Clause (iii) shall not be applied so as to impede
the development of investment projects in hard-
to-develop areas.
‘‘(C) DETERMINATION MADE WHEN CRED-
IT AMOUNT APPLIED FOR AND WHEN BUILDING
PLACED IN SERVICE.—
‘‘(i) IN
GENERAL.—A determination
under subparagraph (A) shall be made as
of each of the following times:
‘‘(I) The application for the rural
investment credit dollar amount.
‘‘(II) The allocation of the rural
investment credit dollar amount.
‘‘(III) The date the building is
first placed in service.
‘‘(ii) CERTIFICATION AS TO AMOUNT
OF OTHER SUBSIDIES.—Prior to each de-
termination under clause (i), the taxpayer
shall certify to the rural investment credit
agency the full extent of all Federal, State,
and local subsidies which apply (or which
the taxpayer expects to apply) with respect
to the building.
‘‘(l) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section, including
regulations—
‘‘(1) dealing with—
‘‘(A) investment projects which include
more than 1 building or only a portion of a
building,
‘‘(B) buildings which are sold in portions,
‘‘(2) providing for the application of this section
to short taxable years,
‘‘(3) preventing the avoidance of the rules of
this section, and
‘‘(4) providing the opportunity for rural invest-
ment credit agencies to correct administrative errors
and omissions with respect to allocations and record
keeping within a reasonable period after their dis-
covery, taking into account the availability of regula-
tions and other administrative guidance from the
Secretary.’’.
(b) CURRENT YEAR BUSINESS CREDIT CALCULA-
TION.—Section 38(b) (relating to current year business
credit) is amended by striking ‘‘plus’’ at the end of para-
graph (14), by striking the period at the end of paragraph
(15) and inserting ‘‘, plus’’, and by adding at the end the
following:
‘‘(16) the rural investment credit determined
under section 42A(a).’’.
(c) LIMITATION ON CARRYBACK.—Subsection (d) of
section 39 (relating to carryback and carryforward of un-
used credits) is amended by adding at the end the fol-
lowing:
‘‘(11) NO CARRYBACK OF RURAL INVESTMENT
CREDIT BEFORE EFFECTIVE DATE.—No amount of
unused business credit available under section 42A
may be carried back to a taxable year ending the
date of the enactment of this paragraph.’’.
(d) CONFORMING AMENDMENTS.—
(1) Section 55(c)(1) is amended by inserting
‘‘or subsection (i) or (j) of section 42A’’ after ‘‘sec-
tion 42’’.
(2) Subsections (i)(c)(3), (i)(c)(6)(B)(i), and
(k)(1) of section 469 are each amended by inserting
‘‘or 42A’’ after ‘‘section 42’’.
(3) Section 772(a) is amended by striking
‘‘and’’ at the end of paragraph (10), by redesig-
nating paragraph (11) as paragraph (12), and by in-
serting after paragraph (10) the following:
‘‘(11) the rural investment credit determined
under section 42A, and’’.
(4) Section 774(b)(4) is amended by inserting
‘‘, 42A(i),’’ after ‘‘section 42(j)’’.
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
is amended by inserting after the item relating to section
42 the following:
‘‘Sec. 42A. Rural investment credit.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures made in taxable
years beginning after December 31, 2001.
SEC. 202. ACCELERATED DEPRECIATION FOR RURAL IN-
VESTMENT PROPERTY.
(a) IN GENERAL.—Section 168 is amended by adding
at the end the following:
‘‘(k) 
PROPERTY
IN
RURAL
INVESTMENT
PROJECTS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the applicable recovery period for qualified rural
investment property shall be determined in accord-
ance with the table contained in paragraph (2) in
lieu of the table contained in subsection (c).
‘‘(2) APPLICABLE
RECOVERY
PERIOD
FOR
RURAL INVESTMENT PROPERTY.—For purposes of
paragraph (1)—
The applicable
‘‘In the case of:
recovery period is:
3-year property .................................................................
2 years
5-year property .................................................................
3 years
The applicable
‘‘In the case of:
recovery period is:
7-year property .................................................................
4 years
10-year property ...............................................................
6 years
15-year property ...............................................................
9 years
20-year property ...............................................................
12 years
Nonresidential real property ............................................
22 years.
‘‘(3) DEDUCTION
ALLOWED
IN
COMPUTING
MINIMUM TAX.—For purposes of determining alter-
native minimum taxable income under section 55,
the deduction under subsection (a) for property to
which paragraph (1) applies shall be determined
under this section without regard to any adjustment
under section 56.
‘‘(4) QUALIFIED
RURAL
INVESTMENT
PROP-
ERTY DEFINED.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
rural investment property’ means property
which is property described in the table in para-
graph (2) and which is—
‘‘(i) used by the taxpayer predomi-
nantly in the active conduct of a trade or
business within a qualified rural invest-
ment project,
‘‘(ii) not used or located outside the
qualified rural investment project on a reg-
ular basis,
‘‘(iii) not acquired (directly or indi-
rectly) by the taxpayer from a person who
is related to the taxpayer (within the
meaning of section 465(b)(3)(C)), and
‘‘(iv) not property (or any portion
thereof) placed in service for purposes of
operating any facility described in section
144(c)(6)(B).
‘‘(B) EXCEPTION FOR ALTERNATIVE DE-
PRECIATION
PROPERTY.—The term ‘qualified
rural investment property’ does not include any
property to which the alternative depreciation
system 
under 
subsection 
(g) 
applies,
determined—
‘‘(i) without regard to subsection
(g)(7) (relating to election to use alter-
native depreciation system), and
‘‘(ii) after the application of section
280F(b) (relating to listed property with
limited business use).
‘‘(C) SPECIAL RULE FOR INFRASTRUCTURE
INVESTMENT.—
‘‘(i) 
IN
GENERAL.—Subparagraph
(A)(ii) shall not apply to qualified infra-
structure property located outside of the
qualified rural investment project if the
purpose of such property is to connect with
qualified infrastructure property located
within such project.
‘‘(ii) 
QUALIFIED
INFRASTRUCTURE
PROPERTY.—For purposes of this subpara-
graph, the term ‘qualified infrastructure
property’ means qualified rural investment
property (determined without regard to
subparagraph (A)(ii)) which—
‘‘(I) benefits the qualifying coun-
ty infrastructure,
‘‘(II) is available to the general
public, and
‘‘(III) is placed in service in con-
nection with the taxpayer’s active con-
duct of a trade or business within a
qualified rural investment project.
Such term includes, but is not limited to,
roads, power lines, water systems, railroad
spurs, and communications facilities.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section, any term used in this section which is used
in section 42A shall have the meaning given such
term by section 42A.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to property placed in service after
December 31, 2001.
TITLE III—NEW HOMESTEAD
VENTURE CAPITAL FUND
SEC. 301. NEW HOMESTEAD VENTURE CAPITAL FUND.
The Consolidated Farm and Rural Development Act
(7 U.S.C. 1921 et seq.) is amended by adding at the end
the following:
‘‘Subtitle G—New Homestead
Venture Capital Fund
‘‘SEC. 383A. SHORT TITLE.
‘‘This subtitle may be cited as the ‘New Homestead
Venture Capital Fund Act’.
‘‘SEC. 383B. DEFINITIONS.
‘‘In this subtitle:
‘‘(1) AUTHORIZED
PRIVATE
INVESTOR.—The
term ‘authorized private investor’ means an indi-
vidual, legal entity, or affiliate or subsidiary of an
individual or legal entity that—
‘‘(A) is eligible to receive a loan guarantee
under this title;
‘‘(B) is eligible to receive a loan guarantee
under the Rural Electrification Act of 1936 (7
U.S.C. 901 et seq.);
‘‘(C) is created under the National Con-
sumer Cooperative Bank Act (12 U.S.C. 3011
et seq.);
‘‘(D) is an insured depository institution
subject to section 383D(b)(2);
‘‘(E) is a Farm Credit System institution
described in section 1.2(a) of the Farm Credit
Act of 1971 (12 U.S.C. 2002(a)); or
‘‘(F) is determined by the Board to be an
appropriate investor in the Fund.
‘‘(2) BOARD.—The term ‘Board’ means the
board of directors of the Fund established under
section 383F.
‘‘(3) FUND.—The term ‘Fund’ means the New
Homestead Venture Capital Fund established under
section 383C.
‘‘(4) GROUP OF SIMILAR AUTHORIZED PRIVATE
INVESTORS.—The term ‘group of similar authorized
private investors’ means any 1 of the following:
‘‘(A) Insured depository institutions with
total assets of more than $250,000,000.
‘‘(B) Insured depository institutions with
total assets equal to or less than $250,000,000.
‘‘(C) Farm Credit System institutions de-
scribed in section 1.2(a) of the Farm Credit Act
of 1971 (12 U.S.C. 2002(a)).
‘‘(D) Cooperative financial institutions
(other than Farm Credit System institutions).
‘‘(E) Authorized private investors, other
than those described in subparagraphs (A)
through (D).
‘‘(F) Other nonprofit organizations, includ-
ing credit unions.
‘‘(5) INSURED DEPOSITORY INSTITUTION.—The
term ‘insured depository institution’ means any bank
or savings association the deposits of which are in-
sured under the Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.).
‘‘(6) QUALIFYING COUNTY.—The term ‘quali-
fying county’ means any county that—
‘‘(A) is located outside a metropolitan sta-
tistical area (as defined by the Office of Man-
agement and Budget); and
‘‘(B) during the 20-year period ending
with the fiscal year preceding the applicable fis-
cal year for which assistance is made available
under section 383E, has a net outmigration of
inhabitants from the county of at least 10 per-
cent of the population of the county at the be-
ginning of the period.
‘‘(7) RURAL BUSINESS.—The term ‘rural busi-
ness’ means a rural cooperative, a value-added agri-
cultural enterprise, or any other enterprise that is or
will be located in a qualifying county.
‘‘SEC. 383C. ESTABLISHMENT OF THE FUND.
‘‘(a) IN GENERAL.—
‘‘(1) AUTHORITY TO ESTABLISH.—Upon certifi-
cation by the Secretary that, to the maximum extent
practicable, the parties proposing to establish a fund
provide a broad representation of all of the groups
of similar authorized private investors described in
subparagraphs (A) through (F) of section 383B(4),
the parties so certified may establish, a non-Federal
entity under State law, to purchase shares of, and
manage a fund to be known as the ‘New Homestead
Venture Capital Fund’, to generate and provide eq-
uity capital to rural businesses.
‘‘(2) OWNERSHIP.—
‘‘(A) IN GENERAL.—To the maximum ex-
tent practicable, equity ownership of the Fund
shall be distributed among authorized private
investors representing all of the groups of simi-
lar authorized private investors described in
subparagraphs (A) through (F) of section
383B(4).
‘‘(B) EXCLUSION OF GROUPS.—No group
of similar authorized private investors shall be
excluded from equity ownership of the Fund
during any period during which the Fund is in
existence if an authorized private investor rep-
resentative of the group is able and willing to
invest in the Fund.
‘‘(b) PURPOSE.—The purpose of the Fund is to
strengthen the economies of qualifying counties by—
‘‘(1) making needed investments in qualifying
counties to reverse the devastating impact of chronic
outmigration and to help the qualifying counties re-
build and grow;
‘‘(2) providing equity funding for existing and
startup rural businesses with high potential for job
creation that are or will be located in qualifying
counties;
‘‘(3) offering the funding described in para-
graph (2) to rural businesses, many of which have
difficulty obtaining equity capital;
‘‘(4) authorizing use of the funding described in
paragraph (2) only after State and local govern-
ments match a significant portion of the funding;
‘‘(5) requiring a portion of the funding de-
scribed in paragraph (2) to be used for technical and
other similar assistance to rural businesses; and
‘‘(6) providing incentives to greater participa-
tion by authorized private investors through provi-
sion of guarantees of up to 60 percent of the invest-
ments of the authorized private investors in quali-
fying counties.
‘‘(c) ARTICLES OF INCORPORATION AND BY-LAWS.—
The articles of incorporation and by-laws of the Fund shall
set forth purposes of the Fund that are consistent with
the purposes described in subsection (b).
‘‘SEC. 383D. INVESTMENT IN THE FUND.
‘‘(a) IN GENERAL.—The Secretary shall—
‘‘(1) subject to subsection (b)(1), make avail-
able to the Fund $200,000,000 for each of fiscal
years 2002 through 2011;
‘‘(2) subject to subsection (c), guarantee a por-
tion of each investment made by an authorized pri-
vate investor in the Fund; and
‘‘(3) subject to subsection (d), guarantee the re-
payment of principal of, and accrued interest on, de-
bentures issued by the Fund to authorized private
investors.
‘‘(b) NON-FEDERAL FUNDS.—
‘‘(1) IN
GENERAL.—Under subsection (a)(1),
the Secretary shall make an amount available to the
Fund for a fiscal year only after—
‘‘(A) at least $50,000,000 has been in-
vested in the Fund for the fiscal year by au-
thorized private investors in accordance with
this subtitle and the terms and conditions set
forth in the by-laws of the Fund; and
‘‘(B) at least $50,000,000 has been in-
vested in the Fund for the fiscal year by State
and local governments.
‘‘(2) INSURED DEPOSITORY INSTITUTIONS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C)—
‘‘(i) an insured depository institution
may be an authorized private investor in
the Fund; and
‘‘(ii) an investment in the Fund may
be considered to be part of the record of
an institution in meeting the credit needs
of the community in which the institution
is located under any applicable Federal
law.
‘‘(B) INVESTMENT LIMIT.—The total in-
vestment in the Fund of an insured depository
institution shall not exceed 5 percent of the in-
stitution’s capital and surplus.
‘‘(C) REGULATORY
AUTHORITY.—An ap-
propriate Federal banking agency may, by regu-
lation or order, impose on any insured deposi-
tory institution investing in the Fund, any safe-
guard, limitation, or condition (including an in-
vestment limit that is lower than the investment
limit under subparagraph (B)) that the Federal
banking agency considers to be appropriate to
ensure that the institution operates—
‘‘(i) in a financially sound manner;
and
‘‘(ii) in compliance with all applicable
law.
‘‘(c) GUARANTEE OF PRIVATE INVESTMENTS.—
‘‘(1) IN GENERAL.—The Secretary shall guar-
antee, under terms and conditions determined by the
Secretary—
‘‘(A) except as provided in subparagraph
(B), 40 percent of any loss of the principal of
each investment made by an authorized private
investor in the Fund; and
‘‘(B) 60 percent of any loss of the prin-
cipal of each investment made by an authorized
private investor in the Fund if the investment
is used for a manufacturing or high-technology
business.
‘‘(2) MAXIMUM TOTAL GUARANTEE.—The ag-
gregate potential liability of the Secretary with re-
spect to all guarantees under paragraph (1) shall
not apply to more than $500,000,000 in private in-
vestments in the Fund.
‘‘(3) REDEMPTION OF GUARANTEE.—
‘‘(A) DATE.—An authorized private inves-
tor in the Fund may redeem a guarantee under
paragraph (1), with respect to the total invest-
ments in the Fund and the total losses of the
authorized private investor as of the date of
redemption—
‘‘(i) on the date that is 5 years after
the date of the initial investment of the au-
thorized private investor; or
‘‘(ii) annually thereafter.
‘‘(B) EFFECT
OF
REDEMPTION.—On re-
demption of a guarantee under subparagraph
(A)—
‘‘(i) the shares in the Fund of the au-
thorized private investor shall be redeemed;
and
‘‘(ii) the authorized private investor
shall be prohibited from making any future
investment in the Fund.
‘‘(d) DEBENTURES.—
‘‘(1) IN GENERAL.—The Fund may, at the dis-
cretion of the Board, raise additional capital through
the issuance of debentures and through other means
determined to be appropriate by the Board.
‘‘(2) GUARANTEE OF DEBT BY SECRETARY.—
‘‘(A) IN
GENERAL.—The Secretary shall
guarantee 100 percent of the principal of, and
accrued interest on, debentures issued by the
Fund that are approved by the Secretary.
‘‘(B) MAXIMUM
DEBT
GUARANTEED
BY
SECRETARY.—The outstanding value of deben-
tures issued by the Fund and guaranteed by
the Secretary shall not exceed the lesser of—
‘‘(i) the amount equal to twice the
value of the assets held by the Fund; or
‘‘(ii) $500,000,000.
‘‘(C) RECAPTURE
OF
GUARANTEE
PAY-
MENTS.—If the Secretary makes a payment on
a debenture issued by the Fund as a result of
a guarantee of the Secretary under this para-
graph, the Secretary shall have priority over
other creditors for repayment of the debenture.
‘‘(3) AUTHORIZED
PRIVATE
INVESTORS.—An
authorized private investor may purchase debentures
issued by the Fund.
‘‘SEC. 383E. INVESTMENTS AND OTHER ACTIVITIES OF THE
FUND.
‘‘(a) INVESTMENTS.—
‘‘(1) IN GENERAL.—
‘‘(A) TYPES.—Subject to subparagraphs
(B) and (C), the Fund may—
‘‘(i) make equity investments in a
rural business that meets the requirements
of paragraph (6) and such other require-
ments as the Board may establish; and
‘‘(ii) extend credit to such rural busi-
ness in—
‘‘(I) the form of mezzanine debt,
convertible debt, or subordinated debt;
or
‘‘(II) any other form of near-eq-
uity debt.
‘‘(B) LIMITATIONS
ON
EQUITY
INVEST-
MENTS.—After the initial equity investment in
a rural business described in subparagraph
(A)(i), the Fund may not make additional eq-
uity investments in such rural business if the
additional equity investments would result in
the Fund owning more than 30 percent of the
equity of such rural business.
‘‘(C) LIMITATION ON NONEQUITY INVEST-
MENTS.—Except in the case of a project to as-
sist a rural cooperative, the total amount of
nonequity investments described in subpara-
graph (A)(ii) that may be provided by the Fund
shall not exceed 20 percent of the total invest-
ments of the Fund in the project.
‘‘(2) PROCEDURES.—The Fund shall implement
procedures to ensure that—
‘‘(A) the financing arrangements of the
Fund meet the Fund’s primary focus of pro-
viding equity capital; and
‘‘(B) the Fund does not compete with con-
ventional sources of credit.
‘‘(3) DIVERSITY OF PROJECTS.—The Fund—
‘‘(A) shall seek to make equity investments
in a variety of viable projects for rural busi-
nesses, 
with 
a 
significant 
share 
of
investments—
‘‘(i) in manufacturing or high-tech-
nology businesses of diverse sizes;
‘‘(ii) in smaller projects in rural com-
munities of diverse sizes; and
‘‘(iii) in cooperative and noncoopera-
tive businesses; and
‘‘(B) shall be managed in a manner that
diversifies the risks to the Fund among a vari-
ety of projects.
‘‘(4) LIMITATION ON RURAL BUSINESSES AS-
SISTED.—The Fund shall not invest in any rural
business that—
‘‘(A) is primarily retail in nature (as deter-
mined by the Board), other than a purchasing
cooperative, or
‘‘(B) consists of the operation of any facil-
ity described in section 144(c)(6)(B).
‘‘(5) INTEREST
RATE
LIMITATIONS.—Returns
on investments in and by the Fund, and returns on
the extension of credit by participants in projects as-
sisted by the Fund, shall not be subject to any State
or Federal law establishing a maximum allowable in-
terest rate.
‘‘(6) REQUIREMENTS FOR RECIPIENTS.—
‘‘(A) OTHER
INVESTMENTS.—Any recipi-
ent of amounts from the Fund shall make or
obtain a significant investment from a source of
capital other than the Fund.
‘‘(B) SPONSORSHIP.—To be considered for
an equity investment from the Fund, a rural
business investment project shall be sponsored
by a regional, State, or local sponsoring or en-
dorsing organization such as—
‘‘(i) a financial institution;
‘‘(ii) a development organization; or
‘‘(iii) any other established entity en-
gaging or assisting in rural business devel-
opment, including a rural cooperative.
‘‘(b) TECHNICAL ASSISTANCE.—The Board shall use
not less than 2 percent of capital provided by the Federal
Government to provide technical assistance to rural busi-
nesses seeking an equity investment from the Fund.
‘‘(c) ANNUAL AUDIT.—
‘‘(1) IN GENERAL.—The Board shall authorize
an annual audit of the financial statements of the
Fund by a nationally recognized auditing firm using
generally accepted accounting procedures.
‘‘(2) AVAILABILITY OF AUDIT RESULTS.—The
results of the audit required by paragraph (1) shall
be made available to investors in the Fund.
‘‘(d) ANNUAL REPORT.—The Board shall prepare
and make available to the public an annual report that—
‘‘(1) describes the projects funded with amounts
from the Fund;
‘‘(2) specifies the recipients of amounts from
the Fund;
‘‘(3) specifies the co-investors in all projects
that receive amounts from the Fund; and
‘‘(4) meets the reporting requirements, if any,
of the State under the law of which the Fund is es-
tablished.
‘‘(e) OTHER AUTHORITIES.—
‘‘(1) IN
GENERAL.—The Board may exercise
such other authorities as are necessary to carry out
this subtitle.
‘‘(2) OVERSIGHT.—The Secretary shall enter
into a contract with the Administrator of the Small
Business Administration under which the Adminis-
trator of the Small Business Administration shall be
responsible for the routine duties of the Secretary in
regard to the Fund.
‘‘SEC. 383F. GOVERNANCE OF THE FUND.
‘‘(a) IN GENERAL.—The Fund shall be governed by
a board of directors that represents all of the authorized
private investors in the Fund and the Federal Government
and that consists of—
‘‘(1) a designee of the Secretary;
‘‘(2) 2 members who are appointed by the Sec-
retary and are not Federal employees, including—
‘‘(A) 1 member with expertise in venture
capital investment; and
‘‘(B) 1 member with expertise in coopera-
tive development;
‘‘(3) 1 member who is appointed by the Sec-
retary and is a State government representative
from among States with the highest rates of out-
migration from qualifying counties; and
‘‘(4) 7 members who are elected by the author-
ized private investors with investments in the Fund,
of whom not less than 1 member shall be a rural
community banker from an insured depository insti-
tution with total assets equal to or less than
$250,000,000 with an investment in the Fund.
‘‘(b) LIMITATION ON VOTING CONTROL.—No indi-
vidual investor or group of similar authorized private in-
vestors may control more than 25 percent of the votes on
the Board.
‘‘SEC. 383G. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated such sums
as are necessary to carry out this subtitle.’’.
Æ