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HUD Archives: News Releases

HUD No. 98-127
Further Information:For Release
In the Washington, DC area: 202/708-0685Monday
Or contact your local HUD officeMarch 23, 1998


WASHINGTON - Housing and Urban Development Secretary Andrew Cuomo said today that reports of many people leaving the welfare rolls without finding jobs are fresh evidence of the need for two initiatives proposed by President Clinton: a new HUD Community Empowerment Fund that would create and retain an estimated 280,000 jobs, and new welfare-to- work rental assistance vouchers that would help families entering the workforce afford housing.

The President proposed $400 million for the Community Empowerment Fund in his 1999 Federal Budget, to help attract new businesses and help existing businesses expand in economically distressed communities where many welfare recipients live.

The President's budget also proposed the creation of 50,000 new rental assistance vouchers through a new $283 million welfare-to-work initiative to provide stable housing to families struggling to move off welfare rolls and join the workforce.

"Welfare reform is designed to help families move from welfare to work - not from welfare to deeper poverty, hunger and homelessness," Cuomo said. "The Community Empowerment Fund and other jobs programs President Clinton has proposed will make welfare reform succeed by helping people go to work so they can climb out of poverty under their own power. The new welfare-to-work vouchers will reward people who are willing to work hard to become self-supporting."

The Community Empowerment Fund would improve and combine two existing HUD programs - the Economic Development Initiative and the Section 108 Loan Guarantee Fund - to promote economic development in distressed communities and bring economic opportunity to their residents. The two programs have created and retained more than 775,000 jobs since 1993. HUD has $38 million in the current year's budget for competitive Economic Development Initiative grants - less than 10 percent of the funding the President is seeking for Community Empowerment Fund grants next year.

"We all agree that a paycheck is better than a welfare check, " Cuomo said. "The best way to create more paychecks is to help businesses create more jobs, especially in areas of high poverty and unemployment. Today, most jobs are being created in suburbs - not in the central cities where many families on welfare live. Many welfare recipients can't afford cars and don't have access to good public transportation. We need to make it easier for them to find jobs in the communities where they live."

"American businesses is the most powerful engine of job creation and economic growth the world has ever known," Cuomo said. "The Community Empowerment Fund would strengthen businesses in communities where jobs are needed most. The Fund is an investment in America's future that can pay dividends for employers, for communities, and for people willing to work hard to build better lives for their families. It uses limited federal dollars as a catalyst to stimulate far greater private investment in communities with the greatest need for economic growth."

The Community Empowerment Fund would distribute the $400 million in grants to states and local governments, which in turn would use the money to leverage an estimated $2 billion in private sector loans to businesses. The investment from the Community Empowerment Fund would be used to buy down interest rates on the private sector loans and to guarantee repayment of the loans. As a result, businesses in low-income communities would gain access to long-term, low-interest loans that are now unavailable.

The combined federal and private sector investment would go toward activities such as: revolving loan funds for business expansion and modernization; start-up funds for new small and medium-size businesses; preserving and expanding industrial facilities; neighborhood-based commercial revitalization efforts; and regional economic strategies.

The 50,000 new welfare-to-work rental assistance vouchers would go to people who are on welfare or have been on welfare in the past year, and need the rental assistance to enable them to get jobs. The new vouchers would help more poor people - many of them unable to get to jobs or able to get to jobs only with great difficulty because they lack cars - to rent housing on the private market and live closer to available jobs, Cuomo said.

HUD already provides 1.4 million rental assistance vouchers to low-income Americans under the tenant-based Section 8 program, and about 446,000 go to families with children whose primary source of income is public assistance. However, many people eligible for housing assistance can't get it because HUD does not have the funds. Only one quarter of welfare recipients receive any type of housing assistance, and less than half of these receive rental vouchers that enable them to rent housing on the private market.

Under the President's proposal, the new vouchers would be awarded on a competitive basis to local housing authorities around the country. People receiving HUD rental vouchers pay 30 percent of their income for rent, with HUD subsidies picking up the remainder of their rent.

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