[Pages H3030-H3033]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

EXPANSION OF DESIGNATED RENEWAL COMMUNITY AREA BASED ON 2000 CENSUS
DATA

Mr. HOUGHTON. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 4193) to amend the Internal Revenue Code of 1986 to allow
for the expansion of areas designated as renewal communities based on
2000 census data and to treat certain census tracts with low
populations as low-income communities for purposes of the new markets
tax credit.
The Clerk read as follows:

H.R. 4193

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. EXPANSION OF DESIGNATED RENEWAL COMMUNITY AREA
BASED ON 2000 CENSUS DATA.

(a) In General.--Section 1400E of the Internal Revenue Code
of 1986 (relating to designation of renewal communities) is
amended by adding at the end the following new subsection:
``(g) Expansion of Designated Area Based on 2000 Census.--
``(1) In general.--At the request of all governments which
nominated an area as a renewal community, the Secretary of
Housing and Urban Development may expand the area of such
community to include any census tract if--
``(A)(i) at the time such community was nominated, such
community would have met the requirements of this section
using 1990 census data even if such tract had been included
in such community, and
``(ii) such tract has a poverty rate using 2000 census data
which exceeds the poverty rate for such tract using 1990
census data, or
``(B)(i) such community would be described in subparagraph
(A)(i) but for the failure to meet one or more of the
requirements of paragraphs (2)(C)(i), (3)(C), and (3)(D) of
subsection (c) using 1990 census data,
``(ii) such community, including such tract, has a
population of not more than 200,000 using either 1990 census
data or 2000 census data,
``(iii) such tract meets the requirement of subsection
(c)(3)(C) using 2000 census data, and
``(iv) such tract meets the requirement of subparagraph
(A)(ii).
``(2) Exception for certain census tracts with low
population in 1990.--In the case of any census tract which
did not have a poverty rate determined by the Bureau of the
Census using 1990 census data, paragraph

[[Page H3031]]

(1)(B) shall be applied without regard to clause (iv)
thereof.
``(3) Special rule for certain census tracts with low
population in 2000.--At the request of all governments which
nominated an area as a renewal community, the Secretary of
Housing and Urban Development may expand the area of such
community to include any census tract if--
``(A) either--
``(i) such tract has no population using 2000 census data,
or
``(ii) no poverty rate for such tract is determined by the
Bureau of the Census using 2000 census data,
``(B) such tract is one of general distress, and
``(C) such community, including such tract, meets the
requirements of subparagraphs (A) and (B) of subsection
(c)(2).
``(4) Period in effect.--Any expansion under this
subsection shall take effect as provided in subsection (b).''
(b) Effective Date.--The amendment made by subsection (a)
shall take effect as if included in the amendments made by
section 101 of the Community Renewal Tax Relief Act of 2000.

SEC. 2. POPULATION CENSUS TRACTS WITH LOW POPULATIONS TREATED
AS LOW-INCOME COMMUNITIES FOR PURPOSES OF NEW
MARKETS TAX CREDIT.

(a) In General.--Subsection (e) of section 45D of the
Internal Revenue Code of 1986 (relating to low-income
community) is amended by adding at the end the following new
paragraph:
``(4) Tracts with low population.--A population census
tract with a population of less than 2,000 shall be treated
as a low-income community for purposes of this section if
such tract--
``(A) is within an empowerment zone, the designation of
which is in effect under section 1391, and
``(B) is contiguous to one or more low-income communities
(determined without regard to this paragraph).''.
(b) Effective Date.--The amendment made by this section
shall apply to investments made after the date of the
enactment of this Act.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New
York (Mr. Houghton) and the gentleman from Washington (Mr. McDermott)
each will control 20 minutes.
The Chair recognizes the gentleman from New York (Mr. Houghton).
Mr. HOUGHTON. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I urge the House to pass H.R. 4193. This measure will
allow communities benefiting from economic development tax incentives
to use those incentives to the maximum extent they possibly can.
The purpose of H.R. 4193 is to increase the flexibility communities
have to use both the Renewal Communities and the New Markets Tax Credit
tax incentives.
The Community Renewal Tax Relief Act of 2000 authorized the
Department of Housing and Urban Development to select, based on a
highly competitive process, 40 distressed areas across the country as
renewal communities. So, as renewal communities, these distressed areas
are able to use tax incentives to promote economic development.
These incentives include: One, a zero percent rate for capital gains
from the sale of qualifying assets; two, a 15 percent wage credit to
employers for the first $10,000 of qualified wages; three, a commercial
revitalization deduction; four, an additional $35,000 in section 179
expensing for qualified property; and last, expansion of the Work
Opportunity Tax Credit.
Communities were initially selected based on the 1990 census data for
population and poverty rates because this was the most current data
available at the time. We now have up-to-date 2000 census data showing
how the population has shifted and the population and poverty rates
have moved. H.R. 4193 is going to allow a renewal community to include
additional census tracts which have experienced rising poverty
according to the 2000 and 2002 census.
The bill also updates the New Markets Tax Credit by helping more
distressed, low-population communities become eligible for the credit's
benefit. Today, the profile of these communities makes its hard for
them to meet poverty and income tests. Without this adjustment, low-
population and economically distressed areas within an Empowerment
Zone's boundaries will not get the help they need to develop further.
The House has already acted by unanimous consent to update Renewal
Communities with this new 2000 census data. So the addition of the New
Markets Tax Credit provision improves the package and does not affect
the Federal budget and has broad bipartisan support.
So I urge my colleagues, Mr. Speaker, to support this legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may
consume. I thank the gentleman from New York. His description of the
bill is quite adequate, I think.
H.R. 4193 is basically a bill that was passed about 10 years ago, and
the census data used at that point was the 1990 census. We now have the
2000 census, and this is simply making this bill work better.
Communities like Yakima, Washington; Hamilton, Ohio; and Mobile,
Alabama, will be among the many beneficiaries of this change in the
law.
It is not a big law. We did not even bother having a hearing in the
Committee on Ways and Means on it. So it must not be too big, and I
urge the adoption of the bill.
Mr. QUINN. Mr. Speaker, I rise today in support of H.R. 4193.
Over the past decade, few areas of the country have faced the
economic and fiscal challenges that my Western New York district has
experienced. When a section of the City of Buffalo received a Renewal
Community designation by the Department of Housing and Urban
Development, I saw the possibility of an economic revival in my
district.
When an area is designated as a Renewal Community, businesses located
there become qualified to receive certain tax incentives such as zero-
percent capital gains rate on qualified community assets held for five
years; work opportunity credits; commercial revitalization deductions;
additional Section 179 expensing and the Renewal Community Employment
Credit that credits employers $1500 for each employee who both lives
and works in the renewal area.
Because of these significant financial and tax incentives designed
for low-income areas, the City of Buffalo has seen many improvements to
the local economy. However, like many of the other Renewal Communities
across the country, the standards HUD uses to designate renewal
communities need to be modified and improved.
The original bill authorizing Renewal Communities, The Community Tax
Reform Act of 2000, directs HUD to use poverty, unemployment and
population levels based on 1990 census tract data to determine if a
tract qualifies for a renewal community designation. To date, HUD has
designated 40 Renewal Communities areas across the country using this
outdated standard.
Section 1 of H.R. 4193 makes a simple change to these designation
requirements by allowing HUD to enlarge a Renewal Community by adding
census tracts using 2000 census tract data.
Given the enormous advantages for cities like Buffalo, it just makes
sense for areas that continue to face decline to be eligible to use the
most current census data available. This bill will provide for the
expansion for Renewal Communities across the country so areas like
Buffalo and Jamestown, N.Y. can finally realize economic success.
Mr. Speaker, thank you for bringing H.R. 4193 to the floor, and I
urge all my colleagues to support this common sense, bipartisan
legislation.
Ms. SLAUGHTER. Mr. Speaker, I rise in strong support of H.R. 4193,
which the House is considering today under suspension of the rules.
I want to take a moment to recognize the work done by my colleague,
Representative Quinn, who introduced the original bill, H.R. 840, which
serves as a basis for H.R. 4193. I was proud to be an original
cosponsor of the earlier bill, which would expand the areas of Renewal
Communities based on more recent census information.
Teh Renewal Communities Initiative combines tax credits and other
provisions designed to revive some of the nation's more impoverished
distressed areas. These cities can take advantage of federal wage
credits, tax deductions, capital gains exclusions, and bond financing
to stimulate economic development and job growth. Each incentive is
tailored to meet the particular needs of a business and offers a
significant inducement for companies to locate and hire additional
workers.
We have come close before to enacting this commonsense change, but
this time we cannot fail.
This is too great an issue of importance to the country, and in
particular, my district in Western New York.
Due to a loss of population in the 1990's, my area would greatly
benefit from this change.
Out of five Renewal Communities designated in New York State, three
are in my district: Buffalo, Niagara Falls, and Rochester.

[[Page H3032]]

According to Fannie Mae, this technical change would allow 14 more
census tracts to qualify in Rochester, 16 more tracts in Buffalo-
Lackawanna, and seven additional census tracts in Niagara Falls.
Each city in my district needs these incentives to expand jobs and
promote business investment in our downtown areas. The statistics from
my district paint the bleak picture.
The March 2004 employment figures released by the U.S. Department of
Labor in late April revealed that the Buffalo-Niagara Falls market had
the highest unemployment rate increase over the past year among all
major metropolitan areas with one million or more residents.
According to the Bureau of Labor Statistics, Buffalo's unemployment
rate in March was 7.4 percent, up 1.1 points from 6.3 percent a year
ago. The number of unemployed was 42,000 this year. In March,
Rochester's unemployment rate was 6.7 percent according, with 700 more
area people employed in March than in February. However, that is still
4,400 fewer people than had jobs in March 2003.
Manufacturers have slashed about 4,600 jobs in the last year. The
biggest dip was in jobs producing nondurable goods such as film--an 8.7
percent drop. This decease was mainly a result of Eastman Kodak Co.'s
continued downsizing.
The Renewal communities program seeks to entice businesses to develop
commercial property and hire local employees. I strongly believe that
the federal government can be an important partner in local efforts to
spur economic development. The program provides critical tools to help
with that partnership.
The expansion of the Renewal Communities program would give these
cities the necessary spark to reignite their economic engines. I
strongly urge my colleagues to support H.R. 4193.
Mr. ISTOOK. Mr. Speaker, H.R. 4193 that we are considering today,
while making some simple changes to the tax code, would provide
considerable positive impact to our low-income and distressed areas for
years to come. I strongly support this measure, which would inject
much-needed wealth into low-income and poverty-stricken areas through
the creation of jobs and opportunities, where few now exist.
I am grateful to the Majority Leader, to the Ways and Means
Committee, to its Chairman (Mr. Thomas) and to the gentleman from New
York (Mr. Houghton) for bringing H.R. 4193 to the House floor today.
Scheduling conflicts prevented them from bringing it to the floor
during the last 3 weeks as was originally planned, so it's important to
act today. Avoiding delay is the reason for acting today even though I
must be absent, due to my long-standing commitment to deliver the
commencement address to the graduating class of Oklahoma State
University in Oklahoma City. But I am confident H.R. 4193 will be
approved without any need for my presence, and thanks to the help from
these other Members.
I want to draw your attention to section 2 of the bill, which
provides a much-needed correction to the tax code for dealing with
what's called the New Markets Tax Credit. This credit is designed to
encourage taxpayers to invest in economically-distressed communities
that have been designated as Empowerment Zones. Unfortunately, the tax
code as it currently stands actually precludes some of the worst hit
areas from taking advantage of the New Markets Tax Credit, which we
have the chance today to begin to rectify.
Empowerment Zones were created to rebuild communities in America's
poverty-stricken areas through incentives that would entice businesses
back to areas that experience high unemployment and shortages of
affordable housing. In the words of HUD Secretary Mel Martinez, ``This
critical partnership between the public and private sectors will give
local businesses in distressed neighborhoods an economic boost to help
drive revitalization, provide jobs and ultimately build a foundation
for stronger communities.'' Currently, there are 30 areas designated as
Empowerment Zones, whose status provides the community with a framework
of tax incentives and bond financing that offers a significant
inducement for companies to locate in designated distressed areas and
to hire additional workers.
The New Markets Tax Credit permits taxpayers to receive a credit
against their Federal income taxes for making qualified investments in
designated Empowerment Zones, which totals 39 percent of the cost of
the investment over a 7-year period. Unfortunately, the current tax
code contains a ``Catch-22'' regarding Empowerment Zones and the New
Markets Tax Credit. The credit is administered according to the poverty
level of each census tract in an Empowerment Zone. To be eligible for
the credit, a census tract must have a 20 percent or greater poverty
level assigned to it by the Census Bureau.

The ``Catch-22'' is that if a census tract has no assigned poverty
level then it is not eligible for the credit. Such a case exists in two
census tracts of the Oklahoma City Empowerment Zone because they either
have no population or an extremely low population. These are census
tracts 1027 and 1031.02, which contain large amounts of space with no
residences, even though they are in an urban setting (which is not
unusual for a city in America's west).
Although the rest of the Oklahoma City Empowerment Zone is New
Markets Tax Credit eligible, the federal statute precludes these two
census tracts from eligibility as they must have a 20 percent or
greater poverty rate. That is an obvious impossibility when there is no
population or such an extremely low population that the Census Bureau
will not assign a poverty rate. Yet these two tracts face the same
compelling economic needs as the rest of the Zone. These two census
tracts are in essence donut holes within the Empowerment Zone. They are
surrounded by other census tracts that do qualify for the New Markets
Tax Credit. Omitting them from that program makes no sense; it is a
bureaucratic accident that would defeat the program's purpose. But like
a donut, they have none of the tasty dough that makes a donut
appealing.
I have worked with the Department of Treasury to try to overcome this
obstacle to New Markets Tax Credit eligibility, but existing Federal
statute does not grant the Treasury Department the discretionary
authority they need to correct the injustice. Therefore, a legislative
fix is required. Section 2 corrects this problem by amending the tax
code so that census tracts with a population of less than 2,000 are
eligible for the NMTC. The 20 percent poverty criteria requirement is
waived if the census tract is located in an Empowerment Zone and is
contiguous to at least one other low-income community.
Downtown areas often serve as commercial, industrial, and office
centers, which consequently have a limited residential population.
Ironically, the lack of housing precludes these areas from tax
incentives that would help inject affordable housing and energize their
economies with activity for the very people these programs are trying
to serve. The Oklahoma City Health Sciences Center area serves as one
such example. This medical complex is adjacent to downtown Oklahoma
City. It includes the Presbyterian Foundation and Research Park, the
University of Oklahoma Health Center, and the Oklahoma Blood Institute
among other health care providers. These, along with the Oklahoma
Medical Research Foundation and the Children's Medical Research
institute, are part of a rapidly-developing area of bio-medical
research and treatment facilities that is removing blight and serving a
wide ranging constituency. But because the census tract that it is
located in, as of the 2000 census, had only 72 residents, it was
excluded from this program. The Census Bureau will not publish poverty
and income information for a census tract such as this, whose source
population is so easily identifiable, thus the Health Sciences Center
area has no assigned poverty rate and is not New Markets Tax Credit
eligible. Enacting H.R. 4193 will encourage development of much-needed
affordable housing in this area, and provide job opportunities that
will benefit people of all income and skill levels anchored through the
growing bio-medical industry.
Another example of a blighted project that would quickly benefit from
passage of H.R. 4193 is the Skirvin Plaza Hotel, located in Oklahoma
City's inner city. This beautiful 1910 building, which is an important
example of early art deco design has been closed since 1988 and is
awaiting a developer. Because its census tract has zero population, the
hotel is not New Markets Tax Credit eligible. Although its
revitalization would greatly contribute to the quality of life in
downtown Oklahoma City through the jobs and economic activity that its
reopening would bring. The simple fact that affordable housing does not
exist in this census tract denies an estimated $9 million in equity
that could otherwise be raised for restoring and reopening this now
empty, abandoned hotel.
I have been advised that Oklahoma City is not alone in this
situation. Chicago, Detroit, East St. Louis, and New York are also
empowerment zone cities each containing census tracts with no
population, for a total of 14 zero population tracts. I have to wonder
how many other census tracts in empowerment zones also have extremely
low populations. I cannot speak to the specifics of each city's case,
but I know that Oklahoma City is not alone in its situation.
Although this legislation has particular importance to Oklahoma City,
I believe that many federally-designated Empowerment Zones will benefit
from its passage. I strongly encourage all members to vote yes for H.R.
4193.
Mr. McDERMOTT. Mr. Speaker, I yield back the balance of my time.
Mr. HOUGHTON. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from New York (Mr. Houghton) that the House suspend the rules
and pass the bill, H.R. 4193.

[[Page H3033]]

The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.

____________________