12 Jan 1996 Renewing Communities by Helping Business: Summary of Business Provisions in H.R. 3467, The American Community Renewal Act of 1996
Although the title of this bill, sponsored by Rep. Jim Talent (R-MO) and Rep. J.C. Watts (R-OK), emphasizes that it will save children, the most interesting part is how it proposes to do so: By encouraging investment and development in America’s economically-depressed areas. Indeed, one of this bill’s primary focuses is on how not only to save business in these areas, but how to make them thrive.
The bill includes numerous provisions that should attract the attention and support of businesses:
- The Establishment of Renewal Communities: One-hundred communities, 10% of which must be in rural areas, will be designated as renewal communities. The eligibility requirements for renewal communities require a course of action to be written and signed by State or local governments and neighborhood organizations. The course of action include the following activities:A reduction of tax rates or fees applying within the renewal community.Actions to reduce, remove, simplify, or streamline governmental requirements applying within the renewal community.State or local income tax benefits for fees paid for services performed by a nongovernmental entity which were formerly performed by a governmental entity.The gift (or sale at below fair market value) of surplus realty (such as land, homes, and commercial or industrial structures) in the renewal community to neighborhood organizations, community development corporations, or private companies.
- The local or state government a renewal community is located in must also meet some economic growth requirements by certifying in writing that the following will be repealed or not enforced within a renewal community unless such regulation of businesses and occupations is necessary or well-tailored to the protection of health and safety:Licensing requirements for occupations that do not ordinarily require a professional degree;Zoning restrictions on home-based businesses which do not create a public nuisance;Permit requirements for street vendors who do not create a public nuisance;Zoning or other restrictions that impede the formation of schools or child care centers; and,Franchises or other restrictions on competition for businesses providing public services, including but not limited to taxicabs, jitneys, cable television, or trash hauling.
- A Zero Tax on Capital Gains: There will be no taxation on any qualified capital gain recognized on the sale or exchange of a qualified community asset held for more than five years. A qualified community asset includes qualified community stock, qualified community business property, and qualified community partnership interest.
- Tax Deductions on the Purchase of Community Stock: The purchase of renewal community stock shall be allowed as a deduction with the maximum amount allowed being $100,000 for any taxable year, and when added to the aggregate amount from prior years, not exceeding $500,000.
- A Commercial Revitalization Tax Credit: Businesses that construct, expand, or rehabilitate facilities in renewal communities could receive a 20% tax credit on eligible expenses the year a qualified revitalization building is placed in service. Another alternative allows businesses to receive a 5% percent tax credit per year for ten years.
- The Expansion of the Work Opportunity Tax Credit to High-Risk Employees: Businesses who hire — regardless of their place of residence — members of needy families receiving welfare assistance, food stamp recipients, veterans, ex-felons, and people with mental and physical disabilities will receive the work opportunity tax credit if the employee meets the necessary qualifications. Businesses who hire youth between the ages of 18-25 residing in renewal communities, and summer youth employees be +?9 9 -9 ; 1s of age whose principal abode is within renewal communities will also receive the tax credit if they employee qualifies.
- Investment By Financial Institutions in Renewal Communities: Federal financial supervisory agencies may grant Community Reinvestment Act credit (as defined by the 1977 Community Reinvestment Act) to regulated financial institutions that cooperate with community development organizations within renewal communities to provide capital investment and bank lending.
- Elimination of FDA User Fee for Developing Drugs to Help People: Qualified renewal community businesses that are manufacturing drugs or have applications or supplements for a drug pending will not have to pay a fee, as is usually required.
-Summary prepared by Arturo Silva of The National Center for Public Policy Research