[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1097 Introduced in Senate (IS)]
103d CONGRESS
1st Session
S. 1097
To provide for the establishment of rural development investment zones,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 15, 1993
Mr. Dorgan introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To provide for the establishment of rural development investment zones,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This Act may be cited as the ``Rural Development
Investment Zone Act of 1993''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. PURPOSES.
The purposes of this Act are to provide for the establishment of
Rural Development Investment Zones (RDIZs) to stimulate the creation of
new jobs and businesses, to promote revitalization of economically
distressed rural areas, and to provide increased economic opportunity
for residents thereof, primarily by providing or encouraging--
(1) tax relief at the Federal, State, and local levels,
(2) increased Federal and State assistance,
(3) regulatory relief at the Federal, State, and local
levels, and
(4) improved local services, particularly through the
increased involvement of private, local, and community
organizations.
TITLE I--DESIGNATION OF RURAL DEVELOPMENT INVESTMENT ZONES
SEC. 101. DESIGNATION OF ZONES.
(a) General Rule.--Chapter 80 (relating to general rules) is
amended by adding at the end thereof the following new subchapter:
``Subchapter D--Designation of Rural Development Investment Zones
``Sec. 7881. Designation.
``SEC. 7881. DESIGNATION.
``(a) Designation of Zones.--
``(1) Definitions.--For purposes of this title, the term
`rural development investment zone' means any area--
``(A) which is nominated by 1 or more local
governments and the State or States in which it is
located for designation as a rural development
investment zone (hereinafter in this section referred
to as a `nominated area'), and
``(B) which the Secretary of the Treasury (after
consultation with the Secretaries of Agriculture,
Commerce, and Labor, and the Administrator of the Small
Business Administration) designates as a rural
development investment zone.
``(2) Limitations on designations.--
``(A) Publication of regulations.--Before
designating any area as a rural development investment
zone and not later than 4 months following the date of
the enactment of this section, the Secretary of the
Treasury shall prescribe by regulation, after
consultation with the officials described in paragraph
(1)(B)--
``(i) the procedures for nominating an area
under paragraph (1)(A),
``(ii) the parameters relating to the size
and population characteristics of a rural
development investment zone, and
``(iii) the manner in which nominated areas
will be compared based on the criteria
specified in subsection (d) and the other
factors specified in subsection (f).
``(B) Time limitations.--The Secretary of the
Treasury shall designate nominated areas as rural
development investment zones only during the 36-month
period beginning on the later of--
``(i) the first day of the first month
following the month in which the effective date
of the regulations described in subparagraph
(A) occurs, or
``(ii) January 1, 1993.
``(C) Number of designations.--The Secretary of the
Treasury may not designate--
``(i) more than 100 nominated areas as
rural development investment zones under this
section, and
``(ii) more than 40 nominated areas as
rural development investment zones during the
first 12-month period beginning on the date
determined under subparagraph (B) and each
subsequent 12-month period.
``(D) Procedural rules.--The Secretary of the
Treasury shall not make any designation of an area as a
rural development investment zone under paragraph (1)
unless--
``(i) the local government and the State in
which the nominated area is located have the
authority--
``(I) to nominate such area for
designation as a rural development
investment zone,
``(II) to make the State and local
commitments under subsection (d), and
``(III) to provide assurances
satisfactory to the Secretary of the
Treasury that such commitments will be
fulfilled,
``(ii) a nomination therefor is submitted
in such a manner and in such form, and contains
such information, as the Secretary of the
Treasury shall by regulation prescribe,
``(iii) the Secretary of the Treasury
determines that any information furnished is
reasonably accurate, and
``(iv) the State and local governments
certify that no portion of such area is already
included in a rural development investment zone
or in an area otherwise nominated to be a rural
development investment zone.
``(b) Period for Which Designation Is in Effect.--
``(1) In general.--Any designation of an area as a rural
development investment zone shall remain in effect during the
period beginning on the date of the designation and ending on
the earliest of--
``(A) December 31 of the 12th calendar year
following the calendar year in which such date occurs,
``(B) the termination date designated by the State
and local governments as provided in the nomination
submitted under subsection (a)(2)(D)(ii), or
``(C) the date the Secretary of the Treasury
revokes such designation under paragraph (2).
``(2) Revocation of designation.--The Secretary of the
Treasury after consultation with the officials described in
subsection (a)(1)(B), may revoke the designation of an area if
the Secretary of the Treasury determines that the local
government or the State in which it is located is not complying
substantially with the State and local commitments under
subsection (d).
``(3) Designation shall not take effect unless inventory of
historic properties.--Notwithstanding paragraph (1)--
``(A) within 60 days after the date of the
designation of an area as a rural development
investment zone (determined without regard to this
paragraph), the State or local government of such area
shall submit to the Secretary of the Treasury an
inventory of historic properties within such area, and
``(B) the date of such designation shall not be
earlier than the date on which such inventory is
submitted.
``(c) Area and Eligibility Requirements.--
``(1) In general.--The Secretary of the Treasury may make a
designation of any nominated area under subsection (a)(1) only
if it meets the requirements of paragraphs (2) and (3).
``(2) Area requirements.--A nominated area meets the
requirements of this paragraph if--
``(A) the area is--
``(i) within a local government
jurisdiction or jurisdictions which are not
central cities of a metropolitan statistical
area (within the meaning of section
143(k)(2)(B)) and which have a population of
less than 50,000 (as determined by the most
recent census data available),
``(ii) outside of a metropolitan
statistical area (within the meaning of section
143(k)(2)(B)), or
``(iii) determined by the Secretary of the
Treasury, after consultation with the Secretary
of Agriculture, to be a rural area,
``(B) the area--
``(i) does not exceed 10,000 square miles,
``(ii) consists of areas within not more
than 4 contiguous counties,
``(iii) has a boundary which is continuous,
or consists of not more than 3 noncontiguous
parcels, and
``(iv) is located entirely within 1 State,
and
``(C) the area has a population, as determined by
the most recent census data available, of at least
1,000.
``(3) Eligibility requirements.--For purposes of paragraph
(1), a nominated area meets the requirements of this paragraph
if the State and local governments in which it is located
certify and the Secretary of the Treasury, after such review of
supporting data as he deems appropriate, accepts such
certification, that the area meets the following criteria:
``(A) Distress.--The area is one of pervasive
poverty, unemployment, and general distress.
``(B) Additional criteria.--The area meets not less
than 2 of the following criteria:
``(i) Unemployment rate.--The unemployment
rate (as determined by the appropriate
available data) is not less than 1.5 times the
national unemployment rate.
``(ii) Poverty rate.--The poverty rate (as
determined by the most recent census data
available) for not less than 90 percent of the
population census tracts (or where not tracted,
the equivalent county divisions as defined by
the Bureau of the Census for the purposes of
defining poverty areas) within the area is not
less than 20 percent.
``(iii) Job loss.--The amount of wages
attributable to employment in the area, and
subject to tax under section 3301, during the
preceding calendar year is not more than 90
percent of the annual average of such wages for
calendar years 1986 through 1990, adjusted as
provided in paragraph (4).
``(iv) Out-migration.--The population of
the area decreased (as determined by the most
recent census data available) by 10 percent or
more between 1980 and 1990.
``(4) Inflation adjustment.--In making the determination
under paragraph (3)(B)(iii) for any calendar year (the
`determination year'), the wages for each of the calendar years
1986 through 1990 shall be adjusted in the same manner as under
section 1(f) to reflect any increase in the consumer price
index between each of such calendar years and the calendar year
preceding the determination year.
``(d) Required State and Local Commitments.--
``(1) In general.--No nominated area shall be designated as
a rural development investment zone unless the local government
and the State in which it is located agree in writing that,
during any period during which the area is a rural development
investment zone, such governments will follow a specified
course of action designed to reduce the various burdens borne
by employers or employees in such area.
``(2) Course of action.--The course of action under
paragraph (1) may be implemented by both such governments and
private nongovernmental entities, may be funded from proceeds
of any Federal program, and may include, but is not limited
to--
``(A) a reduction of tax rates or fees applying
within the rural development investment zone,
``(B) an increase in the level or efficiency of
local services within the rural development investment
zone,
``(C) actions to reduce, remove, simplify, or
streamline governmental requirements applying within
the rural development investment zone,
``(D) involvement in the program by private
entities, organizations, neighborhood associations, and
community groups, particularly those within the
nominated area, including a commitment from such
private entities to provide jobs and job training for,
and technical, financial or other assistance to,
employers, employees, and residents of the nominated
area, and
``(E) mechanisms to increase the equity ownership
of residents and employees within the rural development
investment zone.
``(3) Subsequent modification of course of action.--The
Secretary of the Treasury may by regulation prescribe
procedures for modifying a course of action within a rural
development investment zone under paragraph (1) following
designation of such zone.
``(e) Priority of Designation.--In choosing nominated areas for
designation, the Secretary of the Treasury shall give special
preference to the areas with respect to which the strongest and highest
quality contributions described in subsection (d)(2) have been promised
as part of the course of action, taking into consideration the fiscal
ability of the nominating State and local governments to provide tax
relief. The Secretary shall also give preference to--
``(1) the nominated areas with respect to which the
nominating State and local governments have provided the most
effective and enforceable guarantees that the proposed course
of action under subsection (d) will actually be carried out
during the period of the rural development investment zone
designation,
``(2) the nominated areas with high levels of poverty,
unemployment, and general distress, particularly the areas--
``(A) which are near areas with concentrations of
disadvantaged workers or long-term unemployed or under-
employed individuals, and
``(B) with respect to which there is a strong
likelihood that residents of the area described in
subparagraph (A) will receive jobs if the area is
designated as a rural development investment zone,
``(3) the nominated areas the size and location of which--
``(A) will primarily stimulate new economic
activity, and
``(B) minimize unnecessary tax losses to the
Federal Government,
``(4) the nominated areas with respect to which private
entities have made the most substantial commitments in
additional resources and contributions, including the creation
of new or expanded business activities, and
``(5) the nominated areas which best exhibit such other
factors determined by the Secretary of the Treasury as are--
``(A) consistent with the intent of the rural
development investment zone program, and
``(B) important to minimizing the unnecessary loss
of tax revenues to the Federal Government.
``(f) Definitions.--For the purposes of this title--
``(1) Governments.--If more than 1 government seeks to
nominate an area as a rural development investment zone, any
reference to, or requirement of, this section shall apply to
all such governments.
``(2) State.--The term `State' shall also include the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American
Samoa, the Commonwealth of the Northern Mariana Islands, the
Republic of the Marshall Islands, the Federated States of
Micronesia, the Republic of Palau; and any other possession of
the United States.
``(3) Local government.--The term `local government'
means--
``(A) any county, city, town, township, parish,
village, or other general purpose political subdivision
of a State, and
``(B) any combination of political subdivisions
described in subparagraph (A) recognized by the
Secretary of the Treasury.''
(b) Conforming Amendment.--The table of subchapters for chapter 80
is amended by adding at the end thereof the following new item:
``Subchapter D. Designation of rural
development investment zones.''
SEC. 102. EVALUATION AND REPORTING REQUIREMENTS.
Not later than the close of the third calendar year after the
calendar year in which the Secretary of the Treasury first designates
areas as rural development investment zones under section 7881 of the
Internal Revenue Code of 1986, and at the close of each third calendar
year thereafter, the Secretary of the Treasury shall prepare and submit
to the Congress a report on the effects of such designation in
accomplishing the purposes of this Act.
SEC. 103. INTERACTION WITH OTHER FEDERAL PROGRAMS.
(a) Tax Reductions.--Any reduction of taxes under any required
program of State and local commitment under section 7881(d) of the
Internal Revenue Code of 1986 shall be disregarded in determining the
eligibility of a State or local government for, or the amount or extent
of, any assistance or benefits under any law of the United States.
(b) Coordination With Relocation Assistance.--The designation of a
rural development investment zone under section 7881 of the Internal
Revenue Code of 1986 shall not--
(1) constitute approval of a Federal or federally assisted
program or project (within the meaning of the Uniform
Relocation Assistance and Real Property Acquisition Policies
Act of 1970 (42 U.S.C. 4601 et seq.)), or
(2) entitle any person displaced from real property located
in such zone to any rights or any benefits under such Act.
(c) Coordination With Environmental Policy.--Designation of a rural
development investment zone under section 7881 of the Internal Revenue
Code of 1986 shall not constitute a Federal action for purposes of
applying the requirements of the National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.) or other provisions of Federal law
relating to the protection of the environment.
TITLE II--FEDERAL INCOME TAX INCENTIVES
Subtitle A--Credits for Employers
SEC. 201. CREDIT FOR RURAL DEVELOPMENT INVESTMENT ZONE EMPLOYERS.
(a) Credit for Increased Rural Development Investment Zone
Employment.--Subpart B of part IV of subchapter A of chapter 1
(relating to foreign tax credit, etc.) is amended by inserting after
section 30 the following new section:
``SEC. 30A. CREDIT FOR RURAL DEVELOPMENT INVESTMENT ZONE EMPLOYMENT.
``(a) In General.--There shall be allowed as a credit against the
tax imposed by this chapter for the taxable year an amount equal to 10
percent of the qualified increased employment expenditures of the
taxpayer for the taxable year.
``(b) Limitations Based on Amount of Tax.--
``(1) In general.--The credit allowed by subsection (a) for
a taxable year shall not exceed the excess (if any) of--
``(A) the regular tax liability for the taxable
year reduced by the sum of the credits allowable under
subpart A and sections 27, 28, 29, 30, over
``(B) the tentative minimum tax for the taxable
year.
``(2) Carryback and carryover of unused credit.--
``(A) Allowance of credit.--If the amount of the
credit determined under this section for any taxable
year exceeds the limitation provided by paragraph (1)
for such taxable year (hereinafter in this paragraph
referred to as the `unused credit year'), such excess
shall be--
``(i) a rural development investment zone
employment credit carryback to each of the 3
taxable years preceding the unused credit year,
and
``(ii) a rural development investment zone
employment credit carryover to each of the 15
taxable years following the unused credit year,
and shall be added to the amount allowable as a credit
by this section for such years. If any portion of such
excess is a carryback to a taxable year beginning
before January 1, 1993, this section shall be deemed to
have been in effect for such taxable year for purposes
of allowing such carryback as a credit under this
section. The entire amount of the unused credit for an
unused credit year shall be carried to the earliest of
the 18 taxable years to which (by reason of clauses (i)
and (ii)) such credit may be carried, and then to each
of the other 17 taxable years to the extent that,
because of the limitation contained in subparagraph
(B), such unused credit may not be added for a prior
taxable year to which such unused credit may be
carried.
``(B) Limitation.--The amount of the unused credit
which may be added under subparagraph (A) for any
preceding or succeeding taxable year shall not exceed
the amount by which the limitation provided by
paragraph (1) for such taxable year exceeds the sum
of--
``(i) the credit allowable under this
section for such taxable year, and
``(ii) the amounts which, by reason of this
paragraph, are added to the amount allowable
for such taxable year and which are
attributable to taxable years preceding the
unused credit year.
``(c) Qualified Increased Employment Expenditures Defined.--For
purposes of this section--
``(1) In general.--The term `qualified increased employment
expenditures' means the lesser of--
``(A) the increased zone employment expenditures,
or
``(B) the increased aggregate employment
expenditures.
``(2) Increased zone employment expenditures.--The term
`increased zone employment expenditures' means, with respect to
any rural development investment zone, the excess of--
``(A) the qualified wages paid or incurred by the
employer during the taxable year to qualified employees
with respect to such zone, over
``(B) the base period wages of the employer with
respect to such zone.
``(3) Increased aggregate employment expenditures.--The
term `increased aggregate employment expenditures' means the
excess of--
``(A) the qualified wages paid or incurred by the
employer during the taxable year to all employees, over
``(B) the base period wages of the employer.
``(4) Limitation as to qualified wages taken into
account.--The amount of any qualified wages taken into account
under this subsection for any taxable year with respect to any
employee may not exceed 2.5 times the dollar limitation in
effect under section 3306(b)(1) for the calendar year with or
within which such taxable year ends.
``(5) Base period wages.--
``(A) In general.--The term `base period wages'
means, with respect to any rural development investment
zone, the amount of wages paid to employees during the
12-month period preceding the date on which the rural
development investment zone was designated as such
under section 7881, or the date on which the rural
development investment zone is designated under State
law, enacted after January 1, 1981, if earlier, which
would have been qualified wages paid to qualified
employees if such designation had been in effect for
such period.
``(B) Rules of special application.--For purposes
of subparagraph (A)--
``(i) subsection (e)(1) shall be applied by
substituting `12-month period' for `taxable
year' each place it appears, and
``(ii) the dollar limitation taken into
account under paragraph (2) in computing
qualified wages shall be the amount in effect
for taxable year for which the amount of the
credit under subsection (a) is being computed.
``(d) Qualified Wages Defined.--For purposes of this section--
``(1) In general.--Except as otherwise provided in this
subsection, the term `qualified wages' has the meaning given to
the term `wages' by subsection (b) of section 3306 (determined
without regard to any dollar limitation contained in such
section).
``(2) Reduction for certain federally funded payments.--For
purposes of this section the wages paid or incurred by an
employer for any period shall not include the amount of any
Federally funded payments the employer receives or is entitled
to receive for on-the-job training of such individual for such
period.
``(3) Special rules for agricultural and railway labor.--
Under regulations prescribed by the Secretary, rules similar to
the rules of section 51(h) shall apply with respect to services
described in subparagraphs (A) and (B) of section 51(h)(1).
``(e) Qualified Employee Defined.--
``(1) In general.--For purposes of this section, the term
`qualified employee' means an individual--
``(A) at least 90 percent of whose services for the
employer during the taxable year are directly related
to the conduct of the employer's trade or business
located in a rural development investment zone, and
``(B) who performs at least 50 percent of his
services for the employer during the taxable year in a
rural development investment zone.
``(2) Exception for individuals with respect to whom credit
is determined under section 51(a).--The term `qualified
employee' shall not include an individual with respect to whom
any credit for the employer is determined under section 51(a)
for the taxable year (relating to targeted jobs credit).
``(f) Special Rules.--For purposes of this section--
``(1) Application to certain entities, etc.--Under
regulations prescribed by the Secretary, rules similar to the
rules of section 52 (other than subsection (b) thereof) and
section 30(f)(3) (as in effect before the enactment of the Tax
Reform Act of 1986) shall apply.
``(2) Periods of less than a year.--If designation of an
area as a rural development investment zone under section 7881
occurs, expires, or is revoked on a date other than the first
or last day of the taxable year of the taxpayer, or in the case
of a short taxable year--
``(A) the limitation specified in subsection
(c)(2), and the base period wages determined under
subsection (c)(3), shall be adjusted on a pro rata
basis (based upon the number of days), and
``(B) the reduction specified in subsection (d)(2)
and the 90 percent and 50 percent tests set forth in
subsection (e)(1) shall be determined by reference to
the portion of the taxable year during which the
designation of the area as a rural development
investment zone is in effect.
``(g) Phaseout of Credit.--
``(1) In general.--Except as provided in paragraph (2), in
determining the amount of the credit for a taxable year under
subsection (a) with respect to qualified wages paid or incurred
for services performed in a rural development investment zone,
the following percentages shall be substituted for `10 percent'
in subsection (a):
``(A) 7.5 percent in the earlier of--
``(i) the taxable year which includes the
date which is 21 years after the date on which
such rural development investment zone was
designated under section 7881, or
``(ii) the taxable year which includes the
date which is 4 years before the date (if any)
on which such rural development investment zone
ceases to be a zone under section
7881(b)(1)(B),
``(B) 5 percent in the next succeeding taxable
year,
``(C) 2.5 percent in the second next succeeding
taxable year, and
``(D) zero thereafter.
``(2) Revocation of designation.--If the designation of an
area as a rural development investment zone is revoked under
section 7881(b)(2), such area shall continue to be treated as a
rural development investment zone for the period of 3 taxable
years beginning after the date of such revocation except that
only the allowable percentage of the amount of the credit which
would (but for this paragraph) be allowable under this section
for such a year shall be allowed. For purposes of the preceding
sentence, the term `allowable percentage' means the amount
determined in accordance with the following table:
``If the taxable year beginning
The allowable
after the revocation is:
percentage is:
The first such year.................. 75
The second such year................. 50
The third such year.................. 25.
``(h) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section,
including regulations to prevent the abuse of such purposes by denying
the credit allowable under this section to employers which relocate
their businesses in a rural development investment zone while
displacing former employees or which otherwise conduct their businesses
so as to take advantage of the credit allowable by this section without
furthering such purposes.''
(b) No Deduction Allowed.--Section 280C (relating to disallowance
of deductions for certain expenses for which credits are allowable) is
amended by adding at the end thereof the following new subsection:
``(d) Rule for Section 30A Credits.--No deduction shall be allowed
for that portion of the wages or salaries paid or incurred for the
taxable year which is equal to the amount of the credit allowable under
section 30A (relating to the employment credit for rural development
investment zone businesses). This subsection shall be applied under a
rule similar to the rule under the last sentence of subsection (a).''
(c) Technical Amendments Related to Carryover and Carryback of
Credits.--
(1) Carryover of credit.--
(A) Subsection (c) of section 381 (relating to
items of the distributor or transferor corporation) is
amended by adding at the end thereof the following new
paragraph:
``(26) Credit under section 30a.--The acquiring corporation
shall take into account (to the extent proper to carry out the
purposes of this section and section 30A, and under such
regulations as may be prescribed by the Secretary) the items
required to be taken into account for purposes of section 30A
in respect to the distributor or transferor corporation.''
(B) Paragraph (2) of section 383(a) (relating to
special limitations on certain excess credits, etc.) is
amended by redesignating subparagraphs (A) and (B) as
subparagraphs (B) and (C), respectively, and by
inserting before subparagraph (B) (as so redesignated)
the following new subparagraph:
``(A) any unused rural development investment zone
employment credit under section 30A,''.
(2) Carryback of credit.--
(A) Subparagraph (C) of section 6511(d)(4)
(defining credit carryback) is amended by inserting
``any rural development investment zone employment
credit under section 30A(b) and'' after ``means''.
(B) Subsection (a) of section 6411 (relating to
tentative carryback and refund adjustments) is
amended--
(i) by inserting ``by a rural development
investment zone employment credit carryback
under section 30A,'' after ``172(b),'' in the
first sentence, and
(ii) by striking out ``net capital loss''
the first place it appears in the second
sentence and all that follows before ``in the
manner and form'' and inserting in lieu thereof
the following: ``net capital loss, unused rural
development investment zone employment credit,
or unused business credit from which the
carryback results and within a period of 12
months after such taxable year or, with respect
to any portion of a rural development
investment zone employment credit carryback or
business credit carryback attributable to a net
operating loss carryback or a net capital loss
carryback from a subsequent taxable year,
within a period of 12 months from the end of
such subsequent taxable year or, with respect
to any portion of a business credit carryback
attributable to a rural development investment
zone employment credit carryback from a
subsequent taxable year within a period of 12
months from the end of such subsequent taxable
year,''.
(C) Paragraph (1) of section 6411(a) is amended by
inserting ``unused rural development investment zone
employment credit,'' after ``net capital loss,''.
(d) Clerical Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 is amended by adding after the
item relating to section 30 the following new item:
``Sec. 30A. Credit for rural development
investment zone employment.''
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1992.
Subtitle B--Credits for Investment in Tangible Property in Rural
Development Investment Zones
SEC. 211. INVESTMENT TAX CREDIT FOR NEW RURAL DEVELOPMENT INVESTMENT
ZONE CONSTRUCTION PROPERTY.
(a) Allowance of Investment Credit.--Section 46 (relating to amount
of credit) is amended by striking ``and'' at the end of paragraph (2),
by striking the period at the end of paragraph (3) and inserting ``,
and'', and by adding at the end thereof the following new paragraph:
``(4) the rural development investment zone credit.''
(b) Rural Development Investment Zone Credit.--Section 48 is
amended by adding at the end thereof the following new subsection:
``(c) Rural Development Investment Zone Credit.--
``(1) In general.--For purposes of section 46, the rural
development investment zone credit for any taxable year is the
applicable percentage of the basis of each new rural
development investment zone construction property placed in
service during such taxable year.
``(2) Applicable percentage.--
``(A) In general.--The applicable percentage is the
percentage equal to the product of--
``(i) 10 percent, and
``(ii) the taxpayer's employment growth
success percentage for the taxable year in
which the property is placed in service with
respect to the rural development investment
zone in which such property is placed in
service.
``(B) Employment growth success percentage.--For
purposes of subparagraph (A), the employment growth
success percentage with respect to a rural development
investment zone for any taxable year is the percentage
(but not over 100 percent) which--
``(i) the employment growth percentage of
the taxpayer with respect to such zone for such
year, bears to
``(ii) the target employment growth
percentage.
``(C) Employment growth percentage.--For purposes
of subparagraph (B), the employment growth percentage
with respect to a rural development investment zone for
any taxable year is the average annual percentage
which--
``(i) the qualified increased employment
expenditures (as defined in section 30A) with
respect to such zone for each taxable year
beginning after the base period and before the
taxable year for which the credit is being
determined, bears to
``(ii) the base period wages (as defined in
such section) of the employer
``(D) Target growth employment percentage.--For
purposes of this paragraph, the target growth
employment percentage is 5 percent.
``(E) Phaseout of credit as development investment
zone ends.--Subparagraph (A) shall be applied by
substituting the following percentages for 10 percent:
``(i) For the taxable year described in
section 30A(g)(1)(A), 7.5.
``(ii) For the next succeeding taxable
year, 5.
``(iii) For the second succeeding taxable
year, 2.5.
``(iv) For any subsequent taxable year,
zero.''
``(3) New rural development investment zone construction
property.--For purposes of this subsection, the term `new rural
development investment zone construction property' means
property which is--
``(A) located in a rural development investment
zone,
``(B) nonresidential real property, residential
rental real property, or real property which has a
class life of more than 12.5 years (as such terms are
defined in section 168),
``(C) used by the taxpayer predominantly in the
active conduct of a trade or business within a rural
development investment zone, and
``(D) either--
``(i) the construction, reconstruction,
rehabilitation, renovation, expansion, or
erection of which is completed by the taxpayer
during the period the designation as a zone is
in effect under section 7881, or
``(ii) acquired during such period if the
original use of such property commences with
the taxpayer and commences during such period.
``(4) Special rules.--
``(A) Property ineligible if acquired from related
person.--The term `new rural development investment
zone construction property' shall not include property
acquired (directly or indirectly) by the taxpayer from
a person who is related to the taxpayer (within the
meaning of section 465(b)(3)(C)).
``(B) Credit for progress expenditures allowable
but only basis attributable to construction during
period taken into account.--Rules similar to the rules
of section 47(d) shall apply but in applying such rules
in the case of property described in paragraph
(1)(D)(i), there shall be taken into account only that
portion of the basis which is properly attributable to
the activities described in such paragraph carried on
during such period.
``(3) Real estate rental.--For purposes of this section,
ownership of residential, commercial, or industrial real
property within a rural development investment zone for rental
shall be treated as the active conduct of a trade or business
in a rural development investment zone.''
(d) Lodging to Qualify.--Paragraph (2) of section 50(b) (relating
to property used for lodging) is amended--
(1) by striking out ``and'' at the end of subparagraph (C),
(2) by striking out the period at the end of subparagraph
(D) and inserting in lieu thereof ``, and,'' and
(3) by adding at the end thereof the following new
subparagraph:
``(E) new rural development investment zone
construction property.''
(e) Recapture.--Subsection (a) of section 50 (relating to certain
dispositions, etc., of investment credit property) is amended by adding
at the end thereof the following new paragraph:
``(6) Special rules for new rural development investment
zone construction property.--
``(A) In general.--If, during any taxable year,
property with respect to which the taxpayer claimed a
rural development investment zone credit is disposed
of, the tax under this chapter for such taxable year
shall be increased by the amount described in
subparagraph (B).
``(B) Amount of increase.--The increase in tax
under subparagraph (A) shall equal the aggregate
decrease in the credits allowed under section 38 by
reason of section 46(4) for all prior taxable years
which would have resulted solely from reducing the
expenditures taken into account with respect to the
property by an amount which bears the same ratio to
such expenditures as the number of taxable years that
the property was held by the taxpayer bears to the
applicable recovery period under section 168(g).''
(f) Effective Date.--The amendments made by this section shall
apply to periods after December 31, 1992, under rules similar to the
rules of section 48(m) of the Internal Revenue Code of 1986 (as in
effect before its repeal by the Revenue Reconciliation Act of 1990).
Subtitle C--Rural Development Investment Zone Bonds
SEC. 221. RURAL DEVELOPMENT INVESTMENT ZONE BONDS.
Subsection (a) of section 144 (relating to qualified small issue
bonds) is amended by adding at the end thereof the following new
paragraph:
``(13) Rural development investment zone bonds.--
``(A) In general.--Paragraph (12) shall not apply
to any rural development investment zone bond.
``(B) Rural development investment zone bond.--For
purposes of subparagraph (A), the term `rural
development investment zone bond' means any bond issued
as part of an issue if--
``(i) such bond is a qualified small issue
bond (determined without regard to paragraphs
(8)(A) and (12)),
``(ii) 95 percent or more of the net
proceeds of the issue are to provide facilities
in a rural development investment zone, and
``(iii) the issue meets the requirements of
subparagraphs (C), (D), and (E).
``(C) Period to spend proceeds.--
``(i) General rule.--An issue meets the
requirements of this subparagraph only if the
proceeds are spent for the governmental
purposes of the issue within 18 months after
the date of the issuance of the bond.
``(ii) Exception.--Clause (i) shall not
apply to any issue if--
``(I) the issuer pays a penalty
equal to 3 percent of the amount of
available proceeds of the issue which
is not spent for the governmental
purposes of the issue as of the close
of such 18-month period, and
``(II) the issuer redeems such bond
not later than 24 months after the date
of the issuance of the bond.
``(D) Acquisition of land not permitted.--An issue
meets the requirements of this subparagraph only if no
portion of the proceeds of the issue is used to acquire
land (or any interest therein).
``(E) Repayments; effective rate of interest on
loans.--
``(i) In general.--An issue meets the
requirements of this subparagraph only if, with
respect to loans financed by such issue--
``(I) repayments of principal are
used not later than the close of the
1st semiannual period beginning after
the date the repayment is received to
redeem bonds which are part of such
issue, and
``(II) the effective rate of
interest does not exceed the yield on
the issue by more than 0.125 percentage
points.
In determining the effective rate of interest
for purposes of subclause (II), there shall be
taken into account all fees, charges, and other
amounts (other than amounts for any credit
report) borne by the borrower which are
attributable to the loan or the bond issue.
``(ii) De minimis redemptions not
required.--Clause (i) shall not be construed to
require amounts of less than $250,000 to be
used to redeem bonds. The Secretary may by
regulation treat related issues as 1 issue for
purposes of the preceding sentence.
``(F) Penalty.--
``(i) In general.--In the case of property
with respect to which financing was provided
under this paragraph, if, at any time during
the 10-year period beginning on the date such
financing was provided, substantially all of
the use of such property ceases to be in a
rural development investment zone, there is
hereby imposed on the trade or business to
which such financing was provided a penalty
equal to 1.25 percent of so much of the face
amount of all financing provided (whether or
not from the same issue and whether or not such
issue is outstanding) before such cessation to
the trade or business using such property.
``(ii) No penalty by reason of zone
termination.--No penalty shall be imposed under
clause (i) solely by reason of the termination
or revocation of a tax enterprise zone
designation.
``(iii) Exception for bankruptcy.--Clause
(i) shall not apply to any cessation resulting
from bankruptcy.''.
TITLE III--ESTABLISHMENT OF FOREIGN-TRADE ZONES IN RURAL DEVELOPMENT
INVESTMENT ZONES
SEC. 301. FOREIGN-TRADE ZONE PREFERENCES.
(a) Preference in Establishment of Foreign-Trade Zones in
Revitalization Areas.--In processing applications for the establishment
of foreign-trade zones pursuant to an Act entitled ``To provide for the
establishment, operation, and maintenance of foreign-trade zones in
ports of entry of the United States, to expedite and encourage foreign
commerce, and for other purposes'', approved June 18, 1934 (48 Stat.
998), the Foreign-Trade Zone Board shall consider on a priority basis
and expedite, to the maximum extent possible, the processing of any
application involving the establishment of a foreign-trade zone within
a rural development investment zone designated pursuant to section 7881
of the Internal Revenue Code of 1986.
(b) Application Procedure.--In processing applications for the
establishment of ports of entry pursuant to an Act entitled ``An Act
making appropriations for sundry civil expenses of the Government for
the fiscal year ending June thirtieth, nineteen hundred and fifteen,
and for other purposes'', approved August 1, 1914 (38 Stat. 609), the
Secretary of the Treasury shall consider on a priority basis and
expedite, to the maximum extent possible, the processing of any
application involving the establishment of a port of entry which is
necessary to permit the establishment of a foreign-trade zone within a
rural development investment zone (as so designated).
(c) Application Evaluation.--In evaluating applications for the
establishment of foreign-trade zones and ports of entry in connection
with rural development investment zones (as so designated), the
Foreign-Trade Zone Board and the Secretary of the Treasury shall
approve the applications to the maximum extent practicable, consistent
with their respective statutory responsibilities.
TITLE IV--RESPONSIBILITIES OF FEDERAL AGENCIES IN RURAL DEVELOPMENT
INVESTMENT ZONES; REGULATORY FLEXIBILITY
SEC. 401. RESPONSIBILITIES OF FEDERAL AGENCIES IN RURAL DEVELOPMENT
INVESTMENT ZONES.
(a) In General.--To the extent permitted by law and consistent with
its primary mission, each Federal agency (as defined in section 551(1)
of title 5, United States Code) shall seek to provide special
assistance to rural development investment zones designated pursuant to
section 7881 of the Internal Revenue Code of 1986. Such assistance may
include, but is not limited to--
(1) expedited processing,
(2) priority funding,
(3) program set-asides, and
(4) provision of technical assistance in furtherance of the
purposes set forth in section 2 of this Act.
(b) Regulations.--The head of each Federal agency, after
consultation with the Secretary of Agriculture shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this section.
SEC. 402. DEFINITION OF SMALL ENTITIES IN RURAL DEVELOPMENT INVESTMENT
ZONES FOR PURPOSES OF ANALYSIS OF REGULATORY FUNCTIONS.
Section 601 of title 5, United States Code, is amended--
(1) by striking out ``and'' at the end of paragraph (5);
and
(2) by striking out paragraph (6) and inserting in lieu
thereof the following:
``(6) the term `small entity' means--
``(A) a small business, small organization, or
small governmental jurisdiction within the meaning of
paragraphs (3), (4), and (5) of this section,
respectively; and
``(B) any qualified rural development investment
zone business; any governments which designated and
approved an area which has been designated as a rural
development investment zone (within the meaning of
section 7881 of the Internal Revenue Code of 1986) to
the extent any rule pertains to the carrying out of
projects, activities, or undertakings within such zone;
and any not-for-profit development investment carrying
out a significant portion of its activities within such
a zone; and
``(7) the term `qualified rural development investment zone
business' means any person, corporation, or other entity--
``(A) which is engaged in the active conduct of a
trade or business within a rural development investment
zone (within the meaning of section 7881 of the
Internal Revenue Code of 1986); and
``(B) for whom at least 50 percent of its employees
are qualified employees (within the meaning of section
30A(e) of such Code).''
SEC. 403. WAIVER OR MODIFICATION OF AGENCY RULES IN RURAL DEVELOPMENT
INVESTMENT ZONES.
(a) Chapter 6 of title 5, United States Code, is amended by
redesignating sections 611 and 612 as sections 612 and 613,
respectively, and inserting the following new section immediately after
section 610:
``Sec. 611. Waiver or modification of agency rules in rural development
investment zones
``(a) Upon the written request of the governments which designated
and approved an area which has been designated as a rural development
investment zone under section 7881 of the Internal Revenue Code of
1986, an agency is authorized, in order to further the job creation,
community development, or economic revitalization objectives of the
zone, to waive or modify all or part of any rule which it has authority
to promulgate, as such rule pertains to the carrying out of projects,
activities or undertakings within the zone.
``(b) Nothing in this section shall authorize an agency to waive or
modify any rule adopted to carry out a statute or Executive order which
prohibits, or the purpose of which is to protect persons against,
discrimination on the basis of race, color, religion, sex, marital
status, national origin, age, or handicap.
``(c) A request under subsection (a) shall specify the rule or
rules to be waived or modified and the change proposed, and shall
briefly describe why the change would promote the achievement of the
job creation, community development, or economic revitalization
objectives of the rural development investment zone. If a request is
made to an agency other than the Department of the Treasury, the
requesting governments shall send a copy of the request to the
Secretary of the Treasury at the time the request is made.
``(d) In considering a request, the agency shall weigh the extent
to which the proposed change is likely to further job creation,
community development, or economic revitalization within the rural
development investment zone against the effect the change is likely to
have on the underlying purposes of applicable statutes in the
geographic area which would be affected by the change. The agency shall
approve the request whenever it finds, in its discretion, that the
public interest which the proposed change would serve in furthering
such job creation, community development, or economic revitalization
outweighs the public interest which continuation of the rule unchanged
would serve in furthering such underlying purposes. The agency shall
not approve any request to waive or modify a rule if that waiver or
modification would--
``(1) directly violate a statutory requirement (including
any requirement of the Fair Labor Standards Act of 1938 (52
Stat. 1060; 29 U.S.C. 201 et seq.)); or
``(2) be likely to present a significant risk to the public
health, including environmental health or safety, such as a
rule with respect to occupational safety or health, or
environmental pollution.
``(e) If a request is disapproved, the agency shall inform the
requesting governments in writing of the reasons therefor and shall, to
the maximum extent possible, work with such governments to develop an
alternative, consistent with the standards contained in subsection (d).
``(f) Agencies shall discharge their responsibilities under this
section in an expeditious manner, and shall make a determination on
requests not later than 90 days after their receipt.
``(g) A waiver or modification of a rule under subsection (a) shall
not be considered to be a rule, rulemaking, or regulation under chapter
5 of this title. To facilitate reaching its decision on any requested
waiver or modification, the agency may seek the views of interested
parties and, if the views are to be sought, determine how they should
be obtained and to what extent, if any, they should be taken into
account in considering the request. The agency shall publish a notice
in the Federal Register stating any waiver or modification of a rule
under this section.
``(h) In the event that an agency proposes to amend a rule for
which a waiver or modification under this section is in effect, the
agency shall not change the waiver or modification to impose additional
requirements unless it determines, consistent with standards contained
in subsection (d), that such action is necessary.
``(i) No waiver or modification of a rule under this section shall
remain in effect for a longer period than the period for which the
rural development investment zone designation remains in effect for the
area in which the waiver or modification applies.
``(j) For purposes of this section, the term `rule' means (1) any
rule as defined in section 551(4) of this title or (2) any rulemaking
conducted on the record after opportunity for an agency hearing
pursuant to sections 556 and 557 of this title.''
(b) The table of sections for such chapter is amended by
redesignating the items relating to sections 611 and 612 as sections
612 and 613, respectively, and inserting the following new item
immediately after the item relating to section 610:
``611. Waiver or modification of agency
rules in rural development
investment zones.''
(c) Section 601(2) of such title is amended by inserting ``(except
for purposes of section 611)'' immediately before ``means.''.
(d) Section 613 of such title, as redesignated by subsection (a) of
this section, is amended by--
(1) inserting ``(except section 611)'' immediately after
``chapter'' in subsection (a); and
(2) inserting ``as defined in section 601(2)'' immediately
before the period at the end of the first sentence of
subsection (b).
<all>
S 1097 IS----2
S 1097 IS----3
S 1097 IS----4