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New Markets Initiatives |
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On July 25th, the House passed "The Community Renewal and New Markets Act of 2000" (H.R. 4923) by a vote of 394 to 27 (14 abstentions). The legislative package, which was negotiated by President Clinton and House Speaker Hastert, includes the America's Private Investment Companies (APICs), New Markets Tax Credit, etc. As reported in the Washington Post on July 26th, ?Over the next decade, the tax breaks and credits in the bill would reduce government revenue by $21 billion, making this the largest federal tax incentive program aimed at poor communities.? The House bill is now in the Senate Finance Committee, where mark ups have been postponed twice during the week of September 18th. |
Community Development and Venture Capital Act of 2000 (S. 2779) |
On July 14th, Senators Lieberman and Santorum tried to include their community renewal bill as an amendment to legislation that would repeal the estate tax. However, with a 57-40 vote, the bill fell three short of the 60 needed for consideration. The Charitable Choice provisions are controversial. The Senate Banking and Finance Committees are expected to announce hearing dates on the Santorum/Lieberman bill shortly. The House companion bill (H.R. 4923) passed the full House on July 25th. Separately, Senator Robb (D-VA) is expected to introduce a competing proposal in the Senate very shortly called "Creating New Markets and Empowering America Act of 2000.? |
New Markets Tax Credit (NMTC) |
If NMTC were enacted, investors would be able to claim a tax credit worth 39% of the amount of capital invested over a seven-year period in community development entities. This would encourage private investment in neglected communities and help develop new relationships between investors, community development organizations, and small businesses. The President?s FY 2001 budget proposal includes $15 billion request for NMTC, almost triple his FY 2000 proposal of $6 billion. NCCED is an active participant of the Community Development Tax Credit Coalition, which submitted a letter to legislative leaders with the support of 800 community-based organizations. For more information, you can link to www.rapoza.org , under ?CD Tax Credit Coalition.? To download a letter that you can send to your legislator in support of NMTC, visit www.ncced.org/policy/write10/write10home.html. |
Visit www.house.gov/ways_means/oversite/106cong/3-21-00/3-21phil.htm to read testimony delivered by one of NCCED?s board members at a March 20, 2000 House Ways and Means, Oversight Subcommittee hearing on Tax Incentives to Assist Distressed Communities. Ron Phillips, President of Coastal Enterprises, spoke on behalf of the Community Development Tax Credit Coalition. |
America?s Private Investment Companies (APIC) |
APICs has had a setback from a funding perspective. A provision in the FY00 HUD Appropriations Act required authorizing legislation for APICs to be signed by June 30th, or the program?s $20 million for FY00 would be transferred to the CDFI Fund. While APICs legislation made it through the House Banking Committee in April, the full House did not vote until July, and the Senate hearings and markups are not expected to take place until September. Although it is still possible that the Appropriations committees could return the $20 million to HUD if Congress approves S. 2779 and H.R. 2764 before adjourning, this outcome is not clear. NCCED has urged that if the money goes to CDFI that it support the core program?s TA. Additionally, the House HUD appropriations bill (H.R. 4635), which passed the full House on June 21st, did not include funding for APIC for FY01, even though President Clinton had requested $37 million for APIC in his FY01 budget proposal. This all means that APICs must wait until FY02 for funding if it is indeed authorized this year. |
Additionally, a bipartisan group of House leaders is also opposing the creation of APICs (or new Round III EZs) unless the funding promises for existing Round II EZs are met. These leaders question funding new entities when existing zones in neighboring vicinities have not received full funding. If enacted, APIC will encourage and promote domestic emerging markets by generating increased private investment in America?s untapped markets and by providing capital to large-scale businesses in low and moderate income areas, both urban and rural. The U.S. Department of Housing and Urban Development (HUD) and the Small Business Administration (SBA) will jointly administer APIC. |
Separately, Representative Velazquez (D-NY) sponsored a bill (H.R. 4530) intended to complement APIC legislation. Like APIC, the bill attempts to spur investment in low-income communities. It provides for $45 million for 10 venture funds serving areas where the poverty rate is at least 20% and household earnings are not above 80% of area median income. The central difference between the Velazquez proposal and APIC is that H.R. 4530 offers $30 million in operational assistance grants that will not only provide TA dollars, but will also help cover the employee salaries of such venture capital firms. Additionally, her initiative only targets newly formed, for-profit venture funds that have minimally $15 million in non-federal investment. The bill is currently under consideration in the House Small Banking Committee. |
NCCED is an active participant in an industry coalition supporting APICs. |
Low Income Housing Tax Credit (LIHTC) |
If enacted at this level, LIHTC will help create an additional 180,000 units of affordable housing over the next 5 years. H.R. 175 and H.R. 2400 were both introduced by Rep. Nancy Johnson (R-CT), in January and June 1999 respectively. Both attempt to increase the State ceiling on the low-income housing credit and were referred to the House Ways and Means. Its companion Senate bill (S. 1017) was introduced by Senator Connie Mack (R-FL) in May 1999, and was referred to the Finance Committee. Neither committee has conducted hearings to date. |
For more information visit www.enterprisefoundation.org or www.nlihc.org. |
Empowerment Zones |
Aside from the favorable provisions in the House and Senate New Markets bills, a bipartisan groups of House members seem willing to block approval of new EZs and of APICs if appropriators do not make good on funding promises for the existing Round II EZs. Additionally, the House?s HUD Appropriations bill zeros out EZs. |
Fifteen new EZs were selected in Round II of the program. Full funding of the program would have required an appropriation of $150 million per year for 10 years. However, congress provided only $45 million in FY99 and $55 million in FY00, essentially spreading one year?s worth of funding over two. |
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