretary as being of historic signifi24 cance to the district.
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•S 2936 IS

1 ‘‘(B) CERTAIN STRUCTURES INCLUDED.—

2 Such term includes any building (and its struc3 tural components) which is designated as being

4 of historic significance under a statute of a

5 State or local government, if such statute is

6 certified by the Secretary of the Interior to the

7 Secretary as containing criteria which will sub8 stantially achieve the purpose of preserving and

9 rehabilitating buildings of historic significance.

10 ‘‘(C) QUALIFIED CENSUS TRACTS.—For

11 purposes of subparagraph (A)(ii)—

12 ‘‘(i) IN GENERAL.—The term ‘quali13 fied census tract’ means a census tract in

14 which the median family income is less

15 than twice the statewide median family in16 come.

17 ‘‘(ii) DATA USED.—The determination

18 under clause (i) shall be made on the basis

19 of the most recent decennial census for

20 which data are available.

21 ‘‘(5) REHABILITATION NOT COMPLETE BEFORE

22 CERTIFICATION.—A rehabilitation shall not be treat23 ed as complete before the date of the certification re24 ferred to in subsection (d).
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•S 2936 IS

1 ‘‘(6) LESSEES.—A taxpayer who leases his

2 principal residence shall, for purposes of this section,

3 be treated as the owner thereof if the remaining

4 term of the lease (as of the date determined under

5 regulations prescribed by the Secretary) is not less

6 than such minimum period as the regulations re7 quire.

8 ‘‘(7) TENANT-STOCKHOLDER IN COOPERATIVE

9 HOUSING CORPORATION.—If the taxpayer holds

10 stock as a tenant-stockholder (as defined in section

11 216) in a cooperative housing corporation (as de12 fined in such section), such stockholder shall be

13 treated as owning the house or apartment which the

14 taxpayer is entitled to occupy as such stockholder.

15 ‘‘(8) ALLOCATION OF EXPENDITURES RELAT16 ING TO EXTERIOR OF BUILDING CONTAINING COOP17 ERATIVE OR CONDOMINIUM UNITS.—The percentage

18 of the total expenditures made in the rehabilitation

19 of a building containing cooperative or condominium

20 residential units allocated to the rehabilitation of the

21 exterior of the building shall be attributed propor22 tionately to each cooperative or condominium resi23 dential unit in such building for which a credit

24 under this section is claimed.
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•S 2936 IS

1 ‘‘(f) WHEN EXPENDITURES TAKEN INTO AC2 COUNT.—In the case of a building other than a building

3 to which subsection (g) applies, qualified rehabilitation ex4 penditures shall be treated for purposes of this section as

5 made on the date the rehabilitation is completed.

6 ‘‘(g) ALLOWANCE OF CREDIT FOR PURCHASE OF RE7 HABILITATED HISTORIC HOME.—

8 ‘‘(1) IN GENERAL.—In the case of a qualified

9 purchased historic home, the taxpayer shall be treat10 ed as having made (on the date of purchase) the

11 qualified rehabilitation expenditures made by the

12 seller of such home. For purposes of the preceding

13 sentence, expenditures made by the seller shall be

14 deemed to be qualified rehabilitation expenditures if

15 such expenditures, if made by the purchaser, would

16 be qualified rehabilitation expenditures.

17 ‘‘(2) QUALIFIED PURCHASED HISTORIC

18 HOME.—For purposes of this subsection, the term

19 ‘qualified purchased historic home’ means any sub20 stantially rehabilitated certified historic structure

21 purchased by the taxpayer if—

22 ‘‘(A) the taxpayer is the first purchaser of

23 such structure after the date rehabilitation is

24 completed, and the purchase occurs within 5

25 years after such date,
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•S 2936 IS

1 ‘‘(B) the structure (or a portion thereof)

2 will, within a reasonable period, be the principal

3 residence of the taxpayer,

4 ‘‘(C) no credit was allowed to the seller

5 under this section or section 47 with respect to

6 such rehabilitation, and

7 ‘‘(D) the taxpayer is furnished with such

8 information as the Secretary determines is nec9 essary to determine the credit under this sub10 section.

11 ‘‘(h) HISTORIC REHABILITATION MORTGAGE CREDIT

12 CERTIFICATE.—

13 ‘‘(1) IN GENERAL.—The taxpayer may elect, in

14 lieu of the credit otherwise allowable under this sec15 tion, to receive a historic rehabilitation mortgage

16 credit certificate. An election under this paragraph

17 shall be made—

18 ‘‘(A) in the case of a building to which

19 subsection (g) applies, at the time of purchase,

20 or

21 ‘‘(B) in any other case, at the time reha22 bilitation is completed.

23 ‘‘(2) HISTORIC REHABILITATION MORTGAGE

24 CREDIT CERTIFICATE.—For purposes of this sub-
211

•S 2936 IS

1 section, the term ‘historic rehabilitation mortgage

2 credit certificate’ means a certificate—

3 ‘‘(A) issued to the taxpayer, in accordance

4 with procedures prescribed by the Secretary,

5 with respect to a certified rehabilitation,

6 ‘‘(B) the face amount of which shall be

7 equal to the credit which would (but for this

8 subsection) be allowable under subsection (a) to

9 the taxpayer with respect to such rehabilitation,

10 ‘‘(C) which may only be transferred by the

11 taxpayer to a lending institution (including a

12 non-depository institution) in connection with a

13 loan—

14 ‘‘(i) that is secured by the building

15 with respect to which the credit relates,

16 and

17 ‘‘(ii) the proceeds of which may not be

18 used for any purpose other than the acqui19 sition or rehabilitation of such building,

20 and

21 ‘‘(D) in exchange for which such lending

22 institution provides the taxpayer—

23 ‘‘(i) a reduction in the rate of interest

24 on the loan which results in interest pay25 ment reductions which are substantially
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•S 2936 IS

1 equivalent on a present value basis to the

2 face amount of such certificate, or

3 ‘‘(ii) if the taxpayer so elects with re4 spect to a specified amount of the face

5 amount of such a certificate relating to a

6 building—

7 ‘‘(I) which is a targeted area res8 idence within the meaning of section

9 143(j)(1), or

10 ‘‘(II) which is located in an en11 terprise community or empowerment

12 zone as designated under section

13 1391,

14 a payment which is substantially equivalent

15 to such specified amount to be used to re16 duce the taxpayer’s cost of purchasing the

17 building (and only the remainder of such

18 face amount shall be taken into account

19 under clause (i)).

20 ‘‘(3) METHOD OF DISCOUNTING.—The present

21 value under paragraph (2)(D)(i) shall be

22 determined—

23 ‘‘(A) for a period equal to the term of the

24 loan referred to in subparagraph (D)(i),
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•S 2936 IS

1 ‘‘(B) by using the convention that any pay2 ment on such loan in any taxable year within

3 such period is deemed to have been made on

4 the last day of such taxable year,

5 ‘‘(C) by using a discount rate equal to 65

6 percent of the average of the annual Federal

7 mid-term rate and the annual Federal long8 term rate applicable under section 1274(d)(1)

9 to the month in which the taxpayer makes an

10 election under paragraph (1) and compounded

11 annually, and

12 ‘‘(D) by assuming that the credit allowable

13 under this section for any year is received on

14 the last day of such year.

15 ‘‘(4) USE OF CERTIFICATE BY LENDER.—The

16 amount of the credit specified in the certificate shall

17 be allowed to the lender only to offset the regular

18 tax (as defined in section 55(c)) of such lender. The

19 lender may carry forward all unused amounts under

20 this subsection until exhausted.

21 ‘‘(5) HISTORIC REHABILITATION MORTGAGE

22 CREDIT CERTIFICATE NOT TREATED AS TAXABLE IN23 COME.—Notwithstanding any other provision of law,

24 no benefit accruing to the taxpayer through the use

25 of an historic rehabilitation mortgage credit certifi-
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•S 2936 IS

1 cate shall be treated as taxable income for purposes

2 of this title.

3 ‘‘(i) RECAPTURE.—

4 ‘‘(1) IN GENERAL.—If, before the end of the 5-

5 year period beginning on the date on which the reha6 bilitation of the building is completed (or, if sub7 section (g) applies, the date of purchase of such

8 building by the taxpayer, or, if subsection (h) ap9 plies, the date of the loan)—

10 ‘‘(A) the taxpayer disposes of such tax11 payer’s interest in such building, or

12 ‘‘(B) such building ceases to be used as the

13 principal residence of the taxpayer,

14 the taxpayer’s tax imposed by this chapter for the

15 taxable year in which such disposition or cessation

16 occurs shall be increased by the recapture percent17 age of the credit allowed under this section for all

18 prior taxable years with respect to such rehabilita19 tion.

20 ‘‘(2) RECAPTURE PERCENTAGE.—For purposes

21 of paragraph (1), the recapture percentage shall be

22 determined in accordance with the following table:

‘‘If the disposition or cessation occurs within—The recapture percentage is—

(i) One full year after the taxpayer becomes entitled to the

credit.

100

(ii) One full year after the close of the period described in

clause (i).

80
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•S 2936 IS

‘‘If the disposition or cessation occurs within—The recapture percentage is—

(iii) One full year after the close of the period described in

clause (ii).

60

(iv) One full year after the close of the period described in

clause (iii).

40

(v) One full year after the close of the period described in

clause (iv).

20.

1 ‘‘(j) BASIS ADJUSTMENTS.—For purposes of this

2 subtitle, if a credit is allowed under this section for any

3 expenditure with respect to any property (including any

4 purchase under subsection (g) and any transfer under sub5 section (h)), the increase in the basis of such property

6 which would (but for this subsection) result from such ex7 penditure shall be reduced by the amount of the credit

8 so allowed.

9 ‘‘(k) DENIAL OF DOUBLE BENEFIT.—No credit shall

10 be allowed under this section for any amount for which

11 credit is allowed under section 47.

12 ‘‘(l) REGULATIONS.—The Secretary shall prescribe

13 such regulations as may be appropriate to carry out the

14 purposes of this section, including regulations where less

15 than all of a building is used as a principal residence and

16 where more than 1 taxpayer use the same dwelling unit

17 as their principal residence.’’.

18 (b) CONFORMING AMENDMENT.—Subsection (a) of

19 section 1016 is amended by striking ‘‘and’’ at the end of

20 paragraph (26), by striking the period at the end of para21 graph (27) and inserting ‘‘, and’’, and by adding at the

22 end the following new item:
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•S 2936 IS

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

2 25B(j).’’.

3 (c) CLERICAL AMENDMENT.—The table of sections

4 for subpart A of part IV of subchapter A of chapter 1

5 is amended by inserting after the item relating to section

6 25A the following new item:

‘‘Sec. 25B. Historic homeownership rehabilitation credit.’’.

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to expenses paid or incurred in

9 taxable years beginning after December 31, 2000.

10 SEC. 606. TRANSFER OF UNOCCUPIED AND SUBSTANDARD

11 HUD-HELD HOUSING TO LOCAL GOVERN12 MENTS AND COMMUNITY DEVELOPMENT

13 CORPORATIONS.

14 Section 204 of the Departments of Veterans Affairs

15 and Housing and Urban Development, and Independent

16 Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–

17 11a) is amended—

18 (1) by striking ‘‘FLEXIBLE AUTHORITY.—’’ and

19 inserting ‘‘DISPOSITION OF HUD-OWNED PROP20 ERTIES. (a) FLEXIBLE AUTHORITY FOR MULTI21 FAMILY PROJECTS.—’’; and

22 (2) by adding at the end the following new sub23 section:
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•S 2936 IS

1 ‘‘(b) TRANSFER OF UNOCCUPIED AND SUBSTANDARD

2 HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY

3 DEVELOPMENT CORPORATIONS.—

4 ‘‘(1) TRANSFER AUTHORITY.—Notwithstanding

5 the authority under subsection (a) and the last sen6 tence of section 204(g) of the National Housing Act

7 (12 U.S.C. 1710(g)), the Secretary of Housing and

8 Urban Development shall transfer ownership of any

9 qualified HUD property, subject to the requirements

10 of this section, to a unit of general local government

11 having jurisdiction for the area in which the prop12 erty is located or to a community development cor13 poration which operates within such a unit of gen14 eral local government in accordance with this sub15 section, but only to the extent that units of general

16 local government and community development cor17 porations consent to transfer and the Secretary de18 termines that such transfer is practicable.

19 ‘‘(2) QUALIFIED HUD PROPERTIES.—For pur20 poses of this subsection, the term ‘qualified HUD

21 property’ means any property for which, as of the

22 date that notification of the property is first made

23 under paragraph (3)(B), not less than 6 months

24 have elapsed since the later of the date that the

25 property was acquired by the Secretary or the date
218

•S 2936 IS

1 that the property was determined to be unoccupied

2 or substandard, that is owned by the Secretary and

3 is—

4 ‘‘(A) an unoccupied multifamily housing

5 project;

6 ‘‘(B) a substandard multifamily housing

7 project; or

8 ‘‘(C) an unoccupied single family property

9 that—

10 ‘‘(i) has been determined by the Sec11 retary not to be an eligible asset under sec12 tion 204(h) of the National Housing Act

13 (12 U.S.C. 1710(h)); or

14 ‘‘(ii) is an eligible asset under such

15 section 204(h), but—

16 ‘‘(I) is not subject to a specific

17 sale agreement under such section;

18 and

19 ‘‘(II) has been determined by the

20 Secretary to be inappropriate for con21 tinued inclusion in the program under

22 such section 204(h) pursuant to para23 graph (10) of such section.

24 ‘‘(3) TIMING.—The Secretary shall establish

25 procedures that provide for—
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•S 2936 IS

1 ‘‘(A) time deadlines for transfers under

2 this subsection;

3 ‘‘(B) notification to units of general local

4 government and community development cor5 porations of qualified HUD properties in their

6 jurisdictions;

7 ‘‘(C) such units and corporations to ex8 press interest in the transfer under this sub9 section of such properties;

10 ‘‘(D) a right of first refusal for transfer of

11 qualified HUD properties to units of general

12 local government and community development

13 corporations, under which—

14 ‘‘(i) the Secretary shall establish a pe15 riod during which the Secretary may not

16 transfer such properties except to such

17 units and corporations;

18 ‘‘(ii) the Secretary shall offer qualified

19 HUD properties that are single family

20 properties for purchase by units of general

21 local government at a cost of $1 for each

22 property, but only to the extent that the

23 costs to the Federal Government of dis24 posal at such price do not exceed the costs

25 to the Federal Government of disposing of
220

•S 2936 IS

1 property subject to the procedures for sin2 gle family property established by the Sec3 retary pursuant to the authority under the

4 last sentence of section 204(g) of the Na5 tional Housing Act (12 U.S.C. 1710(g));

6 ‘‘(iii) the Secretary may accept an

7 offer to purchase a property made by a

8 community development corporation only if

9 the offer provides for purchase on a cost

10 recovery basis; and

11 ‘‘(iv) the Secretary shall accept an

12 offer to purchase such a property that is

13 made during such period by such a unit or

14 corporation and that complies with the re15 quirements of this paragraph;

16 ‘‘(E) a written explanation, to any unit of

17 general local government or community develop18 ment corporation making an offer to purchase

19 a qualified HUD property under this subsection

20 that is not accepted, of the reason that such

21 offer was not acceptable.

22 ‘‘(4) OTHER DISPOSITION.—With respect to

23 any qualified HUD property, if the Secretary does

24 not receive an acceptable offer to purchase the prop25 erty pursuant to the procedure established under
221

•S 2936 IS

1 paragraph (3), the Secretary shall dispose of the

2 property to the unit of general local government in

3 which property is located or to community develop4 ment corporations located in such unit of general

5 local government on a negotiated, competitive bid, or

6 other basis, on such terms as the Secretary deems

7 appropriate.

8 ‘‘(5) SATISFACTION OF INDEBTEDNESS.—Be9 fore transferring ownership of any qualified HUD

10 property pursuant to this subsection, the Secretary

11 shall satisfy any indebtedness incurred in connection

12 with the property to be transferred, by canceling the

13 indebtedness.

14 ‘‘(6) DETERMINATION OF STATUS OF PROP15 ERTIES.—To ensure compliance with the require16 ments of this subsection, the Secretary shall take the

17 following actions:

18 ‘‘(A) UPON ENACTMENT.—Upon the enact19 ment of this subsection, the Secretary shall

20 promptly assess each residential property owned

21 by the Secretary to determine whether such

22 property is a qualified HUD property.

23 ‘‘(B) UPON ACQUISITION.—Upon acquiring

24 any residential property, the Secretary shall
222

•S 2936 IS

1 promptly determine whether the property is a

2 qualified HUD property.

3 ‘‘(C) UPDATES.—The Secretary shall peri4 odically reassess the residential properties

5 owned by the Secretary to determine whether

6 any such properties have become qualified

7 HUD properties.

8 ‘‘(7) TENANT LEASES.—This subsection shall

9 not affect the terms or the enforceability of any con10 tract or lease entered into with respect to any resi11 dential property before the date that such property

12 becomes a qualified HUD property.

13 ‘‘(8) USE OF PROPERTY.—Property transferred

14 under this subsection shall be used only for appro15 priate neighborhood revitalization efforts, including

16 homeownership, rental units, commercial space, and

17 parks, consistent with local zoning regulations, local

18 building codes, and subdivision regulations and re19 strictions of record.

20 ‘‘(9) INAPPLICABILITY TO PROPERTIES MADE

21 AVAILABLE FOR HOMELESS.—Notwithstanding any

22 other provision of this subsection, this subsection

23 shall not apply to any properties that the Secretary

24 determines are to be made available for use by the

25 homeless pursuant to subpart E of part 291 of title
223

•S 2936 IS

1 24, Code of Federal Regulations, during the period

2 that the properties are so available.

3 ‘‘(10) PROTECTION OF EXISTING CONTRACTS.—

4 This subsection may not be construed to alter, af5 fect, or annul any legally binding obligations entered

6 into with respect to a qualified HUD property before

7 the property becomes a qualified HUD property.

8 ‘‘(11) DEFINITIONS.—For purposes of this sub9 section, the following definitions shall apply:

10 ‘‘(A) COMMUNITY DEVELOPMENT COR11 PORATION.—The term ‘community development

12 corporation’ means a nonprofit organization

13 whose primary purpose is to promote commu14 nity development by providing housing opportu15 nities for low-income families.

16 ‘‘(B) COST RECOVERY BASIS.—The term

17 ‘cost recovery basis’ means, with respect to any

18 sale of a residential property by the Secretary,

19 that the purchase price paid by the purchaser

20 is equal to or greater than the sum of (i) the

21 appraised value of the property, as determined

22 in accordance with such requirements as the

23 Secretary shall establish, and (ii) the costs in24 curred by the Secretary in connection with such

25 property during the period beginning on the
224

•S 2936 IS

1 date on which the Secretary acquires title to the

2 property and ending on the date on which the

3 sale is consummated.

4 ‘‘(C) MULTIFAMILY HOUSING PROJECT.—

5 The term ‘multifamily housing project’ has the

6 meaning given the term in section 203 of the

7 Housing and Community Development Amend8 ments of 1978.

9 ‘‘(D) RESIDENTIAL PROPERTY.—The term

10 ‘residential property’ means a property that is

11 a multifamily housing project or a single family

12 property.

13 ‘‘(E) SECRETARY.—The term ‘Secretary’

14 means the Secretary of Housing and Urban De15 velopment.

16 ‘‘(F) SEVERE PHYSICAL PROBLEMS.—The

17 term ‘severe physical problems’ means, with re18 spect to a dwelling unit, that the unit—

19 ‘‘(i) lacks hot or cold piped water, a

20 flush toilet, or both a bathtub and a show21 er in the unit, for the exclusive use of that

22 unit;

23 ‘‘(ii) on not less than three separate

24 occasions during the preceding winter

25 months, was uncomfortably cold for a pe-
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•S 2936 IS

1 riod of more than 6 consecutive hours due

2 to a malfunction of the heating system for

3 the unit;

4 ‘‘(iii) has no functioning electrical

5 service, exposed wiring, any room in which

6 there is not a functioning electrical outlet,

7 or has experienced three or more blown

8 fuses or tripped circuit breakers during the

9 preceding 90-day period;

10 ‘‘(iv) is accessible through a public

11 hallway in which there are no working

12 light fixtures, loose or missing steps or

13 railings, and no elevator; or

14 ‘‘(v) has severe maintenance problems,

15 including water leaks involving the roof,

16 windows, doors, basement, or pipes or

17 plumbing fixtures, holes or open cracks in

18 walls or ceilings, severe paint peeling or

19 broken plaster, and signs of rodent infesta20 tion.

21 ‘‘(G) SINGLE FAMILY PROPERTY.—The

22 term ‘single family property’ means a 1- to 4-

23 family residence.

24 ‘‘(H) SUBSTANDARD.—The term ‘sub25 standard’ means, with respect to a multifamily
226

•S 2936 IS

1 housing project, that 25 percent or more of the

2 dwelling units in the project have severe phys3 ical problems.

4 ‘‘(I) UNIT OF GENERAL LOCAL GOVERN5 MENT.—The term ‘unit of general local govern6 ment’ has the meaning given such term in sec7 tion 102(a) of the Housing and Community De8 velopment Act of 1974.

9 ‘‘(J) UNOCCUPIED.—The term ‘unoccu10 pied’ means, with respect to a residential prop11 erty, that the unit of general local government

12 having jurisdiction over the area in which the

13 project is located has certified in writing that

14 the property is not inhabited.

15 ‘‘(12) REGULATIONS.—

16 ‘‘(A) INTERIM.—Not later than 30 days

17 after the date of the enactment of this sub18 section, the Secretary shall issue such interim

19 regulations as are necessary to carry out this

20 subsection.

21 ‘‘(B) FINAL.—Not later than 60 days after

22 the date of the enactment of this subsection,

23 the Secretary shall issue such final regulations

24 as are necessary to carry out this subsection.’’.
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•S 2936 IS

1 SEC. 607. TRANSFER OF HUD ASSETS IN REVITALIZATION

2 AREAS.

3 In carrying out the program under section 204(h) of

4 the National Housing Act (12 U.S.C. 1710(h)), upon the

5 request of the chief executive officer of a county or the

6 government of appropriate jurisdiction and not later than

7 60 days after such request is made, the Secretary of Hous8 ing and Urban Development shall designate as a revital9 ization area all portions of such county that meet the cri10 teria for such designation under paragraph (3) of such

11 section.

12 SEC. 608. RISK-SHARING DEMONSTRATION.

13 Section 249 of the National Housing Act (12 U.S.C.

14 1715z–14) is amended—

15 (1) by striking the section heading and insert16 ing the following:

17 ‘‘RISK-SHARING DEMONSTRATION’’;

18 (2) by striking ‘‘reinsurance’’ each place such

19 term appears and insert ‘‘risk-sharing’’;

20 (3) in subsection (a)—

21 (A) in the first sentence, by inserting ‘‘and

22 insured community development financial insti23 tutions’’ after ‘‘private mortgage insurers’’;

24 (B) in the second sentence—

25 (i) by striking ‘‘two’’ and inserting

26 ‘‘4’’; and
228

•S 2936 IS

1 (ii) by striking ‘‘March 15, 1988’’ and

2 inserting ‘‘the expiration of the 5-year pe3 riod beginning on the date of the enact4 ment of the Creating New Markets and

5 Empowering America Act of 2000’’; and

6 (C) in the last sentence, by striking ‘‘10

7 percent’’ and inserting ‘‘20 percent’’;

8 (4) in subsection (b)—

9 (A) in the first sentence, by inserting ‘‘and

10 with insured community development financial

11 institutions’’ before the period at the end;

12 (B) in the first sentence, by striking

13 ‘‘which have been determined to be qualified in14 surers under section 302(b)(2)(C)’’;

15 (C) in the second sentence, by inserting

16 ‘‘and insured community development financial

17 institutions’’ after ‘‘private mortgage insurance

18 companies’’;

19 (D) by striking paragraph (1) and insert20 ing the following new paragraph:

21 ‘‘(1) assume the first loss on any mortgage in22 sured pursuant to section 203(b), 234, or 245 that

23 covers a one- to four-family dwelling and is included

24 in the program under this section, up to the percent-
229

•S 2936 IS

1 age of loss that is set forth in the risk-sharing con2 tract;’’; and

3 (E) in paragraph (2)—

4 (i) by striking ‘‘carry out (under ap5 propriate delegation) such’’ and inserting

6 ‘‘delegate underwriting,’’; and

7 (ii) by striking ‘‘function’’ and insert8 ing ‘‘functions’’;

9 (5) in subsection (c)—

10 (A) in the first sentence—

11 (i) by striking ‘‘of’’ the first place it

12 appears and insert ‘‘for’’;

13 (ii) by striking ‘‘insurance reserves’’

14 and inserting ‘‘loss reserves’’; and

15 (iii) by striking ‘‘such insurance’’ and

16 inserting ‘‘such reserves’’; and

17 (B) in the second sentence, by inserting

18 ‘‘or insured community development financial

19 institution’’ after ‘‘private mortgage insurance

20 company’’;

21 (6) in subsection (d), by inserting ‘‘or insured

22 community development financial institution’’ after

23 ‘‘private mortgage insurance company’’; and

24 (7) by adding at the end the following new sub25 section:
230

•S 2936 IS

1 ‘‘(e) INSURED COMMUNITY DEVELOPMENT FINAN2 CIAL INSTITUTIONS.—For purposes of this section, the

3 term ‘insured community development financial institu4 tion’ means a community development financial institu5 tion, as such term is defined in section 103 of Reigle Com6 munity Development and Regulatory Improvement Act of

7 1994 (12 U.S.C. 4702) that is an insured depository insti8 tution (as such term is defined in section 3 of the Federal

9 Deposit Insurance Act (12 U.S.C. 1813)) or an insured

10 credit union (as such term is defined in section 101 of

11 the Federal Credit Union Act (12 U.S.C. 1752)).’’.

12 TITLE VII—TRADE-AFFECTED

13 COMMUNITIES RELIEF

14 SEC. 701. DEFINITIONS.

15 In this title:

16 (1) NAFTA.—The term ‘‘NAFTA’’ means the

17 North American Free Trade Agreement entered into

18 between the United States, Mexico, and Canada on

19 December 17, 1992.

20 (2) SECRETARY.—The term ‘‘Secretary’’ means

21 the Secretary of Commerce.

22 (3) TRADE-AFFECTED COMMUNITY.—The term

23 ‘‘trade-affected community’’ means a political sub24 division of a State that meets the trade adjustment

25 assistance requirements.
231

•S 2936 IS

1 (4) TRADE ADJUSTMENT ASSISTANCE REQUIRE2 MENTS.—The term ‘‘trade adjustment assistance re3 quirements’’ means—

4 (A) in the case of a political subdivision

5 with a population of not more than 100,000, at

6 least 300 workers have been certified after No7 vember 1, 1999, as eligible for—

8 (i) trade adjustment assistance under

9 subchapter A of chapter II of the Trade

10 Act of 1974 (19 U.S.C. 2271 et seq.); or

11 (ii) NAFTA trade adjustment assist12 ance under subchapter D of chapter 2 of

13 title II of the Trade Act of 1974 (19

14 U.S.C. 2331); and

15 (B) in the case of a political subdivision

16 with a population of over 100,000, at least 500

17 workers have been certified after November 1,

18 1999, as eligible for—

19 (i) trade adjustment assistance under

20 subchapter A of chapter II of the Trade

21 Act of 1974 (19 U.S.C. 2271 et seq.); or

22 (ii) NAFTA trade adjustment assist23 ance under subchapter D of chapter 2 of

24 title II of the Trade Act of 1974.
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•S 2936 IS

1 SEC. 702. PETITIONS AND DETERMINATIONS.

2 (a) IN GENERAL.—A petition for certification for as3 sistance under this title may be filed with the Secretary

4 by a political subdivision (in this title referred to as a

5 ‘‘community’’), by a group of such communities, or by the

6 Governor of a State on behalf of such communities.

7 (b) CERTIFICATION.—As soon as practicable after

8 the date on which a petition described in subsection (a)

9 is filed, the Secretary shall determine if the community

10 (or group of communities) filing the petition meets the re11 quirements of a trade-affected community and shall certify

12 the community as eligible for assistance under this title

13 if the Secretary determines that the community is a trade14 affected community.

15 SEC. 703. GRANTS FOR ECONOMIC DEVELOPMENT.

16 (a) GRANTS TO DEVELOP ECONOMIC PLANS.—Each

17 community that is certified as a trade-affected community

18 under this title shall receive a grant of not more than

19 $100,000 to be used for planning and technical assistance

20 to develop economic plans for community adjustment as21 sistance and diversification of such community. The

22 amount of the grant shall be determined by the Secretary.

23 (b) GRANTS TO CARRY OUT ECONOMIC DEVELOP24 MENT ACTIVITIES.—Each community that is certified as

25 a trade-affected community under this title shall be eligi26 ble to file an application with the Secretary for adjustment
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•S 2936 IS

1 assistance to make the following improvements in the com2 munity based on the economic plan developed under sub3 section (a):

4 (1) Construct or expand the industrial and

5 commercial infrastructure.

6 (2) Improve educational opportunities.

7 (3) Construct advanced manufacturing centers,

8 industrial parks, and water and sewer facilities.

9 (4) Improve transportation.

10 (5) Establish small business incubators.

11 (6) Make technology infrastructure improve12 ments.

13 (7) Take such other action as necessary to cap14 italize on opportunities to diversify the economy and

15 develop new industrial and commercial ventures.

16 (c) REGULATIONS.—The Secretary shall prescribe

17 such regulations as are necessary to carry out the provi18 sions of this section.

19 SEC. 704. PROVIDE INCENTIVES FOR NEW INVESTMENTS

20 FOR TRADE-AFFECTED COMMUNITIES.

21 (a) EXPANSION OF WORK OPPORTUNITY CREDIT.—

22 (1) IN GENERAL.—Section 51(d)(1) (relating to

23 members of targeted groups) is amended by striking

24 ‘‘or’’ at the end of subparagraph (G), by striking the
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•S 2936 IS

1 period at the end of subparagraph (H) and inserting

2 ‘‘, or’’, and by adding at the end the following:

3 ‘‘(I) an adversely affected individual.’’

4 (2) ADVERSELY AFFECTED INDIVIDUAL.—Sec5 tion 51(d) is amended by redesignating paragraphs

6 (10) through (12) as paragraphs (11) through (13),

7 respectively, and by inserting after paragraph (9)

8 the following:

9 ‘‘(10) ADVERSELY AFFECTED INDIVIDUAL.—

10 The term ‘adversely affected individual’ means any

11 individual who is certified by the designated local

12 agency as being adversely affected by trade-related

13 activities and as residing in a trade-affected commu14 nity as defined in section 701(2) of the Creating

15 New Markets and Empowering America Act of

16 2000.’’

17 (3) EFFECTIVE DATE.—The amendments made

18 by this subsection shall apply to individuals who

19 begin work for the employer after the date of enact20 ment of this Act.

21 (b) EXTENSION OF NEW MARKETS TAX CREDIT.—

22 (1) IN GENERAL.—Section 45D(e)(1) (defining

23 low-income community), as added by section 101(a),

24 is amended to read as follows:
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•S 2936 IS

1 ‘‘(1) IN GENERAL.—The term ‘low-income com2 munity’ means—

3 ‘‘(A) any population census tract if—

4 ‘‘(i) the poverty rate for such tract is

5 at least 20 percent,

6 ‘‘(ii)(I) in the case of a tract not lo7 cated within a metropolitan area, the me8 dian family income for such tract does not

9 exceed 80 percent of statewide median

10 family income, or

11 ‘‘(II) in the case of a tract located

12 within a metropolitan area, the median

13 family income for such tract does not ex14 ceed 80 percent of the greater of statewide

15 median family income or the metropolitan

16 area median family income, or

17 ‘‘(B) any trade-affected community as de18 fined in section 701(2) of the Creating New

19 Markets and Empowering America Act of

20 2000.’’

21 (2) EFFECTIVE DATE.—The amendments made

22 by this subsection shall apply to investments made

23 after December 31, 2000.
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•S 2936 IS

1 SEC. 705. CENTRAL CLEARINGHOUSE FOR ECONOMIC DE2 VELOPMENT.

3 (a) IN GENERAL.—The Secretary shall establish a

4 one-stop clearinghouse for States and political subdivisions

5 of States to obtain information regarding assistance avail6 able for trade-affected communities. The clearinghouse

7 should be easily accessible and contain information regard8 ing grants, low-interest loans, and other types of economic

9 development assistance available from government re10 sources for trade-affected communities.

11 (b) NOTIFICATION BY DEPARTMENT OF LABOR.—

12 Not later than 15 days after the date that a political sub13 division meets the trade adjustment assistance require14 ments defined in section 701(4), the Secretary of Labor

15 shall notify the Secretary. The Secretary shall notify each

16 such political subdivision that the subdivision is eligible

17 to receive a grant described in section 703 (a) and (b),

18 that the clearinghouse established pursuant to subsection

19 (a) exists, and how to access clearinghouse information.

20 SEC. 706. APPROPRIATIONS.

21 There is authorized to be appropriated for fiscal year

22 2001, and each fiscal year thereafter, $30,000,000 for the

23 grants described in section 703(a) and $200,000,000 for

24 the grants described in section 703(b).
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•S 2936 IS

1 SEC. 707. SUPPLEMENT NOT SUPPLANT.

2 Funds appropriated pursuant to the authority of this

3 title shall be used to supplement and not supplant other

4 Federal, State, and local public funds expended to provide

5 economic development assistance for communities.

6 SEC. 708. REGULATIONS.

7 The Secretary may promulgate such regulations as

8 may be necessary to carry out the provisions of this title.

9 TITLE VIII—DELTA REGIONAL

10 AUTHORITY

11 SEC. 801. DELTA REGIONAL AUTHORITY.

12 The Consolidated Farm and Rural Development Act

13 (7 U.S.C. 1921 et seq.) is amended by adding at the end

14 the following:

15 ‘‘Subtitle F—Delta Regional

16 Authority

17 ‘‘SEC. 382A. DEFINITIONS.

18 ‘‘In this subtitle:

19 ‘‘(1) AUTHORITY.—The term ‘Authority’ means

20 the Delta Regional Authority established by section

21 382B.

22 ‘‘(2) REGION.—The term ‘region’ means areas

23 in the States of Arkansas, Illinois, Kentucky, Lou24 isiana, Mississippi, Missouri, and Tennessee, as de25 fined under section 4 of the Lower Mississippi Delta
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•S 2936 IS

1 Development Act (Public Law 100–460; 42 U.S.C.

2 3121 note).

3 ‘‘(3) FEDERAL GRANT PROGRAM.—The term

4 ‘Federal grant program’ means a Federal grant pro5 gram to provide assistance in—

6 ‘‘(A) acquiring or developing land;

7 ‘‘(B) constructing or equipping a facility;

8 or

9 ‘‘(C) carrying out other community or eco10 nomic development or economic adjustment ac11 tivities.

12 ‘‘SEC. 382B. DELTA REGIONAL AUTHORITY.

13 ‘‘(a) ESTABLISHMENT.—

14 ‘‘(1) IN GENERAL.—There is established the

15 Delta Regional Authority.

16 ‘‘(2) COMPOSITION.—The Authority shall be

17 composed of—

18 ‘‘(A) a Federal member, to be appointed

19 by the President, with the advice and consent

20 of the Senate; and

21 ‘‘(B) the Governor (or a designee of the

22 Governor) of each State in the region that

23 elects to participate in the Authority.

24 ‘‘(3) COCHAIRPERSONS.—The Authority shall

25 be headed by 2 cochairpersons, which shall be—
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•S 2936 IS

1 ‘‘(A) the Federal member, who shall

2 serve—

3 ‘‘(i) as the Federal cochairperson; and

4 ‘‘(ii) as a liaison between the Federal

5 Government and the Authority; and

6 ‘‘(B) a State cochairperson, who—

7 ‘‘(i) shall be a Governor of a partici8 pating State in the region; and

9 ‘‘(ii) shall be elected by the State

10 members for a term of not less than 1

11 year.

12 ‘‘(b) ALTERNATE MEMBERS.—

13 ‘‘(1) STATE ALTERNATES.—Each State member

14 may have a single alternate, appointed by the Gov15 ernor from among the members of the cabinet or the

16 personal staff of the Governor.

17 ‘‘(2) ALTERNATE FEDERAL COCHAIRPERSON.—

18 The President shall appoint an alternate Federal co19 chairperson.

20 ‘‘(3) QUORUM.—A State alternate shall not be

21 counted toward the establishment of a quorum of

22 the Authority in any instance in which a quorum of

23 the State members is required to be present.

24 ‘‘(4) DELEGATION OF POWER.—No power or

25 responsibility of the Authority specified in para-
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•S 2936 IS

1 graphs (2) and (3) of subsection (b), and no voting

2 right of any Authority member, shall be delegated to

3 any person—

4 ‘‘(A) who is not a Authority member; or

5 ‘‘(B) who is not entitled to vote in Author6 ity meetings.

7 ‘‘(c) VOTING.—

8 ‘‘(1) IN GENERAL.—Except as provided in sec9 tion 382I(d), decisions by the Authority shall require

10 the affirmative vote of the Federal cochairperson

11 and of a majority of the State members (not includ12 ing a member representing a State that is delin13 quent under subsection (g)(2)(C).

14 ‘‘(2) QUORUM.—A quorum of State members

15 shall be required to be present for the Authority to

16 make any policy decision, including—

17 ‘‘(A) a modification or revision of a Au18 thority policy decision;

19 ‘‘(B) approval of a State or regional devel20 opment plan; and

21 ‘‘(C) any allocation of funds among the

22 States.

23 ‘‘(3) PROJECT AND GRANT PROPOSALS.—The

24 approval of project and grant proposals shall be—

25 ‘‘(A) a responsibility of the Authority; and
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•S 2936 IS

1 ‘‘(B) conducted in accordance with section

2 382I.

3 ‘‘(4) VOTING BY ALTERNATE MEMBERS.—An

4 alternate member shall vote in the case of the ab5 sence, death, disability, removal, or resignation of

6 the State or Federal representative for which the al7 ternate member is an alternate.

8 ‘‘(d) DUTIES.—The Authority shall—

9 ‘‘(1) develop, on a continuing basis, comprehen10 sive and coordinated plans and programs to establish

11 priorities and approve grants for the economic devel12 opment of the region, giving due consideration to

13 other Federal, State, and local planning and devel14 opment activities in the region;

15 ‘‘(2) not later than 220 days after the date of

16 enactment of this subtitle, establish priorities in a

17 development plan for the region (including 5-year re18 gional outcome targets);

19 ‘‘(3) provide for an understanding of the needs

20 and assets of the region through research, dem21 onstration, investigation, assessment, and evaluation

22 of the region, in cooperation with Federal, State,

23 and local agencies, universities, local development

24 districts, and other nonprofit groups, as appropriate;
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•S 2936 IS

1 ‘‘(4) review and study, in cooperation with the

2 appropriate agencies, Federal, State, and local pub3 lic and private programs in the region;

4 ‘‘(5) recommend any modification or addition to

5 a program described in paragraph (4) that could in6 crease the effectiveness of the program;

7 ‘‘(6) formulate and recommend interstate com8 pacts and other forms of interstate cooperation;

9 ‘‘(7) work with State and local agencies in de10 veloping appropriate model legislation;

11 ‘‘(8) encourage the formation of, build the ca12 pacity of, and provide support for, local development

13 districts in the region;

14 ‘‘(9) encourage private investment in industrial,

15 commercial, and other economic development

16 projects in the region;

17 ‘‘(10) serve as a focal point and coordinating

18 unit for region programs;

19 ‘‘(11) provide a forum for consideration of

20 problems of the region and proposed solutions for

21 those problems; and

22 ‘‘(12) establish and involve citizens, special ad23 visory councils, and public conferences to consider

24 and resolve issues concerning the region.
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•S 2936 IS

1 ‘‘(e) INFORMATION.—In carrying out the duties of

2 the Authority under subsection (d), the Authority may—

3 ‘‘(1) hold such hearings, sit and act at such

4 times and places, take such testimony, receive such

5 evidence, and print or otherwise reproduce and dis6 tribute the proceedings and reports on actions by the

7 Authority as the Authority considers appropriate;

8 ‘‘(2) authorize, through the Federal or State co9 chairperson, or any other member of the Authority

10 designated by the Authority, the administration of

11 oaths if the Authority determines that testimony

12 shall be taken or evidence shall be received under

13 oath; and

14 ‘‘(3) arrange for the head of any Federal,

15 State, or local department or agency to furnish to

16 the Authority such information as may be available

17 to or procurable by the department or agency;

18 ‘‘(4) adopt, amend, and repeal bylaws and rules

19 governing the conduct of Authority business and the

20 performance of Authority functions;

21 ‘‘(5) request the head of any Federal depart22 ment or agency to detail to the Authority such per23 sonnel as the Authority requires to carry out func24 tions of the Authority, each such detail to be without

25 loss of seniority, pay, or other employee status;
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•S 2936 IS

1 ‘‘(6) request the head of any State department

2 or agency or local government to detail to the Au3 thority such personnel as the Authority requires to

4 carry out functions of the Authority, each such de5 tail to be without loss of seniority, pay, or other em6 ployee status;

7 ‘‘(7) provide for coverage of Authority employ8 ees in a suitable retirement and employee benefit

9 system by—

10 ‘‘(A) making arrangements or entering

11 into contracts with any participating State gov12 ernment; or

13 ‘‘(B) otherwise providing retirement and

14 other employee benefit coverage;

15 ‘‘(8) accept, use, and dispose of gifts or dona16 tions of services or real, personal, tangible, or intan17 gible property;

18 ‘‘(9) enter into and perform such contracts,

19 leases, cooperative agreements, or other transactions

20 as are necessary to carry out Authority duties, in21 cluding any contracts, leases, cooperative agree22 ments, or any other arrangement with—

23 ‘‘(A) any department, agency, or instru24 mentality of the United States;
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•S 2936 IS

1 ‘‘(B) any State (including a political sub2 division, agency, or instrumentality of the

3 State); or

4 ‘‘(C) any person, firm, association, or cor5 poration;

6 ‘‘(10) establish and maintain a central office

7 and field offices at such locations as the Authority

8 may select; and

9 ‘‘(11) take such other actions and incur such

10 other expenses as are necessary or appropriate.

11 ‘‘(f) FEDERAL AGENCY COOPERATION.—Federal

12 agencies shall—

13 ‘‘(1) cooperate with the Authority; and

14 ‘‘(2) provide such assistance in carrying out

15 this subtitle as the Federal cochairperson may re16 quest.

17 ‘‘(g) ADMINISTRATIVE EXPENSES.—

18 ‘‘(1) IN GENERAL.—Administrative expenses of

19 the Authority shall be paid—

20 ‘‘(A) by the Federal Government, during

21 the period beginning on the date of enactment

22 of this subtitle and ending on September 30,

23 2000; and

24 ‘‘(B) after September 30, 2000 (except for

25 the expenses of the Federal cochairperson, in-
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•S 2936 IS

1 cluding expenses of the alternate and staff of

2 the Federal cochairperson, which shall be paid

3 solely by the Federal Government)—

4 ‘‘(i) by the Federal Government, in an

5 amount equal to 50 percent of the admin6 istrative expenses; and

7 ‘‘(ii) by the States in the region rep8 resented by the Authority, in an amount

9 equal to 50 percent of the administrative

10 expenses.

11 ‘‘(2) STATE SHARE.—

12 ‘‘(A) IN GENERAL.—The share of adminis13 trative expenses of the Authority to be paid by

14 each State shall be determined by the Author15 ity.

16 ‘‘(B) NO FEDERAL PARTICIPATION.—The

17 Federal cochairperson shall not participate or

18 vote in any decision under subparagraph (A) to

19 determine the share of administrative expenses

20 of the Authority to be paid by a State.

21 ‘‘(C) DELINQUENT STATES.—If a State is

22 delinquent in payment of the State’s share of

23 administrative expenses of the Authority under

24 this subsection—
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•S 2936 IS

1 ‘‘(i) no assistance under this subtitle

2 shall be furnished to the State (including

3 assistance to a political subdivision or a

4 resident of the State); and

5 ‘‘(ii) no member of the Authority from

6 the State shall participate or vote in any

7 action by the Authority.

8 ‘‘(h) COMPENSATION.—

9 ‘‘(1) FEDERAL COCHAIRPERSON.—The Federal

10 cochairperson shall be compensated by the Federal

11 Government at level III of the Executive Schedule in

12 subchapter II of chapter 53 of title V, United States

13 Code.

14 ‘‘(2) ALTERNATE FEDERAL COCHAIRPERSON.—

15 The alternate Federal cochairperson—

16 ‘‘(A) shall be compensated by the Federal

17 Government at level V of the Executive Sched18 ule described in paragraph (1); and

19 ‘‘(B) when not actively serving as an alter20 nate for the Federal cochairperson, shall per21 form such functions and duties as are delegated

22 by the Federal cochairperson.

23 ‘‘(3) STATE MEMBERS AND ALTERNATES.—

24 ‘‘(A) IN GENERAL.—A State shall com25 pensate each member and alternate rep-
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•S 2936 IS

1 resenting the State on the Authority at the rate

2 established by law of the State.

3 ‘‘(B) NO ADDITIONAL COMPENSATION.—

4 No State member or alternate member shall re5 ceive any salary, or any contribution to or sup6 plementation of salary from any source other

7 than the State for services provided by the

8 member or alternate to the Authority.

9 ‘‘(4) DETAILED EMPLOYEES.—

10 ‘‘(A) IN GENERAL.—No person detailed to

11 serve the Authority under subsection (e)(6)

12 shall receive any salary or any contribution to

13 or supplementation of salary for services pro14 vided to the Authority from—

15 ‘‘(i) any source other than the State,

16 local, or intergovernmental department or

17 agency from which the person was detailed;

18 or

19 ‘‘(ii) the Authority.

20 ‘‘(B) VIOLATION.—Any person that vio21 lates this paragraph shall be fined not more

22 than $5,000, imprisoned not more than 1 year,

23 or both.

24 ‘‘(C) APPLICABLE LAW.—The Federal co25 chairperson, the alternate Federal cochair-
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•S 2936 IS

1 person, and any Federal officer or employee de2 tailed to duty on the Authority under sub3 section (e)(5) shall not be subject to subpara4 graph (A), but shall remain subject to sections

5 202 through 209 of title 18, United States

6 Code.

7 ‘‘(5) ADDITIONAL PERSONNEL.—

8 ‘‘(A) COMPENSATION.—

9 ‘‘(i) IN GENERAL.—The Authority

10 may appoint and fix the compensation of

11 an executive director and such other per12 sonnel as are necessary to enable the Au13 thority to carry out the duties of the Au14 thority.

15 ‘‘(ii) EXCEPTION.—Compensation de16 scribed under clause (i) shall not exceed

17 the maximum rate for the Senior Executive

18 Service under section 5382 of title 5,

19 United States Code, including any applica20 ble locality-based comparability payment

21 that may be authorized under section

22 5304(h)(2)(C) of that title.

23 ‘‘(B) EXECUTIVE DIRECTOR.—The execu24 tive director shall be responsible for—
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•S 2936 IS

1 ‘‘(i) the carrying out of the adminis2 trative functions of the Authority;

3 ‘‘(ii) direction of the Authority staff;

4 and

5 ‘‘(iii) such other duties as the Author6 ity may assign.

7 ‘‘(C) NO FEDERAL EMPLOYEE STATUS.—

8 No member, alternate, officer, or employee of

9 the Authority (except the Federal cochairperson

10 of the Authority, the alternate and staff for the

11 Federal cochairperson, and any Federal em12 ployee detailed to the Authority under sub13 section (e)(5)) shall be considered to be a Fed14 eral employee for any purpose.

15 ‘‘(i) CONFLICTS OF INTEREST.—

16 ‘‘(1) IN GENERAL.—Except as provided under

17 paragraph (2), no State member, alternate, officer,

18 or employee of the Authority shall participate per19 sonally and substantially as a member, alternate, of20 ficer, or employee of the Authority, through decision,

21 approval, disapproval, recommendation, the ren22 dering of advice, investigation, or otherwise, in any

23 proceeding, application, request for a ruling or other

24 determination, contract, claim, controversy, or other
251

•S 2936 IS

1 matter in which, to knowledge of the member, alter2 nate, officer, or employee—

3 ‘‘(A) the member, alternate, officer, or em4 ployee;

5 ‘‘(B) the spouse, minor child, partner, or

6 organization (other than a State or political

7 subdivision thereof) of the member, alternate,

8 officer, or employee, in which the member, al9 ternate, officer, or employee is serving as offi10 cer, director, trustee, partner, or employee; or

11 ‘‘(C) any person or organization with

12 whom the member, alternate, officer, or em13 ployee is negotiating or has any arrangement

14 concerning prospective employment;

15 has a financial interest.

16 ‘‘(2) DISCLOSURE.—Paragraph (1) shall not

17 apply if the State member, alternate, officer, or

18 employee—

19 ‘‘(A) immediately advises the Authority of

20 the nature and circumstances of the proceeding,

21 application, request for a ruling or other deter22 mination, contract, claim, controversy, or other

23 particular matter presenting a conflict of inter24 est;
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•S 2936 IS

1 ‘‘(B) makes full disclosure of the financial

2 interest; and

3 ‘‘(C) before the proceeding concerning the

4 matter presenting the conflict of interest, re5 ceives a written determination by the Authority

6 that the interest is not so substantial as to be

7 likely to affect the integrity of the services that

8 the Authority may expect from the State mem9 ber, alternate, officer, or employee.

10 ‘‘(3) VIOLATION.—Any person that violates this

11 subsection shall be fined not more than $10,000, im12 prisoned not more than 2 years, or both.

13 ‘‘(j) VALIDITY OF CONTRACTS, LOANS, AND

14 GRANTS.—The Authority may declare void any contract,

15 loan, or grant of or by the Authority in relation to which

16 the Authority determines that there has been a violation

17 of any provision under subsection (h)(4), subsection (i),

18 or sections 202 through 209 of title 18, United States

19 Code.

20 ‘‘SEC. 382C. ECONOMIC AND COMMUNITY DEVELOPMENT

21 GRANTS.

22 ‘‘(a) IN GENERAL.—The Authority may approve

23 grants to States and public and nonprofit entities for

24 projects, approved in accordance with section 382I—
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•S 2936 IS

1 ‘‘(1) to assist the region in obtaining the job

2 training and employment-related education, leader3 ship, business, and civic development (with an em4 phasis on entrepreneurship), that are needed to

5 build and maintain strong local economies;

6 ‘‘(2) to provide assistance to severely distressed

7 and underdeveloped counties that lack financial re8 sources for improving basic services;

9 ‘‘(3) to fund—

10 ‘‘(A) research, demonstrations, evaluations,

11 and assessments of the region; and

12 ‘‘(B) training programs, and construction

13 of necessary facilities, and the provision of tech14 nical assistance necessary to complete activities

15 described in subparagraph (A); or

16 ‘‘(4) to otherwise achieve the objectives of this

17 subtitle.

18 ‘‘(b) FUNDING.—

19 ‘‘(1) IN GENERAL.—Funds for grants under

20 subsection (a) may be provided—

21 ‘‘(A) entirely from appropriations to carry

22 out this section;

23 ‘‘(B) in combination with funds available

24 under another Federal or Federal grant pro25 gram; or
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•S 2936 IS

1 ‘‘(C) from any other source.

2 ‘‘(2) PRIORITY OF FUNDING.—To best build the

3 foundations for long-term, self-sustaining economies

4 and to complement other Federal and State re5 sources in the region, Federal funds available under

6 this subtitle shall be focused on the activities in the

7 following order or priority:

8 ‘‘(A) Basic infrastructure in distressed

9 counties.

10 ‘‘(B) Job-related infrastructure.

11 ‘‘(C) Job training or employment-related

12 education.

13 ‘‘(D) Leadership and civic development.

14 ‘‘(E) Business development, with emphasis

15 on entrepreneurship.

16 ‘‘(3) FEDERAL SHARE IN GRANT PROGRAMS.—

17 Notwithstanding any provision of law limiting the

18 Federal share in any grant program, funds appro19 priated to carry out this section may be used to in20 crease a Federal share in a grant program, as the

21 Authority determines to be appropriate.

22 ‘‘SEC. 382D. SUPPLEMENTS TO FEDERAL GRANT PRO23 GRAMS.

24 ‘‘(a) FINDING.—Congress finds that certain people,

25 States, and local communities of the region, including local
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•S 2936 IS

1 development districts, are unable to take maximum advan2 tage of Federal grant programs for which the people are

3 eligible because—

4 ‘‘(1) they lack the economic resources to supply

5 the required matching share; or

6 ‘‘(2) there are insufficient funds available under

7 the applicable Federal grant law authorizing the

8 program to meet pressing needs of the region.

9 ‘‘(b) FEDERAL GRANT PROGRAM FUNDING.—In ac10 cordance with subsection (c), the Federal cochairperson

11 may use amounts made available to carry out this subtitle,

12 without regard to any limitations on areas eligible for as13 sistance or authorizations for appropriation under any

14 other Act to fund all or any portion of the basic Federal

15 contribution to a project or activity under a Federal grant

16 program in an amount that is above the fixed maximum

17 portion of the cost of the project otherwise authorized by

18 the applicable law, not to exceed 80 percent of the costs

19 of the project except as provided in section 382F(b).

20 ‘‘(c) CERTIFICATION.—

21 ‘‘(1) IN GENERAL.—In the case of any program

22 or project for which all or any portion of the basic

23 Federal contribution to the project under a Federal

24 grant program is proposed to be made under this

25 section, no Federal contribution shall be made until
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•S 2936 IS

1 the Federal official administering the Federal law

2 authorizing the contribution certifies that the pro3 gram or project—

4 ‘‘(A) meets the applicable requirements of

5 the applicable Federal grant law; and

6 ‘‘(B) could be approved for Federal con7 tribution under the law if funds were available

8 under the law for the program or project.

9 ‘‘(2) CERTIFICATION BY AUTHORITY.—

10 ‘‘(A) IN GENERAL.—The certifications and

11 determinations required to be made by the Au12 thority for approval of projects under this sub13 title in accordance with section 382I—

14 ‘‘(i) shall be controlling; and

15 ‘‘(ii) shall be accepted by the Federal

16 agencies.

17 ‘‘(B) ACCEPTANCE BY FEDERAL COCHAIR18 PERSON.—Any finding, report, certification, or

19 documentation required to be submitted to the

20 head of the department, agency, or instrumen21 tality of the Federal Government responsible for

22 the administration of any Federal grant pro23 gram shall be accepted by the Federal cochair24 person with respect to a supplemental grant for

25 any project under the program.
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•S 2936 IS

1 ‘‘SEC. 382E. LOCAL DEVELOPMENT DISTRICTS; CERTIFI2 CATION AND ADMINISTRATIVE EXPENSES.

3 ‘‘(a) DEFINITION OF LOCAL DEVELOPMENT DIS4 TRICT.—In this section, the term ‘‘local development dis5 trict’’ means an entity that is—

6 ‘‘(1) organized and operated in a manner that

7 ensures broad-based community participation and an

8 effective opportunity for other nonprofit and citizen

9 groups to contribute to the development and imple10 mentation of programs in the region;

11 ‘‘(2) certified to the Authority as having a char12 ter or authority that includes the economic develop13 ment of counties or parts of counties or other polit14 ical subdivisions within the region—

15 ‘‘(A) by the Governor of each State in

16 which the entity is located; or

17 ‘‘(B) by the State officer designated by the

18 appropriate State law to make the certification;

19 and

20 ‘‘(3) is—

21 ‘‘(A) a nonprofit incorporated body orga22 nized or chartered under the law of the State

23 in which the entity is located;

24 ‘‘(B) a nonprofit agency or instrumentality

25 of a State or local government;
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•S 2936 IS

1 ‘‘(C) a nonprofit agency or instrumentality

2 created through an interstate compact; or

3 ‘‘(D) a nonprofit association or combina4 tion of bodies, agencies, and instrumentalities

5 described in subparagraphs (A) through (C).

6 ‘‘(b) GRANTS TO LOCAL DEVELOPMENT DIS7 TRICTS.—

8 ‘‘(1) IN GENERAL.—The Authority may make

9 grants for administrative expenses of local develop10 ment districts.

11 ‘‘(2) CONDITIONS FOR GRANTS.—

12 ‘‘(A) MAXIMUM AMOUNT.—The amount of

13 any grant awarded under paragraph (1) shall

14 not exceed 80 percent of the administrative ex15 penses of the local development district receiv16 ing the grant.

17 ‘‘(B) MAXIMUM PERIOD.—No grant de18 scribed in paragraph (1) shall be awarded to a

19 State agency certified as a local development

20 district for a period greater than 3 years.

21 ‘‘(C) LOCAL SHARE.—The contributions of

22 a local development district for administrative

23 expenses may be in cash or in kind, fairly evalu24 ated, including space, equipment, and services.
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•S 2936 IS

1 ‘‘(c) DUTIES OF LOCAL DEVELOPMENT DIS2 TRICTS.—Local development districts—

3 ‘‘(1) shall operate as lead organizations serving

4 multicounty areas in the region at the local level;

5 and

6 ‘‘(2) shall serve as a liaison between State and

7 local governments, nonprofit organizations (including

8 community-based groups and educational institu9 tions), the business community, and citizens that—

10 ‘‘(A) are involved in multijurisdictional

11 planning;

12 ‘‘(B) provide technical assistance to local

13 jurisdictions and potential grantees; and

14 ‘‘(C) provide leadership and civic develop15 ment assistance.

16 ‘‘SEC. 382F. DISTRESSED COUNTIES AND ECONOMICALLY

17 STRONG COUNTIES.

18 ‘‘(a) DESIGNATIONS.—Not later than 90 days after

19 the date of enactment of this subtitle, and annually there20 after, the Authority, in accordance with such criteria as

21 the Authority may establish, shall designate—

22 ‘‘(1) as distressed counties, counties in the re23 gion that are the most severely and persistently dis24 tressed and underdeveloped;
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1 ‘‘(2) as economically strong counties, counties

2 in the region that are approaching or have reached

3 economic parity with the rest of the United States;

4 and

5 ‘‘(3) as isolated areas of distress, areas located

6 in an economically strong county that have high

7 rates of poverty or unemployment.

8 ‘‘(b) DISTRESSED COUNTIES.—

9 ‘‘(1) IN GENERAL.—The Authority shall allo10 cate at least 50 percent of the appropriations made

11 available under section 382N for programs and

12 projects designed to serve the needs of distressed

13 counties in the region.

14 ‘‘(2) FUNDING LIMITATIONS.—The funding lim15 itations under section 382D(b) shall not apply to

16 projects providing basic services to residents in 1 or

17 more distressed counties in the region.

18 ‘‘(c) ECONOMICALLY STRONG COUNTIES.—

19 ‘‘(1) IN GENERAL.—Except as provided in this

20 subsection, no funds shall be provided under this

21 subtitle for a project located in a county designated

22 as an economically strong county under subsection

23 (a).

24 ‘‘(2) EXCEPTIONS.—
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1 ‘‘(A) IN GENERAL.—The funding prohibi2 tion under paragraph (1) shall not apply to

3 grants to fund the administrative expenses of

4 local development districts under section

5 382E(b).

6 ‘‘(B) MULTICOUNTY PROJECTS.—The Au7 thority may approve additional exceptions to

8 the funding prohibition under paragraph (1)

9 for—

10 ‘‘(i) multicounty projects that include

11 participation by an economically strong

12 county; and

13 ‘‘(ii) any other type of project, if the

14 Authority determines that the project could

15 bring significant benefits to areas of the

16 region outside an economically strong

17 county.

18 ‘‘(C) ISOLATED AREAS OF DISTRESS.—

19 ‘‘(i) IN GENERAL.—An isolated area

20 of distress shall be eligible for assistance at

21 the discretion of the Authority.

22 ‘‘(ii) DETERMINATION.—A determina23 tion of eligibility of an isolated area of dis24 tress for assistance shall be supported—
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1 ‘‘(I) by the most recent Federal

2 data available; or

3 ‘‘(II) if no recent Federal data

4 are available, by the most recent data

5 available through the government of

6 the State in which the isolated area of

7 distress is located.

8 ‘‘SEC. 382G. DEVELOPMENT PLANNING PROCESS.

9 ‘‘(a) STATE DEVELOPMENT PLAN.—In accordance

10 with policies established by the Authority, each State

11 member shall submit on such schedule as the Authority

12 shall prescribe a development plan for the area of the re13 gion represented by the State member.

14 ‘‘(b) CONTENT OF PLAN.—A State development plan

15 submitted under subsection (a) shall—

16 ‘‘(1) reflect the goals, objectives, and priorities

17 identified in the regional development plan under

18 section 382B(d);

19 ‘‘(2) describe—

20 ‘‘(A) the organization and continuous proc21 ess for development planning of the State, in22 cluding the procedures established by the State

23 for the participation of local development dis24 tricts in the development planning process;
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1 ‘‘(B) the means by which the development

2 planning process of the State is related to over3 all State-wide planning and budgeting proc4 esses; and

5 ‘‘(C) the method of coordinating planning

6 and projects in the region under this subtitle

7 and other Federal, State, and local programs;

8 ‘‘(3)(A) identify the goals, objectives, priorities,

9 and expected outcomes of the State for the region,

10 as determined by the Governor;

11 ‘‘(B) identify the needs on which those goals,

12 objectives, priorities are based; and

13 ‘‘(C) describe the development strategy for

14 achieving and the expected outcomes of those goals,

15 objectives, and priorities; and

16 ‘‘(4) describe how strategies proposed in the

17 plan would advance the objectives of this subtitle.

18 ‘‘(c) CONSULTATION WITH INTERESTED LOCAL PAR19 TIES.—In carrying out the development planning process

20 (including the selection of programs and projects for as21 sistance), a State shall—

22 ‘‘(1) consult with—

23 ‘‘(A) local development districts;

24 ‘‘(B) local units of government; and

25 ‘‘(C) citizen groups; and
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1 ‘‘(2) take into consideration the goals, objec2 tives, priorities, and recommendations of the entities

3 identified in paragraph (1).

4 ‘‘(d) PUBLIC PARTICIPATION.—

5 ‘‘(1) IN GENERAL.—The Authority and applica6 ble State and local development districts shall en7 courage and assist, to the maximum extent prac8 ticable, public participation in the development, revi9 sion, and implementation of all plans and programs

10 under this subtitle.

11 ‘‘(2) REGULATIONS.—The Authority shall de12 velop guidelines specifying minimum goals for public

13 participation described in paragraph (1), including

14 public hearings.

15 ‘‘SEC. 382H. PROGRAM DEVELOPMENT CRITERIA.

16 ‘‘(a) IN GENERAL.—In considering programs and

17 projects to be provided assistance under this subtitle, and

18 in establishing a priority ranking of the requests for as19 sistance presented to the Authority, the Authority shall

20 follow procedures that ensure, to the maximum extent

21 practicable, consideration of—

22 ‘‘(1) the relationship of the project or class of

23 projects to overall regional development;

24 ‘‘(2) the per capita income and poverty and un25 employment rates in the area;
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1 ‘‘(3) the financial resources available to the ap2 plicants for assistance seeking to carry out the

3 project;

4 ‘‘(4) the importance of the project or class of

5 projects in relation to other projects or classes of

6 projects that may be in competition for the same

7 funds;

8 ‘‘(5) the prospects that the project for which as9 sistance is sought will improve, on a continuing rath10 er than a temporary basis, the opportunities for em11 ployment, the average level of income, or the eco12 nomic and social development of the area served by

13 the project; and

14 ‘‘(6) the extent to which the project design pro15 vides for detailed outcome measurements by which

16 grant expenditures and the results of the expendi17 tures may be evaluated.

18 ‘‘(b) NO RELOCATION ASSISTANCE.—No financial

19 assistance authorized by this subtitle shall be used to as20 sist a person or entity in relocating from 1 area to an21 other.

22 ‘‘(c) REDUCTION OF FUNDS.—Funds may be pro23 vided for a program or project in a State under this sub24 title only if the Authority determines that the level of Fed25 eral or State financial assistance provided under a law
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1 other than this subtitle, for the same type of program or

2 project in the same area of the State within the region,

3 will not be reduced so as to substitute funds authorized

4 by this subtitle.

5 ‘‘SEC. 382I. APPROVAL OF DEVELOPMENT PLANS AND

6 PROJECTS.

7 ‘‘(a) IN GENERAL.—A State or regional development

8 plan or any multistate subregional plan that is proposed

9 for development under this subtitle shall be reviewed for

10 approval by the Authority in accordance with section

11 382B(e)(3).

12 ‘‘(b) EVALUATION BY STATE MEMBER.—An applica13 tion for a grant or any other assistance for a project under

14 this subtitle shall be made through and evaluated for ap15 proval by the State member of the Authority representing

16 the applicant.

17 ‘‘(c) CERTIFICATION.—An application for a grant or

18 other assistance for a project shall be approved only on

19 certification by the State member and the Federal cochair20 person that the application—

21 ‘‘(1) reflects an intent that the project comply

22 with any applicable State development plan;

23 ‘‘(2) meets applicable criteria under section

24 382H;
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1 ‘‘(3) provides adequate assurance that the pro2 posed project will be properly administered, oper3 ated, and maintained; and

4 ‘‘(4) otherwise meets the requirements of this

5 subtitle.

6 ‘‘(d) VOTES FOR DECISIONS.—The certification by a

7 State member of an application for a grant or other assist8 ance for a specific project under this section shall, when

9 joined by an affirmative vote of the Federal cochairperson

10 for the application, be considered to satisfy the require11 ments for affirmative votes for decisions under section

12 382B.

13 ‘‘SEC. 382J. CONSENT OF STATES.

14 ‘‘Nothing in this subtitle requires any State to engage

15 in or accept any program under this subtitle without the

16 consent of the State.

17 ‘‘SEC. 382K. RECORDS.

18 ‘‘(a) RECORDS OF THE AUTHORITY.—

19 ‘‘(1) IN GENERAL.—The Authority shall main20 tain accurate and complete records of all trans21 actions and activities of the Authority financed with

22 Federal funds.

23 ‘‘(2) AVAILABILITY.—All records of the Author24 ity shall be available for audit and examination by

25 the Comptroller General of the United States (in-
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1 cluding authorized representatives of the Comp2 troller General).

3 ‘‘(b) RECORDS OF RECIPIENTS OF FEDERAL ASSIST4 ANCE.—

5 ‘‘(1) IN GENERAL.—Recipients of Federal as6 sistance under this subtitle shall, as required by the

7 Authority, maintain accurate and complete records

8 of transactions and activities financed with Federal

9 funds and report on the transactions and activities

10 to the Authority.

11 ‘‘(2) AVAILABILITY.—All records described in

12 paragraph (1) shall be available for audit by the

13 Comptroller General of the United States and the

14 Authority or their duly authorized representatives.

15 ‘‘SEC. 382L. ANNUAL REPORT.

16 ‘‘Not later than 180 days after the end of each fiscal

17 year, the Authority shall submit to the President and to

18 Congress a report describing the activities carried out

19 under this subtitle.

20 ‘‘SEC. 382M. AUTHORIZATION OF APPROPRIATIONS.

21 ‘‘(a) IN GENERAL.—There is authorized to be appro22 priated to the Authority to carry out this subtitle

23 $30,000,000 for each of fiscal years 2001 through 2005,

24 to remain available until expended.
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1 ‘‘(b) ADMINISTRATIVE EXPENSES.—Not more than 5

2 percent of the amount appropriated under subsection (a)

3 shall be used for administrative expenses.’’.

4 TITLE IX—FEDERAL GRANT PRO5 GRAM PARTICIPATION EX6 PANSION

7 SEC. 901. EQUAL OPPORTUNITY FOR RELIGIOUS AND

8 OTHER COMMUNITY ORGANIZATIONS TO

9 PARTICIPATE IN CERTAIN FEDERAL GRANT

10 PROGRAMS.

11 (a) IN GENERAL.—The Substance Abuse and Mental

12 Health Services Administration in the Department of

13 Health and Human Services shall ensure an equal oppor14 tunity for religious and other community organizations to

15 provide assistance under the programs administered by

16 such Administration by providing information and contact

17 for such programs to such organizations in a manner simi18 lar to that developed by the Office of Community Faith19 Based Organizations in the Department of Housing and

20 Urban Development.

21 (b) ASSISTANCE BY IRS.—The Commissioner of the

22 Internal Revenue Service shall provide for assistance and

23 guidance to religious organizations seeking to establish

24 charitable organizations in order to provide assistance de25 scribed in subsection (a).
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1 TITLE X—NEW MILLENNIUM

2 CLASSROOMS

3 SEC. 1001. CREDIT FOR COMPUTER DONATIONS TO

4 SCHOOLS, SENIOR CENTERS, PUBLIC LIBRAR5 IES, AND OTHER TRAINING CENTERS.

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 (relating to business related cred8 its), as amended by section 604(a), is amended by adding

9 at the end the following new section:

10 ‘‘SEC. 45F. CREDIT FOR COMPUTER DONATIONS TO

11 SCHOOLS, SENIOR CENTERS, PUBLIC LIBRAR12 IES, AND OTHER TRAINING CENTERS.

13 ‘‘(a) GENERAL RULE.—For purposes of section 38,

14 the computer donation credit determined under this sec15 tion is an amount equal to 50 percent of the qualified com16 puter contributions made by the taxpayer during the tax17 able year as determined after the application of section

18 170(e)(6)(A) to any entity located in—

19 ‘‘(1) a renewal community designated under

20 section 1400E,

21 ‘‘(2) an empowerment zone or enterprise com22 munity designated under section 1391,

23 ‘‘(3) an Indian reservation (as defined in sec24 tion 168(j)(6)), or
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1 ‘‘(4) a low-income community (as defined in

2 subsection (c).

3 ‘‘(b) QUALIFIED COMPUTER CONTRIBUTION.—For

4 purposes of this section, the term ‘qualified computer con5 tribution’ has the meaning given the term ‘qualified ele6 mentary or secondary educational contribution’ by section

7 170(e)(6)(B), except that—

8 ‘‘(1) clause (ii) thereof shall be applied—

9 ‘‘(A) by substituting ‘3 years’ for ‘2 years’,

10 ‘‘(B) by inserting ‘or reacquired’ after ‘ac11 quired’, and

12 ‘‘(C) by inserting ‘for the taxpayer’s own

13 use’ after ‘constructed by the taxpayer’,

14 ‘‘(2) clause (iii) thereof shall be applied by in15 serting ‘, the person from whom the donor re16 acquires the property,’ after ‘the donor’,

17 ‘‘(3) such term shall include the contribution of

18 a computer (as defined in section 168(i)(2)(B)(ii))

19 only if computer software (as defined in section

20 197(e)(3)(B)) that serves as a computer operating

21 system has been lawfully installed in such computer,

22 ‘‘(4) notwithstanding clauses (i) and (iv) of sec23 tion 170(e)(6)(B), such term shall include the con24 tribution of computer technology or equipment to—
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1 ‘‘(A) multipurpose senior centers (as de2 fined in section 102(35) of the Older Americans

3 Act of 1965 (42 U.S.C. 3002(35), as in effect

4 on the date of the enactment of the Creating

5 New Markets and Empowering America Act of

6 2000) described in section 501(c)(3) and ex7 empt from tax under section 501(a) to be used

8 by individuals who have attained 60 years of

9 age to improve job skills in computers,

10 ‘‘(B) a public library (within the meaning

11 of section 213(2)(A) of the Library Services

12 and Technology Act (20 U.S.C. 9122(2)(A), as

13 in effect on the date of the enactment of the

14 Creating New Markets and Empowering Amer15 ica Act of 2000) established and maintained by

16 an entity described in section 170(c)(1), or

17 ‘‘(C) an organization exempt from tax

18 under section 501(a) which provides employ19 ment, vocational, and job-training services to

20 individuals with barriers to employment, includ21 ing welfare recipients and individuals with dis22 abilities, and

23 ‘‘(5) such term shall only include contributions

24 which meet the minimum standards prescribed by

25 the Secretary by regulation, after consultation, at
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1 the option of the Secretary, with the National Tele2 communications and Information Agency and any

3 other Federal agency with expertise in computer

4 technology.

5 ‘‘(c) LOW-INCOME COMMUNITY.—For purposes of

6 this section—

7 ‘‘(1) IN GENERAL.—The term ‘low-income com8 munity’ means any population census tract if—

9 ‘‘(A)(i) the poverty rate for such tract is at

10 least 20 percent, or

11 ‘‘(ii)(I) in the case of a tract not located

12 within a metropolitan area, the median family

13 income for such tract does not exceed 80 per14 cent of statewide median family income, or

15 ‘‘(II) in the case of a tract located within

16 a metropolitan area, the median family income

17 for such tract does not exceed 80 percent of the

18 greater of statewide median family income or

19 the metropolitan area median family income,

20 and

21 ‘‘(B) the unemployment rate for such

22 tract, as determined by the most recent available data, was at least 11 23 ⁄2 times the national

24 unemployment rate for the period to which such

25 data relate.
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1 ‘‘(2) AREAS NOT WITHIN CENSUS TRACTS.—In

2 the case of an area which is not tracted for popu3 lation census tracts, the equivalent county divisions

4 (as defined by the Bureau of the Census for pur5 poses of defining poverty areas) shall be used for

6 purposes of determining poverty rates, median fam7 ily income, and unemployment rates.

8 ‘‘(d) CERTAIN RULES MADE APPLICABLE.—For pur9 poses of this section, rules similar to the rules of para10 graphs (1) and (2) of section 41(f) shall apply.

11 ‘‘(e) TERMINATION.—This section shall not apply to

12 taxable years beginning after December 31, 2009.’’.

13 (b) CURRENT YEAR BUSINESS CREDIT CALCULA14 TION.—Section 38(b) (relating to current year business

15 credit), as amended by section 604(c)(1), is amended by

16 striking ‘‘plus’’ at the end of paragraph (13), by striking

17 the period at the end of paragraph (14) and inserting

18 ‘‘, plus’’, and by adding at the end the following:

19 ‘‘(15) the computer donation credit determined

20 under section 45F(a).’’.

21 (c) DISALLOWANCE OF DEDUCTION BY AMOUNT OF

22 CREDIT.—Section 280C (relating to certain expenses for

23 which credits are allowable) is amended by adding at the

24 end the following:
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1 ‘‘(d) CREDIT FOR COMPUTER DONATIONS.—No de2 duction shall be allowed for that portion of the qualified

3 computer contributions (as defined in section 45F(b))

4 made during the taxable year that is equal to the amount

5 of credit determined for the taxable year under section

6 45F(a). In the case of a corporation which is a member

7 of a controlled group of corporations (within the meaning

8 of section 52(a)) or a trade or business which is treated

9 as being under common control with other trades or busi10 nesses (within the meaning of section 52(b)), this sub11 section shall be applied under rules prescribed by the Sec12 retary similar to the rules applicable under subsections (a)

13 and (b) of section 52.’’.

14 (d) LIMITATION ON CARRYBACK.—Subsection (d) of

15 section 39 (relating to carryback and carryforward of un16 used credits), as amended by section 604(b), is amended

17 by adding at the end the following:

18 ‘‘(11) NO CARRYBACK OF COMPUTER DONATION

19 CREDIT BEFORE EFFECTIVE DATE.—No amount of

20 unused business credit available under section 45F

21 may be carried back to a taxable year beginning on

22 or before the date of the enactment of this para23 graph.’’.

24 (e) CLERICAL AMENDMENT.—The table of sections

25 for subpart D of part IV of subchapter A of chapter 1,
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1 as amended by section 604(c)(2), is amended by adding

2 at the end the following:

‘‘Sec. 45F. Credit for computer donations to schools, senior centers, public libraries, and other training centers.’’.

3 (f) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to contributions made in taxable

5 years beginning after December 31, 2000.

Æ