| PRESIDENT CLINTON?S NEW MARKETS INITIATIVE: |
| REVITALIZING AMERICA?S UNDERSERVED COMMUNITIES |
| December 14, 2000 |
Today, President Clinton is pleased to announce the passage of the historic
new bipartisan New Markets and Community Renewal 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 nation?s economic prosperity. The President?s New
Markets Initiative was originally proposed in President Clinton and
Vice-President Gore?s FY 2000 budget. President Clinton has highlighted
the potential of the nation?s 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 LEGISLATION ARE:
NEW MARKETS INITIATIVES:
? The New Markets Tax Credit. The credit will spur $15 billion in equity
investment for business growth in low- and moderate-income rural and urban
communities throughout the United States and Puerto Rico. The credit,
worth over 30 percent of the amount invested (in present value terms), will
be available to taxpayers who invest in a wide range of privately managed
community development investment funds, such as community development banks
and other CDFIs, venture funds, and new investment companies, that finance
businesses in low- and moderate-income 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 and provides $30 million in
technical assistance for small businesses.
? BusinessLINC (Learning, Investment, Networking and Collaboration). The
bill provides $7 million in funding for BusinessLINC -- an innovative
public-private partnership launched by Vice Pres. Gore -- and designed to
encourage large businesses to work with and mentor small business owners
and entrepreneurs in economically-distressed communities.
? Strengthened & Expanded 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:
? A third round of 9 new EZs, bringing the total number to 40, and
extends all EZs to 2009.
? An additional $110 million, for a total of $200 million in
discretionary investment this year for existing EZs.
? Expansion of 20% EZ wage credit (first $15,000 in annual wages for each
worker), increased small business expensing (up to $35,000 more than in
current law for equipment), and enhanced tax-exempt bonds to all EZs.
? Tax-free rollovers for EZ investments, and 60% capital gains exclusion
for investment in small EZ businesses.
? The creation of 40 Renewal Communities designated by the U.S. Dept. of
Housing and Urban Development with targeted, pro-growth tax benefits. Key
incentives aimed at spurring investment in Renewal Communities include:
? Zero capital gains rate on the sales of certain assets held for more
than 5 years.
? Increased small business expensing (up to $35,000 more than in current
law for equipment).
? 15% employment wage credit (first $10,000 in annual income for each
? Commercial revitalization deductions for taxpayers who revitalize
buildings in a Renewal Community.
In addition, the New Market/Renewal Communities legislation includes these
? EXPANSION OF THE LOW INCOME HOUSING TAX CREDIT: To expand and improve
the supply of available low-income housing, This bill increases the
Low-Income Housing Tax Credit by more than 40% over two years and then
indexes the credit for inflation thereafter. The increase will help to
create an additional 180,000 units of affordable housing for working
families over the next five years. The credit will increase to $1.50 per
capita for each state in 2001 and $1.75 per capita in 2002.
? INCREASE IN THE PRIVATE ACTIVITY BOND CAP: The legislation increases
the state private activity bond cap from $50 per resident to $75 per
resident, phased in from 2001 to 2002. Private activity bonds allow states
and municipalities to encourage economic growth in communities through the
issuing of lower cost tax exempt bonds.