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Office of the Press Secretary

For Immediate Release                                       May 23, 2000



Today, President Clinton will be joined by Speaker Dennis Hastert in announcing a bipartisan agreement on a New Markets and Community Renewal legislative initiative. This announcement is the outcome of the commitment President Clinton and Speaker Hastert made in Chicago last Nov. to develop a bipartisan legislative initiative on New Markets and revitalizing impoverished communities this year. This initiative will help encourage private sector equity investment in underserved communities throughout the country to ensure that all Americans share in our nation's economic prosperity. The President's New Markets Initiative was originally proposed in President Clinton and Vice-President Gore's FY 2000 budget. President Clinton has highlighted the potential of the nation's New Markets in three separate trips across America to underserved inner city and rural communities like Newark, NJ, Hartford, CT, the Mississippi Delta, Appalachia, and rural Arkansas, and the Pine Ridge Indian Reservation in S. Dakota.


NEW MARKETS INITIATIVES: -- The New Markets Tax Credit. Under this agreement, this credit will spur $15 billion in equity investment and will be available to taxpayers who invest in certain privately-managed investment funds and institutions, which, in turn, use these funds to finance businesses in low- and moderate-income communities. The proposal would provide a 30-percent credit (in present-value terms) for investments in a wide range of investment vehicles. Eligible investment companies include community development banks and other CDFI's, venture funds, and financial institutions such as the new investment company programs.

EMPOWERMENT ZONES: -- Expanded To 40 EZs & Strengthened EZs. President Clinton and Vice President Gore proposed and signed Empowerment Zone legislation in 1993 establishing 9 EZs across the country -- today there are 31 across America. This agreement: -- Designates a third round of 9 new Empowerment Zones (for a total of 40). -- Expands the Empowerment Zone tax incentives to form strategic partnership with all existing EZs so that all can utilize the 20% EZ wage credit, additional business expensing, and other incentives. -- Commits $200 million in discretionary investment this year for existing EZs. -- Establishes zero-rate capital gains rollover for investments within the EZ. -- A 60% capital gains exclusion for investment in small businesses. -- D.C. tax incentives would also be extended to 2009.

RENEWAL COMMUNITIES: -- The creation of 40 Renewal Communities (32 urban, 8 rural), designated by the U.S. Dept. of Housing and Urban Development with targeted, pro-growth tax benefits, regulatory relief,. The tax benefits of Renewal Communities would address key hurdles facing small businesses when they are just getting started -- raising capital and maintaining cash flow. Key incentives aimed at spurring investment in Renewal Communities include: -- Zero Capital Gains Rate on the sales of assets held for more than 5 years. -- Increased Expensing for Small Businesses (up to $35,000 more than in current law for equipment). -- 15% Employment Wage Credit (up to $10,000 ) for each worker. -- Commercial Revitalization deductions for taxpayers who rehabilitate or revitalize buildings in a Renewal Community.

In addition, the New Market/Renewal Communities Agreement includes these 2 provisions: