[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4923 Engrossed in House (EH)]


  2d Session

                               H. R. 4923

_______________________________________________________________________

                                 AN ACT

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
    for the renewal of distressed communities, to provide for nine 
     additional empowerment zones and increased tax incentives for 
empowerment zone development, to encourage investments in new markets, 
                        and for other purposes.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
106th CONGRESS
  2d Session
                                H. R. 4923

_______________________________________________________________________

                                 AN ACT


 
 To amend the Internal Revenue Code of 1986 to provide tax incentives 
    for the renewal of distressed communities, to provide for nine 
     additional empowerment zones and increased tax incentives for 
empowerment zone development, to encourage investments in new markets, 
                        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; ETC.

    (a) Short Title.--This Act may be cited as the ``Community Renewal 
and New Markets Act of 2000''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; etc.
            TITLE I--TAX INCENTIVES FOR RENEWAL COMMUNITIES

Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Extension of expensing of environmental remediation costs to 
                            renewal communities; extension of 
                            termination date for renewal communities 
                            and empowerment zones.
Sec. 103. Work opportunity credit for hiring youth residing in renewal 
                            communities.
    TITLE II--EXTENSION AND EXPANSION OF EMPOWERMENT ZONE INCENTIVES

Sec. 201. Authority to designate nine additional empowerment zones.
Sec. 202. Extension of enterprise zone treatment through 2009.
Sec. 203. 20 percent employment credit for all empowerment zones
Sec. 204. Increased expensing under section 179.
Sec. 205. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 206. Nonrecognition of gain on rollover of empowerment zone 
                            investments.
Sec. 207. Increased exclusion of gain on sale of empowerment zone 
                            stock.
                   TITLE III--NEW MARKETS TAX CREDIT

Sec. 301. New markets tax credit.
          TITLE IV--IMPROVEMENTS IN LOW-INCOME HOUSING CREDIT

Sec. 401. Modification of State ceiling on low-income housing credit.
Sec. 402. Modification of criteria for allocating housing credits among 
                            projects.
Sec. 403. Additional responsibilities of housing credit agencies.
Sec. 404. Modifications to rules relating to basis of building which is 
                            eligible for credit.
Sec. 405. Other modifications.
Sec. 406. Carryforward rules.
Sec. 407. Effective date.
               TITLE V--PRIVATE ACTIVITY BOND VOLUME CAP

Sec. 501. Acceleration of phase-in of increase in volume cap on private 
                            activity bonds.
            TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES

Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Definitions.
Sec. 604. Authorization.
Sec. 605. Selection of APICs.
Sec. 606. Operations of APICs.
Sec. 607. Credit enhancement by the Federal Government.
Sec. 608. APIC requests for guarantee actions.
Sec. 609. Examination and monitoring of APICs. 
Sec. 610. Penalties.
Sec. 611. Effective date.
Sec. 612. Sunset.
     TITLE VII--OTHER COMMUNITY RENEWAL AND NEW MARKETS ASSISTANCE

Sec. 701. Transfer of unoccupied and substandard HUD-held housing to 
                            local governments and community development 
                            corporations.
Sec. 702. Transfer of HUD assets in revitalization areas.
Sec. 703. Risk-sharing demonstration.
Sec. 704. Prevention and treatment of substance abuse; services 
                            provided through religious organizations.
Sec. 705. New markets venture capital program.
Sec. 706. BusinessLINC grants and cooperative agreements.

            TITLE I--TAX INCENTIVES FOR RENEWAL COMMUNITIES

SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES.

    (a) In General.--Chapter 1 is amended by adding at the end the 
following new subchapter:

                  ``Subchapter X--Renewal Communities

                              ``Part   I. Designation.
                              ``Part  II. Renewal community capital 
                                        gain; renewal community 
                                        business.
                              ``Part  III. Additional incentives.

                         ``PART I--DESIGNATION

                              ``Sec. 1400E. Designation of renewal 
                                        communities.

``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

    ``(a) Designation.--
            ``(1) Definitions.--For purposes of this title, the term 
        `renewal community' means any area--
                    ``(A) which is nominated by one or more local 
                governments and the State or States in which it is 
                located for designation as a renewal community 
                (hereafter in this section referred to as a `nominated 
                area'), and
                    ``(B) which the Secretary of Housing and Urban 
                Development designates as a renewal community, after 
                consultation with--
                            ``(i) the Secretaries of Agriculture, 
                        Commerce, Labor, and the Treasury; the Director 
                        of the Office of Management and Budget, and the 
                        Administrator of the Small Business 
                        Administration, and
                            ``(ii) in the case of an area on an Indian 
                        reservation, the Secretary of the Interior.
            ``(2) Number of designations.--
                    ``(A) In general.--The Secretary of Housing and 
                Urban Development may designate not more than 40 
                nominated areas as renewal communities.
                    ``(B) Minimum designation in rural areas.--Of the 
                areas designated under paragraph (1), at least eight 
                must be areas--
                            ``(i) which are within a local government 
                        jurisdiction or jurisdictions with a population 
                        of less than 50,000,
                            ``(ii) which are outside of a metropolitan 
                        statistical area (within the meaning of section 
                        143(k)(2)(B)), or
                            ``(iii) which are determined by the 
                        Secretary of Housing and Urban Development, 
                        after consultation with the Secretary of 
                        Commerce, to be rural areas.
            ``(3) Areas designated based on degree of poverty, etc.--
                    ``(A) In general.--Except as otherwise provided in 
                this section, the nominated areas designated as renewal 
                communities under this subsection shall be those 
                nominated areas with the highest average ranking with 
                respect to the criteria described in subparagraphs (B), 
                (C), and (D) of subsection (c)(3). For purposes of the 
                preceding sentence, an area shall be ranked within each 
                such criterion on the basis of the amount by which the 
                area exceeds such criterion, with the area which 
                exceeds such criterion by the greatest amount given the 
                highest ranking.
                    ``(B) Exception where inadequate course of action, 
                etc.--An area shall not be designated under 
                subparagraph (A) if the Secretary of Housing and Urban 
                Development determines that the course of action 
                described in subsection (d)(2) with respect to such 
                area is inadequate.
            ``(4) Limitation on designations.--
                    ``(A) Publication of regulations.--The Secretary of 
                Housing and Urban Development shall prescribe by 
                regulation no later than 4 months after the date of the 
                enactment of this section, after consultation with the 
                officials described in paragraph (1)(B)--
                            ``(i) the procedures for nominating an area 
                        under paragraph (1)(A),
                            ``(ii) the parameters relating to the size 
                        and population characteristics of a renewal 
                        community, and
                            ``(iii) the manner in which nominated areas 
                        will be evaluated based on the criteria 
                        specified in subsection (d).
                    ``(B) Time limitations.--The Secretary of Housing 
                and Urban Development may designate nominated areas as 
                renewal communities only during the 24-month period 
                beginning on the first day of the first month following 
                the month in which the regulations described in 
                subparagraph (A) are prescribed.
                    ``(C) Procedural rules.--The Secretary of Housing 
                and Urban Development shall not make any designation of 
                a nominated area as a renewal community under paragraph 
                (2) unless--
                            ``(i) the local governments and the States 
                        in which the nominated area is located have the 
                        authority--
                                    ``(I) to nominate such area for 
                                designation as a renewal community,
                                    ``(II) to make the State and local 
                                commitments described in subsection 
                                (d), and
                                    ``(III) to provide assurances 
                                satisfactory to the Secretary of 
                                Housing and Urban Development that such 
                                commitments will be fulfilled,
                            ``(ii) a nomination regarding such area is 
                        submitted in such a manner and in such form, 
                        and contains such information, as the Secretary 
                        of Housing and Urban Development shall by 
                        regulation prescribe, and
                            ``(iii) the Secretary of Housing and Urban 
                        Development determines that any information 
                        furnished is reasonably accurate.
            ``(5) Nomination process for indian reservations.--For 
        purposes of this subchapter, in the case of a nominated area on 
        an Indian reservation, the reservation governing body (as 
        determined by the Secretary of the Interior) shall be treated 
        as being both the State and local governments with respect to 
        such area.
    ``(b) Period for Which Designation Is in Effect.--
            ``(1) In general.--Any designation of an area as a renewal 
        community shall remain in effect during the period beginning on 
        July 1, 2001, and ending on the earliest of--
                    ``(A) December 31, 2009,
                    ``(B) the termination date designated by the State 
                and local governments in their nomination, or
                    ``(C) the date the Secretary of Housing and Urban 
                Development revokes such designation.
            ``(2) Revocation of designation.--The Secretary of Housing 
        and Urban Development may revoke the designation under this 
        section of an area if such Secretary determines that the local 
        government or the State in which the area is located--
                    ``(A) has modified the boundaries of the area, or
                    ``(B) is not complying substantially with, or fails 
                to make progress in achieving, the State or local 
                commitments, respectively, described in subsection (d).
            ``(3) Earlier termination of certain benefits if earlier 
        termination of designation.--If the designation of an area as a 
        renewal community terminates before December 31, 2009--
                    ``(A) the date of such termination shall be 
                substituted for `December 31, 2009' in section 198(h) 
                with respect to such area, and
                    ``(B) the day after the date of such termination 
                shall be substituted for `January 1, 2010' each place 
                it appears in sections 1400F and 1400J with respect to 
                such area.
    ``(c) Area and Eligibility Requirements.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate a nominated area as a renewal 
        community under subsection (a) only if the area meets the 
        requirements of paragraphs (2) and (3) of this subsection.
            ``(2) Area requirements.--A nominated area meets the 
        requirements of this paragraph if--
                    ``(A) the area is within the jurisdiction of one or 
                more local governments,
                    ``(B) the boundary of the area is continuous, and
                    ``(C) the area--
                            ``(i) has a population of not more than 
                        200,000 and at least--
                                    ``(I) 4,000 if any portion of such 
                                area (other than a rural area described 
                                in subsection (a)(2)(B)(i)) is located 
                                within a metropolitan statistical area 
                                (within the meaning of section 
                                143(k)(2)(B)) which has a population of 
                                50,000 or greater, or
                                    ``(II) 1,000 in any other case, or
                            ``(ii) is entirely within an Indian 
                        reservation (as determined by the Secretary of 
                        the Interior).
            ``(3) Eligibility requirements.--A nominated area meets the 
        requirements of this paragraph if the State and the local 
        governments in which it is located certify in writing (and the 
        Secretary of Housing and Urban Development, after such review 
        of supporting data as he deems appropriate, accepts such 
        certification) that--
                    ``(A) the area is one of pervasive poverty, 
                unemployment, and general distress;
                    ``(B) the unemployment rate in the area, as 
                determined by the most recent available data, was at 
                least 1\1/2\ times the national unemployment rate for 
                the period to which such data relate;
                    ``(C) the poverty rate for each population census 
                tract within the nominated area is at least 20 percent; 
                and
                    ``(D) in the case of an urban area, at least 70 
                percent of the households living in the area have 
                incomes below 80 percent of the median income of 
                households within the jurisdiction of the local 
                government (determined in the same manner as under 
                section 119(b)(2) of the Housing and Community 
                Development Act of 1974).
            ``(4) Consideration of high incidence of crime.--The 
        Secretary of Housing and Urban Development shall take into 
        account, in selecting nominated areas for designation as 
        renewal communities under this section, the extent to which 
        such areas have a high incidence of crime.
            ``(5) Consideration of communities identified in gao 
        study.--The Secretary of Housing and Urban Development shall 
        take into account, in selecting nominated areas for designation 
        as renewal communities under this section, if the area has 
        census tracts identified in the May 12, 1998, report of the 
        General Accounting Office regarding the identification of 
        economically distressed areas.
    ``(d) Required State and Local Commitments.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate any nominated area as a renewal 
        community under subsection (a) only if--
                    ``(A) the local government and the State in which 
                the area is located agree in writing that, during any 
                period during which the area is a renewal community, 
                such governments will follow a specified course of 
                action which meets the requirements of paragraph (2) 
                and is designed to reduce the various burdens borne by 
                employers or employees in such area, and
                    ``(B) the economic growth promotion requirements of 
                paragraph (3) are met.
            ``(2) Course of action.--
                    ``(A) In general.--A course of action meets the 
                requirements of this paragraph if such course of action 
                is a written document, signed by a State (or local 
                government) and neighborhood organizations, which 
                evidences a partnership between such State or 
                government and community-based organizations and which 
                commits each signatory to specific and measurable 
                goals, actions, and timetables. Such course of action 
                shall include at least four of the following:
                            ``(i) A reduction of tax rates or fees 
                        applying within the renewal community.
                            ``(ii) An increase in the level of 
                        efficiency of local services within the renewal 
                        community.
                            ``(iii) Crime reduction strategies, such as 
                        crime prevention (including the provision of 
                        crime prevention services by nongovernmental 
                        entities).
                            ``(iv) Actions to reduce, remove, simplify, 
                        or streamline governmental requirements 
                        applying within the renewal community.
                            ``(v) Involvement in the program by private 
                        entities, organizations, neighborhood 
                        organizations, and community groups, 
                        particularly those in the renewal community, 
                        including a commitment from such private 
                        entities to provide jobs and job training for, 
                        and technical, financial, or other assistance 
                        to, employers, employees, and residents from 
                        the renewal community.
                            ``(vi) The gift (or sale at below fair 
                        market value) of surplus real property (such as 
                        land, homes, and commercial or industrial 
                        structures) in the renewal community to 
                        neighborhood organizations, community 
                        development corporations, or private companies.
                    ``(B) Recognition of past efforts.--For purposes of 
                this section, in evaluating the course of action agreed 
                to by any State or local government, the Secretary of 
                Housing and Urban Development shall take into account 
                the past efforts of such State or local government in 
                reducing the various burdens borne by employers and 
                employees in the area involved.
            ``(3) Economic growth promotion requirements.--The economic 
        growth promotion requirements of this paragraph are met with 
        respect to a nominated area if the local government and the 
        State in which such area is located certify in writing that 
        such government and State (respectively) have repealed or 
        reduced, will not enforce, or will reduce within the nominated 
        area at least four of the following:
                    ``(A) Licensing requirements for occupations that 
                do not ordinarily require a professional degree.
                    ``(B) Zoning restrictions on home-based businesses 
                which do not create a public nuisance.
                    ``(C) Permit requirements for street vendors who do 
                not create a public nuisance.
                    ``(D) Zoning or other restrictions that impede the 
                formation of schools or child care centers.
                    ``(E) Franchises or other restrictions on 
                competition for businesses providing public services, 
                including taxicabs, jitneys, cable television, or trash 
                hauling.
        This paragraph shall not apply to the extent that such 
        regulation of businesses and occupations is necessary for and 
        well-tailored to the protection of health and safety.
    ``(e) Coordination With Treatment of Empowerment Zones and 
Enterprise Communities.--For purposes of this title, the designation 
under section 1391 of any area as an empowerment zone or enterprise 
community shall cease to be in effect as of the date that the 
designation of any portion of such area as a renewal community takes 
effect.
    ``(f) Definitions and Special Rules.--For purposes of this 
subchapter--
            ``(1) Governments.--If more than one government seeks to 
        nominate an area as a renewal community, any reference to, or 
        requirement of, this section shall apply to all such 
        governments.
            ``(2) Local government.--The term `local government' 
        means--
                    ``(A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State, and
                    ``(B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the 
                Secretary of Housing and Urban Development.
            ``(3) Application of rules relating to census tracts.--The 
        rules of section 1392(b)(4) shall apply.
            ``(4) Census data.--Population and poverty rate shall be 
        determined by using 1990 census data.
    ``(g) Priority for District of Columbia Nominated Area.--For 
purposes of this subchapter--
            ``(1) In general.--Any nominated area within the District 
        of Columbia shall be treated for purposes of subsection (a)(3) 
        as having the highest average with respect to the criteria 
        described in subparagraphs (B), (C), and (D) of subsection 
        (c)(3).
            ``(2) Date of designation.--Notwithstanding subsection 
        (b)(1), the designation of a nominated area within the District 
        of Columbia as a renewal community shall take effect on January 
        1, 2003.
            ``(3) Nomination.--The District of Columbia shall be 
        treated as being both a State and local government with respect 
        to such area.

 ``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

                              ``Sec. 1400F. Renewal community capital 
                                        gain.
                              ``Sec. 1400G. Renewal community business 
                                        defined.

``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

    ``(a) General Rule.--Gross income does not include any qualified 
capital gain from the sale or exchange of a qualified community asset 
held for more than 5 years.
    ``(b) Qualified Community Asset.--For purposes of this section--
            ``(1) In general.--The term `qualified community asset' 
        means--
                    ``(A) any qualified community stock,
                    ``(B) any qualified community partnership interest, 
                and
                    ``(C) any qualified community business property.
            ``(2) Qualified community stock.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified community stock' 
                means any stock in a domestic corporation if--
                            ``(i) such stock is acquired by the 
                        taxpayer after June 30, 2001, and before 
                        January 1, 2010, at its original issue 
                        (directly or through an underwriter) from the 
                        corporation solely in exchange for cash,
                            ``(ii) as of the time such stock was 
                        issued, such corporation was a renewal 
                        community business (or, in the case of a new 
                        corporation, such corporation was being 
                        organized for purposes of being a renewal 
                        community business), and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such stock, such 
                        corporation qualified as a renewal community 
                        business.
                    ``(B) Redemptions.--A rule similar to the rule of 
                section 1202(c)(3) shall apply for purposes of this 
                paragraph.
            ``(3) Qualified community partnership interest.--The term 
        `qualified community partnership interest' means any capital or 
        profits interest in a domestic partnership if--
                    ``(A) such interest is acquired by the taxpayer 
                after June 30, 2001, and before January 1, 2010, from 
                the partnership solely in exchange for cash,
                    ``(B) as of the time such interest was acquired, 
                such partnership was a renewal community business (or, 
                in the case of a new partnership, such partnership was 
                being organized for purposes of being a renewal 
                community business), and
                    ``(C) during substantially all of the taxpayer's 
                holding period for such interest, such partnership 
                qualified as a renewal community business.
        A rule similar to the rule of paragraph (2)(B) shall apply for 
        purposes of this paragraph.
            ``(4) Qualified community business property.--
                    ``(A) In general.--The term `qualified community 
                business property' means tangible property if--
                            ``(i) such property was acquired by the 
                        taxpayer by purchase (as defined in section 
                        179(d)(2)) after June 30, 2001, and before 
                        January 1, 2010,
                            ``(ii) the original use of such property in 
                        the renewal community commences with the 
                        taxpayer, and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such property, 
                        substantially all of the use of such property 
                        was in a renewal community business of the 
                        taxpayer.
                    ``(B) Special rule for substantial improvements.--
                The requirements of clauses (i) and (ii) of 
                subparagraph (A) shall be treated as satisfied with 
                respect to--
                            ``(i) property which is substantially 
                        improved by the taxpayer before January 1, 
                        2010, and
                            ``(ii) any land on which such property is 
                        located.
                The determination of whether a property is 
                substantially improved shall be made under clause (ii) 
                of section 1400B(b)(4)(B), except that `June 30, 2001' 
                shall be substituted for `December 31, 1997' in such 
                clause.
    ``(c) Qualified Capital Gain.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `qualified capital gain` means any gain 
        recognized on the sale or exchange of--
                    ``(A) a capital asset, or
                    ``(B) property used in the trade or business (as 
                defined in section 1231(b)).
            ``(2) Gain before july 1, 2001, or after 2014 not 
        qualified.--The term `qualified capital gain' shall not include 
        any gain attributable to periods before July 1, 2001, or after 
        December 31, 2014.
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (3), (4), and (5) of section 1400B(e) shall apply 
        for purposes of this subsection.
    ``(d) Certain Rules To Apply.--For purposes of this section, rules 
similar to the rules of paragraphs (5), (6), and (7) of subsection (b), 
and subsections (f) and (g), of section 1400B shall apply; except that 
for such purposes section 1400B(g)(2) shall be applied by substituting 
`July 1, 2001' for `January 1, 1998' and `December 31, 2014' for 
`December 31, 2007'.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including regulations to prevent the avoidance of the purposes of this 
section.

``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

    ``For purposes of this subchapter, the term `renewal community 
business' means any entity or proprietorship which would be a qualified 
business entity or qualified proprietorship under section 1397C if 
references to renewal communities were substituted for references to 
empowerment zones in such section.

                   ``PART III--ADDITIONAL INCENTIVES

                              ``Sec. 1400H. Renewal community 
                                        employment credit.
                              ``Sec. 1400I. Commercial revitalization 
                                        deduction.
                              ``Sec. 1400J. Increase in expensing under 
                                        section 179.

``SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

    ``(a) In General.--Subject to the modification in subsection (b), a 
renewal community shall be treated as an empowerment zone for purposes 
of section 1396 with respect to wages paid or incurred after June 30, 
2001.
    ``(b) Modification.--In applying section 1396 with respect to 
renewal communities--
            ``(1) the applicable percentage shall be 15 percent, and
            ``(2) subsection (c) thereof shall be applied by 
        substituting `$10,000' for `$15,000' each place it appears.

``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

    ``(a) General Rule.--At the election of the taxpayer, either--
            ``(1) one-half of any qualified revitalization expenditures 
        chargeable to capital account with respect to any qualified 
        revitalization building shall be allowable as a deduction for 
        the taxable year in which the building is placed in service, or
            ``(2) a deduction for all such expenditures shall be 
        allowable ratably over the 120-month period beginning with the 
        month in which the building is placed in service.
    ``(b) Qualified Revitalization Buildings and Expenditures.--For 
purposes of this section--
            ``(1) Qualified revitalization building.--The term 
        `qualified revitalization building' means any building (and its 
        structural components) if--
                    ``(A) the building is placed in service by the 
                taxpayer in a renewal community and the original use of 
                the building begins with the taxpayer, or
                    ``(B) in the case of such building not described in 
                subparagraph (A), such building--
                            ``(i) is substantially rehabilitated 
                        (within the meaning of section 47(c)(1)(C)) by 
                        the taxpayer, and
                            ``(ii) is placed in service by the taxpayer 
                        after the rehabilitation in a renewal 
                        community.
            ``(2) Qualified revitalization expenditure.--
                    ``(A) In general.--The term `qualified 
                revitalization expenditure' means any amount properly 
                chargeable to capital account for property for which 
                depreciation is allowable under section 168 (without 
                regard to this section) and which is--
                            ``(i) nonresidential real property (as 
                        defined in section 168(e)), or
                            ``(ii) section 1250 property (as defined in 
                        section 1250(c)) which is functionally related 
                        and subordinate to property described in clause 
                        (i).
                    ``(B) Certain expenditures not included.--
                            ``(i) Acquisition cost.--In the case of a 
                        building described in paragraph (1)(B), the 
                        cost of acquiring the building or interest 
                        therein shall be treated as a qualified 
                        revitalization expenditure only to the extent 
                        that such cost does not exceed 30 percent of 
                        the aggregate qualified revitalization 
                        expenditures (determined without regard to such 
                        cost) with respect to such building.
                            ``(ii) Credits.--The term `qualified 
                        revitalization expenditure' does not include 
                        any expenditure which the taxpayer may take 
                        into account in computing any credit allowable 
                        under this title unless the taxpayer elects to 
                        take the expenditure into account only for 
                        purposes of this section.
    ``(c) Dollar limitation.--The aggregate amount which may be treated 
as qualified revitalization expenditures with respect to any qualified 
revitalization building shall not exceed the lesser of--
            ``(1) $10,000,000, or
            ``(2) the commercial revitalization expenditure amount 
        allocated to such building under this section by the commercial 
        revitalization agency for the State in which the building is 
        located.
    ``(d) Commercial Revitalization Expenditure Amount.--
            ``(1) In general.--The aggregate commercial revitalization 
        expenditure amount which a commercial revitalization agency may 
        allocate for any calendar year is the amount of the State 
        commercial revitalization expenditure ceiling determined under 
        this paragraph for such calendar year for such agency.
            ``(2) State commercial revitalization expenditure 
        ceiling.--The State commercial revitalization expenditure 
        ceiling applicable to any State--
                    ``(A) for the period after June 30, 2001, and 
                before January 1, 2002, is $6,000,000 for each renewal 
                community in the State,
                    ``(B) for each calendar year after 2001 and before 
                2010 is $12,000,000 for each renewal community in the 
                State, and
                    ``(C) for each calendar year thereafter is zero.
            ``(3) Commercial revitalization agency.--For purposes of 
        this section, the term `commercial revitalization agency' means 
        any agency authorized by a State to carry out this section.
            ``(4) Time and manner of allocations.--Allocations under 
        this section shall be made at the same time and in the same 
        manner as under paragraphs (1) and (7) of section 42(h).
    ``(e) Responsibilities of Commercial Revitalization Agencies.--
            ``(1) Plans for allocation.--Notwithstanding any other 
        provision of this section, the commercial revitalization 
        expenditure amount with respect to any building shall be zero 
        unless--
                    ``(A) such amount was allocated pursuant to a 
                qualified allocation plan of the commercial 
                revitalization agency which is approved (in accordance 
                with rules similar to the rules of section 147(f)(2) 
                (other than subparagraph (B)(ii) thereof)) by the 
                governmental unit of which such agency is a part; and
                    ``(B) such agency notifies the chief executive 
                officer (or its equivalent) of the local jurisdiction 
                within which the building is located of such allocation 
                and provides such individual a reasonable opportunity 
                to comment on the allocation.
            ``(2) Qualified allocation plan.--For purposes of this 
        subsection, the term `qualified allocation plan' means any 
        plan--
                    ``(A) which sets forth selection criteria to be 
                used to determine priorities of the commercial 
                revitalization agency which are appropriate to local 
                conditions,
                    ``(B) which considers--
                            ``(i) the degree to which a project 
                        contributes to the implementation of a 
                        strategic plan that is devised for a renewal 
                        community through a citizen participation 
                        process,
                            ``(ii) the amount of any increase in 
                        permanent, full-time employment by reason of 
                        any project, and
                            ``(iii) the active involvement of residents 
                        and nonprofit groups within the renewal 
                        community, and
                    ``(C) which provides a procedure that the agency 
                (or its agent) will follow in monitoring compliance 
                with this section.
    ``(f) Special Rules.--
            ``(1) Deduction in lieu of depreciation.--The deduction 
        provided by this section for qualified revitalization 
        expenditures shall--
                    ``(A) with respect to the deduction determined 
                under subsection (a)(1), be in lieu of any depreciation 
                deduction otherwise allowable on account of one-half of 
                such expenditures, and
                    ``(B) with respect to the deduction determined 
                under subsection (a)(2), be in lieu of any depreciation 
                deduction otherwise allowable on account of all of such 
                expenditures.
            ``(2) Basis adjustment, etc.--For purposes of sections 1016 
        and 1250, the deduction under this section shall be treated in 
        the same manner as a depreciation deduction. For purposes of 
        section 1250(b)(5), the straight line method of adjustment 
        shall be determined without regard to this section.
            ``(3) Substantial rehabilitations treated as separate 
        buildings.--A substantial rehabilitation (within the meaning of 
        section 47(c)(1)(C)) of a building shall be treated as a 
        separate building for purposes of subsection (a).
            ``(4) Clarification of allowance of deduction under minimum 
        tax.--Notwithstanding section 56(a)(1), the deduction under 
        this section shall be allowed in determining alternative 
        minimum taxable income under section 55.
    ``(g) Regulations.--For purposes of this section, the Secretary 
shall, by regulations, provide for the application of rules similar to 
the rules of section 49 and subsections (a) and (b) of section 50.
    ``(h) Termination.--This section shall not apply to any building 
placed in service after December 31, 2009.

``SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

    ``(a) In General.--For purposes of section 1397A--
            ``(1) a renewal community shall be treated as an 
        empowerment zone,
            ``(2) a renewal community business shall be treated as an 
        empowerment zone business, and
            ``(3) qualified renewal property shall be treated as 
        enterprise zone property.
    ``(b) Qualified Renewal Property.--For purposes of this section--
            ``(1) In general.--The term `qualified renewal property' 
        means any property to which section 168 applies (or would apply 
        but for section 179) if--
                    ``(A) such property was acquired by the taxpayer by 
                purchase (as defined in section 179(d)(2)) after June 
                30, 2001, and before January 1, 2010, and
                    ``(B) such property would be qualified zone 
                property (as defined in section 1397D) if references to 
                renewal communities were substituted for references to 
                empowerment zones in section 1397D.
            ``(2) Certain rules to apply.--The rules of subsections 
        (a)(2) and (b) of section 1397D shall apply for purposes of 
        this section.''.
    (b) Exception for Commercial Revitalization Deduction From Passive 
Loss Rules.--
            (1) Paragraph (3) of section 469(i) is amended by 
        redesignating subparagraphs (C), (D), and (E) as subparagraphs 
        (D), (E), and (F), respectively, and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) Exception for commercial revitalization 
                deduction.--Subparagraph (A) shall not apply to any 
                portion of the passive activity loss for any taxable 
                year which is attributable to the commercial 
                revitalization deduction under section 1400I.''.
            (2) Subparagraph (E) of section 469(i)(3), as redesignated 
        by subparagraph (A), is amended to read as follows:
                    ``(E) Ordering rules to reflect exceptions and 
                separate phase-outs.--If subparagraph (B), (C), or (D) 
                applies for a taxable year, paragraph (1) shall be 
                applied--
                            ``(i) first to the portion of the passive 
                        activity loss to which subparagraph (C) does 
                        not apply,
                            ``(ii) second to the portion of the passive 
                        activity credit to which subparagraph (B) or 
                        (D) does not apply,
                            ``(iii) third to the portion of such credit 
                        to which subparagraph (B) applies,
                            ``(iv) fourth to the portion of such loss 
                        to which subparagraph (C) applies, and
                            ``(v) then to the portion of such credit to 
                        which subparagraph (D) applies.''.
            (3)(A) Subparagraph (B) of section 469(i)(6) is amended by 
        striking ``or'' at the end of clause (i), by striking the 
        period at the end of clause (ii) and inserting ``, or'', and by 
        adding at the end the following new clause:
                            ``(iii) any deduction under section 1400I 
                        (relating to commercial revitalization 
                        deduction).''.
            (B) The heading for such subparagraph (B) is amended by 
        striking ``or rehabilitation credit'' and inserting ``, 
        rehabilitation credit, or commercial revitalization 
        deduction''.
    (c) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

                ``Subchapter X. Renewal Communities.''.

SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO 
              RENEWAL COMMUNITIES; EXTENSION OF TERMINATION DATE FOR 
              RENEWAL COMMUNITIES AND EMPOWERMENT ZONES.

    (a) Extension.--
            (1) In general.--Subparagraph (A) of section 198(c)(2) 
        (defining targeted area) is amended by striking ``and'' at the 
        end of clause (iii), by striking the period at the end of 
        clause (iv) and inserting ``, and'', and by adding at the end 
        the following new clause:
                            ``(v) any renewal community (as defined in 
                        section 1400E).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to expenditures paid or incurred after June 30, 
        2001.
    (b) Extension of Termination Date.--Subsection (h) of section 198 
is amended by inserting before the period ``(December 31, 2009, in the 
case of an empowerment zone or renewal community)''.

SEC. 103. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING IN RENEWAL 
              COMMUNITIES.

    (a) High-Risk Youth.--Subparagraphs (A)(ii) and (B) of section 
51(d)(5) are each amended by striking ``empowerment zone or enterprise 
community'' and inserting ``empowerment zone, enterprise community, or 
renewal community''.
    (b) Qualified Summer Youth Employee.--Clause (iv) of section 
51(d)(7)(A) is amended by striking ``empowerment zone or enterprise 
community'' and inserting ``empowerment zone, enterprise community, or 
renewal community''.
    (c) Headings.--Paragraphs (5)(B) and (7)(C) of section 51(d) are 
each amended by inserting ``or community'' in the heading after 
``zone''.
    (d) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after June 30, 
2001.

    TITLE II--EXTENSION AND EXPANSION OF EMPOWERMENT ZONE INCENTIVES

SEC. 201. AUTHORITY TO DESIGNATE NINE ADDITIONAL EMPOWERMENT ZONES.

    Section 1391 is amended by adding at the end the following new 
subsection:
    ``(h) Additional Designations Permitted.--
            ``(1) In general.--In addition to the areas designated 
        under subsections (a) and (g), the appropriate Secretaries may 
        designate in the aggregate an additional nine nominated areas 
        as empowerment zones under this section, subject to the 
        availability of eligible nominated areas. Of that number, not 
        more than seven may be designated in urban areas and not more 
        than two may be designated in rural areas.
            ``(2) Period designations may be made and take effect.--A 
        designation may be made under this subsection after the date of 
        the enactment of this subsection and before January 1, 2002. 
        Subject to subparagraphs (B) and (C) of subsection (d)(1), such 
        designations shall remain in effect during the period beginning 
        on January 1, 2002, and ending on December 31, 2009.
            ``(3) Modifications to eligibility criteria, etc.--The 
        rules of subsection (g)(3) shall apply to designations under 
        this subsection.''.

SEC. 202. EXTENSION OF ENTERPRISE ZONE TREATMENT THROUGH 2009.

    Subparagraph (A) of section 1391(d)(1) (relating to period for 
which designation is in effect) is amended to read as follows:
                    ``(A) December 31, 2009,''.

SEC. 203. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT ZONES

    (a) 20 Percent Credit.--Subsection (b) of section 1396 (relating to 
empowerment zone employment credit) is amended to read as follows:
    ``(b) Applicable Percentage.--For purposes of this section, the 
applicable percentage is 20 percent.''.
    (b) All Empowerment Zones Eligible for Credit.--Section 1396 is 
amended by striking subsection (e).
    (c) Conforming Amendment.--Subsection (d) of section 1400 is 
amended to read as follows:
    ``(d) Special Rule for Application of Employment Credit.--With 
respect to the DC Zone, section 1396(d)(1)(B) (relating to empowerment 
zone employment credit) shall be applied by substituting `the District 
of Columbia' for `such empowerment zone'.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to wages paid or incurred after December 31, 2001.

SEC. 204. INCREASED EXPENSING UNDER SECTION 179.

    (a) In General.--Subparagraph (A) of section 1397A(a)(1) is amended 
by striking ``$20,000'' and inserting ``$35,000''.
    (b) Expensing for Property Used in Developable Sites.--Section 
1397A is amended by striking subsection (c).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 205. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE FACILITY BONDS.

    (a) In General.--Paragraph (3) of section 1394(f) (relating to 
bonds for empowerment zones designated under section 1391(g)) is 
amended to read as follows:
            ``(3) Empowerment zone facility bond.--For purposes of this 
        subsection, the term `empowerment zone facility bond' means any 
        bond which would be described in subsection (a) if--
                    ``(A) in the case of obligations issued before 
                January 1, 2002, only empowerment zones designated 
                under section 1391(g) were taken into account under 
                sections 1397C and 1397D, and
                    ``(B) in the case of obligations issued after 
                December 31, 2001, all empowerment zones (other than 
                the District of Columbia) were taken into account under 
                sections 1397C and 1397D.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2001.

SEC. 206. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE 
              INVESTMENTS.

    (a) In General.--Part III of subchapter U of chapter 1 is amended--
            (1) by redesignating subpart C as subpart D;
            (2) by redesignating sections 1397B and 1397C as sections 
        1397C and 1397D, respectively; and
            (3) by inserting after subpart B the following new subpart:

  ``Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone 
                              Investments

                              ``Sec. 1397B. Nonrecognition of Gain on 
                                        Rollover of Empowerment Zone 
                                        Investments.

``SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE 
              INVESTMENTS.

    ``(a) Nonrecognition of Gain.--In the case of any sale of a 
qualified empowerment zone asset held by the taxpayer for more than 1 
year and with respect to which such taxpayer elects the application of 
this section, gain from such sale shall be recognized only to the 
extent that the amount realized on such sale exceeds--
            ``(1) the cost of any qualified empowerment zone asset 
        (with respect to the same zone as the asset sold) purchased by 
        the taxpayer during the 60-day period beginning on the date of 
        such sale, reduced by
            ``(2) any portion of such cost previously taken into 
        account under this section.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified empowerment zone asset.--
                    ``(A) In general.--The term `qualified empowerment 
                zone asset' means any property which would be a 
                qualified community asset (as defined in section 1400F) 
                if in section 1400F--
                            ``(i) references to empowerment zones were 
                        substituted for references to renewal 
                        communities,
                            ``(ii) references to enterprise zone 
                        businesses (as defined in section 1397C) were 
                        substituted for references to renewal community 
                        businesses, and
                            ``(iii) the date of the enactment of this 
                        paragraph were substituted for `December 31, 
                        2001' each place it appears.
                    ``(B) Treatment of dc zone.--The District of 
                Columbia Enterprise Zone shall not be treated as an 
                empowerment zone for purposes of this section.
            ``(2) Certain gain not eligible for rollover.--This section 
        shall not apply to--
                    ``(A) any gain which is treated as ordinary income 
                for purposes of this subtitle, and
                    ``(B) any gain which is attributable to real 
                property, or an intangible asset, which is not an 
                integral part of an enterprise zone business.
            ``(3) Purchase.--A taxpayer shall be treated as having 
        purchased any property if, but for paragraph (4), the 
        unadjusted basis of such property in the hands of the taxpayer 
        would be its cost (within the meaning of section 1012).
            ``(4) Basis adjustments.--If gain from any sale is not 
        recognized by reason of subsection (a), such gain shall be 
        applied to reduce (in the order acquired) the basis for 
        determining gain or loss of any qualified empowerment zone 
        asset which is purchased by the taxpayer during the 60-day 
        period described in subsection (a). This paragraph shall not 
        apply for purposes of section 1202.
            ``(5) Holding period.--For purposes of determining whether 
        the nonrecognition of gain under subsection (a) applies to any 
        qualified empowerment zone asset which is sold--
                    ``(A) the taxpayer's holding period for such asset 
                and the asset referred to in subsection (a)(1) shall be 
                determined without regard to section 1223, and
                    ``(B) only the first year of the taxpayer's holding 
                period for the asset referred to in subsection (a)(1) 
                shall be taken into account for purposes of paragraphs 
                (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 
                1400F(b).''.
    (b) Conforming Amendments.--
            (1) Paragraph (23) of section 1016(a) is amended--
                    (A) by striking ``or 1045'' and inserting ``1045, 
                or 1397B''; and
                    (B) by striking ``or 1045(b)(4)'' and inserting 
                ``1045(b)(4), or 1397B(b)(4)''.
            (2) Paragraph (15) of section 1223 is amended to read as 
        follows:
            ``(15) Except for purposes of sections 1202(a)(2), 
        1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the 
        period for which the taxpayer has held property the acquisition 
        of which resulted under section 1045 or 1397B in the 
        nonrecognition of any part of the gain realized on the sale of 
        other property, there shall be included the period for which 
        such other property has been held as of the date of such 
        sale.''.
            (3) Paragraph (2) of section 1394(b) is amended--
                    (A) by striking ``section 1397C'' and inserting 
                ``section 1397D''; and
                    (B) by striking ``section 1397C(a)(2)'' and 
                inserting ``section 1397D(a)(2)''.
            (4) Paragraph (3) of section 1394(b) is amended--
                    (A) by striking ``section 1397B'' each place it 
                appears and inserting ``section 1397C''; and
                    (B) by striking ``section 1397B(d)'' and inserting 
                ``section 1397C(d)''.
            (5) Sections 1400(e) and 1400B(c) are each amended by 
        striking ``section 1397B'' each place it appears and inserting 
        ``section 1397C''.
            (6) The table of subparts for part III of subchapter U of 
        chapter 1 is amended by striking the last item and inserting 
        the following new items:

                              ``Subpart C. Nonrecognition of gain on 
                                        rollover of empowerment zone 
                                        investments.
                              ``Subpart D. General provisions.''.
            (7) The table of sections for subpart D of such part III is 
        amended to read as follows:

                              ``Sec. 1397C. Enterprise zone business 
                                        defined.
                              ``Sec. 1397D. Qualified zone property 
                                        defined.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified empowerment zone assets acquired after the date of 
the enactment of this Act.

SEC. 207. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT ZONE 
              STOCK.

    (a) In General.--Subsection (a) of section 1202 is amended to read 
as follows:
    ``(a) Exclusion.--
            ``(1) In general.--In the case of a taxpayer other than a 
        corporation, gross income shall not include 50 percent of any 
        gain from the sale or exchange of qualified small business 
        stock held for more than 5 years.
            ``(2) Empowerment zone businesses.--
                    ``(A) In general.--In the case of qualified small 
                business stock acquired after the date of the enactment 
                of this paragraph in a corporation which is a qualified 
                business entity (as defined in section 1397C(b)) during 
                substantially all of the taxpayer's holding period for 
                such stock, paragraph (1) shall be applied by 
                substituting `60 percent' for `50 percent'.
                    ``(B) Certain rules to apply.--Rules similar to the 
                rules of paragraphs (5) and (7) of section 1400B(b) 
                shall apply for purposes of this paragraph.
                    ``(C) Gain after 2014 not qualified.--Subparagraph 
                (A) shall not apply to gain attributable to periods 
                after December 31, 2014.
                    ``(D) Treatment of dc zone.--The District of 
                Columbia Enterprise Zone shall not be treated as an 
                empowerment zone for purposes of this paragraph.''.
    (b) Conforming Amendment.--Paragraph (8) of section 1(h) is amended 
by striking ``means'' and all that follows and inserting ``means the 
excess of--
                    ``(A) the gain which would be excluded from gross 
                income under section 1202 but for the percentage 
                limitation in section 1202(a), over
                    ``(B) the gain excluded from gross income under 
                section 1202.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to stock acquired after the date of the enactment of this Act.

                   TITLE III--NEW MARKETS TAX CREDIT

SEC. 301. NEW MARKETS TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(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 the 
        applicable percentage of the amount paid to the qualified 
        community development entity for such investment at its 
        original issue.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage is--
                    ``(A) 5 percent with respect to the first three 
                credit allowance dates, and
                    ``(B) 6 percent with respect to the remainder of 
                the credit allowance dates.
            ``(3) Credit allowance date.--For purposes of paragraph 
        (1), the term `credit allowance date' means, with respect to 
        any qualified equity investment--
                    ``(A) the date on which such investment is 
                initially made, and
                    ``(B) each of the six anniversary dates of such 
                date thereafter.
    ``(b) Qualified Equity Investment.--For 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 (other than nonqualified preferred 
                stock as defined in section 351(g)(2)) in an entity 
                which is a corporation, and
                    ``(B) any capital interest in an entity which is a 
                partnership.
    ``(c) Qualified Community Development 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,
                    ``(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.
            ``(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 
                        1397C(e)).
                    ``(B) Proprietorship.--Such term shall include any 
                business carried on by an individual as a proprietor if 
                such business would meet the requirements of 
                subparagraph (A) were it 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 1397C(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 for each calendar year. Such limitation is--
                    ``(A) $1,000,000,000 for 2001,
                    ``(B) $1,500,000,000 for 2002 and 2003,
                    ``(C) $2,000,000,000 for 2004 and 2005, and
                    ``(D) $3,500,000,000 for 2006 and 2007.
            ``(2) Allocation of limitation.--The 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. No amount may be 
        carried under the preceding sentence to any calendar year after 
        2014.
    ``(g) Recapture of Credit In Certain Cases.--
            ``(1) In general.--If, at any time during the 7-year period 
        beginning on the date of the original issue of a qualified 
        equity investment in a qualified community development entity, 
        there is a recapture event with respect to such investment, 
        then the tax imposed by this chapter for the taxable year in 
        which such event occurs shall be increased by the credit 
        recapture amount.
            ``(2) Credit recapture amount.--For 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. This subsection 
shall not apply for purposes of sections 1202, 1400B, and 1400F.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including 
regulations--
            ``(1) which limit the credit for investments which are 
        directly or indirectly subsidized by other Federal tax benefits 
        (including the credit under section 42 and the exclusion from 
        gross income under section 103),
            ``(2) which prevent the abuse of the purposes of this 
        section,
            ``(3) which provide rules for determining whether the 
        requirement of subsection (b)(1)(B) is treated as met,
            ``(4) which impose appropriate reporting requirements, and
            ``(5) which apply the provisions of this section to newly 
        formed entities.''.
    (b) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38 is amended by 
        striking ``plus'' at the end of 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 
        is amended by adding at the end the following new paragraph:
            ``(9) No carryback of new markets tax credit before january 
        1, 2001.--No portion of the unused business credit for any 
        taxable year which is attributable to the credit under section 
        45D may be carried back to a taxable year ending before January 
        1, 2001.''.
    (c) Deduction for Unused Credit.--Subsection (c) of section 196 is 
amended by striking ``and'' at the end of paragraph (7), by striking 
the period at the end of paragraph (8) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(9) the new markets tax credit determined under section 
        45D(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

                              ``Sec. 45D. New markets tax credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2000.
    (f) Regulations on Allocation of National Limitation.--Not later 
than 60 days after the date of the enactment of this Act, the Secretary 
of the Treasury or the Secretary's delegate shall prescribe regulations 
which specify--
            (1) how entities shall apply for an allocation under 
        section 45D(f)(2) of the Internal Revenue Code of 1986, as 
        added by this section;
            (2) the competitive procedure through which such 
        allocations are made; and
            (3) the actions that such Secretary or delegate shall take 
        to ensure that such allocations are properly made to 
        appropriate entities.

          TITLE IV--IMPROVEMENTS IN LOW-INCOME HOUSING CREDIT

SEC. 401. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING CREDIT.

    (a) In General.--Clauses (i) and (ii) of section 42(h)(3)(C) 
(relating to State housing credit ceiling) are amended to read as 
follows:
                            ``(i) the unused State housing credit 
                        ceiling (if any) of such State for the 
                        preceding calendar year,
                            ``(ii) the greater of--
                                    ``(I) the applicable amount under 
                                subparagraph (H) multiplied by the 
                                State population, or
                                    ``(II) $2,000,000,''.
    (b) Applicable Amount.--Paragraph (3) of section 42(h) (relating to 
housing credit dollar amount for agencies) is amended by adding at the 
end the following new subparagraph:
                    ``(H) Applicable amount of state ceiling.--For 
                purposes of subparagraph (C)(ii), the applicable amount 
                shall be determined under the following table:

                ``For calendar year:
                                              The applicable amount is:
                    2001...................................     $1.35  
                    2002...................................      1.45  
                    2003...................................      1.55  
                    2004...................................      1.65  
                    2005...................................      1.70  
                    2006 and thereafter....................  1.75.''.  
    (c) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) (relating to housing credit dollar 
amount for agencies), as amended by subsection (c), is amended by 
adding at the end the following new subparagraph:
                    ``(I) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2006, the $2,000,000 in 
                        subparagraph (C) and the $1.75 amount in 
                        subparagraph (H) shall each be increased by an 
                        amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 2005' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--
                                    ``(I) In the case of the amount in 
                                subparagraph (C), any increase under 
                                clause (i) which is not a multiple of 
                                $5,000 shall be rounded to the next 
                                lowest multiple of $5,000.
                                    ``(II) In the case of the amount in 
                                subparagraph (H), any increase under 
                                clause (i) which is not a multiple of 5 
                                cents shall be rounded to the next 
                                lowest multiple of 5 cents.''.
    (d) Conforming Amendments.--
            (1) Section 42(h)(3)(C), as amended by subsection (a), is 
        amended--
                    (A) by striking ``clause (ii)'' in the matter 
                following clause (iv) and inserting ``clause (i)''; and
                    (B) by striking ``clauses (i)'' in the matter 
                following clause (iv) and inserting ``clauses (ii)''.
            (2) Section 42(h)(3)(D)(ii) is amended--
                    (A) by striking ``subparagraph (C)(ii)'' and 
                inserting ``subparagraph (C)(i)''; and
                    (B) by striking ``clauses (i)'' in subclause (II) 
                and inserting ``clauses (ii)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to calendar years after 2000.

SEC. 402. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING CREDITS AMONG 
              PROJECTS.

    (a) Selection Criteria.--Subparagraph (C) of section 42(m)(1) 
(relating to certain selection criteria must be used) is amended--
            (1) by inserting ``, including whether the project includes 
        the use of existing housing as part of a community 
        revitalization plan'' before the comma at the end of clause 
        (iii); and
            (2) by striking clauses (v), (vi), and (vii) and inserting 
        the following new clauses:
                            ``(v) tenant populations with special 
                        housing needs,
                            ``(vi) public housing waiting lists,
                            ``(vii) tenant populations of individuals 
                        with children, and
                            ``(viii) projects intended for eventual 
                        tenant ownership.''.
    (b) Preference for Community Revitalization Projects Located in 
Qualified Census Tracts.--Clause (ii) of section 42(m)(1)(B) is amended 
by striking ``and'' at the end of subclause (I), by adding ``and'' at 
the end of subclause (II), and by inserting after subclause (II) the 
following new subclause:
                                    ``(III) projects which are located 
                                in qualified census tracts (as defined 
                                in subsection (d)(5)(C)) and the 
                                development of which contributes to a 
                                concerted community revitalization 
                                plan,''.

SEC. 403. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT AGENCIES.

    (a) Market Study; Public Disclosure of Rationale for Not Following 
Credit Allocation Priorities.--Subparagraph (A) of section 42(m)(1) 
(relating to responsibilities of housing credit agencies) is amended by 
striking ``and'' at the end of clause (i), by striking the period at 
the end of clause (ii) and inserting a comma, and by adding at the end 
the following new clauses:
                            ``(iii) a comprehensive market study of the 
                        housing needs of low-income individuals in the 
                        area to be served by the project is conducted 
                        before the credit allocation is made and at the 
                        developer's expense by a disinterested party 
                        who is approved by such agency, and
                            ``(iv) a written explanation is available 
                        to the general public for any allocation of a 
                        housing credit dollar amount which is not made 
                        in accordance with established priorities and 
                        selection criteria of the housing credit 
                        agency.''.
    (b) Site Visits.--Clause (iii) of section 42(m)(1)(B) (relating to 
qualified allocation plan) is amended by inserting before the period 
``and in monitoring for noncompliance with habitability standards 
through regular site visits''.

SEC. 404. MODIFICATIONS TO RULES RELATING TO BASIS OF BUILDING WHICH IS 
              ELIGIBLE FOR CREDIT.

    (a) Adjusted Basis To Include Portion of Certain Buildings Used by 
Low-Income Individuals Who Are Not Tenants and by Project Employees.--
Paragraph (4) of section 42(d) (relating to special rules relating to 
determination of adjusted basis) is amended--
            (1) by striking ``subparagraph (B)'' in subparagraph (A) 
        and inserting ``subparagraphs (B) and (C)'';
            (2) by redesignating subparagraph (C) as subparagraph (D); 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Inclusion of basis of property used to 
                provide services for certain nontenants.--
                            ``(i) In general.--The adjusted basis of 
                        any building located in a qualified census 
                        tract (as defined in paragraph (5)(C)) shall be 
                        determined by taking into account the adjusted 
                        basis of property (of a character subject to 
                        the allowance for depreciation and not 
                        otherwise taken into account) used throughout 
                        the taxable year in providing any community 
                        service facility.
                            ``(ii) Limitation.--The increase in the 
                        adjusted basis of any building which is taken 
                        into account by reason of clause (i) shall not 
                        exceed 10 percent of the eligible basis of the 
                        qualified low-income housing project of which 
                        it is a part. For purposes of the preceding 
                        sentence, all community service facilities 
                        which are part of the same qualified low-income 
                        housing project shall be treated as one 
                        facility.
                            ``(iii) Community service facility.--For 
                        purposes of this subparagraph, the term 
                        `community service facility' means any facility 
                        designed to serve primarily individuals whose 
                        income is 60 percent or less of area median 
                        income (within the meaning of subsection 
                        (g)(1)(B)).''.
    (b) Certain Native American Housing Assistance Disregarded in 
Determining Whether Building Is Federally Subsidized for Purposes of 
the Low-Income Housing Credit.--Subparagraph (E) of section 42(i)(2) 
(relating to determination of whether building is federally subsidized) 
is amended--
            (1) in clause (i), by inserting ``or the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4101 et seq.) (as in effect on October 1, 1997)'' after 
        ``this subparagraph)''; and
            (2) in the subparagraph heading, by inserting ``or native 
        american housing assistance'' after ``home assistance''.

SEC. 405. OTHER MODIFICATIONS.

    (a) Allocation of Credit Limit to Certain Buildings.--
            (1) The first sentence of section 42(h)(1)(E)(ii) is 
        amended by striking ``(as of'' the first place it appears and 
        inserting ``(as of the later of the date which is 6 months 
        after the date that the allocation was made or''.
            (2) The last sentence of section 42(h)(3)(C) is amended by 
        striking ``project which'' and inserting ``project which fails 
        to meet the 10 percent test under paragraph (1)(E)(ii) on a 
        date after the close of the calendar year in which the 
        allocation was made or which''.
    (b) Determination of Whether Buildings Are Located in High Cost 
Areas.--The first sentence of section 42(d)(5)(C)(ii)(I) is amended--
            (1) by inserting ``either'' before ``in which 50 percent''; 
        and
            (2) by inserting before the period ``or which has a poverty 
        rate of at least 25 percent''.

SEC. 406. CARRYFORWARD RULES.

    (a) In General.--Clause (ii) of section 42(h)(3)(D) (relating to 
unused housing credit carryovers allocated among certain States) is 
amended by striking ``the excess'' and all that follows and inserting 
``the excess (if any) of--
                                    ``(I) the unused State housing 
                                credit ceiling for the year preceding 
                                such year, over
                                    ``(II) the aggregate housing credit 
                                dollar amount allocated for such 
                                year.''.
    (b) Conforming Amendment.--The second sentence of section 
42(h)(3)(C) (relating to State housing credit ceiling) is amended by 
striking ``clauses (i) and (iii)'' and inserting ``clauses (i) through 
(iv)''.

SEC. 407. EFFECTIVE DATE.

    Except as otherwise provided in this title, the amendments made by 
this title shall apply to--
            (1) housing credit dollar amounts allocated after December 
        31, 2000; and
            (2) buildings placed in service after such date to the 
        extent paragraph (1) of section 42(h) of the Internal Revenue 
        Code of 1986 does not apply to any building by reason of 
        paragraph (4) thereof, but only with respect to bonds issued 
        after such date.

               TITLE V--PRIVATE ACTIVITY BOND VOLUME CAP

SEC. 501. ACCELERATION OF PHASE-IN OF INCREASE IN VOLUME CAP ON PRIVATE 
              ACTIVITY BONDS.

    (a) In General.--The table contained in section 146(d)(2) (relating 
to per capita limit; aggregate limit) is amended to read as follows:
      

 
       ``Calendar Year           Per Capita Limit      Aggregate Limit
------------------------------------------------------------------------
  2001.......................         $55.00            $165,000,000
  2002.......................          60.00             180,000,000
  2003.......................          65.00             195,000,000
  2004, 2005, and 2006.......          70.00             210,000,000
  2007 and thereafter........          75.00           225,000,000.''.

    (b) Effective Date.--The amendment made by this section shall apply 
to calendar years beginning after 2000.

            TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES

SEC. 601. SHORT TITLE.

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

SEC. 602. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) people living in distressed areas, both urban and 
        rural, that are characterized by high levels of joblessness, 
        poverty, and low incomes have not 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. 603. 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 604.
            (7) Low-income community.--The term ``low-income 
        community'' means--
                    (A) a census tract or tracts that have--
                            (i) a poverty rate of 20 percent or 
                        greater, based on the most recent census data; 
                        or
                            (ii) a median family income that does not 
                        exceed 80 percent of the greater of: (I) the 
                        median family income for the 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 606(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. 604. 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 
                605(e)(1) applies, the number authorized under such 
                section.
            (2) Use of additional credit subsidy.--Subject to the 
        limitation under paragraph (1), the Secretary may use any 
        budget authority available after credit subsidy has been 
        allocated for the APICs initially licensed pursuant to section 
        605 as follows:
                    (A) Additional licenses.--To license additional 
                APICs.
                    (B) Credit subsidy increases.--To 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 605(a)(6) and 
                        audits conducted under section 609(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. 605. SELECTION OF APICS.

    (a) Eligible Applicants.--An entity shall be eligible to be 
selected for licensing under section 604 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 603(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 604 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. 606. OPERATIONS OF APICS.

    (a) Powers and Authorities.--
            (1) In general.--An APIC shall have any powers or 
        authorities that--
                    (A) the APIC derives from the jurisdiction in which 
                it is organized, or that the APIC 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 one area to another 
area, if the relocation is likely to result in a significant loss of 
employment in the labor market area from which the relocation occurs.
    (f) Exclusion of APIC From Definition of Debtor Under Bankruptcy 
Provisions.--Section 109(b)(2) of title 11, United States Code, is 
amended by inserting before ``credit union'' the following: ``America's 
Private Investment Company licensed under the America's Private 
Investment Companies Act,''.

SEC. 607. CREDIT ENHANCEMENT BY THE FEDERAL 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. 608. 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 610, 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. 609. 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. 610. 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. 611. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this title 
shall take effect upon the expiration of the 6-month period beginning 
on the date of the enactment of this Act.
    (b) Issuance of Regulations and Guidelines.--Any authority under 
this title of the Secretary, the 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. 612. SUNSET.

    After the expiration of the 5-year period beginning upon the date 
that the Secretary awards the first license for an APIC under this 
title--
            (1) the Secretary may not license any APIC; and
            (2) no amount may be appropriated for the costs (as such 
        term is defined in section 502 of the Federal Credit Reform Act 
        of 1990 (2 U.S.C. 661c)) of any guarantee under this title for 
        any debenture issued by an APIC.
This section may not be construed to prohibit, limit, or affect the 
award, allocation, or use of any budget authority for the costs of such 
guarantees that is appropriated before the expiration of such period.

     TITLE VII--OTHER COMMUNITY RENEWAL AND NEW MARKETS ASSISTANCE

SEC. 701. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD HOUSING TO 
              LOCAL GOVERNMENTS AND COMMUNITY DEVELOPMENT CORPORATIONS.

    Section 204 of the Departments of Veterans Affairs and Housing and 
Urban Development, and Independent Agencies Appropriations Act, 1997 
(12 U.S.C. 1715z-11a) is amended--
            (1) by striking ``Flexible Authority.--'' and inserting 
        ``Disposition of HUD-Owned Properties. (a) Flexible Authority 
        for Multifamily Projects.--''; and
            (2) by adding at the end the following new subsection:
    ``(b) Transfer of Unoccupied and Substandard Housing to Local 
Governments and Community Development Corporations.--
            ``(1) Transfer authority.--Notwithstanding the authority 
        under subsection (a) and the last sentence of section 204(g) of 
        the National Housing Act (12 U.S.C. 1710(g)), the Secretary of 
        Housing and Urban Development shall transfer ownership of any 
        qualified HUD property, subject to the requirements of this 
        section, to a unit of general local government having 
        jurisdiction for the area in which the property is located or 
        to a community development corporation which operates within 
        such a unit of general local government in accordance with this 
        subsection, but only to the extent that units of general local 
        government and community development corporations consent to 
        transfer and the Secretary determines that such transfer is 
        practicable.
            ``(2) Qualified hud properties.--For purposes of this 
        subsection, the term `qualified HUD property' means any 
        property for which, as of the date that notification of the 
        property is first made under paragraph (3)(B), not less than 6 
        months have elapsed since the later of the date that the 
        property was acquired by the Secretary or the date that the 
        property was determined to be unoccupied or substandard, that 
        is owned by the Secretary and is--
                    ``(A) an unoccupied multifamily housing project;
                    ``(B) a substandard multifamily housing project; or
                    ``(C) an unoccupied single family property that--
                            ``(i) has been determined by the Secretary 
                        not to be an eligible asset under section 
                        204(h) of the National Housing Act (12 U.S.C. 
                        1710(h)); or
                            ``(ii) is an eligible asset under such 
                        section 204(h), but--
                                    ``(I) is not subject to a specific 
                                sale agreement under such section; and
                                    ``(II) has been determined by the 
                                Secretary to be inappropriate for 
                                continued inclusion in the program 
                                under such section 204(h) pursuant to 
                                paragraph (10) of such section.
            ``(3) Timing.--The Secretary shall establish procedures 
        that provide for--
                    ``(A) time deadlines for transfers under this 
                subsection;
                    ``(B) notification to units of general local 
                government and community development corporations of 
                qualified HUD properties in their jurisdictions;
                    ``(C) such units and corporations to express 
                interest in the transfer under this subsection of such 
                properties;
                    ``(D) a right of first refusal for transfer of 
                qualified HUD properties to units of general local 
                government and community development corporations, 
                under which--
                            ``(i) the Secretary shall establish a 
                        period during which the Secretary may not 
                        transfer such properties except to such units 
                        and corporations;
                            ``(ii) the Secretary shall offer qualified 
                        HUD properties that are single family 
                        properties for purchase by units of general 
                        local government at a cost of $1 for each 
                        property, but only to the extent that the costs 
                        to the Federal Government of disposal at such 
                        price do not exceed the costs to the Federal 
                        Government of disposing of property subject to 
                        the procedures for single family property 
                        established by the Secretary pursuant to the 
                        authority under the last sentence of section 
                        204(g) of the National Housing Act (12 U.S.C. 
                        1710(g));
                            ``(iii) the Secretary may accept an offer 
                        to purchase a property made by a community 
                        development corporation only if the offer 
                        provides for purchase on a cost recovery basis; 
                        and
                            ``(iv) the Secretary shall accept an offer 
                        to purchase such a property that is made during 
                        such period by such a unit or corporation and 
                        that complies with the requirements of this 
                        paragraph;
                    ``(E) a written explanation, to any unit of general 
                local government or community development corporation 
                making an offer to purchase a qualified HUD property 
                under this subsection that is not accepted, of the 
                reason that such offer was not acceptable.
            ``(4) Other disposition.--With respect to any qualified HUD 
        property, if the Secretary does not receive an acceptable offer 
        to purchase the property pursuant to the procedure established 
        under paragraph (3), the Secretary shall dispose of the 
        property to the unit of general local government in which 
        property is located or to community development corporations 
        located in such unit of general local government on a 
        negotiated, competitive bid, or other basis, on such terms as 
        the Secretary deems appropriate.
            ``(5) Satisfaction of indebtedness.--Before transferring 
        ownership of any qualified HUD property pursuant to this 
        subsection, the Secretary shall satisfy any indebtedness 
        incurred in connection with the property to be transferred, by 
        canceling the indebtedness.
            ``(6) Determination of status of properties.--To ensure 
        compliance with the requirements of this subsection, the 
        Secretary shall take the following actions:
                    ``(A) Upon enactment.--Upon the enactment of this 
                subsection, the Secretary shall promptly assess each 
                residential property owned by the Secretary to 
                determine whether such property is a qualified HUD 
                property.
                    ``(B) Upon acquisition.--Upon acquiring any 
                residential property, the Secretary shall promptly 
                determine whether the property is a qualified HUD 
                property.
                    ``(C) Updates.--The Secretary shall periodically 
                reassess the residential properties owned by the 
                Secretary to determine whether any such properties have 
                become qualified HUD properties.
            ``(7) Tenant leases.--This subsection shall not affect the 
        terms or the enforceability of any contract or lease entered 
        into with respect to any residential property before the date 
        that such property becomes a qualified HUD property.
            ``(8) Use of property.--Property transferred under this 
        subsection shall be used only for appropriate neighborhood 
        revitalization efforts, including homeownership, rental units, 
        commercial space, and parks, consistent with local zoning 
        regulations, local building codes, and subdivision regulations 
        and restrictions of record.
            ``(9) Inapplicability to properties made available for 
        homeless.--Notwithstanding any other provision of this 
        subsection, this subsection shall not apply to any properties 
        that the Secretary determines are to be made available for use 
        by the homeless pursuant to subpart E of part 291 of title 24, 
        Code of Federal Regulations, during the period that the 
        properties are so available.
            ``(10) Protection of existing contracts.--This subsection 
        may not be construed to alter, affect, or annul any legally 
        binding obligations entered into with respect to a qualified 
        HUD property before the property becomes a qualified HUD 
        property.
            ``(11) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Community development corporation.--The term 
                `community development corporation' means a nonprofit 
                organization whose primary purpose is to promote 
                community development by providing housing 
                opportunities for low-income families.
                    ``(B) Cost recovery basis.--The term `cost recovery 
                basis' means, with respect to any sale of a residential 
                property by the Secretary, that the purchase price paid 
                by the purchaser is equal to or greater than the sum 
                of: (i) the appraised value of the property, as 
                determined in accordance with such requirements as the 
                Secretary shall establish; and (ii) the costs incurred 
                by the Secretary in connection with such property 
                during the period beginning on the date on which the 
                Secretary acquires title to the property and ending on 
                the date on which the sale is consummated.
                    ``(C) Multifamily housing project.--The term 
                `multifamily housing project' has the meaning given the 
                term in section 203 of the Housing and Community 
                Development Amendments of 1978.
                    ``(D) Residential property.--The term `residential 
                property' means a property that is a multifamily 
                housing project or a single family property.
                    ``(E) Secretary.--The term `Secretary' means the 
                Secretary of Housing and Urban Development.
                    ``(F) Severe physical problems.--The term `severe 
                physical problems' means, with respect to a dwelling 
                unit, that the unit--
                            ``(i) lacks hot or cold piped water, a 
                        flush toilet, or both a bathtub and a shower in 
                        the unit, for the exclusive use of that unit;
                            ``(ii) on not less than three separate 
                        occasions during the preceding winter months, 
                        was uncomfortably cold for a period of more 
                        than 6 consecutive hours due to a malfunction 
                        of the heating system for the unit;
                            ``(iii) has no functioning electrical 
                        service, exposed wiring, any room in which 
                        there is not a functioning electrical outlet, 
                        or has experienced three or more blown fuses or 
                        tripped circuit breakers during the preceding 
                        90-day period;
                            ``(iv) is accessible through a public 
                        hallway in which there are no working light 
                        fixtures, loose or missing steps or railings, 
                        and no elevator; or
                            ``(v) has severe maintenance problems, 
                        including water leaks involving the roof, 
                        windows, doors, basement, or pipes or plumbing 
                        fixtures, holes or open cracks in walls or 
                        ceilings, severe paint peeling or broken 
                        plaster, and signs of rodent infestation.
                    ``(G) Single family property.--The term `single 
                family property' means a 1- to 4-family residence.
                    ``(H) Substandard.--The term `substandard' means, 
                with respect to a multifamily housing project, that 25 
                percent or more of the dwelling units in the project 
                have severe physical problems.
                    ``(I) Unit of general local government.--The term 
                `unit of general local government' has the meaning 
                given such term in section 102(a) of the Housing and 
                Community Development Act of 1974.
                    ``(J) Unoccupied.--The term `unoccupied' means, 
                with respect to a residential property, that the unit 
                of general local government having jurisdiction over 
                the area in which the project is located has certified 
                in writing that the property is not inhabited.
            ``(12) Regulations.--
                    ``(A) Interim.--Not later than 30 days after the 
                date of the enactment of this subsection, the Secretary 
                shall issue such interim regulations as are necessary 
                to carry out this subsection.
                    ``(B) Final.--Not later than 60 days after the date 
                of the enactment of this subsection, the Secretary 
                shall issue such final regulations as are necessary to 
                carry out this subsection.''.

SEC. 702. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.

    In carrying out the program under section 204(h) of the National 
Housing Act (12 U.S.C. 1710(h)), upon the request of the chief 
executive officer of a county or the government of appropriate 
jurisdiction and not later than 60 days after such request is made, the 
Secretary of Housing and Urban Development shall designate as a 
revitalization area all portions of such county that meet the criteria 
for such designation under paragraph (3) of such section.

SEC. 703. RISK-SHARING DEMONSTRATION.

    Section 249 of the National Housing Act (12 U.S.C. 1715z-14) is 
amended--
            (1) by striking the section heading and inserting the 
        following:

                    ``risk-sharing demonstration'';

            (2) by striking ``reinsurance'' each place such term 
        appears and insert ``risk-sharing'';
            (3) in subsection (a)--
                    (A) in the first sentence, by inserting ``and 
                insured community development financial institutions'' 
                after ``private mortgage insurers'';
                    (B) in the second sentence--
                            (i) by striking ``two'' and inserting 
                        ``4''; and
                            (ii) by striking ``March 15, 1988'' and 
                        inserting ``the expiration of the 5-year period 
                        beginning on the date of the enactment of the 
                        Community Renewal and New Market Act of 2000''; 
                        and
                    (C) in the last sentence, by striking ``10 
                percent'' and inserting ``20 percent'';
            (4) in subsection (b)--
                    (A) in the first sentence, by inserting ``and with 
                insured community development financial institutions'' 
                before the period at the end;
                    (B) in the first sentence, by striking ``which have 
                been determined to be qualified insurers under section 
                302(b)(2)(C)'';
                    (C) in the second sentence, by inserting ``and 
                insured community development financial institutions'' 
                after ``private mortgage insurance companies'';
                    (D) by striking paragraph (1) and inserting the 
                following new paragraph:
            ``(1) assume the first loss on any mortgage insured 
        pursuant to section 203(b), 234, or 245 that covers a one- to 
        four-family dwelling and is included in the program under this 
        section, up to the percentage of loss that is set forth in the 
        risk-sharing contract;''; and
                    (E) in paragraph (2)--
                            (i) by striking ``carry out (under 
                        appropriate delegation) such'' and inserting 
                        ``delegate underwriting,''; and
                            (ii) by striking ``function'' and inserting 
                        ``functions'';
            (5) in subsection (c)--
                    (A) in the first sentence--
                            (i) by striking ``of'' the first place it 
                        appears and insert ``for'';
                            (ii) by striking ``insurance reserves'' and 
                        inserting ``loss reserves''; and
                            (iii) by striking ``such insurance'' and 
                        inserting ``such reserves''; and
                    (B) in the second sentence, by inserting ``or 
                insured community development financial institution'' 
                after ``private mortgage insurance company'';
            (6) in subsection (d), by inserting ``or insured community 
        development financial institution'' after ``private mortgage 
        insurance company''; and
            (7) by adding at the end the following new subsection:
    ``(e) Insured Community Development Financial Institutions.--For 
purposes of this section, the term `insured community development 
financial institution' means a community development financial 
institution, as such term is defined in section 103 of Reigle Community 
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702) 
that is an insured depository institution (as such term is defined in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or an 
insured credit union (as such term is defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752)).''.

SEC. 704. PREVENTION AND TREATMENT OF SUBSTANCE ABUSE; SERVICES 
              PROVIDED THROUGH RELIGIOUS ORGANIZATIONS.

    Title V of the Public Health Service Act (42 U.S.C. 290aa et seq.) 
is amended by adding at the end the following part:

      ``Part G--Services Provided Through Religious Organizations

``SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.

    ``(a) Designated Programs.--Subject to subsection (b), this part 
applies to discretionary and formula grant programs administered by the 
Substance Abuse and Mental Health Services Administration that make 
awards of financial assistance to public or private entities for the 
purpose of carrying out activities to prevent or treat substance abuse 
(in this part referred to as a `designated program'). Designated 
programs include the program under subpart II of part B of title XIX 
(relating to formula grants to the States).
    ``(b) Limitation.--This part does not apply to any award of 
financial assistance under a designated program for a purpose other 
than the purpose specified in subsection (a).
    ``(c) Definitions.--For purposes of this part (and subject to 
subsection (b)):
            ``(1) The term `designated program' has the meaning given 
        such term in subsection (a).
            ``(2) The term `financial assistance' means a grant, 
        cooperative agreement, or contract.
            ``(3) The term `program beneficiary' means an individual 
        who receives program services.
            ``(4) The term `program participant' means a public or 
        private entity that has received financial assistance under a 
        designated program.
            ``(5) The term `program services' means treatment for 
        substance abuse, or preventive services regarding such abuse, 
        provided pursuant to an award of financial assistance under a 
        designated program.
            ``(6) The term `religious organization' means a nonprofit 
        religious organization.

``SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PARTICIPANTS.

    ``(a) In General.--Notwithstanding any other provision of law, a 
religious organization, on the same basis as any other nonprofit 
private provider--
            ``(1) may receive financial assistance under a designated 
        program; and
            ``(2) may be a provider of services under a designated 
        program.
    ``(b) Religious Organizations.--The purpose of this section is to 
allow religious organizations to be program participants on the same 
basis as any other nonprofit private provider without impairing the 
religious character of such organizations, and without diminishing the 
religious freedom of program beneficiaries.
    ``(c) Nondiscrimination Against Religious Organizations.--
            ``(1) Eligibility as program participants.--Religious 
        organizations are eligible to be program participants on the 
        same basis as any other nonprofit private organization as long 
        as the programs are implemented consistent with the 
        Establishment Clause and Free Exercise Clause of the First 
        Amendment to the United States Constitution. Nothing in this 
        Act shall be construed to restrict the ability of the Federal 
        Government, or a State or local government receiving funds 
        under such programs, to apply to religious organizations the 
        same eligibility conditions in designated programs as are 
        applied to any other nonprofit private organization.
            ``(2) Nondiscrimination.--Neither the Federal Government 
        nor a State or local government receiving funds under 
        designated programs shall discriminate against an organization 
        that is or applies to be a program participant on the basis 
        that the organization has a religious character.
    ``(d) Religious Character and Freedom.--
            ``(1) Religious organizations.--Except as provided in this 
        section, any religious organization that is a program 
        participant shall retain its independence from Federal, State, 
        and local government, including such organization's control 
        over the definition, development, practice, and expression of 
        its religious beliefs.
            ``(2) Additional safeguards.--Neither the Federal 
        Government nor a State shall require a religious organization 
        to--
                    ``(A) alter its form of internal governance; or
                    ``(B) remove religious art, icons, scripture, or 
                other symbols,
        in order to be a program participant.
    ``(e) Employment Practices.--Nothing in this section shall be 
construed to modify or affect the provisions of any other Federal or 
State law or regulation that relates to discrimination in employment. A 
religious organization's exemption provided under section 702 of the 
Civil Rights Act of 1964 regarding employment practices shall not be 
affected by its participation in, or receipt of funds from, a 
designated program.
    ``(f) Rights of Program Beneficiaries.--
            ``(1) In general.--If an individual who is a program 
        beneficiary or a prospective program beneficiary objects to the 
        religious character of a program participant, within a 
        reasonable period of time after the date of such objection such 
        program participant shall refer such individual to, and the 
        appropriate Federal, State, or local government that 
        administers a designated program or is a program participant 
        shall provide to such individual (if otherwise eligible for 
        such services), program services that--
                    ``(A) are from an alternative provider that is 
                accessible to, and has the capacity to provide such 
                services to, such individual; and
                    ``(B) have a value that is not less than the value 
                of the services that the individual would have received 
                from the program participant to which the individual 
                had such objection.
            ``(2) Notices.--Appropriate Federal, State, or local 
        governments that administer designated programs or are program 
        participants shall ensure that notice is provided to program 
        beneficiaries or prospective program beneficiaries of their 
        rights under this subsection.
            ``(3) Additional requirements.--A program participant 
        making a referral pursuant to paragraph (1) shall--
                    ``(A) prior to making such referral, consider any 
                list that the State or local government makes available 
                of entities in the geographic area that provide program 
                services; and
                    ``(B) ensure that the individual makes contact with 
                the alternative provider to which the individual is 
                referred.
            ``(4) Nondiscrimination.--A religious organization that is 
        a program participant shall not in providing program services 
        or engaging in outreach activities under designated programs 
        discriminate against a program beneficiary or prospective 
        program beneficiary on the basis of religion or religious 
        belief.
    ``(g) Fiscal Accountability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        religious organization that is a program participant shall be 
        subject to the same regulations as other recipients of awards 
        of Federal financial assistance to account, in accordance with 
        generally accepted auditing principles, for the use of the 
        funds provided under such awards.
            ``(2) Limited audit.--With respect to the award involved, 
        if a religious organization that is a program participant 
        maintains the Federal funds in a separate account from non-
        Federal funds, then only the Federal funds shall be subject to 
        audit.
    ``(h) Compliance.--With respect to compliance with this section by 
an agency, a religious organization may obtain judicial review of 
agency action in accordance with chapter 7 of title 5, United States 
Code.

``SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.

    ``No funds provided under a designated program shall be expended 
for sectarian worship, instruction, or proselytization.

``SEC. 584. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG TREATMENT 
              PROGRAMS.

    ``(a) Findings.--The Congress finds that--
            ``(1) establishing unduly rigid or uniform educational 
        qualification for counselors and other personnel in drug 
        treatment programs may undermine the effectiveness of such 
        programs; and
            ``(2) such educational requirements for counselors and 
        other personnel may hinder or prevent the provision of needed 
        drug treatment services.
    ``(b) Nondiscrimination.--In determining whether personnel of a 
program participant that has a record of successful drug treatment for 
the preceding three years have satisfied State or local requirements 
for education and training, a State or local government shall not 
discriminate against education and training provided to such personnel 
by a religious organization, so long as such education and training 
includes basic content substantially equivalent to the content provided 
by nonreligious organizations that the State or local government would 
credit for purposes of determining whether the relevant requirements 
have been satisfied.''.

SEC. 705. NEW MARKETS VENTURE CAPITAL PROGRAM.

    (a) Short Title.--This section may be cited as the ``New Markets 
Venture Capital Program Act of 2000''.
    (b) New Markets Venture Capital Program.--Title III of the Small 
Business Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended--
            (1) in the heading for the title, 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. 351. DEFINITIONS.

    ``In this part, the following definitions apply:
            ``(1) Developmental venture capital.--The term 
        `developmental venture capital' means capital in the form of 
        equity investments in businesses made with a primary objective 
        of fostering economic development in low- or moderate-income 
        geographic areas.
            ``(2) Low- or moderate-income geographic area.--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;
                            ``(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; or
                    ``(B) any area located within--
                            ``(i) a historically underutilized business 
                        zone (HUBZone), as defined in section 3(p) of 
                        the Small Business Act (15 U.S.C. 632(p));
                            ``(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.
            ``(3) New markets venture capital company.--The term `New 
        Markets Venture Capital company' means a company that--
                    ``(A) has been granted final approval by the 
                Administration under section 354(e); and
                    ``(B) has entered into a participation agreement 
                with the Administration.
            ``(4) Operational assistance.--The term `operational 
        assistance' means management, marketing, and other technical 
        assistance that assists a small business concern with business 
        development.
            ``(5) Participation agreement.--The term `participation 
        agreement' means an agreement, between the Administration and a 
        company granted final approval under section 354(e), that--
                    ``(A) details the company's operating plan and 
                investment criteria; and
                    ``(B) requires the company to make investments in 
                smaller enterprises at least 80 percent of which are 
                located in low- or moderate-income geographic areas.
            ``(6) Specialized small business investment company.--The 
        term `specialized small business investment company' means any 
        small business investment company that--
                    ``(A) invests solely in small business concerns 
                that contribute to a well-balanced national economy by 
                facilitating ownership in such concerns by persons 
                whose participation in the free enterprise system is 
                hampered because of social or economic disadvantages;
                    ``(B) is organized or chartered under State 
                business or nonprofit corporations statutes, or formed 
                as a limited partnership; and
                    ``(C) was licensed under section 301(d), as in 
                effect before September 30, 1996.

``SEC. 352. PURPOSES.

    ``The purposes of the New Markets Venture Capital Program 
established under this part are--
            ``(1) to promote economic development and the creation of 
        wealth and job opportunities in low- or moderate-income 
        geographic areas and among individuals living in such areas by 
        encouraging developmental venture capital investments in 
        smaller enterprises primarily located in such areas; and
            ``(2) to establish a developmental venture capital program, 
        with the mission of addressing the unmet equity investment 
        needs of small enterprises located in low- and moderate-income 
        geographic areas, to be administered by the Administration--
                    ``(A) to enter into participation agreements with 
                New Markets Venture Capital companies;
                    ``(B) to guarantee debentures of New Markets 
                Venture Capital companies to enable each such company 
                to make developmental venture capital investments in 
                smaller enterprises in low- or moderate-income 
                geographic areas; and
                    ``(C) to make grants to New Markets Venture Capital 
                companies, and to other entities, for the purpose of 
                providing operational assistance to smaller enterprises 
                financed, or expected to be financed, by such 
                companies.

``SEC. 353. ESTABLISHMENT.

    ``In accordance with this part, the Administration shall establish 
a New Markets Venture Capital Program, under which the Administration 
may--
            ``(1) enter into participation agreements with companies 
        granted final approval under section 354(e) for the purposes 
        set forth in section 352;
            ``(2) guarantee the debentures issued by New Markets 
        Venture Capital companies as provided in section 355; and
            ``(3) make grants to New Markets Venture Capital companies, 
        and to other entities, under section 358.

``SEC. 354. SELECTION OF NEW MARKETS VENTURE CAPITAL COMPANIES.

    ``(a) Eligibility.--A company shall be eligible to apply to 
participate, as a New Markets Venture Capital company, in the program 
established under this part if--
            ``(1) the company is a newly formed for-profit entity or a 
        newly formed for-profit subsidiary of an existing entity;
            ``(2) the company has a management team with experience in 
        community development financing or relevant venture capital 
        financing; and
            ``(3) the company has a primary objective of economic 
        development of low- or moderate-income geographic areas.
    ``(b) Application.--To participate, as a New Markets Venture 
Capital company, in the program established under this part a company 
meeting the eligibility requirements set forth in subsection (a) shall 
submit an application to the Administration that includes--
            ``(1) a business plan describing how the company intends to 
        make successful developmental venture capital investments in 
        identified low- or moderate-income geographic areas;
            ``(2) information regarding the community development 
        finance or relevant venture capital qualifications and general 
        reputation of the company's management;
            ``(3) a description of how the company intends to work with 
        community organizations and to seek to address the unmet 
        capital needs of the communities served;
            ``(4) a proposal describing how the company will use the 
        grant funds provided under this part to provide operational 
        assistance to smaller enterprises financed by the company, 
        including information regarding whether the company will use 
        licensed professionals, where applicable, on the company's 
        staff or from an outside entity;
            ``(5) with respect to binding commitments to be made to the 
        company under this part, an estimate of the ratio of cash to 
        in-kind contributions;
            ``(6) a description of the criteria to be used to evaluate 
        whether and to what extent the company meets the objectives of 
        the program established under this part;
            ``(7) 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
            ``(8) 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 company will meet the 
                goals of its business plan.
                    ``(B) The experience and background of the 
                company's management team.
                    ``(C) The need for developmental venture capital 
                investments in the geographic areas in which the 
                company intends to invest.
                    ``(D) The extent to which the company will 
                concentrate its activities on serving the geographic 
                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 geographic areas in which the company intends to 
                invest.
                    ``(G) The strength of the company's proposal to 
                provide operational assistance under this part as the 
                proposal relates to the ability of the applicant to 
                meet applicable cash requirements and properly utilize 
                in-kind contributions, including the use of resources 
                for the services of licensed professionals whether 
                provided by persons on the company's staff or by 
                persons outside of the company.
                    ``(H) Any other factors deemed appropriate by the 
                Administration.
            ``(3) Nationwide distribution.--The Administration shall 
        select companies under paragraph (1) in such a way that 
        promotes investment nationwide.
    ``(d) Requirements To Be Met for Final Approval.--The 
Administration shall grant each conditionally approved company a period 
of time, not to exceed 2 years, to satisfy the following requirements:
            ``(1) Capital requirement.--Each conditionally approved 
        company must raise not less than $5,000,000 of private capital 
        or binding capital commitments from one or more investors 
        (other than agencies or departments of the Federal Government) 
        who meet criteria established by the Administration.
            ``(2) Nonadministration resources for operational 
        assistance.--In order to provide operational assistance to 
        smaller enterprises expected to be financed by the company, 
        each conditionally approved company--
                    ``(A) must have binding commitments (for 
                contribution 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 not less than 30 
                        percent of the total amount of capital and 
                        commitments raised under paragraph (1);
                    ``(B) must have purchased an annuity--
                            ``(i) from an insurance company acceptable 
                        to the Administration;
                            ``(ii) using funds (other than the funds 
                        raised under paragraph (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 not less than 30 percent of the total 
                        amount of capital and commitments raised under 
                        paragraph (1); or
                    ``(C) must have binding commitments (for 
                contributions in cash or in kind) of the type described 
                in subparagraph (A) and must have purchased an annuity 
                of the type described in subparagraph (B), which in the 
                aggregate make available, over a multiyear period 
                acceptable to the Administration (not to exceed 10 
                years), an amount not less than 30 percent of the total 
                amount of capital and commitments raised under 
                paragraph (1).
    ``(e) Final Approval.--The Administration shall grant to a company 
conditionally approved under subsection (c) final approval to 
participate in the program established under this part after the 
company has met the requirements set forth in subsection (d).

``SEC. 355. DEBENTURES.

    ``(a) In General.--The Administration may guarantee the timely 
payment of principal and interest, as scheduled, on debentures issued 
by any New Markets Venture Capital company.
    ``(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 is pledged to pay all amounts that may 
be required to be paid under any guarantee under this part.
    ``(d) Maximum Guarantee.--
            ``(1) In general.--Under this section, the Administration 
        may guarantee the debentures issued by a New Markets Venture 
        Capital company only to the extent that the total face amount 
        of outstanding guaranteed debentures of such company does not 
        exceed 150 percent of the private capital of the company, as 
        determined by the Administration.
            ``(2) Treatment of certain federal funds.--For the purposes 
        of paragraph (1), private capital shall include capital that is 
        considered to be Federal funds, if such capital is contributed 
        by an investor other than an agency or department of the 
        Federal Government.

``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 a New Markets Venture Capital company and guaranteed by the 
Administration under this part, 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 it deems appropriate, guarantee the timely 
        payment of the principal of and interest on trust certificates 
        issued by the Administration or its agents for purposes of this 
        section.
            ``(2) Limitation.--Each guarantee under this subsection 
        shall be limited to the extent of principal and interest on the 
        guaranteed debentures that 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 is pledged to pay all amounts that may 
be required to be paid under any guarantee of a trust certificate 
issued by the Administration or its agents under this section.
    ``(d) Fees.--The Administration shall not collect a fee for any 
guarantee of a trust certificate 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).
    ``(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 Administration 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, of 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 part; and
                            ``(ii) the issuance of trust certificates 
                        to facilitate the creation of such trusts or 
                        pools.
                    ``(B) Fidelity bond or insurance requirement.--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) Applicability of the securities exchange act of 
        1934.--Notwithstanding section 3(a)(42) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78c(a)(42)), trust certificates 
        issued under this section shall not be treated as government 
        securities for the purposes of that Act.

``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. OPERATIONAL ASSISTANCE GRANTS.

    ``(a) In General.--
            ``(1) Authority.--In accordance with this section, the 
        Administration may make grants to New Markets Venture Capital 
        companies and to other entities, as authorized by this part, to 
        provide operational assistance to smaller enterprises financed, 
        or expected to be financed, by such companies or other 
        entities.
            ``(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.
            ``(3) Grants to specialized small business investment 
        companies.--
                    ``(A) Authority.--In accordance with this section, 
                the Administration may make grants to specialized small 
                business investment companies to provide operational 
                assistance to smaller enterprises financed, or expected 
                to be financed, by such companies after the effective 
                date of the New Markets Venture Capital Program Act of 
                2000.
                    ``(B) Use of funds.--
                            ``(i) In general.--The proceeds of a grant 
                        made under this paragraph may be used by the 
                        company receiving such grant only to provide 
                        operational assistance in connection with an 
                        equity investment (made with capital raised 
                        after the effective date of the New Markets 
                        Venture Capital Program Act of 2000) in a 
                        business located in a low- or moderate-income 
                        geographic area.
                            ``(ii) Additional limitation.--Operational 
                        assistance referred to in clause (i) may not be 
                        provided in connection with more than one 
                        equity investment.
                    ``(C) Submission of plans.--A specialized small 
                business investment company shall be eligible for a 
                grant under this section only if the company submits to 
                the Administrator, in such form and manner as the 
                Administrator may require, a plan for use of the grant.
            ``(4) Grant amount.--
                    ``(A) New markets venture capital companies.--The 
                amount of a grant made under this subsection to a New 
                Markets Venture Capital company shall be equal to the 
                resources (in cash or in kind) raised by the company 
                under with section 354(d)(2).
                    ``(B) Other entities.--The amount of a grant made 
                under this subsection to any entity other than a New 
                Markets Venture capital company shall be equal to the 
                resources (in cash or in kind) raised by the entity in 
                accordance with the requirements applicable to New 
                Markets Venture Capital companies set forth in section 
                354(d)(2).
            ``(5) 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 paragraph (4), 
        the Administration shall make pro rata reductions in the 
        amounts otherwise payable to each company and entity under such 
        paragraph.
    ``(b) Supplemental Grants.--
            ``(1) In general.--The Administration may make supplemental 
        grants to New Markets Venture Capital companies and to other 
        entities, as authorized by this part, under such terms as the 
        Administration may require, to provide additional operational 
        assistance to smaller enterprises financed, or expected to be 
        financed, by the companies.
            ``(2) Matching requirement.--The Administration may 
        require, as a condition of any supplemental grant made under 
        this subsection, that the company or entity receiving the grant 
        provide from resources (in cash or in kind), other than those 
        provided by the Administration, a matching contribution equal 
        to the amount of the supplemental grant.
    ``(c) Limitation.--None of the assistance made available under this 
section may be used for any operating expense of a New Markets Venture 
Capital company or a specialized small business investment company.

``SEC. 359. BANK PARTICIPATION.

    ``(a) In General.--Except as provided in subsection (b), any 
national bank, any member bank of the Federal Reserve System, and (to 
the extent permitted under applicable State law) any insured bank that 
is not a member of such system, 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. 360. FEDERAL FINANCING BANK.

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

``SEC. 361. REPORTING REQUIREMENTS.

    ``Each New Markets Venture Capital company that participates in the 
program established under this part shall provide to the Administration 
such information as the Administration may require, including--
            ``(1) information related to the measurement criteria that 
        the company proposed in its program application; and
            ``(2) in each case in which the company under this part 
        makes an investment in, or a loan or grant to, a business that 
        is not located in a low- or moderate-income geographic area, a 
        report on the number and percentage of employees of the 
        business who reside in such areas.

``SEC. 362. EXAMINATIONS.

    ``(a) In General.--Each New Markets Venture Capital company that 
participates in the program established under this part 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 and the expertise necessary to 
conduct such examinations.
    ``(c) Costs.--
            ``(1) Assessment.--
                    ``(A) In general.--The Administration may assess 
                the cost of examinations under this section, including 
                compensation of the examiners, against the company 
                examined.
                    ``(B) Payment.--Any company against which the 
                Administration assesses costs under this paragraph 
                shall pay such costs.
            ``(2) Deposit of funds.--Funds collected under this section 
        shall be deposited in the account for salaries and expenses of 
        the Administration.

``SEC. 363. INJUNCTIONS AND OTHER ORDERS.

    ``(a) In General.--Whenever, in the judgment of the Administration, 
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, or 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 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) Jurisdiction.--In any proceeding under subsection (a), the 
court as a court of equity may, to such extent as it deems necessary, 
take exclusive jurisdiction of the New Market Venture Capital company 
and the assets thereof, wherever located, and 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) Authority.--The Administration may act as trustee or 
        receiver of a New Markets Venture Capital company.
            ``(2) Appointment.--Upon request of 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 by reason of the special circumstances involved.

``SEC. 364. ADDITIONAL PENALTIES FOR NONCOMPLIANCE.

    ``(a) In General.--With respect to any New Markets Venture Capital 
company that violates or fails to comply with any of the provisions of 
this Act, of any regulation issued under this Act, or of any 
participation agreement entered into under this Act, the Administration 
may in accordance with this section--
            ``(1) void the participation agreement between the 
        Administration and the company; and
            ``(2) cause the company to forfeit all of the rights and 
        privileges derived by the company from this Act.
    ``(b) Adjudication of Noncompliance.--
            ``(1) In general.--Before the Administration may cause a 
        New Markets Venture Capital company to forfeit rights or 
        privileges under subsection (a), a court of the United States 
        of competent jurisdiction must find that the company committed 
        a violation, or failed to comply, in a cause of action brought 
        for that purpose in the district, territory, or other place 
        subject to the jurisdiction of the United States, in which the 
        principal office of the company is located.
            ``(2) Parties authorized to file causes of action.--Each 
        cause of action brought by the United States under this 
        subsection shall be brought by the Administration or by the 
        Attorney General.

``SEC. 365. UNLAWFUL ACTS AND OMISSIONS; BREACH OF FIDUCIARY DUTY.

    ``(a) Parties Deemed To Commit a Violation.--Whenever any New 
Markets Venture Capital company violates any provision of this Act, of 
a regulation issued under this Act, or of a participation agreement 
entered into under this Act, by reason of its failure to comply with 
its terms or by reason of its engaging in any act or practice that 
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 that 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 of the affairs of a New Markets Venture Capital company to 
engage in any act or practice, or to omit any act or practice, in 
breach of the person's fiduciary duty as such officer, director, 
employee, agent, or participant if, as a result thereof, the company 
suffers or is in imminent danger of 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 any New Markets Venture Capital 
        company, or to become an agent or participant in the conduct of 
        the affairs or management of such a company, if the person--
                    ``(A) has been convicted of a felony, or any other 
                criminal offense involving dishonesty or breach of 
                trust, or
                    ``(B) has been found civilly liable in damages, or 
                has been 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; 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 is 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.

``SEC. 366. REMOVAL OR SUSPENSION OF DIRECTORS OR OFFICERS.

    ``Using the procedures for removing or suspending a director or an 
officer of a licensee set forth in section 313 (to the extent such 
procedures are not inconsistent with the requirements of this part), 
the Administration may remove or suspend any director or officer of any 
New Markets Venture Capital company.

``SEC. 367. REGULATIONS.

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

``SEC. 368. AUTHORIZATIONS OF APPROPRIATIONS.

    ``(a) In General.--For fiscal years 2000 through 2005, the 
Administration is authorized to be appropriated, to remain available 
until expended--
            ``(1) such subsidy budget authority as may be necessary to 
        guarantee $150,000,000 of debentures under this part; and
            ``(2) $30,000,000 to make grants under this part.
    ``(b) Funds Collected for Examinations.--Funds deposited under 
section 362(c)(2) are authorized to be appropriated only for the costs 
of examinations under section 362 and for the costs of other oversight 
activities with respect to the program established under this part.''.
    (c) Conforming Amendment.--Section 20(e)(1)(C) of the Small 
Business Act (15 U.S.C 631 note) is amended by inserting ``part A of'' 
before ``title III''.
    (d) Calculation of Maximum Amount of SBIC Leverage.--
            (1) Maximum leverage.--Section 303(b)(2) of the Small 
        Business Investment Act of 1958 (15 U.S.C. 683(b)(2)) is 
        amended to read as follows:
            ``(2) Maximum leverage.--
                    ``(A) In general.--After March 31, 1993, the 
                maximum amount of outstanding leverage made available 
                to a company licensed under section 301(c) of this Act 
                shall be determined by the amount of such company's 
                private capital--
                            ``(i) if the company has private capital of 
                        not more than $15,000,000, the total amount of 
                        leverage shall not exceed 300 percent of 
                        private capital;
                            ``(ii) if the company has private capital 
                        of more than $15,000,000 but not more than 
                        $30,000,000, the total amount of leverage shall 
                        not exceed $45,000,000 plus 200 percent of the 
                        amount of private capital over $15,000,000; and
                            ``(iii) if the company has private capital 
                        of more than $30,000,000, the total amount of 
                        leverage shall not exceed $75,000,000 plus 100 
                        percent of the amount of private capital over 
                        $30,000,000 but not to exceed an additional 
                        $15,000,000.
                    ``(B) Adjustments.--
                            ``(i) In general.--The dollar amounts in 
                        clauses (i), (ii), and (iii) of subparagraph 
                        (A) shall be adjusted annually to reflect 
                        increases in the Consumer Price Index 
                        established by the Bureau of Labor Statistics 
                        of the Department of Labor.
                            (ii) Initial adjustments.--The initial 
                        adjustments made under this subparagraph after 
                        the date of the enactment of the Small Business 
                        Reauthorization Act of 1997 shall reflect only 
                        increases from March 31, 1993.
                    ``(C) Investments in low- or moderate income 
                areas.--In calculating the outstanding leverage of a 
                company for the purposes of subparagraph (A), the 
                Administrator shall not include the amount of the cost 
                basis of any equity investment made by the company in a 
                smaller enterprise located in a low- or moderate-income 
                geographic area (as defined in section 351), to the 
                extent that the total of such amounts does not exceed 
                50 percent of the company's private capital.''.
            (2) Maximum aggregate leverage.--Section 303(b)(4) of the 
        Small Business Investment Act of 1958 (15 U.S.C. 683(b)(4)) is 
        amended by adding at the end the following new subparagraph:
                    ``(D) Investments in low- or moderate income 
                areas.--In calculating the aggregate outstanding 
                leverage of a company for the purposes of subparagraph 
                (A), the Administrator shall not include the amount of 
                the cost basis of any equity investment made by the 
                company in a smaller enterprise located in a low- or 
                moderate-income geographic area (as defined in section 
                351), to the extent that the total of such amounts does 
                not exceed 50 percent of the company's private 
                capital.''.
    (e) 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 351 of the Small Business Investment Act of 1958,'' after 
``homestead association,''.
    (f) 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 351 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.''.

SEC. 706. BUSINESSLINC GRANTS AND COOPERATIVE AGREEMENTS.

    Section 8 of the Small Business Act (15 U.S.C. 637) is amended by 
adding at the end the following:
    ``(m) BusinessLINC Grants and Cooperative Agreements.--
            ``(1) In general.--In accordance with this subsection, the 
        Administrator may make grants to and enter into cooperative 
        agreements with any coalition of private entities, public 
        entities, or any combination of private and public entities--
                    ``(A) to expand business-to-business relationships 
                between large and small businesses; and
                    ``(B) to provide businesses, directly or 
                indirectly, with online information and a database of 
                companies that are interested in mentor-protege 
                programs or community-based, state-wide, or local 
                business development programs.
            ``(2) Matching requirement.--Subject to subparagraph (B), 
        the Administrator may make a grant to a coalition under 
        paragraph (1) only if the coalition provides for activities 
        described in paragraph (1)(A) or (1)(B) an amount, either in 
        kind or in cash, equal to the grant amount.
            ``(3) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $6,600,000, to 
        remain available until expended, for each of fiscal years 2001 
        through 2003.''.

            Passed the House of Representatives July 25, 2000.

            Attest:

                                                                 Clerk.