``(a) General Rule.--In the case of a renewal community business (as defined in section 1400G), for purposes of section 179-- ``(1) the limitation under section 179(b)(1) shall be increased by the lesser of-- ``(A) $35,000, or ``(B) the cost of section 179 property which is qualified renewal property placed in service during the taxable year, and ``(2) the amount taken into account under section 179(b)(2) with respect to any section 179 property which is qualified renewal property shall be 50 percent of the cost thereof. ``(b) Recapture.--Rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified renewal property which ceases to be used in a renewal community by a renewal community business. ``(c) Qualified Renewal Property.--For purposes of this section-- ``(1) In general.--The term `qualified renewal property' means any property to which section 168 applies (or would apply but for section 179) if-- ``(A) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after December 31, 1999, and before January 1, 2007, and ``(B) such property would be qualified zone property (as defined in section 1397C) if references to renewal communities were substituted for references to empowerment zones in section 1397C. ``(2) Certain rules to apply.--The rules of subsections (a)(2) and (b) of section 1397C shall apply for purposes of this section.''

SEC. 603. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO RENEWAL COMMUNITIES.

(a) Extension.--Paragraph (2) of section 198(c) (defining targeted area) is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph: ``(C) Renewal communities included.--Except as provided in subparagraph (B), such term shall include a renewal community (as defined in section 1400E).''

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(b) Extension of Termination Date for Renewal Communities.--Subsection (h) of section 198 is amended by inserting before the period ``(December 31, 2006, in the case of a renewal community, as defined in section 1400E).''

SEC. 604. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR RENEWAL COMMUNITIES

(a) Extension.--Subsection (c) of section 51 (relating to termination) is amended by adding at the end the following new paragraph: ``(5) Extension of credit for renewal communities.-- ``(A) In general.--In the case of an individual who begins work for the employer after the date contained in paragraph (4)(B), for purposes of section 38-- ``(i) in lieu of applying subsection (a), the amount of the work opportunity credit determined under this section for the taxable year shall be equal to--

``(I) 15 percent of the qualified first-year wages for such year, and ``(II) 30 percent of the qualified second-year wages for such year,

``(ii) subsection (b)(3) shall be applied by substituting `$10,000' for `$6,000', ``(iii) paragraph (4)(B) shall be applied by substituting for the date contained therein the last day for which the designation under section 1400E of the renewal community referred to in subparagraph (B)(i) is in effect, and ``(iv) rules similar to the rules of section 51A(b)(5)(C) shall apply. ``(B) Qualified first- and second-year wages.--For purposes of subparagraph (A)-- ``(i) In general.--The term `qualified wages' means, with respect to each 1-year period referred to in clause (ii) or (iii), as the case may be, the wages paid or incurred by the employer during the taxable year to any individual but only if--

``(I) the employer is engaged in a trade or business in a renewal community throughout such 1-year period, ``(II) the principal place of abode of such individual is in such renewal community throughout such 1-year period, and ``(III) substantially all of the services which such individual performs for the employer during such 1-year period are performed in such renewal community.

``(ii) Qualified first-year wages.--The term `qualified first-year wages' means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning with the day the individual begins work for the employer. ``(iii) Qualified second-year wages.--The term `qualified second-year wages' means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under clause (ii).'' (b) Congruent Treatment of Renewal Communities and Enterprise Zones for Purposes of Youth Residence Requirements.-- (1) High-risk youth.--Subparagraphs (A)(ii) and (B) of section 51(d)(5) are each amended by striking ``empowerment zone or enterprise community'' and inserting ``empowerment zone, enterprise community, or renewal community''. (2) Qualified summer youth employee.--Clause (iv) of section 51(d)(7)(A) is amended by striking ``empowerment zone or enterprise community'' and inserting ``empowerment zone, enterprise community, or renewal community''. (3) Headings.--Paragraphs (5)(B) and (7)(C) of section 51(d) are each amended by inserting ``or community'' in the heading after ``zone''.

``Subchapter X. Renewal Communities.''

SEC. 606. EVALUATION AND REPORTING REQUIREMENTS.

Not later than the close of the fourth calendar year after the year in which the Secretary of

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Housing and Urban Development first designates an area as a renewal community under section 1400E of the Internal Revenue Code of 1986, and at the close of each fourth calendar year thereafter, such Secretary shall prepare and submit to the Congress a report on the effects of such designations in stimulating the creation of new jobs, particularly for disadvantaged workers and long-term unemployed individuals, and promoting the revitalization of economically distressed areas.