[Congressional Record Volume 146, Number 98 (Tuesday, July 25, 2000)]
[House]
[Pages H6797-H6841]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COMMUNITY RENEWAL AND NEW MARKETS ACT OF 2000
Mr. ENGLISH. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 4923) to amend the Internal Revenue Code of 1986 to provide
tax incentives for the renewal of distressed communities, to provide
for 9 additional empowerment zones and increased tax incentives for
empowerment zone development, to encourage investments in new markets,
and for other purposes.
The Clerk read as follows:
H.R. 4923
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Community
Renewal and New Markets Act of 2000''.
[[Page H6798]]
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
TITLE I--TAX INCENTIVES FOR RENEWAL COMMUNITIES
Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Extension of expensing of environmental remediation costs to
renewal communities; extension of termination date for
renewal communities and empowerment zones.
Sec. 103. Work opportunity credit for hiring youth residing in renewal
communities.
TITLE II--EXTENSION AND EXPANSION OF EMPOWERMENT ZONE INCENTIVES
Sec. 201. Authority to designate 9 additional empowerment zones.
Sec. 202. Extension of enterprise zone treatment through 2009.
Sec. 203. 20 percent employment credit for all empowerment zones
Sec. 204. Increased expensing under section 179.
Sec. 205. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 206. Nonrecognition of gain on rollover of empowerment zone
investments.
Sec. 207. Increased exclusion of gain on sale of empowerment zone
stock.
TITLE III--NEW MARKETS TAX CREDIT
Sec. 301. New markets tax credit.
TITLE IV--IMPROVEMENTS IN LOW-INCOME HOUSING CREDIT
Sec. 401. Modification of State ceiling on low-income housing credit.
Sec. 402. Modification of criteria for allocating housing credits among
projects.
Sec. 403. Additional responsibilities of housing credit agencies.
Sec. 404. Modifications to rules relating to basis of building which is
eligible for credit.
Sec. 405. Other modifications.
Sec. 406. Carryforward rules.
Sec. 407. Effective date.
TITLE V--PRIVATE ACTIVITY BOND VOLUME CAP
Sec. 501. Acceleration of phase-in of increase in volume cap on private
activity bonds.
TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES
Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Definitions.
Sec. 604. Authorization.
Sec. 605. Selection of APICs.
Sec. 606. Operations of APICs.
Sec. 607. Credit enhancement by the Federal Government.
Sec. 608. APIC requests for guarantee actions.
Sec. 609. Examination and monitoring of APICs.
Sec. 610. Penalties.
Sec. 611. Effective date.
Sec. 612. Sunset.
TITLE VII--OTHER COMMUNITY RENEWAL AND NEW MARKETS ASSISTANCE
Sec. 701. Transfer of unoccupied and substandard HUD-held housing to
local governments and community development corporations.
Sec. 702. Transfer of HUD assets in revitalization areas.
Sec. 703. Risk-sharing demonstration.
Sec. 704. Prevention and treatment of substance abuse; services
provided through religious organizations.
Sec. 705. New markets venture capital program.
Sec. 706. BusinessLINC grants and cooperative agreements.
TITLE I--TAX INCENTIVES FOR RENEWAL COMMUNITIES
SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL
COMMUNITIES.
(a) In General.--Chapter 1 is amended by adding at the end
the following new subchapter:
``Subchapter X--Renewal Communities
``Part I. Designation.
``Part II. Renewal community capital gain; renewal community business.
``Part III. Additional incentives.
``PART I--DESIGNATION
``Sec. 1400E. Designation of renewal communities.
``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.
``(a) Designation.--
``(1) Definitions.--For purposes of this title, the term
`renewal community' means any area--
``(A) which is nominated by one or more local governments
and the State or States in which it is located for
designation as a renewal community (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 40 nominated areas as
renewal communities.
``(B) Minimum designation in rural areas.--Of the areas
designated under paragraph (1), at least 8 must be areas--
``(i) which are within a local government jurisdiction or
jurisdictions with a population of less than 50,000,
``(ii) which are outside of a metropolitan statistical area
(within the meaning of section 143(k)(2)(B)), or
``(iii) which are determined by the Secretary of Housing
and Urban Development, after consultation with the Secretary
of Commerce, to be rural areas.
``(3) Areas designated based on degree of poverty, etc.--
``(A) In general.--Except as otherwise provided in this
section, the nominated areas designated as renewal
communities under this subsection shall be those nominated
areas with the highest average ranking with respect to the
criteria described in subparagraphs (B), (C), and (D) of
subsection (c)(3). For purposes of the preceding sentence, an
area shall be ranked within each such criterion on the basis
of the amount by which the area exceeds such criterion, with
the area which exceeds such criterion by the greatest amount
given the highest ranking.
``(B) Exception where inadequate course of action, etc.--An
area shall not be designated under subparagraph (A) if the
Secretary of Housing and Urban Development determines that
the course of action described in subsection (d)(2) with
respect to such area is inadequate.
``(4) Limitation on designations.--
``(A) Publication of regulations.--The Secretary of Housing
and Urban Development shall prescribe by regulation no later
than 4 months after the date of the enactment of this
section, after consultation with the officials described in
paragraph (1)(B)--
``(i) the procedures for nominating an area under paragraph
(1)(A),
``(ii) the parameters relating to the size and population
characteristics of a renewal community, and
``(iii) the manner in which nominated areas will be
evaluated based on the criteria specified in subsection (d).
``(B) Time limitations.--The Secretary of Housing and Urban
Development may designate nominated areas as renewal
communities only during the 24-month period beginning on the
first day of the first month following the month in which the
regulations described in subparagraph (A) are prescribed.
``(C) Procedural rules.--The Secretary of Housing and Urban
Development shall not make any designation of a nominated
area as a renewal community under paragraph (2) unless--
``(i) the local governments and the States in which the
nominated area is located have the authority--
``(I) to nominate such area for designation as a renewal
community,
``(II) to make the State and local commitments described in
subsection (d), and
``(III) to provide assurances satisfactory to the Secretary
of Housing and Urban Development that such commitments will
be fulfilled,
``(ii) a nomination regarding such area is submitted in
such a manner and in such form, and contains such
information, as the Secretary of Housing and Urban
Development shall by regulation prescribe, and
``(iii) the Secretary of Housing and Urban Development
determines that any information furnished is reasonably
accurate.
``(5) Nomination process for indian reservations.--For
purposes of this subchapter, in the case of a nominated area
on an Indian reservation, the reservation governing body (as
determined by the Secretary of the Interior) shall be treated
as being both the State and local governments with respect to
such area.
``(b) Period for Which Designation Is in Effect.--
``(1) In general.--Any designation of an area as a renewal
community shall remain in effect during the period beginning
on July 1, 2001, and ending on the earliest of--
``(A) December 31, 2009,
``(B) the termination date designated by the State and
local governments in their nomination, or
``(C) the date the Secretary of Housing and Urban
Development revokes such designation.
``(2) Revocation of designation.--The Secretary of Housing
and Urban Development may revoke the designation under this
section of an area if such Secretary determines that the
local government or the State in which the area is located--
``(A) has modified the boundaries of the area, or
``(B) is not complying substantially with, or fails to make
progress in achieving, the State or local commitments,
respectively, described in subsection (d).
``(3) Earlier termination of certain benefits if earlier
termination of designation.--If the designation of an area as
a renewal community terminates before December 31, 2009--
[[Page H6799]]
``(A) the date of such termination shall be substituted for
`December 31, 2009' in section 198(h) with respect to such
area, and
``(B) the day after the date of such termination shall be
substituted for `January 1, 2010' each place it appears in
sections 1400F and 1400J with respect to such area.
``(c) Area and Eligibility Requirements.--
``(1) In general.--The Secretary of Housing and Urban
Development may designate a nominated area as a renewal
community under subsection (a) only if the area meets the
requirements of paragraphs (2) and (3) of this subsection.
``(2) Area requirements.--A nominated area meets the
requirements of this paragraph if--
``(A) the area is within the jurisdiction of one or more
local governments,
``(B) the boundary of the area is continuous, and
``(C) the area--
``(i) has a population of not more than 200,000 and at
least--
``(I) 4,000 if any portion of such area (other than a rural
area described in subsection (a)(2)(B)(i)) is located within
a metropolitan statistical area (within the meaning of
section 143(k)(2)(B)) which has a population of 50,000 or
greater, or
``(II) 1,000 in any other case, or
``(ii) is entirely within an Indian reservation (as
determined by the Secretary of the Interior).
``(3) Eligibility requirements.--A nominated area meets the
requirements of this paragraph if the State and the local
governments in which it is located certify in writing (and
the Secretary of Housing and Urban Development, after such
review of supporting data as he deems appropriate, accepts
such certification) that--
``(A) the area is one of pervasive poverty, unemployment,
and general distress;
``(B) the unemployment rate in the area, as determined by
the most recent available data, was at least 1\1/2\ times the
national unemployment rate for the period to which such data
relate;
``(C) the poverty rate for each population census tract
within the nominated area is at least 20 percent; and
``(D) in the case of an urban area, at least 70 percent of
the households living in the area have incomes below 80
percent of the median income of households within the
jurisdiction of the local government (determined in the same
manner as under section 119(b)(2) of the Housing and
Community Development Act of 1974).
``(4) Consideration of high incidence of crime.--The
Secretary of Housing and Urban Development shall take into
account, in selecting nominated areas for designation as
renewal communities under this section, the extent to which
such areas have a high incidence of crime.
``(5) Consideration of communities identified in gao
study.--The Secretary of Housing and Urban Development shall
take into account, in selecting nominated areas for
designation as renewal communities under this section, if the
area has census tracts identified in the May 12, 1998, report
of the General Accounting Office regarding the identification
of economically distressed areas.
``(d) Required State and Local Commitments.--
``(1) In general.--The Secretary of Housing and Urban
Development may designate any nominated area as a renewal
community under subsection (a) only if--
``(A) the local government and the State in which the area
is located agree in writing that, during any period during
which the area is a renewal community, such governments will
follow a specified course of action which meets the
requirements of paragraph (2) and is designed to reduce the
various burdens borne by employers or employees in such area,
and
``(B) the economic growth promotion requirements of
paragraph (3) are met.
``(2) Course of action.--
``(A) In general.--A course of action meets the
requirements of this paragraph if such course of action is a
written document, signed by a State (or local government) and
neighborhood organizations, which evidences a partnership
between such State or government and community-based
organizations and which commits each signatory to specific
and measurable goals, actions, and timetables. Such course of
action shall include at least 4 of the following:
``(i) A reduction of tax rates or fees applying within the
renewal community.
``(ii) An increase in the level of efficiency of local
services within the renewal community.
``(iii) Crime reduction strategies, such as crime
prevention (including the provision of crime prevention
services by nongovernmental entities).
``(iv) Actions to reduce, remove, simplify, or streamline
governmental requirements applying within the renewal
community.
``(v) Involvement in the program by private entities,
organizations, neighborhood organizations, and community
groups, particularly those in the renewal community,
including a commitment from such private entities to provide
jobs and job training for, and technical, financial, or other
assistance to, employers, employees, and residents from the
renewal community.
``(vi) The gift (or sale at below fair market value) of
surplus real property (such as land, homes, and commercial or
industrial structures) in the renewal community to
neighborhood organizations, community development
corporations, or private companies.
``(B) Recognition of past efforts.--For purposes of this
section, in evaluating the course of action agreed to by any
State or local government, the Secretary of Housing and Urban
Development shall take into account the past efforts of such
State or local government in reducing the various burdens
borne by employers and employees in the area involved.
``(3) Economic growth promotion requirements.--The economic
growth promotion requirements of this paragraph are met with
respect to a nominated area if the local government and the
State in which such area is located certify in writing that
such government and State (respectively) have repealed or
reduced, will not enforce, or will reduce within the
nominated area at least 4 of the following:
``(A) Licensing requirements for occupations that do not
ordinarily require a professional degree.
``(B) Zoning restrictions on home-based businesses which do
not create a public nuisance.
``(C) Permit requirements for street vendors who do not
create a public nuisance.
``(D) Zoning or other restrictions that impede the
formation of schools or child care centers.
``(E) Franchises or other restrictions on competition for
businesses providing public services, including taxicabs,
jitneys, cable television, or trash hauling.
This paragraph shall not apply to the extent that such
regulation of businesses and occupations is necessary for and
well-tailored to the protection of health and safety.
``(e) Coordination With Treatment of Empowerment Zones and
Enterprise Communities.--For purposes of this title, the
designation under section 1391 of any area as an empowerment
zone or enterprise community shall cease to be in effect as
of the date that the designation of any portion of such area
as a renewal community takes effect.
``(f ) Definitions and Special Rules.--For purposes of this
subchapter--
``(1) Governments.--If more than one government seeks to
nominate an area as a renewal community, any reference to, or
requirement of, this section shall apply to all such
governments.
``(2) Local government.--The term `local government'
means--
``(A) any county, city, town, township, parish, village, or
other general purpose political subdivision of a State, and
``(B) any combination of political subdivisions described
in subparagraph (A) recognized by the Secretary of Housing
and Urban Development.
``(3) Application of rules relating to census tracts.--The
rules of section 1392(b)(4) shall apply.
``(4) Census data.--Population and poverty rate shall be
determined by using 1990 census data.
``(g) Priority for District of Columbia Nominated Area.--
For purposes of this subchapter--
``(1) In general.--Any nominated area within the District
of Columbia shall be treated for purposes of subsection
(a)(3) as having the highest average with respect to the
criteria described in subparagraphs (B), (C), and (D) of
subsection (c)(3).
``(2) Date of designation.--Notwithstanding subsection
(b)(1), the designation of a nominated area within the
District of Columbia as a renewal community shall take effect
on January 1, 2003.
``(3) Nomination.--The District of Columbia shall be
treated as being both a State and local government with
respect to such area.
``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS
``Sec. 1400F. Renewal community capital gain.
``Sec. 1400G. Renewal community business defined.
``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.
``(a) General Rule.--Gross income does not include any
qualified capital gain from the sale or exchange of a
qualified community asset held for more than 5 years.
``(b) Qualified Community Asset.--For purposes of this
section--
``(1) In general.--The term `qualified community asset'
means--
``(A) any qualified community stock,
``(B) any qualified community partnership interest, and
``(C) any qualified community business property.
``(2) Qualified community stock.--
``(A) In general.--Except as provided in subparagraph (B),
the term `qualified community stock' means any stock in a
domestic corporation if--
``(i) such stock is acquired by the taxpayer after June 30,
2001, and before January 1, 2010, at its original issue
(directly or through an underwriter) from the corporation
solely in exchange for cash,
``(ii) as of the time such stock was issued, such
corporation was a renewal community business (or, in the case
of a new corporation, such corporation was being organized
for purposes of being a renewal community business), and
``(iii) during substantially all of the taxpayer's holding
period for such stock, such corporation qualified as a
renewal community business.
[[Page H6800]]
``(B) Redemptions.--A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this paragraph.
``(3) Qualified community partnership interest.--The term
`qualified community partnership interest' means any capital
or profits interest in a domestic partnership if--
``(A) such interest is acquired by the taxpayer after June
30, 2001, and before January 1, 2010, from the partnership
solely in exchange for cash,
``(B) as of the time such interest was acquired, such
partnership was a renewal community business (or, in the case
of a new partnership, such partnership was being organized
for purposes of being a renewal community business), and
``(C) during substantially all of the taxpayer's holding
period for such interest, such partnership qualified as a
renewal community business.
A rule similar to the rule of paragraph (2)(B) shall apply
for purposes of this paragraph.
``(4) Qualified community business property.--
``(A) In general.--The term `qualified community business
property' means tangible property if--
``(i) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after June 30,
2001, and before January 1, 2010,
``(ii) the original use of such property in the renewal
community commences with the taxpayer, and
``(iii) during substantially all of the taxpayer's holding
period for such property, substantially all of the use of
such property was in a renewal community business of the
taxpayer.
``(B) Special rule for substantial improvements.--The
requirements of clauses (i) and (ii) of subparagraph (A)
shall be treated as satisfied with respect to--
``(i) property which is substantially improved by the
taxpayer before January 1, 2010, and
``(ii) any land on which such property is located.
The determination of whether a property is substantially
improved shall be made under clause (ii) of section
1400B(b)(4)(B), except that `June 30, 2001' shall be
substituted for `December 31, 1997' in such clause.
``(c) Qualified Capital Gain.--For purposes of this
section--
``(1) In general.--Except as otherwise provided in this
subsection, the term `qualified capital gain` means any gain
recognized on the sale or exchange of--
``(A) a capital asset, or
``(B) property used in the trade or business (as defined in
section 1231(b)).
``(2) Gain before July 1, 2001, or after 2014 not
qualified.--The term `qualified capital gain' shall not
include any gain attributable to periods before July 1, 2001,
or after December 31, 2014.
``(3) Certain rules to apply.--Rules similar to the rules
of paragraphs (3), (4), and (5) of section 1400B(e) shall
apply for purposes of this subsection.
``(d) Certain Rules To Apply.--For purposes of this
section, rules similar to the rules of paragraphs (5), (6),
and (7) of subsection (b), and subsections (f ) and (g), of
section 1400B shall apply; except that for such purposes
section 1400B(g)(2) shall be applied by substituting `July 1,
2001' for `January 1, 1998' and `December 31, 2014' for
`December 31, 2007'.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out the purposes
of this section, including regulations to prevent the
avoidance of the purposes of this section.
``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.
``For purposes of this subchapter, the term `renewal
community business' means any entity or proprietorship which
would be a qualified business entity or qualified
proprietorship under section 1397C if references to renewal
communities were substituted for references to empowerment
zones in such section.
``PART III--ADDITIONAL INCENTIVES
``Sec. 1400H. Renewal community employment credit.
``Sec. 1400I. Commercial revitalization deduction.
``Sec. 1400J. Increase in expensing under section 179.
``SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.
``(a) In General.--Subject to the modification in
subsection (b), a renewal community shall be treated as an
empowerment zone for purposes of section 1396 with respect to
wages paid or incurred after June 30, 2001.
``(b) Modification.--In applying section 1396 with respect
to renewal communities--
``(1) the applicable percentage shall be 15 percent, and
``(2) subsection (c) thereof shall be applied by
substituting `$10,000' for `$15,000' each place it appears.
``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.
``(a) General Rule.--At the election of the taxpayer,
either--
``(1) one-half of any qualified revitalization expenditures
chargeable to capital account with respect to any qualified
revitalization building shall be allowable as a deduction for
the taxable year in which the building is placed in service,
or
``(2) a deduction for all such expenditures shall be
allowable ratably over the 120-month period beginning with
the month in which the building is placed in service.
``(b) Qualified Revitalization Buildings and
Expenditures.--For purposes of this section--
``(1) Qualified revitalization building.--The term
`qualified revitalization building' means any building (and
its structural components) if--
``(A) the building is placed in service by the taxpayer in
a renewal community and the original use of the building
begins with the taxpayer, or
``(B) in the case of such building not described in
subparagraph (A), such building--
``(i) is substantially rehabilitated (within the meaning of
section 47(c)(1)(C)) by the taxpayer, and
``(ii) is placed in service by the taxpayer after the
rehabilitation in a renewal community.
``(2) Qualified revitalization expenditure.--
``(A) In general.--The term `qualified revitalization
expenditure' means any amount properly chargeable to capital
account for property for which depreciation is allowable
under section 168 (without regard to this section) and which
is--
``(i) nonresidential real property (as defined in section
168(e)), or
``(ii) section 1250 property (as defined in section
1250(c)) which is functionally related and subordinate to
property described in clause (i).
``(B) Certain expenditures not included.--
``(i) Acquisition cost.--In the case of a building
described in paragraph (1)(B), the cost of acquiring the
building or interest therein shall be treated as a qualified
revitalization expenditure only to the extent that such cost
does not exceed 30 percent of the aggregate qualified
revitalization expenditures (determined without regard to
such cost) with respect to such building.
``(ii) Credits.--The term `qualified revitalization
expenditure' does not include any expenditure which the
taxpayer may take into account in computing any credit
allowable under this title unless the taxpayer elects to take
the expenditure into account only for purposes of this
section.
``(c) Dollar limitation.--The aggregate amount which may be
treated as qualified revitalization expenditures with respect
to any qualified revitalization building shall not exceed the
lesser of--
``(1) $10,000,000, or
``(2) the commercial revitalization expenditure amount
allocated to such building under this section by the
commercial revitalization agency for the State in which the
building is located.
``(d) Commercial Revitalization Expenditure Amount.--
``(1) In general.--The aggregate commercial revitalization
expenditure amount which a commercial revitalization agency
may allocate for any calendar year is the amount of the State
commercial revitalization expenditure ceiling determined
under this paragraph for such calendar year for such agency.
``(2) State commercial revitalization expenditure
ceiling.--The State commercial revitalization expenditure
ceiling applicable to any State--
``(A) for the period after June 30, 2001, and before
January 1, 2002, is $6,000,000 for each renewal community in
the State,
``(B) for each calendar year after 2001 and before 2010 is
$12,000,000 for each renewal community in the State, and
``(C) for each calendar year thereafter is zero.
``(3) Commercial revitalization agency.--For purposes of
this section, the term `commercial revitalization agency'
means any agency authorized by a State to carry out this
section.
``(4) Time and manner of allocations.--Allocations under
this section shall be made at the same time and in the same
manner as under paragraphs (1) and (7) of section 42(h).
``(e) Responsibilities of Commercial Revitalization
Agencies.--
``(1) Plans for allocation.--Notwithstanding any other
provision of this section, the commercial revitalization
expenditure amount with respect to any building shall be zero
unless--
``(A) such amount was allocated pursuant to a qualified
allocation plan of the commercial revitalization agency which
is approved (in accordance with rules similar to the rules of
section 147(f )(2) (other than subparagraph (B)(ii) thereof))
by the governmental unit of which such agency is a part; and
``(B) such agency notifies the chief executive officer (or
its equivalent) of the local jurisdiction within which the
building is located of such allocation and provides such
individual a reasonable opportunity to comment on the
allocation.
``(2) Qualified allocation plan.--For purposes of this
subsection, the term `qualified allocation plan' means any
plan--
``(A) which sets forth selection criteria to be used to
determine priorities of the commercial revitalization agency
which are appropriate to local conditions,
``(B) which considers--
``(i) the degree to which a project contributes to the
implementation of a strategic plan that is devised for a
renewal community through a citizen participation process,
``(ii) the amount of any increase in permanent, full-time
employment by reason of any project, and
[[Page H6801]]
``(iii) the active involvement of residents and nonprofit
groups within the renewal community, and
``(C) which provides a procedure that the agency (or its
agent) will follow in monitoring compliance with this
section.
``(f) Special Rules.--
``(1) Deduction in lieu of depreciation.--The deduction
provided by this section for qualified revitalization
expenditures shall--
``(A) with respect to the deduction determined under
subsection (a)(1), be in lieu of any depreciation deduction
otherwise allowable on account of \1/2\ of such expenditures,
and
``(B) with respect to the deduction determined under
subsection (a)(2), be in lieu of any depreciation deduction
otherwise allowable on account of all of such expenditures.
``(2) Basis adjustment, etc.--For purposes of sections 1016
and 1250, the deduction under this section shall be treated
in the same manner as a depreciation deduction. For purposes
of section 1250(b)(5), the straight line method of adjustment
shall be determined without regard to this section.
``(3) Substantial rehabilitations treated as separate
buildings.--A substantial rehabilitation (within the meaning
of section 47(c)(1)(C)) of a building shall be treated as a
separate building for purposes of subsection (a).
``(4) Clarification of allowance of deduction under minimum
tax.--Notwithstanding section 56(a)(1), the deduction under
this section shall be allowed in determining alternative
minimum taxable income under section 55.
``(g) Regulations.--For purposes of this section, the
Secretary shall, by regulations, provide for the application
of rules similar to the rules of section 49 and subsections
(a) and (b) of section 50.
``(h) Termination.--This section shall not apply to any
building placed in service after December 31, 2009.
``SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.
``(a) In General.--For purposes of section 1397A--
``(1) a renewal community shall be treated as an
empowerment zone,
``(2) a renewal community business shall be treated as an
empowerment zone business, and
``(3) qualified renewal property shall be treated as
enterprise zone property.
``(b) Qualified Renewal Property.--For purposes of this
section--
``(1) In general.--The term `qualified renewal property'
means any property to which section 168 applies (or would
apply but for section 179) if--
``(A) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after June 30,
2001, and before January 1, 2010, and
``(B) such property would be qualified zone property (as
defined in section 1397D) if references to renewal
communities were substituted for references to empowerment
zones in section 1397D.
``(2) Certain rules to apply.--The rules of subsections
(a)(2) and (b) of section 1397D shall apply for purposes of
this section.''.
(b) Exception for Commercial Revitalization Deduction From
Passive Loss Rules.--
(1) Paragraph (3) of section 469(i) is amended by
redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) Exception for commercial revitalization deduction.--
Subparagraph (A) shall not apply to any portion of the
passive activity loss for any taxable year which is
attributable to the commercial revitalization deduction under
section 1400I.''
(2) Subparagraph (E) of section 469(i)(3), as redesignated
by subparagraph (A), is amended to read as follows:
``(E) Ordering rules to reflect exceptions and separate
phase-outs.--If subparagraph (B), (C), or (D) applies for a
taxable year, paragraph (1) shall be applied--
``(i) first to the portion of the passive activity loss to
which subparagraph (C) does not apply,
``(ii) second to the portion of the passive activity credit
to which subparagraph (B) or (D) does not apply,
``(iii) third to the portion of such credit to which
subparagraph (B) applies,
``(iv) fourth to the portion of such loss to which
subparagraph (C) applies, and
``(v) then to the portion of such credit to which
subparagraph (D) applies.''
(3)(A) Subparagraph (B) of section 469(i)(6) is amended by
striking ``or'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and
by adding at the end the following new clause:
``(iii) any deduction under section 1400I (relating to
commercial revitalization deduction).''
(B) The heading for such subparagraph (B) is amended by
striking ``or rehabilitation credit'' and inserting ``,
rehabilitation credit, or commercial revitalization
deduction''.
(c) Clerical Amendment.--The table of subchapters for
chapter 1 is amended by adding at the end the following new
item:
``Subchapter X. Renewal Communities.''.
SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION
COSTS TO RENEWAL COMMUNITIES; EXTENSION OF
TERMINATION DATE FOR RENEWAL COMMUNITIES AND
EMPOWERMENT ZONES.
(a) Extension.--
(1) In general.--Subparagraph (A) of section 198(c)(2)
(defining targeted area) is amended by striking ``and'' at
the end of clause (iii), by striking the period at the end of
clause (iv) and inserting ``, and'', and by adding at the end
the following new clause:
``(v) any renewal community (as defined in section
1400E).''
(2) Effective date.--The amendment made by paragraph (1)
shall apply to expenditures paid or incurred after June 30,
2001.
(b) Extension of Termination Date.--Subsection (h) of
section 198 is amended by inserting before the period
``(December 31, 2009, in the case of an empowerment zone or
renewal community)''.
SEC. 103. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING
IN RENEWAL COMMUNITIES.
(a) High-Risk Youth.--Subparagraphs (A)(ii) and (B) of
section 51(d)(5) are each amended by striking ``empowerment
zone or enterprise community'' and inserting ``empowerment
zone, enterprise community, or renewal community''.
(b) Qualified Summer Youth Employee.--Clause (iv) of
section 51(d)(7)(A) is amended by striking ``empowerment zone
or enterprise community'' and inserting ``empowerment zone,
enterprise community, or renewal community''.
(c) Headings.--Paragraphs (5)(B) and (7)(C) of section
51(d) are each amended by inserting ``or community'' in the
heading after ``zone''.
(d) Effective Date.--The amendments made by this section
shall apply to individuals who begin work for the employer
after June 30, 2001.
TITLE II--EXTENSION AND EXPANSION OF EMPOWERMENT ZONE INCENTIVES
SEC. 201. AUTHORITY TO DESIGNATE 9 ADDITIONAL EMPOWERMENT
ZONES.
Section 1391 is amended by adding at the end the following
new subsection:
``(h) Additional Designations Permitted.--
``(1) In general.--In addition to the areas designated
under subsections (a) and (g), the appropriate Secretaries
may designate in the aggregate an additional 9 nominated
areas as empowerment zones under this section, subject to the
availability of eligible nominated areas. Of that number, not
more than 7 may be designated in urban areas and not more
than 2 may be designated in rural areas.
``(2) Period designations may be made and take effect.--A
designation may be made under this subsection after the date
of the enactment of this subsection and before January 1,
2002. Subject to subparagraphs (B) and (C) of subsection
(d)(1), such designations shall remain in effect during the
period beginning on January 1, 2002, and ending on December
31, 2009.
``(3) Modifications to eligibility criteria, etc.--The
rules of subsection (g)(3) shall apply to designations under
this subsection.''
SEC. 202. EXTENSION OF ENTERPRISE ZONE TREATMENT THROUGH
2009.
Subparagraph (A) of section 1391(d)(1) (relating to period
for which designation is in effect) is amended to read as
follows:
``(A) December 31, 2009,''.
SEC. 203. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT
ZONES
(a) 20 Percent Credit.--Subsection (b) of section 1396
(relating to empowerment zone employment credit) is amended
to read as follows:
``(b) Applicable Percentage.--For purposes of this section,
the applicable percentage is 20 percent.''
(b) All Empowerment Zones Eligible for Credit.--Section
1396 is amended by striking subsection (e).
(c) Conforming Amendment.--Subsection (d) of section 1400
is amended to read as follows:
``(d) Special Rule for Application of Employment Credit.--
With respect to the DC Zone, section 1396(d)(1)(B) (relating
to empowerment zone employment credit) shall be applied by
substituting `the District of Columbia' for `such empowerment
zone'.''
(d) Effective Date.--The amendments made by this section
shall apply to wages paid or incurred after December 31,
2001.
SEC. 204. INCREASED EXPENSING UNDER SECTION 179.
(a) In General.--Subparagraph (A) of section 1397A(a)(1) is
amended by striking ``$20,000'' and inserting ``$35,000''.
(b) Expensing for Property Used in Developable Sites.--
Section 1397A is amended by striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 205. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE
FACILITY BONDS.
(a) In General.--Paragraph (3) of section 1394(f) (relating
to bonds for empowerment zones designated under section
1391(g)) is amended to read as follows:
``(3) Empowerment zone facility bond.--For purposes of this
subsection, the term `empowerment zone facility bond' means
any bond which would be described in subsection (a) if--
``(A) in the case of obligations issued before January 1,
2002, only empowerment zones designated under section 1391(g)
were taken into account under sections 1397C and 1397D, and
[[Page H6802]]
``(B) in the case of obligations issued after December 31,
2001, all empowerment zones (other than the District of
Columbia) were taken into account under sections 1397C and
1397D.''
(b) Effective Date.--The amendments made by this section
shall apply to obligations issued after December 31, 2001.
SEC. 206. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT
ZONE INVESTMENTS.
(a) In General.--Part III of subchapter U of chapter 1 is
amended--
(1) by redesignating subpart C as subpart D,
(2) by redesignating sections 1397B and 1397C as sections
1397C and 1397D, respectively, and
(3) by inserting after subpart B the following new subpart:
``Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone
Investments
``Sec. 1397B. Nonrecognition of Gain on Rollover of Empowerment Zone
Investments.
``SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF
EMPOWERMENT ZONE INVESTMENTS.
``(a) Nonrecognition of Gain.--In the case of any sale of a
qualified empowerment zone asset held by the taxpayer for
more than 1 year and with respect to which such taxpayer
elects the application of this section, gain from such sale
shall be recognized only to the extent that the amount
realized on such sale exceeds--
``(1) the cost of any qualified empowerment zone asset
(with respect to the same zone as the asset sold) purchased
by the taxpayer during the 60-day period beginning on the
date of such sale, reduced by
``(2) any portion of such cost previously taken into
account under this section.
``(b) Definitions and Special Rules.--For purposes of this
section--
``(1) Qualified empowerment zone asset.--
``(A) In general.--The term `qualified empowerment zone
asset' means any property which would be a qualified
community asset (as defined in section 1400F) if in section
1400F--
``(i) references to empowerment zones were substituted for
references to renewal communities,
``(ii) references to enterprise zone businesses (as defined
in section 1397C) were substituted for references to renewal
community businesses, and
``(iii) the date of the enactment of this paragraph were
substituted for `December 31, 2001' each place it appears.
``(B) Treatment of dc zone.--The District of Columbia
Enterprise Zone shall not be treated as an empowerment zone
for purposes of this section.
``(2) Certain gain not eligible for rollover.--This section
shall not apply to--
``(A) any gain which is treated as ordinary income for
purposes of this subtitle, and
``(B) any gain which is attributable to real property, or
an intangible asset, which is not an integral part of an
enterprise zone business.
``(3) Purchase.--A taxpayer shall be treated as having
purchased any property if, but for paragraph (4), the
unadjusted basis of such property in the hands of the
taxpayer would be its cost (within the meaning of section
1012).
``(4) Basis adjustments.--If gain from any sale is not
recognized by reason of subsection (a), such gain shall be
applied to reduce (in the order acquired) the basis for
determining gain or loss of any qualified empowerment zone
asset which is purchased by the taxpayer during the 60-day
period described in subsection (a). This paragraph shall not
apply for purposes of section 1202.
``(5) Holding period.--For purposes of determining whether
the nonrecognition of gain under subsection (a) applies to
any qualified empowerment zone asset which is sold--
``(A) the taxpayer's holding period for such asset and the
asset referred to in subsection (a)(1) shall be determined
without regard to section 1223, and
``(B) only the first year of the taxpayer's holding period
for the asset referred to in subsection (a)(1) shall be taken
into account for purposes of paragraphs (2)(A)(iii), (3)(C),
and (4)(A)(iii) of section 1400F(b).''
(b) Conforming Amendments.--
(1) Paragraph (23) of section 1016(a) is amended--
(A) by striking ``or 1045'' and inserting ``1045, or
1397B'', and
(B) by striking ``or 1045(b)(4)'' and inserting
``1045(b)(4), or 1397B(b)(4)''.
(2) Paragraph (15) of section 1223 is amended to read as
follows:
``(15) Except for purposes of sections 1202(a)(2),
1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the
period for which the taxpayer has held property the
acquisition of which resulted under section 1045 or 1397B in
the nonrecognition of any part of the gain realized on the
sale of other property, there shall be included the period
for which such other property has been held as of the date of
such sale.''
(3) Paragraph (2) of section 1394(b) is amended--
(A) by striking ``section 1397C'' and inserting ``section
1397D'', and
(B) by striking ``section 1397C(a)(2)'' and inserting
``section 1397D(a)(2)''.
(4) Paragraph (3) of section 1394(b) is amended--
(A) by striking ``section 1397B'' each place it appears and
inserting ``section 1397C'', and
(B) by striking ``section 1397B(d)'' and inserting
``section 1397C(d)''.
(5) Sections 1400(e) and 1400B(c) are each amended by
striking ``section 1397B'' each place it appears and
inserting ``section 1397C''.
(6) The table of subparts for part III of subchapter U of
chapter 1 is amended by striking the last item and inserting
the following new items:
``Subpart C. Nonrecognition of gain on rollover of empowerment zone
investments.
``Subpart D. General provisions.''
(7) The table of sections for subpart D of such part III is
amended to read as follows:
``Sec. 1397C. Enterprise zone business defined.
``Sec. 1397D. Qualified zone property defined.''
(c) Effective Date.--The amendments made by this section
shall apply to qualified empowerment zone assets acquired
after the date of the enactment of this Act.
SEC. 207. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT
ZONE STOCK.
(a) In General.--Subsection (a) of section 1202 is amended
to read as follows:
``(a) Exclusion.--
``(1) In general.--In the case of a taxpayer other than a
corporation, gross income shall not include 50 percent of any
gain from the sale or exchange of qualified small business
stock held for more than 5 years.
``(2) Empowerment zone businesses.--
``(A) In general.--In the case of qualified small business
stock acquired after the date of the enactment of this
paragraph in a corporation which is a qualified business
entity (as defined in section 1397C(b)) during substantially
all of the taxpayer's holding period for such stock,
paragraph (1) shall be applied by substituting `60 percent'
for `50 percent'.
``(B) Certain rules to apply.--Rules similar to the rules
of paragraphs (5) and (7) of section 1400B(b) shall apply for
purposes of this paragraph.
``(C) Gain after 2014 not qualified.--Subparagraph (A)
shall not apply to gain attributable to periods after
December 31, 2014.
``(D) Treatment of dc zone.--The District of Columbia
Enterprise Zone shall not be treated as an empowerment zone
for purposes of this paragraph.''
(b) Conforming Amendment.--Paragraph (8) of section 1(h) is
amended by striking ``means'' and all that follows and
inserting ``means the excess of--
``(A) the gain which would be excluded from gross income
under section 1202 but for the percentage limitation in
section 1202(a), over
``(B) the gain excluded from gross income under section
1202.''
(c) Effective Date.--The amendments made by this section
shall apply to stock acquired after the date of the enactment
of this Act.
TITLE III--NEW MARKETS TAX CREDIT
SEC. 301. NEW MARKETS TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business-related credits) is amended
by adding at the end the following new section:
``SEC. 45D. NEW MARKETS TAX CREDIT.
``(a) Allowance of Credit.--
``(1) In general.--For purposes of section 38, in the case
of a taxpayer who holds a qualified equity investment on a
credit allowance date of such investment which occurs during
the taxable year, the new markets tax credit determined under
this section for such taxable year is an amount equal to the
applicable percentage of the amount paid to the qualified
community development entity for such investment at its
original issue.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage is--
``(A) 5 percent with respect to the first 3 credit
allowance dates, and
``(B) 6 percent with respect to the remainder of the credit
allowance dates.
``(3) Credit allowance date.--For purposes of paragraph
(1), the term `credit allowance date' means, with respect to
any qualified equity investment--
``(A) the date on which such investment is initially made,
and
``(B) each of the 6 anniversary dates of such date
thereafter.
``(b) Qualified Equity Investment.--For purposes of this
section--
``(1) In general.--The term `qualified equity investment'
means any equity investment in a qualified community
development entity if--
``(A) such investment is acquired by the taxpayer at its
original issue (directly or through an underwriter) solely in
exchange for cash,
``(B) substantially all of such cash is used by the
qualified community development entity to make qualified low-
income community investments, and
``(C) such investment is designated for purposes of this
section by the qualified community development entity.
Such term shall not include any equity investment issued by a
qualified community development entity more than 5 years
after the date that such entity receives an allocation under
subsection (f). Any allocation not used within such 5-year
period may be reallocated by the Secretary under subsection
(f).
``(2) Limitation.--The maximum amount of equity investments
issued by a qualified
[[Page H6803]]
community development entity which may be designated under
paragraph (1)(C) by such entity shall not exceed the portion
of the limitation amount allocated under subsection (f) to
such entity.
``(3) Safe harbor for determining use of cash.--The
requirement of paragraph (1)(B) shall be treated as met if at
least 85 percent of the aggregate gross assets of the
qualified community development entity are invested in
qualified low-income community investments.
``(4) Treatment of subsequent purchasers.--The term
`qualified equity investment' includes any equity investment
which would (but for paragraph (1)(A)) be a qualified equity
investment in the hands of the taxpayer if such investment
was a qualified equity investment in the hands of a prior
holder.
``(5) Redemptions.--A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this subsection.
``(6) Equity investment.--The term `equity investment'
means--
``(A) any stock (other than nonqualified preferred stock as
defined in section 351(g)(2)) in an entity which is a
corporation, and
``(B) any capital interest in an entity which is a
partnership.
``(c) Qualified Community Development Entity.--For purposes
of this section--
``(1) In general.--The term `qualified community
development entity' means any domestic corporation or
partnership if--
``(A) the primary mission of the entity is serving, or
providing investment capital for, low-income communities or
low-income persons,
``(B) the entity maintains accountability to residents of
low-income communities through representation on governing or
advisory boards or otherwise, and
``(C) the entity is certified by the Secretary for purposes
of this section as being a qualified community development
entity.
``(2) Special rules for certain organizations.--The
requirements of paragraph (1) shall be treated as met by--
``(A) any specialized small business investment company (as
defined in section 1044(c)(3)), and
``(B) any community development financial institution (as
defined in section 103 of the Community Development Banking
and Financial Institutions Act of 1994 (12 U.S.C. 4702)).
``(d) Qualified Low-Income Community Investments.--For
purposes of this section--
``(1) In general.--The term `qualified low-income community
investment' means--
``(A) any equity investment in, or loan to, any qualified
active low-income community business,
``(B) the purchase from another community development
entity of any loan made by such entity which is a qualified
low-income community investment,
``(C) financial counseling and other services specified in
regulations prescribed by the Secretary to businesses located
in, and residents of, low-income communities, and
``(D) any equity investment in, or loan to, any qualified
community development entity.
``(2) Qualified active low-income community business.--
``(A) In general.--For purposes of paragraph (1), the term
`qualified active low-income community business' means, with
respect to any taxable year, any corporation or partnership
if for such year--
``(i) at least 50 percent of the total gross income of such
entity is derived from the active conduct of a qualified
business within any low-income community,
``(ii) a substantial portion of the use of the tangible
property of such entity (whether owned or leased) is within
any low-income community,
``(iii) a substantial portion of the services performed for
such entity by its employees are performed in any low-income
community,
``(iv) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is
attributable to collectibles (as defined in section
408(m)(2)) other than collectibles that are held primarily
for sale to customers in the ordinary course of such
business, and
``(v) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is
attributable to nonqualified financial property (as defined
in section 1397C(e)).
``(B) Proprietorship.--Such term shall include any business
carried on by an individual as a proprietor if such business
would meet the requirements of subparagraph (A) were it
incorporated.
``(C) Portions of business may be qualified active low-
income community business.--The term `qualified active low-
income community business' includes any trades or businesses
which would qualify as a qualified active low-income
community business if such trades or businesses were
separately incorporated.
``(3) Qualified business.--For purposes of this subsection,
the term `qualified business' has the meaning given to such
term by section 1397C(d); except that--
``(A) in lieu of applying paragraph (2)(B) thereof, the
rental to others of real property located in any low-income
community shall be treated as a qualified business if there
are substantial improvements located on such property,
``(B) paragraph (3) thereof shall not apply, and
``(C) such term shall not include any business if a
significant portion of the equity interests in such business
are held by any person who holds a significant portion of the
equity investments in the community development entity.
``(e) Low-Income Community.--For purposes of this section--
``(1) In general.--The term `low-income community' means
any population census tract if--
``(A) the poverty rate for such tract is at least 20
percent, or
``(B)(i) in the case of a tract not located within a
metropolitan area, the median family income for such tract
does not exceed 80 percent of statewide median family income,
or
``(ii) in the case of a tract located within a metropolitan
area, the median family income for such tract does not exceed
80 percent of the greater of statewide median family income
or the metropolitan area median family income.
``(2) Areas not within census tracts.--In the case of an
area which is not tracted for population census tracts, the
equivalent county divisions (as defined by the Bureau of the
Census for purposes of defining poverty areas) shall be used
for purposes of determining poverty rates and median family
income.
``(f) National Limitation on Amount of Investments
Designated.--
``(1) In general.--There is a new markets tax credit
limitation for each calendar year. Such limitation is--
``(A) $1,000,000,000 for 2001,
``(B) $1,500,000,000 for 2002 and 2003,
``(C) $2,000,000,000 for 2004 and 2005,
``(E) $3,500,000,000 for 2006 and 2007.
``(2) Allocation of limitation.--The limitation under
paragraph (1) shall be allocated by the Secretary among
qualified community development entities selected by the
Secretary. In making allocations under the preceding
sentence, the Secretary shall give priority to entities with
records of having successfully provided capital or technical
assistance to disadvantaged businesses or communities.
``(3) Carryover of unused limitation.--If the new markets
tax credit limitation for any calendar year exceeds the
aggregate amount allocated under paragraph (2) for such year,
such limitation for the succeeding calendar year shall be
increased by the amount of such excess. No amount may be
carried under the preceding sentence to any calendar year
after 2014.
``(g) Recapture of Credit In Certain Cases.--
``(1) In general.--If, at any time during the 7-year period
beginning on the date of the original issue of a qualified
equity investment in a qualified community development
entity, there is a recapture event with respect to such
investment, then the tax imposed by this chapter for the
taxable year in which such event occurs shall be increased by
the credit recapture amount.
``(2) Credit recapture amount.--For purposes of paragraph
(1), the credit recapture amount is an amount equal to the
sum of--
``(A) the aggregate decrease in the credits allowed to the
taxpayer under section 38 for all prior taxable years which
would have resulted if no credit had been determined under
this section with respect to such investment, plus
``(B) interest at the overpayment rate established under
section 6621 on the amount determined under subparagraph (A)
for each prior taxable year for the period beginning on the
due date for filing the return for the prior taxable year
involved.
No deduction shall be allowed under this chapter for interest
described in subparagraph (B).
``(3) Recapture event.--For purposes of paragraph (1),
there is a recapture event with respect to an equity
investment in a qualified community development entity if--
``(A) such entity ceases to be a qualified community
development entity,
``(B) the proceeds of the investment cease to be used as
required of subsection (b)(1)(B), or
``(C) such investment is redeemed by such entity.
``(4) Special rules.--
``(A) Tax benefit rule.--The tax for the taxable year shall
be increased under paragraph (1) only with respect to credits
allowed by reason of this section which were used to reduce
tax liability. In the case of credits not so used to reduce
tax liability, the carryforwards and carrybacks under section
39 shall be appropriately adjusted.
``(B) No credits against tax.--Any increase in tax under
this subsection shall not be treated as a tax imposed by this
chapter for purposes of determining the amount of any credit
under this chapter or for purposes of section 55.
``(h) Basis Reduction.--The basis of any qualified equity
investment shall be reduced by the amount of any credit
determined under this section with respect to such
investment. This subsection shall not apply for purposes of
sections 1202, 1400B, and 1400F.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out this section,
including regulations--
``(1) which limit the credit for investments which are
directly or indirectly subsidized by other Federal tax
benefits (including the credit under section 42 and the
exclusion from gross income under section 103),
[[Page H6804]]
``(2) which prevent the abuse of the purposes of this
section,
``(3) which provide rules for determining whether the
requirement of subsection (b)(1)(B) is treated as met,
``(4) which impose appropriate reporting requirements, and
``(5) which apply the provisions of this section to newly
formed entities.''
(b) Credit Made Part of General Business Credit.--
(1) In general.--Subsection (b) of section 38 is amended by
striking ``plus'' at the end of paragraph (11), by striking
the period at the end of paragraph (12) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(13) the new markets tax credit determined under section
45D(a).''
(2) Limitation on carryback.--Subsection (d) of section 39
is amended by adding at the end the following new paragraph:
``(9) No carryback of new markets tax credit before january
1, 2001.--No portion of the unused business credit for any
taxable year which is attributable to the credit under
section 45D may be carried back to a taxable year ending
before January 1, 2001.''
(c) Deduction for Unused Credit.--Subsection (c) of section
196 is amended by striking ``and'' at the end of paragraph
(7), by striking the period at the end of paragraph (8) and
inserting ``, and'', and by adding at the end the following
new paragraph:
``(9) the new markets tax credit determined under section
45D(a).''
(d) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by
adding at the end the following new item:
``Sec. 45D. New markets tax credit.''
(e) Effective Date.--The amendments made by this section
shall apply to investments made after December 31, 2000.
(f) Regulations on Allocation of National Limitation.--Not
later than 60 days after the date of the enactment of this
Act, the Secretary of the Treasury or the Secretary's
delegate shall prescribe regulations which specify--
(1) how entities shall apply for an allocation under
section 45D(f)(2) of the Internal Revenue Code of 1986, as
added by this section,
(2) the competitive procedure through which such
allocations are made, and
(3) the actions that such Secretary or delegate shall take
to ensure that such allocations are properly made to
appropriate entities.
TITLE IV--IMPROVEMENTS IN LOW-INCOME HOUSING CREDIT
SEC. 401. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING
CREDIT.
(a) In General.--Clauses (i) and (ii) of section
42(h)(3)(C) (relating to State housing credit ceiling) are
amended to read as follows:
``(i) the unused State housing credit ceiling (if any) of
such State for the preceding calendar year,
``(ii) the greater of--
``(I) the applicable amount under subparagraph (H)
multiplied by the State population, or
``(II) $2,000,000,''.
(b) Applicable Amount.--Paragraph (3) of section 42(h)
(relating to housing credit dollar amount for agencies) is
amended by adding at the end the following new subparagraph:
``(H) Applicable amount of state ceiling.--For purposes of
subparagraph (C)(ii), the applicable amount shall be
determined under the following table:
``For calendar year: The applicable amount is:
2001......................................................$1.35
2002..................................................... 1.45
2003..................................................... 1.55
2004..................................................... 1.65
2005..................................................... 1.70
2006 and thereafter.................................. 1.75.''.
(c) Adjustment of State Ceiling for Increases in Cost-of-
Living.--Paragraph (3) of section 42(h) (relating to housing
credit dollar amount for agencies), as amended by subsection
(c), is amended by adding at the end the following new
subparagraph:
``(I) Cost-of-living adjustment.--
``(i) In general.--In the case of a calendar year after
2006, the $2,000,000 in subparagraph (C) and the $1.75 amount
in subparagraph (H) shall each be increased by an amount
equal to--
``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
`calendar year 2005' for `calendar year 1992' in subparagraph
(B) thereof.
``(ii) Rounding.--
``(I) In the case of the amount in subparagraph (C), any
increase under clause (i) which is not a multiple of $5,000
shall be rounded to the next lowest multiple of $5,000.
``(II) In the case of the amount in subparagraph (H), any
increase under clause (i) which is not a multiple of 5 cents
shall be rounded to the next lowest multiple of 5 cents.''.
(d) Conforming Amendments.--
(1) Section 42(h)(3)(C), as amended by subsection (a), is
amended--
(A) by striking ``clause (ii)'' in the matter following
clause (iv) and inserting ``clause (i)''; and
(B) by striking ``clauses (i)'' in the matter following
clause (iv) and inserting ``clauses (ii)''.
(2) Section 42(h)(3)(D)(ii) is amended--
(A) by striking ``subparagraph (C)(ii)'' and inserting
``subparagraph (C)(i)''; and
(B) by striking ``clauses (i)'' in subclause (II) and
inserting ``clauses (ii)''.
(e) Effective Date.--The amendments made by this section
shall apply to calendar years after 2000.
SEC. 402. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING
CREDITS AMONG PROJECTS.
(a) Selection Criteria.--Subparagraph (C) of section
42(m)(1) (relating to certain selection criteria must be
used) is amended--
(1) by inserting ``, including whether the project includes
the use of existing housing as part of a community
revitalization plan'' before the comma at the end of clause
(iii); and
(2) by striking clauses (v), (vi), and (vii) and inserting
the following new clauses:
``(v) tenant populations with special housing needs,
``(vi) public housing waiting lists,
``(vii) tenant populations of individuals with children,
and
``(viii) projects intended for eventual tenant
ownership.''.
(b) Preference for Community Revitalization Projects
Located in Qualified Census Tracts.--Clause (ii) of section
42(m)(1)(B) is amended by striking ``and'' at the end of
subclause (I), by adding ``and'' at the end of subclause
(II), and by inserting after subclause (II) the following new
subclause:
``(III) projects which are located in qualified census
tracts (as defined in subsection (d)(5)(C)) and the
development of which contributes to a concerted community
revitalization plan,''.
SEC. 403. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT
AGENCIES.
(a) Market Study; Public Disclosure of Rationale for Not
Following Credit Allocation Priorities.--Subparagraph (A) of
section 42(m)(1) (relating to responsibilities of housing
credit agencies) is amended by striking ``and'' at the end of
clause (i), by striking the period at the end of clause (ii)
and inserting a comma, and by adding at the end the following
new clauses:
``(iii) a comprehensive market study of the housing needs
of low-income individuals in the area to be served by the
project is conducted before the credit allocation is made and
at the developer's expense by a disinterested party who is
approved by such agency, and
``(iv) a written explanation is available to the general
public for any allocation of a housing credit dollar amount
which is not made in accordance with established priorities
and selection criteria of the housing credit agency.''.
(b) Site Visits.--Clause (iii) of section 42(m)(1)(B)
(relating to qualified allocation plan) is amended by
inserting before the period ``and in monitoring for
noncompliance with habitability standards through regular
site visits''.
SEC. 404. MODIFICATIONS TO RULES RELATING TO BASIS OF
BUILDING WHICH IS ELIGIBLE FOR CREDIT.
(a) Adjusted Basis To Include Portion of Certain Buildings
Used by Low-Income Individuals Who Are Not Tenants and by
Project Employees.--Paragraph (4) of section 42(d) (relating
to special rules relating to determination of adjusted basis)
is amended--
(1) by striking ``subparagraph (B)'' in subparagraph (A)
and inserting ``subparagraphs (B) and (C)'';
(2) by redesignating subparagraph (C) as subparagraph (D);
and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) Inclusion of basis of property used to provide
services for certain nontenants.--
``(i) In general.--The adjusted basis of any building
located in a qualified census tract (as defined in paragraph
(5)(C)) shall be determined by taking into account the
adjusted basis of property (of a character subject to the
allowance for depreciation and not otherwise taken into
account) used throughout the taxable year in providing any
community service facility.
``(ii) Limitation.--The increase in the adjusted basis of
any building which is taken into account by reason of clause
(i) shall not exceed 10 percent of the eligible basis of the
qualified low-income housing project of which it is a part.
For purposes of the preceding sentence, all community service
facilities which are part of the same qualified low-income
housing project shall be treated as one facility.
``(iii) Community service facility.--For purposes of this
subparagraph, the term `community service facility' means any
facility designed to serve primarily individuals whose income
is 60 percent or less of area median income (within the
meaning of subsection (g)(1)(B)).''.
(b) Certain Native American Housing Assistance Disregarded
in Determining Whether Building Is Federally Subsidized for
Purposes of the Low-Income Housing Credit.--Subparagraph (E)
of section 42(i)(2) (relating to determination of whether
building is federally subsidized) is amended--
(1) in clause (i), by inserting ``or the Native American
Housing Assistance and Self-Determination Act of 1996 (25
U.S.C. 4101 et seq.) (as in effect on October 1, 1997)''
after ``this subparagraph)''; and
(2) in the subparagraph heading, by inserting ``or native
american housing assistance'' after ``home assistance''.
[[Page H6805]]
SEC. 405. OTHER MODIFICATIONS.
(a) Allocation of Credit Limit to Certain Buildings.--
(1) The first sentence of section 42(h)(1)(E)(ii) is
amended by striking ``(as of'' the first place it appears and
inserting ``(as of the later of the date which is 6 months
after the date that the allocation was made or''.
(2) The last sentence of section 42(h)(3)(C) is amended by
striking ``project which'' and inserting ``project which
fails to meet the 10 percent test under paragraph (1)(E)(ii)
on a date after the close of the calendar year in which the
allocation was made or which''.
(b) Determination of Whether Buildings Are Located in High
Cost Areas.--The first sentence of section 42(d)(5)(C)(ii)(I)
is amended--
(1) by inserting ``either'' before ``in which 50 percent'';
and
(2) by inserting before the period ``or which has a poverty
rate of at least 25 percent''.
SEC. 406. CARRYFORWARD RULES.
(a) In General.--Clause (ii) of section 42(h)(3)(D)
(relating to unused housing credit carryovers allocated among
certain States) is amended by striking ``the excess'' and all
that follows and inserting ``the excess (if any) of--
``(I) the unused State housing credit ceiling for the year
preceding such year, over
``(II) the aggregate housing credit dollar amount allocated
for such year.''.
(b) Conforming Amendment.--The second sentence of section
42(h)(3)(C) (relating to State housing credit ceiling) is
amended by striking ``clauses (i) and (iii)'' and inserting
``clauses (i) through (iv)''.
SEC. 407. EFFECTIVE DATE.
Except as otherwise provided in this title, the amendments
made by this title shall apply to--
(1) housing credit dollar amounts allocated after December
31, 2000; and
(2) buildings placed in service after such date to the
extent paragraph (1) of section 42(h) of the Internal Revenue
Code of 1986 does not apply to any building by reason of
paragraph (4) thereof, but only with respect to bonds issued
after such date.
TITLE V--PRIVATE ACTIVITY BOND VOLUME CAP
SEC. 501. ACCELERATION OF PHASE-IN OF INCREASE IN VOLUME CAP
ON PRIVATE ACTIVITY BONDS.
(a) In General.--The table contained in section 146(d)(2)
(relating to per capita limit; aggregate limit) is amended to
read as follows:
``Calendar Year Per Capita Limit Aggregate Limit
------------------------------------------------------------------------
2001....................... $55.00 $165,000,000
2002....................... 60.00 180,000,000
2003....................... 65.00 195,000,000
2004, 2005, and 2006....... 70.00 210,000,000
2007 and thereafter........ 75.00 225,000,000.''.
(b) Effective Date.--The amendment made by this section
shall apply to calendar years beginning after 2000.
TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES
SEC. 601. SHORT TITLE.
This title may be cited as the ``America's Private
Investment Companies Act''.
SEC. 602. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds that--
(1) people living in distressed areas, both urban and
rural, that are characterized by high levels of joblessness,
poverty, and low incomes have not benefited adequately from
the economic expansion experienced by the Nation as a whole;
(2) unequal access to economic opportunities continues to
make the social costs of joblessness and poverty to our
Nation very high; and
(3) there are significant untapped markets in our Nation,
and many of these are in areas that are underserved by
institutions that can make equity and credit investments.
(b) Purposes.--The purposes of this title are to--
(1) license private for profit community development
entities that will focus on making equity and credit
investments for large-scale business developments that
benefit low-income communities;
(2) provide credit enhancement for those entities for use
in low-income communities; and
(3) provide a vehicle under which the economic and social
returns on financial investments made pursuant to this title
may be available both to the investors in these entities and
to the residents of the low-income communities.
SEC. 603. DEFINITIONS.
As used in this title:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Small Business Administration.
(2) Agency.--The term ``agency'' has the meaning given such
term in section 551(1) of title 5, United States Code.
(3) APIC.--The term ``APIC'' means a business entity that
has been licensed under the terms of this title as an
America's Private Investment Company, and the license of
which has not been revoked.
(4) Community development entity.--The term ``community
development entity'' means an entity the primary mission of
which is serving or providing investment capital for low-
income communities or low-income persons and which maintains
accountability to residents of low-income communities.
(5) HUD.--The term ``HUD'' means the Secretary of Housing
and Urban Development or the Department of Housing and Urban
Development, as the context requires.
(6) License.--The term ``license'' means a license issued
by HUD as provided in section 604.
(7) Low-income community.--The term ``low-income
community'' means--
(A) a census tract or tracts that have--
(i) a poverty rate of 20 percent or greater, based on the
most recent census data; or
(ii) a median family income that does not exceed 80 percent
of the greater of (I) the median family income for the
metropolitan area in which such census tract or tracts are
located, or (II) the median family income for the State in
which such census tract or tracts are located; or
(B) a property that was located on a military installation
that was closed or realigned pursuant to title II of the
Defense Authorization Amendments and Base Closure and
Realignment Act (Public Law 100-526; 10 U.S.C. 2687 note),
the Defense Base Closure and Realignment Act of 1990 (part A
of title XXIX of Public Law 101-510; 10 U.S.C. 2687 note),
section 2687 of title 10, United States Code, or any other
similar law enacted after the date of the enactment of this
Act that provides for closure or realignment of military
installations.
(8) Low-income person.--The term ``low-income person''
means a person who is a member of a low-income family, as
such term is defined in section 104 of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12704).
(9) Private equity capital.--
(A) In general.--The term ``private equity capital''--
(i) in the case of a corporate entity, the paid-in capital
and paid-in surplus of the corporate entity;
(ii) in the case of a partnership entity, the contributed
capital of the partners of the partnership entity;
(iii) in the case of a limited liability company entity,
the equity investment of the members of the limited liability
company entity; and
(iv) earnings from investments of the entity that are not
distributed to investors and are available for reinvestment
by the entity.
(B) Exclusions.--Such term does not include any--
(i) funds borrowed by an entity from any source or obtained
through the issuance of leverage; except that this clause may
not be construed to exclude amounts evidenced by a legally
binding and irrevocable investment commitment in the entity,
or the use by an entity of a pledge of such investment
commitment to obtain bridge financing from a private lender
to fund the entity's activities on an interim basis; or
(ii) funds obtained directly or indirectly from any
Federal, State, or local government or any government agency,
except for--
(I) funds invested by an employee welfare benefit plan or
pension plan; and
(II) credits against any Federal, State, or local taxes.
(10) Qualified active business.--The term ``qualified
active business'' means a business or trade--
(A) that, at the time that an investment is made in the
business or trade, is deriving at least 50 percent of its
gross income from the conduct of trade or business activities
in low-income communities;
(B) a substantial portion of the use of the tangible
property of which is used within low-income communities;
(C) a substantial portion of the services that the
employees of which perform are performed in low-income
communities; and
(D) less than 5 percent of the aggregate unadjusted bases
of the property of which is attributable to certain financial
property, as the Secretary shall set forth in regulations, or
in collectibles, other than collectibles held primarily for
sale to customers.
(11) Qualified debenture.--The term ``qualified debenture''
means a debt instrument having terms that meet the
requirements established pursuant to section 606(c)(1).
(12) Qualified low-income community investment.--The term
``qualified low-income community investment'' mean an equity
investment in, or a loan to, a qualified active business.
(13) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development, unless otherwise specified
in this title.
SEC. 604. AUTHORIZATION.
(a) Licenses.--The Secretary is authorized to license
community development entities as America's Private
Investment Companies, in accordance with the terms of this
title.
(b) Regulations.--The Secretary shall regulate APICs for
compliance with sound financial management practices, and the
program and procedural goals of this title and other related
Acts, and other purposes as required or authorized by this
title, or determined by the Secretary. The Secretary shall
issue such regulations as are necessary to carry out the
licensing and regulatory and other duties under this title,
and may issue notices and other guidance or directives as the
Secretary determines are appropriate to carry out such
duties.
(c) Use of Credit Subsidy for Licenses.--
[[Page H6806]]
(1) Number of licenses.--The number of APICs licensed at
any one time may not exceed--
(A) the number that may be supported by the amount of
budget authority appropriated in accordance with section
504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C.
661c) for the cost (as such term is defined in section 502 of
such Act) of the subsidy and the investment strategies of
such APICs; or
(B) to the extent the limitation under section 605(e)(1)
applies, the number authorized under such section.
(2) Use of additional credit subsidy.--Subject to the
limitation under paragraph (1), the Secretary may use any
budget authority available after credit subsidy has been
allocated for the APICs initially licensed pursuant to
section 605 as follows:
(A) Additional licenses.--To license additional APICs.
(B) Credit subsidy increases.--To increase the credit
subsidy allocated to an APIC as an award for high performance
under this title, except that such increases may be made only
in accordance with the following requirements and
limitations:
(i) Timing.--An increase may only be provided for an APIC
that has been licensed for a period of not less than 2 years.
(ii) Competition.--An increase may only be provided for a
fiscal year pursuant to a competition for such fiscal year
among APICs eligible for, and requesting, such an increase.
The competition shall be based upon criteria that the
Secretary shall establish, which shall include the financial
soundness and performance of the APICs, as measured by
achievement of the public performance goals included in the
APICs statements required under section 605(a)(6) and audits
conducted under section 609(b)(2). Among the criteria
established by the Secretary to determine priority for
selection under this section, the Secretary shall include
making investments in and loans to qualified active
businesses in urban or rural areas that have been designated
under subchapter U of Chapter 1 of the Internal Revenue Code
of 1986 as empowerment zones or enterprise communities.
(d) Cooperation and Coordination.--
(1) Program policies.--The Secretary is authorized to
coordinate and cooperate, through memoranda of understanding,
an APIC liaison committee, or otherwise, with the
Administrator, the Secretary of the Treasury, and other
agencies in the discretion of the Secretary, on
implementation of this title, including regulation,
examination, and monitoring of APICs under this title.
(2) Financial soundness requirements.--The Secretary shall
consult with the Administrator and the Secretary of the
Treasury, and may consult with such other heads of agencies
as the Secretary may consider appropriate, in establishing
any regulations, requirements, guidelines, or standards for
financial soundness or management practices of APICs or
entities applying for licensing as APICs. In implementing and
monitoring compliance with any such regulations,
requirements, guidelines, and standards, the Secretary shall
enter into such agreements and memoranda of understanding
with the Administrator and the Secretary of the Treasury as
may be appropriate to provide for such officials to provide
any assistance that may be agreed to.
(3) Operations.--The Secretary may carry out this title--
(A) directly, through agreements with other Federal
entities under section 1535 of title 31, United States Code,
or otherwise, or
(B) indirectly, under contracts or agreements, as the
Secretary shall determine.
(e) Fees and Charges for Administrative Costs.--To the
extent provided in appropriations Acts, the Secretary is
authorized to impose fees and charges for application,
review, licensing, and regulation, or other actions under
this title, and to pay for the costs of such activities from
the fees and charges collected.
(f) Guarantee Fees.--The Secretary is authorized to set and
collect fees for loan guarantee commitments and loan
guarantees that the Secretary makes under this title.
(g) Funding.--
(1) Authorization of appropriations for loan guarantee
commitments.--For each of fiscal years 2000, 2001, 2002,
2003, and 2004, there is authorized to be appropriated up to
$36,000,000 for the cost (as such term is defined in section
502(5) of the Federal Credit Reform Act of 1990) of annual
loan guarantee commitments under this title. Amounts
appropriated under this paragraph shall remain available
until expended.
(2) Aggregate loan guarantee commitment limitation.--The
Secretary may make commitments to guarantee loans only to the
extent that the total loan principal, any part of which is
guaranteed, will not exceed $1,000,000,000, unless another
such amount is specified in appropriation Acts for any fiscal
year.
(3) Authorization of appropriations for administrative
expenses.--For each of the fiscal years 2000, 2001, 2002,
2003, and 2004, there is authorized to be appropriated
$1,000,000 for administrative expenses for carrying out this
title. The Secretary may transfer amounts appropriated under
this paragraph to any appropriation account of HUD or another
agency, to carry out the program under this title. Any agency
to which the Secretary may transfer amounts under this title
is authorized to accept such transferred amounts in any
appropriation account of such agency.
SEC. 605. SELECTION OF APICS.
(a) Eligible Applicants.--An entity shall be eligible to be
selected for licensing under section 604 as an APIC only if
the entity submits an application in compliance with the
requirements established pursuant to subsection (b) and the
entity meets or complies with the following requirements:
(1) Organization.--The entity shall be a private, for-
profit entity that qualifies as a community development
entity for the purposes of the New Markets Tax Credits, to
the extent such credits are established under Federal law.
(2) Minimum private equity capital.--The amount of private
equity capital reasonably available to the entity, as
determined by the Secretary, at the time that a license is
approved may not be less than $25,000,000.
(3) Qualified management.--The management of the entity
shall, in the determination of the Secretary, meet such
standards as the Secretary shall establish to ensure that the
management of the APIC is qualified, and has the financial
expertise, knowledge, experience, and capability necessary,
to make investments for community and economic development in
low-income communities.
(4) Conflict of interest.--The entity shall demonstrate
that, in accordance with sound financial management
practices, the entity is structured to preclude financial
conflict of interest between the APIC and a manager or
investor.
(5) Investment strategy.--The entity shall prepare and
submit to the Secretary an investment strategy that includes
benchmarks for evaluation of its progress, that includes an
analysis of existing locally owned businesses in the
communities in which the investments under the strategy will
be made, that prioritizes such businesses for investment
opportunities, and that fulfills the specific public purpose
goals of the entity.
(6) Statement of public purpose goals.--The entity shall
prepare and submit to the Secretary a statement of the public
purpose goals of the entity, which shall--
(A) set forth goals that shall promote community and
economic development, which shall include--
(i) making investments in low-income communities that
further economic development objectives by targeting such
investments in businesses or trades that comply with the
requirements under subparagraphs (A) through (C) of section
603(10) relating to low-income communities in a manner that
benefits low-income persons;
(ii) creating jobs in low-income communities for residents
of such communities;
(iii) involving community-based organizations and residents
in community development activities;
(iv) such other goals as the Secretary shall specify; and
(v) such elements as the entity may set forth to achieve
specific public purpose goals;
(B) include such other elements as the Secretary shall
specify; and
(C) include proposed measurements and strategies for
meeting the goals.
(7) Compliance with laws.--The entity shall agree to comply
with applicable laws, including Federal executive orders,
Office of Management and Budget circulars, and requirements
of the Department of the Treasury, and such operating and
regulatory requirements as the Secretary may impose from time
to time.
(8) Other.--The entity shall satisfy any other application
requirements that the Secretary may impose by regulation or
Federal Register notice.
(b) Competitions.--The Secretary shall select eligible
entities under subsection (a) to be licensed under section
604 as APICs on the basis of competitions. The Secretary
shall announce each such competition by causing a notice to
be published in the Federal Register that invites
applications for licenses and sets forth the requirements for
application and such other terms of the competition not
otherwise provided for, as determined by the Secretary.
(c) Selection.--In competitions under subsection (b), the
Secretary shall select eligible entities under subsection (a)
for licensing as APICs on the basis of--
(1) the extent to which the entity is expected to achieve
the goals of this title by meeting or exceeding criteria
established under subsection (d); and
(2) to the extent practicable and subject to the existence
of approvable applications, ensuring geographical diversity
among the applicants selected and diversity of APICs
investment strategies, so that urban and rural communities
are both served, in the determination of the Secretary, by
the program under this title.
(d) Selection Criteria.--The Secretary shall establish
selection criteria for competitions under subsection (b),
which shall include the following criteria:
(1) Capacity.--
(A) Management.--The extent to which the entity's
management has the quality, experience, and expertise to make
and manage successful investments for community and economic
development in low-income communities.
(B) State and local cooperation.--The extent to which the
entity demonstrates a capacity to cooperate with States or
units of general local government and with community-based
organizations and residents of low-income communities.
(2) Investment strategy.--The quality of the entity's
investment strategy submitted in accordance with subsection
(a)(5) and the
[[Page H6807]]
extent to which the investment strategy furthers the goals of
this title pursuant to paragraph (3) of this subsection.
(3) Public purpose goals.--With respect to the statement of
public purpose goals of the entity submitted in accordance
with subsection (a)(6), and the strategy and measurements
included therein--
(A) the extent to which such goals promote community and
economic development;
(B) the extent to which such goals provide for making
qualified investments in low-income communities that further
economic development objectives, such as--
(i) creating, within 2 years of the completion of the
initial such investment, job opportunities, opportunities for
ownership, and other economic opportunities within a low-
income community, both short-term and of a longer duration;
(ii) improving the economic vitality of a low-income
community, including stimulating other business development;
(iii) bringing new income into a low-income community and
assisting in the revitalization of such community;
(iv) converting real property for the purpose of creating a
site for business incubation and location, or business
district revitalization;
(v) enhancing economic competition, including the
advancement of technology;
(vi) rural development;
(vii) mitigating, rehabilitating, and reusing real property
considered subject to the Solid Waste Disposal Act (42 U.S.C.
6901 et seq.; commonly referred to as the Resource
Conservation and Recovery Act) or restoring coal mine-scarred
land;
(viii) creation of local wealth through investments in
employee stock ownership companies or resident-owned
ventures; and
(ix) any other objective that the Secretary may establish
to further the purposes of this title;
(C) the quality of jobs to be created for residents of low-
income communities, taking into consideration such factors as
the payment of higher wages, job security, employment
benefits, opportunity for advancement, and personal asset
building;
(D) the extent to which achievement of such goals will
involve community-based organizations and residents in
community development activities; and
(E) the extent to which the investments referred to in
subparagraph (B) are likely to benefit existing small
business in low-income communities or will encourage the
growth of small business in such communities.
(4) Other.--Any other criteria that the Secretary may
establish to carry out the purposes of this title.
(e) First Year Requirements.--
(1) Numerical limitation.--The number of APICs may not, at
any time during the 1-year period that begins upon the
Secretary awarding the first license for an APIC under this
title, exceed 15.
(2) Limitation on allocation of available credit subsidy.--
Of the amount of budget authority initially made available
for allocation under this title for APICs, the amount
allocated for any single APIC may not exceed 20 percent.
(3) Native american private investment company.--Subject
only to the absence of an approvable application from an
entity, during the 1-year period referred to in paragraph
(1), of the entities selected and licensed by the Secretary
as APICs, at least one shall be an entity that has as its
primary purpose the making of qualified low-income community
investments in areas that are within Indian country (as such
term is defined in section 1151 of title 18, United States
Code) or within lands that have status as Hawaiian home land
under section 204 of the Hawaiian Homes Commission Act, 1920
(42 Stat. 108) or are acquired pursuant to such Act. The
Secretary may establish specific selection criteria for
applicants under this paragraph.
(f) Communications Between HUD and Applicants.--
(1) In general.--The Secretary shall set forth in
regulations the procedures under which HUD and applicants for
APIC licenses, and others, may communicate. Such regulations
shall--
(A) specify by position the HUD officers and employees who
may communicate with such applicants and others;
(B) permit HUD officers and employees to request and
discuss with the applicant and others (such as banks or other
credit or business references, or potential investors, that
the applicant specifies in writing) any more detailed
information that may be desirable to facilitate HUD's review
of the applicant's application;
(C) restrict HUD officers and employees from revealing to
any applicant--
(i) the fact or chances of award of a license to such
applicant, unless there has been a public announcement of the
results of the competition; and
(ii) any information with respect to any other applicant;
and
(D) set forth requirements for making and keeping records
of any communications conducted under this subsection,
including requirements for making such records available to
the public after the award of licenses under an initial or
subsequent notice, as appropriate, under subsection (a).
(2) Timing.--Regulations under this subsection may be
issued as interim rules for effect on or before the date of
publication of the first notice under subsection (a), and
shall apply only with respect to applications under such
notice. Regulations to implement this subsection with respect
to any notice after the first such notice shall be subject to
notice and comment rulemaking.
(3) Inapplicability of department of hud act provision.--
Section 12(e)(2) of the Department of Housing and Urban
Development Act (42 U.S.C. 3537a(e)(2)) is amended by
inserting before the period at the end the following: ``or
any license provided under the America's Private Investment
Companies Act''.
SEC. 606. OPERATIONS OF APICS.
(a) Powers and Authorities.--
(1) In general.--An APIC shall have any powers or
authorities that--
(A) the APIC derives from the jurisdiction in which it is
organized, or that the APIC otherwise has;
(B) may be conferred by a license under this title; and
(C) the Secretary may prescribe by regulation.
(2) New market assistance.--Nothing in this title shall
preclude an APIC or its investors from receiving an
allocation of New Market Tax Credits (to the extent such
credits are established under Federal law) if the APIC
satisfies any applicable terms and conditions under the
Internal Revenue Code of 1986.
(b) Investment Limitations.--
(1) Qualified low-income community investments.--
Substantially all investments that an APIC makes shall be
qualified low-income community investments if the investments
are financed with--
(A) amounts available from the proceeds of the issuance of
an APIC's qualified debenture guaranteed under this title;
(B) proceeds of the sale of obligations described under
subsection (c)(3)(C)(iii); or
(C) the use of private equity capital, as determined by the
Secretary, in an amount specified in the APIC's license.
(2) Single business investments.--An APIC shall not, as a
matter of sound financial practice, invest in any one
business an amount that exceeds an amount equal to 35 percent
of the sum of--
(A) the APIC's private equity capital; plus
(B) an amount equal to the percentage limit that the
Secretary determines that an APIC may have outstanding at any
one time, under subsection (c)(2)(A).
(c) Borrowing Powers; Qualified Debentures.--
(1) Issuance.--An APIC may issue qualified debentures. The
Secretary shall, by regulation, specify the terms and
requirements for debentures to be considered qualified
debentures for purposes of this title, except that the term
to maturity of any qualified debenture may not exceed 21
years and each qualified debenture shall bear interest during
all or any part of that time period at a rate or rates
approved by the Secretary.
(2) Leverage limits.--In general, as a matter of sound
financial management practices--
(A) the total amount of qualified debentures that an APIC
issues under this title that an APIC may have outstanding at
any one time shall not exceed an amount equal to 200 percent
of the private equity capital of the APIC, as determined by
the Secretary; and
(B) an APIC shall not have more than $300,000,000 in face
value of qualified debentures issued under this title
outstanding at any one time.
(3) Repayment.--
(A) Condition of business wind-up.--An APIC shall have
repaid, or have otherwise been relieved of indebtedness, with
respect to any interest or principal amounts of borrowings
under this subsection no less than 2 years before the APIC
may dissolve or otherwise complete the wind-up of its
business.
(B) Timing.--An APIC may repay any interest or principal
amounts of borrowings under this subsection at any time:
Provided, That the repayment of such amounts shall not
relieve an APIC of any duty otherwise applicable to the APIC
under this title, unless the Secretary orders such relief.
(C) Use of investment proceeds before repayment.--Until an
APIC has repaid all interest and principal amounts on APIC
borrowings under this subsection, an APIC may use the
proceeds of investments, in accordance with regulations
issued by the Secretary, only to--
(i) pay for proper costs and expenses the APIC incurs in
connection with such investments;
(ii) pay for the reasonable administrative expenses of the
APIC;
(iii) purchase Treasury securities;
(iv) repay interest and principal amounts on APIC
borrowings under this subsection;
(v) make interest, dividend, or other distributions to or
on behalf of an investor; or
(vi) undertake such other purposes as the Secretary may
approve.
(D) Use of investment proceeds after repayment.--After an
APIC has repaid all interest and principal amounts on APIC
borrowings under this subsection, and subject to continuing
compliance with subsection (a), the APIC may use the proceeds
from investments to make interest, dividend, or other
distributions to or on behalf of investors in the nature of
returns on capital, or the withdrawal of private equity
capital, without regard to subparagraph (C) but in conformity
with the APIC's investment strategy and statement of public
purpose goals.
(d) Reuse of Qualified Debenture Proceeds.--An APIC may use
the proceeds of sale of Treasury securities purchased under
subsection (c)(3)(C)(iii) to make qualified low-income
community investments, subject
[[Page H6808]]
to the Secretary's approval. In making the request for the
Secretary's approval, the APIC shall follow the procedures
applicable to an APIC's request for HUD guarantee action, as
the Secretary may modify such procedures for implementation
of this subsection. Such procedures shall include the
description and certifications that an APIC must include in
all requests for guarantee action, and the environmental
certification applicable to initial expenditures for a
project or activity.
(e) Antipirating.--Notwithstanding any other provision of
law, an APIC may not use any private equity capital required
to be contributed under this title, or the proceeds from the
sale of any qualified debenture under this title, to make an
investment, as determined by the Secretary, to assist
directly in the relocation of any industrial or commercial
plant, facility, or operation, from 1 area to another area,
if the relocation is likely to result in a significant loss
of employment in the labor market area from which the
relocation occurs.
(f) Exclusion of APIC From Definition of Debtor Under
Bankruptcy Provisions.--Section 109(b)(2) of title 11, United
States Code, is amended by inserting before ``credit union''
the following: ``America's Private Investment Company
licensed under the America's Private Investment Companies
Act,''.
SEC. 607. CREDIT ENHANCEMENT BY THE FEDERAL GOVERNMENT.
(a) Issuance and Guarantee of Qualified Debentures.--
(1) Authority.--To the extent consistent with the Federal
Credit Reform Act of 1990, the Secretary is authorized to
make commitments to guarantee and guarantee the timely
payment of all principal and interest as scheduled on
qualified debentures issued by APICs. Such commitments and
guarantees may only be made in accordance with the terms and
conditions established under paragraph (2).
(2) Terms and conditions.--The Secretary shall establish
such terms and conditions as the Secretary determines to be
appropriate for commitments and guarantees under this
subsection, including terms and conditions relating to
amounts, expiration, number, priorities of repayment,
security, collateral, amortization, payment of interest
(including the timing thereof), and fees and charges. The
terms and conditions applicable to any particular commitment
or guarantee may be established in documents that the
Secretary approves for such commitment or guarantee.
(3) Seniority.--Notwithstanding any other provision of
Federal law or any law or the constitution of any State,
qualified debentures guaranteed under this subsection by the
Secretary shall be senior to any other debt obligation,
equity contribution or earnings, or the distribution of
dividends, interest, or other amounts, of an APIC.
(b) Issuance of Trust Certificates.--The Secretary, or an
agent or entity selected by the Secretary, is authorized to
issue trust certificates representing ownership of all or a
fractional part of guaranteed qualified debentures issued by
APICs and held in trust.
(c) Guarantee of Trust Certificates.--
(1) In general.--The Secretary is authorized, upon such
terms and conditions as the Secretary determines to be
appropriate, to guarantee the timely payment of the principal
of and interest on trust certificates issued by the
Secretary, or an agent or other entity, for purposes of this
section. Such guarantee shall be limited to the extent of
principal and interest on the guaranteed qualified debentures
which compose the trust.
(2) Substitution option.--The Secretary shall have the
option to replace in the corpus of the trust any prepaid or
defaulted qualified debenture with a debenture, another full
faith and credit instrument, or any obligations of the United
States, that may reasonably substitute for such prepaid or
defaulted qualified debenture.
(3) Proportionate reduction option.--In the event that the
Secretary elects not to exercise the option under paragraph
(2), and a qualified debenture in such trust is prepaid, or
in the event of default of a qualified debenture, the
guarantee of timely payment of principal and interest on the
trust certificate shall be reduced in proportion to the
amount of principal and interest that such prepaid qualified
debenture represents in the trust. Interest on prepaid or
defaulted qualified debentures shall accrue and be guaranteed
by the Secretary only through the date of payment of the
guarantee. During the term of a trust certificate, it may be
called for redemption due to prepayment or default of all
qualified debentures that are in the corpus of the trust.
(d) Full Faith and Credit Backing of Guarantees.--The full
faith and credit of the United States is pledged to the
timely payment of all amounts which may be required to be
paid under any guarantee by the Secretary pursuant to this
section.
(e) Subrogation and Liens.--
(1) Subrogation.--In the event the Secretary pays a claim
under a guarantee issued under this section, the Secretary
shall be subrogated fully to the rights satisfied by such
payment.
(2) Priority of liens.--No State or local law, and no
Federal law, shall preclude or limit the exercise by the
Secretary of its ownership rights in the debentures in the
corpus of a trust under this section.
(f) Registration.--
(1) In general.--The Secretary shall provide for a central
registration of all trust certificates issued pursuant to
this section.
(2) Agents.--The Secretary may contract with an agent or
agents to carry out on behalf of the Secretary the pooling
and the central registration functions of this section
notwithstanding any other provision of law, including
maintenance on behalf of and under the direction of the
Secretary, such commercial bank accounts or investments in
obligations of the United States as may be necessary to
facilitate trusts backed by qualified debentures guaranteed
under this title and the issuance of trust certificates to
facilitate formation of the corpus of the trusts. The
Secretary may require such agent or agents to provide a
fidelity bond or insurance in such amounts as the Secretary
determines to be necessary to protect the interests of the
Government.
(3) Form.--Book-entry or other electronic forms of
registration for trust certificates under this title are
authorized.
(g) Timing of Issuance of Guarantees of Qualified
Debentures and Trust Certificates.--The Secretary may, from
time to time in the Secretary's discretion, exercise the
authority to issue guarantees of qualified debentures under
this title or trust certificates under this title.
SEC. 608. APIC REQUESTS FOR GUARANTEE ACTIONS.
(a) In General.--The Secretary may issue a guarantee under
this title for a qualified debenture that an APIC intends to
issue only pursuant to a request to the Secretary by the APIC
for such guarantee that is made in accordance with
regulations governing the content and procedures for such
requests, that the Secretary shall prescribe. Such
regulations shall provide that each such request shall
include--
(1) a description of the manner in which the APIC intends
to use the proceeds from the qualified debenture;
(2) a certification by the APIC that the APIC is in
substantial compliance with--
(A) this title and other applicable laws, including any
requirements established under this title by the Secretary;
(B) all terms and conditions of its license, any cease-and-
desist order issued under section 610, and of any penalty or
condition that may have arisen from examination or monitoring
by the Secretary or otherwise, including the satisfaction of
any financial audit exception that may have been outstanding;
and
(C) all requirements relating to the allocation and use of
New Markets Tax Credits, to the extent such credits are
established under Federal law; and
(3) any other information or certification that the
Secretary considers appropriate.
(b) Requests for Guarantee of Qualified Debentures That
Include Funding for Initial Expenditure for a Project or
Activity.--In addition to the description and certification
that an APIC is required to supply in all requests for
guarantee action under subsection (a), in the case of an
APIC's request for a guarantee that includes a qualified
debenture, the proceeds of which the APIC expects to be used
as its initial expenditure for a project or activity in which
the APIC intends to invest, and the expenditure for which
would require an environmental assessment under the National
Environmental Policy Act of 1969 and other related laws that
further the purposes of such Act, such request for guarantee
action shall include evidence satisfactory to the Secretary
of the certification of the completion of environmental
review of the project or activity required of the cognizant
State or local government under subsection (c). If the
environmental review responsibility for the project or
activity has not been assumed by a State or local government
under subsection (c), then the Secretary shall be responsible
for carrying out the applicable responsibilities under the
National Environmental Policy Act of 1969 and other
provisions of law that further the purposes of such Act that
relate to the project or activity, and the Secretary shall
execute such responsibilities before acting on the APIC's
request for the guarantee that is covered by this subsection.
(c) Responsibility for Environmental Reviews.--
(1) Execution of responsibility by the secretary.--This
subsection shall apply to guarantees by the Secretary of
qualified debentures under this title, the proceeds of which
would be used in connection with qualified low-income
community investments of APICs under this title.
(2) Assumption of responsibility by cognizant unit of
general government.--
(A) Guarantee of qualified debentures.--In order to assure
that the policies of the National Environmental Policy Act of
1969 and other provisions of law that further the purposes of
such Act (as specified in regulations issued by the
Secretary) are most effectively implemented in connection
with the expenditure of funds under this title, and to assure
to the public undiminished protection of the environment, the
Secretary may, under such regulations, in lieu of the
environmental protection procedures otherwise applicable,
provide for the guarantee of qualified debentures, any part
of the proceeds of which are to fund particular qualified
low-income community investments of APICs under this title,
if a State or unit of general local government, as designated
by the Secretary in accordance with regulations issued by the
Secretary, assumes all of the responsibilities for
environmental review, decisionmaking, and action pursuant to
the National Environmental Policy Act of 1969 and such other
provisions of law that further such Act as the regulations of
the Secretary specify, that would otherwise apply to the
Secretary were the Secretary to undertake
[[Page H6809]]
the funding of such investments as a Federal action.
(B) Implementation.--The Secretary shall issue regulations
to carry out this subsection only after consultation with the
Council on Environmental Quality. Such regulations shall--
(i) specify any other provisions of law which further the
purposes of the National Environmental Policy Act of 1969 and
to which the assumption of responsibility as provided in this
subsection applies;
(ii) provide eligibility criteria and procedures for the
designation of a State or unit of general local government to
assume all of the responsibilities in this subsection;
(iii) specify the purposes for which funds may be committed
without regard to the procedure established under paragraph
(3);
(iv) provide for monitoring of the performance of
environmental reviews under this subsection;
(v) in the discretion of the Secretary, provide for the
provision or facilitation of training for such performance;
and
(vi) subject to the discretion of the Secretary, provide
for suspension or termination by the Secretary of the
assumption under subparagraph (A).
(C) Responsibilities of states and units of general local
government.--The Secretary's duty under subparagraph (B)
shall not be construed to limit any responsibility assumed by
a State or unit of general local government with respect to
any particular request for guarantee under subparagraph (A),
or the use of funds for a qualified investment.
(3) Procedure.--Subject to compliance by the APIC with the
requirements of this title, the Secretary shall approve the
request for guarantee of a qualified debenture, any part of
the proceeds of which is to fund particular qualified low-
income community investments of an APIC under this title,
that is subject to the procedures authorized by this
subsection only if, not less than 15 days prior to such
approval and prior to any commitment of funds to such
investment (except for such purposes specified in the
regulations issued under paragraph (2)(B)), the APIC submits
to the Secretary a request for guarantee of a qualified
debenture that is accompanied by evidence of a certification
of the State or unit of general local government which meets
the requirements of paragraph (4). The approval by the
Secretary of any such certification shall be deemed to
satisfy the Secretary's responsibilities pursuant to
paragraph (1) under the National Environmental Policy Act of
1969 and such other provisions of law as the regulations of
the Secretary specify insofar as those responsibilities
relate to the guarantees of qualified debentures, any parts
of the proceeds of which are to fund such investments, which
are covered by such certification.
(4) Certification.--A certification under the procedures
authorized by this subsection shall--
(A) be in a form acceptable to the Secretary;
(B) be executed by the chief executive officer or other
officer of the State or unit of general local government who
qualifies under regulations of the Secretary;
(C) specify that the State or unit of general local
government under this subsection has fully carried out its
responsibilities as described under paragraph (2); and
(D) specify that the certifying officer--
(i) consents to assume the status of a responsible Federal
official under the National Environmental Policy Act of 1969
and each provision of law specified in regulations issued by
the Secretary insofar as the provisions of such Act or other
such provision of law apply pursuant to paragraph (2); and
(ii) is authorized and consents on behalf of the State or
unit of general local government and himself or herself to
accept the jurisdiction of the Federal courts for the purpose
of enforcement of the responsibilities as such an official.
SEC. 609. EXAMINATION AND MONITORING OF APICS.
(a) In General.--The Secretary shall, under regulations,
through audits, performance agreements, license conditions,
or otherwise, examine and monitor the operations and
activities of APICs for compliance with sound financial
management practices, and for satisfaction of the program and
procedural goals of this title and other related Acts. The
Secretary may undertake any responsibility under this section
in cooperation with an APIC liaison committee, or any agency
that is a member of such a committee, or other agency.
(b) Monitoring, Updating, and Program Review.--
(1) Reporting and updating.--The Secretary shall establish
such annual or more frequent reporting requirements for
APICs, and such requirements for the updating of the
statement of public purpose goals, investment strategy
(including the benchmarks in such strategy), and other
documents that may have been used in the license application
process under this title, as the Secretary determines
necessary to assist the Secretary in monitoring the
compliance and performance of APICs.
(2) Annual audits.--The Secretary shall require each APIC
to have an independent audit conducted annually of the
operations of the APIC. The Secretary, in consultation with
the Administrator and the Secretary of the Treasury, shall
establish requirements and standards for such audits,
including requirements that such audits be conducted in
accordance with generally accepted accounting principles,
that the APIC submit the results of the audit to Secretary,
and that specify the information to be submitted.
(3) Examinations.--The Secretary shall, no less often than
once every 2 years, examine the operations and portfolio of
each APIC licensed under this title for compliance with sound
financial management practices, and for compliance with this
title.
(4) Examination standards.--
(A) Sound financial management practices.--The Secretary
shall examine each APIC to ensure, as a matter of sound
financial management practices, substantial compliance with
this and other applicable laws, including Federal executive
orders, Department of Treasury and Office of Management and
Budget guidance, circulars, and application and licensing
requirements on a continuing basis. The Secretary may, by
regulation, establish any additional standards for sound
financial management practices, including standards that
address solvency and financial exposure.
(B) Performance and other examinations.--The Secretary
shall monitor each APIC's progress in meeting the goals in
the APIC's statement of public purpose goals, executing the
APIC's investment strategy, and other matters.
(c) Inspector General Responsibility.--In carrying out
monitoring of HUD's responsibilities under this title and for
purposes of ensuring that the program under this title is
operated in accordance with sound financial management
practices, the Inspector General of the Department of Housing
and Urban Development shall consult with the Inspector
General of the Department of the Treasury and the Inspector
General of the Small Business Administration, as appropriate,
and may enter into such agreements and memoranda of
understanding as may be necessary to obtain the cooperation
of the Inspectors General of the Department of the Treasury
and the Small Business Administration in carrying out such
function.
(d) Annual Report By Secretary.--The Secretary shall submit
a report to the Congress annually regarding the operations,
activities, financial health, and achievements of the APIC
program under this title. The report shall list each
investment made by an APIC and include a summary of the
examinations conducted under subsection (b)(3), the guarantee
actions of HUD, and any regulatory or policy actions taken by
HUD. The report shall distinguish recently licensed APICs
from APICs that have held licenses for a longer period for
purposes of indicating program activities and performance.
(e) GAO Report.--
(1) Requirement.--Not later than 2 years after the date of
the enactment of this Act, the Comptroller General of the
United States shall submit a report to the Congress regarding
the operation of the program under this title for licensing
and guarantees for APICs.
(2) Contents.--The report shall include--
(A) an analysis of the operations and monitoring by HUD of
the APIC program under this title;
(B) the administrative and capacity needs of HUD required
to ensure the integrity of the program;
(C) the extent and adequacy of any credit subsidy
appropriated for the program; and
(D) the management of financial risk and liability of the
Federal Government under the program.
SEC. 610. PENALTIES.
(a) Violations Subject to Penalty.--The Secretary may
impose a penalty under this subsection on any APIC or manager
of an APIC that, by any act, practice, or failure to act,
engages in fraud, mismanagement, or noncompliance with this
title, the regulations under this title, or a condition of
the APIC's license under this title. The Secretary shall, by
regulation, identify, by generic description of a role or
responsibilities, any manager of an APIC that is subject to a
penalty under this section.
(b) Penalties Requiring Notice and an Opportunity to
Respond.--If, after notice in writing to an APIC or the
manager of an APIC that the APIC or manager has engaged in
any action, practice, or failure to act that, under
subsection (a), is subject to a penalty, and after an
opportunity for the APIC or manager to respond to the notice,
the Secretary determines that the APIC or manager engaged in
such action or failure to act, the Secretary may, in addition
to other penalties imposed--
(1) assess a civil money penalty, except than any civil
money penalty under this subsection shall be in an amount not
exceeding $10,000;
(2) issue an order to cease and desist with respect to such
action, practice, or failure to act of the APIC or manager;
(3) suspend, or condition the use of, the APIC's license,
including deferring, for the period of the suspension, any
commitment to guarantee any new qualified debenture of the
APIC, except that any suspension or condition under this
paragraph may not exceed 90 days; and
(4) impose any other penalty that the Secretary determines
to be less burdensome to the APIC than a penalty under
subsection (c).
(c) Penalties Requiring Notice and Hearing.--If, after
notice in writing to an APIC or the manager of an APIC that
an APIC or manager has engaged in any action, practice, or
failure to act that, under subsection (a), is subject to a
penalty, and after an opportunity for administrative hearing,
the Secretary determines that the APIC or manager
[[Page H6810]]
engaged in such action or failure to act, the Secretary may--
(1) assess a civil money penalty against the APIC or a
manager in any amount;
(2) require the APIC to divest any interest in an
investment, on such terms and conditions as the Secretary may
impose; or
(3) revoke the APIC's license.
(d) Effective date of penalties.--
(1) Prior notice requirement.--Except as provided in
paragraph (2) of this subsection, a penalty under subsection
(b) or (c) shall not be due and payable and shall not
otherwise take effect or be subject to enforcement by an
order of a court, before notice of the penalty is published
in the Federal Register.
(2) Cease-and-desist orders and suspension or conditioning
of license.--In the case of a cease-and-desist order under
subsection (b)(2) or the suspension or conditioning of an
APIC's license under subsection (b)(3), the following
procedures shall apply:
(A) Action without published notice.--The Secretary may
order an APIC or manager to cease and desist from an action,
practice, or failure to act or may suspend or condition an
APIC's license, for not more than 45 days without prior
publication of notice in the Federal Register, but such
cease-and-desist order or suspension or conditioning shall
take effect only after the Secretary has issued a written
notice (which may include a writing in electronic form) of
such action to the APIC. Notwithstanding subsection (b), such
written notice shall be effective without regard to whether
the APIC has been accorded an opportunity to respond. Upon
such notice, such cease-and-desist order or suspension or
conditioning shall be subject to enforcement by an order of a
court.
(B) Publication of notice of suspension or conditioning of
license.--Upon a suspension or conditioning of a license
taking effect pursuant to subparagraph (A), the Secretary
shall promptly cause a notice of suspension or conditioning
of such license for a period of not more than 90 days to be
published in the Federal Register. The Secretary shall
provide the APIC an opportunity to respond to such notice.
For purposes of the determining the duration of the period of
any suspension or conditioning under this subparagraph, the
first day of such period shall be the day of issuance of the
written notice under this paragraph of the suspension or
conditioning.
(C) Revocation of license.--During the period of the
suspension or conditioning of an APIC's license, the
Secretary may take action under subsection (c)(3) to revoke
the license of the APIC, in accordance with the procedures
applicable to such subsection. Notwithstanding any other
provision of this section, if the Secretary takes such
action, the Secretary may extend the suspension or
conditioning of the APIC's license, for one or more periods
of not more than 90 days each, by causing notice of such
action to be published in the Federal Register--
(i) for the first such extension, before the expiration of
the period under subparagraph (B); and
(ii) for any subsequent extension, before the expiration of
the preceding extension period under this subparagraph.
(D) Term of effectiveness.--A cease-and-desist order or the
suspension or conditioning of an APIC's license by the
Secretary under this paragraph shall remain in effect in
accordance with the terms of the order, suspension, or
conditioning until final adjudication in any action
undertaken to challenge the order, or the suspension or
conditioning, or the revocation, of an APIC's license.
SEC. 611. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this
title shall take effect upon the expiration of the 6-month
period beginning on the date of the enactment of this Act.
(b) Issuance of Regulations and Guidelines.--Any authority
under this title of the Secretary, the Administrator, and the
Secretary of the Treasury to issue regulations, standards,
guidelines, or licensing requirements, and any authority of
such officials to consult or enter into agreements or
memoranda of understanding regarding such issuance, shall
take effect on the date of the enactment of this Act.
SEC. 612. SUNSET.
After the expiration of the 5-year period beginning upon
the date that the Secretary awards the first license for an
APIC under this title--
(1) the Secretary may not license any APIC; and
(2) no amount may be appropriated for the costs (as such
term is defined in section 502 of the Federal Credit Reform
Act of 1990 (2 U.S.C. 661c)) of any guarantee under this
title for any debenture issued by an APIC.
This section may not be construed to prohibit, limit, or
affect the award, allocation, or use of any budget authority
for the costs of such guarantees that is appropriated before
the expiration of such period.
TITLE VII--OTHER COMMUNITY RENEWAL AND NEW MARKETS ASSISTANCE
SEC. 701. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD
HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY
DEVELOPMENT CORPORATIONS.
Section 204 of the Departments of Veterans Affairs and
Housing and Urban Development, and Independent Agencies
Appropriations Act, 1997 (12 U.S.C. 1715z-11a) is amended--
(1) by striking ``Flexible Authority.--'' and inserting
``Disposition of HUD-Owned Properties. (a) Flexible Authority
for Multifamily Projects.--''; and
(2) by adding at the end the following new subsection:
``(b) Transfer of Unoccupied and Substandard Housing to
Local Governments and Community Development Corporations.--
``(1) Transfer authority.--Notwithstanding the authority
under subsection (a) and the last sentence of section 204(g)
of the National Housing Act (12 U.S.C. 1710(g)), the
Secretary of Housing and Urban Development shall transfer
ownership of any qualified HUD property, subject to the
requirements of this section, to a unit of general local
government having jurisdiction for the area in which the
property is located or to a community development corporation
which operates within such a unit of general local government
in accordance with this subsection, but only to the extent
that units of general local government and community
development corporations consent to transfer and the
Secretary determines that such transfer is practicable.
``(2) Qualified hud properties.--For purposes of this
subsection, the term `qualified HUD property' means any
property for which, as of the date that notification of the
property is first made under paragraph (3)(B), not less than
6 months have elapsed since the later of the date that the
property was acquired by the Secretary or the date that the
property was determined to be unoccupied or substandard, that
is owned by the Secretary and is--
``(A) an unoccupied multifamily housing project;
``(B) a substandard multifamily housing project; or
``(C) an unoccupied single family property that--
``(i) has been determined by the Secretary not to be an
eligible asset under section 204(h) of the National Housing
Act (12 U.S.C. 1710(h)); or
``(ii) is an eligible asset under such section 204(h),
but--
``(I) is not subject to a specific sale agreement under
such section; and
``(II) has been determined by the Secretary to be
inappropriate for continued inclusion in the program under
such section 204(h) pursuant to paragraph (10) of such
section.
``(3) Timing.--The Secretary shall establish procedures
that provide for--
``(A) time deadlines for transfers under this subsection;
``(B) notification to units of general local government and
community development corporations of qualified HUD
properties in their jurisdictions;
``(C) such units and corporations to express interest in
the transfer under this subsection of such properties;
``(D) a right of first refusal for transfer of qualified
HUD properties to units of general local government and
community development corporations, under which--
``(i) the Secretary shall establish a period during which
the Secretary may not transfer such properties except to such
units and corporations;
``(ii) the Secretary shall offer qualified HUD properties
that are single family properties for purchase by units of
general local government at a cost of $1 for each property,
but only to the extent that the costs to the Federal
Government of disposal at such price do not exceed the costs
to the Federal Government of disposing of property subject to
the procedures for single family property established by the
Secretary pursuant to the authority under the last sentence
of section 204(g) of the National Housing Act (12 U.S.C.
1710(g));
``(iii) the Secretary may accept an offer to purchase a
property made by a community development corporation only if
the offer provides for purchase on a cost recovery basis; and
``(iv) the Secretary shall accept an offer to purchase such
a property that is made during such period by such a unit or
corporation and that complies with the requirements of this
paragraph;
``(E) a written explanation, to any unit of general local
government or community development corporation making an
offer to purchase a qualified HUD property under this
subsection that is not accepted, of the reason that such
offer was not acceptable.
``(4) Other disposition.--With respect to any qualified HUD
property, if the Secretary does not receive an acceptable
offer to purchase the property pursuant to the procedure
established under paragraph (3), the Secretary shall dispose
of the property to the unit of general local government in
which property is located or to community development
corporations located in such unit of general local government
on a negotiated, competitive bid, or other basis, on such
terms as the Secretary deems appropriate.
``(5) Satisfaction of indebtedness.--Before transferring
ownership of any qualified HUD property pursuant to this
subsection, the Secretary shall satisfy any indebtedness
incurred in connection with the property to be transferred,
by canceling the indebtedness.
``(6) Determination of status of properties.--To ensure
compliance with the requirements of this subsection, the
Secretary shall take the following actions:
``(A) Upon enactment.--Upon the enactment of this
subsection, the Secretary shall promptly assess each
residential property owned by the Secretary to determine
whether such property is a qualified HUD property.
``(B) Upon acquisition.--Upon acquiring any residential
property, the Secretary shall
[[Page H6811]]
promptly determine whether the property is a qualified HUD
property.
``(C) Updates.--The Secretary shall periodically reassess
the residential properties owned by the Secretary to
determine whether any such properties have become qualified
HUD properties.
``(7) Tenant leases.--This subsection shall not affect the
terms or the enforceability of any contract or lease entered
into with respect to any residential property before the date
that such property becomes a qualified HUD property.
``(8) Use of property.--Property transferred under this
subsection shall be used only for appropriate neighborhood
revitalization efforts, including homeownership, rental
units, commercial space, and parks, consistent with local
zoning regulations, local building codes, and subdivision
regulations and restrictions of record.
``(9) Inapplicability to properties made available for
homeless.--Notwithstanding any other provision of this
subsection, this subsection shall not apply to any properties
that the Secretary determines are to be made available for
use by the homeless pursuant to subpart E of part 291 of
title 24, Code of Federal Regulations, during the period that
the properties are so available.
``(10) Protection of existing contracts.--This subsection
may not be construed to alter, affect, or annul any legally
binding obligations entered into with respect to a qualified
HUD property before the property becomes a qualified HUD
property.
``(11) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Community development corporation.--The term
`community development corporation' means a nonprofit
organization whose primary purpose is to promote community
development by providing housing opportunities for low-income
families.
``(B) Cost recovery basis.--The term `cost recovery basis'
means, with respect to any sale of a residential property by
the Secretary, that the purchase price paid by the purchaser
is equal to or greater than the sum of (i) the appraised
value of the property, as determined in accordance with such
requirements as the Secretary shall establish, and (ii) the
costs incurred by the Secretary in connection with such
property during the period beginning on the date on which the
Secretary acquires title to the property and ending on the
date on which the sale is consummated.
``(C) Multifamily housing project.--The term `multifamily
housing project' has the meaning given the term in section
203 of the Housing and Community Development Amendments of
1978.
``(D) Residential property.--The term `residential
property' means a property that is a multifamily housing
project or a single family property.
``(E) Secretary.--The term `Secretary' means the Secretary
of Housing and Urban Development.
``(F) Severe physical problems.--The term `severe physical
problems' means, with respect to a dwelling unit, that the
unit--
``(i) lacks hot or cold piped water, a flush toilet, or
both a bathtub and a shower in the unit, for the exclusive
use of that unit;
``(ii) on not less than three separate occasions during the
preceding winter months, was uncomfortably cold for a period
of more than 6 consecutive hours due to a malfunction of the
heating system for the unit;
``(iii) has no functioning electrical service, exposed
wiring, any room in which there is not a functioning
electrical outlet, or has experienced three or more blown
fuses or tripped circuit breakers during the preceding 90-day
period;
``(iv) is accessible through a public hallway in which
there are no working light fixtures, loose or missing steps
or railings, and no elevator; or
``(v) has severe maintenance problems, including water
leaks involving the roof, windows, doors, basement, or pipes
or plumbing fixtures, holes or open cracks in walls or
ceilings, severe paint peeling or broken plaster, and signs
of rodent infestation.
``(G) Single family property.--The term `single family
property' means a 1- to 4-family residence.
``(H) Substandard.--The term `substandard' means, with
respect to a multifamily housing project, that 25 percent or
more of the dwelling units in the project have severe
physical problems.
``(I) Unit of general local government.--The term `unit of
general local government' has the meaning given such term in
section 102(a) of the Housing and Community Development Act
of 1974.
``(J) Unoccupied.--The term `unoccupied' means, with
respect to a residential property, that the unit of general
local government having jurisdiction over the area in which
the project is located has certified in writing that the
property is not inhabited.
``(12) Regulations.--
``(A) Interim.--Not later than 30 days after the date of
the enactment of this subsection, the Secretary shall issue
such interim regulations as are necessary to carry out this
subsection.
``(B) Final.--Not later than 60 days after the date of the
enactment of this subsection, the Secretary shall issue such
final regulations as are necessary to carry out this
subsection.''.
SEC. 702. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.
In carrying out the program under section 204(h) of the
National Housing Act (12 U.S.C. 1710(h)), upon the request of
the chief executive officer of a county or the government of
appropriate jurisdiction and not later than 60 days after
such request is made, the Secretary of Housing and Urban
Development shall designate as a revitalization area all
portions of such county that meet the criteria for such
designation under paragraph (3) of such section.
SEC. 703. RISK-SHARING DEMONSTRATION.
Section 249 of the National Housing Act (12 U.S.C. 1715z-
14) is amended--
(1) by striking the section heading and inserting the
following:
``risk-sharing demonstration'';
(2) by striking ``reinsurance'' each place such term
appears and insert ``risk-sharing'';
(3) in subsection (a)--
(A) in the first sentence, by inserting ``and insured
community development financial institutions'' after
``private mortgage insurers'';
(B) in the second sentence--
(i) by striking ``two'' and inserting ``4''; and
(ii) by striking ``March 15, 1988'' and inserting ``the
expiration of the 5-year period beginning on the date of the
enactment of the Community Renewal and New Market Act of
2000''; and
(C) in the last sentence, by striking ``10 percent'' and
inserting ``20 percent'';
(4) in subsection (b)--
(A) in the first sentence, by inserting ``and with insured
community development financial institutions'' before the
period at the end;
(B) in the first sentence, by striking ``which have been
determined to be qualified insurers under section
302(b)(2)(C)'';
(C) in the second sentence, by inserting ``and insured
community development financial institutions'' after
``private mortgage insurance companies'';
(D) by striking paragraph (1) and inserting the following
new paragraph:
``(1) assume the first loss on any mortgage insured
pursuant to section 203(b), 234, or 245 that covers a one- to
four-family dwelling and is included in the program under
this section, up to the percentage of loss that is set forth
in the risk-sharing contract;''; and
(E) in paragraph (2)--
(i) by striking ``carry out (under appropriate delegation)
such'' and inserting ``delegate underwriting,''; and
(ii) by striking ``function'' and inserting ``functions'';
(5) in subsection (c)--
(A) in the first sentence--
(i) by striking ``of'' the first place it appears and
insert ``for'';
(ii) by striking ``insurance reserves'' and inserting
``loss reserves''; and
(iii) by striking ``such insurance'' and inserting ``such
reserves''; and
(B) in the second sentence, by inserting ``or insured
community development financial institution'' after ``private
mortgage insurance company'';
(6) in subsection (d), by inserting ``or insured community
development financial institution'' after ``private mortgage
insurance company''; and
(7) by adding at the end the following new subsection:
``(e) Insured Community Development Financial
Institutions.--For purposes of this section, the term
`insured community development financial institution' means a
community development financial institution, as such term is
defined in section 103 of Reigle Community Development and
Regulatory Improvement Act of 1994 (12 U.S.C. 4702) that is
an insured depository institution (as such term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) or an insured credit union (as such term is defined in
section 101 of the Federal Credit Union Act (12 U.S.C.
1752)).''.
SEC. 704. PREVENTION AND TREATMENT OF SUBSTANCE ABUSE;
SERVICES PROVIDED THROUGH RELIGIOUS
ORGANIZATIONS.
Title V of the Public Health Service Act (42 U.S.C. 290aa
et seq.) is amended by adding at the end the following part:
``Part G--Services Provided Through Religious Organizations
``SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.
``(a) Designated Programs.--Subject to subsection (b), this
part applies to discretionary and formula grant programs
administered by the Substance Abuse and Mental Health
Services Administration that make awards of financial
assistance to public or private entities for the purpose of
carrying out activities to prevent or treat substance abuse
(in this part referred to as a `designated program').
Designated programs include the program under subpart II of
part B of title XIX (relating to formula grants to the
States).
``(b) Limitation.--This part does not apply to any award of
financial assistance under a designated program for a purpose
other than the purpose specified in subsection (a).
``(c) Definitions.--For purposes of this part (and subject
to subsection (b)):
``(1) The term `designated program' has the meaning given
such term in subsection (a).
``(2) The term `financial assistance' means a grant,
cooperative agreement, or contract.
``(3) The term `program beneficiary' means an individual
who receives program services.
``(4) The term `program participant' means a public or
private entity that has received financial assistance under a
designated program.
``(5) The term `program services' means treatment for
substance abuse, or preventive
[[Page H6812]]
services regarding such abuse, provided pursuant to an award
of financial assistance under a designated program.
``(6) The term `religious organization' means a nonprofit
religious organization.
``SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PARTICIPANTS.
``(a) In General.--Notwithstanding any other provision of
law, a religious organization, on the same basis as any other
nonprofit private provider--
``(1) may receive financial assistance under a designated
program; and
``(2) may be a provider of services under a designated
program.
``(b) Religious Organizations.--The purpose of this section
is to allow religious organizations to be program
participants on the same basis as any other nonprofit private
provider without impairing the religious character of such
organizations, and without diminishing the religious freedom
of program beneficiaries.
``(c) Nondiscrimination Against Religious Organizations.--
``(1) Eligibility as program participants.--Religious
organizations are eligible to be program participants on the
same basis as any other nonprofit private organization as
long as the programs are implemented consistent with the
Establishment Clause and Free Exercise Clause of the First
Amendment to the United States Constitution. Nothing in this
Act shall be construed to restrict the ability of the Federal
Government, or a State or local government receiving funds
under such programs, to apply to religious organizations the
same eligibility conditions in designated programs as are
applied to any other nonprofit private organization.
``(2) Nondiscrimination.--Neither the Federal Government
nor a State or local government receiving funds under
designated programs shall discriminate against an
organization that is or applies to be a program participant
on the basis that the organization has a religious character.
``(d) Religious Character and Freedom.--
``(1) Religious organizations.--Except as provided in this
section, any religious organization that is a program
participant shall retain its independence from Federal,
State, and local government, including such organization's
control over the definition, development, practice, and
expression of its religious beliefs.
``(2) Additional safeguards.--Neither the Federal
Government nor a State shall require a religious organization
to--
``(A) alter its form of internal governance; or
``(B) remove religious art, icons, scripture, or other
symbols;
in order to be a program participant.
``(e) Employment Practices.--Nothing in this section shall
be construed to modify or affect the provisions of any other
Federal or State law or regulation that relates to
discrimination in employment. A religious organization's
exemption provided under section 702 of the Civil Rights Act
of 1964 regarding employment practices shall not be affected
by its participation in, or receipt of funds from, a
designated program.
``(f) Rights of Program Beneficiaries.--
``(1) In general.--If an individual who is a program
beneficiary or a prospective program beneficiary objects to
the religious character of a program participant, within a
reasonable period of time after the date of such objection
such program participant shall refer such individual to, and
the appropriate Federal, State, or local government that
administers a designated program or is a program participant
shall provide to such individual (if otherwise eligible for
such services), program services that--
``(A) are from an alternative provider that is accessible
to, and has the capacity to provide such services to, such
individual; and
``(B) have a value that is not less than the value of the
services that the individual would have received from the
program participant to which the individual had such
objection.
``(2) Notices.--Appropriate Federal, State, or local
governments that administer designated programs or are
program participants shall ensure that notice is provided to
program beneficiaries or prospective program beneficiaries of
their rights under this subsection.
``(3) Additional requirements.--A program participant
making a referral pursuant to paragraph (1) shall--
``(A) prior to making such referral, consider any list that
the State or local government makes available of entities in
the geographic area that provide program services; and
``(B) ensure that the individual makes contact with the
alternative provider to which the individual is referred.
``(4) Nondiscrimination.--A religious organization that is
a program participant shall not in providing program services
or engaging in outreach activities under designated programs
discriminate against a program beneficiary or prospective
program beneficiary on the basis of religion or religious
belief.
``(g) Fiscal Accountability.--
``(1) In general.--Except as provided in paragraph (2), any
religious organization that is a program participant shall be
subject to the same regulations as other recipients of awards
of Federal financial assistance to account, in accordance
with generally accepted auditing principles, for the use of
the funds provided under such awards.
``(2) Limited audit.--With respect to the award involved,
if a religious organization that is a program participant
maintains the Federal funds in a separate account from non-
Federal funds, then only the Federal funds shall be subject
to audit.
``(h) Compliance.--With respect to compliance with this
section by an agency, a religious organization may obtain
judicial review of agency action in accordance with chapter 7
of title 5, United States Code.
``SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.
``No funds provided under a designated program shall be
expended for sectarian worship, instruction, or
proselytization.
``SEC. 584. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG
TREATMENT PROGRAMS.
``(a) Findings.--The Congress finds that--
``(1) establishing unduly rigid or uniform educational
qualification for counselors and other personnel in drug
treatment programs may undermine the effectiveness of such
programs; and
``(2) such educational requirements for counselors and
other personnel may hinder or prevent the provision of needed
drug treatment services.
``(b) Nondiscrimination.--In determining whether personnel
of a program participant that has a record of successful drug
treatment for the preceding three years have satisfied State
or local requirements for education and training, a State or
local government shall not discriminate against education and
training provided to such personnel by a religious
organization, so long as such education and training includes
basic content substantially equivalent to the content
provided by nonreligious organizations that the State or
local government would credit for purposes of determining
whether the relevant requirements have been satisfied.''.
SEC. 705. NEW MARKETS VENTURE CAPITAL PROGRAM.
(a) Short Title.--This section may be cited as the ``New
Markets Venture Capital Program Act of 2000''.
(b) New Markets Venture Capital Program.--
Title III of the Small Business Investment Act of 1958 (15
U.S.C. 681 et seq.) is amended--
(1) in the heading for the title, by striking ``SMALL
BUSINESS INVESTMENT COMPANIES'' and inserting ``INVESTMENT
DIVISION PROGRAMS'';
(2) by inserting before the heading for section 301 the
following:
``Part A--Small Business Investment Companies''
; and
(3) by adding at the end the following:
``Part B--New Markets Venture Capital Program
``SEC. 351. DEFINITIONS.
``In this part, the following definitions apply:
``(1) Developmental venture capital.--The term
`developmental venture capital' means capital in the form of
equity investments in businesses made with a primary
objective of fostering economic development in low- or
moderate-income geographic areas.
``(2) Low- or moderate-income geographic area.--The term
`low- or moderate-income geographic area' means--
``(A) a census tract, or the equivalent county division as
defined by the Bureau of the Census for purposes of defining
poverty areas, in which--
``(i) the poverty rate is not less than 20 percent;
``(ii) in the case of a census tract or division located
within a metropolitan area, the median family income for such
tract or division does not exceed the greater of 80 percent
of the statewide median family income or 80 percent of the
metropolitan area median family income; or
``(iii) in the case of a census tract or division not
located within a metropolitan area, the median family income
for such tract or division does not exceed 80 percent of the
statewide median family income; or
``(B) any area located within--
``(i) a historically underutilized business zone (HUBZone),
as defined in section 3(p) of the Small Business Act (15
U.S.C. 632(p));
``(ii) an urban empowerment zone or an urban enterprise
community, as designated by the Secretary of the Department
of Housing and Urban Development; or
``(iii) a rural empowerment zone or a rural enterprise
community, as designated by the Secretary of the Department
of Agriculture.
``(3) New markets venture capital company.--The term `New
Markets Venture Capital company' means a company that--
``(A) has been granted final approval by the Administration
under section 354(e); and
``(B) has entered into a participation agreement with the
Administration.
``(4) Operational assistance.--The term `operational
assistance' means management, marketing, and other technical
assistance that assists a small business concern with
business development.
``(5) Participation agreement.--The term `participation
agreement' means an agreement, between the Administration and
a company granted final approval under section 354(e), that--
``(A) details the company's operating plan and investment
criteria; and
``(B) requires the company to make investments in smaller
enterprises at least 80 percent of which are located in low-
or moderate-income geographic areas.
``(6) Specialized small business investment company.--The
term `specialized small
[[Page H6813]]
business investment company' means any small business
investment company that--
``(A) invests solely in small business concerns that
contribute to a well-balanced national economy by
facilitating ownership in such concerns by persons whose
participation in the free enterprise system is hampered
because of social or economic disadvantages;
``(B) is organized or chartered under State business or
nonprofit corporations statutes, or formed as a limited
partnership; and
``(C) was licensed under section 301(d), as in effect
before September 30, 1996.
``SEC. 352. PURPOSES.
``The purposes of the New Markets Venture Capital Program
established under this part are--
``(1) to promote economic development and the creation of
wealth and job opportunities in low- or moderate-income
geographic areas and among individuals living in such areas
by encouraging developmental venture capital investments in
smaller enterprises primarily located in such areas; and
``(2) to establish a developmental venture capital program,
with the mission of addressing the unmet equity investment
needs of small enterprises located in low- and moderate-
income geographic areas, to be administered by the
Administration--
``(A) to enter into participation agreements with New
Markets Venture Capital companies;
``(B) to guarantee debentures of New Markets Venture
Capital companies to enable each such company to make
developmental venture capital investments in smaller
enterprises in low- or moderate-income geographic areas; and
``(C) to make grants to New Markets Venture Capital
companies, and to other entities, for the purpose of
providing operational assistance to smaller enterprises
financed, or expected to be financed, by such companies.
``SEC. 353. ESTABLISHMENT.
``In accordance with this part, the Administration shall
establish a New Markets Venture Capital Program, under which
the Administration may--
``(1) enter into participation agreements with companies
granted final approval under section 354(e) for the purposes
set forth in section 352;
``(2) guarantee the debentures issued by New Markets
Venture Capital companies as provided in section 355; and
``(3) make grants to New Markets Venture Capital companies,
and to other entities, under section 358.
``SEC. 354. SELECTION OF NEW MARKETS VENTURE CAPITAL
COMPANIES.
``(a) Eligibility.--A company shall be eligible to apply to
participate, as a New Markets Venture Capital company, in the
program established under this part if--
``(1) the company is a newly formed for-profit entity or a
newly formed for-profit subsidiary of an existing entity;
``(2) the company has a management team with experience in
community development financing or relevant venture capital
financing; and
``(3) the company has a primary objective of economic
development of low- or moderate-income geographic areas.
``(b) Application.--To participate, as a New Markets
Venture Capital company, in the program established under
this part a company meeting the eligibility requirements set
forth in subsection (a) shall submit an application to the
Administration that includes--
``(1) a business plan describing how the company intends to
make successful developmental venture capital investments in
identified low- or moderate-income geographic areas;
``(2) information regarding the community development
finance or relevant venture capital qualifications and
general reputation of the company's management;
``(3) a description of how the company intends to work with
community organizations and to seek to address the unmet
capital needs of the communities served;
``(4) a proposal describing how the company will use the
grant funds provided under this part to provide operational
assistance to smaller enterprises financed by the company,
including information regarding whether the company will use
licensed professionals, where applicable, on the company's
staff or from an outside entity;
``(5) with respect to binding commitments to be made to the
company under this part, an estimate of the ratio of cash to
in-kind contributions;
``(6) a description of the criteria to be used to evaluate
whether and to what extent the company meets the objectives
of the program established under this part;
``(7) information regarding the management and financial
strength of any parent firm, affiliated firm, or any other
firm essential to the success of the company's business plan;
and
``(8) such other information as the Administration may
require.
``(c) Conditional Approval.--
``(1) In general.--From among companies submitting
applications under subsection (b), the Administration shall,
in accordance with this subsection, conditionally approve
companies to participate in the New Markets Venture Capital
Program.
``(2) Selection criteria.--In selecting companies under
paragraph (1), the Administration shall consider the
following:
``(A) The likelihood that the company will meet the goals
of its business plan.
``(B) The experience and background of the company's
management team.
``(C) The need for developmental venture capital
investments in the geographic areas in which the company
intends to invest.
``(D) The extent to which the company will concentrate its
activities on serving the geographic areas in which it
intends to invest.
``(E) The likelihood that the company will be able to
satisfy the conditions under subsection (d).
``(F) The extent to which the activities proposed by the
company will expand economic opportunities in the geographic
areas in which the company intends to invest.
``(G) The strength of the company's proposal to provide
operational assistance under this part as the proposal
relates to the ability of the applicant to meet applicable
cash requirements and properly utilize in-kind contributions,
including the use of resources for the services of licensed
professionals whether provided by persons on the company's
staff or by persons outside of the company.
``(H) Any other factors deemed appropriate by the
Administration.
``(3) Nationwide distribution.--The Administration shall
select companies under paragraph (1) in such a way that
promotes investment nationwide.
``(d) Requirements To Be Met for Final Approval.--The
Administration shall grant each conditionally approved
company a period of time, not to exceed 2 years, to satisfy
the following requirements:
``(1) Capital requirement.--Each conditionally approved
company must raise not less than $5,000,000 of private
capital or binding capital commitments from 1 or more
investors (other than agencies or departments of the Federal
Government) who meet criteria established by the
Administration.
``(2) Nonadministration resources for operational
assistance.--In order to provide operational assistance to
smaller enterprises expected to be financed by the company,
each conditionally approved company--
``(A) must have binding commitments (for contribution in
cash or in kind)--
``(i) from any sources other than the Administration that
meet criteria established by the Administration;
``(ii) payable or available over a multiyear period
acceptable to the Administration (not to exceed 10 years);
and
``(iii) in an amount not less than 30 percent of the total
amount of capital and commitments raised under paragraph (1);
``(B) must have purchased an annuity--
``(i) from an insurance company acceptable to the
Administration;
``(ii) using funds (other than the funds raised under
paragraph (1)) from any source other than the Administration;
and
``(iii) that yields cash payments over a multiyear period
acceptable to the Administration (not to exceed 10 years) in
an amount not less than 30 percent of the total amount of
capital and commitments raised under paragraph (1); or
``(C) must have binding commitments (for contributions in
cash or in kind) of the type described in subparagraph (A)
and must have purchased an annuity of the type described in
subparagraph (B), which in the aggregate make available, over
a multiyear period acceptable to the Administration (not to
exceed 10 years), an amount not less than 30 percent of the
total amount of capital and commitments raised under
paragraph (1).
``(e) Final Approval.--The Administration shall grant to a
company conditionally approved under subsection (c) final
approval to participate in the program established under this
part after the company has met the requirements set forth in
subsection (d).
``SEC. 355. DEBENTURES.
``(a) In General.--The Administration may guarantee the
timely payment of principal and interest, as scheduled, on
debentures issued by any New Markets Venture Capital company.
``(b) Terms and Conditions.--The Administration may make
guarantees under this section on such terms and conditions as
it deems appropriate, except that the term of any debenture
guaranteed under this section shall not exceed 15 years.
``(c) Full Faith and Credit of the United States.--The full
faith and credit of the United States is pledged to pay all
amounts that may be required to be paid under any guarantee
under this part.
``(d) Maximum Guarantee.--
``(1) In general.--Under this section, the Administration
may guarantee the debentures issued by a New Markets Venture
Capital company only to the extent that the total face amount
of outstanding guaranteed debentures of such company does not
exceed 150 percent of the private capital of the company, as
determined by the Administration.
``(2) Treatment of certain federal funds.--For the purposes
of paragraph (1), private capital shall include capital that
is considered to be Federal funds, if such capital is
contributed by an investor other than an agency or department
of the Federal Government.
``SEC. 356. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.
``(a) Issuance.--The Administration may issue trust
certificates representing ownership of all or a fractional
part of debentures issued by a New Markets Venture Capital
company and guaranteed by the Administration under this part,
if such certificates are based on and backed by a trust or
pool approved by the Administration and composed solely of
guaranteed debentures.
[[Page H6814]]
``(b) Guarantee.--
``(1) In general.--The Administration may, under such terms
and conditions as it deems appropriate, guarantee the timely
payment of the principal of and interest on trust
certificates issued by the Administration or its agents for
purposes of this section.
``(2) Limitation.--Each guarantee under this subsection
shall be limited to the extent of principal and interest on
the guaranteed debentures that compose the trust or pool.
``(3) Prepayment or default.--In the event that a debenture
in a trust or pool is prepaid, or in the event of default of
such a debenture, the guarantee of timely payment of
principal and interest on the trust certificates shall be
reduced in proportion to the amount of principal and interest
such prepaid debenture represents in the trust or pool.
Interest on prepaid or defaulted debentures shall accrue and
be guaranteed by the Administration only through the date of
payment of the guarantee. At any time during its term, a
trust certificate may be called for redemption due to
prepayment or default of all debentures.
``(c) Full Faith and Credit of the United States.--The full
faith and credit of the United States is pledged to pay all
amounts that may be required to be paid under any guarantee
of a trust certificate issued by the Administration or its
agents under this section.
``(d) Fees.--The Administration shall not collect a fee for
any guarantee of a trust certificate under this section, but
any agent of the Administration may collect a fee approved by
the Administration for the functions described in subsection
(f)(2).
``(e) Subrogation and Ownership Rights.--
``(1) Subrogation.--In the event the Administration pays a
claim under a guarantee issued under this section, it shall
be subrogated fully to the rights satisfied by such payment.
``(2) Ownership rights.--No Federal, State, or local law
shall preclude or limit the exercise by the Administration of
its ownership rights in the debentures residing in a trust or
pool against which trust certificates are issued under this
section.
``(f) Management and Administration.--
``(1) Registration.--
``(A) In general.--The Administration may provide for a
central registration of all trust certificates issued under
this section.
``(B) Forms of registration.--Nothing in this subsection
shall prohibit the use of a book entry or other electronic
form of registration for trust certificates.
``(2) Contracting of functions.--
``(A) In general.--The Administration may contract with an
agent or agents to carry out on behalf of the Administration
the pooling and the central registration functions provided
for in this section including, notwithstanding any other
provision of law--
``(i) maintenance, on behalf of and under the direction of
the Administration, of such commercial bank accounts or
investments in obligations of the United States as may be
necessary to facilitate the creation of trusts or pools
backed by debentures guaranteed under this part; and
``(ii) the issuance of trust certificates to facilitate the
creation of such trusts or pools.
``(B) Fidelity bond or insurance requirement.--Any agent
performing functions on behalf of the Administration under
this paragraph shall provide a fidelity bond or insurance in
such amounts as the Administration determines to be necessary
to fully protect the interests of the United States.
``(3) Applicability of the securities exchange act of
1934.--Notwithstanding section 3(a)(42) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(42)), trust
certificates issued under this section shall not be treated
as government securities for the purposes of that Act.
``SEC. 357. FEES.
``Except as provided in section 356(d), the Administration
may charge such fees as it deems appropriate with respect to
any guarantee or grant issued under this part.
``SEC. 358. OPERATIONAL ASSISTANCE GRANTS.
``(a) In General.--
``(1) Authority.--In accordance with this section, the
Administration may make grants to New Markets Venture Capital
companies and to other entities, as authorized by this part,
to provide operational assistance to smaller enterprises
financed, or expected to be financed, by such companies or
other entities.
``(2) Terms.--Grants made under this subsection shall be
made over a multiyear period not to exceed 10 years, under
such other terms as the Administration may require.
``(3) Grants to specialized small business investment
companies.--
``(A) Authority.--In accordance with this section, the
Administration may make grants to specialized small business
investment companies to provide operational assistance to
smaller enterprises financed, or expected to be financed, by
such companies after the effective date of the New Markets
Venture Capital Program Act of 2000.
``(B) Use of funds.--
``(i) In general.--The proceeds of a grant made under this
paragraph may be used by the company receiving such grant
only to provide operational assistance in connection with an
equity investment (made with capital raised after the
effective date of the New Markets Venture Capital Program Act
of 2000) in a business located in a low- or moderate-income
geographic area.
``(ii) Additional limitation.--Operational assistance
referred to in clause (i) may not be provided in connection
with more than 1 equity investment.
``(C) Submission of plans.--A specialized small business
investment company shall be eligible for a grant under this
section only if the company submits to the Administrator, in
such form and manner as the Administrator may require, a plan
for use of the grant.
``(4) Grant amount.--
``(A) New markets venture capital companies.--The amount of
a grant made under this subsection to a New Markets Venture
Capital company shall be equal to the resources (in cash or
in kind) raised by the company under with section 354(d)(2).
``(B) Other entities.--The amount of a grant made under
this subsection to any entity other than a New Markets
Venture capital company shall be equal to the resources (in
cash or in kind) raised by the entity in accordance with the
requirements applicable to New Markets Venture Capital
companies set forth in section 354(d)(2).
``(5) Pro rata reductions.--If the amount made available to
carry out this section is insufficient for the Administration
to provide grants in the amounts provided for in paragraph
(4), the Administration shall make pro rata reductions in the
amounts otherwise payable to each company and entity under
such paragraph.
``(b) Supplemental Grants.--
``(1) In general.--The Administration may make supplemental
grants to New Markets Venture Capital companies and to other
entities, as authorized by this part, under such terms as the
Administration may require, to provide additional operational
assistance to smaller enterprises financed, or expected to be
financed, by the companies.
``(2) Matching requirement.--The Administration may
require, as a condition of any supplemental grant made under
this subsection, that the company or entity receiving the
grant provide from resources (in cash or in kind), other than
those provided by the Administration, a matching contribution
equal to the amount of the supplemental grant.
``(c) Limitation.--None of the assistance made available
under this section may be used for any operating expense of a
New Markets Venture Capital company or a specialized small
business investment company.
``SEC. 359. BANK PARTICIPATION.
``(a) In General.--Except as provided in subsection (b),
any national bank, any member bank of the Federal Reserve
System, and (to the extent permitted under applicable State
law) any insured bank that is not a member of such system,
may invest in any New Markets Venture Capital company, or in
any entity established to invest solely in New Markets
Venture Capital companies.
``(b) Limitation.--No bank described in subsection (a) may
make investments described in such subsection that are
greater than 5 percent of the capital and surplus of the
bank.
``SEC. 360. FEDERAL FINANCING BANK.
``Section 318 shall not apply to any debenture issued by a
New Markets Venture Capital company under this part.
``SEC. 361. REPORTING REQUIREMENTS.
``Each New Markets Venture Capital company that
participates in the program established under this part shall
provide to the Administration such information as the
Administration may require, including--
``(1) information related to the measurement criteria that
the company proposed in its program application; and
``(2) in each case in which the company under this part
makes an investment in, or a loan or grant to, a business
that is not located in a low- or moderate-income geographic
area, a report on the number and percentage of employees of
the business who reside in such areas.
``SEC. 362. EXAMINATIONS.
``(a) In General.--Each New Markets Venture Capital company
that participates in the program established under this part
shall be subject to examinations made at the direction of the
Investment Division of the Administration in accordance with
this section.
``(b) Assistance of Private Sector Entities.--Examinations
under this section may be conducted with the assistance of a
private sector entity that has both the qualifications and
the expertise necessary to conduct such examinations.
``(c) Costs.--
``(1) Assessment.--
``(A) In general.--The Administration may assess the cost
of examinations under this section, including compensation of
the examiners, against the company examined.
``(B) Payment.--Any company against which the
Administration assesses costs under this paragraph shall pay
such costs.
``(2) Deposit of funds.--Funds collected under this section
shall be deposited in the account for salaries and expenses
of the Administration.
``SEC. 363. INJUNCTIONS AND OTHER ORDERS.
``(a) In General.--Whenever, in the judgment of the
Administration, a New Markets Venture Capital company or any
other person has engaged or is about to engage in any acts or
practices which constitute or will constitute a violation of
any provision of this Act, or of any rule or regulation under
this Act, or of any order issued under this Act, the
Administration may make application to the proper district
court of the
[[Page H6815]]
United States or a United States court of any place subject
to the jurisdiction of the United States for an order
enjoining such acts or practices, or for an order enforcing
compliance with such provision, rule, regulation, or order,
and such courts shall have jurisdiction of such actions and,
upon a showing by the Administration that such New Markets
Venture Capital company or other person has engaged or is
about to engage in any such acts or practices, a permanent or
temporary injunction, restraining order, or other order,
shall be granted without bond.
``(b) Jurisdiction.--In any proceeding under subsection
(a), the court as a court of equity may, to such extent as it
deems necessary, take exclusive jurisdiction of the New
Market Venture Capital company and the assets thereof,
wherever located, and the court shall have jurisdiction in
any such proceeding to appoint a trustee or receiver to hold
or administer under the direction of the court the assets so
possessed.
``(c) Administration as Trustee or Receiver.--
``(1) Authority.--The Administration may act as trustee or
receiver of a New Markets Venture Capital company.
``(2) Appointment.--Upon request of the Administration, the
court may appoint the Administration to act as a trustee or
receiver of a New Markets Venture Capital company unless the
court deems such appointment inequitable or otherwise
inappropriate by reason of the special circumstances
involved.
``SEC. 364. ADDITIONAL PENALTIES FOR NONCOMPLIANCE.
``(a) In General.--With respect to any New Markets Venture
Capital company that violates or fails to comply with any of
the provisions of this Act, of any regulation issued under
this Act, or of any participation agreement entered into
under this Act, the Administration may in accordance with
this section--
``(1) void the participation agreement between the
Administration and the company; and
``(2) cause the company to forfeit all of the rights and
privileges derived by the company from this Act.
``(b) Adjudication of Noncompliance.--
``(1) In general.--Before the Administration may cause a
New Markets Venture Capital company to forfeit rights or
privileges under subsection (a), a court of the United States
of competent jurisdiction must find that the company
committed a violation, or failed to comply, in a cause of
action brought for that purpose in the district, territory,
or other place subject to the jurisdiction of the United
States, in which the principal office of the company is
located.
``(2) Parties authorized to file causes of action.--Each
cause of action brought by the United States under this
subsection shall be brought by the Administration or by the
Attorney General.
``SEC. 365. UNLAWFUL ACTS AND OMISSIONS; BREACH OF FIDUCIARY
DUTY.
``(a) Parties Deemed To Commit a Violation.--Whenever any
New Markets Venture Capital company violates any provision of
this Act, of a regulation issued under this Act, or of a
participation agreement entered into under this Act, by
reason of its failure to comply with its terms or by reason
of its engaging in any act or practice that constitutes or
will constitute a violation thereof, such violation shall
also be deemed to be a violation and an unlawful act
committed by any person who, directly or indirectly,
authorizes, orders, participates in, causes, brings about,
counsels, aids, or abets in the commission of any acts,
practices, or transactions that constitute or will
constitute, in whole or in part, such violation.
``(b) Fiduciary Duties.--It shall be unlawful for any
officer, director, employee, agent, or other participant in
the management or conduct of the affairs of a New Markets
Venture Capital company to engage in any act or practice, or
to omit any act or practice, in breach of the person's
fiduciary duty as such officer, director, employee, agent, or
participant if, as a result thereof, the company suffers or
is in imminent danger of suffering financial loss or other
damage.
``(c) Unlawful Acts.--Except with the written consent of
the Administration, it shall be unlawful--
``(1) for any person to take office as an officer,
director, or employee of any New Markets Venture Capital
company, or to become an agent or participant in the conduct
of the affairs or management of such a company, if the
person--
``(A) has been convicted of a felony, or any other criminal
offense involving dishonesty or breach of trust, or
``(B) has been found civilly liable in damages, or has been
permanently or temporarily enjoined by an order, judgment, or
decree of a court of competent jurisdiction, by reason of any
act or practice involving fraud, or breach of trust; and
``(2) for any person continue to serve in any of the
capacities described in paragraph (1), if--
``(A) the person is convicted of a felony, or any other
criminal offense involving dishonesty or breach of trust, or
``(B) the person is found civilly liable in damages, or is
permanently or temporarily enjoined by an order, judgment, or
decree of a court of competent jurisdiction, by reason of any
act or practice involving fraud or breach of trust.
``SEC. 366. REMOVAL OR SUSPENSION OF DIRECTORS OR OFFICERS.
``Using the procedures for removing or suspending a
director or an officer of a licensee set forth in section 313
(to the extent such procedures are not inconsistent with the
requirements of this part), the Administration may remove or
suspend any director or officer of any New Markets Venture
Capital company.
``SEC. 367. REGULATIONS.
``The Administration may issue such regulations as it deems
necessary to carry out the provisions of this part in
accordance with its purposes.
``SEC. 368. AUTHORIZATIONS OF APPROPRIATIONS.
``(a) In General.--For fiscal years 2000 through 2005, the
Administration is authorized to be appropriated, to remain
available until expended--
``(1) such subsidy budget authority as may be necessary to
guarantee $150,000,000 of debentures under this part; and
``(2) $30,000,000 to make grants under this part.
``(b) Funds Collected for Examinations.--Funds deposited
under section 362(c)(2) are authorized to be appropriated
only for the costs of examinations under section 362 and for
the costs of other oversight activities with respect to the
program established under this part.''.
(c) Conforming Amendment.--Section 20(e)(1)(C) of the Small
Business Act (15 U.S.C 631 note) is amended by inserting
``part A of'' before ``title III''.
(d) Calculation of Maximum Amount of SBIC Leverage.--
(1) Maximum leverage.--Section 303(b)(2) of the Small
Business Investment Act of 1958 (15 U.S.C. 683(b)(2)) is
amended to read as follows:
``(2) Maximum leverage.--
``(A) In general.--After March 31, 1993, the maximum amount
of outstanding leverage made available to a company licensed
under section 301(c) of this Act shall be determined by the
amount of such company's private capital--
``(i) if the company has private capital of not more than
$15,000,000, the total amount of leverage shall not exceed
300 percent of private capital;
``(ii) if the company has private capital of more than
$15,000,000 but not more than $30,000,000, the total amount
of leverage shall not exceed $45,000,000 plus 200 percent of
the amount of private capital over $15,000,000; and
``(iii) if the company has private capital of more than
$30,000,000, the total amount of leverage shall not exceed
$75,000,000 plus 100 percent of the amount of private capital
over $30,000,000 but not to exceed an additional $15,000,000.
``(B) Adjustments.--
``(i) In general.--The dollar amounts in clauses (i), (ii),
and (iii) of subparagraph (A) shall be adjusted annually to
reflect increases in the Consumer Price Index established by
the Bureau of Labor Statistics of the Department of Labor.
(ii) Initial adjustments.--The initial adjustments made
under this subparagraph after the date of enactment of the
Small Business Reauthorization Act of 1997 shall reflect only
increases from March 31, 1993.
``(C) Investments in low- or moderate income areas.--In
calculating the outstanding leverage of a company for the
purposes of subparagraph (A), the Administrator shall not
include the amount of the cost basis of any equity investment
made by the company in a smaller enterprise located in a low-
or moderate-income geographic area (as defined in section
351), to the extent that the total of such amounts does not
exceed 50 percent of the company's private capital.''.
(2) Maximum aggregate leverage.--Section 303(b)(4) of the
Small Business Investment Act of 1958 (15 U.S.C. 683(b)(4))
is amended by adding at the end the following new
subparagraph:
``(D) Investments in low- or moderate income areas.--In
calculating the aggregate outstanding leverage of a company
for the purposes of subparagraph (A), the Administrator shall
not include the amount of the cost basis of any equity
investment made by the company in a smaller enterprise
located in a low- or moderate-income geographic area (as
defined in section 351), to the extent that the total of such
amounts does not exceed 50 percent of the company's private
capital.''.
(e) Bankruptcy Exemption for New Markets Venture Capital
Companies.--Section 109(b)(2) of title 11, United States
Code, is amended by inserting ``a New Markets Venture Capital
company as defined in section 351 of the Small Business
Investment Act of 1958,'' after ``homestead association,''.
(f) Federal Savings Associations.--Section 5(c)(4) of the
Home Owners' Loan Act (12 U.S.C. 1464(c)(4)) is amended by
adding at the end the following:
``(F) New markets venture capital companies.--A Federal
savings association may invest in stock, obligations, or
other securities of any New Markets Venture Capital company
as defined in section 351 of the Small Business investment
Act of 1958, except that a Federal savings association may
not make any investment under this subparagraph if its
aggregate outstanding investment under this subparagraph
would exceed 5 percent of the capital and surplus of such
savings association.''.
SEC. 706. BUSINESSLINC GRANTS AND COOPERATIVE AGREEMENTS.
Section 8 of the Small Business Act (15 U.S.C. 637) is
amended by adding at the end the following:
[[Page H6816]]
``(m) BusinessLINC Grants and Cooperative Agreements.--
``(1) In general.--In accordance with this subsection, the
Administrator may make grants to and enter into cooperative
agreements with any coalition of private entities, public
entities, or any combination of private and public entities--
``(A) to expand business-to-business relationships between
large and small businesses; and
``(B) to provide businesses, directly or indirectly, with
online information and a database of companies that are
interested in mentor-protege programs or community-based,
state-wide, or local business development programs.
``(2) Matching requirement.--Subject to subparagraph (B),
the Administrator may make a grant to a coalition under
paragraph (1) only if the coalition provides for activities
described in paragraph (1)(A) or (1)(B) an amount, either in
kind or in cash, equal to the grant amount.
``(3) Authorization of appropriations.--There is authorized
to be appropriated to carry out this subsection $6,600,000,
to remain available until expended, for each of fiscal years
2001 through 2003.''.
The SPEAKER pro tempore (Mr. Simpson). Pursuant to the rule, the
gentleman from Pennsylvania (Mr. English) and the gentleman from New
York (Mr. Rangel) each will control 20 minutes.
The Chair recognizes the gentleman from Pennsylvania (Mr. English).
General Leave
Mr. ENGLISH. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks, and include extraneous material on the bill, H.R. 4923.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
Mr. ENGLISH. Madam Speaker, I ask unanimous consent that both sides
in this debate control an additional 10 minutes.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
Mr. RANGEL. Mr. Speaker, I am in support of the bill and, under the
rules of the House, the time that is allocated to me should more
properly be allocated to someone that is in opposition to the bill. The
gentleman from Virginia (Mr. Scott) is in opposition, and so I ask that
the 20 minutes allotted to me be yielded to him.
The SPEAKER pro tempore. Does the gentleman object to the additional
10 minutes?
Mr. RANGEL. No, I have no objection.
The SPEAKER pro tempore. There being no objection to the request of
the gentleman from Pennsylvania, the gentleman from Virginia (Mr.
Scott) will control 30 minutes in opposition.
The Chair recognizes the gentleman from Pennsylvania (Mr. English).
Mr. ENGLISH. Mr. Speaker, I yield myself 2\1/4\ minutes.
Today, Mr. Speaker, we will vote on landmark legislation that will
provide our communities with the tools they need to revitalize our
cities and many of our depressed rural areas. This is the day we will
provide communities the tools they need to once again become self-
reliant, and with that we give people more control over their own
futures.
The Community Renewal and New Markets Act breathes new life into
areas that have become America's forgotten communities. With this
legislation, we empower impoverished cities and towns to rise above the
perils of poverty. We give them the mechanisms needed to mold faith,
family, hard work, and cooperation into opportunity, while expanding
the community leaders' ability to attract new investment and grow
existing businesses.
This bipartisan community renewal initiative will provide poor inner
cities and rural areas with workable mechanisms that allow them to
evaluate the needs in their communities and address them. This bill
creates 40 renewal communities with targeted pro-growth tax benefits,
homeownership opportunities, and other incentives that address the
principal hurdles facing budding small businesses: raising capital and
maintaining cash flow.
In a renewal community, individuals would not pay capital gains taxes
on the sale of renewal community businesses and business assets held
for more than 5 years. Small businesses would also be able to expense
up to $35,000 more in equipment than they are able to under current
law. And those who revitalize buildings located in these renewal
communities will receive a special deduction.
Beyond that, this bill will stimulate State efforts to build the
necessary infrastructure and rebuild economically depressed areas by
accelerating the scheduled increase in the amount of tax exempt private
bonds. Even more importantly, we will increase the amount of low-income
tax credits a State can allocate. This translates into more and better
housing opportunities for low-income families.
Today, through a variety of incentives, we will create a fertile
environment for growth, with targeted pro-growth tax benefits,
regulatory relief, savings accounts, and homeownership opportunities,
as well as provide for the inclusion of local faith-based
organizations. This is an opportunity for Congress to aid in lifting up
those who have already been left behind during a time when many are
enjoying the benefits of a prospering economy.
With this legislation, we will truly make a difference in people's
lives and allow more people to participate in the American Dream.
Mr. Speaker, I submit for the Record material from the Joint
Committee on Taxation relevant to this bill.
TECHNICAL EXPLANATION OF THE TAX PROVISIONS IN H.R. 4923 THE
``COMMUNITY RENEWAL AND NEW MARKETS ACT OF 2000''
(Prepared by the Staff of the Joint Committee on Taxation)
I. Introduction
This document, prepared by the staff of the Joint Committee
on Taxation, provides a technical explanation of the tax
provisions contained in H.R. 4923, the ``Community Renewal
and New Markets Act of 2000.''
II. Summary
H.R. 4923, the ``Community Renewal and New Markets Act of
2000,'' provides additional tax incentives for targeted areas
that are identified as areas of pervasive poverty, high
unemployment, and general economic distress. The bill also
increases the limits with respect to the low-income housing
tax credit and the private activity bond volume caps.
Tax incentives for renewal communities
The bill authorizes the Secretary of HUD to designate up to
40 ``renewal communities'' from areas nominated by States and
local governments. At least eight of the designated renewal
communities must be in rural areas. In general, nominated
areas are ranked based on a formula that takes into account
the area's poverty rate, median income, and unemployment
rate. A nominated area within the District of Columbia will
be designated as a renewal community (without regard to its
ranking) beginning in 2003.
A nominated area that is designated as a renewal community
is eligible for the following tax incentives during the
period beginning July 1, 2001, and ending December 31, 2009:
(1) a 100-percent capital gains exclusion for capital gain
from the sale of qualifying assets acquired after June 30,
2001, and before January 1, 2010, and held for more than five
years; (2) a 15 percent wage credit to employers for the
first $10,000 of qualified wages paid to each employee who
(i) is a resident of the renewal community, and (ii) performs
substantially all employment services within the renewal
community in a trade or business of the employer; (3) a
``commercial revitalization expenditure'' that allows
taxpayers (to the extent allocated by the appropriate State
agency for the period after June 30, 2001) to deduct either
(i) 50 percent of qualifying expenditures for the taxable
year in which a qualified building is placed in service, or
(ii) all of the qualifying expenditures ratably over a 10-
year period beginning with the month in which such building
is placed in service; (4) an additional $35,000 of section
179 expensing for qualified renewal property placed in
service after June 30, 2001 and before January 1, 2010 by a
renewal community business; (5) the expensing of certain
environmental remediation expenditures incurred after June
30, 2001, and before January 1, 2010 within a renewal
community; and (6) an expansion of the Work Opportunity Tax
Credit with respect to qualified individuals who live in a
renewal community.
Extension and expansion of empowerment zone incentives
The bill extends the designation of empowerment zone status
for existing zones (other than the D.C. Enterprise Zone)
through December 31, 2009. In addition, the 20-percent wage
credit is made available to all existing empowerment zones
beginning in 2002 (and remains at the 20-percent rate).
Furthermore, $35,000 (rather than $20,000) of additional
section 179 expensing is available for qualified zone
property placed in service in taxable years beginning after
December 31, 2001, by a qualified zone business. The bill
also extends an empowerment zone's status
[[Page H6817]]
as a ``target area'' under section 198 (thus permitting
expensing of certain environmental remediation costs) for
costs incurred after December 31, 2001, and before January 1,
2010. Also beginning in 2002, certain businesses in
existing empowerment zones (other than the D.C. Enterprise
Zone) become eligible for more generous tax-exempt bond
rules.
The bill also authorizes Secretaries of HUD and Agriculture
to designate nine additional empowerment zones (seven to be
located in urban areas and two in rural areas). The new
empowerment zones must be designated by January 1, 2002, and
the tax incentives with respect to the new empowerment zones
generally are available during the period beginning on
January 1, 2002, and ending on December 31, 2009. Businesses
in the new empowerment zones are eligible for the same tax
incentives that, under this bill, are available to existing
zones (i.e., a 20-percent wage credit, $35,000 of additional
section 179 expensing, the enhanced tax-exempt financing
benefits, and expensing of certain environmental remediation
costs).
The bill permits a taxpayer to roll over gain from the sale
or exchange of any qualified empowerment zone asset held for
more than 1 year where the taxpayer uses the proceeds to
purchase other qualifying empowerment zone assets (in the
same zone) within 60 days of the sale of the original asset.
In general, a qualifying empowerment zone asset refers to a
stock or partnership investment in, or assets acquired by, a
qualifying business within an empowerment zone that is
purchased by a taxpayer after the date of enactment of the
bill.
The bill increases to 60 percent (from 50 percent) the
exclusion of gain from the sale of qualifying small business
stock held more than five years where such stock also
satisfies the requirements of a qualifying business under the
empowerment zone rules. The provision applies to qualifying
small business stock that is purchased after the date of
enactment of the bill.
Provide new markets tax credit
The bill creates a new tax credit for qualified equity
investments made after December 31, 2000, to acquire stock in
a community development entity (``CDE''). The maximum annual
amount of qualifying equity investments is capped as follows:
------------------------------------------------------------------------
Maximum qualifying equity
Calendar year investment
------------------------------------------------------------------------
2001............................... $1.0 billion
2002-2003.......................... $1.5 billion per year
2004-2005.......................... $2.0 billion per year
2006-2007.......................... $3.5 billion per year
------------------------------------------------------------------------
The amount of the credit allowed to the investor is (1) a
five-percent credit for the year in which the equity interest
is purchased from the CDE and for the first two anniversary
dates after the purchase from the CDE, and (2) a six percent
on each anniversary date thereafter for the following four
years. The credit is recaptured if the entity fails to
continue to be a CDE or the interest is redeemed within seven
years.
A CDE is any domestic corporation or partnership (1) whose
primary mission is serving or providing investment capital
for low-income communities or low-income persons, (2) that
maintains accountability to residents of low-income
communities through representation on governing or advisory
boards, and (3) is certified by the Treasury Department as an
eligible CDE. A qualified equity investment means stock or a
similar equity interest acquired directly from a CDE for
cash. Substantially all of the cash must be used by the CDE
to make investments in, or loans to, qualified active
businesses located in low-income communities, or certain
financial services to businesses and residents in low-income
communities. A ``low-income community'' generally is defined
as census tracts with either (1) poverty rates of at least 20
percent, or (2) median family income which does not exceed 80
percent of the greater of metropolitan area income or
statewide median family income.
Improvements in the low-income housing tax credit
The bill increases the low-income housing credit cap to
$1.75 per resident between 2001 and 2006 as follows:
Applicable
Calendar year credit amount
2001..............................................................$1.35
2002...............................................................1.45
2003...............................................................1.55
2004...............................................................1.65
2005...............................................................1.70
2006...............................................................1.75
In addition, beginning in 2001, the per capita cap is
modified so that less populous States are given a minimum of
$2 million of annual credit cap. The $1.75 per capita credit
cap and the $2 million amount is indexed for inflation
beginning in 2007. The bill also makes several programmatic
changes to the credit.
Acceleration of phase-in of increase in private activity bond
volume cap
The bill accelerates the scheduled phased-in increases in
the present-law annual State private activity bond volume
limits to $75 per resident of each State or $225 million (if
greater). The increase is phased in as follows, beginning in
calendar year 2001:
------------------------------------------------------------------------
Calendar year Volume limit
------------------------------------------------------------------------
2001........................... $55 per resident ($165 million if
greater)
2002........................... $60 per resident ($180 million if
greater)
2003........................... $65 per resident ($195 million if
greater)
2004, 2005, 2006............... $70 per resident ($210 million if
greater)
2007 and thereafter............ $75 per resident ($225 million if
greater)
------------------------------------------------------------------------
III. Explanation of the Tax Provisions in H.R. 4923
A. Renewal Community Provisions (Secs. 101-103 of the Bill)
Present Law
In recent years, provisions have been added to the Internal
Revenue Code that target specific geographic areas for
special Federal income tax treatment. As described in greater
detail below, empowerment zones and enterprise communities
generally provide tax incentives for businesses that locate
within certain geographic areas designated by the Secretaries
of Housing and Urban Development (``HUD'') and Agriculture.
Explanation of Provision
The bill authorizes the designation of 40 ``renewal
communities'' within which special tax incentives will be
available.
Designation process
Designation of 40 renewal communities.--Secretary of HUD is
authorized to designate up to 40 ``renewal communities'' from
areas nominated by States and local governments. At least
eight of the designated communities must be in rural areas.
The Secretary of HUD is required to publish (within four
months after enactment) regulations describing the nomination
and selection process. Designations of renewal communities
are to be made within 24 months after such regulations are
published. The designation of an areas as a renewal community
generally will be effective on July 1, 2001, and will
terminate after December 31, 2009.
Eligiblity criteria.--To be designated as a renewal
community, a nominated areas must meet the following
criteria: (1) each census tract must have a poverty rate of
at least 20 percent; (2) in the case of urban area, at least
70 percent of the households have incomes below 80 percent of
the median income of households within the local government
jurisdiction; (3) the unemployment rate is at least 1.5 times
the national unemployment rate; and (4) the area is one of
pervasive poverty, unemployment, and general distress. Those
areas with the highest average ranking of eligibility factors
(1), (2), and (3) above would be designated as renewal
communities. A nominated area within the District of Columbia
becomes a renewal community (without regard to its ranking of
eligibility factors) provided that it satisfies the area and
eligibility requirements and the required State and local
commitments described below. The Secretary of HUD shall take
into account in selecting areas for designation the extent to
which such areas have a high incidence of crime, as well as
whether the area has census tracts identified in the May 12,
1998, report of the General Accounting Office regarding the
identification of economically distressed areas.
There are no geographic size limitations placed on renewal
communities. Instead, the boundary of a renewal community
must be continuous. In addition, the renewal community must
have a minimum population of 4,000 if the community is
located within a metropolitan statistical area (at least
1,000 in all other cases) and a maximum population of not
more than 200,000. The population limitations do not apply to
any renewal community that is entirely within an Indian
reservation.
Required State and local communities.--In order for an area
to be designated as a renewal community, State and local
governments are required to submit (1) a written course of
action in which the State and local governments promise to
take at least four governmental actions within the nominated
area from a specified list of actions, and (2) a list of at
least four economic measures the State and local governments
promise to take (from a specified list of measures) if the
area is designated as a renewal community.
Empowerment zones and enterprise a communities seeking
designation as renewal communities.--An empowerment zone or
enterprise community can apply for designation as a renewal
community. If a renewal community designation is granted,
then an area's designation as an empowerment zone or
enterprise community ceases as of the date the area's
designation as a renewal community takes effect.
Tax incentives for renewal communities
The following tax incentives generally would be available
during the period beginning July 1, 2001, and ending December
31, 2009.
100-percent capital gain exclusion.--The bill provides a
100-percent capital gains exclusion for gain from the sale of
a qualified community asset acquired after June 30, 2001 and
before January 1, 2010, and held for more than five years. A
``qualified community asset'' includes: (1) qualified
community stock (meaning original-issue stock purchased for
cash in a renewal community business); (2) a qualified
community partnership interest (meaning a partnership
interest acquired for cash in a renewal community business);
and (3) qualified community business property (meaning
tangible property originally used in a renewal community
business by the taxpayer) that is purchased or
substantially improved after June 30, 2001.
A ``renewal community business'' is similar to the present-
law definition of an enterprise zone business. Property will
continue to be a qualified community asset if sold (or
otherwise transferred) to a subsequent purchaser, provided
that the property continues to represent an interest in (or
tangible property used in) a renewal community business.
[[Page H6818]]
The termination of an area's status as a renewal community
will not affect whether property is a qualified community
asset, but any gain attributable to the period before July 1,
2001, or after December 31, 2014, will not be eligible for
the exclusion.
Renewal community employment credit.--A 15-percent wage
credit is available to employers for the first $10,000 of
qualified wages paid to each employee who (1) is a resident
of the renewal community, and (2) performs substantially all
employment services within the renewal community in a trade
or business of the employer. The wage credit rate applies to
qualifying wages paid after June 30, 2001, and before January
1, 2010.
Wages that qualify for the credit are wages that are
considered ``qualified zone wages'' for purposes of the
empowerment zone wage credit (including coordination with the
Work Opportunity Tax Credit). In general, any taxable
business carrying out activities in the renewal community may
claim the wage credit.
Commercial revitalization deduction.--The bill allows each
State to allocate up to $12 million of ``commercial
revitalization expenditures'' to each renewal community
located within the State for each calendar year after 2001
and before 2010 ($6 million for the period of July 1, 2001
through December 31, 2001). The appropriate State agency will
make the allocations pursuant to a qualified allocation plan.
A ``commercial revitalization expenditure'' means the cost
of a new building or the cost of substantially rehabilitating
an existing building. The building must be used for
commercial purposes and be located in a renewal community. In
the case of the rehabilitation of an existing building, the
cost of acquiring the building will be treated as qualifying
expenditures only to the extent that such costs do not exceed
30 percent of the other rehabilitation expenditures. The
qualifying expenditures for any building cannot exceed $10
million.
A taxpayer can elect either to (a) deduct one-half of the
commercial revitalization expenditures for the taxable year
the building is placed in service or (b) amortize all the
expenditures ratably over the 120-month period beginning with
the month the building is placed in service. No depreciation
is allowed for amounts deducted under this provision. The
adjusted basis is reduced by the amount of the commercial
revitalization deduction, and the deduction is treated as a
depreciation deduction in applying the depreciation recapture
rules (e.g., sec. 1250).
The commercial revitalization deduction is treated in the
same manner as the low income housing credit in applying the
passive loss rules (sec. 469). Thus, up to $25,000 of
deductions (together with the other deductions and credits
not subject to the passive loss limitation by reason of
section 469(i)) are allowed to an individual taxpayer
regardless of the taxpayer's adjusted gross income. The
commercial revitalization deduction is allowed in computing a
taxpayer's alternative minimum taxable income.
Additional section 179 expensing.--A renewal community
business is allowed an additional $35,000 of section 179
expensing for qualified renewal property placed in service
after June 30, 2001, and before January 1, 2010. The section
179 expensing allowed to a taxpayer is phased out by the
amount by which 50 percent of the cost of qualified renewal
property placed in service during the year by the taxpayer
exceeds $200,000. The term ``qualified renewal property'' is
similar to the definition of ``qualified zone property''
under section 1397C.
Expensing of environmental remediation costs
(``brownfields'').--A renewal community is treated as a
``targeted area'' under section 198 (which permits the
expensing of environmental remediation costs). Thus,
taxpayers can elect to treat certain environmental
remediation expenditures that otherwise would be capitalized
as deductible in the year paid or incurred. This provision
applies to expenditures incurred after June 30, 2001, and
before January 1, 2010.
Extension of work opportunity tax credit (``WOTC'').--The
bill expands the high-risk youth and qualified summer youth
categories in the WOTC to include qualified individuals who
live in a renewal community.
Effective Date
Renewal communities must be designated within 24 months
after publication of regulations by HUD. The tax benefits
available in renewal communities are effective for the period
beginning July 1, 2001, and ending December 31, 2009.
B. Extension and Expansion of Empowerment Zone Incentives (secs. 201-
205 of the bill)
Present Law
Round I empowerment zones
The Omnibus Budget Reconciliation Act of 1993 (``OBRA
1993'') authorized the designation of nine empowerment zones
(``Round I empowerment zones'') and 95 enterprise communities
to provide tax incentives for businesses to locate within
targeted areas designated by the Secretaries of HUD and
Agriculture. The targeted areas must have a condition of
pervasive poverty, high unemployment, and general economic
distress, and satisfy certain eligibility criteria,
including specified poverty rates and population and
geographic size limitations. Six of the empowerment zones
are located in urban areas and three are located in rural
areas. The Taxpayer Relief Act of 1997 (``1997 Act'')
authorized the designation of two additional Round I urban
empowerment zones.
Businesses in the 11 Round I empowerment zones qualify for
the following tax incentives: (1) a 20-percent wage credit
for the first $15,000 of wages paid to a zone resident who
works in the empowerment zone, (2) an additional $20,000 of
section 179 expensing for qualifying zone property, and (3)
expanded tax-exempt financing for certain qualifying zone
facilities. Businesses in the enterprise communities are
eligible for the expanded tax-exempt financing benefits, but
not the other tax incentives available to empowerment zones.
The tax incentives with respect to the empowerment zones
designated by OBRA 1993 generally are available during the
10-year period of 1995 through 2004. The tax incentives with
respect to the two additional Round I empowerment zones
generally are available during the 10-year period of 2000
through 2009 (except for the wage credit, which expires after
2007).
Round II empowerment zones
The 1997 Act also authorized the designation of 20
additional empowerment zones (``Round II empowerment
zones''), of which 15 are located in urban areas and five are
located in rural areas. Businesses in the Round II
empowerment zones are not eligible for the wage credit, but
are eligible to receive up to $20,000 of additional section
179 expensing. Businesses in the Round II empowerment zones
also are eligible for more generous tax-exempt financing
benefits than those available in the Round I empowerment
zones. Specifically, the tax-exempt financing benefits for
the Round II empowerment zones are not subject to the State
private activity bond volume caps (but are subject to
separate per-zone volume limitations), and the per-business
size limitations that apply to the Round I empowerment zones
and enterprise communities (i.e., $3 million for each
qualified enterprise zone business with a maximum of $20
million for each principal user for all zones and
communities) do not apply to qualifying bonds issued for
Round II empowerment zones. The tax incentives with respect
to the Round II empowerment zones generally are available
during the 10-year period of 1999 through 2008.
explanation of provision
Extension of tax incentives for Round I and Round II
empowerment zones
The designation of empowerment zone status for Round I and
Round II empowerment zones (other than the District of
Columbia Enterprise Zone) is extended through December 31,
2009. In addition, the 20-percent wage credit is made
available in all Round I and II empowerment zones for
qualifying wages paid or incurred after December 31, 2001.
The credit rate remains at 20 percent (rather than being
phased down) through December 31, 2009, in Round I and Round
II empowerment zones.
In addition, $35,000 (rather than $20,000) of additional
section 179 expensing is available for qualified zone
property placed in service in taxable years beginning after
December 31, 2001, by a qualified business in any of the
empowerment zones. Businesses in the D.C. Enterprise Zone are
entitled to the additional section 179 expensing until the
termination of the D.C. zone designation. The bill also
extends an empowerment zone's status as a ``targeted area''
under section 198 (thus permitting expensing of environmental
remediation costs). The bill applies to expenses incurred
after December 31, 2001, and before January 1, 2010.
Businesses located in Round I empowerment zones (other than
the D.C. Enterprise Zone) also are eligible for the more
generous tax-exempt bond rules that apply under present law
to businesses in the Round II empowerment zones (sec.
1394(f)). The bill applies to tax-exempt bonds issued after
December 31, 2001. Bonds that have been issued by businesses
in Round I zones before January 1, 2002, are not taken into
account in applying the limitations on the amount of new
empowerment zone facility bonds that can be issued under the
bill.
Nine new empowerment zones
The Secretaries of HUD and Agriculture are authorized to
designate nine additional empowerment zones (``Round III
empowerment zones''). Seven of the Round III empowerment
zones would be located in urban areas, and two would be
located in rural areas.
The eligibility and selection criteria for the Round III
empowerment zones are the same as the criteria that applied
to the Round II empowerment zones. The Round III empowerment
zones must be designated by January 1, 2002, and the tax
incentives with respect to the Round III empowerment zones
generally are available during the period beginning on
January 1, 2002, and ending on December 31, 2009.
Businesses in the Round III empowerment zones are eligible
for the same tax incentives that, under the bill, are
available to Round I and Round II empowerment zones (i.e., a
20-percent wage credit, an additional $35,000 of section 179
expensing, and the enhanced tax-exempt financing benefits
presently available to Round II empowerment zones). The Round
III empowerment zones also are considered ``targeted areas''
for purposes of permitting expensing of certain environmental
remediation costs under section 198.
effective date
The extension of the existing empowerment zone designations
is effective after the date of enactment.
The extension of the tax benefits to existing empowerment
zones (i.e., the expanded
[[Page H6819]]
wage credit, the additional section 179 expensing, the
brownfields designation, and the more generous tax-exempt
bond rules generally is effective after December 31, 2001.
The new Round III empowerment zones must be designated by
January 1, 2002, and the tax incentives with respect to the
Round III empowerment zones generally are available during
the period beginning on January 1, 2002, and ending on
December 31, 2009.
C. Rollover of gain from the sale of a qualified empowerment zone
investment (sec. 206 of the bill)
present law
In general, gain or loss is recognized on any sale,
exchange, or other disposition of property. A taxpayer (other
than a corporation) may elect to roll over without payment of
tax any capital gain realized upon the sale of qualified
small business stock held for more than six months where the
taxpayer uses the proceeds to purchase other qualified small
business stock within 60 days of the sale of the original
stock.
explanation of provision
Under the bill, a taxpayer can elect to roll over capital
gain from the sale or exchange of any qualified empowerment
zone asset purchased after the date of enactment and held for
more than one year (``original zone asset'') where the
taxpayer uses the proceeds to purchase other qualifying
empowerment zone assets in the same zone (``replacement zone
asset'') within 60 days of the sale of the original zone
asset. The holding period of the replacement zone asset
includes the holding period of the original zone asset,
except that the replacement zone asset must actually be held
for more than one year to qualify for another tax-free
rollover. The basis of the replacement zone asset is reduced
by the gain not recognized on the rollover. However, if the
replacement zone asset is qualified small business stock (as
defined in sec. 1202), the exclusion under section 1202 would
not apply to gain accrued on the the original zone assets. A
``qualified empowerment zone asset'' means an asset that
would be a qualified community asset if the empowerment zone
were a renewal community (and the asset is acquired after the
date of enactment of the bill). Assets in the D.C. Enterprise
Zone are not eligible for the tax-free rollover treatment.
effective date
The provision is effective for qualifying assets purchased
after the date of enactment.
D. Increased exclusion of gain from the sale of qualifying empowerment
zone stock (sec. 207 of the bill)
present law
Under present law, an individual, subject to limitations,
may exclude 50 percent of the gain from the sale of
qualifying small business stock held more than five years
(sec. 1202).
explanation of provision
The exclusion for small business stock is increased to 60
percent for stock purchased after the date of enactment in a
corporation that is a qualified business entity and that is
held for more then five years. A ``qualified business
entity'' means a corporation that satisfies the requirements
of a qualifying business under the empowerment zone rules
(sec. 1379B(b)) during substantially all the taxpayer's
holding period.
effective date
The provision is effective for qualified stock purchased
after the date of enactment.
E. New markets tax credit (sec. 301 of the bill)
present law
Some tax incentives are available to taxpayers making
investments and loans in low-income communities. For example,
tax incentives are available to taxpayers that invest in
specialized small business investment companies licensed by
the Small Business Administration to make loans to, or equity
investments in, small businesses owned by persons who are
socially or economically disadvantaged.
explanation of provision
The bill creates a new tax credit for qualified equity
investments made to acquire stock in a selected community
development entity (``CDE''). The maximum annual amount of
qualifying equity investments is capped as follows:
------------------------------------------------------------------------
Maximum qualifying equity
Calendar year investment
------------------------------------------------------------------------
2001............................... $1.0 billion
2002-2003.......................... $1.5 billion per year
2004-2005.......................... $2.0 billion per year
2006-2007.......................... $3.5 billion per year
------------------------------------------------------------------------
The amount of the new tax credit to the investor (either
the original purchaser or a subsequent holder) is (1) a five-
percent credit for the year in which the equity interest is
purchased from the CDE and the first two anniversary dates
after the interest is purchased from the CDE, and (2) a six
percent credit on each anniversary date thereafter for the
following four years. The taxpayer's basis in the investment
is reduced by the amount of the credit (other than for
purposes of calculating the capital gain exclusion under
sections 1202, 1400B, and 1400F). The credit is subject to
the general business credit rules.
A CDE is any domestic corporation or partnership (1) whose
primary mission is serving or providing investment capital
for low-income communities or low-income persons, (2) that
maintains accountability to residents of low-income
communities through representation on governing or advisory
boards, or otherwise and (3) is certified by the Treasury
Department as an eligible CDE. No later than 60 days after
enactment, the Treasury Department shall issue regulations
that specify objective criteria to be used by the Treasury to
allocate the credits among eligible CDEs. In allocating the
credits, the Treasury Department will give priority to
entities with records of having successfully provided capital
or technical assistance to disadvantaged businesses or
communities.
If a CDE fails to sell equity interests to investors up to
the amount authorized within five years of the authorization,
then the remaining authorization is canceled. The Treasury
Department can authorize another CDE to issue equity
interests for the unused portion. No authorization can be
made after 2014.
A ``qualified equity investment'' is defined as stock or a
similar equity interest acquired directly from a CDE in
exchange for cash. Substantially all of the investment
proceeds must be used by the CDE to make ``qualified low-
income community investments,'' meaning equity investments
in, or loans to, qualified active businesses located in low-
income communities, certain financial counseling and other
services specified in regulations to businesses and residents
in low-income communities.
The stock or equity interest cannot be redeemed (or
otherwise cashed out) by the CDE for at least seven years. If
an entity fails to be a CDE during the seven-year period
following the taxpayer's investment, or if the equity
interest is redeemed by the issuing CDE during that seven-
year period, then any credits claimed with respect to the
equity interest are recaptured (with interest) and no further
credits are allowed.
A ``low-income community'' is defined as census tracts with
either (1) poverty rates of at least 20 percent (based on the
most recent census data), or (2) median family income which
does not exceed 80 percent of the greater of metropolitan
area income or statewide median family income (for a non-
metropolitan census tract, 80 percent of non-metropolitan
statewide median family income).
A ``qualified active business'' is defined as a business
which satisfies the following requirements: (1) at least 50
percent of the total gross income of the business is derived
from the active conduct of trade or business activities in
low-income communities; (2) a substantial portion of the use
of the tangible property of such business is used within low-
income communities; (3) a substantial portion of the services
performed for such business by its employees is performed in
low-income communities; and (4) less than 5 percent of the
average aggregate of unadjusted bases of the property of
such business is attributable to certain financial
property or to collectibles held for sale to customers).
There is no requirement that employees of the business be
residents of the low income community.
Rental of improved commercial real estate located in a low-
income community is a qualified active business, regardless
of the characteristics of the commercial tenants of the
property. The purchase and holding of unimproved real estate
is not a qualified active business. In addition, a qualified
active business does not include (a) any business consisting
predominantly of the development or holding of intangibles
for sale or license; (b) operation of any facility described
in sec. 144(c)(6)(B); or (c) any business if a significant
equity interest in such business is held by a person who also
holds a significant equity interest in the CDE. A qualified
active business can include an organization that is organized
on a non-profit basis.
effective date
The provision is effective for qualified investment made
after December 31, 2000.
F. Increase Low-Income Housing Tax Credit Cap and Related Program
Modifications (Secs. 401-407 of the Bill)
present law
The low-income housing tax credit may be claimed annually
over a 10-year period for the cost of rental housing occupied
by tenants having incomes below specified levels. The credit
percentage of newly constructed or substantially
rehabilitated housing that is not Federally subsidized is
adjusted monthly by the IRS so that the 10 annual
installments have a present value of 70 percent of the total
qualified expenditures. The credit percentage for new
substantially rehabilitated housing also receiving most other
Federal subsidies and for existing housing is calculated to
have a present value of 30 percent of the total qualified
expenditures. The new credit authority provided annually is
$1.25 per resident of each State. Projects that also receive
financing with proceeds of tax-exempt bonds issued subject to
the private bond volume limit and receive the low income
housing credit outside the State's credit cap.
explanation of provision
The bill increases the annual State credit caps from $1.25
to $1.75 per resident during the period between years 2001
and 2006 as follows:
Applicable
Calendar year credit amount
2001..............................................................$1.35
2002...............................................................1.45
2003...............................................................1.55
2004...............................................................1.65
2005...............................................................1.70
2006...............................................................1.75
[[Page H6820]]
In addition, beginning in 2001, the per capita cap is
modified so that small population states are given a minimum
of $2 million of annual credit cap. The $1.75 per capita
credit cap and the $2 million amount are indexed for
inflation beginning in 2007. The bill also makes several
programmatic changes to the credit.
effective date
The provisions generally are effective for calendar years
after December 31, 2000, and buildings placed in service
after such date in the case of projects that also receive
financing with proceeds of tax-exempt bonds subject to the
private activity bond volume limit which are issued after
such date.
G. Increase in Private Activity Bond State Volume Limits (Sec. 501 of
the Bill)
present law
Interest on bonds issued by States and local governments is
excluded from income if the proceeds of the bonds are used to
finance activities conducted or paid for by the governmental
units. Interest on bonds issued by these governmental units
to finance activities carried out and paid for by private
persons (``private activity bonds'') is taxable unless the
activities are specified in the Code. Private activity bonds
on which interest may be tax exempt include bonds for
privately-operated transportation facilities (airports, docks
and wharves, mass transit, and high speed rail facilities),
privately-owned or privately-provided municipal services
(water, sewer, solid waste disposal, and certain electric and
heating facilities), economic development (small
manufacturing facilities and redevelopment in economically
depressed areas), certain social programs (low-income rental
housing, qualified mortgage bonds, student loan bonds, and
exempt activities of charitable organizations described in
Code sec. 501(c)(3)).
The volume of tax-exempt private activity bonds that States
and local governments may issue in each calendar year is
limited by State-wide volume limits. The volume limits do not
apply to private activity bonds to finance airports, docks
and wharves, certain governmentally owned, but privately
operated, solid waste disposal facilities, certain high speed
rail facilities, and certain types of private activity tax-
exempt bonds that are subject to other limits on their volume
(qualified veterans' mortgage bonds and certain empowerment
zone and enterprise community bonds). The current annual
volume limits are $50 per resident of the State or $150
million (if greater). An increase in these volume limits to
$75 per resident or $225 million (if greater) is scheduled to
be phased-in during calendar years 2003-2007.
explanation of provision
The bill accelerates the currently scheduled phased
increase in the present-law annual State private activity
bond volume limits to $75 per resident of each State or $225
million (if greater). The increase is phased-in as follows,
beginning in calendar year 2001:
------------------------------------------------------------------------
Calendar year Volume limit
------------------------------------------------------------------------
2001........................... $55 per resident ($165 million if
greater)
2002........................... $60 per resident ($180 million if
greater)
2003........................... $65 per resident ($195 million if
greater)
2004, 2005, 2006............... $70 per resident ($210 million if
greater)
2007 and thereafter............ $75 per resident ($225 million if
greater)
------------------------------------------------------------------------
effective date
The volume limit increases are effective beginning in
calendar year 2001.
ESTIMATED REVENUE EFFECTS ON H.R. 4923, THE ``COMMUNITY RENEWAL AND NEW MARKETS ACT OF 2000''--FISCAL YEARS 2001-2005
[Millions of Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Provision Effective 2001 2002 2003 2004 2005 2001-05
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Designate 40 renewal communities, 8 of which are in rural areas, DOE \1\ -75 -545 -576 -578 -606 -2,380
to receive the following tax benefits: 0% capital gains tax rate
on qualifying assets held more than 5 years; deduction for
qualified revitalization expenditures, capped at $6 million per
community in 2001 and $12 million thereafter; an additional
$35,000 of section 179 expensing; expensing of qualifying
environmental remediation costs; a wage credit of 15% on first
$10,000 of qualified wages........................................
2. Provide new markets tax credit with allocation authority of $1.0 ima 12/31/00 -2 -18 -115 -246 -365 -747
billion in 2001, $1.5 billion in 2002 and 2003, $2.0 billion in
2004 and 2005, and $3.5 billion in 2006 and 2007..................
3. Designate 9 new empowerment zones, extend present-law DOE \2\ ......... -246 -476 -474 -541 -1,737
empowerment zone designations through 12/31/09, expand the 20%
wage credit to all empowerment zones, increase the additional
section 179 expensing to $35,000 for all empowerment zones
including D.C. in 2002, and extend the more favorable round II tax
exempt financing rules to all existing and new empowerment zones
excluding D.C.....................................................
4. Capital gain rollover of empowerment zone assets and increased ima DOE (\3\) -3 -15 -32 -52 -102
exclusion of gain on sale of certain empowerment zone investments.
5. Improvements in the Low-Income Housing Credit--increase per tyba 12/31/00 -4 -24 -68 -140 -239 -475
capita credit to $1.35 in 2001, $1.45 in 2002, $1.55 in 2003,
$1.65 in 2004, $1.70 in 2005, $1.75 in 2006, and indexed for
inflation thereafter; $2 million small State minimum beginning in
2001 and indexed for inflation beginning in 2007; modify stacking
rules and credit allocation rules; certain Native American housing
assistance disregarded in determining whether building is
Federally subsidized for purposes of the low-income housing credit
6. Accelerate 5-year phasein of private activity bond volume cap... cyba 12/31/00 -10 -39 -80 -122 -155 -406
------------------------------------------------------------------------------------
Net total.................................................... ................. -91 -875 -1,330 -1,592 -1,958 -5,847
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The Secretary of Housing and Urban Development must prescribe regulations for the nomination process no later than 4 months after the date of
enactment.
\2\ Area may be designated as an empowerment zone any time after the date of enactment and before 1/1/02. The tax benefits generally become effective
after 12/31/01 and terminate on 12/31/09.
\3\ Loss of less than $500,000.
Note: Details may not add to totals due to rounding.
Legend for ``Effective'' column: cyba = calendar years beginning after; DOE = date of enactment; ima = investments made after; tyba = taxable years
beginning after.
Mr. ENGLISH. Mr. Speaker, I reserve the balance of my time.
Mr. SCOTT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, first of all, this is an awkward process because the
bill was just printed up late last night, and we have not gotten a
final version of it. I assume it is the same version that we saw a
couple of days ago.
This bill contains some provisions that are truly troublesome; and we
are in the process right now, because we are under suspension of the
rules, where there is no opportunity to amend the bill to eliminate the
problem created by the charitable choice provisions of the bill. Now,
usually, even if we have a closed rule and cannot offer amendments, at
least we have a rule and we can argue about whether or not we should
have had the opportunity to offer an amendment. But we do not even have
that. We have to vote this thing up or down.
We have heard comments about the good in the bill. The charitable
choice provision is a provision that will allow direct funding of
churches, and that creates a number of problems constitutionally as
well as how it is implemented.
For example, Mr. Speaker, the Supreme Court, in various cases, has
ruled that we cannot constitutionally fund pervasively sectarian
organizations. And they use several standards: one, whether or not the
program is located near a house of worship; an abundance of religious
symbols on the premises; religious discrimination in the institution's
hiring practices; the presence of religious activities; the purposeful
articulation of a religious mission.
Well, if we look at those problems and then we look at charitable
choice, where this bill will allow the direct funding of churches
located near a house of worship, this is in a house of worship. An
abundance of religious symbols. The bill specifically says we cannot
require the removal of religious symbols. Religious discrimination in
an institution's hiring practices. That is in the bill. They can
discriminate. Presence of religious activities. It is in the church. So
on and so forth.
This is so clearly pervasively sectarian, and, Mr. Speaker, that is
why many organizations have written us. In one letter, that came today,
a group wrote, ``This charitable choice provision threatens the
beneficiaries' religious liberties by failing to protect them from
discrimination based on their refusal to participate in religious
activities by a tax-funded religious provider.'' The provision further
threatens to excessively entangle the institutions of church and State,
and they oppose the charitable choice provisions.
The list includes the American Association of University Women, the
American Baptist Churches, the American Civil Liberties Union, the
American Jewish Congress, the Americans United for Separation of Church
and State, the Baptist Joint Committee for Public Affairs, and that is
just through the B's in the list. That is why this provision should be
deleted.
Mr. Speaker, there is another problem with the bill, and that is the
way it deals with drug treatment programs. By specifically funding the
church-run drug programs, we fund in the bill findings by Congress, and
let me read them so my colleagues will know what is in the bill:
``Congress finds that establishing unduly rigid or uniform educational
qualifications for counselors and other personnel in drug treatment
[[Page H6821]]
programs may undermine the effectiveness of such programs, and such
educational requirements for counselors and other personnel may hinder
or prevent the provision of needed drug treatment services.''
{time} 1200
It further says that ``the Government shall not discriminate against
education and training provided to such personnel by religious
organizations so long as education and training includes basic content
substantially equivalent to the content provided by nonreligious
organizations that the state or local government would credit for
purposes of determining whether the relevant requirements have been
satisfied.''
That is a provision that has provoked a number of drug counseling
organizations to write to oppose the bill, including the American
Counseling Association, the American Mental Health Counselors
Association, the American Public Health Association, the American
Psychological Association, the American Society for Addiction Medicine,
and the Anxiety Disorder Association of America. That just gets us down
through the A's.
There is another provision in here that adds insult to injury; and
that is, if a person does not want to participate in the church-run
program, that they are entitled to be referred to a separate but equal
program somewhere else.
I think it is an insult to suggest that Brown v. Board of Education
is not alive and well in America.
But there is a final provision in the bill that I think is
particularly egregious, and this is a provision that allows the
sponsors of Federal programs to discriminate in their hiring based on
religion.
There is a provision in section 582(e) of the bill that says
specifically that the title VII prohibition against discrimination in
hiring based on religion will not apply to these programs.
Civil rights laws should apply to federally funded programs, Mr.
Speaker. The idea that religious bigotry might take place with Federal
funds in this bill is not speculative. The bill specifically provides
that religious sponsors are not covered by title VII of the Civil
Rights Act.
During the prior debates we have had on charitable choice, we have
heard how this would work. Cited on page
H 4687 of the Congressional Record on June 22 of last year, the
gentleman from Texas (Mr. Edwards) asked a major sponsor of charitable
choice if a religious organization using Federal funds could fire or
refuse to hire a perfectly qualified employee because of that person's
religion; and the response from the supporter of charitable choice,
which was never disputed during that debate or subsequent debates was,
``a Jewish organization can fire a Protestant if they choose.''
Last month, the supporter of charitable choice was quoted in
Congressional Quarterly saying that ``organizations should not be
barred from Federal funds because they are a Christian organization and
they like to hire Christians.''
Mr. Speaker, there was a time when some Americans because of their
religion were not considered qualified for certain jobs. In fact,
before 1960 it was thought a Catholic could not be elected president.
And before the civil rights laws of the 1960s, people of certain
religions suffered invidious discrimination in employment routinely.
Fortunately, the civil rights laws of the 1960's put an end to that
practice and we no longer see signs suggesting that those of certain
religions need not apply for certain jobs.
Now, when those civil rights laws were passed, there was a common
sense exception that allowed religious organizations to discriminate
based on religion. When, for example, a Catholic church hires a priest,
they can, of course, require that the prospective priest be Catholic.
Or when a Jewish synagogue hires a rabbi, they can, of course, require
that the rabbi be Jewish. But those exemptions apply to private funds,
not Federal funds.
Many religious organizations already sponsor Federal funds. Catholic
charities will sponsor federally funded programs. But one does not have
to be Catholic to get a job because the civil rights laws apply to
Federal funds.
Lutheran Family Services sponsors Federally funded programs, but one
does not have to be Lutheran to get a job. Yet, section 582(e)
specifically provides that programs' sponsors can look a job applicant
in the eye and say that, although this is being run with Federal
taxpayers' money, they do not qualify for a job because they do not
hire their kind because of their religion.
That is wrong. This bill should not pass with this. We do not have an
opportunity to amend the bill because of the procedural situation we
are in.
This bill, therefore, ought to be opposed because it is
unconstitutional, because it funds pervasively sectarian organizations.
It ought to be opposed because it insults professional drug counselors
by denigrating their professional credentials. And the bill ought to be
opposed because it brings back separate but equal in drug programs and
specifically provides for religious bigotry in hiring with taxpayers'
money.
Mr. Speaker, I frankly do not care how much money might come to my
community. I am not going to turn the clock back on fundamental civil
and constitutional rights.
Mr. Speaker, I reserve the balance of my time.
Mr. ENGLISH. Mr. Speaker, it is a great privilege for me to yield 4
minutes to the gentleman from Missouri (Mr. Talent) one of the most
active advocates of community renewal legislation over the last few
Congresses.
Mr. TALENT. Mr. Speaker, I thank the gentleman for yielding me the
time. I appreciate his advocacy on the Committee on Ways and Means and
generally for these kinds of communities. I know he represents a number
of distressed communities. I just want to thank him for his role in
getting this bill out here.
Before I make my statement, I want to take a few minutes or a brief
moment to respond to the comments made by my friend, the gentleman from
Virginia (Mr. Scott). It is a sign of his typical principle stand and
his eloquence that he made such a powerful statement.
But let me just say that the part of the bill that he is referring to
is a provision that simply allows faith-based drug and alcohol
counseling groups to participate in Federal programs in this sense,
that a voucher would be given to people who have substance abuse or
alcohol problems, and they could, if they wished, use that voucher at a
faith-based program if they think that would be more effective and if
that fits with their life.
This is similar to what we already do with regard to day-care
programs, with regard to community service block grants. It is similar
to what we did in the welfare reform bill. It simply gives individuals
a choice. And the reason is, quite frankly, that these groups are
highly effective in stopping drug abuse. They have a 60 to 80 percent
cure rate.
It is kind of foolish to operate a Federal drug and alcohol substance
abuse program and exclude from participation those groups which have
the greatest success in stopping drug or alcohol abuse. We simply want
them to be in in the same basis in which we have allowed similar groups
to participate in similar programs.
There is no constitutional problem because the choice vests in the
individual. There is no more problem here than there is when a student
uses a Pell Grant to go to Notre Dame or Yeshiva. It is the same
principle.
I understand the concern of the gentleman, and I too regret that we
brought this up under a summary procedure. And yet I would say it has
been so long since we have passed a comprehensive program designed to
help poor people in this country that I will take it any way I can get
it. If this is the only way I can get it here, I will say to the
gentleman I will take it this way.
I am sorry that he did not have more chance to study it and to
comment upon it, and I appreciate his position.
Let me just say that this is the most significant anti-poverty
program to come out of Washington in decades. It is significant not
only in its size and its scope but also in the fact that it represents
a true bipartisan consensus.
This bill is strongly supported by the President of the United
States, without whose advocacy it would not be here. It is strongly
supported by my friend, the gentlewoman from New York (Ms. Velazquez);
by my friend, the gentleman from Chicago (Mr. Davis); by the gentleman
from Oklahoma (Mr.
[[Page H6822]]
Watts), who will speak later; by the gentleman from Pennsylvania (Mr.
English); by me; by, of course, the gentleman from New York (Mr.
Rangel), the distinguished ranking member on the Committee on Ways and
Means, who graciously allowed his friend, the gentleman from Virginia
(Mr. Scott), to have the time to speak in opposition; and because it
represents principles we all agree on now.
We know the Federal Government cannot get people out of poverty by
itself. We also know that individuals cannot just pull themselves up by
the bootstraps when they are raised in communities where families are
in distress, where the institutions of private society that the rest of
us relied upon to help us grow and to be nurtured no longer exist. But
they can do it with help. They can do it with help from their
neighbors. And that is the key.
This bill is designed to increase the tools, the prestige, the
visibility of redevelopment groups, of neighborhood intermediaries who
are rebuilding the infrastructure of life in poor urban and rural
communities around America.
I have traveled, as have many of the other advocates for this bill,
around this country. I talked to people in San Antonio and Washington
and Missouri and Indianapolis about what they are doing to help their
neighbors. This are rebuilding these communities.
They are going to do it I think, Mr. Speaker, whether we do anything
about it or not. But we have the privilege and the opportunity to help
them with this bill.
I am pleased and proud to be part of a body that has come together
without regard to party; that has set aside ideological baggage; that
has worked with the President of the United States, who has taken the
lead with the Speaker of the House.
Let us get this bill passed, move it over to the Senate, and show the
people we can get this done for the most vulnerable among our fellow
citizens.
Mr. SCOTT. Mr. Speaker, I yield 5 minutes to the gentleman from New
York (Mr. Rangel) the ranking member of the Committee on Ways and
Means.
(Mr. RANGEL asked and was given permission to revise and extend his
remarks.)
Mr. RANGEL. Mr. Speaker, I rise in support of this piece of
legislation. It might be the most historic bipartisan piece of
legislation that we have been able to agree on passed and signed into
law in this session.
It is very unusual when the President of the United States can get
together with the Speaker and say that something has to be done when we
find this country enjoying such a robust economy and yet, know, that in
many of the rural and inner-city areas, they have not the slightest
idea as to what Chairman Greenspan is talking about and to see how the
Speaker was able to work with the gentleman from Missouri (Mr. Talent),
the gentleman from Oklahoma (Mr. Watts), the gentleman from Louisiana
(Mr. Jefferson), the gentleman from Illinois (Mr. Davis) and to see
what we have that has worked with empowerment zones; what we can do to
improve upon these things and to see what concepts really worked in
order to get access to capital, which is so necessary if we are going
to talk about economic growth.
The jobs from our communities, most of the jobs in the United States,
they do not come from the big firms. They come from small business
people that hire people from the community. And it is these people that
cannot get people to really invest so that they can expand and really
hire more people from the community.
But we have all types of programs to encourage investment overseas.
We have the Overseas Protection Insurance Corporation that allows for
people to feel more secure. And so, what we have done is to snatch some
of those included in the bill and let people be able to feel just as
secure as investing in their own community as they would overseas.
We hear a lot of talk when trade bills come to the House floor about
how important it is going to be for us to expand our markets, how
important exports are going to be, how important it is to get people to
increase demand.
Well, if it can work for overseas markets, why can it not work for
Americans? We have got 2 million people locked up in jail in these
United States, more than all of the people in China, higher per capita
than any nation in the world. And we know that, with the proper
education and economic opportunity, it did not have to be this way.
We spend billions of dollars just keeping them in jail; where that,
if we could create an education and economic growth situation where
they know that they would be a part of it, they would opt not for jail
but opt to be a part of the prosperity that we are enjoying.
So if we are concerned about creating markets, why can we not go to
the poorer communities that we have to start talking about the same
full employment that we have on the national average to make certain
that every block, every road, every village, every community knows what
the concept of full employment can be.
And when people have money that, after they pay their expenses for
shelter and food and education and health care and start saving, it
means that there is more money available for more people to be able to
expand their businesses. But the most important thing is that they will
have what? Disposable income, so that they would again get more bang
for the buck, as we find that people that now have such limited incomes
will have more incomes to buy the things so America can continue
manufacturing.
The gentleman from Virginia (Mr. Scott) raises some legitimate
constitutional questions, and these things have to be studied. But also
we know when we are talking about treating people in drugs that we know
that there are institutions that spiritually do better than other
people that have been trained but still do not have the people that
have the type of faith which is necessary in order to do it.
When we start walking down this road, we take some gambles because
Minister Farakan has been very, very good in making certain that people
who are drug addicts, people who violate the law, people who go back to
jail time and time again that he has been able to cause these people to
join the Muslim religion, not drink alcohol, not be promiscuous, and
not to do drugs.
{time} 1215
And so when you are saying that you want it for one faith-based
organization, you open the door for others. I hope these type of things
can be corrected. But I want to commend the members of the committees
for working together in a bipartisan way and giving us a chance to vote
for something.
Mr. ENGLISH. Mr. Speaker, I yield 1 minute to the gentlewoman from
Connecticut (Mrs. Johnson), a distinguished member of the Committee on
Ways and Means who has been fighting for low-income housing.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the gentleman for
yielding time, and I rise in strong support of this bipartisan
legislation which will help revitalize our most disadvantaged
communities. It simply gives communities the tools they need to
revitalize their neighborhoods. It includes pro-growth tax incentives,
brownfields cleanup, regulatory relief, all things that will help
create jobs in our distressed cities.
I want to talk about one provision that not only deals with the
regeneration of the economic base of our cities but will enable people
to live close to their jobs by expanding the number of affordable
housing units in our distressed neighborhoods. This bill includes an
increase in the low-income housing tax credit cap and important reforms
to that program. Increasing the cap has the overwhelming support of the
Members of this House and will result in an expansion of the Federal-
State program that has produced more affordable rental housing across
America than any other program; but due to inflation, its value and its
power in our lives has been eroded 50 percent.
I ask strong support of the bill of my colleagues.
Mr. SCOTT. Mr. Speaker, I yield myself 30 seconds, and that is to
comment from a letter that I have received from several national
organizations which says that the National Institute of Drug Addiction
said that it is not the position to support these claims of 60 to 80
percent cure rates. One commonly cited study which is nearly 30 years
old has never been repeated and was not
[[Page H6823]]
published in a peer review journal. This letter was signed by, as I
indicated, about 20 or 30 national drug abuse organizations.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Pennsylvania (Mr. Kanjorski).
Mr. KANJORSKI. Mr. Speaker, I ask unanimous consent because of the
request for additional time on both sides that the Chair allow 10
minutes additional debate on both sides of the aisle.
The SPEAKER pro tempore (Mr. Simpson). Is there objection to the
request of the gentleman from Pennsylvania?
Without objection, each side is recognized for an additional 10
minutes.
There was no objection.
Mr. SCOTT. Mr. Speaker, I yield 3 minutes to the gentleman from New
York (Mr. LaFalce), the ranking member of the Committee on Banking and
Financial Services.
(Mr. LaFALCE asked and was given permission to revise and extend his
remarks.)
Mr. LaFALCE. I thank the gentleman for yielding me this time.
Mr. Speaker, an important component of today's bill is title VI,
America's private investment companies, also known as APIC. This title
incorporates the text of H.R. 2764 as passed by the House Committee on
Banking and Financial Services earlier this spring. H.R. 2764 was
introduced by myself, the gentleman from Pennsylvania (Mr. Kanjorski),
the gentlewoman from New York (Ms. Velazquez), and a number of other
Democrats last year.
APIC is a component of the administration's new markets initiative
and was in fact the first component of the new markets initiative to
receive congressional approval through a bipartisan vote of the House
Committee on Banking and Financial Services earlier this spring.
Approval of APIC represents a bold effort to bring economic
opportunities and quality jobs to individuals and communities being
left behind our strong economic expansion. APIC is structured to ensure
that Federal resources are targeted to create opportunities for lower-
income families and individuals. This is accomplished by providing $1
billion a year in Federal loan guarantees to a number of different
APICs, private investment companies, which will be established
specifically to invest in businesses operating in low-income
communities.
Under the legislation, substantially all investments made with APIC-
guaranteed loans or equity used to support such loans must be made in
low-income communities, defined as census tracts with poverty rates in
excess of 20 percent or median family income levels below 80 percent of
the local or State median. And successful APIC licensees must pursue
public-purpose goals, which include creating good-paying jobs, making
investments in low-income communities, and working with community-based
organizations and residents.
APIC is structured to make maximum use of scarce Federal resources.
Without going into the details, the bottom line is that a Federal
credit subsidy of only $36 million a year as determined by OMB will
create at least $7.5 billion in targeted investments over the next 5
years.
I would also like to note that this bill includes a number of other
critical Democratic and presidential initiatives, including the new
markets tax credit, the new markets venture capital program, the
creation of nine additional empowerment zones, and a 40 percent
increase in the volume cap for the low-income housing tax credit.
I would urge passage of this bill and immediate Senate action, also.
Mr. ENGLISH. Mr. Speaker, it gives me a great deal of pleasure to
yield 2 minutes to the distinguished gentleman from Illinois (Mr.
Weller), one of the leaders on the Committee on Ways and Means on the
issue of brownfields remediation.
(Mr. WELLER asked and was given permission to revise and extend his
remarks.)
Mr. WELLER. Mr. Speaker, I rise in strong support of this bipartisan
effort to help blighted communities across America. I stand in strong
support particularly of the expansion of the low-income housing tax
credit provisions, something that benefits every community in America.
I thought I would take my time just to draw attention to an issue I
feel that we could do more for in this legislation as it moves through
the legislative process, and that is the issue of brownfields. People
often wonder, what is a brownfield? As you drive through your rural or
your suburban or middle-class community or inner-city community, you
see that old abandoned gas station that no one ever buys and fixes up
or you see that old industrial park on the side of town that no one
ever buys and recycles or reuses or revitalizes, and you find out the
chief reason is because it needs some environmental cleanup; and
because of that financial liability, investors are hesitant to buy it.
In 1997 as part of the Balanced Budget Act, a group of us worked
successfully to provide a tax incentive, a tax incentive which
attracted private investors to buy these old brownfields, to clean them
up; and because of fiscal concerns at the time, we left it targeted to
low-income areas. Since then, as that provision has been working to
clean up and revitalize low-income areas, the folks that live in the
rural and suburban and middle-class communities have often said, Hey,
wait a second here. There are 425,000 brownfields across America. Only
about one-fifth of those qualify for the current tax incentive. Why not
help those blighted areas in those communities as well.
A group of us, in fact 22 of us on the Committee on Ways and Means,
cosponsored legislation to eliminate that targeting so every community,
rural and suburban and middle class could benefit from it as well.
Almost every member of the Committee on Ways and Means signed the
letter asking that it be included as part of this bipartisan package.
Mr. Speaker, my hope is that as we move through this process that we
can work together, the chairman, the ranking member, the Speaker as
well as the White House, to include expanded efforts to clean up so-
called brownfields. It is all about jobs. The average cleanup of a
brownfield is only about $500,000; but if you think of those
communities, and every community has one, has those blighted areas in
communities that we can recycle, reuse and revitalize, it will help
every American community. I ask that it be included as we move through
the process.
Thank you for this opportunity to speak regarding H.R. 4923, the
Community Renewal and New Markets Act. While I stand in support of this
bill, I would like to offer my concerns regarding a provision which was
not included in this bill.
For the past several months, I have been working with several of my
colleagues on the Ways and Means Committee to expand the eligible sites
allowed to deduct the cost of environmental remediation expenditures
under Section 198 of the Code to include all brownfield sites. This
provision has broad bipartisan support with 22 cosponsors from the Ways
and Means Committee. A similar provision was included in the Taxpayer
Refund and Relief Act of 1999 and the Senate's version of last year's
extenders bill S. 1792. We had hoped to have this provision included in
H.R. 4923, but were not afforded the opportunity because the bill was
never brought before the Ways and Means Committee.
Brownfields sites exist throughout all of our districts--abandoned
eyesores that blight our urban, rural and suburban communities drag
down local economies. Many brownfields properties are located in prime
business locations near critical infrastructure, including
transportation, and close to a productive workforce. As Members of
Congress, we should be striving to enact policies that put as many of
these sites as possible back into productive use, contributing to the
economic and producing good paying jobs where they are needed most.
The first step towards doing this is to remediate these sites
environmentally. The U.S. Conference of Mayors estimates that there are
over 400,000 brownfields sites across the country. We clearly cannot
limit the treatment of Section 198 to merely targeted areas.
Development of these sites will help restore many blighted areas,
create jobs where unemployment is high and ease pressure to develop
beyond the fringes of communities. Small, urban centered businesses
often benefit most directly by this redevelopment.
Some estimates suggest that there may be as many as 150,000
brownfield sites in urban areas and up to as many as 425,000
nationwide. In a recent survey, the U.S. Conference of Mayors study
estimates that approximately. 21,000 brownfield sites exist in 210
cities surveyed (large and small). This represents almost 81,000 acres
of land. Two-thirds of the 210 cities surveyed estimated that if their
local brownfields sites were redeveloped, it would
[[Page H6824]]
bring in additional tax revenues between $878 million and $2.4 billion
annually. More than 550,000 jobs could be created on former brownfields
sites. It is estimated that the average cost of brownfields cleanup is
$500,000.
In Chicago, Illinois, there are an estimated 2,000 brownfield sites.
According to the Conference of Mayors study, if these sites in Chicago
were cleaned up it would mean a $78 million increase in tax revenue and
an increase in 34,000 jobs. This would be very important to the local
economy.
Mr. Speaker, I ask that you and Chairman Archer continue to work with
myself and other members of the Ways and Means Committee who are
interested in removing the targeting requirement on the existing
brownfields expensing provision to allow brownfield sites to be cleaned
up in all of our districts. I ask that this provision be included in
the Conference Report on H.R. 4923.
Congress of the United States,
Washington, DC, June 9, 2000.
Hon. Bill Archer,
Chairman, House Ways and Means Committee, Longworth House
Office Building, Washington, DC.
Dear Chairman Archer: This letter is to urge you to include
in your chairman's mark for the pending Community
Revitalization tax package a provision included in H.R. 4003,
which expands the eligible sites allowed to deduct the cost
of environmental remediation expenditures under Section 198
of the Code to include all brownfield sites.
As you know, this provision has broad bipartisan support
with 22 cosponsors from the Ways and Means Committee. A
similar provision was included in the Taxpayer Refund and
Relief Act of 1999 and the Senate's version of last year's
extenders bill, S. 1792.
The community revitalization tax package agreed to by
President Clinton and Speaker Hastert, acknowledges the
importance of cleaning up so called ``brownfields'' by
allowing the expensing of clean up costs for such sites
located within the newly added empowerment zones and renewal
communities. This validates the appropriateness of the
expensing policy enacted in 1997 when Section 198 was added
to the Code.
However, brownfields are not limited to empowerment zones
and renewal communities. Brownfields sites exist throughout
our districts--abandoned eyesores that blight our urban,
rural and suburban communities and drag down local economies.
Many brownfields properties are located in prime business
locations near critical infrastructure, including
transportation, and close to a productive workforce. As
Members of Congress, we should be striving to enact policies
that put as many of these sites as possible back into
productive use, contributing to the economy and producing
good paying jobs where they are needed most.
The first step towards doing this is to remediate these
sties environmentally. The U.S. Conference of Mayors
estimates that there are over 400,000 brownfields sites
across the country. We clearly cannot limit the treatment of
Section 198 to merely targeted areas. Development of these
sites will help restore many blighted areas, create jobs
where unemployment is high and ease pressure to develop
beyond the fringes of communities. Small, urban centered
businesses often benefit most directly by this redevelopment.
Again, we urge you to include in your mark for the
community revitalization package the provision in H.R. 4003
which expands the eligible sites allowed to deduct the cost
of environmental remediation expenditures under Section 198
of the Code to include all brownfield sites. Simply lifting
this targeting requirement would lower the cost of the
measure to only $43 million.
Thank you for your consideration of this important issue.
Sincerely,
Phil Crane, Clay Shaw, Nancy Johnson, Amo Houghton, Wally
Herger, Jim McCrery, Dave Camp, Jim Ramstad, Jim
Nussle, Jennifer Dunn, Mac Collins, Rob Portman, Phil
English, Wes Watkins, JD Hayworth, Jerry Weller, Kenny
Hulshof, Scott McInnis, Ron Lewis, Mark Foley.
Charlie Rangel, Pete Stark, Bob Matsui, Bill Coyne, Sandy
Levin, Ben Cardin, Jim McDermott, Gerald Kleczka, John
Lewis, Richard Neal, Michael McNulty, William
Jefferson, John Tanner, Xavier Becerra, Karen Thurman,
Lloyd Doggett.
Mr. SCOTT. Mr. Speaker, I yield 3 minutes to the gentlewoman from New
York (Ms. Velazquez), who is the ranking member of the Committee on
Small Business.
(Ms. VELAZQUEZ asked and was given permission to revise and extend
her remarks.)
Ms. VELAZQUEZ. Mr. Speaker, I rise in strong support of H.R. 4923.
One of America's most resolute first ladies, Eleanor Roosevelt, once
said, ``The future belongs to those who believe in the beauty of their
dreams.''
We have heard throughout the last 10 years how America is in the
greatest economic expansion in our history. Jobs have been created at
an exponential rate and prosperity is everywhere. Well, almost
everywhere. You see, even in these times of great prosperity, many
Americans are being left behind. Too many areas across our Nation have
not seen the economic boom that has benefited so many of their fellow
citizens.
Indeed, the statistics show that our communities have unemployment
rates that are in some cases double the national average. What they
have seen is more of the same: poverty, joblessness and hopelessness.
Today, we have taken a large step toward breaking that cycle, and
breaking it permanently. H.R. 4923, the Community Renewal and New
Markets Act of 2000, is an unequaled effort providing a real chance for
business owners and entrepreneurs in rural and urban cities and towns
throughout America. This legislation will help attract investors to
places with high unemployment and too little hope for determining their
own future.
One of the sections of this bill, the New Markets Venture Capital
Program, provides venture capital, the principal financial tool that
has created a multitude of Internet and high-tech companies that
currently dot.coms the American business landscape.
In short, NMVCs are public-private partnerships that bring equity
investment and technical assistance to those areas that need it the
most.
Mr. Speaker, by creating these long-term partnerships between the
private sector and government, we are opening up a whole new
marketplace for American companies, and this is what our new enterprise
will do. It will harness the entrepreneurial power that exists in these
cities and towns. This initiative will rebuild these communities by
providing the necessary anchors, and not just a quick fix, that will
lead to real growth and opportunity.
Today, we are sending a message to every American, from the family in
rural Appalachia who does not even have safe drinking water, to the
Latina living in ``el barrio'' trying to make ends meet and the African
American youth looking for an alternative to running with the local
gang. This economic boom must benefit everyone and to ensure that they
too will be able to live the beauty of their dreams.
I urge passage of this legislation.
Mr. ENGLISH. Mr. Speaker, it gives me great pleasure to yield 4
minutes to the distinguished gentleman from Oklahoma (Mr. Watts), one
of the most distinguished advocates of community renewal in the House.
Mr. WATTS of Oklahoma. Mr. Speaker, today I rise in support of H.R.
4923, the Community Renewal and New Markets Act, which I was proud to
sponsor along with my good friends and colleagues, the gentleman from
Missouri (Mr. Talent) and the gentleman from Illinois (Mr. Davis).
America is truly blessed as we continue in the longest economic boom
in our history. But with all this extraordinary prosperity in every
region of the country, there is still an unseen hunger that we ignore
at great moral peril. It is a hunger that comes from struggling
neighborhoods where vacant properties become home to crack users who
destroy the sense of safety and security a community needs to grow and
prosper. These are the neighborhoods where potential business sites are
neglected because of the cost of environmental cleanup. These are the
neighborhoods where venture capital does not venture.
Despite the strongest economic growth in this Nation's history, too
many people living in America's poorest neighborhoods are still being
left behind. Today, we can do something about that by voting for H.R.
4923.
This legislation establishes a model that merges new ideas about
venture capital, regulatory reform, drug and alcohol rehabilitation,
housing and homeownership, environmental cleanup, commercial
revitalization and tax incentives.
I want to commend the gentleman from Texas (Mr. Archer) and the
gentleman from New York (Mr. Rangel) and the gentleman from
Pennsylvania (Mr. English) for working so hard to make important tax
aspects of this bill work. I also want to commend the gentleman from
Iowa (Mr. Leach) and the gentleman from New York (Mr. LaFalce) and the
gentleman from New York (Mr. Lazio) for their hard work on the housing
and community development provisions. I also commend the
[[Page H6825]]
gentlewoman from New York (Ms. Velazquez), who worked tirelessly with
the gentleman from Missouri (Mr. Talent) on the small business
provisions.
I want to especially thank my original cosponsors, the gentleman from
Missouri (Mr. Talent) and the gentleman from Illinois (Mr. Davis), who
shared this vision and worked tirelessly over the years to keep this
legislation moving.
{time} 1230
Mr. Speaker, I also want to thank Reverend Floyd Flake, who made a
tremendous contribution to this legislation when he served with us here
in Congress.
Most importantly, I want to thank the gentleman from Illinois (Mr.
Hastert), Speaker of the House, for not simply endorsing this bill, but
for embracing this bill, and devoting himself to hours of negotiations
with the White House and the President to come to the product we are
voting on today.
Friends, today we can deliver hope and opportunity to America's most
distressed communities. Make a difference. Vote ``yes'' for the
Community Renewal and New Markets Act and create homeownership and
opportunity in savings and get rid of these blighted spots in these
communities with the brownfields effort.
Let me say before I close, I would like to thank the gentleman from
New York (Mr. Rangel), who has fought tirelessly to raise the cap on
the private activities bonds. This is the only way that many of these
communities will get assistance, going in and taking rundown housing
complexes or complexes that financial institutions will not invest in;
but by raising the cap on these private activity bonds, we can get
private investment to purchase these bonds that will give the capital
needed to rehab these different housing efforts within these
communities. I appreciate that effort as well.
I want to thank the gentleman from Pennsylvania (Mr. English), again,
for his efforts on the Committee on Ways and Means.
Mr. SCOTT. Mr. Speaker, I yield 4 minutes to the gentleman from
Pennsylvania, (Mr. Kanjorski), the ranking member of the Subcommittee
on Capital Markets, Securities and Government Sponsored Enterprises of
the Committee on Banking and Financial Services.
Mr. KANJORSKI. Mr. Speaker, I thank my friend from Virginia (Mr.
Scott) for the opportunity to rise in favor of passage of this bill
today, but not in total satisfaction, because H.R. 4923 represents a
compromise.
Unfortunately, when we have a compromise, we often do not have
everything that one would think is needed. But not to make the perfect
the enemy of the good, I think it is important that my colleagues in
the House support this bill to move the process along.
This compromise occurs because of a lot of good people in this body,
in the Senate, and, particularly, the President of the United States,
have the dream of extending American opportunity to those distressed
communities and pockets of America that have not participated in the
economic boom of the last 8 years.
Last year, I had the occasion to travel with the President of the
United States the length and width of this country. We stopped in more
than a dozen communities and saw their needs. Each night at dinner or
some other gathering, we discussed what we saw that day. We concluded
that there was not a uniform problem in America, and not any one single
community was the same as another community, in terms of its base
problem. In other words, Mr. Speaker, there is no silver bullet to
bring economic opportunity and improved quality of life to many of
those citizens that do not share it today.
I think this legislation does go a great distance in starting to
develop tools that will help economically lagging communities. Whether
it be the Indian tribes of South Dakota or the inner city of Hartford,
Connecticut, or the Delta of Mississippi, all of these communities will
find something within this bill that can lead them along the road to
more economic development and increased economic opportunity for their
citizens.
I would hope, as this bill proceeds from the House to conference with
the Senate, that my friends in the House will recognize that there are
other good demonstration projects that are being attached as part of
this bill, particularly in the Senate. Our colleague in Pennsylvania,
Senator Santorum, for example, has added a demonstration project to
renew areas by attacking regional problems comprehensively.
Included in the Senate version of the bill by Senator Santorum will
be the Anthracite Region Redevelopment Act. The gentleman from
Pennsylvania (Mr. Sherwood) on the Republican side and I support this
plan. The gentleman from Pennsylvania (Mr. Gekas) and the gentleman
from Pennsylvania (Mr. Holden) also support this proposal from the
standpoint that it represents an approach and a methodology to attack
land destroyed as a result of prior mining practices with a renewal and
a reclamation project that is self-funded and operated by the local
community. It costs this government the least amount of money to
accomplish this greatest end.
It is intended that we take that demonstration project and one day
move it across the coal mines of America, from Pennsylvania to Alabama
and from Alabama to Montana. We can use the project to examine those
areas that have suffered horrendous environmental destruction over the
last 100 years. To a large extent we cannot bring back the economies of
those areas without bringing back the environment of those areas. We
need a Federal vehicle to accomplish that end.
This amendment that was supposed to be part of this bill in the
House, and I think was agreed to by the Speaker in Chicago with the
President last November, does not appear in the context of this bill. I
think we all have to be good sports. Sometimes we are not happy with
what happens, but I hope that the Senate will attach that amendment to
the bill as it proceeds.
Mr. Speaker, I urge my colleagues on both sides of the aisle in
conference to support that plan. In the meantime trying to be a sport
and a player on the team for progress, I compliment both sides of the
aisle and the leadership in proceeding through with this bill today.
Mr. Speaker, I urge all of my colleagues in the House to support H.R.
4923. It is the right thing to do at the right time. In the midst of
American prosperity we should give those distressed communities across
America an opportunity to share in the benefits that most of Americans
have shared in for the last 8 years.
Mr. ENGLISH. Mr. Speaker, how much time is remaining on both sides?
The SPEAKER pro tempore (Mr. Simpson). The gentleman from
Pennsylvania (Mr. English) has 27 minutes remaining, and the gentleman
from Virginia (Mr. Scott) has 15\1/2\ minutes remaining.
Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the distinguished
gentleman from New York (Mr. Lazio), the chairman of the Subcommittee
on Housing and Community Opportunity.
Mr. LAZIO. Mr. Speaker, let me say how wonderful it feels for me to
be in this Chamber and to hear a broad base of support for this
incredibly important piece of legislation. On the right, on the left,
there are things that we love about this bill.
Mr. Chairman, I want to thank the gentleman from Texas (Chairman
Archer) and the gentleman from Iowa (Chairman Leach) for their
leadership in helping to refine this bill. I also want to thank the
ranking members, the gentleman from New York (Mr. Rangel), the
gentleman from New York (Mr. LaFalce), for all of their work. I want to
thank the people who created the original dream of this bill, the
gentleman from Oklahoma (Mr. Watts), the gentleman from Missouri (Mr.
Talent), and the gentleman from Illinois (Mr. Davis), for their
persistence in moving this bill forward.
There are so many people to thank, including the gentleman from
Pennsylvania (Mr. English) for his remarkable help, and I am very proud
to have played a role in the development of this legislation.
I am proud to speak here in support of this bill that will help
revitalize and renew some of our most underserved and most challenged
communities. As you know, Mr. Speaker, this Congress has a substantial
record of legislative
[[Page H6826]]
achievement in the area of housing and community development. Earlier
this year, the House passed H.R. 1776, the American Homeownership Act.
Before that, Congress passed H.R. 202, a bill to protect America's
seniors. And with this bill today, we bring tax incentives. We bring
regulatory relief, and we bring economic investment to our struggling
inner cities and rural areas.
This legislation does many things, including the expansion of the
low-income housing tax credit, and I am happy to see this. If we would
have developed a program from scratch, we would develop this program, a
program that puts private sector capital at risk, that forces the
private sector to do the due diligence and do the research to make sure
that the program works, to make sure that we get to a mixed-income
development so that there are role models for our children, people
going to work during the day.
It is a wonderful program, and it deserves our continued support; and
we are doing it here today. I am proud of the fact that we took APIC
and extended it so that our Native Americans will have a chance at that
dream as well, because this dream is not just for some, it is for
everybody.
I am proud of the fact that people like Taylor Pennington and her
husband and their newborn baby who were living in a cramped, dirty,
dilapidated studio apartment will now have the ability to move into a
new housing tax credit property that will give them a sense of self,
where they can organize their lives and dream those dreams we want for
all of our children, because of the work here.
I am proud of the fact that this bill establishes renewable
communities throughout our Nations and that places like Harlem and the
South Bronx and Troy, New York, will be eligible for employment wage
credits. These credits will help encourage employment of our young men
and women, offer an alternative to the illegal drug economy that
dominates too many of our inner cities.
By encouraging employment, young people will learn the principles of
accountability, responsibility, and punctuality that are necessary for
successful careers.
I am particularly proud that because of our efforts, Native Americans
will not be excluded from this program as they most likely would have
been without our intervention. We insisted on measures devoted to
investing in Native American lands--a Native American Private
Investment Corporation. In 1996, we passed the Native American Housing
and Self-Determination Act to increase the creation of much needed
housing on American Indian reservations. In the same manner with this
bill we continue to respond to the needs of our Native American
citizens.
Mr. Speaker, for decades, we have witnessed a devastating impact that
failed public policies have had on too many of our American cities.
This bill brings new ideas to America's neighborhoods, and I urge its
strong support and adoption.
Mr. SCOTT. Mr. Speaker, I yield 3 minutes to the gentleman from
Chicago, Illinois (Mr. Davis).
(Mr. DAVIS of Illinois asked and was given permission to revise and
extend his remarks.)
Mr. DAVIS of Illinois. Mr. Speaker, first of all, I rise in serious
and enthusiastic support of this legislation. I want to commend the
gentleman from Missouri (Mr. Talent) and the gentleman from Oklahoma
(Mr. Watts) for the longstanding pursuit that they have had of this
legislation.
I also want to take the opportunity to thank all of those committees
that have been a part of processing it up to this point.
I also want to thank President Clinton and Speaker Hastert for
following through, following up on the commitments that they made to
people as they traveled all around America, looking at communities
where people had lost hope, where people had given up, where people
felt that there was nothing really for them.
Now we come with legislation that not only provides hope, but
provides money, resources, venture capital, provides an opportunity to
attract and bring new businesses to communities where there have not
been any for years and years. Wage incentives, so that you can hire
people who have been unemployed, opportunities for people to know that
they, too, are part of America.
Mr. Speaker, I know that some of my colleagues are concerned about
the charitable-choice provisions of this legislation; but I tell my
colleagues, all of my research indicates that this legislation breaks
no new ground in that arena. There are already charitable choices in
the welfare bill that we currently operate under. There are already
charitable choices in some of the community development activities that
we all need and make use of.
So while I am concerned seriously about the Constitution and
upholding the law, this legislation is in compliance with both. And I
would urge a yes vote, a vote for the renewal, not only of people's
minds, but the renewal of their communities.
I remember a passage of scripture in the Bible that says, And they
rebuilt the walls because the people had a mind to work. This
legislation would not only work for renewal communities, but it would
work for all of America; and I urge that we vote its passage.
Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the distinguished
gentleman from Pennsylvania (Mr. Pitts), chairman of the Subcommittee
on Empowerment of the Committee on Small Business.
(Mr. PITTS asked and was given permission to revise and extend his
remarks.)
Mr. PITTS. Mr. Speaker, the American people are the greatest resource
of this land. Every community, no matter how poor, has people in it
that care deeply for their neighbors. Every community, no matter how
high the crime rate, has neighbors who look out for each other.
The American people are the greatest untapped resource of community
renewal in this country. By allowing faith-based organizations to do
what they do best, care for people and help them grow, we will see a
revolution of prosperity, even in our most distressed neighborhoods.
Statistics have shown conclusively that faith-based, community-based
organizations are vastly more successful at turning lives and
neighborhoods around than any government program.
Teen Challenge, a program in Pennsylvania that has operated for over
40 years, it is a faith-based drug treatment program that keeps the
individuals in their program for a year. They track their graduates for
7 years after they graduate. I have seen two studies, one 70 percent,
one 86 percent success rate.
The Government programs do not track their people that go through
their programs, and many of them recycle. The genius of this
legislation is that it replaces faceless bureaucracies with the power
of neighborly compassion. Through tax incentives and the creation of 40
new renewal communities, this bill says to leaders in distressed
communities, ``You go on and do what you do best. We know you'll do a
better job than we can.''
{time} 1245
Mr. Speaker, this legislation is telling the American people that
they hold the power of change, that they hold the key to the future.
Finally, Mr. Speaker, I am hopeful that the conference committee will
insert the Individual Development Account legislation language in the
bill, as the Senate version of the bill contains that language. As
cochairman of the Renewal Alliance, along with my cochair in the
Senate, Senator Santorum, we have been promoting this legislation for 3
years.
I want to commend the gentleman from Missouri (Mr. Talent), the
gentleman from Oklahoma (Mr. Watts), and the President and the Speaker
for their commitment to this legislation.
Mr. Speaker, I urge adoption of the bill.
Mr. Speaker, I am pleased that H.R. 4106, the Savings for Working
Families Act, was included in the Senate's version of the Community
Renewal and New Markets Act.
H.R. 4106, which I introduced with Congressman Stenholm, creates the
first nationwide Individual Development Account program.
These matched savings accounts are restricted to three uses: (1)
buying a first home, (2) receiving post-secondary education or
training, or (3) starting a small business.
Mr. Speaker, America is in a period of unprecedented growth. It is
impossible for many to take advantage of this economic boom
[[Page H6827]]
when one-fifth of American households do not have a bank account.
H.R. 4106 will help American families attain the American dream.
While I am a strong supporter of the bill before us today, I urge my
colleagues to consider including IDAs when this legislation goes to
conference.
H.R. 4106 provides a tax credit to financial institutions and
businesses that match the savings of the working poor through IDAs.
IDAs are matched savings accounts restricted to three uses: (1) buying
a first home, (2) receiving post-secondary education or training, or
(3) starting a small business. All matched dollars are paid directly to
the qualified financial institution and payments from the IDA are made
directly to the asset provider. IDAs would be available to low-income
citizens or legal residents of the U.S.
Mr. Speaker, there is an old joke that says the scariest thing an
American citizen can hear is the phrase: ``Hello, I'm from the federal
government and I'm here to help you.''
And, although it's a joke, I think there is some real wisdom there.
Many of us in this chamber can remember Lyndon Johnson's first 100
days, when he set about trying to solve every problem faced by the
American people.
He planned a War on Poverty, which was designed to eradicate
poverty--forever.
Well, almost 40 years later we still have poverty, and we have
families who have been stuck in poverty for generations now.
Why is that?
Well, I would submit to my colleagues that government--as a rule--is
unfit to solve the greatest problems of society.
Can government create a work ethic?
No.
Can government make people moral?
No.
Can government force families to stay together or communities to
prosper?
No and no.
That was the problem with the Great Society.
It denied the fact that our society--and yes, it is a great one--is
not only of the people, but also by the people.
Mr. SCOTT. Mr. Speaker, I yield myself 30 seconds at this point to
comment on some previous speakers, one of whom said there is no new
ground. Research has found that under the Welfare Reform and Community
Development Block Grant, the recipients of those programs have not
taken advantage of the opportunity to discriminate that is specifically
provided in those bills. They have not taken advantage of it, but that
would be new ground if we expand it, and organizations do take
advantage of it.
Furthermore, Mr. Speaker, a 1998 GAO report found the following:
Other treatment approaches such as faith-based strategies have not yet
to be rigorously examined by the research community.
Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr.
Fattah).
(Mr. FATTAH asked and was given permission to revise and extend his
remarks.)
Request to be Added as Cosponsor of H.R. 4923
Mr. FATTAH. Mr. Speaker, I ask unanimous consent that my name be
added as a cosponsor of this legislation.
The SPEAKER pro tempore (Mr. Simpson). The Chair is unable to
entertain that request. The sponsor of the bill may add a cosponsor.
Mr. FATTAH. Mr. Speaker, I rise in support of this legislation. It
provides a host of rules focused at the needs of communities in which
this economic expansion has not yet reached, and many of which have
been referenced earlier today. I think that is appropriate that this
Congress move in this direction.
I want to compliment the gentleman from Pennsylvania (Mr. English)
and also others who have been involved in moving this legislation
forward, the gentleman from Missouri (Mr. Talent) and the gentleman
from Oklahoma (Mr. Watts); but on my side of the aisle the gentleman
from Illinois (Mr. Davis) and the gentleman from New York (Mr. Rangel)
have done an extraordinary job.
I just want to say that the President's support for the New Markets
initiatives indicates once again that we can, working together, perhaps
provide hope in places where hope is necessary.
I just want to say that in this Congress, to the degree that we focus
in on substantive relief for people who face present problems, I think
that we can all be proud of our work, and this legislation is another
example of it.
Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from Oregon (Ms. Hooley), a distinguished supporter of this
legislation who has given this legislation a strong bipartisan tilt.
(Ms. HOOLEY of Oregon asked and was given permission to revise and
extend her remarks.)
Ms. HOOLEY of Oregon. Mr. Speaker, first of all, I want to commend
the President, Speaker Hastert, and the other Members who worked so
hard in a variety of committees. This bill is about hope and
opportunity, to make sure that all people can share in our economic
good times.
As an original cosponsor of the American Private Investment Companies
Act, I have supported the President's New Markets proposals because it
will bring investments to areas left behind.
In my home state of Oregon, the Portland area has been booming from
an infusion of high-tech jobs, but many rural areas have actually
experienced reduced employment.
Last year, our largest newspaper, the Oregonian, published an article
called ``A Growing Gap'' which stated, ``Oregon's rural counties aren't
keeping pace with Portland. Despite a decade of prosperity,
inequalities not only exist, but they appear to be growing.''
One machinist was quoted as saying that in his hometown, people are
standing in line for minimum wage jobs. What a contrast to the new
economy boom towns like Seattle and Portland. APIC and other programs
in this bill will work, because they bring private sector solutions
that have worked so well in other areas to our distressed rural and
urban areas that have been left behind.
I urge my colleagues to support this bipartisan legislation.
Mr. SCOTT. Mr. Speaker, I yield 3 minutes to the gentlewoman from
California (Ms. Waters).
Ms. WATERS. Mr. Speaker, I rise to raise some questions about the
bill, and I would like to take this opportunity to explain that this is
the kind of legislation that really tests what you stand for.
Of course, this is good legislation that includes in it a lot of the
answers to questions about what are we going to do about inner cities,
how are we going to get some investment. This will do a lot of that. We
all support empowerment zones, we all support venture capital, we all
support more housing opportunities, and the President put a lot of time
into it.
This is oiled, this is greased. Both sides of the aisle have agreed
that this legislation should pass. So for those of us who raise
questions, we raise them knowing that, nine times out of ten, this
legislation is going to pass.
However, this should not have been on the suspension calendar. It is
on the suspension calendar, which eliminates the opportunity for us to
make amendments. Why would we want to make amendments? For several
reasons. I am raising questions on three grounds.
I object, first of all, to the placement of H.R. 4923, the Community
Renewal and New Market Act, on the suspension calendar.
Second, I have serious concerns regarding the use of Federal dollars
for the funding of religious-based institutions which may use the funds
in a discriminatory manner. I want to tell you, the Founding Fathers
did a good job of separating state and religion, and they did this for
a lot of reasons. People should be free to worship their God as they
see fit, but also the government must never have such a strong hand
that they can determine what happens in any religion.
Now, we have advanced in this country to the point where we protect
the rights of people to work and to participate where tax dollars are
involved. When we talk about giving these tax dollars to religious
institutions, we are now talking in this legislation about allowing
them to discriminate based on religion. This is discrimination creep.
What we are doing is opening up the door so that we say it is all
right, 501(c)(3), if you are a religious institution to discriminate,
but when the other 501(c)(3)s come in and say, well, we want to
discriminate based on the fact that we have the kind of work that we
are doing that is so special, that is so important, that we should be
allowed to determine who can get a job
[[Page H6828]]
and who cannot get a job. So we are opening up the door, and certainly
we should have a debate about that on the floor of this Congress. We
should not change our discrimination laws in this manner without a
debate. So I have real concerns about that.
Third, I am concerned about what seems to be a blanket approval of
religious-based drug treatment programs at the expense of State-funded
programs. We do not know who is the best, there is not enough
information for it, but we should give everybody an equal opportunity
without allowing discrimination.
Mr. ENGLISH. Mr. Speaker, I yield 1 minute to the distinguished
gentleman from North Carolina (Mr. Hayes).
Mr. HAYES. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, I might recall for the gentlewoman the remarks of the
gentleman from Missouri (Mr. Talent), that this does not in any way
impose faith-based treatment on anyone. It simply gives the opportunity
for very successful efforts to be available to a wide cross-section of
individuals.
Mr. Speaker, I rise today in full and enthusiastic support of this
bill. I want to commend my colleagues who have worked so hard to bring
this legislation to the floor, the gentleman from Oklahoma (Mr. Watts)
and the gentleman from Missouri (Mr. Talent).
Mr. Speaker, while this bill is meant to address faltering local
economies around the Nation, I want to address the situation in our
rural areas in North Carolina's eighth district. Washington is finally
waking up to the fact that success on Wall Street does not
automatically translate into success on Main Street. In fact, while
many in our Nation reap the benefits of a record economy, in the rural
communities they continue to suffer with few local jobs and
opportunities.
Mr. Speaker, the first bill I introduced after coming to Congress was
the Rural Economic Development and Opportunities Act. This bill was
meant to spur employment in rural areas by extending a modest tax
credit for job creation in these areas. The Community Renewal and New
Market Act captures and implements the spirit of that bill, and I am
proud to support this legislation today.
Mr. ENGLISH. Mr. Speaker, I yield 5 minutes to the distinguished
gentleman from Indiana (Mr. Souder).
(Mr. SOUDER asked and was given permission to revise and extend his
remarks.)
Mr. SOUDER. Mr. Speaker, one thing we need to clarify right off the
bat is what the intent of the Founding Fathers was, in fact, in
religion; and this bill does not go near that far. In fact, the
Founding Fathers printed twice copies of Bibles to be distributed in
American schools because there was a shortage of Bibles, and they
printed them with taxpayer dollars. This bill does not do that.
Furthermore, anybody in this House gallery can see of all the
lawgivers, one is looking down at us. It is Moses, and he is looking
down at ``In God We Trust.'' But this bill does not go that far. It
does not mandate that everybody be in a Chamber that says ``In God We
Trust.''
It gives some flexibility as we try to address the problems of the
cities of this country and the low-income areas of this country.
Problems which are heavily rooted in economics, and this bill has
wonderful things in economics but are also matters of how to reach the
soul, how to reach the families, how to help people who are hurting,
who are broken, who are hungry, who are struggling with drug and
alcohol abuse, and this bill does open that.
The question was raised, have we debated it in this House? We have
debated it in this House five times. We passed it in welfare reform, we
passed it in social services reform, both signed by the President. We
passed it in juvenile justice; we passed it in housing. Every time this
House has passed this bill. Every time we debated it. We have debated
it here, we have debated it in the Senate, we debated it in conference.
Some people do not like the bill, and they do not like it that there
should even be a choice that people should have religious options.
Furthermore, the President of the United States has signed off on
this compromise, Governor Bush of Texas has been very innovative in
using faith-based organizations as alternatives in prison reform and
actually in alcohol and drug assistance. Vice President Gore has on his
home page that in the specific instance of alcohol and drug abuse, that
faith-based organizations ought to be allowed to be used.
The Drug Czar of the United States, General Barry McCaffrey says,
ONDCP applauds your work with President Clinton on this
historic initiative. We welcome broad involvement by private
volunteer and religious groups in support of the national
drug control strategy. Throughout the country, faith-based
organizations are making significant contributions to
educating our youngsters about the dangers of substance abuse
and helping many thousands of addicted Americans to achieve
and maintain recovery through the added motivation faith can
provide.
There is no question that at the minimum, faith-based organizations
are as effective as other programs in alcohol and drug abuse. The fact
is the American Journal of Drug and Alcohol Abuse found that faith-
based addiction programs are much more likely, up to 45 percent, to
report success. Any study that has been done, non-biased, shows in fact
they are cheaper to administer, because you have so many volunteers and
other people willing to produce it, so it helps the taxpayers and the
individual.
Now, one of the great ironies of this as I work with this in the City
of Fort Wayne that I represent is many of these programs that people
are so afraid of that are effective are in fact run by the communities
themselves, by the minority leaders in their communities.
In my hometown, Reverend Jesse White has a computer program, as does
Otha Aden, a pastor in Fort Wayne; so does Reverend Jesse Beasley is
working with a program, Reverend Mike Nicholson has put together a
community housing program through the Associated Black Churches. I have
worked with George Middleton, who has taken his savings to help build a
community center because his faith has motivated him to do so, and
Andre Patterson. I have worked with Reverend Marshall White, who has a
program for music, that in San Antonio, Texas, is one of the most
remarkable programs in the United States. Freddie Garcia, a former
cocaine addict, has run a program that has brought thousands to change
their lives, many of whom are currently ministers and who are back on
the streets. I personally have met over 200 former addicts in San
Antonio in two different visits who have had their lives changed and
are now reaching young people in the neighborhoods going door-to-door
working in the different housing units in the city.
{time} 1300
Bishop Raul Gonzalez in Hartford, Connecticut, has had a tremendous
program to reach out through Youth Challenge to young people who are
struggling with drug and alcohol addiction. He has reached into their
hearts and tried to change their lives.
It is not enough just to give somebody a job who has messed up. One
has to change both the soul and the ability to have a job. It is not
enough sometimes just to change somebody internally either and help
them get off drug and alcohol abuse. If they are going to live in a
place that is unsafe, is intolerable living conditions and they do not
have anything to do, they will fall back into drug and alcohol abuse.
That is what is so great about this bill is it mixes the two.
Reverend Eugene Rivers, and I have a number of things I am going to
insert in the Record, but this Newsweek story shows the debate of
faith-based organizations and what he has done working with gangs in
Massachusetts. When one talks to the people in the street there who
have been working with these kids they say, Why, if we are faith-based,
can we not get any money if we have all of these groups that have
nothing to do with religion who are ineffective, who had no impact in
our community, yet the people who live here, who are active in the
community, have not been able to get access to the funds?
This bill will rectify that; and I congratulate my friends, the
gentleman from Missouri (Mr. Talent) and the gentleman from Oklahoma
(Mr. Watts), on their efforts.
Bishop Raul Gonzalez, Executive Director, Youth Challenge
``Youth Challenge has now expanded to 25 centers in 10
states and foreign countries. It
[[Page H6829]]
has grown because it is based on a model of discipleship,
where ``sons'' of Youth Challenge, who have a common heart
and vision, go into the world to serve others. In Guatemala,
we have a drug program for males. We have food programs,
which we call ``love kitchens.'' We begin by going into the
streets, offering drug addicts and alcoholics food and
clothing. From there, we share the gospel them food, we
witness to them, and we convince them to enter the drug
program.
We also have strong prison ministries. Many of our
chaplains are, themselves, doing time--some for as many as 40
or 60 years. they are some of our best and most committed
pastors, because they ain't going nowhere. Members of our
prison churches actually tithe of soap and toothpaste and
things like that. We provide our services gratis. We only ask
the families to donate at ten dollars a week, if they can.
Our Youth Challenge ministers are committed and impassioned
because they understand that we are in a virtual war and that
this revolution is forever.
Not long ago, an AP story noted the findings of a 13-member
group of experts on a panel set up by the UN. They announced
that drug use is growing among youth in the United States.
Now, the UN didn't have to spend all that money conducting
that study. They could have just asked us who are working on
the streets, and we would have told them that drug abuse was
growing! All the ministers of Youth Challenge stay in touch
with what's happening on the streets. From the beginning, I
made that our policy and I think that is one reason that our
program has lasted so long.
I've been involved in outreach to addicts for 30 years.
Thousands of people have come through our doors. We have
tracked what happens to them, and we have documented a
success rate that ranges from 60 to 80 percent.
Our program has made unique progress as a faith-based
organization, because we have been able to break ground in
working cooperatively with the state. We are licensed, and no
demands have been placed on us to cease preaching the gospel
of Jesus Christ. We are ``professional'' without being
``professionalized.'' I'm governed by a board. We have a
men's home, a women's home, and a training center in
Connecticut.
Our relationship with the State did not come overnight. For
five years, I fought the regulators on the issue of
licensure. I lost in the first count, where the decision was
made by one judge. Then we took our case to a court with
three judges. Eventually, our case was heard by five judges.
Our position was that we were a religious organization, not a
``drug treatment service'' and that, as such, we shouldn't
need a license. We said, ``Okay, before you guys demand that
we apply for a license, we want you to look at our
materials.'' And we brought in a pile of Bibles and stack of
scriptural readings. Our lawyer is retired, but was at the
top of his field, and he proved that Youth Challenge taught
more scripture than any seminary in new England.
What I learned from this experience was that when the state
wants to do something, they just do it. Forget about this
separation of church and state deal. They see what they want
to see. You know what they did to us? They actually licensed
our Bible training center. That's how my license reads--
``Youth Challenge Bible Training Center.'' So the state
thinks it has the power even to license the Bible! I could
have fought them and refused to be licensed and gone to jail,
but they would have closed us down. So I was forced to accept
the license. In spite of their regulations and guidelines, I
believe if they leave programs like ours alone, we would do a
better job. But it was not an option for them to leave us
alone.
I believe that if you know the Lord you can have the power
to deliver a person from addiction. If you don't, but have
all the education in the world, you are not going to deliver
anybody. Yale University is only a half an hour from us, and
they haven't been able to deliver nobody. The most they have
done is to give out needles. Not far away, in Massachusetts,
there is Harvard University. They haven't been able to do
anything about the drug crisis expect document it. Yet, if
somebody believes in Jesus Christ and has the power working
through him, he's able to deliver people. I know because that
is what happened to me 29 years ago, when a group of people
laid hands on me. I met someone who knew God and I was set
free.''
____
C. Youth Challenge Case Study
(By Collette Caprara)
Bishop Raul Gonzalez, stately and commanding, yet embracing
in his love, is the founder and director of Youth Challenge
of Hartford, CT, and the founder of Youth Challenge programs
in Puerto Rico, Florida, and the Bronx, New York. Raul is a
devoted husband of his wife ``Willie'' and father of four
children. He was also the son of an abusive alcoholic father
whose own life was nearly annihilated by a heroine addiction.
But then he emerged into a new life with an unshakeable
commitment to free men, women, and youths from the chains of
drug and alcohol abuse.
The philosophy of the program is the development of self-
respect, confidence, and a capacity to enjoy life through
discipline, proper counsel, and attitude. The basis of the
Youth Challenge approach is a total living environment of
personal and group interaction, with structured activity. The
overall objective is to engender a total change in values and
lifestyles among the young men and women who are served
through the program. A trained and capable staff provide an
atmosphere of warmth, trust, support, and love that many of
the residents never before experienced. Residents participate
in a variety of individual and group activities, and also
engage in supervised housework duties according to a daily
schedule. The primary goal of all the activities in which the
residents are involved is to instill a sense of self-
discipline and self-worth, which equips them to live as
responsible, productive citizens when they graduate from the
program. Instilled in Youth Challenges' students is the
conviction that, not only can they be drug free, but they can
be positive assets to their community.
Youth Challenge has expanded throughout the nation,
establishing centers in 25 locations, within the United
States, Central America, and the Caribbean, with a remarkably
high success rate. Studies of program participants indicate
that 70 percent of Youth Challenge's graduates never return
to drugs. Youth Challenge centers have accepted more than
2,500 drug- and alcohol-dependent in their programs. Its
staff is comprised of individuals from a spectrum of ethnic
backgrounds who have successfully overcome drug and alcohol
dependency, and its doors are open to individuals of all
races, creeds, and ethnic backgrounds. The Youth Challenge
Men's Induction center offers a bilingual program of
counseling and classes.
program activities
Youth Challenge is actively involved in both the treatment
and prevention aspects of drug and alcohol problems. Along
with its primary mission of being a residential
rehabilitation program for troubled individuals, Youth
Challenge has established several active satellite programs
that augment its basic mission. These auxiliary programs have
had a substantial impact on deterring youth crime and self-
destructive behavior among young people as they have made
opportunities available for productive activities and
engendered a substantial change in the lives and lifestyles
of the individuals it serves.
Youth Challenge's auxiliary activities include the
following:
Family Support: Youth Challenge works very closely with the
family of the substance user in a family counseling setting
to support them in accepting and dealing with their loved
one's addiction.
Prison Outreach: Youth Challenge is currently providing
services to six prisons, two of which have extremely high
Spanish-speaking populations and are visited weekly by Youth
Challenge.
School Presentations: At the request of local school
district authorities, Youth Challenge staff members offer
presentations in both the primary and secondary schools
within the greater Hartford area.
Street Outreach: Youth Challenge staff volunteer as street
workers where they make initial contact with troubled
individuals and provide access to treatment in a familiar
non-threatening environment.
Youth Activities: Youth Challenge works with local
neighborhood groups in the inner-city to provide services for
at-risk children, including classes and group activities to
promote positive values, an uplifting self image,
constructive relationships, and character development.
Referred Services: A number of government agencies and
private organizations refer their clients to Youth Challenge
to assist them in addressing substance abuse. Among these
agencies and programs are: the State of Connecticut
Department of Corrections, the State of Connecticut
Department of Education, the Probation Department of the
State of Connecticut, Connecticut Valley Hospital, the State
of Connecticut Department of Parole, the Department of Mental
Health and Addiction Services, and the Salvation Army. In
addition, Dr. Raul Gonzalez has been a consultant to the
military and its Drug Education Program.
central facilities
Youth Challenge's main offices and male induction services
are located at the community residence at 15-19 May Street in
Hartford. This facility provides initial phases of treatment
for 15 residents. Here, the incentive to forsake the drug
habit is engendered and the desire to pursue a new life is
instilled. This induction phase includes counseling, classes,
and group activities, and lasts approximately four months or
until the individual is ready to move to the second phase.
The goal of this program is the development of self
respect, confidence, and a capacity to enjoy life through
discipline, counseling, and positive attitude. A total living
environment of personal and group interaction, with
structured activity, provides the basis of this approach.
The Youth Challenge Mission for Women, which opened in
1981, follows the same program format as the male services
program. It is licensed to accommodate 8 residents and is
located at 32 Atwood Street in Hartford.
Long-range training for men is also provided at the Youth
Challenge Training Center, a 21-acre farm located in Moosup,
CT. The facilities can presently house 9 students. The
training that began at the induction center continues at the
training center, as individuals are challenged to develop, at
progressive levels, the personal, social, academic, and
vocational aspects of their lives. Here, a vocational
training program helps its residents to develop job skills
and a strong work ethic. Opportunities for academic
advancement, including GED classes are also available.
[[Page H6830]]
The third phase of training is internship. Participants in
the program complete six months of supervised, on-the-job
training. This service solidifies gains that they have made
in the induction center and in the training center throughout
the twelve preceding months and provides an opportunity to
continue to develop their personal skills and ability to
relate and work with other people. After their internship,
graduates of the program move into staff trainee positions in
one of the Youth Challenge centers or they can become active
in the re-entry program where they obtain gainful employment
while continuing to reside in the supportive environment of
the Youth Challenge facility. Program graduates may also
choose to move out of the center to pursue their long-term
goals, often reuniting with their family, entering long-term
careers, and furthering their education.
The Corinthian School of Urban Ministry, operated by Youth
Challenge, provides college-level scriptural education and
training in faith-based, non-clinical counseling techniques.
After completing the school's training curriculum, graduates
continue on-the-job training as junior and senior counselors.
This hands-on residential experience, which includes eighteen
months of the National Teen Challenge curriculum, equips
Youth Challenge ministers to become disciples and empathetic
counselors whose firsthand experience gives them the power to
engender transformations in others who suffer the bondage of
addiction.
a goal of complete and lasting freedom from addiction
Most conventional drug treatment programs refer to former
addicts as ``recovering,'' implying that the process is never
fully complete and that progress is always in a state of
jeopardy, as recidivism looms in the background. In contrast,
Youth Challenge is built on the premise that complete and
total freedom from addiction is possible through Christ. In
the words of Raul Gonzalez, ``We don't say that you will live
in the shadow of a relapse.'' The high success rates and low
recidivism rates of Youth Challenge and other faith-based
programs give credence to their methodology of dramatic
transformation when contrasted with conventional ``recovery''
in which relapse is common.
As Bishop Raul Gonzalez explains, the notion of ``sonship''
is central to its effective intervention. Residents at Youth
Challenge centers are not considered as clients, but are
welcomed into a ``family'' that provides a sense of love and
belonging that replaces the false sense of identity and
family structure which attracts many young people to gangs.
The father-son, father-daughter relationships expand through
discipleship to embrace ``grandchildren''--a third level of
individuals who are reached by its healing powers. As a new
generation of sons are embraced by grassroots disciples, the
mantle of leadership is passed and the family structure
expands.
In Youth Challenge, Bishop Gonzalez and his family exhibit
a standard of parental love that lasts a lifetime, not just
for eighteen months of treatment. ``We all need three
fathers,'' he explains, ``Our Heavenly Father, our physical
father, and a spiritual father.''
The powerful paradigm of sonship and parental love is
markedly different from conventional drug treatment programs
that are based on a professional-client model. Youth
Challenge residents and staff resemble a family, or a
``living body,'' as opposed to therapeutic programs that
often ``warehouse'' clients in an institutional setting. The
Youth Challenge program is truly ``spirit filled,'' and is
based on a heartfelt commitment to serve those who are within
the ministry and the entire realm of individuals whose lives
are dominated by addictions.
____
[From the Houston Chronicle, Mar. 6, 1995]
Welfare From the Streets
(By Thaddeus Herrick)
San Antonio--On a vacant lot deep in the barrio, amid
neglected bungalows and gang graffiti, reformed junkie and
born-again preacher Freddie Garcia is waging war on the
welfare state.
He grasps a homeless ex-con named Christopher by the
collar, beseeching him to accept Jesus in voice that recalls
both his Mexican-American heritage and his street-wise past.
``Lord Jesus, I'm a sinner,'' Garcia cries, urging his
convert to repeat after him. ``I ask forgiveness. Forgive all
my sins. Jesus, come into my heart.''
No tax dollars. No bureaucracy. No Washington.
Just this vacant lot and a barracks of sorts for drug
addicts, prostitutes and other urban flotsam--and plenty of
Bibles.
Sound like House Speaker Newt Gingrich's answer to welfare
reform? It pretty much is.
Garcia's successful venture is called Victory Fellowship.
It claims to have cured 13,000 people of drug addiction and
alcoholism over the past 25 years throughout the Southwest
and overseas and has made Garcia a Gingrich poster boy.
At a news conference earlier this month, the Republican
speaker urged policy makers to take note of the 56-year-old
preacher and his organization.
Indeed, Gingrich and his allies believe Garcia represents
the solution to the war on poverty: personal experience,
faith and local know-how.
``People like Freddie share the same zip code with the ones
they're helping,'' says Robert Wodson, president of the
National Center for Neighborhood Enterprise, a Washington-
based group favoring Gingrich's free-market ideas. ``I can't
imagine that would be the case with a psychiatrist.''
Experts, even those from opposing political camps, agree
that Garcia's success should be studied. They warn, however,
against completely localizing anti-poverty efforts.
``What concerns me,'' says Margaret Weir of the Brookings
Institute, a Washington think-tank often allied with
Democratic causes, ``is that this could become a excuse for
state and federal governments to wash their hands of the
inner cities.''
An unassuming man when he's not saving souls, Garcia was
raised on San Antonio's poor East Side where he says he fell
into a miserable, angry, heroin-addicted life.
``He and his girl, Ninfa, lived on the streets,'' reads the
back cover of Garcia's self-published autobiography. ``They
abandoned their first child, aborted their second and brought
their third infant along while they burglarized and scored
drugs.''
In 1966, strung out on the streets of Los angeles, Garcia
accepted a friend's invitation to seek help at a Christian
home called Teen Challenge.
Several months later, Garcia says, he stumbled to the altar
during a revival and, tears filling his eyes, asked Jesus to
``pasame quebrada,'' or ``give me a break.''
He then set out to convert others. After graduating from
the Latin American Bible Institute in La Puente, Calif.,
Garcia returned to San Antonio and opened a home for barrio
drug addicts. Today, there are five San Antonio homes under
the Victory Fellowship umbrella.
``We teach Jesus in the morning, Jesus at noon, Jesus at
night,'' says Garcia. ``You leave Jesus out, man, you're like
every other treatment program in the United States.''
In Garcia's world, there is no room for social and economic
analysis, psychiatry and psychology. Man sins, or he repents.
He is lost, or he is saved.
Such a view of drug abuse makes state officials uneasy.
Rehabilitation, they say, is not an exercise in black and
white.
``I'm not one to say God's not in the miracle business,''
says John Cook, a spokesman for the Texas Commission on
Alcohol and Drug Abuse. ``But addiction is not a moral issue.
It's a disease,'' he claims.
Garcia, however, insists he gets results: Nearly two out of
three of the people who study the Bible at Victory Fellowship
for three to six months overcome their addiction to drugs or
alcohol, he says.
At the very least, the scene at Victory Fellowship on San
Antonio's West 39th Street looks convincing. A group of
addicts, arms in the air, stages a heated mini-revival inside
the center. Outside, 100 down-and-out men and women gather in
clusters for Bible study.
One group stands, waving arms frantically. ``Lord, you are
more beautiful than diamonds,'' they sing, ``and nothing I
desire compares with you.''
In the men's bunkroom, a heroin addict named Paul and an
alcoholic called Sam, both new arrivals, work their way
through the Old Testament with a counselor, a former drug
abuser himself.
``I been in the state hospital in Austin,'' says Sam. ``I
don't want no other program but this one.''
While Garcia cannot document his success rate, his anti-
drug efforts were praised by President Bush in 1990. Then in
early February, Gingrich held Garcia up as a model in the war
against the welfare state.
``But rather than study him,'' said Gingrich at a
Washington press conference, ``the bureaucracy has tried to
put folks like Freddie out of business because they don't
have Ph.D.s or can't fill out the paperwork.''
Experts agree that Garcia's role as a recovered drug addict
is central to his program. In fact, all the Victory
Fellowship Bible instructors are recoveredd addicts, most of
them felons.
``People like this play an important leadership role,''
says Weir. ``They've done a terrific job when not a lot of
other organizations have.''
Still, Weir warns there is a danger in suggesting that
those who fall on hard times--and the struggling communities
where they live--must right themselves.
``There's a bit of false populism here,'' she says. ``The
problems of the inner city are largely economic problems that
neighborhoods have no control over.''
Nevertheless, Gingrich has assembled a National Leadership
Task Force on Grassroots Alternatives for Public Policy, a
group representing Victory Fellowship and several dozen other
mostly faith-based programs, to offer ideas on legislation
that would, in the House speaker's words, ``end the welfare
state.''
Woodson of the National Center for Neighborhood Enterprise
says its March 15 task force report to Gingrich will tout the
achievements and cost-efficiency of organizations such as
Victory Fellowship.
The task force will also urge federal and state leaders to
fund faith-based groups (though Garcia says he wants no
money) and relax the regulations that groups such as Victory
Fellowship face.
``Too often,'' says Garcia, sounding a distinctly Gingrich
theme, ``the government rewards failure and punishes
success.''
For example, Garcia would prefer to advertise Victory
Fellowship as a ``rehabilitation center.'' When he tried
that, however, the Texas Commission on Alcohol and Drug
[[Page H6831]]
Abuse gave him an ultimatum: Apply for a drug-rehab license
or advertise as a church.
But getting a license to treat drug addiction would mean
meeting state health and safety codes. Even Garcia admits
that would be tough, since his shelters seldom turn away the
desperate no matter how full.
It would also mean having licensed counselors, which would
mean hiring staff with college degrees. Garcia says he does
fine with dropouts from the barrio.
``My people have educations you can't get at Yale
University,'' he says.
____
[From the San Antonio Express-News, Feb. 6, 1997]
State of the Union Recognition Costs San Antonio in Limelight
(By Brenda Rodriguez)
For the first time during a State of the Union address, two
of the Alamo City's native sons who rose from humble
beginnings to prominence were recognized for their public
service.
President Clinton took a few minutes from his hourlong
speech to Congress Tuesday night to pay tribute to U.S. Rep.
Frank Tejeda, who died last week after a battle with brain
cancer.
He also recognized Henry Cisneros, the former San Antonio
mayor who spent four years as Clinton's secretary of Housing
and Urban Development.
Republican Rep. J.C. Watts--during remarks in response to
the president's address--also praised Freddy Garcia for
helping people kick their drug addictions.
``We are the incubator for great Hispanic leadership,''
political scientist Richard Gambitta said about Tuesday
night's local honors. ``Clearly San Antonio is a city on the
rise.''
Tejeda's mother, Lillie, and sister Mary Alice Lara sat
behind first lady Hillary Rodham Clinton and Tipper Gore as
the president commended the late congressman for his military
bravery and public service.
The president had extended a special invitation for the
family to attend the address. The Tejeda family would not
comment Wednesday about the trip to Washington.
With help from her daughter, Lillie Tejeda stood proudly
before Congress as they applauded her son's accomplishments.
Tejeda, a decorated Vietnam veteran, was buried with full
military honors Monday at Fort Sam Houston National Cemetery.
The president also saluted Cisneros, who left the Cabinet
in January and now will head the Spanish-language television
network Univision in Los Angeles.
But Cisneros will not stray far from the political
limelight. He will join Gen. Colin Powell and Vice President
Al Gore in leading the president's Summit of Service in
Philadelphia in April.
``Henry Cisneros remains the most viable political
candidate in the state of Texas,'' Gamibtta said. ``Henry
Cisneros without question is a superstar.''
In Watts' Republican Party response to the State of the
Union address, he said Garcia is ``the state of the union.''
Garcia, a recovering drug addict, is the founder and
director of Victory Fellowship, a Christian ministry that
helps people overcome drug and alcohol dependencies.
Garcia said he was surprised Watts mentioned his efforts in
his speech. The Oklahoma representative visited the ministry
last spring during a trip to the Alamo City.
``You don't hear about anybody from our barrios being
mentioned,'' Garcia said. ``I know (Watts) knows our program
is for real.''
Gambitta added that such grassroots efforts by San
Antonians will continue to garner recognition.
``We have tremendous potential in the city,'' he said.
____
[From the San Antonio Express-News, Feb. 21, 1996]
GOP Team Praises Drug Rehabilitation Program
(By Maria F. Durand)
A San Antonio faith-based drug rehabilitation program that
has been heralded nationwide as a model of grass-roots
community intervention won kudos Tuesday from members of a
Republican congressional team charged with restructuring
welfare.
``It's the most impressive of its kind I've seen,'' U.S.
Rep. J.C. Watts, R-Okla., said during a visit to Victory
Fellowship, a Christian-based program that receives no
federal or state funds.
Watts is co-chair of the Task Force on Empowerment and Race
Relations.
``We need to put these kinds of community values back into
the programs,'' said U.S. Rep. Jim Talent, R-Missouri,
another co-chair of the Republican team. ``We need to
encourage what the system has been discouraging.''
During an hour-long noon service, a long list of recovering
drug addicts told similar stories of recovery and clean
lifestyles.
People like David Cortez, George Juarez and Ernest
Guerrero, who now work in many of the center's outreach
programs, lauded Jesus as their savior.
Part of the Republican proposals for welfare reform include
dropping many of the guidelines prohibiting federal funds
from going to faith-based organizations. The GOP also wants
to turn more administrative power over to local
organizations.
Republicans plan to announce welfare reform legislation
next week in Washington.
Most groups working with community-based organizations
agree that more power should go to local agencies and many
regulations should be eliminated.
``Solutions should be local. Federal intervention is not
good,'' said Beverly Watts Davis, executive director for San
Antonio Fighting Back of United Way.
Victory Fellowship was founded by former drug addict
Freddie Garcia in 1972.
``The only way that we would get federal funds is if there
were no strings attached,'' said Garcia, who receives much of
his funding from private donations. ``I am not against the
funds. I am against the regulations that make no sense.''
However, while programs like Victory Fellowship serve some,
they cannot help everyone.
``For some clients who can identify with a higher power,
the program works, but it doesn't work with all the
clients,'' said Cindy Ford, executive director of the San
Antonio Council on Alcohol and Drug Abuse.
While praising the success of faith-based programs, local
agencies insist federal dollars must continue.
``It's really sad with everything else going and what the
state is doing to drug rehabilitation, for the federal funds
to be drying up too,'' Watts Davis said.
A state-funded drug detoxication center here was closed
late last year. Now Bexar County has no detoxication center.
Still, Robert Woodson, president of the National Center for
Neighborhood Enterprise, who brought the congressional team
to San Antonio, said the success rates for faith-based
centers is unparalleled and the methods must be examined.
``We should undertake a major national study to compare the
cost per day and the outcomes of faith-based programs with
conventional programs,'' Woodson said. ``We are interested in
looking for a more effective option to fighting drug abuse.''
____
[From the San Antonio Express-News, Apr. 7, 1996]
Easter Special to Ex-Addicts
(By J. Michael Parker)
Every day is Easter at Victory Fellowship.
The holiest feast on the Christian calendar, Easter
celebrates what Christianity calls the central event of
salvation history--Jesus' Resurrection from the dead and the
triumph of salvation over sin.
But at Victory Fellowship, the Resurrection isn't merely an
event to be commemorated.
It's a miracle that happens whenever a drug addict turns
from his destructive lifestyle and dedicates his life to
Jesus Christ.
Throughout San Antonio, many churches are filled this day
with symbols of new life such as lilies, water and light.
But here, reality speaks for itself.
Once on fire with chemicals that consigned them to a form
of living death, these people, most in their early 20s, now
are on fire with faith.
When they sing, ``I once was lost but now am found, was
blind but now I see,'' they mean it literally.
They're on a high they say they'll never regret.
Their worship crackles with emotion. They sing, praise God
and applaud his name with a fervor rarely seen in
conventional churches.
``Nothing is greater than the love of Jesus!'' shouted
minister Juan Rivera, one of Pastor Freddie Garcia's first
converts in 1973, as he led a recent worship service in the
old church at Buena Vista and South Cibolo streets.
Rivera had been on heroin for six years, burglarizing homes
to support his habit. He described a life of misery, pain,
confusion, causing suffering to people he loved, being chased
by police and sitting in jail wondering where he'd gone
wrong. He wanted to be saved.
``I remember thinking once, `If only I could be born again,
I wouldn't choose this life. I'd warn others to stay away
from it,' '' he said.
But he didn't want Jesus.
``I'd been told since I was a kid that God would punish me.
I'd seen friends killed in my neighborhood and I thought it
was punishment from God,'' Rivera said.
``I thought he was going to get me sooner or later,'' he
said.
In his first worship service at what until recently was
called Victory Outreach, he recalled Garcia announced that
``Jesus is here.''
``I was so naive, I turned around to look at him. I didn't
see him.
``I figured I was so sinful that he wasn't confirming my
relationship with him,'' Rivera recalled.
But Garcia told him Jesus would forgive him and make him a
new person if he would accept Jesus.
When he did, and saw other ex-addicts welcome him as a new
brother in faith, ``it was totally mind-blowing,'' he
recalled.
Rivera said he learned--and has spent his entire life since
then telling other addicts--that no sin is beyond God's power
to forgive.
Rivera said only Jesus saved him from his sinful past.
``I had no will to change on my own, and all the drug
treatment programs I'd tried had failed.
``Drugs were like a water current pulling me under, and I
was drowning, but Jesus reached down and pulled me out,'' he
said.
Easter, Rivera said, has a special meaning for one who's
come out of a life of drugs and crime.
``I really am a new man, I've been clean for 23 years, and
my faith goes beyond a couple
[[Page H6832]]
of hours on Sunday morning. It permeates every aspect of my
life.
``Every day is Easter here. When I see young guys coming
off the street and turning to Jesus, it's an opportunity for
me to thank God for what he's done for all of us,'' Rivera
said.
James Valdez, 25; Ernest Guerrero, 22; and Johnny Samudio,
22, have been among the beneficiaries of Rivera's and
Garcia's ministry.
They're taking leadership classes so they, too, can help
change young addicts into productive servants of Jesus
Christ.
They've also performed with other ex-addicts in a skit,
``The Junkie,'' depicting the destructiveness and despair of
gang life and the joy of feeling loved and cared for.
``My mother used to cry a lot for me. Now she cries for
joy,'' Valdez said.
``Everyone of us here has been brought back to life. It
shows that nothing is greater than the love of God,'' he
said.
Valdez said he had turned to crack cocaine out of boredom.
he spent several years on crack, losing jobs and stealing to
support his habit.
``All the guys I'd never wanted to hang around with before
became my best friends,'' he recalled.
But when his mother took him to Garcia's Victory Home--the
fellowship's residence for recovering addicts at 1030 S.W.
39th St.--his life changed.
``It's easy to do things that are wrong, but it takes a
real man to do what's right. It's a great feeling to know you
can be right with God by confessing your sins and giving your
life to him,'' Valdez said.
Samudio said many youngsters deny God because violence,
crime and family neglect are all around them.
``I want to be an example of the change Jesus can bring in
their lives. I want to be a man of God.
``We tell them about Jesus and show them a different
lifestyle. We show that we care about them,'' he said.
Guerrero said his older brother, who is serving a 10-year
prison sentence for murder, wrote him from prison and told
him to get out of gangs and drugs.
``Gang life was fun for a while, but I lost everything. My
mind was only on cocaine.
``I found drug-dealing everywhere I went. I became
depressed and wanted to kill myself,'' Guerrero recalled,
adding:
``Once, I put a 12-gauge shotgun to my head, but I realized
that if I killed myself, I'd go to hell.''
He said he cried out to God for help, and God saved his
life by taking away his desire for drugs. Now he wants to
help youths and gang members reject drugs as well.
``I was dead in the world,'' Guerrero said, ``but now I'm
alive here.''
____
[From the Washington Times, Mar. 26, 1997]
Abuse Program Believes in Ability Without State Aid: Faith-Based Effort
Serves as Example
(By Cheryl Wetzstein)
One by one, a parade of healthy, well-groomed men take the
microphone at the church stage at Victory Temple.
``My name is Troy,'' says one man dressed in a white T-
shirt and camouflage pants. ``I was a heroin addict for 23
years. Now I have been clean for eight months, and I give all
the honor and glory to Jesus Christ.'' The 600 men and women
in the audience cheer, clap and stamp their feet.
Similar stories come from Martin, Juan, Noel, Roman and
dozens of other men, whose only visible signs of decades of
drug abuse and gang life are the tattoos on their muscular
arms.
Victory Fellowship is the personal ministry of ex-addicts
Freddie and Ninfa Garcia, who, as he puts it, ``used to run
in the streets and rob people, Bonnie and Clyde style.''
Their 1966 conversion came through ex-addicts with the
famed Teen Challenge program, founded by David Wilkerson,
author of ``The Cross and the Switchblade.''
Today, the Garcias say the Victory Fellowship program has
reclaimed no fewer than 13,000 hard-core addicts from the
streets.
Program leaders say they have a 70 percent cure rate with
people who stick with it for nine months, and they do it all
with a $60,000-a-year budget, funded entirely by private
donations.
Other substance-abuse treatment centers with multimillion-
dollar budgets have cure rates around 10 percent.
Members of Congress such as Sen. John Ashcroft, Missouri
Republican, who pushed for ``charitable choice'' in the
welfare law often refer to successes such as Victory
Fellowship and Teen Challenge as examples of programs
government should be supporting.
But Mr. Garcia and other religious leaders aren't convinced
that the government can help them.
``I don't want no grants,'' Mr. Garcia said at a recent
seminar on charitable choice sponsored in San Antonio by the
National Center for Neighborhood Enterprise (NCNE).
``I'm a church. All I want is for you to leave me alone,''
he said.
Under charitable choice, welfare recipients receiving
vouchers for a variety of services--job training, food
pantries, homes for unwed mothers, drug and alcohol
treatment, day care--should be able to redeem them with a
faith-based group.
Charities are prohibited from using the government money
for sectarian worship, instruction or proselytism.
Texas Gov. George W. Bush has made charitable choice a
priority and asked state agencies to report to him on their
progress by May 1.
``I envision a new welfare system--an energized,
competitive program where a person who needs help would get a
debit card, redeemable not just at a government-sponsored
agency, but at the Salvation Army or a church or a day care
facility or a private-sector job-training program,'' the
Republican has said.
One bill would ``exempt'' some faith-based substance-abuse
centers from state regulations. Such programs would have to
register with the state, say in their literature that they
are exempt, and refrain from offering medical care or
detoxification.
Another bill would allow ``alternative accreditation''
systems in lieu of state licensing for some programs.
Getting government funding flowing to programs that
``transform'' troubled people into responsible citizens has
been NCNE founder Robert L. Woodson Sr.'s message for 20
years.
The recent NCNE seminar explored peer accreditation plans
and alternative licensing plans as ways to make charitable
choice work.
But the fear of government heavy-handedness--now and
later--is pervasive.
``Shekels come with shackles,'' one program director
warned.
``Yeah, and when the state comes after you, they go after
your jugular,'' said Raul Gonzalez, executive director of
Youth Challenge of Greater Hartford in Connecticut.
____
Addicts Get Tough Love at Victory
(By Cheryl Wetzstein)
The people come to the modest Victory homes day and night.
Some shake from early drug withdrawal. Others are fresh from
prison or fleeing a gang contract.
They are welcomed with food, a clean bunk and security: San
Antonio's gangs know that Freddie Garcia's Victory Fellowship
centers are havens, and anyone inside is off limits to
attack.
If the newcomers decide to stay and kick their drug habits,
they are surrounded by former addicts, prostitutes and
criminals who pray with them, hold them close and clean up
their messes.
The withdrawal is unmedicated and the violent suffering
lasts for hours. So do the prayers, rubdowns and ministering
by people who believe their own addictions were cured by the
power of Jesus Christ.
``We see a lot of miracles here,'' said Alma Herrera, who
with her husband, Roman, is among Victory home's house
parents.
``The saying `Once a junkie, always a junkie' is not
true,'' said Victory Fellowship co-pastor and ex-addict Juan
Rivera.
Once the purging is over, the newcomer is adopted into a
family of believers whose daily lives are filled with prayer,
chores, Bible study, singling and fellowship. Witnessing is
conducted in housing projects, gang-infested streets and
prisons.
Each Victory home is headed by a married couple who act as
parents setting the standard for love, discipline and
structure. Men work with men, and women work with women. They
focus on building a person's character, self-discipline and
understanding of life as taught in the new Testament.
The privately funded two-year program is offered at no cost
to the ex-addicts. After graduation, the men and women often
end up in school or in jobs. Some married couples volunteer
to start Victory homes in other towns, where they will
recruit addicts to a ``new drug-free life in the Lord.''
[From the Wall Street Journal, Dec. 14, 1993]
The Wrong Fix
(By Robert L. Woodson Sr.)
Surgeon General Joycelyn Elders's recent comments that
America's crime rate could drop ``markedly'' if illicit drugs
were legalized epitomizes the tragic failure of
accommodationists to take a moral stand against an immoral
activity.
Tragically, the person who should be at the helm of a
massive effort to dissuade a new generation from involvement
with drugs cannot seem to bring herself to declare that
actions detrimental to one's personal health and to the well-
being of society are wrong and deserve no tolerance. Dr.
Elders assumes drug use to be an unavoidable ``given'' for
which the best goal is simple damage control.
In addition, Dr. Elders's argument in favor of drug
legalization is riddled with factual errors. For example,
experiments with legalization abroad have not been the
successes she assumes them to be. The majority have now been
reversed as was the failed ``Needle Park'' experiment in
Zurich--a free-drugs zone designed to control drug use and
stem the spread of AIDS. Predictably, this park quickly
became a nest of chaos and licentiousness that spilled into
the surrounding community. Needles were passed around,
despite the availability of a clean-needle program, and the
used, bloody needles were cast on curbsides and surrounding
sidewalks, jeopardizing innocent pedestrians.
Dr. Elders says that legalizing drugs abroad has not
increased drug use, but Hubert Williams, president of the
Washington-based Police Foundation, says that a more relevant
example is our nation's own past and trajectory: Since the
repeal of Prohibition, ``the amount of people using alcohol
has increased significantly, and there's no reason to think
the number of people using drugs will not increase
significantly if drugs are legalized.''
[[Page H6833]]
In a twist of logic, Dr. Elders reasons that because ``many
times they're robbing, stealing and all of these things to
get money to buy drugs,'' legalization would help by making
drugs a little less expensive. But even if drugs were
legalized, regulations regarding their use would be enough to
engender a black market and related criminal activity.
Rather than conduct a study on the possible effects of
legalizing drugs. Dr. Elders should direct her resources to
another type of research. In the same afflicted neighborhoods
where men, women and children huddle on street corners and in
dilapidated buildings to deal and use drugs, there are others
who have not succumbed to their lure. These models of success
should be the focus of Dr. Elders's scrutiny--and their
behavior, vision and values the cornerstone for drug-
prevention programs.
In numerous cases throughout the nation, low-income people
who have opened their homes as safe havens for neighborhood
children have proved that personal investment and the
consistent example set by just one adult can change the
futures of inner-city children--even those with unstable home
lives. The community activists with firsthand knowledge of
what succeeds in reaching young people should be at the
forefront in designing drug-prevention policies. The problem,
at its root, is a matter of values and morals, and those who
have claimed success are those who have addressed the issue
on this level.
The surgeon general should also take her notepad to San
Antonio to study the activities of rehabilitated addict
Freddie Garcia, whose outreach program has changed the lives
of more than 13,000 addicts in its 25 years of operation. She
should then travel to Hartford, Conn., to learn from Raul
Gonzales, also a recovered addict, who has reached out to
thousands of substance abusers through a men's residential
center, a women's mission and a center that includes
academic, vocational and social development training.
Dr. Elders should take the time to speak with a few of Mr.
Garcia's former hardcore addicts who are now leading
productive lives, and to some of the hundreds of families
reunified and healed through Mr. Gonzales's efforts. She
should ask them if their lives and the lives of their
children would have been any better had someone legalized the
drugs that had once controlled their destinies.
[From Newsweek, June 1, 1998]
Savior of the Streets
An ex-gang member who went to Harvard, Gene Rivers is an impolitic
preacher on the cutting edge of a hot idea: can religion fight crime
and save kids?
(By John Leland)
Patriot's Day is a city holiday in Boston, but the Rev.
Eugene Rivers, a compact, graying black man in a blue dress
shirt frayed at the elbows, is working hard. ``Yo, wazzup, G
money?'' he greats a teenager, slapping him five. He wheels
on another. ``Take your hat off, son. Yes, what? No, yes,
sir, we don't speak no Ebonics here.'' It is just noon on a
spring day, and already the Ella J. Baker House--a grand,
bowfront Victorian in Dorchester, one of the poorest
neighborhoods in Boston--is full of fires: a man's teenage
son has brought home a dangerous pit-bull terrier; a pregnant
16-year-old's parents have kicked her out of the house; the
Negros Latinos, the house baseball team, need uniforms and a
gang-neutral field. Rivers, 48, darts from one to the next, a
fixer, embattled but engaged.
When he first moved into this neighborhood, as a refugee
from Harvard, Rivers sought out a local drug dealer and
gangbanger named Selvin Brown--``a sassy, smartass, tough-
talking, gunslinging mother shut your mouth,'' he says, not
without some appreciation. Brown took the reverend into
crackhouses, introduced him to the neighborhood. And he gave
Rivers, a Pentecostal, a lesson in why God was losing to
gangs in the battle for the souls of inner-city kids.
``Selvin explained to us, `I'm there when Johnny goes out for
a loaf of bread for Mama. I'm there, you're not. I win, you
lose, It's all about being there'.''
Ten years later, as the Baker House kids file out into the
sunshine, Rivers turns from his full-contact pastoring--a mix
of street slang and stern lessons--to tell a group of police
officers from Tulsa, Okla., about Selvin Brown. Baker House
is Rivers' answer to Selvin: it's run by a dozen people, some
of whom have given up professorships, military careers and
positions in finance to be there. The Tulsa cops are only the
latest in a recent stream of law-enforcement emissaries who
have come to Rivers' domain, a rec center and parish house
that Rivers says serves more than 1,300 kids a year, to
watch, listen and talk about the hottest new topic in
crime fighting: the power of religion. For decades,
liberals and conservatives have argued past each other
about the crisis in the inner city. The right was obsessed
with crime, out-of-wedlock births and the
``responsibility'' of the underclass; the left only wanted
to talk about poverty, the need for government
intervention and the ``rights'' of the poor. Now both
sides are beginning to form an unlikely alliance founded
on the idea that the only way to rescue kids from the
seductions of the drug and gang cultures is with another,
more powerful set of values: a substitute family for young
people who almost never have two parents, and may not even
have one, at home. And the only institution with the
spiritual message and the physical presence to offer those
traditional values, these strange bedfellows have
concluded, is the church.
As the Tulsa cops sit around the Baker House oak table,
Rivers tells them about a grievous stabbing inside the nearby
Morning Star Baptist Church in 1992. During a funeral service
for a young murder victim, a gang chased another kid into the
church, beating and stabbing his in front of a crowd of
mourners. For the clergy, says Rivers, ``this was a wake-up
call. We had to be out on the streets,'' just like Selvin
Brown was. While the mainline Boston churches issued a
denunciation of the violence, a group of ministers from
smaller churches, mostly shoestring Pentecostal or Baptist,
met in Rivers' house to discuss a more radical response:
walking the hoods, engaging the gangs, pulling kids out.
Instead of bickering with police, the ministers vowed to work
with them, identifying the hardest cases. ``The deal we cut
was, `Take this one off the streets, we can deal with him in
a prison ministry','' the Rev. Jeffrey Brown, a Rivers ally,
tells the Tulsa delegation. The cops, in turn, would rely on
the clergy to work with the more winnable kids.
Since the 1992 alliance, and a reorganization of the Boston
police and probation departments, juvenile crime here has
fallen dramatically. Rivers is now trying to forge a similar
coalition of churches nationwide. It won't be easy: his brand
of street-smart charisma is not easily transferable, and the
work is house by house, block by block. But ``at the end of
the day,'' he says, ``the black church is the last
institution left standing.'' The noted conservative
criminologist John DiIulio Jr., best known for predicting a
coming wave of inner-city ``superpredators,'' has become an
improbable friend and ally. In apocalyptic tones, Rivers--a
forceful speaker who is sometimes accused of grandstanding--
warns that as the teenage population swells in the next
decade, ``there will be virtual apartheid in these cities if
the black church doesn't step into the breach.''
Washington is starting to take notice, too. The 1996
welfare bill gives states the option to fund church groups in
place of welfare agencies. Research on the effectiveness of
faith-based programs is so far largely anecdotal. ``But there
is a lot of interest in this area now, because secular
institutions have failed,'' says Bernardine Watson, a vice
president of the nonprofit Public/Private Ventures. ``Anybody
who wants to fund faith-based programs is looking at the
Baker House model. Conservatives like it because of the crime
angle; liberals like it because of the youth angle.''
When Rivers first came to Dorchester, the cops say, he
believed there was no such thing as a bad kid. That has
changed. Now, ``ministers will come to us about a kid, say
he's menacing the community,'' says Lt. Gary French, who
works with Rivers. The Boston police estimate that 150 to 250
kids are responsible for most of the violent crime in the
city. ``We can disrupt a gang by incarcerating the most
aggressive player,'' says French. ``But we can also disrupt
it by getting the fringe players into alternative programs,''
like those provided by Baker House. The exchange works both
ways. ``Right now,'' says Rivers, ``any cop in Dorchester can
dump a kid off in Baker House, and say, `Look, I'm gonna
crack this kid's skull, take him.' So we have taken the
pressure off the police to play heavies.''
At 2 a.m. in his cramped row house, Gene Rivers is still
keyed up. ``The great thing about serving the poor,'' he
says, ``is that there is no competition. These young males,
ain't no black preacher want to be around these boys. You see
[he names several kids at Baker House] coming, you go the
other way.'' He is on the short side, maybe five feet six--by
his own description, a ``pushy, aggressive, interloper-would-
be-usurper, with this kind of guerrilla campaign.'' In battle
mode, he is scandalously impolitic. He refers to the mainline
black churches as ``the major crime families'' and is a
critic of Henry Louis Gates Jr., chair of Afro-American
studies at Harvard, whom he has called ``the emcee at the
Cotton Club on the Charles.'' His own critics--``[it's a]
long list,'' he says--dismiss him as a ``black Rasputin'' who
has duped white people into thinking he has power in the
black community. He holds no degrees from college or divinity
school; his service on a recent Sunday drew just 19
congregants.
Yet Rivers is becoming a national figure. He has met with
the president, been courted by the Christian Coalition and
served on the religion panel at Colin Powell's 1997
Volunteerism Summit. Though Rivers comes from what he calls a
``radical reform'' line, his arguments for black self-help,
and his unwillingness to make liberal excuses for urban
pathologies, have endeared him to the right. ``There's been
more litmus-test stuff from the left than from the right,''
he says. (Rivers' ministry condemns homosexuality and
abortion.) ``One of the good things about the right is that
they're sufficiently indifferent toward the concerns of
blacks that they don't bother you.'' His alliance with
DiIulio has given Rivers a boost in policy circles. ``Gene
and John are very odd soulmates,'' says Rivers' wife,
Jacqueline, who trains inner-city teachers in the Boston
Algebra Project. ``One is so far left he's right, the other
is so far right he's left. They really think alike.''
The walls of Rivers' house still bear the bullet holes from
two shootings, one a random spray, the second by a drug
dealer Rivers had tried to move from a neighborhood
[[Page H6834]]
park. He roots around for a 1992 essay he wrote for the
Boston Review, entitled ``On the Responsibility of
Intellectuals in the Age of Crack.'' It, like his other
writings, argues that after the victories of the civil-rights
movement, the black middle class, particularly middle-class
churches, abandoned the black poor. The signature phrases of
these articles--``virtual apartheid,'' a ``crisis of moral
and cultural authority''--swim throughout his conversation,
crusty set pieces amid his staccato improvisations. ``When he
talks slang, I don't understand him,'' says Police Lieutenant
French. ``And when he talks the Harvard level, I don't
understand him, either.''
Rivers was born in 1950 in Boston, the eldest of three
children. His mother was a nurse, a Pentecostal; his father,
who moved out when Gene was 3, was a painter, a Muslim, who
later became art director for the Nation of Islam's paper,
Muhammad Speaks. Both parents were black nationalists and
intellectuals. ``What my mother instilled was that life is
duty,'' he says. ``Life itself is a holy war.'' Rivers grew
up in rugged northwest Philadelphia, where he was forcefully
inducted into the Somersville street gang at the age of 12.
``There was a side of my life nobody understood. At age 13,
14 and 15, I remember studying Andrew Wyeth, the Brandywine
tradition. [And I'm] in a street gang with a lot of hoodlums.
You learn to lead a double life. I've always had that
tension.''
Whenever Rivers describes the violent potential of the
Dorchester kids, his voice livens with a certain rogue
romance. ``This ain't Yuppie kids, this ain't Cosby kids,''
he trumpets at one point. In part this is because he's
playing to a public that finds lurid gang violence a sexier
topic than, say, urban poverty. But it's also because he
savors that street edge. Mark Scott, who runs the day-to-day
affairs of Baker House, thinks Rivers would be bored in a
straighter life. ``He's pastor of the church, but he's also
pastored by the people around him, especially Jackie.'' Scott
believes that Baker House has saved Rivers, keeping him on
the street but out of trouble, giving him a channel for his
anger.
As he describes his own past, Rivers' tone becomes more
sober. He's riding in Jackie's Volvo--Rivers doesn't have a
license--listening to NPR and heading to pick up their two
kids, Malcolm and Sojourner, 10 and 8, near their private
school in tony Beacon Hill. It does not strike him as a
contradiction to send his kids to private school. ``I said,
`Jackie, I'm not a liberal. I'm not going to have my kid go
to school where the kids are so completely antisocial that
Malcolm will end up resenting black kids. No no no no no'.''
As Jackie drives, Rivers continues his own story. When he was
13, his life was forever changed by the Rev. Billy
Graham's radio program. Rivers was being menaced by an
older, bigger kid from a rival gang called the Lane, and
Graham's words struck him. ``He asked, was I ready to meet
my creator? At that point, that was not a farfetched
possibility. I had a fear of death, which my conversion
experience transformed. My response to fear is faith.''
Eventually the Rev. Benjamin Smith, a legendary
Philadelphia inner-city evangelical, pulled Rivers out of the
gang and into the Pentecostal community. But he was at odds
here, too, a bookish intellectual in a working-class church.
He dropped in and out of two art schools; he read Herbert
Marcuse and Noam Chomsky, getting deeper into radical
political thought. The 1969 deaths of Black Panthers Fred
Hampton and Mark Clark--men his own age, killed in a police
raid--shook his moral center, as Graham had years before. The
nonviolent movement of the '60s had crashed around him.
Rivers was angry and confused, ``buck wild,'' scorched with a
case of ``survivor's guilt'' that has been his motivating
force ever since. ``I promised the Lord that if he would let
me survive, I would never turn my back on these kids,''
Rivers says. He got a woman pregnant and drifted to New
Haven, Conn., where he met Kwame Toure, then known as Stokely
Carmichael of the Black Panthers. Taking occasional courses
at Yale, he carved three identities for himself, collecting
welfare checks in Philadelphia, New York and New Haven.
Finally, another mentor--Martin Kilson, an iconoclastic black
professor at Harvard--discovered Rivers and lured him to
Cambridge. Rivers raged against the privileged black students
of Harvard--including, at first, a Jamaican woman named
Jacqueline Cooke--and left, angry, in 1983. He and Cooke
married three years later.
On a school holiday at Baker House, Rivers is showing two
boys the documentary ``Eyes on the Prize,'' the installment
about Fred Hampton and the black Panther Party. The boys are
12 and 13; Rivers takes satisfaction in calling the younger
boy, who appeared pseudonymously in a 1997 New Yorker
article, ``America's worst nightmare.'' The kids are to write
reports on the video for which Rivers gives them a few bucks.
He hugs the boy, pays him, and the kids are off.
``Kareem,'' as The New Yorker called the boy, was Baker
House's most critical case a year ago, and he is still.
His day with Rivers began when he showed up at the Rev.'s
house for breakfast; it will end around 11 at night, when
he asks Rivers for a lift to the city bus, bound for
wherever, Rivers doesn't worry that Kareem will get home
safely. ``I'm worried about whether other people will.''
For Rivers, Kareem is a test. ``[Kareem]'s father got
murdered,'' says Rivers. ``His mother lives in the street
more than he does. If you can get [Kareem], you've got the
whole neighborhood.''
In the early days, Rivers pushed religion harder on the
kids, but found that it intimidated--and turned off--many of
them. So now he keeps preaching to a minimum. But the men and
women who are giving their lives to Baker House still see
faith at the heart of their mission. ``Bob Moses and SNCC,
Fred Hampton in Chicago, these folk laid their lives down,''
says Rivers. ``My understanding is that those acts of heroism
were very Christian acts, in the tradition of the martyrs. I
live in Dorchester and have weathered what we've weathered
because that's my understanding of radical discipleship.
There is no crown without the cross. Most folk aren't ready
to hear that.''
At the end of a long day, a half dozen Baker House members
gather for a prayer meeting: Ivy League refugees, MIT
doctorates. Their testimony is an ecstatic, Pentecostal
affair, full of hand-clapping and spontaneous witness. After
half an hour, Rivers ducks out momentarily, passing the
receptionist, a single mother he'd counseled years before.
``Hallelujah, praise Jesus,'' he says--then, without pause,
``Did you page [a city official]?'' This is the refracted
life of the Rev. Eugene Rivers, drawing upon Harvard and the
Philadelphia street gangs, the church and the state. Rivers
checks his pager. The Urban Institute is in for a visit; his
wife is on the other line. He ducks back into the prayer
meeting and gives thanks once more, and once more again.
____
Cops, Crime and Clergy
Boston's commish on how the new alliance between police and preachers
works
(By Paul F. Evans)
I was a beat cop in Gene Rivers' Dorchester neighborhood in
the early '70s, but back then our paths wouldn't have
crossed. At the time, the police force didn't look beyond
itself to solve the problem of violence, and we had very
little interaction with the clergy. By the early '90s,
however, it became clear that our ``get tough'' policies just
weren't working. The 1992 stabbing incident at Morning Star
Baptist Church--there was a melee during a funeral--only
underscored how bad things had gotten. We finally saw that we
couldn't simply arrest our way out of the escalating
bloodshed.
It was time for real collaboration. We realized that
preachers have tremendous credibility as leaders in the
community and that having them working with us out in the
streets would have a powerful impact. For their part, the
clergy saw cops doing their best to get inner-city kids into
summer camps and to get them mentors. We both knew that what
children need is an alternative to crime.
The alliance that resulted works because the police and the
ministers really do have a common goal: keeping kids from
getting killed. And it's not as if we don't know who is at
risk: of the 155 young people who died from violence between
1990 and 1994, two thirds had prior arrests--an average of
9.4 arrests for every victim. For the first time, we can
really concentrate on these specific kids and make honest
assessments of what has to be done with them. We can put our
heads together and say this kid has gotten into trouble, but
he's a good kid--let's try extra hard to get him the services
he needs. This one, we can't save--and if we don't get him
off the streets and into prison, he's not going to make it.
With a clear, structured communication network now in
place, we didn't have to wait for three or four homicides
before realizing we had a problem with the Bloods and Crips
gangs. We've got cops and clergy out there, visiting 36
schools and countless homes trying to identify gang wannabes.
When there is gang warfare we call members in for an open
session with representatives from the D.A.'s office, the
probation officers, social-service workers and neighborhood
ministers and say, ``Look, the community is telling you to
stop. If it doesn't, the whole system you see here is going
to indict you, sentence you and send you to prison.''
____
The New Holy War
(By Kenneth L. Woodward)
Check out any dying neighborhood in inner-city America and
this is what you'll find: the church and the liquor store are
the last establishments to leave. Many of the churches are
Roman Catholic, built big and solid to serve Irish, Italian,
Polish and other European immigrants. Today, most of the
parishioners are Hispanic, Asian or African-American. And the
parish schools where diligent nuns once tutored white ethnic
children through English, math and first holy communion now
cater mostly to kids who are neither white nor Catholic.
Other Christian congregations moved up and out when the inner
city went poor and black. The Catholic Church is the church
that stayed. Around the corner are other, newer churches,
some with Spanish names. Many are little more than basement
``blessing stations'' and storefront congregations:
Pentecostal, Holiness, Jesus-Saves Baptist, Apostolic This or
Prophesy That--the kind of churches that spring up wherever
the promise of this life is so bleak that the promise of the
next is all there is to count on.
These churches can't keep kids out of gangs, fight crime
and rescue the nation's inner cities by themselves. But none
of this is likely to happen without them. After spending 30
years and billions in fighting poverty, and decades trying to
arrest our way out of the problem of crime, Washington
[[Page H6835]]
has belatedly discovered the wisdom of empowering local
churches to do what government alone has so far failed to
accomplish--provide the kinds of direct services and inspired
commitment needed to restore the nation's deteriorating urban
core. In Congress, a bipartisan coalition has swung behind a
series of policy changes--broadly called ``charitable
choice''--which allow federal, state and local funds to flow
to faith-based anti-poverty groups. Among the latest
initiatives is a $500 tax credit for those who contribute to
poverty-fighting programs, including churches. ``Those from
the left are disillusioned with government efforts,'' says
Indiana's Sen. Dan Coats, a conservative Republican, ``and
those coming from the right are not comfortable with the let-
the-market-sort-it-out thinking.'' There are limitations--
money is always scarce, and the appeal of a preacher's
personality in the 'hood is hard to replicate. But for people
of faith, the redemption of the nation's inner cities is a
calling, not a caseload. The God they bring into crime-
infested streets is both the Old Testament Jehovah of law and
order and the New Testament's merciful Jesus. A powerful
combination--particularly if you add federal funding to the
mix.
When it comes to rousing a congregation, or working one-on-
one, there's nothing like the coiled power of a charismatic
preacher. But when it's jobs and housing and a vision for the
long haul, only Catholic leaders with a grasp of the wider
common weal need apply. That's why in urban areas like
Boston, Newark and Philadelphia, clergy are learning to reach
across denominational lines and tap each other's strengths.
When the Rev. Eugene Rivers, a black Pentecostal, needs
access to Boston's power brokers, he dials the phone that
rings beside the bed of Cardinal Bernard Law. ``He's my
patrone,'' says Rivers. ``I don't need an archdiocese because
the cardinal already has one.'' And it's come in handy: in a
city with a traditionally Irish Catholic police force and a
history of racial tension between cops and community, Law has
been a key ally of the black clergy to deracialize law
enforcement.
It's a win-win proposition. Rivers reaches an at-risk, non-
Catholic population with what the cardinal calls ``a pro-
poor, pro-family, pro-life platform that I can
enthusiastically support.'' That support includes the moral
authority and institutional experience of a church that
counts nearly half the Boston area's population as members.
In turn, says Rivers, ``we've got the local talent--the
forgotten 40 percent of the inner-city blacks who are
working, support families and go to church. We've got the
clergy pool, the energy--we can make the conversions and put
the Spirit into the letter of the law.''
But there is much more to inner-city ecumenism than
institutional cooperation. Movements need vision, and in the
social teachings of the Catholic Church, black Protestant
clergy like Rivers have discovered a body of thought that
fits the problems of the inner city into a coherent Christian
perspective. Unlike the individualisms of the secular left
and right, Catholic doctrine conceives society as an
interdependent organism rather than a social contract between
isolated individuals. Rights and duties flow from the
sacredness of every human person, justice seeks the common
good, the state ensures public order. In this view, persons
are inherently social and proper human development requires
civic space for a range of institutions: family,
neighborhood, religious and other voluntary associations like
labor unions and political parties. Catholic lingo such as
``social solidarity'' in matters of public policy speaks
directly to the needs of inner-city populations. In short,
the moral community is one that balances individual goods
with those of civil society and the state. Charity, yes, but
also social justice. In all these ways we become our
brother's keeper.
For people of faith, there's more than one way to give this
vision flesh. In 1967, riots left Newark's Central Ward for
dead. That's when Msgr. William Linder began to put together
the New Community Corporation with government funds and
corporate subsidies. Operating out of St. Rose of Lima
parish, Linder has built 3,100 nonprofit housing units for
inner-city residents. The corporation runs its own shopping
center anchored by Pathmark, the first supermarket to open in
the neighborhood in 25 years. Over the years Linder has
gotten more than 3,000 people off welfare, employing more
than half of them in the corporation's own nursing home, day-
care centers and health services--including one for children
who have HIV-positive. There's an automotive institute that
trains mechanics, a credit union for small loans and another
corporation to provide credit for local businesses.
``Developing a community is a comprehensive task,'' says
Linder, an application of Christian values. ``The whole issue
is--how do you respect the dignity of a person?''
If the New Community Corporation shows what one priest can
accomplish, Cleveland's ``Church in the City'' program
demonstrates how much more has to be done. Five years ago,
Bishop Anthony Pilla looked at the migration of Cleveland's
Catholics and concluded that his was ``quickly becoming a
suburban diocese.'' Over the previous four decades, the
city's 2:1 population ratio over the suburbs had been
reversed. There's nothing in the Bible that says ``Thou shalt
not move to the 'burbs.'' But Pilla, who grew up in
Cleveland's Little Italy, thinks the church is obligated not
to desert the poor who have no choice but to make the inner
city home. As bishop, there are some economies Pilla can
command. Cleveland's Catholic Charities Corporation, which
uses both government funds and contributions from the pews,
offers grants for inner-city projects. Like other Catholic
bishops, Pilla has also twinned city parishes with more
prosperous ones in the suburbs. The goal is partly
financial--to allow the better-off to help keep up those
parishes in need--and partly social--to establish Catholic
solidarity across the boundaries separating safe from
dangerous neighborhoods.
What Pilla does best is exhort others to find answers to
the inner city's needs. Next month, for example, Third
Federal Savings will begin construction of its new
headquarters in the old Polish neighborhood just outside the
city's high-rise downtown core. The bank's budget has grown
from $6 million to $18 million, and instead of a functional
corporate center, chairman Marc Stefanski--inspired by
Pilla--is creating a capacious building that will anchor the
neighborhood with space for retail shops and a small plaza.
Because they represent the institutional commitment of the
church that stayed, Catholic bishops like Pilla can
attract the kind of government and corporate funds that
produce housing, jobs and educational opportunities for
the inner-city poor. (Not for nothing does Andrew Cuomo,
head of the Department of Housing and Urban Development,
keep a Jesuit priest, Father Joseph Hacala, on his staff.)
But inner-city America is honeycombed with fledgling
operations by black evangelicals like Rivers whose faith-
based approach to at-risk youths produces hard-won
individual conversions. They wrestle black males from drug
dealers and mentor kids who never knew their fathers.
Cumulatively, their victories are impressive. ``But
corporate America balks at giving money directly to these
Pentecostals because they don't come well packaged,'' says
John DiIulio, a Princeton professor who labors at
providing the statistical proof that such efforts are
paying off. ``Corporate grant makers are afraid of real
God-talk. They prefer secular rehabilitation to spiritual
transformation.''
That may soon change--and must, both in the capital and in
corporate America, if religion is to really work in the inner
city. However appealing it sounds, ``the churches can't do it
alone,'' says Mark Scott, an associate of Rivers' in Boston.
``We're the glue of civic life, addressing values and
spiritual issues that the government can't address. But just
saying `let the churches do it,' without the government,
won't work.
He's right. But as Scott and Rivers well know, the Devil
may be in the details. In offering tax credits to those who
support faith-based programs, for example, Coats wants to
make sure the money doesn't go for ``a new satellite dish for
the church.'' Rivers is one of many black ministers who think
the senator's caution is justified. He is repulsed by black
denominations like the National Baptist Convention, whose
president, the Rev. Henry Lyons, has been charged with
diverting church funds for his personal use. The NBC board
supports Lyons, who denies the charges. Some church
bureaucracies, Rivers says, are like Caribbean governments--
they ignore their own poor and reward politically connected
stars of the pulpit. ``The way it is now, the black church
structure undermines any system of moral or financial
accountability,'' Rivers argues. ``It simply perpetuates a
circulation of crooks in which younger clergy are encouraged
to imitate the old dirty bulls.''
Rivers and like-minded clergy everywhere think they can do
things differently. Indeed, one of the emerging battlegrounds
in the inner city's holy war lies between the churches
themselves. In this post-civil-rights era, those
congregations that prove their faith with honest deeds will
attract this latest--and perhaps last--infusion of outside
funds. The poor have always looked to their churches--for
hope as well as for healing. Will they be disappointed?
____
The Gospel of St. John
(By Howard Fineman)
John Ashcroft's Washington seems worlds away from Eugene
Rivers' Boston. A first-term Republican senator, Ashcroft is
an antitax, pro-death-penalty conservative from the Missouri
Ozarks, at home with rural accouterments: his bass boat, his
dirt bike, his farm. But though they've never met, Rivers and
Ashcroft are soul brothers of sorts, moved by the same
Pentecostal roots and sociological rationale to pursue a
similar mission: expanding the use of religious institutions
to reclaim the lives--and lethal streets--of the cities.
While Rivers works Dorchester, Ashcroft ministers to
Capitol Hill--and is eyeing a run for the presidency in 2000.
The devout son and grandson of Assembly of God clergymen,
he's leading a crusader to open the federal treasury to
churches (and other religious institutions) who do the kind
of social-welfare work now handled mostly by government.
``Government bureaucracy looks at people by criteria, by
type,'' he told Newsweek. ``Religious people are concerned
with the whole individual, with his whole life--even his
eternal life. That's how you build self-esteem.''
It's long been political and constitutional heresy to
suggest that federal money be used in this way. But violent
gangs and government failures--and the election-year demand
for welfare reform--gave Ashcroft an opening. The 1996
welfare law contains his ``charitable choice'' provision,
which allows states
[[Page H6836]]
to contract with ``faith-based'' organizations to provide
welfare services. The groups can't proselytize, but they can
keep the ``religious character'' of their facilities and,
subject to financial audits, remain exempt from most federal
workplace regulation. The measure is being challenged in
court, but Ashcroft is marching ahead with a new one, which
would extend charitable choice to include drug treatment,
juvenile-crime prevention and even low-income housing. He
got bipartisan support in 1996 and hopes for more this
year.
Ashcroft, 55, comes by his faith in the faith-based
honestly. His late father was president of a sectarian
college and a leading figure in Springfield, the Ozarks city
Ashcroft jokingly calls ``the Rome, the Jerusalem'' of the
Assembly of God. The denomination's tenets: no drinking, no
smoking, no gambling, no dancing, no sex before marriage--but
plenty of missionary work and gospel singing in celebration
of the Holy Spirit. On the eve of his Senate swearing in,
Ashcroft was blessed by a laying on of hands, and his head
was ``anointed with oil'' in Old Testament fashion. He hosts
a voluntary devotion in his office every morning.
Too churchy and remote to be a major player? Look closer.
For college Ashcroft chose Yale (he played rugby but wrote
home every day), followed by law school at the University of
Chicago. His wife, whom he met at Chicago, teaches law in
Washington at Howard University.
Having never heard the ``call'' to the ministry, Ashcroft
instead is listening to what the Lord may tell him about the
White House. Only He knows whether the Monica Lewinsky affair
will lead the public--or even Republican primary voters--to
yearn for an abstemious, high-collar figure.
Meanwhile, Ashcroft is as systematic about politics as his
father was about preaching. He's won five statewide races in
a classic ``swing'' state (two for attorney general, two for
governor, one for the Senate). He sings barbershop with Trent
Lott and is close to Dr. James Dobson and Pat Robertson.
Aided by Christian Coalition members, he won a presidential
straw poll in South Carolina last week and hosted a smart-
money fund-raiser at a bistro in Washington. This week he
campaigns in California. And who knows? He might even find
support on the streets of Boston.
Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the distinguished
gentleman from New Jersey (Mr. LoBiondo).
(Mr. LoBIONDO asked and was given permission to revise and extend his
remarks.)
Mr. LoBIONDO. Mr. Speaker, I rise in very strong support of H.R.
4923, the Community Renewal and New Markets Act. I want to thank all
those who played such a crucial role in bringing this bill to the
floor. I especially want to thank our speaker, the gentleman from
Illinois (Mr. Hastert), for his work, his tireless efforts, to make
sure this initiative moves forward.
Three years ago, Congress authorized and the administration
designated 20 Round II empowerment zones. My home county of Cumberland
County, New Jersey, in the Second Congressional District, is one of
those Round II empowerment zones. We have tremendous potential for our
community to create new jobs, to retain existing jobs, to help both
socially and economically in our community.
However, Mr. Speaker, the Round II zones have not received full
multiyear funding like the first round counterparts. Instead, they have
received two installments in appropriation bills that were far below
the Federal commitment.
Now, although this particular bill does not specifically mention the
funding for Round II zones directly, I am very pleased that the
President of the United States and the Speaker of the House have
reached an agreement that was announced at a press conference at the
White House a short time ago, where $200 million for Round IIs were
agreed to, and also I would like to say that I am very pleased that the
Speaker has personally assured me that discretionary funding to keep
our existing zones operational will be included in the final
appropriations process.
This is extremely important for all of our Round II zones and the
hopes that our citizens have for the potential that this brings.
The employer wage tax credit, already extended to Round I
designations, is included in this bill and is an extremely important
component of our ability to empower these communities.
Those of us representing these distressed communities in Congress
understand the vital need to have full funding in Round II. This bill
helps us move toward that initiative, helps us bring to our communities
renewed hope and empowerment to be able to create those jobs and do
those things that so many of us want to see.
Mr. Speaker, once again I want to congratulate and thank all of those
who have been involved in this process. I look forward to this
enactment. I urge strong support of this initiative.
Mr. SCOTT. Mr. Speaker, I yield 2 minutes to the gentleman from Texas
(Mr. Reyes).
Mr. REYES. Mr. Speaker, I thank the gentleman from Virginia (Mr.
Scott) for yielding me this time.
Mr. Speaker, this morning I was here to express my deep frustration
at our inability, while on the one hand bringing up this suspension
bill for the Community Renewal and New Markets Act, at the same time
when we were unable to get full funding for Round II empowerment zones.
After I just heard my colleague make mention that there has been an
agreement that there will be $200 million for Round II, I am obviously
pleased, as El Paso is one of the areas that was designated under Round
II as an empowerment zone.
It is important to note, Mr. Speaker, that over the 10-year life of
the program, urban empowerment zones were supposed to receive $100
million. However, in fiscal years 1999 and 2000, amounts less than $4
million each year were appropriated for each urban empowerment zone.
Moreover, in this fiscal year, up until a few moments ago, we had been
led to believe that there were zero dollars for empowerment zones. This
is good news for El Paso. It is good news for all the communities that
have been counting on and have been planning on a 10-year basis for
money for their empowerment zones.
Full funding for empowerment zones unleashes tremendous potential for
growth and economic development in places like El Paso under Round II.
Each of these communities have laid out long-term plans and proposals
which will deal with high unemployment, in some cases like El Paso with
unemployment running consistently twice the level of the national
unemployment rate. These communities have already been slated for
assistance, and we are pleased this morning that that assistance will
be forthcoming.
Mr. Speaker, I intend to vote for and support this bipartisan
legislation.
Mr. SCOTT. Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman
from Ohio (Mrs. Jones).
(Mrs. JONES of Ohio asked and was given permission to revise and
extend her remarks.)
Mrs. JONES of Ohio. Mr. Speaker, I rise today in support of H.R.
4923, the Community Renewal and New Markets Act. However, I do want to
say I share the concerns of my colleague, the gentleman from Virginia
(Mr. Scott), with regard to the issues of religious freedom and the
application of religion to someone's requirement or ability to be
served or have a part in a particular program.
I am a freshman Member of Congress. I serve on the Committee on
Banking and Financial Services and the Committee on Small Business. I
chose those committees because in Cleveland, Ohio, the 11th
Congressional District, from 1986 through 1997 the average income
dropped 10 percent. Within the State of Ohio, it rose an average of 5
percent. That is, in part, because the city has lost high-paying blue
collar jobs and has gained jobs in the service sector where the
salaries on average are lower by 13 percent.
I believe that this legislation will allow communities like the City
of Cleveland to be revived. We have had great housing starts in
Cleveland, new housing coming up in areas where we had riots a few
years ago. What is not there is what makes a full community, and that
is businesses and opportunities for employment right in one's own
neighborhood, and opportunities for young people to see that the people
in their communities own businesses and can employ persons right in
their own neighborhood.
I rise in strong support of this act because I believe it will
provide that opportunity and will clean up some of the neighborhoods
through brownfields support. I support everyone who stood in support of
this legislation.
Mr. ENGLISH. Mr. Speaker, I yield 5 minutes to the distinguished
gentleman from Missouri (Mr. Talent), one of the authors of this
legislation.
Mr. TALENT. Mr. Speaker, I thank the gentleman from Pennsylvania (Mr.
English) for yielding me this time.
Mr. Speaker, I will say to the Members of this House this is deja vu
all over again. It is the second time I have stood up in support of
this bill. I think it is worth it.
[[Page H6837]]
I want to compliment the gentlewoman from Ohio (Mrs. Jones) on her
remarks. Let me pick up on what she said because she mentioned she is a
freshman. She is a very aggressive lady who advocates for her
community. She is on the Committee on Small Business and the Committee
on Banking and Financial Services because she recognizes that in the
new world of economic empowerment and community renewal the key is
drawing in private sector investment into these distressed
neighborhoods and private sector investments that make sense in terms
of private sector standards. That is the key to the future. She sees
it, and this is a lady with ties and bonds to her community. She is
hearing it from the organizations that are making a difference in these
communities, as I have heard it, and as the other sponsors of this bill
have heard it as well.
Let me go through some of the provisions in this bill so the House
can see how comprehensive it is in proving out this principle I just
mentioned and not just private sector investment, drug and alcohol
counseling, which we have talked about, homeownership, all of these
provisions that are necessary to rebuilding of neighborhoods, because
these are not neighborhoods with housing problems or drug problems or
police problems or educational problems. These are people who have all
of the needs and the range of needs that people have, and we need to
address them all at once; and we can do it through these community
organizations.
The bill provides, as others have talked about, for the establishment
of renewal communities within which there will be very significant tax
and regulatory relief designed to draw in private venture capital, a
zero capital gains rate, zero percent capital gains for investments
made and held for 5 years in these communities; commercial
revitalization deduction which the gentleman from Pennsylvania has
fought so hard for, who encouraged investors and companies to rehab
buildings in these neighborhoods; increased expenses for small
business, up to $35,000 in deductions for equipment more than they can
currently take, and employment wage credit for businesses to hire
people from these neighborhoods; brownfields credit.
This, coupled with regulatory relief and municipalities that wish to
be a renewal community, must include agreements with these neighborhood
organizations about things like infrastructure investment, or taxes in
those communities, or community policing; again, raising the visibility
and the prestige of these neighborhood organizations.
Homeownership provisions, requires HUD to sell to neighborhood
development organizations substandard housing so that HUD can no longer
not do anything itself with housing, nor refuse to give the housing to
people who will do something with it. This is a constant complaint I
have and others have had from community redevelopment organizations.
The new market tax credit, new market venture capital companies which
my friend, the gentlewoman from New York (Ms. Velazquez), worked so
hard on and which has been part of the President's vision for over a
year, these are similar to small business investment corporations which
we already have. What they do is they will be private equity investment
corporations.
They will raise private capital. The Federal Government will, through
the sale of the ventures, allow them to draw down additional capital,
and they must invest it in these distressed neighborhoods. This idea is
pulsating with the vision that this is correct, that these
neighborhoods are places where the economy can prosper.
There are thousands of budding entrepreneurs in these neighborhoods,
and all they need is some investment capital and some advice. We should
not look on these neighborhoods as liabilities. They are assets, and
the new market venture capital companies are premised on that
assumption.
There are parts of this bill I like more than other parts, obviously,
because I have been sponsoring them for a long time. There is not a
part of this bill I disagree with. This is not a case where anybody in
this coalition has had to accept something they really do not like in
order to get something that they do. That is one of the things that is
exciting about it.
I do not think I need my whole 5 minutes. I will say I appreciated so
much the comments on the part of the sponsors in support of this bill
and also the principled and eloquent statement of concern by my friend,
the gentleman from Virginia (Mr. Scott). Let us go ahead and pass this
bill. We still have Senate passage. We still have conference, but let
us not stop this now.
We do not have a lot of time left in this session. It is almost a
miracle we are able to do this on a bipartisan basis in an election
year. Let us continue the miracle and do something for these
neighborhoods which are doing so much for themselves.
Mr. SCOTT. Mr. Speaker, I yield 2 minutes to the gentleman from North
Carolina (Mr. Watt).
Mr. WATT of North Carolina. Mr. Speaker, I have been in this body 8
years almost now, and I think I have never seen a bill come to the
floor that I thought was a perfect bill. Sometimes we have 99 percent
terrible things in a bill and one good thing that tempts one to vote
for it. Sometimes there is 99 percent good in a bill and one very bad
provision that tempts one to vote against it. That is the situation we
are in in this case, because the overwhelming balance of the argument
about this bill is favorable. It is a magnificent bill that will help
to stimulate inner city communities, rural communities in need of
employment and revitalization. It will bring private funds back into
our communities and extend the empowerment zones and provide bonding
capacity.
{time} 1315
And so this is certainly one of those bills where 99 percent of the
bill is just a magnificent bill. There is 1 percent of the bill that
causes some serious problems. And, unfortunately, they are
constitutional problems that the gentleman from Virginia (Mr. Scott)
has described eloquently in his comments.
They involve the ability of religious institutions to discriminate
against applicants for employment who may not agree with their
religious tenets. And what I am trusting is that as I vote for this
bill and support the 99 percent favorable, that the Court will see fit
to right the legal and constitutional wrong with this bill. I
appreciate the gentleman from Virginia yielding me this time for me to
voice my support of the bill.
Mr. SCOTT. Mr. Speaker, I yield myself the balance of the time.
Mr. Speaker, as many of my colleagues have pointed out, there is a
lot of good in the bill. But there clearly are constitutional problems
with funding pervasively sectarian organizations. There are problems
with the drug counseling provisions.
In a letter of July 12 of this year to Members of Congress, the
National Association of State Alcohol and Drug Abuse Directors wrote
the following: ``There is a strong national consensus around the core
competencies that a substance abuse practitioner must demonstrate in
order for them to be effective,'' and they go on to talk about the
importance of State regulations, which is essentially overturned in
this bill.
Mr. Speaker, there is in the bill a provision that specifically
allows religious discrimination in employment. So we are faced with a
situation that reminds me of the question, ``Other than that, Mrs.
Lincoln, how did you like the play?'' Other than the provisions that
are constitutionally problematic, other than the drug counseling
certification problems, other than the separate-but-equal drug
programs, other than the discrimination in employment, how do we like
the bill?
Mr. Speaker, I think we ought to vote against the bill, allow the
bill to be amended so that we can enjoy the good and favorable things
in the bill.
Mr. Speaker, I yield back the balance of my time.
Mr. ENGLISH. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, this legislation is truly landmark legislation. I have
listened to some of the criticisms from the other side of the
legislation and I have been pleased to see the bipartisan character of
its support. Every one of the objections that have been raised to this
legislation have been before this House in the past and have been set
aside. They should not deter us from moving forward and doing the right
thing, because this legislation, Mr. Speaker,
[[Page H6838]]
will place a new emphasis in this House on distressed communities. It
will give those distressed communities and their inhabitants the
opportunity to participate in our national growth and in our national
opportunity.
We have an opportunity to move opportunities to where the needs are.
That is something that at a time of rising growth and rising tides, we
need to make a priority if our society is going to create opportunity
for Americans and focus not only on liberty, but also on equal
opportunity.
Mr. Speaker, in passing this legislation, we will give thousands of
low-income Americans a stake in the American dream. And as we do so, we
have an opportunity to greenline many of our distressed communities.
All too often in the past, our distressed rural and urban communities
have experienced redlining, a loss of opportunity for investment.
Today, we are creating incentives which would effectively greenline
those communities and attract new investment, new jobs, and new
opportunity and create new tools to allow local people to design local
institutions to their needs.
In western Pennsylvania, we have communities in my district like
Farrell, Pennsylvania, and some of the neighborhoods even of my
hometown of Erie, who could benefit enormously from these new,
nonbureaucratic tools.
Mr. Speaker, we have passed many tax bills in this House. We have
passed a marriage penalty credit, we have passed pension reform, we
have passed a taxpayer Bill of Rights, too. We have passed small
business incentives and we voted to eliminate the death tax. We have
gotten rid of an antiquated phone tax in action in the House and we
will be moving soon to repeal a tax on Social Security benefits.
We have passed many tax bills in this House. Why do we not today pass
a tax bill to provide relief for those communities who all too often
have been left behind? In passing this legislation, we are committing
ourselves to a vision of a growing prosperous America and creating a
land of opportunity where opportunity truly exists for every American.
Mr. Speaker, I urge all of my colleagues to join me in passing this
legislation.
Mr. RYAN of Wisconsin. Mr. Speaker, today we are voting on H.R. 4923,
the Community Renewal and New Markets Act, which includes a provision
to create several very large investment companies targeted toward the
inner cities and rural communities.
The American Private Investment Companies' (APIC) proposed goal of
bringing large-scale businesses to economically distressed communities
is a laudable and important goal. However, the APIC proposed under the
Community Renewal and New Markets Act accepts the various impediments
to investing in the inner city and rural communities and simply offers
businesses a subsidy for risky investment. Further, the legislation
duplicates several existing programs, including Small Business
Investment Companies (SBICs) which are also expanded under this bill.
The proposal has not been adequately scored to take government loan
guarantee risk into consideration, and is to be administered by the
Department of Housing and Urban Development (HUD), which is
inadequately prepared for the responsibility.
A lack of capital is not keeping businesses from investing in these
areas, especially not the large-scale, established businesses that the
APIC program would target--the problem is the high cost of doing
business. Instead of attacking the fundamental problems of these areas,
a program such as APIC reduces urban and rural areas' incentives to
change what makes investment in these communities difficult in the
first place--penalizing tax rates, burdensome regulatory policies, a
lack of pubic infrastructure, and high crime rates.
Further, a lack of venture capital is not an issue. The companies the
APIC proposal targets are not entrepreneurial start-ups, nor are they
small businesses. They are companies like Safeway or Wal-Mart. Location
of venture capital is also not an issue. In today's information economy
where technology facilitates long-distance interpersonal communication,
venture capital flows to where it can earn a high rate of return,
whether the investment is in Chicago or the Appalachian Mountains.
At least eight federal programs already exist that have similar goals
as the APIC program. We understand each program is structured slightly
differently and awards loans and grants differently than APICs, but the
outcome remains the same. These include Community Development Block
Grants (CDBG) Section 108 Loan Guarantees, Community Development
Financial Institutions (CDFIs), Small Business Investment Companies
(SBICs), and the Business and Industry Loan program administered by the
USDA.
The APIC proposed creates quasi-GSEs, by relying on government
subsidies to back ``private'' loans. This is not a private market
initiative. HUD is granted authority to create a secondary market in
APIC debt, similar to how Ginnie Mae guarantees mortgage debt. Creation
of this secondary market further lowers the cost of capital, but
increases taxpayer risk.
In fact, under H.R. 4923, APICs are expected to lose $6 million for
every $1 billion invested. CBO believes that this loss could be greater
if the true value of risk is calculated. In addition, CBO wrote that
although the APIC legislation ``authorizes the appropriation of $36
million annually for the subsidy cost of loan guarantees and $1 million
annually for administrative expenses . . . based on the experience of
similar loan guarantee programs administered by the SBA. CBO estimates
that the subsidy cost to guarantee $1 billion in loans under the APIC
program would cost about $50 million annually.'' Based on SBA programs,
``CBO expects that APIC borrowers would default on between 25 and 30
percent of the guaranteed loans.''
To put this in perspective, CRS contrasts the expected 3.6 percent
subsidy rate with both CDFIs and SBICs. CDFIs have a FY1999 subsidy
rate of over 39 percent and SBICs have a subsidy rate of 25 percent (as
of 1996). Accordingly, CRS, as well as CBO, the proposed 3.6 percent
subsidy rate far too low.
Finally, HUD is a highly political department and has demonstrated a
lack of success in handling new programs, such as the community
builders program. Unlike the Treasury Department or the Small Business
Administration (SBA), HUD has no expertise in managing a large-scale
business investment program.
For the reasons outlined above, we believe that the APIC program is
not the preferred means of addressing poverty and unemployment in
economically distressed urban and rural areas. Its band-aid approach as
a government subsidized investment program does not reduce the cost of
business in these areas, aside from reducing the cost of capital for
large companies who can easily find funds in the private market. The
best way to promote economic growth is to reduce federal, state and
local tax and regulatory burdens, which would encourage local
entrepreneurs--with their own capital at risk--to determine what works
best in their community.
Mr. GARY MILLER of California. Mr. Speaker, I rise today to speak
about the American Community Renewal Act and one of the provisions
relating to a very worthwhile and successful program called the low
income housing tax credit. This program provides low and very low
income families with affordable rental housing and represents the best
of the federal/state public/private partnerships in housing. The low
income housing tax credit encourages investors to fund the required
risk equity for construction and rehabilitation of rental housing.
Currently, the tax credit is the primary federal support for expanding
the nation's stock of affordable housing. Roughly, 35,000 new and
35,000 rehabilitated rental units are created each year with this
state-administered program.
What concerns me is the portion of the American Community Renewal Act
which would reform the way in which the program works today. This
reform would have the effect of requiring states to give a preference
in their credit allocation to housing rehabilitation in qualified
census tracts where more than 50 percent of the households have incomes
at less than 60 percent of the area median income.
I have no quarrel with states allocating the tax credit to areas in
need of community revitalization for rehabilitation of existing units.
However, the beauty of this program is the balance struck between
federal tax incentives and state administration. I do not want us at
the federal level dictating to the states that the credits should go to
any particular area. States already have the discretion to give
preference in allocating the credit to projects going into areas in
need of revitalization or rehabilitation of existing units in under
served areas. I just do not believe the federal government should be in
the business of forcing this upon the states. While I have no doubt
that this provision included in the package is well intentioned I
believe it would have a negative impact on the programs and the states
which administer it. I hope that this bill can move forward and that at
the appropriate time we can revisit this issue and clarify this
provision.
Mr. UDALL of Colorado. Mr. Speaker, I rise in support of H.R. 4923,
the Community Renewal and New Markets Act. H.R. 4923 provides tax
credits, regulatory assistance and access to capital aimed primarily at
economically disadvantaged communities.
Since joining the Small Business Committee, I have been committed to
seeing the President's New Markets Initiative enacted into law. As we
consider H.R. 4923 today, I would like to call my colleague's attention
to a pair
[[Page H6839]]
of provisions in this bill offered by the Small Business Committee. I
am proud to have worked on these bi-partisan, commonsense Small
Business Committee provisions, the New Markets Venture Capital Program
and BusinessLINC.
The New Markets Venture Capital Program (NMVC) creates a public
private partnership to fund businesses located principally in low-
income areas. The New Markets Initiative's primary objective is the
establishment of a venture capital program with the specific mission of
identifying and providing for the investment needs of small
entrepreneurs in low-to-moderate income communities, including inner-
city and rural areas. This program represents the heart and soul of the
New Markets Initiative. NMVC takes the concept of venture capital, in a
public-private partnership, and applies it directly to areas untouched
by economic prosperity. The SBA is planning to name 10 NMVC's
throughout the country. The NMVC's will receive a $15 million
appropriation for loan guarantees that translates into $150 million in
loans.
BusinessLINC encourages large businesses to team with small
businesses and entrepreneurs located in low income areas. This grant
program helps promote business-to-business networking through local
third-party entities such as Chambers of Commerce. In addition, the
program provides funds to these local business organizations for
technical assistance programs, such as marketing and business plans.
Across this country, more than 34.5 million people live below the
poverty line. In this time of unparalleled economic growth and
prosperity, the Community Renewal and New Markets Act is truly needed
to harness the entrepreneurial power that exists in these cities and
towns, and to insure that our nation's economic growth touches all.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I am in strong support of H.R.
4923, the Community Renewal and New Markets Act. This legislation
enables distressed communities with the tools needed for community
development.
As you know, the Empowerment Zone and Enterprise Community (EZ/EC)
Initiative is a key element to President Clinton's job creation
strategy for America. It create jobs and business opportunities in the
most economically distressed areas of inner cities and the rural
heartland. The EZ/EC effort provides tax incentives and performance
grants and loans to create jobs and expand business opportunities. It
also focuses on activities to support people looking for work: job
training, childcare, and transportation.
H.R. 4923, will establish 40 new renewable communities across our
nation and in areas where pervasive poverty and high unemployment
exist. Furthermore, this bill will authorize various tax incentives for
individuals and businesses located within these renewable communities.
Some of these incentives include tax credits for private investors in
poor neighborhoods, and loans and technical assistance to help small
businesses in low income areas.
Most importantly, the bill will authorize the creation of nine
additional EZs in low income neighborhoods. In my district, the 18th
Congressional District of Houston, Texas, there is an urgent need for
community redevelopment. In fact, I was glad to invite both Alvin
Brown, Director of the White House Office of Empowerment Zones and
Secretary Andrew Cuomo to my district to view firsthand the critical
need for community development in my district.
Across our nation, I have seen and heard firsthand the benefits of
EZs in distressed communities. This initiative continues to be one of
our nation's leading programs in the fight against poverty. Although,
there are clearly some provisions in this bill that cause me concern, I
am positive this measure will equip small businesses, and communities
with the tools needed to combat poverty.
In closing, I urge my colleagues to support H.R. 4923 and make
economic revitalization a reality for many of our communities.
Mr. CRANE. Mr. Speaker, I want to commend you, Chairman Archer and
Representatives Watts and Talent for the hard work and excellent result
represented by the legislation before us here today. This bill applies
Republican principles of economic growth and opportunity to those
communities that have not fully participated in the strong economic
growth experienced by much of our nation in the last several years.
Having said this, however, I need to mention one important issue that
has not yet been addressed. This legislation, while helping many
American communities, does little or nothing for the American citizens
of Puerto Rico, citizens whose island is in dire need of economic
development. I have introduced legislation in this Congress, H.R. 2138,
that will apply the job creation incentives of section 30A of the tax
code to U.S. companies doing business in Puerto Rico for new and
expanded activities. My legislation applies to Puerto Rico the same
objectives of the Community Renewal legislation to encourage private
sector investment and job growth in areas which need it the most.
While I certainly support the legislation before us here today, I
hope that we will be able to address as expeditiously as possible, the
concerns I am raising with regard to Puerto Rico. I believe it is only
fair that the opportunities for economic development and economic
prosperity are extended to our American citizens in Puerto Rico as
well. I submit for the Record a copy of a letter sent to Ways and Means
Chairman Archer from a number of my colleagues expressing the very
concerns I have articulated here. I look forward to working with my
colleagues on this important issue.
Congress of the United States,
House of Representatives,
Washington, DC, July 18, 2000.
Hon. Bill Archer,
Chairman, Committee on Ways and Means, House of
Representatives, Longworth House Office Building,
Washington, DC.
Dear Mr. Chairman: In the coming months we will consider
exciting new initiatives to encourage private sector
community economic development and job growth in areas that
have not fully kept up with the economic expansion of the
past decade. We are also considering tax proposals that will
help business offset the impact of another increase in the
minimum wage.
These initiatives are an important part of the economic
agenda that you have been fighting for as Chairman, to
encourage the growth of a vibrant private sector as the
foundation for continued economic prosperity in all American
communities.
Toward that goal, we urge you to include incentives for job
creation in Puerto Rico in these programs. As you know, the
minimum wage increase will apply in Puerto Rico. This
increase will have the greatest impact on business there,
because approximately 57% of workers are within $1.00 of the
current minimum wage, far in excess of any other U.S.
jurisdiction. Moreover, unemployment in Puerto Rico, despite
massive infrastructure development and local tax incentives,
stubbornly remains approximately 11 percent; per capita
incomes remain less than \1/2\ of any state; a very
substantial number of the American citizens in Puerto Rico
have incomes below the poverty line.
The job creation incentives of H.R. 2138 could alleviate
these economic hardships. That bill would provide the
incentives of section 30A to new companies and new lines of
businesses and it would extend the section 30A program beyond
2005, when it is currently scheduled to terminate.
These are essential components of an efficient job
creations incentive uniquely tailored to the needs of Puerto
Rico.
We urge you to consider the principles in H.R. 2138 as you
craft community revitalization tax incentives. This bill
recognizes that the economic strength of this country is in
the private sector. Enactment of this legislation will help
keep Puerto Rico on the road to economic growth through
principles in which we all believe.
Sincerely,
Charles B. Rangel, Xavier Becerra, Patrick J. Kennedy,
Richard Neal, Robert T. Matsui, E. Clay Shaw, Jr., Phil
English, Mark Foley, Michael R. McNulty, Philip M.
Crane, Nancy Johnson, Dave Camp, Jim Ramstad, Jennifer
Dunn, Tom Davis, J.D. Hayworth, Amo Houghton, Members
of Congress.
Mr. LEACH. Mr. Speaker, I rise today in strong support of the
legislation before us, in particular Title VI, the American Private
Investment Companies (APIC) section that the Banking Committee approved
in April. These APICs are designed to create new investment in those
communities and the people of these communities who are not fully
participating in the economic good times most Americans are currently
enjoying.
Let me say at the outset Chairman Greenspan was before the Banking
Committee today to talk about the longest economic expansion in the
nation's post-World War II history which has provided jobs for more
Americans than ever before. As he noted, the unemployment rate is low;
inflation is in check; productivity growth is the highest in 15 years;
and not only is the federal budget in balance, but to the astonishment
of most, surpluses are forecast for the foreseeable future.
Sustained economic growth has occurred in part due to significant
private sector productivity increases, in part as a result of a mix of
fiscal and monetary policies which, perhaps, for the first time in
decades are working in sync, rather than in juxtaposition.
One of the stark difficulties in our economy, however, is that the
gap between the well-to-do and the less well off is widening. While job
opportunities are expanding to the most disadvantaged parts of the
population, clearly more can be done so that all Americans have the
opportunity to work at fulfilling jobs and to provide for their
families.
The portion of the legislation before us under the Banking
Committee's jurisdiction would spur companies to make equity
investments in distressed areas. These companies would be licensed by
HUD as for-profit private venture capital firms and provided government
guarantees of company debentures, provided the licensee brings at least
$25 million in private equity capital and substantially serves
[[Page H6840]]
low-income distressed neighborhoods and communities.
The Administration has testified that APICs, licensed and guaranteed
by the Federal government, would provide the type of incentives
necessary for developments such as shopping centers and manufacturing
facilities that would otherwise not locate in some of our most
distressed communities.
Before closing, I would also like to briefly mention the FHA Risk
Sharing Demonstration Program Proposal that will allow the FHA to risk-
share 20 percent of its mortgage loan portfolio on a demonstration
level with community development financial institutions. This will help
more individuals purchase homes who normally don't qualify for loans
because of a high risk credit history. This provision is similar to
Section 206 of H.R. 1776, which the House approved earlier this year.
In addition, another important provision of this bill allows for
transferring substandard, vacant, HUD-held properties into the
possession of local governments and community development corporations
for homeownership and community revitalization efforts in distressed
communities. Ineffective federal housing policies regarding the
disposition of federally held properties can negatively impact the
economic vitality of neighborhoods. HUD's management of its property
disposition program for FHA foreclosed homes has made it difficult for
many communities to maintain property values and dedicated homeowners.
According to Congressional testimony by HUD's Inspector General, at the
end of January 2000, HUD's real estate-owned inventory totaled 47,711
properties, 42 percent of which had been in the inventory 6 months or
more, and 17 percent of which had been in the inventory 12 months or
more.
HUD's foreclosed, vacant and substandard single-family properties are
widely perceived as contributing to increased crime, urban blight, and
the overall decline of working-class neighborhoods.
This bill requires HUD to transfer, to the maximum extent
practicable, ownership of eligible properties (HUD-owned substandard
multifamily, unoccupied multifamily, or unoccupied single-family
properties) to a unit of local government having jurisdiction for the
area where the property is located, or to a community development
corporation within such jurisdiction, on certain terms and conditions.
In cases where single-family property is transferred to a local unit of
government, this section requires a $1 purchase program, consistent
with current HUD policy.
In closing, I would like to note that Representative Lazio, Chairman
of the Housing Subcommittee, along with Representatives Watts, and
Talent and Banking Committee Ranking Member LaFalce, are to be
congratulated for their hard work on the legislative package before us.
In addition, the leadership of Speaker Hastert has been critical in
putting this entire package together. His commitment to work
bipartisanly with the President to advance this important legislative
package deserves our commendation. I urge adoption of the bill.
Mr. ENGLISH. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Simpson). The question is on the motion
offered by the gentleman from Pennsylvania (Mr. English) that the House
suspend the rules and pass the bill, H.R. 4923.
The question was taken.
Mr. ENGLISH. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
Announcement By The Speaker Pro Tempore
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, following
this 15-minute vote on H.R. 4923, the Chair will put the question on
motions to suspend the rules on which further proceedings were
postponed earlier today in the following order:
H.R. 4923, the pending vote;
H.R. 4888, by the yeas and nays;
H.R. 4864, by the yeas and nays.
The Chair will reduce to 5 minutes the time for each electronic vote
after the first vote in this series.
The vote was taken by electronic device, and there were--yeas 394,
nays 27, not voting 14, as follows:
[Roll No. 430]
YEAS--394
Abercrombie
Aderholt
Allen
Andrews
Archer
Armey
Baca
Bachus
Baird
Baker
Baldacci
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Bass
Bateman
Becerra
Bentsen
Bereuter
Berkley
Berman
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bonior
Bono
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brady (TX)
Brown (FL)
Brown (OH)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Capuano
Cardin
Carson
Castle
Chabot
Chambliss
Chenoweth-Hage
Clay
Clayton
Clement
Clyburn
Coble
Coburn
Collins
Combest
Condit
Cook
Cooksey
Costello
Cox
Coyne
Cramer
Crane
Crowley
Cubin
Cummings
Cunningham
Davis (FL)
Davis (IL)
Davis (VA)
Deal
DeGette
Delahunt
DeLauro
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dicks
Dingell
Dixon
Doggett
Dooley
Doolittle
Doyle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
Engel
English
Eshoo
Etheridge
Evans
Everett
Fattah
Fletcher
Foley
Forbes
Ford
Fossella
Fowler
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gekas
Gephardt
Gibbons
Gilchrest
Gillmor
Gonzalez
Goode
Goodlatte
Goodling
Goss
Graham
Granger
Green (TX)
Green (WI)
Greenwood
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (IN)
Hill (MT)
Hilleary
Hilliard
Hinchey
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Holt
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inslee
Isakson
Istook
Jackson-Lee (TX)
Jefferson
John
Johnson (CT)
Johnson, E.B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kasich
Kelly
Kennedy
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kingston
Kleczka
Klink
Knollenberg
Kolbe
Kucinich
Kuykendall
LaFalce
LaHood
Lantos
Largent
Larson
Latham
LaTourette
Lazio
Leach
Lee
Levin
Lewis (CA)
Lewis (GA)
Lewis (KY)
Linder
Lipinski
LoBiondo
Lowey
Lucas (KY)
Lucas (OK)
Luther
Maloney (CT)
Maloney (NY)
Manzullo
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCrery
McGovern
McHugh
McInnis
McIntyre
McKeon
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Metcalf
Mica
Millender-McDonald
Miller (FL)
Miller, Gary
Minge
Mink
Moakley
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Murtha
Myrick
Nadler
Napolitano
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Oberstar
Obey
Ortiz
Ose
Owens
Oxley
Packard
Pallone
Pascrell
Pastor
Pease
Peterson (MN)
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Rangel
Regula
Reyes
Reynolds
Riley
Rivers
Rodriguez
Roemer
Rogan
Rogers
Rohrabacher
Rothman
Roukema
Roybal-Allard
Royce
Rush
Ryan (WI)
Ryun (KS)
Salmon
Sanchez
Sandlin
Sanford
Sawyer
Saxton
Scarborough
Schaffer
Sensenbrenner
Serrano
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shows
Shuster
Simpson
Sisisky
Skeen
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Spence
Spratt
Stabenow
Stearns
Stenholm
Strickland
Stump
Stupak
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thornberry
Thune
Thurman
Tiahrt
Tierney
Toomey
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Upton
Velazquez
Vitter
Walden
Walsh
Wamp
Watkins
Watt (NC)
Watts (OK)
Weiner
Weldon (FL)
Weldon (PA)
Weller
Wexler
Weygand
Whitfield
Wicker
Wilson
Wise
Wolf
Woolsey
Wu
Wynn
Young (AK)
Young (FL)
NAYS--27
Ackerman
Baldwin
Conyers
DeFazio
Farr
Filner
Frank (MA)
Gejdenson
Gutierrez
Hastings (FL)
Jackson (IL)
Lofgren
McDermott
Miller, George
Olver
Paul
Payne
Pelosi
Sabo
Sanders
Schakowsky
Scott
Sherman
Stark
Visclosky
Waters
Waxman
NOT VOTING--14
Barton
Danner
Edwards
Ewing
Gilman
Gordon
Jenkins
Lampson
McCollum
McIntosh
Menendez
Ros-Lehtinen
Smith (WA)
Vento
{time} 1344
Messrs. McDERMOTT, DeFAZIO, GUTIERREZ, WAXMAN and SHERMAN changed
their vote from ``yea'' to ``nay''.
[[Page H6841]]
Mrs. MEEK of Florida and Ms. JACKSON-LEE of Texas changed their vote
from ``nay'' to ``yea''.
So (two-thirds having voted in favor thereof) the rules were
suspended and the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________