I 
111TH CONGRESS 
1ST SESSION H. R. 3500 
To amend the Internal Revenue Code of 1986 to extend and modify the 
benefits available in empowerment zones and other tax-incentive areas. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 31, 2009 
Mr. MAFFEI introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to extend 
and modify the benefits available in empowerment zones 
and other tax-incentive areas. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Small and Medium Urban Regions Growth and Em-
powerment Act of 2009’’ or the ‘‘SURGE Act of 2009’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
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shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
SEC. 2. FINDINGS. 
The Congress hereby finds the following: 
(1) Businesses in Empowerment Zones with 
less population density are disadvantaged from 
reaching the 35 percent employment rule, making 
them significantly less likely to be eligible for tax-ex-
empt facility bonds and section 179 expensing. 
(2) Businesses in Empowerment Zones with 
less population density have a much smaller pool of 
eligible employees to choose from in order to access 
the employee wage credits. 
(3) Increasing empowerment zone coverage area 
into disadvantaged communities that are not cur-
rently covered by the zone is difficult, bureaucratic 
and lengthy. 
(4) There are too many limitations placed on 
the type of businesses that are eligible for the credit, 
making places such as small biotech firms, spas, and 
family-owned and operated businesses ineligible. 
(5) Workforce development and on-the-job 
training is needed to allow companies to transition 
to newer technologies or begin new hires for newly 
begun ventures. 
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SEC. 3. EXTENSION OF BENEFITS. 
(a) EMPOWERMENT ZONES.— 
(1) ROUNDS I AND II DESIGNATIONS.—Section 
1391(d)(1) is amended by striking ‘‘December 31, 
2009’’ in subparagraph (A)(i) and inserting ‘‘De-
cember 31, 2019’’. 
(2) 
ROUND
III
DESIGNATIONS.—Section 
1391(h)(2) is amended by striking ‘‘December 31, 
2009’’ and inserting ‘‘December 31, 2019’’. 
(b) RURAL
ENTERPRISE
COMMUNITIES.—Section 
1391(d)(1)(A) is amended by striking ‘‘or’’ at the end of 
clause (i) and by striking clause (ii) and inserting the fol-
lowing new clauses: 
‘‘(ii) in the case of an enterprise com-
munity not described in clause (iii), the 
close of the 10th calendar year beginning 
on or after such date of designation, or 
‘‘(iii) in the case of an enterprise com-
munity designated in a rural area pursuant 
to section 766 of division A of the Omni-
bus Consolidated and Emergency Supple-
mental Appropriations Act, 1999, Decem-
ber 31, 2019,’’. 
(c) RENEWAL COMMUNITIES.— 
(1) Sections 1400E(b) and 1400I(g) are each 
amended by striking ‘‘December 31, 2009’’ each 
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place it appears and inserting ‘‘December 31, 
2019’’. 
(2) Sections 1400E(b)(3), 1400F(b), and 
1400J(b) are each amended by striking ‘‘January 1, 
2010’’ each place it appears and inserting ‘‘January 
1, 2020’’. 
(3) Section 1400F(c)(2) amended by striking 
‘‘December 31, 2014’’ and inserting ‘‘December 31, 
2024’’. 
(4) Section 1400F(d) is amended by striking 
‘‘December 31, 2014’’ and inserting ‘‘December 31, 
2024’’. 
(5) Section 1400I(d)(2)(A) is amended by strik-
ing ‘‘2010’’ and inserting ‘‘2020’’. 
(d) TREATMENT OF TERMINATION DATES SPECI-
FIED IN NOMINATIONS.— 
(1) Paragraph (1) of section 1391(d) is amend-
ed by adding at the end the following new flush sen-
tence: 
‘‘The termination date referred to in subparagraph 
(B) shall be treated as being no earlier than the ter-
mination date under subparagraph (A) unless an 
earlier termination date is designated under sub-
paragraph (B) after the date of the enactment of 
this sentence.’’. 
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(2) Paragraph (1) of section 1400E(b) of such 
Code is amended by adding at the end the following 
new flush sentence: 
‘‘The termination date referred to in subparagraph 
(B) shall be treated as being no earlier than the ter-
mination date under subparagraph (A) unless an 
earlier termination date is designated under sub-
paragraph (B) after the date of the enactment of 
this sentence’’. 
SEC. 4. EXPANSION OF BUSINESSES ELIGIBLE FOR BENE-
FITS; EXPANSION OF ELIGIBLE BUSINESS AC-
TIVITIES. 
(a) EXPANSION
OF QUALIFIED BUSINESS ENTI-
TIES.— 
(1) IN GENERAL.—Subsections (b) and (c) of 
section 1397C are amended to read as follows: 
‘‘(b) QUALIFIED BUSINESS ENTITY.—For purposes 
of this section, the term ‘qualified business entity’ means, 
with respect to any taxable year, any corporation or part-
nership if for such year— 
‘‘(1) any trade or business of such entity is the 
active conduct of a qualified business within an em-
powerment zone, 
‘‘(2) at least 35 percent of its employees are 
residents of an empowerment zone, 
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‘‘(3) less than 5 percent of the average of the 
aggregate unadjusted bases of the property of such 
entity is attributable to collectibles (as defined in 
section 408(m)(2)) other than collectibles that are 
held primarily for sale to customers in the ordinary 
course of such business, and 
‘‘(4) less than 5 percent of the average of the 
aggregate unadjusted bases of the property of such 
entity is attributable to nonqualified financial prop-
erty. 
‘‘(c) QUALIFIED PROPRIETORSHIP.—For purposes of 
this section, the term ‘qualified proprietorship’ means, 
with respect to any taxable year, any qualified business 
carried on by an individual as a proprietorship if for such 
year— 
‘‘(1) at least 35 percent of such employees are 
residents of an empowerment zone, 
‘‘(2) less than 5 percent of the average of the 
aggregate unadjusted bases of the property of such 
individual which is used in such business is attrib-
utable 
to 
collectibles 
(as 
defined 
in 
section 
408(m)(2)) other than collectibles that are held pri-
marily for sale to customers in the ordinary course 
of such business, and 
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‘‘(3) less than 5 percent of the average of the 
aggregate unadjusted bases of the property of such 
individual which is used in such business is attrib-
utable to nonqualified financial property. 
For purposes of this subsection, the term ‘employee’ in-
cludes the proprietor.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subsection (e) of section 1400 is 
amended by striking ‘‘subsections (b)(6) and 
(c)(5)’’ and inserting ‘‘subsections (b)(2) and 
(c)(1)’’. 
(B) Paragraph (2) of section 1400B(c) is 
amended by inserting ‘‘(as in effect on the day 
before the date of the enactment of the Small 
and Medium Urban Regions Growth and Em-
powerment Act of 2009)’’ after ‘‘1397C’’. 
(b) MODIFICATION OF EMPLOYMENT REQUIREMENT 
FOR BUSINESSES LOCATED IN AREAS WITH LOWER POP-
ULATION DENSITY.— 
(1) DEFINITION OF QUALIFIED BUSINESS ENTI-
TY.—Section 1397C is amended by adding at the 
end the following new subsection: 
‘‘(g) MODIFICATION
OF EMPLOYMENT REQUIRE-
MENT
FOR
BUSINESSES
LOCATED
IN
AREAS
WITH 
LOWER POPULATION DENSITY.— 
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