Community Development

H.R. 3865, the American Community Renewal Act of 1998, 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 of less than 80 percent of the area median household income. Empowerment Zones and Enterprise Communities seek to revitalize economically distressed areas. This testimony discusses the targeting of community development benefits included in H.R. 3865 and shares 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.