[Senate Report 114-269]
[From the U.S. Government Publishing Office]


                                                       Calendar No. 112
                                                       
114th Congress   }                                           {   Report
                                 SENATE
 2d Session      }                                           {   114-269

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                 THE HUBZONE REVITALIZATION ACT OF 2015

                                _______
                                

                  May 26, 2016.--Ordered to be printed

                                _______
                                

Mr. Vitter, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1292]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 1292) to amend the Small 
Business Act to treat certain qualified disaster areas as 
HUBZones and to extend the period for HUBZone treatment for 
certain base closure areas, and for other purposes, having 
considered the same, reports favorably thereon, without 
amendment and recommends that the bill do pass.

                            I. INTRODUCTION

    The HUBZone Revitalization Act of 2015 (S. 1292) was 
introduced by Senator Vitter with Senator King on May 12, 2015.
    The HUBZone Revitalization Act of 2015 seeks to extend 
HUBZone status to qualified businesses in disaster-affected 
areas. This bill will allow the SBA to designate areas hit by 
major or catastrophic disasters as HUBZones.
    The HUBZone Revitalization Act of 2015 also deals with 
small businesses within Base Realignment and Closure affected 
areas. The bill would allow small businesses under the HUBZone 
program located within base closure areas to draw employees 
from surrounding areas in order to meet the program's 35 
percent residency requirement. These surrounding areas are 
defined by census tract designations and include the census 
tracts that intersect with the base as well as the census 
tracts that are contiguous to the intersecting tracts.
    The bill was also approved unanimously by voice vote. 
Identical language later became law as part of the National 
Defense Authorization Act of 2016, S. 1356 (Public Law No. 114-
92).

              II. HISTORY (PURPOSE & NEED FOR LEGISLATION)

    The United States has consistently recognized the need to 
encourage entrepreneurship as a means to combat unemployment 
and promote economic development. The HUBZone program was 
enacted into law as part of the Small Business Reauthorization 
Act of 1997. The program, run by the Small Business 
Administration, seeks to encourage economic development in 
historically underutilized business zones (HUBZones). This is 
done through the establishment of preferences. After Hurricanes 
Katrina and Rita and other natural disasters imposed tremendous 
needs and burdens on economies throughout the Gulf Coast, 
Congress began considering ways for federal agencies to provide 
additional resources to assist impacted communities in 
recovering after a natural disaster.
    Congress added ``base closure areas'' to the list of 
HUBZone classes in the Consolidated Appropriations Act of 2005 
and defined a base closure area as land within the boundaries 
of a military installation closed through privatization 
processes, including Base Realignment and Closure. Such base 
closure areas would be designated as HUBZones for 5 years 
following the date of the base closure.
    The extensive time associated with transferring land from 
former bases to local redevelopment authorities as well as the 
narrow geographic boundaries of base closure HUBZones soon 
emerged as barriers to effective use of the HUBZone program. In 
2012, Senator Collins and Senator Snowe introduced the HUBZone 
Expansion Act to expand the boundaries of base closure 
HUBZones, and in 2013 and 2015, Senators Collins and King 
introduced similar legislation to expand the area from which 
HUBZone employees could be drawn and extend the base closure 
HUBZone designation from 5 years to 8 years. Senator King 
secured the inclusion of the legislation in the Senate Armed 
Services Committee's markups of both the FY15 and FY16 National 
Defense Authorization Act.

                      III. HEARINGS & ROUNDTABLES

    In the 109th Congress:
    In the 109th Congress, the Senate Committee on Small 
Business and Entrepreneurship held a hearing entitled ``The 
Impact of Hurricane Katrina on Small Business'' on September 
22, 2005 to assess the current relief programs of various 
federal agencies. This hearing discussed possible ideas to help 
revitalize the Gulf coast. One topic that came up was the topic 
of HUBZones. These zones could be used to help in the economic 
development of the areas affected by Hurricane Katrina.
    In the 110th Congress:
    In the 110th Congress, the Senate Committee on Small 
Business and Entrepreneurship held a hearing entitled 
``Increasing Government Accountability and Ensuring Fairness in 
Small Business Contracting'' on July 18, 2007. This hearing 
discussed among other things, the use of HUBZone businesses as 
contractors. The HUBZone program was designed to create jobs 
where they are needed the most. At the hearing, testimonies 
concerning HUBZones focused on the benefits of the HUBZone 
program, and how its shortcomings can be improved.
    114th Congress:
    Identical language later became law as part of the National 
Defense Authorization Act of 2016, S. 1356 (Public Law No. 114-
92).

                        IV. DESCRIPTION OF BILL

    The HUBZone Revitalization Act of 2015 works to ensure the 
continued success of current and graduated HUBZones after major 
disasters. The bill allows the SBA to designate areas that have 
been hit by major disasters as HUBZones. This will only apply 
to areas located within major disaster areas as declared by the 
president which cease to be qualified as HUBZones within 5 
years prior to, or 2 years after, the disaster.
    The HUBZone Revitalization Act of 2015 also works to help 
small businesses remain operable within a Base Realignment and 
Closure. These small businesses do not have a sufficient amount 
of residents to meet the 35% employee requirement to be 
qualified under the HUBZone program. This bill would allow 
small businesses located within base closure areas to draw 
employees from surrounding areas in order to qualify for the 
HUBZone program. These surrounding areas would either border 
the base, or border the area bordering the base. The bill would 
also extend base closure HUBZone eligibility from 5 years to 8 
years.

                           V. COMMITTEE VOTE

    In compliance with rule XXVI (7)(b) of the Standing Rules 
of the Senate, the following vote was recorded on June 3, 2015.
    A motion to adopt the HUBZone Revitalization Act of 2015, a 
bill to amend the Small Business Act to treat certain disaster 
areas as HUBZones and to extend the period for HUBZone 
treatment for certain base closure areas, and for other 
purposes, was approved unanimously by voice vote with the 
following Senators present: Vitter, Risch, Scott, Fischer, 
Gardner, Ernst, Ayotte, Enzi, Shaheen, Cantwell, Cardin, 
Heitkamp, Markey, Booker, Coons, Hirono, and Peters.

                           VI. COST ESTIMATE

    In compliance with rule XXVI (11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed in the 
following letter from the Congressional Budget Office:

                                                     July 31, 2015.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1292, the HUBZone 
Revitalization Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 1292 HUBZone Revitalization Act of 2015

    Small businesses operating in areas designated as 
historically underutilized business zones (HUBZones) are 
eligible for preferences when seeking contracts from the 
federal government. S. 1292 would increase the number of 
geographic areas that would qualify as HUBZones. Under the 
bill, businesses in areas that are declared a major disaster 
area or that suffered a catastrophic incident would be eligible 
for HUBZone benefits. Further, areas surrounding closed 
military bases would be eligible for HUBZone designation for a 
longer period of time.
    Based on information from the Small Business 
Administration, the agency that operates the HUBZone program, 
CBO estimates that implementing S. 1292 would cost less than 
$500,000 over the 2016-2020 period, assuming appropriation of 
the necessary amounts. Those additional costs would be incurred 
to update the program's maps to encompass the newly eligible 
areas. Enacting S. 1292 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 1292 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Susan Willie. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                  VII. EVALUATION OF REGULATORY IMPACT

    In compliance with rule XXVI (11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.

                   VIII. SECTION-BY-SECTION ANALYSIS

Section 1: Short title

    This section provides the title, the ``HUBZone 
Revitalization Act of 2015''.

Section 2: HUBZone qualified disaster areas

    Amends section 3(p) of the Small Business Act to include a 
definition of a qualified disaster area. Section 3(p) of the 
Small Business Act is also amended to describe the treatment of 
qualified disaster areas as HUBZones.
    Section 31(c)(3) is also amended. The amendments made by 
subsection (a) shall apply to a major disaster declared by the 
president or a catastrophic incident occurring on or after the 
enactment date of this act.

Section 3: Base closure HUBZones

    Amends section 3(p)(5)(A)(i)(I) of the Small Business Act 
by allowing employees residing in bordering census tracts to be 
counted for the purpose of being a qualified HUBZone small 
business concern.
    This section also changes the period for base closure areas 
from 5 to 8 years in Section 152(a)(2) of title I of division K 
of the Consolidated Appropriations Act, 2005, as well as 
Section 1698(b)(2) of National Defense Authorization Act for 
Fiscal Year 2013.
    It is also stated in section 3 when the amendments made in 
paragraph (1) shall take effect, and to what they shall apply 
to.