1426
‘‘(D) identifies the funding requested
under any Federal program in support of the
proposed economic, human, community, and
physical development and related activities,
‘‘(E) identifies baselines, methods, and
benchmarks for measuring the success of carry-
ing out the strategic plan, including the extent
to which poor persons and families will be em-
powered to become economically self-sufficient,
and
‘‘(F) does not include any action to assist
any establishment in relocating from one area
outside the nominated area to the nominated
area, except that assistance for the expansion of
an existing business entity through the estab-
lishment of a new branch, affiliate, or subsidi-
ary is permitted if—
‘‘(i) the establishment of the new
branch, affiliate, or subsidiary will not re-
sult in a decrease in employment in the
area of original location or in any other
area where the existing business entity
conducts business operations, and
‘‘(ii) there is no reason to believe that
the new branch, affiliate, or subsidiary is
1427
being established with the intention of clos-
ing down the operations of the existing
business entity in the area of its original
location or in any other area where the ex-
isting business entity conducts business op-
eration, and
‘‘(3) include such other information as may be
required by the appropriate Secretary or the Enter-
prise Board.
‘‘SEC. 1392. ELIGIBILITY CRITERIA.
‘‘(a) IN GENERAL.—A nominated area shall be eligi-
ble for designation under section 1391 only if it meets the
following criteria:
‘‘(1) P OPULATION.—The nominated area has a
maximum population of—
‘‘(A) in the case of an urban area, the
lesser of—
‘‘(i) 200,000, or
‘‘(ii) the greater of 50,000 or 10 per-
cent of the population of the most popu-
lous city located within the nominated
area, and
‘‘(B) in the case of a rural area, 30,000.
1428
‘‘(2) D ISTRESS.—The nominated area is one of
pervasive poverty, unemployment, and general dis-
tress.
‘‘(3) SIZE.—The nominated area—
‘‘(A) does not exceed 20 square miles if an
urban area or 1,000 square miles if a rural
area or an Indian reservation,
‘‘(B) has a boundary which is continuous,
or, except in the case of a rural area located in
more than 1 State, consists of not more than
3 noncontiguous parcels,
‘‘(C)(i) in the case of an urban area, is lo-
cated entirely within no more than 2 contiguous
States, and
‘‘(ii) in the case of a rural area, is located
entirely within no more than 3 contiguous
States, and
‘‘(D) does not include any portion of a
central business district (as such term is used
for purposes of the most recent Census of Re-
tail Trade) unless the poverty rate for each
population census tract in such district is not
less than 35 percent (30 percent in the case of
an enterprise community).
‘‘(4) POVERTY RATE.—The poverty rate—
1429
‘‘(A) for each population census tract with-
in the nominated area is not less than 20 per-
cent,
‘‘(B) for at least 90 percent of the popu-
lation census tracts within the nominated area
is not less than 25 percent, and
‘‘(C) for at least 50 percent of the popu-
lation census tracts within the nominated area
is not less than 35 percent.
‘‘(b) SPECIAL RULES RELATING TO DETERMINATION
OF POVERTY RATE.—For purposes of subsection (a)(4)—
‘‘(1) TREATMENT
OF
CENSUS
TRACTS
WITH
SMALL POPULATIONS.—
‘‘(A) TRACTS WITH NO POPULATION.—In
the case of a population census tract with no
population—
‘‘(i) such tract shall be treated as hav-
ing a poverty rate which meets the require-
ments of subparagraphs (A) and (B) of
subsection (a)(4), but
‘‘(ii) such tract shall be treated as
having a zero poverty rate for purposes of
applying subparagraph (C) thereof.
‘‘(B) TRACTS WITH POPULATIONS OF LESS
THAN 2,000.—A population census tract with a
1430
population of less than 2,000 shall be treated as
having a poverty rate which meets the require-
ments of subparagraphs (A) and (B) of sub-
section (a)(4) if more than 75 percent of such
tract is zoned for commercial or industrial use.
‘‘(2) 
DISCRETION
TO
ADJUST
REQUIRE-
MENTS.—Where necessary to carry out the purposes
of this subchapter, the appropriate Secretary may
reduce by 5 percentage points one of the following
thresholds for not more than 10 percent of the popu-
lation census tracts (or, if fewer, 5 population cen-
sus tracts) in the nominated area:
‘‘(A) The 20 percent threshold in sub-
section (a)(4)(A).
‘‘(B) The 25 percent threshold in sub-
section (a)(4)(B).
‘‘(C) The 35 percent threshold in sub-
section (a)(4)(C).
If the appropriate Secretary elects to reduce the
threshold under subparagraph (C) for an enterprise
community, such Secretary may (in lieu of applying
the preceding sentence) reduce by 10 percentage
points the threshold under subparagraph (C) for 3
population census tracts.
1431
‘‘(3) EACH NONCONTIGUOUS AREA MUST SAT-
ISFY POVERTY RATE RULE.—A nominated area may
not include a noncontiguous parcel unless such par-
cel separately meets (subject to paragraphs (1) and
(2)) the criteria set forth in subsection (a)(4).
‘‘(4) A REAS NOT WITHIN CENSUS TRACTS.—In
the case of an area which is not tracted for popu-
lation census tracts, the equivalent county divisions
(as defined by the Bureau of the Census for pur-
poses of defining poverty areas) shall be used for
purposes of determining poverty rates.
‘‘(c) FACTORS TO CONSIDER.—From among the
nominated areas eligible for designation under section
1391 by the appropriate Secretary, such appropriate Sec-
retary shall make designations of empowerment zones and
enterprise communities on the basis of—
‘‘(1) the effectiveness of the strategic plan sub-
mitted pursuant to section 1391(f)(2) and the assur-
ances made pursuant to section 1391(e)(3), and
‘‘(2) criteria specified by the Enterprise Board.
‘‘SEC. 1393. DEFINITIONS AND SPECIAL RULES.
‘‘(a) IN
GENERAL.—For purposes of this sub-
chapter—
‘‘(1) APPROPRIATE SECRETARY.—The term ‘ap-
propriate Secretary’ means—
1432
‘‘(A) the Secretary of Housing and Urban
Development in the case of any nominated area
which is located in an urban area,
‘‘(B) the Secretary of Agriculture in the
case of any nominated area which is located in
a rural area, and
‘‘(C) the Secretary of the Interior in the
case of any nominated area which is located in
an Indian reservation.
‘‘(2) ENTERPRISE BOARD.—The term ‘Enter-
prise Board’ means any board hereafter established
and designated for purposes of this subchapter as
the ‘Enterprise Board’.
‘‘(3) RURAL
AREA.—The term ‘rural area’
means any area which is—
‘‘(A) outside of a metropolitan statistical
area 
(within 
the 
meaning 
of 
section
143(k)(2)(B)), or
‘‘(B) determined by the Secretary of Agri-
culture, after consultation with the Secretary of
Commerce, to be a rural area.
‘‘(4) URBAN
AREA.—The term ‘urban area’
means an area which is not a rural area.
‘‘(5) INDIAN RESERVATION.—
1433
‘‘(A) I N GENERAL.—The term ‘Indian res-
ervation’ means a reservation as defined in—
‘‘(i) section 3(d) of the Indian Financ-
ing Act of 1974 (25 U.S.C. 1452(d)), or
‘‘(ii) section 4(10) of the Indian Child
Welfare 
Act 
of 
1978 
(25 
U.S.C.
1903(10)).
‘‘(B) GOVERNMENTS.—In the case of an
area in an Indian reservation, the reservation
governing body (as determined by the Secretary
of the Interior) shall be deemed to be both the
State and local governments with respect to
such area.
‘‘(6) LOCAL
GOVERNMENT.—The term ‘local
government’ means—
‘‘(A) any county, city, town, township, par-
ish, village, or other general purpose political
subdivision of a State, and
‘‘(B) any combination of political subdivi-
sions described in subparagraph (A) recognized
by the appropriate Secretary.
‘‘(7) N OMINATED AREA.—The term ‘nominated
area’ means an area which is nominated by 1 or
more local governments and the State or States in
1434
which it is located for designation under section
1391.
‘‘(8) G OVERNMENTS.—If more than 1 State or
local government seeks to nominate an area as a tax
enterprise zone, any reference to, or requirement of,
this subchapter shall apply to all such governments.
‘‘(9) S PECIAL RULE.—An area shall be treated
as nominated by a State and a local government if
it is nominated by such other entity as may be speci-
fied by the Enterprise Board.
‘‘(10) U SE OF CENSUS DATA.—Population and
poverty rate shall be determined by the most recent
decennial census data available.
‘‘(b) EMPOWERMENT ZONE; E NTERPRISE COMMU-
NITY.—For purposes of this title, the terms ‘empowerment
zone’ and ‘enterprise community’ mean areas designated
as such under section 1391.
‘‘PART II—INCENTIVES FOR EMPOWERMENT
ZONES AND ENTERPRISE COMMUNITIES
‘‘Sec. 1394. Incentives.
‘‘SEC. 1394. INCENTIVES.
‘‘(a) INCREASE IN LOW INCOME HOUSING CREDIT.—
For purposes of section 42(d)(5)(C), a building shall be
treated as located in a qualified census tract if—
1435
‘‘(1) such building is located in a census tract
having a poverty rate of at least 30 percent (deter-
mined in accordance with section 1393(a)(10)), and
‘‘(2) 
such 
building 
is 
located 
in 
an
empowerment zone or an enterprise community.
‘‘(b) TAX EXEMPT ENTERPRISE ZONE FACILITY
BONDS.—
‘‘(1) I N GENERAL.—For purposes of part IV of
subchapter B of chapter 1 (relating to tax exemption
requirements for State and local bonds), the term
‘exempt facility bond’ includes any bond issued as
part of an issue 95 percent or more of the net pro-
ceeds (as defined in section 150(a)(3)) of which are
to be used to provide any enterprise zone facility.
‘‘(2) ENTERPRISE ZONE FACILITY.—For pur-
poses of this subsection—
‘‘(A) IN GENERAL.—The term ‘enterprise
zone facility’ means any qualified zone property
the principal user of which is an enterprise zone
business (as defined in section 1397D), and any
land which is functionally related and subordi-
nate to such property.
‘‘(B) QUALIFIED
ZONE
PROPERTY.—The
term ‘qualified zone property’ has the meaning
1436
given such term by section 1397B(c); except
that—
‘‘(i) section 1397B(c)(3) shall not
apply, and
‘‘(ii) the references to empowerment
zones shall be treated as including ref-
erences to enterprise communities.
‘‘(3) LIMITATION ON AMOUNT OF BONDS.—
‘‘(A) IN GENERAL.—Paragraph (1) shall
not apply to any issue if the aggregate amount
of outstanding enterprise zone facility bonds al-
locable to any enterprise zone business (taking
into account such issue) exceeds—
‘‘(i) $3,000,000 with respect to any 1
empowerment zone or enterprise commu-
nity, or
‘‘(ii) $20,000,000 with respect to all
empowerment zones and enterprise com-
munities.
‘‘(B) AGGREGATE ENTERPRISE ZONE FA-
CILITY BOND BENEFIT.—For purposes of sub-
paragraph (A), the aggregate amount of out-
standing enterprise zone facility bonds allocable
to any business shall be determined under rules
similar to the rules of section 144(a)(10), tak-
1437
ing into account only bonds to which paragraph
(1) applies.
‘‘(4) ACQUISITION
OF
LAND
AND
EXISTING
PROPERTY PERMITTED.—The requirements of sec-
tions 147(c)(1)(A) and 147(d) shall not apply to any
bond described in paragraph (1).
‘‘(5) PARTIAL
EXEMPTION
FROM
VOLUME
CAP.—Only for purposes of section 146, the term
‘private activity bond’ shall not include 50 percent of
any bond issued as part of an issue described in
paragraph (1).
‘‘(6) PENALTY
FOR
CEASING
TO
MEET
RE-
QUIREMENTS.—
‘‘(A) FAILURES
CORRECTED.—An issue
which fails to meet 1 or more of the require-
ments of paragraphs (1) and (2) shall be
treated as meeting such requirements if—
‘‘(i) the issuer and any principal user
in good faith attempted to meet such re-
quirements, and
‘‘(ii) any failure to meet such require-
ments is corrected within a reasonable pe-
riod after such failure is first discovered.
‘‘(B) LOSS OF DEDUCTIONS WHERE FACIL-
ITY CEASES TO BE QUALIFIED.—No deduction
1438
shall be allowed under this chapter for interest
on any financing provided from any bond to
which paragraph (1) applies with respect to any
facility to the extent such interest accrues dur-
ing the period beginning on the first day of the
calendar year which includes the date on
which—
‘‘(i) substantially all of the facility
with respect to which the financing was
provided 
ceases 
to 
be 
used 
in 
an
empowerment zone or enterprise commu-
nity, or
‘‘(ii) the principal user of such facility
ceases to be an enterprise zone business
(as defined in section 1397D, but treating
references to empowerment zones as in-
cluding references to enterprise commu-
nities).
‘‘(C) E XCEPTION IF ZONE CEASES.—Sub-
paragraphs (A) and (B) shall not apply solely
by reason of the termination or revocation of a
designation as an empowerment zone or an en-
terprise community.
1439
‘‘(D) EXCEPTION
FOR
BANKRUPTCY.—
Subparagraphs (A) and (B) shall not apply to
any cessation resulting from bankruptcy.
‘‘(c) ENTERPRISE ZONE FACILITY BONDS NOT SUB-
JECT TO INTEREST DEDUCTION LIMITATIONS ON FINAN-
CIAL INSTITUTIONS.—Any tax-exempt bond described in
subsection (b)(1)—
‘‘(1) shall be treated as acquired before August
8, 1986, for purposes of sections 265(b) and
291(e)(1)(B), and
‘‘(2) shall not be taken into account in deter-
mining whether any issuer is a qualified small issuer
for purposes of section 265(b).
‘‘(d) ADDITIONAL LOW-INCOME HOUSING CREDIT
AMOUNT.—
‘‘(1) I N GENERAL.—Each State which includes
any empowerment zone or enterprise community
shall receive an additional State housing credit ceil-
ing amount for purposes of section 42 of $818,000
for each such zone or community.
‘‘(2) ADDITIONAL
AMOUNT
MUST
BE
ALLO-
CATED TO BUILDINGS IN DESIGNATED AREAS.—
‘‘(A) IN GENERAL.—The portion of the ad-
ditional amount received under paragraph (1)
by reason of any empowerment zone or enter-
1440
prise community which may be applied to in-
crease the State housing credit ceiling for any
calendar year shall not exceed the lesser of—
‘‘(i) the unused portion of such addi-
tional amount with respect to such zone or
community, or
‘‘(ii) the aggregate housing credit dol-
lar amount allocated from such ceiling for
such year to buildings located in such zone
or community.
‘‘(B) U NUSED PORTION.—For purposes of
subparagraph (A), the unused portion for any
calendar year of the additional amount received
under paragraph (1) is the amount equal to the
excess of—
‘‘(i) the additional amount received
under paragraph (1) by the State by rea-
son of the zone or community, over
‘‘(ii) the aggregate of the increases in
the State housing credit ceiling by reason
of such amount for all prior calendar
years.
‘‘(3) A VAILABILITY OF ADDITIONAL AMOUNT.—
None of the additional amount received under para-
graph (1) may be applied after 1996.
1441
‘‘(4) AREAS
LOCATED
IN
MORE
THAN
STATE.—In the case of an empowerment zone or en-
terprise community which is located in more than 1
State, the $818,000 amount shall be allocated
among such States in proportion to the population
of such zone or community which is within each
such State.
‘‘(5) ZONES
LOCATED
IN
CONSTITUTIONAL
HOME RULE CITIES.—If any empowerment zone or
enterprise community is located in a constitutional
home rule city (as defined in section 42(h)(4)(E)),
the additional amount received under paragraph (1)
shall be allocated to such city and shall not be taken
into account in determining such city’s share of the
State 
housing 
credit 
ceiling 
under 
section
42(h)(4)(E).
‘‘PART III—ADDITIONAL INCENTIVES FOR
EMPOWERMENT ZONES
‘‘SUBPART A. Empowerment zone employment credit.
‘‘SUBPART B. Zone resident empowerment savings credit.
‘‘SUBPART C. Depreciation and other incentives.
‘‘Subpart A—Empowerment Zone Employment Credit
‘‘Sec. 1396. Empowerment zone employment credit.
‘‘Sec. 1397. Other definitions and special rules.
‘‘SEC. 1396. EMPOWERMENT ZONE EMPLOYMENT CREDIT.
‘‘(a) A MOUNT OF CREDIT.—For purposes of section
38, the amount of the empowerment zone employment
1442
credit determined under this section with respect to any
employer for any taxable year is the applicable percentage
of the qualified zone wages paid or incurred during the
calendar year which ends with or within such taxable year.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
this section, the term ‘applicable percentage’ means the
percentage determined in accordance with the following
table:
‘‘In the case of wages paid or
The applicable
incurred during calendar year:
percentage is:
1994 through 2000 ........................................
2001 ...............................................................
2002 ...............................................................
2003 ...............................................................
2004 ...............................................................
‘‘(c) QUALIFIED ZONE WAGES.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified zone wages’ means any
wages paid or incurred by an employer for services
performed by an employee while such employee is a
qualified zone employee.
‘‘(2) O NLY FIRST $20,000 OF WAGES PER YEAR
TAKEN INTO ACCOUNT.—With respect to each quali-
fied zone employee, the amount of qualified zone
wages which may be taken into account for a cal-
endar year shall not exceed $20,000.
‘‘(3) COORDINATION
WITH
TARGETED
JOBS
CREDIT.—