[Congressional Record Volume 146, Number 99 (Wednesday, July 26, 2000)]
[Senate]
[Pages S7676-S7678]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROBB (for himself, Mr. Daschle, Mr. Baucus, Mr. Breaux, 
        Mr. Dodd, Mr. Dorgan, Mr. Johnson, Mr. Kennedy, Mr. Kerrey, Mr. 
        Kerry, Mr. Leahy, Mr. Lieberman, Mrs. Lincoln, Mr. Reid, Mr. 
        Rockefeller, Mr. Schumer, Mr. Torricelli, Mr. Harkin, and Mr. 
        Bayh):
  S. 2936. A bill to provide incentives for new markets and community 
development, and for other purposes; to the Committee on Finance.


        creating new markets and empowering america act of 2000

  Mr. ROBB. Mr. President, I rise today to introduce the Creating New 
Markets and Empowering America Act of 2000, which is designed to 
strengthen and revitalize low and moderate income communities across 
America.
  Because we made some tough choices to balance our budget, we have the 
first federal surplus since Lyndon Johnson was President. And now is 
the time to give some back, particularly to those who have missed out 
on so much of our economic prosperity. This legislation would pump new 
capital into our nation's inner cities and isolated rural communities--
areas that have had a difficult time building up from within.
  The legislation contains three ``New Markets'' initiatives designed 
to attract and expand new capital into low to moderate income areas. 
First, a New Markets Tax Credit would infuse $15 billion in investments 
over the next 7 years through a 30 percent tax credit for businesses 
who provide capital to lower income communities. Secondly, the bill 
authorizes the designation of America's Private Investment Companies 
(APIC's) which would receive federal matching funds for private 
investments made in lower income areas. This provision would allow $1 
billion in federal low-cost loans to match $500 million in private 
investment. Thirdly, the bill would create a new class of venture 
capital funds to assist with the operation and administration of 
ongoing businesses in lower income areas, who have growth potential, so 
they can continue to expand.

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  The bill also requires mandatory funding for Round II Empowerment 
Zones (EZ's) and Enterprise Communities (EC's) and creates a new set of 
Round III EZ's.
  Mr. President, the mandatory funding of Round II Empowerment Zones is 
critically important to the citizens of Norfolk and Portsmouth, 
Virginia. The Federal Government made a commitment to these two 
communities--they need and deserve the funding--and I am determined to 
get the check in the mail to them. With this legislation, the Norfolk-
Portsmouth Empowerment Zone would be guaranteed the remaining $94 
million it was promised when it competed for the Empowerment Zone 
designation.
  The legislation I'm introducing today also creates 40 Renewal 
Communities--which reflect the agreement between President Clinton and 
Speaker Hastert--along with a host of tax provisions to expand and 
revitalize housing.
  Very important to my home state of Virginia, this bill contains 
legislation I introduced earlier this year (S. 2445) to assist 
communities affected by job loss due to trade. The Assistance in 
Development for Communities Act (AID for Communities Act) both assists 
communities in developing a plan to retool their economies and offers 
financial assistance and tax incentives to help communities implement 
those plans.
  Mr. President, the AID for Communities Act is immensely important to 
the people of Martinsville, Virginia--who have suffered economic 
devastation from the recent closing of a Tultex plant. This bill would 
give the citizens of Martinsville the urgent assistance they need to 
strengthen their economy and create a more vibrant future for all who 
live there.
  Finally, Mr. President, this legislation includes two new initiatives 
to help religious and other community organizations better participate 
in federal grant programs. Specifically, it requires the Substance 
Abuse and Mental Health Services Administration to provide assistance 
in a manner similar to HUD's Office of Community and Faith-Based 
Organizations to assist faith-based and community organizations in 
applying for federal grant funds to provide substance abuse treatment. 
It would also require the IRS to provide guidance and make information 
available to assist religious and community organizations in 
establishing tax-exempt entities that can be used to operate social 
services.
  Many of these organizations are unfamiliar with the process necessary 
to set up a tax-exempt organization and are, therefore, unable to 
participate in federal grant programs. This provision would provide 
them with the necessary information and assistance.
  Mr. President, the ``Creating New Markets and Empowering America Act 
of 2000'' will spur economic growth in low to moderate income 
communities across our nation. As such, it will improve the lives of 
countless Americans. I urge my colleagues to support this important 
legislation.
  Mr. BAUCUS. Mr. President, I rise today to cosponsor the Creating New 
Markets and Empowering America Act of 2000. We are living in a time of 
unprecedented prosperity. However this prosperity has not reached every 
American equally. The boom on Wall Street has not reached Main Street 
in many regions of our nation. The problem is quite simple. Many of our 
lower income communities are unable to attract the investment capital 
that is allowing more affluent areas to flourish. As the United States 
economy continues to grow it has become more and more apparent that 
attracting capital to these communities is one of the largest 
challenges facing the private sector and all levels of government.
  It is important to keep in mind that this is not just an urban 
problem. Many rural communities, especially those that rely on 
agriculture, are watching their jobs disappear with nothing on the 
horizon in the form of new business or industry to offer much hope. My 
home state of Montana is facing this economic turmoil right now. A 
state that was built on agriculture, mining, and timber has watched 
these industries diminish to the point that Montana is now 50th in per-
capita income relative to other states--dead last.
  We often hear the phrase ``digital divide.'' Well, Montana is 
standing on the edge of an economic divide, but we are not quitters. 
Montana has much to offer. We have an unparalleled quality of life, a 
highly-educated work force, a burgeoning high-tech sector, and top-
notch schools. In many respects, we are right on the cusp of an 
economic upswing. However, we are having an extremely difficult time 
attracting the investment capital that we need to become a partner in 
the Internet mainstream, create good paying jobs, and truly turn the 
economic corner.
  This past June over the course of two days, I convened a Montana 
Economic Development Summit that brought together not only our state's 
leaders and decision makers, but also outside experts in various 
disciplines in an effort to build a road map for improving Montana's 
economy. We covered many issues, but primarily focused on high-tech, 
business development, and marketing and trade. We tackled tough 
questions such as how we retain and support our current businesses and 
also attract new businesses that truly fit with Montanans and their 
values. Three points came up time and again. First, the need for and 
inability to get the necessary investment capital. We simply do not 
have the population or resources available that larger states enjoy. 
Second, our window of opportunity is closing. Time moves faster than it 
used to and if we don't act quickly the world will move right past us. 
Third, and most importantly, any action or strategy that we take must 
come from begin locally. Economic development initiatives must be 
bottom-up and not top-down or they just will not work.
  It is for these three reasons that I am cosponsoring this 
legislation. The New Markets proposals are a quick and efficient way to 
leverage the necessary investment in lower-income communities through 
private/public partnerships. And it will give these communities the 
tools they need to map their own economic destiny and create the better 
paying jobs that are so desperately needed.
  Two portions illustrate the private/public partnership. On the public 
side, the Trade Adjustment Assistance provision will enhance the 
ability of each community to be proactive in crafting a long-term 
strategy for economic development. This is crucial for communities and 
regions in rural areas that are natural resource dependent and have 
suffered severe employment losses in the past decade. For the private 
sector, the New Markets tax credit will create opportunity by providing 
a tangible incentive for companies to take a serious look at areas of 
the country that are currently being ignored.
  In closing, this legislation will provide the necessary ingredients 
for revitalizing America's less fortunate rural areas. It will help 
target investment to these communities and it will allow them the 
flexibility to build their economies on their terms and their ability. 
I commend my colleague from Virginia, Senator Robb, for introducing 
such proactive legislation that addresses several of the most urgent 
issues facing economically troubled areas. Finally, I urge my 
colleagues to work together and pass this legislation so that states 
like Montana can begin their long climb back up to economic stability 
and prosperity.
  Mr. KERRY. Mr. President, today I join Senator Robb and 16 other 
colleagues to introduce comprehensive legislation aimed at spurring 
economic development and person empowerment in our inner cities and 
isolated rural areas. Our economy is booming, and has been for most of 
the 90s, yet there are still individuals and families who are 
struggling.
  What we've tried to do is develop economic incentives that will 
encourage business development and remove barriers that make it hard 
for entrepreneurs, community organizations and individuals to build 
healthy communities.
  Among the many important initiatives in this bill is my new markets 
legislation that I introduced last September, S. 1594, the Community 
Development and Venture Capital Act, which passed the Senate Committee 
on Small Business today, and as part of the Clinton/Hastert package in 
the House yesterday. It also includes full funding for Round II of 
Empowerment Zones.
  The Community Development and Venture Capital Act has three parts: a

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venture capital program to funnel investment money into distressed 
communities; Senator Wellstone's program to expand the number of 
venture capital firms and professionals who are devoted to investing in 
such communities; and a mentoring program to link established, 
successful businesses with small businesses owners in stagnant or 
deteriorating communities in order to facilitate the learning curve.
  The venture capital program is modeled after the Small Business 
Administration's successful Small Business Investment Company program. 
As SBA Administrator Alvarez pointed out just last week in a Small 
Business Committee hearing, the SBIC program has been so successful 
that it has generated more than $19 billion in investments in more than 
13,000 businesses since 1992. And, in the past five years, the SBIC 
participating securities program has returned $224 million in profits, 
virtually paying for itself for the past nine years.
  As successful as that program is, it does not sufficiently reach 
areas of our country that need economic development the most. One, out 
of the total $4.2 billion that SBICs invested last year, only 1.6 
percent were deals of less than $1 million dollars in LMI areas. Two, 
only $1.1 million of that $4.2 billion went to LMI investments in rural 
areas. Three, in 1999, 85 percent of SBIC deals were $10 million and 
more.
  In broader terms, the economy is booming. Since 1993, almost 21 
million jobs have been created. Since 1992, unemployment has shrunk 
from 7.5 percent to 4 percent. In the past two years, we've paid down 
the debt $140 billion, and CBO currently projects a surplus of $176 
billion. Some estimates even say more than $2 trillion. In spite of 
these impressive numbers, one out of five children grows up in poverty 
and there are pockets of America where unemployment is as high as 14 
percent.
  We can make a difference by investing in a new industry of community 
development venture capital funds that target investment capital and 
business expertise into low- and moderate-income areas to develop and 
expand local businesses that create jobs and alleviate economic 
distress. The existing 25 or 30 community development venture capital 
funds have set out to demonstrate that the same model of business 
development that has driven economic expansion in Silicon Valley and 
Route 128 Massachusetts can also make a powerful difference in areas 
like the inner-city areas of Boston's Roxbury or New York's East 
Harlem, or the rural desolation of Kentucky's Appalachia or 
Mississippi's Delta region.
  Federal Reserve Board Chairman Alan Greenspan says ``Credit alone is 
not the answer. Businesses must have equity capital before they are 
considered viable candidates for debt financing.'' He emphasizes that 
this is particularly important in lower-income communities.
  What I'm trying to do as Ranking Member of the Small Business 
Committee, and have been working with the SBA to achieve, is expand 
investment in our neediest communities by building on the economic 
activity created by loans. I think one of the most effective ways to do 
that is to spur venture capital investment in our neediest communities. 
I am very glad that Senator Robb and my other colleagues agreed to 
include this powerful economic development plan in this legislation.
  Switching to another provision in this bill, this legislation builds 
on the President's and Speaker's agreement by securing full, mandatory 
funding for Massachusett's Empowerment Zone. As I said earlier, this 
passed the full House yesterday by a vote of 394 to 27. Full, mandatory 
funding is important because, so far, the money has dribbled in--only 
$6.6 million of the $100 million authorized over ten years--and made it 
impossible for the city to implement a plan for economic self-
sufficiency. Some 80 public and private entities, from universities to 
technology companies to banks to local government, showed incredible 
community spirit and committed to matching the EZ money, eight to one. 
Let me say it another way--these groups agreed to match the $100 
million in Federal Empowerment Zone money with $800 million. Yet, 
regrettably, in spite of this incredible alliance, the city of Boston 
has not been able to tap into that leveraged money and implement the 
strategic plan because Congress hasn't held up its part of the bargain. 
I am extremely pleased that we were able to work together and find a 
way to provide full, steady funding to these zones. That money means 
education, daycare, transportation and basic health care in areas--in 
Massachusetts that includes 57,000 residents who live in Roxbury, 
Dorchester and Mattipan--where almost 50 percent of the children are 
living in poverty and nearly half the residents over 25 don't even have 
a high school diploma
  Mr. President, I thank my colleagues for their work on this important 
legislation.
  Mr. LEAHY. Mr. President, I rise today to give my support to the 
Creating New Markets and Empowering America Act of 2000. In a time of 
unprecedented economic prosperity, there are too many communities in 
this nation that are beleaguered by crumbling infrastructures and 
stagnant economies. This legislation will help attract capital, produce 
much-needed housing, and encourage private investment to communities 
most in need.
  I am proud to join in cosponsoring this legislation and would like to 
thank Senator Robb for all his hard work in crafting this bill. Of 
particular importance to my home state of Vermont are increases in the 
Low Income Housing Tax Credit and Private Activity Bond cap.
  Vermont is currently in the middle of an affordable housing crisis. 
Production has stalled and demand has risen. In Chittenden County, one 
of Vermont's most populated areas, residents face a rental vacancy rate 
of less than one percent. Housing costs are so expensive, middle income 
families are being forced into hotels, college dorms, homeless 
shelters, or left out on the street. Sadly, this is a situation that is 
being repeated nationwide.
  As funding for other federal housing assistance programs has 
diminished, states depend more and more on the LIHTC and private 
activity bonds to finance affordable housing projects. The LIHTC has 
been extremely successful since its enactment as part of the Tax Reform 
Act of 1986. Today, the LIHTC is one of the primary tools that states 
have to attract private investment in affordable rental housing. In 
Vermont, the LIHTC has made possible the production, rehabilitation, 
and preservation of over 2,600 affordable apartments since 1987. 
Unfortunately this credit has not been increased since its creation 
nearly fourteen years ago. Today, the demand for tax credits far 
exceeds their availability. This year in Vermont, over $2.5 million in 
credits were requested but only $718,000 were available.
  I am pleased that this bill raises the annual per capita allocation 
of tax credits from $1.25 to $1.75 and indexes the credit to inflation. 
In addition to the increased per capita allocation, I hope to work a 
small state minimum. Such a floor would help to ensure that small 
states like Vermont have access to the resources they need to provide 
affordable housing for every resident in need.
  Private activity bonds also play an important role in providing 
affordable housing for Vermonters. In 1986 the Federal Tax Reform Act 
limited the amount of tax-exempt bonds that each state could issue to 
no more than $50 per capita. There has not been an inflation adjustment 
to the cap since its inception. The Vermont Housing Finance Agency 
(VHFA) has issued over $1.25 billion in private activity bonds since 
1974, bonds which have helped make the dream of home ownership a 
reality for over 20,425 Vermont households. I am pleased that this bill 
includes a cap increase from $50 to $75 per capita which will help 
Vermont's finance agencies continue this success.
  Again, I am proud to be a cosponsor of this bill which will offer 
many households, businesses and communities new opportunities as we 
enter the 21st century. I urge my colleagues to join me in support of 
this legislation.
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