‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage is—
‘‘(A) 5 percent with respect to the first
three credit allowance dates, and
‘‘(B) 6 percent with respect to the remain-
der of the credit allowance dates.
‘‘(3) CREDIT ALLOWANCE DATE.—For purposes
of paragraph (1), the term ‘credit allowance date’
means, with respect to any qualified equity
investment—
‘‘(A) the date on which such investment is
initially made, and
‘‘(B) each of the six anniversary dates of
such date thereafter.
‘‘(b) QUALIFIED EQUITY INVESTMENT.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified equity
investment’ means any equity investment in a quali-
fied community development entity if—
‘‘(A) such investment is acquired by the
taxpayer at its original issue (directly or
through an underwriter) solely in exchange for
cash,
‘‘(B) substantially all of such cash is used
by the qualified community development entity
to make qualified low-income community invest-
ments, and
‘‘(C) such investment is designated for
purposes of this section by the qualified com-
munity development entity.
Such term shall not include any equity investment
issued by a qualified community development entity
more than 5 years after the date that such entity re-
ceives an allocation under subsection (f). Any alloca-
tion not used within such 5-year period may be re-
allocated by the Secretary under subsection (f).
‘‘(2) LIMITATION.—The maximum amount of
equity investments issued by a qualified community
development entity which may be designated under
paragraph (1)(C) by such entity shall not exceed the
portion of the limitation amount allocated under
subsection (f) to such entity.
‘‘(3) SAFE HARBOR FOR DETERMINING USE OF
CASH.—The requirement of paragraph (1)(B) shall
be treated as met if at least 85 percent of the aggre-
gate gross assets of the qualified community devel-
opment entity are invested in qualified low-income
community investments.
‘‘(4) 
TREATMENT
OF
SUBSEQUENT
PUR-
CHASERS.—The term ‘qualified equity investment’
includes any equity investment which would (but for
paragraph (1)(A)) be a qualified equity investment
in the hands of the taxpayer if such investment was
a qualified equity investment in the hands of a prior
holder.
‘‘(5) REDEMPTIONS.—A rule similar to the rule
of section 1202(c)(3) shall apply for purposes of this
subsection.
‘‘(6) EQUITY INVESTMENT.—The term ‘equity
investment’ means—
‘‘(A) any stock (other than nonqualified
preferred stock as defined in section 351(g)(2))
in an entity which is a corporation, and
‘‘(B) any capital interest in an entity
which is a partnership.
‘‘(c) QUALIFIED COMMUNITY DEVELOPMENT ENTI-
TY.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified com-
munity development entity’ means any domestic cor-
poration or partnership if—
‘‘(A) the primary mission of the entity is
serving, or providing investment capital for,
low-income communities or low-income persons,
‘‘(B) the entity maintains accountability to
residents of low-income communities through
representation on governing or advisory boards
or otherwise, and
‘‘(C) the entity is certified by the Secretary
for purposes of this section as being a qualified
community development entity.
‘‘(2) SPECIAL RULES FOR CERTAIN ORGANIZA-
TIONS.—The requirements of paragraph (1) shall be
treated as met by—
‘‘(A) any specialized small business invest-
ment 
company 
(as 
defined 
in 
section
1044(c)(3)), and
‘‘(B) any community development financial
institution (as defined in section 103 of the
Community Development Banking and Finan-
cial Institutions Act of 1994 (12 U.S.C. 4702)).
‘‘(d) QUALIFIED LOW-INCOME COMMUNITY INVEST-
MENTS.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified low-in-
come community investment’ means—
‘‘(A) any equity investment in, or loan to,
any qualified active low-income community busi-
ness,
‘‘(B) the purchase from another commu-
nity development entity of any loan made by
such entity which is a qualified low-income com-
munity investment,
‘‘(C) financial counseling and other serv-
ices specified in regulations prescribed by the
Secretary to businesses located in, and resi-
dents of, low-income communities, and
‘‘(D) any equity investment in, or loan to,
any qualified community development entity.
‘‘(2) QUALIFIED ACTIVE LOW-INCOME COMMU-
NITY BUSINESS.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘qualified active low-income
community business’ means, with respect to any
taxable year, any corporation or partnership if
for such year—
‘‘(i) at least 50 percent of the total
gross income of such entity is derived from
the active conduct of a qualified business
within any low-income community,
‘‘(ii) a substantial portion of the use
of the tangible property of such entity
(whether owned or leased) is within any
low-income community,
‘‘(iii) a substantial portion of the serv-
ices performed for such entity by its em-
ployees are performed in any low-income
community,
‘‘(iv) less than 5 percent of the aver-
age 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
‘‘(v) less than 5 percent of the aver-
age of the aggregate unadjusted bases of
the property of such entity is attributable
to nonqualified financial property (as de-
fined in section 1397C(e)).
‘‘(B) PROPRIETORSHIP.—Such term shall
include any business carried on by an individual
as a proprietor if such business would meet the
requirements of subparagraph (A) were it incor-
porated.
‘‘(C) PORTIONS
OF
BUSINESS
MAY
BE
QUALIFIED
ACTIVE
LOW-INCOME
COMMUNITY
BUSINESS.—The term ‘qualified active low-in-
come community business’ includes any trades
or businesses which would qualify as a qualified
active low-income community business if such
trades or businesses were separately incor-
porated.
‘‘(3) QUALIFIED BUSINESS.—For purposes of
this subsection, the term ‘qualified business’ has the
meaning given to such term by section 1397C(d); ex-
cept that—
‘‘(A) in lieu of applying paragraph (2)(B)
thereof, the rental to others of real property lo-
cated in any low-income community shall be
treated as a qualified business if there are sub-
stantial improvements located on such property,
‘‘(B) paragraph (3) thereof shall not apply,
and
‘‘(C) such term shall not include any busi-
ness if a significant portion of the equity inter-
ests in such business are held by any person
who holds a significant portion of the equity in-
vestments in the community development entity.
‘‘(e) LOW-INCOME COMMUNITY.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘low-income com-
munity’ means any population census tract if—
‘‘(A) the poverty rate for such tract is at
least 20 percent, or
‘‘(B)(i) in the case of a tract not located
within a metropolitan area, the median family
income for such tract does not exceed 80 per-
cent of statewide median family income, or
‘‘(ii) in the case of a tract located within
a metropolitan area, the median family income
for such tract does not exceed 80 percent of the
greater of statewide median family income or
the metropolitan area median family income.
‘‘(2) AREAS 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 and median
family income.
‘‘(f) NATIONAL LIMITATION ON AMOUNT OF INVEST-
MENTS DESIGNATED.—
‘‘(1) IN GENERAL.—There is a new markets tax
credit limitation for each calendar year. Such limita-
tion is—
‘‘(A) $1,000,000,000 for 2001,
‘‘(B) $1,500,000,000 for 2002 and 2003,
‘‘(C) $2,000,000,000 for 2004 and 2005,
and
‘‘(D) $3,500,000,000 for 2006 and 2007.
‘‘(2) ALLOCATION OF LIMITATION.—The limita-
tion under paragraph (1) shall be allocated by the
Secretary among qualified community development
entities selected by the Secretary. In making alloca-
tions under the preceding sentence, the Secretary
shall give priority to entities with records of having
successfully provided capital or technical assistance
to disadvantaged businesses or communities.
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If
the new markets tax credit limitation for any cal-
endar year exceeds the aggregate amount allocated
under paragraph (2) for such year, such limitation
for the succeeding calendar year shall be increased
by the amount of such excess. No amount may be
carried under the preceding sentence to any calendar
year after 2014.
‘‘(g) RECAPTURE OF CREDIT IN CERTAIN CASES.—
‘‘(1) IN GENERAL.—If, at any time during the
7-year period beginning on the date of the original
issue of a qualified equity investment in a qualified
community development entity, there is a recapture
event with respect to such investment, then the tax
imposed by this chapter for the taxable year in
which such event occurs shall be increased by the
credit recapture amount.
‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur-
poses of paragraph (1), the credit recapture amount
is an amount equal to the sum of—
‘‘(A) the aggregate decrease in the credits
allowed to the taxpayer under section 38 for all
prior taxable years which would have resulted if
no credit had been determined under this sec-
tion with respect to such investment, plus
‘‘(B) interest at the overpayment rate es-
tablished under section 6621 on the amount de-
termined under subparagraph (A) for each
prior taxable year for the period beginning on
the due date for filing the return for the prior
taxable year involved.
No deduction shall be allowed under this chapter for
interest described in subparagraph (B).
‘‘(3) RECAPTURE
EVENT.—For purposes of
paragraph (1), there is a recapture event with re-
spect to an equity investment in a qualified commu-
nity development entity if—
‘‘(A) such entity ceases to be a qualified
community development entity,
‘‘(B) the proceeds of the investment cease
to be used as required of subsection (b)(1)(B),
or
‘‘(C) such investment is redeemed by such
entity.
‘‘(4) SPECIAL RULES.—
‘‘(A) TAX
BENEFIT
RULE.—The tax for
the taxable year shall be increased under para-
graph (1) only with respect to credits allowed
by reason of this section which were used to re-
duce tax liability. In the case of credits not so
used to reduce tax liability, the carryforwards
and carrybacks under section 39 shall be appro-
priately adjusted.
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be
treated as a tax imposed by this chapter for
purposes of determining the amount of any
credit under this chapter or for purposes of sec-
tion 55.
‘‘(h) BASIS REDUCTION.—The basis of any qualified
equity investment shall be reduced by the amount of any
credit determined under this section with respect to such
investment. This subsection shall not apply for purposes
of sections 1202, 1400B, and 1400F.
‘‘(i) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out this
section, including regulations—
‘‘(1) which limit the credit for investments
which are directly or indirectly subsidized by other
Federal tax benefits (including the credit under sec-
tion 42 and the exclusion from gross income under
section 103),
‘‘(2) which prevent the abuse of the purposes of
this section,
‘‘(3) which provide rules for determining wheth-
er the requirement of subsection (b)(1)(B) is treated
as met,
‘‘(4) which impose appropriate reporting re-
quirements, and
‘‘(5) which apply the provisions of this section
to newly formed entities.’’.
(b) CREDIT MADE PART OF GENERAL BUSINESS
CREDIT.—
(1) IN GENERAL.—Subsection (b) of section 38
is amended by striking ‘‘plus’’ at the end of para-
graph (11), by striking the period at the end of
paragraph (12) and inserting ‘‘, plus’’, and by add-
ing at the end the following new paragraph:
‘‘(13) the new markets tax credit determined
under section 45D(a).’’.
(2) LIMITATION
ON
CARRYBACK.—Subsection
(d) of section 39 is amended by adding at the end
the following new paragraph:
‘‘(9) NO CARRYBACK OF NEW MARKETS TAX
CREDIT BEFORE JANUARY 1, 2001.—No portion of
the unused business credit for any taxable year
which is attributable to the credit under section 45D
may be carried back to a taxable year ending before
January 1, 2001.’’.
(c) DEDUCTION FOR UNUSED CREDIT.—Subsection
(c) of section 196 is amended by striking ‘‘and’’ at the
end of paragraph (7), by striking the period at the end
of paragraph (8) and inserting ‘‘, and’’, and by adding
at the end the following new paragraph:
‘‘(9) the new markets tax credit determined
under section 45D(a).’’.
(d) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
is amended by adding at the end the following new item:
‘‘Sec. 45D. New markets tax credit.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to investments made after Decem-
ber 31, 2000.
(f) REGULATIONS
ON ALLOCATION
OF NATIONAL
LIMITATION.—Not later than 60 days after the date of
the enactment of this Act, the Secretary of the Treasury
or the Secretary’s delegate shall prescribe regulations
which specify—
(1) how entities shall apply for an allocation
under section 45D(f)(2) of the Internal Revenue
Code of 1986, as added by this section;
(2) the competitive procedure through which
such allocations are made; and
(3) the actions that such Secretary or delegate
shall take to ensure that such allocations are prop-
erly made to appropriate entities.
TITLE IV—IMPROVEMENTS IN
LOW-INCOME HOUSING CREDIT
SEC. 401. MODIFICATION OF STATE CEILING ON LOW-IN-
COME HOUSING CREDIT.
(a) IN GENERAL.—Clauses (i) and (ii) of section
42(h)(3)(C) (relating to State housing credit ceiling) are
amended to read as follows:
‘‘(i) the unused State housing credit
ceiling (if any) of such State for the pre-
ceding calendar year,
‘‘(ii) the greater of—
‘‘(I) the applicable amount under
subparagraph (H) multiplied by the
State population, or
‘‘(II) $2,000,000,’’.
(b) APPLICABLE AMOUNT.—Paragraph (3) of section
42(h) (relating to housing credit dollar amount for agen-
cies) is amended by adding at the end the following new
subparagraph:
‘‘(H) APPLICABLE
AMOUNT
OF
STATE
CEILING.—For 
purposes 
of 
subparagraph
(C)(ii), the applicable amount shall be deter-
mined under the following table:
‘‘For calendar year:
The applicable amount is:
2001 ............................................................................. $1.35
2002 .............................................................................
1.45
2003 .............................................................................
1.55
2004 .............................................................................
1.65
2005 .............................................................................
1.70
2006 and thereafter .....................................................
1.75.’’.
(c) ADJUSTMENT OF STATE CEILING FOR INCREASES
IN COST-OF-LIVING.—Paragraph (3) of section 42(h) (re-
lating to housing credit dollar amount for agencies), as
amended by subsection (c), is amended by adding at the
end the following new subparagraph:
‘‘(I) COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN GENERAL.—In the case of a
calendar year after 2006, the $2,000,000
in subparagraph (C) and the $1.75 amount
in subparagraph (H) shall each be in-
creased by an amount equal to—
‘‘(I) such dollar amount, multi-
plied by
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3)
for such calendar year by substituting
‘calendar year 2005’ for ‘calendar
year 1992’ in subparagraph (B) there-
of.
‘‘(ii) ROUNDING.—
‘‘(I) In the case of the amount in
subparagraph (C), any increase under
clause (i) which is not a multiple of
$5,000 shall be rounded to the next
lowest multiple of $5,000.
‘‘(II) In the case of the amount
in subparagraph (H), any increase
under clause (i) which is not a mul-
tiple of 5 cents shall be rounded to
the next lowest multiple of 5 cents.’’.
(d) CONFORMING AMENDMENTS.—
(1) Section 42(h)(3)(C), as amended by sub-
section (a), is amended—
(A) by striking ‘‘clause (ii)’’ in the matter
following clause (iv) and inserting ‘‘clause (i)’’;
and
(B) by striking ‘‘clauses (i)’’ in the matter
following clause (iv) and inserting ‘‘clauses
(ii)’’.
(2) Section 42(h)(3)(D)(ii) is amended—
(A) by striking ‘‘subparagraph (C)(ii)’’ and
inserting ‘‘subparagraph (C)(i)’’; and
(B) by striking ‘‘clauses (i)’’ in subclause
(II) and inserting ‘‘clauses (ii)’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar years after 2000.
SEC. 402. MODIFICATION OF CRITERIA FOR ALLOCATING
HOUSING CREDITS AMONG PROJECTS.
(a) SELECTION CRITERIA.—Subparagraph (C) of
section 42(m)(1) (relating to certain selection criteria
must be used) is amended—
(1) by inserting ‘‘, including whether the project
includes the use of existing housing as part of a
community revitalization plan’’ before the comma at
the end of clause (iii); and
(2) by striking clauses (v), (vi), and (vii) and
inserting the following new clauses:
‘‘(v) tenant populations with special
housing needs,
‘‘(vi) public housing waiting lists,
‘‘(vii) tenant populations of individ-
uals with children, and
‘‘(viii) projects intended for eventual
tenant ownership.’’.
(b) PREFERENCE FOR COMMUNITY REVITALIZATION
PROJECTS LOCATED IN QUALIFIED CENSUS TRACTS.—
Clause (ii) of section 42(m)(1)(B) is amended by striking
‘‘and’’ at the end of subclause (I), by adding ‘‘and’’ at
the end of subclause (II), and by inserting after subclause
(II) the following new subclause:
‘‘(III) projects which are located
in qualified census tracts (as defined
in subsection (d)(5)(C)) and the devel-
opment of which contributes to a con-
certed 
community 
revitalization
plan,’’.
SEC. 403. ADDITIONAL RESPONSIBILITIES OF HOUSING
CREDIT AGENCIES.
(a) MARKET STUDY; PUBLIC DISCLOSURE OF RA-
TIONALE
FOR NOT FOLLOWING CREDIT ALLOCATION
PRIORITIES.—Subparagraph (A) of section 42(m)(1) (re-
lating to responsibilities of housing credit agencies) is
amended by striking ‘‘and’’ at the end of clause (i), by
striking the period at the end of clause (ii) and inserting
a comma, and by adding at the end the following new
clauses:
‘‘(iii) a comprehensive market study
of the housing needs of low-income individ-
uals in the area to be served by the project
is conducted before the credit allocation is
made and at the developer’s expense by a
disinterested party who is approved by
such agency, and
‘‘(iv) a written explanation is available
to the general public for any allocation of
a housing credit dollar amount which is
not made in accordance with established
priorities and selection criteria of the hous-
ing credit agency.’’.
(b) SITE VISITS.—Clause (iii) of section 42(m)(1)(B)
(relating to qualified allocation plan) is amended by insert-
ing before the period ‘‘and in monitoring for noncompli-
ance with habitability standards through regular site vis-
its’’.
SEC. 404. MODIFICATIONS TO RULES RELATING TO BASIS
OF BUILDING WHICH IS ELIGIBLE FOR CRED-
IT.
(a) ADJUSTED BASIS TO INCLUDE PORTION OF CER-
TAIN BUILDINGS USED BY LOW-INCOME INDIVIDUALS
WHO ARE NOT TENANTS AND BY PROJECT EMPLOY-
EES.—Paragraph (4) of section 42(d) (relating to special
rules relating to determination of adjusted basis) is
amended—
(1) by striking ‘‘subparagraph (B)’’ in subpara-
graph (A) and inserting ‘‘subparagraphs (B) and
(C)’’;
(2) by redesignating subparagraph (C) as sub-
paragraph (D); and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) INCLUSION OF BASIS OF PROPERTY
USED
TO
PROVIDE
SERVICES
FOR
CERTAIN
NONTENANTS.—
‘‘(i) 
IN
GENERAL.—The 
adjusted
basis of any building located in a qualified
census tract (as defined in paragraph
(5)(C)) shall be determined by taking into
account the adjusted basis of property (of
a character subject to the allowance for de-
preciation and not otherwise taken into ac-
count) used throughout the taxable year in
providing any community service facility.
‘‘(ii) LIMITATION.—The increase in
the adjusted basis of any building which is
taken into account by reason of clause (i)
shall not exceed 10 percent of the eligible
basis of the qualified low-income housing
project of which it is a part. For purposes
of the preceding sentence, all community
service facilities which are part of the same
qualified low-income housing project shall
be treated as one facility.
‘‘(iii) COMMUNITY
SERVICE
FACIL-
ITY.—For purposes of this subparagraph,
the term ‘community service facility’
means any facility designed to serve pri-
marily individuals whose income is 60 per-
cent or less of area median income (within
the meaning of subsection (g)(1)(B)).’’.
(b) CERTAIN NATIVE AMERICAN HOUSING ASSIST-
ANCE DISREGARDED IN DETERMINING WHETHER BUILD-
ING IS FEDERALLY SUBSIDIZED FOR PURPOSES OF THE
LOW-INCOME HOUSING CREDIT.—Subparagraph (E) of
section 42(i)(2) (relating to determination of whether
building is federally subsidized) is amended—
(1) in clause (i), by inserting ‘‘or the Native
American Housing Assistance and Self-Determina-
tion Act of 1996 (25 U.S.C. 4101 et seq.) (as in ef-
fect on October 1, 1997)’’ after ‘‘this subpara-
graph)’’; and
(2) in the subparagraph heading, by inserting
‘‘OR NATIVE AMERICAN HOUSING ASSISTANCE’’ after
‘‘HOME ASSISTANCE’’.
SEC. 405. OTHER MODIFICATIONS.
(a) ALLOCATION
OF CREDIT LIMIT
TO CERTAIN
BUILDINGS.—
(1) The first sentence of section 42(h)(1)(E)(ii)
is amended by striking ‘‘(as of’’ the first place it ap-
pears and inserting ‘‘(as of the later of the date
which is 6 months after the date that the allocation
was made or’’.
(2) The last sentence of section 42(h)(3)(C) is
amended by striking ‘‘project which’’ and inserting
‘‘project which fails to meet the 10 percent test
under paragraph (1)(E)(ii) on a date after the close
of the calendar year in which the allocation was
made or which’’.
(b) DETERMINATION OF WHETHER BUILDINGS ARE
LOCATED IN HIGH COST AREAS.—The first sentence of
section 42(d)(5)(C)(ii)(I) is amended—
(2) buildings placed in service after such date
to the extent paragraph (1) of section 42(h) of the
Internal Revenue Code of 1986 does not apply to
any building by reason of paragraph (4) thereof, but
only with respect to bonds issued after such date.
TITLE V—PRIVATE ACTIVITY
BOND VOLUME CAP
SEC. 501. ACCELERATION OF PHASE-IN OF INCREASE IN
VOLUME CAP ON PRIVATE ACTIVITY BONDS.
(a) IN GENERAL.—The table contained in section
146(d)(2) (relating to per capita limit; aggregate limit) is
amended to read as follows:
‘‘Calendar Year
Per Capita
Limit
Aggregate
Limit
2001 ....................................................................................
$55.00
$165,000,000
2002 ....................................................................................
60.00
180,000,000
2003 ....................................................................................
65.00
195,000,000
2004, 2005, and 2006 .........................................................
70.00
210,000,000
2007 and thereafter ............................................................
75.00
225,000,000.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to calendar years beginning after
2000.
TITLE VI—AMERICA’S PRIVATE
INVESTMENT COMPANIES
SEC. 601. SHORT TITLE.
This title may be cited as the ‘‘America’s Private In-
vestment Companies Act’’.
SEC. 602. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) people living in distressed areas, both urban
and rural, that are characterized by high levels of
joblessness, poverty, and low incomes have not bene-
fited adequately from the economic expansion experi-
enced by the Nation as a whole;
(2) unequal access to economic opportunities
continues to make the social costs of joblessness and
poverty to our Nation very high; and
(3) there are significant untapped markets in
our Nation, and many of these are in areas that are
underserved by institutions that can make equity
and credit investments.
(b) PURPOSES.—The purposes of this title are to—
(1) license private for profit community devel-
opment entities that will focus on making equity and
credit investments for large-scale business develop-
ments that benefit low-income communities;
(2) provide credit enhancement for those enti-
ties for use in low-income communities; and
(3) provide a vehicle under which the economic
and social returns on financial investments made
pursuant to this title may be available both to the
investors in these entities and to the residents of the
low-income communities.
SEC. 603. DEFINITIONS.
As used in this title:
(1) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator of the Small Busi-
ness Administration.
(2) AGENCY.—The term ‘‘agency’’ has the
meaning given such term in section 551(1) of title
5, United States Code.
(3) APIC.—The term ‘‘APIC’’ means a busi-
ness entity that has been licensed under the terms
of this title as an America’s Private Investment
Company, and the license of which has not been re-
voked.
(4) COMMUNITY DEVELOPMENT ENTITY.—The
term ‘‘community development entity’’ means an en-
tity the primary mission of which is serving or pro-
viding investment capital for low-income commu-
nities or low-income persons and which maintains
accountability to residents of low-income commu-
nities.
(5) HUD.—The term ‘‘HUD’’ means the Sec-
retary of Housing and Urban Development or the
Department of Housing and Urban Development, as
the context requires.
(6) LICENSE.—The term ‘‘license’’ means a li-
cense issued by HUD as provided in section 604.
(7) LOW-INCOME COMMUNITY.—The term ‘‘low-
income community’’ means—
(A) a census tract or tracts that have—
(i) a poverty rate of 20 percent or
greater, based on the most recent census
data; or
(ii) a median family income that does
not exceed 80 percent of the greater of: (I)
the median family income for the metro-
politan area in which such census tract or
tracts are located; or (II) the median fam-
ily income for the State in which such cen-
sus tract or tracts are located; or
(B) a property that was located on a mili-
tary installation that was closed or realigned
pursuant to title II of the Defense Authoriza-
tion Amendments and Base Closure and Re-
alignment Act (Public Law 100–526; 10 U.S.C.
2687 note), the Defense Base Closure and Re-
alignment Act of 1990 (part A of title XXIX of
Public Law 101–510; 10 U.S.C. 2687 note),
section 2687 of title 10, United States Code, or
any other similar law enacted after the date of
the enactment of this Act that provides for clo-
sure or realignment of military installations.
(8) LOW-INCOME PERSON.—The term ‘‘low-in-
come person’’ means a person who is a member of
a low-income family, as such term is defined in sec-
tion 104 of the Cranston-Gonzalez National Afford-
able Housing Act (42 U.S.C. 12704).
(9) PRIVATE EQUITY CAPITAL.—
(A) IN GENERAL.—The term ‘‘private eq-
uity capital’’—
(i) in the case of a corporate entity,
the paid-in capital and paid-in surplus of
the corporate entity;
(ii) in the case of a partnership entity,
the contributed capital of the partners of
the partnership entity;
(iii) in the case of a limited liability
company entity, the equity investment of
the members of the limited liability com-
pany entity; and
(iv) earnings from investments of the
entity that are not distributed to investors
and are available for reinvestment by the
entity.
(B) EXCLUSIONS.—Such term does not in-
clude any—
(i) funds borrowed by an entity from
any source or obtained through the
issuance of leverage; except that this clause
may not be construed to exclude amounts
evidenced by a legally binding and irrev-
ocable investment commitment in the enti-
ty, or the use by an entity of a pledge of
such investment commitment to obtain
bridge financing from a private lender to
fund the entity’s activities on an interim
basis; or
(ii) funds obtained directly or indi-
rectly from any Federal, State, or local
government or any government agency, ex-
cept for—
(I) funds invested by an employee
welfare benefit plan or pension plan;
and
(II) credits against any Federal,
State, or local taxes.
(10) QUALIFIED ACTIVE BUSINESS.—The term
‘‘qualified active business’’ means a business or
trade—
(A) that, at the time that an investment is
made in the business or trade, is deriving at
least 50 percent of its gross income from the
conduct of trade or business activities in low-in-
come communities;
(B) a substantial portion of the use of the
tangible property of which is used within low-
income communities;
(C) a substantial portion of the services
that the employees of which perform are per-
formed in low-income communities; and
(D) less than 5 percent of the aggregate
unadjusted bases of the property of which is at-
tributable to certain financial property, as the
Secretary shall set forth in regulations, or in
collectibles, other than collectibles held pri-
marily for sale to customers.
(11) 
QUALIFIED
DEBENTURE.—The 
term
‘‘qualified debenture’’ means a debt instrument hav-
ing terms that meet the requirements established
pursuant to section 606(c)(1).
(12) QUALIFIED LOW-INCOME COMMUNITY IN-
VESTMENT.—The term ‘‘qualified low-income com-
munity investment’’ mean an equity investment in,
or a loan to, a qualified active business.
(13) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Housing and Urban Develop-
ment, unless otherwise specified in this title.
SEC. 604. AUTHORIZATION.
(a) LICENSES.—The Secretary is authorized to li-
cense community development entities as America’s Pri-
vate Investment Companies, in accordance with the terms
of this title.
(b) REGULATIONS.—The Secretary shall regulate
APICs for compliance with sound financial management
practices, and the program and procedural goals of this
title and other related Acts, and other purposes as re-
quired or authorized by this title, or determined by the
Secretary. The Secretary shall issue such regulations as
are necessary to carry out the licensing and regulatory and
other duties under this title, and may issue notices and
other guidance or directives as the Secretary determines
are appropriate to carry out such duties.
(c) USE OF CREDIT SUBSIDY FOR LICENSES.—
(1) NUMBER
OF
LICENSES.—The number of
APICs licensed at any one time may not exceed—
(A) the number that may be supported by
the amount of budget authority appropriated in
accordance with section 504(b) of the Federal
Credit Reform Act of 1990 (2 U.S.C. 661c) for
the cost (as such term is defined in section 502
of such Act) of the subsidy and the investment
strategies of such APICs; or
(B) to the extent the limitation under sec-
tion 605(e)(1) applies, the number authorized
under such section.
(2) USE OF ADDITIONAL CREDIT SUBSIDY.—
Subject to the limitation under paragraph (1), the
Secretary may use any budget authority available
after credit subsidy has been allocated for the APICs
initially licensed pursuant to section 605 as follows:
(A) ADDITIONAL
LICENSES.—To license
additional APICs.
(B) CREDIT SUBSIDY INCREASES.—To in-
crease the credit subsidy allocated to an APIC
as an award for high performance under this
title, except that such increases may be made
only in accordance with the following require-
ments and limitations:
(i) TIMING.—An increase may only be
provided for an APIC that has been li-
censed for a period of not less than 2
years.
(ii) COMPETITION.—An increase may
only be provided for a fiscal year pursuant
to a competition for such fiscal year among
APICs eligible for, and requesting, such an
increase. The competition shall be based
upon criteria that the Secretary shall es-
tablish, which shall include the financial
soundness and performance of the APICs,
as measured by achievement of the public
performance goals included in the APICs
statements 
required 
under 
section
605(a)(6) and audits conducted under sec-
tion 609(b)(2). Among the criteria estab-
lished by the Secretary to determine pri-
ority for selection under this section, the
Secretary shall include making investments
in and loans to qualified active businesses
in urban or rural areas that have been des-
ignated under subchapter U of Chapter 1
of the Internal Revenue Code of 1986 as
empowerment zones or enterprise commu-
nities.
(d) COOPERATION AND COORDINATION.—
(1) PROGRAM POLICIES.—The Secretary is au-
thorized to coordinate and cooperate, through memo-
randa of understanding, an APIC liaison committee,
or otherwise, with the Administrator, the Secretary
of the Treasury, and other agencies in the discretion
of the Secretary, on implementation of this title, in-
cluding regulation, examination, and monitoring of
APICs under this title.
(2) FINANCIAL SOUNDNESS REQUIREMENTS.—
The Secretary shall consult with the Administrator
and the Secretary of the Treasury, and may consult
with such other heads of agencies as the Secretary
may consider appropriate, in establishing any regu-
lations, requirements, guidelines, or standards for fi-
nancial soundness or management practices of
APICs or entities applying for licensing as APICs.
In implementing and monitoring compliance with
any such regulations, requirements, guidelines, and
standards, the Secretary shall enter into such agree-
ments and memoranda of understanding with the
Administrator and the Secretary of the Treasury as
may be appropriate to provide for such officials to
provide any assistance that may be agreed to.
(3) OPERATIONS.—The Secretary may carry
out this title—
(A) directly, through agreements with
other Federal entities under section 1535 of
title 31, United States Code, or otherwise; or
(B) indirectly, under contracts or agree-
ments, as the Secretary shall determine.
(e) FEES
AND
CHARGES
FOR
ADMINISTRATIVE
COSTS.—To the extent provided in appropriations Acts,
the Secretary is authorized to impose fees and charges for
application, review, licensing, and regulation, or other ac-
tions under this title, and to pay for the costs of such
activities from the fees and charges collected.
(f) GUARANTEE FEES.—The Secretary is authorized
to set and collect fees for loan guarantee commitments and
loan guarantees that the Secretary makes under this title.
(g) FUNDING.—
(1) AUTHORIZATION OF APPROPRIATIONS FOR
LOAN GUARANTEE COMMITMENTS.—For each of fis-
cal years 2000, 2001, 2002, 2003, and 2004, there
is authorized to be appropriated up to $36,000,000
for the cost (as such term is defined in section
502(5) of the Federal Credit Reform Act of 1990)
of annual loan guarantee commitments under this
title. Amounts appropriated under this paragraph
shall remain available until expended.
(2) AGGREGATE
LOAN
GUARANTEE
COMMIT-
MENT LIMITATION.—The Secretary may make com-
mitments to guarantee loans only to the extent that
the total loan principal, any part of which is guaran-
teed, will not exceed $1,000,000,000, unless another
such amount is specified in appropriation Acts for
any fiscal year.
(3) AUTHORIZATION OF APPROPRIATIONS FOR
ADMINISTRATIVE EXPENSES.—For each of the fiscal
years 2000, 2001, 2002, 2003, and 2004, there is
authorized to be appropriated $1,000,000 for admin-
istrative expenses for carrying out this title. The
Secretary may transfer amounts appropriated under
this paragraph to any appropriation account of
HUD or another agency, to carry out the program
under this title. Any agency to which the Secretary
may transfer amounts under this title is authorized
to accept such transferred amounts in any appro-
priation account of such agency.
SEC. 605. SELECTION OF APICS.
(a) ELIGIBLE APPLICANTS.—An entity shall be eligi-
ble to be selected for licensing under section 604 as an
APIC only if the entity submits an application in compli-
ance with the requirements established pursuant to sub-
section (b) and the entity meets or complies with the fol-
lowing requirements:
(1) ORGANIZATION.—The entity shall be a pri-
vate, for-profit entity that qualifies as a community
development entity for the purposes of the New Mar-
kets Tax Credits, to the extent such credits are es-
tablished under Federal law.
(2) MINIMUM PRIVATE EQUITY CAPITAL.—The
amount of private equity capital reasonably available
to the entity, as determined by the Secretary, at the
time that a license is approved may not be less than
$25,000,000.
(3) QUALIFIED
MANAGEMENT.—The manage-
ment of the entity shall, in the determination of the
Secretary, meet such standards as the Secretary
shall establish to ensure that the management of the
APIC is qualified, and has the financial expertise,
knowledge, experience, and capability necessary, to
make investments for community and economic de-
velopment in low-income communities.
(4) CONFLICT OF INTEREST.—The entity shall
demonstrate that, in accordance with sound financial
management practices, the entity is structured to
preclude financial conflict of interest between the
APIC and a manager or investor.
(5) INVESTMENT STRATEGY.—The entity shall
prepare and submit to the Secretary an investment
strategy that includes benchmarks for evaluation of
its progress, that includes an analysis of existing lo-
cally owned businesses in the communities in which
the investments under the strategy will be made,
that prioritizes such businesses for investment op-
portunities, and that fulfills the specific public pur-
pose goals of the entity.
(6) STATEMENT OF PUBLIC PURPOSE GOALS.—
The entity shall prepare and submit to the Secretary
a statement of the public purpose goals of the entity,
which shall—
(A) set forth goals that shall promote com-
munity and economic development, which shall
include—
(i) making investments in low-income
communities that further economic devel-
opment objectives by targeting such invest-
ments in businesses or trades that comply
with the requirements under subpara-
graphs (A) through (C) of section 603(10)
relating to low-income communities in a
manner that benefits low-income persons;
(ii) creating jobs in low-income com-
munities for residents of such commu-
nities;
(iii) involving community-based orga-
nizations and residents in community de-
velopment activities;
(iv) such other goals as the Secretary
shall specify; and
(v) such elements as the entity may
set forth to achieve specific public purpose
goals;
(B) include such other elements as the
Secretary shall specify; and
(C) include proposed measurements and
strategies for meeting the goals.
(7) COMPLIANCE WITH LAWS.—The entity shall
agree to comply with applicable laws, including Fed-
eral Executive orders, Office of Management and
Budget circulars, and requirements of the Depart-
ment of the Treasury, and such operating and regu-
latory requirements as the Secretary may impose
from time-to-time.
(8) OTHER.—The entity shall satisfy any other
application requirements that the Secretary may im-
pose by regulation or Federal Register notice.
(b) COMPETITIONS.—The Secretary shall select eligi-
ble entities under subsection (a) to be licensed under sec-
tion 604 as APICs on the basis of competitions. The Sec-
retary shall announce each such competition by causing
a notice to be published in the Federal Register that in-
vites applications for licenses and sets forth the require-
ments for application and such other terms of the competi-
tion not otherwise provided for, as determined by the Sec-
retary.
(c) SELECTION.—In competitions under subsection
(b), the Secretary shall select eligible entities under sub-
section (a) for licensing as APICs on the basis of—
(1) the extent to which the entity is expected to
achieve the goals of this title by meeting or exceed-
ing criteria established under subsection (d); and
(2) to the extent practicable and subject to the
existence of approvable applications, ensuring geo-
graphical diversity among the applicants selected
and diversity of APICs investment strategies, so that
urban and rural communities are both served, in the
determination of the Secretary, by the program
under this title.
(d) SELECTION CRITERIA.—The Secretary shall es-
tablish selection criteria for competitions under subsection
(b), which shall include the following criteria:
(1) CAPACITY.—
(A) MANAGEMENT.—The extent to which
the entity’s management has the quality, expe-
rience, and expertise to make and manage suc-
cessful investments for community and eco-
nomic development in low-income communities.
(B) STATE AND LOCAL COOPERATION.—
The extent to which the entity demonstrates a
capacity to cooperate with States or units of
general local government and with community-
based organizations and residents of low-income
communities.
(2) INVESTMENT
STRATEGY.—The quality of
the entity’s investment strategy submitted in accord-
ance with subsection (a)(5) and the extent to which
the investment strategy furthers the goals of this
title pursuant to paragraph (3) of this subsection.
(3) PUBLIC PURPOSE GOALS.—With respect to
the statement of public purpose goals of the entity
submitted in accordance with subsection (a)(6), and
the strategy and measurements included therein—
(A) the extent to which such goals promote
community and economic development;
(B) the extent to which such goals provide
for making qualified investments in low-income
communities that further economic development
objectives, such as—
(i) creating, within 2 years of the
completion of the initial such investment,
job opportunities, opportunities for owner-
ship, and other economic opportunities
within a low-income community, both
short-term and of a longer duration;
(ii) improving the economic vitality of
a low-income community, including stimu-
lating other business development;
(iii) bringing new income into a low-
income community and assisting in the re-
vitalization of such community;
(iv) converting real property for the
purpose of creating a site for business in-
cubation and location, or business district
revitalization;
(v) enhancing economic competition,
including the advancement of technology;
(vi) rural development;
(vii) mitigating, rehabilitating, and
reusing real property considered subject to
the Solid Waste Disposal Act (42 U.S.C.
6901 et seq.; commonly referred to as the
Resource Conservation and Recovery Act)
or restoring coal mine-scarred land;
(viii) creation of local wealth through
investments in employee stock ownership
companies or resident-owned ventures; and
(ix) any other objective that the Sec-
retary may establish to further the pur-
poses of this title;
(C) the quality of jobs to be created for
residents of low-income communities, taking
into consideration such factors as the payment
of higher wages, job security, employment bene-
fits, opportunity for advancement, and personal
asset building;
(D) the extent to which achievement of
such goals will involve community-based organi-
zations and residents in community develop-
ment activities; and
(E) the extent to which the investments re-
ferred to in subparagraph (B) are likely to ben-
efit existing small business in low-income com-
munities or will encourage the growth of small
business in such communities.
(4) OTHER.—Any other criteria that the Sec-
retary may establish to carry out the purposes of
this title.
(e) FIRST YEAR REQUIREMENTS.—
(1) NUMERICAL LIMITATION.—The number of
APICs may not, at any time during the 1-year pe-
riod that begins upon the Secretary awarding the
first license for an APIC under this title, exceed 15.
(2) LIMITATION ON ALLOCATION OF AVAILABLE
CREDIT SUBSIDY.—Of the amount of budget author-
ity initially made available for allocation under this
title for APICs, the amount allocated for any single
APIC may not exceed 20 percent.
(3) NATIVE
AMERICAN
PRIVATE
INVESTMENT
COMPANY.—Subject only to the absence of an ap-
provable application from an entity, during the 1-
year period referred to in paragraph (1), of the enti-
ties selected and licensed by the Secretary as APICs,
at least one shall be an entity that has as its pri-
mary purpose the making of qualified low-income
community investments in areas that are within In-
dian country (as such term is defined in section
1151 of title 18, United States Code) or within
lands that have status as Hawaiian home land under
section 204 of the Hawaiian Homes Commission
Act, 1920 (42 Stat. 108) or are acquired pursuant
to such Act. The Secretary may establish specific se-
lection criteria for applicants under this paragraph.
(f) COMMUNICATIONS BETWEEN HUD AND APPLI-
CANTS.—
(1) IN GENERAL.—The Secretary shall set forth
in regulations the procedures under which HUD and
applicants for APIC licenses, and others, may com-
municate. Such regulations shall—
(A) specify by position the HUD officers
and employees who may communicate with such
applicants and others;
(B) permit HUD officers and employees to
request and discuss with the applicant and oth-
ers (such as banks or other credit or business
references, or potential investors, that the appli-
cant specifies in writing) any more detailed in-
formation that may be desirable to facilitate
HUD’s review of the applicant’s application;
(C) restrict HUD officers and employees
from revealing to any applicant—
(i) the fact or chances of award of a
license to such applicant, unless there has
been a public announcement of the results
of the competition; and
(ii) any information with respect to
any other applicant; and
(D) set forth requirements for making and
keeping records of any communications con-
ducted under this subsection, including require-
ments for making such records available to the
public after the award of licenses under an ini-
tial or subsequent notice, as appropriate, under
subsection (a).
(2) TIMING.—Regulations under this subsection
may be issued as interim rules for effect on or be-
fore the date of publication of the first notice under
subsection (a), and shall apply only with respect to
applications under such notice. Regulations to imple-
ment this subsection with respect to any notice after
the first such notice shall be subject to notice and
comment rulemaking.
(3) INAPPLICABILITY OF DEPARTMENT OF HUD
ACT
PROVISION.—Section 12(e)(2) of the Depart-
ment of Housing and Urban Development Act (42
U.S.C. 3537a(e)(2)) is amended by inserting before
the period at the end the following: ‘‘or any license
provided under the America’s Private Investment
Companies Act’’.
SEC. 606. OPERATIONS OF APICS.
(a) POWERS AND AUTHORITIES.—
(1) IN
GENERAL.—An APIC shall have any
powers or authorities that—
(A) the APIC derives from the jurisdiction
in which it is organized, or that the APIC oth-
erwise has;
(B) may be conferred by a license under
this title; and
(C) the Secretary may prescribe by regula-
tion.
(2) NEW
MARKET
ASSISTANCE.—Nothing in
this title shall preclude an APIC or its investors
from receiving an allocation of New Market Tax
Credits (to the extent such credits are established
under Federal law) if the APIC satisfies any appli-
cable terms and conditions under the Internal Rev-
enue Code of 1986.
(b) INVESTMENT LIMITATIONS.—
(1) QUALIFIED
LOW-INCOME
COMMUNITY
IN-
VESTMENTS.—Substantially all investments that an
APIC makes shall be qualified low-income commu-
nity investments if the investments are financed
with—
(A) amounts available from the proceeds of
the issuance of an APIC’s qualified debenture
guaranteed under this title;
(B) proceeds of the sale of obligations de-
scribed under subsection (c)(3)(C)(iii); or
(C) the use of private equity capital, as de-
termined by the Secretary, in an amount speci-
fied in the APIC’s license.
(2) 
SINGLE
BUSINESS
INVESTMENTS.—An
APIC shall not, as a matter of sound financial prac-
tice, invest in any one business an amount that ex-
ceeds an amount equal to 35 percent of the sum
of—
(A) the APIC’s private equity capital; plus
(B) an amount equal to the percentage
limit that the Secretary determines that an
APIC may have outstanding at any one time,
under subsection (c)(2)(A).
(c) BORROWING
POWERS; QUALIFIED
DEBEN-
TURES.—
(1) ISSUANCE.—An APIC may issue qualified
debentures. The Secretary shall, by regulation, speci-
fy the terms and requirements for debentures to be
considered qualified debentures for purposes of this
title, except that the term to maturity of any quali-
fied debenture may not exceed 21 years and each
qualified debenture shall bear interest during all or
any part of that time period at a rate or rates ap-
proved by the Secretary.
(2) LEVERAGE LIMITS.—In general, as a mat-
ter of sound financial management practices—
(A) the total amount of qualified deben-
tures that an APIC issues under this title that
an APIC may have outstanding at any one time
shall not exceed an amount equal to 200 per-
cent of the private equity capital of the APIC,
as determined by the Secretary; and
(B) an APIC shall not have more than
$300,000,000 in face value of qualified deben-
tures issued under this title outstanding at any
one time.
(3) REPAYMENT.—
(A) CONDITION OF BUSINESS WIND-UP.—
An APIC shall have repaid, or have otherwise
been relieved of indebtedness, with respect to
any interest or principal amounts of borrowings
under this subsection no less than 2 years be-
fore the APIC may dissolve or otherwise com-
plete the wind-up of its business.
(B) TIMING.—An APIC may repay any in-
terest or principal amounts of borrowings under
this subsection at any time: Provided, That the
repayment of such amounts shall not relieve an
APIC of any duty otherwise applicable to the
APIC under this title, unless the Secretary or-
ders such relief.
(C) USE OF INVESTMENT PROCEEDS BE-
FORE REPAYMENT.—Until an APIC has repaid
all interest and principal amounts on APIC bor-
rowings under this subsection, an APIC may
use the proceeds of investments, in accordance
with regulations issued by the Secretary, only
to—
(i) pay for proper costs and expenses
the APIC incurs in connection with such
investments;
(ii) pay for the reasonable administra-
tive expenses of the APIC;
(iii) purchase Treasury securities;
(iv) repay interest and principal
amounts on APIC borrowings under this
subsection;
(v) make interest, dividend, or other
distributions to or on behalf of an investor;
or
(vi) undertake such other purposes as
the Secretary may approve.
(D) USE
OF
INVESTMENT
PROCEEDS
AFTER REPAYMENT.—After an APIC has re-
paid all interest and principal amounts on
APIC borrowings under this subsection, and
subject to continuing compliance with sub-
section (a), the APIC may use the proceeds
from investments to make interest, dividend, or
other distributions to or on behalf of investors
in the nature of returns on capital, or the with-
drawal of private equity capital, without regard
to subparagraph (C) but in conformity with the
APIC’s investment strategy and statement of
public purpose goals.
(d) REUSE
OF
QUALIFIED
DEBENTURE
PRO-
CEEDS.—An APIC may use the proceeds of sale of Treas-
ury securities purchased under subsection (c)(3)(C)(iii) to
make qualified low-income community investments, sub-
ject to the Secretary’s approval. In making the request
for the Secretary’s approval, the APIC shall follow the
procedures applicable to an APIC’s request for HUD
guarantee action, as the Secretary may modify such proce-
dures for implementation of this subsection. Such proce-
dures shall include the description and certifications that
an APIC must include in all requests for guarantee action,
and the environmental certification applicable to initial ex-
penditures for a project or activity.
(e) ANTIPIRATING.—Notwithstanding any other pro-
vision of law, an APIC may not use any private equity
capital required to be contributed under this title, or the
proceeds from the sale of any qualified debenture under
this title, to make an investment, as determined by the
Secretary, to assist directly in the relocation of any indus-
trial or commercial plant, facility, or operation, from one
area to another area, if the relocation is likely to result
in a significant loss of employment in the labor market
area from which the relocation occurs.
(f) EXCLUSION
OF APIC FROM DEFINITION
OF
DEBTOR
UNDER
BANKRUPTCY
PROVISIONS.—Section
109(b)(2) of title 11, United States Code, is amended by
inserting before ‘‘credit union’’ the following: ‘‘America’s
Private Investment Company licensed under the America’s
Private Investment Companies Act,’’.
SEC. 607. CREDIT ENHANCEMENT BY THE FEDERAL GOV-
ERNMENT.
(a) ISSUANCE AND GUARANTEE OF QUALIFIED DE-
BENTURES.—
(1) AUTHORITY.—To the extent consistent with
the Federal Credit Reform Act of 1990, the Sec-
retary is authorized to make commitments to guar-
antee and guarantee the timely payment of all prin-
cipal and interest as scheduled on qualified deben-
tures issued by APICs. Such commitments and
guarantees may only be made in accordance with the
terms and conditions established under paragraph
(2).
(2) TERMS AND CONDITIONS.—The Secretary
shall establish such terms and conditions as the Sec-
retary determines to be appropriate for commit-
ments and guarantees under this subsection, includ-
ing terms and conditions relating to amounts, expi-
ration, number, priorities of repayment, security,
collateral, amortization, payment of interest (includ-
ing the timing thereof), and fees and charges. The
terms and conditions applicable to any particular
commitment or guarantee may be established in doc-
uments that the Secretary approves for such com-
mitment or guarantee.
(3) SENIORITY.—Notwithstanding any other
provision of Federal law or any law or the constitu-
tion of any State, qualified debentures guaranteed
under this subsection by the Secretary shall be sen-
ior to any other debt obligation, equity contribution
or earnings, or the distribution of dividends, inter-
est, or other amounts, of an APIC.
(b) ISSUANCE OF TRUST CERTIFICATES.—The Sec-
retary, or an agent or entity selected by the Secretary,
100
is authorized to issue trust certificates representing own-
ership of all or a fractional part of guaranteed qualified
debentures issued by APICs and held in trust.
(c) GUARANTEE OF TRUST CERTIFICATES.—
(1) IN GENERAL.—The Secretary is authorized,
upon such terms and conditions as the Secretary de-
termines to be appropriate, to guarantee the timely
payment of the principal of and interest on trust
certificates issued by the Secretary, or an agent or
other entity, for purposes of this section. Such guar-
antee shall be limited to the extent of principal and
interest on the guaranteed qualified debentures
which compose the trust.
(2) SUBSTITUTION
OPTION.—The Secretary
shall have the option to replace in the corpus of the
trust any prepaid or defaulted qualified debenture
with a debenture, another full faith and credit in-
strument, or any obligations of the United States,
that may reasonably substitute for such prepaid or
defaulted qualified debenture.
(3) PROPORTIONATE REDUCTION OPTION.—In
the event that the Secretary elects not to exercise
the option under paragraph (2), and a qualified de-
benture in such trust is prepaid, or in the event of
default of a qualified debenture, the guarantee of
101
timely payment of principal and interest on the trust
certificate shall be reduced in proportion to the
amount of principal and interest that such prepaid
qualified debenture represents in the trust. Interest
on prepaid or defaulted qualified debentures shall
accrue and be guaranteed by the Secretary only
through the date of payment of the guarantee. Dur-
ing the term of a trust certificate, it may be called
for redemption due to prepayment or default of all
qualified debentures that are in the corpus of the
trust.
(d) FULL FAITH AND CREDIT BACKING OF GUARAN-
TEES.—The full faith and credit of the United States is
pledged to the timely payment of all amounts which may
be required to be paid under any guarantee by the Sec-
retary pursuant to this section.
(e) SUBROGATION AND LIENS.—
(1) SUBROGATION.—In the event the Secretary
pays a claim under a guarantee issued under this
section, the Secretary shall be subrogated fully to
the rights satisfied by such payment.
(2) PRIORITY
OF
LIENS.—No State or local
law, and no Federal law, shall preclude or limit the
exercise by the Secretary of its ownership rights in
102
the debentures in the corpus of a trust under this
section.
(f) REGISTRATION.—
(1) IN GENERAL.—The Secretary shall provide
for a central registration of all trust certificates
issued pursuant to this section.
(2) AGENTS.—The Secretary may contract with
an agent or agents to carry out on behalf of the Sec-
retary the pooling and the central registration func-
tions of this section notwithstanding any other provi-
sion of law, including maintenance on behalf of and
under the direction of the Secretary, such commer-
cial bank accounts or investments in obligations of
the United States as may be necessary to facilitate
trusts backed by qualified debentures guaranteed
under this title and the issuance of trust certificates
to facilitate formation of the corpus of the trusts.
The Secretary may require such agent or agents to
provide a fidelity bond or insurance in such amounts
as the Secretary determines to be necessary to pro-
tect the interests of the Government.
(3) FORM.—Book-entry or other electronic
forms of registration for trust certificates under this
title are authorized.
103
(g) TIMING
OF ISSUANCE
OF GUARANTEES
OF
QUALIFIED DEBENTURES AND TRUST CERTIFICATES.—
The Secretary may, from time to time in the Secretary’s
discretion, exercise the authority to issue guarantees of
qualified debentures under this title or trust certificates
under this title.
SEC. 608. APIC REQUESTS FOR GUARANTEE ACTIONS.
(a) IN GENERAL.—The Secretary may issue a guar-
antee under this title for a qualified debenture that an
APIC intends to issue only pursuant to a request to the
Secretary by the APIC for such guarantee that is made
in accordance with regulations governing the content and
procedures for such requests, that the Secretary shall pre-
scribe. Such regulations shall provide that each such re-
quest shall include—
(1) a description of the manner in which the
APIC intends to use the proceeds from the qualified
debenture;
(2) a certification by the APIC that the APIC
is in substantial compliance with—
(A) this title and other applicable laws, in-
cluding any requirements established under this
title by the Secretary;
(B) all terms and conditions of its license,
any cease-and-desist order issued under section
104
610, and of any penalty or condition that may
have arisen from examination or monitoring by
the Secretary or otherwise, including the satis-
faction of any financial audit exception that
may have been outstanding; and
(C) all requirements relating to the alloca-
tion and use of New Markets Tax Credits, to
the extent such credits are established under
Federal law; and
(3) any other information or certification that
the Secretary considers appropriate.
(b) REQUESTS FOR GUARANTEE OF QUALIFIED DE-
BENTURES THAT INCLUDE FUNDING FOR INITIAL EX-
PENDITURE FOR A PROJECT OR ACTIVITY.—In addition
to the description and certification that an APIC is re-
quired to supply in all requests for guarantee action under
subsection (a), in the case of an APIC’s request for a
guarantee that includes a qualified debenture, the pro-
ceeds of which the APIC expects to be used as its initial
expenditure for a project or activity in which the APIC
intends to invest, and the expenditure for which would re-
quire an environmental assessment under the National
Environmental Policy Act of 1969 and other related laws
that further the purposes of such Act, such request for
guarantee action shall include evidence satisfactory to the
105
Secretary of the certification of the completion of environ-
mental review of the project or activity required of the cog-
nizant State or local government under subsection (c). If
the environmental review responsibility for the project or
activity has not been assumed by a State or local govern-
ment under subsection (c), then the Secretary shall be re-
sponsible for carrying out the applicable responsibilities
under the National Environmental Policy Act of 1969 and
other provisions of law that further the purposes of such
Act that relate to the project or activity, and the Secretary
shall execute such responsibilities before acting on the
APIC’s request for the guarantee that is covered by this
subsection.
(c) RESPONSIBILITY
FOR
ENVIRONMENTAL
RE-
VIEWS.—
(1) EXECUTION
OF
RESPONSIBILITY
BY
THE
SECRETARY.—This subsection shall apply to guaran-
tees by the Secretary of qualified debentures under
this title, the proceeds of which would be used in
connection with qualified low-income community in-
vestments of APICs under this title.
(2) ASSUMPTION OF RESPONSIBILITY BY COG-
NIZANT UNIT OF GENERAL GOVERNMENT.—
(A) GUARANTEE
OF
QUALIFIED
DEBEN-
TURES.—In order to assure that the policies of
106
the National Environmental Policy Act of 1969
and other provisions of law that further the
purposes of such Act (as specified in regula-
tions issued by the Secretary) are most effec-
tively implemented in connection with the ex-
penditure of funds under this title, and to as-
sure to the public undiminished protection of
the environment, the Secretary may, under such
regulations, in lieu of the environmental protec-
tion procedures otherwise applicable, provide for
the guarantee of qualified debentures, any part
of the proceeds of which are to fund particular
qualified low-income community investments of
APICs under this title, if a State or unit of
general local government, as designated by the
Secretary in accordance with regulations issued
by the Secretary, assumes all of the responsibil-
ities for environmental review, decisionmaking,
and action pursuant to the National Environ-
mental Policy Act of 1969 and such other pro-
visions of law that further such Act as the reg-
ulations of the Secretary specify, that would
otherwise apply to the Secretary were the Sec-
retary to undertake the funding of such invest-
ments as a Federal action.
107
(B) 
IMPLEMENTATION.—The 
Secretary
shall issue regulations to carry out this sub-
section only after consultation with the Council
on Environmental Quality. Such regulations
shall—
(i) specify any other provisions of law
which further the purposes of the National
Environmental Policy Act of 1969 and to
which the assumption of responsibility as
provided in this subsection applies;
(ii) provide eligibility criteria and pro-
cedures for the designation of a State or
unit of general local government to assume
all of the responsibilities in this subsection;
(iii) specify the purposes for which
funds may be committed without regard to
the procedure established under paragraph
(3);
(iv) provide for monitoring of the per-
formance of environmental reviews under
this subsection;
(v) in the discretion of the Secretary,
provide for the provision or facilitation of
training for such performance; and
108
(vi) subject to the discretion of the
Secretary, provide for suspension or termi-
nation by the Secretary of the assumption
under subparagraph (A).
(C) RESPONSIBILITIES
OF
STATES
AND
UNITS OF GENERAL LOCAL GOVERNMENT.—The
Secretary’s duty under subparagraph (B) shall
not be construed to limit any responsibility as-
sumed by a State or unit of general local gov-
ernment with respect to any particular request
for guarantee under subparagraph (A), or the
use of funds for a qualified investment.
(3) PROCEDURE.—Subject to compliance by the
APIC with the requirements of this title, the Sec-
retary shall approve the request for guarantee of a
qualified debenture, any part of the proceeds of
which is to fund particular qualified low-income
community investments of an APIC under this title,
that is subject to the procedures authorized by this
subsection only if, not less than 15 days prior to
such approval and prior to any commitment of funds
to such investment (except for such purposes speci-
fied in the regulations issued under paragraph
(2)(B)), the APIC submits to the Secretary a re-
quest for guarantee of a qualified debenture that is
109
accompanied by evidence of a certification of the
State or unit of general local government which
meets the requirements of paragraph (4). The ap-
proval by the Secretary of any such certification
shall be deemed to satisfy the Secretary’s respon-
sibilities pursuant to paragraph (1) under the Na-
tional Environmental Policy Act of 1969 and such
other provisions of law as the regulations of the Sec-
retary specify insofar as those responsibilities relate
to the guarantees of qualified debentures, any parts
of the proceeds of which are to fund such invest-
ments, which are covered by such certification.
(4) CERTIFICATION.—A certification under the
procedures authorized by this subsection shall—
(A) be in a form acceptable to the Sec-
retary;
(B) be executed by the chief executive offi-
cer or other officer of the State or unit of gen-
eral local government who qualifies under regu-
lations of the Secretary;
(C) specify that the State or unit of gen-
eral local government under this subsection has
fully carried out its responsibilities as described
under paragraph (2); and
(D) specify that the certifying officer—
110
(i) consents to assume the status of a
responsible Federal official under the Na-
tional Environmental Policy Act of 1969
and each provision of law specified in regu-
lations issued by the Secretary insofar as
the provisions of such Act or other such
provision of law apply pursuant to para-
graph (2); and
(ii) is authorized and consents on be-
half of the State or unit of general local
government and himself or herself to ac-
cept the jurisdiction of the Federal courts
for the purpose of enforcement of the re-
sponsibilities as such an official.
SEC. 609. EXAMINATION AND MONITORING OF APICS.
(a) IN GENERAL.—The Secretary shall, under regula-
tions, through audits, performance agreements, license
conditions, or otherwise, examine and monitor the oper-
ations and activities of APICs for compliance with sound
financial management practices, and for satisfaction of the
program and procedural goals of this title and other re-
lated Acts. The Secretary may undertake any responsi-
bility under this section in cooperation with an APIC liai-
son committee, or any agency that is a member of such
a committee, or other agency.
111
(b) MONITORING, UPDATING, AND PROGRAM RE-
VIEW.—
(1) REPORTING
AND
UPDATING.—The Sec-
retary shall establish such annual or more frequent
reporting requirements for APICs, and such require-
ments for the updating of the statement of public
purpose goals, investment strategy (including the
benchmarks in such strategy), and other documents
that may have been used in the license application
process under this title, as the Secretary determines
necessary to assist the Secretary in monitoring the
compliance and performance of APICs.
(2) ANNUAL AUDITS.—The Secretary shall re-
quire each APIC to have an independent audit con-
ducted annually of the operations of the APIC. The
Secretary, in consultation with the Administrator
and the Secretary of the Treasury, shall establish re-
quirements and standards for such audits, including
requirements that such audits be conducted in ac-
cordance with generally accepted accounting prin-
ciples, that the APIC submit the results of the audit
to Secretary, and that specify the information to be
submitted.
(3) EXAMINATIONS.—The Secretary shall, no
less often than once every 2 years, examine the oper-
112
ations and portfolio of each APIC licensed under
this title for compliance with sound financial man-
agement practices, and for compliance with this title.
(4) EXAMINATION STANDARDS.—
(A) 
SOUND
FINANCIAL
MANAGEMENT
PRACTICES.—The Secretary shall examine each
APIC to ensure, as a matter of sound financial
management practices, substantial compliance
with this and other applicable laws, including
Federal executive orders, Department of Treas-
ury and Office of Management and Budget
guidance, circulars, and application and licens-
ing requirements on a continuing basis. The
Secretary may, by regulation, establish any ad-
ditional standards for sound financial manage-
ment practices, including standards that ad-
dress solvency and financial exposure.
(B) PERFORMANCE AND OTHER EXAMINA-
TIONS.—The Secretary shall monitor each
APIC’s progress in meeting the goals in the
APIC’s statement of public purpose goals, exe-
cuting the APIC’s investment strategy, and
other matters.
(c) INSPECTOR GENERAL RESPONSIBILITY.—In car-
rying out monitoring of HUD’s responsibilities under this
113
title and for purposes of ensuring that the program under
this title is operated in accordance with sound financial
management practices, the Inspector General of the De-
partment of Housing and Urban Development shall con-
sult with the Inspector General of the Department of the
Treasury and the Inspector General of the Small Business
Administration, as appropriate, and may enter into such
agreements and memoranda of understanding as may be
necessary to obtain the cooperation of the Inspectors Gen-
eral of the Department of the Treasury and the Small
Business Administration in carrying out such function.
(d) ANNUAL REPORT BY SECRETARY.—The Sec-
retary shall submit a report to the Congress annually re-
garding the operations, activities, financial health, and
achievements of the APIC program under this title. The
report shall list each investment made by an APIC and
include a summary of the examinations conducted under
subsection (b)(3), the guarantee actions of HUD, and any
regulatory or policy actions taken by HUD. The report
shall distinguish recently licensed APICs from APICs that
have held licenses for a longer period for purposes of indi-
cating program activities and performance.
(e) GAO REPORT.—
(1) REQUIREMENT.—Not later than 2 years
after the date of the enactment of this Act, the
114
Comptroller General of the United States shall sub-
mit a report to the Congress regarding the operation
of the program under this title for licensing and
guarantees for APICs.
(2) CONTENTS.—The report shall include—
(A) an analysis of the operations and mon-
itoring by HUD of the APIC program under
this title;
(B) the administrative and capacity needs
of HUD required to ensure the integrity of the
program;
(C) the extent and adequacy of any credit
subsidy appropriated for the program; and
(D) the management of financial risk and
liability of the Federal Government under the
program.
SEC. 610. PENALTIES.
(a) VIOLATIONS SUBJECT TO PENALTY.—The Sec-
retary may impose a penalty under this subsection on any
APIC or manager of an APIC that, by any act, practice,
or failure to act, engages in fraud, mismanagement, or
noncompliance with this title, the regulations under this
title, or a condition of the APIC’s license under this title.
The Secretary shall, by regulation, identify, by generic de-
115
scription of a role or responsibilities, any manager of an
APIC that is subject to a penalty under this section.
(b) PENALTIES REQUIRING NOTICE AND AN OPPOR-
TUNITY TO RESPOND.—If, after notice in writing to an
APIC or the manager of an APIC that the APIC or man-
ager has engaged in any action, practice, or failure to act
that, under subsection (a), is subject to a penalty, and
after an opportunity for the APIC or manager to respond
to the notice, the Secretary determines that the APIC or
manager engaged in such action or failure to act, the Sec-
retary may, in addition to other penalties imposed—
(1) assess a civil money penalty, except than
any civil money penalty under this subsection shall
be in an amount not exceeding $10,000;
(2) issue an order to cease and desist with re-
spect to such action, practice, or failure to act of the
APIC or manager;
(3) suspend, or condition the use of, the APIC’s
license, including deferring, for the period of the
suspension, any commitment to guarantee any new
qualified debenture of the APIC, except that any
suspension or condition under this paragraph may
not exceed 90 days; and
116
(4) impose any other penalty that the Secretary
determines to be less burdensome to the APIC than
a penalty under subsection (c).
(c) PENALTIES REQUIRING NOTICE
AND HEAR-
ING.—If, after notice in writing to an APIC or the man-
ager of an APIC that an APIC or manager has engaged
in any action, practice, or failure to act that, under sub-
section (a), is subject to a penalty, and after an oppor-
tunity for administrative hearing, the Secretary deter-
mines that the APIC or manager engaged in such action
or failure to act, the Secretary may—
(1) assess a civil money penalty against the
APIC or a manager in any amount;
(2) require the APIC to divest any interest in
an investment, on such terms and conditions as the
Secretary may impose; or
(3) revoke the APIC’s license.
(d) EFFECTIVE DATE OF PENALTIES.—
(1) PRIOR NOTICE REQUIREMENT.—Except as
provided in paragraph (2) of this subsection, a pen-
alty under subsection (b) or (c) shall not be due and
payable and shall not otherwise take effect or be
subject to enforcement by an order of a court, before
notice of the penalty is published in the Federal
Register.
117
(2) CEASE-AND-DESIST ORDERS AND SUSPEN-
SION OR CONDITIONING OF LICENSE.—In the case of
a cease-and-desist order under subsection (b)(2) or
the suspension or conditioning of an APIC’s license
under subsection (b)(3), the following procedures
shall apply:
(A) ACTION
WITHOUT
PUBLISHED
NO-
TICE.—The Secretary may order an APIC or
manager to cease and desist from an action,
practice, or failure to act or may suspend or
condition an APIC’s license, for not more than
45 days without prior publication of notice in
the Federal Register, but such cease-and-desist
order or suspension or conditioning shall take
effect only after the Secretary has issued a
written notice (which may include a writing in
electronic form) of such action to the APIC.
Notwithstanding subsection (b), such written
notice shall be effective without regard to
whether the APIC has been accorded an oppor-
tunity to respond. Upon such notice, such
cease-and-desist order or suspension or condi-
tioning shall be subject to enforcement by an
order of a court.
118
(B) PUBLICATION OF NOTICE OF SUSPEN-
SION OR CONDITIONING OF LICENSE.—Upon a
suspension or conditioning of a license taking
effect pursuant to subparagraph (A), the Sec-
retary shall promptly cause a notice of suspen-
sion or conditioning of such license for a period
of not more than 90 days to be published in the
Federal Register. The Secretary shall provide
the APIC an opportunity to respond to such no-
tice. For purposes of the determining the dura-
tion of the period of any suspension or condi-
tioning under this subparagraph, the first day
of such period shall be the day of issuance of
the written notice under this paragraph of the
suspension or conditioning.
(C) REVOCATION
OF
LICENSE.—During
the period of the suspension or conditioning of
an APIC’s license, the Secretary may take ac-
tion under subsection (c)(3) to revoke the li-
cense of the APIC, in accordance with the pro-
cedures applicable to such subsection. Notwith-
standing any other provision of this section, if
the Secretary takes such action, the Secretary
may extend the suspension or conditioning of
the APIC’s license, for one or more periods of
119
not more than 90 days each, by causing notice
of such action to be published in the Federal
Register—
(i) for the first such extension, before
the expiration of the period under subpara-
graph (B); and
(ii) for any subsequent extension, be-
fore the expiration of the preceding exten-
sion period under this subparagraph.
(D) TERM OF EFFECTIVENESS.—A cease-and-
desist order or the suspension or conditioning of an
APIC’s license by the Secretary under this para-
graph shall remain in effect in accordance with the
terms of the order, suspension, or conditioning until
final adjudication in any action undertaken to chal-
lenge the order, or the suspension or conditioning, or
the revocation, of an APIC’s license.
SEC. 611. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b), this title shall take effect upon the expiration of the
6-month period beginning on the date of the enactment
of this Act.
(b) ISSUANCE OF REGULATIONS AND GUIDELINES.—
Any authority under this title of the Secretary, the Admin-
istrator, and the Secretary of the Treasury to issue regula-
120
tions, standards, guidelines, or licensing requirements,
and any authority of such officials to consult or enter into
agreements or memoranda of understanding regarding
such issuance, shall take effect on the date of the enact-
ment of this Act.
SEC. 612. SUNSET.
After the expiration of the 5-year period beginning
upon the date that the Secretary awards the first license
for an APIC under this title—
(1) the Secretary may not license any APIC;
and
(2) no amount may be appropriated for the
costs (as such term is defined in section 502 of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661c))
of any guarantee under this title for any debenture
issued by an APIC.
This section may not be construed to prohibit, limit, or
affect the award, allocation, or use of any budget authority
for the costs of such guarantees that is appropriated be-
fore the expiration of such period.
121
TITLE VII—OTHER COMMUNITY
RENEWAL 
AND 
NEW 
MAR-
KETS ASSISTANCE
SEC. 701. TRANSFER OF UNOCCUPIED AND SUBSTANDARD
HUD-HELD HOUSING TO LOCAL GOVERN-
MENTS 
AND 
COMMUNITY 
DEVELOPMENT
CORPORATIONS.
Section 204 of the Departments of Veterans Affairs
and Housing and Urban Development, and Independent
Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–
11a) is amended—
(1) by striking ‘‘FLEXIBLE AUTHORITY.—’’ and
inserting ‘‘DISPOSITION
OF HUD-OWNED PROP-
ERTIES. (a) FLEXIBLE AUTHORITY
FOR MULTI-
FAMILY PROJECTS.—’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) TRANSFER OF UNOCCUPIED AND SUBSTANDARD
HOUSING
TO LOCAL GOVERNMENTS
AND COMMUNITY
DEVELOPMENT CORPORATIONS.—
‘‘(1) TRANSFER AUTHORITY.—Notwithstanding
the authority under subsection (a) and the last sen-
tence of section 204(g) of the National Housing Act
(12 U.S.C. 1710(g)), the Secretary of Housing and
Urban Development shall transfer ownership of any
122
qualified HUD property, subject to the requirements
of this section, to a unit of general local government
having jurisdiction for the area in which the prop-
erty is located or to a community development cor-
poration which operates within such a unit of gen-
eral local government in accordance with this sub-
section, but only to the extent that units of general
local government and community development cor-
porations consent to transfer and the Secretary de-
termines that such transfer is practicable.
‘‘(2) QUALIFIED HUD PROPERTIES.—For pur-
poses of this subsection, the term ‘qualified HUD
property’ means any property for which, as of the
date that notification of the property is first made
under paragraph (3)(B), not less than 6 months
have elapsed since the later of the date that the
property was acquired by the Secretary or the date
that the property was determined to be unoccupied
or substandard, that is owned by the Secretary and
is—
‘‘(A) an unoccupied multifamily housing
project;
‘‘(B) a substandard multifamily housing
project; or
123
‘‘(C) an unoccupied single family property
that—
‘‘(i) has been determined by the Sec-
retary not to be an eligible asset under sec-
tion 204(h) of the National Housing Act
(12 U.S.C. 1710(h)); or
‘‘(ii) is an eligible asset under such
section 204(h), but—
‘‘(I) is not subject to a specific
sale agreement under such section;
and
‘‘(II) has been determined by the
Secretary to be inappropriate for con-
tinued inclusion in the program under
such section 204(h) pursuant to para-
graph (10) of such section.
‘‘(3) TIMING.—The Secretary shall establish
procedures that provide for—
‘‘(A) time deadlines for transfers under
this subsection;
‘‘(B) notification to units of general local
government and community development cor-
porations of qualified HUD properties in their
jurisdictions;