President Clinton's Challenge To Invest In
America's New Markets
The President's New Markets Tour will Help Direct the Flow of
Opportunity and Investment into Some of the Most Stubborn Pockets of
Poverty in our Nation. The President will not do so with big-government
solutions more appropriate for an earlier time. Instead, he will expand
on the innovative approach to community empowerment he and the Vice
President have pioneered for nearly seven years. He will harness the
entrepreneurial spirit and enlightened self-interest of the private
sector to bring new capital and jobs to communities that the prosperity
of the past 6 - years has passed by. The President will lead a
bipartisan delegation of corporate CEOs, Members of Congress and Cabinet
Secretaries on an unprecedented tour of communities in great need of
capital and support. This four-day tour through America will shine a
spotlight on the great potential of these untapped markets.
The President Will Be Traveling to the Following Communities Across
the Nation. (1) Annville, KY/Hazard, KY (Appalachia); (2) Clarksdale,
Mississippi; (3) East St. Louis, IL; (4) Pine Ridge Indian Reservation,
SD; (5) Phoenix, AZ; (6) Los Angeles, CA/Anaheim, CA On this trip, the
President will mobilize a large and broad array of private-sector
investments in our untapped domestic markets; highlight for the nation
that these investments represent wise business decisions -- especially
at this time of rapid economic growth, when firms are eagerly searching
for new workers and new markets.
America is Enjoying a Time of Remarkable Economic Expansion.
Because this expansion has been so strong and so sustained, the benefits
of economic growth have flowed to millions of people once cut off from
the economic mainstream. Wages are rising and welfare rolls are
shrinking. Unemployment has dropped from 7.2 percent to just 4.2
percent - the lowest it's been since 1970.
Too Many Communities in America where Unemployment is Too High and
Opportunity is Too Scarce. In our inner cities, small- and medium-sized
towns, rural areas, and Native American communities, there is consumer
market that is grossly underdeveloped. There will never be a better
time for America to develop this market.
Attracting New Investments. Later this month, the President will
announce legislation that - through new tax incentives and investment
tools -- will make it more attractive for corporate America to search
for opportunities in places where they have rarely, if ever, looked
before. These underserved areas or New Markets include economically
devastated communities throughout the country. The President's New
Markets initiative will provide to investors the same tax credits and
loan guarantees already provided to investors in emerging economies
| The President's Trip to America's New Markets |
| Below is a short profile on each of the communities the President |
| will visit. These communities represent a broad range of |
| communities that reflect the cultural and geographic diversity of |
| the country. Each community allows the President to call attention |
| to the need for access to capital in economically distressed areas, |
| as well as identify the economic potential for investment in these |
| under-served markets. |
| - Annville/Hazard, Kentucky: The President is traveling to |
| Kentucky to call attention to the need for investment in Appalachia |
| and new market opportunities in these rural areas. |
| - Clarksdale, Mississippi: The President is traveling to |
| Clarksdale - a rural community in the Mississippi Delta - to focus |
| on investment in the Delta and rural new markets. |
| - East St. Louis: East St. Louis is an empowerment zone |
| community. The President is traveling to East St. Louis to call |
| attention to the economic problems in former industrial centers and |
| new market opportunities in urban enterprise zone communities. |
| - Pine Ridge Indian Reservation, South Dakota President Clinton |
| will travel to Pine Ridge to call attention to the lack of private |
| sector investment in Native American communities. Pine Ridge is |
| the first Enterprise Zone on a reservation. |
| - South Phoenix, AZ: South Phoenix is historically one of the |
| poorest neighborhoods in the city. The President is traveling to |
| South Phoenix - an Enterprise Community with a large Hispanic |
| population - to call attention to the need for access to capital in |
| Hispanic communities. |
| - Los Angeles/Anaheim, CA: The President is traveling to LA to |
| call attention to the need to provide job training to disadvantaged |
| youth, and the new market potential in tapping a new, productive |
| workforce. The President will travel to Anaheim to encourage private |
BACKGROUND ON THE CLINTON-GORE ADMINISTRATION'S
COMMUNITY DEVELOPMENT RECORD
PRESIDENT CLINTON AND VICE PRESIDENT GORE'S SIX-YEAR RECORD
OF PROMOTING GROWTH AND OPPORTUNITY IN AMERICA'S COMMUNITIES
Since 1993, President Clinton and Vice President Gore have been
committed to tapping the potential of America's urban and rural
communities. They have a demonstrated record of creating new
initiatives and expanding existing initiatives to promote community and
economic development. The Clinton-Gore Administration has worked with
the private sector, states, and localities to help revitalize America's
communities by bringing capital, jobs, and opportunity to distressed
areas and cleaning up the urban environment. President Clinton and Vice
President Gore have created or expanded the following initiatives over
the last six years:
Helping to Bring Private Enterprise and Capital to Distressed Areas.
The Clinton-Gore Administration has re-newed the commitment of the
Federal government to help bring private enterprise into underserved
communities and improve access to capital for low-income households,
minorities, and traditionally underserved borrowers.
125 Empowerment Zones and Enterprise Communities. The Clinton
Administration has announced 105 EZs and ECs across the country. This
effort was proposed by President Clinton and passed by Congress in 1993.
Since then, the EZ/EC effort has generated more than $2 billion of new
private sector investment in community development activities. The
President also has signed into law a second round of EZs -- 15 new urban
and 5 new rural zones -- which will qualify for tax incentives, small
business expensing, and private activity bonds. In FY 1999, President
Clinton and Congress provided first-year funding of $55 million for the
new EZs, and $5 million in first-year funding for 20 new rural
Enterprise Communities announced in January.
Strengthened and Simplified the Community Reinvestment Act (CRA). In
April 1995, the Clinton Administration reformed the CRA regulations to
emphasize performance. According to the National Community Reinvestment
Coalition (NCRC), the private sector has pledged more than $1 trillion
going forward in loans to distressed communities - and more than 95
percent of these financial commitments have been made since 1992. Banks
made $18.6 billion in community development loans in 1997 alone.
Lending to minority and low-income borrowers is also on the rise.
Created the Community Development Financial Institutions Fund (CDFI).
Proposed and signed into law by the President in 1994, the CDFI fund,
through grants, loans, and equity investments, is helping to create a
network of community development financial institutions in distressed
areas across the United States. In FY99, funding was increased 19
percent to $95 million from $80 million.
The Economic Development Initiative (EDI) and Section 108 Loan
Guarantee. EDI grants are used to infuse capital into community
development projects, enhancing the debt financing provided by the
Section 108 loan guarantee program. Together, these programs support
critical economic development in distressed communities. Estimated jobs
supported by EDI and the Section 108 loan guarantee have grown by
300,000 from 1994 to 1998. During this time period EDI and the Section
108 loan guarantee programs have funded $3.5 billion for more than 650
separate project commitments.
Helping to Bring Jobs and Opportunity to Distressed Areas. A
cornerstone of the Administration's community empowerment agenda is
helping to bring jobs and opportunity back to distressed areas:
$3 Billion Welfare-to-Work Jobs Initiative. The Clinton
Administration fought for a $3 billion welfare-to-work jobs initiative
as part of the 1997 Balanced Budget Agreement. The Administration is
implementing these welfare-to-work grants directly to both cities and
states for allocating additional resources to help long-term,
hard-to-serve welfare recipients find and keep jobs.
Welfare-to-Work Tax Credit and Work Opportunity Tax Credit. The
Welfare-to-Work Tax Credit, enacted in the 1997 Balanced Budget
Agreement, provides a credit equal to 35 percent of the first $10,000 in
wages in the first year of employment, and 50 percent of the first
$10,000 in wages in the second year, to encourage the hiring and
retention of long-term welfare recipients. This credit complements the
Work Opportunity Tax Credit, which expands eligible businesses to
include those who hire young adults living in Empowerment Zones and
Community Development Block Grant (CDBG) Expansion. President
Clinton's FY 2000 budget included an expansion of CDBG. The final budget
increases funding for CDBG from $4.750 billion in FY 1999 to $4.775
billion in FY 2000, a $25 million expansion this year.
Cleaning Up the Urban Environment. The Clinton Administration has
launched a landmark effort, including the Brownfields Tax Incentive, to
clean up and redevelop Brownfields sites. In total, the Brownfields
action agenda has marshaled funds to clean up and redevelop up to 5,000
properties, leveraging between $5 billion and $28 billion in private
investment and creating and supporting 196,000 jobs.
PRESIDENT CLINTON AND VICE PRESIDENT GORE ARE BUILDING ON THEIR PAST
ACHIEVEMENTS THROUGH A NUMBER OF NEW INITIATIVES THIS YEAR.
While Americans are enjoying the fruits of our strong economy, we still
need to do more to improve conditions in underserved urban and rural
communities. To address this need, President Clinton and Vice President
Gore are working on several fronts.
The New Markets Initiative. President Clinton's FY 2000 balanced
budget provides a new initiative designed to create the conditions for
economic success by prompting approximately $15 billion in new
investment in urban and rural areas through:
The New Markets Tax Credit. To help spur $6 billion in new equity
capital, this tax credit is worth up to 25 percent for investments in a
wide range of vehicles serving these communities, including community
development banks, venture funds, and the new investment company
programs created by this initiative (see below). A wide-range of
businesses could be financed by these investment funds, including small
technology firms, inner-city shopping centers, manufacturers with
hundreds of employees, and retail stores.
America's Private Investment Companies (APICs). Just as America's
support for the Overseas Private Investment Corporation helps promote
growth in emerging markets abroad, APICs will encourage private
investment in this country's untapped markets, by leveraging up to $1.5
bilion in investment in new development projects and larger businesses
that are expanding or relocating in inner city and rural areas.
SBIC's Targeted to New Markets. For over 40 years, SBA's Small
Business Investment Company (SBIC) program has provided roughly $20
billion in equity and debt financing to more than 85,000 different
companies, helping them to grow from small businesses to household
names, like AOL and Staples. However, too little of the capital
invested has benefited our cities and rural distressed communities. SBA
now will offer more flexibility and new financing terms for SBICs that
invest in underserved areas.
New Markets Venture Capital (NMVC) Firms. NMVC firms will make both
capital and expert guidance available to small business entrepreneurs in
inner-city and rural areas. Ten to twenty NMVC firms are planned. SBA
will match the equity and technical assistance of private investors.
New Markets Lending Companies (NMLC). For the first time in many
years, SBA will approve approximately 10 new non-bank lenders --- firms
authorized to originate loans under SBA's largest loan program - the
7(a) General Business Loan Guaranty program. Under the 7(a) program,
SBA guarantees up to 80 percent of a loan made by a lender to a
creditworthy small businesses that cannot otherwise secure financing on
reasonable terms. Firms must have a strategy to target lending to
Microenterprise Lending and Technical Assistance. Microenterprise
initiatives in the FY 2000 budget include the proposed PRIME Act, under
which the CDFI Fund will provide microenterprise technical assistance
through competitive grants to microenterprise development organizations
that focus on low-income entrepreneurs. President Clinton's and Vice
President Gore's proposal also includes a doubling of support for
technical assistance in SBA's Microloan Program and a doubling of
support for SBA lending to leverage over $75 million in new
microlending. The microenterprise strategy will also involve new
funding for Individual Development Accounts (IDAs) and for SBA's
One-Stop Capital Shops.
Regional Connections. Regional Connections will provide competitive
funding to States and partnerships of local governments to develop and
implement new, locally driven "smarter growth" strategies that create
more livable communities by addressing economic and community
development needs across jurisdictional lines. Regional Connections, as
part of the Administrations' Livability Agenda, will complement existing
federal programs that respond to growth and investment patterns. The
budget proposes funding at $50 million in FY 2000.
The Economic Development Initiative and Section 108 Loan Guarantee
Program. This program supports critical economic development in
distressed communities in conjunction with the Section 108 loan
guarantee program to help bring economic development to residents. In FY
2000 many projects will be eligible to participate in the Community
Empowerment Fund Trust, a pilot program, which will enable the pooling
of loans and the creation of a private sector secondary market for
economic development loans. The CEF specifically targets Welfare-to-Work
and City-Suburb Business Connections, building upon the success of HUD's
EDI and Section 108 loan guarantee program.
Empowerment Zones and Enterprise Communities. The FY 2000 Budget
proposes mandatory funding for ten years: $150 million a year for urban
EZs and Strategic Planning Communities; $10 million a year for rural
EZs; and $5 million a year for rural ECs.
Community Development Financial Institutions (CDFI) Fund. The budget
proposes to expand funding for the CDFI Fund to $125 million--a $30
million increase from 1999. The Fund increases the availability of
credit, investment capital, financial services, and other development
services in distressed communities.
BusinessLINC. The President's FY 2000 budget includes seed money to
expand Business LINC --- an innovative public-private partnership
launched by Vice President Gore --- for new markets in economically
distressed communities. BusinessLINC (Learning, Information, Networking
and Collaboration) is designed to encourage large businesses to work
with small business owners and entrepreneurs.
Low-Income Housing Tax Credit. Since its creation in 1986, the
Low-Income Housing Tax Credit (LIHTC) has given states tax credits of
$1.25 per capita to allocate to developers of affordable housing. While
building costs have increased 40 percent in the last decade, the amount
of the credit has not been adjusted for inflation. Therefore, President
Clinton and Vice President Gore propose to increase the cap on the LIHTC
from $1.25 per capita to $1.75 per capita -- restoring the value of the
credit to its 1986 level and helping to an create additional
150,000-180,000 new low-income rental housing units over the next five
Play-by-the-Rules. This program will allow renters with solid payment
track records to own a home. The FY 2000 Budget proposes a second round
of $15 million for this initiative.
Helping America's Communities Redevelop Abandoned Buildings.
Redevelopment of Abandoned Buildings, as part of the Administrations'
"Livability Agenda," would attack one of the primary causes of blight in
urban neighborhoods: abandoned apartment buildings, single-family homes,
warehouses, office buildings, and commercial centers. Under the
proposal, HUD will provide $50 million in competitive grant funds in
FY2000 to local governments to support the demolition or deconstruction
of blighted, abandoned spaces.