[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2848 Reported in House (RH)]






                                                 Union Calendar No. 464
106th CONGRESS
  2d Session
                                H. R. 2848

                      [Report No. 106-706, Part I]

   To amend the Small Business Investment Act of 1958 and the Small 
  Business Act to establish a New Markets Venture Capital Program, to 
establish an America's Private Investment Company Program, to amend the 
 Internal Revenue Code of 1986 to establish a New Markets Tax Credit, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 13, 1999

  Mr. Watts of Oklahoma (for himself, Mr. Talent, Mr. Leach, and Mr. 
   Baker) (all by request) introduced the following bill; which was 
  referred to the Committee on Banking and Financial Services, and in 
addition to the Committees on Ways and Means, and Small Business, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

                             June 28, 2000

 Reported from the Committee on Banking and Financial Services with an 
                               amendment
  [Omit the part struck through and insert the part printed in italic]

                             June 28, 2000

    Referral to the Committees on Ways and Means and Small Business 
       extended for a period ending not later than July 28, 2000

                             July 28, 2000

    The Committees on Ways and Means and Small Business discharged; 
committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed

_______________________________________________________________________

                                 A BILL


 
   To amend the Small Business Investment Act of 1958 and the Small 
  Business Act to establish a New Markets Venture Capital Program, to 
establish an America's Private Investment Company Program, to amend the 
 Internal Revenue Code of 1986 to establish a New Markets Tax Credit, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``New Markets Initiative Act of 
1999''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
              TITLE I--NEW MARKETS VENTURE CAPITAL PROGRAM

Sec. 101. New Markets Venture Capital Program.
Sec. 102. Conforming amendments.
Sec. 103. Bankruptcy exemption for New Markets Venture Capital 
                            companies.
Sec. 104. Federal Savings Associations.
                     TITLE II--SMALL BUSINESS LOANS

Sec. 201. Participation rate.
Sec. 202. Guarantee fee.
Sec. 203. Guarantee reduction.
       <DELETED>TITLE III--AMERICA'S PRIVATE INVESTMENT COMPANIES

<DELETED>Sec. 301. Congressional findings and purposes.
<DELETED>Sec. 302. Definitions.
<DELETED>Sec. 303. Authorization.
<DELETED>Sec. 304. Selection of APICs.
<DELETED>Sec. 305. Operations of APICs.
<DELETED>Sec. 306. Credit enhancement by the Federal Government.
<DELETED>Sec. 307. APIC requests for guarantee actions.
<DELETED>Sec. 308. Examination and monitoring of APICs.
<DELETED>Sec. 309. Incentives and penalties.

      </DELETED>TITLE III--AMERICA'S PRIVATE INVESTMENT COMPANIES

Sec. 301. Short Title.
Sec. 302. Findings and purposes.
Sec. 303. Definitions.
Sec. 304. Authorization.
Sec. 305. Selection of APICs.
Sec. 306. Operations of APICs.
Sec. 307. Credit enhancement by the Federal Government.
Sec. 308. APIC requests for guarantee actions.
Sec. 309. Examination and monitoring of APICs.
Sec. 310. Penalties.
Sec. 311. Effective date.
Sec. 312. Sunset.
                      TITLE IV--NEW MARKETS CREDIT

Sec. 401. New markets tax credit.

              TITLE I--NEW MARKETS VENTURE CAPITAL PROGRAM

SEC. 101. NEW MARKETS VENTURE CAPITAL PROGRAM.

    Title III of the Small Business Investment Act of 1958 is amended--
            (1) in the heading, by striking ``SMALL BUSINESS INVESTMENT 
        COMPANIES'' and inserting ``INVESTMENT DIVISION PROGRAMS'';
            (2) by inserting before the heading for section 301 the 
        following:

            ``Part A--Small Business Investment Companies'';

        and
            (3) by adding at the end the following:

             ``Part B--New Markets Venture Capital Program

``SEC. 350. DEFINITIONS.

    ``In this part--
            ``(1) the term `New Markets Venture Capital company' means 
        a company that--
                    ``(A) has been approved by the Administration under 
                section 353(e) to operate under the New Markets Venture 
                Capital Program; and
                    ``(B) has entered into a participation agreement 
                with the Administration; and
            ``(2) the term `low- or moderate-income geographic area' 
        means--
                    ``(A) a census tract, or the equivalent county 
                division as defined by the Bureau of the Census for 
                purposes of defining poverty areas, in which--
                            ``(i) the poverty rate is not less than 20 
                        percent; or
                            ``(ii) in the case of a census tract or 
                        division located within a metropolitan area, 
                        the median family income for such tract or 
                        division does not exceed the greater of 80 
                        percent of the statewide median family income 
                        or 80 percent of the metropolitan-area median 
                        family income: or
                            ``(iii) in the case of a census tract or 
                        division not located within a metropolitan 
                        area, the median family income for such tract 
                        or division does not exceed 80 percent of the 
                        statewide median family income; and
                    ``(B) any area located within--
                            ``(i) a HUBZone (as defined in section 
                        126.103 of title 13, Code of Federal 
                        Regulations);
                            ``(ii) an Urban Empowerment Zone or an 
                        Urban Enterprise Community, as designated by 
                        the Secretary of the Department of Housing and 
                        Urban Development; or
                            ``(iii) a rural Empowerment Zone or a Rural 
                        Enterprise Community, as designated by the 
                        Secretary of the Department of Agriculture; and
            ``(3) the term `participation agreement' means an agreement 
        between the Administration and a New Markets Venture Capital 
        company--
                    ``(A) detailing the company's operating plan and 
                investment criteria; and
                    ``(B) requiring that investments be made in smaller 
                enterprises at least 60 percent of which are located in 
                low- or moderate-income geographic areas.

``SEC. 351. PURPOSES.

    ``The purposes of the New Markets Venture Capital Program are--
            ``(1) to encourage venture capital investment in smaller 
        enterprises located in urban and rural areas; and
            ``(2) to establish a venture capital program to be 
        administered by the Small Business Administration--
                    ``(A) to enter into a participation agreement with 
                New Markets Venture Capital companies;
                    ``(B) to guarantee debentures of New Markets 
                Venture Capital companies to enable each such company 
                to make venture capital investments in smaller 
                enterprises in urban and rural areas; and
                    ``(C) to make grants to New Markets Venture Capital 
                companies for the purpose of providing marketing, 
                management, and technical assistance to smaller 
                enterprises financed, or expected to be financed, by 
                such company.

``SEC. 352. ESTABLISHMENT OF PROGRAM.

    ``The Administration shall establish a New Markets Venture Capital 
Program, under which the Administration may--
            ``(1) enter into a participation agreement with each New 
        Markets Venture Capital company for the purposes set forth in 
        section 351;
            ``(2) guarantee debentures issued by each New Markets 
        Venture Capital company as provided in section 354; and
            ``(3) make grants to each New Markets Venture Capital 
        company as provided in section 355.

``SEC. 353. SELECTION OF NEW MARKETS VENTURE CAPITAL COMPANIES.

    ``(a) Eligibility.--A company shall be eligible for participation 
in the New Markets Venture Capital Program if--
            ``(1) it is a newly formed for-profit entity or a newly 
        formed for-profit subsidiary of an existing entity; and
            ``(2) it has a management team with experience in community 
        development financing or venture capital financing.
    ``(b) Application.--To participate in the New Markets Venture 
Capital Program, an eligible company shall submit an application to the 
Administration that includes--
            ``(1) a business plan describing how the company intends to 
        make successful venture capital investments in low- or 
        moderate-income geographic areas;
            ``(2) information regarding the qualifications of the 
        company's management;
            ``(3) a description of how the company intends to work with 
        community organizations;
            ``(4) a description of how the company will use the grant 
        funds provided under this part to provide marketing, 
        management, and technical assistance to smaller enterprises;
            ``(5) a description of the criteria the company will use to 
        evaluate whether and to what extent it meets the objectives of 
        the program established under this part;
            ``(6) information regarding the management and financial 
        strength of any parent firm, affiliated firm, or any other firm 
        essential to the success of the company's business plan; and
            ``(7) such other information as the Administration may 
        require.
    ``(c) Conditional Approval.--
            ``(1) In general.--From among companies submitting 
        applications under subsection (b), the Administration shall in 
        accordance with this subsection conditionally approve companies 
        to participate in the New Markets Venture Capital Program.
            ``(2) Selection criteria.--In selecting companies under 
        paragraph (1), the Administration shall consider the following:
                    ``(A) The likelihood that the applicant will meet 
                the goals of its business plan.
                    ``(B) The experience and background of the 
                company's management team.
                    ``(C) The need for equity investments in the areas 
                in which the company intends to invest.
                    ``(D) The extent to which the company will 
                concentrate its activities on serving the areas in 
                which it intends to invest.
                    ``(E) The likelihood that the company will be able 
                to satisfy the conditions under subsection (d).
                    ``(F) The extent to which the activities proposed 
                by the company will expand economic opportunities in 
                the areas in which the company intends to invest.
                    ``(G) Any other factors deemed appropriate by the 
                Administration.
            ``(3) Nationwide distribution.--In selecting companies 
        under paragraph (1), the Administration shall ensure that 
        companies are chosen in such a way that investments under the 
        New Markets Venture Capital Program will be made nationwide.
    ``(d) Conditions To Be Met for Final Approval.--The Administration 
shall give each conditionally approved company a period of time, not to 
exceed 24 months, to satisfy the following conditions:
            ``(1) Capital requirement.--Each conditionally approved 
        company must raise not less than $5,000,000 of contributed 
        capital or binding capital commitments from 1 or more investors 
        (other than an agency of the Federal Government) who meet 
        criteria established by the Administration; and
            ``(2) Non-Administration resources for technical 
        assistance.--
                    ``(A) In general.--In order to provide marketing, 
                management, and technical assistance, each 
                conditionally approved company must--
                            ``(i) have binding commitments (in cash or 
                        in-kind)--
                                    ``(I) from any sources other than 
                                the Administration that meet criteria 
                                established by the Administration:
                                    ``(II) payable or available over a 
                                multiyear period acceptable to the 
                                Administration (not to exceed 10 
                                years): and
                                    ``(III) in an amount equal to 30 
                                percent of the capital and commitments 
                                raised under subsection (d)(1); or
                            ``(ii) must have purchased an annuity--
                                    ``(I) from an insurance company 
                                acceptable to the Administration;
                                    ``(II) using funds (other than the 
                                funds raised to satisfy subsection 
                                (d)(1)) from any source other than the 
                                Administration; and
                                    ``(III) that yields cash payments 
                                over a multiyear period acceptable to 
                                the Administration (not to exceed 10 
                                years) in an amount equal to 30 percent 
                                of the capital and commitments raised 
                                under subsection (d)(1); or
                            ``(iii) must have binding commitments (in 
                        cash or in-kind) of the type described in 
                        subsection (d)(2)(A)(i) and must have purchased 
                        an annuity of the type described in subsection 
                        (d)(2)(A)(ii), which in the aggregate make 
                        available, over a multiyear period acceptable 
                        to the Administration (not to exceed 10 years), 
                        an amount equal to 30 percent of the capital 
                        and commitments raised under subsection (d)(1).
                    ``(B) Special rule.-- On a showing of special 
                circumstances and good cause, the Administrator may 
                with respect to a particular company waive the 
                requirements of subsection (d)(2) if the Administrator 
                considers the company to have a viable business plan 
                that reasonably projects the company's capacity to 
                raise the amount (in cash or in-kind) required under 
                subsection (d)(2)(A).
    ``(e) Final Approval.--The Administration shall grant to a 
conditionally approved company final approval to participate in the New 
Markets Venture Capital Program as a New Markets Venture Capital 
company after the company--
            ``(1) has satisfied the conditions under subsection (d); 
        and
            ``(2) has entered into a participation agreement with the 
        Administration.

``SEC. 354. DEBENTURES.

    ``(a) In General.--The Administration may, to the extent authorized 
in advance in appropriations Acts, guarantee the timely payment of 
principal and interest as scheduled on debentures issued by New Markets 
Venture Capital companies.
    ``(b) Terms and Conditions.--The Administration may make guarantees 
under this section on such terms and conditions as it deems 
appropriate, except that the term of any debenture guaranteed under 
this section shall not exceed 15 years.
    ``(c) Full Faith and Credit of the United States.--The full faith 
and credit of the United States shall be pledged to the payment of all 
amounts which may be required to be paid under any guarantee under this 
part.
    ``(d) Maximum Guarantee.--The Administration may provide guarantees 
under this section for the debentures issued by any New Markets Venture 
Capital company only to the extent that such guarantees do not exceed 
150 percent of the contributed capital of the company, as determined by 
the Administration. Contributed capital shall include capital that is 
deemed to be Federal funds contributed by an investor other than an 
agency of the Federal Government.

``SEC. 355. TECHNICAL ASSISTANCE GRANTS.

    ``(a) In General.--
            ``(1) Authority.--In accordance with this section, the 
        Administration may make grants to each New Markets Venture 
        Capital company to provide marketing, management, and technical 
        assistance for the benefit of smaller enterprises financed, or 
        expected to be financed, by the company.
            ``(2) Terms.--Grants made under this subsection shall be 
        made over a multiyear period not to exceed 10 years, under such 
        other terms as the Administration may require.
            ``(2) Grant amount.--
                    ``(A) In general.--The amount of a grant made under 
                this subsection to each New Markets Venture Capital 
                company shall be equal to the amount resources raised 
                by the company (in cash or in-kind) under section 
                353(d)(2).
                    ``(B) Special rule.--Notwithstanding subparagraph 
                (A), the Administration may make a grant under this 
                section in an amount other than that set forth in 
                subparagraph (A), if the Administration considers the 
                grant to be in the best interests of the New Markets 
                Venture Capital Program.
            ``(3) Pro rata reductions.--If the amount made available to 
        carry out this section is insufficient for the Administration 
        to provide grants in the amounts provided for in subsection 
        (a)(2), the Administration shall make pro rata reductions in 
        the amounts otherwise payable to each New Markets Venture 
        Capital company under such subsection.
    ``(b) Supplemental Grants.--
            ``(1) In general.--The Administration may make supplemental 
        grants to any New Markets Venture Capital company, containing 
        such terms as the Administration may require, to provide 
        additional marketing, management, and technical assistance for 
        the benefit of smaller enterprises financed, or expected to be 
        financed, by the New Markets Venture Capital company.
            ``(2) Matching requirement.--The Administration may 
        require, as a condition of any supplemental grant made under 
        this subsection, that the New Markets Venture Capital company 
        provide from resources (in cash or in-kind) other than those 
        provided by the Administration an amount equal to the amount of 
        the supplemental grant.

``SEC. 356. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.

    ``(a) Issuance.--The Administration may issue trust certificates 
representing ownership of all or a fractional part of debentures issued 
by New Markets Venture Capital companies and guaranteed by the 
Administration under this Act, if such certificates are based on and 
backed by a trust or pool approved by the Administration and composed 
solely of guaranteed debentures.
    ``(b) Guarantee.--
            ``(1) In general.--The Administration may, under such terms 
        and conditions as the Administration deems appropriate, 
        guarantee the timely payment of the principal of and interest 
        on trust certificates issued by the Administration or its agent 
        for purposes of this section.
            ``(2) Limitation.--Guarantees under this subsection shall 
        be limited to the extent of principal and interest on the 
        guaranteed debentures which compose the trust or pool.
            ``(3) Prepayment or default.--In the event that a debenture 
        in a trust or pool is prepaid, or in the event of default of 
        such a debenture, the guarantee of timely payment of principal 
        and interest on the trust certificates shall be reduced in 
        proportion to the amount of principal and interest such prepaid 
        debenture represents in the trust or pool. Interest on prepaid 
        or defaulted debentures shall accrue and be guaranteed by the 
        Administration only through the date of payment of the 
        guarantee. At any time during its term, a trust certificate may 
        be called for redemption due to prepayment or default of all 
        debentures.
    ``(c) Full Faith and Credit of the United States.--The full faith 
and credit of the United States shall be pledged to the payment of all 
amounts which may be required to be paid under any guarantee of such 
trust certificates issued by the Administration or its agent under this 
section.
    ``(d) Fees.--The Administration shall not collect a fee for any 
guarantee under this section, but any agent of the Administration may 
collect a fee approved by the Administration for the functions 
described in subsection (f)(2) of this section.
    ``(e) Subrogation and Ownership Rights.--
            ``(1) Subrogation.--In the event the Administration pays a 
        claim under a guarantee issued under this section, it shall be 
        subrogated fully to the rights satisfied by such payment.
            ``(2) Ownership rights.--No Federal, State, or local law 
        shall preclude or limit the exercise by the Administration of 
        its ownership rights in the debentures residing in a trust or 
        pool against which trust certificates are issued under this 
        section.
    ``(f) Management and Administration.--
            ``(1) Registration.--
                    ``(A) In general.--The Administration may provide 
                for a central registration of all trust certificates 
                issued under this section.
                    ``(B) Forms of registration.--Nothing in this 
                subsection shall prohibit the use of a book entry or 
                other electronic form of registration for trust 
                certificates.
            ``(2) Contracting of functions.--
                    ``(A) In general.--The Administrator may contract 
                with an agent or agents to carry out on behalf of the 
                Administration the pooling and the central registration 
                functions provided for in this section including, 
                notwithstanding any other provision of law--
                            ``(i) maintenance on behalf of and under 
                        the direction of the Administration, such 
                        commercial bank accounts or investments in 
                        obligations of the United States as may be 
                        necessary to facilitate the creation of trusts 
                        or pools backed by debentures guaranteed under 
                        this Act; and
                            ``(ii) the issuance of trust certificates 
                        to facilitate the creation of such trusts or 
                        pools.
                    ``(B) Protection of the interests of the united 
                states.--Any agent performing functions on behalf of 
                the Administration under this paragraph shall provide a 
                fidelity bond or insurance in such amounts as the 
                Administration determines to be necessary to fully 
                protect the interests of the United States.
            ``(3) Regulation of brokers and dealers.--The Administrator 
        may regulate brokers and dealers in trust certificates sold 
        under this section.

``SEC. 357. FEES.

    ``Except as provided in section 356(d), the Administration may 
charge such fees as it deems appropriate with respect to any guarantee 
or grant issued under this part.

``SEC. 358. BANK PARTICIPATION.

    ``(a) In General.--To the extent provided for in subsection (b), 
any national bank, any member bank of the Federal Reserve System, and 
any bank that is not a member of such system but which is insured to 
the extent permitted under applicable State law, may invest in any New 
Markets Venture Capital company, or in any entity established to invest 
solely in New Markets Venture Capital companies.
    ``(b) Limitation.--No bank described in subsection (a) may make 
investments described in such subsection that are greater than 5 
percent of the capital and surplus of the bank.

``SEC. 359. FEDERAL FINANCING BANK.

    ``Section 318 shall not apply to any debenture issued by a New 
Markets Venture Capital company under this part.

``SEC. 360. REPORTING REQUIREMENTS.

    ``Each New Markets Venture Capital company shall provide to the 
Administration such information as the Administration may require, 
including information on the measurement criteria that the New Markets 
Venture Capital company proposed in its program application.

``SEC. 361. EXAMINATIONS.

    ``(a) In General.--Each New Markets Venture Capital company shall 
be subject to examinations made at the direction of the Investment 
Division of the Administration in accordance with this section.
    ``(b) Assistance of Private Sector Entities.--Examinations under 
this section may be conducted with the assistance of a private sector 
entity that has both the qualifications to conduct and expertise in 
conducting such examinations.
    ``(c) Costs.--
                    ``(A) In general.--The Administrator may assess the 
                cost of examinations under this section, including 
compensation of the examiners, against the company examined.
                    ``(B) Deposit of funds.--Funds collected under this 
                section shall be deposited in the account for salaries 
                and expenses of the Administration.
                    ``(C) Authorization of appropriations.--Funds 
                deposited under subparagraph (B) are authorized to be 
                appropriated solely to cover the costs of examinations 
                and other program oversight activities.

``SEC. 362. INJUNCTIONS AND OTHER ORDERS.

    ``(a) In General.-- Whenever, in the Administrator considers that a 
New Markets Venture Capital company, or any other person, has engaged 
or is about to engage in any acts or practices which constitute, or 
will constitute, a violation of any provision of this Act, of any rule 
or regulation under this Act, or of any order issued under this Act, 
the Administration may make application to the proper district court of 
the United States or to a United States court of any place subject to 
the jurisdiction of the United States for an order enjoining such acts 
or practices, or for an order enforcing compliance with such provision, 
rule, regulation, or order, and such courts shall have jurisdiction of 
such actions and, upon a showing by the Administration that such New 
Markets Venture Capital company or other person has engaged or is about 
to engage in any such acts or practices, a permanent or temporary 
injunction, restraining order, or other order, shall be granted without 
bond.
    ``(b) Seizing of Assets.--In any such proceeding the court, as a 
court of equity may, to the extent it deems necessary, take exclusive 
jurisdiction of the New Markets Venture Capital company and the assets 
thereof, wherever located. The court shall have jurisdiction in any 
such proceeding to appoint a trustee or receiver to hold or administer 
under the direction of the court the assets so possessed.
    ``(c) Administration as Trustee or Receiver.--
            ``(1) In general.--The Administration may act as trustee or 
        receiver under subsection (b) of a New Markets Venture Capital 
        company.
            ``(2) Appointment.--At the request by the Administration, 
        the court may appoint the Administration to act as a trustee or 
        receiver of a New Markets Venture Capital company unless the 
        court deems such appointment inequitable or otherwise 
        inappropriate.

``SEC. 363. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS, DIRECTORS, 
              EMPLOYEES, OR AGENTS; BREACH OF FIDUCIARY DUTY.

    ``(a) Parties Deemed To Commit a Violation.--Whenever an New 
Markets Venture Capital company violates any provision of this Act, or 
any regulation issued thereunder, by reason of its failure to comply 
with its terms or by reason of its engaging in any act or practice 
which constitutes or will constitute a violation thereof, such 
violation shall also be deemed to be a violation and an unlawful act 
committed by any person who, directly or indirectly, authorizes, 
orders, participates in, causes, brings about, counsels, aids, or abets 
in the commission of any acts, practices, or transactions which 
constitute or will constitute, in whole or in part, such violation.
    ``(b) Fiduciary Duties.--It shall be unlawful for any officer, 
director, employee, agent, or other participant in the management or 
conduct or the affairs of an New Markets Venture Capital company to 
engage in any act or practice, or to omit any act, in breach of his 
fiduciary duty as such officer, director, employee, agent, or 
participant if, as a result thereof, the New Markets Venture Capital 
company has suffered or is in imminent danger or suffering financial 
loss or other damage.
    ``(c) Unlawful Acts.--Except with the written consent of the 
Administration, it shall be unlawful--
            ``(1) for any person to take office as an officer, 
        director, or employee of an New Markets Venture Capital 
        company, or to become an agent or participant in the conduct of 
        the affairs or management of an New Markets Venture Capital 
        company, if the person--
                    ``(A) has been convicted of a felony, or any other 
                criminal offense involving dishonesty or breach of 
                trust, or
                    ``(B) the person has been found civilly liable in 
                damages, or has been permanently or temporarily 
                enjoined by order, judgment, or decree of a court of 
                competent jurisdiction, by reason of any act or 
                practice involving fraud, or breach of trust; and
            ``(2) for any person continue to serve in any of the 
        capacities described in paragraph (1), if--
                    ``(A) the person is convicted of a felony, or any 
                other criminal offense involving dishonesty or breach 
                of trust, or
                    ``(B) the person found civilly liable in damages, 
                or is permanently or temporarily enjoined by an order, 
                judgment, or decree of a court of competent 
                jurisdiction, by reason of any act or practice 
                involving fraud or breach of trust.
    ``(d) Removal or Suspension.--
            ``(1) In general.--As provided in section 313, the 
        Administration may remove or suspend any person upon whom the 
        Administration has served a notice under this subsection.
            ``(2) Notice.--The Administration may serve upon any person 
        who is an officer, director, or employee of a New Markets 
        Venture Capital company, or an agent or participant in the 
        conduct of the affairs or management of the company, a written 
        notice of the Administration's intention to remove or suspend 
        such person from the person's office or position, if in the 
        opinion of the Administration, such person--
                    ``(A) has willfully and knowingly committed any 
                substantial violation of--
                            ``(i) this Act,
                            ``(ii) any regulation issued under this 
                        Act, or
                            ``(iii) a cease-and-desist order which has 
                        become final, or
                    ``(B) has willfully and knowingly committed or 
                engaged in any act, omission, or practice which 
                constitutes a substantial breach of his fiduciary duty, 
                and that such violation or such breach of fiduciary 
duty is one involving personal dishonesty on the part of such person.

``SEC. 364. REGULATIONS.

    ``The Administration is authorized to issue such regulations as it 
deems necessary to carry out the provisions of this part in accordance 
with its purposes.

``SEC. 365. AUTHORIZATION OF APPROPRIATIONS.

    ``For fiscal years 2000 through 2005, the Administration is 
authorized to be appointed such subsidy budget authority as may be 
necessary to guarantee up to $100,000,000 of debentures, and up to 
$30,000,000 to make technical assistance grants, for the purposes of 
this part, to remain available until expended. This authority shall be 
in effect for the period commencing with fiscal year 2000 through 
fiscal year 2005.''.

SEC. 102. CONFORMING AMENDMENTS.

    The table of contents in section 101 of the Small Business 
Investment Act of 1958 (15 U.S.C. 661 note) is amended--
            (1) by striking ``TITLE III--SMALL BUSINESS INVESTMENT 
        COMPANIES'' and inserting the following:

               ``TITLE III--INVESTMENT DIVISION PROGRAMS

            ``Part A--Small Business Investment Companies'';

        and
            (2) by inserting after the item relating to section 322 the 
        following:

             ``Part B--New Markets Venture Capital Program

``Sec. 350. Definitions.
``Sec. 351. Purposes.
``Sec. 352. Program establishment.
``Sec. 353. Selection of new markets venture capital companies.
``Sec. 354. Debentures.
``Sec. 355. Technical assistance.
``Sec. 356. Issuance and guarantee of trust certificates.
``Sec. 357. Fees.
``Sec. 358. Bank participation.
``Sec. 359. Federal financing bank.
``Sec. 360. Reporting requirements.
``Sec. 361. Examinations.
``Sec. 362. Injunctions and other orders.
``Sec. 363. Unlawful acts and omissions by officers, directors, 
                            employees, or agents; breach of fiduciary 
                            duty.
``Sec. 364. Regulations.
``Sec. 365. Authorization of appropriations.''.

SEC. 103. BANKRUPTCY EXEMPTION FOR NEW MARKETS VENTURE CAPITAL 
              COMPANIES.

    Section 109(b)(2) of title 11, United States Code, is amended by 
inserting ``a New Markets Venture Capital company as defined in section 
350 of the Small Business Investment Act of 1958,'' after ``homestead 
association,''.

SEC. 104. FEDERAL SAVINGS ASSOCIATIONS.

    Section 5(c)(4) of the Home Owners' Loan Act (12 U.S.C. 1464(c)(4)) 
is amended by adding at the end the following:
                    ``(F) New markets venture capital companies.--A 
                Federal savings association may invest in stock, 
                obligations, or other securities of any New Markets 
                Venture Capital company as defined in section 350 of 
                the Small Business investment Act of 1958, except that 
                a Federal savings association may not make any 
                investment under this subparagraph if its aggregate 
                outstanding investment under this subparagraph would 
                exceed 5 percent of the capital and surplus of such 
                savings association.''.

                     TITLE II--SMALL BUSINESS LOANS

SEC. 201. PARTICIPATION RATE.

    Section 7(a)(2)(A) of the Small Business Act (15 U.S.C. 
636(a)(2)(A)) is amended by striking ``$100,000'' each place it appears 
and inserting ``$150,000''.

SEC. 202. GUARANTEE FEE.

    Section 7(a)(18)(B) of the Small Business Act (15 U.S.C. 
636(a)(18)(B)) is amended by striking ``$80,000'' and inserting 
``$120,000''.

SEC. 203. GUARANTEE REDUCTION.

    Section 7(a)(23)(A) of the Small Business Act (15 U.S.C. 
636(a)(23)(A)) is amended by striking the period at the end and adding 
the following: ``, except that with respect to each loan of less than 
$150,000 guaranteed under this subsection, the Administration shall 
assess and collect an annual fee in an amount equal to 0.3 percent of 
the outstanding balance of the deferred participation share of the 
loan.''

  <DELETED>TITLE III--AMERICA'S PRIVATE INVESTMENT COMPANIES</DELETED>

<DELETED>SEC. 301. CONGRESSIONAL FINDINGS AND PURPOSES.</DELETED>

<DELETED>    (a) Congressional Findings.--</DELETED>
        <DELETED>    (1) People living in distressed areas, both urban 
        and rural, characterized by high levels of joblessness, 
        poverty, and low incomes continue to miss out on the economic 
        expansion experienced by the Nation as a whole.</DELETED>
        <DELETED>    (2) Unequal access to economic opportunities 
        continues to make the social costs of joblessness and poverty 
        to our Nation very high.</DELETED>
        <DELETED>    (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.</DELETED>
<DELETED>    (b) Purposes.--The purposes of this Act are to--</DELETED>
        <DELETED>    (1) license private for profit community 
        development entities that will focus on making equity and 
        credit investments for large-scale business developments that 
        benefit low-income communities;</DELETED>
        <DELETED>    (2) provide credit enhancement for those entities 
        for use in low-income communities; and</DELETED>
        <DELETED>    (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 investors in these entities 
        and to the residents of the low-income communities.</DELETED>

<DELETED>SEC. 302. DEFINITIONS.</DELETED>

<DELETED>    As used in this Act:</DELETED>
        <DELETED>    (1) The term ``Agency'' has the meaning given such 
        term in section 551(1) of title 5, United States 
        Code.</DELETED>
        <DELETED>    (2) 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.</DELETED>
        <DELETED>    (3) The term ``Administrator'' means the 
        Administrator of the Small Business Administration.</DELETED>
        <DELETED>    (4) The term ``community development entity'' 
        means an entity whose primary mission must be serving or 
        providing investment capital for low-income communities or low-
        income persons, which maintains accountability to residents of 
        low-income communities, and which has 60 percent of its 
        aggregate gross assets invested in low-income community 
        investments or residential property located in low-income 
        communities.</DELETED>
        <DELETED>    (5) The term ``cost'' has the meaning set forth in 
        section 502(5) of the Federal Credit Reform Act of 
        1990.</DELETED>
        <DELETED>    (6) The term ``debentures'' means debt instruments 
        the terms of any of which may be specified by the 
        Secretary.</DELETED>
        <DELETED>    (7) The term ``HUD'' means the Secretary of 
        Housing and Urban Development or the Department of Housing and 
        Urban Development, as the context requires.</DELETED>
        <DELETED>    (8) The term ``low-income communities'' means 
        census tracts with (A) poverty rates of at least 20 percent, 
        based on the most recent census data; or (B) median family 
        income that does not exceed 80 percent of the greater of (i) 
        metropolitan area median family income, or (ii) statewide 
        median family income.</DELETED>
        <DELETED>    (9) The term ``qualified low-income community 
        investments'' means equity investments in, or loans to, 
        qualified active businesses located in low-income 
        communities.</DELETED>
        <DELETED>    (10) The term ``qualified active business'' means 
        a business or trade--</DELETED>
                <DELETED>    (A) at least 50 percent of the gross 
                income of which is derived from conduct of trade or 
                business activities in low-income 
                communities;</DELETED>
                <DELETED>    (B) a substantial portion of the use of 
                the tangible property of which is used within low-
                income communities;</DELETED>
                <DELETED>    (C) a substantial portion of the services 
                that the employees of which perform are performed in 
                low-income communities; and</DELETED>
                <DELETED>    (D) less than 5 percent of the aggregate 
                unadjusted bases of the property of which is 
                attributable to certain financial property, as the 
                Secretary shall set forth in regulations, or in 
                collectibles, other than collectibles held primarily 
                for sale to customers.</DELETED>
        <DELETED>    (11) The term ``Secretary'' means the Secretary of 
        Housing and Urban Development, unless otherwise specified in 
        this Act.</DELETED>

<DELETED>SEC. 303. AUTHORIZATION.</DELETED>

<DELETED>    (a) Licenses.--The Secretary is authorized to license 
America's Private Investment Companies, in accordance with the terms of 
this Act.</DELETED>
<DELETED>    (b) Regulations.--The Secretary is authorized to 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 authorized by this Act, or determined by the 
Secretary. The Secretary may issue regulations, Federal Register 
notices, and other guidance or directives to carry out licensing and 
regulatory and other duties under this Act.</DELETED>
<DELETED>    (c) Use of Credit Subsidy for Licenses.--</DELETED>
        <DELETED>    (1) Number of licenses.--The Secretary is 
        authorized to have outstanding at any one time the number of 
        licenses for APICs that may be supported by the amount of the 
        budget authority appropriated in accordance with the Federal 
        Credit Reform Act of 1990 for the subsidy cost and the 
        investment strategies of such APICs.</DELETED>
        <DELETED>    (2) Use of credit subsidy after initial 
        appropriation to hud.--With respect to any appropriation of 
        budget authority for the credit costs after the initial 
        appropriation, the Secretary may license additional APICs, or 
        as hereinafter provided, increase the credit subsidy allocated 
        to an APIC as an award for high performance under this 
        Act.</DELETED>
<DELETED>    (d) Cooperation and Coordination.--</DELETED>
        <DELETED>    (1) Program policies.--The Secretary is authorized 
        to coordinate and cooperate, through memoranda 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, including regulation, examination, and monitoring 
        of APICs under this Act.</DELETED>
        <DELETED>    (2) Operations.--The Secretary may carry out this 
        Act--</DELETED>
                <DELETED>    (A) directly, through agreements with 
                other Federal entities under section 1535 of title 31, 
                United States Code, or otherwise, or</DELETED>
                <DELETED>    (B) indirectly, under contracts or 
                agreements, as the Secretary shall determine.</DELETED>
<DELETED>    (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 actions under this Act, and to pay for the costs 
of such activities from the fees and charges collected.</DELETED>
<DELETED>    (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 Act.</DELETED>
<DELETED>    (g) Funding.--</DELETED>
        <DELETED>    (1) Authorization for appropriation of cost of 
        annual loan guarantee commitment.--For each of fiscal years 
        2000, 2001, 2002, and 2003, there is authorized to be 
        appropriated up to $36,000,000 for the cost of annual loan 
        guarantee commitments under this Act. The Secretary may make 
        commitments to guarantee loans only to the extent that the 
        total loan principal, any part of which is guaranteed, will not 
        exceed $1,000,000,000, or the amount specified in 
        appropriations Acts in each such fiscal year. Amounts 
        appropriated under this paragraph shall remain available for 5 
        years.</DELETED>
        <DELETED>    (2) Authorization for appropriation of 
        administrative expenses.--For each of the fiscal years 2000, 
        2001, 2002, and 2003, there is authorized to be appropriated 
        $1,000,000 for administrative expenses for carrying out this 
        Act. 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 Act. Any agency to 
        which the Secretary may transfer amounts under this Act is 
        authorized to accept such transferred amounts in any 
        appropriation account of such agency.</DELETED>

<DELETED>SEC. 304. SELECTION OF APICS.</DELETED>

<DELETED>    (a) Notice of Competitions.--The Secretary shall select 
APICs for licensing on the basis of competitions. Such competitions 
shall be announced by a Federal Register notice that invites 
applications for APIC licenses. Each such notice shall set forth 
application requirements, and such other terms of the competition not 
otherwise provided for, as determined by the Secretary.</DELETED>
<DELETED>    (b) Licensee Selection Criteria.--The Secretary shall 
select among applicants for licenses on the basis of the extent to 
which an applicant may be expected to achieve the goals of the Act by 
satisfying the requirements set forth in this subsection.</DELETED>
        <DELETED>    (1) The applicant shall be a private for profit 
        entity that qualifies as a community development entity for the 
        purposes of the New Markets Tax Credits, to the extent such 
        credits are established under Federal law.</DELETED>
        <DELETED>    (2) The entity must, as of the time that the 
        license is approved, have reasonably available to it, as 
        determined by the Secretary, a minimum of $25,000,000 in equity 
        capital, as determined by the Secretary.</DELETED>
        <DELETED>    (3) The entity must demonstrate that its managers 
        are qualified, and have the knowledge, experience, and 
        capability necessary to raise large amounts of capital and make 
        investments for community economic development in distressed 
        areas.</DELETED>
        <DELETED>    (4) The entity must demonstrate that, as a matter 
        of sound financial management practices, it is structured to 
        preclude financial conflict of interest between the APIC and a 
        manager or investor.</DELETED>
        <DELETED>    (5) The entity must prepare and submit an 
        investment strategy that includes benchmarks for evaluation of 
        its progress.</DELETED>
        <DELETED>    (6) The entity must prepare and submit a statement 
        of public purpose goals. The statement shall include elements 
        specified by the Secretary, including proposed measurements and 
        strategies for meeting the goals. The goals shall promote 
        community and economic development, and include at least--
        </DELETED>
                <DELETED>    (A) making investments that are qualified 
                investments in low-income communities;</DELETED>
                <DELETED>    (B) creation of jobs that pay decent wages 
                in low-income communities and for residents of such 
                areas; and</DELETED>
                <DELETED>    (C) involvement of community-based 
                organizations and residents in community development 
                activities.</DELETED>
        <DELETED>    (7) The entity must demonstrate a capacity to 
        cooperate with States or units of general local government and 
        with community-based organizations and residents of low-income 
        communities.</DELETED>
        <DELETED>    (8) The entity must agree to comply with 
        applicable laws, including Federal executive orders, Office of 
        Management and Budget circulars, and Treasury requirements, and 
        such operating and regulatory requirements as the Secretary may 
        impose from time to time.</DELETED>
        <DELETED>    (9) The entity must satisfy other application 
        requirements that the Secretary may impose by regulation or 
        Federal Register notice.</DELETED>
<DELETED>    (c) Communications Between HUD and Applicants During 
Selection Process.--</DELETED>
        <DELETED>    (1) The Secretary shall set forth in regulations 
        the procedures under which HUD, on the one hand, and applicants 
        for APIC licenses, and others, on the other hand, may 
        communicate. Such regulations shall--</DELETED>
                <DELETED>    (A) specify by position the HUD officers 
                and employees who may communicate with such applicants 
                and others;</DELETED>
                <DELETED>    (B) permit such officers and employees to 
                request and discuss with the applicant and others (such 
                as banks or other credit or business references, or 
                potential investors, that the applicant specifies in 
                writing) any more detailed information that may be 
                desirable to facilitate HUD's review of the applicant's 
                application;</DELETED>
                <DELETED>    (C) restrict such officers and employees 
                from revealing to any applicant--</DELETED>
                        <DELETED>    (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</DELETED>
                        <DELETED>    (ii) any information with respect 
                        to any other applicant; and</DELETED>
                <DELETED>    (D) set forth requirements for making and 
                keeping records of any communications conducted under 
                this subsection, including requirements for making such 
                records available to the public after the award of 
                licenses under an initial or subsequent notice, as 
                appropriate, under subsection (a).</DELETED>
        <DELETED>    (2) Regulations under this subsection may be 
        issued as interim rules for effect on or before the date of 
        publication of the first notice under subsection (a), and shall 
        apply only with respect to applications under such notice. 
        Regulations to implement this subsection with respect to any 
        notice after the first such notice shall be subject to notice 
        and comment rulemaking.</DELETED>
        <DELETED>    (3) Section 12(e)(2) of the Department 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''.</DELETED>

<DELETED>SEC. 305. OPERATIONS OF APICS.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) An APIC shall have any powers or authorities--
        </DELETED>
                <DELETED>    (A) that the APIC derives from the 
                jurisdiction in which it is organized, or that the APIC 
                otherwise has;</DELETED>
                <DELETED>    (B) as may be conferred by a license under 
                this Act; and</DELETED>
                <DELETED>    (C) as the Secretary may prescribe by 
                regulation.</DELETED>
        <DELETED>    (2) Nothing in this Act 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 applicable terms and 
        conditions under the Internal Revenue Code of 1986.</DELETED>
<DELETED>    (b) Investment Limitations.--</DELETED>
        <DELETED>    (1) Qualified low-income community investments.--
        Substantially all investments that an APIC makes must be 
        qualified low-income community investments if the investments 
        are financed with--</DELETED>
                <DELETED>    (A) amounts available from the proceeds of 
                the issuance of an APICs debenture guaranteed under 
                this Act;</DELETED>
                <DELETED>    (B) proceeds of the sale of obligations 
                described under subsection (c)(3)(C)(iii); or</DELETED>
                <DELETED>    (C) the use of equity capital, as 
                determined by the Secretary, in an amount specified in 
                the APICs license.</DELETED>
        <DELETED>    (2) Investment limit.--An APIC shall not, as a 
        matter of sound financial practice, invest in any one business, 
        an amount that exceeds an amount equal to 35 percent of the sum 
        of--</DELETED>
                <DELETED>    (A) the APICs equity capital; 
                plus</DELETED>
                <DELETED>    (B) an amount equal to the percentage 
                limit that the Secretary determines that APIC may have 
                outstanding at any one time, under subsection 
                (c)(2)(A).</DELETED>
<DELETED>    (c) Borrowing Powers; Debentures.--</DELETED>
        <DELETED>    (1) Issuing.--An APIC may issue debentures that 
        the Secretary may guarantee under the terms of this 
        Act.</DELETED>
        <DELETED>    (2) Leverage limits.--In general, as a matter of 
        sound financial management practices--</DELETED>
                <DELETED>    (A) the total amount of debentures that an 
                APIC issues under this Act that an APIC may have 
                outstanding at any one time shall not exceed an amount 
                equal to 200 percent of the equity capital of the APIC, 
                as determined by the Secretary: Provided, That the 
                Secretary may by regulation increase the foregoing 
                percentage to up to 300 percent for all APICs, or any 
                reasonable class of APICs; and</DELETED>
                <DELETED>    (B) an APIC must not have more than 
                $300,000,000 in face value of debentures issued under 
                this Act outstanding at any one time.</DELETED>
        <DELETED>    (3) Repayment.--</DELETED>
                <DELETED>    (A) An APIC must 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 before the 
                APIC may dissolve or otherwise complete the wind-up of 
                its business.</DELETED>
                <DELETED>    (B) An APIC may repay any interest 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 Act, unless the 
                Secretary orders such relief.</DELETED>
                <DELETED>    (C) Until an APIC has repaid all interest 
                and principal amounts on APIC borrowings under this 
                subsection, an APIC may use the proceeds of investments 
                in accordance with regulations issued by the Secretary 
                only to--</DELETED>
                        <DELETED>    (i) pay for proper costs and 
                        expenses the APIC incurs in connection with 
                        such investments;</DELETED>
                        <DELETED>    (ii) pay for the reasonable 
                        administrative expenses of the APIC;</DELETED>
                        <DELETED>    (iii) purchase Treasury 
                        securities;</DELETED>
                        <DELETED>    (iv) repay interest and principal 
                        amounts on APIC borrowings under this 
                        subsection;</DELETED>
                        <DELETED>    (v) make interest, dividend, or 
                        other distributions to or on behalf of an 
                        investor; or</DELETED>
                        <DELETED>    (vi) undertake such other purposes 
                        as the Secretary may approve.</DELETED>
                <DELETED>    (D) After an APIC has repaid all interest 
                and principal amounts on APIC borrowings under this 
                subsection, and subject to continuing compliance with 
                subsection (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 withdrawal of 
                equity capital, without regard to subparagraph (C) but 
                in conformity with the APICs investment strategy and 
                statement of public purpose goals.</DELETED>
<DELETED>    (d) Reuse of Debenture Proceeds.--An APIC may use the 
proceeds of sale of Treasury securities purchased under subsection 
(c)(3)(C)(iii) to make qualified low-income community investments, 
subject to the Secretary's approval. In making the request for the 
Secretary's approval, the APIC shall follow the procedures applicable 
to an APICs request for HUD guarantee action, as the Secretary may 
modify such procedures for implementation of this subsection. Such 
procedures shall nevertheless include the description and 
certifications that an APIC must include in all requests for guarantee 
action, and the environmental certification applicable to initial 
expenditures for a project or activity.</DELETED>
<DELETED>    (e) Antipirating.--Notwithstanding any other provision of 
law, an APIC may not use any equity capital required to be contributed 
under this Act, or the proceeds from the sale of any debenture under 
this Act, to make an investment, as determined by the Secretary, to 
assist directly in the relocation of any industrial or commercial 
plant, facility, or operation, from 1 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.</DELETED>
<DELETED>    (f) Exclusion of APIC From Definition of Debtor Under 
Bankruptcy Provisions.--Section 109(b)(2) of title 11 of the United 
States Code is amended by inserting before ``credit union'' the 
following: ``America's Private Investment Companies licensed by the 
Department of Housing and Urban Development under the America's Private 
Investment Companies Act,''.</DELETED>

<DELETED>SEC. 306. CREDIT ENHANCEMENT BY THE FEDERAL 
              GOVERNMENT.</DELETED>

<DELETED>    (a) Issuance and Guarantee of Debentures.--Consistent with 
the Federal Credit Reform Act of 1990, the Secretary is authorized to 
make commitments to guarantee and guarantee the timely payment of all 
principal and interest as scheduled on, debentures issued by APICs. 
Such commitments or guarantees may be made by the Secretary on such 
terms and conditions, including but not limited to amounts, 
expirations, number, priorities of repayment, security, collateral, 
amortization, payment of interest (including the timing thereof), and 
fees and charges, as the Secretary determines to be appropriate, in 
documents that the Secretary approves for any commitment or guarantee, 
or pursuant to regulations issued by the Secretary. Debentures 
guaranteed by the Secretary under this subsection shall be senior to 
any debt obligation, equity contribution or earnings, or the 
distribution of dividends, interest, or other amounts of an APIC, 
notwithstanding any Federal or other law. Debentures may be issued for 
a term of not to exceed 21 years and shall bear interest during all or 
any part of that time period at a rate or rates approved by the 
Secretary. The debentures shall also contain such other terms as the 
Secretary may fix.</DELETED>
<DELETED>    (b) Issuance of Trust Certificates.--The Secretary, or an 
agent or entity selected by the Secretary, is authorized to issue trust 
certificates representing ownership of all or a fractional part of 
guaranteed debentures issued by APICs and held in trust.</DELETED>
<DELETED>    (c) Guarantee of Trust Certificates.--</DELETED>
        <DELETED>    (1) In general.--The Secretary is authorized, upon 
        such terms and conditions as the Secretary determines 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 
        guarantee shall be limited to the extent of principal and 
        interest on the guaranteed debentures which compose the 
        trust.</DELETED>
        <DELETED>    (2) Substitution option.--The Secretary shall have 
        the option to replace in the corpus of the trust any prepaid or 
        defaulted debenture with a debenture, another full faith and 
        credit instrument, or any obligations of the United States, 
        that may reasonably substitute for such prepaid or defaulted 
        debenture.</DELETED>
        <DELETED>    (3) Proportionate reduction option.--In the event 
        that the Secretary elects not to exercise the option under 
        paragraph (2), and a debenture in such trust is prepaid, or in 
        the event of default of a debenture, the guarantee of 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 debenture represents in the trust. 
        Interest on prepaid or defaulted debentures shall accrue and be 
        guaranteed by the Secretary only through the date of payment of 
        the guarantee. During the term of a trust certificate, it may 
        be called for redemption due to prepayment or default of all 
        debentures that are in the corpus of the trust.</DELETED>
<DELETED>    (d) Full Faith and Credit Backing of Guarantees.--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 Secretary pursuant to this section.</DELETED>
<DELETED>    (e) Subrogation and Liens.--</DELETED>
        <DELETED>    (1) 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.</DELETED>
        <DELETED>    (2) No State or local law, and no Federal law, 
        shall preclude or limit the exercise by the Secretary of its 
        ownership rights in the debentures in the corpus of a trust 
        under this section.</DELETED>
<DELETED>    (f) Registration.--</DELETED>
        <DELETED>    (1) The Secretary shall provide for a central 
        registration of all trust certificates issued pursuant to this 
        section.</DELETED>
        <DELETED>    (2) The Secretary may contract with an agent or 
        agents to carry out on behalf of the Secretary the pooling and 
        the central registration functions of this section 
        notwithstanding any other provision of law, including 
        maintenance on behalf of and under the direction of the 
        Secretary, such commercial bank accounts or investments in 
        obligations of the United States as may be necessary to 
        facilitate trusts backed by debentures guaranteed under this 
        Act 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 protect the interests of the Government.</DELETED>
        <DELETED>    (3) Book-entry or other electronic forms of 
        registration for trust certificates under this Act are 
        authorized.</DELETED>
<DELETED>    (g) Timing of Issuance of Guarantees of Debentures and 
Trust Certificates.--The Secretary may, from time to time in the 
Secretary's discretion, exercise the authority to issue guarantees of 
debentures under this Act or trust certificates under this 
Act.</DELETED>

<DELETED>SEC. 307. APIC REQUESTS FOR GUARANTEE ACTIONS.</DELETED>

<DELETED>    (a) All APIC Requests for HUD Guarantee Action.--An APIC 
may request that the Secretary guarantee a debenture that the APIC 
intends to issue, in accordance with the Secretary's regulations. All 
such requests shall include a description of the manner in which the 
APIC intends to use the proceeds from such debenture. All such requests 
shall also include certification by the APIC that the APIC is in 
substantial compliance with--</DELETED>
        <DELETED>    (1) this Act and other applicable laws;</DELETED>
        <DELETED>    (2) all terms and conditions of its license, and 
        of any penalty or condition that may have arisen from 
        examination or monitoring by the Secretary or otherwise, 
        including the satisfaction of any financial audit exception 
        that may have been outstanding;</DELETED>
        <DELETED>    (3) all requirements relating to the allocation 
        and use of New Markets Tax Credits, to the extent such credits 
        are established under Federal law; and</DELETED>
        <DELETED>    (4) any other requirements that the Secretary may 
        specify under regulations.</DELETED>
<DELETED>    (b) Requests for Guarantee of Debentures That Would 
Include Funding for Initial Expenditure for a Project or Activity.--In 
addition to the description and certification that an APIC is required 
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 
debenture, the proceeds 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 require 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 must include evidence satisfactory to the 
Secretary of the certification of the completion of environmental 
review of the project or activity required of the cognizant 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 government under subsection (c), then the Secretary is 
responsible 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 must execute such responsibilities before 
acting on the APIC's request for the guarantee that is covered by this 
subsection.</DELETED>
<DELETED>    (c) Responsibility for Environmental Reviews.--</DELETED>
        <DELETED>    (1) Execution of responsibility by the 
        secretary.--This subsection shall apply to guarantees by the 
        Secretary of debentures under this Act, the proceeds of which 
        would be used in connection with qualified low-income community 
        investments of APICs under this Act.</DELETED>
        <DELETED>    (2) Assumption of responsibility by cognizant unit 
        of general government.--</DELETED>
                <DELETED>    (A) Guarantee of debentures.--In order to 
                assure that the policies of the National Environmental 
                Policy Act of 1969 and other provisions of law that 
                further the purposes of such Act (as specified in 
                regulations issued by the Secretary) are most 
                effectively implemented in connection with the 
                expenditure of funds under this Act, and to assure to 
                the public undiminished protection of the environment, 
                the Secretary may, under such regulations, in lieu of 
                the environmental protection procedures otherwise 
                applicable, provide for the guarantee of debentures, 
                any part of the proceeds of which are to fund 
                particular qualified low-income community investments 
                of APICs under this Act, 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 responsibilities for environmental 
                review, decisionmaking, and action pursuant to the 
                National Environmental Policy Act of 1969 and such 
                other provisions of law that further such Act as the 
                regulations of the Secretary specify, that would 
                otherwise apply to the Secretary were the Secretary to 
                undertake the funding of such investments as a Federal 
                action.</DELETED>
                <DELETED>    (B) Implementation.--The Secretary shall 
                issue regulations to carry out this subsection only 
                after consultation with the Council on Environmental 
                Quality. Such regulations shall--</DELETED>
                        <DELETED>    (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;</DELETED>
                        <DELETED>    (ii) provide eligibility criteria 
                        and procedures for the designation of a State 
                        or unit of general local government to assume 
                        all of the responsibilities in this 
                        subsection;</DELETED>
                        <DELETED>    (iii) specify the purposes for 
                        which funds may be committed without regard to 
                        the procedure established under paragraph 
                        (3);</DELETED>
                        <DELETED>    (iv) provide for monitoring of the 
                        performance of environmental reviews under this 
                        subsection;</DELETED>
                        <DELETED>    (v) in the discretion of the 
                        Secretary, provide for the provision or 
                        facilitation of training for such performance; 
                        and</DELETED>
                        <DELETED>    (vi) subject to the discretion of 
                        the Secretary, provide for suspension or 
                        termination by the Secretary of the assumption 
                        under subparagraph (A).</DELETED>
                <DELETED>    (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 assumed by a State or unit of 
                general local government with respect to any particular 
                request for guarantee under subparagraph (A), or the 
                use of funds for a qualified investment.</DELETED>
        <DELETED>    (3) Procedure.--The Secretary shall approve the 
        request for guarantee of a debenture, any part of the proceeds 
        of which is to fund particular qualified low-income community 
        investments of APICs under this Act, 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 specified in 
        the regulations issued under paragraph (2)(B)), the APIC 
        submits to the Secretary a request for guarantee of a debenture 
        that is accompanied by evidence of a certification of the State 
        or unit of general local government which meets the 
        requirements of paragraph (4). The approval by the Secretary of 
        any such certification shall be deemed to satisfy the 
        Secretary's responsibilities pursuant to paragraph (1) under 
        the National Environmental Policy Act of 1969 and such other 
        provisions of law as the regulations of the Secretary specify 
        insofar as those responsibilities relate to the guarantees of 
        debentures, any parts of the proceeds of which are to fund such 
        investments, which are covered by such certification.</DELETED>
        <DELETED>    (4) Certification.--A certification under the 
        procedures authorized by this subsection shall--</DELETED>
                <DELETED>    (A) be in a form acceptable to the 
                Secretary;</DELETED>
                <DELETED>    (B) be executed by the chief executive 
                officer or other officer of the State or unit of 
                general local government who qualifies under 
                regulations of the Secretary;</DELETED>
                <DELETED>    (C) specify that the State or unit of 
                general local government under this subsection has 
                fully carried out its responsibilities as described 
                under paragraph (2); and</DELETED>
                <DELETED>    (D) specify that the certifying officer--
                </DELETED>
                        <DELETED>    (i) consents to assume the status 
                        of a responsible Federal official under the 
                        National Environmental Policy Act of 1969 and 
                        each provision of law specified in regulations 
                        issued by the Secretary insofar as the 
                        provisions of such Act or other such provision 
                        of law apply pursuant to paragraph (2); 
                        and</DELETED>
                        <DELETED>    (ii) is authorized and consents on 
                        behalf of the State or unit of general local 
                        government and himself or herself to accept the 
                        jurisdiction of the Federal courts for the 
                        purpose of enforcement of the responsibilities 
                        as such an official.</DELETED>

<DELETED>SEC. 308. EXAMINATION AND MONITORING OF APICS.</DELETED>

<DELETED>    (a) In General.--The Secretary shall, under regulations, 
through audits, performance agreements, license conditions, or 
otherwise, examine and monitor the operations and activities of APICs 
for compliance with sound financial management practices, and for 
satisfaction of the program and procedural goals of this Act and other 
related Acts. The Secretary may undertake any responsibility under this 
section in cooperation with an APIC liaison committee, or any agency 
that is a member of such a committee, or other agency.</DELETED>
<DELETED>    (b) Monitoring, Updating, and Program Review.--</DELETED>
        <DELETED>    (1) Reporting and updating.--The Secretary may 
        establish such annual or more frequent reporting requirements 
        for APICs, and such requirements for independent audits, and 
        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 Act, as the Secretary 
        determines necessary to assist the Secretary in monitoring the 
        compliance and performance of APICs.</DELETED>
        <DELETED>    (2) Examinations.--The Secretary shall, no less 
        often than once every 2 years, examine the operations and 
        portfolio of each APIC licensed under this Act for compliance 
        with sound financial management practices, and for compliance 
        with this Act.</DELETED>
        <DELETED>    (3) Examination standards.--</DELETED>
                <DELETED>    (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 Treasury and Office of Management and 
                Budget guidance, circulars, and application and 
                licensing requirements on a continuing basis. The 
                Secretary may set any additional sound financial 
                management practices standards by regulation, including 
                standards that address solvency and financial 
                exposure.</DELETED>
                <DELETED>    (B) Performance and other examinations.--
                The Secretary shall monitor each APICs progress in 
                meeting the goals in the APICs statement of public 
                purpose goals, executing the APICs investment strategy, 
                and other matters.</DELETED>

<DELETED>SEC. 309. INCENTIVES AND PENALTIES.</DELETED>

<DELETED>    (a) Incentives.--From amounts of budget authority 
appropriated after the initial appropriation for the cost of annual 
loan guarantee commitments under this Act, the Secretary may increase 
the credit subsidy allocated to an APIC, in the Secretary's discretion, 
as an award for high performance of the APIC in carrying out its 
investment strategy and statement of public purpose goals.</DELETED>
<DELETED>    (b) Penalties.--</DELETED>
        <DELETED>    (1) In general.--The Secretary may penalize any 
        APIC, or any manager of an APIC, in the event such APIC or a 
        manager of the APIC commits an act of fraud, mismanagement, or 
        noncompliance with this Act or regulations thereunder or a 
        condition of the APICs license under this Act. The Secretary in 
        regulations shall identify, by generic description of a role or 
        responsibilities, any manager of an APIC that is subject to 
        this subsection.</DELETED>
        <DELETED>    (2) Penalties requiring notice and hearing.--With 
        respect to an act of commission or omission under paragraph (1) 
        for which the Secretary may penalize an APIC or a manager, the 
        Secretary may, following notice in writing to the APIC or the 
        manager, and opportunity for administrative hearing--</DELETED>
                <DELETED>    (A) assess a civil money penalty against 
                an APIC, or a manager of an APIC, the amount of which 
                may exceed $10,000;</DELETED>
                <DELETED>    (B) require an APIC to divest any interest 
                in an investment, on such terms and conditions as the 
                Secretary imposes; or</DELETED>
                <DELETED>    (C) revoke the APICs license.</DELETED>
        <DELETED>    (3) Penalties requiring notice and an opportunity 
        to respond.--With respect to any act of commission or omission 
        under paragraph (1) for which the Secretary may penalize an 
        APIC or a manager, following notice in writing and an 
        opportunity for the APIC or manager to respond, impose any 
        reasonable penalty. Such a penalty may, in addition to any 
        others, be--</DELETED>
                <DELETED>    (A) a civil money penalty of $10,000 or 
                less;</DELETED>
                <DELETED>    (B) the suspension of an APICs license, or 
                the conditioning of the use of an APICs license, for up 
                to 90 days, including the deferral for the period of 
                the suspension of a commitment to guarantee any new 
                debenture of the APIC; or</DELETED>
                <DELETED>    (C) any other penalty that the Secretary 
                determines to be less burdensome to the APIC than a 
                penalty that requires notice and an administrative 
                hearing under this Act.</DELETED>
<DELETED>    (c) Procedures.--</DELETED>
        <DELETED>    (1) No award under this section shall be made 
        until notice thereof is published in the Federal 
        Register.</DELETED>
        <DELETED>    (2) No civil money penalty, or other penalty under 
        subsection (b), except suspension or conditioning of an APICs 
        license under subsection (b)(3)(B), shall be due and payable, 
        or otherwise take effect, or be subject to enforcement by an 
        order of a court, until notice thereof is published in the 
        Federal Register.</DELETED>
        <DELETED>    (3)(A) The Secretary may suspend or condition an 
        APICs license for up to 45 days without prior notice in the 
        Federal Register, but such suspension or conditioning shall 
        take effect only after the Secretary has issued a written 
        notice (including a writing in electronic form) of such action 
        to the APIC. Such written notice shall be effective without 
        regard to whether the APIC has been accorded the opportunity to 
        respond. Such suspension or conditioning shall be subject to 
        enforcement by an order of a court when the Secretary has 
        issued such written notice.</DELETED>
        <DELETED>    (B) After such suspension or conditioning takes 
        effect, the Secretary shall promptly cause a notice of 
        suspension or conditioning of such license for a period of up 
        to 90 days to be published in the Federal Register. The APIC 
        shall be entitled to respond to such notice. In counting the 
        time period of the suspension or conditioning, the first day 
        shall be the day that written notice under this paragraph is 
        issued.</DELETED>
        <DELETED>    (C) During the time period of such suspension or 
        conditioning, the Secretary may proceed under subsection 
        (b)(2), and in accordance with the procedures applicable to 
        such subsection, to revoke the APICs license. Only if the 
        Secretary so proceeds, notwithstanding any other provision of 
        this section, the Secretary may extend the suspension or 
        conditioning of the APICs license by publishing a notice of 
        such action in the Federal Register--</DELETED>
                <DELETED>    (i) for the first such extension, before 
                the period under subparagraph (B) expires; 
                and</DELETED>
                <DELETED>    (ii) for any subsequent extensions of up 
                to 90 days, before the preceding period of up to 90 
                days expires.</DELETED>
        <DELETED>    (D) The suspension or conditioning of an APICs 
        license by the Secretary under this paragraph shall remain in 
        effect in accordance with its terms until final adjudication in 
        any litigation undertaken to challenge such suspension or 
        conditioning, or revocation, of an APICs license.</DELETED>

           TITLE III--AMERICA'S PRIVATE INVESTMENT COMPANIES

SEC. 301. SHORT TITLE.

    This title may be cited as the ``America's Private Investment 
Companies Act''.

SEC. 302. 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 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 title are to--
            (1) license private for profit community development 
        entities that will focus on making equity and credit 
        investments for large-scale business developments 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 title 
        may be available both to the investors in these entities and to 
        the residents of the low-income communities.

SEC. 303. DEFINITIONS.

    As used in this title:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Small Business 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 business 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 revoked.
            (4) Community development entity.--The term ``community 
        development entity'' means an entity the primary mission of 
        which is serving or providing investment capital for low-income 
        communities or low-income persons and which maintains 
        accountability to residents of low-income communities.
            (5) HUD.--The term ``HUD'' means the Secretary of Housing 
        and Urban Development or the Department of Housing and Urban 
        Development, as the context requires.
            (6) License.--The term ``license'' means a license issued 
        by HUD as provided in section 304.
            (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 metropolitan 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 military 
                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-income 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 equity 
                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 company 
                        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 include 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 investment 
                        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 indirectly 
                        from any Federal, State, or local government 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 conduct 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-income 
                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 attributable to 
                certain financial property, as the Secretary shall set 
                forth in regulations, or in collectibles, other than 
                collectibles held primarily for sale to customers.
            (11) Qualified debenture.--The term ``qualified debenture'' 
        means a debt instrument having terms that meet the requirements 
        established pursuant to section 306(c)(1).
            (12) Qualified low-income community investment.--The term 
        ``qualified low-income community 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 title.

SEC. 304. AUTHORIZATION.

    (a) Licenses.--The Secretary is authorized to license community 
development entities as America's Private 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 required 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 section 
                305(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 
        305 as follows:
                    (A) Additional licenses.--To license additional 
                APICs.
                    (B) Credit subsidy increases.--To increase 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 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 establish, 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 305(a)(6) and 
                        audits conducted under section 309(b)(2). Among 
                        the criteria established by the Secretary to 
                        determine priority 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 designated under subchapter U of Chapter 1 
                        of the Internal Revenue Code of 1986 as 
                        empowerment zones or enterprise communities.
    (d) Cooperation and Coordination.--
            (1) Program policies.--The Secretary is authorized to 
        coordinate and cooperate, through memoranda 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, including 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 
        regulations, requirements, guidelines, or standards for 
        financial 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 
        agreements 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 agreements, 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 actions 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 fiscal 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 commitment limitation.--The 
        Secretary may make commitments to guarantee loans only to the 
        extent that the total loan principal, any part of which is 
        guaranteed, 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 
        administrative 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 
        appropriation account of such agency.

SEC. 305. SELECTION OF APICS.

    (a) Eligible Applicants.--An entity shall be eligible to be 
selected for licensing under section 304 as an APIC only if the entity 
submits an application in compliance with the requirements established 
pursuant to subsection (b) and the entity meets or complies with the 
following requirements:
            (1) Organization.--The entity shall be a private, for-
        profit entity that qualifies as a community development entity 
        for the purposes of the New Markets Tax Credits, to the extent 
        such credits are established 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 management 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 development 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 locally owned businesses in the 
        communities in which the investments under the strategy will be 
        made, that prioritizes such businesses for investment 
        opportunities, and that fulfills the specific public purpose 
        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 community 
                and economic development, which shall include--
                            (i) making investments in low-income 
                        communities that further economic development 
                        objectives by targeting such investments in 
                        businesses or trades that comply with the 
                        requirements under subparagraphs (A) through 
                        (C) of section 303(10) relating to low-income 
                        communities in a manner that benefits low-
                        income persons;
                            (ii) creating jobs in low-income 
                        communities for residents of such communities;
                            (iii) involving community-based 
                        organizations and residents in community 
                        development 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 Federal executive orders, 
        Office of Management and Budget circulars, and requirements of 
        the Department of the Treasury, and such operating and 
        regulatory requirements as the Secretary may impose from time 
        to time.
            (8) Other.--The entity shall satisfy any other application 
        requirements that the Secretary may impose by regulation or 
        Federal Register notice.
    (b) Competitions.--The Secretary shall select eligible entities 
under subsection (a) to be licensed under section 304 as APICs on the 
basis of competitions. The Secretary shall announce each such 
competition by causing a notice to be published in the Federal Register 
that invites applications for licenses and sets forth the requirements 
for application and such other terms of the competition not otherwise 
provided for, as determined by the Secretary.
    (c) Selection.--In competitions under subsection (b), the Secretary 
shall select eligible entities under subsection (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 exceeding criteria 
        established under subsection (d); and
            (2) to the extent practicable and subject to the existence 
        of approvable applications, ensuring geographical 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 establish 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, experience, and expertise 
                to make and manage successful investments for community 
                and economic 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 accordance 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 ownership, 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 stimulating 
                        other business development;
                            (iii) bringing new income into a low-income 
                        community and assisting in the revitalization 
                        of such community;
                            (iv) converting real property for the 
                        purpose of creating a site for business 
                        incubation 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 Secretary 
                        may establish to further the purposes 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 benefits, opportunity for 
                advancement, and personal asset building;
                    (D) the extent to which achievement of such goals 
                will involve community-based organizations and 
                residents in community development activities; and
                    (E) the extent to which the investments referred to 
                in subparagraph (B) are likely to benefit existing 
                small business in low-income communities or will 
                encourage the growth of small business in such 
                communities.
            (4) Other.--Any other criteria that the Secretary 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 period 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 authority 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 approvable application from an 
        entity, during the 1-year period referred to in paragraph (1), 
        of the entities selected and licensed by the Secretary as 
        APICs, at least one shall be an entity that has as its primary 
        purpose the making of qualified low-income community 
        investments in areas that are within Indian 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 selection criteria for 
        applicants under this paragraph.
    (f) Communications Between HUD and Applicants.--
            (1) In general.--The Secretary shall set forth in 
        regulations the procedures under which HUD and applicants for 
        APIC licenses, and others, may communicate. 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 others (such as 
                banks or other credit or business references, or 
                potential investors, that the applicant specifies in 
                writing) any more detailed information 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 conducted under this 
                subsection, including requirements for making such 
                records available to the public after the award of 
                licenses under an initial or subsequent notice, as 
                appropriate, under subsection (a).
            (2) Timing.--Regulations under this subsection may be 
        issued as interim rules for effect on or before the date of 
        publication of the first notice under subsection (a), and shall 
        apply only with respect to applications under such notice. 
        Regulations to implement 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 Department 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. 306. 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 otherwise has;
                    (B) may be conferred by a license under this title; 
                and
                    (C) the Secretary may prescribe by regulation.
            (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 
        applicable terms and conditions under the Internal Revenue Code 
        of 1986.
    (b) Investment Limitations.--
            (1) Qualified low-income community investments.--
        Substantially all investments that an APIC makes shall be 
        qualified low-income community 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 described 
                under subsection (c)(3)(C)(iii); or
                    (C) the use of private equity capital, as 
                determined by the Secretary, in an amount specified in 
                the APIC's license.
            (2) Single business investments.--An APIC shall not, as a 
        matter of sound financial practice, invest in any one business 
        an amount that exceeds 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 Debentures.--
            (1) Issuance.--An APIC may issue qualified debentures. The 
        Secretary shall, by regulation, specify the terms and 
        requirements for debentures to be considered qualified 
        debentures for purposes of this title, except that the term to 
        maturity of any qualified 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 approved by the 
        Secretary.
            (2) Leverage limits.--In general, as a matter of sound 
        financial management practices--
                    (A) the total amount of qualified debentures 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 percent 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 debentures 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 before the APIC may dissolve or otherwise 
                complete the wind-up of its business.
                    (B) Timing.--An APIC may repay any interest 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 orders such relief.
                    (C) Use of investment proceeds before repayment.--
                Until an APIC has repaid all interest and principal 
                amounts on APIC borrowings 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 administrative 
                        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 repaid all interest and principal 
                amounts on APIC borrowings under this subsection, and 
                subject to continuing compliance with subsection (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 withdrawal 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 Proceeds.--An APIC may use the 
proceeds of sale of Treasury securities purchased under subsection 
(c)(3)(C)(iii) to make qualified low-income community investments, 
subject 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 procedures for implementation of this subsection. Such 
procedures shall include the description and certifications that an 
APIC must include in all requests for guarantee action, and the 
environmental certification applicable to initial expenditures for a 
project or activity.
    (e) Antipirating.--Notwithstanding any other provision 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 industrial or 
commercial plant, facility, or operation, from 1 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. 307. CREDIT ENHANCEMENT BY THE FEDERAL GOVERNMENT.

    (a) Issuance and Guarantee of Qualified Debentures.--
            (1) Authority.--To the extent consistent with the Federal 
        Credit Reform Act of 1990, the Secretary is authorized to make 
        commitments to guarantee and guarantee the timely payment of 
        all principal and interest as scheduled on qualified debentures 
        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 Secretary determines to be 
        appropriate for commitments and guarantees under this 
        subsection, including terms and conditions relating to amounts, 
        expiration, number, priorities of repayment, security, 
        collateral, amortization, payment of interest (including the 
        timing thereof), and fees and charges. The terms and conditions 
        applicable to any particular commitment or guarantee may be 
        established in documents that the Secretary approves for such 
        commitment or guarantee.
            (3) Seniority.--Notwithstanding any other provision of 
        Federal law or any law or the constitution of any State, 
        qualified debentures guaranteed under this subsection by the 
        Secretary shall be senior to any other debt obligation, equity 
        contribution or earnings, or the distribution of dividends, 
        interest, or other amounts, of an APIC.
    (b) Issuance of Trust Certificates.--The Secretary, or an agent or 
entity selected by the Secretary, is authorized to issue trust 
certificates representing ownership 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 determines 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 
        guarantee 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 instrument, 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 debenture in such trust is prepaid, or in 
        the event of default of a qualified debenture, the guarantee of 
        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. 
        During 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 Guarantees.--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 
Secretary 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 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 Secretary the pooling and 
        the central registration functions of this section 
        notwithstanding any other provision of law, including 
        maintenance on behalf of and under the direction of the 
        Secretary, such commercial 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 protect the interests of the Government.
            (3) Form.--Book-entry or other electronic forms of 
        registration for trust certificates under this title are 
        authorized.
    (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. 308. APIC REQUESTS FOR GUARANTEE ACTIONS.

    (a) In General.--The Secretary may issue a guarantee 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 prescribe. Such 
regulations shall provide that each such request 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, including 
                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 310, and of 
                any penalty or condition that may have arisen from 
                examination or monitoring by the Secretary or 
                otherwise, including the satisfaction of any financial 
                audit exception that may have been outstanding; and
                    (C) all requirements relating to the allocation 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 Debentures That Include 
Funding for Initial Expenditure for a Project or Activity.--In addition 
to the description and certification that an APIC is required 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 proceeds 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 require 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 
Secretary of the certification of the completion of environmental 
review of the project or activity required of the cognizant 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 government under subsection (c), then the Secretary 
shall be responsible 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 Reviews.--
            (1) Execution of responsibility by the secretary.--This 
        subsection shall apply to guarantees by the Secretary of 
        qualified debentures under this title, the proceeds of which 
        would be used in connection with qualified low-income community 
        investments of APICs under this title.
            (2) Assumption of responsibility by cognizant unit of 
        general government.--
                    (A) Guarantee of qualified debentures.--In order to 
                assure that the policies of the National Environmental 
                Policy Act of 1969 and other provisions of law that 
                further the purposes of such Act (as specified in 
                regulations issued by the Secretary) are most 
                effectively implemented in connection with the 
                expenditure of funds under this title, and to assure to 
                the public undiminished protection of the environment, 
                the Secretary may, under such regulations, in lieu of 
                the environmental protection 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 responsibilities for 
                environmental review, decisionmaking, and action 
                pursuant to the National Environmental Policy Act of 
                1969 and such other provisions of law that further such 
                Act as the regulations of the Secretary specify, that 
                would otherwise apply to the Secretary were the 
                Secretary to undertake the funding of such investments 
                as a Federal action.
                    (B) Implementation.--The Secretary shall issue 
                regulations to carry out this subsection 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 
                        procedures 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 
                        performance 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
                            (vi) subject to the discretion of the 
                        Secretary, provide for suspension or 
                        termination 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 assumed by a State or unit of general 
                local government 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 Secretary 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 specified in the regulations issued under paragraph 
        (2)(B)), the APIC submits to the Secretary a request for 
        guarantee of a qualified debenture that is accompanied by 
        evidence of a certification of the State or unit of general 
        local government which meets the requirements of paragraph (4). 
        The approval by the Secretary of any such certification shall 
        be deemed to satisfy the Secretary's responsibilities pursuant 
        to paragraph (1) under the National Environmental Policy Act of 
        1969 and such other provisions of law as the regulations of the 
        Secretary specify insofar as those responsibilities relate to 
        the guarantees of qualified debentures, any parts of the 
        proceeds of which are to fund such investments, 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 Secretary;
                    (B) be executed by the chief executive officer or 
                other officer of the State or unit of general local 
                government who qualifies under regulations of the 
                Secretary;
                    (C) specify that the State or unit of general local 
                government under this subsection has fully carried out 
                its responsibilities as described under paragraph (2); 
                and
                    (D) specify that the certifying officer--
                            (i) consents to assume the status of a 
                        responsible Federal official under the National 
                        Environmental Policy Act of 1969 and each 
                        provision of law specified in regulations 
                        issued by the Secretary insofar as the 
                        provisions of such Act or other such provision 
                        of law apply pursuant to paragraph (2); and
                            (ii) is authorized and consents on behalf 
                        of the State or unit of general local 
                        government and himself or herself to accept the 
                        jurisdiction of the Federal courts for the 
                        purpose of enforcement of the responsibilities 
                        as such an official.

SEC. 309. EXAMINATION AND MONITORING OF APICS.

    (a) In General.--The Secretary shall, under regulations, through 
audits, performance agreements, license conditions, or otherwise, 
examine and monitor the operations 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 related Acts. The Secretary may undertake any responsibility 
under this section in cooperation with an APIC liaison committee, or 
any agency that is a member of such a committee, or other agency.
    (b) Monitoring, Updating, and Program Review.--
            (1) Reporting and updating.--The Secretary shall establish 
        such annual or more frequent reporting requirements for APICs, 
        and such requirements 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 require each APIC 
        to have an independent audit conducted annually of the 
        operations of the APIC. The Secretary, in consultation with the 
        Administrator and the Secretary of the Treasury, shall 
        establish requirements and standards for such audits, including 
        requirements that such audits be conducted in accordance with 
        generally accepted accounting principles, 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 operations and portfolio of 
        each APIC licensed under this title for compliance with sound 
        financial management 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 
                Treasury and Office of Management and Budget guidance, 
                circulars, and application and licensing requirements 
                on a continuing basis. The Secretary may, by 
                regulation, establish any additional standards for 
                sound financial management practices, including 
                standards that address solvency and financial exposure.
                    (B) Performance and other examinations.--The 
                Secretary shall monitor each APIC's progress in meeting 
                the goals in the APIC's statement of public purpose 
                goals, executing the APIC's investment strategy, and 
                other matters.
    (c) Inspector General Responsibility.--In carrying out monitoring 
of HUD's responsibilities under this 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 Department 
of Housing and Urban Development shall consult 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 General of the Department of 
the Treasury and the Small Business Administration in carrying out such 
function.
    (d) Annual Report By Secretary.--The Secretary shall submit a 
report to the Congress annually regarding 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 indicating program activities and performance.
    (e) GAO Report.--
            (1) Requirement.--Not later than 2 years after the date of 
        the enactment of this Act, the Comptroller General of the 
        United States shall submit 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 monitoring 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. 310. PENALTIES.

    (a) Violations Subject to Penalty.--The Secretary 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 description 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 Opportunity to Respond.--If, 
after notice in writing to an APIC or the manager of an APIC that the 
APIC or manager 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 Secretary 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 respect 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
            (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 Hearing.--If, after notice in 
writing to an APIC or the manager of an APIC that an APIC or manager 
has engaged in any action, practice, or failure to act that, under 
subsection (a), is subject to a penalty, and after an opportunity for 
administrative hearing, the Secretary determines 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 penalty 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.
            (2) Cease-and-desist orders and suspension 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 notice.--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 opportunity to respond. Upon 
                such notice, such cease-and-desist order or suspension 
                or conditioning shall be subject to enforcement by an 
                order of a court.
                    (B) Publication of notice of suspension or 
                conditioning of license.--Upon a suspension or 
                conditioning of a license taking effect pursuant to 
                subparagraph (A), the Secretary shall promptly cause a 
                notice of suspension 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 notice. For 
                purposes of the determining the duration of the period 
                of any suspension or conditioning 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 action under subsection (c)(3) 
                to revoke the license of the APIC, in accordance with 
                the procedures applicable to such subsection. 
                Notwithstanding 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 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 subparagraph 
                        (B); and
                            (ii) for any subsequent extension, before 
                        the expiration of the preceding extension 
                        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 paragraph shall remain in effect in 
        accordance with the terms of the order, suspension, or 
        conditioning until final adjudication in any action undertaken 
        to challenge the order, or the suspension or conditioning, or 
        the revocation, of an APIC's license.

SEC. 311. 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 Administrator, and the Secretary of 
the Treasury to issue regulations, 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 enactment of this Act.

SEC. 312. 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 before the expiration of such period.

                      TITLE IV--NEW MARKETS CREDIT

SEC. 401. NEW MARKETS TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following new section:

``SEC. 45D. NEW MARKETS TAX CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, in the case 
        of a taxpayer who holds a qualified equity investment on a 
        credit allowance date of such investment which occurs during 
        the taxable year, the new markets tax credit determined under 
        this section for such taxable year is an amount equal to 6 
        percent of the amount paid to the qualified community 
        development entity for such investment at its original issue.
            ``(2) Credit allowance date.--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 4 anniversary dates of such date 
                thereafter.
    ``(b) Qualified Equity Investment.--For purposes of this section--
            ``(1) In general.--The term `qualified equity investment' 
        means any equity investment in a qualified 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 investments, and
                    ``(C) such investment is designated for purposes of 
                this section by the qualified community 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 receives an allocation under 
        subsection (f). Any allocation not used within such 5-year 
        period may be reallocated 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 aggregate gross assets of the qualified 
        community development entity are invested in qualified low-
        income community investments.
            ``(4) Treatment of subsequent purchasers.--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 in a qualified community 
                development entity which is a corporation, and
                    ``(B) any capital interest in a qualified community 
                development entity which is a partnership.
    ``(c) Qualified Community Development Entity.--For purposes of this 
section--
            ``(1) In general.--The term `qualified community 
        development entity' means any domestic corporation 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 organizations.--The 
        requirements of paragraph (1) shall be treated as met by--
                    ``(A) any specialized small business investment 
                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 Financial Institutions Act of 
                1994 (12 U.S.C. 4702)).
    ``(d) Qualified Low-Income Community Investments.--For purposes of 
this section--
            ``(1) In general.--The term `qualified low-income community 
        investment' means--
                    ``(A) any equity investment in, or loan to, any 
                qualified active low-income community business,
                    ``(B) the purchase from another community 
                development entity of any loan made by such entity 
                which is a qualified low-income community investment if 
                the amount received by such other entity from such 
                purchase is used by such other entity to make qualified 
                low-income community investments,
                    ``(C) financial counseling and other services 
                specified in regulations prescribed by the Secretary to 
                businesses located in, and residents of, low-income 
                communities, and
                    ``(D) any equity investment in, or loan to, any 
                qualified community development entity if substantially 
                all of the investment or loan is used by such entity to 
                make qualified low-income community investments 
                described in subparagraphs (A), (B), and (C).
            ``(2) Qualified active low-income community business.--
                    ``(A) In general.--For purposes of paragraph (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 
                        services performed for such entity by its 
                        employees are performed in any low-income 
                        community,
                            ``(iv) less than 5 percent of the average 
                        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 average of 
                        the aggregate unadjusted bases of the property 
                        of such entity is attributable to nonqualified 
                        financial property (as defined in section 
                        1397B(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 incorporated.
                    ``(C) Portions of business may be qualified active 
                low-income community business.--The term `qualified 
                active low-income 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 incorporated.
            ``(3) Qualified business.--For purposes of this subsection, 
        the term `qualified business' has the meaning given to such 
        term by section 1397B(d); except that--
                    ``(A) in lieu of applying paragraph (2)(B) thereof, 
                the rental to others of real property located in any 
                low-income community shall be treated as a qualified 
                business if there are substantial improvements located 
                on such property,
                    ``(B) paragraph (3) thereof shall not apply, and
                    ``(C) such term shall not include any business if a 
                significant portion of the equity interests in such 
                business are held by any person who holds a significant 
                portion of the equity investments in the community 
                development entity.
    ``(e) Low-Income Community.--For purposes of this section--
            ``(1) In general.--The term `low-income community' 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 percent 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 population census tracts, the 
        equivalent county divisions (as defined by the Bureau of the 
        Census for purposes of defining poverty areas) shall be used 
        for purposes of determining poverty rates and median family 
        income.
    ``(f) National Limitation on Amount of Investments Designated.--
            ``(1) In general.--There is a new markets tax credit 
        limitation of $1,200,000,000 for each of calendar years 2000 
        through 2004.
            ``(2) Allocation of limitation.--The limitation under 
        paragraph (1) shall be allocated by the Secretary among 
        qualified community development entities selected by the 
        Secretary. In making allocations 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 calendar 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.
    ``(g) Recapture of Credit In Certain Cases.--
            ``(1) In general.--If, at any time during the 5-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 purposes 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 section with respect to such 
                investment, plus
                    ``(B) interest at the overpayment rate established 
                under section 6621 on the amount determined 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 respect to an equity investment 
        in a qualified community 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 paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase 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 section 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.
    ``(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 benefits 
        (including the credit under section 42 and the exclusion from 
        gross income under section 103),
            ``(2) which prevent the abuse of the provisions of this 
        section through the use of related parties,
            ``(3) which impose appropriate reporting requirements, and
            ``(4) 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 of such Code 
        is amended by striking ``plus'' at the end of paragraph (11), 
        by striking the period at the end of paragraph (12) and 
        inserting ``, plus'', and by adding 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 
        of such Code is amended by adding at the end the following new 
        paragraph:
            ``(9) No carryback of new markets tax credit before january 
        1, 2000.--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, 2000.''
    (c) Deduction for Unused Credit.--Subsection (c) of section 196 of 
such Code 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 of such Code 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 December 31, 1999.




                                                       Calendar No. 464

106th CONGRESS

  2d Session

                               H. R. 2848

                      [Report No. 106-706, Part I]

_______________________________________________________________________

                                 A BILL

   To amend the Small Business Investment Act of 1958 and the Small 
  Business Act to establish a New Markets Venture Capital Program, to 
establish an America's Private Investment Company Program, to amend the 
 Internal Revenue Code of 1986 to establish a New Markets Tax Credit, 
                        and for other purposes.

_______________________________________________________________________

                             June 28, 2000

 Reported from the Committee on Banking and Financial Services with an 
                               amendment

                             June 28, 2000

    Referral to the Committees on Ways and Means and Small Business 
       extended for a period ending not later than July 28, 2000

                             July 28, 2000

    The Committees on Ways and Means and Small Business discharged; 
committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed