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FY 2001 Budget
Congressional Justifications for Estimates
Community Planning and Development
Empowerment Zones
PROGRAM HIGHLIGHTS
NA = Not Applicable.
SUMMARY OF BUDGET ESTIMATES
- SUMMARY OF BUDGET REQUEST
The fiscal year 2001 Budget proposes $150 million for Round II Urban Empowerment Zones (EZs). Fiscal year 2001 would be the first year of mandatory funding for the Round II EZs, which would total $1.45 billion over the life of their designation, including discretionary funding.
As a result of the EZ Round II competition held in 1998, fifteen applicants were chosen for EZ designation, and will receive approximately $100 million over a 10-year period. The 1999 Omnibus Appropriations Act (P.L. 105-277) provided $45 million and the 2000 Appropriations Act (P.L. 106-74) provided $55 million in discretionary funds for the 15 Round II EZs. Of this total, each newly designated EZ received $3 million and $3.666 million, respectively, "for use in conjunction with economic development activities consistent with the strategic plan of each empowerment zone." These funds, as well as the flexible block grant funds requested in 2001, will complement the tax incentives authorized by the Taxpayer Relief Act of 1997 and the other benefits available to designated EZs. The proposed mandatory funding would provide a consistent and reliable source of flexible funding over the life of the program to encourage comprehensive planning for revitalization in the 15 new Zones to better integrate America's poor into the larger metropolitan economy. This funding would assist the 15 urban EZs in their revitalization efforts, with a special emphasis on stimulating job creation linked to welfare reform.
The Empowerment Zone/Enterprise Community (EZ/EC) program reflects HUD's strong commitment to involve key strategic partners in community revitalization. The EZ/EC program encourages residents, States and localities, as well as private companies and non-profit organizations to work together to address local needs. The EZ/EC program also involves cooperation of other Federal Departments to respond to local conditions and produce results. The program directly advances the Department's Strategic Goal #4, "Improve community quality of life and economic vitality" through increasing the number and quality of jobs in urban and rural communities. The Annual Performance Plan performance indicator for the EZ/EC program, 4.1.a, is "Increasing the share of EZs and ECs that show satisfactory progress towards locally defined benchmarks continues to be at least 95 percent," as measured through the new performance measurement system (PERMS). The EZ/EC program reflects HUD's commitment to empowerment with accountability because communities are assessed in terms of the performance relative to progress made on projects and programs in their strategic plans. Moreover, this program is an innovative approach to community revitalization which recognizes that attracting private investment is necessary for sustainable economic revitalization. The EZ/EC initiative also recognizes that local communities working together, through a bottom-up approach, can best identify and develop local solutions to the problems they face, and encourages communities to develop comprehensive strategic plans for change. The EZ/EC program also supports Strategic Goal #3: "Promote Self-Sufficiency and Asset Development of Families and Individuals." The EZ/EC program is a key element in the strategy to produce suitable jobs in distressed areas and to empower low- and moderate-income persons to take advantage of those jobs.
EZ outcomes are locally determined and can vary substantially from year-to-year. However, EZ activities also contribute to outcome indicator 1.1.1-homeownership levels; 1.2.1, 1.2.2, 1.2-reducing "worst case" housing needs; 1.2.5 - 1.2.8-increasing affordable housing units; 2.3.1-minority homeownership; 3.2.2 improving transition from welfare to work; 3.2.7- youth employment; 4.1.1, 4.1.2, 4.1.3-city/suburban poverty, employment and income ratios; 4.2.1- central city homeownership ratio; 4.2.4-city resident opinion of neighborhood; 4.2.5-capital available for housing rehabilitation, 4.3.1-reduction in reported crime; and 4.3.3-reduction in urban blight.
Empowerment Zones embody the core principles of the President's Community Empowerment agenda. The EZ/EC initiative combines Federal tax incentives with direct funding for job creation, physical improvements and social services. It requires unparalleled levels of private sector involvement and investment. It brings all stakeholders in a community�residents, nonprofits, businesses, and Government�to the table to develop a locally fashioned and locally controlled comprehensive revitalization strategy. It makes the private sector the driver of economic growth, with the government acting as a partner. As in the first round, communities that chose to compete for Round II EZ designation were challenged to develop their own comprehensive strategic plans for revitalization, with the input of residents and a wide array of community partners. HUD chose to invest in those 15 communities that developed the most innovative plans and garnered significant local and private sector commitments. The conceptual framework of the program is embodied in four key principles:
- The Strategic Vision for Change identifies what a community will become in the future and includes a clear statement of the values that the community used to create its vision. The vision should include coordinated strategies that will help to achieve the community's goals, and should take into account the development of a performance measurement system that will provide the framework for evaluating progress and adjusting the Strategic Plan.
- Community-Based Partnerships emphasize the importance of involving all community stakeholders in the revitalization of distressed neighborhoods. Key partners include residents; businesses; local political leaders; local, State and Federal Governments; community development corporations; local public health and social service departments; regional planning organizations; unions; environmental groups; schools and universities; interfaith non-profit organizations; and other community groups. A successful EZ should be able to leverage the resources that these partners bring to the table. Key partners should be included in the governance structure, and all partners should be held accountable for their commitment to revitalizing the community.
- Economic Opportunity includes creating jobs for Zone residents and linking residents to jobs within the Zone and throughout the region. Successful economic opportunity strategies provide entrepreneurs with technical assistance and greater access to capital and credit; assist businesses to expand and create job opportunities for residents; provide residents with jobs; and provide residents with job training and placement services, with an emphasis on linkages to welfare-to-work and school-to-work initiatives.
- Sustainable Community Development advances the creation of livable and vibrant communities through physical, environmental, community, and human development. In successful Zones, these approaches preserve the environment and historic landmarks; address brownfields cleanup and redevelopment; advance the use of telecommunications as a means of improving community coordination and interaction; explore the economic development advantages of energy efficiency and the use of renewable energy resources; and improve the quality of and/or access to programs supporting families, affordable housing, youth development, substance abuse prevention, healthcare, human services, education, childcare, transportation, and public safety.
These principles are drawn from the experiences of communities around the Nation that have used them successfully to develop holistic approaches to community revitalization. Applicants were challenged to address these principles in their Strategic Plans, which describe in detail the community's strategy for revitalization and is the vehicle for building commitments, large and small, among all of the individuals and organizations that will be working together to strengthen their community.
Progress for any EZ/EC is measured by the progress that the community makes in implementing its Strategic Plan. A wide variety of indicators have been developed, based on three of the four core principles, against which EZ/ECs report specific activities. (There are no specific indicators for the Strategic Vision for Change goal.) Under Community-Based Partnerships, communities report on governance and capacity building activities; under Economic Opportunity, communities report on workforce development, business assistance and capital and credit access activities; and under Sustainable Community Development, communities report on housing, public safety and crime prevention, infrastructure, environment, health, education, human services and family support, and other similar activities. A computerized system to collect this data has been implemented and Round I communities entered accomplishments for the first time in late 1998.
For the first round of funding (1994), more than 500 urban and rural communities applied to be designated as an urban Empowerment Zone or Enterprise Community. Since that time, EZs and ECs have evolved from establishing governance structures and performance benchmarks to actively implementing programs that will help to revitalize their communities. Significant progress is being made thanks to strong partnerships between government, the private sector, non-profits, and community residents. In the time since their designation, the 72 urban EZs and ECs have generated an estimated $10 billion in private and public investment to revive inner city neighborhoods once considered beyond repair, and to create jobs and help families move from welfare to work. In addition, education and job training has been provided to over 42,000 Zone residents, resulting in the employment of approximately 30,000 people. The funding requested here is essential in order to enable the Round II EZs to achieve similar results.
- CHANGES FROM 1999 ESTIMATES INCLUDED IN 2000 BUDGET
Actual obligations were $6.4 million less than expected in 1999 mainly due to the fact that two EZ grants were not obligated by the end of fiscal year 1999. They are both expected to be obligated early in fiscal year 2000.
- CHANGES FROM ORIGINAL 2000 BUDGET ESTIMATES
The fiscal year 2000 Appropriations Act (P.L. 106-74) provided $55 million in discretionary funding versus the fiscal year 2000 request of $150 million in mandatory funding. The obligations and outlays in 2000 shown in this justification only reflect activity against the discretionary account.
EXPLANATION OF INCREASES AND DECREASES
The fiscal year 2001 request is the first of 9 years of mandatory funding to provide flexible grants to the 15 Round II Urban EZs authorized by the Taxpayer Relief Act of 1997. The increases in obligations and appropriations in 2001 reflect the additional funding requested in 2001. Although outlays increase for this reason as well, they also increase because the 1998, 1999, and 2000 appropriations are expected to outlay at a higher rate than the previous 2 years.
PROGRAM DESCRIPTION AND ACTIVITY
- Legislative Authority. The designation of 15 Round II Urban Empowerment Zones is authorized by the Taxpayers Relief Act of 1997.
- Program Area Organization. The Taxpayer Relief Act of 1997, enacted on August 5, 1997, authorizes the Secretary of HUD to designate 15 additional urban EZs under criteria similar to those enacted for the first round of designations authorized in the Omnibus Budget Reconciliation Act of 1993. This Act also authorizes the Secretary of Agriculture to designate five additional rural EZs. These Round II EZs are eligible for a special Brownfields tax incentive, allowing designation of up to 2,000 acres of non-poverty, industrial acreage, which will be the focus of job creation for Zone residents; the Public School Renovation tax credit, which will promote the creation of more rigorous schools and job-skilled youth; relaxed eligibility rules for bonds and expensing, including $20,000 in additional section 179 expensing of investments in capital and equipment in order to promote commercial investment; and Enhanced Private Activity Bonds, including $60 million-$230 million in flexible private-activity bond authority, outside the state volume cap, to subsidize job-creation and business expansion in the Zone.
In December 1994, 105 distressed urban and rural communities around the country received a combination of tax incentives and flexible block grants to implement 10-year strategic plans to promote economic opportunity and community wide revitalization. The EZ/EC initiative marks the most significant effort launched by the Federal Government in decades on behalf of the Nation's distressed inner cities and impoverished rural communities. The program is notable as an innovative approach to attracting private investment as the foundation for sustainable, comprehensive development and economic opportunity.
Each of the Round I and Round II urban EZs and ECs developed strategic plans which provide a blueprint for an entrepreneurial way to distribute funds and to fulfill commitments. Those strategic plans include benchmarks used to monitor these Zones and communities closely and help ensure that progress proceeds in an orderly fashion.
Grants are used for a broad range of activities that assist residents, businesses, and organizations, including workforce preparation and job creation efforts linked to welfare reform; neighborhood development; support for financing of capital projects; financing of projects in conjunction with the Section 108 Loan Guarantee program and other economic development projects; support for project-based rental assistance; financing other housing activities; community policing; and health care. HUD promotes partnerships with private and community service providers who can help residents achieve self-sufficiency. This initiative seeks to revitalize city neighborhoods in a way that retains and attracts middle-class residents and empowers low-income residents to become a part of the middle class.
- Eligible Recipients. Any jurisdiction designated as one of 15 Round II empowerment zones.
- Allocation of Funds. $150 million of the Round II grant funds will be distributed to those 15 communities that won a second-round EZ designation. Criteria for competitive selection included several factors, such as the extent to which the activities proposed in the application:
- create permanent jobs accessible to low-income persons, minority persons, persons receiving public assistance, and unemployed persons;
- complement welfare reform initiatives that empower low-income persons and families receiving public assistance to become economically self-sufficient;
- involve interagency and intergovernmental coordination of Federal, State and local public and private (including nonprofit) resources;
- use private resources to leverage assistance under this Act, including the extent to which there is a firm commitment for the use of the resources; and
- establish or expand business opportunities within the Empowerment Zones.
- Eligible Activities. Eligible activities include those that are consistent with the applicable strategic plan. Grant funds are available to support the financing of capital projects, including housing and economic development, in urban EZs. Eligible activities include financing of projects in conjunction with the Section 108 loan guarantee program and other economic development projects, and support for project-based rental assistance and other housing initiatives. The funds could also be used in integrating human capital needs with economic and community development initiatives. This includes day care, transportation, education, job training and other social service support designed to enable the recipients to achieve economic self sufficiency.
- Program Accomplishments. The following provides a national snapshot of the cumulative accomplishments of the Empowerment Zones and Enterprise Communities. The EZ/ECs reported this information using the new Internet-based EZ/EC Performance Measurement System (PERMS). The cumulative results shown are based the inaugural submissions by the EZ/ECs. It is expected that the quality and quantity of reporting will improve over time as the EZ/ECs become more familiar with PERMS and more sophisticated in the art of performance measurement.
- Workforce Development. The Empowerment Zones and Enterprise Communities report that they are engaged in more than 550 job training programs with over 42,000 Zone residents having received job training. Nearly 30,000 Zone residents have been placed in jobs as a result of these job training programs. Zone residents have attended approximately 270 job fairs resulting in 16,000 job placements.
- Access to Capital. As a result of the Empowerment and Enterprise Zone Initiative, access to cheap sources of capital, the lifeblood of commerce, has greatly improved. Loan pools totaling $2 billion dollars have been created with 1,700 loans processed and 5,000 jobs created from those loans. The EZ/ECs report that over 4,300 businesses have been served by the capital access/credit access programs and 4,500 businesses have received technical assistance. In addition, the EZ/EC Initiative has created the largest community development bank in the nation�the $430 million dollar Los Angeles Community Development Bank�which has loaned over $70 million to businesses that could not obtain conventional bank financing.
- Projects and Programs. The EZ/ECs report that 2,600 neighborhood-based projects and programs have been developed and are underway as a result of each EZ/ECs' locally derived strategic plan. Federal EZ/EC seed money has leveraged over $10 billion in additional public and private sector investments related to the implementation of local EZ/EC strategic plans.
- Housing. The Empowerment Zone and Enterprise Communities report that they have completed 2,400 housing units and have rehabilitated another 11,000. Nearly 14,000 homeless people have been served under the "homeless to housing" program. Within the Zones and Communities, there are 146 homeownership programs that have served 8,600 residents.
- Private Sector Involvement. Private sector involvement has played a vital role in the Empowerment Zones and Enterprise Communities. Countless corporations have hired Zone residents and actively participated in EZ/EC governance, as well as provided funds and in-kind technical assistance to the Zones. Well-known companies involved in the Zones include General Motors, Ford, Chrysler, Home Depot, The Walt Disney Company, GAP, Inc., Ameritech, Rite Aid, Microsoft, Starbucks, MCI/Worldcom, IBM, and scores of others.
- Environment. The EZ/ECs report that they are engaged in 39 Brownfield's projects - transforming abandoned and contaminated commercial and industrial sites into clean, reusable parcels of land. Forty-three sites have been transformed to date. The EZ/EC's are also involved in approximately 180 beautification programs.
- Public Safety. The EZ/ECs report that nearly 380,000 people have been served by the 300 public safety programs operating in the Empowerment Zones and Enterprise Communities. There are 580 crime prevention programs which have served 310,000 residents.
- Health Care. There are 220 health-related programs in the EZ/ECs serving 94,000 residents. Seven new health-care facilities have opened in the EZ/EC neighborhoods and four have been remodeled which has expanded service to 9,000 EZ/EC residents.
- Human Services. Within the Empowerment Zones and Enterprise Communities, there are a number of human services underway serving residents including:
- 369 recreation programs serving over 116,00 Zone residents;
- 157 child care programs serving over 4,850 Zone families;
- 21 elderly programs serving over 2,480 Zone residents; and
- 339 youth programs serving over 65,000 Zone youth.
- Education. Vital to the well-being and economic development in the EZ/EC's is education and as a result of the EZ/EC initiative, many education and training programs have served Zone residents. The EZ/ECs report:
- 32,000 residents have been served in 641 K-12 education programs;
- 5,500 residents have been served in 106 vocational education programs;
- 5,775 residents have been served in 74 post-secondary assistance programs; and
- approximately 13,300 residents have been served in 152 head-start/pre-school programs.
More than 180 urban and rural EZ/EC programs and projects are highlighted in the publication, What Works! In the Empowerment Zones and Enterprise Communities, Volume III, providing reason to celebrate the successful revitalization of our Nation's communities. They serve as models for programs throughout the country, helping to bring businesses and residents back to America's most distressed areas and giving hope to the people of every community. Some examples of successes are:
- In Boston, Massachusetts, the EZ is a prominent partner in the city's School-to-Career program, which is designed to link students who live or attend high school in the EZ to job training and employment opportunities. Participants in the program work with Private Industry Council (PIC) employees who are located at the schools to learn job readiness skills such as resume writing and interviewing. The EZ identifies businesses willing to act as mentors for the students and PIC helps to cultivate individual relationships by acting as a link between the two. PIC then works to place students in jobs at the businesses. The program has served 330 EZ students and Zone staff hope to double that number in the future.
- In Norfolk/Portsmouth, Virginia, women within the EZ have been given a chance to gain valuable job skills by completing a pre-apprenticeship training program in heating/ventilation/air conditioning/refrigeration (HVAC/R). Women who show an aptitude for this type of work are enrolled in the program by Norfolk Works, the agency charged with carrying out the activities in the EZ. The women undergo a 16-week training program provided by Tidewater Community College (TCC) in Norfolk, the other partner in the project. Once they have completed the program, the women serve as interns with one of the private companies that helped to develop the curriculum. The program maintains 85 percent over all graduation rate, and all those who have finished have been able to find employment.
- In Tacoma, Washington, the city and the EC are about to complete the rehabilitation and refurbishment of a 100-year old building in downtown Tacoma. The building will become the new home of Total Renal Care, the back office of a dialysis treatment center that was about to leave the city. The Tacoma Empowerment Consortium (TEC) was instrumental in putting together a package that included access to private activity bonding, a Section 108 loan from the city, the development of parking and shuttle services for employees, and training of 100 EC residents to be employed by the firm. In addition to providing employment, TEC is creating synergy in Tacoma by sparking the revitalization of a portion of the downtown that had been depressed for 15 years. This effort promises to be a catalyst for further development and more job opportunities for EC residents.
- In Philadelphia, Pennsylvania, 3 acres at the center of the American Street corridor have been cleaned up and redeveloped to become the new home of Asia Foods, the second largest distributor of Asians foods in the mid-Atlantic. The EZ helped to secure $900,000 in State funds and the city provided $300,000 to remediate the contaminated site. Drug addicts were moved out of an abandoned office building, and above and below ground storage tanks were removed. Construction of the new warehouse began in December 1998 and the site was dedicated on March 23, 1999. The EZ provided $500,000 for construction of the new facility in addition to more than $1 million from the City's development authority. The principal owners of Asia Foods plan to add a minimum of 24 people from the EZ to their current staff of 46. They are partnering with other companies in the EZ and envision Phase II, a plan to bring in six to eight small distributors of fresh produce, fish, and other foods to complement their current enterprise.
STATUS OF FUNDS
The tables below reflect appropriations in 1999 and 2000 that are discretionary funding.
a. Unobligated Balances. This table compares obligations with funds available by year.
b. Obligated Balances. The status of obligated balances is as follows:
The tables below reflect appropriations in 2001 that are mandatory funding.
a. Unobligated Balances. This table compares obligations with funds available by year.
b. Obligated Balances. The status of obligated balances is as follows:
Content Archived: January 20, 2009
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