THE WHITE HOUSE

Office of the Press Secretary

             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 overseas.

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|            The President's Trip to America's New Markets             |
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| 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.                                                |
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| -    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.                   |
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| -    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.                    |
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| -    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.       |
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| - 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.                          |
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| - 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.                                                |
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| - 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 |

| sector workforce investments in disadvantaged youth.                 |
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           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 Enterprise Communities.
• 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 underserved areas.
• 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 years.
• 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.

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