[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 463 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 463

     To amend the Internal Revenue Code of 1986 to provide for the 
designation of renewal communities, to provide tax incentives relating 
              to such communities, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 24, 1999

    Mr. Abraham (for himself, Mr. Coverdell, Mr. Lieberman, and Mr. 
   Santorum) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
     To amend the Internal Revenue Code of 1986 to provide for the 
designation of renewal communities, to provide tax incentives relating 
              to such communities, 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 ``American Community 
Renewal Act of 1999''.
    (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--DESIGNATION OF AND 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.
Sec. 103. Extension of work opportunity tax credit for renewal 
                            communities.
Sec. 104. Conforming and clerical amendments.
Sec. 105. Evaluation and reporting requirements.
Sec. 106. Exclusion of effects of this Act from Paygo scorecard.
                    TITLE II--ADDITIONAL PROVISIONS

Sec. 201. Transfer of unoccupied and substandard HUD-held housing in 
                            renewal communities to local governments.
Sec. 202. Prevention and treatment of substance abuse; services 
                            provided through religious organizations.
Sec. 203. CRA credit for investments in community development 
                            organizations located in renewal 
                            communities.

   TITLE I--DESIGNATION OF AND 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.  Family development accounts.
                              ``Part IV.  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 
                (hereinafter 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 100 
                nominated areas as renewal communities.
                    ``(B) Minimum designation in rural areas.--Of the 
                areas designated under paragraph (1), at least 20 
                percent 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.
                    ``(C) Priority for empowerment zones and enterprise 
                communities with respect to first half of 
                designations.--With respect to the first 50 percent of 
                the designations made under this section--
                            ``(i) half shall be chosen from nominated 
                        areas which are empowerment zones or enterprise 
                        communities (and are otherwise eligible for 
                        designation under this section); and
                            ``(ii) 20 percent shall be areas described 
                        in paragraph (2)(B).
            ``(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 
        the date of the designation and ending on the earliest of--
                    ``(A) December 31, 2007,
                    ``(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).
    ``(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 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 (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 
        Government 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 five 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 
                        such 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) State or local income tax benefits 
                        for fees paid for services performed by a 
                        nongovernmental entity which were formerly 
                        performed by a governmental entity.
                            ``(vii) 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 
        otherwise will not enforce within the area, if such area is 
        designated as a renewal community--
                    ``(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; and
                    ``(E) franchises or other restrictions on 
                competition for businesses providing public services, 
                including but not limited to taxicabs, jitneys, cable 
                television, or trash hauling,
        except 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, if there are in 
effect with respect to the same area both--
            ``(1) a designation as a renewal community; and
            ``(2) a designation as an empowerment zone or enterprise 
        community,
both of such designations shall be given full effect with respect to 
such area.
    ``(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) State.--The term `State' includes Puerto Rico, the 
        Virgin Islands of the United States, Guam, American Samoa, the 
        Northern Mariana Islands, and any other possession of the 
        United States.
            ``(3) Local government.--The term `local government' 
        means--
                    ``(A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State;
                    ``(B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the 
                Secretary of Housing and Urban Development; and
                    ``(C) the District of Columbia.
            ``(4) Application of rules relating to census tracts and 
        census data.--The rules of sections 1392(b)(4) and 1393(a)(9) 
        shall apply.

 ``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 recognized on 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 December 31, 2000, and before 
                        January 1, 2008, 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 interest 
        in a partnership if--
                    ``(A) such interest is acquired by the taxpayer 
                after December 31, 2000, and before January 1, 2008;
                    ``(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 December 31, 2000, and before 
                        January 1, 2008;
                            ``(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 (within the meaning of section 
                        1400B(b)(4)(B)(ii)) by the taxpayer before 
                        January 1, 2008; and
                            ``(ii) any land on which such property is 
                        located.
    ``(c) Certain Rules To Apply.--Rules similar to the rules of 
paragraphs (5), (6), and (7) of subsection (b), and subsections (e), 
(f), and (g), of section 1400B shall apply for purposes of this 
section.

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

    ``For purposes of this part, the term `renewal community business' 
means any entity or proprietorship which would be a qualified business 
entity or qualified proprietorship under section 1397B if--
            ``(1) references to renewal communities were substituted 
        for references to empowerment zones in such section; and
            ``(2) `80 percent' were substituted for `50 percent' in 
        subsections (b)(2) and (c)(1) of such section.

                ``PART III--FAMILY DEVELOPMENT ACCOUNTS

                              ``Sec. 1400H. Family development accounts 
                                        for renewal community EITC 
                                        recipients.
                              ``Sec. 1400I. Demonstration program to 
                                        provide matching contributions 
                                        to family development accounts 
                                        in certain renewal communities.
                              ``Sec. 1400J. Designation of earned 
                                        income tax credit payments for 
                                        deposit to family development 
                                        account.

``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL COMMUNITY EITC 
              RECIPIENTS.

    ``(a) Allowance of Deduction.--
            ``(1) In general.--There shall be allowed as a deduction--
                    ``(A) in the case of a qualified individual, the 
                amount paid in cash for the taxable year by such 
                individual to any family development account for such 
                individual's benefit; and
                    ``(B) in the case of any person other than a 
                qualified individual, the amount paid in cash for the 
                taxable year by such person to any family development 
                account for the benefit of a qualified individual but 
                only if the amount so paid is designated for purposes 
                of this section by such individual.
        No deduction shall be allowed under this paragraph for any 
        amount deposited in a family development account under section 
        1400I (relating to demonstration program to provide matching 
        amounts in renewal communities).
            ``(2) Limitation.--
                    ``(A) In general.--The amount allowable as a 
                deduction to any individual for any taxable year by 
                reason of paragraph (1)(A) shall not exceed the lesser 
                of--
                            ``(i) $2,000, or
                            ``(ii) an amount equal to the compensation 
                        includible in the individual's gross income for 
                        such taxable year.
                    ``(B) Persons donating to family development 
                accounts of others.--The amount which may be designated 
                under paragraph (1)(B) by any qualified individual for 
                any taxable year of such individual shall not exceed 
                $1,000.
            ``(3) Special rules for certain married individuals.--Rules 
        similar to rules of section 219(c) shall apply to the 
        limitation in paragraph (2)(A).
            ``(4) Coordination with ira's.--No deduction shall be 
        allowed under this section to any person by reason of a payment 
        to an account for the benefit of a qualified individual if any 
        amount is paid into an individual retirement account (including 
        a Roth IRA) for the benefit of such individual.
            ``(5) Rollovers.--No deduction shall be allowed under this 
        section with respect to any rollover contribution.
    ``(b) Tax Treatment of Distributions.--
            ``(1) Inclusion of amounts in gross income.--Except as 
        otherwise provided in this subsection, any amount paid or 
        distributed out of a family development account shall be 
        included in gross income by the payee or distributee, as the 
        case may be.
            ``(2) Exclusion of qualified family development 
        distributions.--Paragraph (1) shall not apply to any qualified 
        family development distribution.
    ``(c) Qualified Family Development Distribution.--For purposes of 
this section--
            ``(1) In general.--The term `qualified family development 
        distribution' means any amount paid or distributed out of a 
        family development account which would otherwise be includible 
        in gross income, to the extent that such payment or 
        distribution is used exclusively to pay qualified family 
        development expenses for the holder of the account or the 
        spouse or dependent (as defined in section 152) of such holder.
            ``(2) Qualified family development expenses.--The term 
        `qualified family development expenses' means any of the 
        following:
                    ``(A) Qualified higher education expenses.
                    ``(B) Qualified first-time homebuyer costs.
                    ``(C) Qualified business capitalization costs.
                    ``(D) Qualified medical expenses.
                    ``(E) Qualified rollovers.
            ``(3) Qualified higher education expenses.--
                    ``(A) In general.--The term `qualified higher 
                education expenses' has the meaning given such term by 
                section 72(t)(7), determined by treating postsecondary 
                vocational educational schools as eligible educational 
                institutions.
                    ``(B) Postsecondary vocational education school.--
                The term `postsecondary vocational educational school' 
                means an area vocational education school (as defined 
                in subparagraph (C) or (D) of section 521(4) of 
the Carl D. Perkins Vocational and Applied Technology Education Act (20 
U.S.C. 2471(4))) which is in any State (as defined in section 521(33) 
of such Act), as such sections are in effect on the date of the 
enactment of this section.
                    ``(C) Coordination with other benefits.--The amount 
                of qualified higher education expenses for any taxable 
                year shall be reduced as provided in section 25A(g)(2).
            ``(4) Qualified first-time homebuyer costs.--The term 
        `qualified first-time homebuyer costs' means qualified 
        acquisition costs (as defined in section 72(t)(8) without 
        regard to subparagraph (B) thereof) with respect to a principal 
        residence (within the meaning of section 121) for a qualified 
        first-time homebuyer (as defined in such section).
            ``(5) Qualified business capitalization costs.--
                    ``(A) In general.--The term `qualified business 
                capitalization costs' means qualified expenditures for 
                the capitalization of a qualified business pursuant to 
                a qualified plan.
                    ``(B) Qualified expenditures.--The term `qualified 
                expenditures' means expenditures included in a 
                qualified plan, including capital, plant, equipment, 
                working capital, and inventory expenses.
                    ``(C) Qualified business.--The term `qualified 
                business' means any business that does not contravene 
                any law.
                    ``(D) Qualified plan.--The term `qualified plan' 
                means a business plan which meets such requirements as 
                the Secretary may specify.
            ``(6) Qualified medical expenses.--The term `qualified 
        medical expenses' means any amount paid during the taxable 
        year, not compensated for by insurance or otherwise, for 
        medical care (as defined in section 213(d)) of the taxpayer, 
        his spouse, or his dependent (as defined in section 152).
            ``(7) Qualified rollovers.--The term `qualified rollover' 
        means any amount paid from a family development account of a 
        taxpayer into another such account established for the benefit 
        of--
                    ``(A) such taxpayer, or
                    ``(B) any qualified individual who is--
                            ``(i) the spouse of such taxpayer, or
                            ``(ii) any dependent (as defined in section 
                        152) of the taxpayer.
        Rules similar to the rules of section 408(d)(3) shall apply for 
        purposes of this paragraph.
    ``(d) Tax Treatment of Accounts.--
            ``(1) In general.--Any family development account is exempt 
        from taxation under this subtitle unless such account has 
        ceased to be a family development account by reason of 
        paragraph (2). Notwithstanding the preceding sentence, any such 
        account is subject to the taxes imposed by section 511 
        (relating to imposition of tax on unrelated business income of 
        charitable, etc., organizations). Notwithstanding any other 
        provision of this title (including chapters 11 and 12), the 
        basis of any person in such an account is zero.
            ``(2) Loss of exemption in case of prohibited 
        transactions.--For purposes of this section, rules similar to 
        the rules of section 408(e) shall apply.
            ``(3) Other rules to apply.--Rules similar to the rules of 
        paragraphs (4), (5), and (6) of section 408(d) shall apply for 
        purposes of this section.
    ``(e) Family Development Account.--For purposes of this title, the 
term `family development account' means a trust created or organized in 
the United States for the exclusive benefit of a qualified individual 
or his beneficiaries, but only if the written governing instrument 
creating the trust meets the following requirements:
            ``(1) Except in the case of a qualified rollover (as 
        defined in subsection (c)(7))--
                    ``(A) no contribution will be accepted unless it is 
                in cash; and
                    ``(B) contributions will not be accepted for the 
                taxable year in excess of $3,000 (determined without 
                regard to any contribution made under section 1400I 
                (relating to demonstration program to provide matching 
                amounts in renewal communities)).
            ``(2) The requirements of paragraphs (2) through (6) of 
        section 408(a) are met.
    ``(f) Qualified Individual.--For purposes of this section, the term 
`qualified individual' means, for any taxable year, an individual--
            ``(1) who is a bona fide resident of a renewal community 
        throughout the taxable year; and
            ``(2) to whom a credit was allowed under section 32 for the 
        preceding taxable year.
    ``(g) Other Definitions and Special Rules.--
            ``(1) Compensation.--The term `compensation' has the 
        meaning given such term by section 219(f)(1).
            ``(2) Married individuals.--The maximum deduction under 
        subsection (a) shall be computed separately for each 
        individual, and this section shall be applied without regard to 
        any community property laws.
            ``(3) Time when contributions deemed made.--For purposes of 
        this section, a taxpayer shall be deemed to have made a 
        contribution to a family development account on the last day of 
        the preceding taxable year if the contribution is made on 
        account of such taxable year and is made not later than the 
        time prescribed by law for filing the return for such taxable 
        year (not including extensions thereof).
            ``(4) Employer payments; custodial accounts.--Rules similar 
        to the rules of sections 219(f)(5) and 408(h) shall apply for 
        purposes of this section.
            ``(5) Reports.--The trustee of a family development account 
        shall make such reports regarding such account to the Secretary 
        and to the individual for whom the account is maintained with 
        respect to contributions (and the years to which they relate), 
        distributions, and such other matters as the Secretary may 
        require under regulations. The reports required by this 
        paragraph--
                    ``(A) shall be filed at such time and in such 
                manner as the Secretary prescribes in such regulations; 
                and
                    ``(B) shall be furnished to individuals--
                            ``(i) not later than January 31 of the 
                        calendar year following the calendar year to 
                        which such reports relate; and
                            ``(ii) in such manner as the Secretary 
                        prescribes in such regulations.
            ``(6) Investment in collectibles treated as 
        distributions.--Rules similar to the rules of section 408(m) 
        shall apply for purposes of this section.
    ``(h) Penalty for Distributions Not Used for Qualified Family 
Development Expenses.--
            ``(1) In general.--If any amount is distributed from a 
        family development account and is not used exclusively to pay 
        qualified family development expenses for the holder of the 
        account or the spouse or dependent (as defined in section 152) 
        of such holder, the tax imposed by this chapter for the taxable 
        year of such distribution shall be increased by the sum of--
                    ``(A) 100 percent of the portion of such amount 
                which is includible in gross income and is attributable 
                to amounts contributed under section 1400I (relating to 
                demonstration program to provide matching amounts in 
                renewal communities); and
                    ``(B) 10 percent of the portion of such amount 
                which is includible in gross income and is not 
                described in subparagraph (A).
        For purposes of this subsection, distributions which are 
        includible in gross income shall be treated as attributable to 
        amounts contributed under section 1400I to the extent thereof. 
        For purposes of the preceding sentence, all family development 
        accounts of an individual shall be treated as one account.
            ``(2) Exception for certain distributions.--Paragraph (1) 
        shall not apply to distributions which are--
                    ``(A) made on or after the date on which the 
                account holder attains age 59\1/2\,
                    ``(B) made to a beneficiary (or the estate of the 
                account holder) on or after the death of the account 
                holder, or
                    ``(C) attributable to the account holder's being 
                disabled within the meaning of section 72(m)(7).
    ``(i) Termination.--No deduction shall be allowed under this 
section for any amount paid to a family development account for any 
taxable year beginning after December 31, 2007.

``SEC. 1400I. DEMONSTRATION PROGRAM TO PROVIDE MATCHING CONTRIBUTIONS 
              TO FAMILY DEVELOPMENT ACCOUNTS IN CERTAIN RENEWAL 
              COMMUNITIES.

    ``(a) Designation.--
            ``(1) Definitions.--For purposes of this section, the term 
        `FDA matching demonstration area' means any renewal community--
                    ``(A) which is nominated under this section by each 
                of the local governments and States which nominated 
                such community for designation as a renewal community 
                under section 1400E(a)(1)(A); and
                    ``(B) which the Secretary of Housing and Urban 
                Development designates as an FDA matching demonstration 
                area 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 a community 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 5 
                communities as FDA matching demonstration areas.
                    ``(B) Minimum designation in rural areas.--Of the 
                areas designated under subparagraph (A), at least 2 
                must be areas described in section 1400E(a)(2)(B).
            ``(3) Limitations 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 a 
                        renewal community under paragraph (1)(A) 
                        (including procedures for coordinating such 
                        nomination with the nomination of an area for 
                        designation as a renewal community under 
                        section 1400E); and
                            ``(ii) the manner in which nominated 
                        renewal communities will be evaluated for 
                        purposes of this section.
                    ``(B) Time limitations.--The Secretary of Housing 
                and Urban Development may designate renewal communities 
                as FDA matching demonstration areas 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.
            ``(4) Designation based on degree of poverty, etc.--The 
        rules of section 1400E(a)(3) shall apply for purposes of 
        designations of FDA matching demonstration areas under this 
        section.
    ``(b) Period for Which Designation Is in Effect.--Any designation 
of a renewal community as an FDA matching demonstration area shall 
remain in effect during the period beginning on the date of such 
designation and ending on the date on which such area ceases to be a 
renewal community.
    ``(c) Matching Contributions to Family Development Accounts.--
            ``(1) In general.--Not less than once each taxable year, 
        the Secretary shall deposit (to the extent provided in 
        appropriation Acts) into a family development account of each 
        qualified individual (as defined in section 1400H(f))--
                    ``(A) who is a resident throughout the taxable year 
                of an FDA matching demonstration area; and
                    ``(B) who requests (in such form and manner as the 
                Secretary prescribes) such deposit for the taxable 
                year,
        an amount equal to the sum of the amounts deposited into all of 
        the family development accounts of such individual during such 
        taxable year (determined without regard to any amount 
        contributed under this section).
            ``(2) Limitations.--
                    ``(A) Annual limit.--The Secretary shall not 
                deposit more than $1000 under paragraph (1) with 
                respect to any individual for any taxable year.
                    ``(B) Aggregate limit.--The Secretary shall not 
                deposit more than $2000 under paragraph (1) with 
                respect to any individual for all taxable years.
            ``(3) Exclusion from income.--Except as provided in section 
        1400H, gross income shall not include any amount deposited into 
        a family development account under paragraph (1).
    ``(d) Notice of Program.--The Secretary shall provide appropriate 
notice to residents of FDA matching demonstration areas of the 
availability of the benefits under this section.
    ``(e) Termination.--No amount may be deposited under this section 
for any taxable year beginning after December 31, 2007.

``SEC. 1400J. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR 
              DEPOSIT TO FAMILY DEVELOPMENT ACCOUNT.

    ``(a) In General.--With respect to the return of any qualified 
individual (as defined in section 1400H(f)) for the taxable year of the 
tax imposed by this chapter, such individual may designate that a 
specified portion (not less than $1) of any overpayment of tax for such 
taxable year which is attributable to the earned income tax credit 
shall be deposited by the Secretary into a family development account 
of such individual. The Secretary shall so deposit such portion 
designated under this subsection.
    ``(b) Manner and Time of Designation.--A designation under 
subsection (a) may be made with respect to any taxable year--
            ``(1) at the time of filing the return of the tax imposed 
        by this chapter for such taxable year, or
            ``(2) at any other time (after the time of filing the 
        return of the tax imposed by this chapter for such taxable 
        year) specified in regulations prescribed by the Secretary.
Such designation shall be made in such manner as the Secretary 
prescribes by regulations.
    ``(c) Portion Attributable to Earned Income Tax Credit.--For 
purposes of subsection (a), an overpayment for any taxable year shall 
be treated as attributable to the earned income tax credit to the 
extent that such overpayment does not exceed the credit allowed to the 
taxpayer under section 32 for such taxable year.
    ``(d) Overpayments Treated as Refunded.--For purposes of this 
title, any portion of an overpayment of tax designated under subsection 
(a) shall be treated as being refunded to the taxpayer as of the last 
date prescribed for filing the return of tax imposed by this chapter 
(determined without regard to extensions) or, if later, the date the 
return is filed.
    ``(e) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2007.

                    ``PART IV--ADDITIONAL INCENTIVES

                              ``Sec. 1400K. Commercial revitalization 
                                        credit.
                              ``Sec. 1400L. Increase in expensing under 
                                        section 179.

``SEC. 1400K. COMMERCIAL REVITALIZATION CREDIT.

    ``(a) General Rule.--For purposes of section 46, except as provided 
in subsection (e), the commercial revitalization credit for any taxable 
year is an amount equal to the applicable percentage of the qualified 
revitalization expenditures with respect to any qualified 
revitalization building.
    ``(b) Applicable Percentage.--For purposes of this section--
            ``(1) In general.--The term `applicable percentage' means--
                    ``(A) 20 percent for the taxable year in which a 
                qualified revitalization building is placed in service, 
                or
                    ``(B) at the election of the taxpayer, 5 percent 
                for each taxable year in the credit period.
        The election under subparagraph (B), once made, shall be 
        irrevocable.
            ``(2) Credit period.--
                    ``(A) In general.--The term `credit period' means, 
                with respect to any building, the period of 10 taxable 
                years beginning with the taxable year in which the 
                building is placed in service.
                    ``(B) Applicable rules.--Rules similar to the rules 
                under paragraphs (2) and (4) of section 42(f) shall 
                apply.
    ``(c) 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) such building is located in a renewal 
                community and is placed in service after December 31, 
                2000;
                    ``(B) a commercial revitalization credit amount is 
                allocated to the building under subsection (e); and
                    ``(C) depreciation (or amortization in lieu of 
                depreciation) is allowable with respect to the 
                building.
            ``(2) Qualified revitalization expenditure.--
                    ``(A) In general.--The term `qualified 
                revitalization expenditure' means any amount properly 
                chargeable to capital account--
                            ``(i) for property for which depreciation 
                        is allowable under section 168 and which is--
                                    ``(I) nonresidential real property; 
                                or
                                    ``(II) an addition or improvement 
                                to property described in subclause (I); 
                                and
                            ``(ii) in connection with the construction 
                        of any qualified revitalization building which 
                        was not previously placed in service or in 
                        connection with the substantial rehabilitation 
                        (within the meaning of section 47(c)(1)(C)) of 
                        a building which was placed in service before 
                        the beginning of such rehabilitation.
                    ``(B) Dollar limitation.--The aggregate amount 
                which may be treated as qualified revitalization 
                expenditures with respect to any qualified 
                revitalization building for any taxable year shall not 
                exceed the excess of--
                            ``(i) $10,000,000, reduced by
                            ``(ii) any such expenditures with respect 
                        to the building taken into account by the 
                        taxpayer or any predecessor in determining the 
                        amount of the credit under this section for all 
                        preceding taxable years.
                    ``(C) Certain expenditures not included.--The term 
                `qualified revitalization expenditure' does not 
                include--
                            ``(i) Straight line depreciation must be 
                        used.--Any expenditure (other than with respect 
                        to land acquisitions) with respect to which the 
                        taxpayer does not use the straight line method 
                        over a recovery period determined under 
                        subsection (c) or (g) of section 168. The 
                        preceding sentence shall not apply to any 
                        expenditure to the extent the alternative 
                        depreciation system of section 168(g) applies 
                        to such expenditure by reason of subparagraph 
                        (B) or (C) of section 168(g)(1).
                            ``(ii) Acquisition costs.--The costs of 
                        acquiring any building or interest therein and 
                        any land in connection with such building to 
                        the extent that such costs exceed 30 percent of 
                        the qualified revitalization expenditures 
                        determined without regard to this clause.
                            ``(iii) Other credits.--Any expenditure 
                        which the taxpayer may take into account in 
                        computing any other credit allowable under this 
                        title unless the taxpayer elects to take the 
                        expenditure into account only for purposes of 
                        this section.
    ``(d) When Expenditures Taken Into Account.--
            ``(1) In general.--Qualified revitalization expenditures 
        with respect to any qualified revitalization building shall be 
        taken into account for the taxable year in which the qualified 
        revitalization building is placed in service. For purposes of 
        the preceding sentence, a substantial rehabilitation of a 
        building shall be treated as a separate building.
            ``(2) Progress expenditure payments.--Rules similar to the 
        rules of subsections (b)(2) and (d) of section 47 shall apply 
        for purposes of this section.
    ``(e) Limitation on Aggregate Credits Allowable With Respect to 
Buildings Located in a State.--
            ``(1) In general.--The amount of the credit determined 
        under this section for any taxable year with respect to any 
        building shall not exceed the commercial revitalization credit 
        amount (in the case of an amount determined under subsection 
        (b)(1)(B), the present value of such amount as determined under 
        the rules of section 42(b)(2)(C)) allocated to such building 
        under this subsection by the commercial revitalization credit 
        agency. Such allocation shall be made at the same time and in 
        the same manner as under paragraphs (1) and (7) of section 
        42(h).
            ``(2) Commercial revitalization credit amount for 
        agencies.--
                    ``(A) In general.--The aggregate commercial 
                revitalization credit amount which a commercial 
                revitalization credit agency may allocate for any 
                calendar year is the amount of the State commercial 
                revitalization credit ceiling determined under this 
                paragraph for such calendar year for such agency.
                    ``(B) State commercial revitalization credit 
                ceiling.--The State commercial revitalization credit 
                ceiling applicable to any State--
                            ``(i) for each calendar year after 2000 and 
                        before 2008 is $2,000,000 for each renewal 
                        community in the State; and
                            ``(ii) zero for each calendar year 
                        thereafter.
                    ``(C) Commercial revitalization credit agency.--For 
                purposes of this section, the term `commercial 
                revitalization credit agency' means any agency 
                authorized by a State to carry out this section.
    ``(f) Responsibilities of Commercial Revitalization Credit 
Agencies.--
            ``(1) Plans for allocation.--Notwithstanding any other 
        provision of this section, the commercial revitalization credit 
        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 credit 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 credit 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.
    ``(g) Termination.--This section shall not apply to any building 
placed in service after December 31, 2007.

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

    ``(a) General Rule.--In the case of a renewal community business 
(as defined in section 1400G), for purposes of section 179--
            ``(1) the limitation under section 179(b)(1) shall be 
        increased by the lesser of--
                    ``(A) $35,000; or
                    ``(B) the cost of section 179 property which is 
                qualified renewal property placed in service during the 
                taxable year; and
            ``(2) the amount taken into account under section 179(b)(2) 
        with respect to any section 179 property which is qualified 
        renewal property shall be 50 percent of the cost thereof.
    ``(b) Recapture.--Rules similar to the rules under section 
179(d)(10) shall apply with respect to any qualified renewal property 
which ceases to be used in a renewal community by a renewal community 
business.
    ``(c) 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 
                December 31, 2000, and before January 1, 2008; and
                    ``(B) such property would be qualified zone 
                property (as defined in section 1397C) if references to 
                renewal communities were substituted for references to 
                empowerment zones in section 1397C.
            ``(2) Certain rules to apply.--The rules of subsections 
        (a)(2) and (b) of section 1397C shall apply for purposes of 
        this section.''.

SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO 
              RENEWAL COMMUNITIES.

    (a) Extension.--Paragraph (2) of section 198(c) (defining targeted 
area) is amended by redesignating subparagraph (C) as subparagraph (D) 
and by inserting after subparagraph (B) the following new subparagraph:
                    ``(C) Renewal communities included.--Except as 
                provided in subparagraph (B), such term shall include a 
                renewal community (as defined in section 1400E).''.
    (b) Extension of Termination Date for Renewal Communities.--
Subsection (h) of section 198 is amended by inserting before the period 
``(December 31, 2007, in the case of a renewal community, as defined in 
section 1400E).''.

SEC. 103. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR RENEWAL 
              COMMUNITIES

    (a) Extension.--Subsection (c) of section 51 (relating to 
termination) is amended by adding at the end the following new 
paragraph:
            ``(5) Extension of credit for renewal communities.--
                    ``(A) In general.--In the case of an individual who 
                begins work for the employer after the date contained 
                in paragraph (4)(B), for purposes of section 38--
                            ``(i) in lieu of applying subsection (a), 
                        the amount of the work opportunity credit 
                        determined under this section for the taxable 
                        year shall be equal to--
                                    ``(I) 15 percent of the qualified 
                                first-year wages for such year; and
                                    ``(II) 30 percent of the qualified 
                                second-year wages for such year;
                            ``(ii) subsection (b)(3) shall be applied 
                        by substituting `$10,000' for `$6,000';
                            ``(iii) paragraph (4)(B) shall be applied 
                        by substituting for the date contained therein 
                        the last day for which the designation under 
                        section 1400E of the renewal community referred 
                        to in subparagraph (B)(i) is in effect; and
                            ``(iv) rules similar to the rules of 
                        section 51A(b)(5)(C) shall apply.
                    ``(B) Qualified first- and second-year wages.--For 
                purposes of subparagraph (A)--
                            ``(i) In general.--The term `qualified 
                        wages' means, with respect to each 1-year 
                        period referred to in clause (ii) or (iii), as 
                        the case may be, the wages paid or incurred by 
                        the employer during the taxable year to any 
                        individual but only if--
                                    ``(I) the employer is engaged in a 
                                trade or business in a renewal 
                                community throughout such 1-year 
                                period;
                                    ``(II) the principal place of abode 
                                of such individual is in such renewal 
                                community throughout such 1-year 
                                period; and
                                    ``(III) substantially all of the 
                                services which such individual performs 
                                for the employer during such 1-year 
                                period are performed in such renewal 
                                community.
                            ``(ii) Qualified first-year wages.--The 
                        term `qualified first-year wages' means, with 
                        respect to any individual, qualified wages 
                        attributable to service rendered during the 1-
                        year period beginning with the day the 
                        individual begins work for the employer.
                            ``(iii) Qualified second-year wages.--The 
                        term `qualified second-year wages' means, with 
                        respect to any individual, qualified wages 
                        attributable to service rendered during the 1-
                        year period beginning on the day after the last 
                        day of the 1-year period with respect to such 
                        individual determined under clause (ii).''.
    (b) Congruent Treatment of Renewal Communities and Enterprise Zones 
for Purposes of Youth Residence Requirements.--
            (1) 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''.
            (2) 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''.
            (3) Headings.--Paragraphs (5)(B) and (7)(C) of section 
        51(d) are each amended by inserting ``or community'' in the 
        heading after ``zone''.

SEC. 104. CONFORMING AND CLERICAL AMENDMENTS.

    (a) Deduction for Contributions to Family Development Accounts 
Allowable Whether or Not Taxpayer Itemizes.--Subsection (a) of section 
62 (relating to adjusted gross income defined) is amended by inserting 
after paragraph (17) the following new paragraph:
            ``(18) Family development accounts.--The deduction allowed 
        by section 1400H(a)(1)(A).''.
    (b) Tax on Excess Contributions.--
            (1) Tax imposed.--Subsection (a) of section 4973 is amended 
        by striking ``or'' at the end of paragraph (3), adding ``or'' 
        at the end of paragraph (4), and inserting after paragraph (4) 
        the following new paragraph:
            ``(5) a family development account (within the meaning of 
        section 1400H(e)),''.
            (2) Excess contributions.--Section 4973 is amended by 
        adding at the end the following new subsection:
    ``(g) Family Development Accounts.--For purposes of this section, 
in the case of a family development account, the term `excess 
contributions' means the sum of--
            ``(1) the excess (if any) of--
                    ``(A) the amount contributed for the taxable year 
                to the account (other than a qualified rollover, as 
                defined in section 1400H(c)(7), or a contribution under 
                section 1400I), over
                    ``(B) the amount allowable as a deduction under 
                section 1400H for such contributions; and
            ``(2) the amount determined under this subsection for the 
        preceding taxable year reduced by the sum of--
                    ``(A) the distributions out of the account for the 
                taxable year which were included in the gross income of 
                the payee under section 1400H(b)(1);
                    ``(B) the distributions out of the account for the 
                taxable year to which rules similar to the rules of 
                section 408(d)(5) apply by reason of section 
                1400H(d)(3); and
                    ``(C) the excess (if any) of the maximum amount 
                allowable as a deduction under section 1400H for the 
                taxable year over the amount contributed to the account 
                for the taxable year (other than a contribution under 
                section 1400I).
For purposes of this subsection, any contribution which is distributed 
from the family development account in a distribution to which rules 
similar to the rules of section 408(d)(4) apply by reason of section 
1400H(d)(3) shall be treated as an amount not contributed.''.
    (c) Tax on Prohibited Transactions.--Section 4975 is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(6) Special rule for family development accounts.--An 
        individual for whose benefit a family development account is 
        established and any contributor to such account shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if, with respect to such 
        transaction, the account ceases to be a family development 
        account by reason of the application of section 1400H(d)(2) to 
        such account.''; and
            (2) in subsection (e)(1), by striking ``or'' at the end of 
        subparagraph (E), by redesignating subparagraph (F) as 
        subparagraph (G), and by inserting after subparagraph (E) the 
        following new subparagraph:
                    ``(F) a family development account described in 
                section 1400H(e), or''.
    (d) Information Relating to Certain Trusts and Annuity Plans.--
Subsection (c) of section 6047 is amended--
            (1) by inserting ``or section 1400H'' after ``section 
        219''; and
            (2) by inserting ``, of any family development account 
        described in section 1400H(e),'', after ``section 408(a)''.
    (e) Inspection of Applications for Tax Exemption.--Clause (i) of 
section 6104(a)(1)(B) is amended by inserting ``a family development 
account described in section 1400H(e),'' after ``section 408(a),''.
    (f) Failure To Provide Reports on Family Development Accounts.--
Paragraph (2) of section 6693(a) is amended by striking ``and'' at the 
end of subparagraph (C), by striking the period and inserting ``, and'' 
at the end of subparagraph (D), and by adding at the end the following 
new subparagraph:
                    ``(E) section 1400H(g)(6) (relating to family 
                development accounts).''.
    (g) Conforming Amendments Regarding Commercial Revitalization 
Credit.--
            (1) Section 46 (relating to investment credit) is amended 
        by striking ``and'' at the end of paragraph (2), by striking 
        the period at the end of paragraph (3) and inserting ``, and'', 
        and by adding at the end the following new paragraph:
            ``(4) the commercial revitalization credit provided under 
        section 1400K.''.
            (2) Section 39(d) is amended by adding at the end the 
        following new paragraph:
            ``(9) No carryback of section 1400k credit before date of 
        enactment.--No portion of the unused business credit for any 
        taxable year which is attributable to any commercial 
        revitalization credit determined under section 1400K may be 
        carried back to a taxable year ending before the date of the 
        enactment of section 1400K.''.
            (3) Subparagraph (B) of section 48(a)(2) is amended by 
        inserting ``or commercial revitalization'' after 
        ``rehabilitation'' each place it appears in the text and 
        heading.
            (4) Subparagraph (C) of section 49(a)(1) is amended by 
        striking ``and'' at the end of clause (ii), by striking the 
        period at the end of clause (iii) and inserting ``, and'', and 
        by adding at the end the following new clause:
                            ``(iv) the portion of the basis of any 
                        qualified revitalization building attributable 
                        to qualified revitalization expenditures.''.
            (5) Paragraph (2) of section 50(a) is amended by inserting 
        ``or 1400K(d)(2)'' after ``section 47(d)'' each place it 
        appears.
            (6) Subparagraph (A) of section 50(a)(2) is amended by 
        inserting ``or qualified revitalization building 
        (respectively)'' after ``qualified rehabilitated building''.
            (7) Subparagraph (B) of section 50(a)(2) is amended by 
        adding at the end the following new sentence: ``A similar rule 
        shall apply for purposes of section 1400K.''.
            (8) Paragraph (2) of section 50(b) is amended by striking 
        ``and'' at the end of subparagraph (C), by striking the period 
        at the end of subparagraph (D) and inserting ``; and'', and by 
        adding at the end the following new subparagraph:
                    ``(E) a qualified revitalization building (as 
                defined in section 1400K) to the extent of the portion 
                of the basis which is attributable to qualified 
                revitalization expenditures (as defined in section 
                1400K).''.
            (9) The last sentence of section 50(b)(3) is amended to 
        read as follows: ``If any qualified rehabilitated building or 
        qualified revitalization building is used by the tax-exempt 
        organization pursuant to a lease, this paragraph shall not 
        apply for purposes of determining the amount of the 
        rehabilitation credit or the commercial revitalization 
        credit.''.
            (10) Subparagraph (C) of section 50(b)(4) is amended--
                    (A) by inserting ``or commercial revitalization'' 
                after ``rehabilitated'' in the text and heading; and
                    (B) by inserting ``or commercial revitalization'' 
                after ``rehabilitation''.
            (11) Subparagraph (C) of section 469(i)(3) is amended--
                    (A) by inserting ``or section 1400K'' after 
                ``section 42''; and
                    (B) by striking ``credit'' in the heading and 
                inserting ``and commercial revitalization credits''.
    (h) Clerical Amendments.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

                              ``Subchapter X. Renewal Communities.''.

SEC. 105. EVALUATION AND REPORTING REQUIREMENTS.

    Not later than the close of the fourth calendar year after the year 
in which the Secretary of Housing and Urban Development first 
designates an area as a renewal community under section 1400E of the 
Internal Revenue Code of 1986, and at the close of each fourth calendar 
year thereafter, such Secretary shall prepare and submit to the 
Congress a report on the effects of such designations in stimulating 
the creation of new jobs, particularly for disadvantaged workers and 
long-term unemployed individuals, and promoting the revitalization of 
economically distressed areas.

SEC. 106. EXCLUSION OF EFFECTS OF THIS ACT FROM PAYGO SCORECARD.

    Upon the enactment of this Act, the Director of the Office of 
Management and Budget shall not make any estimates of changes in 
receipts under section 252(d) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 resulting from the enactment of this Act.

                    TITLE II--ADDITIONAL PROVISIONS

SEC. 201. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD HOUSING IN 
              RENEWAL COMMUNITIES TO LOCAL GOVERNMENTS.

    (a) Transfer Requirement.--Pursuant to the authority under section 
204 of the Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act, 1997, the 
Secretary shall transfer ownership of any qualified HUD property to the 
unit of general local government having jurisdiction for the area in 
which the property is located in accordance with this section, but only 
if the unit of general local government enters into an agreement with 
the Secretary meeting the requirements of subsection (d).
    (b) Qualified HUD Properties.--For purposes of this section, the 
term ``qualified HUD property'' means any unoccupied multifamily 
housing, project, substandard multifamily housing project, or 
unoccupied single family property, that is--
            (1) owned by the Secretary; and
            (2) located within a renewal community.
    (c) Timing of Transfer.--Any transfer of ownership required under 
subsection (a) shall be completed--
            (1) with respect to any multifamily housing project or 
        single family property that is acquired by the Secretary before 
        the date on which the area in which property is located is 
        designated as a renewal community and that is substandard or 
        unoccupied (as applicable) upon such date, not later than 1 
        year after such date; and
            (2) with respect to any multifamily housing project or 
        single family property that is acquired by the Secretary on or 
        after the date on which the area in which the property is 
        located is designated as a renewal community, not later than 1 
        year after--
                    (A) the date on which the project is determined to 
                be substandard or unoccupied (as applicable), in the 
                case of a property that is not unoccupied or 
                substandard upon acquisition by the Secretary; or
                    (B) the date on which the project is acquired by 
                the Secretary, in the case of a property that is 
                substandard or unoccupied (as applicable) upon such 
                acquisition.
    (d) Agreements To Sell Property to Community Development 
Corporations.--An agreement described in this subsection is an 
agreement that requires a unit of general local government to dispose 
of the qualified HUD property acquired by the unit of general local 
government in accordance with the following requirements:
            (1) Notification to community development corporations.--
        Not later than 30 days after the date on which the unit of 
        general local government acquires title to the property under 
        subsection (a), the unit of general local government shall 
        notify each community development corporation located in the 
        State in which the property is located--
                    (A) of such acquisition of title; and
                    (B) that, during the 6-month period beginning on 
                the date on which such notification is made, such 
                community development corporations shall have the 
                exclusive right under this subsection to make bona fide 
                offers to purchase the property on a cost recovery 
                basis.
            (2) Right of first refusal.--During the 6-month period 
        described in paragraph (1)(B)--
                    (A) the unit of general local government may not 
                sell or offer to sell the qualified HUD property other 
                than to a party notified under paragraph (1), unless 
                each community development corporation required to be 
                so notified has notified the unit of general local 
                government that the corporation will not make an offer 
                to purchase the property; and
                    (B) the unit of general local government shall 
                accept a bona fide offer to purchase the property made 
                during such period if the offer is acceptable to the 
                unit of general local government, except that a unit of 
                general local government may not sell a property to a 
                community development corporation during that 6-month 
                period other than on a cost recovery basis.
            (3) Other disposition.--During the 6-month period beginning 
        on the expiration of the 6-month period described in paragraph 
        (1)(B), the unit of general local government shall dispose of 
        the property on a negotiated, competitive bid, or other basis, 
        on such terms as the unit of general local government deems 
        appropriate.
    (e) Satisfaction of Indebtedness.--Before transferring ownership of 
any qualified HUD property pursuant to subsection (a), the Secretary 
shall satisfy any indebtedness incurred in connection with the property 
to be transferred, by--
            (1) canceling the indebtedness; or
            (2) reimbursing the unit of general local government to 
        which the property is transferred for the amount of the 
        indebtedness.
    (f) Determination of Status of Properties.--To ensure compliance 
with the requirements of subsection (c), the Secretary shall take the 
following actions:
            (1) Upon designation of renewal communities.--Upon the 
        designation of any renewal community, the Secretary shall 
        promptly assess each residential property owned by the 
        Secretary that is located within such renewal community to 
        determine whether such property is a qualified HUD property.
            (2) Upon acquisition.--Upon acquiring any residential 
        property that is located with a renewal community, the 
        Secretary shall promptly determine whether the property is a 
        qualified HUD property.
            (3) Updates.--The Secretary shall periodically reassess the 
        residential properties owned by the Secretary to determine 
        whether any such properties have become qualified HUD 
        properties.
    (g) Tenant Leases.--This section 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.
    (h) Procedures.--Not later than the expiration of the 6-month 
period beginning on the date of the enactment of this Act, the 
Secretary shall establish, by rule, regulation, or order, such 
procedures as may be necessary to carry out this section.
    (i) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) 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.
            (2) Cost recovery basis.--The term ``cost recovery basis'' 
        means, with respect to any sale of a residential property by a 
        unit of general local government to a community development 
        corporation under subsection (d)(2), that the purchase price 
        paid by the community development corporation is less than or 
        equal to the costs incurred by the unit of general local 
        government in connection with such property during the period 
        beginning on the date on which the unit of general local 
        government acquires title to the property under subsection (a) 
        and ending on the date on which the sale is consummated.
            (3) Low-income families.--The term ``low-income families'' 
        has the meaning given the term in section 3(b) of the United 
        States Housing Act of 1937.
            (4) 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.
            (5) Renewal community.--The term ``renewal community'' 
        means an area designated (under subchapter X of chapter 1 of 
        the Internal Revenue Code of 1986) as a renewal community.
            (6) Residential property.--The term ``residential 
        property'' means a property that is a multifamily housing 
        project or a single family property.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (8) Severe physical problems.--The term ``severe physical 
        problems'' means, with respect to a dwelling unit, that the 
        unit--
                    (A) 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;
                    (B) on not less than 3 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;
                    (C) has no functioning electrical service, exposed 
                wiring, any room in which there is not a functioning 
                electrical outlet, or has experienced 3 or more blown 
                fuses or tripped circuit breakers during the preceding 
                90-day period;
                    (D) is accessible through a public hallway in which 
                there are no working light fixtures, loose or missing 
                steps or railings, and no elevator; or
                    (E) 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.
            (9) Single family property.--The term ``single family 
        property'' means a 1- to 4-family residence.
            (10) 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.
            (11) Unit of general local government.--The term ``unit of 
        general local government'' has the meaning given the term in 
        section 102(a) of the Housing and Community Development Act of 
        1974.
            (12) 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.

SEC. 202. 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 each program under this Act that makes awards of Federal 
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 Federal 
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 award recipient' means a public 
        or private entity that has received an award under a designated 
        program (whether the award is a designated direct award or a 
        designated subaward).
            ``(2) The term `designated direct award' means an award 
        under a designated program that is received directly from the 
        Federal Government.
            ``(3) The term `designated subaward' means an award of 
        financial assistance made by a non-Federal entity, which award 
        consists in whole or in part of Federal financial assistance 
        provided through an award under a designated program.
            ``(4) The term `designated program' has the meaning given 
        such term in subsection (a).
            ``(5) The term `financial assistance' means a grant, 
        cooperative agreement, contract, or voucherized assistance.
            ``(6) The term `program beneficiary' means an individual 
        who receives program services.
            ``(7) The term `program participant' has the meaning given 
        such term in section 582(a)(2).
            ``(8) The term `program services' means treatment for 
        substance abuse, or preventive services regarding such abuse, 
        provided pursuant to an award under a designated program.
            ``(9) The term `religious organization' means a nonprofit 
        religious organization.
            ``(10) The term `voucherized assistance' means--
                    ``(A) a system of selecting and reimbursing program 
                services in which--
                            ``(i) the beneficiary is given a document 
                        or other authorization that may be used to pay 
                        for program services;
                            ``(ii) the beneficiary chooses the 
                        organization that will provide services to him 
                        or her according to rules specified by the 
                        designated award recipient; and
                            ``(iii) the organization selected by the 
                        beneficiary is reimbursed by the designated 
                        award recipient for program services provided; 
                        or
                    ``(B) any other mode of financial assistance to pay 
                for program services in which the program beneficiary 
                determines the allocation of program funds through his 
                or her selection of one service provider from among 
                alternatives.

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

    ``(a) In General.--
            ``(1) Scope of authority.--Notwithstanding any other 
        provision of law, a religious organization--
                    ``(A) may be a designated award recipient;
                    ``(B) may make designated subawards to other public 
                or nonprofit private entities (including other 
                religious organizations);
                    ``(C) may provide for the provision of program 
                services to program beneficiaries through the use of 
                voucherized assistance; and
                    ``(D) may be a provider of services under a 
                designated program, including a provider that accepts 
                voucherized assistance.
            ``(2) Definition of program participant.--For purposes of 
        this part, the term `program participant' means a public or 
        private entity that has received a designated direct award, or 
        a designated subaward, regardless of whether the entity 
        provides program services. Such term includes an entity whose 
        only participation in a designated program is to provide 
        program services pursuant to the acceptance of voucherized 
        assistance.
    ``(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) Findings.--The Congress finds that the establishment 
        clause of the first amendment to the Constitution of the United 
        States does not require that--
                    ``(A) social-welfare programs discriminate against 
                faith-based providers of services; or
                    ``(B) faith-based providers of services, as a 
                prerequisite to participation in Federal programs, 
                abandon their religious character and censor their 
                religious expression.
            ``(2) Nondiscrimination.--Religious organizations are 
        eligible to be program participants on the same basis as any 
        other nonprofit private organization. Neither the Federal 
        Government nor a State receiving funds under such 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) Nondiscrimination in Employment.--
            ``(1) In general.--Except as provided in paragraph (2), 
        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 on the basis of 
        religion.
            ``(2) Exception.--A religious organization that is a 
        program participant may require that an employee rendering 
        program services adhere to--
                    ``(A) the religious beliefs and practices of such 
                organization; and
                    ``(B) any rules of the organization regarding the 
                use of drugs or alcohol.
    ``(f) Rights of Program Beneficiaries.--
            (1) Objections regarding religious organizations.--With 
        respect to an individual who is a program beneficiary or a 
        prospective program beneficiary, if the individual objects to a 
        program participant on the basis that the participant is a 
        religious organization, the following applies:
                    ``(A) If the organization received a designated 
                direct award, the organization shall arrange for the 
                individual to receive program services through an 
                alternative entity.
                    ``(B) If the organization received a designated 
                subaward, the non-Federal entity that made the subaward 
                shall arrange for the individual to receive the program 
                services through an alternative program participant.
                    ``(C) If the organization is providing services 
                pursuant to voucherized assistance, the designated 
                award recipient that operates the voucherized 
                assistance program shall arrange for the individual to 
                receive the program services through an alternative 
                provider.
                    ``(D) Arrangements under any of paragraphs (A) 
                through (C) with an alternative entity shall provide 
                for program services the monetary value of which is not 
                less than the monetary value of the program services 
                that the individual would have received from the 
                religious organization involved.
            ``(2) Nondiscrimination.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) or as otherwise provided in law, a 
                religious organization that is a program participant 
                shall not in providing program services discriminate 
                against a program beneficiary on the basis of religion 
                or religious belief.
                    ``(B) Limitation.--A religious organization that is 
                a program participant may require a program beneficiary 
                who has elected in accordance with paragraph (1) to 
                receive program services from such organization--
                            ``(i) to actively participate in religious 
                        practice, worship, and instruction; and
                            ``(ii) to follow rules of behavior devised 
                        by the organizations that are religious in 
                        content or origin.
    ``(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.

    ``(a) In General.--Except as provided in subsection (b), no funds 
provided directly to an entity under a designated program shall be 
expended for sectarian worship or instruction.
    ``(b) Exception.--Subsection (a) shall not apply to assistance 
provided to or on behalf of a program beneficiary if the beneficiary 
may choose where such assistance is redeemed or allocated.

``SEC. 584. ADMINISTRATION OF PROGRAM AND TREATMENT OF FUNDS.

    ``(a) Funds Not Aid to Institutions.--Financial assistance under a 
designated program provided to or on behalf of program beneficiaries is 
aid to the beneficiary, not to the organization providing program 
services. The receipt by a program beneficiary of program services at 
the facilities of the organization shall not constitute Federal 
financial assistance to the organization involved.
    ``(b) Prohibition on State Discrimination in Use of Funds.--No 
provision in any State constitution or State law shall be construed to 
prohibit the expenditure of Federal funds under a designated program in 
a religious facility or by a religious organization that is a program 
participant. If a State law or constitution would prevent the 
expenditure of State or local public funds in such a facility or by 
such an organization, then the State or local government shall 
segregate the Federal funds from State or other public funds for 
purposes of carrying out the designated program.

``SEC. 585. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG TREATMENT 
              PROGRAMS.

    ``(a) Findings.--The Congress finds that--
            ``(1) establishing formal educational qualification for 
        counselors and other personnel in drug treatment programs may 
        undermine the effectiveness of such programs; and
            ``(2) such formal educational requirements for counselors 
        and other personnel may hinder or prevent the provision of 
        needed drug treatment services.
    ``(b) Limitation on Educational Requirements of Personnel.--
            ``(1) Treatment of religious education.--If any State or 
        local government that is a program participant imposes formal 
        educational qualifications on providers of program services, 
        including religious organizations, such State or local 
        government shall treat religious education and training of 
        personnel as having a critical and positive role in the 
        delivery of program services. In applying educational 
        qualifications for personnel in religious organizations, such 
        State or local government shall give credit for religious 
        education and training equivalent to credit given for secular 
        course work in drug treatment or any other secular subject that 
        is of similar grade level and duration.
            ``(2) Restriction of discrimination requirements.--
                    ``(A) In general.--Subject to paragraph (1), a 
                State or local government that is a program participant 
                may establish formal educational qualifications for 
                personnel in organizations providing program services 
                that contribute to success in reducing drug use among 
                program beneficiaries.
                    ``(B) Exception.--The Secretary shall waive the 
                application of any educational qualification imposed 
                under subparagraph (A) for an individual religious 
                organization, if the Secretary determines that--
                            ``(i) the religious organization has a 
                        record of prior successful drug treatment for 
                        at least the preceding three years;
                            ``(ii) the educational qualifications have 
                        effectively barred such religious organization 
                        from becoming a program provider;
                            ``(iii) the organization has applied to the 
                        Secretary to waive the qualifications; and
                            ``(iv) the State or local government has 
                        failed to demonstrate empirically that the 
                        educational qualifications in question are 
                        necessary to the successful operation of a drug 
                        treatment program.''.

SEC. 203. CRA CREDIT FOR INVESTMENTS IN COMMUNITY DEVELOPMENT 
              ORGANIZATIONS LOCATED IN RENEWAL COMMUNITIES.

    Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C. 
2903) is amended by adding at the end the following new subsection:
    ``(c) Investments in Certain Community Development Organizations.--
In assessing and taking into account, under subsection (a), the record 
of a regulated financial institution, the appropriate Federal financial 
supervisory agency may consider, as a factor, investments of the 
institution in, and capital investment, loan participation, and other 
ventures undertaken by the institution in cooperation with, any 
community development organization (as defined in section 234 of the 
Bank Enterprise Act of 1991) which is located in a renewal community 
(as designated under section 1400E of the Internal Revenue Code of 
1986).''.
                                 <all>