By Larry Jones
July 1, 2002

Members of the Urban Economic Policy Committee met in Madison on June 15 and were briefed on a number of key issues including New Market Tax Credits, the American Community Survey and a local sovereignty preemption issue in pending trade legislation. Guest speakers from Washington discussed how the Treasury Department's new tax credits initiative is benefitting cities, how the Census Bureau's new survey is improving the data that cities depend on for planning purposes, and the status of pending trade proposal that would preempt local authority. Following each presentation, Berkeley Mayor and Committee Chair Shirley Dean led committee members in a lively discussion of each issue before considering and unanimously adopting five resolutions.

Issues and Speakers

New Markets Tax Credits—The first speaker was Tony T. Brown, director of the Community Development Financial Institutions Fund (CDFI) at the U.S. Department of Treasury, who discussed the federal government's New Markets Tax Credit program. He told members that the program was enacted in 1999 to help local communities stimulate economic growth in distressed neighborhoods. The program will provide tax incentives to generate $15 billion in new private capital which will be available through community development entities (CDE) such as community development banks and community development corporations.

These entities must first apply to CDFI to become certified and awarded New Markets Tax Credits, which will be allocated based on objective criteria. Once an entity is awarded tax credit allocations, it will be authorized to allocate its share to private equity investors who invest in the CDE. For their investment, investors will be able to claim a 5 percent tax credit on the investment amount for the first three years, and 6 percent for each of the next four years. Overall, a 39 percent tax credit is available to investors over the life of the investment. The equity generated by the CDE will be used to invest in or make loans to qualified businesses that expand or locate in distressed neighborhoods. Typical businesses may include inner-city sBrown told members that so far 312 entities have been certified as community development entities, the application process began June 11 and the deadline for receiving applications is August 29.

Brown told members that so far 312 entities have been certified as community development entities, the application process began June 11 and the deadline for receiving applications is August 29.

American Community Survey—Assistant Undersecretary of Commerce E.R. Gregory discussed the American Community Survey, an initiative launched by the U.S. Census Bureau to provide local communities more up-to-date and accurate data to help them better plan to address the needs of their citizens. The survey will be conducted every year to determine how social and economic conditions are changing in states and local communities. Instead of providing a snapshot of states and local communities every 10 years, as was the case with the census long form, the American Community Survey will replace the census long form and provide the same information annually. Information is collected for example on household members, relationships, age, race, income, educThe American Community Survey is currently being conducted in 31 sites across the nation and in two nationwide tests involving 700,000 households. Plans call for the survey to make information available to areas with populations larger than 65,000 beginning in 2004; to areas with a population between 20,000 and 65,000 beginning 2006; and to areas with populations smaller than 20,000 beginning 2008.

The American Community Survey is currently being conducted in 31 sites across the nation and in two nationwide tests involving 700,000 households. Plans call for the survey to make information available to areas with populations larger than 65,000 beginning in 2004; to areas with a population between 20,000 and 65,000 beginning 2006; and to areas with populations smaller than 20,000 beginning 2008.

Local Sovereignty in Pending Trade Legislation—John Echeverria told members of the committee that the so-called "fast track" trade bill had cleared both Houses of Congress. There are significant differences between the two versions. A conference committee composed of members from both Houses is expected to meet in the near future to see if a compromise can be reached. Under the House version, the President would be given "fast track" negotiating authority. Congress would be required to take swift action on trade deals. Members would not be allowed to amend trade deals. They would only be able to vote in favor or against each deal. The Senate version differs in that it combines a number of trade proposals with the fast track bill. The Hose Included in both versions of the bill is an investor protection provision which would give foreign investors the exclusive right to sue the U.S. government before an international arbitration panel for any federal, state or local action that can be viewed as a trade barrier, including laws and regulations that restrict the use of property to protect the environment and public health and safety. Not only does this provision preempt state and local sovereignty but it gives foreign investors operating in the United State greater rights than U.S. investors. Although, the Senate version includes language that state that foreign investors will be given no greater rights than U.S. investors, there is no enforcement mechanism to ensure that this is impleResolutions

Included in both versions of the bill is an investor protection provision which would give foreign investors the exclusive right to sue the U.S. government before an international arbitration panel for any federal, state or local action that can be viewed as a trade barrier, including laws and regulations that restrict the use of property to protect the environment and public health and safety. Not only does this provision preempt state and local sovereignty but it gives foreign investors operating in the United State greater rights than U.S. investors. Although, the Senate version includes language that state that foreign investors will be given no greater rights than U.S. investors, there is no enforcement mechanism to ensure that this is impleResolutions

Resolutions

State and Local Sales Tax Rates urges representatives of states participating in the Streamlined Sales Tax Project to retain recommendations adopted last April that will allow local governments to continue collecting taxes on some items that their states do not tax. The Project is a multi-state effort launched to develop a tax simplification plan that states will be able to adopt to reform their sales and use taxes to make them uniform, simple and easy for all merchants to collect taxes, particularly out-of-state merchants.

The American Community Survey expresses The United States Conference of Mayors support for the American Community Survey, which will offer an unparalleled source of timely, relevant and accurate information about the needs of local residents and the condition of local communities; and urges Congress to fully fund the ACS at the level requested by the Administration for 2003 and at adequate levels in future years.

International Trade urges House and Senate conferees on the Trade Promotion Authority Act to add language to the bill to protect state and local sovereignty and ensure that foreign investors operating in the United States are given no greater rights than U.S. investors are accorded under the U.S. Constitution.

U.S. Metro Economy Reports expresses mayors support for the continued development of The U.S. Conference of Mayors U.S. Metro Economy Reports, which release annually a new national economic measure called the "Gross Metropolitan Product" for the nation's 319 metro areas; and encourages mayors and others to disseminate the report to promote regional economic cooperation, incentives to attract investments, and financial literacy to empower citizens to become investors and stakeholders through home ownership and start-up businesses.