    [Budget of the United States Government]
    [V. Investing in the Common Good: Program Performance in Federal Functions]
    [19. Community and Regional Development]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    [[Page 227]]

                     19.  COMMUNITY AND REGIONAL DEVELOPMENT

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

                     Table 19-1.  Federal Resources in Support of Community and Regional Development
                                                (In millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                   Estimate
                   Function 450                   1999   -----------------------------------------------------------
                                                 Actual     2000      2001      2002      2003      2004      2005
    ----------------------------------------------------------------------------------------------------------------
    Spending:
      Discretionary Budget Authority..........    11,027    11,493    12,327    12,327    12,472    12,781    13,062
      Mandatory Outlays:
        Existing law..........................       -18      -523      -637      -774      -851      -942    -1,086
        Proposed legislation..................  ........  ........       -54        44       125       151       157
    Credit Activity:
      Direct loan disbursements...............     1,715     2,064     2,762       N/A       N/A       N/A       N/A
      Guaranteed loans........................     1,606     2,439     2,946       N/A       N/A       N/A       N/A
    Tax Expenditures:
      Existing law............................     1,260     1,415     1,505     1,370     1,150     1,125     1,100
      Proposed legislation....................  ........  ........        66       487     1,000     1,341     1,648
    ----------------------------------------------------------------------------------------------------------------
    N/A = Not available.

      ----------------------------------------------------------------------
       Federal support for community and regional development helps build
    the Nation's economy, and helps economically distressed urban and rural
    communities secure a larger share of America's prosperity. The Federal
    Government spends over $11 billion a year, and offers about $1.4 billion
    in tax incentives to help States and localities create jobs and economic
    opportunity, and build infrastructure to support commercial and
    industrial development.
       Federal programs have stabilized and revitalized many of these
    communities allowing them to expand their economic base and support
    their citizens, particularly those in need. Communities 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 funds to promote commercial and
    industrial development, enhance infrastructure, and develop strategies
    for providing affordable housing close to jobs. HUD also provides grants
    and sponsors research to reduce the hazards created by lead-based paint
    in housing.
       Community Development Block Grants (CDBG) provide funds for various
    community development activities directed primarily at low- and
    moderate-income persons. CDBG funds go to improving housing, public
    works and services, promoting economic development, and acquiring or
    clearing land. Seventy percent of CDBG funds go to over 980 central
    cities and urban counties, and the remaining 30 percent go to States to
    award to smaller localities. The Section 107 set-aside within CDBG, the
    University Partnerships Program, provides grants to academic
    institutions including Historically Black Colleges and Universities,
    Hispanic Serving Institutions, New Magnets University Partnerships, and
    Tribal Colleges. The Indian CDBG, also a set-aside within the CDBG
    program, focuses mainly on public infrastructure, community facilities,
    and economic development on res

    [[Page 228]]

    ervations. The 2001 Budget establishes a new information hotline for
    Government-wide Native American programs funded out of the Indian CDBG
    program.
       HUD's HOME Investment Partnership Program supports construction of
    new housing, rehabilitation of existing homes, acquisition of standard
    housing, assistance to home buyers, and tenant-based rental assistance.
       The 2001 goals for the CDBG, HOME and Lead Hazard programs include:
       Increasing the number of CDBG grantees who incorporate
              milestones with timetables in Consolidated Plans that
              demonstrates progress in improving locally defined conditions
              in their neighborhoods and communities;
      Decreasing unemployment rates among young entry-level job
              seekers in central cities by 0.5 percent annually to 17.5
              percent by 2001 through the creation of jobs through
              investment in entitlement communities and Youthbuild;
       Assisting 102,947 households, supporting construction of
              22,258 new units of affordable housing, rehabilitating 44,924
              units, and acquiring 24,884 units through HOME, helping to
              increase by eight percent the number of households receiving
              assistance through the HOME program;
       Increasing the homeownership rate of first time minority
              homeowners in inner city areas by .5 percent in 2001 through
              the HOME program and other HUD programs;
       Providing housing assistance to over 210,000 households
              though the CDBG program in 2001 and at least 241,000 by 2003;
              and,
       Assuring that at least 92 percent of entitlement community
              funding and at least 98 percent of funds for the State portion
              of CDBG are used for activities that benefit low to moderate
              income persons.
      By 2010, HUD, in cooperation with other Federal agencies, will
    eliminate elevated lead blood levels and lead poisoning in children.
       By the end of 2001, HUD will establish baseline measures that will
    help evaluate the contributions these programs make to community
    development and affordable housing.
       Empowerment Zones (EZs) provide tax incentives and grants to carry
    out 10-year, community-wide strategic plans to revitalize designated
    areas. In 1994, the Administration designated nine Round I EZs, two
    Supplemental EZs (which were designated full EZs in 1998) and 95
    Enterprise Communities (ECs). These Round I EZs and related ECs leverage
    private investment, expand affordable housing and homeownership
    opportunities, and help create jobs. In January 1999, the Administration
    designated 15 new urban EZs and five new rural EZs (administered by the
    Department of Agriculture) from more than 268 distressed areas that
    applied for new designations. These EZs, along with the 20 new rural ECs
    have begun initial implementation of their comprehensive strategies to
    redevelop their areas.
       In the budget, the Administration proposes a series of tax measures
    to extend and improve economic growth in the 31 existing Round I and
    Round II EZs and also proposes to create a Third Round of 10 new EZs. To
    encourage employment and growth, the Budget proposes to extend until
    2009 the wage credit currently available only for Round I Zones through
    2004, and to make the wage credit also available in Round II and Round
    III EZs through 2009. To lower the cost of investment for small
    businesses in EZs, the budget proposes to allow them to deduct an
    additional $35,000 in investments above the normal small business
    investment deductions. The proposal also will allow local governments to
    issue tax-exempt bonds on behalf of EZ businesses. Finally, the
    President's proposal would permanently extend the Brownfields Tax
    Incentive in EZs.
       The 2001 goals for the EZ and EC program include:
       Increase to 95 percent the share of urban EZs and ECs that
              show satisfactory progress toward locally defined benchmarks.
              Examples of benchmarks include: In Baltimore, MD, in the 2000-
              2001 period, reduce crime by an additional two percent and
              increase the homeownership rate in that EZ of 39.6 percent by
              0.5 percent. In Chicago, IL, complete 100 of the

    [[Page 229]]

              300 low-income housing units remaining to be constructed. In
              Los Angeles, CA, increase from 41 percent to 46 percent the
              number of youths obtaining jobs through the Youth
              Opportunities Program. In Detroit, MI, increase the number of
              permanent housing units constructed for the disabled by 10
              from 20 units to 30.

     Department of Commerce

       The Economic Development Administration (EDA) provides assistance to
    communities to help build capacity and address long-term economic
    challenges through its nationwide program delivery network. EDA's public
    works grants help build or expand public facilities to stimulate
    industrial and commercial growth, such as industrial parks, business
    incubators, access roads, water and sewer lines, and port and terminal
    developments. Between 1992 and 1999, EDA awarded 1,456 public works
    grants, totaling $1.4 billion, to economically distressed communities
    for infrastructure projects. In 2001, there will be two new initiatives
    at EDA, an E-commerce program and a Community Economic Adjustment
    program. These programs will create equitable access to new technologies
    and the broadband networks necessary to support full access to E-
    commerce in all communities and help distressed communities recover from
    sudden and/or severe economic downturns.
       EDA's revolving loan fund (RLF) program enhances communities'
    capacity to invest in locally identified commercial development that
    creates jobs. Since 1976, when the RLF program was implemented, EDA has
    provided initial capital for over 800 local RLFs.
       These RLF funds have made more than 17,000 loans to private
    businesses and have leveraged more than $1.5 billion in private capital
    that upon repayment has tended to stay in the community for re-lending
    and further economic development activity.
       The 2001 goals for EDA include:
       Creating or retaining of a total of 56,789 jobs.

     Department of the Treasury

       The Community Development Financial Institutions (CDFI) Fund seeks to
    promote economic revitalization and community development in distressed
    areas by increasing the availability of capital and leveraging private
    sector funds. The CDFI Fund provides financial and technical assistance
    to a diverse set of specialized, private, for-profit and nonprofit
    financial institutions known as community development financial
    institutions. CDFIs have a primary mission of community development and
    include community development banks, credit unions, loan funds, venture
    capital funds, and microenterprise loan funds.
       The 2001 goals for the CDFI Fund include:
       Increasing the number of States with at least one CDFI Fund
              awardee from 46 in 1999 to 49 in 2001; and
       Increasing the number of awards to CDFIs from 158 in 1999 to
              160 in 2001.

     Department of Agriculture (USDA)

       USDA gives financial assistance to rural communities and businesses
    to boost employment and further diversify the rural economy. The Rural
    Community Advancement Program's grants, loans, and loan guarantees help
    build rural community facilities, such as health clinics and day care
    centers, and create or expand rural businesses. USDA also provides loans
    through the Intermediary Relending Program (IRP), which provides funds
    to an intermediary such as a State or local government agency that, in
    turn, provides funds for economic and community development projects in
    rural areas.
       The 2001 goals for these USDA programs include:
       Retaining and creating 115,000 new jobs, compared to 82,000
              in 1999, through the Business and Industry loans, IRP, and
              community facilities programs.

     Department of the Interior (DOI)

       The Interior Department's Bureau of Indian Affairs (BIA), for which
    the budget proposes $2.2 billion in 2001, helps Tribes and Native
    American individuals develop resources to improve their communities and
    economies through various programs and technical assistance. BIA assists
    Tribes in such areas as agricultural and rangeland resource management
    to manage and generate revenues from

    [[Page 230]]

    mineral, agricultural and forestry resources. The Department will
    strengthen its Tribal resource management programs by facilitating more
    prudent land management and maintaining approximately 150 Tribal
    management plans, projects, co-management programs and fishing access
    sites; supporting 18 major irrigation projects; managing lands for
    farming and grazing; and, funding 18 water rights negotiations teams. In
    addition, the budget will enable BIA to continue and to expand efforts
    to improve trust services activities, reduce crime, and expand community
    development activities. The budget includes $630 million, a substantial
    increase ($20 million) over 2000, to improve trust service activity
    within BIA--in support of the Administration's efforts to improve Tribal
    trust management. BIA and the Department of Justice seek to lower crime
    rates on the 56 million acres of Indian lands, through the expansion of
    its joint law enforcement initiative begun in 1998. BIA maintains over
    7,000 buildings, including 185 schools and 3,000 housing units; over 100
    high-hazard dams; and, (with the Departments of Transportation and State
    and local governments) about 50,000 miles of roads and 770 bridges.
       The 2001 goals for DOI include:
       Generating nearly $82 million in federally-guaranteed
              commercial loans on reservations. These loans, supported by a
              $5.5 million appropriation, will foster growth and development
              in Indian Country;
       Obtaining about $328 million in timber sales revenue by
              helping Tribes manage 16.2 million acres of forest land;
       Reducing crime rates on Indian lands by increasing the number
              of police officers per 1,000 citizens; and,
       Replacing the final three schools on BIA's existing
              replacement priority list and at least three schools from a
              new list. These schools are BIA's oldest, most dilapidated
              schools. In addition, BIA will complete major improvement and
              repair projects (including a joint demonstration project with
              the Department of Energy utilizing energy-efficient
              construction materials). As part of the Administration's
              commitment to renovating schools across the Nation, the budget
              proposes $300 million ($167 million over 2000) to replace,
              repair, and improve educational facilities; up to $30 million
              may be used by Tribes and tribal consortia to defease the
              principal on school construction bonds.

     Tennessee Valley Authority (TVA)

       TVA operates integrated navigation, flood control, water supply, and
    recreation programs. Along with TVA's electric power program, these
    programs contribute to the economic prosperity of the seven-State region
    it serves. TVA plans to pay for most of these programs in 2001 as it did
    in 2000, using proceeds from the agency's $6.8 billion power program,
    user fees and sources other than appropriations.
       The 2001 goals for TVA include:
       Maximizing the percentage of time the Tennessee River is open
              to commercial navigation from Knoxville, Tennessee to Paducah,
              Kentucky. In 1999, TVA kept the river open 82 percent of the
              time. TVA's target is 93 percent in 2000 and 95 percent in
              2001.
       Minimizing flood damage by operating the river system with
              flood control as a priority. In 1999, TVA's actual performance
              for ``flood storage availability'' was 94 percent. TVA's
              target is 80 percent in 2000 and 2001.

     Appalachian Regional Commission (ARC)

       ARC targets its resources to highly distressed areas, focusing on
    critical development issues on a regional scale, and making strategic
    investments that encourage other Federal, State, local and private
    participation and dollars. From 1988 to1996, Appalachian employment grew
    at the national rate of 10.6 percent.
       The 2001 goals for ARC include:
       22,000 people will retain or get jobs, compared to 8,700 in
              1999;
       25,000 households will have access to new or improved water,
              sewerage and waste management systems, compared to 20,000 in
              2000;

    [[Page 231]]

       7,000 people will benefit from business development services;
              and,
       100 physicians will be placed in the region's health
              professional shortage areas to provide another 460,000 patient
              office visits a year.

     Disaster Relief and Insurance

       The Federal Government provides financial help to cover a large share
    of the Nation's losses from natural disasters. Since 1993, 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--have provided over $31.4
    billion in emergency assistance. The Federal Government shares the costs
    with States for infrastructure rebuilding; makes disaster loans on
    uninsured losses to individuals and businesses; and provides grants for
    emergency needs and housing assistance, unemployment assistance, and
    crisis counseling.
       In addition to its disaster response activities, FEMA is working with
    118 ``disaster resistant communities'' across the country as of the end
    of 1999 and plans to add up to 47 more during 2000. Participating
    communities assess their risks from earthquakes, floods, hurricanes and
    other disasters, and adopt prioritized mitigation plans.
       Communities participating in FEMA's flood insurance program, which
    provides the only source of affordable flood insurance to property
    owners, must mitigate future losses by adopting and enforcing floodplain
    management measures that protect lives and new construction from
    flooding. FEMA is also modernizing its inventory of flood plain maps,
    and will be taking measures to mitigate properties experiencing
    repetitive flood damages.
       The 2001 goals for FEMA include:
       Providing incentives and support to the public sector to
              increase the disaster resistance of communities;
       Improving disaster response and customer satisfaction by
              processing disaster declarations within eight days, making 50
              percent of funding for emergency work projects available to
              States within 30 days of application approval, making 80
              percent of public assistance funding determinations, on
              average, within 180 days, and processing disaster housing
              applications from individuals within five to eight days of
              receipt; and,
       Increasing the number of flood insurance policies in force by
              five percent to a total of 4,600,000 in 2001.
       The 2001 goals for the SBA Disaster Loan Program include:
       Increasing the number of disaster loan applications processed
              within 21 days of receipt from 65 percent in 1999 to 70
              percent in 2001; and,
       Establishing an effective field presence at the disaster site
              within three days of a disaster, for 98 percent of declared
              events.

     Tax Expenditures

       The Federal Government provides tax incentives to encourage community
    and regional development activities, including: (1) tax-exempt bonds for
    airports, docks, high-speed rail facilities, and sports and convention
    facilities (costing $3.8 billion from 2000 to 2004); (2) tax incentives
    for qualifying businesses in economically distressed areas that qualify
    as EZs--including an employer wage credit, higher up-front deductions
    for investments in equipment, tax-exempt financing, and accelerated
    depreciation--as well as capital gains preferences for certain
    investments in the District of Columbia and incentives for first-time
    buyers of a principal residence in the District; (3) a 10-percent
    investment tax credit for rehabilitating buildings that were built
    before 1936 for non-residential purposes (costing $150 million over the
    five years); (4) tax exemptions for qualifying mutual and cooperative
    telephone and electric companies (costing $325 million over the five
    years); and, (5) up-front deductions of environmental remediation costs
    at qualified sites (costing $140 million over the five years).