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HUD No. 97-24
FOR RELEASE(202) 708-0685
11 a.m. FridayMarch 7, 1997
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WASHINGTON -- The U.S. Department of Housing and Urban Development today released its reviews on all 72 Empowerment Zones and Enterprise Communities, a ten-year program that provides federal aid and tax incentives to revitalize distressed communities. The agency reported progress in five of the six Empowerment Zones and in 62 of the 66 Enterprise Communities, and warned five communities that they were at risk of decertification, which would terminate their EZ/EC status.

"Our performance reviews show that, at this early stage, the vast majority of Empowerment Zones and Enterprise Communities are already showing real, and in some places, substantial progress," HUD Secretary Andrew Cuomo said. "The reports also highlight communities that are not yet showing progress and will be receiving more intensive HUD oversight and technical assistance."

"Because this program was designed to meet the needs of America's communities, not Washington's bureaucrats, this is not one program but really 72 programs tailored to help revitalize 72 different communities," said Cuomo. "Progress in each zone is measured against the goals communities set for themselves, not against a one-size-fits-all, cookie-cutter federal standard."

"The overall picture we get from these reports is that nationwide the zones are stimulating billions of dollars in private investment, beginning to revive inner city neighborhoods once given up for dead, creating jobs and helping families move from welfare to work," said Cuomo. "We also can see the key lessons we've learned that should be applied to round two."

The performance reviews are intended to serve as a management tool for the cities to receive feedback on how they are proceeding. HUD is also conducting an official program evaluation, which is a ten-year academic study that will issue an interim report past the five-year mark.

Among the top national performers at this stage of the program are the Baltimore and Detroit Empowerment Zones, and the Enterprise Communities in Akron, Burlington, Charleston, Columbus, Southern Nevada, Lousiville, Nashville, New Haven, Norfolk, Rochester and San Francisco.

Five communities are being notified that they could be dropped from the program if they don't improve their performance. Of the six EZs this includes the Camden portion of the Philadelphia-Camden zone. Of the 66 ECs, these include: Ouachita Parish, LA; Pittsburgh/Alleghaney County,PA; Oakland, CA; and Kingston-Newburgh, NY.

Key lessons cited in the report will be used by HUD in the near future to consolidate recommendations to President Clinton for the implementation of a second round of zones. They include:

  • Leverage Private Sector Investment. Almost all EZs and ECs that showed progress are creating new partnerships with the private sector, stimulating private investment to flow back into many inner city neighborhoods. The reports show that a small amount of federal funding can attract significant private sector investment. Projects that depended solely on federal funds tended to make the slowest economic development progress.

  • Make Community Development Comprehensive. Instead of the traditional approach where communities plan development projects piecemeal, local communities are best able, and most likely, to generate overall revitalization of distressed areas if they do comprehensive development in partnership with community residents, the private sector and all levels of government.

  • Achieve Community-Wide Buy-In. While there can be tension generated by meaningful and diverse community involvement in the planning and implementation process, this tension is often an effective barometer of the communities commitment to achieving community-wide buy-in and thus generating lasting change.

  • Use Performance Benchmarks. Performance measurement is an important part of ensuring that federal tax dollars and tax incentives are used effectively. This is also a critical tool to help communities gauge their efforts and make mid-course corrections to their projects as necessary.

  • Coordinate Among Government Agencies. Extensive interagency cooperation at the federal and local level is vital to the success of community revitalization efforts.

HUD formulated its opinions of the EZs and ECs for these reviews based on the experience it has gained working with all of the zones over the last two years. HUD also gave consideration to the following sources of information:

  • Performance reviews submitted by the EZ/EC identifying actions taken in accordance with the community's strategic plan.

  • Reviews/assessments by HUD's Office of Community Planning and Development field offices, including on-site monitoring.

  • Progress reports by State agencies that administer EZ/EC block grant funds.

  • A General Accounting Office report: "Status of Urban Empowerment Zones."

  • Third party analysis and on-site reviews conducted by academic institutions, including the Rockefeller Institute of Government in Albany, NY; the University of Illinois in Chicago; and the Center for Neighborhood Technology in Chicago.

  • A review of investment activities in Empowerment Zones performed by the firm of Price Waterhouse.

  • Consultation with HUD, the Department of Health and Human Services, and the Federal Community Empowerment Board.
"While only 24 months have passed since the designation of the Empowerment Zones, investment strategies suggest considerable rethinking has occurred at the local level to achieve positive and sustainable community development," said John Korbel of Price Waterhouse in summarizing the Price Waterhouse review of Empowerment Zones. "The Empowerment Zones have made significant strides in utilizing federal funds and tax incentives to attract private sector investment, generate job growth, stimulate new business openings and expansions, construct new housing, expand homeownership opportunities, and stabilize deteriorating neighborhoods."

"While the Empowerment Zone effort will undoubtedly be judged by the tangible outcomes such as number of jobs created, housing units constructed and businesses relocated or expanded, it very well could be the intangible outcomes, such as a renewed notion that local residents can effect change, that becomes the true measure of...(their)....success," said Michael Bennett, the principal investigator for the National Empowerment Zones Action Research Project, which is based at the University of Illinois at Chicago. He is also a professor at the University.

"The EZ/EC initiative is intended to serve as a catalyst for locally generated strategies toward resurgence of distressed inner city areas," said Professor Richard Nathan, who authored and was the principal investigator of the Rockefeller Institute's report. "Knowing how complex the task is and how other efforts have fared in this environment, we are impressed by the amount of serious effort and activity generated by the EZ/EC initiative."

Nathan, the Director of the Rockefeller Institute of Government, served as an official in the Republican Administration of President Nixon.

Explaining how the research for the Rockefeller Institute's study was organized, David Wright, who coordinated the project's administration, which involved experts from 18 universities, said: "Local field associates in each of the 18 communities use interviews, focus groups, individual case studies, and local data sources to collect information on the wide range of...activities being implemented in each community. The field associates... include some of the most renowned experts in the nation."

Wright, Director of Urban Studies at the Rockefeller Institute, served in the Democratic Administration of New York Governor Mario Cuomo.

The six Empowerment Zones -- Atlanta, Chicago, Baltimore, Detroit, New York City and Philadelphia/Camden -- receive $250 million in tax incentives, along with $100 million in flexible social service block grants over 10 years.versupply of new high-rent apartments. In Denver, new apartment projects are continuing to fill, but rent concessions are widespread.

U.S. Housing Market Conditions brings together data from the housing, real estate, and primary and secondary mortgage markets. Data are collected from housing organizations such as the National Association of Homebuilders, the National Association of Realtors, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Other data come from HUD, the Census Bureau and the Commerce Department.

The report, issued quarterly, is available by subscription at a cost of $30 per year. Write HUD USER, PO Box 6091, Rockville, MD 20849, or call HUD USER at 1(800)245-2691.

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