Agenda - Council - 02/22/1982 - Laserfiche WebLink

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of AmeHc~ PROCEEDINGS AND DEBATES OF ~E ~NG~, FIP~T S~ION I Vol. 127 ~TASHINGTON, ~gTEDNESDA¥, JUNE 3, 1981 No. 83 By Mr. BOSCHWITZ Cfor himself, Mr. C.~r£r, Mr, BURDICK, Mr. I Oosro~, Mr. H~c~i, ~. ~aw~, Mr. HUMPHREY, Mr. J~- s~s. Mr. Prncx. Mr. Towns, ~. Qv~vrr, ~. A~isT~onc and ~. S. 1310. A bill ~ amend thc ~cvcnuc C~c of 1954 ~ p~vldc ccrt~ community development, rind t~x tncentlv~ for Indlvidu~ and Ibusinesses in dcprc~d gr~; ~ ~e Comm~t~c on ~nan~. ~. ~OSCH~TZ. ~. Pr~ldent. on beh~f of Senator C~rnr~r and myse~, lam lntr~ucing t~ay the "Urb~ J~ ~d ~tcrprt~e Zone Act o~ 1981/' legislation, which has been the subJ~t of much debate and di~usslon over the ~t lYear. w~ fl~t intr~uc~ In the Congress. And t~ay, ~er hav~g con- sul~d with the v~t majority of ~e l~d- l~ urban org~atio~ around ~e count~, as well ~ many of o~ Imayo~ and busings, we ~e ducat an ~end~ ve~ton of ~ ~ ~sal which we f~l will ~ far more f~tlve In the ~sk ~ c~t~g J~ our Nation's l~er elgin, S~ul~l~sly I~ay, an identical bill is ~o ~lng ~- ~uc~ ~ ~e II~ of R~r~n~tiv~ by Congre~men ~u~ and duc~ ~ the 96t~ Congr~, Mr. d~t, the en~usl~ic r~ w~ v~ ~tifying. Mayors from all over the count~ wrote indicating su~o~ and of- fering their suggestions and r~o~en- daf]oas, a number of which have ~en ~cor~ra~d ~ th~ new b~ that we are ~t~ucing ~day. Of co.se, nob ~1 agr~ with each and every provision of ~e leg~lation, but all eagerly weicam~ a f~sh, new, ~nd innovative approach ~sol~ng the problc~ of poverty ~d Jobl~sness In ~ner-clty ~e~. After inviting scor~ of b~lio~ of dol- l.s ~ the so-called war on ~ve~y over th~ two d~ades, we 'have fall~ ~ provide any meaningful op~rtu~ty for advancemen~an opportunity ~ get a foot up the ladder of success, so to s~. While our welf~e progr~s provide ial services, they. unfartuna~ly, have rested a system of dependency which h~ helped trap many of our poor In self-perpetuating cycle of povert.v. ~e rban Jobs and ~terprlse Zeus Act at- mpts to bre~k that cycle by offering a ore ]ast~g and rewarding alternative to welfare dependency--a Job, and a Job ~ the private sector, which v:ffi mean er~nnl. economic, and s~letal growth. The focus of this year's urban Jobs legislation is the same as last year's: Bma]! business development and Job creation In the most distressed areas of our urban center~ as well as depressed rural areas. The means to reach that end have changed somewhat, but the overall goal is still the same: Job creation. Those area~whlch HUD designates as enterprise zones based upon the severity o~ their economic dL~tresa will qualify for a package of beneflt~ designed to lure Job-creating businesses Into the inner city. Any business that is willing to take the risk of locating in one of the.~e zones and who will pledge to hire-at least 40 percent of its workers from the unem- ployed labor force, will qualify for a lu- crative series of Federal tax incentives. By simply locating In the zone Itself busine.~ will qualify for some of the in- centives, but by employing at least 40 percent of the workers from the unem- ployed labor force, additional Incentives will be available. And workers who take Jobs in those zones will receive a 5 per- cent break on their personal income taxes up to $1,500 a year. In keeping with last year's bill, this legislation is directed at small businesses. They create the vast majority of new Jobs. In the past 10 years, nearly 20 per- cent of new private sector employment has come from businesses with 20 or fewer employees and 80 percent of new Jobs have been created by businesses with less than 100 employees. The scm'ce of that is a study. Mr. Pres- ident, done by David Birch of the Massa- chusetts Institute of Tecqmology. Another advantage of small businesses, as compared to corporations, is the in- creased opportunity for rapid advance- ment. A person working in a small busi- ness ha~ a one-to-one relationship with the boss. something that is not often the case in larger businesses. Too often, peo- ple at the lower end of the wage scale get lost in the shuffle of big business. How- ever, from my own experience. I Just do not think this ts as prevalent in small businesses. The employer and employee identify more with one another. A per- son's qualities, problems, family, and bitlons cannot escape the boss' notice, and seldom do. Furthermore. working in a small busi- ness 1~ sMmulating and exciting. OettLqg in on the ground flo~r of a new business, partAcularly a small business, allows you to see aH the wheels turning at once be- lore you. It offers a very effective method for advancement and a means to learn how businesses work so that eventually '. S 5745 '-you'll be able't~- go into business yourself. If people are going to maximize their effort~ and abilities, there must be poten- tim for them to rise above low-skilled m~nLmum wage Jobs--to see an opportu- nity to advance ~flthin a business. The urban Jobs bill offers that potential. As I have previously mentioned, the fo- cus and concept of this legislation re- m ~lns unchanged; howeveG we have de- veloped a list of new incentives that will m ~ke these enterprise zones more attrac- tive to businesses. After consulting with dozens of urban organizations, we con- cluded that the incentives needed to be .~trengthened to overcome the drawbacks of locating In an inner city. The problems of crtme, weak infra- structure support, city taxes, et cetera. remain a harrier to business development in these areas. Business already encoun- ters the usual problems of tax burder~s and a lack of startup capital and tech- nical expertise; but when these are com- bined with the disadvantages of locating in a distressed area, businesses are hit with a double whnmmy, so to speak. Thus, our task is not only to make it attractive for entrepreneurs to invest in risk-tak- ing venture~, but abe to invest in new businesses that are located within the inner cities. We have tackled this problem by com- bLvAng a package of Federal ~nd local incentAves. Those cities that have UDAO eligible areas and can also show $1grm o! high unemployment, poverW, out-migra- tion, or abandonment of buildings, can apply to HUD for zone designation. However. to recelv~ designation, these cities will have to compete among one another on the basis of the severity of their economic distress plus their "local commitment." The cities, Btates, coun- ties, and other municipal-type govern- m~nts are encouraged to work together to construct a State and locgl package of Incentives, Cities will then compete with et ~er cities for zone designation on the bi sis of who can offer the most attrac- ti 'e package. 5o. not only must cities qualify on the b~sis of their economic distress, but ti-ere has to be a local. Brats and county p: ckage of various types of incentives--- p~ operty or income tax relief, relaxation el building code~, increased inlrastru¢- h, re support, et cetera---to augment the :Federal package of tax incentives, that 1~, elfin/station of capital gaLr~ taxes, a 50-percent reduction in income taxes, a 5-percent refundable tax credit for wages paid to previously unemployed workers.