IB
Union Calendar No. 351
106TH CONGRESS
2D SESSION
H. R. 2764
[Report No. 106–638]
To license America’s Private Investment Companies and provide enhanced
credit to stimulate private investment in low-income communities, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 5, 1999
Mr. LAFALCE (for himself, Mr. KANJORSKI, Mr. VENTO, Ms. WATERS, Mr.
WATT of North Carolina, Ms. HOOLEY of Oregon, Mr. GUTIERREZ, Ms.
CARSON, Mr. SANDLIN, Mr. MEEKS of New York, Mr. MASCARA, Mr.
GONZALEZ, Mr. BRADY of Pennsylvania, Mr. JEFFERSON, Mr. KLINK,
Mr. OWENS, Mr. ANDREWS, Mr. FROST, Mrs. MINK of Hawaii, Ms.
SLAUGHTER, and Mr. RUSH) introduced the following bill; which was re-
ferred to the Committee on Banking and Financial Services
MAY 23, 2000
Additional sponsors: Mr. PASTOR, Ms. EDDIE BERNICE JOHNSON of Texas,
Mr. UDALL of Colorado, Mr. SNYDER, Mr. BECERRA, Mr. ORTIZ, Mr.
REYES, Mr. RODRIGUEZ, Ms. ROYBAL-ALLARD, Mr. SERRANO, Ms.
VELA´ZQUEZ, Mr. LARSON, Mr. RAHALL, Ms. PELOSI, Ms. DEGETTE, Mr.
MARTINEZ, Mr. THOMPSON of Mississippi, Mr. ENGEL, Ms. LEE, and
Mr. FATTAH
MAY 23, 2000
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on August 5, 1999]
A BILL
To license America’s Private Investment Companies and pro-
vide enhanced credit to stimulate private investment in
low-income communities, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION. 1. SHORT TITLE.
This Act may be cited as the ‘‘America’s Private In-
vestment Companies Act’’.
SEC. 2. 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 job-
lessness, poverty, and low incomes have not benefited
adequately from the economic expansion experienced
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 Act are to—
(1) license private for profit community develop-
ment 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 entities
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 Act may be available both to the in-
vestors in these entities and to the residents of the
low-income communities.
SEC. 3. DEFINITIONS.
As used in this Act:
(1) 
ADMINISTRATOR.—The 
term 
‘‘Adminis-
trator’’ means the Administrator of the Small Busi-
ness Administration.
(2) AGENCY.—The term ‘‘agency’’ has the mean-
ing given such term in section 551(1) of title 5,
United States Code.
(3) APIC.—The term ‘‘APIC’’ means a business
entity that has been licensed under the terms of this
Act as an America’s Private Investment Company,
and the license of which has not been revoked.
(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 ac-
countability to residents of low-income communities.
(5) HUD.—The term ‘‘HUD’’ means the Sec-
retary of Housing and Urban Development or the De-
partment 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 4.
(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 metropoli-
tan area in which such census tract or
tracts are located, or (II) the median family
income for the State in which such census
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 Authorization
Amendments and Base Closure and Realignment
Act (Public Law 100–526; 10 U.S.C. 2687 note),
the Defense Base Closure and Realignment 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 closure 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 section
104 of the Cranston-Gonzalez National Affordable
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 irrevocable invest-
ment commitment in the entity, 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 gov-
ernment or any government agency, except
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 con-
duct of trade or business activities in low-income
communities;
(B) a substantial portion of the use of the
tangible property of which is used within low-in-
come communities;
(C) a substantial portion of the services that
the employees of which perform are performed 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 col-
lectibles, other than collectibles held primarily
for sale to customers.
(11) QUALIFIED DEBENTURE.—The term ‘‘quali-
fied debenture’’ means a debt instrument having
terms that meet the requirements established pursuant
to section 6(c)(1).
(12) QUALIFIED
LOW-INCOME
COMMUNITY
IN-
VESTMENT.—The term ‘‘qualified low-income commu-
nity 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 Development,
unless otherwise specified in this Act.
SEC. 4. AUTHORIZATION.
(a) LICENSES.—The Secretary is authorized to license
community development entities as America’s Private In-
vestment Companies, in accordance with the terms of this
Act.
(b) REGULATIONS.—The Secretary shall regulate
APICs for compliance with sound financial management
practices, and the program and procedural goals of this and
other related Acts, and other purposes as required or au-
thorized by this Act, 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 Act, 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 5(e)(1) applies, the number authorized
under such section.
(2) USE OF ADDITIONAL CREDIT SUBSIDY.—Sub-
ject to the limitation under paragraph (1), the Sec-
retary may use any budget authority available after
credit subsidy has been allocated for the APICs ini-
tially licensed pursuant to section 5 as follows:
(A) ADDITIONAL LICENSES.—To license ad-
ditional APICs.
(B) CREDIT SUBSIDY INCREASES.—To in-
crease the credit subsidy allocated to an APIC as
an award for high performance under this Act,
except that such increases may be made only in
accordance with the following requirements and
limitations:
(i) TIMING.—An increase may only be
provided for an APIC that has been licensed
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 estab-
lish, which shall include the financial
soundness and performance of the APICs, as
measured by achievement of the public per-
formance goals included in the APICs state-
ments required under section 5(a)(6) and
audits conducted under section 9(b)(2).
Among the criteria established by the Sec-
retary to determine priority for selection
under this section, the Secretary shall in-
clude making investments in and loans to
qualified active businesses in urban or rural
areas that have been designated under sub-
chapter U of Chapter 1 of the Internal Rev-
enue Code of 1986 as empowerment zones or
enterprise communities.
(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 Act, includ-
ing regulation, examination, and monitoring of
APICs under this Act.
(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 regula-
tions, requirements, guidelines, or standards for fi-
nancial soundness or management practices of APICs
or entities applying for licensing as APICs. In imple-
menting and monitoring compliance with any such
regulations, requirements, guidelines, and standards,
the Secretary shall enter into such agreements and
memoranda of understanding with the Administrator
and the Secretary of the Treasury as may be appro-