I 
109TH CONGRESS 
2D SESSION 
H. R. 5660 
To amend the Internal Revenue Code of 1986 to extend and expand the 
benefits for businesses operating in empowerment zones, enterprise com-
munities, or renewal communities, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 21, 2006 
Mr. ALEXANDER (for himself, Mr. MCCRERY, Mr. ISTOOK, Mr. WALSH, Mr. 
RAHALL, Mr. BOUSTANY, Mr. MELANCON, and Mr. JINDAL) introduced 
the following bill; which was referred to the Committee on Ways and 
Means 
A BILL 
To amend the Internal Revenue Code of 1986 to extend 
and expand the benefits for businesses operating in em-
powerment zones, enterprise communities, or renewal 
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. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Empowerment Zone and Renewal Community Enhance-
ment Act of 2006’’. 
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(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
SEC. 2. EXTENSION OF BENEFITS. 
(a) EMPOWERMENT ZONES AND ENTERPRISE COM-
MUNITIES.— 
(1) ROUNDS
I
AND
II
DESIGNATIONS.—Sub-
section (d)(1)(A)(i) of section 1391 is amended— 
(A) by striking ‘‘December 31, 2009’’ and 
inserting ‘‘December 31, 2015’’, and 
(B) by adding at the end the following new 
flush sentence: 
‘‘For purposes of section 1396, subparagraph (A) 
shall be applied by substituting ‘December 31, 2009’ 
for ‘December 31, 2015’ in the case of designations 
made under subsection (a).’’. 
(2) ROUND
III
DESIGNATIONS.—Subsection 
(h)(2) of section 1391 is amended by striking ‘‘De-
cember 31, 2009’’ and inserting ‘‘December 31, 
2015’’. 
(b) RENEWAL COMMUNITIES.— 
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(1) Sections 1400E(b) and 1400I(g) are each 
amended by striking ‘‘December 31, 2009’’ and in-
serting ‘‘December 31, 2015’’. 
(2) Sections 1400E(b)(3), 1400F(b), and 
1400J(b) are each amended by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2016’’. 
(3) Section 1400F(d) is amended— 
(A) by striking ‘‘December 31, 2010’’ and 
inserting ‘‘December 31, 2016’’, and 
(B) by striking ‘‘December 31, 2014’’ and 
inserting ‘‘December 31, 2020’’. 
(4) Section 1400I(d)(2)(A) is amended by strik-
ing ‘‘2010’’ and inserting ‘‘2016’’. 
SEC. 3. REVISION OF BENEFITS. 
(a) SAFE HARBOR
FOR MEETING REQUIREMENT 
THAT 35 PERCENT OF EMPLOYEES BE RESIDENTS OF 
ZONE.—Paragraph (2) of section 1394(b) (defining enter-
prise zone facility) is amended by adding at the end the 
following new subparagraph: 
‘‘(D) ADDITIONAL
SAFE
HARBOR
FOR 
MEETING REQUIREMENT THAT 35 PERCENT OF 
EMPLOYEES BE RESIDENTS OF ZONE.—The re-
quirements of subsections (b)(6) and (c)(7) of 
section 1397C shall not fail to be treated as 
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met for any period with respect to a qualified 
business if— 
‘‘(i) as of the date of issuance of the 
issue, it is reasonably expected that within 
3 years after such date the business will 
increase employment by at least the lesser 
of— 
‘‘(I)(aa) 500 full-time employees 
in the case of a business located in a 
renewal community or in a rural area 
(as defined in section 1393(a)(2)) in 
an empowerment zone or enterprise 
community, or 
‘‘(bb) 1,000 full-time employees 
in the case of a business located out-
side a rural area (as so defined) in an 
empowerment zone or enterprise com-
munity, or 
‘‘(II) 10 percent of the number 
of full-time employees estimated to 
have been employed in such zone or 
community on the date of its designa-
tion, 
‘‘(ii) as of the date of issuance of the 
issue, it is reasonably expected that as a 
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result of the bonds the business will in-
crease employment by at least one job for 
each $150,000 in face amount of the issue, 
‘‘(iii) at any time within 3 years after 
the date of issuance of the issue, the re-
quirements of such subsections are met, or 
‘‘(iv) the business enters into a bind-
ing agreement with the appropriate local 
government employment agency to apply a 
first source rule to advertise and prioritize 
employment opportunities with such busi-
ness for qualified residents of such zone or 
community.’’. 
(b) ELIGIBILITY OF BUSINESSES DEVELOPING OR 
HOLDING
INTANGIBLES.—Paragraph (4) of section 
1397C(d) is amended by inserting before the period ‘‘un-
less the intangibles are developed within the empowerment 
zone’’. 
(c) REDUCED WAGE CREDIT ALLOWABLE FOR ZONE 
RESIDENTS EMPLOYED OUTSIDE THE ZONE; EMPLOYEES 
NEED NOT BE RESIDENTS OF ZONE IN WHICH EM-
PLOYED.— 
(1) IN
GENERAL.—Subsection (b) of section 
1396 is amended to read as follows: 
‘‘(b) APPLICABLE PERCENTAGE.— 
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‘‘(1) QUALIFIED ZONE EMPLOYEES WHO PER-
FORM SUBSTANTIALLY ALL OF THEIR SERVICES IN 
AN EMPOWERMENT ZONE.—The applicable percent-
age is 20 percent with respect to qualified zone em-
ployees who would meet the requirement of sub-
section (d)(1) if only services performed within an 
empowerment zone were taken into account. 
‘‘(2) OTHER QUALIFIED ZONE EMPLOYEES.— 
‘‘(A) IN
GENERAL.—The applicable per-
centage is— 
‘‘(i) 20 percent in the case of des-
ignated qualified zone employees of em-
ployers which are enterprise zone busi-
nesses, and 
‘‘(ii) 10 percent in the case of any 
other designated qualified zone employee. 
‘‘(B) LIMITATIONS ON NUMBER OF DES-
IGNATED EMPLOYEES.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), the term ‘designated 
qualified zone employee’ means a qualified 
zone employee— 
‘‘(I) to whom paragraph (1) does 
not apply, and 
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‘‘(II) who is designated under 
this subparagraph. 
‘‘(ii) MANNER
OF
DESIGNATIONS.— 
Designations under this subparagraph 
shall be made by the local government or 
governments which nominated the area to 
be an empowerment zone. 
‘‘(iii) 
LIMITATION
ON
DESIGNA-
TIONS.—The number of employees for 
whom a designation under this subpara-
graph is in effect at any one time with re-
spect to each empowerment zone shall not 
exceed— 
‘‘(I) 500 for purposes of subpara-
graph (A)(i), and 
‘‘(II) 2,000 for purposes of sub-
paragraph (A)(ii).’’. 
(2) QUALIFIED ZONE EMPLOYEE.—Paragraph 
(1) of section 1396(d) is amended— 
(A) by striking ‘‘within an empowerment 
zone’’ in subparagraph (A), and 
(B) by striking ‘‘such empowerment zone’’ 
in subparagraph (B) and inserting ‘‘an em-
powerment zone’’. 
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(d) CARRYFORWARD OF UNALLOCATED STATE COM-
MERCIAL
REVITALIZATION
EXPENDITURE
CEILING.— 
Paragraph (1) of section 1400I(d) is amended to read as 
follows: 
‘‘(1) IN GENERAL.—The aggregate commercial 
revitalization expenditure amount which a commer-
cial revitalization agency may allocate for any cal-
endar year is the amount equal to the sum of— 
‘‘(A) the amount of the State commercial 
revitalization expenditure ceiling determined 
under this paragraph for such calendar year for 
such agency (determined without regard to sub-
paragraph (B)), and 
‘‘(B) the aggregate of the unused State 
commercial revitalization expenditure ceilings 
determined under this paragraph for such agen-
cy for each of the 2 preceding calendar years. 
For purposes of subparagraph (B), amounts of ex-
penditure ceiling shall be treated as allocated by an 
agency first from unused amounts for the second 
preceding calendar year, then from unused amounts 
for the 1st preceding calendar year, and then from 
amounts from the current year State allocation.’’. 
(e) AUTHORITY TO EXPAND BOUNDARIES OF ZONES 
AND COMMUNITIES.— 
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(1) EMPOWERMENT
ZONES
AND
ENTERPRISE 
COMMUNITIES.—Section 1391 is amended by adding 
at the end the following new subsection: 
‘‘(i) AUTHORITY TO EXPAND BOUNDARIES OF DES-
IGNATED AREAS.—At the request of all governments 
which nominated an area as an empowerment zone or en-
terprise community, the appropriate Secretary may ex-
pand the area of such zone or community to include 1 
or more noncontiguous areas if such governments estab-
lish to the satisfaction of the appropriate Secretary that 
such expansion furthers the purposes of the designation 
of the initial area as such a zone or community.’’. 
(2) RENEWAL COMMUNITIES.—Section 1400E 
is amended by adding at the end the following new 
subsection: 
‘‘(h) AUTHORITY TO EXPAND BOUNDARIES OF DES-
IGNATED AREAS.—At the request of all governments 
which nominated an area as a renewal community, the 
Secretary of Housing and Urban Development may ex-
pand the area of such community to include 1 or more 
noncontiguous areas if such governments establish to the 
satisfaction of such Secretary that such expansion fur-
thers the purposes of the designation of the initial area 
as a renewal community.’’. 
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(f) MODIFICATION OF REQUIREMENT FOR EXPAND-
ING DESIGNATED AREA BASED
ON 2000 CENSUS.— 
Clause (ii) of section 1400E(g)(1)(A) is amended to read 
as follows: 
‘‘(ii) such tract has a poverty rate 
using 2000 census data— 
‘‘(I) which is at least 20 percent, 
or 
‘‘(II) which exceeds the poverty 
rate for such tract using 1990 census 
data.’’. 
(g) REPEAL OF EXCLUSION OF CENTRAL BUSINESS 
DISTRICT FROM ELIGIBILITY AS DESIGNATED AREA.— 
Paragraph (3) of section 1392(a) is amended by adding 
‘‘and’’ at the end of subparagraph (B), by striking ‘‘, and’’ 
at the end of subparagraph (C) and inserting a period, 
and by striking subparagraph (D). 
(h) CARRYOVER OF UNUSED INCREASED SECTION 
179 EXPENSING LIMIT.— 
(1) IN GENERAL.—Subparagraph (A) of section 
1397A(a)(1) is amended to read as follows: 
‘‘(A) the sum of— 
‘‘(i) $35,000, and 
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‘‘(ii) the aggregate of the unused in-
creased limitations for each of the 2 pre-
ceding taxable years, or’’. 
(2) UNUSED INCREASED LIMITATION.—Section 
1392 is amended by adding at the end the following 
new subsection: 
‘‘(c) UNUSED INCREASED LIMITATION.—For pur-
poses of subsection (a)(1)(A)— 
‘‘(1) IN GENERAL.—The unused increased limi-
tation for any taxable year is the excess (but not 
more than $35,000) of the limitation under section 
179(b)(1) as increased under subsection (a) over the 
cost of section 179 property which is qualified zone 
property placed in service during the taxable year. 
‘‘(2) ORDERING RULE.—The limitation under 
section 179(b)(1) as increased under subsection (a) 
shall be treated as used first from unused limitation 
for the second preceding calendar year, then from 
unused limitation for the 1st preceding calendar 
year, and then from such limitation for the current 
year.’’. 
(i) ELECTION
OF FINANCING ARRANGEMENT
IN 
LIEU OF TAX BENEFITS.—Section 1396 is amended by 
adding at the end the following new subsection: 
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‘‘(e) ELECTION OF FINANCING ARRANGEMENT IN 
LIEU OF TAX BENEFITS.— 
‘‘(1) IN GENERAL.—At the election of any sig-
nificant empowerment zone business, for the pay-
ment period of the debt obligation designated in 
such election by such business— 
‘‘(A) such business— 
‘‘(i) shall not be treated as an enter-
prise zone business for purposes of section 
1396, and 
‘‘(ii) shall not be allowed any deduc-
tion for depreciation under section168 with 
respect to qualified zone property, and 
‘‘(B) the Secretary shall make the pay-
ments described in paragraph (2) to the holder 
of such debt obligation. 
‘‘(2) PAYMENTS.— 
‘‘(A) IN GENERAL.—At the beginning of 
each year of the payment period, the Secretary 
shall pay (out of any money in the Treasury not 
otherwise appropriated) to the holder of the 
debt obligation designated by such zone busi-
ness an amount equal to the value of the tax 
benefits under this chapter for such year to 
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which such zone business would be entitled but 
for the election under this subsection. 
‘‘(B) ASSUMPTIONS.—For purposes of val-
uing tax benefits under subparagraph (A), the 
Secretary shall assume that— 
‘‘(i) the business is an enterprise zone 
business for purposes of section 1396, 
‘‘(ii) all qualified zone property placed 
in service by the zone business is a single 
property with a recovery period under sec-
tion 168 of 15 years, and 
‘‘(iii) the rate of tax under this chap-
ter is 25 percent. 
‘‘(C) PAYMENT PERIOD.—The payment pe-
riod is the period of 15 calendar years begin-
ning with the earlier of— 
‘‘(i) the calendar year specified (be-
fore the beginning of such year) by the 
taxpayer as the 1st year of the payment 
period, or 
‘‘(ii) the 5th calendar year beginning 
after the date that the election under this 
subsection is made. 
‘‘(3) SIGNIFICANT EMPOWERMENT ZONE BUSI-
NESS.—For purposes of this subsection, the term 
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‘significant empowerment zone business’ means any 
trade or business operating in an empowerment zone 
if— 
‘‘(A) such business is nominated by the 
State or local government which nominated the 
area taken into account under section 1396 to 
be an empowerment zone, and 
‘‘(B) the Secretary of Housing and Urban 
Development determines that it is reasonably 
anticipated that such business will increase em-
ployment in such zone during the first 3 years 
of the payment period by at least the lesser 
of— 
‘‘(i) 1,000 full-time employees, or 
‘‘(ii) 10 percent of the number of full- 
time employees estimated to have been em-
ployed in such zone on the date of its des-
ignation.’’. 
(j) CERTAIN
FEDERALLY
GUARANTEED
BONDS 
ISSUED TO PROVIDE INVESTMENTS IN EMPOWERMENT 
ZONES AND RENEWAL COMMUNITIES PERMITTED TO BE 
TAX-EXEMPT, 
ETC.—Subparagraph 
(A) 
of 
section 
149(b)(3) is amended by striking ‘‘or’’ at the end of clause 
(ii), by striking the period at the end of clause (iii) and 
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inserting ‘‘, or’’, and by adding at the end the following 
new clause: 
‘‘(iv) any guarantee by a Federal 
Home Loan Bank for a bond 95 percent or 
more of the net proceeds of which are to 
be used to provide property in an em-
powerment zone or renewal community.’’. 
(k) TAX-EXEMPT INTEREST OF FINANCIAL INSTITU-
TIONS ON ZONE FACILITY BONDS NOT SUBJECT TO IN-
TEREST DISALLOWANCE.—Subparagraph (B) of section 
265(b)(3) (defining qualified bond) is amended by adding 
at the end the following new clause: 
‘‘(iii) ENTERPRISE
ZONE
FACILITY 
BONDS.—The term ‘qualified tax-exempt 
obligation’ includes any obligation which is 
treated as an exempt facility bond by sec-
tion 1394.’’. 
(l) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
(m) REPORTING.—The Secretary of the Treasury (or 
the Secretary’s delegate) shall annually submit to the 
Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate 
a report detailing for each empowerment zone, enterprise 
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community, and renewal community the amount and type 
of claimed tax benefits. 
Æ 
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