Community Economic Assistance Act of 2017

To expand certain empowerment zone provisions to communities receiving a Worker Adjustment and Retraining Notification Act notice, and for other purposes. 1. Short title This Act may be cited as the Community Economic Assistance Act of 2017 2. Extension of empowerment zone provisions to certain communities (a) In general Chapter 1 U–1 Community economic assistance zones Sec. 1397G. Designation of community economic assistance zones. Sec. 1397H. Incentives for community economic assistance zones. 1397G. Designation of community economic assistance zones (a) In general For purposes of this title, the term community economic assistance zone (1) which is nominated by the governor or governors of the State or States in which it is located for designation as a community economic assistance zone (hereafter in this section referred to as a nominated area (2) which the Secretary designates as a community economic assistance zone, after consultation with— (A) the Secretary of Labor, and (B) in the case of an area on an Indian reservation, the Secretary of the Interior. (b) Designation based on loss of employment, etc (1) In general Except as otherwise provided in this section, a nominated area designated as a community economic assistance zone under this subsection shall be— (A) a nominated area— (i) where— (I) a facility is located with respect to which a notice was issued after December 31, 2014, under section 3 of the Worker Adjustment and Retraining Notification Act ( 29 U.S.C. 2102 (II) where 100 or more employees with respect to which such a notice was issued reside, (ii) where the number of employees— (I) with respect to which the notice was issued (in the case of an area described in clause (i)(I)), or (II) the number of employees who are described in clause (i)(II) (in any other case), is equal to or greater than 0.5 percent of the employed population of the metropolitan statistical area (as determined by the Secretary), and (iii) where a loss of employment satisfying the requirements applicable to such notice under clauses (i) and (ii) actually occurs, (B) a nominated area which the Secretary, in consultation with the Secretaries of Labor and Commerce, determines has been or will be seriously impacted by changes in trade through loss of employment (directly or indirectly), taking into account the number of individuals certified as eligible to apply for trade adjustment assistance under chapter 2 of title II of the Trade Act of 1974 or who are receiving benefits under such chapter, or (C) a nominated area which satisfies not less than two of the conditions described in paragraph (2). (2) Conditions described The conditions described in this subparagraph are the following: (A) The area is designated by the governor of the State as an energy-transitioning community. (B) The area, at the time of nomination— (i) has a composite index value, as determined by the Appalachian Regional Commission, among the lowest 10 percent of counties in the State, (ii) is a low-income community (as defined in section 45D(e)), or (iii) has an unemployment rate which is 8 percent or greater, or which is 6.5 percent or greater and is equal to or greater than 125 percent of the average unemployment rate of the State. (C) Tax revenues collected in the area decreased, not due to any changes in tax law or policy, by at least— (i) 7 percent as compared to the preceding year, or (ii) an average of 10 percent over the preceding 3 years. (D) The number of business establishments in the area decreased significantly during the preceding year or on average during the preceding 3 years, as determined by the Secretary. (E) The area is among the 10 percent of counties nationally which have experienced the largest increases in unemployment and the largest decreases in manufacturing over the preceding 3 years, as determined by the Secretary. (3) Energy-transitioning communities For purposes of paragraph (2)(A)— (A) In general The term energy-transitioning communities (B) Energy source transition For purposes of subparagraph (A), the term energy source transition (i) a situation in which the occurrence of a shift from the use of a type of fossil fuel to use of other sources of energy is followed by the closing of a facility, or layoff of employees at a facility, that mines, extracts, produces, processes, or utilizes fossil fuels to generate electricity, and (ii) another situation as determined by the Secretary of Labor, in consultation with the Secretary of Energy, which is indicative of new demands or burdens on affected employees or employees in affected industries due to a significant change in the source of energy used by the facility or industry involved. (4) Eligibility criteria A nominated area shall be eligible for designation under this subsection only if it meets the requirements of section 1392(a)(1) and subparagraphs (A), (B), and (C) of section 1392(a)(3). (c) Period for which designation is in effect Any designation of an area as a community economic assistance zone shall remain in effect during the period beginning on January 1, 2017, and ending on the date that is 5 years after the latest designation of such area as a community economic assistance zone. (d) Limitation relating to State population An area shall not be designated as a community economic assistance zone under subsection (b) if such designation would result in more than 10 percent of the population of the State residing in such a zone (determined by aggregating all such zones within the State). (e) Coordination with treatment of renewal communities, empowerment zones, and enterprise communities For purposes of this title, the designation under any other provision of this title of any area as a renewal community, empowerment zone, or enterprise community shall cease to be in effect as of the date that the designation of any portion of such area as a community economic assistance zone takes effect. 1397H. Incentives for community economic assistance zones (a) Employment credit (1) In general Section 1396 shall be applied— (A) by treating any reference to an empowerment zone as a reference to a community economic assistance zone, (B) by treating any reference to an employer as a reference to a qualified employer, and (C) without respect to subsection (d)(1)(B) thereof. (2) Qualified zone employer For purposes of paragraph (1), with respect to a taxable year, the term qualified employer (b) Increase in expensing under section 179 (1) In general Section 1397A shall be applied— (A) by treating any reference to an empowerment zone as a reference to a community economic assistance zone, (B) by treating any reference to an enterprise zone business as a reference to a community economic assistance zone business, (C) by treating any reference to qualified zone property as a reference to qualified community economic assistance zone property, and (D) by substituting 20 percent of such limitation $35,000 (2) Community economic assistance zone business For purposes of this subsection, the term community economic assistance zone business (A) any business entity, and (B) any proprietorship, other than an excepted taxpayer described in subsection (g), which would be a qualified business entity (as defined in section 1397C(b)) or a qualified proprietorship (as defined in section 1397C(c)) if section 1397C were applied by substituting community economic assistance zone empowerment zone (c) Nonrecognition of gain on rollover of community economic assistance zone investments (1) In general In the case of any sale of a qualified community economic assistance zone asset held by the taxpayer for more than 1 year and with respect to which such taxpayer elects the application of this subsection, gain from such sale shall be recognized only to the extent that the amount realized on such sale exceeds— (A) the cost of any qualified community economic assistance zone asset (with respect to the same zone as the asset sold) purchased by the taxpayer during the 60-day period beginning on the date of such sale, reduced by (B) any portion of such cost previously taken into account under this subsection. (2) Definitions and special rules For purposes of this subsection— (A) Qualified community economic assistance zone asset The term qualified community economic assistance zone asset (i) after December 31, 2016 after December 31, 2001, and before January 1, 2010 (ii) after December 31, 2016 before January 1, 2010 (iii) references to community economic assistance zone businesses (as defined in subsection (b)(2) of this section) were substituted for references to renewal community businesses, and (iv) references to community economic assistance zones were substituted for references to renewal communities. (B) Other rules The rules of paragraphs (2), (3), (4), and (5) of section 1397B(b) shall apply— (i) by treating any reference to an enterprise zone business as a reference to a community economic assistance zone business (as defined in subsection (b)(2)), (ii) by treating any reference to a qualified empowerment zone asset as a reference to a qualified community economic assistance zone asset, and (iii) by treating any reference to subsection (a) of section 1397B as a reference to paragraph (1) of this subsection. (3) Excepted taxpayers Paragraph (1) shall not apply in the case of an excepted taxpayer described in subsection (g). (d) 3–Year carryback of net operating losses (1) In general If a portion of any net operating loss of a taxpayer for any taxable year is a qualified community economic assistance zone loss, section 172(b)(1) shall be applied with respect to such portion— (A) by substituting 3 taxable years 2 taxable years (B) by not taking such portion into account in determining any eligible loss of the taxpayer under subparagraph (E) thereof for the taxable year. (2) Qualified community economic assistance zone loss For purposes of paragraph (1), the term qualified community economic assistance zone loss (A) losses in a community economic assistance zone, (B) expenses paid or incurred within a community economic assistance zone, and (C) expenses paid or incurred with respect to property placed in service in a community economic assistance zone, during either the taxable year in which the designation of such zone goes into effect under section 1397G or the immediately succeeding taxable year, whichever is elected by the taxpayer. (3) Excepted taxpayers Paragraph (1) shall not apply in the case of an excepted taxpayer described in subsection (g). (e) Credit to holders of community economic support bonds (1) In general With respect to a taxpayer holding a community economic support bond, such bond shall be treated in the same manner as a Gulf tax credit bond under section 1400N(l), applied— (A) by substituting community economic support bond Gulf tax credit bond (B) without regard to paragraphs (4) and (5) thereof. (2) Community economic support bond For purposes of this subsection— (A) In general The term community economic support bond (i) the bond is issued by a State in which a community economic assistance area (as defined in section 45D(f)(3)(B)) is located, (ii) 95 percent or more of the proceeds of such issue are to be used in accordance with the priorities outlined in the community economic development plan approved under section 6 of the Community Economic Assistance Act of 2017 (iii) the Governor of such State designates such bond for purposes of this subsection, (iv) the bond is a general obligation of such State and is in registered form (within the meaning of section 149(a)), (v) the maturity of such bond does not exceed 15 years, and (vi) the bond is issued after the designation of such zone goes into effect under section 1397G, and before such designation ends under section 1397G(c). (B) Aggregate limit on bond designations The maximum aggregate face amount of bonds which may be designated under this subsection by the Governor of a State shall not exceed $100,000,000 per community economic assistance area located in the State. (C) Special rules relating to arbitrage A bond which is part of an issue shall not be treated as a community economic support bond unless, with respect to the issue of which the bond is a part, the issuer satisfies the arbitrage requirements of section 148 with respect to proceeds of the issue and any loans made with such proceeds. (3) Excepted taxpayers Paragraph (1) shall not apply in the case of an excepted taxpayer described in subsection (g). (f) Qualified community economic assistance zone property For purposes of this section, the term qualified community economic assistance zone property community economic assistance zone empowerment zone (g) Taxpayers excepted With respect to any community economic assistance zone, an excepted taxpayer described in this subsection is— (1) an entity that operates a facility in such zone with respect to which a notice under section 3 of the Worker Adjustment and Retraining Notification Act ( 29 U.S.C. 2102 (2) any entity that would be treated as a single employer with such an entity under the rules of subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414. . (b) Clerical amendment The table of subchapters for chapter 1 SUBCHAPTER U–1—Community economic assistance zones . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2016. 3. 15-year depreciation for certain rebuilt and retrofitted community economic assistance zone property (a) In general Subparagraph (E) of section 168(e)(3) (1) by striking and (2) by striking the period at the end of clause (ix) and inserting , and (3) by adding at the end the following new clause: (x) any qualified rebuilt or retrofitted community economic assistance zone property. . (b) Qualified rebuilt or retrofitted community economic assistance zone property Subsection (e) of section 168 (9) Qualified rebuilt or retrofitted community economic assistance zone property (A) In general The term qualified rebuilt or retrofitted community economic assistance zone property (i) any qualified community economic assistance zone property (as defined in section 1397H(f)), and (ii) any residential real property located in a community economic assistance zone which is acquired by the taxpayer by purchase (as defined in section 179(d)(2)) during such period, if such property was unoccupied and had been deemed condemned, neglected, or derelict as of the time of acquisition by the taxpayer. (B) Qualified taxpayer For purposes of this paragraph, the term qualified taxpayer . 4. Increase in start-up expenditures for community economic assistance zone businesses Paragraph (3) of section 195(b) (3) Special rule for community economic assistance zone businesses In the case of any start-up expenditures made within a community economic assistance zone during the period the designation of such zone is in effect under section 1397G— (A) such expenditures shall be treated separately from other start-up expenditures of the taxpayer for the taxable year, and (B) in determining the deduction under paragraph (1) with respect to such expenditures within such zone, paragraph (1)(A)(ii) shall be applied— (i) by substituting $30,000 $5,000 (ii) by substituting $120,000 $50,000 . 5. Increase in new markets tax credit designation for community economic assistance zones Subsection (f) of section 45D (1) by striking The limitation Except as provided in paragraph (3), the limitation (2) by redesignating paragraph (3) as paragraph (4); (3) by inserting after paragraph (2) the following new paragraph: (3) Allocation of limitation for calendar years after 2016 (A) In general In the case of any calendar year described in paragraph (1)(G) beginning after December 31, 2016, the limitation under paragraph (1) shall be increased by $500,000,000, and such increase shall be allocated as provided in paragraph (2) among qualified community development entities located in community economic assistance areas. (B) Community economic assistance area For purposes of subparagraph (A), the term community economic assistance area (i) is a community economic assistance zone, and (ii) has a community economic development plan approved under section 6 of the Community Economic Assistance Act of 2017 (C) Use of increase Any amount of such increase which is so allocated to such an entity shall be used only in accordance with the priorities outlined in such community economic development plan to implement the strategies and objectives under such plan described in section 6(3) of Community Economic Assistance Act of 2017 ; (4) by striking paragraph (2) paragraph (2) or (3) (5) by striking the second sentence of paragraph (4), as so redesignated, and inserting the following: Any carryover under the preceding sentence of an amount allocated under paragraph (3) shall be allocated first among qualified community development entities located in community economic assistance areas, and may then be allocated among any qualified community development entities selected by the Secretary under paragraph (2). No amount may be carried under the preceding sentences to any calendar year after 2024. 6. Approval of community economic development plans A community economic development plan for a region shall be considered approved under this section if each of the following criteria are satisfied: (1) The plan is submitted to the Secretary of the Treasury in such form, and containing such information, as the Secretary may require. (2) The plan contains a certification that the plan was developed and approved through a process that included participation from the following: (A) State, Indian tribal, and local governments and agencies or instrumentalities of State, Indian tribal, and local governments. (B) State planning boards, workforce investment boards, chambers of commerce, and economic development organizations, if relevant. (C) Local businesses. (D) Labor and health organizations. (E) Public school systems and institutions of higher education (as defined in section 101 of the Higher Education Act of 1965 ( 20 U.S.C. 1001 (F) Religious and other community-based groups in the region, including those that provide assistance to the workers of the region and the families of the workers. (G) Other public community institutions, such as library and park systems. (H) Members of the public, including unemployed or soon to be unemployed workers. (3) The Secretary determines that the plan— (A) ascertains the severity of an anticipated or existing economic dislocation of the region, including consideration of measures of unemployment rates and employment opportunities; (B) assesses the capacity of the region to respond to such economic dislocation and the needs of the region, as the region undertakes economic advancement or adjustment, including with respect to— (i) the diversity of industries in the region; (ii) the skills of the labor force in the region; (iii) the condition of the labor market of the region; (iv) the availability of financial resources in the region; (v) the quality and availability of educational facilities, including 2-year institutions of higher education and vocational institutions, that serve the region; and (vi) the infrastructure of the region; (C) includes a plan to use a local workforce and, when necessary, to train a local workforce; (D) addresses the need of the region to attract investment, create jobs, increase wages, improve educational opportunities, and expand the availability of broadband Internet access; (E) leverages the region's economic strengths and outlines targeted investments to develop competitive advantages to execute the objectives outlined, including a plan to utilize a local workforce and recently dislocated workers and, when necessary, train a local workforce; (F) is the result of collaboration across a wide range of stakeholders; (G) outlines a strategy which connects the region to drivers of regional economic growth; (H) proposes a strategy for focusing on increased access to high quality, affordable, stable housing and improved public safety; and (I) discusses the anticipated benefits execution of the plan will deliver for community integration, safety, employment outcomes, and home weatherization and energy efficiency, and the expected contribution of the project to the inclusion of individuals with disabilities. 7. Grants to carry out assessments required for development of community economic development plans (a) In general The Secretary of the Treasury may award a grant to an eligible entity involved in the development of a community economic development plan described in section 6 to carry out such assessments and other activities as may be required for the plan to meet the requirements of section 6(3). (b) Eligible entities For purposes of this section, an eligible entity is a local or Indian tribal government or an agency or instrumentality of such a government. (c) Grant amount The Secretary may not award a grant under this section in excess of $1,000,000. (d) Matching requirement (1) In general An eligible entity receiving a grant under this section shall provide non-Federal matching funds equal to not less than 20 percent of the amount of the grant. (2) In-kind support Matching funds may include in-kind support. 8. Federal economic support team (a) Deployment required The Secretary of Commerce shall deploy a targeted investment generating economic recovery team to a region to provide support and assistance to such region if— (1) the Governor of the State requests such deployment; and (2) the Secretary of Commerce determines that the region is experiencing an actual or threatened abrupt rise of unemployment or economic hardship due to the closing or curtailment of a major source of employment, significant industry transition, or other mitigating economic factors, including international trade. (b) Support and assistance (1) Development of economic recovery and employment plan In providing support and assistance to a region under subsection (a), a targeted investment generating economic recovery team shall work in coordination with a State or regional economic development and workforce agency and the Rapid Response team of the Department of Labor to assist in the development of an economic recovery and employment plan for the region, including by identifying grants, sources of State and Federal funding, and unemployment insurance resources (including short-time compensation) which may be beneficially utilized in the region. (2) Cases of facilities shutdown In addition to the support and assistance provided under paragraph (1), in a case in which the actual or threatened abrupt rise of unemployment or economic hardship in the region involves the shutdown of a facility of a business unit, the team shall work in coordination with the Administrator of the Small Business Administration to assess the feasibility and advisability of an employee purchase of such business unit. (3) Coordination In addition to the support and assistance provided by a team under paragraph (1) to a region, the team, in coordination with the Secretary of Labor, shall— (A) coordinate the activities of all Federal agencies relating to the provision of assistance to the region in response to the actual or threatened abrupt rise of unemployment or economic hardship referred to in subsection (a)(2); and (B) act as a liaison between the region and all Federal agencies providing assistance in response to such actual or threatened abrupt rise of unemployment or economic hardship, including, as the case may be, the following: (i) The Department of Agriculture. (ii) The Department of Commerce. (iii) The Department of Defense. (iv) The Department of Education. (v) The Department of Energy. (vi) The Department of Health and Human Services. (vii) The Department of Housing and Urban Development. (viii) The Department of Labor. (ix) The Department of Transportation. (x) The Department of the Treasury. (xi) The National Economic Council. (xii) The Small Business Administration. (xiii) The Department of Veterans Affairs.

Summary: Community Economic Assistance Act of 2017 This bill amends the Internal Revenue Code to provide for the establishment of community economic assistance zones that are eligible for certain tax deductions and credits. A zone must be nominated by the governor of the state where it is located and designated by the Department of the Treasury. A nominated area must: have received a Worker Adjustment and Retraining Notification Act notice after December 31, 2014, and met other criteria related to loss of employment; have been (or will be) seriously impacted by changes in trade through loss of employment; or satisfy at least two specified conditions, including status as an energy-transitioning or low-income community and other factors related to employment and economic activity. For businesses or individuals located in or investing in a zone, the bill allows: an employment tax credit, increased expensing, nonrecognition of gain from certain investments, a 3-year carryback of net operating losses, a tax credit for bonds issued for a community economic development plan, a 15-year depreciation period for certain rebuilt and retrofitted property, an increased deduction for start-up expenditures, and an increased new markets tax credit. Treasury must approve community economic development plans using specified criteria and may award grants for assessments to develop the plans. The Department of Commerce must deploy teams to provide support and assistance to a region if: (1) it is requested by the governor, and (2) the region is experiencing or threatened with an abrupt rise of unemployment or other specified economic hardships.