Arent Fox, working closely with client Catholic Charities USA, drafted landmark poverty legislation designed to empower local communities to address poverty, bring market forces to bear on poverty, and reduce dependence on federal programs. Sen. Robert P. Casey, D-Penn., introduced the National Opportunity and Community Renewal Act in the Senate on September 27, 2010 as S.3845 and Rep. James McGovern, D-Mass., introduced the legislation in the House of Representatives on September 28, 2010 as H.R. 6222 to encourage the implementation of innovative approaches to reduce poverty. Under the Act, 10 communities will be awarded grants in the amount of $10 million and individuals within the communities will be eligible for certain tax incentives. The 10 participating communities (qualified areas) will be chosen through a competitive application process and must report to a bipartisan, independent national board composed of political appointees. Qualified areas may be of any size but must include three rural areas and one area containing or adjacent to a military installation. The National Competition for Community Renewal program (National Competition) under the Act has a five-year term, at the end of which each qualified area will submit a detailed report to the national board.
Communities desiring to participate in the National Competition must form a local board and submit an application to the national board describing the proposed programs under the Act, including the implementation of the Human Development Index, defined as a summary composite index that measures an area’s average achievements in three basic aspects of human development (health, knowledge, and a decent standard of living); the ability to provide local matching funds; the recognition of poverty reduction and prevention at varying levels of service for individuals in three different stages of poverty – (i) individuals at or below the Federal Poverty Guidelines, (ii) individuals currently relying on at least one government program for basic needs, and (iii) individuals requiring services to prevent reliance on more expensive government programs; the establishment of individual opportunity plans; and the adoption of intensive client advocacy and detailed evaluation practices. In addition to the $10 million grant, each qualified area will be granted a waiver to use the allocable funds under various federal poverty-related assistant programs to implement the approved plan. For example, a qualified area’s allocable funds under the Temporary Assistance to Needy Families Program (TANF) and the Workforce Investment Act (WIA) for the first year of the program may be aggregated with the $10 million grant in a separate account, distributions out of which will be made in furtherance of the approved plan and not under the provisions of TANF or WIA. Funds also will be available to qualified areas from the sale of Community Renewal Bonds. These bonds will be sold nationwide, the funds of which will be divided among the qualified areas and subsequently paid back by the qualified areas at the end of the seven-year bond term. Community Renewal Bonds will enable individuals to participate in the alleviation of poverty.
In addition, each qualified area will have access to specialized tax incentives. The Community Renewal Incentives are designed to encourage a wide array of community participation in the program, including providers, recipients, and supporters of poverty-related services. The amount of tax incentives available within each qualified area will be based in part on the value of the total federal and state funds directly or indirectly saved under the local plan in successfully assisting individuals. Tax incentives under the Act include a high school graduation refundable tax credit, eligible employer refundable business credit, unrelated business taxable income deduction for eligible nonprofit entities, and modified charitable contribution deductions for certain donations. Qualified areas also will be able to modify the requirements of the earned income tax credit with the approval of the national board and will be considered a “low-income community” for purposes of the new markets tax credit.
The Act strives not only to revise existing services and programs, but to promote innovative technological advances in quantifying poverty data and individual information. The national board will award $5 million grants to eligible entities that establish a client advocacy and consumer services technology platform which creates a user-friendly interface operable across numerous programs using the Human Development Index. The goal of these platforms is to measure poverty and progress on an individual level instead of on an area basis. The provisions under the Act are groundbreaking in eliminating the current “one size fits all” approach to poverty at the federal level, transforming poverty aid into more effective, community-focused poverty programs, and introducing market-based concepts to provide necessary resources to assist people in breaking out of the poverty cycle.