By Whitman, Cameron
Nation's Cities Weekly , Vol. 23, No. 16
Bill Intends to Spur Economic Development in Smaller Communities
Just before the Easter recess, the House Banking Committee passed H.R. 2764, which contains authorizing language for America's Private Investment Companies (APIC). This legislation would help empower communities by providing equity and other investments for business to create jobs and spur economic development in inner cities and rural areas. According to a press release from the Department of Housing and Urban Development (HUD), "APICs represents a bold new approach for tapping under-served markets and entrepreneurial energy in low- and moderate-income areas."
On passage of the APIC legislation in the House, President Bill Clinton said, "Last fall in Chicago, Speaker Hastert and I agreed to work together on a bipartisan legislative initiative to bring new private investment to America's economically disadvantaged communities. Today, I am pleased to report that we have made some progress on that pledge. Passage of the APICs initiative by the House Banking and Financial Services Committee represents the first crucial, step in this bipartisan effort. APICs will spur as much as $1.5 billion in new private investment in New Markets across America. They represent a smart, innovative way to help ensure that all communities share in America's economic prosperity."
How do APICs Work?
APICs would be private companies that invest in a portfolio of businesses that operate in low- and moderate-income areas.
Government loan guarantees would provide the incentive. They would be structured much like venture capital funds but would target untapped markets. To help these investment funds become sufficiently large enough to have a real impact on communities, APICs will receive government guarantees on loans to help leverage two loan dollars for every one dollar obtained from private investors.
Businesses eligible for an APIC license would have to be for-profit community development groups with a minimum of $25 million in equity capital available that seek to invest in job creation in cooperation with community-based organizations and residents of the area of the investment. …