Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Community Renewal and New Markets Act of 2000’’.
(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.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc.
TITLE I—TAX INCENTIVES FOR RENEWAL COMMUNITIES
Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Extension of expensing of environmental remediation costs to renewal
communities; extension of termination date for renewal commu-
nities and empowerment zones.
Sec. 103. Work opportunity credit for hiring youth residing in renewal commu-
nities.
TITLE II—EXTENSION AND EXPANSION OF EMPOWERMENT
ZONE INCENTIVES
Sec. 201. Authority to designate nine additional empowerment zones.
Sec. 202. Extension of enterprise zone treatment through 2009.
Sec. 203. 20 percent employment credit for all empowerment zones
Sec. 204. Increased expensing under section 179.
Sec. 205. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 206. Nonrecognition of gain on rollover of empowerment zone investments.
Sec. 207. Increased exclusion of gain on sale of empowerment zone stock.
TITLE III—NEW MARKETS TAX CREDIT
Sec. 301. New markets tax credit.
TITLE IV—IMPROVEMENTS IN LOW-INCOME HOUSING CREDIT
Sec. 401. Modification of State ceiling on low-income housing credit.
Sec. 402. Modification of criteria for allocating housing credits among projects.
Sec. 403. Additional responsibilities of housing credit agencies.
Sec. 404. Modifications to rules relating to basis of building which is eligible
for credit.
Sec. 405. Other modifications.
Sec. 406. Carryforward rules.
Sec. 407. Effective date.
TITLE V—PRIVATE ACTIVITY BOND VOLUME CAP
Sec. 501. Acceleration of phase-in of increase in volume cap on private activity
bonds.
TITLE VI—AMERICA’S PRIVATE INVESTMENT COMPANIES
Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Definitions.
Sec. 604. Authorization.
Sec. 605. Selection of APICs.
Sec. 606. Operations of APICs.
Sec. 607. Credit enhancement by the Federal Government.
Sec. 608. APIC requests for guarantee actions.
Sec. 609. Examination and monitoring of APICs.
Sec. 610. Penalties.
Sec. 611. Effective date.
Sec. 612. Sunset.
TITLE VII—OTHER COMMUNITY RENEWAL AND NEW MARKETS
ASSISTANCE
Sec. 701. Transfer of unoccupied and substandard HUD-held housing to local
governments and community development corporations.
Sec. 702. Transfer of HUD assets in revitalization areas.
Sec. 703. Risk-sharing demonstration.
Sec. 704. Prevention and treatment of substance abuse; services provided
through religious organizations.
Sec. 705. New markets venture capital program.
Sec. 706. BusinessLINC grants and cooperative agreements.
TITLE I—TAX INCENTIVES FOR
RENEWAL COMMUNITIES
SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RE-
NEWAL COMMUNITIES.
(a) IN GENERAL.—Chapter 1 is amended by adding
at the end the following new subchapter:
‘‘Subchapter X—Renewal Communities
‘‘Part 
I. Designation.
‘‘Part II. Renewal community capital gain; renewal community
business.
‘‘Part III. Additional incentives.
‘‘PART I—DESIGNATION
‘‘Sec. 1400E. Designation of renewal communities.
‘‘SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.
‘‘(a) DESIGNATION.—
‘‘(1) DEFINITIONS.—For purposes of this title,
the term ‘renewal community’ means any area—
‘‘(A) which is nominated by one or more
local governments and the State or States in
which it is located for designation as a renewal
community (hereafter in this section referred to
as a ‘nominated area’), and
‘‘(B) which the Secretary of Housing and
Urban Development designates as a renewal
community, after consultation with—
‘‘(i) the Secretaries of Agriculture,
Commerce, Labor, and the Treasury; the
Director of the Office of Management and
Budget, and the Administrator of the
Small Business Administration, and
‘‘(ii) in the case of an area on an In-
dian reservation, the Secretary of the Inte-
rior.
‘‘(2) NUMBER OF DESIGNATIONS.—
‘‘(A) IN
GENERAL.—The Secretary of
Housing and Urban Development may des-
ignate not more than 40 nominated areas as re-
newal communities.
‘‘(B) MINIMUM
DESIGNATION
IN
RURAL
AREAS.—Of the areas designated under para-
graph (1), at least eight must be areas—
‘‘(i) which are within a local govern-
ment jurisdiction or jurisdictions with a
population of less than 50,000,
‘‘(ii) which are outside of a metropoli-
tan statistical area (within the meaning of
section 143(k)(2)(B)), or
‘‘(iii) which are determined by the
Secretary of Housing and Urban Develop-
ment, after consultation with the Secretary
of Commerce, to be rural areas.
‘‘(3) AREAS DESIGNATED BASED ON DEGREE
OF POVERTY, ETC.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this section, the nominated areas
designated as renewal communities under this
subsection shall be those nominated areas with
the highest average ranking with respect to the
criteria described in subparagraphs (B), (C),
and (D) of subsection (c)(3). For purposes of
the preceding sentence, an area shall be ranked
within each such criterion on the basis of the
amount by which the area exceeds such cri-
terion, with the area which exceeds such cri-
terion by the greatest amount given the highest
ranking.
‘‘(B) EXCEPTION
WHERE
INADEQUATE
COURSE OF ACTION, ETC.—An area shall not be
designated under subparagraph (A) if the Sec-
retary of Housing and Urban Development de-
termines that the course of action described in
subsection (d)(2) with respect to such area is
inadequate.
‘‘(4) LIMITATION ON DESIGNATIONS.—
‘‘(A) PUBLICATION
OF
REGULATIONS.—
The Secretary of Housing and Urban Develop-
ment shall prescribe by regulation no later than
4 months after the date of the enactment of
this section, after consultation with the officials
described in paragraph (1)(B)—
‘‘(i) the procedures for nominating an
area under paragraph (1)(A),
‘‘(ii) the parameters relating to the
size and population characteristics of a re-
newal community, and
‘‘(iii) the manner in which nominated
areas will be evaluated based on the cri-
teria specified in subsection (d).
‘‘(B) TIME LIMITATIONS.—The Secretary
of Housing and Urban Development may des-
ignate nominated areas as renewal communities
only during the 24-month period beginning on
the first day of the first month following the
month in which the regulations described in
subparagraph (A) are prescribed.
‘‘(C) PROCEDURAL RULES.—The Secretary
of Housing and Urban Development shall not
make any designation of a nominated area as a
renewal 
community 
under 
paragraph 
(2)
unless—
‘‘(i) the local governments and the
States in which the nominated area is lo-
cated have the authority—
‘‘(I) to nominate such area for
designation as a renewal community,
‘‘(II) to make the State and local
commitments described in subsection
(d), and
‘‘(III) to provide assurances sat-
isfactory to the Secretary of Housing
and Urban Development that such
commitments will be fulfilled,
‘‘(ii) a nomination regarding such
area is submitted in such a manner and in
such form, and contains such information,
as the Secretary of Housing and Urban
Development shall by regulation prescribe,
and
‘‘(iii) the Secretary of Housing and
Urban Development determines that any
information furnished is reasonably accu-
rate.
‘‘(5) NOMINATION PROCESS FOR INDIAN RES-
ERVATIONS.—For purposes of this subchapter, in
the case of a nominated area on an Indian reserva-
tion, the reservation governing body (as determined
by the Secretary of the Interior) shall be treated as
being both the State and local governments with re-
spect to such area.
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—
‘‘(1) IN GENERAL.—Any designation of an area
as a renewal community shall remain in effect dur-
ing the period beginning on July 1, 2001, and end-
ing on the earliest of—
‘‘(A) December 31, 2009,
‘‘(B) the termination date designated by
the State and local governments in their nomi-
nation, or
‘‘(C) the date the Secretary of Housing
and Urban Development revokes such designa-
tion.
‘‘(2) REVOCATION OF DESIGNATION.—The Sec-
retary of Housing and Urban Development may re-
voke the designation under this section of an area if
such Secretary determines that the local government
or the State in which the area is located—
‘‘(A) has modified the boundaries of the
area, or
‘‘(B) is not complying substantially with,
or fails to make progress in achieving, the State
or local commitments, respectively, described in
subsection (d).
‘‘(3) EARLIER TERMINATION OF CERTAIN BEN-
EFITS
IF
EARLIER
TERMINATION
OF
DESIGNA-
TION.—If the designation of an area as a renewal
community terminates before December 31, 2009—
‘‘(A) the date of such termination shall be
substituted for ‘December 31, 2009’ in section
198(h) with respect to such area, and
‘‘(B) the day after the date of such termi-
nation shall be substituted for ‘January 1,
2010’ each place it appears in sections 1400F
and 1400J with respect to such area.
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate a nominated
area as a renewal community under subsection (a)
only if the area meets the requirements of para-
graphs (2) and (3) of this subsection.
‘‘(2) AREA REQUIREMENTS.—A nominated area
meets the requirements of this paragraph if—
‘‘(A) the area is within the jurisdiction of
one or more local governments,
‘‘(B) the boundary of the area is contin-
uous, and
‘‘(C) the area—
‘‘(i) has a population of not more than
200,000 and at least—
‘‘(I) 4,000 if any portion of such
area (other than a rural area de-
scribed in subsection (a)(2)(B)(i)) is
located within a metropolitan statis-
tical area (within the meaning of sec-
tion 143(k)(2)(B)) which has a popu-
lation of 50,000 or greater, or
‘‘(II) 1,000 in any other case, or
‘‘(ii) is entirely within an Indian res-
ervation (as determined by the Secretary of
the Interior).
‘‘(3) ELIGIBILITY
REQUIREMENTS.—A nomi-
nated area meets the requirements of this paragraph
if the State and the local governments in which it
is located certify in writing (and the Secretary of
Housing and Urban Development, after such review
of supporting data as he deems appropriate, accepts
such certification) that—
‘‘(A) the area is one of pervasive poverty,
unemployment, and general distress;
‘‘(B) the unemployment rate in the area,
as determined by the most recent available
data, was at least 11⁄2 times the national unem-
ployment rate for the period to which such data
relate;
‘‘(C) the poverty rate for each population
census tract within the nominated area is at
least 20 percent; and
‘‘(D) in the case of an urban area, at least
70 percent of the households living in the area
have incomes below 80 percent of the median
income of households within the jurisdiction of
the local government (determined in the same
manner as under section 119(b)(2) of the
Housing and Community Development Act of
1974).
‘‘(4) CONSIDERATION OF HIGH INCIDENCE OF
CRIME.—The Secretary of Housing and Urban De-
velopment shall take into account, in selecting nomi-
nated areas for designation as renewal communities
under this section, the extent to which such areas
have a high incidence of crime.
‘‘(5) CONSIDERATION OF COMMUNITIES IDENTI-
FIED
IN
GAO
STUDY.—The Secretary of Housing
and Urban Development shall take into account, in
selecting nominated areas for designation as renewal
communities under this section, if the area has cen-
sus tracts identified in the May 12, 1998, report of
the General Accounting Office regarding the identi-
fication of economically distressed areas.
‘‘(d) REQUIRED
STATE
AND
LOCAL
COMMIT-
MENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate any nomi-
nated area as a renewal community under subsection
(a) only if—
‘‘(A) the local government and the State in
which the area is located agree in writing that,
during any period during which the area is a
renewal community, such governments will fol-
low a specified course of action which meets the
requirements of paragraph (2) and is designed
to reduce the various burdens borne by employ-
ers or employees in such area, and
‘‘(B) the economic growth promotion re-
quirements of paragraph (3) are met.
‘‘(2) COURSE OF ACTION.—
‘‘(A) IN
GENERAL.—A course of action
meets the requirements of this paragraph if
such course of action is a written document,
signed by a State (or local government) and
neighborhood organizations, which evidences a
partnership between such State or government
and community-based organizations and which
commits each signatory to specific and measur-
able goals, actions, and timetables. Such course
of action shall include at least four of the fol-
lowing:
‘‘(i) A reduction of tax rates or fees
applying within the renewal community.
‘‘(ii) An increase in the level of effi-
ciency of local services within the renewal
community.
‘‘(iii) Crime reduction strategies, such
as crime prevention (including the provi-
sion of crime prevention services by non-
governmental entities).
‘‘(iv) Actions to reduce, remove, sim-
plify, or streamline governmental require-
ments applying within the renewal commu-
nity.
‘‘(v) Involvement in the program by
private entities, organizations, neighbor-
hood 
organizations, 
and 
community
groups, particularly those in the renewal
community, including a commitment from
such private entities to provide jobs and
job training for, and technical, financial, or
other assistance to, employers, employees,
and residents from the renewal community.
‘‘(vi) The gift (or sale at below fair
market value) of surplus real property
(such as land, homes, and commercial or
industrial structures) in the renewal com-
munity to neighborhood organizations,
community development corporations, or
private companies.
‘‘(B) RECOGNITION OF PAST EFFORTS.—
For purposes of this section, in evaluating the
course of action agreed to by any State or local
government, the Secretary of Housing and
Urban Development shall take into account the
past efforts of such State or local government
in reducing the various burdens borne by em-
ployers and employees in the area involved.
‘‘(3) ECONOMIC GROWTH PROMOTION REQUIRE-
MENTS.—The economic growth promotion require-
ments of this paragraph are met with respect to a
nominated area if the local government and the
State in which such area is located certify in writing
that such government and State (respectively) have
repealed or reduced, will not enforce, or will reduce
within the nominated area at least four of the fol-
lowing:
‘‘(A) Licensing requirements for occupa-
tions that do not ordinarily require a profes-
sional degree.
‘‘(B) Zoning restrictions on home-based
businesses which do not create a public nui-
sance.
‘‘(C) Permit requirements for street ven-
dors who do not create a public nuisance.
‘‘(D) Zoning or other restrictions that im-
pede the formation of schools or child care cen-
ters.
‘‘(E) Franchises or other restrictions on
competition for businesses providing public
services, including taxicabs, jitneys, cable tele-
vision, or trash hauling.
This paragraph shall not apply to the extent that
such regulation of businesses and occupations is nec-
essary for and well-tailored to the protection of
health and safety.
‘‘(e) COORDINATION WITH TREATMENT
OF EM-
POWERMENT ZONES AND ENTERPRISE COMMUNITIES.—
For purposes of this title, the designation under section
1391 of any area as an empowerment zone or enterprise
community shall cease to be in effect as of the date that
the designation of any portion of such area as a renewal
community takes effect.
‘‘(f ) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter—
‘‘(1) GOVERNMENTS.—If more than one govern-
ment seeks to nominate an area as a renewal com-
munity, any reference to, or requirement of, this sec-
tion shall apply to all such governments.
‘‘(2) LOCAL
GOVERNMENT.—The term ‘local
government’ means—
‘‘(A) any county, city, town, township, par-
ish, village, or other general purpose political
subdivision of a State, and
‘‘(B) any combination of political subdivi-
sions described in subparagraph (A) recognized
by the Secretary of Housing and Urban Devel-
opment.
‘‘(3) APPLICATION
OF
RULES
RELATING
TO
CENSUS TRACTS.—The rules of section 1392(b)(4)
shall apply.
‘‘(4) CENSUS
DATA.—Population and poverty
rate shall be determined by using 1990 census data.
‘‘(g) PRIORITY FOR DISTRICT OF COLUMBIA NOMI-
NATED AREA.—For purposes of this subchapter—
‘‘(1) IN GENERAL.—Any nominated area within
the District of Columbia shall be treated for pur-
poses of subsection (a)(3) as having the highest av-
erage with respect to the criteria described in sub-
paragraphs (B), (C), and (D) of subsection (c)(3).
‘‘(2) DATE OF DESIGNATION.—Notwithstanding
subsection (b)(1), the designation of a nominated
area within the District of Columbia as a renewal
community shall take effect on January 1, 2003.
‘‘(3) NOMINATION.—The District of Columbia
shall be treated as being both a State and local gov-
ernment with respect to such area.
‘‘PART II—RENEWAL COMMUNITY CAPITAL GAIN;
RENEWAL COMMUNITY BUSINESS
‘‘Sec. 1400F. Renewal community capital gain.
‘‘Sec. 1400G. Renewal community business defined.
‘‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.
‘‘(a) GENERAL RULE.—Gross income does not in-
clude any qualified capital gain from the sale or exchange
of a qualified community asset held for more than 5 years.
‘‘(b) QUALIFIED COMMUNITY ASSET.—For purposes
of this section—
‘‘(1) IN GENERAL.—The term ‘qualified com-
munity asset’ means—
‘‘(A) any qualified community stock,
‘‘(B) any qualified community partnership
interest, and
‘‘(C) any qualified community business
property.
‘‘(2) QUALIFIED COMMUNITY STOCK.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘qualified commu-
nity stock’ means any stock in a domestic cor-
poration if—
‘‘(i) such stock is acquired by the tax-
payer after June 30, 2001, and before
January 1, 2010, at its original issue (di-
rectly or through an underwriter) from the
corporation solely in exchange for cash,
‘‘(ii) as of the time such stock was
issued, such corporation was a renewal
community business (or, in the case of a
new corporation, such corporation was
being organized for purposes of being a re-
newal community business), and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such stock,
such corporation qualified as a renewal
community business.
‘‘(B) REDEMPTIONS.—A rule similar to
the rule of section 1202(c)(3) shall apply for
purposes of this paragraph.
‘‘(3) QUALIFIED COMMUNITY PARTNERSHIP IN-
TEREST.—The term ‘qualified community partner-
ship interest’ means any capital or profits interest in
a domestic partnership if—
‘‘(A) such interest is acquired by the tax-
payer after June 30, 2001, and before January
1, 2010, from the partnership solely in ex-
change for cash,
‘‘(B) as of the time such interest was ac-
quired, such partnership was a renewal commu-
nity business (or, in the case of a new partner-
ship, such partnership was being organized for
purposes of being a renewal community busi-
ness), and
‘‘(C) during substantially all of the
taxpayer’s holding period for such interest,
such partnership qualified as a renewal commu-
nity business.
A rule similar to the rule of paragraph (2)(B) shall
apply for purposes of this paragraph.
‘‘(4) QUALIFIED COMMUNITY BUSINESS PROP-
ERTY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
community business property’ means tangible
property if—
‘‘(i) such property was acquired by
the taxpayer by purchase (as defined in
section 179(d)(2)) after June 30, 2001,
and before January 1, 2010,
‘‘(ii) the original use of such property
in the renewal community commences with
the taxpayer, and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such prop-
erty, substantially all of the use of such
property was in a renewal community busi-
ness of the taxpayer.
‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM-
PROVEMENTS.—The requirements of clauses (i)
and (ii) of subparagraph (A) shall be treated as
satisfied with respect to—
‘‘(i) property which is substantially
improved by the taxpayer before January
1, 2010, and
‘‘(ii) any land on which such property
is located.
The determination of whether a property is sub-
stantially improved shall be made under clause
(ii) of section 1400B(b)(4)(B), except that
‘June 30, 2001’ shall be substituted for ‘De-
cember 31, 1997’ in such clause.
‘‘(c) QUALIFIED CAPITAL GAIN.—For purposes of
this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified capital
gain‘ means any gain recognized on the sale or ex-
change of—
‘‘(A) a capital asset, or
‘‘(B) property used in the trade or busi-
ness (as defined in section 1231(b)).
‘‘(2) GAIN BEFORE JULY 1, 2001, OR AFTER 2014
NOT QUALIFIED.—The term ‘qualified capital gain’
shall not include any gain attributable to periods be-
fore July 1, 2001, or after December 31, 2014.
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar
to the rules of paragraphs (3), (4), and (5) of sec-
tion 1400B(e) shall apply for purposes of this sub-
section.
‘‘(d) CERTAIN RULES TO APPLY.—For purposes of
this section, rules similar to the rules of paragraphs (5),
(6), and (7) of subsection (b), and subsections (f ) and
(g), of section 1400B shall apply; except that for such pur-
poses section 1400B(g)(2) shall be applied by substituting
‘July 1, 2001’ for ‘January 1, 1998’ and ‘December 31,
2014’ for ‘December 31, 2007’.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this section, including regulations to prevent
the avoidance of the purposes of this section.
‘‘SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.
‘‘For purposes of this subchapter, the term ‘renewal
community business’ means any entity or proprietorship
which would be a qualified business entity or qualified pro-
prietorship under section 1397C if references to renewal
communities were substituted for references to empower-
ment zones in such section.
‘‘PART III—ADDITIONAL INCENTIVES
‘‘Sec. 1400H. Renewal community employment credit.
‘‘Sec. 1400I. Commercial revitalization deduction.
‘‘Sec. 1400J. Increase in expensing under section 179.
‘‘SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.
‘‘(a) IN GENERAL.—Subject to the modification in
subsection (b), a renewal community shall be treated as
an empowerment zone for purposes of section 1396 with
respect to wages paid or incurred after June 30, 2001.
‘‘(b) MODIFICATION.—In applying section 1396 with
respect to renewal communities—
‘‘(1) the applicable percentage shall be 15 per-
cent, and
‘‘(2) subsection (c) thereof shall be applied by
substituting ‘$10,000’ for ‘$15,000’ each place it ap-
pears.
‘‘SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.
‘‘(a) GENERAL RULE.—At the election of the tax-
payer, either—
‘‘(1) one-half of any qualified revitalization ex-
penditures chargeable to capital account with respect
to any qualified revitalization building shall be allow-
able as a deduction for the taxable year in which the
building is placed in service, or
‘‘(2) a deduction for all such expenditures shall
be allowable ratably over the 120-month period be-
ginning with the month in which the building is
placed in service.
‘‘(b) QUALIFIED REVITALIZATION BUILDINGS AND
EXPENDITURES.—For purposes of this section—
‘‘(1) QUALIFIED REVITALIZATION BUILDING.—
The term ‘qualified revitalization building’ means
any building (and its structural components) if—
‘‘(A) the building is placed in service by
the taxpayer in a renewal community and the
original use of the building begins with the tax-
payer, or
‘‘(B) in the case of such building not de-
scribed in subparagraph (A), such building—
‘‘(i) 
is 
substantially 
rehabilitated
(within 
the 
meaning 
of 
section
47(c)(1)(C)) by the taxpayer, and
‘‘(ii) is placed in service by the tax-
payer after the rehabilitation in a renewal
community.
‘‘(2) QUALIFIED
REVITALIZATION
EXPENDI-
TURE.—
‘‘(A) IN
GENERAL.—The term ‘qualified
revitalization expenditure’ means any amount
properly chargeable to capital account for prop-
erty for which depreciation is allowable under
section 168 (without regard to this section) and
which is—
‘‘(i) nonresidential real property (as
defined in section 168(e)), or
‘‘(ii) section 1250 property (as defined
in section 1250(c)) which is functionally
related and subordinate to property de-
scribed in clause (i).
‘‘(B) CERTAIN
EXPENDITURES
NOT
IN-
CLUDED.—
‘‘(i) ACQUISITION COST.—In the case
of a building described in paragraph
(1)(B), the cost of acquiring the building
or interest therein shall be treated as a
qualified revitalization expenditure only to
the extent that such cost does not exceed
30 percent of the aggregate qualified revi-
talization expenditures (determined with-
out regard to such cost) with respect to
such building.
‘‘(ii) CREDITS.—The term ‘qualified
revitalization expenditure’ does not include
any expenditure which the taxpayer may
take into account in computing any credit
allowable under this title unless the tax-
payer elects to take the expenditure into
account only for purposes of this section.
‘‘(c) DOLLAR LIMITATION.—The aggregate amount
which may be treated as qualified revitalization expendi-
tures with respect to any qualified revitalization building
shall not exceed the lesser of—
‘‘(1) $10,000,000, or
‘‘(2) the commercial revitalization expenditure
amount allocated to such building under this section
by the commercial revitalization agency for the State
in which the building is located.
‘‘(d) COMMERCIAL REVITALIZATION EXPENDITURE
AMOUNT.—
‘‘(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 of the State commercial
revitalization expenditure ceiling determined under
this paragraph for such calendar year for such agen-
cy.
‘‘(2) STATE COMMERCIAL REVITALIZATION EX-
PENDITURE CEILING.—The State commercial revi-
talization expenditure ceiling applicable to any
State—
‘‘(A) for the period after June 30, 2001,
and before January 1, 2002, is $6,000,000 for
each renewal community in the State,
‘‘(B) for each calendar year after 2001
and before 2010 is $12,000,000 for each re-
newal community in the State, and
‘‘(C) for each calendar year thereafter is
zero.
‘‘(3) COMMERCIAL REVITALIZATION AGENCY.—
For purposes of this section, the term ‘commercial
revitalization agency’ means any agency authorized
by a State to carry out this section.
‘‘(4) TIME AND MANNER OF ALLOCATIONS.—
Allocations under this section shall be made at the
same time and in the same manner as under para-
graphs (1) and (7) of section 42(h).
‘‘(e) RESPONSIBILITIES OF COMMERCIAL REVITAL-
IZATION AGENCIES.—
‘‘(1) 
PLANS
FOR
ALLOCATION.—Notwith-
standing any other provision of this section, the
commercial revitalization expenditure amount with
respect to any building shall be zero unless—
‘‘(A) such amount was allocated pursuant
to a qualified allocation plan of the commercial
revitalization agency which is approved (in ac-
cordance with rules similar to the rules of sec-
tion 147(f )(2) (other than subparagraph (B)(ii)
thereof)) by the governmental unit of which
such agency is a part; and
‘‘(B) such agency notifies the chief execu-
tive officer (or its equivalent) of the local juris-
diction within which the building is located of
such allocation and provides such individual a
reasonable opportunity to comment on the allo-
cation.
‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
poses of this subsection, the term ‘qualified alloca-
tion plan’ means any plan—
‘‘(A) which sets forth selection criteria to
be used to determine priorities of the commer-
cial revitalization agency which are appropriate
to local conditions,
‘‘(B) which considers—
‘‘(i) the degree to which a project con-
tributes to the implementation of a stra-
tegic plan that is devised for a renewal
community through a citizen participation
process,
‘‘(ii) the amount of any increase in
permanent, full-time employment by reason
of any project, and
‘‘(iii) the active involvement of resi-
dents and nonprofit groups within the re-
newal community, and
‘‘(C) which provides a procedure that the
agency (or its agent) will follow in monitoring
compliance with this section.
‘‘(f) SPECIAL RULES.—
‘‘(1) DEDUCTION IN LIEU OF DEPRECIATION.—
The deduction provided by this section for qualified
revitalization expenditures shall—
‘‘(A) with respect to the deduction deter-
mined under subsection (a)(1), be in lieu of any
depreciation deduction otherwise allowable on
account of one-half of such expenditures, and
‘‘(B) with respect to the deduction deter-
mined under subsection (a)(2), be in lieu of any
depreciation deduction otherwise allowable on
account of all of such expenditures.
‘‘(2) BASIS ADJUSTMENT, ETC.—For purposes
of sections 1016 and 1250, the deduction under this
section shall be treated in the same manner as a de-
preciation deduction. For purposes of section
1250(b)(5), the straight line method of adjustment
shall be determined without regard to this section.
‘‘(3) SUBSTANTIAL REHABILITATIONS TREATED
AS SEPARATE BUILDINGS.—A substantial rehabilita-
tion (within the meaning of section 47(c)(1)(C)) of
a building shall be treated as a separate building for
purposes of subsection (a).
‘‘(4) CLARIFICATION
OF
ALLOWANCE
OF
DE-
DUCTION
UNDER
MINIMUM
TAX.—Notwithstanding
section 56(a)(1), the deduction under this section
shall be allowed in determining alternative minimum
taxable income under section 55.
‘‘(g) REGULATIONS.—For purposes of this section,
the Secretary shall, by regulations, provide for the applica-
tion of rules similar to the rules of section 49 and sub-
sections (a) and (b) of section 50.
‘‘(h) TERMINATION.—This section shall not apply to
any building placed in service after December 31, 2009.
‘‘SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.
‘‘(a) 
IN
GENERAL.—For 
purposes 
of 
section
1397A—
‘‘(1) a renewal community shall be treated as
an empowerment zone,
‘‘(2) a renewal community business shall be
treated as an empowerment zone business, and
‘‘(3) qualified renewal property shall be treated
as enterprise zone property.
‘‘(b) QUALIFIED RENEWAL PROPERTY.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified renewal
property’ means any property to which section 168
applies (or would apply but for section 179) if—
‘‘(A) such property was acquired by the
taxpayer by purchase (as defined in section
179(d)(2)) after June 30, 2001, and before
January 1, 2010, and
‘‘(B) such property would be qualified zone
property (as defined in section 1397D) if ref-
erences to renewal communities were sub-
stituted for references to empowerment zones in
section 1397D.
‘‘(2) CERTAIN RULES TO APPLY.—The rules of
subsections (a)(2) and (b) of section 1397D shall
apply for purposes of this section.’’.
(b) EXCEPTION FOR COMMERCIAL REVITALIZATION
DEDUCTION FROM PASSIVE LOSS RULES.—
(1) Paragraph (3) of section 469(i) is amended
by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and
by inserting after subparagraph (B) the following
new subparagraph:
‘‘(C) EXCEPTION FOR COMMERCIAL REVI-
TALIZATION
DEDUCTION.—Subparagraph (A)
shall not apply to any portion of the passive ac-
tivity loss for any taxable year which is attrib-
utable to the commercial revitalization deduc-
tion under section 1400I.’’.
(2) Subparagraph (E) of section 469(i)(3), as
redesignated by subparagraph (A), is amended to
read as follows:
‘‘(E) ORDERING RULES TO REFLECT EX-
CEPTIONS
AND
SEPARATE
PHASE-OUTS.—If
subparagraph (B), (C), or (D) applies for a tax-
able year, paragraph (1) shall be applied—
‘‘(i) first to the portion of the passive
activity loss to which subparagraph (C)
does not apply,
‘‘(ii) second to the portion of the pas-
sive activity credit to which subparagraph
(B) or (D) does not apply,
‘‘(iii) third to the portion of such
credit to which subparagraph (B) applies,
‘‘(iv) fourth to the portion of such loss
to which subparagraph (C) applies, and
‘‘(v) then to the portion of such credit
to which subparagraph (D) applies.’’.
(3)(A) Subparagraph (B) of section 469(i)(6) is
amended by striking ‘‘or’’ at the end of clause (i),
by striking the period at the end of clause (ii) and
inserting ‘‘, or’’, and by adding at the end the fol-
lowing new clause:
‘‘(iii) any deduction under section
1400I (relating to commercial revitaliza-
tion deduction).’’.
(B) The heading for such subparagraph (B) is
amended by striking ‘‘OR REHABILITATION CREDIT’’
and inserting ‘‘, REHABILITATION CREDIT, OR COM-
MERCIAL REVITALIZATION DEDUCTION’’.
(c) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 is amended by adding at the end
the following new item:
‘‘Subchapter X. Renewal Communities.’’.
SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL
REMEDIATION COSTS TO RENEWAL COMMU-
NITIES; EXTENSION OF TERMINATION DATE
FOR 
RENEWAL 
COMMUNITIES 
AND 
EM-
POWERMENT ZONES.
(a) EXTENSION.—
(1) IN GENERAL.—Subparagraph (A) of section
198(c)(2) (defining targeted area) is amended by
striking ‘‘and’’ at the end of clause (iii), by striking
the period at the end of clause (iv) and inserting ‘‘,
and’’, and by adding at the end the following new
clause:
‘‘(v) any renewal community (as de-
fined in section 1400E).’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to expenditures paid or
incurred after June 30, 2001.
(b) EXTENSION
OF
TERMINATION
DATE.—Sub-
section (h) of section 198 is amended by inserting before
the period ‘‘(December 31, 2009, in the case of an em-
powerment zone or renewal community)’’.
SEC. 103. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH
RESIDING IN RENEWAL COMMUNITIES.
(a) HIGH-RISK YOUTH.—Subparagraphs (A)(ii) and
(B) of section 51(d)(5) are each amended by striking ‘‘em-
powerment zone or enterprise community’’ and inserting
‘‘empowerment zone, enterprise community, or renewal
community’’.
(b) QUALIFIED
SUMMER
YOUTH
EMPLOYEE.—
Clause (iv) of section 51(d)(7)(A) is amended by striking
‘‘empowerment zone or enterprise community’’ and insert-
ing ‘‘empowerment zone, enterprise community, or re-
newal community’’.
(c) HEADINGS.—Paragraphs (5)(B) and (7)(C) of
section 51(d) are each amended by inserting ‘‘OR COMMU-
NITY’’ in the heading after ‘‘ZONE’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to individuals who begin work for
the employer after June 30, 2001.
TITLE II—EXTENSION AND EX-
PANSION OF EMPOWERMENT
ZONE INCENTIVES
SEC. 201. AUTHORITY TO DESIGNATE NINE ADDITIONAL
EMPOWERMENT ZONES.
Section 1391 is amended by adding at the end the
following new subsection:
‘‘(h) ADDITIONAL DESIGNATIONS PERMITTED.—
‘‘(1) IN GENERAL.—In addition to the areas
designated under subsections (a) and (g), the appro-
priate Secretaries may designate in the aggregate an
additional nine nominated areas as empowerment
zones under this section, subject to the availability
of eligible nominated areas. Of that number, not
more than seven may be designated in urban areas
and not more than two may be designated in rural
areas.
‘‘(2) PERIOD DESIGNATIONS MAY BE MADE AND
TAKE EFFECT.—A designation may be made under
this subsection after the date of the enactment of
this subsection and before January 1, 2002. Subject
to subparagraphs (B) and (C) of subsection (d)(1),
such designations shall remain in effect during the
period beginning on January 1, 2002, and ending on
December 31, 2009.