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.

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. 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.

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. 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.

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. Speaker, I yield back the balance of my time.

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.

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. Speaker, I yield back the balance of my time.