TABLE OF CONTENTS:
Title I: Designation Of and Tax Incentives for Renewal
Communities
Title II: Additional Provisions
American Community Renewal Act of 1999 - Title I: Designation of and Tax Incentives for Renewal Communities - Amends the Internal Revenue Code to authorize the Secretary of Housing and Urban Development to designate (upon local or State nomination) up to 100 renewal communities, of which at least 20 percent shall be in rural areas.
Requires for nomination purposes that: (1) the area be experiencing high rates of poverty and unemployment and general distress; and (2) State and local governments enter into written contracts with community organizations to promote specified economic growth and employment activities.
Excludes from gross income capital gains on the sale or exchange of a qualified community asset (stock, business property, or partnership interest) held for more than five years.
Allows a specified deduction for amounts paid into a family development account on behalf of an individual or another qualified individual who is a renewal community resident. Excludes from gross income account distributions used for qualified family development expenses (postsecondary education, first-home purchase, business capitalization, medical, and rollovers). Provides a penalty (with exceptions) in addition to inclusion as gross income for nonqualifying distributions.
Provides for designation of up to five qualifying renewal communities as matching demonstration areas eligible to receive family development account matching contributions.
Authorizes: (1) designation of earned income tax credit payments for family development account deposit; (2) a commercial building revitalization tax credit; (3) increased first year expensing for renewal community businesses; (4) extension of environmental remediation cost expensing and the work opportunity credit for renewal communities; and (5) similar tax treatment of renewal communities and enterprise zones for specified youth residence requirements.
(Sec. 104) Permits a deduction for contributions to a family development account whether or not a taxpayer itemizes.
Makes conforming amendments to provisions respecting: (1) tax on excess contributions and prohibited transactions; (2) trust and annuity information; (3) tax exemption applications; and (4) the commercial revitalization credit.
(Sec. 105) Sets forth reporting requirements.
(Sec. 106) Directs the Director of the Office of Management and Budget not to make any estimates of changes in receipts under the pay-as-you-go estimate provisions of the Balanced Budget and Emergency Deficit Control Act of 1985 resulting from the enactment of this Act.
Title II: Additional Provisions - Provides for local government transfer of unoccupied and substandard Department of Housing and Urban Development multifamily and single family housing in renewal communities, with subsequent disposition priority to be given to community development corporations.
(202) Amends the Public Health Service Act to declare that the amendments made by this Act apply to each program that makes awards of Federal financial assistance to prevent or treat substance abuse.
Allows, notwithstanding any other provision of law, a religious organization to be an award recipient, make subawards, provide services through vouchers, or accept vouchers for providing services. Makes religious organizations eligible on the same basis as any other nonprofit private organization. Prohibits Federal or State: (1) discrimination against an organization on the basis that the organization has a religious character; and (2) requirements that a religious organization, in order to be a program participant, remove religious art, icons, scripture, or other symbols.
Requires a religious organization to arrange for services through an alternative entity if an individual objects to the religious organization. Allows a religious organization to require a beneficiary who has elected to receive services from the organization to actively participate in religious practice, worship, and instruction.
Prohibits using funds for sectarian worship or instruction, unless the beneficiary may choose where the assistance is redeemed or allocated.
Declares that assistance to or on behalf of a beneficiary is aid to the beneficiary and not to the organization. Requires, if a State law or constitution would prevent the expenditure of State or local funds by religious organizations, that the Federal funds shall be segregated from State or other public funds.
Requires, for personnel working in religious organization drug treatment programs, giving credit for religious education and training equivalent to credit given for secular course work. Mandates waiver of educational requirements if the religious organization has a record of successful drug treatment and the State or local government fails to demonstrate empirically that the educational qualifications are necessary.
(Sec. 203) Amends the Community Reinvestment Act of 1977 to provide that a financial institution's investments in community development organizations located in renewal communities may be considered in evaluations under such Act.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 463 Introduced in Senate (IS)]
106th CONGRESS
1st Session
S. 463
To amend the Internal Revenue Code of 1986 to provide for the
designation of renewal communities, to provide tax incentives relating
to such communities, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 24, 1999
Mr. Abraham (for himself, Mr. Coverdell, Mr. Lieberman, and Mr.
Santorum) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for the
designation of renewal communities, to provide tax incentives relating
to such communities, 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 Act of 1999''.
(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--DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES
Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Extension of expensing of environmental remediation costs to
renewal communities.
Sec. 103. Extension of work opportunity tax credit for renewal
communities.
Sec. 104. Conforming and clerical amendments.
Sec. 105. Evaluation and reporting requirements.
Sec. 106. Exclusion of effects of this Act from Paygo scorecard.
TITLE II--ADDITIONAL PROVISIONS
Sec. 201. Transfer of unoccupied and substandard HUD-held housing in
renewal communities to local governments.
Sec. 202. Prevention and treatment of substance abuse; services
provided through religious organizations.
Sec. 203. CRA credit for investments in community development
organizations located in renewal
communities.
TITLE I--DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES
SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES.
(a) In General.--Chapter 1 is amended by adding at the end the
following new subchapter:
``Subchapter X--Renewal Communities
``Part I. Designation.
``Part II. Renewal community capital
gain; renewal community
business.
``Part III. Family development accounts.
``Part IV. 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 100
nominated areas as renewal communities.
``(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.
``(C) Priority for empowerment zones and enterprise
communities with respect to first half of
designations.--With respect to the first 50 percent of
the designations made under this section--
``(i) half shall be chosen from nominated
areas which are empowerment zones or enterprise
communities (and are otherwise eligible for
designation under this section); and
``(ii) 20 percent shall be areas described
in paragraph (2)(B).
``(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
the date of the designation and ending on the earliest of--
``(A) December 31, 2007,
``(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 five 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) State or local income tax benefits
for fees paid for services performed by a
nongovernmental entity which were formerly
performed by a governmental entity.
``(vii) 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 or
otherwise will not enforce within the area, 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; and
``(E) franchises or other restrictions on
competition for businesses providing public services,
including but not limited to taxicabs, jitneys, cable
television, or trash hauling,
except to the extent that such regulation of businesses and
occupations is necessary for and well-tailored to the
protection of health and safety.
``(e) Coordination With Treatment of Empowerment Zones and
Enterprise Communities.--For purposes of this title, if there are in
effect with respect to the same area both--
``(1) a designation as a renewal community; and
``(2) a designation as an empowerment zone or enterprise
community,
both of such designations shall be given full effect with respect to
such area.
``(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) State.--The term `State' includes Puerto Rico, the
Virgin Islands of the United States, Guam, American Samoa, the
Northern Mariana Islands, and any other possession of the
United States.
``(3) Local government.--The term `local government'
means--
``(A) any county, city, town, township, parish,
village, or other general purpose political subdivision
of a State;
``(B) any combination of political subdivisions
described in subparagraph (A) recognized by the
Secretary of Housing and Urban Development; and
``(C) the District of Columbia.
``(4) Application of rules relating to census tracts and
census data.--The rules of sections 1392(b)(4) and 1393(a)(9)
shall apply.
``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, 2008, 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 interest
in a partnership if--
``(A) such interest is acquired by the taxpayer
after December 31, 2000, and before January 1, 2008;
``(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, 2008;
``(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 (within the meaning of section
1400B(b)(4)(B)(ii)) by the taxpayer before
January 1, 2008; and
``(ii) any land on which such property is
located.
``(c) Certain Rules To Apply.--Rules similar to the rules of
paragraphs (5), (6), and (7) of subsection (b), and subsections (e),
(f), and (g), of section 1400B shall apply for purposes of this
section.
``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.
``For purposes of this part, the term `renewal community business'
means any entity or proprietorship which would be a qualified business
entity or qualified proprietorship under section 1397B if--
``(1) references to renewal communities were substituted
for references to empowerment zones in such section; and
``(2) `80 percent' were substituted for `50 percent' in
subsections (b)(2) and (c)(1) of such section.
``PART III--FAMILY DEVELOPMENT ACCOUNTS
``Sec. 1400H. Family development accounts
for renewal community EITC
recipients.
``Sec. 1400I. Demonstration program to
provide matching contributions
to family development accounts
in certain renewal communities.
``Sec. 1400J. Designation of earned
income tax credit payments for
deposit to family development
account.
``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL COMMUNITY EITC
RECIPIENTS.
``(a) Allowance of Deduction.--
``(1) In general.--There shall be allowed as a deduction--
``(A) in the case of a qualified individual, the
amount paid in cash for the taxable year by such
individual to any family development account for such
individual's benefit; and
``(B) in the case of any person other than a
qualified individual, the amount paid in cash for the
taxable year by such person to any family development
account for the benefit of a qualified individual but
only if the amount so paid is designated for purposes
of this section by such individual.
No deduction shall be allowed under this paragraph for any
amount deposited in a family development account under section
1400I (relating to demonstration program to provide matching
amounts in renewal communities).
``(2) Limitation.--
``(A) In general.--The amount allowable as a
deduction to any individual for any taxable year by
reason of paragraph (1)(A) shall not exceed the lesser
of--
``(i) $2,000, or
``(ii) an amount equal to the compensation
includible in the individual's gross income for
such taxable year.
``(B) Persons donating to family development
accounts of others.--The amount which may be designated
under paragraph (1)(B) by any qualified individual for
any taxable year of such individual shall not exceed
$1,000.
``(3) Special rules for certain married individuals.--Rules
similar to rules of section 219(c) shall apply to the
limitation in paragraph (2)(A).
``(4) Coordination with ira's.--No deduction shall be
allowed under this section to any person by reason of a payment
to an account for the benefit of a qualified individual if any
amount is paid into an individual retirement account (including
a Roth IRA) for the benefit of such individual.
``(5) Rollovers.--No deduction shall be allowed under this
section with respect to any rollover contribution.
``(b) Tax Treatment of Distributions.--
``(1) Inclusion of amounts in gross income.--Except as
otherwise provided in this subsection, any amount paid or
distributed out of a family development account shall be
included in gross income by the payee or distributee, as the
case may be.
``(2) Exclusion of qualified family development
distributions.--Paragraph (1) shall not apply to any qualified
family development distribution.
``(c) Qualified Family Development Distribution.--For purposes of
this section--
``(1) In general.--The term `qualified family development
distribution' means any amount paid or distributed out of a
family development account which would otherwise be includible
in gross income, to the extent that such payment or
distribution is used exclusively to pay qualified family
development expenses for the holder of the account or the
spouse or dependent (as defined in section 152) of such holder.
``(2) Qualified family development expenses.--The term
`qualified family development expenses' means any of the
following:
``(A) Qualified higher education expenses.
``(B) Qualified first-time homebuyer costs.
``(C) Qualified business capitalization costs.
``(D) Qualified medical expenses.
``(E) Qualified rollovers.
``(3) Qualified higher education expenses.--
``(A) In general.--The term `qualified higher
education expenses' has the meaning given such term by
section 72(t)(7), determined by treating postsecondary
vocational educational schools as eligible educational
institutions.
``(B) 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 the
enactment of this section.
``(C) 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).
``(4) Qualified first-time homebuyer costs.--The term
`qualified first-time homebuyer costs' means qualified
acquisition costs (as defined in section 72(t)(8) without
regard to subparagraph (B) thereof) with respect to a principal
residence (within the meaning of section 121) for a qualified
first-time homebuyer (as defined in such section).
``(5) Qualified business capitalization costs.--
``(A) In general.--The term `qualified business
capitalization costs' means qualified expenditures for
the capitalization of a qualified business pursuant to
a qualified plan.
``(B) Qualified expenditures.--The term `qualified
expenditures' means expenditures included in a
qualified plan, including capital, plant, equipment,
working capital, and inventory expenses.
``(C) Qualified business.--The term `qualified
business' means any business that does not contravene
any law.
``(D) Qualified plan.--The term `qualified plan'
means a business plan which meets such requirements as
the Secretary may specify.
``(6) Qualified medical expenses.--The term `qualified
medical expenses' means any amount paid during the taxable
year, not compensated for by insurance or otherwise, for
medical care (as defined in section 213(d)) of the taxpayer,
his spouse, or his dependent (as defined in section 152).
``(7) Qualified rollovers.--The term `qualified rollover'
means any amount paid from a family development account of a
taxpayer into another such account established for the benefit
of--
``(A) such taxpayer, or
``(B) any qualified individual who is--
``(i) the spouse of such taxpayer, or
``(ii) any dependent (as defined in section
152) of the taxpayer.
Rules similar to the rules of section 408(d)(3) shall apply for
purposes of this paragraph.
``(d) Tax Treatment of Accounts.--
``(1) In general.--Any family development account is exempt
from taxation under this subtitle unless such account has
ceased to be a family development account by reason of
paragraph (2). Notwithstanding the preceding sentence, any such
account is subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business income of
charitable, etc., organizations). Notwithstanding any other
provision of this title (including chapters 11 and 12), the
basis of any person in such an account is zero.
``(2) Loss of exemption in case of prohibited
transactions.--For purposes of this section, rules similar to
the rules of section 408(e) shall apply.
``(3) Other rules to apply.--Rules similar to the rules of
paragraphs (4), (5), and (6) of section 408(d) shall apply for
purposes of this section.
``(e) Family Development Account.--For purposes of this title, the
term `family development account' means a trust created or organized in
the United States for the exclusive benefit of a qualified individual
or his beneficiaries, but only if the written governing instrument
creating the trust meets the following requirements:
``(1) Except in the case of a qualified rollover (as
defined in subsection (c)(7))--
``(A) no contribution will be accepted unless it is
in cash; and
``(B) contributions will not be accepted for the
taxable year in excess of $3,000 (determined without
regard to any contribution made under section 1400I
(relating to demonstration program to provide matching
amounts in renewal communities)).
``(2) The requirements of paragraphs (2) through (6) of
section 408(a) are met.
``(f) Qualified Individual.--For purposes of this section, the term
`qualified individual' means, for any taxable year, an individual--
``(1) who is a bona fide resident of a renewal community
throughout the taxable year; and
``(2) to whom a credit was allowed under section 32 for the
preceding taxable year.
``(g) Other Definitions and Special Rules.--
``(1) Compensation.--The term `compensation' has the
meaning given such term by section 219(f)(1).
``(2) Married individuals.--The maximum deduction under
subsection (a) shall be computed separately for each
individual, and this section shall be applied without regard to
any community property laws.
``(3) Time when contributions deemed made.--For purposes of
this section, a taxpayer shall be deemed to have made a
contribution to a family 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 return for such taxable
year (not including extensions thereof).
``(4) Employer payments; custodial accounts.--Rules similar
to the rules of sections 219(f)(5) and 408(h) shall apply for
purposes of this section.
``(5) Reports.--The trustee of a family development account
shall make such reports regarding such account to the Secretary
and to the individual for whom the account is maintained with
respect to contributions (and the years to which they relate),
distributions, and such other matters as the Secretary may
require under regulations. The reports required by this
paragraph--
``(A) shall be filed at such time and in such
manner as the Secretary prescribes in such regulations;
and
``(B) shall be furnished to individuals--
``(i) not later than January 31 of the
calendar year following the calendar year to
which such reports relate; and
``(ii) in such manner as the Secretary
prescribes in such regulations.
``(6) Investment in collectibles treated as
distributions.--Rules similar to the rules of section 408(m)
shall apply for purposes of this section.
``(h) Penalty for Distributions Not Used for Qualified Family
Development Expenses.--
``(1) In general.--If any amount is distributed from a
family development account and is not used exclusively to pay
qualified family development expenses for the holder of the
account or the spouse or dependent (as defined in section 152)
of such holder, the tax imposed by this chapter for the taxable
year of such distribution shall be increased by the sum of--
``(A) 100 percent of the portion of such amount
which is includible in gross income and is attributable
to amounts contributed under section 1400I (relating to
demonstration program to provide matching amounts in
renewal communities); and
``(B) 10 percent of the portion of such amount
which is includible in gross income and is not
described in subparagraph (A).
For purposes of this subsection, distributions which are
includible in gross income shall be treated as attributable to
amounts contributed under section 1400I to the extent thereof.
For purposes of the preceding sentence, all family development
accounts of an individual shall be treated as one account.
``(2) Exception for certain distributions.--Paragraph (1)
shall not apply to distributions which are--
``(A) made on or after the date on which the
account holder attains age 59\1/2\,
``(B) made to a beneficiary (or the estate of the
account holder) on or after the death of the account
holder, or
``(C) attributable to the account holder's being
disabled within the meaning of section 72(m)(7).
``(i) Termination.--No deduction shall be allowed under this
section for any amount paid to a family development account for any
taxable year beginning after December 31, 2007.
``SEC. 1400I. DEMONSTRATION PROGRAM TO PROVIDE MATCHING CONTRIBUTIONS
TO FAMILY DEVELOPMENT ACCOUNTS IN CERTAIN RENEWAL
COMMUNITIES.
``(a) Designation.--
``(1) Definitions.--For purposes of this section, the term
`FDA matching demonstration area' means any renewal community--
``(A) which is nominated under this section by each
of the local governments and States which nominated
such community for designation as a renewal community
under section 1400E(a)(1)(A); and
``(B) which the Secretary of Housing and Urban
Development designates as an FDA matching demonstration
area 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 a community 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 5
communities as FDA matching demonstration areas.
``(B) Minimum designation in rural areas.--Of the
areas designated under subparagraph (A), at least 2
must be areas described in section 1400E(a)(2)(B).
``(3) Limitations 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 a
renewal community under paragraph (1)(A)
(including procedures for coordinating such
nomination with the nomination of an area for
designation as a renewal community under
section 1400E); and
``(ii) the manner in which nominated
renewal communities will be evaluated for
purposes of this section.
``(B) Time limitations.--The Secretary of Housing
and Urban Development may designate renewal communities
as FDA matching demonstration areas 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.
``(4) Designation based on degree of poverty, etc.--The
rules of section 1400E(a)(3) shall apply for purposes of
designations of FDA matching demonstration areas under this
section.
``(b) Period for Which Designation Is in Effect.--Any designation
of a renewal community as an FDA matching demonstration area shall
remain in effect during the period beginning on the date of such
designation and ending on the date on which such area ceases to be a
renewal community.
``(c) Matching Contributions to Family Development Accounts.--
``(1) In general.--Not less than once each taxable year,
the Secretary shall deposit (to the extent provided in
appropriation Acts) into a family development account of each
qualified individual (as defined in section 1400H(f))--
``(A) who is a resident throughout the taxable year
of an FDA matching demonstration area; and
``(B) who requests (in such form and manner as the
Secretary prescribes) such deposit for the taxable
year,
an amount equal to the sum of the amounts deposited into all of
the family development accounts of such individual during such
taxable year (determined without regard to any amount
contributed under this section).
``(2) Limitations.--
``(A) Annual limit.--The Secretary shall not
deposit more than $1000 under paragraph (1) with
respect to any individual for any taxable year.
``(B) Aggregate limit.--The Secretary shall not
deposit more than $2000 under paragraph (1) with
respect to any individual for all taxable years.
``(3) Exclusion from income.--Except as provided in section
1400H, gross income shall not include any amount deposited into
a family development account under paragraph (1).
``(d) Notice of Program.--The Secretary shall provide appropriate
notice to residents of FDA matching demonstration areas of the
availability of the benefits under this section.
``(e) Termination.--No amount may be deposited under this section
for any taxable year beginning after December 31, 2007.
``SEC. 1400J. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR
DEPOSIT TO FAMILY DEVELOPMENT ACCOUNT.
``(a) In General.--With respect to the return of any qualified
individual (as defined in section 1400H(f)) 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 earned income tax credit
shall be deposited by the Secretary into a family development account
of such individual. The Secretary shall so deposit such portion
designated under this subsection.
``(b) Manner and Time of Designation.--A designation under
subsection (a) may be made with respect to any taxable year--
``(1) at the time of filing the return of the tax imposed
by this chapter for such taxable year, or
``(2) 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.
``(c) Portion Attributable to Earned Income Tax Credit.--For
purposes of subsection (a), an overpayment for any taxable year shall
be treated as attributable to the earned income tax credit to the
extent that such overpayment does not exceed the credit allowed to the
taxpayer under section 32 for such taxable year.
``(d) Overpayments Treated as Refunded.--For purposes of this
title, any portion of an overpayment of tax designated under subsection
(a) 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.
``(e) Termination.--This section shall not apply to any taxable
year beginning after December 31, 2007.
``PART IV--ADDITIONAL INCENTIVES
``Sec. 1400K. Commercial revitalization
credit.
``Sec. 1400L. Increase in expensing under
section 179.
``SEC. 1400K. COMMERCIAL REVITALIZATION CREDIT.
``(a) General Rule.--For purposes of section 46, except as provided
in subsection (e), the commercial revitalization credit for any taxable
year is an amount equal to the applicable percentage of the qualified
revitalization expenditures with respect to any qualified
revitalization building.
``(b) Applicable Percentage.--For purposes of this section--
``(1) In general.--The term `applicable percentage' means--
``(A) 20 percent for the taxable year in which a
qualified revitalization building is placed in service,
or
``(B) at the election of the taxpayer, 5 percent
for each taxable year in the credit period.
The election under subparagraph (B), once made, shall be
irrevocable.
``(2) Credit period.--
``(A) In general.--The term `credit period' means,
with respect to any building, the period of 10 taxable
years beginning with the taxable year in which the
building is placed in service.
``(B) Applicable rules.--Rules similar to the rules
under paragraphs (2) and (4) of section 42(f) shall
apply.
``(c) 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 credit amount is
allocated to the building under subsection (e); and
``(C) depreciation (or amortization in lieu of
depreciation) is allowable with respect to the
building.
``(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 and which is--
``(I) nonresidential real property;
or
``(II) an addition or improvement
to property described in subclause (I);
and
``(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.
``(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 credit under this section for all
preceding taxable years.
``(C) Certain expenditures not included.--The term
`qualified revitalization expenditure' does not
include--
``(i) Straight line depreciation must be
used.--Any expenditure (other than with respect
to land acquisitions) with respect to which the
taxpayer does not use the straight line method
over a recovery period determined under
subsection (c) or (g) of section 168. The
preceding sentence shall not apply to any
expenditure to the extent the alternative
depreciation system of section 168(g) applies
to such expenditure by reason of subparagraph
(B) or (C) of section 168(g)(1).
``(ii) 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.
``(iii) Other credits.--Any expenditure
which the taxpayer may take into account in
computing any other credit allowable under this
title unless the taxpayer elects to take the
expenditure into account only for purposes of
this section.
``(d) When Expenditures Taken Into Account.--
``(1) In general.--Qualified revitalization expenditures
with respect to any qualified revitalization building shall be
taken into account for the taxable year in which the qualified
revitalization building is placed in service. For purposes of
the preceding sentence, a substantial rehabilitation of a
building shall be treated as a separate building.
``(2) Progress expenditure payments.--Rules similar to the
rules of subsections (b)(2) and (d) of section 47 shall apply
for purposes of this section.
``(e) Limitation on Aggregate Credits Allowable With Respect to
Buildings Located in a State.--
``(1) In general.--The amount of the credit determined
under this section for any taxable year with respect to any
building shall not exceed the commercial revitalization credit
amount (in the case of an amount determined under subsection
(b)(1)(B), the present value of such amount as determined under
the rules of section 42(b)(2)(C)) allocated to such building
under this subsection by the commercial revitalization credit
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 credit amount for
agencies.--
``(A) In general.--The aggregate commercial
revitalization credit amount which a commercial
revitalization credit agency may allocate for any
calendar year is the amount of the State commercial
revitalization credit ceiling determined under this
paragraph for such calendar year for such agency.
``(B) State commercial revitalization credit
ceiling.--The State commercial revitalization credit
ceiling applicable to any State--
``(i) for each calendar year after 2000 and
before 2008 is $2,000,000 for each renewal
community in the State; and
``(ii) zero for each calendar year
thereafter.
``(C) Commercial revitalization credit agency.--For
purposes of this section, the term `commercial
revitalization credit agency' means any agency
authorized by a State to carry out this section.
``(f) Responsibilities of Commercial Revitalization Credit
Agencies.--
``(1) Plans for allocation.--Notwithstanding any other
provision of this section, the commercial revitalization credit
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 credit 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 credit 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.
``(g) Termination.--This section shall not apply to any building
placed in service after December 31, 2007.
``SEC. 1400L. INCREASE IN EXPENSING UNDER SECTION 179.
``(a) General Rule.--In the case of a renewal community business
(as defined in section 1400G), for purposes of section 179--
``(1) the limitation under section 179(b)(1) shall be
increased by the lesser of--
``(A) $35,000; or
``(B) the cost of section 179 property which is
qualified renewal property placed in service during the
taxable year; and
``(2) the amount taken into account under section 179(b)(2)
with respect to any section 179 property which is qualified
renewal property shall be 50 percent of the cost thereof.
``(b) Recapture.--Rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified renewal property
which ceases to be used in a renewal community by a renewal community
business.
``(c) 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, 2008; and
``(B) such property would be qualified zone
property (as defined in section 1397C) if references to
renewal communities were substituted for references to
empowerment zones in section 1397C.
``(2) Certain rules to apply.--The rules of subsections
(a)(2) and (b) of section 1397C shall apply for purposes of
this section.''.
SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO
RENEWAL COMMUNITIES.
(a) Extension.--Paragraph (2) of section 198(c) (defining targeted
area) is amended by redesignating subparagraph (C) as subparagraph (D)
and by inserting after subparagraph (B) the following new subparagraph:
``(C) Renewal communities included.--Except as
provided in subparagraph (B), such term shall include a
renewal community (as defined in section 1400E).''.
(b) Extension of Termination Date for Renewal Communities.--
Subsection (h) of section 198 is amended by inserting before the period
``(December 31, 2007, in the case of a renewal community, as defined in
section 1400E).''.
SEC. 103. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR RENEWAL
COMMUNITIES
(a) Extension.--Subsection (c) of section 51 (relating to
termination) is amended by adding at the end the following new
paragraph:
``(5) Extension of credit for renewal communities.--
``(A) In general.--In the case of an individual who
begins work for the employer after the date contained
in paragraph (4)(B), for purposes of section 38--
``(i) in lieu of applying subsection (a),
the amount of the work opportunity credit
determined under this section for the taxable
year shall be equal to--
``(I) 15 percent of the qualified
first-year wages for such year; and
``(II) 30 percent of the qualified
second-year wages for such year;
``(ii) subsection (b)(3) shall be applied
by substituting `$10,000' for `$6,000';
``(iii) paragraph (4)(B) shall be applied
by substituting for the date contained therein
the last day for which the designation under
section 1400E of the renewal community referred
to in subparagraph (B)(i) is in effect; and
``(iv) rules similar to the rules of
section 51A(b)(5)(C) shall apply.
``(B) Qualified first- and second-year wages.--For
purposes of subparagraph (A)--
``(i) In general.--The term `qualified
wages' means, with respect to each 1-year
period referred to in clause (ii) or (iii), as
the case may be, the wages paid or incurred by
the employer during the taxable year to any
individual but only if--
``(I) the employer is engaged in a
trade or business in a renewal
community throughout such 1-year
period;
``(II) the principal place of abode
of such individual is in such renewal
community throughout such 1-year
period; and
``(III) substantially all of the
services which such individual performs
for the employer during such 1-year
period are performed in such renewal
community.
``(ii) Qualified first-year wages.--The
term `qualified first-year wages' means, with
respect to any individual, qualified wages
attributable to service rendered during the 1-
year period beginning with the day the
individual begins work for the employer.
``(iii) Qualified second-year wages.--The
term `qualified second-year wages' means, with
respect to any individual, qualified wages
attributable to service rendered during the 1-
year period beginning on the day after the last
day of the 1-year period with respect to such
individual determined under clause (ii).''.
(b) Congruent Treatment of Renewal Communities and Enterprise Zones
for Purposes of Youth Residence Requirements.--
(1) 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''.
(2) 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''.
(3) Headings.--Paragraphs (5)(B) and (7)(C) of section
51(d) are each amended by inserting ``or community'' in the
heading after ``zone''.
SEC. 104. CONFORMING AND CLERICAL AMENDMENTS.
(a) Deduction for Contributions to Family Development Accounts
Allowable Whether or Not Taxpayer Itemizes.--Subsection (a) of section
62 (relating to adjusted gross income defined) is amended by inserting
after paragraph (17) the following new paragraph:
``(18) Family development accounts.--The deduction allowed
by section 1400H(a)(1)(A).''.
(b) Tax on Excess Contributions.--
(1) Tax imposed.--Subsection (a) of section 4973 is amended
by striking ``or'' at the end of paragraph (3), adding ``or''
at the end of paragraph (4), and inserting after paragraph (4)
the following new paragraph:
``(5) a family development account (within the meaning of
section 1400H(e)),''.
(2) Excess contributions.--Section 4973 is amended by
adding at the end the following new subsection:
``(g) Family Development Accounts.--For purposes of this section,
in the case of a family development account, the term `excess
contributions' means the sum of--
``(1) the excess (if any) of--
``(A) the amount contributed for the taxable year
to the account (other than a qualified rollover, as
defined in section 1400H(c)(7), or a contribution under
section 1400I), over
``(B) the amount allowable as a deduction under
section 1400H for such contributions; and
``(2) the amount determined under this subsection for the
preceding taxable year reduced by the sum of--
``(A) the distributions out of the account for the
taxable year which were included in the gross income of
the payee under section 1400H(b)(1);
``(B) the distributions out of the account for the
taxable year to which rules similar to the rules of
section 408(d)(5) apply by reason of section
1400H(d)(3); and
``(C) the excess (if any) of the maximum amount
allowable as a deduction under section 1400H for the
taxable year over the amount contributed to the account
for the taxable year (other than a contribution under
section 1400I).
For purposes of this subsection, any contribution which is distributed
from the family development account in a distribution to which rules
similar to the rules of section 408(d)(4) apply by reason of section
1400H(d)(3) shall be treated as an amount not contributed.''.
(c) Tax on Prohibited Transactions.--Section 4975 is amended--
(1) by adding at the end of subsection (c) the following
new paragraph:
``(6) Special rule for family development accounts.--An
individual for whose benefit a family development account is
established and any contributor to such account shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a family development
account by reason of the application of section 1400H(d)(2) to
such account.''; and
(2) in subsection (e)(1), by striking ``or'' at the end of
subparagraph (E), by redesignating subparagraph (F) as
subparagraph (G), and by inserting after subparagraph (E) the
following new subparagraph:
``(F) a family development account described in
section 1400H(e), or''.
(d) Information Relating to Certain Trusts and Annuity Plans.--
Subsection (c) of section 6047 is amended--
(1) by inserting ``or section 1400H'' after ``section
219''; and
(2) by inserting ``, of any family development account
described in section 1400H(e),'', after ``section 408(a)''.
(e) Inspection of Applications for Tax Exemption.--Clause (i) of
section 6104(a)(1)(B) is amended by inserting ``a family development
account described in section 1400H(e),'' after ``section 408(a),''.
(f) Failure To Provide Reports on Family Development Accounts.--
Paragraph (2) of section 6693(a) is amended by striking ``and'' at the
end of subparagraph (C), by striking the period and inserting ``, and''
at the end of subparagraph (D), and by adding at the end the following
new subparagraph:
``(E) section 1400H(g)(6) (relating to family
development accounts).''.
(g) Conforming Amendments Regarding Commercial Revitalization
Credit.--
(1) Section 46 (relating to investment credit) is amended
by striking ``and'' at the end of paragraph (2), by striking
the period at the end of paragraph (3) and inserting ``, and'',
and by adding at the end the following new paragraph:
``(4) the commercial revitalization credit provided under
section 1400K.''.
(2) Section 39(d) is amended by adding at the end the
following new paragraph:
``(9) No carryback of section 1400k credit before date of
enactment.--No portion of the unused business credit for any
taxable year which is attributable to any commercial
revitalization credit determined under section 1400K may be
carried back to a taxable year ending before the date of the
enactment of section 1400K.''.
(3) Subparagraph (B) of section 48(a)(2) is amended by
inserting ``or commercial revitalization'' after
``rehabilitation'' each place it appears in the text and
heading.
(4) Subparagraph (C) of section 49(a)(1) is amended by
striking ``and'' at the end of clause (ii), by striking the
period at the end of clause (iii) and inserting ``, and'', and
by adding at the end the following new clause:
``(iv) the portion of the basis of any
qualified revitalization building attributable
to qualified revitalization expenditures.''.
(5) Paragraph (2) of section 50(a) is amended by inserting
``or 1400K(d)(2)'' after ``section 47(d)'' each place it
appears.
(6) Subparagraph (A) of section 50(a)(2) is amended by
inserting ``or qualified revitalization building
(respectively)'' after ``qualified rehabilitated building''.
(7) Subparagraph (B) of section 50(a)(2) is amended by
adding at the end the following new sentence: ``A similar rule
shall apply for purposes of section 1400K.''.
(8) Paragraph (2) of section 50(b) is amended by striking
``and'' at the end of subparagraph (C), by striking the period
at the end of subparagraph (D) and inserting ``; and'', and by
adding at the end the following new subparagraph:
``(E) a qualified revitalization building (as
defined in section 1400K) to the extent of the portion
of the basis which is attributable to qualified
revitalization expenditures (as defined in section
1400K).''.
(9) The last sentence of section 50(b)(3) is amended to
read as follows: ``If any qualified rehabilitated building or
qualified revitalization building is used by the tax-exempt
organization pursuant to a lease, this paragraph shall not
apply for purposes of determining the amount of the
rehabilitation credit or the commercial revitalization
credit.''.
(10) Subparagraph (C) of section 50(b)(4) is amended--
(A) by inserting ``or commercial revitalization''
after ``rehabilitated'' in the text and heading; and
(B) by inserting ``or commercial revitalization''
after ``rehabilitation''.
(11) Subparagraph (C) of section 469(i)(3) is amended--
(A) by inserting ``or section 1400K'' after
``section 42''; and
(B) by striking ``credit'' in the heading and
inserting ``and commercial revitalization credits''.
(h) Clerical Amendments.--The table of subchapters for chapter 1 is
amended by adding at the end the following new item:
``Subchapter X. Renewal Communities.''.
SEC. 105. 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. 106. EXCLUSION OF EFFECTS OF THIS ACT FROM PAYGO SCORECARD.
Upon the enactment of this Act, 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 Act.
TITLE II--ADDITIONAL PROVISIONS
SEC. 201. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD HOUSING IN
RENEWAL COMMUNITIES TO LOCAL GOVERNMENTS.
(a) Transfer Requirement.--Pursuant to the authority under section
204 of the Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act, 1997, the
Secretary shall transfer ownership of any qualified HUD property to the
unit of general local government having jurisdiction for the area in
which the property is located in accordance with this section, but only
if the unit of general local government enters into an agreement with
the Secretary meeting the requirements of subsection (d).
(b) Qualified HUD Properties.--For purposes of this section, the
term ``qualified HUD property'' means any unoccupied multifamily
housing, project, substandard multifamily housing project, or
unoccupied single family property, that is--
(1) owned by the Secretary; and
(2) located within a renewal community.
(c) Timing of Transfer.--Any transfer of ownership required under
subsection (a) shall be completed--
(1) with respect to any multifamily housing project or
single family property that is acquired by the Secretary before
the date on which the area in which property is located is
designated as a renewal community and that is substandard or
unoccupied (as applicable) upon such date, not later than 1
year after such date; and
(2) with respect to any multifamily housing project or
single family property that is acquired by the Secretary on or
after the date on which the area in which the property is
located is designated as a renewal community, not later than 1
year after--
(A) the date on which the project is determined to
be substandard or unoccupied (as applicable), in the
case of a property that is not unoccupied or
substandard upon acquisition by the Secretary; or
(B) the date on which the project is acquired by
the Secretary, in the case of a property that is
substandard or unoccupied (as applicable) upon such
acquisition.
(d) Agreements To Sell Property to Community Development
Corporations.--An agreement described in this subsection is an
agreement that requires a unit of general local government to dispose
of the qualified HUD property acquired by the unit of general local
government in accordance with the following requirements:
(1) Notification to community development corporations.--
Not later than 30 days after the date on which the unit of
general local government acquires title to the property under
subsection (a), the unit of general local government shall
notify each community development corporation located in the
State in which the property is located--
(A) of such acquisition of title; and
(B) that, during the 6-month period beginning on
the date on which such notification is made, such
community development corporations shall have the
exclusive right under this subsection to make bona fide
offers to purchase the property on a cost recovery
basis.
(2) Right of first refusal.--During the 6-month period
described in paragraph (1)(B)--
(A) the unit of general local government may not
sell or offer to sell the qualified HUD property other
than to a party notified under paragraph (1), unless
each community development corporation required to be
so notified has notified the unit of general local
government that the corporation will not make an offer
to purchase the property; and
(B) the unit of general local government shall
accept a bona fide offer to purchase the property made
during such period if the offer is acceptable to the
unit of general local government, except that a unit of
general local government may not sell a property to a
community development corporation during that 6-month
period other than on a cost recovery basis.
(3) Other disposition.--During the 6-month period beginning
on the expiration of the 6-month period described in paragraph
(1)(B), the unit of general local government shall dispose of
the property on a negotiated, competitive bid, or other basis,
on such terms as the unit of general local government deems
appropriate.
(e) Satisfaction of Indebtedness.--Before transferring ownership of
any qualified HUD property pursuant to subsection (a), the Secretary
shall satisfy any indebtedness incurred in connection with the property
to be transferred, by--
(1) canceling the indebtedness; or
(2) reimbursing the unit of general local government to
which the property is transferred for the amount of the
indebtedness.
(f) Determination of Status of Properties.--To ensure compliance
with the requirements of subsection (c), the Secretary shall take the
following actions:
(1) Upon designation of renewal communities.--Upon the
designation of any renewal community, the Secretary shall
promptly assess each residential property owned by the
Secretary that is located within such renewal community to
determine whether such property is a qualified HUD property.
(2) Upon acquisition.--Upon acquiring any residential
property that is located with a renewal community, the
Secretary shall promptly determine whether the property is a
qualified HUD property.
(3) Updates.--The Secretary shall periodically reassess the
residential properties owned by the Secretary to determine
whether any such properties have become qualified HUD
properties.
(g) Tenant Leases.--This section 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.
(h) Procedures.--Not later than the expiration of the 6-month
period beginning on the date of the enactment of this Act, the
Secretary shall establish, by rule, regulation, or order, such
procedures as may be necessary to carry out this section.
(i) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) 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.
(2) Cost recovery basis.--The term ``cost recovery basis''
means, with respect to any sale of a residential property by a
unit of general local government to a community development
corporation under subsection (d)(2), that the purchase price
paid by the community development corporation is less than or
equal to the costs incurred by the unit of general local
government in connection with such property during the period
beginning on the date on which the unit of general local
government acquires title to the property under subsection (a)
and ending on the date on which the sale is consummated.
(3) Low-income families.--The term ``low-income families''
has the meaning given the term in section 3(b) of the United
States Housing Act of 1937.
(4) 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.
(5) Renewal community.--The term ``renewal community''
means an area designated (under subchapter X of chapter 1 of
the Internal Revenue Code of 1986) as a renewal community.
(6) Residential property.--The term ``residential
property'' means a property that is a multifamily housing
project or a single family property.
(7) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(8) Severe physical problems.--The term ``severe physical
problems'' means, with respect to a dwelling unit, that the
unit--
(A) 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;
(B) on not less than 3 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;
(C) has no functioning electrical service, exposed
wiring, any room in which there is not a functioning
electrical outlet, or has experienced 3 or more blown
fuses or tripped circuit breakers during the preceding
90-day period;
(D) is accessible through a public hallway in which
there are no working light fixtures, loose or missing
steps or railings, and no elevator; or
(E) 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.
(9) Single family property.--The term ``single family
property'' means a 1- to 4-family residence.
(10) 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.
(11) Unit of general local government.--The term ``unit of
general local government'' has the meaning given the term in
section 102(a) of the Housing and Community Development Act of
1974.
(12) 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.
SEC. 202. 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 each program under this Act that makes 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 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
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 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) Findings.--The Congress finds that the establishment
clause of the first amendment to the Constitution of the United
States does not require that--
``(A) social-welfare programs discriminate against
faith-based providers of services; or
``(B) faith-based providers of services, as a
prerequisite to participation in Federal programs,
abandon their religious character and censor their
religious expression.
``(2) Nondiscrimination.--Religious organizations are
eligible to be program participants on the same basis as any
other nonprofit private organization. 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) Nondiscrimination in Employment.--
``(1) In general.--Except as provided in paragraph (2),
nothing in this section shall be construed to modify or affect
the provisions of any other Federal or State law or regulation
that relates to discrimination in employment on the basis of
religion.
``(2) Exception.--A religious organization that is a
program participant may require that an employee rendering
program services adhere to--
``(A) the religious beliefs and practices of such
organization; and
``(B) any rules of the organization regarding the
use of drugs or alcohol.
``(f) Rights of Program Beneficiaries.--
(1) Objections regarding religious organizations.--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 arrange for the
individual to receive program services through an
alternative entity.
``(B) If the organization received a designated
subaward, the non-Federal entity that made the subaward
shall arrange for the individual to receive the program
services through an alternative program participant.
``(C) If the organization is providing services
pursuant to voucherized assistance, the designated
award recipient that operates the voucherized
assistance program shall arrange for the individual to
receive the program services through an alternative
provider.
``(D) Arrangements under any of paragraphs (A)
through (C) with an alternative entity shall provide
for 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.--
``(A) In general.--Except as provided in
subparagraph (B) or 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.
``(B) Limitation.--A religious organization that is
a program participant may require a program beneficiary
who has elected in accordance with paragraph (1) to
receive program services from such organization--
``(i) to actively participate in religious
practice, worship, and instruction; and
``(ii) to follow rules of behavior devised
by the organizations that are religious in
content or origin.
``(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. ADMINISTRATION OF PROGRAM AND TREATMENT OF FUNDS.
``(a) Funds Not Aid to Institutions.--Financial assistance under a
designated program provided to or on behalf of program beneficiaries is
aid to the beneficiary, not to the organization providing program
services. The receipt by a program beneficiary of program services at
the facilities of the organization shall not constitute Federal
financial assistance to the organization involved.
``(b) Prohibition on State Discrimination in Use of Funds.--No
provision in any State constitution or State law shall be construed to
prohibit the expenditure of Federal funds under a designated program in
a religious facility or by a religious organization that is a program
participant. If a State law or constitution would prevent the
expenditure of State or local public funds in such a facility or by
such an organization, then the State or local government shall
segregate the Federal funds from State or other public funds for
purposes of carrying out the designated program.
``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.--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. In applying educational
qualifications for personnel in religious organizations, such
State or local government shall give credit for religious
education and training equivalent to credit given for secular
course work in drug treatment or any other secular subject that
is of similar grade level and duration.
``(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.''.
SEC. 203. CRA CREDIT FOR INVESTMENTS IN COMMUNITY DEVELOPMENT
ORGANIZATIONS LOCATED IN RENEWAL COMMUNITIES.
Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C.
2903) is amended by adding at the end the following new subsection:
``(c) Investments in Certain Community Development Organizations.--
In assessing and taking into account, under subsection (a), the record
of a regulated financial institution, the appropriate Federal financial
supervisory agency may consider, as a factor, investments of the
institution in, and capital investment, loan participation, and other
ventures undertaken by the institution in cooperation with, any
community development organization (as defined in section 234 of the
Bank Enterprise Act of 1991) which is located in a renewal community
(as designated under section 1400E of the Internal Revenue Code of
1986).''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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