[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]


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                 19.  COMMUNITY AND REGIONAL DEVELOPMENT

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                 Table 19-1.  Federal Resources in Support of Community and Regional Development
                                            (In millions of dollars)
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                                                                               Estimate
               Function 450                   1999   -----------------------------------------------------------
                                             Actual     2000      2001      2002      2003      2004      2005
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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
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N/A = Not available.

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   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

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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

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          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

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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;

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   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).
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