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Barthelemy urges Bush to broaden urban aid proposal: NLC leader seeks administration support for local investment.

NLC Immediate Past President Sidney Barthelemy, mayor of New Orleans, met with President George Bush at the White House last week to urge support for increased community development and housing funding.

Mayor Barthelemy also sought the President's support for NLC's efforts to ensure incentives for bank credit and low interest municipal financing for jobs and the creation of private investment in all distressed communities as part of any urban aid legislation.

As Bush and Barthelemy were meeting, Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) indicated his committee would take up the House-passed urban aid bill, HR 11, this week.

Bentsen said while his version would track the House version, he intended for it to be more comprehensive as well as more focused on helping the residents of distressed areas than outside businesses and investors. Bentsen said he also intends to include other provisions which would simplify and reduce the cost of issuing tax exempt bonds for many cities and towns.

After meeting with the President, Barthelemy met with HUD Secretary Jack Kemp to encourage his support for more comprehensive urban aid legislation than either the administration or House has proposed. Barthelemy told Kemp that under the House-passed bill about 200 cities and 100 rural communities would be eligible for designation as an enterprise zone, but only 25 urban and 25 rural areas could be designated between now and 1996. Only 8 urban and rural communities could be designated as of December 31, 1993.

Barthelemy said, "We support a more comprehensive approach for all distressed cities and towns and one which speaks more broadly to the fundamental building blocks of economic revitalization.

"We believe enterprise zones, by themselves, are inadequate. A more comprehensive plan which leverages business credit availability and reduces lending and insurance discrimination is critical to building a new economic infrastructure in our most distressed cities and towns."

After the Kemp meeting, Barthelemy met with Sen. John Breaux (D-La.), a key member of the Senate Finance Committee, to urge Breaux's active support for initiatives adopted by NLC's Board of Directors to support providing some benefits to all distressed areas - especially authority to issue tax exempt economic development bonds and incentives for bank lending or credit availability.

Barthelemy noted that while 49 communities in Louisiana are distressed, the administration and House-passed proposals would probably only make one of those communities eligible for any assistance over the next five years. He urged some immediate economic tools for each of those communities and support for a special effort to provide incentives for bank reinvestment in distressed areas.

Current federal laws provides little incentive for reinvestment in urban areas, while market forces and racism create enormous disincentives. Recent studies indicate that banks and thrifts in minority neighborhoods lend about half as much in their own communities, as a percentage of deposits, as do financial institutions in white neighborhoods. Twenty percent of the nation's lowest rated community Reinvestment Act (CRA) financial institutions are in Los Angeles. 75 percent of the lenders with unsatisfactory CRA ratings are small banks and thrifts.

Bentsen indicated last week that when his committee begins action this week he intends to offer a broader package than the House-passed urban aid bill. Bentsen said the Senate version, which will carry the same number, HR 11, as the House-passed bill, will include a package of tax simplification measures - including a number helping cities. The bill is also likely to include provisions to repeal the luxury tax, to expand individual retirement accounts, and, possibly, reincorporate extensions of expired municipal tax programs - including mortgage revenue and small issue industrial development bonds, and the low income housing and targeted jobs tax credit programs.

The Finance Committee passed HR 3400 earlier this year to extend the expired provisions through December 31, 1993, but the Senate has not yet acted on that bill. The House urban aid package includes permanent extensions of the key municipal programs.

Bentsen indicated his new plan is likely to include simplification measures similar to those the committee adopted earlier this year which would increase incentives for banks to purchase municipal bonds and notes and ease some existing arbitrage and rebate requirements on cities and towns.

Among the key simplification measures the committee is likely to consider affecting cities are:

[subsection] increase the bank deduction for cities from $10 to $25 million annually;

[subsection] expand the six-month exemption from the arbitrage rebate requirement to a city that has spent 95 percent of the proceeds within that period; and

[subsection] ease requirements for bonafide debt service funds.
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Title Annotation:Sidney Barthelemy; National League of Cities
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Jul 27, 1992
Previous Article:Bi-partisan action breathes life back into partnership act.
Next Article:Cable bill passes House.

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