Empowerment Zone and Renewal Community Enhancement Act of 2007 - Amends Internal Revenue Code provisions relating to tax-preferred empowerment zones, rural enterprise communities, and renewal communities to: (1) extend the period of designation for such areas through 2015; (2) provide a safe harbor standard for employee residency requirements in empowerment zones; (3) eliminate certain residency requirements for the empowerment zone employment tax credit; (4) grant authority to expand the boundaries of empowerment zones and enterprise communities, including those located in rural areas; (5) allow carryovers of unused expensing allowances for enterprise zone businesses; (6) allow certain empowerment zone businesses to elect to receive payments in lieu of tax benefits; (7) allow federal guarantees and tax exemptions for enterprise zones and renewal communities; and (8) allow the issuance of tax-exempt rural enterprise community bonds.
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2578 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 2578
To amend the Internal Revenue Code of 1986 to extend and expand the
benefits for businesses operating in empowerment zones, enterprise
communities, or renewal communities, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 6, 2007
Mr. Davis of Alabama (for himself, Mr. Alexander, Mr. Rodriguez, Mr.
Higgins, Mr. Walsh of New York, Mrs. Jones of Ohio, Ms. Corrine Brown
of Florida, Mr. Kildee, Mr. Michaud, Mr. Ryan of Ohio, Mr. Boren, Mr.
Clay, Mr. Cohen, Mr. Rahall, Mr. Marshall, Mr. Bonner, Mr. Jindal, and
Mr. Boustany) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to extend and expand the
benefits for businesses operating in empowerment zones, enterprise
communities, or renewal 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.
(a) Short Title.--This Act may be cited as the ``Empowerment Zone
and Renewal Community Enhancement Act of 2007''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. EXTENSION OF BENEFITS.
(a) Empowerment Zones.--
(1) Rounds i and ii designations.--Section 1391(d)(1) is
amended by striking ``December 31, 2009'' in subparagraph
(A)(i) and inserting ``December 31, 2015''.
(2) Round iii designations.--Section 1391(h)(2) is amended
by striking ``December 31, 2009'' and inserting ``December 31,
2015''.
(b) Rural Enterprise Communities.--Section 1391(d)(1)(A) is amended
by striking clause (ii) and inserting the following new clauses:
``(ii) in the case of an enterprise community
designated in an urban area, the close of the 10th
calendar year beginning on or after such date of
designation, or
``(iii) in the case of an enterprise community
designated in a rural area, December 31, 2015,''.
(c) Renewal Communities.--
(1) Sections 1400E(b) and 1400I(g) are each amended by
striking ``December 31, 2009'' each place it occurs and
inserting ``December 31, 2015''.
(2) Sections 1400E(b)(3), 1400F(b), and 1400J(b) are each
amended by striking ``January 1, 2010'' and inserting ``January
1, 2016''.
(3) Section 1400F(d) is amended by striking ``December 31,
2014'' and inserting ``December 31, 2020''.
(4) Section 1400I(d)(2)(A) is amended by striking ``2010''
and inserting ``2016''.
SEC. 3. REVISION OF BENEFITS.
(a) Safe Harbor for Meeting Requirement That 35 Percent of
Employees Be Residents of Zone.--
(1) In general.--Section 1397C (defining enterprise zone
business) is amended by adding at the end the following new
subsection:
``(g) Additional Safe Harbor for Meeting Requirement That 35
Percent of Employees Be Residents of Zone.--The requirements of
subsections (b)(6) and (c)(5) shall not fail to be treated as met for
any period with respect to a qualified business if--
``(1) as of the date of issuance of an issue, the date
property is placed in service, or the date of the sale of an
asset, it is reasonably expected that within 3 years after such
date the business will increase employment by at least the
lesser of--
``(A) in the case of--
``(i) a business located in a renewal
community or in a rural area (as defined in
section 1393(a)(2)) in an empowerment zone or
enterprise community, 500 full-time employees,
or
``(ii) a business located outside a rural
area (as so defined) in an empowerment zone or
enterprise community, 1,000 full-time
employees, or
``(B) 10 percent of the number of full-time
employees estimated to have been employed in such zone
or community on the date of its designation,
``(2) as of the date of issuance of the issue, it is
reasonably expected that as a result of the bonds the business
will increase employment by at least one job for each $150,000
in face amount of the issue,
``(3) at any time within 3 years after the date of the
issuance of an issue, the date property is placed in service,
or the date of the sale of an asset, the requirements of such
subsections are met, or
``(4) the business enters into a binding agreement with the
appropriate local government employment agency to apply a first
source rule to advertise and prioritize employment
opportunities with such business for qualified residents of
such zone or community.''.
(2) Effective date.--The amendment made by this subsection
shall take effect on the date of the enactment of this Act,
except that in the case of obligations which are outstanding on
such date, such date shall be deemed the date of issuance for
such obligations.
(b) Eligibility of Businesses Developing or Holding Intangibles.--
(1) In general.--Paragraph (4) of section 1397C(d) is
amended by inserting before the period ``unless the intangibles
are developed within the empowerment zone''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(c) Reduced Wage Credit Allowable for Zone Residents Employed
Outside the Zone; Employees Need Not Be Residents of Zone in Which
Employed.--
(1) In general.--Subsection (b) of section 1396 is amended
to read as follows:
``(b) Applicable Percentage.--
``(1) Qualified zone employees who perform substantially
all of their services in an empowerment zone.--The applicable
percentage is 20 percent with respect to qualified zone
employees who would meet the requirement of subsection (d)(1)
if only services performed within an empowerment zone were
taken into account.
``(2) Other qualified zone employees.--
``(A) In general.--The applicable percentage is--
``(i) 20 percent in the case of designated
qualified zone employees of employers which are
enterprise zone businesses, and
``(ii) 10 percent in the case of any other
designated qualified zone employee.
``(B) Limitations on number of designated
employees.--
``(i) In general.--For purposes of
subparagraph (A), the term `designated
qualified zone employee' means a qualified zone
employee--
``(I) to whom paragraph (1) does
not apply, and
``(II) who is designated under this
subparagraph.
``(ii) Manner of designations.--
Designations under this subparagraph shall be
made by the local government or governments
which nominated the area to be an empowerment
zone.
``(iii) Limitation on designations.--The
number of employees for whom a designation
under this subparagraph is in effect at any one
time with respect to each empowerment zone
shall not exceed--
``(I) 500 for purposes of
subparagraph (A)(i), and
``(II) 2,000 for purposes of
subparagraph (A)(ii).''.
(2) Qualified zone employee.--Paragraph (1) of section
1396(d) is amended--
(A) by striking ``within an empowerment zone'' in
subparagraph (A), and
(B) by striking ``such empowerment zone'' in
subparagraph (B) and inserting ``an empowerment zone''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(d) Carryforward of Unallocated State Commercial Revitalization
Expenditure Ceiling.--
(1) In general.--Paragraph (1) of section 1400I(d) is
amended to read as follows:
``(1) In general.--The aggregate commercial revitalization
expenditure amount which a commercial revitalization agency may
allocate for any calendar year is the amount equal to the sum
of--
``(A) the amount of the State commercial
revitalization expenditure ceiling determined under
this paragraph for such calendar year for such agency
(determined without regard to subparagraph (B)), and
``(B) the aggregate of the unused State commercial
revitalization expenditure ceilings determined under
this paragraph for such agency for each of the 2
preceding calendar years.
For purposes of subparagraph (B), amounts of expenditure
ceiling shall be treated as allocated by an agency first from
unused amounts for the second preceding calendar year, then
from unused amounts for the 1st preceding calendar year, and
then from amounts from the current year State allocation.''.
(2) Effective date.--The amendment made by this subsection
shall apply to calendar years beginning after the date of the
enactment of this Act.
(e) Commercial Revitalization Deduction for Building Expansions.--
(1) In general.--Section 1400I(b)(1) is amended--
(A) by striking ``any building (and its structural
components) if'',
(B) by inserting ``any building (and its structural
components) if'' before ``the building is placed'' in
subparagraph (A),
(C) by striking ``or'' at the end of subparagraph
(A),
(D) by striking ``such building not described in
subparagraph (A),'' in subparagraph (B) and inserting
``any building (and its structural components) not
described in subparagraph (A) if'',
(E) by striking the period at the end of
subparagraph (B)(ii) and inserting ``, or'', and
(F) by adding at the end the following new
subparagraph:
``(C) in the case of any expansion of a building
not described in subparagraph (A) or (B), such
expansion if--
``(i) such expansion is made to a building
owned by the taxpayer,
``(ii) the taxpayer provides a detailed
accounting of the distinct capital costs
attributable to such expansion, and
``(iii) such expansion is placed in service
by the taxpayer in a renewal community and the
original use of such expansion begins with the
taxpayer.''.
(2) Effective date.--The amendments made by this subsection
shall apply to property placed in service after the date of the
enactment of this Act.
(f) Authority To Expand Boundaries of Zones and Communities.--
(1) Empowerment zones and enterprise communities.--Section
1391 is amended by adding at the end the following new
subsection:
``(i) Authority To Expand Boundaries of Designated Areas.--
``(1) In general.--At the request of all governments which
nominated an area as an empowerment zone or enterprise
community, the appropriate Secretary may expand the area of
such zone or community to include 1 or more noncontiguous areas
if such governments establish to the satisfaction of the
appropriate Secretary that such expansion furthers the purposes
of the designation of the initial area as such a zone or
community.
``(2) Rural areas.--With respect to any empowerment zone or
enterprise community located in a rural area, at the request of
the nominating local government, the appropriate Secretary
shall expand the area of such zone or community to include the
entire area of such nominating local government, but only if--
``(A) either--
``(i) the poverty rate and the unemployment
rate for such entire area as determined by the
2000 decennial census data was at least 110
percent of such rate for the United States, or
``(ii) during the period beginning with the
1990 decennial census and ending with the 2000
decennial census, such entire area has a net
out migration of inhabitants of at least 10
percent of the population of such area, and
``(B) such entire area meets 1 or more of the
following criteria determined by the 2000 decennial
census data:
``(i) Median household income is not more
than 70 percent of such income for the United
States.
``(ii) Per capita income is not more than
75 percent of such income for the United
States.
``(iii) The percentage of such area's
population which is disabled is at least 130
percent of such percentage for the United
States.''.
(2) Renewal communities.--Section 1400E is amended by
adding at the end the following new subsection:
``(h) Authority To Expand Boundaries of Designated Areas.--
``(1) In general.--At the request of all governments which
nominated an area as a renewal community, the Secretary of
Housing and Urban Development may expand the area of such
community to include 1 or more noncontiguous areas if such
governments establish to the satisfaction of such Secretary
that such expansion furthers the purposes of the designation of
the initial area as a renewal community.
``(2) Rural areas.--With respect to any renewal community
located in a rural area, at the request of the nominating local
government, the Secretary of Housing and Urban Development
shall expand the area of such community to include the entire
area of such nominating local government, but only if--
``(A) either--
``(i) the poverty rate and the unemployment
rate for such entire area as determined by the
2000 decennial census data was at least 110
percent of such rate for the United States, or
``(ii) during the period beginning with the
1990 decennial census and ending with the 2000
decennial census, such entire area has a net
out migration of inhabitants of at least 10
percent of the population of such area, and
``(B) such entire area meets 1 or more of the
following criteria determined by the 2000 decennial
census data:
``(i) Median household income is not more
than 70 percent of such income for the United
States.
``(ii) Per capita income is not more than
75 percent of such income for the United
States.
``(iii) The percentage of such area's
population which is disabled is at least 130
percent of such percentage for the United
States.''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
(g) Modification of Requirement for Expanding Designated Area Based
on 2000 Census.--
(1) In general.--Clause (ii) of section 1400E(g)(1)(A) is
amended to read as follows:
``(ii) such tract has a poverty rate using
2000 census data--
``(I) which is at least 20 percent,
or
``(II) which exceeds the poverty
rate for such tract using 1990 census
data.''.
(2) Effective date.--The amendment made by this subsection
shall take effect on the date of the enactment of this Act.
(h) Repeal of Exclusion of Central Business District From
Eligibility as Designated Area.--
(1) In general.--Paragraph (3) of section 1392(a) is
amended by adding ``and'' at the end of subparagraph (B), by
striking ``, and'' at the end of subparagraph (C) and inserting
a period, and by striking subparagraph (D).
(2) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
(i) Carryover of Unused Increased Section 179 Expensing Limit.--
(1) In general.--Subparagraph (A) of section 1397A(a)(1) is
amended to read as follows:
``(A) the sum of--
``(i) $35,000, and
``(ii) the aggregate of the unused
increased limitations for each of the 2
preceding taxable years, or''.
(2) Unused increased limitation.--Section 1397A is amended
by adding at the end the following new subsection:
``(c) Unused Increased Limitation.--For purposes of subsection
(a)(1)(A)--
``(1) In general.--The unused increased limitation for any
taxable year is the excess (but not more than $35,000) of the
limitation under section 179(b)(1) as increased under
subsection (a) over the cost of section 179 property which is
qualified zone property placed in service during the taxable
year.
``(2) Ordering rule.--The limitation under section
179(b)(1) as increased under subsection (a) shall be treated as
used first from unused limitation for the second preceding
calendar year, then from unused limitation for the 1st
preceding calendar year, and then from such limitation for the
current year.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(j) Election of Financing Arrangement in Lieu of Tax Benefits.--
(1) In general.--Section 1396 is amended by adding at the
end the following new subsection:
``(e) Election of Financing Arrangement in Lieu of Tax Benefits.--
``(1) In general.--At the election of any significant
empowerment zone business, for the payment period of the debt
obligation designated in such election by such business--
``(A) such business--
``(i) shall not be allowed an empowerment
zone employment credit described in subsection
(a), and
``(ii) shall not be allowed any deduction
for depreciation under section 168 with respect
to qualified zone property, and
``(B) the Secretary shall make the payments
described in paragraph (2) to the holder of such debt
obligation (or in the event that there is more than 1
holder, to such trustee designated by the electing
business to accept such payments on behalf of such
holders).
``(2) Payments.--
``(A) In general.--At the beginning of each year of
the payment period, the Secretary shall pay (out of any
money in the Treasury not otherwise appropriated) to
the holder of the debt obligation designated by such
business an amount equal to--
``(i) the empowerment zone employment
credit computed each year under this section as
if the election was not made under this
subsection, and
``(ii) the cost recovery benefit described
in subparagraph (B),
paid in equal installments (or as adjusted pursuant to
paragraph (4(A)) over the payment period described in
subparagraph (C).
``(B) Cost recovery benefit.--For purposes of
subparagraph (A), the cost recovery benefit shall be an
amount equal to 25 percent of--
``(i) the cost of any tangible property
which is qualified zone property (including
improvements to such tangible property)
incurred by the significant empowerment zone
business, and
``(ii) any such cost for which a binding
contract for financing the acquisition of such
tangible property (including improvements to
such tangible property) has been made by such
business and which under the terms of the
financing is to be incurred within the first 5
full calendar years beginning after the date of
the election made under this subsection.
``(C) Payment period.--The payment period is the
period of 15 calendar years beginning with the earlier
of--
``(i) the calendar year specified (before
the beginning of such year) by the significant
empowerment zone business as the 1st year of
the payment period without regard to the date
the property is placed in service, or
``(ii) the 5th calendar year beginning
after the date that the election under this
subsection is made.
``(3) Significant empowerment zone business.--For purposes
of this subsection, the term `significant empowerment zone
business' means any trade or business operating in an
empowerment zone if--
``(A) such business is nominated by the chief
executive or the legislative body of the State or a
local government in which the zone property is located,
and
``(B) the Secretary of Housing and Urban
Development determines that--
``(i) it is a facility for qualified
research as defined in section 41(d) which is
reasonably anticipated to make at least
$50,000,000 of capital expenditures within the
first 3 years of the payment period, or
``(ii) with respect to any other business,
it is reasonably anticipated that such business
will increase employment in such zone by the
end of the first 3 years of the payment period
by at least the lesser of--
``(I) 1,000 full-time employees or
equivalents, or
``(II) 10 percent of the number of
full-time employees estimated to have
been employed in such zone on the date
of its designation.
``(4) Special rules.--
``(A) Adjustment to cost recovery benefit.--In the
event that the significant empowerment zone business
does not incur a cost within the period described in
paragraph (2)(B) and for which a cost recovery benefit
payment is made under this subsection, the Secretary
shall reduce future recovery benefit payments to
recover 110 percent of the overpayments in equal
installments over the remaining payment period.
``(B) Basis adjustment.--For purposes of this
subtitle, if a cost recovery payment is made under this
subsection with respect to any property, the basis of
such property shall be reduced by the amount of such
payment.
``(5) Treatment of payments.--Any payment made under this
subsection shall not be treated as a Federal Government
guarantee for purposes of section 149(b).''.
(2) Conforming amendment.--Section 1016(a) is amended by
striking ``and'' at the end of paragraph (36), by striking the
period at the end of paragraph (37) and inserting ``, and'',
and by adding at the end the following new paragraph:
``(38) to the extent provided in section 1396(e)(4)(B).''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(k) Certain Federally Guaranteed Bonds Issued To Provide
Investments in Empowerment Zones and Renewal Communities Permitted To
Be Tax-Exempt, etc.--
(1) In general.--Subparagraph (A) of section 149(b)(3) is
amended by striking ``or'' at the end of clause (ii), by
striking the period at the end of clause (iii) and inserting
``, or'', and by adding at the end the following new clause:
``(iv) any guarantee by a Federal Home Loan
Bank for a bond 95 percent or more of the net
proceeds of which are to be used to provide
property in an empowerment zone or renewal
community.''.
(2) Effective date.--The amendments made by this subsection
shall apply to bonds issued after the date of the enactment of
this Act.
(l) Tax-Exempt Interest of Financial Institutions on Zone Facility
Bonds Not Subject to Interest Disallowance.--
(1) In general.--Subparagraph (B) of section 265(b)(3)
(defining qualified bond) is amended by adding at the end the
following new clause:
``(iii) Enterprise zone facility bonds.--
The term `qualified tax-exempt obligation'
includes any obligation which is treated as an
exempt facility bond by section 1394.''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(m) Developable Sites Population Clarification.--
(1) In general.--Subparagraph (C) of section 1391(g)(3)
(relating to modifications to eligibility criteria, etc.) is
amended to read as follows:
``(C) Population limitation.--
``(i) Aggregate population limitation.--The
aggregate population limitation under the last
sentence of subsection (b)(2) shall not apply
to a designation under paragraph (1).
``(ii) Exception for developable sites.--
The parcels described in subparagraph (A)(iii)
shall not be taken into account in determining
whether the requirement of section
1392(a)(1)(A) is met.''.
(2) Effective date.--The amendment made by this subsection
shall take effect on the date of the enactment of this Act.
(n) Reporting.--The Secretary of the Treasury (or the Secretary's
delegate) shall annually submit to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of the Senate
a report detailing for each empowerment zone, enterprise community, and
renewal community the amount and type of claimed tax benefits.
SEC. 4. ADDITIONAL ACCESS TO CAPITAL BY RURAL ENTERPRISE COMMUNITIES.
Section 1394 (relating to tax-exempt enterprise zone facility
bonds) is amended by adding at the end the following new subsection:
``(g) Bonds for Rural Enterprise Communities.--
``(1) In general.--In the case of a rural enterprise
community bond--
``(A) such bond shall not be treated as a private
activity bond for purposes of section 146, and
``(B) subsections (c) and (f)(2) of this section
shall not apply.
``(2) Limitation of amount of bonds.--
``(A) In general.--Paragraph (1) shall apply to a
rural enterprise community bond only if such bond is
designated for purposes of this subsection by the
Secretary of Agriculture for the area to which such
bond relates.
``(B) Limitation on bonds designated.--The
aggregate face amount of bonds which may be designated
under subparagraph (A) with respect to all rural
enterprise communities shall not exceed $200,000,000.
``(C) Special rules.--
``(i) Coordination with other
limitations.--Bonds to which paragraph (1)
applies shall not be taken into account in
applying the limitation of subsection (c) or
(f)(2) to other bonds.
``(ii) Current refunding not taken into
account.--In the case of a refunding (or series
of refundings) of a bond designated under this
paragraph, the refunding obligation shall be
treated as designated under this paragraph (and
shall not be taken into account in applying
subparagraph (B)) if--
``(I) the amount of the refunding
bond does not exceed the outstanding
amount of the refunded bond, and
``(II) the refunded bond is
redeemed not later than 90 days after
the date of issuance of the refunding
bond.
``(3) Rural enterprise community bond.--For purposes of
this subsection, the term `rural enterprise community bond'
means any bond which would be described in subsection (a) if
all rural enterprise communities were taken into account under
sections 1397C and 1397D.
``(4) Designation procedure.--The Secretary of Agriculture
shall establish within 90 days after the date of the enactment
of this subsection, the procedure for the nomination and
selection of rural enterprise communities with respect to the
designation of rural enterprise community bonds.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line