United States General Accounting Office

GAO Report to the Subcommittee on Human

Resources, Committee on Government

Reform and Oversight, House of

Representatives

November 1998 COMMUNITY

DEVELOPMENT

Progress on Economic

Development Activities

Varies Among the

Empowerment Zones

GAO/RCED-99-29

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-281310 

November 25, 1998

The Honorable Christopher Shays

Chairman, Subcommittee on

 Human Resources

Committee on Government Reform

 and Oversight

House of Representatives

Dear Mr. Chairman:

In August 1993, the Congress authorized the 10-year Empowerment Zone

and Enterprise Community program to help selected distressed

communities develop comprehensive approaches for dealing with their

social and economic problems. In December 1994, over 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 certain businesses located in the

communities.1

 In 1997, the Congress authorized the designation of 22

additional empowerment zones, 2 of which—Los Angeles and

Cleveland—the administration has already designated. In addition,

Members of the Congress have introduced legislative proposals to further

extend this program or provide for similar programs.2

To learn how the program is working, you asked us to (1) examine the

progress made by the federal empowerment zones in implementing the

program, (2) describe the steps taken by the two responsible federal

agencies—the Department of Housing and Urban Development (HUD) and

the U.S. Department of Agriculture (USDA)—to monitor and evaluate the

existing zones’ progress, and (3) describe the status of steps to designate

the second group of empowerment zones. This report focuses on six zones

that we visited—three urban (Atlanta, Baltimore, and New York City) and

three rural (the Rio Grande Valley, the Kentucky Highlands, and the

Mississippi Mid-Delta) empowerment zones, all of which were designated

in 1994. As agreed with your office, the report focuses on the

empowerment zones’ progress in implementing economic development

activities.

1

Empowerment zones receive much larger grants and more tax incentives than enterprise communities

and are the subject of this report.

2

For example, see our report and testimonies on the American Community Renewal Act of

1998—GAO/RCED-98-158R and GAO/T-RCED-98-196, issued in May 1998, and GAO/T-RCED-98-263,

issued in Aug. 1998.

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Results in Brief The six empowerment zones that we 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. While the mix of activities varies

among the zones, economic development activities generally account for

the largest portion of their planned expenditures. The six zones reported

that they are making progress in implementing their economic

development activities (creating jobs, training workers, and providing

access to capital); however, the extent of their progress varies. Four of the

zones—Baltimore, the Kentucky Highlands, New York, and the Rio Grande

Valley—have initiated or completed many of their economic development

activities. The two remaining zones—Atlanta and the Mississippi

Mid-Delta—have established organizations, called one-stop capital shops,

that provide comprehensive technical and financial assistance in a single

location to small businesses. They have also provided several loans and

one grant to businesses but have made little progress on other economic

development activities. Officials involved in implementing the

empowerment zone program told us that two factors facilitated their

progress—experience in implementing activities and agreement among

stakeholders.

Both HUD and USDA have sponsored studies of the empowerment zone

program to help them monitor implementation efforts. In addition, 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. 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. Both agencies

perform field reviews and site visits to check the accuracy of the progress

reports. While field staff from both agencies said they provide assistance

upon request, the extent of their involvement in monitoring and evaluation

has varied. Specifically, HUD field staff told us they have not had a routine

role in monitoring and evaluating the program. However, under HUD’s

management reform initiative, which is now being implemented, the field

offices will have a greater role in assisting the zones and monitoring their

activities. 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.

Earlier this year, the Secretaries of Housing and Agriculture invited

communities to apply for the 20 remaining empowerment zone

designations. These zones will have fewer tax benefits and smaller grants

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than the original zones. HUD and USDA subsequently issued regulations

covering the program, provided guidance to potential applicants, and

conducted informational workshops across the country. Both agencies are

currently evaluating communities’ applications for designation. Program

officials from both agencies told us that they expect the designations to be

made no later than January 1, 1999, the statutory deadline.

Background The Congress established the Empowerment Zone (EZ) and Enterprise

Community program in the Omnibus Budget Reconciliation Act of 1993

(P.L. 103-66, Aug. 10, 1993). The act also amended title XX of the Social

Security Act to authorize the special use of Social Services Block Grant

(SSBG) funds for the program.3

 In addition, the act allows businesses

located within the EZs to (1) receive tax credits on the wages paid to

employees who live and work in the zones; (2) deduct higher levels of

depreciation expenses than other businesses; and (3) borrow, at low

interest rates, funds raised from the sale of tax-exempt bonds issued by

the state or local government to be used for facilities and/or land. Finally,

the act specifies that the Secretaries of Housing and Urban Development

and Agriculture will designate the communities that are to participate in

the program and have the authority to revoke a designation if the

boundaries of an empowerment zone or enterprise community are

modified, if a designated area is not complying with the program’s

requirements, or if a designated area is not making significant progress in

implementing the program.

Communities that participate in the 10-year EZ program had to (1) meet

specific criteria for characteristics such as geographic size and poverty

rate and (2) prepare a strategic plan for implementing the program’s four

key principles—creating economic opportunity, creating sustainable

community development, building broad participation among

community-based partners, and describing a strategic vision for change in

the community.4

 Each EZ must spend its SSBG funds in accordance with its

strategic plan, which includes goals and measures, called performance

benchmarks. The progress of each EZ in achieving its goals is to be based

3

Historically, SSBG funds could be used only for social service activities, such as assisting and feeding

children. However, under the EZ program, the funds can also be used for economic and social

activities, such as purchasing or improving land and facilities or providing cash payments to

individuals for medical care. The urban EZs received $100 million each in SSBG funds, the rural EZs

received $40 million each, and the enterprise communities (both urban and rural) received

approximately $3 million each. These funds remain in the federal government until needed by the EZs.

4

On Dec. 21, 1994, the Secretaries of Housing and Urban Development and Agriculture designated nine

EZs—six urban and three rural—that would participate in this program.

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B-281310 

on the extent to which it accomplishes its performance benchmarks, not

on how much federal money it spends. The benchmarks are set forth in a

benchmark document that describes the activities that the EZ plans to

implement and includes time lines for their implementation. The

document can be modified to accommodate changes in the EZ’s needs or

scheduling problems. The benchmark document is to serve the EZ, as well

as HUD or USDA, as an important management tool and constitutes the

primary basis for evaluating the progress being made.

HUD and USDA have each issued regulations and guidance for implementing

the EZ program. In addition, they have commissioned studies to help them

evaluate the program and have required the EZs to report on their progress

in implementation. HUD requires the urban EZs to submit periodic progress

reports to its EZ program office. The program office sends these reports to

the HUD field offices for assessment. These reports were submitted in the

summer of 1996 and the summer of 1997, and the next reports are due by

December 31, 1998, according to the coordinator for the EZ program.5 USDA

requires the rural EZs to submit weekly progress reports to the field offices

and semiannual progress reports to the headquarters Office of Community

Development, which is responsible for the rural program’s overall

implementation.6

Under the Taxpayer Relief Act of 1997 (P.L. 105-34), the Congress

authorized a second round of EZs. This act provides for two urban EZs that

are to operate under the same rules as the EZs authorized in 1993. In

January 1998, the administration selected Los Angeles and Cleveland as

the two new EZs.7

 The act also provides for 20 new EZs—15 in urban areas

and 5 in rural areas—that are to operate under slightly revised rules set

forth in the act. Communities across the nation—including the existing

enterprise communities and tribal areas—are eligible to apply for the new

EZ designations.8 In October 1998, the Congress provided $55 million for

5

For more information on the initial implementation of this program in urban areas, see our earlier

report entitled Community Development: Status of Urban Empowerment Zones (GAO/RCED-97-21,

Dec. 20, 1996) and our testimony entitled Community Development: The Federal Empowerment Zone

and Enterprise Community Program (GAO/T-RCED-98-27, Oct. 28, 1997).

6

According to USDA officials, the frequency of their evaluation has increased in response to a GAO

report that recommended improvements in obtaining information for assessing the progress of EZs.

(See Rural Development: New Approach to Empowering Communities Needs Refinement

(GAO/RCED-97-75, Mar. 31, 1997).)

7

As specified in the Taxpayer Relief Act, the effective date for these two EZs is Jan. 1, 2000.

8

The Omnibus Budget Reconciliation Act of 1993 did not allow communities from tribal areas to

participate in the original program.

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B-281310 

fiscal year 1999 for the 20 new EZs—$45 million for the 15 new urban EZs

and $10 million for the 5 new rural EZs.9

Progress Varies in

Implementing the

Empowerment Zone

Program

The six EZs that we visited—Atlanta, Baltimore, the Kentucky Highlands,

the Mississippi Mid-Delta, New York City, and the Rio Grande

Valley—have reported on their progress in implementing a variety of

activities involving economic development, housing, public safety, health

care, public transportation, education, and family self-sufficiency. For five

of the six EZs, economic development activities (creating jobs, training

workers, and providing access to capital) accounted for a larger portion of

the planned first-phase expenditures than other activities. All six EZs

reported that they are making progress in implementing their economic

development activities; however, the extent of their progress varies.

Generally, progress was greater in EZs where stakeholders had experience

in implementation and could agree on their roles and responsibilities.

Planned Activities Vary

Among Empowerment

Zones

Each of the six EZs has reported to either HUD or USDA on its progress in

implementing the first phase of its planned activities. The reports prepared

by the EZs that we visited often emphasized economic development

activities (creating jobs and training workers) but usually included

activities in other areas, such as housing and public safety. For example,

as table 1 shows, the activities in the New York and Kentucky Highlands

EZs were classified almost exclusively as related to economic

development, while those in the other EZs were classified as both related

and not related to economic development. Whereas the New York and

Kentucky Highlands EZs focused on creating jobs, developing businesses,

training workers, and providing access to capital, the Atlanta, Baltimore,

and Rio Grande Valley EZs included activities that provided health care,

housing, public transportation, education, family self-sufficiency services,

and services for the elderly. The Mississippi Mid-Delta EZ included

activities such as community beautification, housing, health care, public

safety, and infrastructure improvement; however, almost all of its initial

SSBG allocation supported economic development activities. (See apps. I

through VI for details on each EZ’s activities as reported in 1997).

9

P.L. 105-277 (Oct. 21, 1998). For more details see the Conference Report on H.R. 4328, Making

Omnibus Consolidated and Emergency Supplemental Appropriations for Fiscal Year 1999, House

Report 825 (Oct. 19, 1998). In this report, the Congress also authorized USDA to designate 20 new

enterprise communities in rural areas and provided $5 million for them.

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Table 1: Activities Planned in Six EZs

EZ

Activities related

to economic

development

Activities not

related to

economic

development

Total planned

activities

Atlantaa 23 104 127

Baltimore 19 27 46

New York 38 2 40

Kentucky Highlands 20 8 28

Mississippi Mid-Delta 8 13 21

Rio Grande Valley 10 8 18

Total 118 162 280

aA March 1998 status report provided by Atlanta EZ officials included 21 activities, of which 7

were related to economic development and 14 were not.

Source: EZs’ progress reports to HUD and USDA from July through Sept. 1997.

Activities classified as related to economic development also generally

accounted for a larger portion of the EZs’ reported SSBG allocations than

other activities. As table 2 shows, the EZs allocated from 31 to 97 percent

of their grant funds for economic development activities.

Table 2: Allocations of SSBG Funds

Reported by Six EZs Dollars in millions

EZ

SSBG funds

allocated for

economic

development

activities

Total

SSBG funds

allocateda

Percentage of

funds allocated to

economic

development

Atlanta $13.6 $43.5 31

Baltimore $39.8 $59.7 67

New Yorkb $9.7 $10.0 97

Kentucky Highlands $27.8 $40.0 70

Mississippi Mid-Delta $5.3 $5.5 96

Rio Grande Valley $9.3 $12.9 72

Total $105.5 $171.6 61

aThese amounts reflect the SSBG funds that each EZ planned to use for the first phase of its

activities over the 10-year life of the program; therefore, the amount generally does not reflect the

total amount available to each EZ.

bThe federal SSBG amounts allocated by the New York EZ for each activity were matched by

equal amounts from the city and the state.

Source: EZs’ reports to HUD and USDA from July through Sept. 1997.

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Progress in Implementing

Economic Development

Activities Also Varies

The six EZs reported that they are making progress in implementing their

economic development activities. However, the extent of their progress

varies. Four of the EZs—Baltimore, the Kentucky Highlands, New York,

and the Rio Grande Valley—have reported that they have initiated or

completed many of their economic development activities. The two

remaining EZs—Atlanta and the Mississippi Mid-Delta—have established

one-stop capital shops, which are designed to provide comprehensive

technical and financial assistance in a single location to small businesses.

They also have made several loans and one grant to businesses but have

made little progress on other economic development activities.

In its performance review, the Baltimore EZ reported completing or

initiating action on 17 of its 19 economic development activities. Officials

from the EZ governing body confirmed this progress during our visit.

Specifically, the officials said that, as of May 1998, they (1) had provided

training that contributed to the placement of 100 residents in jobs, (2) had

completed the privatization of neighborhood food markets that provide

business opportunities within the zone, and (3) will continue their efforts

to attract businesses and create or expand job opportunities. They also

said that they had worked with Employ Baltimore—a city government

employment development initiative—to place more than 1,100 of the

zone’s residents in jobs throughout the city. Although the Baltimore EZ has

begun to implement its system for getting zone residents into jobs, it is

behind schedule largely because the establishment of a community-based

structure for identifying potential community employees and offering

career counseling, training, and placement services has taken longer than

anticipated. The EZ has not yet established a community development

bank, which, according to the EZ’s plans, will lend funds for business and

residential development within the eastern side of the zone.10

The Kentucky Highlands EZ reported completing or initiating action on 18

of 20 economic development activities. During our visit, officials from the

EZ said that the 1997 performance review generally reflected its progress.

They noted that one loan fund had provided loans to businesses, resulting

in the creation of 644 jobs as of March 31, 1998. Other activities that had

been initiated included developing industrial parks, training workers for

jobs in the manufacturing industry, and providing downtown revitalization

loans to businesses. Of the two actions that had not been initiated, one

was classified as uncertain and the other was found to be infeasible.

Specifically, the EZ had not begun developing an airport that would

accommodate larger airplanes because, according to EZ officials, funding

10This initiative was funded by the city and did not involve the use of SSBG funds.

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was hard to obtain and a court ruling found that the airport’s board was

improperly organized. The EZ’s efforts to establish a waste recycling plant

were terminated after a feasibility study determined that there would not

be enough waste available to make the plant cost-effective. Officials from

the EZ said that the funds for this activity would be reallocated to other

activities.

According to its 1997 performance review, the New York EZ has initiated

action on 20 of its 38 economic development activities, including

(1) establishing a business resource and service center, which, according

to the report, has held 26 business seminars and facilitated 27 loans;

(2) establishing a credit union for use by the zone’s residents; and

(3) revitalizing commercial facilities. Funding has been approved for the

18 activities on which action had not begun at the time the progress report

was prepared. EZ officials told us that they had subsequently canceled their

plans for an apprenticeship preparation program and had initiated actions

on five other activities, including enrolling 233 residents in workforce

preparation activities. The remaining economic development activities

included efforts to increase tourism and expand workforce preparation

initiatives.

The Rio Grande Valley EZ reported taking action on all 10 of its economic

development activities. These activities included developing training for

nursing assistants; training welders to work in the local manufacturing

industry; and extending small loans, as part of a one-stop capital shop, to

EZ residents to start small businesses. The EZ had also completed a facility,

called a business incubator, for fostering new businesses within the zone

by providing them with administrative support and work space at a

minimal cost. At the time of our visit in March 1998, the Rio Grande EZ had

planned 10 additional economic development activities, of which 6 were

ongoing. All of the additional activities related to business development

and workforce training.

Although the Atlanta EZ reported to HUD in its 1997 performance review

that it had completed or begun implementing 22 of its 23 economic

development activities, EZ officials gave us a March 1998 internal status

report showing that action had begun on only 4 out of 7 economic

development activities. Specifically, the status report showed that actions

were initiated to set up a one-stop capital shop, establish a revolving loan

fund, provide funds to develop employment strategies for women, and

renovate a vacant building. The report also showed that actions had not

yet been initiated to redevelop the Centennial Olympic Business Park,

Page 8 GAO/RCED-99-29 Economic Development in Empowerment Zones
B-281310 

establish another revolving loan fund, or market the EZ’s tax credits. The

differences in the progress reported in the 1997 performance review and in

the 1998 status report are due to several factors. First, the performance

review lists a revolving loan fund as one activity and individual loans

issued from that fund as other, separate activities, while the status report

lists all of these as a single activity. Similarly, the performance review lists

a project related to vacant property and a specific entity that received

funds under that project as separate activities, while the status report lists

both as a single activity. The performance review also includes activities,

such as reconstructing a sports arena and tracking job applicants, that

were not included in the status report. In addition, the status report

includes only activities that had been approved by the board at the time

the report was issued. Finally, the performance review indicates that

actions have been initiated on three activities for which the status report

shows that no actions have been initiated. The acting executive director of

the EZ at the time of our visit told us that he was not involved with the EZ

when the performance review was prepared and, consequently, could not

explain the differences.

The Mississippi Mid-Delta EZ reported starting five of eight economic

development activities. For example, the EZ said it had initiated actions to

attract and maintain jobs and to strengthen and maintain businesses and

industries. The EZ board had approved three other activities—to promote

and attract industrial and manufacturing jobs, to help businesses expand

within the zone, and to expand and improve training programs for

workers. At the time of our visit in April 1998, the EZ said it had added a

one-stop capital shop to its list of activities. Officials noted that actions

had been initiated on a total of seven activities—the five reported in 1997,

the one-stop capital shop, and an activity to attract and maintain jobs at

Dollar General Corporation. However, no action had been taken on the

other two funded activities at the time of our visit.

Experience and Agreement

Among Stakeholders

Promote Progress

Officials involved in implementing the EZs told us that two factors

facilitated their progress—obtaining agreement among stakeholders and

experience in implementing similar economic development activities. For

example, officials from the Kentucky Highlands and Rio Grande Valley EZs

attributed much of their progress to their multilevel project approval

processes, which were established early in the program. Their processes

allowed stakeholders to participate at the local level as well as at the

zonewide level. Once decisions were approved at the local level, they were

then submitted for approval to a zonewide board. Members of this board

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B-281310 

also made decisions on projects affecting the entire EZ. Conversely,

disagreement among stakeholders delayed activities. For example, the

New York EZ said that its progress was inhibited until its three major

stakeholders (the federal, state, and city governments, each of which

contributed $100 million to the EZ) clarified their roles and responsibilities.

The EZ has since made steady progress. Similarly, the Atlanta EZ has had

difficulty implementing activities because of disagreements among the EZ

advisory board, board of directors, and staff over their roles and

responsibilities.11 The Mississippi Mid-Delta EZ also ascribed delays to

disagreements over the state government’s role in making SSBG funds

available to the EZ. In the absence of written operating policies and

procedures, several disagreements have also arisen among this EZ’s

executive director, board members, and community representatives.

Another factor affecting the progress of the EZs was the extent to which

their management organizations had prior experience in implementing

similar activities. Officials from the Kentucky Highlands EZ said that the

organization managing its EZ has existed for 26 years and had prior

experience implementing economic development programs, such as those

funded through the Department of Commerce’s Economic Development

Administration. Consequently, the people involved were knowledgeable

about other federal, state, and local economic development programs and

regulations. The Kentucky Highlands executive director attributed his EZ’s

progress in implementing the program to this experience. On the other

hand, officials in the Baltimore EZ said that they had difficulty locating

experienced organizations to implement career centers, which would

identify residents’ needs for jobs and provide training to those residents.

EZ officials in New York also mentioned that it took longer than expected

to involve residents in the implementation process because the residents

lacked experience in evaluating proposals to implement projects.

Both HUD and USDA

Monitor the

Empowerment Zones’

Progress

Both HUD and USDA said that they use progress reports from the EZs,

together with visits by their own field office staff, to monitor the

performance of the EZs and evaluate their fitness to continue in the EZ

program. In addition, both agencies have sponsored studies, which were

11At the time of our review, the Atlanta EZ was operating under an acting executive director. The

former executive director’s contract was not renewed and most of the EZ staff had been fired for lack

of progress in implementing the EZ’s projects and excessive administrative spending.

Page 10 GAO/RCED-99-29 Economic Development in Empowerment Zones
B-281310 

performed by organizations that were not involved in implementing the

program, to help them monitor implementation efforts.12

HUD’s coordinator for the EZ program told us that HUD uses the reports from

the EZs to help monitor the progress that is being made. The reports are

reviewed in headquarters and by field office representatives. For instance,

in March 1997, HUD issued reports on each of the communities involved in

the program and identified implementation problems at five locations,

including one EZ—the Camden portion of the Philadelphia/Camden EZ. On

the basis of subsequent reports, HUD determined that improvements were

made in all five communities. The official added that HUD would consider

revoking a designation, as allowed by the program’s authorizing

legislation, if progress was not being made.

HUD field staff said that although the EZ program is primarily run by HUD

headquarters, they have provided assistance when asked by the EZs and

have reviewed progress reports at the request of headquarters. HUD field

and headquarters staff told us that under HUD’s management reform

initiative, the field offices will have an increased role in assisting the EZs

and monitoring their activities. Specifically, the field offices will have

(1) community builders, who will be responsible for assisting several HUD

programs, including the EZ program, and (2) public trust officers, who will

be responsible for monitoring HUD programs, including the EZ program.

According to the EZ program’s coordinator, training for the community

builders is under way and training for the public trust officers is being

developed. In addition, the EZ office in HUD headquarters plans to conduct

its own training sessions on the EZ program for community builders and

public trust officers.

According to USDA officials involved in implementing the EZ program,

representatives from the Department’s field offices conduct periodic site

visits to rural EZs and are expected to attend EZ board or committee

meetings, as well as keep abreast of the zones’ progress in implementing

the program. Accordingly, the cognizant USDA rural development field

office staff member prepares a weekly report to the headquarters Office of

Community Development outlining the EZ’s overall performance. USDA

officials told us that they have also brought in a technical expert when

(1) they have identified a specific problem or (2) an EZ has requested

technical assistance on a particular project. In addition, USDA plans to

12These reports were Building a Community Plan for Strategic Change: Findings From the First Round

Assessment, Nelson A. Rockefeller Institute of Government, State University of New York (1996) and

Rural Empowerment Zones/Enterprise Communities: Lessons From the Learning Initiative,

Community Partnership Center, University of Tennessee (Feb. 1998).

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conduct a comprehensive review of the EZ program about once every 3

years and/or when field office reports identify problems or show that a

particular EZ is falling behind in its benchmarks. In May 1998, for example,

USDA conducted such a review of the Mid-Delta Mississippi EZ to obtain an

overall view of its performance. The review involved meeting with state

officials, board members, and the executive director, as well as examining

the EZ’s files and planned activities. The results of this review were not

available when we were conducting our work. Finally, USDA’s Office of

Community Development prepares weekly reports to the Under Secretary

for Rural Development that include information on the EZs’ progress and

any changes or significant problems.

Efforts to Designate

the Remaining

Empowerment Zones

Are Ongoing

In April 1998, HUD and USDA published notices inviting communities to

apply for the new EZ designations by October 9, 1998. They also issued

regulations covering the program. HUD and USDA have jointly prepared

program and application guides and have each held workshops throughout

the country for communities interested in applying for a designation.

Specifically, HUD conducted 10 workshops nationwide between April and

May 1998, while USDA conducted 14 workshops nationwide between May

and June. Workshop topics included how to apply for the program,

develop a strategic plan, develop a governance structure, design a

performance management system, understand and market EZ tax

incentives, develop programs and projects to promote business

development, and use job training and job placement services to help

residents get jobs.

In October 1998, the Congress provided $45 million for the 15 new urban

EZs ($3 million for each one) and $10 million for the 5 new rural EZs. USDA

officials told us that they will allocate $2 million to each new rural EZ.

13

Both agencies are evaluating communities’ applications for designation.

HUD received about 120 applications, while USDA received 169 applications,

of which 160 were complete. Program officials from both agencies told us

that they expect the designations to be made no later than January 1, 1999,

the statutory deadline.

Agency Comments We provided a draft of this report to HUD and USDA for review and

comment. In addition, we sent the relevant sections of the report to each

EZ for its review.

13The Congress also authorized the designation of 20 new rural enterprise communities and provided a

total of $5 million for them. USDA officials said that they will allocate $250,000 to each new rural

enterprise community.

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HUD generally agreed with the information in the report. However, HUD

suggested that the report’s title be revised to reflect its focus on economic

development activities. We revised the title of the report as suggested. HUD

also said that it planned to increase its monitoring of the EZs and to

implement an Internet-based performance measurement system. HUD’s

comments are reproduced in appendix VII of this report.

USDA generally agreed with the information presented in the report and

provided editorial and technical corrections, which we incorporated

where appropriate.

In general, the EZs provided updated information or clarification on the

status of their activities, which we incorporated where appropriate. In

addition, the New York EZ provided current information on the funding of

its projects. We did not incorporate this information because we did not

receive similar information from the other EZs.

Scope and

Methodology

To determine the progress that the Atlanta, Baltimore, New York,

Kentucky Highlands, Mississippi Mid-Delta, and Rio Grande Valley EZs

made in implementing their economic development activities and the

causes for any delays, we reviewed documents prepared by the EZs,

including memorandums of agreement, benchmark documents, and

performance reports submitted to HUD and USDA. We did not review the

accuracy of the information reported by the EZs in these reports; however,

we did review HUD’s and USDA’s methods for ensuring the reports’

accuracy.14 We also reviewed HUD’s and USDA’s field evaluations for all of

the EZs visited, interviewed HUD and USDA headquarters officials and field

staff, and reviewed reports from entities that were under contract with

HUD and USDA to evaluate the EZ program. During our visits to the EZs, we

interviewed their executive directors and toured locations where

economic development activities were being implemented. In addition, we

interviewed residents and business representatives in the Baltimore, New

York, Kentucky Highlands, Mississippi Mid-Delta, and Rio Grande Valley

EZs. We also attended meetings of the advisory board or board of directors

in the Atlanta, Baltimore, Kentucky Highlands, and Rio Grande Valley EZs.

14HUD’s Office of Inspector General recently issued reports on, among other things, the accuracy of

reporting at EZs in four locations—Atlanta, Chicago, Detroit, and Philadelphia. These reports are Audit

Report: City of Atlanta Empowerment Zone Program (98-CH-259-1005, Sept. 28, 1998), Audit Report:

City of Chicago Empowerment Zone Program (99-CH-259-1002, Oct. 15, 1998), Audit Report: City of

Detroit Empowerment Zone Program (99-CH-259-1003, Oct. 20, 1998), and Audit Report: City of

Philadelphia Empowerment Zone Program (98-CH-259-1006, Sept. 30, 1998).

Page 13 GAO/RCED-99-29 Economic Development in Empowerment Zones
B-281310 

To determine monitoring and evaluation efforts, we interviewed HUD and

USDA officials in headquarters and in the field offices we visited, reviewed

reports prepared by field office staff, and reviewed training documents

provided to HUD’s community builders. To describe the efforts to

implement the second round of EZs, we compared the 1993 legislation

authorizing the first EZs to the 1997 legislation authorizing the new EZ

designations. We also obtained and reviewed HUD and USDA documents on

the new EZ designations. In addition, we reviewed other information

relevant to the EZs, including the President’s fiscal year 1999 budget

request. We conducted our work from December 1997 through

November 1998 in accordance with generally accepted government

auditing standards.

We are sending copies of this report to the appropriate congressional

committees and to the Secretaries of Housing and Urban Development,

Agriculture, and Health and Human Services. We will also make copies

available to others on request.

Please call me at (202) 512-7631 if you or your staff have any questions

about the material in this report. Major contributors to this report are

listed in appendix VIII.

Sincerely yours,

Stanley J. Czerwinski

Associate Director, Housing and

 Community Development Issues

Page 14 GAO/RCED-99-29 Economic Development in Empowerment Zones
Page 15 GAO/RCED-99-29 Economic Development in Empowerment Zones
Contents

Letter 1

Appendix I 

Status of Activities in

the Atlanta

Empowerment Zone

20

Appendix II 

Status of Activities in

the Baltimore

Empowerment Zone

23

Appendix III 

Status of Activities in

the New York

Empowerment Zone

25

Appendix IV 

Status of Activities in

the Kentucky

Highlands

Empowerment Zone

27

Appendix V 

Status of Activities in

the Mississippi

Mid-Delta

Empowerment Zone

29

Page 16 GAO/RCED-99-29 Economic Development in Empowerment Zones
Contents

Appendix VI 

Status of Activities in

the Rio Grande Valley

Empowerment Zone

31

Appendix VII 

Comments From the

Department of

Housing and Urban

Development

33

Appendix VIII 

Major Contributors to

This Report

38

Tables Table 1: Activities Planned in Six EZs 6

Table 2: Allocations of SSBG Funds Reported by Six EZs 6

 Table I.1: Atlanta EZ’s Economic Development Activities—Status

and SSBG Allocation

21

Table I.2: Other Categories of Activities and Their SSBG

Allocation

22

Table II.1: Baltimore EZ’s Economic Development

Activities—Status and SSBG Allocation

24

Table III.1: New York EZ’s Economic Development

Activities—Status and SSBG Allocation

25

Table IV.1: Kentucky Highlands EZ’s Economic Development

Activities—Status and SSBG Allocation

28

Table V.1: Mississippi Mid-Delta EZ’s Economic Development

Activities—Status and SSBG Allocation

29

Table V.2: Other Categories of Activities and Their SSBG

Allocation

30

Table VI.1: Rio Grande Valley EZ’s Economic Development

Activities—Status and SSBG Allocation

31

Table VI.2: Other Categories of Activities and Their SSBG

Allocation

32

Page 17 GAO/RCED-99-29 Economic Development in Empowerment Zones
Contents

Abbreviations

EZ empowerment zone

HUD Department of Housing and Urban Development

SSBG Social Services Block Grant

USDA U.S. Department of Agriculture

Page 18 GAO/RCED-99-29 Economic Development in Empowerment Zones
Page 19 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix I 

Status of Activities in the Atlanta

Empowerment Zone

The Atlanta empowerment zone’s (EZ) implementation process involves a

sequence of steps that include proposing an activity, obtaining approval

from the EZ board to proceed with that activity, obtaining approval for

funding the activity from the appropriate local and state entities, initiating

actions to implement the activity, and completing actions associated with

the activity. These steps are referred to as “proposed,” “board approved,”

“funding approved,” “ongoing,” and “completed,” respectively. Table I.1

shows each planned economic development activity, its status as reported

by the EZ in its 1997 performance review, and the amount of Social

Services Block Grant (SSBG) funds allocated to the activity.15

A March 1998 status report provided by Atlanta EZ officials showed seven

activities as planned and indicated that progress was ongoing for four of

the activities—the vacant property strategy, the female power

demonstration, the one-stop capital shop, and the Atlanta Empowerment

Zone Corporation revolving loan fund. The EZ had not yet initiated action

on the three remaining activities. (See note a

 in table I.1 for the activities

that were included in the status report). The differences in the progress

reported in the 1997 performance review and in the 1998 status report are

due to several factors: (1) the performance review lists a revolving loan

fund as one activity and individual loans issued from that fund as other,

separate activities, while the status report lists all of these as a single

activity; (2) the performance review lists a project related to vacant

property and a specific entity that received funds under that project as

separate activities, while the status report lists both as a single activity;

(3) the performance review includes activities, such as reconstructing a

sports arena and tracking job applicants, that are not included in the status

report; (4) the status report includes only activities that had been

approved by the board at the time the report was issued; and (5) the

performance review indicates that actions have been initiated on three

activities for which the status report shows that no actions have been

initiated.16

15Under the EZ program, the Atlanta EZ received $100 million in SSBG funds for use over the 10-year

life of the program.

16The acting executive director of the EZ at the time of our visit told us that he was not involved with

the EZ when the performance review was prepared and, consequently, could not explain the

differences.

Page 20 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix I 

Status of Activities in the Atlanta

Empowerment Zone

Table I.1: Atlanta EZ’s Economic Development Activities—Status and SSBG Allocation

Activity Status SSBG allocation

Marketing Business Incentivesa—to market EZ business incentives to existing and

prospective zone businesses

Ongoing $200,000

Vacant Property Strategya—to identify and redevelop vacant EZ buildings Ongoing 2,000,000

Old Fourth Ward Commercial Property Redevelopment—to redevelop a building located at

551 Ralph McGill Boulevard

Ongoing b

Manufactured Housing Study—to assess the use of manufactured housing in the zone Ongoing 200,000

Female Power Demonstrationa—to educate and empower female zone residents to move

them toward self-sufficiency through employment

Completed 400,000

Atlanta One-Stop Capital Shopa—to provide comprehensive technical and financial

assistance in a single location to the area’s small businesses

Ongoing 1,016,000

Community Empowerment Advisory Board Revolving Loan Funda—to provide loans of up to

$50,000 to home, community-based, and start-up businesses

Ongoing 2,100,000

Atlanta Empowerment Zone Corporation Revolving Loan Funda—to provide loans in excess of

$50,000 to businesses that locate or expand in the zone

Ongoing 2,400,000

Autocraft Body and Paint Shop—to renovate and expand a business in its current location Ongoing c

Corporate Courier—to finance businesses that expand in or relocate to the zone Ongoing c

Creative Fine Arts—to finance businesses that expand in or relocate to the zone Ongoing c

Fulton Cotton Bag Mill—to renovate a vacant property for commercial, retail, and residential

use

Ongoing c

Miss Piggy’s Southern Cuisine—to create a new business in the zone Ongoing c

Sweet Auburn Curb Market—to renovate an historic food market Ongoing c

Leveraged Loan Fund—to provide loans to existing small businesses that have little or no

collateral and are service-oriented

Proposed 200,000

Job Training—to provide training Ongoing 0

Job Training-Career Day—to provide job information and solicit job interests Completed 0

Job Training-Computer Jobs Bank—to identify all jobs available in the state of Georgia Ongoing 0

Job Training-Renewal Atlanta—to recruit, train, and track applicants for jobs in EZ businesses Ongoing 85,000

Atlanta Hawks/Atlanta Thrashers Arena—to reconstruct a sports arena Ongoing 0

Centennial Olympic Park Area Business Parka—to redevelop a 1-million-square-foot office

park

Ongoing 5,000,000

MLK and Ashby Shopping Center—to develop vacant land into a shopping center Ongoing 0

Turner Field—to renovate the Olympic stadium for use as a baseball field Completed 0

Total $13,601,000

(Table notes on next page)

Page 21 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix I 

Status of Activities in the Atlanta

Empowerment Zone

aThese seven activities were included in the Mar. 1998 status report provided by Atlanta EZ

officials.

bThis activity, which is part of the Vacant Property Strategy, is listed as a separate activity in the

Atlanta EZ’s 1997 performance review but has no additional funds associated with it.

cThis activity, which is part of the Atlanta Empowerment Zone Corporation Revolving Loan Fund,

is listed as a separate activity in the Atlanta EZ’s 1997 performance review but has no additional

funds associated with it.

Source: Atlanta EZ’s 1997 performance review.

Table I.2 lists categories that include the Atlanta EZ’s planned activities

that are not related to economic development and shows the amount of

SSBG funds allocated to each category. Each category contains multiple

planned activities.

Table I.2: Other Categories of

Activities and Their SSBG Allocation Category SSBG allocation

Creating safe and livable communities $4,514,300

Lifting youth and families out of poverty 5,173,999

Providing adequate housing for all 18,000,000

Governance 2,248,000

Total $29,936,299

Source: Atlanta EZ’s 1997 performance review.

Page 22 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix II 

Status of Activities in the Baltimore

Empowerment Zone

The Baltimore EZ’s implementation process involves a sequence of steps

that include researching and reviewing the activities in the EZ’s original

application to develop the program’s design and obtain review and input

from an advisory council whose members represent the EZ’s various

constituencies, obtaining approval from the EZ board to proceed with an

activity, presenting that activity to the state and federal governments for

review and acceptance, initiating actions to implement the activity, and

completing actions associated with the activity. These steps are referred to

as “proposed,” “board approved,” “state and federal government

approved,” “ongoing,” and “completed,” respectively. Table II.1 shows

each planned economic development activity, its status as reported by the

EZ in 1997, and the amount of SSBG funds allocated to the activity.17

17Under the EZ program, the Baltimore EZ received $100 million in SSBG funds for use over the 10-year

life of the program.

Page 23 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix II 

Status of Activities in the Baltimore

Empowerment Zone

Table II.1: Baltimore EZ’s Economic Development Activities—Status and SSBG Allocation

Activity Status SSBG allocation

Business Empowerment Center—to provide businesses with assistance and access to capital Ongoing $4,200,000

High-Risk Capital Loan Fund—to provide gap financing for small businesses to obtain capital

from traditional lenders

Ongoing 1,000,000

Zone Spin-Off Business—to create spin-off businesses on the supplier network for health care

industries in the zone

Ongoing 250,000

Fairfield Ecological Park—to convert brownfield land into an industrial park Ongoing 863,600

State Enterprise Zone Development—to provide additional incentives to locate in the zone Completed 0

Carroll Park Industrial Area Business—to improve infrastructure needed for businesses to

strengthen and grow

Ongoing 250,000

Finance Vehicle—to provide incentive financing to stimulate job creation Ongoing 2,500,000

Brownfield Loans and Grants—to provide incentive financing and grants to revitalize

brownfield land in the zone

Ongoing 3,000,000

Neighborhood Food Market Privatization—to privatize four public markets Completed 0

Neighborhood Commercial Revitalization—to stabilize and expand employment in

commercial areas

Ongoing 750,000

Community Development Bank—to lend money to businesses and for residential development Board approved 0

Village Center Employment and Training—to design a career center model to meet residents’

job needs

Ongoing 15,350,000

Family Support Strategy—to assist in developing activities that support workforce participation Ongoing 1,102,000

Primary and Preventive Health—to provide health screening for residents prior to training or

employment

Board approved 3,050,000

Substance Abuse Strategy—to assist addicted persons in participating in the workforce Ongoing 5,045,115

Reverse Commuting—to provide transportation to connect EZ residents with jobs in the

suburbs

Ongoing 1,000,000

Employ Baltimore Zone Advisor—to increase linkages between zone businesses and zone

residents in order to increase the residents’ participation in the workforce

Ongoing 0

Business Skills Advisory Group—to focus on the workforce needs of businesses Ongoing 0

Child Care—to support workforce participation by providing resources for child care Ongoing 1,400,000

Total $39,760,715

Source: Baltimore EZ’s 1997 performance review.

The Baltimore EZ also had planned activities related to improving the

quality of life and building community capacity that were allocated

$12,423,800 and $7,500,000 in SSBG funds, respectively.

Page 24 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix III 

Status of Activities in the New York

Empowerment Zone

The New York EZ’s implementation process involves a sequence of steps

that include proposing an activity, obtaining approval from the EZ board to

proceed with that activity, obtaining approval for funding the activity from

the appropriate local and state entities, initiating actions to implement the

activity, and completing actions associated with the activity. These steps

are referred to as “proposed,” “board approved,” “funding approved,”

“ongoing,” and “completed,” respectively. Table III.1 shows each planned

economic development activity, its status as reported by the EZ in 1997,

and the amount of SSBG funds allocated to the activity.18

Table III.1: New York EZ’s Economic Development Activities—Status and SSBG Allocation

Activity Status SSBG allocation

Neighborhood Trust Federal Credit Union—to create a credit union in the area Ongoing $98,750

Harlem USA Operating Company—to build a retail and entertainment center Ongoing 3,733,333

Minton’s Playhouse and Restaurant—to renovate and reopen this restaurant and jazz club Board approved 116,666

Isabella Geriatric Center Nursing Assistant Training—to expose students to health care

careers through a school-to-work program

Ongoing 20,000

Washington Heights/Inwood Development Corporation—to provide capital to small business

owners and entrepreneurs

Ongoing 75,000

Business Resource and Investment Service Center—to establish a one-stop capital shop and

technical assistance center

Ongoing 564,402

Black United Fund of New York—to offer copying, computer, and communications services to

individuals and businesses

Ongoing 33,333

Broadway Video Incorporated—to expand the company’s duplication services division by

developing a mass video production facility

Board approved 146,313

Alexander Doll Company—to provide training and factory renovation Board approved 533,334

East Harlem Microloan Program—to market small business loans to local businesses that do

not qualify for traditional loans

Board approved 83,333

Institute for Youth Entrepreneurship—to expose youth to entrepreneurial career paths Ongoing 41,667

The Studio Museum in Harlem Store—to expand the museum store’s capacity to increase

revenues from tourism

Funding approved 50,000

Small Business Assistance Initiative—to help businesses construct and maintain proper

financial records

Board approved 583,333

Central Harlem Commercial Revitalization Program—to provide technical assistance for EZ

businesses

Ongoing 250,000

East Harlem Commercial Revitalization Program—to provide technical assistance for EZ

businesses

Ongoing 250,000

Washington Heights/Inwood Commercial Revitalization Program—to provide technical

assistance for EZ businesses

Ongoing 250,000

Washington Heights Business Improvement District Management Association—to provide

technical assistance for EZ businesses

Ongoing 41,666

(continued)

18Under the EZ program, the New York EZ received $100 million in SSBG funds for use over the

10-year life of the program.

Page 25 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix III 

Status of Activities in the New York

Empowerment Zone

Activity Status SSBG allocation

Julia de Burgos Latino Cultural Center Feasibility Study—to develop a plan for local art and

cultural groups to get tenants for and manage a vacant building

Ongoing 41,666

Masjid Malcolm Shabazz 116th Street Anchor/Retail—to provide assistance to vendors selling

at a local marketplace

Ongoing 100,000

Boys Harbor Incorporated—to develop a collection of rare photos, videos, recordings,

literature, and oral histories related to Latin music

Board approved 41,667

Community Family Planning Center—to acquire, renovate, and convert an abandoned

firehouse into a health care facility

Ongoing 76,796

East Harlem Neighborhood-Based Alliance Corporation—to introduce EZ youth to health care

careers through internships

Ongoing 20,000

Community Court Feasibility and Development Study—to study the feasibility of a

decentralized court that will immediately sentence convicted wrongdoers who have not

committed felonies and attempt to reintegrate them into neighborhood life

Ongoing 36,666

Beacon School Community Partnership—to expand computer literacy training to youth Ongoing 266,666

Virtual Y—to increase reading scores through an after-school program Ongoing 190,000

Harlem Technology Center—to expand computer literacy training to youth and community

residents

Funding approved 44,315

Baked in the Hood—to create a professional kitchen that will permit production to meet

demand for baked goods and increase workers’ readiness for permanent jobs

Funding approved 78,000

Harlem Hospital and Columbia University Dental Training Program—to provide high-quality

training for certified dental assistants

Funding approved 83,333

135th Street Gatehouse Project—to expand performance and rehearsal space for local

performing arts groups

Funding approved 166,666

The Valley Incorporated Summer Youth Employment—to provide youth with summer

internships and employment

Ongoing 8,333

University Consortium Technical Assistance Pilot—to provide technical assistance for EZ

residents, organizations, and businesses

Ongoing 50,000

Welfare-to-Work Initiatives—to enroll at least 200 public assistance recipients in welfare-to

work-programs

Funding approved 380,000

Training for Growing Sectors of the Zone and Regional Economy—to equip EZ residents with

skills and training and help them obtain jobs in growth industries

Funding approved 666,668

Entrepreneurial Training Programs—to create and enhance entrepreneurial activities Funding approved 195,834

Basic Literacy Programs—to enroll at least 24 EZ residents in basic literacy programs Funding approved 56,668

Apprenticeship Preparation Program—to establish or expand youth apprenticeship programs Funding approved 60,000

English as a Second Language Program—to enroll at least 195 EZ residents in the program Funding approved 141,668

General Equivalency Diploma Program—to enroll at least 900 EZ residents in the program Funding approved 113,336

Total $9,689,412

Source: 1997 performance reviews from the Bronx Overall Economic Development Corporation

and the Upper Manhattan Empowerment Zone Development Corporation.

The New York EZ also had planned activities related to child care that were

allocated $333,334 in SSBG funds.

Page 26 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix IV 

Status of Activities in the Kentucky

Highlands Empowerment Zone

The Kentucky Highlands EZ’s implementation process involves a sequence

of steps that include proposing an activity, obtaining approval from the EZ

board to proceed with that activity, obtaining approval for funding the

activity from the appropriate local and state entities, initiating actions to

implement the activity, and completing actions associated with the

activity. These steps are referred to as “proposed,” “board approved,”

“funding approved,” “ongoing,” and “completed,” respectively. Table IV.1

shows each planned economic development activity, its status as reported

by the EZ in 1997, and the amount of SSBG funds allocated to the activity.19

19Under the EZ program, the Kentucky Highlands EZ received $40 million in SSBG funds for use over

the 10-year life of the program.

Page 27 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix IV 

Status of Activities in the Kentucky

Highlands Empowerment Zone

Table IV.1: Kentucky Highlands EZ’s Economic Development Activities—Status and SSBG Allocation

Activity Status SSBG allocation

Developmental Venture Fund—to establish and manage a developmental venture fund for

new and expanding businesses

Ongoing $11,000,000

Clinton County Industrial Park—to develop an industrial park Ongoing 1,000,000

Wayne County Industrial Park—to develop an industrial park Ongoing 1,000,000

Jackson County Specification Building—to construct an industrial specification and make

infrastructure improvements

Complete 1,000,000

Crop Loan Fund—to establish an alternative crop loan fund for growers in the zone Ongoing 300,000

Production Loan Fund—to provide an operating line of credit for farmers in the zone Ongoing 1,000,000

Mountain Venture Loan Fund—to recapitalize a small business investment corporation to

provide financing for businesses in the zone

Ongoing 2,000,000

Training Program-Rehabilitation Workshop—to establish a workshop in each area to raise the

production and skills of workers

Ongoing 1,300,000

Entrepreneurial Training—to establish semi-annual entrepreneurial training courses in

Jackson County

Ongoing 700,000

Training/Recreation—to construct and operate a training and postsecondary education facility Ongoing 2,500,000

Clinton County Revolving Loan Fund—to establish and manage a revolving loan fund for

economic/community development purposes

Ongoing 1,000,000

Wayne County Revolving Loan Fund—to establish and manage a revolving loan fund for

economic/community development purposes

Ongoing 150,000

Home Keyer Program—to establish and manage a revolving loan fund for

economic/community development purposes

Ongoing 400,000

Albany Downtown Revitalization—to develop and implement a downtown revitalization

program

Funding approved 500,000

McKee Downtown Revitalization—to develop and implement a downtown revitalization

program

Ongoing 250,000

Annville Downtown Revitalization—to develop and implement a downtown revitalization

program

Ongoing 250,000

Airport Project—to develop a transport-class airport with a 5,500-foot runway to serve the zone Proposed 475,000

Clinton County Water System Expansion—to upgrade water delivery systems for residents

and businesses

Ongoing 500,000

Wayne County Water System—to upgrade water delivery systems for residents and

businesses

Completed 500,000

Recycling Project—to determine the feasibility of and develop a multicounty recycling facility Terminated 2,000,000

Total $27,825,000

Source: Kentucky Highlands EZ’s Sept. 1997 accountability assessment.

The Kentucky Highlands EZ also had planned activities related to

community development and project administration that were allocated

$7,825,000 and $4,350,000 in SSBG funds, respectively.

Page 28 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix V 

Status of Activities in the Mississippi

Mid-Delta Empowerment Zone

The Mississippi Mid-Delta EZ’s implementation process involves a

sequence of steps that include proposing an activity, obtaining approval

from the EZ board to proceed with that activity, obtaining approval for

funding the activity from the appropriate local and state entities, initiating

actions to implement the activity, and completing actions associated with

the activity. These steps are referred to as “proposed,” “board approved,”

“funding approved,” “ongoing,” and “completed,” respectively. Table V.1

shows each planned economic development activity, its status as reported

by the EZ in 1997, and the amount of SSBG funds allocated to the activity.20

Table V.1: Mississippi Mid-Delta EZ’s Economic Development Activities—Status and SSBG Allocation

Activity Status SSBG allocation

Viking Range—to attract and maintain industrial jobs Ongoing $0

Leading Edge Aircraft Painting—to attract and maintain industrial jobs Ongoing 0

Dollar General Corporation—to attract and maintain industrial jobs Board approved 900,000

Wolverine Tube—to strengthen existing businesses and industries Board approved 427,000

Sporting World—to strengthen existing businesses and industries Ongoing 0

Southern Fasteners—to strengthen existing businesses and industries Ongoing 0

Manufacturing and Technology Center—to expand and improve workforce training programs Board approved 4,000,000

A. Philip Randolph Educational Fund—to strengthen existing businesses and industries Ongoing 0

Total $5,327,000

Source: Mississippi Mid-Delta EZ’s Sept. 1997 accountability assessment.

Table V.2 lists categories that include the Mississippi Mid-Delta EZ’s

planned activities that are not related to economic development and

shows the amount of SSBG funds allocated to each category. Each category

contains multiple planned activities.

20Under the EZ program, the Mississippi Mid-Delta EZ received $40 million in SSBG funds for use over

the 10-year life of the program.

Page 29 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix V 

Status of Activities in the Mississippi

Mid-Delta Empowerment Zone

Table V.2: Other Categories of

Activities and Their SSBG Allocation Category SSBG allocation

Promote community beautification $2,500

Improve the availability of housing 220,000

Improve the quality and accessibility of health care 0

Improve public safety 0

Improve drug prevention efforts 0

Improve existing infrastructure 0

Total $222,500

Source: Mississippi Mid-Delta EZ’s Sept. 1997 accountability assessment.

Page 30 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VI 

Status of Activities in the Rio Grande Valley

Empowerment Zone

For the Rio Grande Valley EZ, table VI.1 shows each planned economic

development activity, its status as reported by the EZ in 1997, and the

amount of SSBG funds allocated to the activity.21 The status was reported as

“ongoing” if actions had been initiated beyond obtaining approvals and

funding for the activity.

Table VI.1: Rio Grande Valley EZ’s Economic Development Activities—Status and SSBG Allocation

Activity Status SSBG allocation

One-Stop Capital Shop—to provide concentrated technical assistance and counseling to

individuals and businesses in the zone

Ongoing $1,200,000

Enterprise Center—to create a small business incubator Ongoing 750,000

Historical Preservation and Redevelopment—to improve the quality of the community to

attract people and businesses to Port Isabel

Ongoing 763,100

Community Investment Fund-Starr County—to implement a revolving loan fund in Starr County Ongoing 400,000

Community Investment Fund-Willacy County—to implement a revolving loan fund in Willacy

County

Ongoing 625,000

Community Investment Fund-Hidalgo County—to implement a revolving loan fund in Hidalgo

County

Ongoing 2,000,000

High Skills Training—to test new labor market strategies to reconnect low-income

unemployed individuals with quality jobs

Ongoing 1,500,000

Demand-Driven Job Training—to provide job training in the Cameron County subzone Ongoing 679,000

College and University Center—to develop an education and training center Ongoing 1,108,385

Community Empowerment Center—to provide a literacy instruction program that will meet the

needs of preliterate adults to continue their education and learn marketable skills

Ongoing 310,194

Total $9,335,679

Source: Rio Grande Valley EZ’s Sept. 1997 accountability assessment.

Table VI.2 lists categories that include the Rio Grande Valley EZ’s planned

activities that are not related to economic development and shows the

amount of SSBG funds allocated to each category. Each category contains

multiple planned activities.

21Under the EZ program, the Rio Grande Valley EZ received $40 million in SSBG funds for use over the

10-year life of the program.

Page 31 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VI 

Status of Activities in the Rio Grande Valley

Empowerment Zone

Table VI.2: Other Categories of

Activities and Their SSBG Allocation Category SSBG allocation

Health care $800,000

Housing 250,000

Youth and education 806,424

Public safety 75,620

Infrastructure and community facilities 1,635,000

Total $3,567,044

Source: Rio Grande Valley EZ’s Sept. 1997 accountability assessment.

Page 32 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VII 

Comments From the Department of Housing

and Urban Development

Page 33 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VII 

Comments From the Department of Housing

and Urban Development

Page 34 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VII 

Comments From the Department of Housing

and Urban Development

Page 35 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VII 

Comments From the Department of Housing

and Urban Development

Page 36 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VII 

Comments From the Department of Housing

and Urban Development

Page 37 GAO/RCED-99-29 Economic Development in Empowerment Zones
Appendix VIII 

Major Contributors to This Report

Kathy R. Alexander

Johnnie E. Barnes

Nancy A. Boardman

Elizabeth R. Eisenstadt

Nancy A. Simmons

Marc A. Wallace

(385732) Page 38 GAO/RCED-99-29 Economic Development in Empowerment Zones
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