[Congressional Record Volume 143, Number 28 (Thursday, March 6, 1997)]
[Senate]
[Pages S2021-S2025]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      TV RATING SYSTEM LEGISLATION

  Mr. COATS. Mr. President, this past Thursday the Senate Commerce 
Committee held a hearing on the current television rating system. I 
want to commend Senator McCain for calling that hearing. It was very 
instructional for all of us. What was apparent from that hearing is the 
near universal dissatisfaction with the current Hollywood rating 
system, the need for immediate change, the utter failure of the 
industry to understand what parents want in a rating system, and the 
basic

[[Page S2022]]

responsibility that goes with using publicly owned broadcast spectrum.
  Mr. President, we are beyond debate regarding the influence of 
television programming on children, particularly the most vulnerable of 
our children, growing up in single-parent homes or homes where the 
demand of work keep parents away and children unsupervised for long 
hours. This is, unfortunately, an increasing norm in our society.
  It was a combination of these facts and the increasingly violent and 
explicit nature of television programming that produced the ``V'' chip 
legislation that passed last year and the demand for ratings that 
empower parents with content information so that they can exercise 
control over the type of television programming invading their 
households and their children's minds that they believe is 
inappropriate.
  I call attention to the 1995 study of children age 10 to 16 conducted 
by the Los Angeles polling firm of Fairbank, Maslin, Maulin & 
Associates. In that poll, one-third of the children stated they would 
like to try what they see others doing on television; two-thirds stated 
that their peers are influenced by what they see on TV; 65 percent said 
programming like the Simpsons encouraged them to disrespect their 
parents; and an alarming 62 percent said that sex portrayed on 
television influences kids to have sex when they are too young. These 
are the results of the study of children 10 to 16. These are their 
responses to the questions that were asked by the poll.
  Upon hearing the results of this poll, entertainer Steve Allen told 
editorialist Cal Thomas, ``My first reaction is that we should take 
this information and beat (network TV executives) over the head with 
it.'' I think some of last week's hearing, for those who tuned in and 
those who were there, may have had the same effect, because there was 
universal, near universal, dissatisfaction with the efforts, lack of 
effort, made by the broadcasters, Hollywood producers and others to 
address some of these fundamental questions. That was a bipartisan 
response not confined to any one particular party.
  Unfortunately, the system offered by the television industry to 
address this is critically flawed. There are two fatal problems with 
the system. First is the fact that the system does not provide program-
specific, content-based information. This is the critical point.
  The Hollywood ratings system adopted by the television industry 
essentially hides the true content of programs behind a generic rating 
that suggests to parents what may be in a program--I say what ``may 
be'' in a program, not what actually is in a program. Take the TV 
``PG'' rating, which 61 percent of current television programs receive. 
In a 52-word explanation of this rating, it is stated: ``This program 
may contain infrequent coarse language, limited violence, some 
suggestive dialog and situations.''
  Mr. President, I suggest that telling a parent what a program ``may'' 
include does not tell them very much. I ask, what would be so 
difficult, what is so hard about simply substituting the word ``does'' 
for the word ``may.'' The program ``does'' contain infrequent coarse 
language. The program ``does'' contain limited violence. This program 
``does'' contain some suggestive dialog and situations. In addition, 
why not provide parents with an audible explanation of content just 
prior to airing the programming and stating the information clearly and 
prominently on the screen.

  The second fatal flaw in the current system proposed by Hollywood and 
adopted by the broadcasters is there is no standard format for how 
ratings are arrived at. In other words, each station or channel uses 
their own methods and priorities in assigning ratings. Fox uses one 
method, NBC another and so on. What is recommended as a standardized 
system to parents is, in fact, completely unique from station to 
station, channel to channel. In other words, it a rating in search of a 
meaning.
  The Hollywood system designed by the Motion Producers Association 
head Jack Valenti was created to avoid giving parents information on 
the content of programs. I do not think you can come to any other 
conclusion. It is so confusing, it is so imprecise, I think you have to 
conclude that it was designed not to give specific information. Why? 
Well, clearly, I think they were concerned about advertisers not 
wanting to advertise on programs that included offensive language. 
Ultimately, it is the parents who turn off the sets, or the sets that 
are turned off because of the contents of programs, that will determine 
where those advertising dollars flow.
  Now, Mr. President, I want to make sure that we all understand that 
we cannot and we should not be censors, but that our society depends on 
informed choices. We need to provide informed information and informed 
choices for parents. To do that requires information which the current 
Hollywood-Valenti rating system refuses to give.
  It had been my hope that the television industry would be responsive 
to the public outcry against their age-based rating system. Polls 
conducted in response to the industry proposal by the PTA/Institute for 
Mental Health Initiatives demonstrated that 80 percent of parents 
desire a content-based system and a Media Study Center poll found 
similar results. Ask any parent, ask any parent what they need in order 
to make a determination on what they think their children should watch, 
and they say tell us what is in it. Do not give us some rating scheme 
where we do not know what it relates to, that is not standardized, that 
changes from station to station. Just tell us what is there.
  Unfortunately, the industry has not simply ignored the American 
public; it has defied them. Mr. Valenti, the architect and the 
cheerleader for the current system, claims the system must be simple so 
that parents can understand it. Must be simple? Parents can understand 
it? The TV-Y rating requires a 47-word explanation; TV-Y7 requires 73 
words to explain what it means; TV-14, 61 words. All of these ratings 
explanations are riddled with ambiguity. The only thing easy to 
understand about these ratings is who came up with them and why.
  The system is not profamily, it is pro-Hollywood. It is designed to 
protect the Hollywood production houses. It is designed to protect 
advertisers who, confronted with content-specific ratings, would shun 
programs that include explicit material.
  Now, supposedly there was some miraculous coming together of 
television executives and Hollywood for a commonsense rating of 
programs. Well, I think there has been some confusion here in the 
statement that they have refused to change, regardless of what the 
public wants. Now, thankfully, under the pressure of the congressional 
investigation, the congressional hearing, and the outpouring of outrage 
and frustration and dissatisfaction and disgust with the current 
system, there have been expressions that, yes, the industry is willing 
to take another look at this. I hope they not only take another look, 
but that they will do it quickly and do it effectively, because the 
industry doesn't own the broadcast spectrum, the public owns the 
broadcast spectrum. And because the public owns the spectrum, I think 
it is reasonable to ask that those who use the spectrum be responsive 
to the public's requests--again, not for censorship, but simply for 
information so they can make decisions about what is appropriate and 
not appropriate for their children to watch. Therefore, I think 
combining the request for granting or renewal of a license to broadcast 
on that spectrum is a reasonable thing to ask for in return for a 
content-based, program-specific rating system. In other words, if you 
want to use the public spectrum, if you have a responsibility--and the 
responsibility is to provide parents with information.

  I, therefore, am introducing legislation today that will ensure that 
the changes the American people demand as a condition for license 
renewal, for license granting, or for loan of spectrum for the 
transition of digital broadcast--in return for that, we get broadcaster 
consent to accurately label their programming. I don't create a 
Government rating system. I simply want to put some information in the 
hands of parents.
  The spectrum that is going to be loaned to broadcasters for digital 
transmission is extremely valuable. This resource also belongs to the 
American public, a public that overwhelmingly supports a program-
specific, content-based rating system. The basic criteria for issuing a 
broadcast license is service of the public good. If a

[[Page S2023]]

broadcaster can't comply with the basic will of the American people, by 
accurately labeling the product they seek to provide, on the taxpayers' 
spectrum, then I don't believe they deserve, nor should they receive, 
the precious resource of broadcast spectrum.
  Mr. President, we cannot use Government to force more family-friendly 
programming--as much as sometimes I wish we could, given what we 
currently see.
  Mr. President, we can empower parents with information that they need 
to guide their children's viewing habits. In doing so, we empower them 
to send a message to the networks, and television advertisers to stop 
the onslaught of the kind of programming that flows through our 
television sets into the minds of our children.
  Mr. President, in conclusion, let me just say that in this age where 
it's harder and harder to protect children from information and from 
behavior and from activities in our society that is damaging not only 
to their bodies, but to their minds and souls, the parents need tools; 
they are crying out for weapons and tools to fight back against this 
onslaught of a hostile culture. They want to try to protect the 
innocence of their children--even if just for a little while. I think 
they have every right to demand the tool of accurate and responsible 
television ratings in return for the use of the public broadcast 
system.
  My legislation would ensure this end. I hope my colleagues will join 
me in support of this effort. With that, I send to the desk the 
legislation designed to accomplish this very purpose.
                                 ______
                                 
      By Mr. D'AMATO (for himself, Mr. Gramm, Mr. Sarbanes, and Mr. 
        Dodd):
  S. 410. A bill to extend the effective date of the Investment 
Advisers Supervision Coodination Act; to the Committee on Banking, 
Housing, and Urban Affairs.


        THE NATIONAL SECURITIES MARKETS IMPROVEMENT ACT OF 1997

 Mr. D'AMATO. Mr. President, today, I introduce with Senator 
Gramm, Senator Sarbanes, and Senator Dodd, a bill to extend for 90 days 
the effective date of title III of the National Securities Markets 
Improvement Act of 1997.
  The Investment Advisers Supervision Coordination Act enacted as part 
of the National Securities Market Improvement Act, divides the 
regulation of the Nation's 22,500 registered investment advisers 
between the SEC and State commissions. Under the new divided 
jurisdiction, investment advisers entrusted with over $10 trillion in 
customer funds, will be subject to better regulation and regular 
examination. As a result, consumers and investors will be better 
protected.
  The legislation we introduce today will extend the effective date of 
the title III, section 308 of the National Securities Markets 
Improvement Act of 1996 90 days, from April 9, 1997 to July 8, 1997. 
This extension was requested by the Chairman of the SEC, Arthur Levitt, 
in his letter to the committee dated February 12, 1997. The legislation 
is necessary to ensure that the proper rules are in place to carry out 
the provisions of this title. While the Securities and Exchange 
Commission is working diligently to complete its rules by the original 
effective date, the Commission is concerned that investment advisers 
will not have enough time to examine the final rules and to complete 
and submit the new forms required.
  Mr. President, Congress intended for State commissions to regulate 
investment advisers with assets under $25 million. However, State law 
will be preempted as it relates to all investment advisers who are 
still registered with the SEC when the provision becomes effective, 
regardless of their asset value. This means that if the SEC rules are 
not final or if investment advisers have not submitted forms to end 
their registration by April 9, 1997, State commissions will be unable 
to regulate the investment advisers who fall within their jurisdiction. 
Extending the effective date of the Investment Advisers Supervision 
Coordination Act would ensure that all investment advisers have 
sufficient time to register with the proper commission and prevent a 
gap in effective regulation.
  I would like to thank the chairman of the Securities Subcommittee, 
and the ranking members of both the Banking Committee and the 
Securities Subcommittee for their cosponsorship of this legislation. It 
is my hope that the Senate will pass this legislation without amendment 
or delay so that the SEC and the State commissions can continue to move 
forward with these important changes to improve the regulation of 
investment advisers and protect investors.
  Mr. President, I ask unanimous consent that the full text of the bill 
and the February 12, 1997 letter from Securities and Exchange 
Commission be included in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 410

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

     SECTION 1. EXTENSION OF EFFECTIVE DATE.

       Section 308(a) of the Investment Advisers Supervision 
     Coordination Act (110 Stat. 3440) is amended by striking 
     ``180'' and inserting ``270''.
                                  ____

                                               U.S. Securities and


                                          Exchange Commission,

                              Washington, D.C., February 12, 1997.
     Hon. Alfonse M. D'Amato,
     Chairman, Committee on Banking, Housing and Urban Affairs, 
         U.S. Senate, Washington, DC.
       Dear Chairman D'Amato: I am writing to request that 
     Congress extend the effective date of Title III of the 
     National Securities Markets Improvement Act of 1996 for 90 
     days, from April 9 to July 8, 1997. Title III reallocates 
     regulatory responsibilities over investment advisers between 
     the states and the Commission.
       The Commission has made substantial progress in completing 
     the many rulemaking directives given to the Commission in the 
     Improvement Act. In October, the Commission proposed a rule 
     providing a safe harbor to allow journalists access to off-
     shore press conferences. In December, we proposed rules 
     implementing new exemptions from the Investment Company Act 
     for pools sold only to qualified investors. The Commission 
     also proposed, on December 18, 1996, rules to implement Title 
     III.
       The Commission is making every effort to meet the 
     legislative deadlines of the Improvement Act. Our rule 
     proposals were issued only two months after the legislation 
     was enacted, and the comment period for the proposals ended 
     earlier this week. While we believe the Commission should be 
     able to finish work on the adoption of the proposed rules by 
     April 9, the effective date of Title III, we are very 
     concerned that this timetable is likely not to afford 
     investment advisers sufficient time to examine the new rules, 
     consult with counsel as to their continuing regulatory 
     status, and properly complete and submit the required forms.
       We are also concerned about the effect of the April 9th 
     effective date on state regulatory programs. As you know, 
     Title III assigns important responsibilities for the 
     regulation of investment advisers to state regulators. 
     Because Title III will become effective on April 9th (whether 
     or not the proposed rules are adopted), state law will be 
     preempted as to all advisers still registered with the 
     Commission, including those advisers that will be exclusively 
     regulated by the states. If all (or most) advisers remain 
     registered with the Commission on April 9 because they have 
     not submitted the required forms, much of state investment 
     adviser laws will be preempted, compromising state regulatory 
     and enforcement programs.
       By dividing jurisdiction over the 22,500 advisers currently 
     registered with the Commission, the Improvement Act promises 
     to provide more efficient and effective regulation of the 
     investment advisory industry. The Commission strongly 
     supported the enactment of the Act and has moved quickly to 
     implement its purposes. We believe that by providing an 
     additional 90 days, Congress will allow investment advisers 
     adequate time to meet their obligations under the new rules 
     and will avoid disrupting state regulatory efforts that are 
     important if the goals of Title III of the Improvement Act 
     are to be achieved.
       If I or any of the Commission staff can answer any 
     questions, please do not hesitate to contact us.
           Sincerely,
                                            Arthur Levitt.
                                 ______
                                 
      By Mrs. HUTCHISON (for herself, Mr. Abraham, Mr. Campbell, Mr. 
        D'Amato, Ms. Moseley-Braun and Mr. Specter):
  S. 411. A bill to amend the Internal Revenue Code of 1986 to provide 
a tax credit for investment necessary to revitalize communities within 
the United States, and for other purposes; to the Committee on Finance.


             THE COMMERCIAL REVITALIZATION TAX ACT OF 1997

  Mrs. HUTCHISON. Mr. President, I stand today to sponsor, along with 
Mr. Abraham, Mr. Campbell, Mr. D'Amato, Ms. Moseley-Braun, Mr. Specter, 
and Mr. Cochran, the introduction of the Commercial Revitalization Tax 
Credit

[[Page S2024]]

Act of 1997. This bill is identical to the bipartisan and widely 
supported legislation I sponsored during the last session.
  This measure will create jobs, expand economic activity, and improve 
the physical appearance and increase the value of residential and 
commercial buildings in America's most distressed urban and rural 
communities. The bill provides a targeted tax credit to businesses to 
help defray the cost of construction, expansion, and renovation in 
these areas, and in the process will generate billions in privately 
based economic activity in those areas that need the most help in our 
country.
  The Commercial Revitalization Tax Credit Act will fill in the gap 
between the broad range of tools our States and localities utilize to 
make declining neighborhoods healthy places to do business, to work, 
and to raise families. This tax credit will help businesses form a 
partnership with the Government to help revitalize areas of our country 
that have, in many cases, suffered from neglect and despair.
  As we continue to look for ways to combat the decay of our inner 
cities and to raise the standard of living in many of our rural areas, 
I believe, and numerous studies demonstrate, that improving the 
physical structures in our neighborhoods not only has economic benefits 
but also tends to lift the hopes and expectations of the residents of 
those neighborhoods. Indeed, one of the key recommendations of the 
recent top-to-bottom review of law enforcement in this city, our 
Nation's Capital, was to improve the many abandoned buildings in the 
city that create an atmosphere conducive to crime and despair.
  This legislation will build on local initiatives like this in the 
District of Columbia, as well as many now underway in cities in Texas 
and throughout the country. The Commercial Revitalization Tax Credit 
Act will build upon the empowerment zone/enterprise community program 
that is now unfolding in 109 communities in the United States. Texas 
has five of these specially designated areas: Houston, Dallas, El Paso, 
San Antonio, and Waco, as well as one rural zone in the Rio Grande 
valley covering four counties. Not only will these cities qualify for 
the credit under my bill, but so will the 400 communities in the United 
States that sought such designation but were not selected. State-
established enterprise zones and others specifically designated 
revitalization districts established by State and local governments 
will also be able to participate. In all, over 1,000 areas will qualify 
for this credit nationwide.
  Our bill contains the following main features: A tax credit that may 
be applied to construction amounting to at least 25 percent of the 
basis of the property, in designated revitalization areas; qualified 
investors could choose a one-time 20-percent tax credit against the 
cost of new construction or rehabilitation. For instance, if the 
expansion of a supermarket in Brownsville, TX, in the Rio Grande 
valley, in the empowerment zone there, cost $150,000, the tax credit 
against income would be $30,000. Alternatively, the business owner 
could take a 5-percent credit each year over a 10-year period; And tax 
credits totaling $1.5 billion would be allocated to each State 
according to a formula, with States and localities determining the 
priority of the projects.
  Mr. President, with a minimum level of bureaucratic involvement and 
through a proven tax mechanism, this initiative will make a significant 
difference in the lives of thousands of families in need and for the 
economies of hundreds of distressed urban and rural communities across 
this Nation. I hope my colleagues will join me in supporting this sound 
and effective pro-growth initiative.
  I ask unanimous consent that the text of my bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 411

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Commercial Revitalization 
     Tax Act of 1997''.

     SEC. 2. COMMERCIAL REVITALIZATION TAX CREDIT.

       (a) Allowance of Credit.--Section 46 of the Internal 
     Revenue Code of 1986 (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.''
       (b) Commercial Revitalization Credit.--Subpart E of part IV 
     of subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 (relating to rules for computing investment credit) is 
     amended by inserting after section 48 the following new 
     section:

     ``SEC. 48A. 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, 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 an eligible commercial 
     revitalization area,
       ``(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 rehabilitation expenditure.--
       ``(A) In general.--The term `qualified rehabilitation 
     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),

       ``(ii) in connection with the construction or substantial 
     rehabilitation or reconstruction of a qualified 
     revitalization building, and
       ``(iii) for the acquisition of land in connection with the 
     qualified revitalization building.
       ``(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 $10,000,000, reduced by 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 part unless the taxpayer elects to take the 
     expenditure into account only for purposes of this section.
       ``(3) Eligible commercial revitalization area.--The term 
     `eligible commercial revitalization area' means--
       ``(A) an empowerment zone or enterprise community 
     designated under subchapter U,
       ``(B) any area established pursuant to any consolidated 
     planning process for the use of Federal housing and community 
     development funds, and
       ``(C) any other specially designated commercial 
     revitalization district established by any State or local 
     government, which is a low-income census tract or low-income 
     nonmetropolitan area (as defined in subsection (e)(2)(C)) and 
     is not primarily a nonresidential central business district.
       ``(4) Substantial rehabilitation or reconstruction.--For 
     purposes of this subsection, a rehabilitation or 
     reconstruction shall be treated as a substantial 
     rehabilitation or reconstruction only if the qualified 
     revitalization expenditures in connection

[[Page S2025]]

     with the rehabilitation or reconstruction exceed 25 percent 
     of the fair market value of the building (and its structural 
     components) immediately before the rehabilitation or 
     reconstruction.
       ``(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 rehabilitated building is placed in service. For 
     purposes of the preceding sentence, a substantial 
     rehabilitation or reconstruction 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 portion of the 
     State commercial revitalization credit ceiling allocated 
     under this paragraph for such calendar year for such agency.
       ``(B) State commercial revitalization credit ceiling.--
       ``(i) In general.--The State commercial revitalization 
     credit ceiling applicable to any State for any calendar year 
     is an amount which bears the same ratio to the national 
     ceiling for the calendar year as the population of low-income 
     census tracts and low-income nonmetropolitan areas within the 
     State bears to the population of such tracts and areas within 
     all States.
       ``(ii) National ceiling.--For purposes of clause (i), the 
     national ceiling is $100,000,000 for 1998, $200,000,000 for 
     1999, and $400,000,000 for each calendar year after 1999.
       ``(iii) Other special rules.--Rules similar to the rules of 
     subparagraphs (D), (E), (F), and (G) of section 42(h)(3) 
     shall apply for purposes of this subsection.
       ``(C) Low-income areas.--For purposes of subparagraph (B), 
     the terms `low-income census tract' and `low-income 
     nonmetropolitan area' mean a tract or area in which, 
     according to the most recent census data available, at least 
     50 percent of residents earned no more than 60 percent of the 
     median household income for the applicable Metropolitan 
     Standard Area, Consolidated Metropolitan Standard Area, or 
     all nonmetropolitan areas in the State.
       ``(D) 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.
       ``(E) State.--For purposes of this section, the term 
     `State' includes a possession of the United States.
       ``(f) Responsibilities of Commercial Revitalization Credit 
     Agencies.--
       ``(1) Plans for allocation.--Notwithstanding any other 
     provision of this section, the commercial revitalization 
     credit dollar 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 by the governmental unit (in 
     accordance with rules similar to the rules of section 
     147(f)(2) (other than subparagraph (B)(ii) thereof)) 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 project and provides such 
     individual a reasonable opportunity to comment on the 
     project.
       ``(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 an 
     eligible commercial revitalization area 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 eligible commercial revitalization area, 
     and
       ``(C) which provides a procedure that the agency (or its 
     agent) will follow in monitoring for compliance with this 
     section.
       ``(g) Termination.--This section shall not apply to any 
     building placed in service after December 31, 2000.''
       (b) Conforming Amendments.--
       (1) Section 39(d) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new paragraph:
       ``(8) No carryback of section 48a credit before 
     enactment.--No portion of the unused business credit for any 
     taxable year which is attributable to any commercial 
     revitalization credit determined under section 48A may be 
     carried back to a taxable year ending before the date of the 
     enactment of section 48A.''
       (2) Subparagraph (B) of section 48(a)(2) of such Code is 
     amended by inserting ``or commercial revitalization'' after 
     ``rehabilitation'' each place it appears in the text and 
     heading thereof.
       (3) Subparagraph (C) of section 49(a)(1) of such Code 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 basis of any qualified revitalization building 
     attributable to qualified revitalization expenditures.''
       (4) Paragraph (2) of section 50(a) of such Code is amended 
     by inserting ``or 48A(d)(2)'' after ``section 47(d)'' each 
     place it appears.
       (5) Subparagraph (B) of section 50(a)(2) of such Code is 
     amended by adding at the end the following new sentence: ``A 
     similar rule shall apply for purposes of section 48A.''
       (6) Paragraph (2) of section 50(b) of such Code 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 to the extent of 
     the portion of the basis which is attributable to qualified 
     revitalization expenditures.''
       (7) Subparagraph (C) of section 50(b)(4) of such Code is 
     amended by inserting ``or commercial revitalization'' after 
     ``rehabilitated'' each place it appears in the text and 
     heading thereof.
       (8) Subparagraph (C) of section 469(i)(3) is amended--
       (A) by inserting ``or section 48A'' after ``section 42'', 
     and
       (B) by striking ``credit'' in the heading and inserting 
     ``and commercial revitalization credits''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     1997.

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