H. R. 2488—60 
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EFFECT.— 
‘‘(1) IN GENERAL.—Any designation of an area as a renewal 
community shall remain in effect during the period beginning 
on the date of the designation and ending on the earliest 
of— 
‘‘(A) December 31, 2007, 
‘‘(B) the termination date designated by the State and 
local governments in their nomination, or 
‘‘(C) the date the Secretary of Housing and Urban 
Development revokes such designation. 
‘‘(2) REVOCATION
OF
DESIGNATION.—The Secretary of 
Housing and Urban Development may revoke the designation 
under this section of an area if such Secretary determines 
that the local government or the State in which the area 
is located— 
‘‘(A) has modified the boundaries of the area, or 
‘‘(B) is not complying substantially with, or fails to 
make progress in achieving, the State or local commit-
ments, respectively, described in subsection (d). 
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.— 
‘‘(1) IN GENERAL.—The Secretary of Housing and Urban 
Development may designate a nominated area as a renewal 
community under subsection (a) only if the area meets the 
requirements of paragraphs (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 one or more 
local governments; 
‘‘(B) the boundary of the area is continuous; and 
‘‘(C) the area— 
‘‘(i) has a population, of at least— 
‘‘(I) 4,000 if any portion of such area (other 
than 
a 
rural 
area 
described 
in 
subsection 
(a)(2)(B)(i)) is located within a metropolitan statis-
tical 
area 
(within 
the 
meaning 
of 
section 
143(k)(2)(B)) which has a population of 50,000 or 
greater; or 
‘‘(II) 1,000 in any other case; or 
‘‘(ii) is entirely within an Indian reservation (as 
determined by the Secretary of the Interior). 
‘‘(3) ELIGIBILITY REQUIREMENTS.—A nominated 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 sup-
porting data as he deems appropriate, accepts such certification) 
that— 
‘‘(A) the area is one of pervasive poverty, unemploy-
ment, and general distress; 
‘‘(B) the unemployment rate in the area, as determined 
by the most recent available data, was at least 11⁄2 times 
the national unemployment rate for the period to which 
such data relate; 
‘‘(C) the poverty rate for each population census tract 
within the nominated area is at least 20 percent; 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 
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H. R. 2488—61 
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 Development shall take into 
account, in selecting nominated 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 IDENTIFIED IN GAO 
STUDY.—The Secretary of Housing and Urban Development 
shall take into account, in selecting nominated areas for des-
ignation as renewal communities under this section, if the 
area has census tracts identified in the May 12, 1998, report 
of the Government Accounting Office regarding the identifica-
tion of economically distressed areas. 
‘‘(d) REQUIRED STATE AND LOCAL COMMITMENTS.— 
‘‘(1) IN GENERAL.—The Secretary of Housing and Urban 
Development may designate any nominated 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 follow a specified course of action which 
meets the requirements of paragraph (2) and is designed 
to reduce the various burdens borne by employers or 
employees in such area; and 
‘‘(B) the economic growth promotion requirements of 
paragraph (3) are met. 
‘‘(2) COURSE OF ACTION.— 
‘‘(A) IN GENERAL.—A course of action meets the require-
ments 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 measurable goals, actions, and timetables. Such course 
of action shall include at least five of the following: 
‘‘(i) A reduction of tax rates or fees applying within 
the renewal community. 
‘‘(ii) An increase in the level of efficiency of local 
services within the renewal community. 
‘‘(iii) Crime reduction strategies, such as crime 
prevention (including the provision of such services 
by nongovernmental entities). 
‘‘(iv) Actions to reduce, remove, simplify, or stream-
line governmental requirements applying within the 
renewal community. 
‘‘(v) Involvement in the program by private enti-
ties, organizations, neighborhood organizations, and 
community groups, particularly those in the renewal 
community, including a commitment from such private 
entities to provide jobs and job training for, and tech-
nical, financial, or other assistance to, employers, 
employees, and residents from the renewal community. 
‘‘(vi) State or local income tax benefits for fees 
paid for services performed by a nongovernmental 
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H. R. 2488—62 
entity which were formerly performed by a govern-
mental entity. 
‘‘(vii) The gift (or sale at below fair market value) 
of surplus real property (such as land, homes, and 
commercial or industrial structures) in the renewal 
community to neighborhood organizations, community 
development corporations, or private companies. 
‘‘(B) RECOGNITION OF PAST EFFORTS.—For purposes of 
this section, in evaluating the course of action agreed to 
by any State or local government, the Secretary of Housing 
and Urban Development shall take into account the past 
efforts of such State or local government in reducing the 
various burdens borne by employers and employees in the 
area involved. 
‘‘(3) ECONOMIC GROWTH PROMOTION REQUIREMENTS.—The 
economic growth promotion requirements of this paragraph 
are met with respect to a nominated area if the local govern-
ment and the State in which such area is located certify in 
writing that such government and State, respectively, have 
repealed or otherwise will not enforce within the area, if such 
area is designated as a renewal community— 
‘‘(A) licensing requirements for occupations that do not 
ordinarily require a professional degree; 
‘‘(B) zoning restrictions on home-based businesses 
which do not create a public nuisance; 
‘‘(C) permit requirements for street vendors who do 
not create a public nuisance; 
‘‘(D) zoning or other restrictions that impede the forma-
tion of schools or child care centers; and 
‘‘(E) franchises or other restrictions on competition for 
businesses providing public services, including but not lim-
ited to taxicabs, jitneys, cable television, or trash hauling, 
except to the extent that such regulation of businesses and 
occupations is necessary for and well-tailored to the protection 
of health and safety. 
‘‘(e) COORDINATION WITH TREATMENT OF EMPOWERMENT ZONES 
AND ENTERPRISE COMMUNITIES.—For purposes of this title, if there 
are in effect with respect to the same area both— 
‘‘(1) a designation as a renewal community; and 
‘‘(2) a designation as an empowerment zone or enterprise 
community, 
both of such designations shall be given full effect with respect 
to such area. 
‘‘(f ) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
subchapter— 
‘‘(1) GOVERNMENTS.—If more than one government seeks 
to nominate an area as a renewal community, any reference 
to, or requirement of, this section shall apply to all such govern-
ments. 
‘‘(2) STATE.—The term ‘State’ includes Puerto Rico, the 
Virgin Islands of the United States, Guam, American Samoa, 
the Northern Mariana Islands, and any other possession of 
the United States. 
‘‘(3) LOCAL
GOVERNMENT.—The term ‘local government’ 
means— 
‘‘(A) any county, city, town, township, parish, village, 
or other general purpose political subdivision of a State; 
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H. R. 2488—63 
‘‘(B) any combination of political subdivisions described 
in subparagraph (A) recognized by the Secretary of Housing 
and Urban Development; and 
‘‘(C) the District of Columbia. 
‘‘(4) APPLICATION OF RULES RELATING TO CENSUS TRACTS 
AND
CENSUS
DATA.—The rules of sections 1392(b)(4) and 
1393(a)(9) shall apply. 
‘‘PART II—RENEWAL COMMUNITY CAPITAL 
GAIN; RENEWAL COMMUNITY BUSINESS 
‘‘Sec. 1400F. Renewal community capital gain. 
‘‘Sec. 1400G. Renewal community business defined. 
‘‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN. 
‘‘(a) GENERAL RULE.—Gross income does not include any quali-
fied capital gain recognized on the sale or exchange of a qualified 
community asset held for more than 5 years. 
‘‘(b) QUALIFIED COMMUNITY ASSET.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘qualified community asset’ 
means— 
‘‘(A) any qualified community stock; 
‘‘(B) any qualified community partnership interest; and 
‘‘(C) any qualified community business property. 
‘‘(2) QUALIFIED COMMUNITY STOCK.— 
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B), the term ‘qualified community stock’ means any stock 
in a domestic corporation if— 
‘‘(i) such stock is acquired by the taxpayer after 
December 31, 2000, and before January 1, 2008, at 
its original issue (directly or through an underwriter) 
from the corporation solely in exchange for cash; 
‘‘(ii) as of the time such stock was issued, such 
corporation was a renewal community business (or, 
in the case of a new corporation, such corporation 
was being organized for purposes of being a renewal 
community business); and 
‘‘(iii) during substantially all of the taxpayer’s 
holding period for such stock, such corporation quali-
fied as a renewal community business. 
‘‘(B) REDEMPTIONS.—A rule similar to the rule of sec-
tion 1202(c)(3) shall apply for purposes of this paragraph. 
‘‘(3) QUALIFIED COMMUNITY PARTNERSHIP INTEREST.—The 
term ‘qualified community partnership interest’ means any cap-
ital or profits interest in a domestic partnership if— 
‘‘(A) such interest is acquired by the taxpayer after 
December 31, 2000, and before January 1, 2008; 
‘‘(B) as of the time such interest was acquired, such 
partnership was a renewal community business (or, in 
the case of a new partnership, such partnership was being 
organized for purposes of being a renewal community busi-
ness); and 
‘‘(C) during substantially all of the taxpayer’s holding 
period for such interest, such partnership qualified as a 
renewal community business. 
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