HUD's FY 99 Budget
Key Programs and Initiatives: The Community Empowerment Fund

While unemployment rates have dropped throughout the nation, they remain high in too many distressed urban and rural areas. With President Clinton's new Community Empowerment Fund (CEF), HUD and these cities and towns will have a powerful tool to support new businesses - especially small and medium-sized companies - and help stem the loss of existing good-paying jobs. The 1999 request of $400 million is expected to leverage an estimated $2 billion in private sector loans and will support an estimated 280,000 jobs when projects are completed. The President's request compares to just $38 million available for competitive EDI grant requests in 1998. While the EDI Program was funded at $138 million last year, it included $100 million in Congressional earmarks. Therefore, the President's request for $400 million in 1999 compares to just $38 million available for competitive EDI grants in 1998.

HUD's FY 1999 proposal will provide strong incentives for standardization of economic development lending, a crucial first step in creating an effective secondary market for economic development loans.

An Approach Based On Success

The Community Empowerment Fund will improve, and combine, two successful programs - the Economic Development Initiative, and the Section 108 Loan Guarantee Fund - to boost economic development in communities with sound plans to create jobs and prosperity for all of their citizens. Using a similar approach, HUD's EDI program funded:

• Revolving Loan Funds, such as Ohio's Mahoning Valley Economic Development Fund that is aimed at helping communities retool their economies in the wake of the steel industry's decline, which had once been the backbone of the local economy.
• Inner-city shopping centers, such as the Good Hope Marketplace in Washington DC's Anacostia neighborhood, which includes a full-service 55,000 square foot Safeway Food and Drug Store.
• CEF will merge the discipline of a strengthened Section 108 Loan Guarantee program; the power of private capital leverage through a revamped Economic Development Initiative; and the flexible approach of HUD's esteemed Community Development Block Grant program to local economic development problems. CEF is a creative financing tool that combines local control, private sector capital, and federal loan guarantees to spur a wide range of job-creating projects.
• Cessna Aircraft's Learning and Work Complex in Wichita, Kansas, a welfare-to-work effort which provides daycare and job training for former welfare recipients employed in the company's adjacent industrial facility.

Public/Private Partnerships to Help Move People from Welfare to Work

CEF will play a key role in assisting former welfare recipients to successfully move from welfare to work through revolving loan funds for business expansion or modernization; startup funds for new, small- and medium-sized businesses; preservation and expansion of new and existing industrial facilities; neighborhood-based commercial revitalization efforts; and regional economic strategies.