    [Budget of the U.S. Government]
    [VI. Investing in the Common Good: The Major Functions of the Federal Government]
    [20. Community and Regional Development]
    [From the U.S. Government Publishing Office, www.gpo.gov]

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                     20.  COMMUNITY AND REGIONAL DEVELOPMENT

      ----------------------------------------------------------------------

                     Table 20-1.  FEDERAL RESOURCES IN SUPPORT OF COMMUNITY AND REGIONAL DEVELOPMENT
                                                (In millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                Estimate
                Function 450                1996   -----------------------------------------------------------------
                                           Actual      1997       1998       1999       2000       2001       2002
    ----------------------------------------------------------------------------------------------------------------
    Spending:
      Discretionary Budget Authority...     11,645      9,313     10,920      8,333      7,681      7,751      7,870
      Mandatory Outlays:
        Existing law...................        317        343       -112         63        126        255         63
        Proposed legislation...........  .........        157          5         20  .........        -15        -13
    Credit Activity:
      Direct loan disbursements........      1,963      2,313      2,460      1,908      2,118      2,210      2,143
      Guaranteed loans.................        839      1,454      1,941      2,055      2,090      2,159      2,022
    Tax Expenditures:
      Existing law.....................      2,650      2,700      2,740      2,720      2,700      2,640      2,425
      Proposed legislation.............  .........         40        450        551        565        544        489
    ----------------------------------------------------------------------------------------------------------------

      ----------------------------------------------------------------------
      Federal support for community and regional development helps build the
    Nation's economy, and helps economically distressed urban and rural
    communities earn a larger share of America's prosperity. The Federal
    Government spends over $12 billion a year, and offers about $2.7 billion
    in tax incentives, to help States and localities create jobs and
    economic opportunity, and build infrastructure to support commercial and
    industrial development.
      The needs of States and localities are varied and hard to measure.
    Still, Federal programs in this area have proved successful in creating
    stable and healthy communities that offer greater economic opportunity.
    The Government helps communities with basic infrastructure needs pay for
    constructing roads, improving water and sewage systems, and constructing
    affordable housing. For those affected by layoffs and rising job
    insecurity, Federal programs promote jobs skills through employment
    training and education, and promote access to jobs by helping businesses
    and rehabilitating commercial properties. Communities that are hard hit
    by natural disasters receive Federal assistance to rebuild
    infrastructure, businesses, and homes. States and localities also use
    these Federal funds to leverage private resources for their community
    revitalization strategies.

    Department of Housing and Urban Development (HUD)

      HUD provides communities with flexible funds to promote commercial and
    industrial development; enhance infrastructure; clean up abandoned
    industrial sites, or ``brownfields''; and develop strategies for
    providing affordable housing close to jobs. HUD estimates that projects
    for which it provided economic assistance from 1993 to 1996 created or
    saved 1.4 million jobs.

      Community Development Block Grant (CDBG): The CDBG program, for which
    the budget proposes $4.6 billion, gives States and localities flexible
    funds for activities that meet one of three national objectives: (1)
    benefit low- and moderate-income persons, (2) help prevent or eliminate
    slums or blight, or (3) meet other urgent community needs that pose
    immediate threats to public health. Every Federal dollar spent for CDBG
    leverages an estimated $2.31

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    in private and other investment. Communities spend CDBG funds to improve housing, public works, public services, and economic development, and to acquire or clear land.
      Seventy percent of CDBG funds go to over 900 designated central cities
    and urban counties, the remaining 30 percent to States to award to
    smaller localities. CDBG's Section 108 Loan Guarantee Program gives
    Federal guarantees to private investors who buy debt obligations issued
    by local governments, thus giving communities efficient financing for
    housing rehabilitation, economic development, and large-scale physical
    development projects. Indian CDBG programs provide services for Native
    Americans, primarily focusing on public infrastructure, community
    facilities, and economic development. In 1996, 84 Tribes received a
    total of $49 million in CDBG grants through competition.

      HOME: The budget proposes $1.3 billion in flexible HOME grants to
    States and communities to address their most severe housing needs. This
    program (classified in the Income Security function) generates an
    estimated $1.80 in private and other investment for every Federal dollar
    spent. Eligible activities include new construction, rehabilitation,
    acquisition of standard housing, assistance to home buyers, and tenant-
    based rental assistance. From the program's inception in 1992 to June
    1996, recipients have committed or used HOME funds to build or
    rehabilitate 201,000 housing units and to help 26,500 families pay their
    rent.

    Department of Agriculture

      The Agriculture Department (USDA) gives financial assistance to rural
    communities and businesses to provide safe drinking water and adequate
    wastewater treatment facilities; boost employment; and further diversify
    the rural economy. The budget proposes $2.5 billion in such assistance.
    Grants, loans, and loan guarantees go for constructing rural community
    facilities, such as health clinics and day care centers; constructing
    water and wastewater systems; and creating or expanding rural
    businesses. USDA offers loan assistance for building community
    facilities and water and wastewater facilities at interest rates tied to
    the community's income--the lowest-income communities receive
    significantly subsidized interest rates. These programs are designed to
    help rural communities with fewer than 10,000 residents. Since 1993,
    over 4,500 communities have received financial assistance to build or
    upgrade drinking water or wastewater systems, and the rural business and
    industry loan guarantee program has created or saved over 110,00 rural
    jobs.

    Department of the Treasury

      Treasury's Community Development Financial Institutions (CDFI) Fund,
    for which the budget proposes $125 million, provides grants, loans,
    equity investments, and technical assistance to qualified CDFIs--
    including community development banks, low-income credit unions,
    microenterprise funds, and many multi-bank community development
    corporations. The assistance, which must be matched by comparable non-
    Federal money, is designed to promote economic revitalization and
    community development. Federal funds may be used for small business,
    low-income housing, community facilities, the provision of basic
    financial services, and other community development activities. In 1996,
    the CDFI Fund approved $37 million for 32 CDFIs, serving 46 states and
    the District of Columbia. The fund also awarded $13 million to 38
    traditional banks and thrifts for increasing their activities in
    economically distressed communities and investing in CDFIs.

    Department of the Interior

      The Interior Department's Bureau of Indian Affairs (BIA), for which
    the budget proposes $1.7 billion in 1998, helps Tribes, Native American
    organizations, and individuals develop resources to improve their
    economies through financial assistance programs, various loans and
    grants, assistance in getting financing from other sources, and
    technical assistance in using agricultural and rangeland resources.
    BIA's guaranteed business loans in 1996 generated about $40 million in
    total financing, creating or sustaining over 1,700 jobs.
      Each year, BIA helps Tribes manage 16 million acres of forest land and
    conduct timber sales of $250 million that sustain over 10,000 forest and
    timber-related jobs, and helps Tribes manage mineral resources

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    and generate mineral income. BIA funds housing improvement and maintains
    over 4,500 single family housing units for BIA teachers and other
    reservation-based staff. Finally, BIA (with the Transportation
    Department) maintains and improves over 40,000 miles of public and BIA
    roads and 745 bridges, and addresses deficiencies at over 100 high-
    hazard dams on reservations.

    The Tennessee Valley Authority (TVA)

      The TVA adds to the prosperity of seven States by: (1) providing
    reliable supplies of electricity at rates that are among the Nation's
    lowest, (2) paying over $250 million a year to State and local
    governments in lieu of taxes, and (3) operating economic and regional
    development programs that provide flood protection, recreational
    facilities, navigation, and various other services. The budget proposes
    $106 million for these purposes, but TVA will develop a plan to
    eliminate Federal funding for these programs for 1999 and beyond. In
    1997 and 1998, TVA will work with Congress, State and local governments,
    and other interested parties and undertake a major effort to find
    alternate ways to fund, organize, and manage these programs. The
    proposal reflects TVA's efforts over several years to decrease its
    reliance on Federal funds to finance its activities.

    The Economic Development Administration (EDA)

      The EDA creates jobs and stimulates commercial and industrial growth
    in economically distressed areas--rural and urban areas with high
    unemployment, a large share of poor people, or sudden and severe
    distress. EDA's public works grants help build or expand public
    facilities to stimulate and foster industrial and commercial growth.
    Typical projects include industrial parks, business incubators, access
    roads, water and sewer lines, and port and terminal developments. From
    1992 to 1996, EDA awarded 821 public works grants, totaling $810
    million, to help economically distressed communities build these types
    of infrastructure projects.
      EDA's capacity building grants help communities pay for expertise to
    plan, implement, and coordinate comprehensive economic development
    projects. The grants also provide technical assistance to communities
    and firms to find solutions to problems that stifle economic growth. In
    addition, EDA's economic adjustment assistance grants help communities
    solve severe adjustment problems, such as those resulting from natural
    disasters and industry relocations or major downsizings. To date, EDA
    has approved 479 disaster recovery grants, totaling $403 million, to
    help impacted communities recover from natural disasters that include
    hurricanes, flooding, earthquakes, and tropical storms.

    Disaster Relief

      The Federal Government provides financial help to cover a large share
    of the Nation's losses from natural hazards. Over the past several
    years, spending from the two major Federal disaster assistance
    programs--the Federal Emergency Management Agency's (FEMA) Disaster
    Relief Fund and the Small Business Administration's (SBA) Disaster Loan
    program--has risen significantly, and private casualty insurers
    experienced their five most costly natural disasters. Why? Because the
    natural hurricane cycle seems to be entering a phase in which more
    hurricanes strike our shores; demographic and economic growth has been
    great in hurricane- and earthquake-prone areas; and global climate
    changes or cyclical weather trends seem to be increasing the number and
    severity of events.
      The Federal Government shares the costs with States for infrastructure
    rebuilding; makes disaster loans to individuals and businesses; and
    provides grants for emergency needs and housing assistance, unemployment
    assistance, and crisis counseling. In addition, the National Flood
    Insurance Program enables property owners to purchase flood insurance
    that's unavailable in the commercial market. To mitigate losses and in
    exchange for flood insurance, communities must adopt and enforce
    floodplain management measures to protect lives and new construction
    from future flooding. FEMA also encourages and supports mitigation
    measures before disasters strike by providing hazard mitigation grants,
    and sponsoring training, preparedness, and other planning events.

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    Tax Expenditures

      The Federal Government provides several tax incentives to encourage
    community and regional development activities: (1) A 10 percent
    investment tax credit for rehabilitating buildings that were built
    before 1936 for non-residential purposes (costing $340 million from 1998
    to 2002); (2) tax-exempt bonds for airports, docks, and wharves, as well
    as high-speed rail facilities which need not be government-owned
    (costing $9.3 billion over the same five years); (3) tax-exemptions for
    qualifying mutual and cooperative telephone and electric companies
    (costing $325 million over the five years); and, (4) tax incentives for
    qualifying businesses in economically distressed areas that qualify as
    Empowerment Zones--including an employer wage credit, higher up-front
    deductions for investments in equipment, tax-exempt financing, and
    accelerated depreciation (costing $3.2 billion over the five years). In
    addition, the law provides tax credits for contributions to certain
    community development banks.