U.S. GOVERNMENT PRINTING OFFICE

67–149 WASHINGTON : 2000

THE FUTURE OF ROUND II EMPOWERMENT ZONES

HEARING

BEFORE THE

SUBCOMMITTEE ON RURAL ENTERPRISES,

BUSINESS OPPORTUNITIES, AND SPECIAL

SMALL BUSINESS PROBLEMS

OF THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

WASHINGTON, DC, JUNE 7, 2000

Serial No. 106–61

Printed for the use of the Committee on Small Business

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

(II)

COMMITTEE ON SMALL BUSINESS

JAMES M. TALENT, Missouri, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

DONALD A. MANZULLO, Illinois

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PHIL ENGLISH, Pennsylvania

DAVID M. MCINTOSH, Indiana

RICK HILL, Montana

JOSEPH R. PITTS, Pennsylvania

JOHN E. SWEENEY, New York

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

EDWARD PEASE, Indiana

JOHN THUNE, South Dakota

MARY BONO, California

NYDIA M. VELAZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

CAROLYN MCCARTHY, New York

BILL PASCRELL, New Jersey

RUBEN HINOJOSA, Texas

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

SHELLEY BERKLEY, Nevada

HARRY KATRICHIS, Chief Counsel

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON RURAL ENTERPRISES, BUSINESS OPPORTUNITIES, AND SPECIAL

SMALL BUSINESS PROBLEMS

FRANK A. LOBIONDO, New Jersey, Chairman

RICK HILL, Montana

JIM DEMINT, South Carolina

JOHN THUNE, South Dakota

JOHN E. SWEENEY, New York

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

DAVID D. PHELPS, Illinois

TOM UDALL, New Mexico

BRIAN BAIRD, Washington

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C O N T E N T S

HEARING HELD ON JUNE 7, 2000

WITNESSES

Page

Bono, Mary, Member, U.S. House of Representatives, California ....................... 4

Capuano, Michael, Member, U.S. House of Representatives, Massachusetts .... 5

Mathews, Maria, Deputy Administrator for Rural Development, United States

Department of Agricuture ................................................................................... 7

Velazquez, Gerard, Executive Director, Cumberland County Empowerment

Zone ....................................................................................................................... 9

Dunkins, James, Vice-Chairman, Cumberland County Empowerment Zone ..... 12

APPENDIX

Opening statements:

LoBiondo, Hon. Frank ...................................................................................... 22

Prepared statements:

Bono, Mary ........................................................................................................ 26

Capuano, Michael ............................................................................................. 29

Mathews, Maria ................................................................................................ 31

Velazquez, Gerard ............................................................................................ 36

Dunkins, James ................................................................................................ 45

Additional material:

Written Statement of the EZ/EC Initiative Office, U.S. Department of

Housing and Urban Development ............................................................... 48

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THE FUTURE OF ROUND II EMPOWERMENT

ZONES

WEDNESDAY, JUNE 7, 2000

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON RURAL ENTERPRISES, BUSINESS, OPPORTUNITIES AND SPECIAL SMALL BUSINESS PROBLEMS, Washington, DC.

The Subcommittee met, pursuant to call, at 2:45 p.m., in room

2360, Rayburn House Office Building, Hon. Frank A. LoBiondo

[chairman of the Subcommittee] presiding.

Chairman LOBIONDO. Committee will come to order. I would first

like to apologize to our panelists and guests for the delay, unfortunately, beyond our control. Welcome to the Subcommittee on the

Future of Round II Empowerment Zones. I am going to have a brief

opening statement and then turn to our ranking member for her

opening statement, and then we will move into the first panel.

Good afternoon, ladies and gentlemen. Today the Subcommittee

on Rural Enterprises, Business Opportunities and Special Small

Business Problems is convening to discuss the Future of Round II

Empowerment Zones. As many of you know, the EZ/ECs program

was enacted in 1993. This 10-year program targets Federal grants

to economically distressed urban and rural communities for social

services and community redevelopment, and provides tax and regulatory relief. In what is now referred to as round I of the program,

104 empowerment zones and enterprise communities were created.

As part of this program, each urban and each rural empowerment

zone received $100 million and $40 million respectively in flexible

Social Service Block Grant funds. In addition, qualifying EZ employers are entitled to a 20 percent credit on the first $15,000 of

wages paid to certain qualified zone employees.

The Taxpayer Relief Act of 1997 authorized a second round of 20

EZ designations known as Round II Empowerment Zones. In the

round II competition, 279 communities and groups of adjacent communities, 119 in urban areas and 160 in rural areas, competed for

15 urban and five rural zone designations.

In my congressional District in Cumberland County, New Jersey,

we were one of the 15 urban areas to receive this designation on

January the 13th, 1999.

Unfortunately, employers in Round II Empowerment Zones are

not currently able to benefit from the hiring tax credit afforded to

employers located in the Round I EZs. Additionally, the block grant

funding that is available for Round I EZs has not been made fully

available to Round II zones. Cumberland County should be receivVerDate 11-MAY-2000 10:03 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HEARINGS\67149 pfrm08 PsN: 67149
2

ing $10 million a year for the next 10 years. To date, they have

received approximately 6.7 million, only one third of the amount of

funding promised at the Federal level over two years. Business people, community groups and residents of the Round II Empowerment Zones have no choice but to sit through Congress’ annual appropriations battles before they are able to construct, with a level

of certainty, economic plans that will revitalize their community.

Those of us representing one of these distressed communities in

Congress understand the vital need to have full funding mechanism in place for Round II, as it is in place for Round I designations.

This is the second hearing that the Small Business Committee

has held on this issue. The first was held on April 26th, 2000 in

Mecca, California and was chaired by one of our witnesses, Representative Mary Bono. At that hearing, members of the community discussed their concerns with the uncertainty that Round II

zones face and how these uncertainties affect their business plans.

Surely, these uncertainties are not what Congress intended to

subject these communities to when we decided to create new empowerment zones. Indeed, with the newly reached agreement regarding the Talent-Watts Community Renewal Legislation, Congress runs the risk of creating a fractured structure of community

development zones and forgetting about the promises made to communities that were designated Round II Empowerment Zones in

1999.

Over the last several years, our Nation has experienced an historic period of wealth creation. Our challenge now is to expand that

prosperity to lower income families in rural and urban communities. Through empowerment zone opportunities, we invite low income working Americans to be participants in our strong American

economy and to determine how resources will be used within their

neighborhoods.

Today, we will hear from two distinguished panels of witnesses

to discuss the future of Round II Empowerment Zones. On the first

panel we have a member of our full committee, Representative

Mary Bono. Additionally, I would also like to welcome Representative Mike Capuano. Mike and I decided several months ago to form

the EZ/EC congressional bipartisan caucus to highlight the fact

that the 20 round II EZ/ECs designated by the President in 1999

still have not received the full funding allotment they were promised.

Our second panel consists of Maria Matthews, the Deputy Administrator for Rural Development from the United States Department of Agriculture; Jerry Velazquez, Executive Director of the

Cumberland County EZ; and Reverend James A Dunkins, Vice

Chairman of the Cumberland County Empowerment Zone.

[Mr. LoBiondo’s statement may be found in appendix.]

Chairman LOBIONDO. I look forward to the enlightening testimony of our witnesses, and now I turn to the ranking member for

any opening statement she may have.

Ms. CHRISTIAN-CHRISTENSEN. Thank you, Mr. Chairman. I am

pleased to join you this afternoon for this hearing on something

that I consider to be an important issue, the future of Round II and

also Round III Empowerment Zones. I would like to welcome our

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panel of witnesses also, and especially extend a welcome to our colleagues, Representative Bono and Representative Capuano, and I

look forward to hearing from all of you and learning your experiences and concerns and receiving some of your insights into this

issue.

Coming from a particularly economically distressed community,

the U.S. Virgin Islands, and having introduced legislation myself,

H.R. 3643, to create empowerment zones for the territories because

they are not included in any of these authorizations, the EZ/EC

program has been and continues to be of major interest to me. To

this subcommittee, which represents the interests of rural business

particularly, it is important that we look at this program, which

has the potential to be a lifeline to our often overlooked or forgotten communities, either urban or rural.

It is our responsibility to ensure that the EZ/EC program represents more than an empty promise, but that it will indeed provide the resources to enable parts of this country, which have not

yet begun to share in its extraordinary economic bounty, to be able

to do so.

Today’s hearing focuses on whether or not, given the limited

funding we have provided the opportunities to Round II Empowerment Zones, to realize the goals set out in their strategic plans. We

will also explore the need for additional tax incentives and other

tools to encourage investment in these zones and review the recent

agreement on new market provisions.

The Taxpayer Relief Act of 1997 created what is now known as

Round II of the empowerment zone enterprise communities, which

provides for the designation of additional EZs. However, one of the

major issues before us today is the fact that the Act failed to provide Social Service Block Grant funding for the second round,

which was a key feature of that first round. Over the 10-year life

of the program urban and rural EZs are each to receive 100 million

and 40 million respectively. Currently, only 3 million for each

urban zone and 2 million for each rural zone has been approved in

Round II.

The Empowerment Zone program is a vital antidote to the economic and social problems confronted by distressed urban and

rural areas in this country. According to Vice President Gore,

Round I resulted in more than 80 million in private sector investment to the designated communities and unprecedented public private partnerships. Round II should add more substance to the program because the Taxpayer Relief Act designated 20 additional

communities, making them eligible for a share of 50 million in proposed Federal grants over the next 10 years.

Despite these new provisions, the reason that we are all here

today is because Round II lacks what it takes to fully empower

these communities by encouraging the investment they need to

make them whole. I must note at this point that it is the administration’s goal and that of the Congress to obtain full funding for

Round II of the Empowerment Zone program. Such legislation in

the Congress would include H.R. 4463 introduced by Representative Bono, which would amend the Internal Revenue Code of 1986

to allow the empowerment zone employment credit for additional

empowerment zones and enterprise communities and increase

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funding for those zones and communities. It is important that we

look at this legislation as we seek a remedy to improve Round II

Empowerment Zones.

Last week, the White House announced an agreement between

the administration and Speaker Hastert on the New Markets Initiative. This agreement incorporates a designation of yet a third

round of EZs. We must look at the new components that that third

round designation would add, either before creating a new program, or at least at the same time we consider the status of the

current program.

I look forward to listening to your testimony and discussing these

issues with you. Again, thank you for being here.

Chairman LOBIONDO. Thank you. We will now move to the

panel. Congresswoman Mary Bono, we thank you for joining us.

Mary has sponsored legislation that a number of us are cosponsoring, that would help in the funding scenario, and has been a

very strong advocate. We thank you for your help and welcome you

today.

STATEMENT OF THE HON. MARY BONO, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. BONO. Thank you, Mr. Chairman. I would like to thank you

and the ranking member for holding this hearing on the Round II

Empowerment Zones and on H.R. 4463, the Empowerment Zone

Enhancement Act of 2000.

As we continue to study the very exciting agreement recently

reached between the Speaker of the House and the President regarding the American Community Renewal Act and the New Markets Initiative, it has become even more clear that we must finish

the work that was begun in the Round II Empowerment Zones.

In 1997, 20 empowerment zones were authorized as part of the

tax reconciliation package in the Balanced Budget Act. This second

round of empowerment zones, 15 urban and five rural, were designated in January 1999. Unlike the first round, the Round II Empowerment Zones were not authorized to benefit from the employer

wage tax credit, also referred to as the hiring tax credit, nor were

there funds available to implement the strategic plans upon which

the designations were made.

A couple of months ago, the Small Business Committee held a

hearing in the Desert Communities Empowerment Zone, which I

have the pleasure of representing. While this hearing discussed

some of the positive initiatives that have begun in eastern

Coachella Valley, it also brought to light the obvious need, especially in rural empowerment zones, for consistent funding as well

as the employer wage tax credit.

I am concerned that Congress has an unfulfilled obligation to

complete the process begun for the Round II Empowerment Zones.

That is why I have introduced H.R. 4463, a bill to provide title 20

funding to the Round II Empowerment Zones and extend the hiring

tax credit. I, along with my colleagues on the Round II Empowerment Zone Caucus, am committed to doing all that we can to ensure that we pass legislation to provide full funding along with the

hiring tax credit for the second round empowerment zones and

5

complete the commitment that we have made to our distressed

communities.

Thank you again for allowing me to testify on an issue that

means very much to my district and to all of the Round II Empowerment Zones that are trying to better their communities.

Thank you.

[Mrs. Bono’s statement may be found in appendix.]

Chairman LOBIONDO. Thank you, Mary. Next is Congressman

Mike Capuano representing Boston, Massachusetts. I want to

thank Mike for all his effort and energy in helping with the caucus

that we set up. He has been a tireless advocate. This has been a

very strong bipartisan effort. Mike, thank you for joining us today.

STATEMENT OF THE HON. MIKE CAPUANO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. CAPUANO. Thank you, Mr. Chairman, and thank you for inviting me here, and thank you, Madam Ranking Member, although

some day it ought to be chairman soon, I hope, nothing personal.

I really came to talk a little bit about promises made, promises

broken, hope uplifted and hope shattered. That is what the EZs

and ECs are all about. I know that many of the things that have

happened in my community would not have happened without the

promise of an empowerment zone. Some things have actually physically happened. We have had some social programs and we have

had some investment, but we have many things in the pipeline

that if we don’t get the funding that we were promised, will never

come to fruition, which I personally think is the worst thing that

any government can do, which is to tell people we are going to help

you, we are here to help and then walk away. And I honestly think,

in many ways, that if we are not going to fund the Round III, we

shouldn’t designate them, just walk away, forget it and don’t do it.

I know in Boston, as you said, the numbers are the same. We are

only getting 33 percent of the money that we were promised to get,

and that money has been put to great use. People have been hired,

money has been invested. We have already leveraged, I think the

number is, about $700 million are either leveraged already or in

the pipeline to be leveraged on projects to go into some of the poorest areas in my district.

And I know that many people think of places like Boston as a

wealthy area, and in general, that is true, but the empowerment

zone in Boston represents the area of the city, the typical core area

of the city that has been walked away from years after years after

years from all government agencies that are now mostly populated

by minorities, many of whom don’t speak English.

If we don’t reinvest in those communities, you are going to have

nothing but a hot bed of trouble forever, and I know that that is

why empowerment zones were created. I know you know this. I

know that anybody who understands what this whole program is

all about understands it and supports it, and I recommend to anyone who doesn’t know that to take a walk through any of them, either the urban ones or the rural ones. They are all the same. They

look a little different but the bottom line is still the same. There

are environmental concerns. In the cities you have dumps that that

were there, walked away from years after year, and in the rural

6

areas you have dumps they don’t even know they are there until

they walk across and stumble across them as they try to build

something.

So for me, I really came to talk about the promises that were

made by the government. We should fulfill them. I make the same

arguments when it comes to veterans. We have promised veterans

certain things, and this House has voted to give those things because we feel strongly that if we made those promises, we need to

live up to them. The same is true for every other American citizen.

When the government makes a promise, we need to live up to it

and we need to do that before we go on to the next step. That includes both Round IIIs, that includes the New Markets Initiative,

that includes APIC, all of which are great programs. I support

every one of them. I want to be there to vote for them, but they

will not work, they will not work if we walk away from our commitments on Round II because anyone coming in the pipeline next is

going to have to look at those Round II people who did all of the

same things, followed all of the same rules, and were able to fulfill

their commitments.

What would you do if you were a city manager or a town manager and you know you have this wonderful APIC, all these new

initiatives we are talking about, if you look right next door and the

community next door has an empowerment zone or an EC that

wasn’t funded, you are not going to step up to the plate too quickly.

We have only about 40 of these communities all across the country. They deserve to have the promises made to them fulfilled so

we can get back to the business of fulfilling the hope that this Congress told them that we would fulfill, and that is why I came to

say this today. Mr. Chairman, I appreciate your effort. You have

been a fantastic leader. I have learned a lot in the short time that

we have been working together on this issue, both on the issue on

how to get things accomplished. You have done a great job for this

year, and obviously we will be there forever to work on this issue

to make sure that these commitments are fulfilled. Thank you.

[Mr. Capuano’s statement may be found in appendix.]

Chairman LOBIONDO. Thank you, Mike. If there are any questions that the committee has of our two Members on the panel, this

would be the time. Otherwise, I think that the indication was that

both Members had markups. You are welcome to join us if you

have the time on this side. No questions. I am sorry.

Ms. CHRISTIAN-CHRISTENSEN. It is a very brief question, but I

completely agree with everything that you said, and I am a health

person. I represent the health branches of the caucus, and we will

never be able to address even the health issues unless we can address the economic and other issues in our community.

The nine new empowerment zones, if they come into being, I understand don’t have any grant funding. They just have tax incentives. Does that meet what you think our communities need?

Mr. CAPUANO. As far as I am concerned, the answer is no. But

for me, the most important thing, I was the mayor of my community for 9 years before I came here, and I would say that the most

important thing, tell me what the rules are and stick by them so

that I can make plans. You don’t just build a building or set up

a social network in matter of a year. It takes years to develop these

7

things, to get a hold of the property. You may not own most of the

property. You may not have people who want to develop properties

that you want to develop. It takes years to find them, years to get

the money lined up, and if the rules change when you are halfway

down the road, you have already found the developer to develop

that dump and you walk away, it is the worst thing. So the answer

is no, I don’t think it does enough. But my argument, my strongest

argument comes that whatever we say we are going to do, we need

to do it for the length of the program.

Ms. BONO. I agree wholeheartedly with what he said. I think

that, first of all, whatever the rules are from day one should be the

rules. I think people can do a lot better if they know that what

they are told they are going to get is what they get. It makes planning an awful lot easier, and that is what I heard in the field hearing, too, is that people, the uncertainty was probably the biggest

deterrent of all.

Chairman LOBIONDO. We have a very strong feeling within the

caucus that while we certainly don’t object to the Round IIIs, we

object to the Round IIIs being designated without the full commitment to the Round IIs, and that if Round II had the full commitment and funding scenario that the Round I’s had, then we would

open our arms to the new designation of Round III zones, welcome

them in and help them through the process that we went through,

but we find it very puzzling, many of us, that these Round IIIs are

going to be designated when we have a very clear record of how

the Round IIs have not been handled properly, and that is part of

the reason of the hearing, to focus attention so that we can rectify

this situation, and maybe through some of the testimony that we

are going to have, the brakes will be put on those Round III designations until we can get our Round II straightened out.

Thank you both very much.

I would like to welcome—Mr. Phelps, Thank you for joining us.

Okay. I would like to welcome our second panel. Thank you for

joining us. And first we will call on Maria Matthews, Deputy Administrator for Rural Development for the Office of Community Development for the United States Department of Agriculture. Thank

you for joining us.

STATEMENT OF MARIA MATTHEWS, DEPUTY ADMINISTRATOR

FOR RURAL DEVELOPMENT, OFFICE OF COMMUNITY DEVELOPMENT, UNITED STATES DEPARTMENT OF AGRICULTURE

Ms. MATTHEWS. And thank you very much, Mr. Chairman, and

ranking member, for your invitation to the committee. I am very,

very pleased to be here, and I am also very grateful to you and

Congressman Capuano for your vision in beginning the EZ/EC congressional caucus forum so vitally needed by both the urban and

the rural empowerment zones. And I would like to stress also our

enterprise communities, who have certainly demonstrated that in

rural America, if you give them a lot, they learn how to do something with it very quickly.

I do have a prepared statement, but I think it is best at this

point that we have conversation, and I like to do that because I am

originally from a Round I enterprise community in the Imperial

8

Valley, California. I was the executive director of that enterprise

community and the full beneficiary of Round I, and saw, prior to

coming USDA, what that opportunity has now done for that community in establishing new jobs and new industry and in giving

the community hope.

And I think that that is definitely the foundation of the EZ/EC

program and what it does, it has such a vision, and it gives a community hope in looking at itself holistically, and we required of

these communities that had this hope and had this vision that the

Federal Government would come in a different capacity as in past

history and really provide them with a tool that gave them the

reigns to solving their own problem while we gave them the resources with which to begin to implement those solutions.

It was a completely new way of doing business, and in a sense,

the community has embraced it wholeheartedly, and we promised

them that if they went through this wonderful bittersweet, agonizing, sometimes painful process, a true community development

planning and put together a 10-year vision that we would assist

them with the resources, at least just the seed resources, to begin

making these solutions a reality. We did it in Round I, and the full

anticipation of Round II applicants was that this would be the

same promise.

We have heard that mentioned and could not agree with you

more fully on that. What it does do, and I am in complete agreement, to communities, when you do not provide them the funding

they had an expectation of receiving, it does stagnate the implementation of their strategic plans. They cannot put all of those

projects that they worked so hard to leverage resources and create

partnerships to complete. It does not allow them to move forward.

I think that if you look at the record in rural America for the 57

communities that we have designated, both as empowerment zones

and enterprise communities, if you take a look at what they have

done with the dollars that were given in Round I, for example, with

their initial allocations of 40 million for first three zones and nearly

three million for the 30 enterprise communities that were designated, they have leveraged, as of February of this year, about $1

billion in additional resources from other areas, both the Federal

Government, State governments, local government, the private sector and nonprofit institutions. With that, they have created well

over, close to 11,000 jobs, created 250 new businesses, put in 50

new water and waste lines, and on and on and on and trained people. They are on a leveraging ratio of about 81⁄2 to 1 in terms of

dollars.

When you look at what Round II has done, and I believe Congressman Capuano talked a little bit about what the Round IIs

have done with leveraging, considering the fact that they have received a third of what they were promised, on the rural side, the

Round IIs have drawn down approximately $3 million of what they

have received at this point, and this is based on our benchmark

management system that we have at USDA where we collect this

data. Well, they have already leveraged close to $30 million and

are on a leveraging ratio of 91⁄2 to 1, and I think what that demonstrates is that if we keep our promise, our communities keep

their promise.

9

They gain capacity. They learn how to use the resources that we

give them in terms of technical assistance and the seed money that

we give them, and they find partners in the public and the private

sector to fulfill the intentions of their strategic plans. And I think

that that is probably one of the most unique features of this particular initiative.

In the President’s request for fiscal year 2001, it had indicated,

or it had requested 15 million a year on the rural side for the next

8 years, and although that is not full funding, because that follows

the line for rural communities at 2 million a year for the zones and

250,000 for the enterprise communities, which is not what would

equal the 40 million for the zones in the year and the 3 million for

the enterprise communities, that has now been superseded by the

new agreement between the President and the Speaker and has

caused, as I think Congresswoman Bono said, great uncertainty

within the Round II communities as to what the future of their

funding is.

I believe in recent information, it states 200 million, but the concern from the community is that it doesn’t mention the enterprise

communities in terms of the funding scheme and it doesn’t really

indicate how that funding is going to be distributed. And just this

week for the U.S. Department of Agriculture’s Office of Community

Development has their enterprise committees and their empowerment zones in town for our annual training meeting, and in a session that we heard, this is a concern they have that they are uncertain about the Round II communities, they are uncertain about

what that means for their funding future.

And I think that we must find a way to calm that uncertainty

and to fulfill the promise that we made to them and to see them

flourish and continue to create jobs and continue to increase their

capacity, continue to add potable water systems in communities

that don’t have them, continue to train people for this new business

environment as they have been doing so well and continue to create the partnerships that will fundamentally change the social and

economic conditions within their communities.

I want to thank you very much for the opportunity to speak to

you today. I believe that our communities are a shining example

of what they can do when you provide them with some resources

and allow them to have hope and innovation and look for their own

solutions. Thank you.

Chairman LOBIONDO. Thank you very much, Ms. Matthews.

[Ms. Matthews’ statement may be found in appendix.]

Chairman LOBIONDO. Now, we will hear from Gerard Velazquez,

executive director of the Cumberland County Empowerment Zone

located in Bridgeton, New Jersey. Jerry, thank you.

STATEMENT OF GERARD VELAZQUEZ, EXECUTIVE DIRECTOR,

CUMBERLAND COUNTY EMPOWERMENT ZONE, BRIDGETON,

NEW JERSEY

Mr. VELAZQUEZ. Thank you, Mr. Chairman, members of the committee, for allowing me to speak before you today.

When I first came on board at the empowerment zone, I was

asked two questions: Number one, what empowerment zone meant

to me, and number two, what I thought about the funding and the

10

fact that funding had been cut. When we talk about empowerment

zone in Cumberland County, we talk about three main issues:

Number one, education and training. We have employers who have

gone out of business who have left the area and left us with employees who are in big need of a retraining and retooling, which is

really consistent with a lot of the empowerment zones in the distressed neighborhoods that we have.

Number two, we talk about opportunity. We talk about opportunity to obtain the education, we talk about opportunity to obtain

the training. We also talk about the opportunity to access the types

of transportation, the types of initiatives that the urban areas and

the distressed areas in the Round IIs in the rural areas as well,

the residents, the businesses and the communities did not have.

And lastly, most importantly, we talked about a transformation,

a revitalization, if you will, of not only the community, but also the

vision. One of the biggest problems that we have in our community

is the whole issue around vision, where the vision of our distressed

area has gone as a result of the businesses fleeing the areas, what

the morale of the people in our communities is, why we don’t have

homeownership in our distressed areas. And those were the keys

to our empowerment zone designation. Those were the keys to our

strategy, if you will. We don’t consider the empowerment zone as

a program. This is definitely not a program. It is a long-term strategy that not only allows us to change what is going on in our community, but it really allows us to change the foundation of the programs, of the systems that are in place now that allows us to set

up the mechanisms for long-term sustainability, long after the empowerment zone has gone away.

The beauty of the empowerment zone is that we understand that

it takes an entrepreneurial spirit to make the empowerment zone

successful. We are not here to perpetuate the types of things that

have been going on, good yes, bad no. We don’t want to recreate

the wheel, so to speak. We want to put rubber on the wheel. We

want to make things happen. We want to enhance, we want to create and we want to move the process forward, so that when we are

gone, hopefully 10-years from now when we get our full appropriation, that the sustainability of our neighborhoods is longstanding.

If after 10 years we do not have a mechanism in place, or the

mechanisms in place, the economic viability, then we have not done

our job and we understand that fully, and that is a part of the

process that we have gone through to put together our strategy.

I talk about the initiatives, I talk about the types of activities

that we have already been successful with in our zone. Our zone

only has 16,000 residents in our census track. We have already created 700 jobs, a year and a half. I have only been on board for four

months. We have already leveraged $43 million. We have already

trained 300 residents within our zone. We have already saved businesses $300,000 in tax incentives as a result of the zone. That is

with our existing incentives. That doesn’t include the new incentives that are coming in. So we have had a lot of success.

Part of our problem is that that success has dwindled as we have

gone along in the process. The residents of our community are shying away from the empowerment zone because they were promised

a lot of things, and obviously now, with one third of the money, we

11

are having a big problem achieving all of things that we had in our

2-year plan, and then obviously, our 10-year implementation strategy.

Businesses who were willing to come in, who were ready to come

into our neighborhoods have now thought about it again and said,

well, if you are not going to revitalize your downtown areas, if you

are not going to create viable employees and viable communities,

then maybe we want to take a second look about coming into the

zone, and it is very critical that everyone understand that the

strategy that we have implemented will create opportunity not only

for the residents, for the businesses, but also the region as a whole,

and it is a critical aspect of what we are trying to do here.

Lastly, I think that it is just very important to understand that

when we talk about the funding that is necessary, it is really the

funding will create a foundation for us. We have been asked to set

up a strategy that builds a neighborhood, that revitalizes a community. We have been given enough money to build a few houses.

That is not going to work. We need to be given the opportunities,

we need to be given the resources. Again, $100 million over 10

years is not a whole lot of money in the scheme of things. We are

talking about investment that is going to go, and just in Cumberland County, we are talking about leveraging our money at

least 10 to one.

So for the $100 million that you are putting in there, you are

going to get $10 for every dollar at least, new businesses coming

in, and again, in the end, the biggest benefit to us will be that

some money today, over the course of the next 10 years, has created a mechanism that will allow us to have Cumberland County

be sustainable long into the future and that is the key to the empowerment zone.

And I am here to talk and ask you to please do whatever you

can to give us the resources that we need to bring our communities

back to life, to bring the hope back, to bring sustainability back,

to bring the viability back that has been lost over the course of

time.

We are not going to fix this today, we are not going to fix this

tomorrow, but over the course of the next 10 years, we can definitely implement strategies, implement mechanisms, implement

the types of programming that is necessary to help Cumberland

County be brought back to life.

Thank you.

[Mr. Velazquez’s statement may be found in appendix.]

Chairman LOBIONDO. Thank you, Jerry, very much for your testimony, and also, since I have had a chance to sort of up close and

personal see your work, thank you for the commitment, the dedication you bring to making our zone work, and it is a tremendous

asset to enabling us.

Next on the panel is Reverend James A. Dunkins, the vice chair

of the Cumberland County Empowerment Zone, and I would like

to just take a minute and say just a personal observation, that we

can craft legislation and we can have the best of intentions, and

this legislation is a very good example of identifying sections of our

nation that can use additional help, a role that the Federal governVerDate 11-MAY-2000 10:03 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 E:\HEARINGS\67149 pfrm08 PsN: 67149
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ment should play. We can put the right language in. We can provide tax incentives, we can provide funding.

What we are not able to do is to put in the legislation and mandate an energy and enthusiasm from the people who have to make

it work. I have known Jim Dunkins for a lot of years. Our community is enriched beyond measurement by, Jim, what you have done,

the dedication, the energy, the enthusiasm, the countless hours

that you put in to working with the youth of the community, working with employment issues, working in areas that many other people would have given up on.

The ability for us to succeed with legislation like this is, in large

measure, in direct proportion to the energy that people like yourself bring to the program. I want to thank you so very much for

what you have done or what you are going to continue to do, for

being here today, and I look forward to your testimony.

Reverend DUNKINS. Thank you, Mr. Chairman. I am almost

afraid to speak after that eloquent introduction, but I do thank you

for allowing me to speak today.

STATEMENT OF REVEREND JAMES A. DUNKINS, VICE CHAIRMAN, CUMBERLAND COUNTY EMPOWERMENT ZONE,

BRIDGETON, NEW JERSEY

Reverend DUNKINS. My name is Reverend James A. Dunkins. I

am the pastor of the Shiloh Baptist Church in Port Norris, New

Jersey, which is in Cumberland County, which is a part of the empowerment zone. I have heard so many people speak already, so I

don’t have to use any of the terminology that you all are familiar

with, designations and zones and all the other stuff. I want to talk

about people.

I am an administrator in the Bridgeton school system. I had to

leave school at 2:00 because a 16-year old student in our county

was killed in a collision. He was riding with another student who

is 24 years old. This student was in the alternative program that

was shut down because funding was not available for him to immediately get into the slot. He was put out of school or placed out

waiting for a slot to open up. So in the meantime, what did they

do, they ride around, they sell drugs, they become involved in other

areas that is going to give them some sort of notoriety and something to do.

As has been stated, our problem is not the problem of not knowing what to do. It is that we can never get a light at the end of

the tunnel. We can never see beyond someone starting a program,

designating some money and then saying that it is over and we

don’t worry about the community suffering, I am talking about the

people suffering.

I would like to tell you about the residents of Cumberland County, the residents of Port Norris, a very desolate area where we are

building more prisons than we are doing anything else because we

don’t have the social service programs, we don’t have the long-term

commitments that we can make any inroad into getting any kind

of viable training.

I believe that the empowerment zone, no, I know the empowerment zone is the answer to giving us some stability. We have high

crime. We have social diseases that are left worse by someone

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promising us to give money and when we don’t get the money, we

have programs that leave dilapidated buildings, that leave eyesores, that leave people with no hope, that leave grandmothers in

the community saying, Reverend, I am not getting involved anymore because nothing is going to be done. We drag people out to

the polls. We tell them money is coming in. We tell them Mr.

LoBiondo is going to do it, we tell them this person is going to do

it, and then we still don’t have any kind of viable commitment in

our area.

In our program we probably could have saved that young man’s

life because I started a program through some of the money the

empowerment zone has promised. We have even placed some of our

community money into it. I started a program called the Job Readiness Program. We take juveniles off the street who may not ever

make it in a mainstream social setting of a regular school system,

may not make it in the programs that are already here, but they

can make it if someone puts some time into them. We are teaching

them skills such as anger management. We are teaching them

skills how not to get fired at your job, how not to curse your job

out, how to make sure you are going to become a productive member of society.

It is programs like these that need to have some long-term investments because what we are going for, we can make a stable

program that can be self-sufficient if we can get the money and we

can save people’s lives.

Port Norris, as I said, is a small desolate community. You have

seen the numbers, but you know what we do have, we have a community policing unit. We have young men standing on the corner.

We have women who are having babies who are long-term third

generation welfare recipients. We have all of the same indicators

that you have. If you look at the composite ranking out of the 21

counties in New Jersey, we have some of the highest numbers in

all of the negative areas, and what happens, we get an empowerment zone designated—I have served on countless boards, countless numbers of committees, and we do it tirelessly because we see

some benefits to people.

I am telling you that if you really want to make a difference, if

you really want to see some people’s lives changed, forget all of

these numbers, all this designation, all this Round II, Round III,

and give us what we said we are going to get. And if you give it

to us, we can make a difference in the community. We have stagnant industry, we have industries leaving us, and I am telling you,

you are looking for chaos in the street, you are looking for people

who have no hope, they are going to have no determination and no

commitment to doing things the right way.

If I could tell you what the empowerment zone means in just

closing up, I can tell you this. I can see that our young people can

be turned around. I can see that we can have businesses. We have

young entrepreneurs in our minority, in the minorities of our county who definitely, if they had some long-term commitment, can

make businesses work. I hate to bring up something like institutional racism, but we don’t have the loans. They don’t get the cooperation from the banks. You know what they do? They put together money on their credit card, they start businesses, and then

14

we come along and say we can help you, and then the help is never

forthcoming.

I am saying that the empowerment zone can help us see that

light at the end of the tunnel if you will give us the funding we

have. I know our program maybe will have a 5-year projection

where we can be self-sufficient surviving on our own because we

can take kids, at a prorated basis, out of the high schools. They get

dropped out, maybe they won’t graduate, but you know what they

won’t do, they won’t be wearing an orange prison suit. They will

be able to get a job. It may be small skilled labor, but they will

start somewhere.

So I know that if you can help us in any way to get that money

through, I can go along with Mr. Velazquez and we can do something in Cumberland County that is going to make a difference in

people’s lives.

Chairman LOBIONDO. Well, Jim, thank you.

[Reverend Dunkins’ statement may be found in appendix.]

Chairman LOBIONDO. One of the things that we hope to accomplish through this hearing and hearings like this are to be able to

put the human face on what happens here inside the Beltway, that

this drastically affects people’s lives. We have the ability to impact

in a very positive way if we do the right thing, and your testimony

very much helped to highlight that. We will go into the questions

now and I would like to start with Ms. Matthews.

And in your written testimony, you mentioned that the New

Markets Community Renewal agreement calls for 100 million in

FY 2001 and 100 million in FY 2002. I am a little taken back. It

was my understanding in the agreement that we entered into that

we would receive 200 million for Round IIs in FY 2001. Could you

please help clarify this discrepancy?

Ms. MATTHEWS. I think that a lot of those details are still being

worked out, but I can tell you that still having those details in the

working out phase is what is creating the uncertainty with the

communities. I wish I could give you more information to clarify

that, but I don’t have any more to give you at this time.

Chairman LOBIONDO. Because from my standpoint, there was no

doubt in my mind of what the memorandum called for, and it clearly called for 200 million, and I don’t recall seeing anywhere a

spread over a 2-year period. So that is a great cause for concern,

and as I just want to very stridently state, that that scenario is totally unacceptable because of all the reasons said before.

Reverend Dunkins, I wanted to follow up and ask you, you talked

in some terms of problems with the youth, and while much of the

focus of the legislation has to deal with job creation and what

would be considered help in the adult community, I think you

touched on an area that is important because it speaks directly to

our future. Can you give us some more specific examples of how

you think the youth in our community, and I am sure it would be

the same in other communities, would benefit from programs and

give us any specifics that you might be able to come up with about

examples that you think would be there if we are able to deliver

on this promise.

Reverend DUNKINS. Yes. I can start with something very concrete. In the Port Norris area, one of the barriers is a water waste

15

treatment system. That may not seem like it is connected directly

to youth, but it is, because one of the things is we don’t have a car

wash, we don’t have a laundromat. We don’t have certain things

that we can give these young people, unskilled labor. So what I am

saying, a lot of times young people get involved in the juvenile justice system and become habitual offenders, but also the ones that

don’t even become offenders don’t also become contributing adults.

So one of the things that we look at that the zone can do is give

us the money we need to take away some of these barriers. Transportation is a barrier. When I talked about second and third generation welfare recipients, one of the reasons is the training is in

Vineland and Bridgeton, but Cumberland County doesn’t have a

transportation system or bus system that runs from Port Norris. So

they can’t even get there. So a lot of times there is no baby-sitting.

So while we are waiting on all of this help to become as adults,

I am saying that a lot of times they start out as teenage mothers,

they start out as juveniles. And then we get an adult population

that have no school skills and have no training.

So what I see is a direct impact, not only on the youth because

if the adults can get a job and become examples—one of the things

I tell my teachers when we are training, and I am going to be very

brief, is when they tell me when a kid does something that is catastrophic, something that is crazy, they say they should know better. My answer always to them is who taught them better, and if

we don’t get some adults that know better, that there is hope, that

there is jobs, who is going to teach the young people better?

Chairman LOBIONDO. Great answer.

Mr. Velazquez, you stated that we have created over 700 new

jobs with our zone, and could you give me your take on what the

additional hiring tax credit would mean to this number, and provide some specific examples if you can think of them?

Mr. VELAZQUEZ. Sure. I think obviously, when we talk about the

tax incentives, the most important thing the tax incentives bring

to the table is an opportunity for our residents to be hired in situations where they typically would not have been. The incentives

allow us to invest in human capital. It allows a business to take

a chance on hiring someone from the zone that they may not have

hired before. It allows us to get involved with programs such as

Reverend Dunkins’ and the local training where we are going to

train people, and those incentives are the linchpin that allow the

businesses, or that provide the businesses kind of the mechanism

to take a chance that they would not have.

One of the things that I would like to point out about the 700

jobs we have created, we are talking about small businesses, we

are talking about businesses that are local. Even for the businesses

that are coming in, we have a business that is coming in from Belgium, we have a business that is coming in from another county,

we are talking about hiring locally. We are talking about people

who have lived in the area. We are talking about the leverage of

human capital within our zones. The benefit, and it is appropriate

that we hear today of the tax incentives, is that the major thrust

and the major benefactors of the tax incentives are the small businesses. The largest sole business that we have created through the

empowerment zone only employs eighty people.

16

So we are talking about many, many businesses that compose

the 700 that are hired, and again, those tax incentives that we now

have, the additional tax incentives that are proposed are going to

allow businesses to take a chance where they didn’t before, to hire

someone that is not quite as skilled as they would have liked. However, with the knowledge that there is empowerment zone backing,

with the knowledge that there are programs in place, they are willing to take that chance and willing to hire people that typically

would not have been hired.

Chairman LOBIONDO. Thank you. I have some more questions,

but I would like to turn to Congresswoman Christian-Christensen.

Ms. CHRISTIAN-CHRISTENSEN. Thank you, Mr. Chairman. I want

to join the panelists and thank you for calling this hearing and for

the new caucus that you have started because it has been a very

enlightening hearing. We don’t have an empowerment zone, as I

said in my opening remarks, but being on the outside, we kind of

thought that things were moving along a lot better than they are,

and we really have heard quite a bit about our communities that

are so much in need of hope, communities that are so hard to convince to hope one more time, and to have those hopes dashed is

really a travesty in those communities.

It makes most of the questions that I did have not really very

relevant at this point, but let me ask Reverend Dunkins, we have

several pieces of legislation in the Congress that talk about applying Federal funding to faith-based organizations, and it is a little

bit of a controversy over the people that feel that we should and

others that feel that we shouldn’t.

Can you talk about the role that faith-based organizations, particularly, have played in this empowerment zone?

Reverend DUNKINS. Yes. I can tell you that in our state, when

faith-based organizations were started, we were one of the only organizations, churches. We do have a development corporation at

our church. I convinced my traditional old congregants that we now

need to move into accepting grants. You will find that my people

are well-informed from the oldest to the youngest on what a

501(C)(3) is. They understand how to put together a corporation,

but this is what they didn’t understand. They now see how we have

made the segue of doing old benevolent fund and doing WIC and

knowing the people in the community, they understand now how

we can take our expertise, which was maybe unskilled and thought

to be unskilled, and really make an impact by partnering with

other people.

So the faith-based look or the faith-based advantage which people should look at is we can be effective, whereas regular programs

cannot be effective if they look at the bureaucracy attached. I can

go in to Annie Lane’s house and say, you have a young man on

drugs and we now have a program that is a halfway house at our

church. Because we have a faith-based organization, we can get to

that young man quicker than the police can. So the faith-based

piece you are talking about is very important with the empowerment zones because most of the churches and most of the activities

that are in the community lead some way to the religious community or lead to the institution of the church.

17

So I think that the social impact of the church of faith-based can

make the quality of the programs better and that is what we have

been able to do. We are partnering with welfare, we are partnering

with every agency in our area because they are glad to get the help

that we can provide as an organized community of faith.

Ms. CHRISTIAN-CHRISTENSEN. I don’t know if anyone else wanted

to comment.

Ms. MATTHEWS. Well, I think that I would like to comment on

that because we see faith-based organizations as a good community

partner in rural America. Oftentimes, a faith-based institution in

some of our rural communities will be the centerpiece of that

neighborhood or that community and will be the one place where

many community members feel safe to come and talk about the

issues, form their strategic plan and what have you.

I think that the empowerment zone/enterprise community initiative does exactly that. It opens the spectrum of partnership to

every organization that is a key member of truly beginning to solve

the problems of endemic poverty in the community, and a faithbased organization in many of our poorest communities plays the

key role of being one of the central places, safety of learning, of

child care, and so you cannot exclude any partner when you are

looking at a holistic view to community economic development.

Ms. CHRISTIAN-CHRISTENSEN. Thank you, Mr. Chairman. I don’t

have any other questions at this time.

Chairman LOBIONDO. Mr. Phelps, do you have any questions?

Mr. PHELPS. I don’t have any questions other than just say I

have an empowerment zone in deep southern Illinois in my district,

which shares many of the demographics that all of you have experienced in your territories, so I fully support and hope that we can

advance from here. And I guess what I would ask maybe ourselves,

what do we need to do beyond pushing for funding? Is there a vacuum in what is going on right now that is not getting clearly indicated in the process?

Mr. VELAZQUEZ. I think one of the keys to the process is have

everyone understand or clearly define what full funding is. Are we

talking about $10 million for this year? Are we talking about

multiyear funding? Are we talking about implementing our strategy over the long term? I think that we need to come to grips with

the terminology that we are using so that everyone understands

when we say ‘‘full funding,’’ when we say ‘‘200 million,’’ does it

mean 100 million over 2 years? Does it mean 200 hundred million

this year? I think that is critical as we have, as empowerment zone

directors have gotten together and talked about the issues and concerns that we have. One of our biggest concerns is just the clarity

and the definitions of what those meanings and what the terminology is because, again, one person’s understanding of full funding

may be totally different.

Our understanding as empowerment zone directors is full funding is $10 million a year over the next nine years. That is full funding for us. So if we can make sure that the definitions are clear,

I think that would help in pushing the process forward.

Mr. PHELPS. As members that participate in the process, one of

the things, not necessarily speaking for everyone, but one of the

things that concerns me is when we talk about expanding the proVerDate 11-MAY-2000 10:03 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 E:\HEARINGS\67149 pfrm08 PsN: 67149
18

gram that is in the middle of yet being commitment to funding, do

you think this helps our chances of solidifying our funding that

hasn’t been forthcoming, or are we going to sort of distribute what

is available among all the new as well as old commitments? What

do you think our chances are, better or worse, from expanding sort

of Round III so to speak? How would you feel?

Sometimes this process works where the more you get involved,

the better everybody is in the way of terms of dollars. Sometimes

it can erode what was originally intended but yet never quite met.

So that is my concern as a member here, what do I push on, get

on board for the whole program as the full scope of things or do

I just push for what McKinley intended was originally and not yet

met?

Mr. VELAZQUEZ. Again, from the point of view of a Round II, one

of the things that we as a board had to kind of deal with was the

whole issue around, okay, we had a $20 million plan that is now

a $6.7 million plan, do we fund all the programs that were proposed at a lower level and have a lot of programs that are halfway

successful or partially successful, or do we fund enough programs

or the programs that we have that are going to make a difference

and are really going to have sustainability, and from our point of

view, we decided that we were going to fund programs fully so that

they would have the full impact on a community.

And again if it was only five programs that were fully effective,

that had long-term viability that 3 years from now, if the empowerment zone went away, still worked, then that is what we decided

we were going to do.

So again, speaking from a Round II, as a Round II director, obviously in our opinion we would like full funding for Round II. We

would like to make the difference, and I think the difference that

would be made and really realized would allow possibly for Round

III in the future.

Reverend DUNKINS. I want to speak from my perspective from

what have you just said, because to me, I think my answer to you

would be yes, we have got to keep pushing it no matter what is

coming down. I believe the empowerment zone, in its weakest element, is still whatever program you keep coming up with, maybe

a light bulb will come on in someone’s head sooner or later, and

say we keep coming up with the same type programs that we have

already said will make a difference but we are not funding.

So as long as you keep that in the forefront, I think somebody

along the way is going to see that the empowerment zone, in its

weakest element, is going to be successful, because if I can leave

one person with a business that wouldn’t have had a business, if

I can leave one person with a job that didn’t have a job, that is

going to be better than all the promises in the world.

So I guess what I see in this whole malaise of things is that we

continue, no matter what other program I hear about, they all

seem to be similar, and we are talking about not fully funding

what we have already promised to fund. So somewhere along the

line somebody’s got to say, hey, we have got something good, let us

put some money in it.

Mr. PHELPS. Just real quickly, in terms of faith-based concerns,

I very much applaud you for your concern and your input and acVerDate 11-MAY-2000 10:03 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 E:\HEARINGS\67149 pfrm08 PsN: 67149
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tivity because I am one that believes that while we need resources

in these poor communities, that for those people that believe that

there is going to be a value system, all of a sudden raise up, because you have got resources pouring in, even though a good job

is a good start for teaching the family values, I hope that your

leadership in the community from the standpoint of faith-based is

really the key to try to get dysfunctional families, teaching their

young people that violence and destruction of property and not

staying in school, whatever else we promote that is decent, is going

to have to come from the community. We don’t have the answers

here for the few dollars, but we can sure help those families that

are struggling. Thank you.

Ms. MATTHEWS. If I may, I think I would like to address it from

the standpoint of something Mr. Velazquez said earlier, that in the

scheme of things, when you look at an urban or a rural designation, you look at the actual amounts. $40 million over the course

of 10 years is not a lot of money when you are looking at a 10-year

vision for the change of an entire social and economic structure and

community that begins with hope. I think that the $40 million that

we promised those zones and the $3 million we promised those enterprise communities are, again, just a piece of the puzzle that they

have put together with partnerships, and leveraging has demonstrated already, when it comes to $9 million, there is something

that we, as rural communities, need to look at in terms of what is

being proposed. One is that it is only tax incentives.

We have capacity issues in rural America that may not put us

in a position to be able to use solely tax incentives. We need to

build infrastructure systems that will allow rural communities to

diversify their economies and grow new markets and what have

you. So that alone may be something that would require a discussion from rural communities and see how much excitement there

is about the prospect of a zone with only those characteristics, and

also talking to the question of a little equity.

I think in current conversations the distribution of the nine new

zones is seven urban and two rural. Well, two rural don’t seem like

an awful lot when we have more than 13,000 rural places and

1,400 rural counties, and I think also that we have demonstrated

in rural America that we know how to gain capacity and make

small dollars go very far. I think the enterprise communities are

a good example of that so that would be my comments on the question.

Chairman LOBIONDO. Let me reemphasize that Congressman

Capuano and myself, and I believe I speak for most of the members

of the caucus, feel very strongly about the Round IIIs with any designation and possible funding before Round IIs are, fully enabled

by virtue of the promises that were made. We think that, since we

are dealing with one year at a time right now, to expand to Round

IIIs without the firm commitment for Round IIs leads to a path for

potential trouble, if not worse, than the way of disaster for programs—any of these zones that we have that are up and running,

putting plans together, if on any single year the funding drops or

is—some reason isn’t there, we have got a catastrophe on our

hands. I think that unless we have that commitment on the Round

IIs, the Round IIIs only put more pressure that way.

20

Let me just take a moment to say that we find that with any successful program, there are partnerships that are developed. I think

we have a clear indication today, with the partnerships between

the Federal government, our local communities, different agencies

within the government, but I also want to publicly thank Senator

Bob Torricelli. He has been a great partner for us in New Jersey.

He was very instrumental in the designation of our zone. He continues to remain very instrumental in our help in putting together

what we need to additionally do. We have had personal discussions

and meetings. We have his commitment of pushing on the Senate

side, because there are a lot of questions of we are working on the

House side, what happens on the Senate side. Senator Torricelli

has assured me of his continued strong backing for the program,

and I want to publicly thank him for that.

Another question for Ms. Matthews, but any of our panelists, as

we are going through this, we are talking specifically about doing

something with the tax credits and specifically for the funding. But

as we are examining what we have been able to do with empowerment zones in the rural and the urban and the communities and

all the aspects of this, do you have any suggestions of areas that

can or should be tweaked with wording and/or authorization, other

than the tax credits or the funding, that would help in allowing the

zones to be more productive and just be better off?

Ms. MATTHEWS. I think I can only tell you what some of the

rural communities are telling me as I go out and visit them in the

community, and I think that some rural communities that do not

maybe fit within the current eligibility criteria in terms of poverty

and what have you would like an exploration of other criteria that

may bring more rural areas into eligibility for this community development planning process, because I think, as Mr. Velazquez

said, and as you said, actually, that maybe consider that some of

these metropolitan areas are considered very wealthy, or they have

a lot of money, or a high per capita income or what have you, but

there are certainly pockets within these communities as there are

in rural America, especially when you take the eligibility from a

census track perspective, that sometimes—particularly in the West,

for example, you will take a very, very large area into a census

track that can skew numbers—there are other measurements that

indicate need. I think we could have a discussion on how we might

be able to better serve some of those areas.

Certainly for Round II specifically, the tax incentives and full

funding are just the two things that are going to be continuously

on the mind of those communities so that they continue the implementation of the plans.

Chairman LOBIONDO. Mr. Velazquez, do you find that in the dayto-day operation of our zone, that there are any particularly onerous rules and regulations that you are compelled to work under

that are hampering your ability to have full maximization in the

zone of what our potential is?

Mr. VELAZQUEZ. I think functionally the zones are working pretty

well actually. The process that has been set up seems to be working well, allows us some flexibility. It also provides a monitoring

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ously, there are some areas that we can tweak as far as how the

funds are utilized.

Part of our other problem, back to the definition issue, is the

money originally was coming through the social service block grant,

which allowed for more flexibility in the types of programs that we

were going to implement.

The money came through HUD, which then had a whole new definition of how the money could be used, economic opportunity

versus the more general definition that was used in the CFR.

So, again, that is the result of the type of money that came out

of the Round II appropriation, but I think it is important and critical—again, I hate to go back to this, but for us it is important that

we know up front how our money can be used so that when we are

implementing our strategies, it is clear and the opportunities are

clear for us, because what it has meant for us as a Round II, and

the changing definition, means we have to go back and revisit all

of our implementation plans and then tweak them, and maybe in

some cases, some programs, such as the local programming, the

human service programming, has fallen by the wayside because we

have not been able to put it into that category of economic development.

Again, that is a critical issue for us. But as far as process goes,

it has actually been a pretty easy process to work with.

Chairman LOBIONDO. Well, I want to thank our panelists for

being here today. This was, I think, very helpful for us in our quest

for full funding for our Round IIs, Empowerment Zones in order to

help the many people that we have the potential to reach.

Your testimony was extremely valuable. I appreciate your taking

the time to spend with us here. With that, the subcommittee is adjourned.

[Whereupon, at 3:55 p.m., the Subcommittee was adjourned.]

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