[Congressional Record Volume 149, Number 10 (Tuesday, January 21, 2003)]
[Senate]
[Pages S1246-S1250]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. SMITH (for himself, Ms. Stabenow, and Mr. Santorum):
S. 198. A bill to amend the Internal Revenue Code of 1986 to allow an
income tax credit for the provision of homeownership and community
development, and for other purposes; to the Committee on Finance.
Mr. SMITH. Mr. President, I rise today with Senators Stabenow and
Santorum to introduce the New Homestead Economic Opportunity Act. This
legislation will create a single-family housing tax credit for
developers who build in low income areas, and allow more Americans to
reach their dreams of homeownership. It will also encourage developers
of single family units to invest in low income areas and improve our
communities.
Currently, there are no tax credits available to developers of new or
rehabilitated, affordable single-family housing. The low-income housing
tax credit provides tax credits to owners of low-income rental units,
but does not provide a solution to the problem of a lack of affordable
homes. The quality of life in distressed neighborhoods can be improved
dramatically by increasing home ownership. Existing buildings in these
neighborhoods often need extensive renovation before they can provide
decent owner-occupied housing. It is also difficult for renovations to
occur because the costs involved exceed the prices at which the housing
units could be sold. Similarly, the costs of new construction may
exceed its market value. Properties sit vacant and neighborhoods remain
devastated. The New Homestead Economic Opportunity Act bridges the gap
between development costs and market prices and will revitalize these
areas.
Our legislation will create a single-family housing tax credit of
$1.75 per resident which will be made available annually to States. In
my home State of Oregon, the most recent Census estimates State or
local housing credit agencies will award these credits to housing
units, including condominiums and cooperatives planned for development
of single-family housing in census tracts with median incomes of 80
percent or less of area median income. The value of the credits could
not exceed 50 percent of the qualifying cost of the unit. Rules similar
to the current law rules for the Low Income Housing Tax Credit will
apply to determine eligible costs of individual units.
The owner of the housing unit being sold to a qualified buyer will be
eligible to claim the single-family housing tax credit over a 5-year
period beginning on that date. Eligible home buyers must have incomes
at 80 percent or less of applicable median family income. They would
not have to be first time homebuyers, and rules similar to the mortgage
revenue bond provisions will apply to determine applicable median
family income.
In Oregon, rising housing costs are prohibiting working families from
being able to afford homes. With a lack of affordable housing, costs
are rising, and families are unable to gain the stability and equity
homeownership provides. In its first year, the New Homestead Economic
Opportunity Act would support more than 360 new affordable homes,
probably more if credits are used in connection with less costly
rehabilitations. A family of three or more with an income of $30,000
will be a qualified buyer in Oregon. This legislation will affect real
working Americans.
I am proud to sponsor this legislation that will further the dream of
so many Americans through homeownership. I urge my colleagues to join
me in supporting the New Homestead Economic Opportunity Act.
I ask unanimous consent that the New Homestead Economic Opportunity
Act be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 198
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 ``New
Homestead Economic Opportunity Act''.
(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.
SEC. 2. COMMUNITY HOMEOWNERSHIP CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 is amended by inserting after section 42 the
following new section:
``SEC. 42A. HOMEOWNERSHIP CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the
amount of the homeownership credit determined under this
section for any taxable year in the credit period shall be an
amount equal to the applicable percentage of the eligible
basis of each qualified residence.
``(b) Applicable Percentage.--For purposes of this
section--
``(1) In general.--The term `applicable percentage' means
the appropriate percentage prescribed by the Secretary for
the month in which the taxpayer and the homeownership credit
agency enter into an agreement with respect to such residence
(which is binding on such agency, the taxpayer, and all
successors in interest) as to the homeownership credit dollar
amount to be allocated to such residence.
``(2) Method of prescribing percentage.--The percentage
prescribed by the Secretary for any month shall be the
percentage which will yield over a 5-year period amounts of
credit under subsection (a) which have a present value equal
to 50 percent of the eligible basis of a qualified residence.
``(3) Method of discounting.--The present value under
paragraph (2) shall be determined--
``(A) as of the last day of the 1st year of the 5-year
period referred to in paragraph (2),
``(B) by using a discount rate equal to 72 percent of the
annual Federal mid-term rate applicable under section
1274(d)(1) to the month applicable under paragraph (1) and
compounded annually, and
``(C) by assuming that the credit allowable under this
section for any year is received on the last day of such
year.
``(c) Qualified Residence.--For purposes of this section--
``(1) In general.--The term `qualified residence' means any
residence--
``(A) which is located--
[[Page S1247]]
``(i) in a census tract which has a median gross income
which does not exceed 80 percent of the greater of area or
state-wide median gross income, or
``(ii) in an area of chronic economic distress, and
``(B) which is purchased by a qualified buyer.
For purposes of clause (ii) of subparagraph (A), an area is
an area of chronic economic distress if it is approved for
designation as such under section 143(j)(3), except that such
designation shall not require the approval of the Secretary
and shall cease to apply after the end of the 5th calendar
year after the calendar year in which the designation is
made.
``(2) Residence.--For purposes of paragraph (1), the term
`residence' means--
``(A) a single-family home containing 1 to 4 housing units,
``(B) a condominium unit,
``(C) stock in a cooperative housing corporation (as
defined in section 216(b)), or
``(D) any factory-made housing which is permanently affixed
to real property.
In the case of a single-family home described in subparagraph
(A) which contains more than 1 housing unit, the term
`residence' shall not include any new residence and shall
include only the portion of such home which is to be occupied
by the owner thereof (based on the percentage of the total
area of such home which is to be occupied by the owner).
``(3) Timing of determination.--For purposes of paragraph
(1), the determination of whether a residence is a qualified
residence shall be made at the time a binding commitment for
an allocation of credit is awarded by the homeownership
credit agency, except that the determination of whether a
buyer is a qualified buyer shall be made at the time the
residence is sold.
``(4) Median gross income.--For purposes of this section,
median gross income shall be determined consistent with
section 143(f)(2).
``(d) Eligible Basis.--For purposes of this section--
``(1) New qualified residences.--
``(A) In general.--The eligible basis of a new qualified
residence is--
``(i) in the case of a qualified residence which is sold in
a transaction which meets the requirements of subparagraph
(B), its adjusted basis (excluding land) immediately before
such sale, and
``(ii) zero in any other case.
``(B) Requirements.--A sale of a qualified residence meets
the requirements of this subparagraph if--
``(i) the buyer acquires the qualified residence by
purchase (as defined in section 179(d)(2)),
``(ii) the buyer of the qualified residence is not a
related person with respect to the seller, and
``(iii) the buyer's debt financing is originated by a 3rd
party who is not a related person with respect to the seller.
``(2) Existing qualified residences.--
``(A) In general.--The eligible basis of an existing
qualified residence is--
``(i) in the case of a qualified residence which is sold in
a transaction which meets the requirements of subparagraph
(B), the adjusted basis of the rehabilitation expenditures
with respect to the qualified residence which are paid or
incurred in connection with such sale, and
``(ii) zero in any other case.
``(B) Requirements.--A sale of a qualified residence meets
the requirements of this subparagraph if--
``(i) the buyer acquires the qualified residence by
purchase (as defined in section 179(d)(2)),
``(ii) the qualified residence has undergone substantial
rehabilitation in connection with the sale described in
clause (i),
``(iii) the buyer of the qualified residence is not a
related person with respect to the seller, and
``(iv) the buyer's debt financing is originated by a 3rd
party who is not a related person with respect to the seller.
``(C) Substantial rehabilitation.--
``(i) In general.--For purposes of subparagraph (B),
substantial rehabilitation means rehabilitation expenditures
paid or incurred with respect to a qualified residence which
are at least $25,000.
``(ii) Inflation adjustment.--In the case of a calendar
year after 2003, the dollar amount contained in clause (i)
shall 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 2002' for `calendar year 1992' in subparagraph
(B) thereof.
Any increase under this clause which is not a multiple of
$1,000 shall be rounded to the next lowest multiple of
$1,000.
``(3) Effect of subsequent sale, etc.--A subsequent sale,
assignment, rental, or refinancing of the qualified residence
by the buyer or the subsequent sale, assignment, or pooling
of the buyer's financing by the originator shall not be
considered in determining whether or not the prior sales
transaction satisfied the requirements of subparagraph (B) of
paragraph (1) or (2).
``(4) Special rules relating to determination of adjusted
basis.--For purposes of this subsection--
``(A) In general.--Except as provided in subparagraph (B),
the adjusted basis of any qualified residence (or any
rehabilitation expenditures in respect thereof)--
``(i) shall not include so much of the basis of such
qualified residence (or rehabilitation expenditures) as is
determined by reference to the basis of other property held
at any time by the person acquiring the residence, and
``(ii) shall be determined without regard to the adjusted
basis of any property which is not part of such qualified
residence.
``(B) Basis of property in common areas, etc., included.--
The adjusted basis of any qualified residence shall be
determined by taking into account (on a pro rata basis) the
adjusted basis of property (of a character subject to the
allowance for depreciation) used in common areas or provided
as comparable amenities to all residences within a project.
``(5) Special rules for determining eligible basis.--
``(A) Related person, etc.--For purposes of this section, a
person (in this clause referred to as the `related person')
is related to any person if the related person bears a
relationship to such person specified in section 267(b) or
707(b)(1), or the related person and such person are engaged
in trades or businesses under common control (within the
meaning of subsections (a) and (b) of section 52). For
purposes of the preceding sentence, in applying section
267(b) or 707(b)(1), `10 percent' shall be substituted for
`50 percent'.
``(B) Nonresidential space excluded.--No portion of the
eligible basis of a qualified residence shall include costs
attributable to nonresidential space.
``(C) Limitation.--The eligible basis of any residence may
not exceed the mortgage limit for Federal Housing
Administration insured mortgages in the area in which such
residence is located.
``(e) Definition and Special Rules Relating To Credit
Period.--
``(1) Credit period defined.--For purposes of this section,
the term `credit period' means, with respect to any qualified
residence, the period of 5 taxable years beginning with the
taxable year in which the sale of the qualified residence
occurs satisfying the requirements of subsection (d)(1)(B) or
(d)(2)(B).
``(2) Special rule for 1st year of credit period.--
``(A) In general.--The credit allowable under subsection
(a) with respect to any qualified residence for the 1st
taxable year of the credit period shall be determined by
multiplying the eligible basis under subsection (d) by the
fraction--
``(i) the numerator of which is the sum of the number of
remaining whole months in such 1st taxable year after the
sale of the qualified residence, and
``(ii) the denominator of which is 12.
``(B) Disallowed 1st year credit allowed in 6th year.--Any
reduction by reason of subparagraph (A) in the credit
allowable (without regard to subparagraph (A)) for the 1st
taxable year of the credit period shall be allowable under
subsection (a) for the 1st taxable year following the credit
period.
``(f) Limitation on Aggregate Credit Allowable With Respect
to Qualified Residences Located in a State.--
``(1) Credit may not exceed credit dollar amount allocated
to qualified residence.--
``(A) In general.--The amount of the credit determined
under this section for any taxable year with respect to any
qualified residence shall not exceed the homeownership credit
dollar amount allocated to such qualified residence under
this subsection.
``(B) Time for making allocation.--
``(i) General rule.--An allocation shall be taken into
account under subparagraph (A) only if it is made not later
than the close of the calendar year in which the qualified
residence is sold, and only if the qualified residence is
sold within 1 year after the residence (or the rehabilitation
expenditures, as applicable) is completed.
``(ii) Earlier allocation by agency.--A homeownership
credit agency may allocate available homeownership credit
dollar amounts to a qualified residence prior to the year of
sale of such qualified residence if--
``(I) the taxpayer owns fee title or a leasehold interest
of not less than 50 years in the site of the qualified
residence as of the later of the date which is 6 months after
the date that the allocation was made or the close of the
calendar year in which the allocation is made, and
``(II) such qualified residence is completed not later than
the close of the 2nd calendar year following the calendar
year in which the allocation was made.
``(C) Vested right to credit dollar amount.--Once a
homeownership credit allocation is received by a taxpayer,
the right to such credit is vested in such taxpayer and is
not subject to recapture, except as provided in paragraph
(4)(B).
``(2) Homeownership credit dollar amount for agencies.--
``(A) In general.--The aggregate homeownership credit
dollar amount which a homeownership credit agency may
allocate for any calendar year is the portion of the State
homeownership credit ceiling allocated under this paragraph
for such calendar year to such agency.
``(B) State ceiling initially allocated to state
homeownership credit agencies.--Except as provided in
subparagraphs (D) and (E), the State homeownership credit
ceiling for each calendar year shall be allocated to the
homeownership credit agency of such State. If there is more
than 1 homeownership
[[Page S1248]]
credit agency of a State, all such agencies shall be treated
as a single agency.
``(C) State homeownership credit ceiling.--The State
homeownership credit ceiling applicable to any State for any
calendar year before 2003 shall be zero and for any calendar
year after 2002 shall be an amount equal to the sum of--
``(i) the unused State homeownership credit ceiling (if
any) of such State for the preceding calendar year,
``(ii) the greater of--
``(I) $1.75 multiplied by the State population, or
``(II) $2,000,000,
``(iii) the amount of State homeownership credit ceiling
returned in the calendar year, plus
``(iv) the amount (if any) allocated under subparagraph (D)
to such State by the Secretary.
For purposes of clause (i), the unused State homeownership
credit ceiling for any calendar year is the excess (if any)
of the sum of the amounts described in clauses (ii) through
(iv) over the aggregate homeownership credit dollar amount
allocated for such year, except that such amount shall be
zero for 2003. For purposes of clause (iii), the amount of
State homeownership credit ceiling returned in the calendar
year equals the homeownership credit dollar amount previously
allocated within the State to any qualified residence with
respect to which an allocation is canceled by mutual consent
of the homeownership credit agency and the allocation
recipient.
``(D) Unused homeownership credit carryovers allocated
among certain states.--
``(i) In general.--The unused homeownership credit
carryover of a State for any calendar year shall be assigned
to the Secretary for allocation among qualified States for
the succeeding calendar year.
``(ii) Unused homeownership credit carryover.--For purposes
of this subparagraph, the unused homeownership credit
carryover of a State for any calendar year is the excess (if
any) of the unused State homeownership credit ceiling for
such year (as defined in subparagraph (C)(i)) over the excess
(if any) of--
``(I) the unused State homeownership credit ceiling for the
year preceding such year, over
``(II) the aggregate homeownership credit dollar amount
allocated for such year.
``(iii) Formula for allocation of unused homeownership
credit carryovers among qualified states.--The amount
allocated under this subparagraph to a qualified State for
any calendar year shall be the amount determined by the
Secretary to bear the same ratio to the aggregate unused
homeownership credit carryovers of all States for the
preceding calendar year as such State's population for the
calendar year bears to the population of all qualified States
for the calendar year.
``(iv) Qualified state.--For purposes of this subparagraph,
the term `qualified State' means, with respect to a calendar
year, any State--
``(I) which allocated its entire State homeownership credit
ceiling for the preceding calendar year, and
``(II) for which a request is made (not later than May 1 of
the calendar year) to receive an allocation under clause
(iii).
``(E) State may provide for different allocation.--Rules
similar to the rules of section 146(e) (other than paragraph
(2)(B) thereof) shall apply for purposes of this paragraph.
``(F) Population.--For purposes of this paragraph,
population shall be determined in accordance with section
146(j).
``(G) Cost-of-living adjustment.--
``(i) In general.--In the case of a calendar year after
2003, the $2,000,000 and $1.75 amounts in subparagraph (C)
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 2002' for `calendar year 1992' in subparagraph
(B) thereof.
``(ii) Rounding.--
``(I) In the case of the $2,000,000 amount, 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 $1.75 amount, any increase under
clause (i) which is not a multiple of 5 cents shall be
rounded to the next lowest multiple of 5 cents.
``(3) Limitation on allocations to areas of chronic
economic distress.--Not more than 50 percent of a
homeownership credit agency's portion of the State
homeownership credit ceiling for a calendar year may be
allocated to residences located in areas which are designated
as areas of chronic economic distress in accordance with
paragraph (1) of subsection (c).
``(4) Special rules.--
``(A) Residence must be located within jurisdiction of
credit agency.--A homeownership credit agency may allocate
its aggregate homeownership credit dollar amount only to
qualified residences located in the jurisdiction of the
governmental unit of which such agency is a part.
``(B) Agency allocations in excess of limit.--If the
aggregate homeownership credit dollar amounts allocated by a
homeownership credit agency for any calendar year exceed the
portion of the State homeownership credit ceiling allocated
to such agency for such calendar year, the homeownership
credit dollar amounts so allocated shall be reduced (to the
extent of such excess) for residences in the reverse of the
order in which the allocations of such amounts were made.
``(g) Definitions and Special Rules.--For purposes of this
section--
``(1) Completed.--The term `completed' means the point in
time where a qualified residence is first placed in a
condition or state of readiness and availability for
occupancy.
``(2) Project.--The term `project' means 1 or more
residences together with functionally related and subordinate
facilities developed and made available to inhabitants of
such residences, including recreational facilities and
parking areas. To constitute a project, each residence must--
``(A) be developed by the same taxpayer pursuant to common
planning and feasibility studies,
``(B) be financed through a common plan of construction
financing, and
``(C) have common ownership prior to sale.
For purposes of this paragraph, it is not necessary that all
residences within a project be contiguous or that all
residences consist only of either new residences or existing
residences and it is not necessary that each residence within
a project be a qualified residence.
``(3) Qualified buyer.--
``(A) In general.--The term `qualified buyer' means a buyer
if at the time of the acquisition of the qualified residence,
the buyer--
``(i) is 1 or more individuals whose income does not exceed
80 percent of the area median gross income (70 percent for
families of less than 3 members), and
``(ii) intends to occupy the residence as the buyer's
principal residence (within the meaning of section 121).
``(B) Special rules in qualified census tracts.--With
respect to residences located in qualified census tracts (as
defined in section 42), subparagraph (A) shall be applied by
substituting `100 percent' for `80 percent' and `90 percent'
for `70 percent'.
``(C) Determination of income.--For purposes of this
paragraph, a buyer's income shall be determined in accordance
with section 143(f)(4).
``(4) New qualified residence.--The term `new qualified
residence' means a qualified residence the original ownership
of which begins with the taxpayer.
``(5) Existing qualified residence.--The term `existing
qualified residence' means any qualified residence which is
not a new qualified residence.
``(6) Homeownership credit agency.--The term `homeownership
credit agency' means any agency authorized to carry out this
section.
``(7) Possessions treated as states.--The term `State'
includes the District of Columbia and a possession of the
United States.
``(8) Application to estates and trusts.--In the case of an
estate or trust, the amount of the credit determined under
subsection (a) shall be apportioned between the estate or
trust and the beneficiaries on the basis of the income of the
estate or trust allocable to each.
``(h) Reduction in Tax Benefits.--
``(1) Recapture of credit.--If within the first 3 years
after the original purchase of a qualified residence, the
residence is sold by the qualified buyer to a buyer who does
not qualify as a qualified buyer, the qualified buyer--
``(A) shall deduct and withhold an amount equal to the
recapture amount from the amount realized on such sale, and
``(B) shall transfer such amount to the homeownership
credit agency which allocated the homeownership credit dollar
amount to such residence.
``(2) Recapture amount.--For purposes of paragraph (1), the
recapture amount is an amount equal to 50 percent of the gain
resulting from such resale, reduced by 1/36th for each month
the resale occurs after the original purchase.
``(3) Denial of deductions if converted to rental
housing.--If a qualified residence is converted to rental
housing within the first 3 years after the original purchase,
no deduction under this chapter shall be permitted to offset
rental income with respect to such residence during such
period.
``(i) Application of At-Risk Rules.--For purposes of this
section, rules of section 465 shall not apply in determining
the eligible basis of any qualified residence.
``(j) Reports to the Secretary.--
``(1) From the taxpayer.--The Secretary may require
taxpayers to submit an information return (at such time and
in such form and manner as the Secretary prescribes) for each
taxable year setting forth--
``(A) the eligible basis for the taxable year of each
qualified residence with respect to which the taxpayer is
claiming a credit under this section,
``(B) the amount of all homeownership credit allocations
received by the taxpayer from any and all State homeownership
credit agencies, and
``(C) such other information as the Secretary may require.
The penalty under section 6652(j) shall apply to any failure
to submit the return required by the Secretary under the
preceding sentence on the date prescribed therefor.
``(2) From homeownership credit agencies.--Each agency
which allocates any homeownership credit dollar amount to any
residence for any calendar year shall submit to the Secretary
(at such time and in such
[[Page S1249]]
form and manner as the Secretary shall prescribe) an annual
report specifying--
``(A) the amount of the homeownership credit dollar amount
allocated to each residence for such year,
``(B) sufficient information to identify each such
residence and the taxpayer initially entitled to claim the
credit under this section with respect thereto, and
``(C) such other information as the Secretary may require.
``(k) Responsibilities of Homeownership Credit Agencies.--
``(1) Plans for allocation of credit among residences.--
``(A) In general.--Notwithstanding any other provision of
this section, the homeownership credit dollar amount with
respect to any qualified residence shall be zero unless such
amount was allocated pursuant to a qualified allocation plan
of the homeownership credit agency which is approved by the
governmental unit (in accordance with rules similar to the
rules of section 147(f)(2) (other than subparagraph (B)(ii)
thereof)) of which such agency is a part.
``(B) Qualified allocation plan.--For purposes of this
paragraph, the term `qualified allocation plan' means any
plan which sets forth the homeownership development
priorities of the homeownership credit agency.
``(C) Certain homeownership development priorities must be
used.--The development priorities set forth in a qualified
allocation plan must include--
``(i) contribution of the development to community
stability and revitalization,
``(ii) community and local government support for the
development,
``(iii) need for homeownership development within the area,
``(iv) sponsor capability, and
``(v) long-term sustainability of the project as owner-
occupied residences.
``(2) Credit allocated to residence not to exceed amount
necessary to assure feasibility.--
``(A) In general.--The homeownership credit dollar amount
allocated to a residence shall not exceed the amount the
homeownership credit agency determines is necessary for the
feasibility of the residence.
``(B) Agency evaluation.--In making the determination under
subparagraph (A), the homeownership credit agency shall
consider--
``(i) the sources and uses of funds and the total financing
planned for the residence,
``(ii) any proceeds or receipts expected to be generated by
reason of tax benefits,
``(iii) the anticipated appraised value of the residence,
and
``(iv) the reasonableness of the developmental costs of the
residence.
``(C) Determination made when credit dollar amount applied
for.--A determination under subparagraph (A) shall be made as
of each of the following times:
``(i) The application for the homeownership credit dollar
amount.
``(ii) The allocation of the homeownership credit dollar
amount.
``(3) Lien for recapture amount.--A homeownership credit
dollar amount may be allocated by a homeownership credit
agency to a residence only if such agency has a lien on such
residence for the payment of any amount potentially required
to be paid under subsection (h) to such agency.
``(l) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section, including regulations--
``(1) dealing with--
``(A) projects which include more than 1 residence or only
a portion of a residence, and
``(B) buildings which are completed in portions,
``(2) providing for the application of this section to
short taxable years,
``(3) preventing the avoidance of the rules of this
section, and
``(4) providing the opportunity for homeownership credit
agencies to correct administrative errors and omissions with
respect to allocations and record keeping within a reasonable
period after their discovery, taking into account the
availability of regulations and other administrative guidance
from the Secretary.''.
(b) Current Year Business Credit Calculation.--Section
38(b) (relating to current year business credit) is amended
by striking ``plus'' at the end of paragraph (14), by
striking the period at the end of paragraph (15) and
inserting ``, plus'', and by adding at the end the following:
``(16) the homeownership credit determined under section
42A(a).''.
(c) Limitation on Carryback.--Subsection (d) of section 39
(relating to carryback and carryforward of unused credits) is
amended by adding at the end the following:
``(11) No carryback of homeownership credit before
effective date.--No amount of unused business credit
available under section 42A may be carried back to a taxable
year beginning on or before the date of the enactment of this
paragraph.''.
(d) Conforming Amendments.--
(1) Section 55(c)(1) is amended by inserting ``or
subsection (h) or (i) of section 42A'' after ``section 42''.
(2) Subsections (i)(3)(D), (i)(6)(B)(i), and (k)(1) of
section 469 are each amended by inserting ``or 42A'' after
``section 42''.
(3) Section 772(a) is amended by striking ``and'' at the
end of paragraph (10), by redesignating paragraph (11) as
paragraph (12), and by inserting after paragraph (10) the
following:
``(11) the homeownership credit determined under section
42A, and''.
(4) Section 774(b)(4) is amended by inserting ``, 42A(h),''
after ``section 42(j)''.
(e) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by
inserting after the item relating to section 42 the
following:
``Sec. 42A. Homeownership credit.''.
(f) Effective Date.--The amendments made by this section
shall apply to qualified residences sold after December 31,
2002.
By Mr. LEVIN (for himself and Ms. Stabenow):
S. 199. A bill to amend the Solid Waste Disposal Act to authorize the
Administrator of the Environmental Protection Agency to carry out
certain authorities relating to the importation of municipal solid
waste under the Agreement Concerning the Transboundary Movement of
Hazardous Waste between the United States and Canada; to the Committee
on Environment and Public Works.
Mr. LEVIN. Mr. President, I ask unanimous consent that the Canadian
Waste bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 199
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. CANADIAN TRANSBOUNDARY MOVEMENT OF MUNICIPAL SOLID
WASTE.
(a) In General.--Subtitle D of the Solid Waste Disposal Act
(42 U.S.C. 6941 et seq.) is amended by adding at the end the
following:
``SEC. 4011. CANADIAN TRANSBOUNDARY MOVEMENT OF MUNICIPAL
SOLID WASTE.
``(a) Definitions.--In this section:
``(1) Agreement.--The term `Agreement' means--
``(A) the Agreement Concerning the Transboundary Movement
of Hazardous Waste between the United States and Canada,
signed at Ottawa on October 28, 1986 (TIAS 11099); and
``(B) any regulations promulgated to implement and enforce
that Agreement.
``(2) Municipal solid waste.--The term `municipal solid
waste' has the meaning given the term in the Agreement.
``(b) Prohibition.--It shall be unlawful for any person to
import, transport, or export municipal solid waste, for final
disposal or incineration, in violation of the Agreement.
``(c) Authority of Administrator.--
``(1) In general.--Beginning immediately after the date of
enactment of this section, the Administrator shall--
``(A) perform the functions of the Designated Authority of
the United States described in the Agreement with respect to
the importation and exportation of municipal solid waste
under the Agreement; and
``(B) implement and enforce the Agreement (including notice
and consent provisions of the Agreement).
``(2) Consent to importation.--In considering whether to
consent to the importation of municipal solid waste under
article 3(c) of the Agreement, the Administrator shall--
``(A) give substantial weight to the views of each State
into which the municipal solid waste is to be imported; and
``(B) consider the impact of the importation on--
``(i) continued public support for, and adherence to, State
and local recycling programs;
``(ii) landfill capacity, as provided in comprehensive
waste management plans;
``(iii) air emissions resulting from increased vehicular
traffic;
``(iv) road deterioration resulting from increased
vehicular traffic; and
``(v) public health and the environment.
``(d) Compliance Orders.--
``(1) In general.--If, on the basis of any information, the
Administrator determines that a person has violated or is in
violation of this section, the Administrator may--
``(A) issue an order that--
``(i) assesses a civil penalty against the person for any
past or current violation of the person; or
``(ii) requires compliance by the person with this section
immediately or by a specified date; or
``(B) bring a civil action against the person for
appropriate relief (including a temporary or permanent
injunction) in the United States district court for the
district in which the violation occurred.
``(2) Specificity.--
``(A) In general.--Any order issued under paragraph (1) for
a violation of this subsection shall state with reasonable
specificity the nature of the violation.
``(B) Penalties.--
``(i) Maximum penalty.--Any penalty assessed by an order
issued under paragraph (1) shall not exceed $25,000 per day
of noncompliance for each violation.
``(ii) Considerations.--In assessing a penalty under this
section, the Administrator shall take into account--
``(I) the seriousness of the violation for which the
penalty is assessed; and
[[Page S1250]]
``(II) any good faith efforts of the person against which
the penalty is assessed to comply with applicable
requirements.
``(e) Public Hearing.--
``(1) In general.--Any order issued under this section
shall become final unless, not later than 30 days after the
date of issuance of the order, the person or persons against
which the order is issued submit to the Administrator a
request for a public hearing.
``(2) Hearing.--On receipt of a request under paragraph
(1), the Administrator shall promptly conduct a public
hearing.
``(3) Subpoenas.--In connection with any hearing under this
subsection, the Administrator may--
``(A) issue subpoenas for--
``(i) the attendance and testimony of witnesses; and
``(ii) the production of relevant papers, books, and
documents; and
``(B) promulgate regulations that provide for procedures
for discovery.
``(f) Violation of Compliance Orders.--If a person against
which an order is issued fails to take corrective action as
specified in the order, the Administrator may assess a civil
penalty of not more than $25,000 for each day of continued
noncompliance with the order.''.
(b) Table of Contents.--The table of contents of the Solid
Waste Disposal Act (42 U.S.C. prec. 6901) is amended by
adding at the end of the items relating to subtitle D the
following:
``Sec. 4011. Canadian transboundary movement of municipal solid
waste.''.
Ms. STABENOW. Mr. President, I am pleased to join with Senator Levin
in reintroducing this bill to address the growing problem of Canadian
waste shipments to Michigan.
In 2001, Michigan imported almost 3.6 million tons of municipal solid
waste, more than double the amount that was imported in 1999. This
gives Michigan the unwelcome distinction of being the third largest
importer of waste in the United States.
My colleagues may be surprised to know that the biggest source of
this waste was not another state, but our neighbor to the north,
Canada. More than half the waste that was shipped to Michigan in 2001
was from Ontario, Canada, and these imports are growing rapidly. On
January 1, 2003, as another Ontario landfill closed its doors, the city
of Toronto switched from shipping two-thirds of its trash, to shipping
all of its trash, 1.1 million tons, to Michigan landfills. Experts
predict that soon there will be virtually no local disposal capacity in
Ontario, which could mean even more waste being shipped across the
border to Michigan.
Not only does this waste dramatically decrease Michigan's own
landfill capacity, but it has a tremendous negative impact on
Michigan's environment and the public health of its citizens. The
Canadian waste also hampers the effectiveness of Michigan's State and
local recycling efforts, since Ontario does not have a bottle law
requiring recycling.
Currently, 110-130 truckloads of waste come into Michigan each day
from Canada. These trucks cross the Ambassador Bridge and Blue Water
Bridge and travel through the busiest parts of Metro Detroit, causing
traffic delays, and filling our air with the stench of exhaust and
garbage. These trucks also present a security risk at our Michigan-
Canadian border, since by their nature trucks full of garbage are
harder for Customs agents to inspect than traditional cargo.
Michigan already has protections contained in an international
agreement between the United States and Canada, but they are being
ignored. Under the Agreement Concerning the Transboundary Movement of
Hazardous Waste, which was entered into in 1986, shipments of waste
across the Canadian-U.S. border require government-to-government
notification. The Environmental Protection Agency, EPA, as the
designated authority for the United States would receive the
notification and then would have 30 days to consent or object to the
shipment. Not only have these notification provisions not been
enforced, but the EPA has indicated that they would not object to the
municipal waste shipments.
This legislation will give Michigan residents the protection they are
entitled to under this bilateral treaty. The bill would give EPA the
authority to implement and enforce this treaty, and would create civil
penalties for those who ship waste in violation of the treaty. In
addition, it would create criteria for the EPA's determination of
whether or not to consent to a shipment, such as the State's views on
the shipment, and the shipment's impact on landfill capacity, air
emissions, public health and the environment. These waste shipments
should no longer be accepted without an examination of how it will
affect the health and welfare of Michigan families.
Again, I thank my colleague, Senator Levin, for introducing this bill
and I look forward to working with him to move it through the Senate.
____________________