and interest as scheduled on, debentures issued by APICs.
Such commitments or guarantees may be made by the
Secretary on such terms and conditions, including but not
limited to amounts, expirations, number, priorities of re-
payment, security, collateral, amortization, payment of in-
terest (including the timing thereof), and fees and charges,
as the Secretary determines to be appropriate, in docu-
ments that the Secretary approves for any commitment
or guarantee, or pursuant to regulations issued by the Sec-
retary. Debentures guaranteed by the Secretary under this
subsection shall be senior to any debt obligation, equity
contribution or earnings, or the distribution of dividends,
interest, or other amounts of an APIC, notwithstanding
any Federal or other law. Debentures may be issued for
a term of not to exceed 21 years and shall bear interest
during all or any part of that time period at a rate or
rates approved by the Secretary. The debentures shall also
contain such other terms as the Secretary may fix.
(b) ISSUANCE OF TRUST CERTIFICATES.—The Sec-
retary, or an agent or entity selected by the Secretary,
is authorized to issue trust certificates representing own-
ership of all or a fractional part of guaranteed debentures
issued by APICs and held in trust.
(c) GUARANTEE OF TRUST CERTIFICATES.—
(1) IN GENERAL.—The Secretary is authorized,
upon such terms and conditions as the Secretary de-
termines to be appropriate, to guarantee the timely
payment of the principal of and interest on trust
certificates issued by the Secretary, or an agent or
other entity, for purposes of this section. Such guar-
antee shall be limited to the extent of principal and
interest on the guaranteed debentures which com-
pose the trust.
(2) SUBSTITUTION
OPTION.—The Secretary
shall have the option to replace in the corpus of the
trust any prepaid or defaulted debenture with a de-
benture, another full faith and credit instrument, or
any obligations of the United States, that may rea-
sonably substitute for such prepaid or defaulted de-
benture.
(3) PROPORTIONATE REDUCTION OPTION.—In
the event that the Secretary elects not to exercise
the option under paragraph (2), and a debenture in
such trust is prepaid, or in the event of default of
a debenture, the guarantee of timely payment of
principal and interest on the trust certificate shall be
reduced in proportion to the amount of principal and
interest that such prepaid debenture represents in
the trust. Interest on prepaid or defaulted deben-
tures shall accrue and be guaranteed by the Sec-
retary only through the date of payment of the guar-
antee. During the term of a trust certificate, it may
be called for redemption due to prepayment or de-
fault of all debentures that are in the corpus of the
trust.
(d) FULL FAITH AND CREDIT BACKING OF GUARAN-
TEES.—The full faith and credit of the United States is
pledged to the timely payment of all amounts which may
be required to be paid under any guarantee by the Sec-
retary pursuant to this section.
(e) SUBROGATION AND LIENS.—
(1) In the event the Secretary pays a claim
under a guarantee issued under this section, the
Secretary shall be subrogated fully to the rights sat-
isfied by such payment.
(2) No State or local law, and no Federal law,
shall preclude or limit the exercise by the Secretary
of its ownership rights in the debentures in the cor-
pus of a trust under this section.
(f) REGISTRATION.—
(1) The Secretary shall provide for a central
registration of all trust certificates issued pursuant
to this section.
(2) The Secretary may contract with an agent
or agents to carry out on behalf of the Secretary the
pooling and the central registration functions of this
section notwithstanding any other provision of law,
including maintenance on behalf of and under the
direction of the Secretary, such commercial bank ac-
counts or investments in obligations of the United
States as may be necessary to facilitate trusts
backed by debentures guaranteed under this Act and
the issuance of trust certificates to facilitate forma-
tion of the corpus of the trusts. The Secretary may
require such agent or agents to provide a fidelity
bond or insurance in such amounts as the Secretary
determines to be necessary to protect the interests of
the Government.
(3) Book-entry or other electronic forms of reg-
istration for trust certificates under this Act are au-
thorized.
(g) TIMING OF ISSUANCE OF GUARANTEES OF DE-
BENTURES AND TRUST CERTIFICATES.—The Secretary
may, from time to time in the Secretary’s discretion, exer-
cise the authority to issue guarantees of debentures under
this Act or trust certificates under this Act.
SEC. 307. APIC REQUESTS FOR GUARANTEE ACTIONS.
(a) ALL APIC REQUESTS FOR HUD GUARANTEE
ACTION.—An APIC may request that the Secretary guar-
antee a debenture that the APIC intends to issue, in ac-
cordance with the Secretary’s regulations. All such re-
quests shall include a description of the manner in which
the APIC intends to use the proceeds from such deben-
ture. All such requests shall also include certification by
the APIC that the APIC is in substantial compliance
with—
(1) this Act and other applicable laws;
(2) all terms and conditions of its license, and
of any penalty or condition that may have arisen
from examination or monitoring by the Secretary or
otherwise, including the satisfaction of any financial
audit exception that may have been outstanding;
(3) all requirements relating to the allocation
and use of New Markets Tax Credits, to the extent
such credits are established under Federal law; and
(4) any other requirements that the Secretary
may specify under regulations.
(b) REQUESTS FOR GUARANTEE OF DEBENTURES
THAT WOULD INCLUDE FUNDING FOR INITIAL EXPENDI-
TURE FOR A PROJECT OR ACTIVITY.—In addition to the
description and certification that an APIC is required to
supply in all requests for guarantee action under sub-
section (a), in the case of an APIC’s request for a guar-
antee that includes a debenture, the proceeds of which the
APIC expects to be used as its initial expenditure for a
project or activity in which the APIC intends to invest,
and the expenditure for which would require an environ-
mental assessment under the National Environmental Pol-
icy Act of 1969 and other related laws that further the
purposes of such Act, such request for guarantee action
must include evidence satisfactory to the Secretary of the
certification of the completion of environmental review of
the project or activity required of the cognizant State or
local government under subsection (c). If the environ-
mental review responsibility for the project or activity has
not been assumed by a State or local government under
subsection (c), then the Secretary is responsible for car-
rying out the applicable responsibilities under the National
Environmental Policy Act of 1969 and other provisions
of law that further the purposes of such Act that relate
to the project or activity, and the Secretary must execute
such responsibilities before acting on the APIC’s request
for the guarantee that is covered by this subsection.
(c) RESPONSIBILITY
FOR
ENVIRONMENTAL
RE-
VIEWS.—
(1) EXECUTION
OF
RESPONSIBILITY
BY
THE
SECRETARY.—This subsection shall apply to guaran-
tees by the Secretary of debentures under this Act,
the proceeds of which would be used in connection
with qualified low-income community investments of
APICs under this Act.
(2) ASSUMPTION OF RESPONSIBILITY BY COG-
NIZANT UNIT OF GENERAL GOVERNMENT.—
(A) GUARANTEE
OF
DEBENTURES.—In
order to assure that the policies of the National
Environmental Policy Act of 1969 and other
provisions of law that further the purposes of
such Act (as specified in regulations issued by
the Secretary) are most effectively implemented
in connection with the expenditure of funds
under this Act, and to assure to the public
undiminished protection of the environment, the
Secretary may, under such regulations, in lieu
of the environmental protection procedures oth-
erwise applicable, provide for the guarantee of
debentures, any part of the proceeds of which
are to fund particular qualified low-income com-
munity investments of APICs under this Act, if
a State or unit of general local government, as
designated by the Secretary in accordance with
regulations issued by the Secretary, assumes all
of the responsibilities for environmental review,
decisionmaking, and action pursuant to the Na-
tional Environmental Policy Act of 1969 and
such other provisions of law that further such
Act as the regulations of the Secretary specify,
that would otherwise apply to the Secretary
were the Secretary to undertake the funding of
such investments as a Federal action.
(B) 
IMPLEMENTATION.—The 
Secretary
shall issue regulations to carry out this sub-
section only after consultation with the Council
on Environmental Quality. Such regulations
shall—
(i) specify any other provisions of law
which further the purposes of the National
Environmental Policy Act of 1969 and to
which the assumption of responsibility as
provided in this subsection applies;
(ii) provide eligibility criteria and pro-
cedures for the designation of a State or
unit of general local government to assume
all of the responsibilities in this subsection;
(iii) specify the purposes for which
funds may be committed without regard to
the procedure established under paragraph
(3);
(iv) provide for monitoring of the per-
formance of environmental reviews under
this subsection;
(v) in the discretion of the Secretary,
provide for the provision or facilitation of
training for such performance; and
(vi) subject to the discretion of the
Secretary, provide for suspension or termi-
nation by the Secretary of the assumption
under subparagraph (A).
(C) RESPONSIBILITIES
OF
STATES
AND
UNITS OF GENERAL LOCAL GOVERNMENT.—The
Secretary’s duty under subparagraph (B) shall
not be construed to limit any responsibility as-
sumed by a State or unit of general local gov-
ernment with respect to any particular request
for guarantee under subparagraph (A), or the
use of funds for a qualified investment.
(3) PROCEDURE.—The Secretary shall approve
the request for guarantee of a debenture, any part
of the proceeds of which is to fund particular quali-
fied low-income community investments of APICs
under this Act, that is subject to the procedures au-
thorized by this subsection only if, not less than 15
days prior to such approval and prior to any com-
mitment of funds to such investment (except for
such purposes specified in the regulations issued
under paragraph (2)(B)), the APIC submits to the
Secretary a request for guarantee of a debenture
that is accompanied by evidence of a certification of
the State or unit of general local government which
meets the requirements of paragraph (4). The ap-
proval by the Secretary of any such certification
shall be deemed to satisfy the Secretary’s respon-
sibilities pursuant to paragraph (1) under the Na-
tional Environmental Policy Act of 1969 and such
other provisions of law as the regulations of the Sec-
retary specify insofar as those responsibilities relate
to the guarantees of debentures, any parts of the
proceeds of which are to fund such investments,
which are covered by such certification.
(4) CERTIFICATION.—A certification under the
procedures authorized by this subsection shall—
(A) be in a form acceptable to the Sec-
retary;
(B) be executed by the chief executive offi-
cer or other officer of the State or unit of gen-
eral local government who qualifies under regu-
lations of the Secretary;
(C) specify that the State or unit of gen-
eral local government under this subsection has
fully carried out its responsibilities as described
under paragraph (2); and
(D) specify that the certifying officer—
(i) consents to assume the status of a
responsible Federal official under the Na-
tional Environmental Policy Act of 1969
and each provision of law specified in regu-
lations issued by the Secretary insofar as
the provisions of such Act or other such
provision of law apply pursuant to para-
graph (2); and
(ii) is authorized and consents on be-
half of the State or unit of general local
government and himself or herself to ac-
cept the jurisdiction of the Federal courts
for the purpose of enforcement of the re-
sponsibilities as such an official.
SEC. 308. EXAMINATION AND MONITORING OF APICS.
(a) IN GENERAL.—The Secretary shall, under regula-
tions, through audits, performance agreements, license
conditions, or otherwise, examine and monitor the oper-
ations and activities of APICs for compliance with sound
financial management practices, and for satisfaction of the
program and procedural goals of this Act and other re-
lated Acts. The Secretary may undertake any responsi-
bility under this section in cooperation with an APIC liai-
son committee, or any agency that is a member of such
a committee, or other agency.
(b) MONITORING, UPDATING, AND PROGRAM RE-
VIEW.—
(1) REPORTING
AND
UPDATING.—The Sec-
retary may establish such annual or more frequent
reporting requirements for APICs, and such require-
ments for independent audits, and the updating of
the statement of public purpose goals, investment
strategy (including the benchmarks in such strat-
egy), and other documents that may have been used
in the license application process under this Act, as
the Secretary determines necessary to assist the Sec-
retary in monitoring the compliance and perform-
ance of APICs.
(2) EXAMINATIONS.—The Secretary shall, no
less often than once every 2 years, examine the oper-
ations and portfolio of each APIC licensed under
this Act for compliance with sound financial man-
agement practices, and for compliance with this Act.
(3) EXAMINATION STANDARDS.—
(A) 
SOUND
FINANCIAL
MANAGEMENT
PRACTICES.—The Secretary shall examine each
APIC to ensure, as a matter of sound financial
management practices, substantial compliance
with this and other applicable laws, including
Federal executive orders, Department of Treas-
ury and Office of Management and Budget
guidance, circulars, and application and licens-
ing requirements on a continuing basis. The
Secretary may set any additional sound finan-
cial management practices standards by regula-
tion, including standards that address solvency
and financial exposure.
(B) PERFORMANCE AND OTHER EXAMINA-
TIONS.—The Secretary shall monitor each
APICs progress in meeting the goals in the
APICs statement of public purpose goals, exe-
cuting the APICs investment strategy, and
other matters.
SEC. 309. INCENTIVES AND PENALTIES.
(a) INCENTIVES.—From amounts of budget authority
appropriated after the initial appropriation for the cost of
annual loan guarantee commitments under this Act, the
Secretary may increase the credit subsidy allocated to an
APIC, in the Secretary’s discretion, as an award for high
performance of the APIC in carrying out its investment
strategy and statement of public purpose goals.
(b) PENALTIES.—
(1) IN GENERAL.—The Secretary may penalize
any APIC, or any manager of an APIC, in the event
such APIC or a manager of the APIC commits an
act of fraud, mismanagement, or noncompliance with
this Act or regulations thereunder or a condition of
the APICs license under this Act. The Secretary in
regulations shall identify, by generic description of a
role or responsibilities, any manager of an APIC
that is subject to this subsection.
(2) PENALTIES REQUIRING NOTICE AND HEAR-
ING.—With respect to an act of commission or omis-
sion under paragraph (1) for which the Secretary
may penalize an APIC or a manager, the Secretary
may, following notice in writing to the APIC or the
manager, 
and 
opportunity 
for 
administrative
hearing—
(A) assess a civil money penalty against an
APIC, or a manager of an APIC, the amount
of which may exceed $10,000;
(B) require an APIC to divest any interest
in an investment, on such terms and conditions
as the Secretary imposes; or
(C) revoke the APICs license.
(3) PENALTIES REQUIRING NOTICE AND AN OP-
PORTUNITY TO RESPOND.—With respect to any act
of commission or omission under paragraph (1) for
which the Secretary may penalize an APIC or a
manager, following notice in writing and an oppor-
tunity for the APIC or manager to respond, impose
any reasonable penalty. Such a penalty may, in addi-
tion to any others, be—
(A) a civil money penalty of $10,000 or
less;
(B) the suspension of an APICs license, or
the conditioning of the use of an APICs license,
for up to 90 days, including the deferral for the
period of the suspension of a commitment to
guarantee any new debenture of the APIC; or
(C) any other penalty that the Secretary
determines to be less burdensome to the APIC
than a penalty that requires notice and an ad-
ministrative hearing under this Act.
(c) PROCEDURES.—
(1) No award under this section shall be made
until notice thereof is published in the Federal Reg-
ister.
(2) No civil money penalty, or other penalty
under subsection (b), except suspension or condi-
tioning of an APICs license under subsection
(b)(3)(B), shall be due and payable, or otherwise
take effect, or be subject to enforcement by an order
of a court, until notice thereof is published in the
Federal Register.
(3)(A) The Secretary may suspend or condition
an APICs license for up to 45 days without prior no-
tice in the Federal Register, but such suspension or
conditioning shall take effect only after the Sec-
retary has issued a written notice (including a writ-
ing in electronic form) of such action to the APIC.
Such written notice shall be effective without regard
to whether the APIC has been accorded the oppor-
tunity to respond. Such suspension or conditioning
shall be subject to enforcement by an order of a
court when the Secretary has issued such written
notice.
(B) After such suspension or conditioning takes
effect, the Secretary shall promptly cause a notice of
suspension or conditioning of such license for a pe-
riod of up to 90 days to be published in the Federal
Register. The APIC shall be entitled to respond to
such notice. In counting the time period of the sus-
pension or conditioning, the first day shall be the
day that written notice under this paragraph is
issued.
(C) During the time period of such suspension
or conditioning, the Secretary may proceed under
subsection (b)(2), and in accordance with the proce-
dures applicable to such subsection, to revoke the
APICs license. Only if the Secretary so proceeds,
notwithstanding any other provision of this section,
the Secretary may extend the suspension or condi-
tioning of the APICs license by publishing a notice
of such action in the Federal Register—
(i) for the first such extension, before the
period under subparagraph (B) expires; and
(ii) for any subsequent extensions of up to
90 days, before the preceding period of up to
90 days expires.
(D) The suspension or conditioning of an
APICs license by the Secretary under this paragraph
shall remain in effect in accordance with its terms
until final adjudication in any litigation undertaken
to challenge such suspension or conditioning, or rev-
ocation, of an APICs license.
TITLE IV—NEW MARKETS
CREDIT
SEC. 401. NEW MARKETS TAX CREDIT.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business-related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45D. NEW MARKETS TAX CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 38,
in the case of a taxpayer who holds a qualified eq-
uity investment on a credit allowance date of such
investment which occurs during the taxable year, the
new markets tax credit determined under this sec-
tion for such taxable year is an amount equal to 6
percent of the amount paid to the qualified commu-
nity development entity for such investment at its
original issue.
‘‘(2) CREDIT
ALLOWANCE
DATE.—The term
‘credit allowance date’ means, with respect to any
qualified equity investment—
‘‘(A) the date on which such investment is
initially made, and
‘‘(B) each of the 4 anniversary dates of
such date thereafter.
‘‘(b) QUALIFIED EQUITY INVESTMENT.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified equity
investment’ means any equity investment in a quali-
fied community development entity if—
‘‘(A) such investment is acquired by the
taxpayer at its original issue (directly or
through an underwriter) solely in exchange for
cash,
‘‘(B) substantially all of such cash is used
by the qualified community development entity
to make qualified low-income community invest-
ments, and
‘‘(C) such investment is designated for
purposes of this section by the qualified com-
munity development entity.
Such term shall not include any equity investment
issued by a qualified community development entity
more than 5 years after the date that such entity re-
ceives an allocation under subsection (f). Any alloca-
tion not used within such 5-year period may be re-
allocated by the Secretary under subsection (f).
‘‘(2) LIMITATION.—The maximum amount of
equity investments issued by a qualified community
development entity which may be designated under