[Congressional Record Volume 144, Number 135 (Thursday, October 1, 1998)]
[Extensions of Remarks]
[Page E1866]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE EMPOWERMENT ZONE ENHANCEMENT AND RURAL ENTERPRISE 
                            COMMUNITIES ACT

                                 ______
                                 

                        HON. MAURICE D. HINCHEY

                              of new york

                    in the house of representatives

                       Thursday, October 1, 1998

  Mr. HINCHEY. Mr. Speaker, I rise with my colleague Mr. Watkins of 
Oklahoma to introduce legislation aimed at securing funding for Round 
II of the Empowerment Zone program. Last year's Taxpayer Relief Act 
authorized the designation of 20 new Empowerment Zones--15 in urban 
cities and 5 in rural areas--but did not provide any funding for these 
communities. The bill we are introducing tonight builds on a measure we 
introduced earlier this year to expand the rural program--the Rural 
Enterprise Communities Act (H.R. 4071)--to include funding for the 15 
urban empowerment zones.
  The flexible funding for EZs and ECs is so important because it gives 
communities the ability to participate directly with their private 
sector partners in development projects. The communities leverage these 
funds many times over, using them as seed capital to attract resources 
from the private sector, non-profit organizations, foundations, 
universities, churches, and government agencies. Without the funding in 
place, it will be very difficult for the new empowerment zones to begin 
implementing their comprehensive strategic development plans.
  In addition, we believe that the rural side of this program must be 
expanded. The Taxpayer Relief Act only authorized five rural 
empowerment zones. To date, more than 250 communities have notified 
USDA that they will be competing for these designations. Our bill 
recognizes the significance of this program for distressed rural 
communities and allows the USDA to designate an additional 33 
enterprise communities in rural areas.
  We need to act quickly to ensure that the new EZs and ECs are funded 
at the beginning of their life cycle when it will do the most good. I 
have attached a summary of the Empowerment Zone Enhancement and Rural 
Enterprise Communities Act, and urge my colleagues to support this 
important measure.


 The Empowerment Zone Enhancement and Rural Enterprise Communities Act

  Section 2(a), (b). Selection of Additional Enterprise Communities. 
This section expands Round II of the EZ/EC competition to authorize the 
Secretary of Agriculture to designate 33 rural enterprise communities. 
The EC designations are in addition to the five rural and 15 urban 
empowerment zones authorized by the Taxpayer Relief Act of 1997. In 
addition, this section extends the filing deadline until January 1, 
2000 for communities to apply for a new EC designation.
  Section 2(c). Modification of Eligibility Criteria for Rural 
Empowerment Zones and Enterprise Communities. Poverty is still the main 
criteria for a rural EZ/EC designation. This section gives the 
Secretary the discretionary authority to consider other significant 
factors that contribute to distress in rural communities that are not 
as prevalent in urban areas. These include: Emigration; 
Underemployment; Rise in unemployment caused by the federal government, 
such as a military base closure; and Sudden economic dislocation that 
causes significant job loss, such as a plant closure.
  In addition, this section clarifies that for communities that 
otherwise meet all of the program's eligibility criteria, the Secretary 
may exempt sites that will be developed for commercial and industrial 
purposes from the poverty criteria as long as they do not exceed 2,000 
acres or contain more than three non-contiguous parcels.
  Section 2(d), (e). Use of Bond Proceeds. The Taxpayer Relief Act 
authorized EZs to issue ``new empowerment facility bonds'' that are 
exempt from the state's tax-exempt bond cap, and also created a new 
type of ``zone academy bond'' to finance school construction in these 
communities. This section specifies that: Issues of new empowerment 
zone facility bonds must be consistent with the EZ's strategic plan to 
receive the special treatment; Rural ECs designated in the Round II 
competition may not issue zone facility bonds; The comprehensive 
education plan required to issue zone academy bonds must not be 
inconsistent with the EZ's strategic plan; and At least 25 percent of 
the zone academy bonds must be allocated to rural EZs
  Section 3(a), (b). Recognition and Incentives for Top Performing EZs 
and ECs. This section directs the Secretaries of Housing and Urban 
Development and Agriculture to recognize top-performing EZs and ECs 
annually. Top performing Round I ECs that otherwise meet all the 
program's eligibility criteria will be given priority in the Round II 
EZ competition.
  Section 3(c). Continuation Funding for Top Performing Round I EZs and 
ECs. This section allows HHS to set aside up to 10 percent, of the 
funds for the Round II EZs ($150 million for urban, $10 million for 
Rural). Round I EZs and ECs that have completed or made satisfactory 
progress toward implementing their strategic plans will be eligible to 
compete for these funds at the direction of USDA and HUD.
  Section 4(a)-(d). Funding for Round II EZs and ECs. EZ/EC program 
funds are distributed through the Social Services Block Grant (Title 
XX). The President's budget allocates $1.7 billion for the Round II 
empowerment zones ($1.5 billion for urban and $200 million for rural). 
This section divides those funds to provide: Urban EZs an annual grant 
of up to $10 million for the next 10 years for a total of as much as 
$100 million; Rural EZs an annual grant of up to $2 million for the 
next 10 years for a total of as much as $20 million; and Rural ECs two 
grants of $1.5 million for the next two years for a total $3 million.
  Section 4(e). Rural Community Planning Grants. To help rural 
communities prepare their strategic plans during the application 
process, this section designates $1 million for 100 community planning 
grants of up to $10,000 each.
  Section 5. Responsibility for Environmental Review. The National 
Environmental Policy Act requires every federal agency that administers 
a program funded through grants to states, such as the Title XX Social 
Services Block Grant, to determine, among other things, whether the 
program will have any adverse effects on the environment. The 
Department of Health and Human Services--which releases the SSBG funds 
to the states for EZs and ECs--is currently required to make this 
environmental review for EZ/EC grants, even though it is not 
responsible for selecting the communities or approving their strategic 
plans. This section transfers responsibility for conducting the NEPA 
reviews to HUD for urban areas and to USDA for rural areas. It also 
gives the Secretaries the authority to delegate this responsibility to 
state and local governments and tribal authorities under certain 
conditions.
  Section 6. Performance Measurement and Evaluation. This section 
requires HUD and USDA to make regular evaluations of the Round II EZ's 
and EC's progress toward implementing their strategic plans, according 
to a performance measurement system established by the Secretaries. 
This section also give HUD and USDA authority to adjust, reduce, or 
cancel a zone's or community's grant for poor performance.
  Section 7. Distribution of Surplus Government Property. This section 
allows USDA to distribute surplus government property (computers, vans, 
construction equipment, etc.) to rural EZs, ECs, and champion 
communities on preferred basis.
  Section 8. Effective Dates. In general, the amendments made by this 
bill take effect as if passed as part of the Taxpayer Relief Act of 
1997.

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