Community Development

H.R. 3865, the American Community Renewal Act of 1998, would allow 100 areas to be designated as "renewal" communities, enabling them to receive incentives to increase jobs, form and expand small businesses, and increase educational opportunities and homeownership. To be eligible for such a designation, an area must meet economic distress criteria that measure unemployment and poverty rates. Empowerment Zones and Enterprise Communities, authorized by the Omnibus Reconciliation Act of 1993 and the Taxpayer Relief Act of 1997, also seek to revitalize economically distressed areas. This testimony identifies the number of census tracts that meet the economic distress criteria of H.R. 3865. GAO also discusses its December 1996 report (xxx/RCED-97-21) on six urban Empowerment Zones that described the program's early implementation, including factors that participants believed may have either helped or hindered efforts to carry out the program. These lessons may be helpful in considering H.R. 3865.

GAO noted that: (1) out of nearly 59,000 census tracts nationwide, 4,323 meet the bill's economic distress criteria, according to GAO's analysis of 1990 census data; (2) of these distressed tracts, 1,354 are in rural areas, 2,535 in urban areas, and 434 in mixed urban/rural areas; (3) 19 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.