HUD Archives: News Releases

HUD No. 98-31
Further Information:For Release
In the Washington, DC area: 202/708-1420Saturday
Or contact your local HUD officeJanuary 31, 1998


CLEVELAND - Vice President Al Gore today announced that Cleveland has been designated a full Empowerment Zone by the Clinton Administration, opening the way for economically distressed areas of the city to benefit from new federal tax incentives to stimulate job creation and economic development.

The Vice President made the announcement from Los Angeles via satellite television link-up with Housing and Urban Development Secretary Andrew Cuomo, Ohio Congressman Louis Stokes and Cleveland Mayor Michael White, who were all in Cleveland.

"Under Congressman Stokes and Mayor White's leadership, Cleveland's economic renaissance has captured the attention of the nation," Vice President Gore said. "Through the Administration's Empowerment Zone initiative, we are working side-by-side with Cleveland's leaders to assure that residents see greater economic opportunity well into the 21st Century."

Cuomo said Cleveland's strong performance as a Supplemental Empowerment Zone shows the city will be able to accomplish even more as a full Empowerment Zone.

"Like its newest tourist attraction, Cleveland's economy is rocking and rolling," Cuomo said. "We hope today's designation will speed up the tempo of the city's economic growth."

"Empowerment Zones are powerful engines for job creation and economic growth that can transform some of our poorest neighborhoods and the lives of people living there," Cuomo said. "These zones create a partnership for success between the federal government, local government, the businesses community and neighborhood residents."

Cuomo announced that President Clinton's 1999 Federal Budget, to be presented to Congress Monday, will ask for the designation of 20 new Empowerment Zones in urban and rural areas. The budget provides $1.5 billion over 10 years for the 15 new urban zones.

"President Clinton and Vice President Gore are enthusiastic supporters of Empowerment Zones because they know the federal investment pays dividends many times over, generating far greater amounts of business investment in the zones," Cuomo said.

Congressman Louis Stokes said: "In the Greater Cleveland area, we have experienced firsthand the value of being a Supplemental Empowerment Zone. Today's announcement will provide our area with the full range of Empowerment Zone benefits. I applaud President Clinton, Vice President Gore and Secretary Cuomo for their strong commitment to revitalizing America's urban areas. I am proud to be a part of this important effort."

Cleveland Mayor Michael R. White said: "Cleveland is proud to accept the status as a full Empowerment Zone and the benefits that we will be able to offer to businesses and employers that hire EZ residents. Cleveland's focus on economic development and job creation is at the core of our proactive plan to revitalize our neighborhoods and improve the quality of life for her residents. This historic announcement will allow us to implement several new measures including a Brownfields Tax Credit Incentive, a Public School Renovation Tax Credit and a Work Opportunity Tax Credit. This means clean buildable land, renovated schools and needed jobs for our residents."

In 1994, the Clinton 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.

Cleveland and Los Angeles have both been Supplemental Empowerment Zones since 1994. Today's designation of Cleveland and Los Angeles as full Empowerment Zones was made possible under the Taxpayer Relief Act of 1997.

The Cleveland SEZ consists of a cluster of four contiguous neighborhoods on the East side of Cleveland: Hough, Glenville, Fairfax and the industrial Midtown Corridor. As an SEZ, Cleveland received: a HUD $87 million Economic Development Initiative grant; $87 million in HUD Section 108 loan guarantees; $3 million in Title XX Social Services Block Grant funds; and access to EZ/EC - specific tax-exempt bond financing.

The focus of Cleveland's investments thus far has been targeted toward economic development. The city has concentrated on identifying barriers to employment for Empowerment Zone residents, providing job training and job placement, and assisting businesses to remain in the Empowerment Zone. In addition, the city has focused on developing affordable housing opportunities and increasing the safety of commercial areas of the Empowerment Zone.

The Cleveland SEZ has shown strong growth with over 175 jobs having been already created and another 500 projected during the next two years. Currently, public and private investments exceed $120 million in the SEZ, with commitments of an additional $200 million plus over the life of the program.

TAX PROVISIONS for the new Cleveland Empowerment Zone are as follows:

  • Employer wage credit: Businesses in the Empowerment Zone get up to a $3,000 per resident tax credit for hiring Zone residents on a full or part-time basis.

  • Increased Section 179 Deduction: Businesses can deduct up to $20,000 of the cost of qualifying property - such as machinery and equipment - in the year it is placed in service instead of recovering the cost over a period of years through depreciation.

  • Tax-exempt bond financing: $3 million in tax-exempt federal private activity bonds is available to finance zone-related economic development activity.

Cleveland's Empowerment Zone can also take advantage of:

  • Tax incentives for so-called Brownfields to promote the clean-up and redevelopment of contaminated industrial sites. Environmental clean-up costs paid or incurred before January 1, 2001 will be immediately tax deductible.

  • The Work Opportunity Tax Credit, enabling employers to claim up to a $2,400 tax credit for hiring 18-24 year-old Zone residents and other hard-to-employ residents who start work before July 1, 1998.

  • Public School Renovation Tax Credits, providing up to $400 million per year in tax credits over the next two years to states for renovating and equiping of qualified public schools.


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