Community Development: Information Related to H.R. 3865, the American
Community Renewal Act of 1998 (Testimony, 05/19/98, GAO/T-RCED-98-196).
GAO discussed the targeting of community development benefits included
in H.R. 3865, the American Renewal Act of 1998, as well as lessons
learned from the early implementation of another community development
program that created Empowerment Zones and Enterprise Communities.
GAO noted that: (1) out of nearly 59,000 census tracts nationwide, 9,184
tracts met both the poverty and unemployment requirements of the bill,
according to GAO's analysis of 1990 Census data; (2) these tracts
include 1,354 census tracts in rural areas; 7,396 in urban areas; and
434 in mixed urban/rural areas; (3) fourteen percent of these census
tracts are located in an Empowerment Zone or Enterprise Community; (4)
more than half of the local, state, and federal officials involved in
implementing the Empowerment Zone program who responded to a survey that
GAO conducted in 1996 agreed on the factors that had either helped or
hindered their efforts to implement the program; (5) for example, they
identified factors such as community representation within the
governance structures and enhanced communication among stakeholders as
helping the program's implementation; and (6) similarly, preexisting
relationships among Empowerment Zone stakeholders and pressure for quick
results were identified as hindering the program's implementation.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-RCED-98-196
TITLE: Community Development: Information Related to H.R. 3865,
the American Community Renewal Act of 1998
DATE: 05/19/98
SUBJECT: Unemployment rates
Economic analysis
Community development
Urban economic development
Rural economic development
State/local relations
Census
Economically depressed areas
Statistical data
IDENTIFIER: HUD Empowerment Zones and Enterprise Communities Program
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Cover
================================================================ COVER
Before the Committee on Small Business, House of Representatives
For Release
on Delivery
Expected at
1 p.m. EDT
Tuesday
May 19, 1998
COMMUNITY DEVELOPMENT -
INFORMATION RELATED TO
H.R. 3865, THE AMERICAN COMMUNITY
RENEWAL ACT OF 1998
Statement of Stanley J. Czerwinski,
Associate Director,
Housing and Community Development Issues,
Resources, Community, and Economic
Development Division
GAO/T-RCED-98-196
GAO/RCED-98-196T
(385737)
Abbreviations
=============================================================== ABBREV
HUD -
EC -
EZ/EC -
EZ -
============================================================ Chapter 0
Mr. Chairman and Members of the Committee:
We are pleased to be here today to discuss the targeting of community
development benefits included in H.R. 3865, the American Community
Renewal Act of 1998, as well as to share lessons learned from the
early implementation of another community development program that
created Empowerment Zones and Enterprise Communities. The bill we
are discussing today, H.R. 3865, was introduced in the House of
Representatives May 14, 1998, and allows for the designation of 100
areas as "renewal" communities. These communities would receive
incentives to increase jobs, form and expand small businesses, and
increase educational opportunities and homeownership. To be eligible
for designation as a renewal community, the community must meet
economic distress criteria of at least 150 percent of the national
unemployment rate, at least 20 percent poverty, and in urban areas,
at least 70 percent of the community's households must have incomes
less than 80 percent of the area median household income.
Empowerment Zones and Enterprise Communities, authorized by the
Omnibus Budget Reconciliation Act of 1993 and the Taxpayer Relief Act
of 1997, seek to promote the revitalization of economically
distressed areas.
In our statement today, we identify the number of Census tracts that
meet the poverty and unemployment requirements of H.R. 3865 which
are the same criteria as in the bill's predecessor, H.R. 1031,\1 on
which we recently reported.\2 On the basis of our preliminary
analysis, we agreed with the requestors' staffs not to include the
median income measure, because it severely restricted the number of
tracts, particularly rural tracts, that could qualify for assistance.
We will also discuss the results of a prior report that focused on
six urban empowerment zones in which we described the early
implementation of the program, including factors that participants
believed may have either helped or hindered efforts to carry out the
program.\3 These lessons from the early Empowerment Zone
implementation may be useful when considering H.R. 3865.
In summary, we found the following:
-- Out of nearly 59,000 census tracts nationwide, 9,184 tracts met
both the poverty and unemployment requirements of the bill,
according to our analysis of 1990 Census data. These tracts
include 1,354 census tracts in rural areas; 7,396 in urban
areas; and 434 in mixed urban/rural areas. Fourteen percent of
these census tracts are located in an Empowerment Zone or
Enterprise Community.
-- More than half of the local, state, and federal officials
involved in implementing the Empowerment Zone program who
responded to a survey that we conducted in 1996 agreed on the
factors that had either helped or hindered their efforts to
implement the program. For example, they identified factors
such as community representation within the governance
structures and enhanced communication among stakeholders as
helping the program's implementation. Similarly, preexisting
relationships among Empowerment Zone stakeholders and pressure
for quick results were identified as hindering the program's
implementation.
--------------------
\1 H.R. 1031, the American Community Renewal Act of 1997 was
introduced in the House of Representatives, March 12, 1997.
\2 Community Development: Identification of Economically Distressed
Areas (GAO/RCED-98-158R, May 12, 1998).
\3 Community Development: Status of Urban Empowerment Zones
(GAO/RCED-97-21, Dec. 20, 1996).
BACKGROUND
---------------------------------------------------------- Chapter 0:1
On May 14, 1998, H.R. 3865, was introduced in the House of
Representatives to allow the Secretary of the Department of Housing
and Urban Development (HUD) to designate up to 100 areas as renewal
communities. For these communities, the bill seeks to increase the
number of new jobs; form and expand small businesses; increase
educational opportunities and homeownership; and foster moral renewal
by providing federal tax incentives, regulatory reform, and
homeownership incentives.
A renewal community under H.R. 3865 must, among other things, have
(1) a poverty rate of at least 20 percent, (2) an unemployment rate
of at least 1.5 times the national unemployment rate, and (3) in the
case of an urban area, at least 70 percent of the households living
in the area have incomes below 80 percent of the area median
household income. In addition, H.R. 3865 provides that a renewal
community be within the jurisdiction of a local government, have a
continuous boundary, and meet population requirements.\4
Empowerment Zones and Enterprise Communities (EZ/EC), which also are
designed to promote the revitalization of economically distressed
areas, were authorized by the Omnibus Budget Reconciliation Act of
1993 and the Taxpayer Relief Act of 1997. To date, 105 communities,
including both urban and rural areas, have been designated as either
an EZ or EC.
--------------------
\4 Population requirements are that the area have (1) at least 4,000
persons if any portion of the area is located within a Metropolitan
Statistical Area (MSA) which has a population of at least 50,000 or
(2) 1,000 persons in any other case. There is no population
requirement if the area is entirely within an Indian reservation.
NUMBER OF TRACTS THAT MEET BOTH
THE POVERTY AND UNEMPLOYMENT
CRITERIA OF H.R. 3865
---------------------------------------------------------- Chapter 0:2
To identify areas that could be part of a designated renewal
community, we analyzed the most recent data (1990 Census) from the
Census Bureau. Using these data, we identified census tracts\5 with
at least 50 households, that met the poverty and unemployment
criteria of H.R. 3865. The Census Bureau defines census tracts as
small, relatively permanent statistical subdivisions of counties.
The term "community" is not defined in census data and can take many
different forms. However, a community would most likely include more
than one census tract. For example, the "community" that is
participating in the EZ program in Atlanta includes 23 census tracts
and the participating "community" in a Chicago EZ includes 96 census
tracts.\6
As shown in table 1, our analysis identified 9,184 of 58,981 census
tracts throughout the country that meet the poverty and unemployment
criteria of H.R. 3865. As previously stated, this analysis does not
include the bill's median income criteria for either rural or urban
tracts.
The table does show the number of tracts that are urban or rural in
nature in the nation, as well as for those that meet the bill's
poverty and unemployment criteria. In order to identify a tract as
urban, rural, or mixed urban/rural, we used Census Bureau's data on
whether persons lived in rural or urban areas. We defined tracts as
rural if more than 80 percent of the residents of the tract were
designated as rural. If more than 80 percent of the residents of the
tract were designated as urban, then we defined the tract as urban.
All other tracts were defined as mixed urban/rural tracts.
Table 1
Number of Census Tracts in Total and
Number of Census Tracts That Meet the
Poverty and Unemployment Criteria of
H.R. 3865
Tracts in the Tracts meeting
nation\a both criteria
------------------------------ ------------------ ------------------
Rural 13,719 1,354
Urban 40,173 7,396
Mixed urban/rural 5,089 434
======================================================================
Total 58,981 9,184
----------------------------------------------------------------------
\a We included census tracts in the analysis if a tract had at least
50 households. Tracts with less than 50 households were not
included--there were 2,277 such tracts.
Source: GAO's analysis of 1990 Census data.
--------------------
\5 We use the term "census tracts" to include census tracts, as well
as Block Numbering Areas used by the Census Bureau for areas where
census tracts have not been established.
\6 The EZ/EC program requires that their geographic area include
whole census tracts. The use of census tracts to draw EZ boundaries
instead of using existing neighborhoods was identified as a factor
hindering EZ planning and implementation efforts.
GEOGRAPHIC DISPERSION OF TRACTS
THAT MEET BOTH THE POVERTY AND
UNEMPLOYMENT CRITERIA OF H.R.
3865
---------------------------------------------------------- Chapter 0:3
Tracts that meet both the poverty and unemployment criteria of H.R.
3865 are located in all 50 states, the District of Columbia, and
1,373 counties (out of 3,141). Figure 1 shows the dispersion of
eligible tracts among counties throughout the United States.
Counties that include qualifying tracts are shaded according to the
number of persons in all qualifying tracts in a county.
Figure 1: Counties With Census
Tracts That Meet the Poverty
and Unemployment Criteria of
H.R. 3865
(See figure in printed
edition.)
Note: White areas represent
counties in which there were no
census tracts that met the
criteria.
(See figure in printed
edition.)
Source: GAO's analysis of 1990
Census data.
(See figure in printed
edition.)
LESSONS LEARNED FROM THE EARLY
IMPLEMENTATION OF EMPOWERMENT
ZONES
---------------------------------------------------------- Chapter 0:4
Information we obtained from participants in the urban EZ program
about factors that helped or hindered program planning and
implementation are useful as "lessons learned" for future community
development programs, such as proposed in H.R. 3865.
As part of our report on the status of urban EZs, we surveyed 32
federal, state, and local officials who were involved in the planning
and implementation of the EZ/EC program and asked them to indicate
the extent to which a broad set of factors had helped or hindered the
program's implementation. Among those we surveyed were EZ directors
and governance board members, state officials, contractors who
provided day-to-day assistance to the EZs, and HUD and Department of
Health and Human Services employees. While the survey respondents'
views cannot be generalized to the entire EZ/EC program, they are
useful in understanding how such a program can be improved.
In the 27 surveys that were returned to us, the following five
factors were identified by more than half of the survey respondents
as having helped them implement the EZ program:
-- community representation on the EZ governance boards,
-- enhanced communication among stakeholders,
-- assistance from HUD's contractors (called generalists),\7
-- support from the city's mayor, and
-- support from White House and Cabinet-level officials.
Similarly, the following six factors were frequently identified by
survey respondents as having hindered their efforts to implement the
EZ program:
-- difficulty in selecting an appropriate governance board
structure,
-- the additional layer of bureaucracy created by the state
government's involvement,
-- preexisting relationships among EZ stakeholders,
-- pressure for quick results from the media,
-- the lack of federal funding for initial administrative
activities, and
-- pressure for quick results from the public and private sectors.
In closing, Mr. Chairman, our analysis shows that areas throughout
the nation, both urban and rural, could be part of the "renewal
communities" envisioned in the American Community Renewal Act of
1998. Some of these areas are also part of designated EZs or ECs.
In addition, our prior report on the EZ program\8 shows lessons
learned that may be applicable to the implementation of other
community development programs.
Mr. Chairman, this concludes our prepared remarks. We will be
pleased to respond to any questions that you or other Members of the
Committee might have.
--------------------
\7 Generalists were private-sector community development specialists
who acted as liaisons to specific communities within a geographical
area. They provided the EZs and ECs with a single point of access to
various types of technical assistance, provided information about
federal programs and private-sector initiatives, and fostered
community involvement in implementing strategic plans.
\8 GAO/RCED-97-21
*** End of document. ***