Prepared by the Staff of the Joint Committee on Taxation

TITLE I. COMMUNITY RENEWAL PROVISIONS

A. Renewal Communities Provisions

The bill authorizes the Secretary of HUD to designate up to 40 "renewal communities" from areas nominated by States and local governments. At least 12 of the designated renewal communities must be in rural areas. In general, nominated areas are ranked based on a formula that takes into account the area's poverty rate, median income, and unemployment rate. A nominated area that is designated as a renewal community is eligible for the following tax incentives: (1) a zero-percent rate for capital gain from the sale of qualifying assets; (2) a 15-percent wage credit to employers for the first $10,000 of qualified wages; (3) a "commercial revitalization deduction" that allows taxpayers (to the extent allocated by the appropriate State agency for the period after December 31, 2001) to deduct either (a) 50 percent of qualifying expenditures for the taxable year in which a qualified building is placed in service, or (b) all of the qualifying expenditures ratably over a 10-year period beginning with the month in which such building is placed in service; (4) an additional $35,000 of section 179 expensing for qualified property; and (5) an expansion of the WOTC with respect to individuals who live in a renewal community. The 40 renewal communities must be designated by January 1, 2002, and the resulting tax benefits will be available for the period beginning on January 1, 2002, and ending December 31, 2009.