[Congressional Record Volume 145, Number 18 (Tuesday, February 2, 1999)]
[Extensions of Remarks]
[Page E107]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  EMPOWERMENT ZONE REFORM LEGISLATION

                                 ______
                                 

                      HON. JAMES A. TRAFICANT, JR.

                                of ohio

                    in the house of representatives

                       Tuesday, February 2, 1999

  Mr. TRAFICANT. Mr. Speaker, today I am introducing legislation to 
require the U.S. Department of Housing and Urban Development (HUD), 
when evaluating future applications for designation as an urban 
empowerment zone (EZ), to make an applicant's unemployment rate and 
poverty rate 50 percent of the criteria.
  Last month, the Vice President announced 15 new urban empowerment 
zones. Each zone will receive $10 million a year for ten years in 
federal grants and $13 million a year for ten years in bonding 
authority. While many of the new zones went to needy areas, some 
designations raised serious questions about the designation process. 
HUD selected zones based on a 100-point scoring system that measured 
the quality of revitalization plans, poverty and unemployment rates, 
and private and public sector commitments made to implement the plans. 
An applicant's poverty and unemployment rate only counted for 25 points 
under HUD's current scoring system.
  The scoring system presented many distressed communities across the 
country with a Catch-22. In order to put together a competitive 
application, communities had to secure large commitments from both the 
public and private sector. Most of the winning applicants had 
commitments in excess of one billion dollars. But most distressed 
communities do not have billions in public and private resources to 
commit to an EZ application. In fact, communities with more than a 
billion dollars in public and private resources really don't need 
additional aid in the form of empowerment zone designation. It is those 
communities that have seen an exodus of manufacturing and other private 
sector jobs that most need federal assistance. But the way the EZ 
application scoring system was developed, those communities cannot 
compete.
  For example, last October the cities of Youngstown and Warren in Ohio 
submitted a joint application for an EZ designation. The Youngstown-
Warren area has a poverty rate of 51.42 percent and an unemployment 
rate of 17.3 percent--almost four times the state and national average. 
Youngstown-Warren's application was turned down. But Santa Ana, 
California, with an unemployment rate of only 5.6 percent and a 31 
percent poverty rate, got an EZ designation. Youngstown-Warren's 
unemployment rate was three times higher than Santa Ana's. Youngstown-
Warren's poverty rate was 20 percent higher. Yet, Youngstown-Warren's 
application didn't make the cut. The difference? Santa Ana was able to 
leverage $2.54 billion in public and private sector commitments. 
Youngstown-Warren was only able to come up with about $200 million.
  The list goes on. Minneapolis, Minnesota, with an unemployment rate 
three percentage points lower than Youngstown-Warren's, and a poverty 
rate 11 points lower, received an EZ designation. The difference once 
again was the fact that Minneapolis was able to come up with $2 billion 
in public-private sector commitments. In fact, most of the communities 
awarded EZ designations last month had poverty and unemployment rates 
significantly lower that Youngstown-Warren's. But they all had very 
strong public and private sector commitments.
  I agree that EZ applicants should demonstrate strong local and 
private participation. But something is wrong when a community with a 
poverty rate of more than 50 percent and an unemployment rate of 17.3 
percent is turned down, and a community with a poverty rate of 31 
percent and an unemployment rate of only 5.6 percent is approved. EZ 
designations should be reserved for those communities that desperately 
need to attract private sector jobs.
  My legislation will change the scoring system HUD uses in evaluating 
EZ applications so that, in the future, struggling communities will 
have a fighting chance to get the federal assistance they so 
desperately need. The Traficant bill will end the Catch-22 many 
communities faced in the recent round of EZ awards. The bill would 
still require communities to put together applications with strong 
public and private commitments. But it would give an applicant's 
poverty and unemployment rates equal footing with public and private 
dollars. That's the way it should be.
  This legislation is a common sense fix to ensure that future EZ 
designations go to the neediest communities.

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