Securing Equity for the Economic Development of Low Income Areas Act of 2006

Mr. President, in 1999, President Clinton unveiled the New Markets Investment Initiative to counter an unmet challenge in the 21st century: building economically vibrant communities in underserved places such as inner cities and distressed rural areas, where there is a great need for jobs and economic development. The goal was to build a bridge between Wall Street and our untapped markets in Main Street America. In that same year, Senators Paul Wellstone, Jeff Bingaman, Paul Sarbanes, Carl Levin, Max Cleland, and I introduced the Community Development and Venture Capital Act to spearhead this innovative New Markets initiative in the Senate. In 2000, our New Markets initiative was enacted with bipartisan support in Congress as part of the Consolidated Appropriations Act of 2001. The New Markets Venture Capital Program, NMVC, which specifically promotes the creation of wealth and job opportunities in low-income areas, was only one part of the initiative agreed to by Speaker Hastert and then-President Clinton. The other elements of that agreement included the New Markets Tax Credits, NMTC, additional empowerment zones, and a new program: Community Renewal Zones. The overall goal of the legislation was to provide a number of different approaches to alleviating poverty so that we could better understand what works best. With the exception of the NMVC Program, all of the other programs have moved forward. However, the NMVC Program has not been given the opportunity, the funding, or the support to reach its full potential as Congress intended.

The NMVC Program has had many successes since its inception 5 years ago. CEI Community Ventures, Inc. from Maine--close to my home State of Massachusetts--has invested venture capital funds in Look's Gourmet Food Company, which manufactures and sells all-natural, high-quality, shelf-stable seafood products under the ``Bar Harbor T'' and ``Atlantic T'' brands. Another example can be found in Vermont, where Carolyn Cooke and Poppy Gall founded Juno Rising/Isis Women's Apparel, an outdoor clothing company targeting the needs of today's active women. Their products can be found in outdoor stores throughout the country.

Today, I rise to introduce legislation that will not only reauthorize the New Markets Venture Capital Program for 3 years, but will provide critical components for success: providing appropriate funding authorization levels, expanding the NMVC program into all regions of the country, encouraging investment in small manufacturers, making the NMVC Program consistent with the NMTC as Congress intended, incorporating the operational assistance grant model from the Rural Business Investment Program, and establishing a long-overdue Office of New Markets Venture Capital. The legislation is a companion to H.R. 4303, introduced by Representatives Gwen Moore of Wisconsin and Hal Rogers of Kentucky. While few differences exist between our bills, both send a clear legislative signal that there is strong bipartisan and bicameral support from Congress to reauthorize this program.

Mr. President, this program has a history of strong bipartisan support. In fiscal year 2001, together we appropriated $150 million for debenture guarantees and $30 million in grant financing to support up to 15 NMVC companies. Unfortunately, only half of this money was obligated to support 6 NMVC companies, and the remaining funds were rescinded in the Fiscal Year 2003 Omnibus Appropriations Act Conference Report. Now today this program faces further challenges with the President's Fiscal Year 2007 budget request asking for no funding for the NMVC Program. This is the sixth year in a row the President has not backed this program, although Congress restored funding in 2002 and initially provided funding in 2003. The Small Business Administration's, SBA's, failure to obligate the remaining funds and the President's lack of support for funding the NMVC Program raises an important question: Has the challenge in the 21st century of improving local economies in low-income urban and rural communities been met? All evidence says no. A 2006 report on America's Children by the Federal Interagency Forum on Child and Family Statistics stated that in 2004, 17 percent of children live in poverty--a total of 12.5 million. In addition, 42 percent of children with single mothers and one in three African-American children live in poverty. The Bureau of Labor Statistics shows that in areas such as Flint, MI, where the NMVC has not yet had the time or resources to reach, the unemployment rate is at 7.3 percent, well above the national average of 4.6

percent. Congress must use this reauthorization process as an opportunity to stimulate business activity in all communities and create jobs for low-income residents throughout the entire country.

Prior to the creation of the NMVC Program, Congress attempted to fill this unmet need through various programs. In fact, Congress created the NMVC Program based on the SBA's Small Business Investment Company Program, SBIC. Since its beginning in 1958, the SBIC Program has provided approximately $46 billion of long-term debt and equity capital to more than 99,000 small U.S. companies. Although the SBIC Program has been popular, it does not sufficiently reach the underserved areas of our country that need economic development the most. The NMVC is targeted specifically to very low-income areas, including historically underutilized business zones--HUB Zones--and low-income rural and urban neighborhoods, which are overlooked by traditional venture capital investors. I do not have an NMVC Company in my State, and I am sure that many Sates, like Massachusetts, could benefit from the opportunities that the NMVC creates. To ensure that the NMVC Program expands into diverse areas around the country, the legislation encourages the SBA Administrator to establish not fewer than one company from each of the 10 geographic regions of the country. In addition to diversifying the geographic distribution of NMVC companies to our underserved communities, there is a great need to diversify the types of investments approved by the SBA, particularly in the area of manufacturing. According to a 2004 study by the U.S. Department of Commerce, the most recent recession in the business cycle hit U.S. manufacturers and their workers hardest--a downturn that first was felt in 2000. The manufacturing community lost 2.6 million jobs, accounting for all of the net job losses from the fourth quarter of 2000 through the third quarter of 2003. Much of the manufacturing sector continues to operate well below its previous peak and potential. For example, in places such as Milwaukee, where in 2002, according to the Bureau of Labor Statistics, 59 percent of working-age African-American males were either unemployed or out of the workforce. Milwaukee has also lost 33,000 manufacturing jobs in the past 5 years. We need to do all we can to bring back these lost manufacturing jobs, and the NMVC Program could play a role. Relying on the market to bring venture capital funding to Milwaukee and other manufacturing hubs is not the solution. According to a study by the University of Kansas, Milwaukee ranks 49th out of the 50 largest U.S. cities in terms of venture capital dollars. Imagine the difference that a venture capital investment could make in this area, creating one job for every $15,000 invested.

As I mentioned previously, this legislation is a companion to the bipartisan legislation introduced by Representatives Moore and Rogers in the House. Both of our bills include small manufacturers in the mission of the program, by encouraging the SBA Administrator to select at least one NMVC company that is primarily involved in the investment and development of small manufacturing firms.

Mr. President, the legislation also makes the NMVC Program and the NMTC consistent in defining low-income geographic areas. Both programs were designed to work together--the NMTC was intended to be a tool to encourage NMVC companies to raise private investment capital in low- income communities. Conforming their definitions will assure a smooth coordination between the two programs for future investors.

The nexus between the NMVC Program and the NMTC is only one aspect that makes this program unique among all of the SBA's programs. Another unique aspect is the operational assistance grant program that fund managers can use to assist entrepreneurs in low-income communities to develop a business plan, manage employees, or market their products and services. These grants are an essential tool for fostering community development using venture capital firms because investors are able to reach out into communities not served by conventional investors. Many of the NMVC companies are also members of the surrounding community, therefore, they will have the local expertise and guidance for entrepreneurs to start and sustain a viable business. Some NMVC companies are having a difficult time meeting the SBA requirement that each company raise an upfront dollar-for-dollar match in order to obtain an operational assistance grant. To avoid this unnecessary burden, the legislation incorporates a provision modeled after the joint SBA/Department of Agriculture Rural Business Investment Program which does not require a match from the company and limits the amount of the grant.

Mr. President, these improvements to the NMVC Program are important but they cannot be implemented without dedicated staff at the SBA. In October 2005, I wrote a letter to the SBA expressing my concern about the lack of staffing and resources devoted to the NMVC office within the SBA's Investment Division. The SBA informed me that staff members within the Office of SBIC Operations were getting cross-trained on the NMVC Program to ensure adequate staffing and provide ample support to meet the needs of the six NMVC companies currently assigned to the Office of New Markets Venture Capital within the SBIC Program. Reshuffling SBA staff to assist six companies is not sufficient. If this program grows to its originally intended potential of 15 companies, there needs to be staff dedicated solely to administering the NMVC Program. This legislation establishes an Office of New Markets Venture Capital within the Investment Division of the SBA, headed by a Director appointed by the SBA Administrator. The Director would be responsible for administering and encouraging investment in small manufacturing firms and working to expand the number of small businesses participating in the NMVC Program.

This bill is urgently needed now to expand the good work of the NMVC Program, and I urge all of my colleagues to show their support for the small but growing number of businesses that promise both financial returns for their investors and social returns to low-income people and distressed regions in which they invest. This double bottom line distinguishes the NMVC Program from any other SBA program, and we cannot afford to let it expire.

Mr. President, in 1999, President Clinton unveiled the New Markets Investment Initiative to counter an unmet challenge in the 21st century: building economically vibrant communities in underserved places such as inner cities and distressed rural areas, where there is a great need for jobs and economic development. The goal was to build a bridge between Wall Street and our untapped markets in Main Street America. In that same year, Senators Paul Wellstone, Jeff Bingaman, Paul Sarbanes, Carl Levin, Max Cleland, and I introduced the Community Development and Venture Capital Act to spearhead this innovative New Markets initiative in the Senate. In 2000, our New Markets initiative was enacted with bipartisan support in Congress as part of the Consolidated Appropriations Act of 2001. The New Markets Venture Capital Program, NMVC, which specifically promotes the creation of wealth and job opportunities in low-income areas, was only one part of the initiative agreed to by Speaker Hastert and then-President Clinton. The other elements of that agreement included the New Markets Tax Credits, NMTC, additional empowerment zones, and a new program: Community Renewal Zones. The overall goal of the legislation was to provide a number of different approaches to alleviating poverty so that we could better understand what works best. With the exception of the NMVC Program, all of the other programs have moved forward. However, the NMVC Program has not been given the opportunity, the funding, or the support to reach its full potential as Congress intended.

The NMVC Program has had many successes since its inception 5 years ago. CEI Community Ventures, Inc. from Maine--close to my home State of Massachusetts--has invested venture capital funds in Look's Gourmet Food Company, which manufactures and sells all-natural, high-quality, shelf-stable seafood products under the ``Bar Harbor T'' and ``Atlantic T'' brands. Another example can be found in Vermont, where Carolyn Cooke and Poppy Gall founded Juno Rising/Isis Women's Apparel, an outdoor clothing company targeting the needs of today's active women. Their products can be found in outdoor stores throughout the country.

Today, I rise to introduce legislation that will not only reauthorize the New Markets Venture Capital Program for 3 years, but will provide critical components for success: providing appropriate funding authorization levels, expanding the NMVC program into all regions of the country, encouraging investment in small manufacturers, making the NMVC Program consistent with the NMTC as Congress intended, incorporating the operational assistance grant model from the Rural Business Investment Program, and establishing a long-overdue Office of New Markets Venture Capital. The legislation is a companion to H.R. 4303, introduced by Representatives Gwen Moore of Wisconsin and Hal Rogers of Kentucky. While few differences exist between our bills, both send a clear legislative signal that there is strong bipartisan and bicameral support from Congress to reauthorize this program.

Mr. President, this program has a history of strong bipartisan support. In fiscal year 2001, together we appropriated $150 million for debenture guarantees and $30 million in grant financing to support up to 15 NMVC companies. Unfortunately, only half of this money was obligated to support 6 NMVC companies, and the remaining funds were rescinded in the Fiscal Year 2003 Omnibus Appropriations Act Conference Report. Now today this program faces further challenges with the President's Fiscal Year 2007 budget request asking for no funding for the NMVC Program. This is the sixth year in a row the President has not backed this program, although Congress restored funding in 2002 and initially provided funding in 2003. The Small Business Administration's, SBA's, failure to obligate the remaining funds and the President's lack of support for funding the NMVC Program raises an important question: Has the challenge in the 21st century of improving local economies in low-income urban and rural communities been met? All evidence says no. A 2006 report on America's Children by the Federal Interagency Forum on Child and Family Statistics stated that in 2004, 17 percent of children live in poverty--a total of 12.5 million. In addition, 42 percent of children with single mothers and one in three African-American children live in poverty. The Bureau of Labor Statistics shows that in areas such as Flint, MI, where the NMVC has not yet had the time or resources to reach, the unemployment rate is at 7.3 percent, well above the national average of 4.6

percent. Congress must use this reauthorization process as an opportunity to stimulate business activity in all communities and create jobs for low-income residents throughout the entire country.

Prior to the creation of the NMVC Program, Congress attempted to fill this unmet need through various programs. In fact, Congress created the NMVC Program based on the SBA's Small Business Investment Company Program, SBIC. Since its beginning in 1958, the SBIC Program has provided approximately $46 billion of long-term debt and equity capital to more than 99,000 small U.S. companies. Although the SBIC Program has been popular, it does not sufficiently reach the underserved areas of our country that need economic development the most. The NMVC is targeted specifically to very low-income areas, including historically underutilized business zones--HUB Zones--and low-income rural and urban neighborhoods, which are overlooked by traditional venture capital investors. I do not have an NMVC Company in my State, and I am sure that many Sates, like Massachusetts, could benefit from the opportunities that the NMVC creates. To ensure that the NMVC Program expands into diverse areas around the country, the legislation encourages the SBA Administrator to establish not fewer than one company from each of the 10 geographic regions of the country. In addition to diversifying the geographic distribution of NMVC companies to our underserved communities, there is a great need to diversify the types of investments approved by the SBA, particularly in the area of manufacturing. According to a 2004 study by the U.S. Department of Commerce, the most recent recession in the business cycle hit U.S. manufacturers and their workers hardest--a downturn that first was felt in 2000. The manufacturing community lost 2.6 million jobs, accounting for all of the net job losses from the fourth quarter of 2000 through the third quarter of 2003. Much of the manufacturing sector continues to operate well below its previous peak and potential. For example, in places such as Milwaukee, where in 2002, according to the Bureau of Labor Statistics, 59 percent of working-age African-American males were either unemployed or out of the workforce. Milwaukee has also lost 33,000 manufacturing jobs in the past 5 years. We need to do all we can to bring back these lost manufacturing jobs, and the NMVC Program could play a role. Relying on the market to bring venture capital funding to Milwaukee and other manufacturing hubs is not the solution. According to a study by the University of Kansas, Milwaukee ranks 49th out of the 50 largest U.S. cities in terms of venture capital dollars. Imagine the difference that a venture capital investment could make in this area, creating one job for every $15,000 invested.

As I mentioned previously, this legislation is a companion to the bipartisan legislation introduced by Representatives Moore and Rogers in the House. Both of our bills include small manufacturers in the mission of the program, by encouraging the SBA Administrator to select at least one NMVC company that is primarily involved in the investment and development of small manufacturing firms.

Mr. President, the legislation also makes the NMVC Program and the NMTC consistent in defining low-income geographic areas. Both programs were designed to work together--the NMTC was intended to be a tool to encourage NMVC companies to raise private investment capital in low- income communities. Conforming their definitions will assure a smooth coordination between the two programs for future investors.

The nexus between the NMVC Program and the NMTC is only one aspect that makes this program unique among all of the SBA's programs. Another unique aspect is the operational assistance grant program that fund managers can use to assist entrepreneurs in low-income communities to develop a business plan, manage employees, or market their products and services. These grants are an essential tool for fostering community development using venture capital firms because investors are able to reach out into communities not served by conventional investors. Many of the NMVC companies are also members of the surrounding community, therefore, they will have the local expertise and guidance for entrepreneurs to start and sustain a viable business. Some NMVC companies are having a difficult time meeting the SBA requirement that each company raise an upfront dollar-for-dollar match in order to obtain an operational assistance grant. To avoid this unnecessary burden, the legislation incorporates a provision modeled after the joint SBA/Department of Agriculture Rural Business Investment Program which does not require a match from the company and limits the amount of the grant.

Mr. President, these improvements to the NMVC Program are important but they cannot be implemented without dedicated staff at the SBA. In October 2005, I wrote a letter to the SBA expressing my concern about the lack of staffing and resources devoted to the NMVC office within the SBA's Investment Division. The SBA informed me that staff members within the Office of SBIC Operations were getting cross-trained on the NMVC Program to ensure adequate staffing and provide ample support to meet the needs of the six NMVC companies currently assigned to the Office of New Markets Venture Capital within the SBIC Program. Reshuffling SBA staff to assist six companies is not sufficient. If this program grows to its originally intended potential of 15 companies, there needs to be staff dedicated solely to administering the NMVC Program. This legislation establishes an Office of New Markets Venture Capital within the Investment Division of the SBA, headed by a Director appointed by the SBA Administrator. The Director would be responsible for administering and encouraging investment in small manufacturing firms and working to expand the number of small businesses participating in the NMVC Program.

This bill is urgently needed now to expand the good work of the NMVC Program, and I urge all of my colleagues to show their support for the small but growing number of businesses that promise both financial returns for their investors and social returns to low-income people and distressed regions in which they invest. This double bottom line distinguishes the NMVC Program from any other SBA program, and we cannot afford to let it expire.

Mr. President, I am pleased to join my colleague, Senator Alexander, in introducing legislation

that would create the America's Opportunity Scholarships for Kids. First proposed by President Bush, this legislation will provide children who are in schools designated for restructuring with scholarships either for the cost of tuition at a private school or for sustained, supplemental educational services.

The No Child Left Behind Act set up a structure for schools to get evaluated annually to determine whether they are meeting adequate yearly progress. Schools are designated for restructuring after 6 years of poor student academic achievement. Children are often trapped in these circumstances, and this legislation will help provide them with either a way out or additional services to increase their academic achievement levels.

I believe that the America's Opportunity Scholarships for Kids will provide true school choice across the country.

Competitiveness and innovation are two of the latest buzz words that surround education. I believe that school choice will breed both competitiveness and innovation.

A few years ago I read an article by Maurice McTigue, now a professor at George Mason University. Mr. McTigue was the equivalent of the Secretary of Transportation in New Zealand when their government underwent a radical transformation. During that time New Zealand's government was decentralized, with most control and money going to local areas. This included the education system.

Rather than having money go directly to the schools, the money followed the children. The government set specific dollar amounts for each child, depending on whether the child had special needs, and that money was given to the school of the child's parents' choice.

This truly radical change caused great uproar at the time, as everyone believed that it would lead to the destruction of the public school system. During the first few years of this new system, enrollment in public schools did decline slightly. However, because each public school was allowed to change and meet the needs of its local students, parents eventually moved back to their home schools.

Now, public school enrollment is at an all-time high in New Zealand. Why? Because schools were forced to compete among themselves without artificial governmental barriers. Parents were allowed to choose the school that best fit their child's needs.

I believe the same thing would happen in the United States if school choice were made available across the country. In fact, two studies by Harvard researchers have shown that, as the voucher program in Milwaukee was expanded, there was a marked improvement in test scores at the public schools most threatened by the program. Students in these public schools have benefited from competition.

In Milwaukee, the choice program caused the public school system to shift power from a centralized administration to each individual school. This shift allowed parents and teachers to make decisions, including who could teach at the school.

Elementary and secondary education is one of the few sectors in this country that does not have open competition. By contrast, our higher education system has flourished because of competition.

The purpose of this legislation is to provide low-income children who are in schools that have consistently not met adequate yearly progress benchmarks, and have not improved student academic achievement, with other options.

This legislation would provide low-income students and their parents with two options. First, these students would have the option of a $4,000 scholarship that would be applied to the cost of tuition at the private school of their parent's choice. If parents decide not to take the scholarship, their child would be eligible for up to $3,000 of intensive, sustained supplemental educational services. Supplemental educational services are services that are provided outside of the regular school day, such as after or before school, that are designed to improve academic achievement.

I believe that this legislation is the next step toward bringing true competition to elementary and secondary education.

I hope that my colleagues will join Senator Alexander and me in supporting this legislation.

Mr. President, I rise today to introduce the Agricultural Protection and Prosperity Act of 2006. I would like to thank my colleagues from both sides of the aisle for their support by cosponsoring this important legislation.

The Agricultural Protection and Prosperity Act of 2006 seeks to clarify the original intent of the Comprehensive Environmental Response, Compensation, and Liability Act, CERCLA, by providing an exemption for manure derived from agricultural operations. This clarification is badly needed in order to protect America's agriculture industry from onerous and frivolous lawsuits. Without clarification, agriculture operations could be fined up to $27,500 per day per violation, thereby bankrupting many livestock operations in this country. American livestock operations are already some of the most regulated businesses with regards to environmental quality. Additional requirements and liability under CERCLA, which is designed to clean up toxic industrial pollutants, is unwarranted and unfair for America's farmers.

Agriculture has been the backbone of this country since its inception and we owe our farmers a debt of gratitude. However, in an environment where our farmers and ranchers are struggling to

compete on the international stage, it seems unconscionable that some people wish to place them at a further disadvantage.

This clarification is especially important for New Mexico's dairy industry. This relatively new sector of our economy has grown by leaps and bounds over the years to a point where it contributes substantially to the overall economic output of my great State. On a national level, New Mexico enjoys one of the largest average herd sizes and per capita milk production in the country. This dramatic increase benefits many related businesses from the alfalfa growers along the Rio Grande to the implement salesman in our small towns. However, this growth and the future of the dairy industry in New Mexico are in great jeopardy. If this clarification to CERCLA is not made, the resulting dairy closures and the effects on related industries would devastate my State.

Mr. President, I ask unanimous consent that a copy of the bill be printed in the Record.

Mr. President, I am pleased to join the Senator from Virginia as an original cosponsor of legislation to study and promote the use of energy efficient computer servers in the United States. The growth of the Internet and online applications and the strong demand for electronic transactions are creating a growing need for data centers. Most data center equipment is composed of servers, which are computers that share resources with other computers on a network.

The average annual power and cooling bill for 100 servers is about $40,000--from Computer World, February 6, 2006. The U.S. server market is expected to grow from 2.8 billion servers in 2005 to 4.9 billion in 2009. Without improved efficiency, data center power costs could easily overtake hardware costs in the next few years--A. Fanara, EPA, technical workshop on server benchmarking, March 27, 2006.

Our bill would require the Administrator of EPA to study and analyze the growth and energy consumption of computer data centers. A critical goal of the study is to develop a standard way to measure server efficiency. Energy efficient servers and data center designs are currently available. This analysis would help promote the use of efficient server technology through the Energy Star Program or the Department of Energy's buildings standards program and allow consumers to compare products on the basis of efficiency.

This legislation has broad support from the information technology sector and energy efficiency advocates, including the Alliance to Save Energy, the American Electronics Association, the American Council for an Energy Efficient Economy, the Electronic Industries Alliance, the Information Technology Industry Council, the Semiconductor Association, and leading companies such as Intel, AMD, Sun, and HP.

Mr. President, under the bipartisan leadership of Representative Eshoo, and Representative Rogers, the House approved identical legislation last week. I hope that the Senate will also pass this needed legislation as soon as possible.