I

103D CONGRESS

2D SESSION H. R. 5113

To amend the Public Works and Economic Development Act of 1965 to

establish a Competitive Communities Demonstration Program to assist

distressed communities in developing a competitive economic base, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 27, 1994

Mr. WISE introduced the following bill; which was referred jointly to the Committees on Public Works and Transportation and Banking, Finance and

Urban Affairs

A BILL

To amend the Public Works and Economic Development

Act of 1965 to establish a Competitive Communities

Demonstration Program to assist distressed communities

in developing a competitive economic base, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Competitive Commu5 nities Demonstration Act of 1994’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress finds the following:
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1 (1) Traditionally, the Economic Development

2 Administration has primarily helped communities

3 develop the necessary public infrastructure to enable

4 such communities to foster private sector investment

5 and in many communities public infrastructure re6 mains a critical enabler to economic development.

7 (2) However, in many distressed communities

8 the primary economic development challenge is not

9 a lack of public infrastructure but rather a lack of

10 supporting high growth, globally competitive private

11 sector activities as a generator of quality jobs.

12 (3) Therefore, building upon its existing net13 work of programs, the Economic Development Ad14 ministration should institute a Competitive Commu15 nities Demonstration Program to assist distressed

16 communities develop the necessary economic base to

17 compete in the global marketplace.

18 (b) PURPOSES.—The purposes of this Act include the

19 following:

20 (1) To enable the Economic Development Ad21 ministration to become a more active partner in

22 bringing community leadership together with com23 petitive growth businesses to build a new competitive

24 economic base in communities outside the main25 stream of economic growth.
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1 (2) To raise the economic aspirations of such

2 communities beyond the retention of the existing

3 economic base to building a new competitive eco4 nomic base for the future.

5 SEC. 3. COMPETITIVE COMMUNITIES DEMONSTRATION

6 PROGRAM.

7 Title IX of the Public Works and Economic Develop8 ment Act of 1965 (42 U.S.C. 3241–3245) is amended—

9 (1) by redesignating section 905 as section 908;

10 and

11 (2) by inserting after section 904 the following:

12 ‘‘SEC. 905. COMPETITIVE COMMUNITIES DEMONSTRATION

13 PROGRAM.

14 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab15 lish and carry out a Competitive Communities Demonstra16 tion Program (hereinafter in this section referred to as

17 the ‘program’) under which the Secretary may make

18 grants to eligible intermediaries in accordance with the re19 quirements of this section.

20 ‘‘(b) ELIGIBLE INTERMEDIARY DEFINED.—In this

21 section, the term ‘eligible intermediary’ means an eco22 nomic development district established under title IV of

23 this Act, an Indian tribe, a State, a city or other political

24 subdivision of a State, a nonprofit organization, or a con25 sortium of any of such entities which demonstrate the fi-
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1 nancial expertise, ability, and legal authority to make in2 vestments under the program, as well as the ability to de3 velop and implement a community investment strategy.

4 ‘‘(c) USE OF GRANTS.—A grant made to an eligible

5 intermediary under the program shall be used by the eligi6 ble intermediary to provide financial assistance to high

7 growth businesses in a distressed community. Such finan8 cial assistance may include loans, loan guarantees, and

9 payments to reduce interest on loan guarantees.

10 ‘‘(d) GRANT APPLICATIONS.—An eligible

11 intermediary seeking a grant under the program shall sub12 mit to the Secretary a grant application which—

13 ‘‘(1) identifies proposed uses of the grant

14 amounts;

15 ‘‘(2) demonstrates that receipt of the grant

16 amounts would be a determining factor in a business

17 decision to proceed with an investment in a high

18 growth business in a distressed community;

19 ‘‘(3) demonstrates that the proposed uses of the

20 grant amounts are part of a community investment

21 strategy for economic development;

22 ‘‘(4) contains assurances satisfactory to the

23 Secretary that the proceeds from the repayment of

24 loans made by the eligible intermediary under the
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1 program will be used for purposes which are consist2 ent with the purposes of the program; and

3 ‘‘(5) is in such form and contains such addi4 tional information as the Secretary may prescribe.

5 ‘‘(e) PANEL OF EXPERTS.—

6 ‘‘(1) ESTABLISHMENT.—The Secretary shall es7 tablish a panel of experts to review grant applica8 tions submitted to the Secretary under the program.

9 Such panel shall consist of 7 members as follows:

10 ‘‘(A) The Secretary (or the Secretary’s

11 designee).

12 ‘‘(B) The Assistant Secretary for Eco13 nomic Development.

14 ‘‘(C) 1 Regional Director of the Economic

15 Development Administration appointed by the

16 Secretary.

17 ‘‘(D) 1 Economic Development Represent18 ative of the Economic Development Administra19 tion appointed by the Secretary.

20 ‘‘(E) 3 private citizens with economic de21 velopment and business expertise appointed by

22 the Secretary.

23 ‘‘(2) DIVERSITY OF MEMBERS.— In making ap24 pointments under paragraph (1), the Secretary shall
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1 seek to appoint members with diverse ethnic, cul2 tural, and geographic backgrounds.

3 ‘‘(f) SELECTION OF GRANT RECIPIENTS.—

4 ‘‘(1) IN GENERAL.—Grant recipients under the

5 program will be selected by the Secretary on the

6 basis of recommendations made by the panel of ex7 perts established pursuant to subsection (e) after a

8 merit-based comparative evaluation of proposed

9 projects conducted as part of a national competition.

10 The national competition shall be held on a periodic

11 basis.

12 ‘‘(2) SCORING SYSTEM.—In order to make rec13 ommendations pursuant to paragraph (1), the panel

14 shall rank the proposed projects by priority using a

15 scoring system based on criteria described in sub16 section (g).

17 ‘‘(3) GEOGRAPHIC BALANCE.—The project scor18 ing system used pursuant to paragraph (2) shall be

19 weighted to promote a balance among the regions of

20 the United States and a balance among urban and

21 rural areas; except that no specific formula may be

22 used to apportion the projects between urban and

23 rural areas.

24 ‘‘(g) CRITERIA TO BE USED BY PANEL.—
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1 ‘‘(1) CRITERIA.—In recommending grant recipi2 ents under the program, the panel shall consider the

3 following:

4 ‘‘(A) The role of the intermediary in the

5 community, including the extent to which the

6 intermediary has a clearly articulated role in

7 the economic development strategy of the com8 munity and the extent to which such role is

9 supported by both private sector and public sec10 tor leaders in the community.

11 ‘‘(B) The capacity of the eligible

12 intermediary to participate in the program.

13 ‘‘(C) The business plans and prospects of

14 the businesses which would receive assistance

15 from the grant amounts.

16 ‘‘(D) The quantity and quality of jobs to

17 be created or retained by the projects.

18 ‘‘(E) The commitment of the businesses to

19 remain in the community.

20 ‘‘(F) The level of economic distress in the

21 community involved.

22 ‘‘(G) The leveraging of non-Federal funds

23 committed to the projects.

24 ‘‘(2) SPECIAL CONSIDERATIONS.—In rec25 ommending grant recipients under the program, the
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1 panel shall give special consideration to the following

2 applicants:

3 ‘‘(A) Applicants who operate existing re4 volving loan funds.

5 ‘‘(B) Applicants who have applied for des6 ignation as empowerment zones or enterprise

7 communities under subchapter U of chapter 1

8 of the Internal Revenue Code of 1986 but have

9 not received such designation because of the

10 limited number of communities that may receive

11 such designation.

12 ‘‘(C) Applicants who represent commu13 nities adversely affected by the closure or re14 alignment of a military installation or by de15 fense industry cutbacks.

16 ‘‘(h) DEADLINES.—

17 ‘‘(1) SUBMISSION OF APPLICATIONS.—The Sec18 retary shall publish in the Federal Register dead19 lines for the submission of grant applications under

20 the program.

21 ‘‘(2) APPROVAL OR DISAPPROVAL OF APPLICA22 TIONS.—The Secretary shall approve or disapprove

23 each grant application received by the Secretary

24 under the program on or before the 60th day follow-
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1 ing the deadline for submission of such grant appli2 cation established pursuant to paragraph (1).

3 ‘‘(3) USE OF GRANT AMOUNTS.—Any grant

4 agreement entered into by the Secretary and an eli5 gible intermediary under the program shall require

6 that the eligible intermediary provide assistance to

7 businesses using the grant amounts on or before the

8 90th day after the date of receipt of such grant

9 amounts or shall return any remaining portion of

10 such grant amounts to the Secretary for subsequent

11 grant awards under the program.

12 ‘‘(i) FUNDING.—Of the amounts appropriated to

13 carry out this title for fiscal year 1995 $20,000,000 shall

14 be available to carry out this section.’’.

15 SEC. 4. LOAN GUARANTEE DEMONSTRATION PROGRAM.

16 Title IX of such Act is further amended by inserting

17 after section 905, as added by section 3 of this Act, the

18 following:

19 ‘‘SEC. 906. LOAN GUARANTEE DEMONSTRATION PROGRAM.

20 ‘‘(a) AUTHORITY TO GUARANTEE LOANS.—To the

21 extent the Secretary considers appropriate to carry out the

22 economic adjustment purposes of this title, the Secretary

23 is authorized to guarantee loans made to private borrowers

24 by private lending institutions, community development fi25 nancial institutions, and other lenders.
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1 ‘‘(b) ELIGIBLE ACTIVITIES.—Activities for which

2 loans may be guaranteed under this section include the

3 development of land and facilities (including machinery

4 and equipment) for industrial or commercial usage (such

5 as the construction of new buildings, the rehabilitation of

6 abandoned or unoccupied buildings, and alterations, con7 version, or enlargement of existing buildings) and the pro8 vision of working capital.

9 ‘‘(c) TERMS AND CONDITIONS.—The Secretary may

10 make loan guarantees under this section upon application

11 of the lenders and upon such terms and conditions as the

12 Secretary may prescribe; except that—

13 ‘‘(1) no such guarantee shall at any time exceed

14 90 percent of the outstanding unpaid balance of

15 such loans; and

16 ‘‘(2) no such guarantee shall be provided unless

17 the lender or the lender’s designee is responsible and

18 makes adequate provision for servicing the loan on

19 reasonable terms and for protecting the financial in20 terests of the United States.

21 ‘‘(d) FULL FAITH AND CREDIT.—Loan guarantees

22 provided under this section shall have the full faith and

23 credit of the United States.

24 ‘‘(e) PREFERRED LENDERS.—To the extent feasible,

25 the Secretary shall conduct the guarantee program estab-
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1 lished under this section on a preferred lenders basis and

2 shall authorize lenders, in accordance with agreements en3 tered into between the Secretary and such lenders, to take

4 such actions on the Secretary’s behalf as the Secretary

5 considers appropriate, including the determination of eligi6 bility and credit worthiness and loan monitoring, collec7 tions, and liquidation.

8 ‘‘(f) FUNDING.—Of the amounts appropriated to

9 carry out this title for fiscal year 1995 $10,000,000 shall

10 be available to carry out this section.’’.

11 SEC. 5. REPORTING REQUIREMENT.

12 Title IX of such Act is further amended by inserting

13 after section 906, as added by section 4 of this Act, the

14 following:

15 ‘‘SEC. 907. REPORTING REQUIREMENT.

16 ‘‘As part of the annual report to be transmitted to

17 Congress under section 707 of this Act, the Secretary shall

18 include an assessment of—

19 ‘‘(1) the competitiveness of the economic base

20 of the Nation’s distressed areas;

21 ‘‘(2) the Nation’s progress in encouraging in22 vestment in competitive businesses located in dis23 tressed areas outside the mainstream of economic

24 growth;
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1 ‘‘(3) the success of the Competitiveness Com2 munities Demonstration Program authorized by sec3 tion 905, including the number of grants provided

4 under the program, the distribution of such grants

5 among geographic regions and among urban and

6 rural areas, the amount of non-Federal funds lever7 aged using such grants, and the quantity and qual8 ity of jobs created; and

9 ‘‘(4) the success of the loan guarantee program

10 authorized by section 906, including the subsidy cost

11 of loan guarantees made under the program.’’.

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