II

106TH CONGRESS

2D SESSION S. 2445

To provide community-based economic development assistance for tradeaffected communities.

IN THE SENATE OF THE UNITED STATES

APRIL 13, 2000

Mr. ROBB (for himself, Mr. EDWARDS, and Ms. LANDRIEU) introduced the

following bill; which was read twice and referred to the Committee on Finance

A BILL

To provide community-based economic development

assistance for trade-affected communities.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Assistance in Develop5 ment for Communities Act’’ or the ‘‘AID for Communities

6 Act’’.

7 SEC. 2. PURPOSE.

8 The purpose of this Act is to provide funds to com9 munities adversely affected by trade-related activities in
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1 order to create jobs and assistance for long-term economic

2 development.

3 SEC. 3. DEFINITIONS.

4 In this Act:

5 (1) NAFTA.—The term ‘‘NAFTA’’ means the

6 North American Free Trade Agreement entered into

7 between the United States, Mexico, and Canada on

8 December 17, 1992.

9 (2) SECRETARY.—The term ‘‘Secretary’’ means

10 the Secretary of Commerce.

11 (3) TRADE-AFFECTED COMMUNITY.—The term

12 ‘‘trade-affected community’’ means a political sub13 division of a State that meets the trade adjustment

14 assistance requirements.

15 (4) TRADE ADJUSTMENT ASSISTANCE REQUIRE16 MENTS.—The term ‘‘trade adjustment assistance re17 quirements’’ means—

18 (A) in the case of a political subdivision

19 with a population of not more than 100,000, at

20 least 300 workers have been certified after No21 vember 1, 1999, as eligible for—

22 (i) trade adjustment assistance under

23 subchapter A of chapter II of the Trade

24 Act of 1974 (19 U.S.C. 2271 et seq.); or
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1 (ii) NAFTA trade adjustment assist2 ance under subchapter D of chapter 2 of

3 title II of the Trade Act of 1974 (19

4 U.S.C. 2331); and

5 (B) in the case of a political subdivision

6 with a population of over 100,000, at least 500

7 workers have been certified after November 1,

8 1999, as eligible for—

9 (i) trade adjustment assistance under

10 subchapter A of chapter II of the Trade

11 Act of 1974 (19 U.S.C. 2271 et seq.); or

12 (ii) NAFTA trade adjustment assist13 ance under subchapter D of chapter 2 of

14 title II of the Trade Act of 1974.

15 SEC. 4. PETITIONS AND DETERMINATIONS.

16 (a) IN GENERAL.—A petition for certification for as17 sistance under this Act may be filed with the Secretary

18 by a political subdivision (in this Act referred to as a

19 ‘‘community’’), by a group of such communities, or by the

20 Governor of a State on behalf of such communities.

21 (b) CERTIFICATION.—As soon as practicable after

22 the date on which a petition described in subsection (a)

23 is filed, the Secretary shall determine if the community

24 (or group of communities) filing the petition meets the re25 quirements of a trade-affected community and shall certify
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1 the community as eligible for assistance under this Act

2 if the Secretary determines that the community is a trade3 affected community.

4 SEC. 5. GRANTS FOR ECONOMIC DEVELOPMENT.

5 (a) GRANTS TO DEVELOP ECONOMIC PLANS.—Each

6 community that is certified as a trade-affected community

7 under this Act shall receive a grant of not more than

8 $100,000 to be used for planning and technical assistance

9 to develop economic plans for community adjustment as10 sistance and diversification of such community. The

11 amount of the grant shall be determined by the Secretary.

12 (b) GRANTS TO CARRY OUT ECONOMIC DEVELOP13 MENT ACTIVITIES.—Each community that is certified as

14 a trade-affected community under this Act shall be eligible

15 to file an application with the Secretary for adjustment

16 assistance to make the following improvements in the com17 munity based on the economic plan developed under sub18 section (a):

19 (1) Construct or expand the industrial and

20 commercial infrastructure.

21 (2) Improve educational opportunities.

22 (3) Construct advanced manufacturing centers,

23 industrial parks, and water and sewer facilities.

24 (4) Improve transportation.

25 (5) Establish small business incubators.
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1 (6) Make technology infrastructure improve2 ments.

3 (7) Take such other action as necessary to cap4 italize on opportunities to diversify the economy and

5 develop new industrial and commercial ventures.

6 (c) REGULATIONS.—The Secretary shall prescribe

7 such regulations as are necessary to carry out the provi8 sions of this section.

9 SEC. 6. PROVIDE INCENTIVES FOR NEW INVESTMENTS FOR

10 TRADE-AFFECTED COMMUNITIES.

11 (a) EXPANSION OF WORK OPPORTUNITY CREDIT.—

12 (1) IN GENERAL.—Section 51(d)(1) of the In13 ternal Revenue Code of 1986 (relating to members

14 of targeted groups) is amended by striking ‘‘or’’ at

15 the end of subparagraph (G), by striking the period

16 at the end of subparagraph (H) and inserting ‘‘, or’’,

17 and by adding at the end the following:

18 ‘‘(I) an adversely affected individual.’’

19 (2) ADVERSELY AFFECTED INDIVIDUAL.—Sec20 tion 51(d) of the Internal Revenue Code of 1986 is

21 amended by redesignating paragraphs (10) through

22 (12) as paragraphs (11) through (13), respectively,

23 and by inserting after paragraph (9) the following:

24 ‘‘(10) ADVERSELY AFFECTED INDIVIDUAL.—

25 The term ‘adversely affected individual’ means any
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1 individual who is certified by the designated local

2 agency as being adversely affected by trade-related

3 activities and as residing in a trade-affected commu4 nity as defined in section 3(2) of the Assistance in

5 Development for Communities Act.’’

6 (3) EFFECTIVE DATE.—The amendments made

7 by this subsection shall apply to individuals who

8 begin work for the employer after the date of enact9 ment of this Act.

10 (b) NEW MARKETS TAX CREDIT.—

11 (1) IN GENERAL.—Subpart D of part IV of

12 subchapter A of chapter 1 of the Internal Revenue

13 Code of 1986 (relating to business-related credits) is

14 amended by adding at the end the following new sec15 tion:

16 ‘‘SEC. 45D. NEW MARKETS TAX CREDIT.

17 ‘‘(a) ALLOWANCE OF CREDIT.—

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

19 in the case of a taxpayer who holds a qualified eq20 uity investment on a credit allowance date of such

21 investment which occurs during the taxable year, the

22 new markets tax credit determined under this sec23 tion for such taxable year is an amount equal to 6

24 percent of the amount paid to the qualified commu-
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1 nity development entity for such investment at its

2 original issue.

3 ‘‘(2) CREDIT ALLOWANCE DATE.—The term

4 ‘credit allowance date’ means, with respect to any

5 qualified equity investment—

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

7 initially made, and

8 ‘‘(B) each of the 4 anniversary dates of

9 such date thereafter.

10 ‘‘(b) QUALIFIED EQUITY INVESTMENT.—For pur11 poses of this section—

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

13 investment’ means any equity investment in a quali14 fied community development entity if—

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

16 taxpayer at its original issue (directly or

17 through an underwriter) solely in exchange for

18 cash,

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

20 by the qualified community development entity

21 to make qualified low-income community invest22 ments, and

23 ‘‘(C) such investment is designated for

24 purposes of this section by the qualified com25 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 5 years after the date that such entity re4 ceives an allocation under subsection (f). Any alloca5 tion not used within such 5-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 in a qualified community

7 development entity which is a corporation, and

8 ‘‘(B) any capital interest in a qualified

9 community development entity which is a part10 nership.

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 domestic cor15 poration 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, and

23 ‘‘(C) the entity is certified by the Secretary

24 for purposes of this section as being a qualified

25 community development entity.
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1 ‘‘(2) SPECIAL RULES FOR CERTAIN ORGANIZA2 TIONS.—The requirements of paragraph (1) shall be

3 treated as met by—

4 ‘‘(A) any specialized small business invest5 ment company (as defined in section

6 1044(c)(3)), and

7 ‘‘(B) any community development financial

8 institution (as defined in section 103 of the

9 Community Development Banking and Finan10 cial Institutions Act of 1994 (12 U.S.C. 4702)).

11 ‘‘(d) QUALIFIED LOW-INCOME COMMUNITY INVEST12 MENTS.—For purposes of this section—

13 ‘‘(1) IN GENERAL.—The term ‘qualified low-in14 come community investment’ means—

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

16 any qualified active low-income community busi17 ness,

18 ‘‘(B) the purchase from another commu19 nity development entity of any loan made by

20 such entity which is a qualified low-income com21 munity investment if the amount received by

22 such other entity from such purchase is used by

23 such other entity to make qualified low-income

24 community investments,
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1 ‘‘(C) financial counseling and other serv2 ices specified in regulations prescribed by the

3 Secretary to businesses located in, and resi4 dents of, low-income communities, and

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

6 any qualified community development entity if

7 substantially all of the investment or loan is

8 used by such entity to make qualified low-in9 come community investments described in sub10 paragraphs (A), (B), and (C).

11 ‘‘(2) QUALIFIED ACTIVE LOW-INCOME COMMU12 NITY BUSINESS.—

13 ‘‘(A) IN GENERAL.—For purposes of para14 graph (1), the term ‘qualified active low-income

15 community business’ means, with respect to any

16 taxable year, any corporation or partnership if

17 for such year—

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

19 gross income of such entity is derived from

20 the active conduct of a qualified business

21 within any low-income community,

22 ‘‘(ii) a substantial portion of the use

23 of the tangible property of such entity

24 (whether owned or leased) is within any

25 low-income community,
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1 ‘‘(iii) a substantial portion of the serv2 ices performed for such entity by its em3 ployees are performed in any low-income

4 community,

5 ‘‘(iv) less than 5 percent of the aver6 age of the aggregate unadjusted bases of

7 the property of such entity is attributable

8 to collectibles (as defined in section

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

10 held primarily for sale to customers in the

11 ordinary course of such business, and

12 ‘‘(v) less than 5 percent of the aver13 age of the aggregate unadjusted bases of

14 the property of such entity is attributable

15 to nonqualified financial property (as de16 fined in section 1397B(e)).

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

18 include any business carried on by an individual

19 as a proprietor if such business would meet the

20 requirements of subparagraph (A) were it incor21 porated.

22 ‘‘(C) PORTIONS OF BUSINESS MAY BE

23 QUALIFIED ACTIVE LOW-INCOME COMMUNITY

24 BUSINESS.—The term ‘qualified active low-in25 come community business’ includes any trades
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1 or businesses which would qualify as a qualified

2 active low-income community business if such

3 trades or businesses were separately incor4 porated.

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

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

7 meaning given to such term by section 1397B(d);

8 except that—

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

10 thereof, the rental to others of real property lo11 cated in any low-income community shall be

12 treated as a qualified business if there are sub13 stantial improvements located on such property,

14 ‘‘(B) paragraph (3) thereof shall not apply,

15 and

16 ‘‘(C) such term shall not include any busi17 ness if a significant portion of the equity inter18 ests in such business are held by any person

19 who holds a significant portion of the equity in20 vestments in the community development entity.

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

22 this section—

23 ‘‘(1) IN GENERAL.—The term ‘low-income com24 munity’ means—

25 ‘‘(A) any population census tract if—
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1 ‘‘(i) the poverty rate for such tract is

2 at least 20 percent, or

3 ‘‘(ii)(I) in the case of a tract not lo4 cated within a metropolitan area, the me5 dian family income for such tract does not

6 exceed 80 percent of statewide median

7 family income, or

8 ‘‘(II) in the case of a tract located

9 within a metropolitan area, the median

10 family income for such tract does not ex11 ceed 80 percent of the greater of statewide

12 median family income or the metropolitan

13 area median family income, or

14 ‘‘(B) any trade-affected community as de15 fined in section 3(2) of the Assistance in Devel16 opment for Communities Act.

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

18 the case of an area which is not tracted for popu19 lation census tracts, the equivalent county divisions

20 (as defined by the Bureau of the Census for pur21 poses of defining poverty areas) shall be used for

22 purposes of determining poverty rates and median

23 family income.

24 ‘‘(f) NATIONAL LIMITATION ON AMOUNT OF INVEST25 MENTS DESIGNATED.—
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1 ‘‘(1) IN GENERAL.—There is a new markets tax

2 credit limitation of $750,000,000 for each of cal3 endar years 2001 through 2005 and zero for any

4 succeeding calendar year.

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 entities with records of having

11 successfully provided capital or technical assistance

12 to disadvantaged businesses or communities.

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

14 the new markets tax credit limitation for any cal15 endar year exceeds the aggregate amount allocated

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

17 for the succeeding calendar year shall be increased

18 by the amount of such excess.

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

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

21 5-year period beginning on the date of the original

22 issue of a qualified equity investment in a qualified

23 community development entity, there is a recapture

24 event with respect to such investment, then the tax

25 imposed by this chapter for the taxable year in
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1 which such event occurs shall be increased by the

2 credit recapture amount.

3 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur4 poses of paragraph (1), the credit recapture amount

5 is an amount equal to the sum of—

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

7 allowed to the taxpayer under section 38 for all

8 prior taxable years which would have resulted if

9 no credit had been determined under this sec10 tion with respect to such investment, plus

11 ‘‘(B) interest at the overpayment rate es12 tablished under section 6621 on the amount de13 termined under subparagraph (A) for each

14 prior taxable year for the period beginning on

15 the due date for filing the return for the prior

16 taxable year involved.

17 No deduction shall be allowed under this chapter for

18 interest described in subparagraph (B).

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

20 paragraph (1), there is a recapture event with re21 spect to an equity investment in a qualified commu22 nity development entity if—

23 ‘‘(A) such entity ceases to be a qualified

24 community development entity,
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1 ‘‘(B) the proceeds of the investment cease

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

3 or

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

5 entity.

6 ‘‘(4) SPECIAL RULES.—

7 ‘‘(A) TAX BENEFIT RULE.—The tax for

8 the taxable year shall be increased under para9 graph (1) only with respect to credits allowed

10 by reason of this section which were used to re11 duce tax liability. In the case of credits not so

12 used to reduce tax liability, the carryforwards

13 and carrybacks under section 39 shall be appro14 priately adjusted.

15 ‘‘(B) NO CREDITS AGAINST TAX.—Any in16 crease in tax under this subsection shall not be

17 treated as a tax imposed by this chapter for

18 purposes of determining the amount of any

19 credit under this chapter or for purposes of sec20 tion 55.

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

22 equity investment shall be reduced by the amount of any

23 credit determined under this section with respect to such

24 investment.
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1 ‘‘(i) REGULATIONS.—The Secretary shall prescribe

2 such regulations as may be appropriate to carry out this

3 section, including regulations—

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

5 which are directly or indirectly subsidized by other

6 Federal benefits (including the credit under section

7 42 and the exclusion from gross income under sec8 tion 103),

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

10 of this section through the use of related parties,

11 ‘‘(3) which impose appropriate reporting re12 quirements, and

13 ‘‘(4) which apply the provisions of this section

14 to newly formed entities.’’

15 (2) CREDIT MADE PART OF GENERAL BUSINESS

16 CREDIT.—

17 (A) IN GENERAL.—Subsection (b) of sec18 tion 38 of such Code is amended by striking

19 ‘‘plus’’ at the end of paragraph (12), by strik20 ing the period at the end of paragraph (13) and

21 inserting ‘‘, plus’’, and by adding at the end the

22 following new paragraph:

23 ‘‘(14) the new markets tax credit determined

24 under section 45D(a).’’
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1 (B) LIMITATION ON CARRYBACK.—Sub2 section (d) of section 39 of such Code is amend3 ed by adding at the end the following new para4 graph:

5 ‘‘(10) NO CARRYBACK OF NEW MARKETS TAX

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

7 the unused business credit for any taxable year

8 which is attributable to the credit under section 45D

9 may be carried back to a taxable year ending before

10 January 1, 2001.’’

11 (3) DEDUCTION FOR UNUSED CREDIT.—Sub12 section (c) of section 196 of such Code is amended

13 by striking ‘‘and’’ at the end of paragraph (7), by

14 striking the period at the end of paragraph (8) and

15 inserting ‘‘, and’’, and by adding at the end the fol16 lowing new paragraph:

17 ‘‘(9) the new markets tax credit determined

18 under section 45D(a).’’

19 (4) CLERICAL AMENDMENT.—The table of sec20 tions for subpart D of part IV of subchapter A of

21 chapter 1 of such Code is amended by adding at the

22 end the following new item:

‘‘Sec. 45D. New markets tax credit.’’

23 (5) EFFECTIVE DATE.—The amendments made

24 by this subsection shall apply to investments made

25 after December 31, 2000.
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1 SEC. 7. CENTRAL CLEARINGHOUSE FOR ECONOMIC DEVEL2 OPMENT.

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 3(4), the Secretary of Labor shall

15 notify the Secretary. The Secretary shall notify each such

16 political subdivision that the subdivision is eligible to re17 ceive a grant described in section 5 (a) and (b), that the

18 clearinghouse established pursuant to subsection (a) ex19 ists, and how to access clearinghouse information.

20 SEC. 8. 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 5(a) and $200,000,000 for the

24 grants described in section 5(b).
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1 SEC. 9. SUPPLEMENT NOT SUPPLANT.

2 Funds appropriated pursuant to the authority of this

3 Act 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. 10. REGULATIONS.

7 The Secretary may promulgate such regulations as

8 may be necessary to carry out the provisions of this Act.

Æ