Questions and Answers for Renewal Communities Workshops (8/22/01 revision)

* APPLICANTS WHO ARE NOW ECs or EZs

* ROLE OF THE STATE

* HOW THE APPLICATION WILL BE EVALUATED

* POST DESIGNATION

* DESIGN OF THE CORA

* ADDITIONAL QUESTIONS

* APPLICATION PROCESS

* ELIGIBILITY

* POVERTY RATES

* CENSUS TRACTS

* POPULATION CRITERIA

* LEVERAGING OF COMMITMENTS

These Renewal Community Questions and Answers are merely a study guide and not intended to provide an authoritative interpretation of the legal and administrative requirements governing HUD's Renewal Community Initiative or any other federal requirements. For official guidance on the RC initiative, please refer to the Interim Rule (24 CFR part 599) published on pages 35849 to 35860 of the July 9, 2001 Federal Register and the Notice Inviting Applications. When the Interim Rule is cited in the Q&As, only the section number will be used, for example, "599.107(b)."

APPLICATION PROCESS

1. Does the course of action limit the types of actions to business activities only or can it include such actions as housing and recreational activities within the nominated area? The Course of Action should be limited to at least four of the six strategies listed in the Interim Rule 599.107.

2. Why aren't public hearings and direct participation a requirement in the development of the course of action? Applicants are required to provide certification of public notice. HUD does not mandate a specific form of community participation or notice, but communities are encouraged to use a variety of ways of involving the public. See 599.203 (c).

3. Does each nomination package need to show the boundaries of their nominated area on an original census bureau plot map using 1990 census geography? No, unlike the Round III EZ requirement that Applicants show the boundaries of their nominated area on a 1990 census tract outline map, Renewal Community applicants may submit a map of their choice so long as it shows each of the 1990 census tracts making up the nominated area and clearly delineates the boundaries of the proposed Renewal Community.

4. To what extent may CDBG funds be used for developing a Tax Incentive Utilization Plan for a Renewal Community (RC) or Round III Urban Empowerment Zone (EZ), for developing an EZ Strategic Plan, or to cover the costs associated with the submission of an application for designation of an area as an EZ or RC? Please refer to the CDBG regulations, 24 CFR Part 570. As a general rule, use of CDBG funds is permissible when the proposed expenditure is for an eligible activity and meets a national objective. At least 70% of a community's CDBG expenditures must be for activities that meet the national objective of benefiting low- and moderate-income people. Planning also is a CDBG-eligible activity if it meets the criteria set forth in 24 CFR 570.205. However, the recipient's total expenditures for administrative and planning costs under section 206 may not exceed 20% of its total CDBG expenditures.

5. If an entity wants to submit a Renewal Community application can that entity submit an application directly to HUD for CDBG funds to cover the costs associated with the submission of an RC application? No. It's up to the entitlement community or the state to decide whether they wish to use CDBG funds for these costs.

6. Will the applicant's statistics and narrative information indicating poverty, unemployment and general distress be rated and ranked as part of the Renewal Community scoring? Scoring is based on specified statistics, not on narrative information. See 599.105 & 599.303.

7. Is there any way that I can compare my renewal community nominated area with other urban and rural areas eligible to compete for a Renewal Community designation? Applicants are welcome to do the research they feel necessary to determine the merits of their application, but in the interests of fairness HUD cannot share information about the status of applications or notices of intent to apply.

ELIGIBILITY

8. Why do existing Empowerment Zones and Enterprise Communities receive preference for the first twenty RC designations? HUD is limited to the selection criteria as authorized in the statute enacted by Congress. Existing EZs or ECs receive preference provided at least one census tract of the designated area is included in RC nominated area.

9. Q. If you are not selected for a Round III EZ designation, does the EZ applicant get preference for obtaining an RC designation? Only existing EZs or ECs get a preference. See 599.401 (b). INCOME 10. In the case of Renewal Community nominations, is HUD's definition of low income based solely on a percentage of median income, such as 80%, 50% or 30%? Yes. The data that HUD compiled for this competition lists the number of households in each census tract whose incomes are below 80% of the Household Adjusted Median Family Income. The HAMFI reflects a HUD adjustment, however, and the adjustment comes in several forms, such as a household size adjustment and also an area adjustment that replaces local MFI with US or state MFI, or with a high rent based number. See 599.105(d).

11. Where exactly do people get the Household Adjusted Median Family Income (HAMFI)? HUD-adjusted area median family income (HAMFI) -- In 1974, Congress defined "low income" and "very low income" for HUD rental programs as incomes not exceeding 80 and 50 percent, respectively, of the area median family income, as adjusted by HUD. Statutory adjustments now include upper and lower caps for areas with low or high ratios of housing costs to income and, for each non-metropolitan county, a lower cap equal to its State's non-metropolitan average. Estimates of the median family income and the official income cutoffs for each metropolitan area and non-metropolitan county are based on the most recent Decennial Census results and then updated each year by HUD. Each base income cutoff is assumed to apply to a household of four, and official cutoffs are further adjusted by household size: one person, 70 percent of base; two persons, 80 percent; three persons, 90 percent; five persons, 108 percent; six persons, 116 percent; and so on.

UNEMPLOYMENT

12. Does the unemployment requirement apply to the nominated area as a whole and not to each individual tract? Yes. See 599.105(b).

13. We have been calculating the unemployment rate by looking at the 1990 number of unemployed for the nominated area and then determining what percentage this represents of the total 1990 persons listed as employed or unemployed (the sum of the two). Which is correct? Our on-line application system does the calculations for you and the practice system allows you to do all planning necessary. The correct procedure is the number of unemployed persons divided by the sum of employed persons and unemployed persons.

14. It was noted that a 9.4% unemployment rate was necessary to be eligible for an RC designation. This sounds higher than 1 1/2 (150%) of the national unemployment rate. Is the 9.4% figure correct? This would place the national rate at 6.3%? The nominated area must have unemployment greater than 9.4%, i.e. 9.401% or greater. This figure is based on 150% of the 1990 national unemployment figure.

POVERTY RATES

15. Does the EZ 20% and 25% poverty rate requirement regarding a census tract with a population less than 2,000 and where 75% of the tract is zoned for commercial or industrial apply to Renewal Communities? No. EACH census tract in the RC nominated area must have at least 20% poverty unless it is on an Indian Reservation in which case we take the nominated area as a whole. 16. Is it 20% of households or persons living in poverty in each tract? HUD is looking for 20% of persons living in poverty in each tract. 17. What does the 20% poverty rate mean and how is the poverty rate determined for a given census tract? Poverty rates are taken from the Decennial Census. Following the Office of Management and Budget's (OMB) Statistical Policy Directive 14, the U.S. Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is poor. If a family's total income is less than that family's threshold, then that family, and every individual in it, is considered poor. The poverty thresholds do not vary geographically, but they are updated annually for inflation using the Consumer Price Index (CPI-U). The official poverty definition counts money income before taxes and does not include capital gains and noncash benefits (such as public housing, Medicaid, and food stamps). Poverty is not defined for people in military barracks, institutional group quarters, or for unrelated individuals under age 15 (such as foster children). These categories are excluded from the poverty universe--that is, they are considered neither as "poor" nor as "nonpoor." 18. Will the documentation regarding pervasive poverty that is submitted with the Certification for Economic Condition Requirements be reviewed as part of the selection process and will it be rated? Providing satisfactory documentation of pervasive poverty is a requirement for an application to be rated and ranked. All applications must complete the same certifications to qualify. See 599.105(a)

19. Is there a page limit on the Course of Action part for the RC application? If not, what is the recommended length? There is no page limit, but remember we do not score it. Be sure to include the required contents but there is no need to provide extraneous details or special formatting. We do not have a recommended length.

CENSUS TRACTS

20. Is the "raw" number of households below the 80%, median income available on HUD's site? How and where do you get the unemployment data at the census tract level? What is an economically distressed census tract and where can I find statistics or data on this? Unemployment, poverty and household income data at the census tract level is on our website at https://www.hud.gov/offices/cpd/ezec/index.cfm. Also on this page is the list of GAO distressed census tracts. POPULATION CRITERIA

21. Will nominated areas having large populations (200,000) be rated with areas having smaller populations (2000 or 4000)? Urban and rural nominated areas that meet the eligibility requirements are ranked separately. Then, selections are made considering the required preferences for existing EZs or ECs and for rural area nominations. The remaining designations will be made from both rural and urban areas in rank order. See 599.401, 403 and 405.

LEVERAGING OF COMMITMENTS

22. Can the Renewal Community applicant get a blanket sign off from the State instead of having to get signatures for each of the certifications? No, each of the required Certifications and the Course of Action must have the original signature of the responsible official who is authorized to act on behalf of each nominating State or local government named in the application documents, including those documents that pertain to the certifications. See 599.101(c) and 599.107(a)(1).

23. Would reducing utilities costs by a utility company defined as a municipal cooperative be considered as a local effort/action in meeting Course of Action requirements? A reduction in a municipal entity's fees or costs that otherwise would apply in the nominated area appear to meet the course of action requirements. See 599.107(a)(2)(v)(A) and (B). In addition, the reduction of fees or costs does not have to be limited to future actions but could be included in the course of action even if the reduction within the nominated area is either complete or ongoing. See 599.107(c).

APPLICANTS WHO ARE NOW ECs or EZs

24. If a portion of a Round I or II rural EC is included in the Renewal Community's nominated area will the entire Round I or II rural Enterprise Community designation cease to exist? Yes. However, the loss of designation may not result in the loss of grant funds previously awarded.

25. If all of the first twenty Renewal Community slots in Category 1 that give preference to Empowerment Zones (EZs) and Enterprise Communities (ECs) go to EZs and ECs, what then becomes of the "freed-up" EZ and EC slots? The Community Renewal Tax Relief Act of 2000 (CRTR Act) provides that when a Round I and Round II Empowerment Zone is designated as a Renewal Community, it ceases to exists as an EZ, but its former EZ slot will be available to other applicants through a competitive process. This does not apply to ECs. If an ECs gets a designation as an RC its lost designation would not become available to other applicants.

26. What would be the incentive for a current Empowerment Zone or Enterprise Community to be designated as a Renewal Community? Please see the Tax Incentive Guide for Businesses to compare the benefits of each. Also, ECs' benefits end on December 31, 2004 and RCs' benefits end on December 31, 2009. For example, Renewal Communities have a 0% Capital Gains Tax Incentive for businesses in the nominated area and a Commercial Revitalization tax credit that the EZ/ECs do not. Applicants need to determine the benefits for their community on a case-by-case basis by involving business partners in their Tax Incentive Utilization Plan.

ROLE OF THE STATE

27. Has HUD contacted the States to ask them to designate the Office and contact person who will certify the Renewal Community applications? HUD has not contacted States to specifically ask them to designate an office and contact person, but since a successful RC is based on partnerships and requires a nomination from the State, it would be helpful if States take that step. Also, for local governments who want to know the contact information for the current urban EZs and ECs, that list is available by calling 202-708-6339. In addition, questions about the situation in specific states may be submitted by email to john_haines@hud.gov, or by facsimile to 202-401-7615 or 202-708-3363.

HOW THE APPLICATION WILL BE EVALUATED

28. Why are areas of highest crime (Local Crime Index Rate) not given priority for Renewal Community nominated areas where economic development is needed the most instead of census tracts with lower crime rates? HUD is limited to the selection criteria in the authorizing statute enacted by Congress. The Renewal Community initiative takes an assets based approach to economic development. A low crime rate is one of the assets that a community can use to leverage resources for its course of action.

29. How can a nominee calculate the Local Crime Index (LCI) for a nominated area if crime data is not available for individual census tracts? If it is impossible to determine the LCI for the nominated area because the boundaries of the crime reporting sectors do not correspond to the boundaries of the census-tract based nominated areas, then the nominating governments should use data from the smallest-sized sectors that most closely approximate and include the nominated area.

POST DESIGNATION 30. Is there any intention of providing funding to Renewal Communities or Round III Empowerment Zones next year or later? Congress has not authorized such RC funding for this year or later at this time.

ADDITIONAL QUESTIONS

31. Are there HHS grants that non-profit agencies can apply directly for consideration? Please see www.dhhs.gov for more information about DHHS grants programs.

32. What are the Champion Communities? Who made them that? Champion Communities are communities that applied for the Round I EZ/EC competition and for who did not win a designation, but were deemed by HUD to have significant merit in their applications. Some States supported Champion Communities with their own resources and incentives and some Federal competitions provided preference points.