Community Development

In 1993, Congress authorized the 10-year Empowerment Zone and Enterprise Community Program to help distressed communities develop comprehensive approaches for dealing with their social and economic problems. In December 1994, more than 100 communities were designated as federal empowerment zones and enterprise communities. These communities will receive about $1 billion in federal grants, as well as tax benefits for businesses in the communities. Last year, Congress authorized the designation of 22 additional empowerment zones, two of which--Los Angeles and Cleveland--the administration has already designated. This report (1) examines the progress made by federal empowerment zones in implementing the program, (2) describes the steps taken by two responsible federal agencies--the Department of Housing and Urban Development and the Department of Agriculture--to monitor and evaluate the existing zones' progress, and (3) describes the status of steps to designate the second group of empowerment zones. GAO focuses on six zones--three urban (Atlanta, Baltimore, and New York City) and three rural (the Rio Grande Valley, the Kentucky Highlands, and the Mississippi Mid-Delta), all of which were designated in 1994.

GAO noted that: (1) the six empowerment zones that GAO visited have reported on their implementation of a variety of planned activities in the areas of economic development, housing, public safety, health care, public transportation, education, and family self-sufficiency; (2) while the mix of activities varies among the zones, economic development activities generally account for the largest portion of their planned expenditures; (3) the six zones reported that they are making progress in implementing their economic development activities; however, the extent of their progress varies; (4) four of the zones have initiated or completed many of their economic development activities and two zones have established organizations that provide comprehensive technical and financial assistance in a single location to small businesses; (5) officials involved in implementing the empowerment zone program told GAO that two factors facilitated their progress--experience in implementing activities and agreement among stakeholders; (6) both HUD and USDA have sponsored studies of the empowerment zone program to help them monitor implementation efforts; (7) both agencies use progress reports from the zones, together with visits by their own field office staff, to monitor the performance of the zones and evaluate their fitness to continue in the program; (8) HUD required reports from the urban zones in the summers of 1996 and 1997, while USDA has generally required semiannual reports from the rural zones; (9) both agencies perform field reviews and site visits to check the accuracy of the progress reports; (10) while field staff from both agencies said they provide assistance upon request, the extent of their involvement in monitoring and evaluation has varied; (11) HUD field staff told GAO they have not had a routine role in monitoring and evaluating the program; (12) under HUD's management reform initiative, the field offices will have a greater role in assisting the zones and monitoring their activities; (13) USDA involved its field office representatives in monitoring and evaluating the program by requiring the rural zones to submit weekly progress reports to field office representatives for their review; (14) HUD and USDA subsequently issued regulations covering the program, provided guidance to potential applicants, and conducted informational workshops across the country; and (15) both agencies are currently evaluating communities' applications for designation, and expect them to be made by January 1, 1999.