I
105TH CONGRESS
2D SESSION
H. R. 3865
To amend the Internal Revenue Code of 1986 to allow the designation
of renewal communities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 14, 1998
Mr. WATTS of Oklahoma (for himself, Mr. DAVIS of Illinois, Mr. TALENT, Mr.
DAVIS of Virginia, Mr. MCINTOSH, Mr. KNOLLENBERG, Mr. DEAL of
Georgia, Mr. PITTS, Mr. ENSIGN, Ms. GRANGER, Mr. RIGGS, Mr. SES-
SIONS, Mr. THORNBERRY, Mr. GINGRICH, Mr. SENSENBRENNER, Mr.
WAMP, Mr. DELAY, Mr. LARGENT, Mr. BONILLA, Ms. FURSE, Mrs.
MYRICK, Mr. COBURN, Mr. CHABOT, Mrs. EMERSON, Mr. BURTON of In-
diana, Mr. PETERSON of Pennsylvania, Mr. NORWOOD, Mr. GRAHAM, Mr.
LEWIS of Kentucky, Mr. DOOLITTLE, Mr. RYUN, Mrs. NORTHUP, Mr.
FROST, Mr. TOWNS, Mr. KING, Mr. ENGLISH of Pennsylvania, Mr.
SOUDER, Mr. WATKINS, Mrs. KELLY, Mr. BOEHNER, Mr. DOOLEY of
California, Mr. ARMEY, Mr. HINOJOSA, Mr. DREIER, Mr. CALVERT, and
Ms. EDDIE BERNICE JOHNSON of Texas) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committees on Banking and Financial Services, and Com-
merce, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to allow the
designation of renewal communities, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘American Community Renewal Act of 1998’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Findings and purpose.
TITLE I—DESIGNATION AND EVALUATION OF RENEWAL
COMMUNITIES
Sec. 101. Short title.
Sec. 102. Statement of purpose.
Sec. 103. Designation of renewal communities.
Sec. 104. Evaluation and reporting requirements.
Sec. 105. Interaction with other Federal programs.
TITLE II—TAX INCENTIVES FOR RENEWAL COMMUNITIES
Sec. 201. Tax treatment of renewal communities.
Sec. 202. Extension of work opportunity tax credit for renewal communities
Sec. 203. Allowance of commercial revitalization credit.
Sec. 204. Conforming and clerical amendments.
TITLE III—ADDITIONAL PROVISIONS
Sec. 301. Transfer of unoccupied and substandard HUD-held housing in re-
newal communities to local governments.
Sec. 302. Prevention and treatment of substance abuse; services provided
through religious organizations.
Sec. 303. CRA credit for investments in community development organizations
located in renewal communities.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS.—The Congress makes the following
findings:
(1) Many of the Nation’s urban centers are
places with high levels of poverty, high rates of wel-
fare dependency, high crime rates, poor schools, and
joblessness.
(2) Federal tax incentives and regulatory re-
forms can encourage economic growth, job creation,
and small business formation in many urban centers.
(3) Encouraging private sector investment in
America’s economically distressed urban and rural
areas is essential to breaking the cycle of poverty
and the related ills of crime, drug abuse, illiteracy,
welfare dependency, and unemployment.
(b) PURPOSE.—The purpose of this Act is to increase
job creation, small business expansion and formation, edu-
cational opportunities, and homeownership, and to foster
moral renewal, in economically depressed areas by provid-
ing Federal tax incentives, regulatory reforms, school re-
form pilot projects, and homeownership incentives.
TITLE 
I—DESIGNATION 
AND
EVALUATION 
OF 
RENEWAL
COMMUNITIES
SEC. 101. SHORT TITLE.
This title may be cited as the ‘‘Renewing American
Communities Act of 1998’’.
SEC. 102. STATEMENT OF PURPOSE.
It is the purpose of this title to provide for the estab-
lishment of renewal communities in order to stimulate the
creation of new jobs, particularly for disadvantaged work-
ers and long-term unemployed individuals, and to promote
revitalization of economically distressed areas primarily by
providing or encouraging—
(1) tax relief at the Federal, State, and local
levels;
(2) regulatory relief at the Federal, State, and
local levels; and
(3) improved local services and an increase in
the economic stake of renewal community residents
in their own community and its development, par-
ticularly through the increased involvement of pri-
vate, local, and neighborhood organizations.
SEC. 103. DESIGNATION OF RENEWAL COMMUNITIES.
(a) IN GENERAL.—Chapter 1 of the Internal Reve-
nue Code of 1986 is amended by adding at the end the
following new subchapter:
‘‘Subchapter X—Renewal Communities
‘‘Part I.
Designation.’’
‘‘PART I—DESIGNATION
‘‘Sec. 1400E. Designation of Renewal Communities.
‘‘SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.
‘‘(a) DESIGNATION.—
‘‘(1) DEFINITIONS.—For purposes of this title,
the term ‘renewal community’ means any area—
‘‘(A) which is nominated by one or more
local governments and the State or States in
which it is located for designation as a renewal
community (hereinafter in this section referred
to as a ‘nominated area’), and
‘‘(B) which the Secretary of Housing and
Urban Development, after consultation with—
‘‘(i) the Secretaries of Agriculture,
Commerce, Labor, and the Treasury; the
Director of the Office of Management and
Budget; and the Administrator of the
Small Business Administration, and
‘‘(ii) in the case of an area on an In-
dian reservation, the Secretary of the Inte-
rior,
designates as a renewal community.
‘‘(2) NUMBER OF DESIGNATIONS.—
‘‘(A) IN
GENERAL.—The Secretary of
Housing and Urban Development may des-
ignate not more than 100 nominated areas as
renewal communities.
‘‘(B) MINIMUM
DESIGNATION
IN
RURAL
AREAS.—Of the areas designated under para-
graph (1), at least 20 percent must be areas—
‘‘(i) which are within a local govern-
ment jurisdiction or jurisdictions with a
population of less than 50,000 (as deter-
mined under the most recent census data
available),
‘‘(ii) which are outside of a metropoli-
tan statistical area (within the meaning of
section 143(k)(2)(B)), or
‘‘(iii) which are determined by the
Secretary of Housing and Urban Develop-
ment, after consultation with the Secretary
of Commerce, to be rural areas.
‘‘(C) ADDITIONAL DESIGNATIONS TO RE-
PLACE REVOKED DESIGNATIONS.—
‘‘(i) IN GENERAL.—The Secretary of
Housing and Urban Development may des-
ignate one additional area under subpara-
graph (A) to replace each area for which
the designation is revoked under subsection
(b)(2), but in no event may more than 100
areas designated under this subsection
bear designations as renewal communities
at any time.
‘‘(ii) EXTENSION OF TIME LIMIT ON
DESIGNATIONS.—In the case of any des-
ignation made under this subparagraph,
paragraph (4)(B) shall be applied by sub-
stituting ‘36-month’ for ‘24-month’.
‘‘(3) AREAS DESIGNATED BASED ON DEGREE
OF POVERTY, ETC.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this section, the nominated areas
designated as renewal communities under this
subsection shall be those nominated areas with
the highest average ranking with respect to the
criteria described in subparagraphs (C), (D),
and (E) of subsection (c)(3). For purposes of
the preceding sentence, an area shall be ranked
within each such criterion on the basis of the
amount by which the area exceeds such cri-
terion, with the area which exceeds such cri-
terion by the greatest amount given the highest
ranking.
‘‘(B) EXCEPTION
WHERE
INADEQUATE
COURSE OF ACTION, ETC.—An area shall not be
designated under subparagraph (A) if the Sec-
retary of Housing and Urban Development de-
termines that the course of action described in
subsection (d)(2) with respect to such area is
inadequate.
‘‘(C) PRIORITY FOR EMPOWERMENT ZONES
AND ENTERPRISE COMMUNITIES WITH RESPECT
TO FIRST HALF OF DESIGNATIONS.—With re-
spect to the first half of the designations made
under this section, the nominated areas des-
ignated as renewal communities shall be chosen
first from nominated areas which are enterprise
zones or empowerment communities (and are
otherwise eligible for designation under this sec-
tion), and then from other nominated areas
which are so eligible.
‘‘(D) SEPARATE APPLICATION TO RURAL
AND OTHER AREAS.—Subparagraph (A) shall
be applied separately with respect to areas de-
scribed in paragraph (2)(B) and to other areas.
‘‘(4) LIMITATION ON DESIGNATIONS.—
‘‘(A) PUBLICATION
OF
REGULATIONS.—
The Secretary of Housing and Urban Develop-
ment shall prescribe by regulation no later than
4 months after the date of the enactment of
this section, after consultation with the officials
described in paragraph (1)(B)—
‘‘(i) the procedures for nominating an
area under paragraph (1)(A),
‘‘(ii) the parameters relating to the
size and population characteristics of a re-
newal community, and
‘‘(iii) the manner in which nominated
areas will be evaluated based on the cri-
teria specified in subsection (d).
‘‘(B) TIME LIMITATIONS.—The Secretary
of Housing and Urban Development may des-
ignate nominated areas as renewal communities
only during the 24-month period beginning on
the first day of the first month following the
month in which the regulations described in
subparagraph (A) are prescribed.
‘‘(C) PROCEDURAL RULES.—The Secretary
of Housing and Urban Development shall not
make any designation of a nominated area as a
renewal community under paragraph (2) un-
less—
‘‘(i) the local governments and the
State in which the nominated area is lo-
cated have the authority—
‘‘(I) to nominate such area for
designation as a renewal community,
‘‘(II) to make the State and local
commitments described in subsection
(d), and
‘‘(III) to provide assurances sat-
isfactory to the Secretary of Housing
and Urban Development that such
commitments will be fulfilled,
‘‘(ii) a nomination regarding such
area is submitted in such a manner and in
such form, and contains such information,
as the Secretary of Housing and Urban
Development shall by regulation prescribe,
and
‘‘(iii) the Secretary of Housing and
Urban Development determines that any
information furnished is reasonably accu-
rate.
‘‘(5) NOMINATION PROCESS FOR INDIAN RES-
ERVATIONS.—For purposes of this subchapter, in
the case of a nominated area on an Indian reserva-
tion, the reservation governing body (as determined
by the Secretary of the Interior) shall be treated as
being both the State and local governments with re-
spect to such area.
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—
‘‘(1) IN GENERAL.—Any designation of an area
as a renewal community shall remain in effect dur-
ing the period beginning on the date of the designa-
tion and ending on the earliest of—
‘‘(A) December 31 of the 7th calendar year
following the calendar year in which such date
occurs,
‘‘(B) the termination date designated by
the State and local governments in their nomi-
nation pursuant to subsection (a)(4)(C)(ii), or
‘‘(C) the date the Secretary of Housing
and Urban Development revokes such designa-
tion under paragraph (2).
‘‘(2) REVOCATION OF DESIGNATION.—The Sec-
retary of Housing and Urban Development may,
after—
‘‘(A) consultation with the officials de-
scribed in subsection (a)(1)(B) (and the Sec-
retary of Education if notification required
under section 304 of the Low-Income Edu-
cational Opportunity Scholarship Act of 1998 is
received), and
‘‘(B) a hearing on the record involving offi-
cials of the State or local government involved
(or both, if applicable),
revoke the designation of an area if the Secretary of
Housing and Urban Development determines that
the local government or State in which the area is
located is not complying substantially with the State
or local commitments, respectively, described in sub-
section (d).
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate any nomi-
nated area as a renewal community under subsection
(a) only if the area meets the requirements of para-
graphs (2) and (3) of this subsection.
‘‘(2) AREA REQUIREMENTS.—A nominated area
meets the requirements of this paragraph if—
‘‘(A) the area is within the jurisdiction of
a local government,
‘‘(B) the boundary of the area is continu-
ous, and
‘‘(C) the area—
‘‘(i) has a population, as determined
by the most recent census data available,
of at least—
‘‘(I) 4,000 if any portion of such
area (other than a rural area de-
scribed in subsection (a)(2)(B)(i)) is
located within a metropolitan statis-
tical area (within the meaning of sec-
tion 143(k)(2)(B)) which has a popu-
lation of 50,000 or greater, or
‘‘(II) 1,000 in any other case, or
‘‘(ii) is entirely within an Indian res-
ervation (as determined by the Secretary of
the Interior).
‘‘(3) ELIGIBILITY
REQUIREMENTS.—A nomi-
nated area meets the requirements of this paragraph
if the State and the local governments in which it
is located certify (and the Secretary of Housing and
Urban Development, after such review of supporting
data as he deems appropriate, accepts such certifi-
cation) that—
‘‘(A) the area is one of pervasive poverty,
unemployment, and general distress,
‘‘(B) the unemployment rate in the area,
as determined by the appropriate available
data, was at least 11⁄2 times the national unem-
ployment rate for the period to which such data
relate,
‘‘(C) the poverty rate (as determined by
the most recent census data available) for each
population census tract (or where not tracted,
the equivalent county division as defined by the
Bureau of the Census for the purpose of defin-
ing poverty areas) within the area was at least
20 percent for the period to which such data re-
late, and
‘‘(D) in the case of an urban area, at least
70 percent of the households living in the area
have incomes below 80 percent of the median
income of households within the jurisdiction of
the local government (determined in the same
manner as under section 119(b)(2) of the
Housing and Community Development Act of
1974).
‘‘(4) CONSIDERATION OF HIGH INCIDENCE OF
CRIME.—The Secretary of Housing and Urban De-
velopment shall take into account, in selecting nomi-
nated areas for designation as renewal communities
under this section, the extent to which such areas
have a high incidence of crime.
‘‘(5) CONSIDERATION OF COMMUNITIES IDENTI-
FIED
IN
GAO
STUDY.—The Secretary of Housing
and Urban Development shall take into account, in
selecting nominated areas for designation as renewal
communities under this section, if the area has cen-
sus tracts identified in the May 12, 1998, report of
the Government Accounting Office regarding the
identification of economically distressed areas.
‘‘(d) REQUIRED
STATE
AND
LOCAL
COMMIT-
MENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate any nomi-
nated area as a renewal community under subsection
(a) only if—
‘‘(A) the local government and the State in
which the area is located agree in writing that,
during any period during which the area is a
renewal community, such governments will fol-
low a specified course of action which meets the
requirements of paragraph (2) and is designed
to reduce the various burdens borne by employ-
ers or employees in such area, and
‘‘(B) the economic growth promotion re-
quirements of paragraph (3) are met.
‘‘(2) COURSE OF ACTION.—
‘‘(A) IN
GENERAL.—A course of action
meets the requirements of this paragraph if
such course of action is a written document,
signed by a State (or local government) and
neighborhood organizations, which evidences a
partnership between such State or government
and community-based organizations and which
commits each signatory to specific and measur-