Provides for the designation of and tax incentives for renewal communities. Provides that the designations shall be based on degree of poverty.
Provides a credit for computer donations to schools, senior centers, public libraries and other training centers located in a renewal community, empowerment zone, Indian reservation, or a defined low-income community.
Provides for the designation of additional empowerment zones and increased empowerment zone tax incentives.
Permits a religious organization to receive Federal funding through the Substance Abuse and Mental Health Services Administration. Prohibits funding discrimination against such an organization so long as its program is implemented in a manner consistent with the Establishment Clause of the first amendment to the Constitution.
Provides for the transfer of unoccupied and substandard HUD housing to local governments and community development corporations.
Authorizes the licensing of community development entities as America's Private Investment Companies which shall promote community and economic development in low-income communities.
Establishes a new markets tax credit with respect to specified qualified low-income community investments.
Establishes a New Markets Capital Venture Program to encourage venture capital investment in smaller enterprises located in low- and moderate-income urban and rural areas.
Provides for bond volume cap and low-income housing credit increases.
Provides for the establishment of Individual Development Accounts and Individual Development Account Programs to provide for the accumulation of assets in low-income communities to used to promote education, homeownership, family, community, and business development.
Requires the Federal Government, or a State or local government, to consider a religious organization's assistance program on the same basis as other nongovernmental organizations in the distribution of Federal funds so long as the religious organization's assistance program provides assistance in a manner consistent with the Establishment Clause of the first amendment to the Constitution.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2779 Introduced in Senate (IS)]
106th CONGRESS
2d Session
S. 2779
To provide for the designation of renewal communities and to provide
tax incentives relating to such communities, to provide a tax credit to
taxpayers investing in entities seeking to provide capital to create
new markets in low-income communities, and to provide for the
establishment of Individual Development Accounts (IDAs), and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 22, 2000
Mr. Santorum (for himself, Mr. Lieberman, Mr. Abraham, Mr. Kohl, Mr.
Hutchinson, Mr. Torricelli, and Mr. Kerry) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To provide for the designation of renewal communities and to provide
tax incentives relating to such communities, to provide a tax credit to
taxpayers investing in entities seeking to provide capital to create
new markets in low-income communities, and to provide for the
establishment of Individual Development Accounts (IDAs), and for other
purposes.
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 ``American Community
Renewal and New Markets Empowerment Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
TITLE I--AMERICAN COMMUNITY RENEWAL
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.
Sec. 104. Evaluation and reporting requirements.
Sec. 105. Exclusion of effects of this title from paygo scorecard.
TITLE II--NEW MILLENNIUM CLASSROOMS
Sec. 201. Credit for computer donations to schools, senior centers,
public libraries, and other training
centers.
TITLE III--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES
Sec. 301. Authority to designate 9 additional empowerment zones.
Sec. 302. Extension of enterprise zone treatment through 2009.
Sec. 303. 20 percent employment credit for all empowerment zones.
Sec. 304. Increased expensing under section 179.
Sec. 305. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 306. Nonrecognition of gain on rollover of empowerment zone
investments.
Sec. 307. Increased exclusion of gain on sale of empowerment zone
investments.
Sec. 308. Funding entitlement for Round II empowerment zones.
Sec. 309. Custom user fees.
TITLE IV--FAITH BASED SUBSTANCE ABUSE TREATMENT
Sec. 401. Prevention and treatment of substance abuse; services
provided through religious organizations.
TITLE V--HOMEOWNERSHIP
Sec. 501. Transfer of unoccupied and substandard HUD-held housing to
local governments and community development
corporations.
Sec. 502. Transfer of HUD assets in revitalization areas.
Sec. 503. Risk-sharing demonstration.
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--NEW MARKETS TAX CREDIT
Sec. 701. New markets tax credit.
TITLE VIII--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL
Sec. 800. Short title.
Subtitle A--New Markets Venture Capital Program
Sec. 801. New Markets Venture Capital Program.
Sec. 802. Bankruptcy exemption for NMVC companies.
Sec. 803. Federal savings associations.
Subtitle B--Community Development Venture Capital Assistance
Sec. 811. Findings and purposes.
Sec. 812. Community development venture capital activities.
Subtitle C--Business LINC
Sec. 821. Grants authorized.
Sec. 822. Regulations.
TITLE IX--BOND VOLUME CAP AND LOW-INCOME HOUSING CREDIT INCREASES
Sec. 901. Increase in State ceiling on private activity bonds.
Sec. 902. Increase in State ceiling on low-income housing credit.
TITLE X--INDIVIDUAL DEVELOPMENT ACCOUNTS
Sec. 1001. Findings.
Sec. 1002. Purposes.
Sec. 1003. Definitions.
Subtitle A--Individual Development Accounts for Low-Income Workers
Sec. 1011. Structure and administration of qualified individual
development account programs.
Sec. 1012. Procedures for opening an Individual Development Account and
qualifying for matching funds.
Sec. 1013. Contributions to Individual Development Accounts.
Sec. 1014. Deposits by qualified individual development account
programs.
Sec. 1015. Withdrawal procedures.
Sec. 1016. Certification and termination of qualified individual
development account programs.
Sec. 1017. Reporting, monitoring, and evaluation.
Sec. 1018. Certain account funds of program participants disregarded
for purposes of certain means-tested
Federal programs.
Subtitle B--Qualified Individual Development Account Program Investment
Credits
Sec. 1021. Qualified individual development account program investment
credits.
Sec. 1022. CRA credit treatment for qualified individual development
account program investments.
Sec. 1023. Designation of earned income tax credit payments for deposit
to Individual Development Accounts.
TITLE XI--CHARITABLE CHOICE EXPANSION
Sec. 1101. Provision of assistance under government programs by
religious organizations.
TITLE I--AMERICAN COMMUNITY RENEWAL
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 1
nominated area as a renewal community in each State.
``(B) Minimum designation in rural areas.--Of the
areas designated under paragraph (1), at least 20
percent 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
January 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).
``(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 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 (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
Government 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
such services by nongovernmental entities).
``(iv) Actions to reduce, remove, simplify,
or streamline governmental requirements
applying within the renewal community.
``(v) Involvement in the program by private
entities, organizations, neighborhood
organizations, and community groups,
particularly those in the renewal community,
including a commitment from such private
entities to provide jobs and job training for,
and technical, financial, or other assistance
to, employers, employees, and residents from
the renewal community.
``(vi) The gift (or sale at below fair
market value) of surplus real property (such as
land, homes, and commercial or industrial
structures) in the renewal community to
neighborhood organizations, community
development corporations, or private companies.
``(B) Recognition of past efforts.--For purposes of
this section, in evaluating the course of action agreed
to by any State or local government, the Secretary of
Housing and Urban Development shall take into account
the past efforts of such State or local government in
reducing the various burdens borne by employers and
employees in the area involved.
``(3) Economic growth promotion requirements.--The economic
growth promotion requirements of this paragraph are met with
respect to a nominated area if the local government and the
State in which such area is located certify in writing that
such government and State (respectively) have repealed, will not
enforce, or will reduce within the area at least 4 of the following if
such area is designated as a renewal community:
``(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.--
``(1) In general.--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 any portion of such area is designated as a
renewal community.
``(2) Special rule for wage credit.--For purposes of
section 1400H (relating to renewal community employment
credit)--
``(A) there shall not be taken into account wages
taken into account under section 1396 (without regard
to section 1400H), and
``(B) the $15,000 amount in section 1396(c) shall
(in applying section 1400H) be reduced for any calendar
year by the amount of wages paid or incurred during
such year which are taken into account in determining
the credit under section 1396 (without regard to
section 1400H).
``(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) State.--The term `State' means the several States.
``(4) Application of rules relating to census tracts.--The
rules of sections 1392(b)(4) shall apply.
``(5) Census data.--Population and poverty rate shall be
determined by using 1990 census data.
``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 recognized on 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 December 31, 2000, 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 December 31, 2000, 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 December 31, 2000, 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 `December 31,
2000' 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 2001 or after 2014 not qualified.--The
term `qualified capital gain' shall not include any gain
attributable to periods before January 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
`January 1, 2001' for `January 1, 1998' and `December 31, 2014' for
`December 31, 2007'.
``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.
``(b) Modification.--In applying section 1396 with respect to
renewal communities, the applicable percentage shall be--
``(1) 15 percent in the case of calendar years 2001, 2002,
2003, or 2004, and
``(2) 20 percent in the case of calendar years after 2004
and before 2010.
``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.
``(a) General Rule.--At the election of the taxpayer, either--
``(1) one-half of any qualified revitalization expenditures
chargeable to capital account with respect to any qualified
revitalization building shall be allowable as a deduction for
the taxable year in which the building is placed in service, or
``(2) a deduction for all such expenditures shall be
allowable ratably over the 120-month period beginning with the
month in which the building is placed in service.
``(b) Qualified Revitalization Buildings and Expenditures.--For
purposes of this section--
``(1) Qualified revitalization building.--The term
`qualified revitalization building' means any building (and its
structural components) if--
``(A) such building is located in a renewal
community and is placed in service after December 31,
2000,
``(B) a commercial revitalization deduction amount
is allocated to the building under subsection (d), and
``(C) depreciation is allowable with respect to the
building (without regard to this section).
``(2) Qualified revitalization expenditure.--
``(A) In general.--The term `qualified
revitalization expenditure' means any amount properly
chargeable to capital account--
``(i) for property for which depreciation
is allowable under section 168 (without regard
to this section) and which is--
``(I) nonresidential real property,
or
``(II) an addition or improvement
to property described in subclause (I),
``(ii) in connection with the construction
of any qualified revitalization building which
was not previously placed in service or in
connection with the substantial rehabilitation
(within the meaning of section 47(c)(1)(C)) of
a building which was placed in service before
the beginning of such rehabilitation, and
``(iii) for land (including land which is
functionally related to such property and
subordinate thereto).
``(B) Dollar limitation.--The aggregate amount
which may be treated as qualified revitalization
expenditures with respect to any qualified
revitalization building for any taxable year shall not
exceed the excess of--
``(i) $10,000,000, reduced by
``(ii) any such expenditures with respect
to the building taken into account by the
taxpayer or any predecessor in determining the
amount of the deduction under this section for
all preceding taxable years.
``(C) Certain expenditures not included.--The term
`qualified revitalization expenditure' does not
include--
``(i) Acquisition costs.--The costs of
acquiring any building or interest therein and
any land in connection with such building to
the extent that such costs exceed 30 percent of
the qualified revitalization expenditures
determined without regard to this clause.
``(ii) Credits.--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) Limitation on Aggregate Expenditures Allowable With Respect
to Buildings Located in a State.--
``(1) In general.--The aggregate qualified revitalization
expenditures chargeable to capital account with respect to any
building which may be taken into account in determining the
deduction under this section with respect to such building
shall not exceed the commercial revitalization expenditure
amount allocated to such building under this subsection by the
commercial revitalization agency. Such allocation shall be made
at the same time and in the same manner as under paragraphs (1)
and (7) of section 42(h).
``(2) Commercial revitalization expenditure amount for
agencies.--
``(A) 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.
``(B) State commercial revitalization expenditure
ceiling.--The State commercial revitalization
expenditure ceiling applicable to any State--
``(i) for each calendar year after 2000 and
before 2010 is $12,000,000 for each renewal
community in the State, and
``(ii) for each calendar year thereafter is
zero.
``(C) 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.
``(d) Responsibilities of Commercial Revitalization Agencies.--
``(1) Plans for allocation.--Notwithstanding any other
provision of this section, the commercial revitalization
deduction 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.
``(e) 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.
``(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.
``(f) 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.
``(g) 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
December 31, 2000, and before January 1, 2010, and
``(B) such property would be qualified zone
property (as defined in section 1397D) if references to
renewal communities were substituted for references to
empowerment zones in section 1397D.
``(2) Certain rules to apply.--The rules of subsections
(a)(2) and (b) of section 1397D shall apply for purposes of
this section.''.
(b) Exception for Commercial Revitalization Deduction From Passive
Loss Rules.--
(1) Paragraph (3) of section 469(i) is amended by
redesignating subparagraphs (C), (D), and (E) as subparagraphs
(D), (E), and (F), respectively, and by inserting after
subparagraph (B) the following new subparagraph:
``(C) Exception for commercial revitalization
deduction.--Subparagraph (A) shall not apply to any
portion of the passive activity loss for any taxable
year which is attributable to the commercial
revitalization deduction under section 1400I.''.
(2) Subparagraph (E) of section 469(i)(3), as redesignated
by subparagraph (A), is amended to read as follows:
``(E) Ordering rules to reflect exceptions and
separate phase-outs.--If subparagraph (B), (C), or (D)
applies for a taxable year, paragraph (1) shall be
applied--
``(i) first to the portion of the passive
activity loss to which subparagraph (C) does
not apply,
``(ii) second to the portion of the passive
activity credit to which subparagraph (B) or
(D) does not apply,
``(iii) third to the portion of such credit
to which subparagraph (B) applies,
``(iv) fourth to the portion of such loss
to which subparagraph (C) applies, and
``(v) then to the portion of such credit to
which subparagraph (D) applies.''.
(3)(A) Subparagraph (B) of section 469(i)(6) is amended by
striking ``or'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and by
adding at the end the following new clause:
``(iii) any deduction under section 1400I
(relating to commercial revitalization
deduction).''.
(B) The heading for such subparagraph (B) is amended by
striking ``or rehabilitation credit'' and inserting ``,
rehabilitation credit, or commercial revitalization
deduction''.
(c) Clerical Amendment.--The table of subchapters for chapter 1 is
amended by adding at the end the following new item:
``Subchapter X. Renewal Communities.''.
SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO
RENEWAL COMMUNITIES; EXTENSION OF TERMINATION DATE FOR
RENEWAL COMMUNITIES AND EMPOWERMENT ZONES.
(a) Extension.--
(1) In general.--Subparagraph (A) of section 198(c)(2)
(defining targeted area) is amended by striking ``and'' at the
end of clause (iii), by striking the period at the end of
clause (iv) and inserting
``, and'', and by adding at the end the following new clause:
``(v) any renewal community (as defined in
section 1400E).''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to expenditures paid or incurred after December 31,
2000.
(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 December 31,
2000.
SEC. 104. EVALUATION AND REPORTING REQUIREMENTS.
Not later than the close of the fourth calendar year after the year
in which the Secretary of Housing and Urban Development first
designates an area as a renewal community under section 1400E of the
Internal Revenue Code of 1986, and at the close of each fourth calendar
year thereafter, such Secretary shall prepare and submit to the
Congress a report on the effects of such designations in stimulating
the creation of new jobs, particularly for disadvantaged workers and
long-term unemployed individuals, and promoting the revitalization of
economically distressed areas.
SEC. 105. EXCLUSION OF EFFECTS OF THIS TITLE FROM PAYGO SCORECARD.
Upon the enactment of this title, the Director of the Office of
Management and Budget shall not make any estimates of changes in
receipts under section 252(d) of the Balanced Budget and Emergency
Deficit Control Act of 1985 resulting from the enactment of this title.
TITLE II--NEW MILLENNIUM CLASSROOMS
SEC. 201. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR CENTERS,
PUBLIC LIBRARIES, AND OTHER TRAINING CENTERS.
(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. 48D. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR CENTERS,
PUBLIC LIBRARIES, AND OTHER TRAINING CENTERS.
``(a) General Rule.--For purposes of section 38, the computer
donation credit determined under this section is an amount equal to 50
percent of the qualified computer contributions made by the taxpayer
during the taxable year as determined after the application of section
170(e)(6)(A) to any entity located in--
``(1) a renewal community designated under section 1400E,
``(2) an empowerment zone or enterprise community
designated under section 1391,
``(3) an Indian reservation (as defined in section
168(j)(6)), or
``(4) a low-income community (as defined in subsection (c).
``(b) Qualified Computer Contribution.--For purposes of this
section, the term `qualified computer contribution' has the meaning
given the term `qualified elementary or secondary educational
contribution' by section 170(e)(6)(B), except that--
``(1) clause (ii) thereof shall be applied--
``(A) by substituting `3 years' for `2 years',
``(B) by inserting `or reacquired' after
`acquired', and
``(C) by inserting `for the taxpayer's own use'
after `constructed by the taxpayer',
``(2) clause (iii) thereof shall be applied by inserting `,
the person from whom the donor reacquires the property,' after
`the donor',
``(3) such term shall include the contribution of a
computer (as defined in section 168(i)(2)(B)(ii)) only if
computer software (as defined in section 197(e)(3)(B)) that
serves as a computer operating system has been lawfully
installed in such computer,
``(4) notwithstanding clauses (i) and (iv) of section
170(e)(6)(B), such term shall include the contribution of
computer technology or equipment to--
``(A) multipurpose senior centers (as defined in
section 102(35) of the Older Americans Act of 1965 (42
U.S.C. 3002(35), as in effect on the date of the
enactment of the American Community Renewal and New
Markets Empowerment Act) described in section 501(c)(3)
and exempt from tax under section 501(a) to be used by
individuals who have attained 60 years of age to
improve job skills in computers,
``(B) a public library (within the meaning of
section 213(2)(A) of the Library Services and
Technology Act (20 U.S.C. 9122(2)(A), as in effect on
the date of the enactment of the American Community
Renewal and New Markets Empowerment Act) established
and maintained by an entity described in section
170(c)(1), or
``(C) an organization exempt from tax under section
501(a) which provides employment, vocational, and job-
training services to individuals with barriers to
employment, including welfare recipients and
individuals with disabilities, and
``(5) such term shall only include contributions which meet
the minimum standards prescribed by the Secretary by
regulation, after consultation, at the option of the Secretary,
with the National Telecommunications and Information Agency and
any other Federal agency with expertise in computer technology.
``(c) Low-Income Community.--For purposes of this section--
``(1) In general.--The term `low-income community' means
any population census tract if--
``(A)(i) the poverty rate for such tract is at
least 20 percent, or
``(ii)(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, and
``(B) the unemployment rate for such tract, 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.
``(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, median family
income, and unemployment rates.
``(d) Certain Rules Made Applicable.--For purposes of this section,
rules similar to the rules of paragraphs (1) and (2) of section 41(f)
shall apply.
``(e) Termination.--This section shall not apply to taxable years
beginning after December 31, 2009.''.
(b) Current Year Business Credit Calculation.--Section 38(b)
(relating to current year business credit) is amended by striking
``plus'' at the end of paragraph (11), by striking the period at the
end of paragraph (12) and inserting ``, plus'', and by adding at the
end the following:
``(13) the computer donation credit determined under
section 45D(a).''.
(c) Disallowance of Deduction by Amount of Credit.--Section 280C
(relating to certain expenses for which credits are allowable) is
amended by adding at the end the following:
``(d) Credit for Computer Donations.--No deduction shall be allowed
for that portion of the qualified computer contributions (as defined in
section 45D(b)) made during the taxable year that is equal to the
amount of credit determined for the taxable year under section 45D(a).
In the case of a corporation which is a member of a controlled group of
corporations (within the meaning of section 52(a)) or a trade or
business which is treated as being under common control with other
trades or businesses (within the meaning of section 52(b)), this
subsection shall be applied under rules prescribed by the Secretary
similar to the rules applicable under subsections (a) and (b) of
section 52.''.
(d) Limitation on Carryback.--Subsection (d) of section 39
(relating to carryback and carryforward of unused credits) is amended
by adding at the end the following:
``(9) No carryback of computer donation credit before
effective date.--No amount of unused business credit available
under section 45D may be carried back to a taxable year
beginning on or before the date of the enactment of this
paragraph.''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 45C the following:
``Sec. 45D. Credit for computer donations
to schools, senior centers,
public libraries, and other
training centers.''.
(f) Effective Date.--The amendments made by this section shall
apply to contributions made in taxable years beginning after December
31, 2000.
TITLE III--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES
SEC. 301. ADDITIONAL EMPOWERMENT ZONE DESIGNATIONS.
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, 2001.
Subject to subparagraphs (B) and (C) of subsection (d)(1), such
designations shall remain in effect during the period beginning
on January 1, 2001, 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.
``(4) Empowerment zones which become renewal communities.--
The number of areas which may be designated as empowerment
zones under this subsection shall be increased by 1 for each
area which ceases to be an empowerment zone by reason of
section 1400E(e). Each additional area designated by reason of
the preceding sentence shall have the same urban or rural
character as the area it is replacing.''.
SEC. 302. 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. 303. 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, 2000.
SEC. 304. 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 amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2000.
SEC. 305. 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 only
empowerment zones were taken into account under sections 1397C
and 1397D.'' .
(b) Conforming Amendments.--
(1) Subsection (f) of section 1394 is amended by striking
``new empowerment zone facility bond'' each place it appears
and inserting ``empowerment zone facility bond''.
(2) The heading for such subsection is amended to read as
follows:
``(f) Bonds for Empowerment Zones.--''.
(3) Paragraph (1) of section 1394(c) is amended--
(A) by striking ``empowerment zone or'' in
subparagraph (A), and
(B) by striking ``empowerment zones and'' in
subparagraph (B).
(c) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 2000.
SEC. 306. 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.
This section shall apply only to gain which is qualified capital gain.
``(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, and
``(ii) references to enterprise zone
businesses (as defined in section 1397C) were
substituted for references to renewal community
businesses.
``(B) Treatment of dc zone.--
For termination of rollover with
respect to the District of Columbia Enterprise Zone for property
acquired after December 31, 2002, see section 1400(f).
``(2) Qualified capital gain.--
``(A) In general.--Except as otherwise provided in
this paragraph, the term `qualified capital gain` means
any gain from the sale or exchange of--
``(i) a capital asset, or
``(ii) property used in the trade or
business (as defined in section 1231(b)).
``(B) Certain rules to apply.--Rules similar to the
rules of paragraphs (3) and (4) of section 1400B(e)
shall apply for purposes of this subsection.
``(3) Purchase.--A taxpayer shall be treated as having
purchased any property if, but for paragraph (4), the
unadjusted basis of such property in the hands of the taxpayer
would be its cost (within the meaning of section 1012).
``(4) Basis adjustments.--If gain from any sale is not
recognized by reason of subsection (a), such gain shall be
applied to reduce (in the order acquired) the basis for
determining gain or loss of any qualified empowerment zone
asset which is purchased by the taxpayer during the 60-day
period described in subsection (a). This paragraph shall not
apply for purposes of section 1202.
``(5) Holding period.--For purposes of determining whether
the nonrecognition of gain under subsection (a) applies to any
qualified empowerment zone asset which is sold--
``(A) the taxpayer's holding period for such asset
and the asset referred to in subsection (a)(1) shall be
determined without regard to section 1223, and
``(B) only the first year of the taxpayer's holding
period for the asset referred to in subsection (a)(1)
shall be taken into account for purposes of paragraphs
(2)(A)(iii), (3)(C), and (4)(A)(iii) of section
1400F(b).''
(b) Conforming Amendments.--
(1) Paragraph (23) of section 1016(a) is amended--
(A) by striking ``or 1045'' and inserting ``1045,
or 1397B'', and
(B) by striking ``or 1045(b)(4)'' and inserting
``1045(b)(4), or 1397B(b)(4)''.
(2) Paragraph (15) of section 1223 is amended to read as
follows:
``(15) Except for purposes of sections 1202(a)(2),
1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the
period for which the taxpayer has held property the acquisition
of which resulted under section 1045 or 1397B in the
nonrecognition of any part of the gain realized on the sale of
other property, there shall be included the period for which
such other property has been held as of the date of such
sale.''
(3) Paragraph (2) of section 1394(b) is amended--
(A) by striking ``section 1397C'' and inserting
``section 1397D'', and
(B) by striking ``section 1397C(a)(2)'' and
inserting ``section 1397D(a)(2)''.
(4) Paragraph (3) of section 1394(b) is amended--
(A) by striking ``section 1397B'' each place it
appears and inserting ``section 1397C'', and
(B) by striking ``section 1397B(d)'' and inserting
``section 1397C(d)''.
(5) Sections 1400(e) and 1400B(c) are each amended by
striking ``section 1397B'' each place it appears and inserting
``section 1397C''.
(6) The table of subparts for part III of subchapter U of
chapter 1 is amended by striking the last item and inserting
the following new items:
``Subpart C. Nonrecognition of gain on
rollover of empowerment zone
investments.
``Subpart D. General provisions.''
(7) The table of sections for subpart D of such part III is
amended to read as follows:
``Sec. 1397C. Enterprise zone business
defined.
``Sec. 1397D. Qualified zone property
defined.''
(c) Effective Date.--The amendments made by this section shall
apply to qualified empowerment zone assets acquired after December 31,
2000.
SEC. 307. 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.''.
(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 December 31, 2000.
SEC. 308. FUNDING ENTITLEMENT FOR ROUND II EMPOWERMENT ZONES.
(a) In General.--
(1) Entitlement.--Section 2007(a)(1) of the Social Security
Act (42 U.S.C. 1397f(a)(1)) is amended--
(A) in subparagraph (A), by striking ``in the
State; and'' and inserting ``that is in the State and
is designated pursuant to section 1391(b) of the
Internal Revenue Code of 1986;'';
(B) by adding after subparagraph (B) the following:
``(C)(i) 8 grants under this section for each
qualified empowerment zone that is in an urban area in
the State and is designated pursuant to section 1391(g)
of such Code; and
``(ii) 8 grants under this section for each
qualified empowerment zone that is in a rural area in
the State and is designated pursuant to section 1391(g)
of such Code;
``(D) 8 grants under this section for each
qualified enterprise community that is in the State and
is designated pursuant to section 766 of the
Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations
Act, 1999; and
``(E) 1 grant under this section for each strategic
planning community.''.
(2) Amount of grants.--Section 2007(a)(2) of such Act (42
U.S.C. 1397f(a)(2)) is amended--
(A) in the heading of subparagraph (A), by
inserting ``Original'' before ``Empowerment'';
(B) in subparagraph (A), in the matter preceding
clause (i), by inserting ``referred to in paragraph
(1)(A)'' after ``empowerment zone'';
(C) by redesignating subparagraph (C) as
subparagraph (F); and
(D) by inserting after subparagraph (B) the
following:
``(C) Additional empowerment grants.--The amount of
the grant to a State under this section for a qualified
empowerment zone referred to in paragraph (1)(C) shall
be--
``(i) if the zone is in an urban area,
$11,675,000 for each of fiscal years 2001
through 2008; or
``(ii) if the zone is in a rural area,
$4,600,000 for each of fiscal years 2001
through 2008,
multiplied by the proportion of the population of the
zone that resides in the State.
``(D) Additional enterprise community grants.--The
amount of the grant to a State under this section for a
qualified enterprise community referred to in paragraph
(1)(D) shall be $2,750,000, multiplied by the
proportion of the population of the community that
resides in the State.
``(E) Strategic planning community grants.--The
amount of the grant to a State under this section for a
strategic planning community shall be $3,000,000,
multiplied by the proportion of the population of the
community that resides in the State.''.
(3) Timing of grants.--Section 2007(a)(3) of such Act (42
U.S.C. 1397f(a)(3)) is amended--
(A) in the heading of subparagraph (A), by
inserting ``Original'' before ``Qualified'';
(B) in subparagraph (A), in the matter preceding
clause (i), by inserting ``referred to in paragraph
(1)(A)'' after ``empowerment zone''; and
(C) by adding after subparagraph (B) the following:
``(C) Additional qualified empowerment zones.--With
respect to each qualified empowerment zone referred to
in paragraph (1)(C), the Secretary shall make 1 grant
under this section to the State in which the zone lies,
on the first day of fiscal year 2001 and of each of the
7 succeeding fiscal years.
``(D) Additional qualified enterprise
communities.--With respect to each qualified enterprise
community referred to in paragraph (1)(D), the
Secretary shall make 1 grant under this section to the
State in which the community lies on the first day of
fiscal year 2001 and of each of the 7 succeeding fiscal
years.
``(E) Strategic planning communities.--With respect
to each strategic planning community, the Secretary
shall make 1 grant under this section to the State in
which the community is located, on October 1, 2001.''.
(4) Funding.--Section 2007(a)(4) of such Act (42 U.S.C.
1397f(a)(4)) is amended--
(A) by striking ``(4) Funding.--$1,000,000'' and
inserting the following:
``(4) Funding.--
``(A) Original grants.--$1,000,000'';
(B) by inserting ``for empowerment zones and
enterprise communities described in subparagraphs (A)
and (B) of paragraph (1)'' before the period; and
(C) by adding after and below the end the
following:
``(B) Additional empowerment zone grants.--
$1,585,000,000 shall be made available to the Secretary
for grants under this section for empowerment zones
referred to in paragraph (1)(C).
``(C) Additional enterprise community grants.--
$55,000,000 shall be made available to the Secretary
for grants under this section for enterprise
communities referred to in paragraph (1)(D).
``(D) Strategic planning community grants.--
$45,000,000 shall be made available to the Secretary
for grants under this section for strategic planning
communities.''.
(5) Direct funding for indian tribes.--Section 2007(a) of
such Act (42 U.S.C. 1397f(a)) is amended by adding at the end
the following:
``(5) Direct funding for indian tribes.--
``(A) In general.--The Secretary may make a grant
under this section directly to the governing body of an
Indian tribe if--
``(i) the tribe is identified in the
strategic plan of a qualified empowerment zone
or qualified enterprise community as the entity
that assumes sole or primary responsibility for
carrying out activities and projects under the
grant; and
``(ii) the grant is to be used for
activities and projects that are--
``(I) included in the strategic
plan of the qualified empowerment zone
or qualified enterprise community,
consistent with this section; and
``(II) approved by the Secretary of
Agriculture, in the case of a qualified
empowerment zone or qualified
enterprise community in a rural area,
or the Secretary of Housing and Urban
Development, in the case of a qualified
empowerment zone or qualified
enterprise community in an urban area.
``(B) Rules of interpretation.--
``(i) If grant under this section is made
directly to the governing body of an Indian
tribe under subparagraph (A), the tribe shall
be considered a State for purposes of this
section.
``(ii) This subparagraph shall not be
construed as making applicable to this section
the provisions of the Indian Self-Determination
and Education Assistance Act.''.
(6) Definitions.--
(A) Qualified enterprise community.--Section
2007(f)(2)(A) of such Act (42 U.S.C. 1397f(f)(2)(A)) is
amended by inserting ``or pursuant to section 766 of
the Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act, 1999'' before
the semicolon.
(B) Strategic plan.--Section 2007(f)(3) of such Act
(42 U.S.C. 1397f(f)(3)) is amended by inserting ``or
under section 766 of the Agriculture, Rural
Development, Food and Drug Administration, and Related
Agencies Appropriations Act, 1999'' before the period.
(C) Strategic planning community.--Section 2007(f)
of such Act (42 U.S.C. 1397f(f)) is amended by adding
at the end the following:
``(7) Strategic planning community.--The term `strategic
planning community' means a respondent to the Notice Inviting
Applications at 63 Federal Register 19162 (April 16, 1998)
whose application was ranked 16th through 30th in the
competition that concluded in December 1998.''.
(D) Indian tribe.--Section 2007(f) of such Act (42
U.S.C. 1397f(f)), as amended by subparagraph (C), is
amended by adding at the end the following:
``(8) Indian tribe.--The term `Indian tribe' means any
Indian tribe, band, nation, or other organized group or
community, including any Alaska Native village or regional or
village corporation as defined in or established pursuant to
the Alaska Native Claims Settlement Act, which is recognized as
eligible for the special programs and services provided by the
United States to Indians because of their status as Indians.''.
(b) Use of Grant Funds.--
(1) Revolving loan activities.--Section 2007(b) of the
Social Security Act (42 U.S.C. 1397f(b)) is amended by adding
at the end the following:
``(5) Revolving loan activities.--
``(A) In general.--In order to assist disadvantaged
adults and youths in achieving and maintaining economic
self-support, a State may use amounts paid under this
section to fund revolving loan funds or similar
arrangements for the purpose of making loans to
residents, institutions, organizations, or businesses
that hire disadvantaged adults and youths.
``(B) Rules for disbursement.--Amounts to be used
as described in subparagraph (A) shall be disbursed by
the Secretary, consistent with the provisions of the
Cash Management Improvement Act and its implementing
rules, regulations, and procedures issued by the
Secretary of the Treasury--
``(i) in the case of a grant to a revolving
loan fund--
``(I) pursuant to a written
irrevocable grant commitment; and
``(II) at such time or times as the
Secretary determines that the funds are
needed to meet the purposes of such
commitment; or
``(ii) in the case of a grant for purposes
of capitalizing an insured depository
institution (as defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813))
or an insured credit union (as defined in
section 101 of the Federal Credit Union Act (12
U.S.C. 1742)), at such time or times as the
Secretary determines that funds are needed for
such capitalization.''.
(2) Use as non-federal share.--Section 2007(b) of such Act
(42 U.S.C. 1397f(b)), as amended by paragraph (1), is amended
by adding at the end the following:
``(6) A State may use amounts received from a grant under
this section to pay all or part of the non-Federal share of
expenditures under any other Federal grant to a local public or
nonprofit private agency or organization for activities
consistent with the purposes of this section, unless the
statutory authority for such other grant expressly prohibits
counting of Federal grant funds as such non-Federal share.''.
(c) Environmental Review.--Section 2007 of the Social Security Act
(42 U.S.C. 1397f) is amended--
(1) by redesignating subsection (f) as subsection (g); and
(2) by inserting after subsection (e) the following:
``(f) Environmental Review.--
``(1) Execution of responsibility by the secretary of
housing and urban development and the secretary of
agriculture.--
``(A) Applicability.--This subsection shall apply
to grants under this section in connection with
empowerment zones, enterprise communities, and
strategic planning communities (as defined in
subsection (g)).
``(B) Execution of responsibility.--With respect to
grants described in subparagraph (A), the Secretary of
Housing and Urban Development and the Secretary of
Agriculture, as appropriate, shall execute the
responsibilities under 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 each such Secretary under
paragraph (2)(B)) that would otherwise apply to the
Secretary of Health and Human Services, and may provide
for the assumption of such responsibilities in
accordance with paragraphs (2) through (5).
``(C) Definition of secretary.--Except as otherwise
specified, in this subsection, the term `Secretary'
means the Secretary of Housing and Urban Development
for purposes of grants under this section with respect
to qualified empowerment zones and qualified enterprise
communities in urban areas, and strategic planning
areas, and the Secretary of Agriculture for purposes of
grants under this section with respect to qualified
empowerment zones and qualified enterprise communities
in rural areas.
``(2) Assumption of responsibility by states, units of
general local government, and indian tribes.--
``(A) Release of funds.--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 under subparagraph (B)) are
most effectively implemented in connection with the
expenditure of funds under this section, 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 release of funds
for particular projects to recipients of assistance
under this section if the State, unit of general local
government, or Indian tribe, as designated by the
Secretary in accordance with regulations issued by the
Secretary under subparagraph (B), assumes all of the
responsibilities for environmental review,
decisionmaking, and action pursuant to such Act, and
such other provisions of law as the regulations of the
Secretary specify, that would otherwise apply to the
Secretary were the Secretary to undertake such projects
as Federal projects.
``(B) Implementation.--The Secretary of Housing and
Urban Development and the Secretary of Agriculture
shall each 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
that 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, unit
of general local government, or Indian tribe to
assume all of the responsibilities described in
subparagraph (A);
``(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 state, unit of general
local government, or indian tribe.--The Secretary's
duty under subparagraph (B) shall not be construed to
limit any responsibility assumed by a State, unit of
general local government, or Indian tribe with respect
to any particular release of funds under subparagraph
(A).
``(3) Procedure.--The Secretary shall approve the release
of funds for projects 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 projects
(except for such purposes specified in the regulations issued
under paragraph (2)(B)), the recipient submits to the Secretary
a request for such release accompanied by a certification of
the State, unit of general local government, or Indian tribe
that 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 releases of funds for projects to be carried out pursuant
thereto that 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, unit of general local
government, or Indian tribe who qualifies under
regulations of the Secretary;
``(C) specify that the State, unit of general local
government, or Indian tribe 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 provisions
of law apply pursuant to paragraph (2); and
``(ii) is authorized and consents on behalf
of the State, unit of general local government,
or Indian tribe and himself or herself to
accept the jurisdiction of the Federal courts
for the purpose of enforcement of the
responsibilities as such an official.
``(5) Approval by states.--In cases in which a unit of
general local government carries out the responsibilities
described in paragraph (2), the Secretary may permit the State
to perform those actions of the Secretary described in
paragraph (3). The performance of such actions by the State,
where permitted, shall be deemed to satisfy the
responsibilities referred to in the second sentence of
paragraph (3).''.
SEC. 309. CUSTOMS USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking
``2003'' and inserting ``2008''.
TITLE IV--FAITH BASED SUBSTANCE ABUSE TREATMENT
SEC. 401. 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 Federal 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 Federal
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 award recipient' means a public
or private entity that has received an award of financial
assistance under a designated program (whether the award is a
designated direct award or a designated subaward).
``(2) The term `designated direct award' means an award of
financial assistance under a designated program that is
received directly from the Federal Government.
``(3) The term `designated subaward' means an award of
financial assistance made by a non-Federal entity, which award
consists in whole or in part of Federal financial assistance
provided through an award under a designated program.
``(4) The term `designated program' has the meaning given
such term in subsection (a).
``(5) The term `financial assistance' means a grant,
cooperative agreement, contract, or voucherized assistance.
``(6) The term `program beneficiary' means an individual
who receives program services.
``(7) The term `program participant' has the meaning given
such term in section 582(a)(2).
``(8) 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.
``(9) The term `religious organization' means a nonprofit
religious organization.
``(10) The term `voucherized assistance' means--
``(A) a system of selecting and reimbursing program
services in which--
``(i) the beneficiary is given a document
or other authorization that may be used to pay
for program services;
``(ii) the beneficiary chooses the
organization that will provide services to him
or her according to rules specified by the
designated award recipient; and
``(iii) the organization selected by the
beneficiary is reimbursed by the designated
award recipient for program services provided;
or
``(B) any other mode of financial assistance to pay
for program services in which the program beneficiary
determines the allocation of program funds through his
or her selection of one service provider from among
alternatives.
``SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PARTICIPANTS.
``(a) In General.--
``(1) Scope of authority.--Notwithstanding any other
provision of law, a religious organization--
``(A) may be a designated award recipient;
``(B) may make designated subawards to other public
or nonprofit private entities (including other
religious organizations);
``(C) may provide for the provision of program
services to program beneficiaries through the use of
voucherized assistance; and
``(D) may be a provider of services under a
designated program, including a provider that accepts
voucherized assistance.
``(2) Definition of program participant.--For purposes of
this part, the term `program participant' means a public or
private entity that has received a designated direct award, or
a designated subaward, regardless of whether the entity
provides program services. Such term includes an entity whose
only participation in a designated program is to provide
program services pursuant to the acceptance of voucherized
assistance.
``(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 of the First Amendment to the United
States Constitution. The Federal Government may under the
preceding sentence apply to religious organizations the same
eligibility conditions in designated programs as are applied to
any nonprofit private organization as long as the conditions
are consistent with the Free Exercise Clause of the First
Amendment.
``(2) Nondiscrimination.--Neither the Federal Government
nor a State receiving funds under such 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.--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.--With respect to an individual who is a
program beneficiary or a prospective program beneficiary, if
the individual objects to a program participant on the basis
that the participant is a religious organization, the following
applies:
``(A) If the organization received a designated
direct award, the organization shall refer the
individual to an alternative entity that provides
program services and shall, to the extent practicable,
provide appropriate follow-up services.
``(B) If the organization received a designated
subaward, the non-Federal entity that made the subaward
shall refer the individual to an alternative entity
that provides program services and shall, to the extent
practicable, provide appropriate follow-up services.
``(C) If the organization is providing services
pursuant to voucherized assistance, the designated
award recipient that operates the voucherized
assistance program shall refer the individual to an
alternative entity that provides program services and
shall, to the extent practicable, provide appropriate
follow-up services.
``(D) If the local government involved makes
available a list of entities in the geographic area
that provide program services, the program participant
with the responsibility for making the referral under
subparagraph (A), (B), or (C), as the case may be,
shall obtain a copy of such list and consider the list
in making the referral (except that this subparagraph
does not apply if the program participant is the local
government or the State).
``(E) Referrals under any of subparagraphs (A)
through (C) shall be made to alternative entities that
will provide program services the monetary value of
which is not less than the monetary value of the
program services that the individual would have
received from the religious organization involved.
``(2) Nondiscrimination.--Except as otherwise provided in
law, a religious organization that is a program participant
shall not in providing program services discriminate against a
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.
``(a) In General.--Except as provided in subsection (b), no funds
provided directly to an entity under a designated program shall be
expended for sectarian worship or instruction.
``(b) Exception.--Subsection (a) shall not apply to assistance
provided to or on behalf of a program beneficiary if the beneficiary
may choose where such assistance is redeemed or allocated.
``SEC. 584. FINANCIAL ASSISTANCE NOT AID TO INSTITUTIONS.
``Financial assistance under a designated program is aid to the
beneficiary, not to the organization providing program services.
``SEC. 585. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG TREATMENT
PROGRAMS.
``(a) Findings.--The Congress finds that--
``(1) establishing formal educational qualification for
counselors and other personnel in drug treatment programs may
undermine the effectiveness of such programs; and
``(2) such formal educational requirements for counselors
and other personnel may hinder or prevent the provision of
needed drug treatment services.
``(b) Limitation on Educational Requirements of Personnel.--
``(1) Treatment of religious education.--
``(A) In general.--If any State or local government
that is a program participant imposes formal
educational qualifications on providers of program
services, including religious organizations, such State
or local government shall treat religious education and
training of personnel as having a critical and positive
role in the delivery of program services.
``(B) Education and training on prevention and
treatment of substance abuse.--In applying to religious
organizations educational qualifications for personnel
of such organizations who provide program services, a
State or local government that is a program participant
shall, with respect to education and training on
preventing and treating substance abuse, give credit
for such education and training that is provided by
religious organizations equivalent to credit given for
secular course work that provides such education and
training.
``(C) General educational requirements.--In
applying to religious organizations educational
qualifications for personnel of such organizations who
provide program services, a State or local government
that is a program participant shall, if such
qualifications include course work that does not relate
specifically to preventing or treating substance abuse,
give credit for religious education equivalent to
credit given for secular course work.
``(2) Restriction of discrimination requirements..--
``(A) In general.--Subject to paragraph (1), a
State or local government that is a program participant
may establish formal educational qualifications for
personnel in organizations providing program services
that contribute to success in reducing drug use among
program beneficiaries.
``(B) Exception.--The Secretary shall waive the
application of any educational qualification imposed
under subparagraph (A) for an individual religious
organization, if the Secretary determines that--
``(i) the religious organization has a
record of prior successful drug treatment for
at least the preceding three years;
``(ii) the educational qualifications have
effectively barred such religious organization
from becoming a program provider;
``(iii) the organization has applied to the
Secretary to waive the qualifications; and
``(iv) the State or local government has
failed to demonstrate empirically that the
educational qualifications in question are
necessary to the successful operation of a drug
treatment program.''.
TITLE V--HOMEOWNERSHIP
SEC. 501. 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 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. 502. 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. 503. 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
American Community Renewal and New Markets
Empowerment Act''; 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)).''.
TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES
SEC. 601. SHORT TITLE.
This title may be cited as the ``America's Private Investment
Companies Act''.
SEC. 602. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds that--
(1) people living in distressed areas, both urban and
rural, that are characterized by high levels of joblessness,
poverty, and low incomes have not benefited adequately from the
economic expansion experienced by the Nation as a whole;
(2) unequal access to economic opportunities continues to
make the social costs of joblessness and poverty to our Nation
very high; and
(3) there are significant untapped markets in our Nation,
and many of these are in areas that are underserved by
institutions that can make equity and credit investments.
(b) Purposes.--The purposes of this title are to--
(1) license private for profit community development
entities that will focus on making equity and credit
investments for large-scale business developments that benefit
low-income communities;
(2) provide credit enhancement for those entities for use
in low-income communities; and
(3) provide a vehicle under which the economic and social
returns on financial investments made pursuant to this title
may be available both to the investors in these entities and to
the residents of the low-income communities.
SEC. 603. DEFINITIONS.
As used in this title:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Small Business Administration.
(2) Agency.--The term ``agency'' has the meaning given such
term in section 551(1) of title 5, United States Code.
(3) APIC.--The term ``APIC'' means a business entity that
has been licensed under the terms of this title as an America's
Private Investment Company, and the license of which has not
been revoked.
(4) Community development entity.--The term ``community
development entity'' means an entity the primary mission of
which is serving or providing investment capital for low-income
communities or low-income persons and which maintains
accountability to residents of low-income communities.
(5) HUD.--The term ``HUD'' means the Secretary of Housing
and Urban Development or the Department of Housing and Urban
Development, as the context requires.
(6) License.--The term ``license'' means a license issued
by HUD as provided in section 604.
(7) Low-income community.--The term ``low-income
community'' means--
(A) a census tract or tracts that have--
(i) a poverty rate of 20 percent or
greater, based on the most recent census data;
or
(ii) a median family income that does not
exceed 80 percent of the greater of (I) the
median family income for the metropolitan area
in which such census tract or tracts are
located, or (II) the median family income for
the State in which such census tract or tracts
are located; or
(B) a property that was located on a military
installation that was closed or realigned pursuant to
title II of the Defense Authorization Amendments and
Base Closure and Realignment Act (Public Law 100-526;
10 U.S.C. 2687 note), the Defense Base Closure and
Realignment Act of 1990 (part A of title XXIX of Public
Law 101-510; 10 U.S.C. 2687 note), section 2687 of
title 10, United States Code, or any other similar law
enacted after the date of the enactment of this Act
that provides for closure or realignment of military
installations.
(8) Low-income person.--The term ``low-income person''
means a person who is a member of a low-income family, as such
term is defined in section 104 of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12704).
(9) Private equity capital.--
(A) In general.--The term ``private equity
capital''--
(i) in the case of a corporate entity, the
paid-in capital and paid-in surplus of the
corporate entity;
(ii) in the case of a partnership entity,
the contributed capital of the partners of the
partnership entity;
(iii) in the case of a limited liability
company entity, the equity investment of the
members of the limited liability company
entity; and
(iv) earnings from investments of the
entity that are not distributed to investors
and are available for reinvestment by the
entity.
(B) Exclusions.--Such term does not include any--
(i) funds borrowed by an entity from any
source or obtained through the issuance of
leverage; except that this clause may not be
construed to exclude amounts evidenced by a
legally binding and irrevocable investment
commitment in the entity, or the use by an
entity of a pledge of such investment
commitment to obtain bridge financing from a
private lender to fund the entity's activities
on an interim basis; or
(ii) funds obtained directly or indirectly
from any Federal, State, or local government or
any government agency, except for--
(I) funds invested by an employee
welfare benefit plan or pension plan;
and
(II) credits against any Federal,
State, or local taxes.
(10) Qualified active business.--The term ``qualified
active business'' means a business or trade--
(A) that, at the time that an investment is made in
the business or trade, is deriving at least 50 percent
of its gross income from the conduct of trade or
business activities in low-income communities;
(B) a substantial portion of the use of the
tangible property of which is used within low-income
communities;
(C) a substantial portion of the services that the
employees of which perform are performed in low-income
communities; and
(D) less than 5 percent of the aggregate unadjusted
bases of the property of which is attributable to
certain financial property, as the Secretary shall set
forth in regulations, or in collectibles, other than
collectibles held primarily for sale to customers.
(11) Qualified debenture.--The term ``qualified debenture''
means a debt instrument having terms that meet the requirements
established pursuant to section 606(c)(1).
(12) Qualified low-income community investment.--The term
``qualified low-income community investment'' mean an equity
investment in, or a loan to, a qualified active business.
(13) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development, unless otherwise specified in
this title.
SEC. 604. AUTHORIZATION.
(a) Licenses.--The Secretary is authorized to license community
development entities as America's Private Investment Companies, in
accordance with the terms of this title.
(b) Regulations.--The Secretary shall regulate APICs for compliance
with sound financial management practices, and the program and
procedural goals of this title and other related Acts, and other
purposes as required or authorized by this title, or determined by the
Secretary. The Secretary shall issue such regulations as are necessary
to carry out the licensing and regulatory and other duties under this
title, and may issue notices and other guidance or directives as the
Secretary determines are appropriate to carry out such duties.
(c) Use of Credit Subsidy for Licenses.--
(1) Number of licenses.--The number of APICs licensed at
any one time may not exceed--
(A) the number that may be supported by the amount
of budget authority appropriated in accordance with
section 504(b) of the Federal Credit Reform Act of 1990
(2 U.S.C. 661c) for the cost (as such term is defined
in section 502 of such Act) of the subsidy and the investment
strategies of such APICs; or
(B) to the extent the limitation under section
605(e)(1) applies, the number authorized under such
section.
(2) Use of additional credit subsidy.--Subject to the
limitation under paragraph (1), the Secretary may use any
budget authority available after credit subsidy has been
allocated for the APICs initially licensed pursuant to section
605 as follows:
(A) Additional licenses.--To license additional
APICs.
(B) Credit subsidy increases.--To increase the
credit subsidy allocated to an APIC as an award for
high performance under this title, except that such
increases may be made only in accordance with the
following requirements and limitations:
(i) Timing.--An increase may only be
provided for an APIC that has been licensed for
a period of not less than 2 years.
(ii) Competition.--An increase may only be
provided for a fiscal year pursuant to a
competition for such fiscal year among APICs
eligible for, and requesting, such an increase.
The competition shall be based upon criteria
that the Secretary shall establish, which shall
include the financial soundness and performance
of the APICs, as measured by achievement of the
public performance goals included in the APICs
statements required under section 605(a)(6) and
audits conducted under section 609(b)(2). Among
the criteria established by the Secretary to
determine priority for selection under this
section, the Secretary shall include making
investments in and loans to qualified active
businesses in urban or rural areas that have
been designated under subchapter U of Chapter 1
of the Internal Revenue Code of 1986 as
empowerment zones or enterprise communities.
(d) Cooperation and Coordination.--
(1) Program policies.--The Secretary is authorized to
coordinate and cooperate, through memoranda of understanding,
an APIC liaison committee, or otherwise, with the
Administrator, the Secretary of the Treasury, and other
agencies in the discretion of the Secretary, on implementation
of this title, including regulation, examination, and
monitoring of APICs under this title.
(2) Financial soundness requirements.--The Secretary shall
consult with the Administrator and the Secretary of the
Treasury, and may consult with such other heads of agencies as
the Secretary may consider appropriate, in establishing any
regulations, requirements, guidelines, or standards for
financial soundness or management practices of APICs or
entities applying for licensing as APICs. In implementing and
monitoring compliance with any such regulations, requirements,
guidelines, and standards, the Secretary shall enter into such
agreements and memoranda of understanding with the
Administrator and the Secretary of the Treasury as may be
appropriate to provide for such officials to provide any
assistance that may be agreed to.
(3) Operations.--The Secretary may carry out this title--
(A) directly, through agreements with other Federal
entities under section 1535 of title 31, United States
Code, or otherwise, or
(B) indirectly, under contracts or agreements, as
the Secretary shall determine.
(e) Fees and Charges for Administrative Costs.--To the extent
provided in appropriations Acts, the Secretary is authorized to impose
fees and charges for application, review, licensing, and regulation, or
other actions under this title, and to pay for the costs of such
activities from the fees and charges collected.
(f) Guarantee Fees.--The Secretary is authorized to set and collect
fees for loan guarantee commitments and loan guarantees that the
Secretary makes under this title.
(g) Funding.--
(1) Authorization of appropriations for loan guarantee
commitments.--For each of fiscal years 2000, 2001, 2002, 2003,
and 2004, there is authorized to be appropriated up to
$36,000,000 for the cost (as such term is defined in section
502(5) of the Federal Credit Reform Act of 1990) of annual loan
guarantee commitments under this title. Amounts appropriated
under this paragraph shall remain available until expended.
(2) Aggregate loan guarantee commitment limitation.--The
Secretary may make commitments to guarantee loans only to the
extent that the total loan principal, any part of which is
guaranteed, will not exceed $1,000,000,000, unless another such
amount is specified in appropriation Acts for any fiscal year.
(3) Authorization of appropriations for administrative
expenses.--For each of the fiscal years 2000, 2001, 2002, 2003,
and 2004, there is authorized to be appropriated $1,000,000 for
administrative expenses for carrying out this title. The
Secretary may transfer amounts appropriated under this
paragraph to any appropriation account of HUD or another
agency, to carry out the program under this title. Any agency
to which the Secretary may transfer amounts under this title is
authorized to accept such transferred amounts in any
appropriation account of such agency.
SEC. 605. SELECTION OF APICS.
(a) Eligible Applicants.--An entity shall be eligible to be
selected for licensing under section 604 as an APIC only if the entity
submits an application in compliance with the requirements established
pursuant to subsection (b) and the entity meets or complies with the
following requirements:
(1) Organization.--The entity shall be a private, for-
profit entity that qualifies as a community development entity
for the purposes of the New Markets Tax Credits, to the extent
such credits are established under Federal law.
(2) Minimum private equity capital.--The amount of private
equity capital reasonably available to the entity, as
determined by the Secretary, at the time that a license is
approved may not be less than $25,000,000.
(3) Qualified management.--The management of the entity
shall, in the determination of the Secretary, meet such
standards as the Secretary shall establish to ensure that the
management of the APIC is qualified, and has the financial
expertise, knowledge, experience, and capability necessary, to
make investments for community and economic development in low-
income communities.
(4) Conflict of interest.--The entity shall demonstrate
that, in accordance with sound financial management practices,
the entity is structured to preclude financial conflict of
interest between the APIC and a manager or investor.
(5) Investment strategy.--The entity shall prepare and
submit to the Secretary an investment strategy that includes
benchmarks for evaluation of its progress, that includes an
analysis of existing locally owned businesses in the
communities in which the investments under the strategy will be
made, that prioritizes such businesses for investment opportunities,
and that fulfills the specific public purpose goals of the entity.
(6) Statement of public purpose goals.--The entity shall
prepare and submit to the Secretary a statement of the public
purpose goals of the entity, which shall--
(A) set forth goals that shall promote community
and economic development, which shall include--
(i) making investments in low-income
communities that further economic development
objectives by targeting such investments in
businesses or trades that comply with the
requirements under subparagraphs (A) through
(C) of section 603(10) relating to low-income
communities in a manner that benefits low-
income persons;
(ii) creating jobs in low-income
communities for residents of such communities;
(iii) involving community-based
organizations and residents in community
development activities;
(iv) such other goals as the Secretary
shall specify; and
(v) such elements as the entity may set
forth to achieve specific public purpose goals;
(B) include such other elements as the Secretary
shall specify; and
(C) include proposed measurements and strategies
for meeting the goals.
(7) Compliance with laws.--The entity shall agree to comply
with applicable laws, including Federal executive orders,
Office of Management and Budget circulars, and requirements of
the Department of the Treasury, and such operating and
regulatory requirements as the Secretary may impose from time
to time.
(8) Other.--The entity shall satisfy any other application
requirements that the Secretary may impose by regulation or
Federal Register notice.
(b) Competitions.--The Secretary shall select eligible entities
under subsection (a) to be licensed under section 604 as APICs on the
basis of competitions. The Secretary shall announce each such
competition by causing a notice to be published in the Federal Register
that invites applications for licenses and sets forth the requirements
for application and such other terms of the competition not otherwise
provided for, as determined by the Secretary.
(c) Selection.--In competitions under subsection (b), the Secretary
shall select eligible entities under subsection (a) for licensing as
APICs on the basis of--
(1) the extent to which the entity is expected to achieve
the goals of this title by meeting or exceeding criteria
established under subsection (d); and
(2) to the extent practicable and subject to the existence
of approvable applications, ensuring geographical diversity
among the applicants selected and diversity of APICs investment
strategies, so that urban and rural communities are both
served, in the determination of the Secretary, by the program
under this title.
(d) Selection Criteria.--The Secretary shall establish selection
criteria for competitions under subsection (b), which shall include the
following criteria:
(1) Capacity.--
(A) Management.--The extent to which the entity's
management has the quality, experience, and expertise
to make and manage successful investments for community
and economic development in low-income communities.
(B) State and local cooperation.--The extent to
which the entity demonstrates a capacity to cooperate
with States or units of general local government and
with community-based organizations and residents of
low-income communities.
(2) Investment strategy.--The quality of the entity's
investment strategy submitted in accordance with subsection
(a)(5) and the extent to which the investment strategy furthers
the goals of this title pursuant to paragraph (3) of this
subsection.
(3) Public purpose goals.--With respect to the statement of
public purpose goals of the entity submitted in accordance with
subsection (a)(6), and the strategy and measurements included
therein--
(A) the extent to which such goals promote
community and economic development;
(B) the extent to which such goals provide for
making qualified investments in low-income communities
that further economic development objectives, such as--
(i) creating, within 2 years of the
completion of the initial such investment, job
opportunities, opportunities for ownership, and
other economic opportunities within a low-
income community, both short-term and of a
longer duration;
(ii) improving the economic vitality of a
low-income community, including stimulating
other business development;
(iii) bringing new income into a low-income
community and assisting in the revitalization
of such community;
(iv) converting real property for the
purpose of creating a site for business
incubation and location, or business district
revitalization;
(v) enhancing economic competition,
including the advancement of technology;
(vi) rural development;
(vii) mitigating, rehabilitating, and
reusing real property considered subject to the
Solid Waste Disposal Act (42 U.S.C. 6901 et
seq.; commonly referred to as the Resource
Conservation and Recovery Act) or restoring
coal mine-scarred land;
(viii) creation of local wealth through
investments in employee stock ownership
companies or resident-owned ventures; and
(ix) any other objective that the Secretary
may establish to further the purposes of this
title;
(C) the quality of jobs to be created for residents
of low-income communities, taking into consideration
such factors as the payment of higher wages, job
security, employment benefits, opportunity for
advancement, and personal asset building;
(D) the extent to which achievement of such goals
will involve community-based organizations and
residents in community development activities; and
(E) the extent to which the investments referred to
in subparagraph (B) are likely to benefit existing
small business in low-income communities or will
encourage the growth of small business in such
communities.
(4) Other.--Any other criteria that the Secretary may
establish to carry out the purposes of this title.
(e) First Year Requirements.--
(1) Numerical limitation.--The number of APICs may not, at
any time during the 1-year period that begins upon the
Secretary awarding the first license for an APIC under this
title, exceed 15.
(2) Limitation on allocation of available credit subsidy.--
Of the amount of budget authority initially made available for
allocation under this title for APICs, the amount allocated for
any single APIC may not exceed 20 percent.
(3) Native american private investment company.--Subject
only to the absence of an approvable application from an
entity, during the 1-year period referred to in paragraph (1),
of the entities selected and licensed by the Secretary as
APICs, at least one shall be an entity that has as its primary
purpose the making of qualified low-income community
investments in areas that are within Indian country (as such
term is defined in section 1151 of title 18, United States
Code) or within lands that have status as Hawaiian home land
under section 204 of the Hawaiian Homes Commission Act, 1920
(42 Stat. 108) or are acquired pursuant to such Act. The
Secretary may establish specific selection criteria for
applicants under this paragraph.
(f) Communications Between HUD and Applicants.--
(1) In general.--The Secretary shall set forth in
regulations the procedures under which HUD and applicants for
APIC licenses, and others, may communicate. Such regulations
shall--
(A) specify by position the HUD officers and
employees who may communicate with such applicants and
others;
(B) permit HUD officers and employees to request
and discuss with the applicant and others (such as
banks or other credit or business references, or
potential investors, that the applicant specifies in
writing) any more detailed information that may be
desirable to facilitate HUD's review of the applicant's
application;
(C) restrict HUD officers and employees from
revealing to any applicant--
(i) the fact or chances of award of a
license to such applicant, unless there has
been a public announcement of the results of
the competition; and
(ii) any information with respect to any
other applicant; and
(D) set forth requirements for making and keeping
records of any communications conducted under this
subsection, including requirements for making such
records available to the public after the award of
licenses under an initial or subsequent notice, as
appropriate, under subsection (a).
(2) Timing.--Regulations under this subsection may be
issued as interim rules for effect on or before the date of
publication of the first notice under subsection (a), and shall
apply only with respect to applications under such notice.
Regulations to implement this subsection with respect to any
notice after the first such notice shall be subject to notice
and comment rulemaking.
(3) Inapplicability of department of hud act provision.--
Section 12(e)(2) of the Department of Housing and Urban
Development Act (42 U.S.C. 3537a(e)(2)) is amended by inserting
before the period at the end the following: ``or any license
provided under the America's Private Investment Companies
Act''.
SEC. 606. OPERATIONS OF APICS.
(a) Powers and Authorities.--
(1) In general.--An APIC shall have any powers or
authorities that--
(A) the APIC derives from the jurisdiction in which
it is organized, or that the APIC otherwise has;
(B) may be conferred by a license under this title;
and
(C) the Secretary may prescribe by regulation.
(2) New market assistance.--Nothing in this title shall
preclude an APIC or its investors from receiving an allocation
of New Market Tax Credits (to the extent such credits are
established under Federal law) if the APIC satisfies any
applicable terms and conditions under the Internal Revenue Code
of 1986.
(b) Investment Limitations.--
(1) Qualified low-income community investments.--
Substantially all investments that an APIC makes shall be
qualified low-income community investments if the investments
are financed with--
(A) amounts available from the proceeds of the
issuance of an APIC's qualified debenture guaranteed
under this title;
(B) proceeds of the sale of obligations described
under subsection (c)(3)(C)(iii); or
(C) the use of private equity capital, as
determined by the Secretary, in an amount specified in
the APIC's license.
(2) Single business investments.--An APIC shall not, as a
matter of sound financial practice, invest in any one business
an amount that exceeds an amount equal to 35 percent of the sum
of--
(A) the APIC's private equity capital; plus
(B) an amount equal to the percentage limit that
the Secretary determines that an APIC may have
outstanding at any one time, under subsection
(c)(2)(A).
(c) Borrowing Powers; Qualified Debentures.--
(1) Issuance.--An APIC may issue qualified debentures. The
Secretary shall, by regulation, specify the terms and
requirements for debentures to be considered qualified
debentures for purposes of this title, except that the term to
maturity of any qualified debenture may not exceed 21 years and
each qualified debenture shall bear interest during all or any
part of that time period at a rate or rates approved by the
Secretary.
(2) Leverage limits.--In general, as a matter of sound
financial management practices--
(A) the total amount of qualified debentures that
an APIC issues under this title that an APIC may have
outstanding at any one time shall not exceed an amount
equal to 200 percent of the private equity capital of
the APIC, as determined by the Secretary; and
(B) an APIC shall not have more than $300,000,000
in face value of qualified debentures issued under this
title outstanding at any one time.
(3) Repayment.--
(A) Condition of business wind-up.--An APIC shall
have repaid, or have otherwise been relieved of
indebtedness, with respect to any interest or principal
amounts of borrowings under this subsection no less
than 2 years before the APIC may dissolve or otherwise
complete the wind-up of its business.
(B) Timing.--An APIC may repay any interest or
principal amounts of borrowings under this subsection
at any time: Provided, That the repayment of such
amounts shall not relieve an APIC of any duty otherwise
applicable to the APIC under this title, unless the
Secretary orders such relief.
(C) Use of investment proceeds before repayment.--
Until an APIC has repaid all interest and principal
amounts on APIC borrowings under this subsection, an
APIC may use the proceeds of investments, in accordance
with regulations issued by the Secretary, only to--
(i) pay for proper costs and expenses the
APIC incurs in connection with such
investments;
(ii) pay for the reasonable administrative
expenses of the APIC;
(iii) purchase Treasury securities;
(iv) repay interest and principal amounts
on APIC borrowings under this subsection;
(v) make interest, dividend, or other
distributions to or on behalf of an investor;
or
(vi) undertake such other purposes as the
Secretary may approve.
(D) Use of investment proceeds after repayment.--
After an APIC has repaid all interest and principal
amounts on APIC borrowings under this subsection, and
subject to continuing compliance with subsection (a),
the APIC may use the proceeds from investments to make
interest, dividend, or other distributions to or on
behalf of investors in the nature of returns on
capital, or the withdrawal of private equity capital,
without regard to subparagraph (C) but in conformity
with the APIC's investment strategy and statement of
public purpose goals.
(d) Reuse of Qualified Debenture Proceeds.--An APIC may use the
proceeds of sale of Treasury securities purchased under subsection
(c)(3)(C)(iii) to make qualified low-income community investments,
subject to the Secretary's approval. In making the request for the
Secretary's approval, the APIC shall follow the procedures applicable
to an APIC's request for HUD guarantee action, as the Secretary may
modify such procedures for implementation of this subsection. Such
procedures shall include the description and certifications that an
APIC must include in all requests for guarantee action, and the
environmental certification applicable to initial expenditures for a
project or activity.
(e) Antipirating.--Notwithstanding any other provision of law, an
APIC may not use any private equity capital required to be contributed
under this title, or the proceeds from the sale of any qualified
debenture under this title, to make an investment, as determined by the
Secretary, to assist directly in the relocation of any industrial or
commercial plant, facility, or operation, from 1 area to another area,
if the relocation is likely to result in a significant loss of
employment in the labor market area from which the relocation occurs.
(f) Exclusion of APIC From Definition of Debtor Under Bankruptcy
Provisions.--Section 109(b)(2) of title 11, United States Code, is
amended by inserting before ``credit union'' the following: ``America's
Private Investment Company licensed under the America's Private
Investment Companies Act,''.
SEC. 607. CREDIT ENHANCEMENT BY THE FEDERAL GOVERNMENT.
(a) Issuance and Guarantee of Qualified Debentures.--
(1) Authority.--To the extent consistent with the Federal
Credit Reform Act of 1990, the Secretary is authorized to make
commitments to guarantee and guarantee the timely payment of
all principal and interest as scheduled on qualified debentures
issued by APICs. Such commitments and guarantees may only be
made in accordance with the terms and conditions established
under paragraph (2).
(2) Terms and conditions.--The Secretary shall establish
such terms and conditions as the Secretary determines to be
appropriate for commitments and guarantees under this
subsection, including terms and conditions relating to amounts,
expiration, number, priorities of repayment, security,
collateral, amortization, payment of interest (including the
timing thereof), and fees and charges. The terms and conditions
applicable to any particular commitment or guarantee may be
established in documents that the Secretary approves for such
commitment or guarantee.
(3) Seniority.--Notwithstanding any other provision of
Federal law or any law or the constitution of any State,
qualified debentures guaranteed under this subsection by the
Secretary shall be senior to any other debt obligation, equity
contribution or earnings, or the distribution of dividends,
interest, or other amounts, of an APIC.
(b) Issuance of Trust Certificates.--The Secretary, or an agent or
entity selected by the Secretary, is authorized to issue trust
certificates representing ownership of all or a fractional part of
guaranteed qualified debentures issued by APICs and held in trust.
(c) Guarantee of Trust Certificates.--
(1) In general.--The Secretary is authorized, upon such
terms and conditions as the Secretary determines to be
appropriate, to guarantee the timely payment of the principal
of and interest on trust certificates issued by the Secretary,
or an agent or other entity, for purposes of this section. Such
guarantee shall be limited to the extent of principal and
interest on the guaranteed qualified debentures which compose
the trust.
(2) Substitution option.--The Secretary shall have the
option to replace in the corpus of the trust any prepaid or
defaulted qualified debenture with a debenture, another full
faith and credit instrument, or any obligations of the United
States, that may reasonably substitute for such prepaid or
defaulted qualified debenture.
(3) Proportionate reduction option.--In the event that the
Secretary elects not to exercise the option under paragraph
(2), and a qualified debenture in such trust is prepaid, or in
the event of default of a qualified debenture, the guarantee of
timely payment of principal and interest on the trust
certificate shall be reduced in proportion to the amount of
principal and interest that such prepaid qualified debenture
represents in the trust. Interest on prepaid or defaulted
qualified debentures shall accrue and be guaranteed by the
Secretary only through the date of payment of the guarantee.
During the term of a trust certificate, it may be called for
redemption due to prepayment or default of all qualified
debentures that are in the corpus of the trust.
(d) Full Faith and Credit Backing of Guarantees.--The full faith
and credit of the United States is pledged to the timely payment of all
amounts which may be required to be paid under any guarantee by the
Secretary pursuant to this section.
(e) Subrogation and Liens.--
(1) Subrogation.--In the event the Secretary pays a claim
under a guarantee issued under this section, the Secretary
shall be subrogated fully to the rights satisfied by such
payment.
(2) Priority of liens.--No State or local law, and no
Federal law, shall preclude or limit the exercise by the
Secretary of its ownership rights in the debentures in the
corpus of a trust under this section.
(f) Registration.--
(1) In general.--The Secretary shall provide for a central
registration of all trust certificates issued pursuant to this
section.
(2) Agents.--The Secretary may contract with an agent or
agents to carry out on behalf of the Secretary the pooling and
the central registration functions of this section
notwithstanding any other provision of law, including
maintenance on behalf of and under the direction of the
Secretary, such commercial bank accounts or investments in
obligations of the United States as may be necessary to
facilitate trusts backed by qualified debentures guaranteed
under this title and the issuance of trust certificates to
facilitate formation of the corpus of the trusts. The Secretary
may require such agent or agents to provide a fidelity bond or
insurance in such amounts as the Secretary determines to be
necessary to protect the interests of the Government.
(3) Form.--Book-entry or other electronic forms of
registration for trust certificates under this title are
authorized.
(g) Timing of Issuance of Guarantees of Qualified Debentures and
Trust Certificates.--The Secretary may, from time to time in the
Secretary's discretion, exercise the authority to issue guarantees of
qualified debentures under this title or trust certificates under this
title.
SEC. 608. APIC REQUESTS FOR GUARANTEE ACTIONS.
(a) In General.--The Secretary may issue a guarantee under this
title for a qualified debenture that an APIC intends to issue only
pursuant to a request to the Secretary by the APIC for such guarantee
that is made in accordance with regulations governing the content and
procedures for such requests, that the Secretary shall prescribe. Such
regulations shall provide that each such request shall include--
(1) a description of the manner in which the APIC intends
to use the proceeds from the qualified debenture;
(2) a certification by the APIC that the APIC is in
substantial compliance with--
(A) this title and other applicable laws, including
any requirements established under this title by the
Secretary;
(B) all terms and conditions of its license, any
cease-and-desist order issued under section 610, and of
any penalty or condition that may have arisen from
examination or monitoring by the Secretary or
otherwise, including the satisfaction of any financial
audit exception that may have been outstanding; and
(C) all requirements relating to the allocation and
use of New Markets Tax Credits, to the extent such
credits are established under Federal law; and
(3) any other information or certification that the
Secretary considers appropriate.
(b) Requests for Guarantee of Qualified Debentures That Include
Funding for Initial Expenditure for a Project or Activity.--In addition
to the description and certification that an APIC is required to supply
in all requests for guarantee action under subsection (a), in the case
of an APIC's request for a guarantee that includes a qualified
debenture, the proceeds of which the APIC expects to be used as its
initial expenditure for a project or activity in which the APIC intends
to invest, and the expenditure for which would require an environmental
assessment under the National Environmental Policy Act of 1969 and
other related laws that further the purposes of such Act, such request
for guarantee action shall include evidence satisfactory to
the Secretary of the certification of the completion of environmental
review of the project or activity required of the cognizant State or
local government under subsection (c). If the environmental review
responsibility for the project or activity has not been assumed by a
State or local government under subsection (c), then the Secretary
shall be responsible for carrying out the applicable responsibilities
under the National Environmental Policy Act of 1969 and other
provisions of law that further the purposes of such Act that relate to
the project or activity, and the Secretary shall execute such
responsibilities before acting on the APIC's request for the guarantee
that is covered by this subsection.
(c) Responsibility for Environmental Reviews.--
(1) Execution of responsibility by the secretary.--This
subsection shall apply to guarantees by the Secretary of
qualified debentures under this title, the proceeds of which
would be used in connection with qualified low-income community
investments of APICs under this title.
(2) Assumption of responsibility by cognizant unit of
general government.--
(A) Guarantee of qualified debentures.--In order to
assure that the policies of the National Environmental
Policy Act of 1969 and other provisions of law that
further the purposes of such Act (as specified in
regulations issued by the Secretary) are most
effectively implemented in connection with the
expenditure of funds under this title, and to assure to
the public undiminished protection of the environment,
the Secretary may, under such regulations, in lieu of
the environmental protection procedures otherwise
applicable, provide for the guarantee of qualified
debentures, any part of the proceeds of which are to
fund particular qualified low-income community
investments of APICs under this title, if a State or
unit of general local government, as designated by the
Secretary in accordance with regulations issued by the
Secretary, assumes all of the responsibilities for
environmental review, decisionmaking, and action
pursuant to the National Environmental Policy Act of
1969 and such other provisions of law that further such
Act as the regulations of the Secretary specify, that
would otherwise apply to the Secretary were the
Secretary to undertake the funding of such investments
as a Federal action.
(B) Implementation.--The Secretary shall issue
regulations to carry out this subsection only after
consultation with the Council on Environmental Quality.
Such regulations shall--
(i) specify any other provisions of law
which further the purposes of the National
Environmental Policy Act of 1969 and to which
the assumption of responsibility as provided in
this subsection applies;
(ii) provide eligibility criteria and
procedures for the designation of a State or
unit of general local government to assume all
of the responsibilities in this subsection;
(iii) specify the purposes for which funds
may be committed without regard to the
procedure established under paragraph (3);
(iv) provide for monitoring of the
performance of environmental reviews under this
subsection;
(v) in the discretion of the Secretary,
provide for the provision or facilitation of
training for such performance; and
(vi) subject to the discretion of the
Secretary, provide for suspension or
termination by the Secretary of the assumption
under subparagraph (A).
(C) Responsibilities of states and units of general
local government.--The Secretary's duty under
subparagraph (B) shall not be construed to limit any
responsibility assumed by a State or unit of general
local government with respect to any particular request
for guarantee under subparagraph (A), or the use of
funds for a qualified investment.
(3) Procedure.--Subject to compliance by the APIC with the
requirements of this title, the Secretary shall approve the
request for guarantee of a qualified debenture, any part of the
proceeds of which is to fund particular qualified low-income
community investments of an APIC under this title, that is
subject to the procedures authorized by this subsection only
if, not less than 15 days prior to such approval and prior to
any commitment of funds to such investment (except for such
purposes specified in the regulations issued under paragraph
(2)(B)), the APIC submits to the Secretary a request for
guarantee of a qualified debenture that is accompanied by
evidence of a certification of the State or unit of general
local government which meets the requirements of paragraph (4).
The approval by the Secretary of any such certification shall
be deemed to satisfy the Secretary's responsibilities pursuant
to paragraph (1) under the National Environmental Policy Act of
1969 and such other provisions of law as the regulations of the
Secretary specify insofar as those responsibilities relate to
the guarantees of qualified debentures, any parts of the
proceeds of which are to fund such investments, which are
covered by such certification.
(4) Certification.--A certification under the procedures
authorized by this subsection shall--
(A) be in a form acceptable to the Secretary;
(B) be executed by the chief executive officer or
other officer of the State or unit of general local
government who qualifies under regulations of the
Secretary;
(C) specify that the State or unit of general local
government under this subsection has fully carried out
its responsibilities as described under paragraph (2);
and
(D) specify that the certifying officer--
(i) consents to assume the status of a
responsible Federal official under the National
Environmental Policy Act of 1969 and each
provision of law specified in regulations
issued by the Secretary insofar as the
provisions of such Act or other such provision
of law apply pursuant to paragraph (2); and
(ii) is authorized and consents on behalf
of the State or unit of general local
government and himself or herself to accept the
jurisdiction of the Federal courts for the
purpose of enforcement of the responsibilities
as such an official.
SEC. 609. EXAMINATION AND MONITORING OF APICS.
(a) In General.--The Secretary shall, under regulations, through
audits, performance agreements, license conditions, or otherwise,
examine and monitor the operations and activities of APICs for
compliance with sound financial management practices, and for
satisfaction of the program and procedural goals of this title and
other related Acts. The Secretary may undertake any responsibility
under this section in cooperation with an APIC liaison committee, or
any agency that is a member of such a committee, or other agency.
(b) Monitoring, Updating, and Program Review.--
(1) Reporting and updating.--The Secretary shall establish
such annual or more frequent reporting requirements for APICs,
and such requirements for the updating of the statement of
public purpose goals, investment strategy (including the
benchmarks in such strategy), and other documents that may have
been used in the license application process under this title,
as the Secretary determines necessary to assist the Secretary
in monitoring the compliance and performance of APICs.
(2) Annual audits.--The Secretary shall require each APIC
to have an independent audit conducted annually of the
operations of the APIC. The Secretary, in consultation with the
Administrator and the Secretary of the Treasury, shall
establish requirements and standards for such audits, including
requirements that such audits be conducted in accordance with
generally accepted accounting principles, that the APIC submit
the results of the audit to Secretary, and that specify the
information to be submitted.
(3) Examinations.--The Secretary shall, no less often than
once every 2 years, examine the operations and portfolio of
each APIC licensed under this title for compliance with sound
financial management practices, and for compliance with this
title.
(4) Examination standards.--
(A) Sound financial management practices.--The
Secretary shall examine each APIC to ensure, as a
matter of sound financial management practices,
substantial compliance with this and other applicable
laws, including Federal executive orders, Department of
Treasury and Office of Management and Budget guidance,
circulars, and application and licensing requirements
on a continuing basis. The Secretary may, by
regulation, establish any additional standards for
sound financial management practices, including
standards that address solvency and financial exposure.
(B) Performance and other examinations.--The
Secretary shall monitor each APIC's progress in meeting
the goals in the APIC's statement of public purpose
goals, executing the APIC's investment strategy, and
other matters.
(c) Inspector General Responsibility.--In carrying out monitoring
of HUD's responsibilities under this title and for purposes of ensuring
that the program under this title is operated in accordance with sound
financial management practices, the Inspector General of the Department
of Housing and Urban Development shall consult with the Inspector
General of the Department of the Treasury and the Inspector General of
the Small Business Administration, as appropriate, and may enter into
such agreements and memoranda of understanding as may be necessary to
obtain the cooperation of the Inspectors General of the Department of
the Treasury and the Small Business Administration in carrying out such
function.
(d) Annual Report By Secretary.--The Secretary shall submit a
report to the Congress annually regarding the operations, activities,
financial health, and achievements of the APIC program under this
title. The report shall list each investment made by an APIC and
include a summary of the examinations conducted under subsection
(b)(3), the guarantee actions of HUD, and any regulatory or policy
actions taken by HUD. The report shall distinguish recently licensed
APICs from APICs that have held licenses for a longer period for
purposes of indicating program activities and performance.
(e) GAO Report.--
(1) Requirement.--Not later than 2 years after the date of
the enactment of this Act, the Comptroller General of the
United States shall submit a report to the Congress regarding
the operation of the program under this title for licensing and
guarantees for APICs.
(2) Contents.--The report shall include--
(A) an analysis of the operations and monitoring by
HUD of the APIC program under this title;
(B) the administrative and capacity needs of HUD
required to ensure the integrity of the program;
(C) the extent and adequacy of any credit subsidy
appropriated for the program; and
(D) the management of financial risk and liability
of the Federal Government under the program.
SEC. 610. PENALTIES.
(a) Violations Subject to Penalty.--The Secretary may impose a
penalty under this subsection on any APIC or manager of an APIC that,
by any act, practice, or failure to act, engages in fraud,
mismanagement, or noncompliance with this title, the regulations under
this title, or a condition of the APIC's license under this title. The
Secretary shall, by regulation, identify, by generic description of a
role or responsibilities, any manager of an APIC that is subject to a
penalty under this section.
(b) Penalties Requiring Notice and an Opportunity to Respond.--If,
after notice in writing to an APIC or the manager of an APIC that the
APIC or manager has engaged in any action, practice, or failure to act
that, under subsection (a), is subject to a penalty, and after an
opportunity for the APIC or manager to respond to the notice, the
Secretary determines that the APIC or manager engaged in such action or
failure to act, the Secretary may, in addition to other penalties
imposed--
(1) assess a civil money penalty, except than any civil
money penalty under this subsection shall be in an amount not
exceeding $10,000;
(2) issue an order to cease and desist with respect to such
action, practice, or failure to act of the APIC or manager;
(3) suspend, or condition the use of, the APIC's license,
including deferring, for the period of the suspension, any
commitment to guarantee any new qualified debenture of the
APIC, except that any suspension or condition under this
paragraph may not exceed 90 days; and
(4) impose any other penalty that the Secretary determines
to be less burdensome to the APIC than a penalty under
subsection (c).
(c) Penalties Requiring Notice and Hearing.--If, after notice in
writing to an APIC or the manager of an APIC that an APIC or manager
has engaged in any action, practice, or failure to act that, under
subsection (a), is subject to a penalty, and after an opportunity for
administrative hearing, the Secretary determines that the APIC or
manager engaged in such action or failure to act, the Secretary may--
(1) assess a civil money penalty against the APIC or a
manager in any amount;
(2) require the APIC to divest any interest in an
investment, on such terms and conditions as the Secretary may
impose; or
(3) revoke the APIC's license.
(d) Effective Date of Penalties.--
(1) Prior notice requirement.--Except as provided in
paragraph (2) of this subsection, a penalty under subsection
(b) or (c) shall not be due and payable and shall not otherwise
take effect or be subject to enforcement by an order of a
court, before notice of the penalty is published in the Federal
Register.
(2) Cease-and-desist orders and suspension or conditioning
of license.--In the case of a cease-and-desist order under
subsection (b)(2) or the suspension or conditioning of an
APIC's license under subsection (b)(3), the following
procedures shall apply:
(A) Action without published notice.--The Secretary
may order an APIC or manager to cease and desist from
an action, practice, or failure to act or may suspend
or condition an APIC's license, for not more than 45
days without prior publication of notice in the Federal
Register, but such cease-and-desist order or suspension
or conditioning shall take effect only after the
Secretary has issued a written notice (which may
include a writing in electronic form) of such action to
the APIC. Notwithstanding subsection (b), such written
notice shall be effective without regard to whether the
APIC has been accorded an opportunity to respond. Upon
such notice, such cease-and-desist order or suspension
or conditioning shall be subject to enforcement by an
order of a court.
(B) Publication of notice of suspension or
conditioning of license.--Upon a suspension or
conditioning of a license taking effect pursuant to
subparagraph (A), the Secretary shall promptly cause a
notice of suspension or conditioning of such license
for a period of not more than 90 days to be published
in the Federal Register. The Secretary shall provide
the APIC an opportunity to respond to such notice. For
purposes of the determining the duration of the period
of any suspension or conditioning under this
subparagraph, the first day of such period shall be the
day of issuance of the written notice under this
paragraph of the suspension or conditioning.
(C) Revocation of license.--During the period of
the suspension or conditioning of an APIC's license,
the Secretary may take action under subsection (c)(3)
to revoke the license of the APIC, in accordance with
the procedures applicable to such subsection.
Notwithstanding any other provision of this section, if
the Secretary takes such action, the Secretary may
extend the suspension or conditioning of the APIC's
license, for one or more periods of not more than 90
days each, by causing notice of such action to be
published in the Federal Register--
(i) for the first such extension, before
the expiration of the period under subparagraph
(B); and
(ii) for any subsequent extension, before
the expiration of the preceding extension
period under this subparagraph.
(D) Term of effectiveness.--A cease-and-desist order or the
suspension or conditioning of an APIC's license by the
Secretary under this paragraph shall remain in effect in
accordance with the terms of the order, suspension, or
conditioning until final adjudication in any action undertaken
to challenge the order, or the suspension or conditioning, or
the revocation, of an APIC's license.
SEC. 611. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this title
shall take effect upon the expiration of the 6-month period beginning
on the date of the enactment of this Act.
(b) Issuance of Regulations and Guidelines.--Any authority under
this title of the Secretary, the Administrator, and the Secretary of
the Treasury to issue regulations, standards, guidelines, or licensing
requirements, and any authority of such officials to consult or enter
into agreements or memoranda of understanding regarding such issuance,
shall take effect on the date of the enactment of this Act.
SEC. 612. SUNSET.
After the expiration of the 5-year period beginning upon the date
that the Secretary awards the first license for an APIC under this
title--
(1) the Secretary may not license any APIC; and
(2) no amount may be appropriated for the costs (as such
term is defined in section 502 of the Federal Credit Reform Act
of 1990 (2 U.S.C. 661c)) of any guarantee under this title for
any debenture issued by an APIC.
This section may not be construed to prohibit, limit, or affect the
award, allocation, or use of any budget authority for the costs of such
guarantees that is appropriated before the expiration of such period.
TITLE VII--NEW MARKETS TAX CREDIT
SEC. 701. NEW MARKETS TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business-related credits), as amended by section 201(a),
is amended by adding at the end the following new section:
``SEC. 45E. 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 the proceeds from such
investment 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 in a qualified community
development entity which is a corporation, and
``(B) any capital interest in a qualified community
development 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 if
the amount received by such other entity from such
purchase is used by such other entity to make qualified
low-income community investments,
``(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 if substantially
all of the investment or loan is used by such entity to
make qualified low-income community investments
described in subparagraphs (A), (B), and (C).
``(2) Qualified active low-income community business.--
``(A) In general.--For purposes of paragraph (1),
the term `qualified active low-income community
business' means, with respect to any taxable year, any
corporation or partnership if for such year--
``(i) at least 50 percent of the total
gross income of such entity is derived from the
active conduct of a qualified business within
any low-income community,
``(ii) a substantial portion of the use of
the tangible property of such entity (whether
owned or leased) is within any low-income
community,
``(iii) a substantial portion of the
services performed for such entity by its
employees are performed in any low-income
community,
``(iv) less than 5 percent of the average
of the aggregate unadjusted bases of the
property of such entity is attributable to
collectibles (as defined in section 408(m)(2))
other than collectibles that are held primarily
for sale to customers in the ordinary course of
such business, and
``(v) less than 5 percent of the average of
the aggregate unadjusted bases of the property
of such entity is attributable to nonqualified
financial property (as defined in section
1397C(e)).
``(B) Proprietorship.--Such term shall include any
business carried on by an individual as a proprietor if
such business would meet the requirements of
subparagraph (A) were it incorporated.
``(C) Portions of business may be qualified active
low-income community business.--The term `qualified
active low-income community business' includes any
trades or businesses which would qualify as a qualified
active low-income community business if such trades or
businesses were separately incorporated.
``(3) Qualified business.--For purposes of this subsection,
the term `qualified business' has the meaning given to such
term by section 1397C(d); except that--
``(A) in lieu of applying paragraph (2)(B) thereof,
the rental to others of real property located in any
low-income community shall be treated as a qualified
business if there are substantial improvements located
on such property,
``(B) paragraph (3) thereof shall not apply, and
``(C) such term shall not include any business if a
significant portion of the equity interests in such
business are held by any person who holds a significant
portion of the equity investments in the community
development entity.
``(e) Low-Income Community.--For purposes of this section--
``(1) In general.--The term `low-income community' means
any population census tract if--
``(A) the poverty rate for such tract is at least
20 percent,
``(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, or
``(C) as determined by the Secretary based on
objective criteria, a substantial population of low-
income individuals reside in such tract, an inadequate
access to investment capital exists in such tract, or
other indications of economic distress exist in such
tract.
``(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) $500,000,000 for 2001,
``(B) $1,500,000,000 for 2002 and 2003,
``(C) $2,500,000,000 for 2004 and 2005,
``(D) $3,000,000,000 for 2006,
``(E) $3,500,000,000 for 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.
``(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.
``(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 benefits
(including the credit under section 42 and the exclusion from
gross income under section 103),
``(2) which prevent the abuse of the provisions of this
section through the use of related parties,
``(3) which impose appropriate reporting requirements, and
``(4) 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, as amended
by section 201(b), is amended by striking ``plus'' at the end
of paragraph (12), by striking the period at the end of
paragraph (13) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(14) the new markets tax credit determined under section
45E(a).''.
(2) Limitation on carryback.--Subsection (d) of section 39,
as amended by section 201(d), is amended by adding at the end
the following new paragraph:
``(10) 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 45E 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
45E(a).''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1, as amended by section 201(e), is
amended by adding at the end the following new item:
``Sec. 45E. 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 90 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 objective criteria to be used in making the allocations
under section 45E(f)(2) of the Internal Revenue Code of 1986, as added
by this section.
TITLE VIII--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL
SEC. 800. SHORT TITLE.
This title may be cited as the ``Community Development and Venture
Capital Act of 2000''.
Subtitle A--New Markets Venture Capital Program
SEC. 801. NEW MARKETS VENTURE CAPITAL PROGRAM.
(a) In General.--Title III of the Small Business Investment Act of
1958 (15 U.S.C. 681 et seq.) is amended--
(1) by striking the title designation and heading and
inserting the following:
``TITLE III--INVESTMENT DIVISION PROGRAMS
``PART A--SMALL BUSINESS INVESTMENT COMPANIES'';
and
(2) by adding at the end the following:
``PART B--NEW MARKETS VENTURE CAPITAL PROGRAM
``SEC. 351. DEFINITIONS.
``In this part--
``(1) the term `eligible company' means a company that--
``(A) is a newly formed for-profit entity, which
may be a newly formed for-profit subsidiary of an
existing entity; and
``(B) has a management team with experience in
community development financing or relevant venture
capital financing;
``(2) the term `low-income individual' means an individual
whose income (adjusted for family size) does not exceed--
``(A) for metropolitan areas, 80 percent of the
area median income; and
``(B) for nonmetropolitan areas, the greater of--
``(i) 80 percent of the area median income;
or
``(ii) 80 percent of the statewide
nonmetropolitan area median income;
``(3) the term `low- or moderate-income geographic area'
means--
``(A) any population census tract (or in the case
of an area that is not tracted for population census
tracts, the equivalent county division, as defined by
the Bureau of the Census of the Department of Commerce
for purposes of defining poverty areas) if--
``(i) the poverty rate for such census
tract is not less than 20 percent;
``(ii)(I) in the case of a tract located
within a metropolitan area, the median family
income for such tract 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
``(II) 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 the statewide median family income;
or
``(iii) as determined by the Administrator
based on objective criteria, a substantial
population of low-income individuals reside, an
inadequate access to investment capital exists,
or other indications of economic distress
exist; or
``(B) any area located within--
``(i) a HUBZone (as defined in section 3(p)
of the Small Business Act and the implementing
regulations issued under that section);
``(ii) an urban empowerment zone or urban
enterprise community (as designated by the
Secretary of Housing and Urban Development); or
``(iii) a rural empowerment zone or rural
enterprise community (as designated by the
Secretary of Agriculture);
``(4) the terms `new markets venture capital company' and
`NMVC company' mean a company that has been designated as a new
markets venture capital company by the Administrator under
section 354(d);
``(5) the term `participation agreement' means an
agreement, between the Administrator and a company granted
final approval under section 354(e), that--
``(A) details the company's operating plan and
investment criteria; and
``(B) requires the company to make investments in
smaller enterprises at least 80 percent of which are
located in low- or moderate-income geographic areas;
and
``(6) 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 this part are--
``(1) to encourage venture capital investment in smaller
enterprises located within urban and rural areas;
``(2) to promote the creation of wealth, economic
development, and job opportunities in low- and moderate-income
geographic areas; and
``(3) to establish a venture capital program, which shall
be administered by the Administrator--
``(A) to make grants to NMVC companies for the
purpose of providing marketing, management, and
technical assistance to smaller enterprises financed,
or expected to be financed, by such companies; and
``(B) to guarantee debentures issued by NMVC
companies to enable such companies to make venture
capital investments in smaller enterprises within urban
and rural areas.
``SEC. 353. PROGRAM ESTABLISHMENT.
``There is established a New Markets Venture Capital Program, under
which the Administrator is authorized to--
``(1) make grants to NMVC companies, as provided in section
355; and
``(2) guarantee debentures issued by NMVC companies, as
provided in section 356.
``SEC. 354. SELECTION OF NMVC COMPANIES.
``(a) Applications.--In order to be eligible to participate in the
program under this part as an NMVC company, an eligible company shall
submit to the Administrator an application, within such period of time
as the Administrator shall establish, which shall include--
``(1) a business plan that describes the manner and
geographic areas in which the applicant will make successful
venture capital investments in smaller enterprises described in
subparagraphs (A) and (B) of section 351(5) and provide
marketing, management, and technical assistance to those
enterprises;
``(2) the qualifications and general business reputation of
the management of the applicant, specifically addressing--
``(A) the experience of the management in making
venture capital investments in smaller enterprises
described in subparagraphs (A) and (B) of section
351(5); and
``(B) the success of those investments in terms of
business growth, jobs created, and such other factors
as the Administrator may require; and
``(3) a description of the manner in which the applicant
will interface with community organizations;
``(4) a proposal describing the manner in which grant
amounts made available under this part would provide marketing,
management, and technical assistance to smaller enterprises
expected to be financed by the applicant;
``(5) proposed criteria by which to evaluate the
performance of the applicant in meeting program objectives;
``(6) the management and financial strength of any parent
or affiliated firm, or any firm essential to the success of the
business plan of the applicant;
``(7) 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; and
``(8) such other information as the Administrator may
require.
``(b) Criteria for Conditional Approval.--
``(1) In general.--Upon receipt of an application submitted
under subsection (a), the Administrator shall review the
application and make a determination regarding whether to grant
conditional approval to the applicant to operate as an NMVC
company during the time period described in subsection (c),
based on--
``(A) the geographic area and employment
characteristics of the smaller enterprises in which the
proposed investments of the NMVC company will be made
(in order to promote investment nationwide);
``(B) the likelihood that the applicant will meet
the goals of the business plan of the applicant;
``(C) the experience and background of the
company's management team;
``(D) the need for equity or equity-type
investments within the proposed investment areas;
``(E) the extent to which the applicant will
concentrate its activities on serving its investment
areas;
``(F) the likelihood that the applicant will be
able to satisfy the requirements of subsection (c);
``(G) the extent to which the proposed activities
will expand economic opportunities within the
investment areas; and
``(H) such other factors as the Administrator
determines to be appropriate.
``(2) Nationwide distribution.--The Administrator shall
select companies under paragraph (1) in such a way that
promotes investment nationwide.
``(c) Requirements for Final Approval.--
``(1) In general.--Subject to paragraph (2), each applicant
that is granted conditional approval by the Administrator to
operate as an NMVC company under subsection (b), shall, before
the expiration of a time period established by the
Administrator not to exceed 24 months, beginning on the date on
which such conditional approval is granted--
``(A) raise not less than $5,000,000 of contributed
capital or binding capital commitments from 1 or more
investors (other than an agency of the Federal
Government) that meet criteria established by the
Administrator; and
``(B) in order to provide marketing, management,
and technical assistance, have--
``(i) cash or binding commitments for
contributions (in cash or in-kind) from 1 or
more sources other than the Administration that
meet criteria established by the Administrator,
payable or available over a multiyear period
acceptable to the Administrator (not to exceed
10 years), in an amount equal to 30 percent of
the capital and commitments raised under
subparagraph (A);
``(ii) purchased an annuity from an
insurance company acceptable to the
Administrator, using amounts (other than the
amounts raised to satisfy the requirements of
subparagraph (A)) from any source other than
the Administration, that would yield cash
payments over a multiyear period acceptable to
the Administrator (not to exceed 10 years), in
an amount equal to 30 percent of the capital
and commitments raised under subparagraph (A);
or
``(iii) cash or binding commitments for
contributions (in cash or in-kind) of the type
described in clause (i) and have purchased an
annuity of the type described in clause (ii),
that in the aggregate make available, over a
multiyear period acceptable to the
Administrator (not to exceed 10 years), an
amount equal to 30 percent of the capital and
commitments raised under subparagraph (A).
``(2) Exception.--The Administrator may, in the discretion
of the Administrator and based upon a showing of special
circumstances and good cause, consider an applicant to have
satisfied the requirements of paragraph (1)(B) if the applicant
has--
``(A) a viable plan that reasonably projects the
capacity of the applicant to raise the amount (in cash
or in-kind) required under paragraph (1)(B); and
``(B) binding commitments in an amount not less
than 20 percent of the total amount required under
paragraph (1)(B).
``(d) Grant of Final Approval; Designation.--The Administrator
shall, with respect to each applicant conditionally approved to operate
as an NMVC company under subsection (b), either--
``(1) grant final approval to the applicant to operate as
an NMVC company under this part and designate the applicant as
an NMVC company, if the applicant--
``(A) satisfies the requirements of subsection (c)
on or before the expiration of the time period
described in that subsection; and
``(B) enters into a participation agreement with
the Administrator; or
``(2) if the applicant fails to satisfy the requirements of
subsection (c) on or before the expiration of the time period
described in that subsection, revoke the conditional approval
granted under that subsection.
``SEC. 355. TECHNICAL ASSISTANCE GRANTS.
``(a) Grants.--
``(1) In general.--The Administrator, in accordance with
such terms and conditions as the Administrator may require, is
authorized to award 1 or more grants to each NMVC company or to
any other entity, as authorized by this part, which shall be
used to provide marketing, management, and technical assistance
for the benefit of smaller enterprises financed, or expected to
be financed, by the NMVC company or other authorized entity.
``(2) Multiyear grants.--Amounts from a grant awarded under
this section shall be paid upon the direction of the
Administrator over a multiyear period of not to exceed 10
years.
``(3) Grants to specialized small business investment
companies.--
``(A) Authority.--In accordance with this section,
the Administrator may make grants to specialized small
business investment companies to provide marketing,
management, and technical assistance to smaller
enterprises financed, or expected to be financed, by
such companies after the effective date of the
Community Development and Venture Capital Act of 2000.
``(B) Use of funds.--The proceeds of a grant made
under this paragraph may be used by the company
receiving such grant only to provide marketing,
management, and technical assistance in connection with
an equity or equity-type investment (made with capital
raised after the effective date of the Community
Development and Venture Capital Act of 2000) in a
business located in a low- or moderate-income
geographic area.
``(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) In general.--Subject to subparagraph (B), the
amount of a grant awarded to an NMVC company or other
authorized entity under this subsection shall be equal
to 30 percent of the amount of capital and commitments
raised under section 354(c)(1)(A).
``(B) Matching requirement.--In order to receive
funds under a grant awarded under this subsection, an
NMVC company or other authorized entity shall provide a
matching contribution (in cash or in-kind) from sources
other than the Administration, in an amount equal to
the funds to received.
``(5) Pro rata reductions.--If the amount made available to
carry out this section for a fiscal year is insufficient for
the Administrator to award grants in the amounts required under
paragraph (4), the Administrator shall make pro rata reductions
in the amounts otherwise payable to each NMVC company or other
authorized entity under that paragraph.
``(b) Supplemental Grants.--
``(1) In general.--In addition to any grant under
subsection (a), the Administrator, in accordance with such
terms and conditions as the Administrator may require, may make
1 or more supplemental grants to an NMVC company or other
authorized entity, which shall be used to provide additional
marketing, management, and technical assistance for the benefit
of smaller enterprises financed, or expected to be financed, by
the NMVC company or other authorized entity.
``(2) Matching requirement.--The Administrator may require,
as a condition of any supplemental grant made under this
subsection, that the NMVC company provide a matching
contribution (in cash or in-kind) from 1 or more sources other
than the Administrator in an amount equal to the amount of the
supplemental grant.
``(c) Limitation.--No part of any grant made available under this
section may be used for any purpose other than to provide direct
technical and financial assistance to smaller enterprises financed, or
expected to be financed, by the NMVC companies or other authorized
entities.
``SEC. 356. DEBENTURES.
``(a) In General.--The Administrator is authorized to guarantee the
timely payment of principal and interest as scheduled on debentures
issued by NMVC companies, in accordance with such terms and conditions
the Administrator determines to be appropriate.
``(b) Full Faith and Credit.--The full faith and credit of the
United States is pledged to the payment of all amounts that may be
required to be paid under any guarantee under this section.
``(c) Debenture Requirements.--A debenture guaranteed under this
section--
``(1) may be issued for a term of not to exceed 15 years;
``(2) shall bear interest at a rate approved by the
Administrator; and
``(3) shall contain such other terms and conditions as the
Administrator may require.
``(d) Total Face Value.--The total face amount of debentures issued
by an NMVC company and guaranteed under this section that may be
outstanding at any 1 time shall not exceed 150 percent of the
contributed capital of the NMVC company, as determined by the
Administrator. For purposes of this subsection, the contributed capital
of an NMVC company includes capital that is deemed to be Federal funds
contributed by an investor other than an agency of the Federal
Government.
``SEC. 357. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.
``(a) In General.--The Administrator (or an agent of the
Administrator) is authorized to issue trust certificates representing
ownership of all or a fractional part of debentures guaranteed by the
Administrator under section 356, if such trust certificates are based
on and backed by a trust or pool approved by the Administrator and
composed solely of debentures guaranteed under section 356.
``(b) Guarantee Authority.--
``(1) In general.--The Administrator is authorized to, upon
such terms and conditions as the Administrator determines to be
appropriate, guarantee the timely payment of the principal of
and interest on any trust certificate issued under this
section.
``(2) Limitation.--A guarantee under this subsection shall
be limited to the extent of the principal of and interest on
the guaranteed debentures that compose the trust or pool
described in subsection (a).
``(3) Reduction.--If a debenture in a trust or pool
described in subsection (a) is prepaid, or in the event of
default of a debenture, the guarantee of timely payment of
principal and interest on the related trust certificate issued
under this section shall be reduced in proportion to the amount
of principal and interest that such prepaid debenture
represents in that trust or pool.
``(4) Accrual of interest.--Interest on prepaid or
defaulted debentures shall accrue and be guaranteed by the
Administrator only through the date of payment of the
guarantee.
``(5) Redemption of trust certificates.--During the term of
any trust certificate issued under this subsection, the trust
certificate may be called for redemption due to prepayment or
default of all debentures in the trust or pool.
``(c) Full Faith and Credit.--The full faith and credit of the
United States is pledged to the payment of all amounts that may be
required to be paid under any guarantee of a trust certificate issued
under this section.
``(d) Fees.--The Administrator shall not collect a fee for any
guarantee of a trust certificate issued under this section, except that
nothing in this subsection may be construed to preclude an agent of the
Administrator from collecting a fee approved by the Administrator for
the functions described in subsection (f)(2).
``(e) Subrogation.--
``(1) In general.--If the Administrator pays a claim under
a guarantee issued under this section, the Administration 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 Administrator of
the ownership rights of the Administrator in the debentures
residing in a trust or pool against which trust certificates
are issued under this section.
``(f) Central Registration.--
``(1) In general.--The Administrator may provide for a
central registration of all trust certificates issued under
this section.
``(2) Contracting of functions.--
``(A) In general.--The Administrator may contract
with an agent or agents to carry out on behalf of the
Administrator the pooling and the central registration
functions of this section including, notwithstanding
any other provision of law--
``(i) maintenance on behalf of and under
the direction of the Administrator of such
commercial bank accounts or investments in
obligations of the United States as may be
necessary to facilitate trusts or pools backed
by debentures guaranteed under this part; and
``(ii) the issuance of trust certificates
to facilitate such poolings.
``(B) Fidelity bond or insurance required.--An
agent contracting with the Administrator under this
paragraph shall be required to provide a fidelity bond
or insurance in such amounts as the Administrator
determines to be necessary to fully protect the
interests of the Government.
``(3) Regulation of brokers and dealers.--Notwithstanding
section 3(a)(42) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(42)), the Administrator may regulate brokers and
dealers in trust certificates issued under this section.
``(4) Electronic registration.--Nothing in this subsection
may be construed to prohibit the use of a book-entry or other
electronic form of registration for trust certificates issued
under this section.
``SEC. 358. FEES.
``Except as provided under section 357(d), the Administrator may
charge such fees as the Administrator determines to be appropriate with
respect to any guarantee issued or grant awarded under this part.
``SEC. 359. BANK PARTICIPATION.
``Any national bank, or any member bank of the Federal Reserve
System or nonmember insured bank to the extent permitted under
applicable State law, may invest in any 1 or more NMVC companies, or in
any entity established to invest solely in NMVC companies, except that
in no event shall the total amount of such investments of any such bank
exceed 5 percent of the total capital and surplus of the bank.
``SEC. 360. FEDERAL FINANCING BANK.
``Section 318 shall not apply to any debenture issued by a NMVC
company under this part.
``SEC. 361. REPORTING REQUIREMENTS.
``Each NMVC company shall provide to the Administrator such
information as the Administrator may request, including--
``(1) information related to the measurement criteria that
the NMVC company proposed in the application submitted under
section 354(a);
``(2) documentation on the use of technical assistance
grants under this part; and
``(3) 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 NMVC company shall be subject to
examinations made at the direction of the Investment Division of the
Administration, which may be conducted with the assistance of a private
sector entity that has both the qualifications to conduct and the
expertise in conducting such examinations.
``(b) Assessment of Costs.--The cost of such examinations,
including the compensation of the examiners, may in the discretion of
the Administrator be assessed against the company examined and when so
assessed shall be paid by such company.
``(c) Deposit of Fees.--Fees 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.--If, in the judgment of the Administrator, an
NMVC company or any other person has engaged or is about to engage in
any act or practice that constitutes or will constitute a violation of
any provision of this title (or any rule, regulation, or order issued
under this title) or of a participation agreement entered into under
this part--
``(1) the Administrator 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 act or practice, or for an order
enforcing compliance with such provision; and
``(2) such court shall--
``(A) have jurisdiction over such application and
any ensuing proceedings; and
``(B) upon a showing by the Administrator that such
NMVC company or other person has engaged or is about to
engage in any such act or practice, grant without bond
a permanent or temporary injunction, restraining order,
or other appropriate order.
``(b) Powers of Court.--In any proceeding under subsection (a)--
``(1) the court as a court of equity may, to such extent as
the court determines to be necessary, take exclusive
jurisdiction of the NMVC company and the assets thereof,
wherever located; and
``(2) 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) Trustee or Receiver.--The Administrator is authorized to act
as trustee or receiver of the NMVC company. Upon request by the
Administrator, the court may appoint the Administrator to act in such
capacity unless the court determines such appointment to be inequitable
or otherwise inappropriate based on the special circumstances at issue.
``SEC. 364. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS, DIRECTORS,
EMPLOYEES, OR AGENTS; BREACH OF FIDUCIARY DUTY.
``(a) In General.--If an NMVC company violates any provision of
this title (or any rule or regulation issued under this title), or of a
participation agreement entered into under this part, by failing to
comply with the terms thereof or by engaging in any act or practice
that constitutes or will constitute a violation thereof, such violation
shall be deemed to be also a violation and an unlawful act on the part
of any person who, directly or indirectly, authorizes, orders,
participates in, or causes, brings about, counsels, aids, or abets in
the commission of any act, practice, or transaction that constitutes or
will constitute, in whole or in part, such violation.
``(b) Breach of Fiduciary Duty.--It shall be unlawful for any
officer, director, employee, agent, or other participant in the
management or conduct of the affairs of an NMVC company to engage in
any act or practice, or to omit any act, in breach of the fiduciary
duty of such officer, director, employee, agent, or participant, if, as
a result thereof, the NMVC company has suffered or is in imminent
danger of suffering financial loss or other damage.
``(c) Other Prohibitions.--Except with the written consent of the
Administrator, it shall be unlawful--
``(1) for any person to take office as an officer,
director, or employee of an NMVC company, or to become an agent
or participant in the conduct of the affairs or management of
an NMVC company, if that 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 order,
judgment, or decree of a court of competent
jurisdiction, by reason of any act or practice
involving fraud or breach of trust; or
``(2) for any person to continue to serve in any of the
above-described capacities, if that person is subsequently--
``(A) convicted of a felony, or any other criminal
offense involving dishonesty or breach of trust; or
``(B) 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.
``(d) Notice.--The Administrator may serve upon any officer,
director, employee, or other participant in the conduct of the
management or other affairs of an NMVC company a written notice of the
intention of the Administrator to remove that person from his or her
position whenever, in the opinion of the Administrator, that person--
``(1) has willfully committed any substantial violation
of--
``(A) this title (or any rule, regulation, or order
issued under this title); or
``(B) a participation agreement entered into under
this part; or
``(C) a cease-and-desist order that has become
final; or
``(2) has willfully committed or engaged in any act,
omission, or practice that constitutes a substantial breach of
fiduciary duty, and that such violation or such breach of
fiduciary duty is one involving personal dishonesty on the part
of such person.
``(e) Suspension or Removal.--The Administrator may suspend or
remove from office any person upon whom the Administrator has served a
notice under subsection (d), in accordance with the procedures set
forth in section 313.
``SEC. 365. REGULATIONS.
``The Administrator may promulgate such regulations as the
Administrator determines to be necessary to carry out this part.
``SEC. 366. AUTHORIZATIONS.
``(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) 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.''.
(b) 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''.
SEC. 802. BANKRUPTCY EXEMPTION FOR NMVC COMPANIES.
Section 109(b)(2) of title 11, United States Code, is amended by
inserting after ``homestead association,'' the following: ``a new
markets venture capital company (as defined in section 351 of the Small
Business Investment Act of 1958),''.
SEC. 803. 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). 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.''.
Subtitle B--Community Development Venture Capital Assistance
SEC. 811. FINDINGS.
Congress finds that--
(1) there is a need for the development and expansion of
organizations that provide private equity capital to smaller
businesses in areas in which equity-type capital is scarce,
such as inner cities and rural areas, in order to create and
retain jobs for low-income residents of those areas;
(2) to invest successfully in smaller businesses,
particularly in inner cities and rural areas, requires highly
specialized investment and management skills;
(3) there is a shortage of professionals who possess such
skills and there are few training grounds for individuals to
obtain those skills;
(4) providing assistance to organizations that provide
specialized technical assistance and training to individuals
and organizations seeking to enter or expand in this segment of
the market would stimulate small business development and
entrepreneurship in economically distressed communities; and
(5) assistance from the Federal Government could act as a
catalyst to attract investment from the private sector and
would help to develop a specialized venture capital industry
focused on creating jobs, increasing business ownership, and
generating wealth in low-income communities.
SEC. 812. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.
(a) In General.--The Small Business Act (15 U.S.C. 631 et seq.) is
amended--
(1) by redesignating section 34 as section 35; and
(2) by inserting after section 33 the following:
``SEC. 34. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.
``(a) Definitions.--In this section:
``(1) Community development venture capital organization.--
The term `community development venture capital organization'
means a privately-controlled organization that--
``(A) has a primary mission of promoting community
development in low-income communities, as defined by
the Administrator, through investment in private
business enterprises; or
``(B) administers or is in the process of
establishing a community development venture capital
fund for the purpose of making equity investments in
private business enterprises in such communities.
``(2) Developmental organization.--The term `developmental
organization'--
``(A) means a public or private entity, including a
college or university, that provides technical
assistance to community development venture capital
organizations or that conducts research or training in
community development venture capital investment; and
``(B) may include an intermediary organization.
``(3) Intermediary organization.--The term `intermediary
organization'--
``(A) means a private, nonprofit entity that has--
``(i) a primary mission of promoting
community development through investment in
private businesses in low-income communities;
and
``(ii) significant prior experience in
providing technical assistance or financial
assistance to community development venture
capital organizations;
``(B) may include community development venture
capital organizations.
``(b) Authority.--In order to promote the development of community
development venture capital organizations, the Administrator, may--
``(1) enter into contracts with 1 or more developmental
organizations to carry out training and research activities
under subsection (c); and
``(2) make grants in accordance with this section--
``(A) to developmental organizations to carry out
training and research activities under subsection (c);
and
``(B) to intermediary organizations to provide
intensive marketing, management, and technical
assistance and training to community development
venture capital organizations under subsection (d).
``(c) Training and Research Activities.--
``(1) In general.--Subject to paragraph (2), a
developmental organization that receives a grant under
subsection (b) shall use the funds made available through the
grant for 1 or more of the following training and research
activities:
``(A) Strengthening professional skills.--Creating
and operating training programs to enhance the
professional skills for individuals in community
development venture capital organizations or operating
private community development venture capital funds.
``(B) Increasing interest in community development
venture capital.--Creating and operating a program to
select and place students and recent graduates from
business and related professional schools as interns
with community development venture capital
organizations and intermediary organizations for a
period of up to 1 year, and to provide stipends for
such interns during the internship period.
``(C) Promoting `best practices'.--Organizing an
annual national conference for community development
venture capital organizations to discuss and share
information on the best practices regarding issues
relevant to the creation and operation of community
development venture capital organizations.
``(D) Mobilizing academic resources.--Encouraging
the formation of 1 or more centers for the study of
community development venture capital at graduate
schools of business and management, providing funding
for the development of materials for courses on topics
in this area, and providing funding for research on
economic, operational, and policy issues relating to
community development venture capital.
``(2) Limitation.--The Administrator shall ensure that not
more than 25 percent of the amount made available to carry out
this section is used for activities described in paragraph (1).
``(d) Intensive Marketing, Management, and Technical Assistance and
Training.--An intermediary organization that receives a grant under
subsection (b) shall use the funds made available through the grant to
provide intensive marketing, management, and technical assistance and
training to promote the development of community development venture
capital organizations, which assistance may include grants to community
development venture capital organizations for the start up costs and
operating support of those organizations.
``(e) Matching Contribution Requirement.--The Administrator shall
require, as a condition of any grant made to an intermediary
organization under this section, that a matching contribution equal to
the amount of such grant be provided from sources other than the
Federal Government.
``(f) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $20,000,000 for fiscal years
2000 through 2003, to remain available until expended.''.
(b) Requirements.--The Administrator of the Small Business
Administration may promulgate such regulations as may be necessary to
carry out section 34 of the Small Business Act, as amended by this
section, which regulations may take effect upon issuance.
Subtitle C--Business LINC
SEC. 821. GRANTS AUTHORIZED.
Section 8 of the Small Business Act (15 U.S.C. 637) is amended by
adding at the end the following:
``(m) Business LINC Grants.--
``(1) In general.--The Administrator may make grants to and
enter into cooperative agreements with any coalition of private
or public sector participants that--
``(A) expand business-to-business relationships
between large and small businesses; and
``(B) provide businesses, directly or indirectly,
with online information and a database of companies
that are interested in mentor-protegee programs or
community-based, state-wide, or local business
development programs.
``(2) Matching requirements.--
``(A) In general.--Subject to subparagraph (B), the
Administrator may make grants to and enter into
cooperative agreements with any coalition of private or
public sector participants if the coalition provides a
matching amount, either in-kind or in cash, equal to
the grant amount.
``(B) Waiver.--In the best interests of the
program, the Administrator may waive the requirements
for matching funds to be provided by the coalition.
``(3) Authorization of appropriations.--There is authorized
to be appropriated to carry out this subsection $6,600,000 for
each of fiscal years 2000 through 2003, to remain available
until expended.''.
SEC. 822. REGULATIONS.
The Administrator of the Small Business Administration may
promulgate such regulations as the Administration determines to be
necessary to carry out this title and the amendment made by this title.
TITLE IX--BOND VOLUME CAP AND LOW-INCOME HOUSING CREDIT INCREASES
SEC. 901. INCREASE IN STATE CEILING ON PRIVATE ACTIVITY BONDS.
(a) In General.--Paragraphs (1) and (2) of section 146(d) (relating
to State ceiling) are amended to read as follows:
``(1) In general.--The State ceiling applicable to any
State for any calendar year shall be the greater of--
``(A) an amount equal to $75 multiplied by the
State population, or
``(B) $225,000,000.
Subparagraph (B) shall not apply to any possession of the
United States.
``(2) Inflation adjustment.--In the case of a calendar year
after 2001, each of the dollar amounts contained in paragraph
(1) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by
substituting `calendar year 2000' for `calendar year
1992' in subparagraph (B) thereof.
If any increase determined under the preceding sentence is not
a multiple of $1 ($250 in the case of the dollar amount in
paragraph (1)(B), such increase shall be rounded to the nearest
multiple thereof.''
(c) Effective Date.--The amendments made by this section shall
apply to calendar years after 2000.
SEC. 902. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING CREDIT.
(a) In General.--Clause (i) of section 42(h)(3)(C) (relating to
State housing credit ceiling) is amended by striking ``$1.25'' and
inserting ``$1.75''.
(b) Adjustment of State Ceiling for Increases in Cost-of-Living.--
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) Cost-of-living adjustment.--
``(i) In general.--In the case of a
calendar year after 2001, the dollar amount
contained in subparagraph (C)(i) shall be
increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2000' for
`calendar year 1992' in subparagraph
(B) thereof.
``(ii) Rounding.--If any increase under
clause (i) is not a multiple of 5 cents, such
increase shall be rounded to the next lowest
multiple of 5 cents.''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years after 2000.
TITLE X--INDIVIDUAL DEVELOPMENT ACCOUNTS
SEC. 1001. FINDINGS.
Congress makes the following findings:
(1) One-third of all Americans have no assets available for
investment, and another 20 percent have only negligible assets.
The household savings rate of the United States lags far behind
other industrial nations, presenting a barrier to national
economic growth and preventing many Americans from entering the
economic mainstream by buying a house, obtaining an adequate
education, or starting a business.
(2) By building assets, Americans can improve their
economic independence and stability, stimulate the development
of human and other capital, and work toward a viable and
hopeful future for themselves and their children. Thus,
economic well-being does not come solely from income, spending,
and consumption, but also requires savings, investment, and
accumulation of assets.
(3) Traditional public assistance programs based on income
and consumption have rarely been successful in promoting and
supporting the transition to increased economic self-
sufficiency. Income-based social policies that meet consumption
needs (including food, child care, rent, clothing, and health
care) should be complemented by asset-based policies that can
provide the means to achieve long-term independence and
economic well-being.
(4) Individual Development Accounts (IDAs) can provide
working Americans with strong incentives to build assets, basic
financial management training, and access to secure and
relatively inexpensive banking services.
(5) There is reason to believe that Individual Development
Accounts would also foster greater participation in electric
fund transfers (EFT), generate financial returns, including
increased income, tax revenue, and decreased welfare cash
assistance, that will far exceed the cost of public investment
in the program.
SEC. 1002. PURPOSES.
The purposes of this title are to provide for the establishment of
individual development account programs that will--
(1) provide individuals and families with limited means an
opportunity to accumulate assets and to enter the financial
mainstream;
(2) promote education, homeownership, and the development
of small businesses;
(3) stabilize families and build communities; and
(4) support continued United States economic expansion.
SEC. 1003. DEFINITIONS.
As used in this title:
(1) Eligible individual.--
(A) In general.--The term ``eligible individual''
means an individual who--
(i) has attained the age of 18 years;
(ii) is a citizen or legal resident of the
United States; and
(iii) is a member of a household the gross
income of which does not exceed 80 percent of
the median family income for the area in which
such individual resides (as published by the
Department of Housing and Urban Affairs).
(B) Household.--The term ``household'' means all
individuals who share use of a dwelling unit as primary
quarters for living and eating separate from other
individuals.
(2) Individual development account.--The term ``Individual
Development Account'' means an account established for an
eligible individual as part of a qualified individual
development account program, but only if the written governing
instrument creating the account meets the following
requirements:
(A) The sole owner of the account is the eligible
individual.
(B) No contribution will be accepted unless it is
in cash, by check, by electronic fund transfer, or by
electronic money order.
(C) The holder of the account is a qualified
financial institution, a qualified nonprofit
organization, or an Indian tribe.
(D) The assets of the account will not be
commingled with other property except in a common trust
fund or common investment fund.
(E) Except as provided in section 1015(b), any
amount in the account may be paid out only for the
purpose of paying the qualified expenses of the
eligible individual.
(3) Parallel account.--The term ``parallel account'' means
a separate, parallel individual or pooled account for all
matching funds and earnings dedicated to an eligible individual
as part of a qualified individual account program, the sole
owner of which is a qualified financial institution, a
qualified nonprofit organization, or an Indian tribe.
(4) Qualified financial institution.--
(A) In general.--The term ``qualified financial
institution'' means any person authorized to be a
trustee of any individual retirement account under
section 408(a)(2).
(B) Rule of construction.--Nothing in this
paragraph shall be construed as preventing a person
described in subparagraph (A) from collaborating with 1
or more qualified nonprofit organizations or Indian
tribes to carry out an individual development account
program established under section 1011.
(5) Qualified nonprofit organization.--The term ``qualified
nonprofit organization'' means--
(A)(i) any organization described in section
501(c)(3) of the Internal Revenue Code of 1986 and
exempt from taxation under section 501(a) of such Code;
(ii) any community development financial
institution as certified by the Community Development
Financial Institution Fund; or
(iii) any credit union certified by the National
Credit Union Administration,
that meets standards for financial management and fiduciary
responsibility as defined by the Secretary or an organization
designated by the Secretary.
(6) Indian tribe.--The term ``Indian tribe'' means any
Indian tribe as defined in section 4(12) of the Native American
Housing Assistance and Self-Determination Act of 1996 (25
U.S.C. 4103(12), and includes any tribal subsidiary,
subdivision, or other wholly owned tribal entity.
(7) Qualified individual development account program.--The
term ``qualified individual development program'' means a
program established under section 1011 under which--
(A) individual development accounts and parallel
accounts are held by a qualified financial institution,
a qualified nonprofit organization, or an Indian tribe;
and
(B) additional activities determined by the
Secretary, or an organization designated by the
Secretary, as necessary to responsibly develop and
administer accounts, including recruiting, providing
financial education and other training to account
holders, and regular program monitoring, are carried
out by such qualified financial institution, qualified
nonprofit organization, or Indian tribe.
(8) Qualified expense distribution.--
(A) In general.--The term ``qualified expense
distribution'' means any amount paid (including through
electronic payments) or distributed out of an
Individual Development Account and a parallel account
established for an eligible individual if such amount--
(i) is used exclusively to pay the
qualified expenses of such individual or such
individual's spouse or dependents,
(ii) is paid by the qualified financial
institution, qualified nonprofit organization,
or Indian tribe directly to the person to whom
the amount is due or to another Individual
Development Account, and
(iii) is paid after the holder of the
Individual Development Account has completed a
financial education course as required under
section 1012(b).
(B) Qualified expenses.--
(i) In general.--The term ``qualified
expenses'' means any of the following:
(I) Qualified higher education
expenses.
(II) Qualified first-time homebuyer
costs.
(III) Qualified business
capitalization or expansion costs.
(IV) Qualified rollovers.
(ii) Qualified higher education expenses.--
(I) In general.--The term
``qualified higher education expenses''
has the meaning given such term by
section 72(t)(7) of the Internal
Revenue Code of 1986, determined by
treating postsecondary vocational
educational schools as eligible
educational institutions.
(II) Postsecondary vocational
education school.--The term
``postsecondary vocational educational
school'' means an area vocational
education school (as defined in
subparagraph (C) or (D) of section
521(4) of the Carl D. Perkins
Vocational and Applied Technology
Education Act (20 U.S.C. 2471(4)))
which is in any State (as defined
in section 521(33) of such Act), as such sections are in effect on the
date of enactment of this Act.
(III) Coordination with other
benefits.--The amount of qualified
higher education expenses for any
taxable year shall be reduced as
provided in section 25A(g)(2) of such
Code and by the amount of such expenses
for which a credit or exclusion is
allowed under chapter 1 of such Code
for such taxable year.
(iii) Qualified first-time homebuyer
costs.--The term ``qualified first-time
homebuyer costs'' means qualified acquisition
costs (as defined in section 72(t)(8) of such
Code without regard to subparagraph (B)
thereof) with respect to a principal residence
(within the meaning of section 121 of such
Code) for a qualified first-time homebuyer (as
defined in section 72(t)(8) of such Code).
(iv) Qualified business capitalization or
expansion costs.--
(I) In general.--The term
``qualified business capitalization or
expansion costs'' means qualified
expenditures for the capitalization or
expansion of a qualified business
pursuant to a qualified business plan.
(II) Qualified expenditures.--The
term ``qualified expenditures'' means
expenditures included in a qualified
business plan, including capital,
plant, equipment, working capital,
inventory expenses, attorney and
accounting fees, and other costs
normally associated with starting or
expanding a business.
(III) Qualified business.--The term
``qualified business'' means any
business that does not contravene any
law.
(IV) Qualified business plan.--The
term ``qualified business plan'' means
a business plan which meets such
requirements as the Secretary or an
organization designated by the
Secretary may specify.
(v) Qualified rollovers.--The term
``qualified rollover'' means, with respect to
any distribution from an Individual Development
Account, the payment, within 120 days of such
distribution, of all or a portion of such
distribution to such account or to another
Individual Development Account established in
another qualified financial institution,
qualified nonprofit organization, or Indian
tribe for the benefit of the eligible
individual. Rules similar to the rules of
section 408(d)(3) of such Code (other than
subparagraph (C) thereof) shall apply for
purposes of this clause.
(9) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
Subtitle A--Individual Development Accounts for Low-Income Workers
SEC. 1011. STRUCTURE AND ADMINISTRATION OF QUALIFIED INDIVIDUAL
DEVELOPMENT ACCOUNT PROGRAMS.
(a) Establishment of Qualified Individual Development Account
Programs.--Any qualified financial institution, qualified nonprofit
organization, or Indian tribe may establish 1 or more qualified
individual development account programs which meet the requirements of
this title.
(b) Basic Program Structure.--
(1) In general.--All qualified individual development
account programs shall consist of the following 2 components:
(A) An Individual Development Account to which an
eligible individual may contribute money in accordance
with section 1013.
(B) A parallel account to which all matching funds
shall be deposited in accordance with section 1014.
(2) Tailored ida programs.--A qualified financial
institution, qualified nonprofit organization, or Indian tribe
may tailor its qualified individual development account program
to allow matching funds to be spent on 1 or more of the
categories of qualified expenses.
(c) Account Population Distribution Requirement.--An individual
development account program shall be treated as qualified under this
title only if not less than one third of the Individual Development
Accounts under such program are owned by eligible individuals each of
whom is a member of a household the gross income of which does not
exceed 50 percent of the median family income for the area in which
such individuals reside (as published by the Department of Housing and
Urban Affairs).
(d) Tax Treatment of Accounts.--Any account described in
subparagraph (B) of subsection (b)(1) is exempt from taxation under the
Internal Revenue Code of 1986 unless such account has ceased to be such
an account by reason of section 1015(c) or the termination of the
qualified individual development account program under section 1016(b).
SEC. 1012. PROCEDURES FOR OPENING AN INDIVIDUAL DEVELOPMENT ACCOUNT AND
QUALIFYING FOR MATCHING FUNDS.
(a) Opening an Account.--An eligible individual must open an
Individual Development Account with a qualified financial institution,
qualified nonprofit organization, or Indian tribe and contribute money
in accordance with section 1013 to qualify for matching funds in a
parallel account.
(b) Required Completion of Financial Education Course.--
(1) In general.--Before becoming eligible to withdraw
matching funds to pay for qualified expenses, holders of
Individual Development Accounts must complete a financial
education course offered by a qualified financial institution,
a qualified nonprofit organization, an Indian tribe, or a
government entity.
(2) Standard and applicability of course.--The Secretary or
an organization designated by the Secretary, in consultation
with representatives of qualified individual development
account programs and financial educators, shall establish
minimum performance standards for financial education courses
offered under paragraph (1) and a protocol to exempt eligible
individuals from the requirement under paragraph (1) because of
hardship or lack of need.
SEC. 1013. CONTRIBUTIONS TO INDIVIDUAL DEVELOPMENT ACCOUNTS.
(a) In General.--Except in the case of a qualified rollover,
individual contributions to an Individual Development Account will not
be accepted for the taxable year in excess of the lesser of--
(1) $2,000; or
(2) an amount equal to the sum of--
(A) the compensation (as defined in section
219(f)(1) of the Internal Revenue Code of 1986)
includible in the individual's gross income for such taxable year; and
(B) in the case of an eligible individual who has
attained age 65 or retired on disability (within the
meaning of section 22 of the Internal Revenue Code of
1986) before the close of the taxable year, any amount
received as a pension or annuity or as a disability
benefit and excluded from the individual's gross income
for such taxable year.
(b) Proof of Compensation and Status as an Eligible Individual.--
Federal W-2 forms and other forms specified by the Secretary proving
the eligible individual's wages and other compensation (including
amounts described in subsection (a)(2)(B)) and the status of the
individual as an eligible individual shall be presented at the time of
the establishment of the Individual Development Account and at least
once annually thereafter.
(c) Time When Contributions Deemed Made.--For purposes of this
section, a taxpayer shall be deemed to have made a contribution to an
Individual Development Account on the last day of the preceding taxable
year if the contribution is made on account of such taxable year and is
made not later than the time prescribed by law for filing the Federal
income tax return for such taxable year (not including extensions
thereof).
(d) Deemed Withdrawals of Excess Contributions.--If the individual
for whose benefit an Individual Development Account is established
contributes an amount in excess of the amount allowed under subsection
(a) and fails to withdraw the excess contribution plus the amount of
net income attributable to such excess contribution on or before the
day prescribed by law (including extensions of time) for filing such
individual's return of tax for the taxable year, such excess
contribution and net income shall be deemed to have been withdrawn on
such day by such individual for purposes other than to pay qualified
expenses.
(e) Cross Reference.--
For designation of earned income tax
credit payments for deposit to an Individual Development Account, see
section 32(o) of the Internal Revenue Code of 1986.
SEC. 1014. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT
PROGRAMS.
(a) Parallel Accounts.--The qualified financial institution,
qualified nonprofit organization, or Indian tribe shall deposit all
matching funds for each Individual Development Account into a parallel
account at a qualified financial institution, qualified nonprofit
organization, or Indian tribe.
(b) Regular Deposits of Matching Funds.--
(1) In general.--Subject to paragraph (2), the qualified
financial institution, qualified nonprofit organization, or
Indian tribe shall not less than annually deposit into the
parallel account with respect to each eligible individual the
following:
(A) A dollar-for-dollar match for the first $500
contributed by the eligible individual into an
Individual Development Account with respect to any
taxable year.
(B) Any matching funds provided by State, local, or
private sources in accordance to the matching ratio set
by those sources.
(2) Cross reference.--
For allowance of tax credit for
Individual Development Account subsidies, including matching funds, see
section 30B of the Internal Revenue Code of 1986.
(c) Forfeiture of Matching Funds.--Matching funds that are
forfeited under section 1015(b) shall be used by the qualified
financial institution, qualified nonprofit organization, or Indian
tribe to pay matches for other Individual Development Account
contributions by eligible individuals.
(d) Uniform Accounting Regulations.--The Secretary shall prescribe
regulations with respect to accounting for matching funds from all
possible sources in the parallel accounts.
(e) Regular Reporting of Accounts.--Any qualified financial
institution, qualified nonprofit organization, or Indian tribe shall
report the balances in any Individual Development Account and parallel
account of an eligible individual on not less than an annual basis.
SEC. 1015. WITHDRAWAL PROCEDURES.
(a) Withdrawals for Qualified Expenses.--To withdraw money from an
eligible individual's Individual Development Account to pay qualified
expenses of such individual or such individual's spouse or dependents,
the qualified financial institution, qualified nonprofit organization,
or Indian tribe shall directly transfer such funds from the Individual
Development Account, and, if applicable, from the parallel account
electronically to the vendor or other Individual Development Account.
If the vendor is not equipped to receive funds electronically, the
qualified financial institution, qualified nonprofit organization, or
Indian tribe may issue such funds by paper check to the vendor.
(b) Withdrawals for Nonqualified Expenses.--An Individual
Development Account holder may unilaterally withdraw funds from the
Individual Development Account for purposes other than to pay qualified
expenses, but shall forfeit the corresponding matching funds and
interest earned on the matching funds by doing so, unless such
withdrawn funds are recontributed to such Account by September 30
following the withdrawal.
(c) Deemed Withdrawals From Accounts of Noneligible Individuals.--
If the individual for whose benefit an Individual Development Account
is established ceases to be an eligible individual, such account shall
cease to be an Individual Development Account as of the first day of
the taxable year of such individual and any balance in such account
shall be deemed to have been withdrawn on such first day by such
individual for purposes other than to pay qualified expenses.
(d) Tax Treatment of Matching Funds.--Any amount withdrawn from a
parallel account shall not be includible in an eligible individual's
gross income.
SEC. 1016. CERTIFICATION AND TERMINATION OF QUALIFIED INDIVIDUAL
DEVELOPMENT ACCOUNT PROGRAMS.
(a) Certification Procedures.--Upon establishing a qualified
individual development account program under section 1011, a qualified
financial institution, qualified nonprofit organization, or Indian
tribe shall certify to the Secretary, or an organization designated by
the Secretary, on forms prescribed by the Secretary or
such organization and accompanied by any documentation required by the
Secretary or such organization, that--
(1) the accounts described in subparagraphs (A) and (B) of
section 1011(b)(1) are operating pursuant to all the provisions
of this title; and
(2) the qualified financial institution, qualified
nonprofit organization, or Indian tribe agrees to implement an
information system necessary to monitor the cost and outcomes
of the qualified individual development account program.
(b) Authority To Terminate Qualified IDA Program.--If the
Secretary, or an organization designated by the Secretary, determines
that a qualified financial institution, qualified nonprofit
organization, or Indian tribe under this title is not operating a
qualified individual development account program in accordance with the
requirements of this title (and has not implemented any corrective
recommendations directed by the Secretary or such organization), the
Secretary or such organization shall terminate such institution's,
nonprofit organization's, or Indian tribe's authority to conduct the
program. If the Secretary, or an organization designated by the
Secretary, is unable to identify a qualified financial institution,
qualified nonprofit organization, or Indian tribe to assume the
authority to conduct such program, then any account established for the
benefit of any eligible individual under such program shall cease to be
an Individual Development Account as of the first day of such
termination and any balance in such account shall be deemed to have
been withdrawn on such first day by such individual for purposes other
than to pay qualified expenses.
SEC. 1017. REPORTING, MONITORING, AND EVALUATION.
(a) Responsibilities of Qualified Financial Institutions, Qualified
Nonprofit Organizations, and Indian Tribes.--Each qualified financial
institution, qualified nonprofit organization, or Indian tribe that
establishes a qualified individual development account program under
section 1011 shall report annually to the Secretary, directly or
through an organization designated by the Secretary, within 90 days
after the end of each calendar year on--
(1) the number of eligible individuals making contributions
into Individual Development Accounts;
(2) the amounts contributed into Individual Development
Accounts and deposited into parallel accounts for matching
funds;
(3) the amounts withdrawn from Individual Development
Accounts and parallel accounts, and the purposes for which such
amounts were withdrawn;
(4) the balances remaining in Individual Development
Accounts and parallel accounts; and
(5) such other information needed to help the Secretary, or
an organization designated by the Secretary, monitor the cost
and outcomes of the qualified individual development account
program.
(b) Responsibilities of the Secretary or Designated Organization.--
(1) Monitoring protocol.--Not later than 12 months after
the date of enactment of this Act, the Secretary, or an
organization designated by the Secretary, shall develop and
implement a protocol and process to monitor the cost and
outcomes of the qualified individual development account
programs established under section 1011.
(2) Annual reports.--In each year after the date of
enactment of this Act, the Secretary, or an organization
designated by the Secretary, shall issue a progress report on
the status of such qualified individual development account
programs. Such report shall include from a representative
sample of qualified financial institutions, qualified nonprofit
organizations, and Indian tribes a report on--
(A) the characteristics of participants, including
age, gender, race or ethnicity, marital status, number
of children, employment status, and monthly income;
(B) individual level data on deposits, withdrawals,
balances, uses of Individual Development Accounts, and
participant characteristics;
(C) the characteristics of qualified individual
development account programs, including match rate,
economic education requirements, permissible uses of
accounts, staffing of programs in full time employees,
and the total costs of programs; and
(D) process information on program implementation
and administration, especially on problems encountered
and how problems were solved.
(3) Appropriations for monitoring.--There is authorized to
be appropriated $5,000,000 for the purposes of monitoring
qualified individual development account programs established
under section 1011, to remain available until expended.
SEC. 1018. CERTAIN ACCOUNT FUNDS OF PROGRAM PARTICIPANTS DISREGARDED
FOR PURPOSES OF CERTAIN MEANS-TESTED FEDERAL PROGRAMS.
Notwithstanding any provision of the Internal Revenue Code of 1986
or the Social Security Act that requires consideration of 1 or more
financial circumstances of an individual, for the purposes of
determining eligibility to receive, or the amount of, any assistance or
benefit authorized by such provision to be provided to or for the
benefit of such individual, the sum of--
(1) the lesser of--
(A) the sum of all contributions by an eligible
individual (including earnings thereon) to any
Individual Development Account; or
(B) $10,000; plus
(2) the sum of the matching deposits made on behalf of such
individual (including earnings thereon) in any parallel
account,
shall be disregarded for such purpose with respect to any period during
which the individual participates in a qualified individual development
account program established under section 1011.
Subtitle B--Qualified Individual Development Account Program Investment
Credits
SEC. 1021. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT
CREDITS.
(a) In General.--Subpart B of part IV of subchapter A of chapter 1
(relating to other credits) is amended by inserting after section 30A
the following:
``SEC. 30B. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT
CREDIT.
``(a) Determination of Amount.--There shall be allowed as a credit
against the applicable tax for the taxable year an amount equal to the
qualified individual development account program investment provided by
a taxpayer during the taxable year under a qualified individual
development account program established under section 1011 of the
American Community Renewal and New Markets Empowerment Act.
``(b) Applicable Tax.--For the purposes of this section, the term
`applicable tax' means the excess (if any) of--
``(1) the tax imposed under this chapter (other than the
taxes imposed under the provisions described in subparagraphs
(C) through (Q) of section 26(b)(2)), over
``(2) the credits allowable under subpart B (other than
this section) and subpart D of this part.
``(c) Qualified Individual Development Account Program
Investment.--For purposes of this section, the term `qualified
individual development account program investment' means an amount
equal to--
``(1) in the case of a taxpayer which is a qualified
financial institution, the sum of--
``(A) the lesser of--
``(i) 90 percent of the aggregate amount of
dollar-for-dollar matches under any qualified
individual development account program by such
taxpayer under section 1014 of the American
Community Renewal and New Markets Empowerment
Act for such taxable year, or
``(ii) $90,000,000, plus
``(B) the lesser of--
``(i) 50 percent of the aggregate costs
paid or incurred under such program by the
taxpayer during such taxable year--
``(I) to provide financial
education courses to Individual
Development Account holders under
section 1012(b) of such Act, and
``(II) to underwrite program
activities described in section
503(6)(B) of such Act), or
``(ii) $1,500,000, and
``(2) in the case of a taxpayer which is not a qualified
financial institution and which meets the requirement described
in paragraph (2) of subsection (d), the lesser of--
``(A) the sum of--
``(i) 50 percent of the aggregate amount of
such dollar-for-dollar matches by such taxpayer
for such taxable year, plus
``(ii) 50 percent of the aggregate costs
described in paragraph (1)(B)(i) paid under
such program by the taxpayer during such
taxable year, or
``(B) $5,000,000.
``(d) Definitions and Special Rules.--
``(1) In general.--For purposes of this section, the terms
`Individual Development Account' , `qualified individual
development account program', and `qualified financial
institution' have the meanings given such terms by section 1003
of the American Community Renewal and New Markets Empowerment
Act.
``(2) Requirement for taxpayers which are not qualified
financial institutions.--The requirement described in this
paragraph with respect to any taxpayer which is not a qualified
financial institution is the requirement that at least 70
percent of the expenditures by such taxpayer with respect to
any qualified individual development account program for any
taxable year are described in subsection (c)(2)(A).
``(3) Certain rules made applicable.--Rules similar to the
rules of paragraphs (1) and (2) of section 41(f) shall apply
for purposes of this section.
``(4) Denial of Double Benefit.--No deduction or credit
under any other provision of this chapter shall be allowed with
respect to qualified individual development account program
investments taken into account under subsection (a).
``(e) Regulations.--The Secretary may prescribe such regulations as
may be necessary or appropriate to carry out this section, including
regulations providing for a reduction of the credit allowed under this
section for any taxable year by the amount of any forfeiture under
section 1015(b) of the American Community Renewal and New Markets
Empowerment Act in such taxable year of any amount which was taken into
account in determining the amount of such credit in a preceding taxable
year.
``(f) Termination.--This section shall not apply to any taxable
year beginning after December 31, 2006.''.
(b) Conforming Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 30A the following:
``Sec. 30B. Qualified individual development account program investment
credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 1022. CRA CREDIT TREATMENT FOR QUALIFIED INDIVIDUAL DEVELOPMENT
ACCOUNT PROGRAM INVESTMENTS.
Qualified financial institutions which establish qualified
individual development account programs under section 1011 shall not
receive credit for funding, administration, and education expenses
under any test contained in regulations for the Community Reinvestment
Act of 1977 for those activities and expenses related to such programs
and taken into account for purposes of the tax credit allowed under
section 30B of the Internal Revenue Code of 1986.
SEC. 1023. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR DEPOSIT
TO INDIVIDUAL DEVELOPMENT ACCOUNTS.
(a) In General.--Section 32 (relating to earned income credit) is
amended by adding at the end the following:
``(o) Designation of Credit for Deposit to Individual Development
Account.--
``(1) In general.--With respect to the return of any
eligible individual (as defined in section 1003(1) of the
American Community Renewal and New Markets Empowerment Act) for
the taxable year of the tax imposed by this chapter, such
individual may designate that a specified portion (not less
than $1) of any overpayment of tax for such taxable year which
is attributable to the credit allowed under this section shall
be deposited by the Secretary into an Individual Development
Account (as defined in section 1003(2) of such Act) of such
individual. The Secretary shall so deposit such portion
designated under this paragraph.
``(2) Manner and time of designation.--A designation under
paragraph (1) may be made with respect to any taxable year--
``(A) at the time of filing the return of the tax
imposed by this chapter for such taxable year, or
``(B) at any other time (after the time of filing
the return of the tax imposed by this chapter for such
taxable year) specified in regulations prescribed by
the Secretary.
Such designation shall be made in such manner as the Secretary
prescribes by regulations.
``(3) Portion attributable to earned income tax credit.--
For purposes of paragraph (1), an overpayment for any taxable
year shall be treated as attributable to the credit allowed
under this section for such taxable year to the extent that
such overpayment does not exceed the credit so allowed.
``(4) Overpayments treated as refunded.--For purposes of
this title, any portion of an overpayment of tax designated
under paragraph (1) shall be treated as being refunded to the
taxpayer as of the last date prescribed for filing the return
of tax imposed by this chapter (determined without regard to
extensions) or, if later, the date the return is filed.
``(5) Termination.--This subsection shall not apply to any
taxable year beginning after December 31, 2006.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2001.
TITLE XI--CHARITABLE CHOICE EXPANSION
SEC. 1101. PROVISION OF ASSISTANCE UNDER GOVERNMENT PROGRAMS BY
RELIGIOUS ORGANIZATIONS.
Title XXIV of the Revised Statutes is amended by inserting after
section 1990 (42 U.S.C. 1994) the following:
``SEC. 1994A. CHARITABLE CHOICE.
``(a) Short Title.--This section may be cited as the `Charitable
Choice Expansion Act of 2000'.
``(b) Purpose.--The purposes of this section are--
``(1) to prohibit discrimination against nongovernmental
organizations and certain individuals on the basis of religion
in the distribution of government funds to provide government
assistance and distribution of such assistance, under
government programs described in subsection (c); and
``(2) to allow such organizations to accept such funds to
provide such assistance to such individuals without impairing
the religious character of such organizations or the religious
freedom of such individuals.
``(c) Religious Organizations Included as Nongovernmental
Providers.--For any program carried out by the Federal Government, or
by a State or local government with Federal funds, in which the
Federal, State, or local government is authorized to use
nongovernmental organizations, through contracts, grants, certificates,
vouchers, or other forms of disbursement, to provide assistance to
beneficiaries under the program, the government shall consider, on the
same basis as other nongovernmental organizations, religious
organizations to provide the assistance under the program, so long as
the program is implemented in a manner consistent with the
Establishment Clause of the first amendment to the Constitution.
Neither the Federal Government nor a State or local government
receiving funds under such program shall discriminate against an
organization that provides assistance under, or applies to provide
assistance under, such program, on the basis that the organization has
a religious character.
``(d) Exclusions.--As used in subsection (c), the term `program'
does not include activities carried out under--
``(1) Federal programs providing education to children
eligible to attend elementary schools or secondary schools, as
defined in section 14101 of the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 8801) (except for activities
to assist students in obtaining the recognized equivalents of
secondary school diplomas);
``(2) the Higher Education Act of 1965 (20 U.S.C. 1001 et
seq.);
``(3) the Head Start Act (42 U.S.C. 9831 et seq.); or
``(4) the Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9858 et seq.).
``(e) Religious Character and Independence.--
``(1) In general.--A religious organization that provides
assistance under a program described in subsection (c) shall
retain its independence from Federal, State, and local
governments, 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 or local government shall require a
religious organization--
``(A) to alter its form of internal governance; or
``(B) to remove religious art, icons, scripture, or
other symbols;
in order to be eligible to provide assistance under a program
described in subsection (c).
``(f) Employment Practices.--
``(1) Tenets and teachings.--A religious organization that
provides assistance under a program described in subsection (c)
may require that its employees providing assistance under such
program adhere to the religious tenets and teachings of such
organization, and such organization may require that those
employees adhere to rules forbidding the use of drugs or
alcohol.
``(2) Title vii exemption.--The exemption of a religious
organization provided under section 702 or 703(e)(2) of the
Civil Rights Act of 1964 (42 U.S.C. 2000e-1, 2000e-2(e)(2))
regarding employment practices shall not be affected by the
religious organization's provision of assistance under, or
receipt of funds from, a program described in subsection (c).
``(g) Rights of Beneficiaries of Assistance.--
``(1) In general.--If an individual described in paragraph
(3) has an objection to the religious character of the
organization from which the individual receives, or would
receive, assistance funded under any program described in
subsection (c), the appropriate Federal, State, or local
governmental entity shall provide to such individual (if
otherwise eligible for such assistance) within a reasonable
period of time after the date of such objection, assistance
that--
``(A) is from an alternative organization that is
accessible to the individual; and
``(B) has a value that is not less than the value
of the assistance that the individual would have
received from such organization.
``(2) Notice.--The appropriate Federal, State, or local
governmental entity shall ensure that notice is provided to
individuals described in paragraph (3) of the rights of such
individuals under this section.
``(3) Individual described.--An individual described in
this paragraph is an individual who receives or applies for
assistance under a program described in subsection (c).
``(h) Nondiscrimination Against Beneficiaries.--
``(1) Grants and contracts.--A religious organization
providing assistance through a grant or contract under a
program described in subsection (c) shall not discriminate, in
carrying out the program, against an individual described in
subsection (g)(3) on the basis of religion, a religious belief,
a refusal to hold a religious belief, or a refusal to actively
participate in a religious practice.
``(2) Indirect forms of disbursement.--A religious
organization providing assistance through a voucher,
certificate, or other form of indirect disbursement under a
program described in subsection (c) shall not deny an
individual described in subsection (g)(3) admission into such
program on the basis of religion, a religious belief, or a
refusal to hold a religious belief.
``(i) Fiscal Accountability.--
``(1) In general.--Except as provided in paragraph (2), any
religious organization providing assistance under any program
described in subsection (c) shall be subject to the same
regulations as other nongovernmental organizations to account
in accord with generally accepted accounting principles for the
use of such funds provided under such program.
``(2) Limited audit.--Such organization shall segregate
government funds provided under such program into a separate
account. Only the government funds shall be subject to audit by
the government.
``(j) Compliance.--A party alleging that the rights of the party
under this section have been violated by a State or local government
may bring a civil action pursuant to section 1979 against the official
or government agency that has allegedly committed such violation. A
party alleging that the rights of the party under this section have
been violated by the Federal Government may bring a civil action for
appropriate relief in an appropriate Federal district court against the
official or government agency that has allegedly committed such
violation.
``(k) Limitations on Use of Funds for Certain Purposes.--No funds
provided through a grant or contract to a religious organization to
provide assistance under any program described in subsection (c) shall
be expended for sectarian worship, instruction, or proselytization.
``(l) Effect on State and Local Funds.--If a State or local
government contributes State or local funds to carry out a program
described in subsection (c), the State or local government may
segregate the State or local funds from the Federal funds provided to
carry out the program or may commingle the State or local funds with
the Federal funds. If the State or local government commingles the
State or local funds, the provisions of this section shall apply to the
commingled funds in the same manner, and to the same extent, as the
provisions apply to the Federal funds.
``(m) Treatment of Intermediate Contractors.--If a nongovernmental
organization (referred to in this subsection as an `intermediate
organization'), acting under a contract or other agreement with the
Federal Government or a State or local government, is given the
authority under the contract or agreement to select nongovernmental
organizations to provide assistance under the programs described in
subsection (c), the intermediate organization shall have the same
duties under this section as the government but shall retain all other
rights of a nongovernmental organization under this section.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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