[Congressional Record (Bound Edition), Volume 146 (2000), Part 11]
[House]
[Pages 16063-16108]
[From the U.S. 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''.
       (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.

[[Page 16064]]

       ``(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--
       ``(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.

[[Page 16065]]

       ``(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.
       ``(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

[[Page 16066]]

     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
       ``(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).''

[[Page 16067]]

       (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
       ``(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)''.

[[Page 16068]]

       (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 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

[[Page 16069]]

     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),
       ``(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  

[[Page 16070]]

      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''.

     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''.

[[Page 16071]]



     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.--
       (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

[[Page 16072]]

     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 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.

[[Page 16073]]

       (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 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

[[Page 16074]]

     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 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.

[[Page 16075]]

       (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 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

[[Page 16076]]

     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 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

[[Page 16077]]

     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 services regarding such abuse, 
     provided pursuant to an award of financial assistance under a 
     designated program.

[[Page 16078]]

       ``(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--

[[Page 16079]]

       ``(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 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.

[[Page 16080]]

       ``(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.
       ``(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

[[Page 16081]]

     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 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:

[[Page 16082]]

       ``(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:
       ``(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

[[Page 16083]]

     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 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.

[[Page 16084]]

       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. 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

[[Page 16085]]

     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 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

[[Page 16086]]

     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

       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,

[[Page 16087]]

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 
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

[[Page 16088]]

(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. 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. 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

[[Page 16089]]

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 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. 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. 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,

[[Page 16090]]

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 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. 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

[[Page 16091]]

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 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.

[[Page 16092]]

  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 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. 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

[[Page 16093]]

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. 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 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).


             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

[[Page 16094]]

distinguished supporter of this legislation who has given this 
legislation a strong bipartisan tilt.
  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 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. 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

[[Page 16095]]

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 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.

[[Page 16096]]

       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.
       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.

[[Page 16097]]

       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 recovered 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 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 Casts 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

[[Page 16098]]

     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 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,

[[Page 16099]]

     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.''
       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

                            (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-

[[Page 16100]]

     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 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.

[[Page 16101]]

     ``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

                           (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 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

[[Page 16102]]

     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 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,

[[Page 16103]]

     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. 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. 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.
  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

[[Page 16104]]

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, 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.

[[Page 16105]]

  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 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

[[Page 16106]]

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 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

[[Page 16107]]

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''.
  Mrs. MEEK of Florida and Ms. JACKSON-LEE of Texas changed their vote 
from ``nay'' to ``yea''.

[[Page 16108]]

  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.

                          ____________________

                              {time}  1345