< Back to S. 2936 (106th Congress, 1999–2000)

Text of the Creating New Markets and Empowering America Act of 2000

This bill was introduced on July 26, 2000, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jul 26, 2000 (Introduced).

Source: GPO

S 2936 IS

106th CONGRESS

2d Session

S. 2936

To provide incentives for new markets and community development, and for other purposes.

IN THE SENATE OF THE UNITED STATES

July 26, 2000

Mr. ROBB (for himself, Mr. DASCHLE, Mr. BAUCUS, Mr. BREAUX, Mr. DODD, Mr. DORGAN, Mr. JOHNSON, Mr. KENNEDY, Mr. KERREY, Mr. KERRY, Mr. LEAHY, Mr. LIEBERMAN, Mrs. LINCOLN, Mr. REID, Mr. ROCKEFELLER, Mr. SCHUMER, Mr. TORRICELLI, Mr. HARKIN, and Mr. BAYH) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To provide incentives for new markets and community development, 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 ‘Creating New Markets and Empowering America Act of 2000’.

    (b) AMENDMENT OF 1986 CODE- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

    (c) TABLE OF CONTENTS-

      Sec. 1. Short title; etc.

TITLE I--NEW MARKETS TAX CREDIT

      Sec. 101. New markets tax credit.

TITLE II--AMERICA’S PRIVATE INVESTMENT COMPANIES

      Sec. 201. Definitions.

      Sec. 202. Authorization.

      Sec. 203. Selection of APIC’s.

      Sec. 204. Operations of APIC’s.

      Sec. 205. Credit enhancement by the Federal government.

      Sec. 206. APIC requests for guarantee actions.

      Sec. 207. Examination and monitoring of APIC’s.

      Sec. 208. Penalties.

      Sec. 209. Effective date.

      Sec. 210. Sunset.

TITLE III--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL

Subtitle A--New Markets Venture Capital Program

      Sec. 301. New markets venture capital program.

      Sec. 302. Bankruptcy exemption for NMVC companies.

      Sec. 303. Federal savings associations.

Subtitle B--Community Development Venture Capital Assistance

      Sec. 311. Findings.

      Sec. 312. Community development venture capital activities.

Subtitle C--Business LINC

      Sec. 321. Grants authorized.

      Sec. 322. Regulations.

TITLE IV--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES

      Sec. 401. Additional empowerment zone designations.

      Sec. 402. Extension of enterprise zone treatment through 2009.

      Sec. 403. 20 percent employment credit for all empowerment zones.

      Sec. 404. Increased expensing under section 179.

      Sec. 405. Higher limits on tax-exempt empowerment zone facility bonds.

      Sec. 406. Nonrecognition of gain on rollover of empowerment zone investments.

      Sec. 407. Increased exclusion of gain on sale of empowerment zone stock.

      Sec. 408. Treatment of intangibles.

      Sec. 409. Application of developable site opportunities to round I empowerment zones and enterprise communities.

      Sec. 410. Funding entitlement for round II empowerment zones.

      Sec. 411. Extension of termination date for expensing of environmental remediation costs; extension to renewal communities.

TITLE V--AMERICAN COMMUNITY RENEWAL

      Sec. 501. Designation of and tax incentives for renewal communities.

      Sec. 502. Work opportunity credit for hiring youth residing in renewal communities.

      Sec. 503. Evaluation and reporting requirements.

TITLE VI--HOMEOWNERSHIP AND REVITALIZATION

      Sec. 601. Increase in State ceiling on low-income housing credit.

      Sec. 602. Additional modifications to low-income housing credit.

      Sec. 603. Increase in State ceiling on private activity bonds.

      Sec. 604. Home ownership tax credit.

      Sec. 605. Tax credit for renovating historic homes.

      Sec. 606. Transfer of unoccupied and substandard HUD-held housing to local governments and community development corporations.

      Sec. 607. Transfer of HUD assets in revitalization areas.

      Sec. 608. Risk-sharing demonstration.

TITLE VII--TRADE-AFFECTED COMMUNITIES RELIEF

      Sec. 701. Definitions.

      Sec. 702. Petitions and determinations.

      Sec. 703. Grants for economic development.

      Sec. 704. Provide incentives for new investments for trade-affected communities.

      Sec. 705. Central clearinghouse for economic development.

      Sec. 706. Appropriations.

      Sec. 707. Supplement not supplant.

      Sec. 708. Regulations.

TITLE VIII--DELTA REGIONAL AUTHORITY

      Sec. 801. Delta Regional Authority.

TITLE IX--FEDERAL GRANT PROGRAM PARTICIPATION EXPANSION

      Sec. 901. Equal opportunity for religious and other community organizations to participate in Federal grant programs.

TITLE X--NEW MILLENNIUM CLASSROOMS

      Sec. 1001. Credit for computer donations to schools, senior centers, public libraries, and other training centers.

TITLE I--NEW MARKETS TAX CREDIT

SEC. 101. NEW MARKETS TAX CREDIT.

    (a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 (relating to business-related credits) is amended by adding at the end the following new section:

‘SEC. 45D. NEW MARKETS TAX CREDIT.

    ‘(a) ALLOWANCE OF CREDIT-

      ‘(1) IN GENERAL- For purposes of section 38, in the case of a taxpayer who holds a qualified equity investment on a credit allowance date of such investment which occurs during the taxable year, the new markets tax credit determined under this section for such taxable year is an amount equal to the applicable percentage of the amount paid to the qualified community development entity for such investment at its original issue.

      ‘(2) APPLICABLE PERCENTAGE- For purposes of paragraph (1), the applicable percentage is--

        ‘(A) 5 percent with respect to the first 3 credit allowance dates, and

        ‘(B) 6 percent with respect to the remainder of the credit allowance dates.

      ‘(3) CREDIT ALLOWANCE DATE- For purposes of paragraph (1), the term ‘credit allowance date’ means, with respect to any qualified equity investment--

        ‘(A) the date on which such investment is initially made, and

        ‘(B) each of the 6 anniversary dates of such date thereafter.

    ‘(b) QUALIFIED EQUITY INVESTMENT- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified equity investment’ means any equity investment in a qualified community development entity if--

        ‘(A) such investment is acquired by the taxpayer at its original issue (directly or through an underwriter) solely in exchange for cash,

        ‘(B) substantially all of such cash is used by the qualified community development entity to make qualified low-income community investments, and

        ‘(C) such investment is designated for purposes of this section by the qualified community development entity.

      Such term shall not include any equity investment issued by a qualified community development entity more than 7 years after the date that such entity receives an allocation under subsection (f). Any allocation not used within such 7-year period may be reallocated by the Secretary under subsection (f).

      ‘(2) LIMITATION- The maximum amount of equity investments issued by a qualified community development entity which may be designated under paragraph (1)(C) by such entity shall not exceed the portion of the limitation amount allocated under subsection (f) to such entity.

      ‘(3) SAFE HARBOR FOR DETERMINING USE OF CASH- The requirement of paragraph (1)(B) shall be treated as met if at least 85 percent of the aggregate gross assets of the qualified community development entity are invested in qualified low-income community investments.

      ‘(4) TREATMENT OF SUBSEQUENT PURCHASERS- The term ‘qualified equity investment’ includes any equity investment which would (but for paragraph (1)(A)) be a qualified equity investment in the hands of the taxpayer if such investment was a qualified equity investment in the hands of a prior holder.

      ‘(5) REDEMPTIONS- A rule similar to the rule of section 1202(c)(3) shall apply for purposes of this subsection.

      ‘(6) EQUITY INVESTMENT- The term ‘equity investment’ means--

        ‘(A) any stock (other than nonqualified preferred stock as defined in section 351(g)(2)) in an entity which is a corporation, and

        ‘(B) any capital interest in an entity which is a partnership.

    ‘(c) QUALIFIED COMMUNITY DEVELOPMENT ENTITY- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified community development entity’ means any corporation or partnership if--

        ‘(A) the primary mission of the entity is serving, or providing investment capital for, low-income communities or low-income persons,

        ‘(B) the entity maintains accountability to residents of low-income communities through representation on governing or advisory boards or otherwise, (This requirement may be met by an entity that controls the community development entity applying for a credit allocation.) and

        ‘(C) the entity is certified by the Secretary for purposes of this section as being a qualified community development entity.

      ‘(2) SPECIAL RULES FOR CERTAIN ORGANIZATIONS- The requirements of paragraph (1) shall be treated as met by--

        ‘(A) any specialized small business investment company (as defined in section 1044(c)(3)), and

        ‘(B) any community development financial institution (as defined in section 103 of the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4702)).

    ‘(d) QUALIFIED LOW-INCOME COMMUNITY INVESTMENTS- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified low-income community investment’ means--

        ‘(A) any equity investment in, or loan to, any qualified active low-income community business,

        ‘(B) the purchase from another community development entity of any loan made by such entity which is a qualified low-income community investment if the amount received by such other entity from such purchase is used by such other entity to make qualified low-income community investments,

        ‘(C) financial counseling and other services specified in regulations prescribed by the Secretary to businesses located in, and residents of, low-income communities, and

        ‘(D) any equity investment in, or loan to, any qualified community development entity if substantially all of the investment or loan is used by such entity to make qualified low-income community investments described in subparagraphs (A), (B), and (C).

      ‘(2) QUALIFIED ACTIVE LOW-INCOME COMMUNITY BUSINESS-

        ‘(A) IN GENERAL- For purposes of paragraph (1), the term ‘qualified active low-income community business’ means, with respect to any taxable year, any corporation (including a nonprofit corporation) or partnership if for such year--

          ‘(i) at least 50 percent of the total gross income of such entity is derived from the active conduct of a qualified business within any low-income community,

          ‘(ii) a substantial portion of the use of the tangible property of such entity (whether owned or leased) is within any low-income community,

          ‘(iii) a substantial portion of the services performed for such entity by its employees are performed in any low-income community,

          ‘(iv) less than 5 percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to collectibles (as defined in section 408(m)(2)) other than collectibles that are held primarily for sale to customers in the ordinary course of such business, and

          ‘(v) less than 5 percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to nonqualified financial property (as defined in section 1397C(e)). The determination of whether an investment made by a community development entity constitutes a qualified low-income community investment is made at the time that the entity makes the loan to, or purchases equity interests in a qualified business.

        ‘(B) PROPRIETORSHIP- Such term shall include any business carried on by an individual as a proprietor if such business would meet the requirements of subparagraph (A) were it incorporated.

        ‘(C) PORTIONS OF BUSINESS MAY BE QUALIFIED ACTIVE LOW-INCOME COMMUNITY BUSINESS- The term ‘qualified active low-income community business’ includes any trades

or businesses which would qualify as a qualified active low-income community business if such trades or businesses were separately incorporated.

      ‘(3) QUALIFIED BUSINESS- For purposes of this subsection, the term ‘qualified business’ has the meaning given to such term by section 1397C(d); except that--

        ‘(A) in lieu of applying paragraph (2)(B) thereof, the rental to others of real property located in any low-income community shall be treated as a qualified business if there are substantial improvements located on such property,

        ‘(B) paragraph (3) thereof shall not apply, and

        ‘(C) such term shall not include any business if a significant portion of the equity interests in such business are held by any person who otherwise holds a significant portion of the equity investments in the community development entity.

    ‘(e) LOW-INCOME COMMUNITY- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘low-income community’ means any population census tract (including tracts in U.S. territories or possessions) if--

        ‘(A) the poverty rate for such tract is at least 20 percent,

        ‘(B)(i) in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide (or if in a U.S. territory, territory-wide) median family income, or

        ‘(ii) in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide (or if in a U.S. territory, territory-wide) median family income or the metropolitan area median family income.

      ‘(2) AREAS NOT WITHIN CENSUS TRACTS- In the case of an area which is not tracted for population census tracts, the equivalent county divisions (as defined by the Bureau of the Census for purposes of defining poverty areas) shall be used for purposes of determining poverty rates and median family income.

      ‘(3) TARGETED POPULATION- The Secretary may prescribe regulations under which 1 or more targeted populations (within the meaning of section 3(20) of the Riegle Community Development and Regulatory Improvement Act of 1974 (12 U.S.C. 4702(20))) may be treated as low-income communities. Such regulations shall include procedures for identifying the area covered by any such community for purposes of determining entities which are qualified active low-income community businesses with respect to such community.

    ‘(f) NATIONAL LIMITATION ON AMOUNT OF INVESTMENTS DESIGNATED-

      ‘(1) IN GENERAL- There is a new markets tax credit limitation for each calendar year. Such limitation is--

        ‘(A) $1,000,000,000 for 2001,

        ‘(B) $1,500,000,000 for 2002 and 2003,

        ‘(C) $2,000,000,000 for 2004 and 2005,

        ‘(D) $3,500,000,000 for 2006 and 2007.

      ‘(2) ALLOCATION OF LIMITATION- The limitation under paragraph (1) shall be allocated by the Secretary among qualified community development entities selected by the Secretary. In making allocations under the preceding sentence, the Secretary shall give priority to community development entities with records of having successfully provided capital or technical assistance to disadvantaged businesses or communities and to entities whose controlling parents have such records.

      ‘(3) CARRYOVER OF UNUSED LIMITATION- If the new markets tax credit limitation for any calendar year exceeds the aggregate amount allocated

under paragraph (2) for such year, such limitation for the succeeding calendar year shall be increased by the amount of such excess.

    ‘(g) RECAPTURE OF CREDIT IN CERTAIN CASES-

      ‘(1) IN GENERAL- If, at any time during the 7-year period beginning on the date of the original issue of a qualified equity investment in a qualified community development entity, there is a recapture event with respect to such investment, then the tax imposed by this chapter for the taxable year in which such event occurs shall be increased by the credit recapture amount.

      ‘(2) CREDIT RECAPTURE AMOUNT- For purposes of paragraph (1), the credit recapture amount is an amount equal to the sum of--

        ‘(A) the aggregate decrease in the credits allowed to the taxpayer under section 38 for all prior taxable years which would have resulted if no credit had been determined under this section with respect to such investment, plus

        ‘(B) interest at the overpayment rate established under section 6621 on the amount determined under subparagraph (A) for each prior taxable year for the period beginning on the due date for filing the return for the prior taxable year involved.

      No deduction shall be allowed under this chapter for interest described in subparagraph (B).

      ‘(3) RECAPTURE EVENT- For purposes of paragraph (1), there is a recapture event with respect to an equity investment in a qualified community development entity if--

        ‘(A) such entity ceases to be a qualified community development entity,

        ‘(B) the proceeds of the investment cease to be used as required of subsection (b)(1)(B), or

        ‘(C) such investment is redeemed by such entity.

      If the original community development entity no longer exists, a successor entity can continue to meet the requirements of a community development entity without triggering recapture. A recapture event occurs only if the entity fails to make a good faith effort to ensure that the proceeds of the investment as required by subsection (b)(1)(B).

      ‘(4) SPECIAL RULES-

        ‘(A) TAX BENEFIT RULE- The tax for the taxable year shall be increased under paragraph (1) only with respect to credits allowed by reason of this section which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carryforwards and carrybacks under section 39 shall be appropriately adjusted.

        ‘(B) NO CREDITS AGAINST TAX- Any increase in tax under this subsection shall not be treated as a tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.

    ‘(h) BASIS REDUCTION- The basis of any qualified equity investment shall be reduced by the amount of any credit determined under this section with respect to such investment. This subsection shall not apply for purposes of sections 1202, 1400B, and 1400F.

    ‘(i) REGULATIONS- The Secretary shall prescribe such regulations as may be appropriate to carry out this section, including regulations--

      ‘(1) which limit the credit for investments which are directly or indirectly subsidized by other Federal benefits (including the credit under section 42 and the exclusion from gross income under section 103),

      ‘(2) which prevent the abuse of the provisions of this section through the use of related parties,

      ‘(3) which provide rules for determining whether the requirement of subsection (b)(1)(B) is treated as met,

      ‘(4) which impose appropriate reporting requirements, and

      ‘(5) which apply the provisions of this section to newly formed entities.’.

    (b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT-

      (1) IN GENERAL- Subsection (b) of section 38 is amended by striking ‘plus’ at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting ‘, plus’, and by adding at the end the following new paragraph:

      ‘(13) the new markets tax credit determined under section 45D(a).’.

      (2) LIMITATION ON CARRYBACK- Subsection (d) of section 39 is amended by adding at the end the following new paragraph:

      ‘(9) NO CARRYBACK OF NEW MARKETS TAX CREDIT BEFORE JANUARY 1, 2001- No portion of the unused business credit for any taxable year which is attributable to the credit under section 45D may be carried back to a taxable year ending before January 1, 2001.’.

    (c) DEDUCTION FOR UNUSED CREDIT- Subsection (c) of section 196 is amended by striking ‘and’ at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting ‘, and’, and by adding at the end the following new paragraph:

      ‘(9) the new markets tax credit determined under section 45D(a).’.

    (d) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

‘Sec. 45D. New markets tax credit.’.

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to investments made after December 31, 2000.

    (f) REGULATIONS ON ALLOCATION OF NATIONAL LIMITATION- Not later than 60 days after the date of the enactment of this Act, the Secretary of the Treasury or the Secretary’s delegate shall prescribe regulations which specify--

      (1) how entities shall apply for an allocation under section 45D(f)(2) of the Internal Revenue Code of 1986, as added by this section,

      (2) the competitive procedure through which such allocations are made, and

      (3) the actions that such Secretary or delegate shall take to ensure that such allocations are properly made to appropriate entities.

TITLE II--AMERICA’S PRIVATE INVESTMENT COMPANIES

SEC. 201. DEFINITIONS.

    As used in this title:

      (1) ADMINISTRATOR- The term ‘Administrator’ means the Administrator of the Small Business Administration.

      (2) AGENCY- The term ‘agency’ has the meaning given such term in section 551(1) of title 5, United States Code.

      (3) APIC- The term ‘APIC’ means a business entity that has been licensed under the terms of this title as an America’s Private Investment Company, and the license of which has not been revoked.

      (4) COMMUNITY DEVELOPMENT ENTITY- The term ‘community development entity’ means an entity the primary mission of which is serving or providing investment capital for low-income communities or low-income persons, and which maintains accountability to residents of low-income communities.

      (5) HUD- The term ‘HUD’ means the Secretary of Housing and Urban Development or the Department of Housing and Urban Development, as the context requires.

      (6) LICENSE- The term ‘license’ means a license issued by HUD as provided in section 202.

      (7) LOW-INCOME COMMUNITY- The term ‘low-income community’ means--

        (A) a census tract or tracts that have--

          (i) a poverty rate of 20 percent or greater, based on the most recent census data; or

          (ii) a median family income that does not exceed 80 percent of the greater of--

            (I) the median family income for the metropolitan area in which such census tract or tracts are located, or

            (II) the median family income for the State in which such census tract or tracts are located;

        (B) a property that was located on a military installation that was closed or realigned pursuant to title II of the Defense Authorization Amendments and Base Closure and Realignment Act (Public Law 100-526; 10 U.S.C. 2687 note), the Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of

Public Law 101-510; 10 U.S.C. 2687 note), section 2687 of title 10, United States Code, or any other similar law enacted after the date of the enactment of this Act that provides for closure or realignment of military installations; or

        (C) an area designated by the Secretary of the Treasury as eligible for new markets tax credits under section 45D of the Internal Revenue Code of 1986 (as added by section 101).

      (8) LOW-INCOME PERSON- The term ‘low-income person’ means a person who is a member of a low-income family, as such term is defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12704).

      (9) PRIVATE EQUITY CAPITAL-

        (A) IN GENERAL- The term ‘private equity capital’ means--

          (i) in the case of a corporate entity, the paid-in capital and paid-in surplus of the corporate entity;

          (ii) in the case of a partnership entity, the contributed capital of the partners of the partnership entity;

          (iii) in the case of a limited liability company entity, the equity investment of the members of the limited liability company entity; and

          (iv) earnings from investments of the entity that are not distributed to investors and are available for reinvestment by the entity.

        (B) EXCLUSIONS- Such term does not include any--

          (i) funds borrowed by an entity from any source or obtained through the issuance of leverage; except that this clause may not be construed to exclude amounts evidenced by a legally binding and irrevocable investment commitment in the entity, or the use by an entity of a pledge of such investment commitment to obtain bridge financing from a private lender to fund the entity’s activities on an interim basis; or

          (ii) funds obtained directly or indirectly from any Federal, State, or local government or any government agency, except for--

            (I) funds invested by an employee welfare benefit plan or pension plan; and

            (II) credits against any Federal, State, or local taxes.

      (10) QUALIFIED ACTIVE BUSINESS- The term ‘qualified active business’ means a business or trade--

        (A) that, at the time that an investment is made in the business or trade, or within one year of the time the investment is made, is deriving at least 50 percent of its gross income from the conduct of trade or business activities in low-income communities;

        (B) a substantial portion of the use of the tangible property of which is used within low-income communities;

        (C) a substantial portion of the services that the employees of which perform are performed in low-income communities; and

        (D) less than 5 percent of the aggregate unadjusted bases of the property of which is attributable to certain financial property, as the Secretary shall set forth in regulations, or in collectibles, other than collectibles held primarily for sale to customers.

      (11) QUALIFIED DEBENTURE- The term ‘qualified debenture’ means a debt instrument having terms that meet the requirements established pursuant to section 204(c)(1).

      (12) QUALIFIED LOW-INCOME COMMUNITY INVESTMENT- The term ‘qualified low-income community investment’ means--

        (A) an equity investment in, or a loan to, a qualified active business;

        (B) the purchase from another community development entity of any loan made by such entity which is a qualified low-income community investment if the amount received by such other entity from such purchase is used by such other entity to make qualified low-income community investments;

        (C) financial counseling and other services specified in regulations prescribed by the Secretary to businesses located in, and residents of, low-income communities; and

        (D) any equity investment in, or loan to, any qualified community development entity if substantially all of the investment or loan is used by such entity to make qualified low-income community investments described in subparagraphs (A), (B), and (C).

      (13) ‘Secretary’ means the Secretary of Housing and Urban Development, unless otherwise specified in this title.

SEC. 202. AUTHORIZATION.

    (a) LICENSES- The Secretary is authorized to license community development entities as America’s Private Investment Companies, in accordance with the terms of this title.

    (b) REGULATIONS- The Secretary shall regulate APICs for compliance with sound financial management practices, and the program and procedural goals of this title and other related Acts, and other purposes as required or authorized by this title, or determined by the Secretary. The Secretary shall issue such regulations as are necessary to carry out the licensing and regulatory and other duties under this title, and may issue notices and other guidance or directives as the Secretary determines are appropriate to carry out such duties.

    (c) USE OF CREDIT SUBSIDY FOR LICENSES-

      (1) NUMBER OF LICENSES- The number of APICs licensed at any one time may not exceed--

        (A) the number that may be supported by the amount of budget authority appropriated in accordance with section 504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661c) for the cost (as such term is defined in section 502 of such Act) of the subsidy and the investment strategies of such APICs; or

        (B) to the extent the limitation under section 203(e)(1) applies, the number authorized under such section.

      (2) USE OF ADDITIONAL CREDIT SUBSIDY- Subject to the limitation under paragraph (1), the Secretary may use any budget authority available after credit subsidy has been allocated for the APICs initially licensed pursuant to section 203 as follows:

        (A) ADDITIONAL LICENSES- To license additional APICs.

        (B) CREDIT SUBSIDY INCREASES- To increase the credit subsidy allocated to an APIC as an award for high performance under this title, except that such increases may be made only in accordance with the following requirements and limitations:

          (i) TIMING- An increase may only be provided for an APIC that has been licensed for a period of not less than 2 years.

          (ii) COMPETITION- An increase may only be provided for a fiscal year pursuant to a competition for such fiscal year among APICs eligible for, and requesting, such an increase. The competition shall be based upon criteria that the Secretary shall establish, which shall include the financial soundness and performance of the APICs, as measured by achievement of the public performance goals included in the APICs statements required under section 203(a)(6) and audits conducted under section 207(b)(2). Among the criteria established by the Secretary to determine priority for selection under this section, the Secretary shall include making investments in and loans to qualified active businesses in urban or rural areas that have been designated under subchapter U of chapter 1 of the Internal Revenue Code of 1986 as empowerment zones or enterprise communities.

    (d) Cooperation and Coordination-

      (1) PROGRAM POLICIES- The Secretary is authorized to coordinate and cooperate, through memoranda of understanding, an APIC liaison committee, or otherwise, with the Administrator, the Secretary of the Treasury, and other agencies in the discretion of the Secretary, on implementation of this title, including regulation, examination, and monitoring of APICs under this title.

      (2) FINANCIAL SOUNDNESS REQUIREMENTS- The Secretary shall consult with the Administrator and the Secretary of the Treasury, and may consult with such other heads of agencies as the Secretary may consider appropriate, in establishing any regulations, requirements, guidelines, or standards for financial soundness or management practices of APICs or entities applying for licensing as APICs. In implementing and monitoring compliance with any such regulations, requirements, guidelines, and standards, the Secretary shall enter into such agreements and memoranda of understanding with the Administrator and the Secretary of the Treasury as may be appropriate to provide for such officials to provide any assistance that may be agreed to.

      (3) OPERATIONS- The Secretary may carry out this title--

        (A) directly, through agreements with other Federal entities under section 1535 of title 31, United States Code, or otherwise, or

        (B) indirectly, under contracts or agreements, as the Secretary shall determine.

    (e) FEES AND CHARGES FOR ADMINISTRATIVE COSTS- To the extent provided in appropriations Acts, the Secretary is authorized to impose fees and charges for application, review, licensing, and regulation, or other actions under this title, and to pay for the costs of such activities from the fees and charges collected.

    (f) GUARANTEE FEES- The Secretary is authorized to set and collect fees for loan guarantee commitments and loan guarantees that the Secretary makes under this title.

    (g) FUNDING-

      (1) AUTHORIZATION OF APPROPRIATIONS FOR LOAN GUARANTEE COMMITMENTS- For each of fiscal years 2000, 2001, 2002, 2003, and 2004, there is authorized to be appropriated up to $36,000,000 for the cost (as such term is defined in section 502(5) of the Federal Credit Reform Act of 1990) of annual loan guarantee commitments under this title. Amounts appropriated under this paragraph shall remain available for until expended.

      (2) AGGREGATE LOAN GUARANTEE COMMITMENT LIMITATION- The Secretary may make commitments to guarantee loans only to the extent that the total loan principal, any part of which is guaranteed, will not exceed $1,000,000,000, unless another such amount is specified in appropriation Acts for any fiscal year.

      (3) AUTHORIZATION FOR APPROPRIATION OF ADMINISTRATIVE EXPENSES- For each of the fiscal years 2000, 2001, 2002, 2003, and 2004, there is authorized to be appropriated $1,000,000 for administrative expenses for carrying out this title. The Secretary may transfer amounts appropriated under this paragraph to any appropriation account of HUD or another agency, to carry out the program under this title. Any agency to which the Secretary may transfer amounts under this title is authorized to accept such transferred amounts in any appropriation account of such agency.

    (h) PERSONNEL-

      (1) OFFICE PERSONNEL- The Secretary may appoint and fix the compensation of such officers and employees who staff the APIC program at HUD as the Secretary considers necessary to carry out the functions of this title. Such officers and employees

may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to classification and General Schedule pay rates.

      (2) COMPARABILITY OF COMPENSATION WITH FEDERAL BANKING AGENCIES- In fixing and directing compensation under paragraph (1), the Secretary shall consult with, and maintain comparability with the compensation of, officers and employees of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision.

      (3) OUTSIDE EXPERTS AND CONSULTANTS- Notwithstanding any provision of law limiting pay or compensation, the Secretary may appoint and compensate such outside experts and consultants as the Secretary determines necessary to assist in the implementation of this title.

    (i) BANK PARTICIPATION- Any national bank, or any member bank of the Federal Reserve System or nonmember insured bank to the extent permitted under applicable State law, may invest in any 1 or more APICs, or in any entity established to invest solely in APICs, except that in no event shall the total amount of such investments of any such bank exceed 5 percent of the total capital and surplus of the bank.

SEC. 203. SELECTION OF APIC’S.

    (a) ELIGIBLE APPLICANTS- An entity shall be eligible to be selected for licensing under section 202 as an APIC only if the entity submits an application in compliance with the requirements established pursuant to subsection (b) and the entity meets or complies with the following requirements:

      (1) ORGANIZATION- The entity shall be a private, for-profit entity that qualifies as a community development entity, as determined by the Secretary, for the purposes of the new markets tax credits under section 45D of the Internal Revenue Code of 1986 (as added by section 101).

      (2) MINIMUM PRIVATE EQUITY CAPITAL- The amount of private equity capital reasonably available to the entity, as determined by the Secretary, at the time that a license is approved may not be less than $25,000,000.

      (3) QUALIFIED MANAGEMENT- The management of the entity shall, in the determination of the Secretary, meet such standards as the Secretary shall establish to ensure that the management of the APIC is qualified, and has the financial expertise, knowledge, experience, and capability necessary, to make investments for community and economic development in low-income communities.

      (4) CONFLICT OF INTEREST- The entity shall demonstrate that, in accordance with sound financial management practices, the entity is structured to preclude financial conflict of interest between the APIC and a manager or investor.

      (5) INVESTMENT STRATEGY- The entity shall prepare and submit to the Secretary an investment strategy that includes benchmarks for evaluation of its progress, that includes an analysis of existing locally owned businesses in the communities in which the investments under the strategy will be made, that prioritizes such businesses for investment opportunities, and that fulfills the specific public purpose goals of the entity.

      (6) STATEMENT OF PUBLIC PURPOSE GOALS- The entity shall prepare and submit to the Secretary a statement of the public purpose goals of the entity, which shall--

        (A) set forth goals that shall promote community and economic development, which shall include--

          (i) making investments in low-income communities that further economic development objectives by targeting such investments in businesses or trades that comply with the requirements under subparagraphs (A) through (C) of section 201(10) relating to low-income communities in a manner that benefits low-income persons;

          (ii) creating jobs in low-income communities for residents of such communities;

          (iii) involving community-based organizations and residents in community development activities;

          (iv) such other goals as the Secretary shall specify; and

          (v) such elements as the entity may set forth to achieve specific public purpose goals;

        (B) include such other elements as the Secretary shall specify; and

        (C) include proposed measurements and strategies for meeting the goals.

      (7) COMPLIANCE WITH LAWS- The entity shall agree to comply with applicable laws, including Federal executive orders, Office of Management and Budget circulars, and requirements of the Department of the Treasury, and such additional operating and regulatory requirements as the Secretary may impose from time to time.

      (8) OTHER- The entity shall satisfy any other application requirements that the Secretary may impose by regulation or Federal Register notice.

    (b) COMPETITIONS- The Secretary shall select eligible entities under subsection (a) to be licensed under section 202 as APICs on the basis of competitions. The Secretary shall announce each such competition by causing a notice to be published in the Federal Register that invites applications for licenses and sets forth the requirements for application and such other terms of the competition not otherwise provided for, as determined by the Secretary.

    (c) SELECTION- In competitions under subsection (b), the Secretary shall select eligible entities under subsection (a) for licensing as APICs on the basis of--

      (1) the extent to which the entity is expected to achieve the goals of this title by meeting or exceeding criteria established under subsection (d); and

      (2) to the extent practicable and subject to the existence of approvable applications, ensuring geographical diversity among the applicants selected and diversity of APICs investment strategies, so that urban and rural communities are both served, in the determination of the Secretary, by the program under this title.

    (d) SELECTION CRITERIA- The Secretary shall establish selection criteria for competitions under subsection (b), which shall include the following criteria:

      (1) CAPACITY-

        (A) MANAGEMENT- The extent to which the entity’s management has the quality, experience, and expertise to make and manage successful investments for community and economic development in low-income communities.

        (B) STATE AND LOCAL COOPERATION- The extent to which the entity demonstrates a capacity to cooperate with States or units of general local government and with community-based organizations and residents of low-income communities.

      (2) INVESTMENT STRATEGY- The quality of the entity’s investment strategy submitted in accordance with subsection (a)(5) and the extent to which the investment strategy furthers the goals of this title pursuant to paragraph (3) of this subsection.

      (3) PUBLIC PURPOSE GOALS- With respect to the statement of public purpose goals of the entity submitted in accordance with subsection (a)(6), and the strategy and measurements included therein--

        (A) the extent to which such goals promote community and economic development;

        (B) the extent to which such goals provide for making qualified investments in low-income communities that further economic development objectives, such as--

          (i) creating, within 2 years of the completion of the initial such investment, job opportunities, opportunities for ownership, and other economic opportunities within a low-income community, both short-term and of a longer duration;

          (ii) improving the economic vitality of a low-income community, including stimulating other business development;

          (iii) bringing new income into a low-income community and assisting in the revitalization of such community;

          (iv) converting real property for the purpose of creating a site for business incubation and location, or business district revitalization;

          (v) enhancing economic competition, including the advancement of technology;

          (vi) rural development;

          (vii) mitigating, rehabilitating, and reusing real property considered subject to the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.; commonly referred to as the Resource Conservation and Recovery Act) or restoring coal mine-scarred land;

          (viii) creation of local wealth through investments in employee stock ownership companies or resident-owned ventures; and

          (ix) any other objective that the Secretary may establish to further the purposes of this title;

        (C) the quality of jobs to be created for residents of low-income communities, taking into consideration such factors as the payment of higher wages, job security, employment benefits, opportunity for advancement, and personal asset building;

        (D) the extent to which achievement of such goals will involve community-based organizations and residents in community development activities; and

        (E) the extent to which the investments referred to in subparagraph (B) are likely to benefit existing small business in low-income communities or will encourage the growth of small business in such communities.

      (4) OTHER- Any other criteria that the Secretary may establish to carry out the purposes of this title.

    (e) FIRST YEAR REQUIREMENTS-

      (1) NUMERICAL LIMITATION- The number of APICs may not, at any time during the 1-year period that begins upon the Secretary awarding the first license for an APIC under this title, exceed 15.

      (2) LIMITATION ON ALLOCATION OF AVAILABLE CREDIT SUBSIDY- Of the amount of budget authority initially made available for allocation under this title for APICs, the amount allocated for any single APIC may not exceed 20 percent.

      (3) NATIVE AMERICAN PRIVATE INVESTMENT COMPANY- Subject only to the absence of an approvable application from an entity, during the 1-year period referred to in paragraph (1), of the entities selected and licensed by the Secretary as APICs, at least one shall be an entity that has as its primary purpose the making of qualified low-income community investments in areas that are within Indian country (as such term is defined in section 1151 of title 18, United States Code) or within lands that have status as Hawaiian home land under section 204 of the Hawaiian Homes Commission Act, 1920 (42 Stat. 108) or are acquired pursuant to such Act. The Secretary may establish specific selection criteria for applicants under this paragraph.

    (f) COMMUNICATIONS BETWEEN HUD AND APPLICANTS-

      (1) IN GENERAL- The Secretary shall set forth in regulations the procedures under which HUD and applicants for APIC licenses, and others, may communicate. Such regulations shall--

        (A) specify by position the HUD officers and employees who may communicate with such applicants and others;

        (B) permit HUD officers and employees to request and discuss with the applicant and others (such as banks or other credit or business references, or potential investors) any more detailed information that may be desirable to facilitate HUD’s review of the applicant’s application;

        (C) restrict HUD officers and employees from revealing to any applicant the fact or chances of award of a license to such applicant or any other applicant, unless there has been a public announcement of the results of the competition; and

        (D) set forth requirements for making and keeping records of any communications conducted under this subsection, including requirements for making such records available to the public after the award of licenses under an initial or subsequent notice, as appropriate, under subsection (a).

      (2) TIMING- Regulations under this subsection may be issued as interim rules for effect on or before the date of publication of the first notice under subsection (a), and shall apply only with respect to applications under such notice. Regulations to implement this subsection with respect to any notice after the first such notice shall be subject to notice and comment rulemaking.

      (3) INAPPLICABILITY OF DEPARTMENT OF HUD ACT PROVISION- Section 12(e)(2) of the Department of Housing and Urban Development Act (42 U.S.C. 3537a(e)(2)) is amended by inserting before the period at the end the following: ‘or any license provided under title II of the Creating New Markets and Empowering America Act of 2000’.

SEC. 204. OPERATIONS OF APIC’S.

    (a) POWERS AND AUTHORITIES-

      (1) IN GENERAL- An APIC shall have any powers or authorities that--

        (A) the APIC derives from the jurisdiction in which it is organized, or that the APIC otherwise has;

        (B) may be conferred by a license under this title; and

        (C) the Secretary may prescribe by regulation.

      (2) NEW MARKET ASSISTANCE- Nothing in this title shall preclude an APIC or its investors from receiving an allocation of new markets tax credits if the APIC satisfies the applicable terms and conditions under the Internal Revenue Code of 1986.

    (b) INVESTMENT LIMITATIONS-

      (1) QUALIFIED LOW-INCOME COMMUNITY INVESTMENTS- Substantially all investments that an

APIC makes shall be qualified low-income community investments if the investments are financed with--

        (A) amounts available from the proceeds of the issuance of an APIC’s qualified debenture guaranteed under this title;

        (B) proceeds of the sale of obligations described under subsection (c)(3)(C)(iii); or

        (C) the use of private equity capital, as determined by the Secretary, in an amount specified in the APIC’s license.

      (2) SINGLE BUSINESS INVESTMENTS- An APIC shall not, as a matter of sound financial practice, invest in any one business, an amount that exceeds an amount equal to 35 percent of the sum of--

        (A) the APIC’s private equity capital, plus

        (B) an amount equal to the percentage limit that the Secretary determines that APIC may have outstanding at any one time, under subsection (c)(2)(A).

    (c) BORROWING POWERS; QUALIFIED DEBENTURES-

      (1) ISSUANCE- An APIC may issue qualified debentures. The Secretary shall, by regulation, specify the terms and requirements for debentures to be considered qualified debentures for purposes of this title, except that the term to maturity of any qualified debenture may not exceed 21 years and each qualified debenture shall bear interest during all or any part of that time period at a rate or rates approved by the Secretary.

      (2) LEVERAGE LIMITS- In general, as a matter of sound financial management practices--

        (A) the total amount of qualified debentures that an APIC issues under this title that an APIC may have outstanding at any one time shall not exceed an amount equal to 200 percent of the private equity capital of the APIC, as determined by the Secretary; and

        (B) an APIC shall not have more than $300,000,000 in face value of qualified debentures issued under this title outstanding at any one time.

      (3) REPAYMENT-

        (A) CONDITION OF BUSINESS WIND-UP- An APIC must have repaid, or have otherwise been relieved of indebtedness, with respect to any interest or principal amounts of borrowings under this subsection no less than 2 years before the APIC may dissolve or otherwise complete the wind-up of its business.

        (B) TIMING- An APIC may repay any interest or principal amounts of borrowings under this subsection at any time, except that the repayment of such amounts shall not relieve an APIC of any duty otherwise applicable to the APIC under this title, unless the Secretary orders such relief.

        (C) USE OF INVESTMENT PROCEEDS BEFORE REPAYMENT- Until an APIC has repaid all interest and principal amounts on APIC borrowings under this subsection, an APIC may use the proceeds of investments in accordance with regulations issued by the Secretary only to--

          (i) pay for proper costs and expenses the APIC incurs in connection with such investments;

          (ii) pay for the reasonable administrative expenses of the APIC;

          (iii) purchase Treasury securities;

          (iv) repay interest and principal amounts on APIC borrowings under this subsection;

          (v) make interest, dividend, or other distributions to or on behalf of an investor; or

          (vi) undertake such other purposes as the Secretary may approve.

        (D) USE OF INVESTMENT PROCEEDS AFTER REPAYMENT- After an APIC has repaid all interest and principal amounts on APIC borrowings under this subsection, and subject to continuing compliance with subsection (a), the APIC may use the proceeds from investments to make interest, dividend, or other distributions to or on behalf of investors in the nature of returns on capital, or the withdrawal of private equity capital, without regard to subparagraph (C) but in conformity with the APIC’s investment strategy and statement of public purpose goals.

    (d) REUSE OF QUALIFIED DEBENTURE PROCEEDS- An APIC may use the proceeds of sale of Treasury securities purchased under subsection (c)(3)(C)(iii) to make qualified low-income community investments, subject to the Secretary’s approval. In making the request for the Secretary’s approval, the APIC shall follow the procedures applicable to an APIC’s request for HUD guarantee action, as the Secretary may modify such procedures for implementation of this subsection. Such procedures shall include the description and certifications that an APIC must include in all requests for guarantee action, and the environmental certification applicable to initial expenditures for a project or activity.

    (e) ANTIPIRATING- Notwithstanding any other provision of law, an APIC may not use any private equity capital required to be contributed under this title, or the proceeds from the sale of any qualified debenture under this title, to make an investment, as determined by the Secretary, to assist directly in the relocation of any industrial or commercial plant, facility, or operation, from 1 area to another area, if the relocation is likely to result in a significant loss of employment in the labor market area from which the relocation occurs.

    (f) EXCLUSION OF APIC FROM DEFINITION OF DEBTOR UNDER BANKRUPTCY PROVISIONS- Section 109(b)(2) of title 11 of the United States Code is amended by inserting before ‘credit union’ the following: ‘America’s Private Investment Company licensed under title II of the Creating New Markets and Empowering America Act of 2000,’.

SEC. 205. CREDIT ENHANCEMENT BY THE FEDERAL GOVERNMENT.

    (a) ISSUANCE AND GUARANTEE OF QUALIFIED DEBENTURES-

      (1) AUTHORITY- To the extent consistent with the Federal Credit Reform Act of 1990, the Secretary is authorized to make commitments to fully and unconditionally guarantee the timely payment of all principal and interest on, qualified debentures issued by APICs. Such commitments or guarantees may only be made in accordance with the terms and conditions established under paragraph (2).

      (2) TERMS AND CONDITIONS- The Secretary shall establish such terms and conditions as the Secretary determines to be appropriate for commitments and guarantees under this subsection, including terms and conditions relating to amounts, expiration, number, priorities of repayment, security, collateral, amortization, payment of interest (including the timing thereof), and fees and charges. The terms and conditions applicable to any particular commitment or guarantee may be established in documents that the Secretary approves for such commitment or guarantee.

      (3) SENIORITY- Notwithstanding any other provision of Federal law or any law or the constitution of any State, qualified debentures guaranteed under this subsection by the Secretary shall be senior to any other debt obligation, equity contribution or earnings, or the distribution of dividends, interest, or other amounts, of an APIC.

    (b) ISSUANCE OF TRUST CERTIFICATES- The Secretary, or an agent or entity selected by the Secretary, is authorized to cause a trust to issue trust certificates representing ownership of all or a fractional part of guaranteed qualified debentures issued by APICs and held in trust.

    (c) Guarantee of Trust Certificates-

      (1) IN GENERAL- The Secretary is authorized, upon such terms and conditions as the Secretary determines to be appropriate, to fully and unconditionally guarantee the timely payment of the principal of and interest on any trust certificate issued under this section.

      (2) SUBSTITUTION OPTION- The Secretary shall have the option to replace in the corpus of the trust any prepaid or defaulted qualified debenture with a debenture, another full faith and credit instrument, or any obligations of the United States, that may reasonably substitute for such prepaid or defaulted qualified debenture.

      (3) PROPORTIONATE REDUCTION OPTION- In the event that the Secretary elects not to exercise the option under paragraph (2), and a qualified debenture in such trust is prepaid, or in the event of default of a qualified debenture, the guarantee of timely payment of principal and interest on the trust certificate shall be reduced in proportion to the amount of principal and interest that such prepaid qualified debenture represents in the trust, provided that the guarantee of timely payment of principal of and interest on the trust certificates remains full and unconditional. Interest on prepaid or defaulted qualified debentures shall accrue and be guaranteed by the Secretary only through the date of payment of the guarantee. During the term of a trust certificate, it may be called for redemption due to prepayment or default of all qualified debentures that are in the corpus of the trust.

    (d) FULL FAITH AND CREDIT BACKING OF GUARANTEES- The full faith and credit of the United States is pledged to the timely payment of all amounts which may be required to be paid under any guarantee by the Secretary pursuant to this section.

    (e) Subrogation and Liens-

      (1) SUBROGATION- In the event the Secretary pays a claim under a guarantee issued under this section, the Secretary shall be subrogated fully to the rights satisfied by such payment.

      (2) PRIORITY OF LIENS- No State or local law, and no Federal law, shall preclude or limit the exercise by the Secretary of its ownership rights in the debentures in the corpus of a trust under this section.

    (f) Registration-

      (1) IN GENERAL- The Secretary shall provide for a central registration of all trust certificates issued pursuant to this section.

      (2) AGENTS- The Secretary may contract with an agent or agents to carry out on behalf of the Secretary the pooling and the central registrations functions of this section notwithstanding any other provisions of law, including maintenance on behalf of and under the direction of the Secretary, such commercial bank accounts or investments in obligations of the United States as may be necessary to facilitate trusts backed by qualified debentures guaranteed under this title and the issuance of trust certificates to facilitate formation of the corpus of the trusts. The Secretary may require such agent or agents to

provide a fidelity bond or insurance in such amounts as the Secretary determines to be necessary to protect the interests of the Government.

      (3) FORM- Book-entry or other electronic forms of registration for trust certificates under this title are authorized.

    (g) TIMING OF ISSUANCE OF GUARANTEES OF QUALIFIED DEBENTURES AND TRUST CERTIFICATES- The Secretary may, from time to time in the Secretary’s discretion, exercise the authority to issue guarantees of qualified debentures under this title or trust certificates under this title.

    (h) CONFORMING AMENDMENT- Section 514(c)(6) of the Internal Revenue Code of 1986 is amended by inserting ‘or a debenture issued by an America’s Private Investment Company (APIC), to the extent it is guaranteed by the Secretary of Housing and Urban Development’ before the period at the end.

SEC. 206. APIC REQUESTS FOR GUARANTEE ACTIONS.

    (a) IN GENERAL- The Secretary may issue a guarantee under this title for a qualified debenture that an APIC intends to issue only pursuant to a request to the Secretary by the APIC for such guarantee that is made in accordance with regulations governing the content and procedures for such requests, that the Secretary shall prescribe. Such regulations shall provide that each such request shall include--

      (1) a description of the manner in which the APIC intends to use the proceeds from the qualified debenture;

      (2) a certification by the APIC that the APIC is in substantial compliance with--

        (A) this title and other applicable laws, including any requirements established under this title by the Secretary;

        (B) all terms and conditions of its license, any cease-and-desist order issued under section 210, and of any penalty or condition that may have arisen from examination or monitoring by the Secretary or otherwise, including the satisfaction of any financial audit exception that may have been outstanding; and

        (C) all requirements relating to the allocation and use of new markets tax credits under section 45D of the Internal Revenue Code of 1986 (as added by section 101); and

      (3) any other information or certification that the Secretary considers appropriate.

    (b) REQUESTS FOR GUARANTEE OF QUALIFIED DEBENTURES THAT INCLUDE FUNDING FOR INITIAL EXPENDITURE FOR A PROJECT OR ACTIVITY- In addition to the description and certification that an APIC is required to supply in all requests for guarantee action under subsection (a), in the case of an APIC’s request for a guarantee that includes a qualified debenture, the proceeds of which the APIC expects to be used as its initial expenditure for a project or activity in which the APIC intends to invest, and the expenditure for which would require an environmental assessment under the National Environmental Policy Act of 1969 and other related laws that further the purposes of such Act, such request for guarantee action must include evidence satisfactory to the Secretary of the certification of the completion of environmental review of the project or activity required of the cognizant State or local government under subsection (c). If the environmental review responsibility for the project or activity has not been assumed by a State or local government under subsection (c), then the Secretary shall be responsible for carrying out the applicable responsibilities under the National Environmental Policy Act of 1969 and other provisions of law that further the purposes of such Act that relate to the project or activity, and the Secretary shall execute such responsibilities before acting on the APIC’s request for the guarantee that is covered by this subsection.

    (c) Responsibility for Environmental Reviews-

      (1) EXECUTION OF RESPONSIBILITY BY THE SECRETARY- This subsection shall apply to guarantees by the Secretary of qualified debentures under this title, the proceeds of which would be used in connection with qualified low-income community investments of APICs under this title.

      (2) Assumption of responsibility by cognizant unit of general government-

        (A) GUARANTEE OF QUALIFIED DEBENTURES- In order to assure that the policies of the National Environmental Policy Act of 1969 and other provisions of law that further the purposes of such Act (as specified in regulations issued by the Secretary) are most effectively implemented in connection with the expenditure of funds under this title, and to assure to the public undiminished protection of the environment, the Secretary may, under such regulations, in lieu of the environmental protection procedures otherwise applicable, provide for the guarantee of qualified debentures, any part of the proceeds of which are to fund particular qualified low-income community investments of APICs under this title, if a State or unit of general local government, as designated by the Secretary in accordance with regulations issued by the Secretary, assumes all of the responsibilities for environmental review, decision making, and action pursuant to the National Environmental Policy Act of 1969 and such other provisions of law that further such Act as the regulations of the Secretary specify, that would otherwise apply to the Secretary were the Secretary to undertake the funding of such investments as a Federal action.

        (B) IMPLEMENTATION- The Secretary shall issue regulations to carry out this subsection only after consultation with the Council on Environmental Quality. Such regulations shall--

          (i) specify any other provisions of law which further the purposes of the National Environmental Policy Act of 1969 and to which the assumption of responsibility as provided in this subsection applies;

          (ii) provide eligibility criteria and procedures for the designation of a State or

unit of general local government to assume all of the responsibilities in this subsection;

          (iii) specify the purposes for which funds may be committed without regard to the procedure established under paragraph (3);

          (iv) provide for monitoring of the performance of environmental reviews under this subsection;

          (v) in the discretion of the Secretary, provide for the provision or facilitation of training for such performance; and

          (vi) subject to the discretion of the Secretary, provide for suspension or termination by the Secretary of the assumption under subparagraph (A).

        (C) RESPONSIBILITIES OF STATES AND UNITS OF GENERAL LOCAL GOVERNMENT- The Secretary’s duty under subparagraph (B) shall not be construed to limit any responsibility assumed by a State or unit of general local government with respect to any particular request for guarantee under subparagraph (A), or the use of funds for a qualified investment.

      (3) PROCEDURE- Subject to compliance by the APIC with the requirements of this title, the Secretary shall approve the request for guarantee of a qualified debenture, any part of the proceeds of which is to fund particular qualified low-income community investments of APICs under this title, that is subject to the procedures authorized by this subsection only if, not less than 15 days prior to such approval and prior to any commitment of funds to such investment (except for such purposes specified in the regulations issued under paragraph (2)(B)), the APIC submits to the Secretary a request for guarantee of a qualified debenture that is accompanied by evidence of a certification of the State or unit of general local government which meets the requirements of paragraph (4). The approval by the Secretary of any such certification shall be deemed to satisfy the Secretary’s responsibilities pursuant to paragraph (1) under the National Environmental Policy Act of 1969 and such other provisions of law as the regulations of the Secretary specify insofar as those responsibilities relate to the guarantees of qualified debentures, any parts of the proceeds of which are to fund such investments, which are covered by such certification.

      (4) CERTIFICATION- A certification under the procedures authorized by this subsection shall--

        (A) be in a form acceptable to the Secretary;

        (B) be executed by the chief executive officer or other officer of the State or unit of general local government who qualifies under regulations of the Secretary;

        (C) specify that the State or unit of general local government under this subsection has fully carried out its responsibilities as described under paragraph (2); and

        (D) specify that the certifying officer--

          (i) consents to assume the status of a responsible Federal official under the National Environmental Policy Act of 1969 and each provision of law specified in regulations issued by the Secretary insofar as the provisions of such Act or other such provision of law apply pursuant to paragraph (2); and

          (ii) is authorized and consents on behalf of the State or unit of general local government and himself or herself to accept the jurisdiction of the Federal courts for the purpose of enforcement of the responsibilities of such an official.

SEC. 207. EXAMINATION AND MONITORING OF APIC’S.

    (a) IN GENERAL- The Secretary shall, under regulations, through audits, performance agreements, license conditions, or otherwise, examine and monitor the operations and activities of APICs for compliance with sound financial management practices, and for satisfaction of the program and procedural goals of this title and other related Acts. The Secretary may undertake any responsibility under this section in cooperation with an APIC liaison committee, or any agency that is a member of such a committee, or other agency.

    (b) Monitoring, Updating, and Program Review-

      (1) REPORTING AND UPDATING- The Secretary shall establish such annual or more frequent reporting requirements for APICs, and such requirements for the updating of the statement of public purpose goals, investment strategy (including the benchmarks in such strategy), and other documents that may have been used in the license application process under this title, as the Secretary determines necessary to assist the Secretary in monitoring the compliance and performance of APICs.

      (2) ANNUAL AUDITS- The Secretary shall require each APIC to have an independent audit conducted annually of the operations of the APIC. The Secretary, in consultation with the Administrator and the Secretary of the Treasury, shall establish requirements and standards for such audits, including requirements that such audits be conducted in accordance with generally accepted accounting principles, that the APIC submit the results of the audit to Secretary, and that specify the information to be submitted.

      (3) EXAMINATIONS- The Secretary shall, no less often than once every 2 years, examine the operations and portfolio of each APIC licensed under this title for compliance with sound financial management practices, and for compliance with this title.

      (4) Examination standards-

        (A) SOUND FINANCIAL MANAGEMENT PRACTICES- The Secretary shall examine each APIC to ensure, as a matter of sound financial management practices, substantial compliance with this and other applicable laws, including Federal executive orders, Department of Treasury and Office of Management and Budget guidance, circulars, and application and licensing requirements on a continuing basis. The Secretary may, by regulation, establish any additional standards for sound financial management practices, including standards that address solvency and financial exposure.

        (B) PERFORMANCE AND OTHER EXAMINATIONS- The Secretary shall monitor each APIC’s progress in meeting the goals in the APIC’s statement of public purpose goals, executing the APIC’s investment strategy, and other matters.

    (c) INSPECTOR GENERAL RESPONSIBILITY- In carrying out monitoring of HUD’s responsibilities under this title and for purposes of ensuring that the program under this title is operated in accordance with sound financial management practices, the Inspector General of the Department of Housing and Urban Development shall consult with the Inspector General of the Department of the Treasury and the Inspector General of the Small Business Administration, as appropriate, and may enter into such agreements and memoranda of understanding as may be necessary to obtain the cooperation of the Inspectors General of the Department of the Treasury and the Small Business Administration in carrying out such function.

    (d) ANNUAL REPORT BY SECRETARY- The Secretary shall submit a report to the Congress annually regarding the operations, activities, financial health, and achievements of the APIC program under this title. The report shall list each investment made by an APIC and include a summary of the examinations conducted under subsection (b)(3), the guarantee actions of HUD, and any regulatory or policy actions taken by HUD. The report shall distinguish recently licensed APICs from APICs that have held licenses for a longer period for purposes of indicating program activities and performance.

    (e) GAO REPORT-

      (1) REQUIREMENT- Not later than 2 years after the date of the enactment of this Act, the Comptroller General of the United States shall submit a report to the Congress regarding the operation of the program under this title for licensing and guarantees for APICs.

      (2) CONTENTS- The report shall include--

        (A) an analysis of the operations and monitoring by HUD of the APIC program under this title;

        (B) the administrative and capacity needs of HUD required to ensure the integrity of the program;

        (C) the extent and adequacy of any credit subsidy appropriated for the program; and

        (D) the management of financial risk and liability of the Federal Government under the program.

SEC. 208. PENALTIES.

    (a) VIOLATIONS SUBJECT TO PENALTY- The Secretary may impose a penalty under this subsection on any APIC or manager of an APIC that, by any act, practice, or failure to act, engages in fraud, mismanagement, or noncompliance with this title, the regulations under this title, or a condition of the APIC’s license under this title. The Secretary shall, by regulation, identify, by generic description of a role or responsibilities, any manager of an APIC that is subject to a penalty under this section.

    (b) PENALTIES REQUIRING NOTICE AND AN OPPORTUNITY TO RESPOND- If, after notice in writing to an APIC or the manager of an APIC that the APIC or manager has engaged in any action, practice, or failure to act that, under subsection (a), is subject to a penalty, and after an opportunity for the APIC or manager to respond to the notice, the Secretary determines that the APIC or manager engaged in such action or failure to act, the Secretary may, in addition to other penalties imposed--

      (1) assess a civil money penalty, except than any civil money penalty under this subsection shall be in an amount not exceeding $10,000;

      (2) issue an order to cease and desist with respect to such action, practice, or failure to act of the APIC or manager;

      (3) suspend, or condition the use of, the APIC’s license, including deferring, for the period of the suspension, any commitment to guarantee any new qualified debenture of the APIC, except that any suspension or condition under this paragraph may not exceed 90 days; and

      (4) impose any other penalty that the Secretary determines to be less burdensome to the APIC than a penalty under subsection (c).

    (c) PENALTIES REQUIRING NOTICE AND HEARING- If, after notice in writing to an APIC or the manager of an APIC that an APIC or manager has engaged in any action, practice, or failure to act that, under subsection (a), is subject to a penalty, and after an opportunity for administrative hearing, the Secretary determines that the APIC or manager engaged in such action or failure to act, the Secretary may--

      (1) assess a civil money penalty against the APIC or a manager in any amount;

      (2) require the APIC to divest any interest in an investment, on such terms and conditions as the Secretary may impose; or

      (3) revoke the APIC’s license.

    (d) EFFECTIVE DATE OF PENALTIES-

      (1) PRIOR NOTICE REQUIREMENT- Except as provided in paragraph (2) of this subsection, a penalty under subsection (b) or (c) shall not be due and payable and shall not otherwise take effect or be subject to enforcement by an order of a court, before notice of the penalty is published in the Federal Register.

      (2) CEASE-AND-DESIST ORDERS AND SUSPENSION OR CONDITIONING OF LICENSE- In the case of a cease-and-desist order under subsection (b)(2) or the suspension or conditioning of an APIC’s license under subsection (b)(3), the following procedures shall apply:

        (A) ACTION WITHOUT PUBLISHED NOTICE- The Secretary may order an APIC or manager to cease and desist from an action, practice, or failure to act or may suspend or condition an APIC’s license, for not more than 45 days without prior publication of notice in the Federal Register, but such cease-and-desist order or suspension or conditioning shall take effect only after the Secretary has issued a written notice (which may include a writing in electronic form) of such action to the APIC. Notwithstanding subsection (b), such written notice shall be effective without regard to whether the APIC has been accorded an opportunity to respond. Upon such notice, such cease-and-desist order or suspension or conditioning shall be subject to enforcement by an order of a court.

        (B) PUBLICATION OF NOTICE OF SUSPENSION OR CONDITIONING OF LICENSE- Upon a suspension or conditioning of a license taking effect pursuant to subparagraph (A), the Secretary shall promptly cause a notice of suspension or conditioning of such license for a period of not more than 90 days to be published in the Federal Register. The Secretary shall provide the APIC an opportunity to respond to such notice. For purposes of the determining the duration of the period of any suspension or conditioning under this subparagraph, the first day of such period shall be the day of issuance of

the written notice under this paragraph of the suspension or conditioning.

        (C) REVOCATION OF LICENSE- During the period of the suspension or conditioning of an APIC’s license, the Secretary may take action under subsection (c)(3) to revoke the license of the APIC, in accordance with the procedures applicable to such subsection. Notwithstanding any other provision of this section, if the Secretary takes such action, the Secretary may extend the suspension or conditioning of the APIC’s license, for one or more periods of not more than 90 days each, by causing notice of such action to be published in the Federal Register--

          (i) for the first such extension, before the expiration of the period under subparagraph (B); and

          (ii) for any subsequent extension, before the expiration of the preceding extension period under this subparagraph.

        (D) TERM OF EFFECTIVENESS- A cease-and-desist order or the suspension or conditioning of an APIC’s license by the Secretary under this paragraph shall remain in effect in accordance with the terms of the order, suspension, or conditioning until final adjudication in any action undertaken to challenge the order, or the suspension or conditioning, or the revocation, of an APIC’s license.

SEC. 209. EFFECTIVE DATE.

    (a) IN GENERAL- Except as provided in subsection (b), this title shall take effect upon the expiration of the 6-month period beginning on the date of the enactment of this Act.

    (b) ISSUANCE OF REGULATIONS AND GUIDELINES- Any authority under this title of the Secretary, the Administrator, and the Secretary of the Treasury to issue regulations, standards, guidelines, or licensing requirements, and any authority of such officials to consult or enter into agreements or memoranda of understanding regarding such issuance, shall take effect on the date of the enactment of this Act.

SEC. 210. SUNSET.

    (a) IN GENERAL- After the expiration of the 5-year period beginning upon the date that the Secretary awards the first license for an APIC under this title--

      (1) the Secretary may not license any APIC; and

      (2) no amount may be appropriated for the costs (as such term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661c) of any guarantee under this title for any debenture issued by an APIC.

    (b) CONSTRUCTION- This section may not be construed to prohibit, limit, or affect the award, allocation, or use of any budget authority for the costs of such guarantees that is appropriated before the expiration of such 5-year period.

TITLE III--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL

Subtitle A--New Markets Venture Capital Program

SEC. 301. NEW MARKETS VENTURE CAPITAL PROGRAM.

    (a) IN GENERAL- Title III of the Small Business Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended--

      (1) by striking the title designation and heading and inserting the following:

‘TITLE III--INVESTMENT DIVISION PROGRAMS

‘Subtitle A--Small Business Investment Companies’;

      and

      (2) by adding at the end the following:

‘Subtitle B--New Markets Venture Capital Program

‘SEC. 351. DEFINITIONS.

    ‘In this subtitle--

      ‘(1) the term ‘eligible company’ means a company that--

        ‘(A) is a newly formed for-profit entity, which may be a newly formed for-profit subsidiary of an existing entity; and

        ‘(B) has a management team with experience in community development financing or relevant venture capital financing;

      ‘(2) the term ‘low-income individual’ means an individual whose income (adjusted for family size) does not exceed--

        ‘(A) for metropolitan areas, 80 percent of the area median income; and

        ‘(B) for nonmetropolitan areas, the greater of--

          ‘(i) 80 percent of the area median income; or

          ‘(ii) 80 percent of the statewide (or, in the case of a U.S. territory, territory-wide) nonmetropolitan area median income;

      ‘(3) the term ‘low- or moderate-income geographic area’ means--

        ‘(A) any population census tract (or in the case of an area that is not tracted for population census tracts, the equivalent county division, as defined by the Bureau of the Census of the Department of Commerce for purposes of defining poverty areas), if--

          ‘(i) the poverty rate for such census tract is not less than 20 percent;

          ‘(ii) in the case of a tract--

            ‘(I) that is located within a metropolitan area, the median family income for such tract does not exceed the greater of 80 percent of the statewide (or in the case of a U.S. territory, territory-wide) median family income or 80 percent of the metropolitan area median family income; or

            ‘(II) that is not located within a metropolitan area, the median family income for such tract does not exceed

80 percent of the statewide (or, in case of a U.S. territory, territory-wide) median family income; or

          ‘(iii) as determined by the Administrator based on objective criteria, a substantial population of low-income individuals reside, an inadequate access to investment capital exists, or other indications of economic distress exist in that census tract; or

        ‘(B) any area located within--

          ‘(i) a HUBZone (as defined in section 3(p) of the Small Business Act and the implementing regulations issued under that section);

          ‘(ii) an urban empowerment zone or urban enterprise community (as designated by the Secretary of Housing and Urban Development); or

          ‘(iii) a rural empowerment zone or rural enterprise community (as designated by the Secretary of Agriculture);

        ‘(C) any other area designated by the Secretary of the Treasury, as a low-income community for the purposes of the New Markets Tax Credit;

      ‘(4) the terms ‘new markets venture capital company’ and ‘NMVC company’ mean a company that has been designated as a new markets venture capital company by the Administrator under section 354(d);

      ‘(5) the term ‘participation agreement’ means an agreement between the Administrator and a company granted final approval under section 354(d) that--

        ‘(A) details the operating plan and investment criteria of the company; and

        ‘(B) requires the company to make investments in smaller enterprises, at least 80 percent of which are located in low- or moderate-income geographic areas; and

      ‘(6) the term ‘specialized small business investment company’ means any small business investment company that--

        ‘(A) invests solely in small business concerns that contribute to a well-balanced national economy by facilitating ownership in such concerns by persons whose participation in the free enterprise system is hampered because of social or economic disadvantages;

        ‘(B) is organized or chartered under State business or nonprofit corporations statutes, or formed as a limited partnership; and

        ‘(C) was licensed under section 301(d), as in effect before September 30, 1996.

‘SEC. 352. PURPOSES.

    ‘The purposes of this subtitle are--

      ‘(1) to encourage venture capital investment in smaller enterprises located within urban and rural areas;

      ‘(2) to promote the creation of wealth, economic development, and job opportunities in low- and moderate-income geographic areas; and

      ‘(3) to establish a venture capital program, which shall be administered by the Administrator--

        ‘(A) to make grants to NMVC companies for the purpose of providing marketing, management, and technical assistance to smaller enterprises financed, or expected to be financed, by such companies; and

        ‘(B) to guarantee debentures issued by NMVC companies to enable such companies to make venture capital investments in smaller enterprises within urban and rural areas.

‘SEC. 353. PROGRAM ESTABLISHMENT.

    ‘There is established a New Markets Venture Capital Program, under which the Administrator is authorized to--

      ‘(1) make grants to NMVC companies, as provided in section 355; and

      ‘(2) guarantee debentures issued by NMVC companies, as provided in section 356.

‘SEC. 354. SELECTION OF NMVC COMPANIES.

    ‘(a) APPLICATIONS- In order to be eligible to participate in the program under this subtitle as an NMVC company, an eligible company shall submit to the Administrator an application, within such period of time as the Administrator shall establish, which shall include--

      ‘(1) a business plan that--

        ‘(A) includes the information referred to in subparagraph (A) of section 351(5); and

        ‘(B) describes the manner and geographic areas in which the applicant will--

          ‘(i) make successful venture capital investments in smaller enterprises described in subparagraph (B) of section 351(5); and

          ‘(ii) provide marketing, management, and technical assistance to those enterprises;

      ‘(2) the qualifications and general business reputation of the management of the applicant, specifically addressing--

        ‘(A) the experience of the management in making venture capital investments in smaller enterprises described in section 351(5)(B); and

        ‘(B) the success of those investments in terms of business growth, jobs created, and such other factors as the Administrator may require;

      ‘(3) a description of the manner in which the applicant will interface with community organizations;

      ‘(4) a proposal describing the manner in which grant amounts made available under this subtitle would provide marketing, management, and technical assistance to smaller enterprises expected to be financed by the applicant;

      ‘(5) proposed criteria by which to evaluate the performance of the applicant in meeting program objectives;

      ‘(6) the management and financial strength of any parent or affiliated firm, or any firm essential to the success of the business plan of the applicant;

      ‘(7) with respect to binding commitments to be made to the company under this subtitle, an estimate of the ratio of cash to in-kind contributions; and

      ‘(8) such other information as the Administrator may require.

    ‘(b) CRITERIA FOR CONDITIONAL APPROVAL-

      ‘(1) IN GENERAL- Upon receipt of an application submitted under subsection (a), the Administrator shall review the application and make a determination regarding whether to grant conditional approval to the applicant to operate as an NMVC company during the time period described in subsection (c), based on--

        ‘(A) the geographic area and employment characteristics of the smaller enterprises in which the proposed investments of the NMVC company will be made (in order to promote investment nationwide);

        ‘(B) the likelihood that the applicant will meet the goals of the business plan of the applicant;

        ‘(C) the experience and background of the management team of the company;

        ‘(D) the need for equity or equity-type investments within the proposed investment areas;

        ‘(E) the extent to which the applicant will concentrate its activities on serving its investment areas;

        ‘(F) the likelihood that the applicant will be able to satisfy the requirements of subsection (c);

        ‘(G) the extent to which the proposed activities will expand economic opportunities within the investment areas; and

        ‘(H) such other factors as the Administrator determines to be appropriate.

      ‘(2) NATIONWIDE DISTRIBUTION- The Administrator shall select companies under paragraph (1) in such a way that promotes investment nationwide.

    ‘(c) REQUIREMENTS FOR FINAL APPROVAL-

      ‘(1) IN GENERAL- Subject to paragraph (2), each applicant that is granted conditional approval by the Administrator to operate as an NMVC company under subsection (b) shall, before the expiration of a time period established by the Administrator, not to exceed 24 months, beginning on the date on which such conditional approval is granted--

        ‘(A) raise not less than $5,000,000 of contributed capital or binding capital commitments from 1 or more investors (other than an agency of the Federal Government) that meet criteria established by the Administrator; and

        ‘(B) in order to provide marketing, management, and technical assistance, have--

          ‘(i) cash or binding commitments for contributions (in cash or in-kind) from 1 or more sources other than the Administration that meet criteria established by the Administrator, payable or available over a multiyear period acceptable to the Administrator (not to exceed 10 years), in an amount equal to 30 percent of the capital and commitments raised under subparagraph (A);

          ‘(ii) purchased an annuity from an insurance company acceptable to the Administrator, using amounts (other than the amounts raised to satisfy the requirements of subparagraph (A)) from any source other than the Administration, that would yield cash payments over a multiyear period acceptable to the Administrator (not to exceed 10 years), in an amount equal to 30 percent of the capital and commitments raised under subparagraph (A); or

          ‘(iii) cash or binding commitments for contributions (in cash or in-kind) of the type described in clause (i) and have purchased an annuity of the type described in clause (ii), that in the aggregate make available, over a multiyear period acceptable to the Administrator (not to exceed 10 years), an amount equal to 30 percent of the capital and commitments raised under subparagraph (A).

      ‘(2) EXCEPTION- The Administrator may, in the discretion of the Administrator and based upon a showing of special circumstances and good cause, consider an applicant to have satisfied the requirements of paragraph (1)(B) if the applicant has--

        ‘(A) a viable plan that reasonably projects the capacity of the applicant to raise the amount (in cash or in-kind) required under paragraph (1)(B); and

        ‘(B) binding commitments in an amount equal to not less than 20 percent of the total amount required under paragraph (1)(B).

    ‘(d) GRANT OF FINAL APPROVAL; DESIGNATION- The Administrator shall, with respect to each applicant conditionally approved to operate as an NMVC company under subsection (b), either--

      ‘(1) grant final approval to the applicant to operate as an NMVC company under this subtitle and designate the applicant as an NMVC company, if the applicant--

        ‘(A) satisfies the requirements of subsection (c) on or before the expiration of the time period described in that subsection; and

        ‘(B) enters into a participation agreement with the Administrator; or

      ‘(2) if the applicant fails to satisfy the requirements of subsection (c) on or before the expiration of the time period described in that subsection, revoke the conditional approval granted under subsection (b).

‘SEC. 355. TECHNICAL ASSISTANCE GRANTS.

    ‘(a) GRANTS-

      ‘(1) GRANTS TO NMVC’S-

        ‘(A) IN GENERAL- The Administrator, in accordance with such terms and conditions as the Administrator may require, is authorized to award 1 or more grants to each NMVC company, which shall be used to provide marketing, management, and technical assistance for the benefit of smaller enterprises financed, or expected to be financed, by the NMVC company.

        ‘(B) GRANT AMOUNT- Subject to subparagraph (C), the amount of a grant awarded to an NMVC company under this subsection shall be equal to 30 percent of the amount of capital and commitments raised under section 354(c)(1)(A).

        ‘(C) MATCHING REQUIREMENT- In order to receive funds under a grant awarded under this subsection, an NMVC company shall provide a matching contribution (in cash or in-kind) from sources other than the Administration, in an amount equal to the funds to be received.

      ‘(2) GRANTS TO SPECIALIZED SMALL BUSINESS INVESTMENT COMPANIES-

        ‘(A) AUTHORITY- In accordance with this section, the Administrator may make grants to specialized small business investment companies to provide marketing, management, and technical assistance to smaller enterprises, if the smaller enterprise is financed, or expected

to be financed, by such companies after the effective date of the Creating New Markets and Empowering America Act of 2000.

        ‘(B) USE OF FUNDS- The proceeds of a grant made under this paragraph may be used by the company receiving such grant only to provide marketing, management, and technical assistance in connection with one or more equity or equity-type investments (made with capital raised after the effective date of the Creating New Markets and Empowering America Act of 2000) in one or more smaller enterprises located in low- or moderate-income geographic areas.

        ‘(C) SUBMISSION OF PLANS- A specialized small business investment company shall be eligible for a grant under this section only if the company submits to the Administrator, in such form and manner as the Administrator may require, a plan for use of the grant.

        ‘(D) GRANT AMOUNT- Subject to subparagraph (E), the amount of a grant awarded to a specialized small business investment company under this subsection shall be equal to not more than 30 percent of the investments of the specialized small business investment company described in subparagraph (B).

        ‘(E) MATCHING REQUIREMENT- In order to receive funds under a grant awarded under this subsection, a specialized small business investment company shall provide a matching contribution (in cash or in-kind) from sources other than the Administration, in an amount equal to the funds to be received.

      ‘(3) MULTIYEAR GRANTS- Amounts from a grant awarded under this section shall be paid upon the direction of the Administrator over a multiyear period of not to exceed 10 years.

      ‘(4) PRO RATA REDUCTIONS- If the amount made available to carry out this section for a fiscal year is insufficient for the Administrator to award grants in the amounts required under paragraphs (1) and (2), the Administrator may make pro rata reductions in the amounts otherwise payable to each NMVC company or specialized small business investment company under those paragraphs.

    ‘(b) SUPPLEMENTAL GRANTS-

      ‘(1) IN GENERAL- In addition to any grant under subsection (a), the Administrator, in accordance with such terms and conditions as the Administrator may require, may make 1 or more supplemental grants to an NMVC company or specialized small business investment company, which shall be used to provide additional marketing, management, and technical assistance for the benefit of smaller enterprises financed, or expected to be financed, by the NMVC company or the specialized small business investment company, as applicable.

      ‘(2) MATCHING REQUIREMENT- The Administrator may require, as a condition of any supplemental grant made under this subsection, that the NMVC company or the specialized small business investment company, as applicable, provide a matching contribution (in cash or in-kind) from 1 or more sources other than the Administration in an amount equal to the amount of the supplemental grant.

    ‘(c) LIMITATION- No part of any grant made available under this section may be used for any purpose other than to provide marketing, management, and technical assistance to smaller enterprises financed, or expected to be financed, by an NMVC company or a specialized small business investment company, as applicable.

‘SEC. 356. DEBENTURES.

    ‘(a) IN GENERAL- The Administrator is authorized to fully and unconditionally guarantee the timely payment of principal and interest as scheduled on debentures issued by NMVC companies, in accordance with such terms and conditions as the Administrator determines to be appropriate.

    ‘(b) FULL FAITH AND CREDIT- The full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guarantee under this section.

    ‘(c) DEBENTURE REQUIREMENTS- A debenture guaranteed under this section--

      ‘(1) may be issued for a term of not to exceed 15 years;

      ‘(2) shall bear interest at a rate approved by the Administrator; and

      ‘(3) shall contain such other terms and conditions as the Administrator may require.

    ‘(d) TOTAL FACE VALUE-

      ‘(1) IN GENERAL- The total face amount of debentures issued by an NMVC company and guaranteed under this section that may be outstanding at any one time shall not exceed 150 percent of the contributed capital of the NMVC company, as determined by the Administrator.

      ‘(2) CONTRIBUTED CAPITAL- For purposes of this subsection, the contributed capital of an NMVC company includes capital that is deemed to be Federal funds contributed by an investor other than an agency of the Federal Government.

‘SEC. 357. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.

    ‘(a) IN GENERAL- The Administrator (or an agent of the Administrator) is authorized to cause a trust to issue trust certificates representing ownership of all or a fractional part of debentures guaranteed by the Administrator under section 356, if such trust certificates are based on and backed by a trust or pool approved by the Administrator and composed solely of debentures guaranteed under section 356.

    ‘(b) GUARANTEE AUTHORITY-

      ‘(1) IN GENERAL- The Administrator is authorized, upon such terms and conditions as the Administrator determines to be appropriate, to fully and unconditionally guarantee the timely payment of the principal of and interest on any trust certificate issued under this section.

      ‘(2) REDUCTION- If a debenture in a trust or pool described in subsection (a) is prepaid, or in the event of default of a debenture, the guarantee of timely payment of principal and interest on the related trust certificate issued under this section shall

be reduced in proportion to the corresponding payment amount of principal and interest on the trust certificates, provided that the guarantee of timely payment of principal and interest on the trust certificates after such reduction shall remain full and unconditional.

      ‘(3) ACCRUAL OF INTEREST- Interest on prepaid or defaulted debentures shall accrue and be guaranteed by the Administrator only through the date of payment of the guarantee.

      ‘(4) REDEMPTION OF TRUST CERTIFICATES- During the term of any trust certificate issued under this subsection, the trust certificate may be called for redemption due to prepayment or default of all debentures in the trust or pool.

    ‘(c) FULL FAITH AND CREDIT- The full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guarantee of a trust certificate issued under this section.

    ‘(d) FEES- The Administrator shall not collect a fee for any guarantee of a trust certificate issued under this section, except that nothing in this subsection may be construed to preclude an agent of the Administrator from collecting a fee approved by the Administrator for the functions described in subsection (f)(2).

    ‘(e) SUBROGATION-

      ‘(1) IN GENERAL- If the Administrator pays a claim under a guarantee issued under this section, the Administration shall be subrogated fully to the rights satisfied by such payment.

      ‘(2) OWNERSHIP RIGHTS- No Federal, State, or local law shall preclude or limit the exercise by the Administrator of the ownership rights of the Administrator in the debentures residing in a trust or pool against which trust certificates are issued under this section.

    ‘(f) CENTRAL REGISTRATION-

      ‘(1) IN GENERAL- The Administrator may provide for a central registration of all trust certificates issued under this section.

      ‘(2) CONTRACTING OF FUNCTIONS-

        ‘(A) IN GENERAL- The Administrator may contract with an agent or agents to carry out on behalf of the Administrator the pooling and the central registration functions referred to in this section, including, notwithstanding any other provision of law--

          ‘(i) maintenance on behalf of and under the direction of the Administrator of such commercial bank accounts or investments in obligations of the United States as may be necessary to facilitate trusts or pools backed by debentures guaranteed under this subtitle; and

          ‘(ii) the issuance of trust certificates to facilitate such poolings.

        ‘(B) FIDELITY BOND OR INSURANCE REQUIRED- An agent contracting with the Administrator under this paragraph shall be required to provide a fidelity bond or insurance in such amounts as the Administrator determines to be necessary to fully protect the interests of the Government.

      ‘(3) REGULATION OF BROKERS AND DEALERS- The Administrator may regulate brokers and dealers in trust certificates issued under this section.

      ‘(4) ELECTRONIC REGISTRATION- Nothing in this subsection may be construed to prohibit the use of a book-entry or other electronic form of registration for trust certificates issued under this section.

‘SEC. 358. FEES.

    ‘Except as provided under section 357(d), the Administrator may charge such fees as the Administrator determines to be appropriate with respect to any guarantee issued or grant awarded under this subtitle.

‘SEC. 359. BANK PARTICIPATION.

    ‘Any national bank, or any member bank of the Federal Reserve System or nonmember insured bank, to the extent permitted under applicable State law, may invest in any 1 or more NMVC companies, or in any entity established to invest solely in NMVC companies, except that in no event shall the total amount of such investments of any such bank exceed 5 percent of the total capital and surplus of the bank.

‘SEC. 360. FEDERAL FINANCING BANK.

    ‘Section 318 shall not apply to any debenture issued by a NMVC company under this subtitle.

‘SEC. 361. REPORTING REQUIREMENTS.

    ‘Each NMVC company shall provide to the Administrator such information as the Administrator may request, including--

      ‘(1) information related to the measurement criteria that the NMVC company proposed in the application submitted under section 354(a);

      ‘(2) documentation on the use of technical assistance grants under this subtitle; and

      ‘(3) in each case in which the company under this subtitle makes an investment in, or a loan or grant to, a business that is not located in a low- or moderate-income geographic area, a report on the number and percentage of employees of the business who reside in such areas.

‘SEC. 362. EXAMINATIONS.

    ‘(a) IN GENERAL- Each NMVC company shall be subject to examinations made at the direction of the Investment Division of the Administration, which may be conducted with the assistance of a private sector entity that has both the qualifications to conduct and the expertise in conducting such examinations.

    ‘(b) ASSESSMENT OF COSTS- The cost of examinations under subsection (a), including the compensation of the examiners, may, in the discretion of the Administrator, be assessed against the company examined, and when so assessed shall be paid by such company.

    ‘(c) DEPOSIT OF FEES- Fees collected under this section shall be deposited in the account for salaries and expenses of the Administration.

‘SEC. 363. INJUNCTIONS AND OTHER ORDERS.

    ‘(a) IN GENERAL- If, in the judgment of the Administrator, an NMVC company or any other person has engaged or is about to engage in any act or practice that constitutes or will constitute a violation of any provision of this subtitle (or any rule, regulation, or order issued under this subtitle) or of a participation agreement entered into under this subtitle--

      ‘(1) the Administrator may make application to the proper district court of the United States or a United States court of any place subject to the jurisdiction of the United States for an order enjoining such act or practice, or for an order enforcing compliance with such provision; and

      ‘(2) such court shall--

        ‘(A) have jurisdiction over such application and any ensuing proceedings; and

        ‘(B) upon a showing by the Administrator that such NMVC company or other person has engaged or is about to engage in any such act or practice, grant without bond a permanent or temporary injunction, restraining order, or other appropriate order.

    ‘(b) POWERS OF COURT- In any proceeding under subsection (a)--

      ‘(1) the court as a court of equity may, to such extent as the court determines to be necessary, take exclusive jurisdiction of the NMVC company and the assets thereof, wherever located; and

      ‘(2) the court shall have jurisdiction in any such proceeding to appoint a trustee or receiver to hold or administer under the direction of the court the assets so possessed.

    ‘(c) TRUSTEE OR RECEIVER- The Administrator is authorized to act as trustee or receiver of the NMVC company referred to in subsection (a). Upon request by the Administrator, the court may appoint the Administrator to act in such capacity, unless the court determines such appointment to be inequitable or otherwise inappropriate based on the special circumstances at issue.

‘SEC. 364. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS, DIRECTORS, EMPLOYEES, OR AGENTS; BREACH OF FIDUCIARY DUTY.

    ‘(a) IN GENERAL- If an NMVC company violates any provision of this subtitle (or any rule or regulation issued under this subtitle), or of a participation agreement entered into under this subtitle, by failing to comply with the terms thereof or by engaging in any act or practice that constitutes or will constitute a violation thereof, such violation shall be deemed to be also a violation and an unlawful act on the part of any person who, directly or indirectly, authorizes, orders, participates in, or causes, brings about, counsels, aids, or abets in the commission of any act, practice, or transaction that constitutes or will constitute, in whole or in part, such violation.

    ‘(b) BREACH OF FIDUCIARY DUTY- It shall be unlawful for any officer, director, employee, agent, or other participant in the management or conduct of the affairs of an NMVC company to engage in any act or practice, or to omit any act, in breach of the fiduciary duty of such officer, director, employee, agent, or participant, if, as a result thereof, the NMVC company has suffered or is in imminent danger of suffering financial loss or other damage.

    ‘(c) OTHER PROHIBITIONS- Except with the written consent of the Administrator, it shall be unlawful--

      ‘(1) for any person to take office as an officer, director, or employee of an NMVC company, or to become an agent or participant in the conduct of the affairs or management of an NMVC company, if that person--

        ‘(A) has been convicted of a felony, or any other criminal offense involving dishonesty or breach of trust; or

        ‘(B) has been found civilly liable in damages, or has been permanently or temporarily enjoined by order, judgment, or decree of a court of competent jurisdiction, by reason of any act or practice involving fraud or breach of trust; or

      ‘(2) for any person to continue to serve in any of the capacities described in paragraph (1), if that person is subsequently--

        ‘(A) convicted of a felony, or any other criminal offense involving dishonesty or breach of trust; or

        ‘(B) found civilly liable in damages, or is permanently or temporarily enjoined by an order, judgment, or decree of a court of competent jurisdiction, by reason of any act or practice involving fraud or breach of trust.

    ‘(d) NOTICE- The Administrator may serve upon any officer, director, employee, or other participant in the conduct of the management or other affairs of an NMVC company a written notice of the intention of the Administrator to remove that person from his or her position whenever, in the opinion of the Administrator, that person--

      ‘(1) has willfully committed any substantial violation of--

        ‘(A) this subtitle (or any rule, regulation, or order issued under this subtitle); or

        ‘(B) a participation agreement entered into under this subtitle; or

        ‘(C) a cease-and-desist order that has become final; or

      ‘(2) has willfully committed or engaged in any act, omission, or practice that constitutes a substantial breach of fiduciary duty, and that such violation or such breach of fiduciary duty is one involving personal dishonesty on the part of such person.

    ‘(e) SUSPENSION OR REMOVAL- The Administrator may suspend or remove from office any person upon whom the Administrator has served a notice under subsection (d), in accordance with the procedures set forth in section 313.

‘SEC. 365. REGULATIONS.

    ‘The Administrator may promulgate such regulations as the Administrator determines to be necessary to carry out this subtitle.

‘SEC. 366. AUTHORIZATIONS.

    ‘(a) IN GENERAL- There is authorized to be appropriated to the Administration, for fiscal years 2000 through 2005, to remain available until expended--

      ‘(1) such subsidy budget authority as may be necessary to guarantee $150,000,000 of debentures under this subtitle; and

      ‘(2) $30,000,000 to make grants under this subtitle.

    ‘(b) FUNDS COLLECTED FOR EXAMINATIONS- Funds deposited under section 362(c) may be used only for the costs of examinations under section 362 and for

the costs of other oversight activities with respect to the program established under this subtitle.’.

    (b) CONFORMING AMENDMENT- Section 20(e)(1)(C) of the Small Business Act (15 U.S.C. 631 note) is amended by inserting ‘subtitle A of’ before ‘title III’.

    (c) CLERICAL AMENDMENT- Subtitle A of title III of the Small Business Investment Company Act of 1958 (15 U.S.C. 681 et seq.), as so designated by this title, is amended by striking ‘this title’ each place that term appears and inserting ‘this subtitle’.

SEC. 302. BANKRUPTCY EXEMPTION FOR NMVC COMPANIES.

    Section 109(b)(2) of title 11, United States Code, is amended by inserting after ‘homestead association,’ the following: ‘a new markets venture capital company (as defined in section 351 of the Small Business Investment Act of 1958),’.

SEC. 303. FEDERAL SAVINGS ASSOCIATIONS.

    Section 5(c)(4) of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(4)) is amended by adding at the end the following:

        ‘(F) NEW MARKETS VENTURE CAPITAL COMPANIES- A Federal savings association may invest in stock, obligations, or other securities of any new markets venture capital company (as defined in section 351 of the Small Business Investment Act of 1958). A Federal savings association may not make any investment under this subparagraph if its aggregate outstanding investment under this subparagraph would exceed 5 percent of the capital and surplus of such savings association.’.

Subtitle B--Community Development Venture Capital Assistance

SEC. 311. FINDINGS.

    Congress finds that--

      (1) there is a need for the development and expansion of organizations that provide private equity capital to smaller businesses in areas in which equity-type capital is scarce, such as inner cities and rural areas, in order to create and retain jobs for low-income residents of those areas;

      (2) to invest successfully in smaller businesses, particularly in inner cities and rural areas, requires highly specialized investment and management skills;

      (3) there is a shortage of professionals who possess such skills and there are few training grounds for individuals to obtain those skills;

      (4) providing assistance to organizations that provide specialized technical assistance and training to individuals and organizations seeking to enter or expand in this segment of the market would stimulate small business development and entrepreneurship in economically distressed communities; and

      (5) assistance from the Federal Government could act as a catalyst to attract investment from the private sector and would help to develop a specialized venture capital industry focused on creating jobs, increasing business ownership, and generating wealth in low-income communities.

SEC. 312. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.

    (a) IN GENERAL- The Small Business Act (15 U.S.C. 631 et seq.) is amended--

      (1) by redesignating section 34 as section 35; and

      (2) by inserting after section 33 the following:

‘SEC. 34. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.

    ‘(a) DEFINITIONS- In this section, the following definitions shall apply:

      ‘(1) COMMUNITY DEVELOPMENT VENTURE CAPITAL ORGANIZATION- The term ‘community development venture capital organization’ means a privately-controlled organization that--

        ‘(A) has a primary mission of promoting community development in low-income communities, as defined by the Administrator, through investment in private business enterprises; or

        ‘(B) administers or is in the process of establishing a community development venture capital fund for the purpose of making equity investments in private business enterprises in such communities.

      ‘(2) DEVELOPMENTAL ORGANIZATION- The term ‘developmental organization’--

        ‘(A) means a public or private entity, including a college or university, that provides technical assistance to community development venture capital organizations or that conducts research or training in community development venture capital investment; and

        ‘(B) may include an intermediary organization.

      ‘(3) INTERMEDIARY ORGANIZATION- The term ‘intermediary organization’--

        ‘(A) means a private, nonprofit entity that has--

          ‘(i) a primary mission of promoting community development through investment in private businesses in low-income communities; and

          ‘(ii) significant prior experience in providing technical assistance or financial assistance to community development venture capital organizations; and

        ‘(B) may include community development venture capital organizations.

    ‘(b) AUTHORITY- In order to promote the development of community development venture capital organizations, the Administrator may--

      ‘(1) enter into contracts with 1 or more developmental organizations to carry out training and research activities under subsection (c); and

      ‘(2) make grants in accordance with this section--

        ‘(A) to developmental organizations to carry out training and research activities under subsection (c); and

        ‘(B) to intermediary organizations to provide intensive marketing, management, and technical assistance and training to community

development venture capital organizations under subsection (d).

    ‘(c) TRAINING AND RESEARCH ACTIVITIES-

      ‘(1) IN GENERAL- Subject to paragraph (2), a developmental organization that receives a grant under subsection (b) shall use the funds made available through the grant for 1 or more of the following training and research activities:

        ‘(A) STRENGTHENING PROFESSIONAL SKILLS- Creating and operating training programs to enhance the professional skills for individuals in community development venture capital organizations or operating private community development venture capital funds.

        ‘(B) INCREASING INTEREST IN COMMUNITY DEVELOPMENT VENTURE CAPITAL- Creating and operating a program to select and place students and recent graduates from business and related professional schools as interns with community development venture capital organizations and intermediary organizations for a period of up to 1 year, and to provide stipends for such interns during the internship period.

        ‘(C) PROMOTING ‘BEST PRACTICES’- Organizing an annual national conference for community development venture capital organizations to discuss and share information on the best practices regarding issues relevant to the creation and operation of community development venture capital organizations.

        ‘(D) MOBILIZING ACADEMIC RESOURCES- Encouraging the formation of 1 or more centers for the study of community development venture capital at graduate schools of business and management, providing funding for the development of materials for courses on topics in this area, and providing funding for research on economic, operational, and policy issues relating to community development venture capital.

      ‘(2) LIMITATION- The Administrator shall ensure that not more than 25 percent of the amount made available to carry out this section is used for the activities described in paragraph (1).

    ‘(d) INTENSIVE MARKETING, MANAGEMENT, AND TECHNICAL ASSISTANCE AND TRAINING- An intermediary organization that receives a grant under subsection (b) shall use the funds made available through the grant to provide intensive marketing, management, and technical assistance and training to promote the development of community development venture capital organizations, which assistance may include grants to community development venture capital organizations for the start up costs and operating support of those organizations.

    ‘(e) MATCHING CONTRIBUTION REQUIREMENT- The Administrator shall require, as a condition of any grant made to an intermediary organization under this section, that a matching contribution equal to the amount of such grant be provided from sources other than the Federal Government.

    ‘(f) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $20,000,000 for fiscal years 2000 through 2003, to remain available until expended.’.

    (b) REQUIREMENTS- The Administrator of the Small Business Administration may promulgate such regulations as may be necessary to carry out section 34 of the Small Business Act, as added by this section, which regulations may take effect upon issuance.

Subtitle C--Business LINC

SEC. 321. GRANTS AUTHORIZED.

    Section 8 of the Small Business Act (15 U.S.C. 637) is amended by adding at the end the following:

    ‘(m) BUSINESS LINC GRANTS-

      ‘(1) IN GENERAL- The Administrator may make grants to and enter into cooperative agreements with any coalition of private or public sector participants that--

        ‘(A) expand business-to-business relationships between large and small businesses; and

        ‘(B) provide businesses, directly or indirectly, with online information and a database of companies that are interested in mentor-protegee programs or community-based, state-wide, or local business development programs.

      ‘(2) MATCHING REQUIREMENTS-

        ‘(A) IN GENERAL- Subject to subparagraph (B), the Administrator may make grants to and enter into cooperative agreements with any coalition of private or public sector participants if the coalition provides a matching amount, either in-kind or in cash, equal to the grant amount.

        ‘(B) WAIVER- In the best interests of the program established under this subsection, the Administrator may waive the requirements for matching funds to be provided by the coalition under subparagraph (A).

      ‘(3) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this subsection $6,600,000 for each of fiscal years 2000 through 2005, to remain available until expended.’.

SEC. 322. REGULATIONS.

    The Administrator of the Small Business Administration may promulgate such regulations as the Administrator determines to be necessary to carry out this subtitle and the amendment made by this subtitle.

TITLE IV--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES

SEC. 401. ADDITIONAL EMPOWERMENT ZONE DESIGNATIONS.

    Section 1391 is amended by adding at the end the following new subsections:

    ‘(h) ADDITIONAL DESIGNATIONS PERMITTED-

      ‘(1) IN GENERAL- In addition to the areas designated under subsections (a) and (g), the appropriate Secretaries may designate in the aggregate an additional 9 nominated areas as empowerment zones under this section, subject to the availability of eligible nominated areas. Of that number, up to 7 may

be designated in urban areas and at least 2 may be designated in rural areas.

      ‘(2) PERIOD DESIGNATIONS MAY BE MADE AND TAKE EFFECT- A designation may be made under this subsection after the date of the enactment of this subsection and before January 1, 2001. Subject to subparagraphs (B) and (C) of subsection (d)(1), such designations shall remain in effect during the period beginning on January 1, 2001, and ending on December 31, 2009.

      ‘(3) MODIFICATIONS TO ELIGIBILITY CRITERIA, ETC-

        ‘(A) IN GENERAL- The rules of subsection (g)(3) shall apply to designations under this subsection, and with respect to the criteria for any designation, an additional eligibility criteria shall be the consideration that the nominated area is a strategic planning community and with respect to the criteria for the designation of any rural area, an additional eligibility criteria shall be the existence of outmigration from such area.

        ‘(B) STRATEGIC PLANNING COMMUNITY- The term ‘strategic planning community’ means a respondent to the Notice Inviting Applications at 63 Federal Register 19162 (April 16, 1998) whose application was ranked 16th through 30th in the competition that concluded in December 1998.

      ‘(4) EMPOWERMENT ZONES WHICH BECOME RENEWAL COMMUNITIES- The number of areas which may be designated as empowerment zones under this subsection shall be increased by 1 for each area which ceases to be an empowerment zone by reason of section 1400E(e). Each additional area designated by reason of the preceding sentence shall have the same urban or rural character as the area it is replacing.

    ‘(i) TRANSFER OF ENTERPRISE COMMUNITY DESIGNATION-

      ‘(1) PROHIBITION OF DUAL DESIGNATION-

        ‘(A) IN GENERAL- No area may retain dual designation as an enterprise community and an empowerment zone or renewal community. The subsequent designation as an empowerment zone or a renewal community of any area previously designated under subsection (b)(1) as an enterprise community shall cause that area to forfeit its designation as an enterprise community.

        ‘(B) RULES FOR INCLUSION IN EMPOWERMENT ZONE- In the case of any enterprise community which is later designated pursuant to subsection (g) or (h) as an empowerment zone, all census tracts included in such enterprise community shall be included in such empowerment zone without regard to the limitations on population or size imposed by paragraphs (1) and (3) of section 1392(a).

      ‘(2) REDESIGNATIONS-

        ‘(A) IN GENERAL- Any enterprise community designation that is forfeited pursuant to this paragraph shall be available for transfer by the appropriate Secretary.

        ‘(B) RULES OF REDESIGNATION- To the extent that enterprise community designations become available for transfer pursuant to subparagraph (A) and for the period that such designations remain in effect pursuant to subsection (d), the appropriate Secretaries may designate the highest ranking areas nominated for designation as empowerment zones pursuant to subsection (g) or (h) which were not so designated and which continue to meet appropriate eligibility criteria, as enterprise communities. Except as set forth in subparagraph (C), areas designated as enterprise communities pursuant to this paragraph shall be subject to all other limitations and shall be accorded all remaining benefits otherwise applicable to enterprise communities designated pursuant to subsection (b)(1).

        ‘(C) SPECIAL RULES- Any area nominated for designation as an enterprise community pursuant to this paragraph which is located in Alaska or Hawaii shall be treated as meeting the requirements of paragraphs (2), (3), and (4) of section 1392(a) if for each census tract or block group within such area 20 percent or more of the families have income which is 50 percent or less of the statewide median family income (as determined under section 143).’.

SEC. 402. EXTENSION OF ENTERPRISE ZONE TREATMENT THROUGH 2009.

    (a) IN GENERAL- Subparagraph (A) of section 1391(d)(1) (relating to period for which designation is in effect) is amended to read as follows:

        ‘(A) December 31, 2009,’.

    (b) DISTRICT OF COLUMBIA- Section 1400(f) (relating to time for which designation applicable) is amended by striking ‘2002’ both places it appears and inserting ‘2009’.

SEC. 403. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT ZONES.

    (a) 20 Percent Credit- Subsection (b) of section 1396 (relating to empowerment zone employment credit) is amended to read as follows:

    ‘(b) APPLICABLE PERCENTAGE- For purposes of this section, the applicable percentage is 20 percent.’.

    (b) ALL EMPOWERMENT ZONES ELIGIBLE FOR CREDIT- Section 1396 is amended by striking subsection (e).

    (c) CONFORMING AMENDMENT- Subsection (d) of section 1400 is amended to read as follows:

    ‘(d) SPECIAL RULE FOR APPLICATION OF EMPLOYMENT CREDIT- With respect to the DC Zone, section 1396(d)(1)(B) (relating to empowerment zone employment credit) shall be applied by substituting ‘the District of Columbia’ for ‘such empowerment zone’.’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to wages paid or incurred after December 31, 2000.

SEC. 404. INCREASED EXPENSING UNDER SECTION 179.

    (a) IN GENERAL- Subparagraph (A) of section 1397A(a)(1) is amended by striking ‘$20,000’ and inserting ‘$35,000’.

    (b) EXPENSING FOR PROPERTY USED IN DEVELOPABLE SITES- Section 1397A is amended by striking subsection (c).

    (c) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2000.

SEC. 405. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE FACILITY BONDS.

    (a) IN GENERAL- Paragraph (3) of section 1394(f) (relating to bonds for empowerment zones designated under section 1391(g)) is amended to read as follows:

      ‘(3) EMPOWERMENT ZONE FACILITY BOND- For purposes of this subsection, the term ‘empowerment zone facility bond’ means any bond which would be described in subsection (a) if only empowerment zones were taken into account under sections 1397C and 1397D.’ .

    (b) CONFORMING AMENDMENTS-

      (1) Subsection (f) of section 1394 is amended by striking ‘new empowerment zone facility bond’ each place it appears and inserting ‘empowerment zone facility bond’.

      (2) The heading for such subsection is amended to read as follows:

    ‘(f) BONDS FOR EMPOWERMENT ZONES- ’.

      (3) Paragraph (1) of section 1394(c) is amended--

        (A) by striking ‘empowerment zone or’ in subparagraph (A), and

        (B) by striking ‘empowerment zones and’ in subparagraph (B).

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to obligations issued after December 31, 2000.

SEC. 406. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE INVESTMENTS.

    (a) IN GENERAL- Part III of subchapter U of chapter 1 is amended--

      (1) by redesignating subpart C as subpart D,

      (2) by redesignating sections 1397B and 1397C as sections 1397C and 1397D, respectively, and

      (3) by inserting after subpart B the following new subpart:

‘Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone Investments

‘Sec. 1397B. Nonrecognition of Gain on Rollover of Empowerment Zone Investments.

‘SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE INVESTMENTS.

    ‘(a) NONRECOGNITION OF GAIN- In the case of any sale of a qualified empowerment zone asset held by the taxpayer for more than 1 year and with respect to which such taxpayer elects the application of this section, gain from such sale shall be recognized only to the extent that the amount realized on such sale exceeds--

      ‘(1) the cost of any qualified empowerment zone asset (with respect to the same zone as the asset sold) purchased by the taxpayer during the 60-day period beginning on the date of such sale, reduced by

      ‘(2) any portion of such cost previously taken into account under this section.

    This section shall apply only to gain which is qualified capital gain.

    ‘(b) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

      ‘(1) QUALIFIED EMPOWERMENT ZONE ASSET-

        ‘(A) IN GENERAL- The term ‘qualified empowerment zone asset’ means any property which would be a qualified community asset (as defined in section 1400F) if in section 1400F--

          ‘(i) references to empowerment zones were substituted for references to renewal communities, and

          ‘(ii) references to enterprise zone businesses (as defined in section 1397C) were substituted for references to renewal community businesses.

        ‘(B) TREATMENT OF DC ZONE-

For termination of rollover with respect to the District of Columbia Enterprise Zone for property acquired after December 31, 2002, see section 1400(f).

      ‘(2) QUALIFIED CAPITAL GAIN-

        ‘(A) IN GENERAL- Except as otherwise provided in this paragraph, the term ‘qualified capital gain’ means any gain from the sale or exchange of--

          ‘(i) a capital asset, or

          ‘(ii) property used in the trade or business (as defined in section 1231(b)).

        ‘(B) CERTAIN RULES TO APPLY- Rules similar to the rules of paragraphs (3) and (4) of section 1400B(e) shall apply for purposes of this subsection.

      ‘(3) PURCHASE- A taxpayer shall be treated as having purchased any property if, but for paragraph (4), the unadjusted basis of such property in the hands of the taxpayer would be its cost (within the meaning of section 1012).

      ‘(4) BASIS ADJUSTMENTS- If gain from any sale is not recognized by reason of subsection (a), such gain shall be applied to reduce (in the order acquired) the basis for determining gain or loss of any qualified empowerment zone asset which is purchased by the taxpayer during the 60-day period described in subsection (a). This paragraph shall not apply for purposes of section 1202.

      ‘(5) HOLDING PERIOD- For purposes of determining whether the nonrecognition of gain under subsection (a) applies to any qualified empowerment zone asset which is sold--

        ‘(A) the taxpayer’s holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223, and

        ‘(B) only the first year of the taxpayer’s holding period for the asset referred to in subsection (a)(1) shall be taken into account for purposes of paragraphs (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 1400F(b).’

    (b) CONFORMING AMENDMENTS-

      (1) Paragraph (23) of section 1016(a) is amended--

        (A) by striking ‘or 1045’ and inserting ‘1045, or 1397B’, and

        (B) by striking ‘or 1045(b)(4)’ and inserting ‘1045(b)(4), or 1397B(b)(4)’.

      (2) Paragraph (15) of section 1223 is amended to read as follows:

      ‘(15) Except for purposes of sections 1202(a)(2), 1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the period for which the taxpayer has held property the acquisition of which resulted under section 1045 or 1397B in the nonrecognition of any part of the gain realized on the sale of other property, there shall be included the period for which such other property has been held as of the date of such sale.’

      (3) Paragraph (2) of section 1394(b) is amended--

        (A) by striking ‘section 1397C’ and inserting ‘section 1397D’, and

        (B) by striking ‘section 1397C(a)(2)’ and inserting ‘section 1397D(a)(2)’.

      (4) Paragraph (3) of section 1394(b) is amended--

        (A) by striking ‘section 1397B’ each place it appears and inserting ‘section 1397C’, and

        (B) by striking ‘section 1397B(d)’ and inserting ‘section 1397C(d)’.

      (5) Sections 1400(e) and 1400B(c) are each amended by striking ‘section 1397B’ each place it appears and inserting ‘section 1397C’.

      (6) The table of subparts for part III of subchapter U of chapter 1 is amended by striking the last item and inserting the following new items:

‘Subpart C. Nonrecognition of gain on rollover of empowerment zone investments.

‘Subpart D. General provisions.’

      (7) The table of sections for subpart D of such part III is amended to read as follows:

‘Sec. 1397C. Enterprise zone business defined.

‘Sec. 1397D. Qualified zone property defined.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to qualified empowerment zone assets acquired after December 31, 2000.

SEC. 407. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT ZONE STOCK.

    (a) IN GENERAL- Subsection (a) of section 1202 is amended to read as follows:

    ‘(a) EXCLUSION-

      ‘(1) IN GENERAL- In the case of a taxpayer other than a corporation, gross income shall not include 50 percent of any gain from the sale or exchange of qualified small business stock held for more than 5 years.

      ‘(2) EMPOWERMENT ZONE BUSINESSES-

        ‘(A) IN GENERAL- In the case of qualified small business stock acquired after the date of the enactment of this paragraph in a corporation which is a qualified business entity (as defined in section 1397C(b)) during substantially all of the taxpayer’s holding period for such stock, paragraph (1) shall be applied by substituting ‘60 percent’ for ‘50 percent’.

        ‘(B) CERTAIN RULES TO APPLY- Rules similar to the rules of paragraphs (5) and (7) of section 1400B(b) shall apply for purposes of this paragraph.

        ‘(C) GAIN AFTER 2014 NOT QUALIFIED- Subparagraph (A) shall not apply to gain attributable to periods after December 31, 2014.’.

    (b) CONFORMING AMENDMENT- Paragraph (8) of section 1(h) is amended by striking ‘means’ and all that follows and inserting ‘means the excess of--

        ‘(A) the gain which would be excluded from gross income under section 1202 but for the percentage limitation in section 1202(a), over

        ‘(B) the gain excluded from gross income under section 1202.’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to stock acquired after December 31, 2000.

SEC. 408. TREATMENT OF INTANGIBLES.

    (a) IN GENERAL- Section 1397C(d)(4) (relating to treatment of business holding intangibles) is amended--

      (1) by striking ‘development or’, and

      (2) by inserting ‘unless a substantial portion of the development with respect to such intangibles occurs within any empowerment zone’ after ‘license’.

    (b) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 409. APPLICATION OF DEVELOPABLE SITE OPPORTUNITIES TO ROUND I EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

    (a) IN GENERAL- Section 1392(a)(4) (relating to poverty rate) is amended--

      (1) by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively,

      (2) by striking ‘The poverty rate--’ and inserting the following:

        ‘(A) IN GENERAL- The poverty rate--’, and

      (3) by adding at the end the following:

        ‘(B) EXCEPTION FOR DEVELOPABLE SITES- Subparagraph (A) shall not apply to up to 3 noncontiguous parcels in a nominated area which may be developed for commercial or industrial purposes. The aggregate area of noncontiguous parcels to which the preceding sentence applies with respect to any nominated area shall not exceed 2,000 acres.’.

    (b) CONFORMING AMENDMENTS- Section 1391(g)(3)(A) is amended by striking clause (iii) and by redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively.

    (c) EFFECTIVE DATE- The amendments made by this section shall take effect with respect to designations made before, on, and after the date of the enactment of this Act.

SEC. 410. FUNDING ENTITLEMENT FOR ROUND II EMPOWERMENT ZONES.

    (a) IN GENERAL-

      (1) ENTITLEMENT- Section 2007(a)(1) of the Social Security Act (42 U.S.C. 1397f(a)(1)) is amended--

        (A) in subparagraph (A), by striking ‘in the State; and’ and inserting ‘that is in the State and is designated pursuant to section 1391(b) of the Internal Revenue Code of 1986;’;

        (B) by adding after subparagraph (B) the following:

        ‘(C)(i) 9 grants under this section for each qualified empowerment zone that is in an urban area in the State and is designated pursuant to section 1391(g) of such Code; and

        ‘(ii) 9 grants under this section for each qualified empowerment zone that is in a rural area in the State and is designated pursuant to section 1391(g) of such Code; and

        ‘(D) 8 grants under this section for each qualified enterprise community that is in the State and is designated pursuant to section 766 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999.’.

      (2) AMOUNT OF GRANTS- Section 2007(a)(2) of such Act (42 U.S.C. 1397f(a)(2)) is amended--

        (A) in the heading of subparagraph (A), by inserting ‘ORIGINAL’ before ‘EMPOWERMENT’;

        (B) in subparagraph (A), in the matter preceding clause (i), by inserting ‘referred to in paragraph (1)(A)’ after ‘empowerment zone’;

        (C) by redesignating subparagraph (C) as subparagraph (F); and

        (D) by inserting after subparagraph (B) the following:

        ‘(C) ADDITIONAL EMPOWERMENT GRANTS- The amount of the grant to a State under this section for a qualified empowerment zone referred to in paragraph (1)(C) shall be--

          ‘(i) if the zone is in an urban area, $10,000,000 for each of fiscal years 2001 through 2008 and $13,300,000 for fiscal year 2009; or

          ‘(ii) if the zone is in a rural area, $3,000,000 for each of fiscal years 2001 through 2009,

        multiplied by the proportion of the population of the zone that resides in the State.

        ‘(D) ADDITIONAL ENTERPRISE COMMUNITY GRANTS- The amount of the grant to a State under this section for a qualified enterprise community referred to in paragraph (1)(D) shall be $250,000, multiplied by the proportion of the population of the community that resides in the State, for each of fiscal years 2001 through 2008.’.

      (3) TIMING OF GRANTS- Section 2007(a)(3) of such Act (42 U.S.C. 1397f(a)(3)) is amended--

        (A) in the heading of subparagraph (A), by inserting ‘ORIGINAL’ before ‘QUALIFIED’;

        (B) in subparagraph (A), in the matter preceding clause (i), by inserting ‘referred to in paragraph (1)(A)’ after ‘empowerment zone’; and

        (C) by adding after subparagraph (B) the following:

        ‘(C) ADDITIONAL QUALIFIED EMPOWERMENT ZONES- With respect to each qualified empowerment zone referred to in paragraph (1)(C), the Secretary shall make 1 grant under this section to the State in which the zone is located, on the first day of fiscal year 2001 and of each of the 8 succeeding fiscal years.

        ‘(D) ADDITIONAL QUALIFIED ENTERPRISE COMMUNITIES- With respect to each qualified enterprise community referred to in paragraph (1)(D), the Secretary shall make 1 grant under this section to the State in which the community is located on the first day of fiscal year 2001 and each of the 7 succeeding fiscal years.’.

      (4) FUNDING- Section 2007(a)(4) of such Act (42 U.S.C. 1397f(a)(4)) is amended--

        (A) by striking ‘(4) FUNDING- $1,000,000,000’ and inserting the following:

      ‘(4) FUNDING-

        ‘(A) ORIGINAL GRANTS- $1,000,000,000’;

        (B) by inserting ‘for empowerment zones and enterprise communities described in subparagraphs (A) and (B) of paragraph (1)’ before the period; and

        (C) by adding after and below the end the following:

        ‘(B) ADDITIONAL EMPOWERMENT ZONE GRANTS- $1,535,000,000 shall be made available to the Secretary for grants under this section for empowerment zones referred to in paragraph (1)(C).

        ‘(C) ADDITIONAL ENTERPRISE COMMUNITY GRANTS- $40,000,000 shall be made available to the Secretary for grants under this section for enterprise communities referred to in paragraph (1)(D).’.

      (5) DIRECT FUNDING FOR INDIAN TRIBES- Section 2007(a) of such Act (42 U.S.C. 1397f(a)) is amended by adding at the end the following:

      ‘(5) DIRECT FUNDING FOR INDIAN TRIBES-

        ‘(A) IN GENERAL- The Secretary may make a grant under this section directly to the governing body of an Indian tribe if--

          ‘(i) the tribe is identified in the strategic plan of a qualified empowerment zone or qualified enterprise community as the entity that assumes sole or primary responsibility for carrying out activities and projects under the grant; and

          ‘(ii) the grant is to be used for activities and projects that are--

            ‘(I) included in the strategic plan of the qualified empowerment

zone or qualified enterprise community, consistent with this section; and

            ‘(II) approved by the Secretary of Agriculture, in the case of a qualified empowerment zone or qualified enterprise community in a rural area, or the Secretary of Housing and Urban Development, in the case of a qualified empowerment zone or qualified enterprise community in an urban area.

        ‘(B) RULES OF INTERPRETATION-

          ‘(i) If grant under this section is made directly to the governing body of an Indian tribe under subparagraph (A), the tribe shall be considered a State for purposes of this section.

          ‘(ii) This subparagraph shall not be construed as making applicable to this section the provisions of the Indian Self-Determination and Education Assistance Act.’.

      (6) DEFINITIONS-

        (A) QUALIFIED ENTERPRISE COMMUNITY- Section 2007(f)(2)(A) of such Act (42 U.S.C. 1397f(f)(2)(A)) is amended by inserting ‘or pursuant to section 766 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999’ before the semicolon.

        (B) STRATEGIC PLAN- Section 2007(f)(3) of such Act (42 U.S.C. 1397f(f)(3)) is amended by inserting ‘or under section 766 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999’ before the period.

        (C) INDIAN TRIBE- Section 2007(f) of such Act (42 U.S.C. 1397f(f)), as amended by subparagraph (C), is amended by adding at the end the following:

      ‘(8) INDIAN TRIBE- The term ‘Indian tribe’ means any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act, which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.’.

    (b) USE OF GRANT FUNDS-

      (1) REVOLVING LOAN ACTIVITIES- Section 2007(b) of the Social Security Act (42 U.S.C. 1397f(b)) is amended by adding at the end the following:

      ‘(5) REVOLVING LOAN ACTIVITIES-

        ‘(A) IN GENERAL- In order to assist disadvantaged adults and youths in achieving and maintaining economic self-support, a State may use amounts paid under this section to fund revolving loan funds or similar arrangements for the purpose of making loans to residents, institutions, organizations, or businesses.

        ‘(B) RULES FOR DISBURSEMENT- Amounts to be used as described in subparagraph (A) shall be disbursed by the Secretary, consistent with the provisions of the Cash Management Improvement Act and its implementing rules, regulations, and procedures issued by the Secretary of the Treasury--

          ‘(i) in the case of a grant to a revolving loan fund--

            ‘(I) pursuant to a written irrevocable grant commitment; and

            ‘(II) at such time or times as the Secretary determines that the funds are needed to meet the purposes of such commitment; or

          ‘(ii) in the case of a grant for purposes of capitalizing an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or an insured credit union (as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1742)), at such time or times as the Secretary determines that funds are needed for such capitalization.’.

      (2) USE AS NON-FEDERAL SHARE- Section 2007(b) of such Act (42 U.S.C. 1397f(b)), as amended by paragraph (1), is amended by adding at the end the following:

      ‘(6) A State may use amounts received from a grant under this section to pay all or part of the non-Federal share of expenditures under any other Federal grant to a local public or nonprofit private agency or organization for activities consistent with the purposes of this section, unless the statutory authority for such other grant expressly prohibits counting of Federal grant funds as such non-Federal share.’.

    (c) ENVIRONMENTAL REVIEW- Section 2007 of the Social Security Act (42 U.S.C. 1397f) is amended--

      (1) by redesignating subsection (f) as subsection (g); and

      (2) by inserting after subsection (e) the following:

    ‘(f) ENVIRONMENTAL REVIEW-

      ‘(1) EXECUTION OF RESPONSIBILITY BY THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT AND THE SECRETARY OF AGRICULTURE-

        ‘(A) APPLICABILITY- This subsection shall apply to grants under this section in connection with empowerment zones and enterprise communities.

        ‘(B) EXECUTION OF RESPONSIBILITY- With respect to grants described in subparagraph (A), the Secretary of Housing and Urban Development and the Secretary of Agriculture, as appropriate, shall execute the responsibilities under the National Environmental Policy Act of 1969 and other provisions of law that further the purposes of such Act (as specified in regulations issued by each such Secretary under paragraph (2)(B)) that would otherwise apply to the Secretary of Health and Human Services, and

may provide for the assumption of such responsibilities in accordance with paragraphs (2) through (5).

        ‘(C) DEFINITION OF SECRETARY- Except as otherwise specified, in this subsection, the term ‘Secretary’ means the Secretary of Housing and Urban Development for purposes of grants under this section with respect to qualified empowerment zones and qualified enterprise communities in urban areas, and the Secretary of Agriculture for purposes of grants under this section with respect to qualified empowerment zones and qualified enterprise communities in rural areas.

      ‘(2) ASSUMPTION OF RESPONSIBILITY BY STATES, UNITS OF GENERAL LOCAL GOVERNMENT, AND INDIAN TRIBES-

        ‘(A) RELEASE OF FUNDS- In order to assure that the policies of the National Environmental Policy Act of 1969 and other provisions of law that further the purposes of such Act (as specified in regulations issued by the Secretary under subparagraph (B)) are most effectively implemented in connection with the expenditure of funds under this section, and to assure to the public undiminished protection of the environment, the Secretary may, under such regulations, in lieu of the environmental protection procedures otherwise applicable, provide for the release of funds for particular projects to recipients of assistance under this section if the State, unit of general local government, or Indian tribe, as designated by the Secretary in accordance with regulations issued by the Secretary under subparagraph (B), assumes all of the responsibilities for environmental review, decisionmaking, and action pursuant to such Act, and such other provisions of law as the regulations of the Secretary specify, that would otherwise apply to the Secretary were the Secretary to undertake such projects as Federal projects.

        ‘(B) IMPLEMENTATION- The Secretary of Housing and Urban Development and the Secretary of Agriculture shall each issue regulations to carry out this subsection only after consultation with the Council on Environmental Quality. Such regulations shall--

          ‘(i) specify any other provisions of law that further the purposes of the National Environmental Policy Act of 1969 and to which the assumption of responsibility as provided in this subsection applies;

          ‘(ii) provide eligibility criteria and procedures for the designation of a State, unit of general local government, or Indian tribe to assume all of the responsibilities described in subparagraph (A);

          ‘(iii) specify the purposes for which funds may be committed without regard to the procedure established under paragraph (3);

          ‘(iv) provide for monitoring of the performance of environmental reviews under this subsection;

          ‘(v) in the discretion of the Secretary, provide for the provision or facilitation of training for such performance; and

          ‘(vi) subject to the discretion of the Secretary, provide for suspension or termination by the Secretary of the assumption under subparagraph (A).

        ‘(C) RESPONSIBILITIES OF STATE, UNIT OF GENERAL LOCAL GOVERNMENT, OR INDIAN TRIBE- The Secretary’s duty under subparagraph (B) shall not be construed to limit any responsibility assumed by a State, unit of general local government, or Indian tribe with respect to any particular release of funds under subparagraph (A).

      ‘(3) PROCEDURE- The Secretary shall approve the release of funds for projects subject to the procedures authorized by this subsection only if, not less than 15 days prior to such approval and prior to any commitment of funds to such projects (except for such purposes specified in the regulations issued under paragraph (2)(B)), the recipient submits to the Secretary a request for such release accompanied by a certification of the State, unit of general local government, or Indian tribe that meets the requirements of paragraph (4). The approval by the Secretary of any such certification shall be deemed to satisfy the Secretary’s responsibilities pursuant to paragraph (1) under the National Environmental Policy Act of 1969 and such other provisions of law as the regulations of the Secretary specify insofar as those responsibilities relate to the releases of funds for projects to be carried out pursuant thereto that are covered by such certification.

      ‘(4) CERTIFICATION- A certification under the procedures authorized by this subsection shall--

        ‘(A) be in a form acceptable to the Secretary;

        ‘(B) be executed by the chief executive officer or other officer of the State, unit of general local government, or Indian tribe who qualifies under regulations of the Secretary;

        ‘(C) specify that the State, unit of general local government, or Indian tribe under this subsection has fully carried out its responsibilities as described under paragraph (2); and

        ‘(D) specify that the certifying officer--

          ‘(i) consents to assume the status of a responsible Federal official under the National Environmental Policy Act of 1969 and each provision of law specified in regulations issued by the Secretary insofar as the provisions of such Act or other such provisions of law apply pursuant to paragraph (2); and

          ‘(ii) is authorized and consents on behalf of the State, unit of general local government, or Indian tribe and himself or herself to accept the jurisdiction of the

Federal courts for the purpose of enforcement of the responsibilities as such an official.

      ‘(5) APPROVAL BY STATES- In cases in which a unit of general local government carries out the responsibilities described in paragraph (2), the Secretary may permit the State to perform those actions of the Secretary described in paragraph (3). The performance of such actions by the State, where permitted, shall be deemed to satisfy the responsibilities referred to in the second sentence of paragraph (3).’.

SEC. 411. EXTENSION OF TERMINATION DATE FOR EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS; EXTENSION TO RENEWAL COMMUNITIES.

    (a) EXTENSION OF TERMINATION DATE- Subsection (h) of section 198 is amended by inserting before the period ‘(December 31, 2009, in the case of an empowerment zone or renewal community)’.

    (b) EXTENSION-

      (1) IN GENERAL- Subparagraph (A) of section 198(c)(2) (defining targeted area) is amended by striking ‘and’ at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ‘, and’, and by adding at the end the following new clause:

          ‘(v) any renewal community (as defined in section 1400E).’.

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to expenditures paid or incurred after December 31, 2000.

TITLE V--AMERICAN COMMUNITY RENEWAL

SEC. 501. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES.

    (a) IN GENERAL- Chapter 1 is amended by adding at the end the following new subchapter:

‘Subchapter X--Renewal Communities

‘Part I. Designation.

‘Part II. Renewal community capital gain; renewal community business.

‘Part III. Additional incentives.

‘PART I--DESIGNATION

‘Sec. 1400E. Designation of renewal communities.

‘SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

    ‘(a) DESIGNATION-

      ‘(1) DEFINITIONS- For purposes of this title, the term ‘renewal community’ means any area--

        ‘(A) which is nominated by one or more local governments and the State or States in which it is located for designation as a renewal community (hereinafter in this section referred to as a ‘nominated area’), and

        ‘(B) which the Secretary of Housing and Urban Development designates as a renewal community, after consultation with--

          ‘(i) the Secretaries of Agriculture, Commerce, Labor, and the Treasury; the Director of the Office of Management and Budget, and the Administrator of the Small Business Administration, and

          ‘(ii) in the case of an area on an Indian reservation, the Secretary of the Interior.

      ‘(2) NUMBER OF DESIGNATIONS-

        ‘(A) IN GENERAL- The Secretary of Housing and Urban Development may designate not more than 40 nominated areas as renewal communities.

        ‘(B) MINIMUM DESIGNATION IN RURAL AREAS- Of the areas designated under paragraph (1), at least 20 percent must be areas--

          ‘(i) which are within a local government jurisdiction or jurisdictions with a population of less than 50,000,

          ‘(ii) which are outside of a metropolitan statistical area (within the meaning of section 143(k)(2)(B)), or

          ‘(iii) which are determined by the Secretary of Housing and Urban Development, after consultation with the Secretary of Commerce, to be rural areas.

      ‘(3) AREAS DESIGNATED BASED ON DEGREE OF POVERTY, ETC-

        ‘(A) IN GENERAL- Except as otherwise provided in this section, the nominated areas designated as renewal communities under this subsection shall be those nominated areas with the highest average ranking with respect to the criteria described in subparagraphs (B), (C), and (D) of subsection (c)(3). For purposes of the preceding sentence, an area shall be ranked within each such criterion on the basis of the amount by which the area exceeds such criterion, with the area which exceeds such criterion by the greatest amount given the highest ranking.

        ‘(B) EXCEPTION WHERE INADEQUATE COURSE OF ACTION, ETC- An area shall not be designated under subparagraph (A) if the Secretary of Housing and Urban Development determines that the course of action described in subsection (d)(2) with respect to such area is inadequate.

      ‘(4) Limitation on designations-

        ‘(A) PUBLICATION OF REGULATIONS- The Secretary of Housing and Urban Development shall prescribe by regulation no later than 4 months after the date of the enactment of this section, after consultation with the officials described in paragraph (1)(B)--

          ‘(i) the procedures for nominating an area under paragraph (1)(A),

          ‘(ii) the parameters relating to the size and population characteristics of a renewal community, and

          ‘(iii) the manner in which nominated areas will be evaluated based on the criteria specified in subsection (d).

        ‘(B) TIME LIMITATIONS- The Secretary of Housing and Urban Development may designate nominated areas as renewal communities only during the 24-month period beginning on the first day of the first month following the

month in which the regulations described in subparagraph (A) are prescribed.

        ‘(C) PROCEDURAL RULES- The Secretary of Housing and Urban Development shall not make any designation of a nominated area as a renewal community under paragraph (2) unless--

          ‘(i) the local governments and the States in which the nominated area is located have the authority--

            ‘(I) to nominate such area for designation as a renewal community,

            ‘(II) to make the State and local commitments described in subsection (d), and

            ‘(III) to provide assurances satisfactory to the Secretary of Housing and Urban Development that such commitments will be fulfilled,

          ‘(ii) a nomination regarding such area is submitted in such a manner and in such form, and contains such information, as the Secretary of Housing and Urban Development shall by regulation prescribe, and

          ‘(iii) the Secretary of Housing and Urban Development determines that any information furnished is reasonably accurate.

      ‘(5) NOMINATION PROCESS FOR INDIAN RESERVATIONS- For purposes of this subchapter, in the case of a nominated area on an Indian reservation, the reservation governing body (as determined by the Secretary of the Interior) shall be treated as being both the State and local governments with respect to such area.

    ‘(b) Period for Which Designation Is in Effect-

      ‘(1) IN GENERAL- Any designation of an area as a renewal community shall remain in effect during the period beginning on January 1, 2001, and ending on the earliest of--

        ‘(A) December 31, 2009,

        ‘(B) the termination date designated by the State and local governments in their nomination, or

        ‘(C) the date the Secretary of Housing and Urban Development revokes such designation.

      ‘(2) REVOCATION OF DESIGNATION- The Secretary of Housing and Urban Development may revoke the designation under this section of an area if such Secretary determines that the local government or the State in which the area is located--

        ‘(A) has modified the boundaries of the area, or

        ‘(B) is not complying substantially with, or fails to make progress in achieving, the State or local commitments, respectively, described in subsection (d).

      ‘(3) EARLIER TERMINATION OF ENVIRONMENTAL REMEDIATION EXPENSING IF EARLIER TERMINATION OF DESIGNATION- If the designation of an area as a renewal community terminates before December 31, 2009, the date of such termination shall be substituted for ‘December 31, 2009’ in section 198(h) with respect to such area.

    ‘(c) Area and Eligibility Requirements-

      ‘(1) IN GENERAL- The Secretary of Housing and Urban Development may designate a nominated area as a renewal community under subsection (a) only if the area meets the requirements of paragraphs (2) and (3) of this subsection.

      ‘(2) AREA REQUIREMENTS- A nominated area meets the requirements of this paragraph if--

        ‘(A) the area is within the jurisdiction of one or more local governments,

        ‘(B) the boundary of the area is continuous, and

        ‘(C) the area--

          ‘(i) has a population, of 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 and general distress,

        ‘(B) the poverty rate for each population census tract within the nominated area is at least 20 percent, and

        ‘(C) in the case of an urban area, at least 70 percent of the households living in the area have incomes below 80 percent of the median income of households within the jurisdiction of the local government (determined in the same manner as under section 119(b)(2) of the Housing and Community Development Act of 1974).

      ‘(4) CONSIDERATION OF HIGH INCIDENCE OF CRIME- The Secretary of Housing and Urban Development shall take into account, in selecting nominated areas for designation as renewal communities under this section, the extent to which such areas have a high incidence of crime.

      ‘(5) CONSIDERATION OF COMMUNITIES IDENTIFIED IN GAO STUDY- The Secretary of Housing and Urban Development shall take into account, in selecting nominated areas for designation as renewal

communities under this section, if the area has census tracts identified in the May 12, 1998, report of the Government Accounting Office regarding the identification of economically distressed areas.

    ‘(d) Required State and Local Commitments-

      ‘(1) IN GENERAL- The Secretary of Housing and Urban Development may designate any nominated area as a renewal community under subsection (a) only if--

        ‘(A) the local government and the State in which the area is located agree in writing that, during any period during which the area is a renewal community, such governments will follow a specified course of action which meets the requirements of paragraph (2) and is designed to reduce the various burdens borne by employers or employees in such area, and

        ‘(B) the economic growth promotion requirements of paragraph (3) are met.

      ‘(2) COURSE OF ACTION-

        ‘(A) IN GENERAL- A course of action meets the requirements of this paragraph if such course of action is a written document, signed by a State (or local government) and neighborhood organizations, which evidences a partnership between such State or government and community-based organizations and which commits each signatory to specific and measurable goals, actions, and timetables. Such course of action shall include at least 4 of the following:

          ‘(i) A reduction of tax rates or fees applying within the renewal community.

          ‘(ii) An increase in the level of efficiency of local services within the renewal community.

          ‘(iii) Crime reduction strategies, such as crime prevention (including the provision of such services by nongovernmental entities).

          ‘(iv) Actions to reduce, remove, simplify, or streamline governmental requirements applying within the renewal community.

          ‘(v) Involvement in the program by private entities, organizations, neighborhood organizations, and community groups, particularly those in the renewal community, including a commitment from such private entities to provide jobs and job training for, and technical, financial, or other assistance to, employers, employees, and residents from the renewal community.

          ‘(vi) The gift (or sale at below fair market value) of surplus real property (such as land, homes, and commercial or industrial structures) in the renewal community to neighborhood organizations, community development corporations, or private companies.

        ‘(B) RECOGNITION OF PAST EFFORTS- For purposes of this section, in evaluating the course of action agreed to by any State or local government, the Secretary of Housing and Urban Development shall take into account the past efforts of such State or local government in reducing the various burdens borne by employers and employees in the area involved.

      ‘(3) ECONOMIC GROWTH PROMOTION REQUIREMENTS- The economic growth promotion requirements of this paragraph are met with respect to a nominated area if the local government and the State in which such area is located certify in writing that such government and State (respectively) have repealed, will not enforce, or will reduce within the area at least 4 of the following if such area is designated as a renewal community:

        ‘(A) Licensing requirements for occupations that do not ordinarily require a professional degree.

        ‘(B) Zoning restrictions on home-based businesses which do not create a public nuisance.

        ‘(C) Permit requirements for street vendors who do not create a public nuisance.

        ‘(D) Zoning or other restrictions that impede the formation of schools or child care centers.

        ‘(E) Franchises or other restrictions on competition for businesses providing public services, including taxicabs, jitneys, cable television, or trash hauling.

      This paragraph shall not apply to the extent that such regulation of businesses and occupations is necessary for and well-tailored to the protection of health and safety.

    ‘(e) COORDINATION WITH TREATMENT OF EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES-

      ‘(1) IN GENERAL- For purposes of this title, the designation under section 1391 of any area as an empowerment zone or enterprise community shall cease to be in effect as of the date that any portion of such area is designated as a renewal community.

      ‘(2) SPECIAL RULE FOR WAGE CREDIT- For purposes of section 1400H (relating to renewal community employment credit)--

        ‘(A) there shall not be taken into account wages taken into account under section 1396 (without regard to section 1400H), and

        ‘(B) the $15,000 amount in section 1396(c) shall (in applying section 1400H) be reduced for any calendar year by the amount of wages paid or incurred during such year which are taken into account in determining the credit under section 1396 (without regard to section 1400H).

    ‘(f) DEFINITIONS AND SPECIAL RULES- For purposes of this subchapter--

      ‘(1) GOVERNMENTS- If more than one government seeks to nominate an area as a renewal community, any reference to, or requirement of, this section shall apply to all such governments.

      ‘(2) LOCAL GOVERNMENT- The term ‘local government’ means--

        ‘(A) any county, city, town, township, parish, village, or other general purpose political subdivision of a State, and

        ‘(B) any combination of political subdivisions described in subparagraph (A) recognized by the Secretary of Housing and Urban Development.

      ‘(3) STATE- The term ‘State’ means the several States.

      ‘(4) APPLICATION OF RULES RELATING TO CENSUS TRACTS- The rules of sections 1392(b)(4) shall apply.

      ‘(5) CENSUS DATA- Population and poverty rate shall be determined by using 1990 census data.

‘PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

‘Sec. 1400F. Renewal community capital gain.

‘Sec. 1400G. Renewal community business defined.

‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

    ‘(a) GENERAL RULE- Gross income does not include any qualified capital gain recognized on the sale or exchange of a qualified community asset held for more than 5 years.

    ‘(b) QUALIFIED COMMUNITY ASSET- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified community asset’ means--

        ‘(A) any qualified community stock,

        ‘(B) any qualified community partnership interest, and

        ‘(C) any qualified community business property.

      ‘(2) QUALIFIED COMMUNITY STOCK-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the term ‘qualified community stock’ means any stock in a domestic corporation if--

          ‘(i) such stock is acquired by the taxpayer after December 31, 2000, and before January 1, 2010, at its original issue (directly or through an underwriter) from the corporation solely in exchange for cash,

          ‘(ii) as of the time such stock was issued, such corporation was a renewal community business (or, in the case of a new corporation, such corporation was being organized for purposes of being a renewal community business), and

          ‘(iii) during substantially all of the taxpayer’s holding period for such stock, such corporation qualified as a renewal community business.

        ‘(B) REDEMPTIONS- A rule similar to the rule of section 1202(c)(3) shall apply for purposes of this paragraph.

      ‘(3) QUALIFIED COMMUNITY PARTNERSHIP INTEREST- The term ‘qualified community partnership interest’ means any capital or profits interest in a domestic partnership if--

        ‘(A) such interest is acquired by the taxpayer after December 31, 2000, and before January 1, 2010, from the partnership solely in exchange for cash,

        ‘(B) as of the time such interest was acquired, such partnership was a renewal community business (or, in the case of a new partnership, such partnership was being organized for purposes of being a renewal community business), and

        ‘(C) during substantially all of the taxpayer’s holding period for such interest, such partnership qualified as a renewal community business.

      A rule similar to the rule of paragraph (2)(B) shall apply for purposes of this paragraph.

      ‘(4) QUALIFIED COMMUNITY BUSINESS PROPERTY-

        ‘(A) IN GENERAL- The term ‘qualified community business property’ means tangible property if--

          ‘(i) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after December 31, 2000, and before January 1, 2010,

          ‘(ii) the original use of such property in the renewal community commences with the taxpayer, and

          ‘(iii) during substantially all of the taxpayer’s holding period for such property, substantially all of the use of such property was in a renewal community business of the taxpayer.

        ‘(B) SPECIAL RULE FOR SUBSTANTIAL IMPROVEMENTS- The requirements of clauses (i) and (ii) of subparagraph (A) shall be treated as satisfied with respect to--

          ‘(i) property which is substantially improved by the taxpayer before January 1, 2010, and

          ‘(ii) any land on which such property is located.

        The determination of whether a property is substantially improved shall be made under clause (ii) of section 1400B(b)(4)(B), except that ‘December 31, 2000’ shall be substituted for ‘December 31, 1997’ in such clause.

    ‘(c) QUALIFIED CAPITAL GAIN- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the term ‘qualified capital gain’ means any gain recognized on the sale or exchange of--

        ‘(A) a capital asset, or

        ‘(B) property used in the trade or business (as defined in section 1231(b).

      ‘(2) GAIN BEFORE 2001 OR AFTER 2014 NOT QUALIFIED- The term ‘qualified capital gain’ shall not include any gain attributable to periods before January 1, 2001, or after December 31, 2014.

      ‘(3) CERTAIN RULES TO APPLY- Rules similar to the rules of paragraphs (3), (4), and (5) of section 1400B(e) shall apply for purposes of this subsection.

    ‘(d) CERTAIN RULES TO APPLY- For purposes of this section, rules similar to the rules of paragraphs (5), (6), and (7) of subsection (b), and subsections (f) and (g), of section 1400B shall apply; except that for such purposes section 1400B(g)(2) shall be applied by substituting ‘January 1, 2001’ for ‘January 1, 1998’ and ‘December 31, 2014’ for ‘December 31, 2007’.

    ‘(e) REGULATIONS- The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations to prevent the avoidance of the purposes of this section.

‘SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

    ‘For purposes of this subchapter, the term ‘renewal community business’ means any entity or proprietorship which would be a qualified business entity or qualified proprietorship under section 1397C if references to renewal communities were substituted for references to empowerment zones in such section.

‘PART III--ADDITIONAL INCENTIVES

‘Sec. 1400H. Renewal community employment credit.

‘Sec. 1400I. Commercial revitalization deduction.

‘Sec. 1400J. Increase in expensing under section 179.

‘SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

    ‘(a) IN GENERAL- Subject to the modification in subsection (b), a renewal community shall be treated as

an empowerment zone for purposes of section 1396 with respect to wages paid or incurred after December 31, 2000.

    ‘(b) MODIFICATION- In applying section 1396 with respect to renewal communities--

      ‘(1) the applicable percentage shall be 15 percent, and

      ‘(2) subsection (c) thereof shall be applied by substituting ‘$10,000’ for ‘$15,000’ each place it appears.

‘SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

    ‘(a) GENERAL RULE- At the election of the taxpayer, either--

      ‘(1) one-half of any qualified revitalization expenditures chargeable to capital account with respect to any qualified revitalization building shall be allowable as a deduction for the taxable year in which the building is placed in service, or

      ‘(2) a deduction for all such expenditures shall be allowable ratably over the 120-month period beginning with the month in which the building is placed in service.

    ‘(b) QUALIFIED REVITALIZATION BUILDINGS AND EXPENDITURES- For purposes of this section--

      ‘(1) QUALIFIED REVITALIZATION BUILDING- The term ‘qualified revitalization building’ means any building (and its structural components) if--

        ‘(A) such building is located in a renewal community and is placed in service after December 31, 2000,

        ‘(B) a commercial revitalization deduction amount is allocated to the building under subsection (d), and

        ‘(C) depreciation is allowable with respect to the building (without regard to this section).

      ‘(2) QUALIFIED REVITALIZATION EXPENDITURE-

        ‘(A) IN GENERAL- The term ‘qualified revitalization expenditure’ means any amount properly chargeable to capital account--

          ‘(i) for property for which depreciation is allowable under section 168 (without regard to this section) and which is--

            ‘(I) nonresidential real property, or

            ‘(II) an addition or improvement to property described in subclause (I),

          ‘(ii) in connection with the construction of any qualified revitalization building which was not previously placed in service or in connection with the substantial rehabilitation (within the meaning of section 47(c)(1)(C)) of a building which was placed in service before the beginning of such rehabilitation, and

          ‘(iii) for land (including land which is functionally related to such property and subordinate thereto).

        ‘(B) DOLLAR LIMITATION- The aggregate amount which may be treated as qualified revitalization expenditures with respect to any qualified revitalization building for any taxable year shall not exceed the excess of--

          ‘(i) $10,000,000, reduced by

          ‘(ii) any such expenditures with respect to the building taken into account by the taxpayer or any predecessor in determining the amount of the deduction under this section for all preceding taxable years.

        ‘(C) CERTAIN EXPENDITURES NOT INCLUDED- The term ‘qualified revitalization expenditure’ does not include--

          ‘(i) ACQUISITION COSTS- The costs of acquiring any building or interest therein and any land in connection with such building to the extent that such costs exceed 30 percent of the qualified revitalization expenditures determined without regard to this clause.

          ‘(ii) CREDITS- Any expenditure which the taxpayer may take into account in computing any credit allowable under this title unless the taxpayer elects to take the expenditure into account only for purposes of this section.

    ‘(c) LIMITATION ON AGGREGATE EXPENDITURES ALLOWABLE WITH RESPECT TO BUILDINGS LOCATED IN A STATE-

      ‘(1) IN GENERAL- The aggregate qualified revitalization expenditures chargeable to capital account with respect to any building which may be taken into account in determining the deduction under this section with respect to such building shall not exceed the commercial revitalization expenditure amount allocated to such building under this subsection by the commercial revitalization agency. Such allocation shall be made at the same time and in the same manner as under paragraphs (1) and (7) of section 42(h).

      ‘(2) COMMERCIAL REVITALIZATION EXPENDITURE AMOUNT FOR AGENCIES-

        ‘(A) IN GENERAL- The aggregate commercial revitalization expenditure amount which a commercial revitalization agency may allocate for any calendar year is the amount of the State commercial revitalization expenditure ceiling determined under this paragraph for such calendar year for such agency.

        ‘(B) STATE COMMERCIAL REVITALIZATION EXPENDITURE CEILING- The State commercial revitalization expenditure ceiling applicable to any State--

          ‘(i) for each calendar year after 2000 and before 2010 is $12,000,000 for each renewal community in the State, and

          ‘(ii) for each calendar year thereafter is zero.

        ‘(C) COMMERCIAL REVITALIZATION AGENCY- For purposes of this section, the term ‘commercial revitalization agency’ means any agency authorized by a State to carry out this section.

    ‘(d) RESPONSIBILITIES OF COMMERCIAL REVITALIZATION AGENCIES-

      ‘(1) PLANS FOR ALLOCATION- Notwithstanding any other provision of this section, the commercial revitalization deduction amount with respect to any building shall be zero unless--

        ‘(A) such amount was allocated pursuant to a qualified allocation plan of the commercial revitalization agency which is approved (in accordance with rules similar to the rules of section 147(f)(2) (other than subparagraph (B)(ii) thereof)) by the governmental unit of which such agency is a part, and

        ‘(B) such agency notifies the chief executive officer (or its equivalent) of the local jurisdiction within which the building is located of such allocation and provides such individual a reasonable opportunity to comment on the allocation.

      ‘(2) QUALIFIED ALLOCATION PLAN- For purposes of this subsection, the term ‘qualified allocation plan’ means any plan--

        ‘(A) which sets forth selection criteria to be used to determine priorities of the commercial revitalization agency which are appropriate to local conditions,

        ‘(B) which considers--

          ‘(i) the degree to which a project contributes to the implementation of a strategic plan that is devised for a renewal community through a citizen participation process,

          ‘(ii) the amount of any increase in permanent, full-time employment by reason of any project, and

          ‘(iii) the active involvement of residents and nonprofit groups within the renewal community, and

        ‘(C) which provides a procedure that the agency (or its agent) will follow in monitoring compliance with this section.

    ‘(e) SPECIAL RULES-

      ‘(1) DEDUCTION IN LIEU OF DEPRECIATION- The deduction provided by this section for qualified revitalization expenditures shall--

        ‘(A) with respect to the deduction determined under subsection (a)(1), be in lieu of any depreciation deduction otherwise allowable on account of 1/2 of such expenditures, and

        ‘(B) with respect to the deduction determined under subsection (a)(2), be in lieu of any depreciation deduction otherwise allowable on account of all of such expenditures.

      ‘(2) BASIS ADJUSTMENT, ETC- For purposes of sections 1016 and 1250, the deduction under this section shall be treated in the same manner as a depreciation deduction. For purposes of section 1250(b)(5), the straight line method of adjustment shall be determined without regard to this section.

      ‘(3) SUBSTANTIAL REHABILITATIONS TREATED AS SEPARATE BUILDINGS- A substantial rehabilitation (within the meaning of section 47(c)(1)(C)) of a building shall be treated as a separate building for purposes of subsection (a).

      ‘(4) CLARIFICATION OF ALLOWANCE OF DEDUCTION UNDER MINIMUM TAX- Notwithstanding section 56(a)(1), the deduction under this section shall be allowed in determining alternative minimum taxable income under section 55.

    ‘(f) REGULATIONS- For purposes of this section, the Secretary shall, by regulations, provide for the application of rules similar to the rules of section 49 and subsections (a) and (b) of section 50.

    ‘(g) TERMINATION- This section shall not apply to any building placed in service after December 31, 2009.

‘SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

    ‘(a) IN GENERAL- For purposes of section 1397A--

      ‘(1) a renewal community shall be treated as an empowerment zone,

      ‘(2) a renewal community business shall be treated as an empowerment zone business, and

      ‘(3) qualified renewal property shall be treated as enterprise zone property.

    ‘(b) QUALIFIED RENEWAL PROPERTY- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified renewal property’ means any property to which section 168 applies (or would apply but for section 179) if--

        ‘(A) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after December 31, 2000, and before January 1, 2010, and

        ‘(B) such property would be qualified zone property (as defined in section 1397D) if references to renewal communities were substituted for references to empowerment zones in section 1397D.

      ‘(2) CERTAIN RULES TO APPLY- The rules of subsections (a)(2) and (b) of section 1397D shall apply for purposes of this section.’.

    (b) EXCEPTION FOR COMMERCIAL REVITALIZATION DEDUCTION FROM PASSIVE LOSS RULES-

      (1) Paragraph (3) of section 469(i) is amended by redesignating subparagraphs (C), (D), and (E) as subparagraphs (D), (E), and (F), respectively, and by inserting after subparagraph (B) the following new subparagraph:

        ‘(C) EXCEPTION FOR COMMERCIAL REVITALIZATION DEDUCTION- Subparagraph (A) shall not apply to any portion of the passive activity loss for any taxable year which is attributable to the commercial revitalization deduction under section 1400I.’.

      (2) Subparagraph (E) of section 469(i)(3), as redesignated by subparagraph (A), is amended to read as follows:

        ‘(E) ORDERING RULES TO REFLECT EXCEPTIONS AND SEPARATE PHASE-OUTS- If subparagraph (B), (C), or (D) applies for a taxable year, paragraph (1) shall be applied--

          ‘(i) first to the portion of the passive activity loss to which subparagraph (C) does not apply,

          ‘(ii) second to the portion of the passive activity credit to which subparagraph (B) or (D) does not apply,

          ‘(iii) third to the portion of such credit to which subparagraph (B) applies,

          ‘(iv) fourth to the portion of such loss to which subparagraph (C) applies, and

          ‘(v) then to the portion of such credit to which subparagraph (D) applies.’.

      (3)(A) Subparagraph (B) of section 469(i)(6) is amended by striking ‘or’ at the end of clause (i), by striking the period at the end of clause (ii) and inserting ‘, or’, and by adding at the end the following new clause:

          ‘(iii) any deduction under section 1400I (relating to commercial revitalization deduction).’.

      (B) The heading for such subparagraph (B) is amended by striking ‘OR REHABILITATION CREDIT’ and inserting ‘, REHABILITATION CREDIT, OR COMMERCIAL REVITALIZATION DEDUCTION’.

    (c) CLERICAL AMENDMENT- The table of subchapters for chapter 1 is amended by adding at the end the following new item:

‘Subchapter X. Renewal Communities.’.

SEC. 502. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING IN RENEWAL COMMUNITIES.

    (a) HIGH-RISK YOUTH- Subparagraphs (A)(ii) and (B) of section 51(d)(5) are each amended by striking ‘empowerment zone or enterprise community’ and inserting ‘empowerment zone, enterprise community, or renewal community’.

    (b) QUALIFIED SUMMER YOUTH EMPLOYEE- Clause (iv) of section 51(d)(7)(A) is amended by striking ‘empowerment zone or enterprise community’ and inserting ‘empowerment zone, enterprise community, or renewal community’.

    (c) HEADINGS- Paragraphs (5)(B) and (7)(C) of section 51(d) are each amended by inserting ‘OR COMMUNITY’ in the heading after ‘ZONE’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to individuals who begin work for the employer after December 31, 2000.

SEC. 503. 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.

TITLE VI--HOMEOWNERSHIP AND REVITALIZATION

SEC. 601. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING CREDIT.

    (a) IN GENERAL- Clause (i) of section 42(h)(3)(C) (relating to State housing credit ceiling) is amended by striking ‘$1.25’ and inserting ‘$1.75’.

    (b) ADJUSTMENT OF STATE CEILING FOR INCREASES IN COST-OF-LIVING- Paragraph (3) of section 42(h) (relating to housing credit dollar amount for agencies) is amended by adding at the end the following new subparagraph:

        ‘(H) COST-OF-LIVING ADJUSTMENT-

          ‘(i) IN GENERAL- In the case of a calendar year after 2001, the dollar amount contained in subparagraph (C)(i) shall be increased by an amount equal to--

            ‘(I) such dollar amount, multiplied by

            ‘(II) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 2000’ for ‘calendar year 1992’ in subparagraph (B) thereof.

          ‘(ii) ROUNDING- If any increase under clause (i) is not a multiple of 5 cents, such increase shall be rounded to the next lowest multiple of 5 cents.’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to calendar years after 2000.

SEC. 602. ADDITIONAL MODIFICATIONS TO LOW-INCOME HOUSING CREDIT.

    (a) MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING CREDITS AMONG PROJECTS-

      (1) SELECTION CRITERIA- Subparagraph (C) of section

42(m)(1) (relating to certain selection criteria must be used) is amended--

        (A) by inserting ‘, including whether the project includes the use of existing housing as part of a community revitalization plan’ before the comma at the end of clause (iii), and

        (B) by striking clauses (v), (vi), and (vii) and inserting the following new clauses:

          ‘(v) tenant populations with special housing needs,

          ‘(vi) public housing waiting lists,

          ‘(vii) tenant populations of individuals with children,

          ‘(viii) projects intended for eventual tenant ownership, and

          ‘(ix) the accessibility of jobs, including lower skilled jobs, to the project.’

      (2) PREFERENCE FOR COMMUNITY REVITALIZATION PROJECTS LOCATED IN QUALIFIED CENSUS TRACTS- Clause (ii) of section 42(m)(1)(B) is amended by striking ‘and’ at the end of subclause (I), by adding ‘and’ at the end of subclause (II), and by inserting after subclause (II) the following new subclause:

            ‘(III) projects which are located in qualified census tracts (as defined in subsection (d)(5)(C)) and the development of which contributes to a concerted community revitalization plan,’.

    (b) ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT AGENCIES-

      (1) MARKET STUDY; PUBLIC DISCLOSURE OF RATIONALE FOR NOT FOLLOWING CREDIT ALLOCATION PRIORITIES- Subparagraph (A) of section 42(m)(1) (relating to responsibilities of housing credit agencies) is amended by striking ‘and’ at the end of clause (i), by striking the period at the end of clause (ii) and inserting a comma, and by adding at the end the following new clauses:

          ‘(iii) a comprehensive market study of the housing needs of low-income individuals in the area to be served by the building is conducted before the credit allocation is made and at the developer’s expense by a disinterested party who is approved by such agency, and

          ‘(iv) a written explanation is available to the general public for any allocation of a housing credit dollar amount which is not made in accordance with established priorities and selection criteria of the housing credit agency.’.

      (2) SITE VISITS- Clause (iii) of section 42(m)(1)(B) (relating to qualified allocation plan) is amended by inserting before the period ‘and in monitoring for noncompliance with habitability standards through regular site visits’.

    (c) OTHER MODIFICATIONS-

      (1) ADJUSTED BASIS TO INCLUDE PORTION OF CERTAIN BUILDINGS USED BY LOW-INCOME INDIVIDUALS WHO ARE NOT TENANTS AND BY PROJECT EMPLOYEES- Paragraph (4) of section 42(d) (relating to special rules relating to determination of adjusted basis) is amended--

        (A) by striking ‘subparagraph (B)’ in subparagraph (A) and inserting ‘subparagraphs (B) and (C)’,

        (B) by redesignating subparagraph (C) as subparagraph (D), and

        (C) by inserting after subparagraph (B) the following new subparagraph:

        ‘(C) INCLUSION OF BASIS OF PROPERTY USED TO PROVIDE SERVICES FOR CERTAIN NONTENANTS-

          ‘(i) IN GENERAL- The adjusted basis of any building located in a qualified census tract (as defined in paragraph (5)(C)) shall be determined by taking into account the adjusted basis of property (of a character subject to the allowance for depreciation and not otherwise taken into account) used throughout the taxable year in providing any community service facility.

          ‘(ii) LIMITATION- The increase in the adjusted basis of any building which is taken into account by reason of clause (i) shall not exceed 20 percent of the eligible basis of the qualified low-income housing project of which it is a part. For purposes of the preceding sentence, all community service facilities which are part of the same qualified low-income housing project shall be treated as 1 facility.

          ‘(iii) COMMUNITY SERVICE FACILITY- For purposes of this subparagraph, the term ‘community service facility’ means any facility designed to serve primarily individuals whose income is 60 percent or less of area median income (within the meaning of subsection (g)(1)(B)).’.

      (2) ALLOCATION OF CREDIT LIMIT TO CERTAIN BUILDINGS-

        (A) The first sentence of section 42(h)(1)(E)(ii) is amended by striking ‘(as of’ the first place it appears and inserting ‘(as of the later of the date which is 6 months after the date that the allocation was made or’.

        (B) The last sentence of section 42(h)(3)(C) is amended by striking ‘project which’ and inserting ‘project which fails to meet the 10 percent test under paragraph (1)(E)(ii) on a date after the close of the calendar year in which the allocation was made or which’.

      (3) DETERMINATION OF WHETHER BUILDINGS ARE LOCATED IN HIGH COST AREAS- The first sentence of section 42(d)(5)(C)(ii)(I) is amended--

        (A) by inserting ‘either’ before ‘in which 50 percent’, and

        (B) by inserting before the period ‘ or which has a poverty rate of at least 25 percent’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to--

      (1) housing credit dollar amounts allocated after December 31, 2000, and

      (2) buildings placed in service after December 31, 2000, to the extent paragraph (1) of section 42(h) of the Internal Revenue Code of 1986 does not apply to any building by reason of paragraph (4) thereof, but only with respect to bonds issued after December 31, 2000.

SEC. 603. INCREASE IN STATE CEILING ON PRIVATE ACTIVITY BONDS.

    (a) IN GENERAL- Paragraphs (1) and (2) of section 146(d) (relating to State ceiling) are amended to read as follows:

      ‘(1) IN GENERAL- The State ceiling applicable to any State for any calendar year shall be the greater of--

        ‘(A) an amount equal to $75 multiplied by the State population, or

        ‘(B) $225,000,000.

      Subparagraph (B) shall not apply to any possession of the United States.

      ‘(2) INFLATION ADJUSTMENT- In the case of a calendar year after 2001, each of the dollar amounts contained in paragraph (1) shall be increased by an amount equal to--

        ‘(A) such dollar amount, multiplied by

        ‘(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 2000’ for ‘calendar year 1992’ in subparagraph (B) thereof.

      If any increase determined under the preceding sentence is not a multiple of $1 ($250 in the case of the dollar amount in paragraph (1)(B), such increase shall be rounded to the nearest multiple thereof.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to calendar years after 2000.

SEC. 604. HOME OWNERSHIP TAX CREDIT.

    (a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits), as amended by section 101(a), is amended by adding at the end the following:

‘SEC. 45E. HOME OWNERSHIP TAX CREDIT.

    ‘(a) ALLOWANCE OF CREDIT-

      ‘(1) IN GENERAL- For purposes of section 38, the amount of the home ownership tax credit determined under this section for any taxable year in the credit period shall be an amount equal to the applicable percentage of the home ownership tax credit amount allocated such taxpayer by a State housing finance agency in the credit allocation year under subsection (b).

      ‘(2) APPLICABLE PERCENTAGE- For purposes of this section, the Secretary shall prescribe the applicable percentage for any year in which the taxpayer is a qualified lender. Such percentage with respect to any month in the credit period with respect to such taxpayer shall be percentages which will

yield over such period amounts of credit under paragraph (1) which have a present value equal to 100 percent of the home ownership tax credit amount allocated such taxpayer under subsection (b).

      ‘(3) METHOD OF DISCOUNTING- The present value under paragraph (2) shall be determined in the same manner as the low-income housing credit under section 42(b)(2)(C).

    ‘(b) ALLOCATION OF HOME OWNERSHIP TAX CREDIT AMOUNTS-

      ‘(1) AMOUNT OF CREDIT- Each qualified State shall receive a home ownership tax credit dollar amount for each calendar year in an amount equal to the sum of--

        ‘(A) an amount equal to--

          ‘(i) 40 cents multiplied by the State population, multiplied by

          ‘(ii) 10, plus

        ‘(B) the unused home ownership tax credit dollar amount (if any) of such State for the preceding year.

      ‘(2) QUALIFIED STATE- For purposes of this section--

        ‘(A) IN GENERAL- The term ‘qualified State’ means a State with an approved allocation plan to allocate home ownership tax credits to qualified lenders through the State housing finance agency.

        ‘(B) APPROVED ALLOCATION PLAN- For purposes of this paragraph, the term ‘approved allocation plan’ means a written plan, certified by the Secretary, which includes--

          ‘(i) selection criteria for the allocation of credits to qualified lenders--

            ‘(I) based on a process in which lenders submit bids for the value of the credit, and

            ‘(II) which gives priority to qualified lenders with qualified home ownership tax credit loans which are prepaid during a calendar year, for credit allocations in the succeeding calendar year,

          ‘(ii) an assurance that the State will not allocate in excess of 10 percent of the home ownership tax credit amount for the calendar year for qualified home ownership tax credit loans which are neighborhood revitalization project loans,

          ‘(iii) a procedure that the agency (or an agent or other private contractor of such agency) will follow in monitoring for noncompliance with the provisions of this section and in notifying the Internal Revenue Service of such noncompliance with respect to which such agency becomes aware, and

          ‘(iv) such other assurances as the Secretary may require.

      ‘(3) QUALIFIED LENDER- For purposes of this section, the term ‘qualified lender’ means a lender which--

        ‘(A) is an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act), insured credit union (as defined in section 101 of the Federal Credit Union Act), community development financial institution (as defined in section 103 of the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4702)), or nonprofit community development corporation (as defined in section 613 of the Community Economic Development Act of 1981 (42 U.S.C. 9802)),

        ‘(B) makes available, through such lender or the lender’s designee, pre-purchase homeownership counseling for mortgagors, and

        ‘(C) during the 1-year period beginning on the date of the credit allocation, originates not less than 100 qualified home ownership tax credit loans in an aggregate amount not less than the amount of the bid of such lender for such credit allocation.

      ‘(4) CARRYOVER OF CREDIT- A home ownership tax credit amount received by a State for any calendar year and not allocated in such year shall remain available to be allocated in the succeeding calendar year.

      ‘(5) POPULATION- For purposes of this section, population shall be determined in accordance with section 146(j).

      ‘(6) COST-OF-LIVING ADJUSTMENT-

        ‘(A) IN GENERAL- In the case of a calendar year after 2000, the 40 cent amount contained in paragraph (1)(A)(i) shall be increased by an amount equal to--

          ‘(i) such amount, multiplied by

          ‘(ii) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 1999’ for ‘calendar year 1992’ in subparagraph (B) thereof.

        ‘(B) ROUNDING- If any amount as adjusted under subparagraph (A) is not a multiple of 5 cents, such amount shall be rounded to the next lowest multiple of 5 cents.

    ‘(c) QUALIFIED HOME OWNERSHIP TAX CREDIT LOAN DEFINED- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified home ownership tax credit loan’ means a loan originated and funded by a qualified lender which is secured by a second lien on a residence, but only if--

        ‘(A) the requirements of subsections (d), (e), and (f) are met,

        ‘(B) subject to subparagraphs (F), (H), and (I), the proceeds from such loan are applied exclusively--

          ‘(i) to acquire such residence, or

          ‘(ii) to substantially improve such residence in connection with a neighborhood revitalization project,

        ‘(C) the principal amount of the loan is equal to an amount which is--

          ‘(i) not less than 18 percent of the purchase price of the residence securing the loan, and

          ‘(ii) not more than the lesser of--

            ‘(I) 22 percent of such purchase price, or

            ‘(II) $25,000,

        ‘(D) in the case of a neighborhood revitalization project loan, subparagraph (C) is applied by substituting--

          ‘(i) ‘purchase price or appraised value’ for ‘purchase price’, and

          ‘(ii) ‘$40,000’ for ‘$25,000’,

        ‘(E) the loan is--

          ‘(i) amortized over a period of not more than 30 years (or any lesser period of time as determined by the lender or the State housing finance agency (as applicable)), or

          ‘(ii) described in paragraph (2),

        ‘(F) the proceeds of such loan are not used for settlement or other closing costs of the transaction in an amount in excess of 4 percent of the purchase price of the residence securing the loan,

        ‘(G) the rate of interest of the loan does not exceed the greater of--

          ‘(i) the excess of--

            ‘(I) the prime lending rate in effect as of the date on which the loan is originated, over

            ‘(II) 5.5 percent, or

          ‘(ii) 3 percent,

        ‘(H) the origination fee paid with respect to the loan does not cause the aggregate amount of origination fees paid with respect to any loans secured by the residence--

          ‘(i) in the case of a neighborhood revitalization project loan, to exceed 1 percent of the appraised value of the residence which secures the loan, and

          ‘(ii) in the case of any other loan, to exceed 2 percent of the appraised value of such residence, and

        ‘(I) the servicing fees of such loan--

          ‘(i) are allocated from interest payments made with respect to the loan, and

          ‘(ii) may not--

            ‘(I) in the case of a neighborhood revitalization project loan, exceed a total of 38 basis points, and

            ‘(II) in the case of any other loan, when added to such fees of any other loan secured by the residence, exceed a total of 63 basis points.

      ‘(2) BALLOON PAYMENT LOAN-

        ‘(A) IN GENERAL- A loan is described in this paragraph if such loan--

          ‘(i) meets the requirements of subparagraphs (B) and (C),

          ‘(ii) is for a period of 25 years and, except as provided in clause (iv), no payment is due on such loan until the sooner of--

            ‘(I) the end of such period, or

            ‘(II) the date on which the residence which secures the loan is disposed of,

          ‘(iii) does not prohibit early repayment of such loan, and

          ‘(iv) requires payment on such loan if the mortgagor receives any portion of the equity of such residence as part of a refinancing of any loan secured by such residence.

        ‘(B) INTEREST- Notwithstanding paragraph (1)(G), the rate of interest of the loan is zero percent.

        ‘(C) SERVICING FEES- Notwithstanding paragraph (1)(I), there shall be no servicing fees in connection with the loan.

      ‘(3) INDEX OF AMOUNT-

        ‘(A) IN GENERAL- In the case of a calendar year after 2000, the amounts under subparagraphs (C) and (D) of paragraph (1) shall be increased by an amount equal to--

          ‘(i) such amount, multiplied by

          ‘(ii) the housing price adjustment for such calendar year.

        ‘(B) HOUSING PRICE ADJUSTMENT- For purposes of subparagraph (A), the housing price adjustment for any calendar year is the percentage (if any) by which--

          ‘(i) the housing price index for the preceding calendar year, exceeds

          ‘(ii) the housing price index for calendar year 2000.

        ‘(C) HOUSING PRICE INDEX- For purposes of subparagraph (B), the housing price index means the housing price index published by the Federal Housing Finance Board (as established in section 2A of the Federal Home Loan Bank Act (12 U.S.C. 1422a)) for the calendar year.

    ‘(d) MORTGAGOR-

      ‘(1) IN GENERAL- A loan meets the requirements of this subsection if it is made to a mortgagor--

        ‘(A) whose family income for the year in which the mortgagor applies for the loan is 80 percent or less of the area median gross income for the area in which the residence which secures the mortgage is located,

        ‘(B) for whom the loan would not result in a housing debt-to-income ratio, with respect to the residence securing the loan, or total debt-to-income ratio which is greater than the guidelines set by the Federal Housing Administration (or any other ratio as determined by the State housing finance agency or lender if such ratio is less than such guidelines), and

        ‘(C) who attends pre-purchase homeownership counseling provided by the qualified lender or the lender’s designee.

      ‘(2) DETERMINATION OF FAMILY INCOME- For purposes of this subsection and subsection (h), the family income of a mortgagor and area median gross income shall be determined in accordance with section 143(f)(2).

    ‘(e) RESIDENCE REQUIREMENTS- A loan meets the requirements of this subsection if it is secured by a residence that is--

      ‘(1) a single-family residence (including a manufactured home (within the meaning of section 25(e)(10))) which is the principal residence (within the meaning of section 121) of the mortgagor, or can reasonably be expected to become the principal residence of the mortgagor within a reasonable time after the financing is provided,

      ‘(2) purchased by the mortgagor with a down payment in an amount not less than the lesser of--

        ‘(A) 2 percent of the purchase price, or

        ‘(B) $1,000, and

      ‘(3) in the case of a mortgagor with a family income greater than 50 percent of the area median gross income, as determined under subsection (d)(1)(A), not financed in connection with a qualified mortgage issued under section 143.

    ‘(f) DEFINITION AND SPECIAL RULES RELATING TO CREDIT PERIOD-

      ‘(1) CREDIT PERIOD DEFINED- For purposes of this section, the term ‘credit period’ means the period of 10 taxable years beginning with the taxable year in which a home ownership tax credit amount is allocated to the taxpayer.

      ‘(2) SPECIAL RULE FOR 1ST YEAR OF CREDIT PERIOD-

        ‘(A) IN GENERAL- The credit allowable under subsection (a) with respect to any taxpayer for the 1st taxable year of the credit period shall be determined by substituting for the applicable percentage under subsection (a)(2) the fraction--

          ‘(i) the numerator of which is the sum of the applicable percentages determined under subsection (a)(2) as of the close of each full month of such year, during which the taxpayer was a qualified lender, and

          ‘(ii) the denominator of which is 12.

        ‘(B) DISALLOWED 1ST YEAR CREDIT ALLOWED IN 11TH YEAR- Any reduction by reason of subparagraph (A) in the credit allowable (without regard to subparagraph (A)) for the 1st taxable year of the credit period shall be allowable under subsection (a) for the 1st taxable year following the credit period.

      ‘(3) DISPOSITION OF HOME OWNERSHIP TAX CREDIT LOANS- If a qualified home ownership tax credit loan is disposed of during any year for which a credit is allowable under subsection (a), such credit shall be allocated between the parties on the basis of the number of days during such year the mortgage was held by each and the portion of the total credit allocated to the qualified lender which is attributable to such mortgage.

    ‘(g) LOSS OF CREDIT- If, during the taxable year, a qualified home ownership tax credit loan is repaid prior to the expiration of the credit period with respect to such loan, the amount of the home ownership tax credit attributable to such loan is no longer available under subsection (a). For purposes of the preceding sentence, the tax credit is allowable for the portion of the year in which such repayment occurs for which the loan is outstanding, determined in the same manner as provided in subsection (f)(2)(A).

    ‘(h) RECAPTURE OF PORTION OF FEDERAL SUBSIDY FROM HOME-OWNER-

      ‘(1) IN GENERAL- If, during the taxable year, any taxpayer described in paragraph (3) disposes of an interest in a residence with respect to which a home ownership tax credit amount applies, then the taxpayer’s tax imposed by this chapter for such taxable year shall be increased by 50 percent of the gain (if any) on the disposition of such interest.

      ‘(2) EXCEPTIONS- Paragraph (1) shall not apply to any disposition--

        ‘(A) by reason of death,

        ‘(B) which is made on a date that is more than 10 years after the date on which the qualified home ownership tax credit loan secured by such residence was made, or

        ‘(C) in which the purchaser of the residence assumes the qualified home ownership tax credit loan secured by the residence.

      ‘(3) INCOME LIMITATION- A taxpayer is described in this paragraph if, on the date of the disposition, the family income of the mortgagor is 115 percent or more of the area median gross income as determined under subsection (d)(1)(A) for the year in which the disposition occurs.

      ‘(4) SPECIAL RULES RELATING TO LIMITATION ON RECAPTURE AMOUNT BASED ON GAIN REALIZED- For purposes of this subsection, rules similar to the rules of section 143(m)(6) shall apply.

      ‘(5) LENDER TO INFORM MORTGAGOR OF POTENTIAL RECAPTURE- The qualified lender which makes a qualified home ownership tax credit loan to a mortgagor shall, at the time of settlement, provide a written statement informing the mortgagor of the potential recapture under this subsection.

      ‘(6) SPECIAL RULES- For purposes of this subsection, rules similar to the rules of section 143(m)(8) shall apply.

    ‘(i) OTHER DEFINITIONS-

      ‘(1) NEIGHBORHOOD REVITALIZATION PROJECT LOAN-

        ‘(A) IN GENERAL- The term ‘neighborhood revitalization project loan’ means a loan secured by a second lien on a residence, the proceeds of which are used to substantially improve such residence in connection with a neighborhood revitalization project.

        ‘(B) NEIGHBORHOOD REVITALIZATION PROJECT- The term ‘neighborhood revitalization project’ means a project of sufficient size and scope to alleviate physical deterioration and stimulate investment in--

          ‘(i) a geographic location within the jurisdiction of a unit of local government (but not the entire jurisdiction) designated in comprehensive plans, ordinances, or other documents as a neighborhood, village, or similar geographic designation, or

          ‘(ii) the entire jurisdiction of a unit of local government if the population of such jurisdiction is not in excess of 25,000.

      ‘(2) STATE- The term ‘State’ includes a possession of the United States.

      ‘(3) STATE HOUSING FINANCE AGENCY- The term ‘State housing finance agency’ means the public agency, authority, corporation, or other instrumentality of a State that has the authority to provide residential mortgage loan financing throughout the State.

    ‘(j) CERTIFICATION AND OTHER REPORTS TO THE SECRETARY-

      ‘(1) CERTIFICATION WITH RESPECT TO STATE ALLOCATION OF HOME OWNERSHIP TAX CREDITS- The Secretary may, upon a finding of noncompliance, revoke the certification of a qualified State and revoke any qualified home ownership tax credit amounts allocated to such State or allocated by such State to a qualified lender.

      ‘(2) ANNUAL REPORT FROM HOUSING FINANCE AGENCIES- Each State housing finance agency which allocates any home ownership tax credit amount to any qualified lender for any calendar year shall submit to the Secretary (at such time and in such manner as the Secretary shall prescribe) an annual report specifying--

        ‘(A) the home ownership tax credit amount allocated to each qualified lender for such year, and

        ‘(B) with respect to each qualified lender--

          ‘(i) the principal amount of the aggregate qualified home ownership tax credit loans made by such lender in such year and the outstanding amount of such loans in such year, and

          ‘(ii) the number of qualified home ownership tax credit loans made by such lender in such year.

      The penalty under section 6652(j) shall apply to any failure to submit the report required by this paragraph on the date prescribed therefore.

    ‘(k) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.’.

    (b) LIMITATION ON CARRYBACK OF UNUSED CREDIT- Subsection (d) of section 39 (relating to carryback and carryforward of unused credits), as amended by section 101(b)(2) is amended by adding at the end the following:

      ‘(10) NO CARRYBACK OF HOME OWNERSHIP TAX CREDITS BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the home ownership tax credit determined under section 45E may be carried back to a taxable year ending before the date of the enactment of section 45E.’.

    (c) CONFORMING AMENDMENTS-

      (1) Section 38(b), as amended by section 101(b)(1), is amended--

        (A) by striking ‘plus’ at the end of paragraph (12),

        (B) by striking the period at the end of paragraph (13), and inserting ‘, plus’, and

        (C) by adding at the end the following:

      ‘(14) the home ownership tax credit determined under section 45E.’

      (2) The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by section 101(d), is amended by adding at the end the following:

‘Sec. 45E. Home ownership tax credit.’

    (d) EFFECTIVE DATE- The amendments made by this section apply to calendar years after 2000.

SEC. 605. TAX CREDIT FOR RENOVATING HISTORIC HOMES.

    (a) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 (relating to nonrefundable personal credits) is amended by inserting after section 25A the following new section:

‘SEC. 25B. HISTORIC HOMEOWNERSHIP REHABILITATION CREDIT.

    ‘(a) GENERAL RULE- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 20 percent of the qualified rehabilitation expenditures made by the taxpayer with respect to a qualified historic home.

    ‘(b) DOLLAR LIMITATION- The credit allowed by subsection (a) with respect to any residence of a taxpayer shall not exceed $20,000 ($10,000 in the case of a married individual filing a separate return).

    ‘(c) QUALIFIED REHABILITATION EXPENDITURE- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified rehabilitation expenditure’ means any amount properly chargeable to capital account--

        ‘(A) in connection with the certified rehabilitation of a qualified historic home, and

        ‘(B) for property for which depreciation would be allowable under section 168 if the qualified historic home were used in a trade or business.

      ‘(2) CERTAIN EXPENDITURES NOT INCLUDED-

        ‘(A) EXTERIOR- Such term shall not include any expenditure in connection with the rehabilitation of a building unless at least 5 percent of the total expenditures made in the rehabilitation process are allocable to the rehabilitation of the exterior of such building.

        ‘(B) OTHER RULES TO APPLY- Rules similar to the rules of clauses (ii) and (iii) of section 47(c)(2)(B) shall apply.

      ‘(3) MIXED USE OR MULTIFAMILY BUILDING- If only a portion of a building is used as the principal residence of the taxpayer, only qualified rehabilitation expenditures which are properly allocable to such portion shall be taken into account under this section.

    ‘(d) CERTIFIED REHABILITATION- For purposes of this section:

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the term ‘certified rehabilitation’ has the meaning given such term by section 47(c)(2)(C).

      ‘(2) FACTORS TO BE CONSIDERED IN THE CASE OF TARGETED AREA RESIDENCES, ETC-

        ‘(A) IN GENERAL- For purposes of applying section 47(c)(2)(C) under this section with respect to the rehabilitation of a building to which this paragraph applies, consideration shall be given to--

          ‘(i) the feasibility of preserving existing architectural and design elements of the interior of such building,

          ‘(ii) the risk of further deterioration or demolition of such building in the event that certification is denied because of the failure to preserve such interior elements, and

          ‘(iii) the effects of such deterioration or demolition on neighboring historic properties.

        ‘(B) BUILDINGS TO WHICH THIS PARAGRAPH APPLIES- This paragraph shall apply with respect to any building--

          ‘(i) any part of which is a targeted area residence within the meaning of section 143(j)(1), or

          ‘(ii) which is located within an enterprise community or empowerment zone as designated under section 1391,

        but shall not apply with respect to any building which is listed in the National Register.

      ‘(3) APPROVED STATE PROGRAM- The term ‘certified rehabilitation’ includes a certification made by--

        ‘(A) a State Historic Preservation Officer who administers a State Historic Preservation Program approved by the Secretary of the Interior pursuant to section 101(b)(1) of the National Historic Preservation Act, as in effect on the date of the enactment of this section, or

        ‘(B) a local government, certified pursuant to section 101(c)(1) of the National Historic Preservation Act, as in effect on the date of the enactment of this section, and authorized by a State Historic Preservation Officer, or the Secretary of the Interior where there is no approved State program),

      subject to such terms and conditions as may be specified by the Secretary of the Interior for the rehabilitation of buildings within the jurisdiction of such officer (or local government) for purposes of this section.

    ‘(e) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

      ‘(1) QUALIFIED HISTORIC HOME- The term ‘qualified historic home’ means a certified historic structure--

        ‘(A) which has been substantially rehabilitated, and

        ‘(B) which (or any portion of which)--

          ‘(i) is owned by the taxpayer, and

          ‘(ii) is used (or will, within a reasonable period, be used) by such taxpayer as his principal residence.

      ‘(2) SUBSTANTIALLY REHABILITATED- The term ‘substantially rehabilitated’ has the meaning given such term by section 47(c)(1)(C); except that, in the case of any building described in subsection (d)(2), clause (i)(I) thereof shall not apply.

      ‘(3) PRINCIPAL RESIDENCE- The term ‘principal residence’ has the same meaning as when used in section 121.

      ‘(4) CERTIFIED HISTORIC STRUCTURE-

        ‘(A) IN GENERAL- The term ‘certified historic structure’ means any building (and its structural components) which--

          ‘(i) is listed in the National Register, or

          ‘(ii) is located in a registered historic district (as defined in section 47(c)(3)(B)) within which only qualified census tracts (or portions thereof) are located, and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district.

        ‘(B) CERTAIN STRUCTURES INCLUDED- Such term includes any building (and its structural components) which is designated as being of historic significance under a statute of a State or local government, if such statute is certified by the Secretary of the Interior to the Secretary as containing criteria which will substantially achieve the purpose of preserving and rehabilitating buildings of historic significance.

        ‘(C) QUALIFIED CENSUS TRACTS- For purposes of subparagraph (A)(ii)--

          ‘(i) IN GENERAL- The term ‘qualified census tract’ means a census tract in which the median family income is less than twice the statewide median family income.

          ‘(ii) DATA USED- The determination under clause (i) shall be made on the basis of the most recent decennial census for which data are available.

      ‘(5) REHABILITATION NOT COMPLETE BEFORE CERTIFICATION- A rehabilitation shall not be treated as complete before the date of the certification referred to in subsection (d).

      ‘(6) LESSEES- A taxpayer who leases his principal residence shall, for purposes of this section, be treated as the owner thereof if the remaining term of the lease (as of the date determined under regulations prescribed by the Secretary) is not less than such minimum period as the regulations require.

      ‘(7) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING CORPORATION- If the taxpayer holds stock as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), such stockholder shall be treated as owning the house or apartment which the taxpayer is entitled to occupy as such stockholder.

      ‘(8) ALLOCATION OF EXPENDITURES RELATING TO EXTERIOR OF BUILDING CONTAINING COOPERATIVE OR CONDOMINIUM UNITS- The percentage of the total expenditures made in the rehabilitation of a building containing cooperative or condominium residential units allocated to the rehabilitation of the exterior of the building shall be attributed proportionately to each cooperative or condominium residential unit in such building for which a credit under this section is claimed.

    ‘(f) WHEN EXPENDITURES TAKEN INTO ACCOUNT- In the case of a building other than a building to which subsection (g) applies, qualified rehabilitation expenditures shall be treated for purposes of this section as made on the date the rehabilitation is completed.

    ‘(g) ALLOWANCE OF CREDIT FOR PURCHASE OF REHABILITATED HISTORIC HOME-

      ‘(1) IN GENERAL- In the case of a qualified purchased historic home, the taxpayer shall be treated as having made (on the date of purchase) the qualified rehabilitation expenditures made by the seller of such home. For purposes of the preceding sentence, expenditures made by the seller shall be deemed to be qualified rehabilitation expenditures if such expenditures, if made by the purchaser, would be qualified rehabilitation expenditures.

      ‘(2) QUALIFIED PURCHASED HISTORIC HOME- For purposes of this subsection, the term ‘qualified purchased historic home’ means any substantially rehabilitated certified historic structure purchased by the taxpayer if--

        ‘(A) the taxpayer is the first purchaser of such structure after the date rehabilitation is completed, and the purchase occurs within 5 years after such date,

        ‘(B) the structure (or a portion thereof) will, within a reasonable period, be the principal residence of the taxpayer,

        ‘(C) no credit was allowed to the seller under this section or section 47 with respect to such rehabilitation, and

        ‘(D) the taxpayer is furnished with such information as the Secretary determines is necessary to determine the credit under this subsection.

    ‘(h) HISTORIC REHABILITATION MORTGAGE CREDIT CERTIFICATE-

      ‘(1) IN GENERAL- The taxpayer may elect, in lieu of the credit otherwise allowable under this section, to receive a historic rehabilitation mortgage credit certificate. An election under this paragraph shall be made--

        ‘(A) in the case of a building to which subsection (g) applies, at the time of purchase, or

        ‘(B) in any other case, at the time rehabilitation is completed.

      ‘(2) HISTORIC REHABILITATION MORTGAGE CREDIT CERTIFICATE- For purposes of this subsection, the term ‘historic rehabilitation mortgage credit certificate’ means a certificate--

        ‘(A) issued to the taxpayer, in accordance with procedures prescribed by the Secretary, with respect to a certified rehabilitation,

        ‘(B) the face amount of which shall be equal to the credit which would (but for this subsection) be allowable under subsection (a) to the taxpayer with respect to such rehabilitation,

        ‘(C) which may only be transferred by the taxpayer to a lending institution (including a non-depository institution) in connection with a loan--

          ‘(i) that is secured by the building with respect to which the credit relates, and

          ‘(ii) the proceeds of which may not be used for any purpose other than the acquisition or rehabilitation of such building, and

        ‘(D) in exchange for which such lending institution provides the taxpayer--

          ‘(i) a reduction in the rate of interest on the loan which results in interest payment reductions which are substantially equivalent on a present value basis to the face amount of such certificate, or

          ‘(ii) if the taxpayer so elects with respect to a specified amount of the face amount of such a certificate relating to a building--

            ‘(I) which is a targeted area residence within the meaning of section 143(j)(1), or

            ‘(II) which is located in an enterprise community or empowerment zone as designated under section 1391,

          a payment which is substantially equivalent to such specified amount to be used to reduce the taxpayer’s cost of purchasing the building (and only the remainder of such face amount shall be taken into account under clause (i)).

      ‘(3) METHOD OF DISCOUNTING- The present value under paragraph (2)(D)(i) shall be determined--

        ‘(A) for a period equal to the term of the loan referred to in subparagraph (D)(i),

        ‘(B) by using the convention that any payment on such loan in any taxable year within such period is deemed to have been made on the last day of such taxable year,

        ‘(C) by using a discount rate equal to 65 percent of the average of the annual Federal mid-term rate and the annual Federal long-term rate applicable under section 1274(d)(1) to the month in which the taxpayer makes an election under paragraph (1) and compounded annually, and

        ‘(D) by assuming that the credit allowable under this section for any year is received on the last day of such year.

      ‘(4) USE OF CERTIFICATE BY LENDER- The amount of the credit specified in the certificate shall be allowed to the lender only to offset the regular tax (as defined in section 55(c)) of such lender. The lender may carry forward all unused amounts under this subsection until exhausted.

      ‘(5) HISTORIC REHABILITATION MORTGAGE CREDIT CERTIFICATE NOT TREATED AS TAXABLE INCOME- Notwithstanding any other provision of law, no benefit accruing to the taxpayer through the use of an historic rehabilitation mortgage credit certificate shall be treated as taxable income for purposes of this title.

    ‘(i) RECAPTURE-

      ‘(1) IN GENERAL- If, before the end of the 5-year period beginning on the date on which the rehabilitation of the building is completed (or, if subsection (g) applies, the date of purchase of such building by the taxpayer, or, if subsection (h) applies, the date of the loan)--

        ‘(A) the taxpayer disposes of such taxpayer’s interest in such building, or

        ‘(B) such building ceases to be used as the principal residence of the taxpayer,

      the taxpayer’s tax imposed by this chapter for the taxable year in which such disposition or cessation occurs shall be increased by the recapture percentage of the credit allowed under this section for all prior taxable years with respect to such rehabilitation.

      ‘(2) RECAPTURE PERCENTAGE- For purposes of paragraph (1), the recapture percentage shall be determined in accordance with the following table:

‘If the disposition or cessation occurs within--

The recapture percentage is--

(i) One full year after the taxpayer becomes entitled to the credit

100

(ii) One full year after the close of the period described in clause (i)

80

(iii) One full year after the close of the period described in clause (ii)

60

(iv) One full year after the close of the period described in clause (iii)

40

(v) One full year after the close of the period described in clause (iv)

20.

    ‘(j) BASIS ADJUSTMENTS- For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property (including any purchase under subsection (g) and any transfer under subsection (h)), the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

    ‘(k) DENIAL OF DOUBLE BENEFIT- No credit shall be allowed under this section for any amount for which credit is allowed under section 47.

    ‘(l) REGULATIONS- The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations where less than all of a building is used as a principal residence and where more than 1 taxpayer use the same dwelling unit as their principal residence.’.

    (b) CONFORMING AMENDMENT- Subsection (a) of section 1016 is amended by striking ‘and’ at the end of paragraph (26), by striking the period at the end of paragraph (27) and inserting ‘, and’, and by adding at the end the following new item:

      ‘(28) to the extent provided in section 25B(j).’.

    (c) CLERICAL AMENDMENT- The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 25A the following new item:

‘Sec. 25B. Historic homeownership rehabilitation credit.’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to expenses paid or incurred in taxable years beginning after December 31, 2000.

SEC. 606. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY DEVELOPMENT CORPORATIONS.

    Section 204 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z-11a) is amended--

      (1) by striking ‘FLEXIBLE AUTHORITY- ’ and inserting ‘DISPOSITION OF HUD-OWNED PROPERTIES. (a) FLEXIBLE AUTHORITY FOR MULTIFAMILY PROJECTS- ’; and

      (2) by adding at the end the following new subsection:

    ‘(b) TRANSFER OF UNOCCUPIED AND SUBSTANDARD HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY DEVELOPMENT CORPORATIONS-

      ‘(1) TRANSFER AUTHORITY- Notwithstanding the authority under subsection (a) and the last sentence of section 204(g) of the National Housing Act (12 U.S.C. 1710(g)), the Secretary of Housing and Urban Development shall transfer ownership of any qualified HUD property, subject to the requirements of this section, to a unit of general local government having jurisdiction for the area in which the property is located or to a community development corporation which operates within such a unit of general local government in accordance with this subsection, but only to the extent that units of general local government and community development corporations consent to transfer and the Secretary determines that such transfer is practicable.

      ‘(2) QUALIFIED HUD PROPERTIES- For purposes of this subsection, the term ‘qualified HUD property’ means any property for which, as of the date that notification of the property is first made under paragraph (3)(B), not less than 6 months have elapsed since the later of the date

that the property was acquired by the Secretary or the date that the property was determined to be unoccupied or substandard, that is owned by the Secretary and is--

        ‘(A) an unoccupied multifamily housing project;

        ‘(B) a substandard multifamily housing project; or

        ‘(C) an unoccupied single family property that--

          ‘(i) has been determined by the Secretary not to be an eligible asset under section 204(h) of the National Housing Act (12 U.S.C. 1710(h)); or

          ‘(ii) is an eligible asset under such section 204(h), but--

            ‘(I) is not subject to a specific sale agreement under such section; and

            ‘(II) has been determined by the Secretary to be inappropriate for continued inclusion in the program under such section 204(h) pursuant to paragraph (10) of such section.

      ‘(3) TIMING- The Secretary shall establish procedures that provide for--

        ‘(A) time deadlines for transfers under this subsection;

        ‘(B) notification to units of general local government and community development corporations of qualified HUD properties in their jurisdictions;

        ‘(C) such units and corporations to express interest in the transfer under this subsection of such properties;

        ‘(D) a right of first refusal for transfer of qualified HUD properties to units of general local government and community development corporations, under which--

          ‘(i) the Secretary shall establish a period during which the Secretary may not transfer such properties except to such units and corporations;

          ‘(ii) the Secretary shall offer qualified HUD properties that are single family properties for purchase by units of general local government at a cost of $1 for each property, but only to the extent that the costs to the Federal Government of disposal at such price do not exceed the costs to the Federal Government of disposing of property subject to the procedures for single family property established by the Secretary pursuant to the authority under the last sentence of section 204(g) of the National Housing Act (12 U.S.C. 1710(g));

          ‘(iii) the Secretary may accept an offer to purchase a property made by a community development corporation only if the offer provides for purchase on a cost recovery basis; and

          ‘(iv) the Secretary shall accept an offer to purchase such a property that is made during such period by such a unit or corporation and that complies with the requirements of this paragraph;

        ‘(E) a written explanation, to any unit of general local government or community development corporation making an offer to purchase a qualified HUD property under this subsection that is not accepted, of the reason that such offer was not acceptable.

      ‘(4) OTHER DISPOSITION- With respect to any qualified HUD property, if the Secretary does not receive an acceptable offer to purchase the property pursuant to the procedure established under paragraph (3), the Secretary shall dispose of the property to the unit of general local government in which property is located or to community development corporations located in such unit of general local government on a negotiated, competitive bid, or other basis, on such terms as the Secretary deems appropriate.

      ‘(5) SATISFACTION OF INDEBTEDNESS- Before transferring ownership of any qualified HUD property pursuant to this subsection, the Secretary shall satisfy any indebtedness incurred in connection with the property to be transferred, by canceling the indebtedness.

      ‘(6) DETERMINATION OF STATUS OF PROPERTIES- To ensure compliance with the requirements of this subsection, the Secretary shall take the following actions:

        ‘(A) UPON ENACTMENT- Upon the enactment of this subsection, the Secretary shall promptly assess each residential property owned by the Secretary to determine whether such property is a qualified HUD property.

        ‘(B) UPON ACQUISITION- Upon acquiring any residential property, the Secretary shall promptly determine whether the property is a qualified HUD property.

        ‘(C) UPDATES- The Secretary shall periodically reassess the residential properties owned by the Secretary to determine whether any such properties have become qualified HUD properties.

      ‘(7) TENANT LEASES- This subsection shall not affect the terms or the enforceability of any contract or lease entered into with respect to any residential property before the date that such property becomes a qualified HUD property.

      ‘(8) USE OF PROPERTY- Property transferred under this subsection shall be used only for appropriate neighborhood revitalization efforts, including homeownership, rental units, commercial space, and parks, consistent with local zoning regulations, local building codes, and subdivision regulations and restrictions of record.

      ‘(9) INAPPLICABILITY TO PROPERTIES MADE AVAILABLE FOR HOMELESS- Notwithstanding any other provision of this subsection, this subsection shall not apply to any properties that the Secretary determines are to be made available for use by the homeless pursuant to subpart E of part 291 of title

24, Code of Federal Regulations, during the period that the properties are so available.

      ‘(10) PROTECTION OF EXISTING CONTRACTS- This subsection may not be construed to alter, affect, or annul any legally binding obligations entered into with respect to a qualified HUD property before the property becomes a qualified HUD property.

      ‘(11) DEFINITIONS- For purposes of this subsection, the following definitions shall apply:

        ‘(A) COMMUNITY DEVELOPMENT CORPORATION- The term ‘community development corporation’ means a nonprofit organization whose primary purpose is to promote community development by providing housing opportunities for low-income families.

        ‘(B) COST RECOVERY BASIS- The term ‘cost recovery basis’ means, with respect to any sale of a residential property by the Secretary, that the purchase price paid by the purchaser is equal to or greater than the sum of (i) the appraised value of the property, as determined in accordance with such requirements as the Secretary shall establish, and (ii) the costs incurred by the Secretary in connection with such property during the period beginning on the date on which the Secretary acquires title to the property and ending on the date on which the sale is consummated.

        ‘(C) MULTIFAMILY HOUSING PROJECT- The term ‘multifamily housing project’ has the meaning given the term in section 203 of the Housing and Community Development Amendments of 1978.

        ‘(D) RESIDENTIAL PROPERTY- The term ‘residential property’ means a property that is a multifamily housing project or a single family property.

        ‘(E) SECRETARY- The term ‘Secretary’ means the Secretary of Housing and Urban Development.

        ‘(F) SEVERE PHYSICAL PROBLEMS- The term ‘severe physical problems’ means, with respect to a dwelling unit, that the unit--

          ‘(i) lacks hot or cold piped water, a flush toilet, or both a bathtub and a shower in the unit, for the exclusive use of that unit;

          ‘(ii) on not less than three separate occasions during the preceding winter months, was uncomfortably cold for a period of more than 6 consecutive hours due to a malfunction of the heating system for the unit;

          ‘(iii) has no functioning electrical service, exposed wiring, any room in which there is not a functioning electrical outlet, or has experienced three or more blown fuses or tripped circuit breakers during the preceding 90-day period;

          ‘(iv) is accessible through a public hallway in which there are no working light fixtures, loose or missing steps or railings, and no elevator; or

          ‘(v) has severe maintenance problems, including water leaks involving the roof, windows, doors, basement, or pipes or plumbing fixtures, holes or open cracks in walls or ceilings, severe paint peeling or broken plaster, and signs of rodent infestation.

        ‘(G) SINGLE FAMILY PROPERTY- The term ‘single family property’ means a 1- to 4-family residence.

        ‘(H) SUBSTANDARD- The term ‘substandard’ means, with respect to a multifamily housing project, that 25 percent or more of the dwelling units in the project have severe physical problems.

        ‘(I) UNIT OF GENERAL LOCAL GOVERNMENT- The term ‘unit of general local government’ has the meaning given such term in section 102(a) of the Housing and Community Development Act of 1974.

        ‘(J) UNOCCUPIED- The term ‘unoccupied’ means, with respect to a residential property, that the unit of general local government having jurisdiction over the area in which the project is located has certified in writing that the property is not inhabited.

      ‘(12) REGULATIONS-

        ‘(A) INTERIM- Not later than 30 days after the date of the enactment of this subsection, the Secretary shall issue such interim regulations as are necessary to carry out this subsection.

        ‘(B) FINAL- Not later than 60 days after the date of the enactment of this subsection, the Secretary shall issue such final regulations as are necessary to carry out this subsection.’.

SEC. 607. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.

    In carrying out the program under section 204(h) of the National Housing Act (12 U.S.C. 1710(h)), upon the request of the chief executive officer of a county or the government of appropriate jurisdiction and not later than 60 days after such request is made, the Secretary of Housing and Urban Development shall designate as a revitalization area all portions of such county that meet the criteria for such designation under paragraph (3) of such section.

SEC. 608. RISK-SHARING DEMONSTRATION.

    Section 249 of the National Housing Act (12 U.S.C. 1715z-14) is amended--

      (1) by striking the section heading and inserting the following:

‘RISK-SHARING DEMONSTRATION’;

      (2) by striking ‘reinsurance’ each place such term appears and insert ‘risk-sharing’;

      (3) in subsection (a)--

        (A) in the first sentence, by inserting ‘and insured community development financial institutions’ after ‘private mortgage insurers’;

        (B) in the second sentence--

          (i) by striking ‘two’ and inserting ‘4’; and

          (ii) by striking ‘March 15, 1988’ and inserting ‘the expiration of the 5-year period beginning on the date of the enactment of the Creating New Markets and Empowering America Act of 2000’; and

        (C) in the last sentence, by striking ‘10 percent’ and inserting ‘20 percent’;

      (4) in subsection (b)--

        (A) in the first sentence, by inserting ‘and with insured community development financial institutions’ before the period at the end;

        (B) in the first sentence, by striking ‘which have been determined to be qualified insurers under section 302(b)(2)(C)’;

        (C) in the second sentence, by inserting ‘and insured community development financial institutions’ after ‘private mortgage insurance companies’;

        (D) by striking paragraph (1) and inserting the following new paragraph:

      ‘(1) assume the first loss on any mortgage insured pursuant to section 203(b), 234, or 245 that covers a one- to four-family dwelling and is included in the program under this section, up to the percentage of loss that is set forth in the risk-sharing contract;’; and

        (E) in paragraph (2)--

          (i) by striking ‘carry out (under appropriate delegation) such’ and inserting ‘delegate underwriting,’; and

          (ii) by striking ‘function’ and inserting ‘functions’;

      (5) in subsection (c)--

        (A) in the first sentence--

          (i) by striking ‘of’ the first place it appears and insert ‘for’;

          (ii) by striking ‘insurance reserves’ and inserting ‘loss reserves’; and

          (iii) by striking ‘such insurance’ and inserting ‘such reserves’; and

        (B) in the second sentence, by inserting ‘or insured community development financial institution’ after ‘private mortgage insurance company’;

      (6) in subsection (d), by inserting ‘or insured community development financial institution’ after ‘private mortgage insurance company’; and

      (7) by adding at the end the following new subsection:

    ‘(e) INSURED COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS- For purposes of this section, the term ‘insured community development financial institution’ means a community development financial institution, as such term is defined in section 103 of Reigle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702) that is an insured depository institution (as such term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or an insured credit union (as such term is defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752)).’.

TITLE VII--TRADE-AFFECTED COMMUNITIES RELIEF

SEC. 701. DEFINITIONS.

    In this title:

      (1) NAFTA- The term ‘NAFTA’ means the North American Free Trade Agreement entered into between the United States, Mexico, and Canada on December 17, 1992.

      (2) SECRETARY- The term ‘Secretary’ means the Secretary of Commerce.

      (3) TRADE-AFFECTED COMMUNITY- The term ‘trade-affected community’ means a political subdivision of a State that meets the trade adjustment assistance requirements.

      (4) TRADE ADJUSTMENT ASSISTANCE REQUIREMENTS- The term ‘trade adjustment assistance requirements’ means--

        (A) in the case of a political subdivision with a population of not more than 100,000, at least 300 workers have been certified after November 1, 1999, as eligible for--

          (i) trade adjustment assistance under subchapter A of chapter II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.); or

          (ii) NAFTA trade adjustment assistance under subchapter D of chapter 2 of title II of the Trade Act of 1974 (19 U.S.C. 2331); and

        (B) in the case of a political subdivision with a population of over 100,000, at least 500 workers have been certified after November 1, 1999, as eligible for--

          (i) trade adjustment assistance under subchapter A of chapter II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.); or

          (ii) NAFTA trade adjustment assistance under subchapter D of chapter 2 of title II of the Trade Act of 1974.

SEC. 702. PETITIONS AND DETERMINATIONS.

    (a) IN GENERAL- A petition for certification for assistance under this title may be filed with the Secretary by a political subdivision (in this title referred to as a ‘community’), by a group of such communities, or by the Governor of a State on behalf of such communities.

    (b) CERTIFICATION- As soon as practicable after the date on which a petition described in subsection (a) is filed, the Secretary shall determine if the community (or group of communities) filing the petition meets the requirements of a trade-affected community and shall certify the community as eligible for assistance under this title if the Secretary determines that the community is a trade-affected community.

SEC. 703. GRANTS FOR ECONOMIC DEVELOPMENT.

    (a) GRANTS TO DEVELOP ECONOMIC PLANS- Each community that is certified as a trade-affected community under this title shall receive a grant of not more than $100,000 to be used for planning and technical assistance to develop economic plans for community adjustment assistance and diversification of such community. The amount of the grant shall be determined by the Secretary.

    (b) GRANTS TO CARRY OUT ECONOMIC DEVELOPMENT ACTIVITIES- Each community that is certified as a trade-affected community under this title shall be eligible to file an application with the Secretary for adjustment

assistance to make the following improvements in the community based on the economic plan developed under subsection (a):

      (1) Construct or expand the industrial and commercial infrastructure.

      (2) Improve educational opportunities.

      (3) Construct advanced manufacturing centers, industrial parks, and water and sewer facilities.

      (4) Improve transportation.

      (5) Establish small business incubators.

      (6) Make technology infrastructure improvements.

      (7) Take such other action as necessary to capitalize on opportunities to diversify the economy and develop new industrial and commercial ventures.

    (c) REGULATIONS- The Secretary shall prescribe such regulations as are necessary to carry out the provisions of this section.

SEC. 704. PROVIDE INCENTIVES FOR NEW INVESTMENTS FOR TRADE-AFFECTED COMMUNITIES.

    (a) EXPANSION OF WORK OPPORTUNITY CREDIT-

      (1) IN GENERAL- Section 51(d)(1) (relating to members of targeted groups) is amended by striking ‘or’ at the end of subparagraph (G), by striking the period at the end of subparagraph (H) and inserting ‘, or’, and by adding at the end the following:

        ‘(I) an adversely affected individual.’

      (2) ADVERSELY AFFECTED INDIVIDUAL- Section 51(d) is amended by redesignating paragraphs (10) through (12) as paragraphs (11) through (13), respectively, and by inserting after paragraph (9) the following:

      ‘(10) ADVERSELY AFFECTED INDIVIDUAL- The term ‘adversely affected individual’ means any individual who is certified by the designated local agency as being adversely affected by trade-related activities and as residing in a trade-affected community as defined in section 701(2) of the Creating New Markets and Empowering America Act of 2000.’

      (3) EFFECTIVE DATE- The amendments made by this subsection shall apply to individuals who begin work for the employer after the date of enactment of this Act.

    (b) EXTENSION OF NEW MARKETS TAX CREDIT-

      (1) IN GENERAL- Section 45D(e)(1) (defining low-income community), as added by section 101(a), is amended to read as follows:

      ‘(1) IN GENERAL- The term ‘low-income community’ means--

        ‘(A) any population census tract if--

          ‘(i) the poverty rate for such tract is at least 20 percent,

          ‘(ii)(I) in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income, or

          ‘(II) in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income, or

        ‘(B) any trade-affected community as defined in section 701(2) of the Creating New Markets and Empowering America Act of 2000.’

      (2) EFFECTIVE DATE- The amendments made by this subsection shall apply to investments made after December 31, 2000.

SEC. 705. CENTRAL CLEARINGHOUSE FOR ECONOMIC DEVELOPMENT.

    (a) IN GENERAL- The Secretary shall establish a one-stop clearinghouse for States and political subdivisions of States to obtain information regarding assistance available for trade-affected communities. The clearinghouse should be easily accessible and contain information regarding grants, low-interest loans, and other types of economic development assistance available from government resources for trade-affected communities.

    (b) NOTIFICATION BY DEPARTMENT OF LABOR- Not later than 15 days after the date that a political subdivision meets the trade adjustment assistance requirements defined in section 701(4), the Secretary of Labor shall notify the Secretary. The Secretary shall notify each such political subdivision that the subdivision is eligible to receive a grant described in section 703 (a) and (b), that the clearinghouse established pursuant to subsection (a) exists, and how to access clearinghouse information.

SEC. 706. APPROPRIATIONS.

    There is authorized to be appropriated for fiscal year 2001, and each fiscal year thereafter, $30,000,000 for the grants described in section 703(a) and $200,000,000 for the grants described in section 703(b).

SEC. 707. SUPPLEMENT NOT SUPPLANT.

    Funds appropriated pursuant to the authority of this title shall be used to supplement and not supplant other Federal, State, and local public funds expended to provide economic development assistance for communities.

SEC. 708. REGULATIONS.

    The Secretary may promulgate such regulations as may be necessary to carry out the provisions of this title.

TITLE VIII--DELTA REGIONAL AUTHORITY

SEC. 801. DELTA REGIONAL AUTHORITY.

    The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) is amended by adding at the end the following:

‘Subtitle F--Delta Regional Authority

‘SEC. 382A. DEFINITIONS.

    ‘In this subtitle:

      ‘(1) AUTHORITY- The term ‘Authority’ means the Delta Regional Authority established by section 382B.

      ‘(2) REGION- The term ‘region’ means areas in the States of Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee, as defined under section 4 of the Lower Mississippi Delta

Development Act (Public Law 100-460; 42 U.S.C. 3121 note).

      ‘(3) FEDERAL GRANT PROGRAM- The term ‘Federal grant program’ means a Federal grant program to provide assistance in--

        ‘(A) acquiring or developing land;

        ‘(B) constructing or equipping a facility; or

        ‘(C) carrying out other community or economic development or economic adjustment activities.

‘SEC. 382B. DELTA REGIONAL AUTHORITY.

    ‘(a) ESTABLISHMENT-

      ‘(1) IN GENERAL- There is established the Delta Regional Authority.

      ‘(2) COMPOSITION- The Authority shall be composed of--

        ‘(A) a Federal member, to be appointed by the President, with the advice and consent of the Senate; and

        ‘(B) the Governor (or a designee of the Governor) of each State in the region that elects to participate in the Authority.

      ‘(3) COCHAIRPERSONS- The Authority shall be headed by 2 cochairpersons, which shall be--

        ‘(A) the Federal member, who shall serve--

          ‘(i) as the Federal cochairperson; and

          ‘(ii) as a liaison between the Federal Government and the Authority; and

        ‘(B) a State cochairperson, who--

          ‘(i) shall be a Governor of a participating State in the region; and

          ‘(ii) shall be elected by the State members for a term of not less than 1 year.

    ‘(b) ALTERNATE MEMBERS-

      ‘(1) STATE ALTERNATES- Each State member may have a single alternate, appointed by the Governor from among the members of the cabinet or the personal staff of the Governor.

      ‘(2) ALTERNATE FEDERAL COCHAIRPERSON- The President shall appoint an alternate Federal cochairperson.

      ‘(3) QUORUM- A State alternate shall not be counted toward the establishment of a quorum of the Authority in any instance in which a quorum of the State members is required to be present.

      ‘(4) DELEGATION OF POWER- No power or responsibility of the Authority specified in paragraphs (2) and (3) of subsection (b), and no voting right of any Authority member, shall be delegated to any person--

        ‘(A) who is not a Authority member; or

        ‘(B) who is not entitled to vote in Authority meetings.

    ‘(c) VOTING-

      ‘(1) IN GENERAL- Except as provided in section 382I(d), decisions by the Authority shall require the affirmative vote of the Federal cochairperson and of a majority of the State members (not including a member representing a State that is delinquent under subsection (g)(2)(C).

      ‘(2) QUORUM- A quorum of State members shall be required to be present for the Authority to make any policy decision, including--

        ‘(A) a modification or revision of a Authority policy decision;

        ‘(B) approval of a State or regional development plan; and

        ‘(C) any allocation of funds among the States.

      ‘(3) PROJECT AND GRANT PROPOSALS- The approval of project and grant proposals shall be--

        ‘(A) a responsibility of the Authority; and

        ‘(B) conducted in accordance with section 382I.

      ‘(4) VOTING BY ALTERNATE MEMBERS- An alternate member shall vote in the case of the absence, death, disability, removal, or resignation of the State or Federal representative for which the alternate member is an alternate.

    ‘(d) DUTIES- The Authority shall--

      ‘(1) develop, on a continuing basis, comprehensive and coordinated plans and programs to establish priorities and approve grants for the economic development of the region, giving due consideration to other Federal, State, and local planning and development activities in the region;

      ‘(2) not later than 220 days after the date of enactment of this subtitle, establish priorities in a development plan for the region (including 5-year regional outcome targets);

      ‘(3) provide for an understanding of the needs and assets of the region through research, demonstration, investigation, assessment, and evaluation of the region, in cooperation with Federal, State, and local agencies, universities, local development districts, and other nonprofit groups, as appropriate;

      ‘(4) review and study, in cooperation with the appropriate agencies, Federal, State, and local public and private programs in the region;

      ‘(5) recommend any modification or addition to a program described in paragraph (4) that could increase the effectiveness of the program;

      ‘(6) formulate and recommend interstate compacts and other forms of interstate cooperation;

      ‘(7) work with State and local agencies in developing appropriate model legislation;

      ‘(8) encourage the formation of, build the capacity of, and provide support for, local development districts in the region;

      ‘(9) encourage private investment in industrial, commercial, and other economic development projects in the region;

      ‘(10) serve as a focal point and coordinating unit for region programs;

      ‘(11) provide a forum for consideration of problems of the region and proposed solutions for those problems; and

      ‘(12) establish and involve citizens, special advisory councils, and public conferences to consider and resolve issues concerning the region.

    ‘(e) INFORMATION- In carrying out the duties of the Authority under subsection (d), the Authority may--

      ‘(1) hold such hearings, sit and act at such times and places, take such testimony, receive such evidence, and print or otherwise reproduce and distribute the proceedings and reports on actions by the Authority as the Authority considers appropriate;

      ‘(2) authorize, through the Federal or State cochairperson, or any other member of the Authority designated by the Authority, the administration of oaths if the Authority determines that testimony shall be taken or evidence shall be received under oath; and

      ‘(3) arrange for the head of any Federal, State, or local department or agency to furnish to the Authority such information as may be available to or procurable by the department or agency;

      ‘(4) adopt, amend, and repeal bylaws and rules governing the conduct of Authority business and the performance of Authority functions;

      ‘(5) request the head of any Federal department or agency to detail to the Authority such personnel as the Authority requires to carry out functions of the Authority, each such detail to be without loss of seniority, pay, or other employee status;

      ‘(6) request the head of any State department or agency or local government to detail to the Authority such personnel as the Authority requires to carry out functions of the Authority, each such detail to be without loss of seniority, pay, or other employee status;

      ‘(7) provide for coverage of Authority employees in a suitable retirement and employee benefit system by--

        ‘(A) making arrangements or entering into contracts with any participating State government; or

        ‘(B) otherwise providing retirement and other employee benefit coverage;

      ‘(8) accept, use, and dispose of gifts or donations of services or real, personal, tangible, or intangible property;

      ‘(9) enter into and perform such contracts, leases, cooperative agreements, or other transactions as are necessary to carry out Authority duties, including any contracts, leases, cooperative agreements, or any other arrangement with--

        ‘(A) any department, agency, or instrumentality of the United States;

        ‘(B) any State (including a political subdivision, agency, or instrumentality of the State); or

        ‘(C) any person, firm, association, or corporation;

      ‘(10) establish and maintain a central office and field offices at such locations as the Authority may select; and

      ‘(11) take such other actions and incur such other expenses as are necessary or appropriate.

    ‘(f) FEDERAL AGENCY COOPERATION- Federal agencies shall--

      ‘(1) cooperate with the Authority; and

      ‘(2) provide such assistance in carrying out this subtitle as the Federal cochairperson may request.

    ‘(g) ADMINISTRATIVE EXPENSES-

      ‘(1) IN GENERAL- Administrative expenses of the Authority shall be paid--

        ‘(A) by the Federal Government, during the period beginning on the date of enactment of this subtitle and ending on September 30, 2000; and

        ‘(B) after September 30, 2000 (except for the expenses of the Federal cochairperson, including expenses of the alternate and staff of the Federal cochairperson, which shall be paid solely by the Federal Government)--

          ‘(i) by the Federal Government, in an amount equal to 50 percent of the administrative expenses; and

          ‘(ii) by the States in the region represented by the Authority, in an amount equal to 50 percent of the administrative expenses.

      ‘(2) STATE SHARE-

        ‘(A) IN GENERAL- The share of administrative expenses of the Authority to be paid by each State shall be determined by the Authority.

        ‘(B) NO FEDERAL PARTICIPATION- The Federal cochairperson shall not participate or vote in any decision under subparagraph (A) to determine the share of administrative expenses of the Authority to be paid by a State.

        ‘(C) DELINQUENT STATES- If a State is delinquent in payment of the State’s share of administrative expenses of the Authority under this subsection--

          ‘(i) no assistance under this subtitle shall be furnished to the State (including assistance to a political subdivision or a resident of the State); and

          ‘(ii) no member of the Authority from the State shall participate or vote in any action by the Authority.

    ‘(h) COMPENSATION-

      ‘(1) FEDERAL COCHAIRPERSON- The Federal cochairperson shall be compensated by the Federal Government at level III of the Executive Schedule in subchapter II of chapter 53 of title V, United States Code.

      ‘(2) ALTERNATE FEDERAL COCHAIRPERSON- The alternate Federal cochairperson--

        ‘(A) shall be compensated by the Federal Government at level V of the Executive Schedule described in paragraph (1); and

        ‘(B) when not actively serving as an alternate for the Federal cochairperson, shall perform such functions and duties as are delegated by the Federal cochairperson.

      ‘(3) STATE MEMBERS AND ALTERNATES-

        ‘(A) IN GENERAL- A State shall compensate each member and alternate representing the State on the Authority at the rate established by law of the State.

        ‘(B) NO ADDITIONAL COMPENSATION- No State member or alternate member shall receive any salary, or any contribution to or supplementation of salary from any source other than the State for services provided by the member or alternate to the Authority.

      ‘(4) DETAILED EMPLOYEES-

        ‘(A) IN GENERAL- No person detailed to serve the Authority under subsection (e)(6) shall receive any salary or any contribution to or supplementation of salary for services provided to the Authority from--

          ‘(i) any source other than the State, local, or intergovernmental department or agency from which the person was detailed; or

          ‘(ii) the Authority.

        ‘(B) VIOLATION- Any person that violates this paragraph shall be fined not more than $5,000, imprisoned not more than 1 year, or both.

        ‘(C) APPLICABLE LAW- The Federal cochairperson, the alternate Federal cochairperson, and any Federal officer or employee detailed to duty on the Authority under subsection (e)(5) shall not be subject to subparagraph (A), but shall remain subject to sections 202 through 209 of title 18, United States Code.

      ‘(5) ADDITIONAL PERSONNEL-

        ‘(A) COMPENSATION-

          ‘(i) IN GENERAL- The Authority may appoint and fix the compensation of an executive director and such other personnel as are necessary to enable the Authority to carry out the duties of the Authority.

          ‘(ii) EXCEPTION- Compensation described under clause (i) shall not exceed the maximum rate for the Senior Executive Service under section 5382 of title 5, United States Code, including any applicable locality-based comparability payment that may be authorized under section 5304(h)(2)(C) of that title.

        ‘(B) EXECUTIVE DIRECTOR- The executive director shall be responsible for--

          ‘(i) the carrying out of the administrative functions of the Authority;

          ‘(ii) direction of the Authority staff; and

          ‘(iii) such other duties as the Authority may assign.

        ‘(C) NO FEDERAL EMPLOYEE STATUS- No member, alternate, officer, or employee of the Authority (except the Federal cochairperson of the Authority, the alternate and staff for the Federal cochairperson, and any Federal employee detailed to the Authority under subsection (e)(5)) shall be considered to be a Federal employee for any purpose.

    ‘(i) CONFLICTS OF INTEREST-

      ‘(1) IN GENERAL- Except as provided under paragraph (2), no State member, alternate, officer, or employee of the Authority shall participate personally and substantially as a member, alternate, officer, or employee of the Authority, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in any proceeding, application, request for a ruling or other determination, contract, claim, controversy, or other matter in which, to knowledge of the member, alternate, officer, or employee--

        ‘(A) the member, alternate, officer, or employee;

        ‘(B) the spouse, minor child, partner, or organization (other than a State or political subdivision thereof) of the member, alternate, officer, or employee, in which the member, alternate, officer, or employee is serving as officer, director, trustee, partner, or employee; or

        ‘(C) any person or organization with whom the member, alternate, officer, or employee is negotiating or has any arrangement concerning prospective employment;

    has a financial interest.

      ‘(2) DISCLOSURE- Paragraph (1) shall not apply if the State member, alternate, officer, or employee--

        ‘(A) immediately advises the Authority of the nature and circumstances of the proceeding, application, request for a ruling or other determination, contract, claim, controversy, or other particular matter presenting a conflict of interest;

        ‘(B) makes full disclosure of the financial interest; and

        ‘(C) before the proceeding concerning the matter presenting the conflict of interest, receives a written determination by the Authority that the interest is not so substantial as to be likely to affect the integrity of the services that the Authority may expect from the State member, alternate, officer, or employee.

      ‘(3) VIOLATION- Any person that violates this subsection shall be fined not more than $10,000, imprisoned not more than 2 years, or both.

    ‘(j) VALIDITY OF CONTRACTS, LOANS, AND GRANTS- The Authority may declare void any contract, loan, or grant of or by the Authority in relation to which the Authority determines that there has been a violation of any provision under subsection (h)(4), subsection (i), or sections 202 through 209 of title 18, United States Code.

‘SEC. 382C. ECONOMIC AND COMMUNITY DEVELOPMENT GRANTS.

    ‘(a) IN GENERAL- The Authority may approve grants to States and public and nonprofit entities for projects, approved in accordance with section 382I--

      ‘(1) to assist the region in obtaining the job training and employment-related education, leadership, business, and civic development (with an emphasis on entrepreneurship), that are needed to build and maintain strong local economies;

      ‘(2) to provide assistance to severely distressed and underdeveloped counties that lack financial resources for improving basic services;

      ‘(3) to fund--

        ‘(A) research, demonstrations, evaluations, and assessments of the region; and

        ‘(B) training programs, and construction of necessary facilities, and the provision of technical assistance necessary to complete activities described in subparagraph (A); or

      ‘(4) to otherwise achieve the objectives of this subtitle.

    ‘(b) FUNDING-

      ‘(1) IN GENERAL- Funds for grants under subsection (a) may be provided--

        ‘(A) entirely from appropriations to carry out this section;

        ‘(B) in combination with funds available under another Federal or Federal grant program; or

        ‘(C) from any other source.

      ‘(2) PRIORITY OF FUNDING- To best build the foundations for long-term, self-sustaining economies and to complement other Federal and State resources in the region, Federal funds available under this subtitle shall be focused on the activities in the following order or priority:

        ‘(A) Basic infrastructure in distressed counties.

        ‘(B) Job-related infrastructure.

        ‘(C) Job training or employment-related education.

        ‘(D) Leadership and civic development.

        ‘(E) Business development, with emphasis on entrepreneurship.

      ‘(3) FEDERAL SHARE IN GRANT PROGRAMS- Notwithstanding any provision of law limiting the Federal share in any grant program, funds appropriated to carry out this section may be used to increase a Federal share in a grant program, as the Authority determines to be appropriate.

‘SEC. 382D. SUPPLEMENTS TO FEDERAL GRANT PROGRAMS.

    ‘(a) FINDING- Congress finds that certain people, States, and local communities of the region, including local development districts, are unable to take maximum advantage of Federal grant programs for which the people are eligible because--

      ‘(1) they lack the economic resources to supply the required matching share; or

      ‘(2) there are insufficient funds available under the applicable Federal grant law authorizing the program to meet pressing needs of the region.

    ‘(b) FEDERAL GRANT PROGRAM FUNDING- In accordance with subsection (c), the Federal cochairperson may use amounts made available to carry out this subtitle, without regard to any limitations on areas eligible for assistance or authorizations for appropriation under any other Act to fund all or any portion of the basic Federal contribution to a project or activity under a Federal grant program in an amount that is above the fixed maximum portion of the cost of the project otherwise authorized by the applicable law, not to exceed 80 percent of the costs of the project except as provided in section 382F(b).

    ‘(c) CERTIFICATION-

      ‘(1) IN GENERAL- In the case of any program or project for which all or any portion of the basic Federal contribution to the project under a Federal grant program is proposed to be made under this section, no Federal contribution shall be made until the Federal official administering the Federal law authorizing the contribution certifies that the program or project--

        ‘(A) meets the applicable requirements of the applicable Federal grant law; and

        ‘(B) could be approved for Federal contribution under the law if funds were available under the law for the program or project.

      ‘(2) CERTIFICATION BY AUTHORITY-

        ‘(A) IN GENERAL- The certifications and determinations required to be made by the Authority for approval of projects under this subtitle in accordance with section 382I--

          ‘(i) shall be controlling; and

          ‘(ii) shall be accepted by the Federal agencies.

        ‘(B) ACCEPTANCE BY FEDERAL COCHAIRPERSON- Any finding, report, certification, or documentation required to be submitted to the head of the department, agency, or instrumentality of the Federal Government responsible for the administration of any Federal grant program shall be accepted by the Federal cochairperson with respect to a supplemental grant for any project under the program.

‘SEC. 382E. LOCAL DEVELOPMENT DISTRICTS; CERTIFICATION AND ADMINISTRATIVE EXPENSES.

    ‘(a) DEFINITION OF LOCAL DEVELOPMENT DISTRICT- In this section, the term ‘local development district’ means an entity that is--

      ‘(1) organized and operated in a manner that ensures broad-based community participation and an effective opportunity for other nonprofit and citizen groups to contribute to the development and implementation of programs in the region;

      ‘(2) certified to the Authority as having a charter or authority that includes the economic development of counties or parts of counties or other political subdivisions within the region--

        ‘(A) by the Governor of each State in which the entity is located; or

        ‘(B) by the State officer designated by the appropriate State law to make the certification; and

      ‘(3) is--

        ‘(A) a nonprofit incorporated body organized or chartered under the law of the State in which the entity is located;

        ‘(B) a nonprofit agency or instrumentality of a State or local government;

        ‘(C) a nonprofit agency or instrumentality created through an interstate compact; or

        ‘(D) a nonprofit association or combination of bodies, agencies, and instrumentalities described in subparagraphs (A) through (C).

    ‘(b) GRANTS TO LOCAL DEVELOPMENT DISTRICTS-

      ‘(1) IN GENERAL- The Authority may make grants for administrative expenses of local development districts.

      ‘(2) CONDITIONS FOR GRANTS-

        ‘(A) MAXIMUM AMOUNT- The amount of any grant awarded under paragraph (1) shall not exceed 80 percent of the administrative expenses of the local development district receiving the grant.

        ‘(B) MAXIMUM PERIOD- No grant described in paragraph (1) shall be awarded to a State agency certified as a local development district for a period greater than 3 years.

        ‘(C) LOCAL SHARE- The contributions of a local development district for administrative expenses may be in cash or in kind, fairly evaluated, including space, equipment, and services.

    ‘(c) DUTIES OF LOCAL DEVELOPMENT DISTRICTS- Local development districts--

      ‘(1) shall operate as lead organizations serving multicounty areas in the region at the local level; and

      ‘(2) shall serve as a liaison between State and local governments, nonprofit organizations (including community-based groups and educational institutions), the business community, and citizens that--

        ‘(A) are involved in multijurisdictional planning;

        ‘(B) provide technical assistance to local jurisdictions and potential grantees; and

        ‘(C) provide leadership and civic development assistance.

‘SEC. 382F. DISTRESSED COUNTIES AND ECONOMICALLY STRONG COUNTIES.

    ‘(a) DESIGNATIONS- Not later than 90 days after the date of enactment of this subtitle, and annually thereafter, the Authority, in accordance with such criteria as the Authority may establish, shall designate--

      ‘(1) as distressed counties, counties in the region that are the most severely and persistently distressed and underdeveloped;

      ‘(2) as economically strong counties, counties in the region that are approaching or have reached economic parity with the rest of the United States; and

      ‘(3) as isolated areas of distress, areas located in an economically strong county that have high rates of poverty or unemployment.

    ‘(b) DISTRESSED COUNTIES-

      ‘(1) IN GENERAL- The Authority shall allocate at least 50 percent of the appropriations made available under section 382N for programs and projects designed to serve the needs of distressed counties in the region.

      ‘(2) FUNDING LIMITATIONS- The funding limitations under section 382D(b) shall not apply to projects providing basic services to residents in 1 or more distressed counties in the region.

    ‘(c) ECONOMICALLY STRONG COUNTIES-

      ‘(1) IN GENERAL- Except as provided in this subsection, no funds shall be provided under this subtitle for a project located in a county designated as an economically strong county under subsection (a).

      ‘(2) EXCEPTIONS-

        ‘(A) IN GENERAL- The funding prohibition under paragraph (1) shall not apply to grants to fund the administrative expenses of local development districts under section 382E(b).

        ‘(B) MULTICOUNTY PROJECTS- The Authority may approve additional exceptions to the funding prohibition under paragraph (1) for--

          ‘(i) multicounty projects that include participation by an economically strong county; and

          ‘(ii) any other type of project, if the Authority determines that the project could bring significant benefits to areas of the region outside an economically strong county.

        ‘(C) ISOLATED AREAS OF DISTRESS-

          ‘(i) IN GENERAL- An isolated area of distress shall be eligible for assistance at the discretion of the Authority.

          ‘(ii) DETERMINATION- A determination of eligibility of an isolated area of distress for assistance shall be supported--

            ‘(I) by the most recent Federal data available; or

            ‘(II) if no recent Federal data are available, by the most recent data available through the government of the State in which the isolated area of distress is located.

‘SEC. 382G. DEVELOPMENT PLANNING PROCESS.

    ‘(a) STATE DEVELOPMENT PLAN- In accordance with policies established by the Authority, each State member shall submit on such schedule as the Authority shall prescribe a development plan for the area of the region represented by the State member.

    ‘(b) CONTENT OF PLAN- A State development plan submitted under subsection (a) shall--

      ‘(1) reflect the goals, objectives, and priorities identified in the regional development plan under section 382B(d);

      ‘(2) describe--

        ‘(A) the organization and continuous process for development planning of the State, including the procedures established by the State for the participation of local development districts in the development planning process;

        ‘(B) the means by which the development planning process of the State is related to overall State-wide planning and budgeting processes; and

        ‘(C) the method of coordinating planning and projects in the region under this subtitle and other Federal, State, and local programs;

      ‘(3)(A) identify the goals, objectives, priorities, and expected outcomes of the State for the region, as determined by the Governor;

      ‘(B) identify the needs on which those goals, objectives, priorities are based; and

      ‘(C) describe the development strategy for achieving and the expected outcomes of those goals, objectives, and priorities; and

      ‘(4) describe how strategies proposed in the plan would advance the objectives of this subtitle.

    ‘(c) CONSULTATION WITH INTERESTED LOCAL PARTIES- In carrying out the development planning process (including the selection of programs and projects for assistance), a State shall--

      ‘(1) consult with--

        ‘(A) local development districts;

        ‘(B) local units of government; and

        ‘(C) citizen groups; and

      ‘(2) take into consideration the goals, objectives, priorities, and recommendations of the entities identified in paragraph (1).

    ‘(d) PUBLIC PARTICIPATION-

      ‘(1) IN GENERAL- The Authority and applicable State and local development districts shall encourage and assist, to the maximum extent practicable, public participation in the development, revision, and implementation of all plans and programs under this subtitle.

      ‘(2) REGULATIONS- The Authority shall develop guidelines specifying minimum goals for public participation described in paragraph (1), including public hearings.

‘SEC. 382H. PROGRAM DEVELOPMENT CRITERIA.

    ‘(a) IN GENERAL- In considering programs and projects to be provided assistance under this subtitle, and in establishing a priority ranking of the requests for assistance presented to the Authority, the Authority shall follow procedures that ensure, to the maximum extent practicable, consideration of--

      ‘(1) the relationship of the project or class of projects to overall regional development;

      ‘(2) the per capita income and poverty and unemployment rates in the area;

      ‘(3) the financial resources available to the applicants for assistance seeking to carry out the project;

      ‘(4) the importance of the project or class of projects in relation to other projects or classes of projects that may be in competition for the same funds;

      ‘(5) the prospects that the project for which assistance is sought will improve, on a continuing rather than a temporary basis, the opportunities for employment, the average level of income, or the economic and social development of the area served by the project; and

      ‘(6) the extent to which the project design provides for detailed outcome measurements by which grant expenditures and the results of the expenditures may be evaluated.

    ‘(b) NO RELOCATION ASSISTANCE- No financial assistance authorized by this subtitle shall be used to assist a person or entity in relocating from 1 area to another.

    ‘(c) REDUCTION OF FUNDS- Funds may be provided for a program or project in a State under this subtitle only if the Authority determines that the level of Federal or State financial assistance provided under a law other than this subtitle, for the same type of program or project in the same area of the State within the region, will not be reduced so as to substitute funds authorized by this subtitle.

‘SEC. 382I. APPROVAL OF DEVELOPMENT PLANS AND PROJECTS.

    ‘(a) IN GENERAL- A State or regional development plan or any multistate subregional plan that is proposed for development under this subtitle shall be reviewed for approval by the Authority in accordance with section 382B(e)(3).

    ‘(b) EVALUATION BY STATE MEMBER- An application for a grant or any other assistance for a project under this subtitle shall be made through and evaluated for approval by the State member of the Authority representing the applicant.

    ‘(c) CERTIFICATION- An application for a grant or other assistance for a project shall be approved only on certification by the State member and the Federal cochairperson that the application--

      ‘(1) reflects an intent that the project comply with any applicable State development plan;

      ‘(2) meets applicable criteria under section 382H;

      ‘(3) provides adequate assurance that the proposed project will be properly administered, operated, and maintained; and

      ‘(4) otherwise meets the requirements of this subtitle.

    ‘(d) VOTES FOR DECISIONS- The certification by a State member of an application for a grant or other assistance for a specific project under this section shall, when joined by an affirmative vote of the Federal cochairperson for the application, be considered to satisfy the requirements for affirmative votes for decisions under section 382B.

‘SEC. 382J. CONSENT OF STATES.

    ‘Nothing in this subtitle requires any State to engage in or accept any program under this subtitle without the consent of the State.

‘SEC. 382K. RECORDS.

    ‘(a) RECORDS OF THE AUTHORITY-

      ‘(1) IN GENERAL- The Authority shall maintain accurate and complete records of all transactions and activities of the Authority financed with Federal funds.

      ‘(2) AVAILABILITY- All records of the Authority shall be available for audit and examination by the Comptroller General of the United States (including authorized representatives of the Comptroller General).

    ‘(b) RECORDS OF RECIPIENTS OF FEDERAL ASSISTANCE-

      ‘(1) IN GENERAL- Recipients of Federal assistance under this subtitle shall, as required by the Authority, maintain accurate and complete records of transactions and activities financed with Federal funds and report on the transactions and activities to the Authority.

      ‘(2) AVAILABILITY- All records described in paragraph (1) shall be available for audit by the Comptroller General of the United States and the Authority or their duly authorized representatives.

‘SEC. 382L. ANNUAL REPORT.

    ‘Not later than 180 days after the end of each fiscal year, the Authority shall submit to the President and to Congress a report describing the activities carried out under this subtitle.

‘SEC. 382M. AUTHORIZATION OF APPROPRIATIONS.

    ‘(a) IN GENERAL- There is authorized to be appropriated to the Authority to carry out this subtitle $30,000,000 for each of fiscal years 2001 through 2005, to remain available until expended.

    ‘(b) ADMINISTRATIVE EXPENSES- Not more than 5 percent of the amount appropriated under subsection (a) shall be used for administrative expenses.’.

TITLE IX--FEDERAL GRANT PROGRAM PARTICIPATION EXPANSION

SEC. 901. EQUAL OPPORTUNITY FOR RELIGIOUS AND OTHER COMMUNITY ORGANIZATIONS TO PARTICIPATE IN CERTAIN FEDERAL GRANT PROGRAMS.

    (a) IN GENERAL- The Substance Abuse and Mental Health Services Administration in the Department of Health and Human Services shall ensure an equal opportunity for religious and other community organizations to provide assistance under the programs administered by such Administration by providing information and contact for such programs to such organizations in a manner similar to that developed by the Office of Community Faith-Based Organizations in the Department of Housing and Urban Development.

    (b) ASSISTANCE BY IRS- The Commissioner of the Internal Revenue Service shall provide for assistance and guidance to religious organizations seeking to establish charitable organizations in order to provide assistance described in subsection (a).

TITLE X--NEW MILLENNIUM CLASSROOMS

SEC. 1001. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR CENTERS, PUBLIC LIBRARIES, AND OTHER TRAINING CENTERS.

    (a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits), as amended by section 604(a), is amended by adding at the end the following new section:

‘SEC. 45F. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR CENTERS, PUBLIC LIBRARIES, AND OTHER TRAINING CENTERS.

    ‘(a) GENERAL RULE- For purposes of section 38, the computer donation credit determined under this section is an amount equal to 50 percent of the qualified computer contributions made by the taxpayer during the taxable year as determined after the application of section 170(e)(6)(A) to any entity located in--

      ‘(1) a renewal community designated under section 1400E,

      ‘(2) an empowerment zone or enterprise community designated under section 1391,

      ‘(3) an Indian reservation (as defined in section 168(j)(6)), or

      ‘(4) a low-income community (as defined in subsection (c).

    ‘(b) QUALIFIED COMPUTER CONTRIBUTION- For purposes of this section, the term ‘qualified computer contribution’ has the meaning given the term ‘qualified elementary or secondary educational contribution’ by section 170(e)(6)(B), except that--

      ‘(1) clause (ii) thereof shall be applied--

        ‘(A) by substituting ‘3 years’ for ‘2 years’,

        ‘(B) by inserting ‘or reacquired’ after ‘acquired’, and

        ‘(C) by inserting ‘for the taxpayer’s own use’ after ‘constructed by the taxpayer’,

      ‘(2) clause (iii) thereof shall be applied by inserting ‘, the person from whom the donor reacquires the property,’ after ‘the donor’,

      ‘(3) such term shall include the contribution of a computer (as defined in section 168(i)(2)(B)(ii)) only if computer software (as defined in section 197(e)(3)(B)) that serves as a computer operating system has been lawfully installed in such computer,

      ‘(4) notwithstanding clauses (i) and (iv) of section 170(e)(6)(B), such term shall include the contribution of computer technology or equipment to--

        ‘(A) multipurpose senior centers (as defined in section 102(35) of the Older Americans Act of 1965 (42 U.S.C. 3002(35), as in effect on the date of the enactment of the Creating New Markets and Empowering America Act of 2000) described in section 501(c)(3) and exempt from tax under section 501(a) to be used by individuals who have attained 60 years of age to improve job skills in computers,

        ‘(B) a public library (within the meaning of section 213(2)(A) of the Library Services and Technology Act (20 U.S.C. 9122(2)(A), as in effect on the date of the enactment of the Creating New Markets and Empowering America Act of 2000) established and maintained by an entity described in section 170(c)(1), or

        ‘(C) an organization exempt from tax under section 501(a) which provides employment, vocational, and job-training services to individuals with barriers to employment, including welfare recipients and individuals with disabilities, and

      ‘(5) such term shall only include contributions which meet the minimum standards prescribed by the Secretary by regulation, after consultation, at the option of the Secretary, with the National Telecommunications and Information Agency and any other Federal agency with expertise in computer technology.

    ‘(c) LOW-INCOME COMMUNITY- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘low-income community’ means any population census tract if--

        ‘(A)(i) the poverty rate for such tract is at least 20 percent, or

        ‘(ii)(I) in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income, or

        ‘(II) in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income, and

        ‘(B) the unemployment rate for such tract, as determined by the most recent available data, was at least 1 1/2 times the national unemployment rate for the period to which such data relate.

      ‘(2) AREAS NOT WITHIN CENSUS TRACTS- In the case of an area which is not tracted for population census tracts, the equivalent county divisions (as defined by the Bureau of the Census for purposes of defining poverty areas) shall be used for purposes of determining poverty rates, median family income, and unemployment rates.

    ‘(d) CERTAIN RULES MADE APPLICABLE- For purposes of this section, rules similar to the rules of paragraphs (1) and (2) of section 41(f) shall apply.

    ‘(e) TERMINATION- This section shall not apply to taxable years beginning after December 31, 2009.’.

    (b) CURRENT YEAR BUSINESS CREDIT CALCULATION- Section 38(b) (relating to current year business credit), as amended by section 604(c)(1), is amended by striking ‘plus’ at the end of paragraph (13), by striking the period at the end of paragraph (14) and inserting ‘, plus’, and by adding at the end the following:

      ‘(15) the computer donation credit determined under section 45F(a).’.

    (c) DISALLOWANCE OF DEDUCTION BY AMOUNT OF CREDIT- Section 280C (relating to certain expenses for which credits are allowable) is amended by adding at the end the following:

    ‘(d) CREDIT FOR COMPUTER DONATIONS- No deduction shall be allowed for that portion of the qualified computer contributions (as defined in section 45F(b)) made during the taxable year that is equal to the amount of credit determined for the taxable year under section 45F(a). In the case of a corporation which is a member of a controlled group of corporations (within the meaning of section 52(a)) or a trade or business which is treated as being under common control with other trades or businesses (within the meaning of section 52(b)), this subsection shall be applied under rules prescribed by the Secretary similar to the rules applicable under subsections (a) and (b) of section 52.’.

    (d) LIMITATION ON CARRYBACK- Subsection (d) of section 39 (relating to carryback and carryforward of unused credits), as amended by section 604(b), is amended by adding at the end the following:

      ‘(11) NO CARRYBACK OF COMPUTER DONATION CREDIT BEFORE EFFECTIVE DATE- No amount of unused business credit available under section 45F may be carried back to a taxable year beginning on or before the date of the enactment of this paragraph.’.

    (e) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by section 604(c)(2), is amended by adding at the end the following:

‘Sec. 45F. Credit for computer donations to schools, senior centers, public libraries, and other training centers.’.

    (f) EFFECTIVE DATE- The amendments made by this section shall apply to contributions made in taxable years beginning after December 31, 2000.