[Congressional Record Volume 145, Number 114 (Thursday, August 5, 1999)]
[Extensions of Remarks]
[Pages E1769-E1770]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE AMERICA'S PRIVATE INVESTMENT COMPANIES ACT

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Thursday, August 5, 1999

  Mr. LaFALCE. Mr. Speaker, today, on behalf of myself and a number of 
House Members, I plan to introduce the America's Private Investment 
Companies Act. This legislation, also known as APIC, is part of the 
Administration's broader New Markets Initiative, which includes 
separate legislation to provide tax credits for investments in APIC's 
and other community development entities, and to expand small business 
lending in low- and moderate-income communities.
  After seven years of strong economic growth and job creation, the 
unfortunate truth is that many urban areas, mid-sized cities, and rural 
areas are not fully participating in our economic prosperity. Despite 
strong income and wage growth for many Americans, millions of Americans 
still don't have access to jobs which pay decent wages. APIC is 
designed to harness the private sector to revitalize distressed low-
income communities, and to create jobs and economic opportunities for 
those individuals who are being left behind.
  Under the bill, the Secretary of HUD is authorized to licensing a 
number of newly created America's Private Investment Companies [called 
APIC's] each year, and to guarantee debt for these APIC's. In turn, 
these newly created APIC's will be required to invest substantially all 
of the funds raised through such debt in businesses operating in low-
income communities.
  In order to be eligible for APIC certification and for federal loan 
guarantees, an applicant must be a for-profit community development 
entity, which must have a primary mission of serving or providing 
investment capital for low-income communities or low-income persons, 
and which must maintain accountability to residents of low-income 
communities. The applicant must have a minimum of $25 million in equity 
capital available to it. Finally, the applicant must have a statement 
of public purpose, with goals that at least include making qualified 
investments in low-income communities, creating jobs that pay decent 
wages to residents in low-income communities, and involving community-
based organizations and residents.
  Under the legislation, HUD is authorized to guarantee $1 billion in 
debt each year for the next five years for an estimated ten to fifteen 
new APIC's each year. For every $2 of debt that the government 
guarantees for an individual APIC, that APIC must have at least $1 in 
equity capital, which is at risk of loss ahead of the federal 
guarantee. As a result, at $7.5 billion in additional low-income 
community investments will be generated over the next five years. Yet, 
the cost of the combined credit subsidy and administrative cost is only 
$37 million a year.

[[Page E1770]]

  Substantially all of the funds from guaranteed debt, plus required 
equity, must be used to make investments in ``qualified low-income 
investments''--that is, in equity investments in or loans to 
``qualified active businesses'' located in ``low-income communities''
  A ``qualified active business'' is a business or trade, of which at 
least 50% of gross income must come from activities in ``low-income 
communities,'' of which a substantial portion of any tangible property 
must be in low-income communities, and of which a substantial portion 
of employee services must be performed in low-income communities''
  Low-income communities are census tracts with either poverty rates of 
at least 20%, or with median family income that does not exceed 80% of 
the greater of the metropolitan area median family or the statewide 
median family income.
  At a time when Congress seems eager to enact tax breaks and loan 
guarantees for a broad range of industries, it is not too to ask for 
limited resources targeted to corporations which invest in distressed 
communities and low-income individuals. I urge the House to hold 
hearings on this legislation, and to move towards its enactment.

                          ____________________