HUD's FY 99 Budget
Key Programs and Initiatives: Creating Jobs and Spurring New Economic Development

President Clinton's proposed 1999 budget will boost HUD funding by $1.8 billion, in large part through increases in programs and initiatives that have a solid track record on job creation, and urban economic development and housing. While a strong national economy has created 14 million new jobs, until now only 13 percent of those jobs have been created in cities, where people moving from welfare to work need them most. Only 3 percent of the new businesses have been created in central cities, where the poverty rate has increased 50 percent the past 20 years.

Millions of Americans and communities across the nation will benefit from the President's urban agenda and its emphasis on creating new housing opportunities, expanding homeownership, spurring new economic development and creating tens of thousands of new jobs. The proposed 50,000 Welfare-to-Work vouchers and $400 million Community Empowerment Fund are a large step in this direction. Some of the other HUD programs receiving significant budget increases - and those which consistently assist in promoting jobs and economic growth - include:

15 New Empowerment Zones

To build on the early success of the Empowerment Zone Initiative, the 1997 Taxpayer Relief Act created 20 Empowerment Zones -- 15 new urban zones and 5 new rural zones. Second Round Zones are provided with tax incentives to attract economic activity, but need the direct spending complement that the successful first round Zones received. The President's 1999 HUD Budget provides $1.5 billion funded over 10 years in equal $150 million amounts for the 15 new urban zones.

In 1995, the Administration selected nine Empowerment Zones -- six urban and three rural -- which entitled them to receive federal tax incentives and direct funding for physical improvements and social services. These communities fashioned comprehensive revitalization strategies, with all local stakeholders - residents, non-profits, business and government - at the table. The early results have been extremely encouraging: they have leveraged billions of dollars in private investment and new jobs and business activity are evident in many of these communities.

Following the model set forth in the first round, funding will be made available for a broad range of job stimulation activities, with an effort to link revitalization plans to welfare reform strategies. Examples of eligible activities include: community policing, health care, neighborhood development, brownfields cleanup and redevelopment, economic development projects, work force development, and housing assistance.

Spending Power For Community Development Block Grants Up $238 Million

A total of $4.725 billion is requested for the major Community Development Block Grant Program (CDBG), an increase of more than $50 million over the 1998 enacted level, and an all time high. Further, HUD has substantially reduced the requested set-asides for other programs within CDBG, from $479 million in FY 1998 to $292 million in FY 1999. As a result, funding available for formula allocation to state and local governments effectively increase by $238 million FY 1999, a five percent increase.

In addition, the CDBG will support $1.3 billion in new loan guarantees under the Section 108 program of the Housing and Community Development Act. This is the same level enacted in 1998.

CDBG provides communities and states with extremely flexible funding to address locally-determined community and economic development priorities. CDBG funds are used to rehabilitate housing, improve infrastructure, provide job training, finance revolving loan funds, and finance other community-determined projects. Under the 1999 budget, the CDBG and Section 108 programs are expected to create 276,036 jobs.

CDBG funds are allocated to 900 communities, all States and urban counties based on estimates of need and poverty rates. CDBG activities must meet one of three broad national objectives:

• Benefit low-and moderate-income persons.
• Aid in the prevention or elimination of slums and blight.
• Meet other particularly urgent community development needs.

Brownfields Funding Up 50%

Brownfields are contaminated industrial or commercial sites - the legacy of an earlier, less environmentally-conscious era in America. In 1999, President Clinton proposes doubling funding for HUD's Brownfields Redevelopment program - from $25 million this year to $50 million next year - to target more of these sites for cleanup and reuse. There are an estimated 450,000 brownfields across the nation. HUD works closely with EPA which has responsibility for the actual cleanup effort, while HUD concentrates on the redevelopment of the sites after cleanup has been completed.

HUD's program is highly leveraged, and about $4 in loans and loan guarantees are expected for each $1 HUD awards in 1999 - for an additional $200 million investment in these communities. Because of the high dollar leverage, HUD's grant awards are expected to create about 28,000 construction and other related jobs.

Youthbuild Funding Up 30%

Youthbuild provides hands-on job training, as well as academic and job skills training, to at-risk young men and women between the ages of 16 and 24. Focused on inner-city high school drop-outs who face poverty, broken homes, and few good choices for the future, this is another important tool in our national effort to help move families from welfare to work. Youthbuild has an established record in reaching disadvantaged young men and women; the average wage earned by trainees is $7.00 an hour. In 1999, it is proposed as a stand-alone program funded at $45 million dollars - a 30 percent increase over what HUD can provide in 1998. It is expected to serve up to 6,000 inner city youth.