Community Economic Assistance Act of 2017

“U–1 Community economic assistance zones

“1397G. Designation of community economic assistance zones

“(a) In general—For purposes of this title, the term community economic assistance zone means any area—

“(1) which is nominated by the governor or governors of the State or States in which it is located for designation as a community economic assistance zone (hereafter in this section referred to as a “nominated area”), and

“(2) which the Secretary designates as a community economic assistance zone, after consultation with—

“(A) the Secretary of Labor, and

“(B) in the case of an area on an Indian reservation, the Secretary of the Interior.

“(b) Designation based on loss of employment, etc

“(1) In general—Except as otherwise provided in this section, a nominated area designated as a community economic assistance zone under this subsection shall be—

“(A) a nominated area—

“(i) where—

“(I) a facility is located with respect to which a notice was issued after December 31, 2014, under section 3 of the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2102) with respect to 250 or more employees, or

“(II) where 100 or more employees with respect to which such a notice was issued reside,

“(ii) where the number of employees—

“(I) with respect to which the notice was issued (in the case of an area described in clause (i)(I)), or

“(II) the number of employees who are described in clause (i)(II) (in any other case),

“(iii) where a loss of employment satisfying the requirements applicable to such notice under clauses (i) and (ii) actually occurs,

“(B) a nominated area which the Secretary, in consultation with the Secretaries of Labor and Commerce, determines has been or will be seriously impacted by changes in trade through loss of employment (directly or indirectly), taking into account the number of individuals certified as eligible to apply for trade adjustment assistance under chapter 2 of title II of the Trade Act of 1974 or who are receiving benefits under such chapter, or

“(C) a nominated area which satisfies not less than two of the conditions described in paragraph (2).

“(2) Conditions described—The conditions described in this subparagraph are the following:

“(A) The area is designated by the governor of the State as an energy-transitioning community.

“(B) The area, at the time of nomination—

“(i) has a composite index value, as determined by the Appalachian Regional Commission, among the lowest 10 percent of counties in the State,

“(ii) is a low-income community (as defined in section 45D(e)), or

“(iii) has an unemployment rate which is 8 percent or greater, or which is 6.5 percent or greater and is equal to or greater than 125 percent of the average unemployment rate of the State.

“(C) Tax revenues collected in the area decreased, not due to any changes in tax law or policy, by at least—

“(i) 7 percent as compared to the preceding year, or

“(ii) an average of 10 percent over the preceding 3 years.

“(D) The number of business establishments in the area decreased significantly during the preceding year or on average during the preceding 3 years, as determined by the Secretary.

“(E) The area is among the 10 percent of counties nationally which have experienced the largest increases in unemployment and the largest decreases in manufacturing over the preceding 3 years, as determined by the Secretary.

“(3) Energy-transitioning communities—For purposes of paragraph (2)(A)—

“(A) In general—The term energy-transitioning communities means those nominated areas where the Secretary of Labor, in consultation with the Secretary of Energy, determines there is a high concentration of jobs in industries or at facilities directly affected by an energy source transition.

“(B) Energy source transition—For purposes of subparagraph (A), the term energy source transition means—

“(i) a situation in which the occurrence of a shift from the use of a type of fossil fuel to use of other sources of energy is followed by the closing of a facility, or layoff of employees at a facility, that mines, extracts, produces, processes, or utilizes fossil fuels to generate electricity, and

“(ii) another situation as determined by the Secretary of Labor, in consultation with the Secretary of Energy, which is indicative of new demands or burdens on affected employees or employees in affected industries due to a significant change in the source of energy used by the facility or industry involved.

“(4) Eligibility criteria—A nominated area shall be eligible for designation under this subsection only if it meets the requirements of section 1392(a)(1) and subparagraphs (A), (B), and (C) of section 1392(a)(3).

“(c) Period for which designation is in effect—Any designation of an area as a community economic assistance zone shall remain in effect during the period beginning on January 1, 2017, and ending on the date that is 5 years after the latest designation of such area as a community economic assistance zone.

“(d) Limitation relating to State population—An area shall not be designated as a community economic assistance zone under subsection (b) if such designation would result in more than 10 percent of the population of the State residing in such a zone (determined by aggregating all such zones within the State).

“(e) Coordination with treatment of renewal communities, empowerment zones, and enterprise communities—For purposes of this title, the designation under any other provision of this title of any area as a renewal community, empowerment zone, or enterprise community shall cease to be in effect as of the date that the designation of any portion of such area as a community economic assistance zone takes effect.

“1397H. Incentives for community economic assistance zones

“(a) Employment credit

“(1) In general—Section 1396 shall be applied—

“(A) by treating any reference to an empowerment zone as a reference to a community economic assistance zone,

“(B) by treating any reference to an employer as a reference to a qualified employer, and

“(C) without respect to subsection (d)(1)(B) thereof.

“(2) Qualified zone employer—For purposes of paragraph (1), with respect to a taxable year, the term qualified employer means any employer other than an excepted taxpayer described in subsection (g).

“(b) Increase in expensing under section 179

“(1) In general—Section 1397A shall be applied—

“(A) by treating any reference to an empowerment zone as a reference to a community economic assistance zone,

“(B) by treating any reference to an enterprise zone business as a reference to a community economic assistance zone business,

“(C) by treating any reference to qualified zone property as a reference to qualified community economic assistance zone property, and

“(D) by substituting “20 percent of such limitation” for “$35,000” in subsection (a)(1)(A) thereof.

“(2) Community economic assistance zone business—For purposes of this subsection, the term community economic assistance zone business means—

“(A) any business entity, and

“(B) any proprietorship,

“(c) Nonrecognition of gain on rollover of community economic assistance zone investments

“(1) In general—In the case of any sale of a qualified community economic assistance zone asset held by the taxpayer for more than 1 year and with respect to which such taxpayer elects the application of this subsection, gain from such sale shall be recognized only to the extent that the amount realized on such sale exceeds—

“(A) the cost of any qualified community economic assistance zone asset (with respect to the same zone as the asset sold) purchased by the taxpayer during the 60-day period beginning on the date of such sale, reduced by

“(B) any portion of such cost previously taken into account under this subsection.

“(2) Definitions and special rules—For purposes of this subsection—

“(A) Qualified community economic assistance zone asset—The term qualified community economic assistance zone asset means any property which would be a qualified community asset (as defined in section 1400F(b)) if in section 1400F(b)—

“(i) “after December 31, 2016” were substituted for “after December 31, 2001, and before January 1, 2010” each place it appears,

“(ii) “after December 31, 2016” were substituted for “before January 1, 2010” in paragraph (4)(B)(i) thereof,

“(iii) references to community economic assistance zone businesses (as defined in subsection (b)(2) of this section) were substituted for references to renewal community businesses, and

“(iv) references to community economic assistance zones were substituted for references to renewal communities.

“(B) Other rules—The rules of paragraphs (2), (3), (4), and (5) of section 1397B(b) shall apply—

“(i) by treating any reference to an enterprise zone business as a reference to a community economic assistance zone business (as defined in subsection (b)(2)),

“(ii) by treating any reference to a qualified empowerment zone asset as a reference to a qualified community economic assistance zone asset, and

“(iii) by treating any reference to subsection (a) of section 1397B as a reference to paragraph (1) of this subsection.

“(3) Excepted taxpayers—Paragraph (1) shall not apply in the case of an excepted taxpayer described in subsection (g).

“(d) 3–Year carryback of net operating losses

“(1) In general—If a portion of any net operating loss of a taxpayer for any taxable year is a qualified community economic assistance zone loss, section 172(b)(1) shall be applied with respect to such portion—

“(A) by substituting “3 taxable years” for “2 taxable years” in subparagraph (A)(i), and

“(B) by not taking such portion into account in determining any eligible loss of the taxpayer under subparagraph (E) thereof for the taxable year.

“(2) Qualified community economic assistance zone loss—For purposes of paragraph (1), the term qualified community economic assistance zone loss means the portion of the net operating loss (as defined in section 172(c)) for the taxable year which is attributable to deductions arising from—

“(A) losses in a community economic assistance zone,

“(B) expenses paid or incurred within a community economic assistance zone, and

“(C) expenses paid or incurred with respect to property placed in service in a community economic assistance zone,

“(3) Excepted taxpayers—Paragraph (1) shall not apply in the case of an excepted taxpayer described in subsection (g).

“(e) Credit to holders of community economic support bonds

“(1) In general—With respect to a taxpayer holding a community economic support bond, such bond shall be treated in the same manner as a Gulf tax credit bond under section 1400N(l), applied—

“(A) by substituting “community economic support bond” for “Gulf tax credit bond” each place it appears in paragraphs (1), (2), (3), and (7) thereof, and

“(B) without regard to paragraphs (4) and (5) thereof.

“(2) Community economic support bond—For purposes of this subsection—

“(A) In general—The term community economic support bond means any bond issued as part of an issue if—

“(i) the bond is issued by a State in which a community economic assistance area (as defined in section 45D(f)(3)(B)) is located,

“(ii) 95 percent or more of the proceeds of such issue are to be used in accordance with the priorities outlined in the community economic development plan approved under section 6 of the Community Economic Assistance Act of 2017 to implement the strategies and objectives under such plan described in section 6(3) of such Act,

“(iii) the Governor of such State designates such bond for purposes of this subsection,

“(iv) the bond is a general obligation of such State and is in registered form (within the meaning of section 149(a)),

“(v) the maturity of such bond does not exceed 15 years, and

“(vi) the bond is issued after the designation of such zone goes into effect under section 1397G, and before such designation ends under section 1397G(c).

“(B) Aggregate limit on bond designations—The maximum aggregate face amount of bonds which may be designated under this subsection by the Governor of a State shall not exceed $100,000,000 per community economic assistance area located in the State.

“(C) Special rules relating to arbitrage—A bond which is part of an issue shall not be treated as a community economic support bond unless, with respect to the issue of which the bond is a part, the issuer satisfies the arbitrage requirements of section 148 with respect to proceeds of the issue and any loans made with such proceeds.

“(3) Excepted taxpayers—Paragraph (1) shall not apply in the case of an excepted taxpayer described in subsection (g).

“(f) Qualified community economic assistance zone property—For purposes of this section, the term qualified community economic assistance zone property means any property which would be qualified zone property for purposes of section 1397D if such section were applied by substituting “community economic assistance zone” for “empowerment zone” each place it appears.

“(g) Taxpayers excepted—With respect to any community economic assistance zone, an excepted taxpayer described in this subsection is—

“(1) an entity that operates a facility in such zone with respect to which a notice under section 3 of the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2102) was issued, if such notice caused the region to be designated as such a zone, and

“(2) any entity that would be treated as a single employer with such an entity under the rules of subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414.”

“(9) Qualified rebuilt or retrofitted community economic assistance zone property

“(A) In general—The term qualified rebuilt or retrofitted community economic assistance zone property means property placed in service in a community economic assistance zone by a qualified taxpayer during the period the designation of such zone is in effect under section 1397G which relates to the rebuilding or retrofitting of—

“(i) any qualified community economic assistance zone property (as defined in section 1397H(f)), and

“(ii) any residential real property located in a community economic assistance zone which is acquired by the taxpayer by purchase (as defined in section 179(d)(2)) during such period,

“(B) Qualified taxpayer—For purposes of this paragraph, the term qualified taxpayer means a taxpayer other than an excepted taxpayer (within the meaning of section 1397H(g)).”

“(3) Allocation of limitation for calendar years after 2016

“(A) In general—In the case of any calendar year described in paragraph (1)(G) beginning after December 31, 2016, the limitation under paragraph (1) shall be increased by $500,000,000, and such increase shall be allocated as provided in paragraph (2) among qualified community development entities located in community economic assistance areas.

“(B) Community economic assistance area—For purposes of subparagraph (A), the term community economic assistance area means an area which—

“(i) is a community economic assistance zone, and

“(ii) has a community economic development plan approved under section 6 of the Community Economic Assistance Act of 2017.

“(C) Use of increase—Any amount of such increase which is so allocated to such an entity shall be used only in accordance with the priorities outlined in such community economic development plan to implement the strategies and objectives under such plan described in section 6(3) of Community Economic Assistance Act of 2017.”