Avis C. Vidal co-principal investigator of the evaluation of the Empowerment Zone and Enterprise Community program.

Principal Research Associate The Urban Institute Washington, D.C.

May 19, 1998 ...Second, the bill makes no provision for managing Renewal Communities-and good, entrepreneurial management costs money. This would not be a problem for Renewal Communities that are also Empowerment Zones, because they have Title XX funds (or local matching funds) to support the management entities they already have in place. It would be a problem for newly-designated zones, and for Renewal Communities that are also Enterprise Communities, since many will have no federal funding to support their zone management entities after the current fiscal year.

What, then, accounts for the limited number of successful zones pointed to by Erickson and Friedman and others? The weight of the available evidence indicates that "successful" zones have two characteristics:

Successful zones are good places to do business. Although the zones designated under state programs include residential areas that are experiencing some level of distress (most commonly measured in terms of high unemployment, high poverty rates, and low median income), they also include areas with genuine development potential, including a labor pool with good basic skills.

Successful zones are actively managed by individuals with entrepreneurial skills-people who (a) reach out to business owners in the zone to keep them informed about the benefits available to them and provide them with tax forms and specific information about exactly how to take advantage of the benefits; (b) market the zone and its advantages to firms outside the zone that seek new locations; and (c) represent zone businesses in seeking improvements, such as new infrastructure, to the zone.

https://www.urban.org/testimon/vidal5-19-98.html

The RC Initiative focuses on creating meaningful and pro- ductive partnerships, which HUD will fully support through technical assistance and capacity-building activities. Technical assistance available to RCs will include easy access to available Federal resources and programs, a network for reaching out to the business community, and help in implementing courses of action. Building Lasting Alliances. The RC Initia- tive looks at ways to gain support and commitment from State and local governments to compose and refine a course of action that substantively addresses regulatory barriers, tax relief, and improvement of local services in the nominated areas. EZ Designation Increases Business EZs prove that even seemingly insurmountable obstacles faced by a distressed com- munity can be overcome through public and private partnerships. The successes of EZs can be tangibly measured in $4 billion in new private-sector investments in community development, in improved bond ratings, and in increased numbers of decent and affordable housing structures. Seven New Zones. Urban communities will have the opportunity to compete for seven additional designations available in Round III. Currently, there are 23 designated urban EZs representing an elite group of communities renowned and nationally recognized for their successes in urban revitalization. More Tax Credits. One of the major bene- fits offered to Round III EZ designees is a generous multimillion-dollar tax package that will include the EZ wage credit and the Work Opportunity Tax Credit. Federal Bonus Points. Other benefits in- clude special preferences and consideration in obtaining funding through other Federal competitions, with many offering bonus points to EZs. Technical Assistance. As a designated EZ, awardees receive funding and program information through HUD's Office of Empowerment Zones and Enterprise Com- munities. Round III EZ designees will have a network of experienced and knowledge- able Round I and Round II EZ communities to draw from for guidance and experience.

https://www.comcon.org/

C. Cooperation Among the Nominating Governments and Community Organizations

Every application for RC designation must contain a course of action describing the commitment to cooperation in the nominated area by the nominating governments and community organizations that meets the requirements of this section II.C. listed immediately below.

1. Commitment to a course of action. A course of action is a written document, signed by the nominated area's State and local governments, or in the case of a nominated area located within an Indian reservation, the reservation governing body, and community-based organizations which commits each signatory to undertake and achieve measurable goals and actions within the nominated area upon its designation as a Renewal Community.

2. Community-based organizations. For purposes of the course of action, ``community-based organizations'' includes for-profit and non- profit private entities, businesses and business organizations, neighborhood organizations, and community groups. Community-based organizations are not required to be located in the nominated area as long as they commit to achieving the goals of the course of action in the Renewal Community.

3. Timetable. The course of action must include a timetable that identifies the significant steps and target dates for implementing the goals and actions.

4. Performance measures. The course of action must include a description of how the performance of the course of action will be measured and evaluated.

5. Required goals and actions. The course of action must include at least four of the following:

a. A reduction of tax rates or fees applying within the Renewal Community;

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b. An increase in the level of efficiency of local services within the Renewal Community, such as services for residents funded through the Federal Temporary Assistance for Needy Families program and related Federal programs including, for example, job support services, child care and after school care for children of working residents, employment training, transportation services and other services that help residents become economically self-sufficient;

c. Crime reduction strategies, such as crime prevention, including the provision of crime prevention services by nongovernmental entities;

d. Actions to reduce, remove, simplify, or streamline governmental requirements applying within the Renewal Community, such as:

i. Density bonus. Permission to develop or redevelop real property at a higher density level than otherwise permitted under the zoning ordinance, e.g., increased height or increased number of residential or business units;

ii. Incentive zoning. Providing a density bonus or other real property-related incentive for the development, redevelopment, or preservation of a parcel in the designated area;

iii. Comprehensive or one-stop permit. Streamlining construction or other development permitting processes, rather than requiring multiple applications for multiple permits, e.g., for demolition, site preparation, and construction, the developer or redeveloper submits asingle application that is circulated for the necessary reviews by the various planning, engineering, and other departments in the county or municipality;

iv. Variance and exception policies. Counties or municipalities may pass ordinances that permit variances to or exceptions from certain zoning or other land use limitations. Examples include a reduced building set-back requirement or a reduced requirement for the provision of parking. The policy may be limited to a particular geographic area.

v. Voluntary environmental compliance program. A shared or limited environmental liability program, with limited liability from certain legal or administrative action in exchange for undertaking an approved program of environmental investigation, hazard control, and on-going risk reduction activities. Typically, the liability limitation is for future environmental cleanup (and not against lawsuit for damages). Risk of cleanup may be shared by the developer or property owner and the government;

e. Involvement in economic development activities by private entities, organizations, neighborhood organizations, and community groups, particularly those in the Renewal Community, including a commitment from such private entities to provide jobs and job training for, and technical, financial, or other assistance to, employers, employees, and residents from the Renewal Community;

f. The gift or sale at below fair market value of surplus real property held by State or local governments, such as land, homes, and commercial or industrial structures in the Renewal Community to neighborhood organizations, community development corporations, or private companies.

6. Recognition of past efforts. The course of action is not limited to future goals and actions. Past efforts within the previous eight years, either completed or on-going, of the nominating State or local governments in reducing the various burdens borne by employers and employees in the nominated area by undertaking any of the goals or actions listed in section II.C.5., above, of this notice may be used to meet the course of action requirement. If past efforts are used, the course of action must identify which of the required goals and actions listed in section II.C.5. they address; the timetable for their continued implementation, if on-going; the community-based organizations involved, if any; and an evaluation of their performance and the performance measures used. https://www.epa.gov/brownfields/html-doc/fr080701.htm

Having been unsuccessful in getting members of the Senate Finance Committee to refrain from insisting on a host of amendments to his Chairman's mark, Senator William V. Roth on September 28 decided his $38.7 billion ten-year legislative package will sidestep panel action.

After three postponed markups since the week of September 18, Chairman Roth had hoped his fellow committee members would go along with his modified mark. At a September 27 executive session panel meeting, the Chairman presented members with his modified version which incorporated nearly half of the 73 proposed amendments. The tentative markup was postponed 24 hours as lawmakers considered their options. In the end, members were reluctant to give up their rights to offer amendments because--it is widely agreed--the Chairman's mark looked to be the committee's last tax cut vehicle of the 106th Congress.

On September 28, having met with members before the rescheduled markup, Chairman Roth decided to cancel drafting action on the measure. On October 3, Sen. Roth introduced S. 3152 (text: CR S. 9704-9729) as a stand-alone bill that was placed directly on the Senate calendar. According to aides, the thinking is that the legislation will not be brought up for Senate floor consideration. Rather, S. 3152 is intended to establish the Senate's position with regard to anticipated end-of-the-year negotiations between the White House and GOP leaders on a tax relief package that includes community renewal provisions.

The Community Renewal and New Markets Act of 2000 closely tracks a number of the provisions in the House-passed package (H.R. 4923) of tax incentives designed to spur renewal of economically distressed urban and rural communities. At the same time, however, the Chairman's mark contains a number of tax breaks what were not included in the House measure.

Key provisions of Chairman Roth's proposal would:

Provide for the designation of up to 30 renewal zones that would be eligible for a range of tax breaks, including zero capital gains tax rate for sales of qualifying assets. The new renewal communities would be designated by January 1, 2002, and the resulting tax credits would be available to all Empowerment Zones--the new ones as well as those already designated during Rounds I and II--between January 1, 2002, and December 31, 2009.

Provide $85 million in grants to Round II Empowerment Zones for FY2001 ($5 million to each urban zone and $2 million to each rural zone).

Provide $88 million ($250,000 each) in grants for FY2001 to the 88 Round I Enterprise Communities (excludes Round I communities which were subsequently upgraded to zone status under Round II).

Create a new markets tax credit with allocation authority of $1 billion in 2002 and $1.5 billion from 2003 through 2006.

Establish Individual Development Accounts which would provide financial institutions with a 90 percent tax credit for matching a maximum contribution of $300 per account; sunset Dec. 31, 2005.

Increase the annual low-income housing tax credit fro $1.25 to $1.75 per capita, beginning in 2001. The credit would be modified so that small population states would be given a minimum of $2 million of the annual credit cap.

Create a tax credit for renovating historic homes.

Authorize the issuance of tax credit bonds for the National Railroad Passenger Corporation ("Amtrak").

Create a broadband internet access tax credit.

Expand the expensing of environmental remediation expenditures to all qualifying sites ("brownfields").

Accelerate an increase in the private activity bond volume limits to $75 per resident of each state or $225 million, if greater, so that it would be fully effective in 2001, rather than phased in during 2003-2007.

Concluding Observations

The idea behind the RC/NM initiative has been described as a merger of President Clinton's "New Markets Initiative"--including a tax credit and other incentives designed to attract capital to low-income areas--with a House Republican proposal called the "American Community Renewal Act (H.R. 815), which would provide tax and regulatory relief to economically distressed areas and help poor families set up subsidized savings accounts. (12) Instead of a merger, however, the bipartisan, anti-poverty package has been characterized as a juxtaposition: "We allow two different forms to see what we can learn over the next several years about what works best in attracting investment and job growth," said Gene Sperling. (13)

Indeed, if a renewal communities/new markets initiative is enacted, it may be possible in a few years to examine the results and draw conclusions about which incentives, programs, and approaches seem to work best. The phenomenon of moribund urban and rural areas, and the myriad economic and human problems associated with them, will present a public policy challenge for the foreseeable future. The need to learn what works best argues for systematic collection of data that will facilitate program evaluation.

On the other hand, history has shown that drawing conclusions about these types of economic development programs will not be easy. By the late 1980s, about three dozen states had created a variety of enterprise zone programs, yet even today there is little information about what works and what does not. The simple fact is that it is difficult to judge the success of economic development efforts. As one report notes:

Although the economic development literature often discusses the potential effects of enterprise zones, empirical research on, or analysis of zone programs is somewhat limited. The modest amount of empirical research is due to two basic constraints: (1) the lack of reliable quantitative data to evaluate zone performance, and (2) the difficulty of isolating the effects of zone designation and incentives from those of other economic development factors and initiatives.

(14)

Compounding the difficulty of determining what works in the RC/NM initiative, should it come to pass, is one immutable fact: each empowerment zone or renewal community will be unique. They will differ in varying ways, including geographic and demographic characteristics, the nature of local governance, and unemployment and poverty rates-to name just a few.

https://cnie.org/NLE/CRSreports/Economics/econ-73.cfm#_1_13