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Bipartisan Agreement On New Markets And Renewal Communities May 23,
THE WHITE HOUSE Office of the Press Secretary
For Immediate Release
May 23, 2000
PRESIDENT CLINTON & SPEAKER HASTERT ANNOUNCE
BIPARTISAN AGREEMENT ON NEW MARKETS AND RENEWAL COMMUNITIES May 23,
Today, President Clinton will be joined by Speaker Dennis Hastert in
announcing a bipartisan agreement on a New Markets and Community Renewal
legislative initiative. This announcement is the outcome of the commitment
President Clinton and Speaker Hastert made in Chicago last Nov. to develop a
bipartisan legislative initiative on New Markets and revitalizing impoverished
communities this year. This initiative will help encourage private sector
equity investment in underserved communities throughout the country to ensure
that all Americans share in our nations economic prosperity. The
Presidents New Markets Initiative was originally proposed in President
Clinton and Vice-President Gores FY 2000 budget. President Clinton has
highlighted the potential of the nations New Markets in three separate
trips across America to underserved inner city and rural communities like
Newark, NJ, Hartford, CT, the Mississippi Delta, Appalachia, and rural
Arkansas, and the Pine Ridge Indian Reservation in S. Dakota.
THE KEY ELEMENTS OF THE AGREEMENT ARE:
NEW MARKETS INITIATIVES:
The New Markets Tax Credit. Under this agreement, this
credit will spur $15 billion in equity investment and will be available to
taxpayers who invest in certain privately-managed investment funds and
institutions, which, in turn, use these funds to finance businesses in low- and
moderate-income communities. The proposal would provide a 30-percent credit (in
present-value terms) for investments in a wide range of investment vehicles.
Eligible investment companies include community development banks and other
CDFIs, venture funds, and financial institutions such as the new
investment company programs.
America's Private Investment Companies (APICs). Just as
Americas support for the Overseas Private Investment Corporation helps
promote growth in emerging markets abroad, APIC will encourage private
investment in this countrys untapped markets. Leveraging $2 for every $1
in private investment, the agreement authorizes HUD to guarantee up to $1
billion in low cost loans to match $500 million in private investment for a
total of $1.5 billion in investments in underserved communities.
New Markets Venture Capital (NMVC) Firms. NMVC firms will
provide incentives to increase the availability of venture capital in low and
moderate-income communities for small businesses. Expert guidance will also be
made available to small business entrepreneurs in inner city and rural areas.
Ten to twenty NMVC firms are planned. The agreement authorizes the SBA to
guarantee up to $150 million in loans that will match $100 million in private
equity for a total of $250 million. SBA will also have the authority to make
$30 million in operating assistance grants to match equivalent private
Expanded To 40 EZs & Strengthened EZs. President Clinton
and Vice President Gore proposed and signed Empowerment Zone legislation in
1993 establishing 9 EZs across the country -- today there are 31
across America. This agreement:
Designates a third round of 9 new Empowerment Zones (for a total
Expands the Empowerment Zone tax incentives to form strategic
partnership with all existing EZs so that all can utilize the 20% EZ wage
credit, additional business expensing, and other incentives.
Commits $200 million in discretionary investment this year for
Establishes zero-rate capital gains rollover for investments within
A 60% capital gains exclusion for investment in small businesses.
D.C. tax incentives would also be extended to 2009.
The creation of 40 Renewal Communities (32 urban, 8 rural),
designated by the U.S. Dept. of Housing and Urban Development with targeted,
pro-growth tax benefits, regulatory relief,. The tax benefits of Renewal
Communities would address key hurdles facing small businesses when they are
just getting started -- raising capital and maintaining cash flow. Key
incentives aimed at spurring investment in Renewal Communities include:
Zero Capital Gains Rate on the sales of assets held for more than 5
Increased Expensing for Small Businesses (up to $35,000 more than
in current law for equipment).
15% Employment Wage Credit (up to $10,000 ) for each worker.
Commercial Revitalization deductions for taxpayers who rehabilitate
or revitalize buildings in a Renewal Community.
In addition, the New Market/Renewal Communities Agreement includes
these 2 provisions:
EXPANSION OF THE LOW INCOME HOUSING TAX CREDIT: To expand
and improve the supply of available low-income housing, this agreement
increases the Low-Income Housing Tax Credit by more than 40% to build an
additional 180,000 units of affordable housing for working families over the
next five years.
ALLOWING FAITH-BASED ORGANIZATIONS TO QUALIFY FOR SUBSTANCE
ABUSE FUNDING: The initiative allows faith-based substance abuse prevention
and treatment programs to qualify for federal funds on the same basis as other
non-profits consistent with the 1996 Welfare Reform Act and the constitutional
line between church and state.