I
107TH CONGRESS
2D SESSION
H. R. 3974
To increase the expertise and capacity of community-based organizations
involved in economic development activities and key community develop-
ment programs.
IN THE HOUSE OF REPRESENTATIVES
MARCH 14, 2002
Mrs. JONES of Ohio (for herself and Mr. WATTS of Oklahoma) introduced the
following bill; which was referred to the Committee on Financial Services
A BILL
To increase the expertise and capacity of community-based
organizations involved in economic development activities
and key community development programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Community Economic
Development Expertise Enhancement Act of 2002’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) CONGRESSIONAL FINDINGS.—The Congress finds
that—
(1) there are a multitude of community eco-
nomic development programs that the Federal Gov-
ernment successfully administers that help many of
the Nation’s most economically distressed areas revi-
talize their physical and economic structures and
provide support to small and medium-sized busi-
nesses to help them grow and generate long-term
jobs and economic opportunity;
(2) there are many nonprofit, nongovernmental,
community-based economic development organiza-
tions, including faith-based organizations, that have
successfully operated community economic develop-
ment programs;
(3) existing Federal community economic devel-
opment programs are intended to leverage private
sector investment as part of an overall community
development effort;
(4) existing Federal community economic devel-
opment programs connect residents of distressed
neighborhoods to jobs and opportunities of the re-
gional marketplace, thereby replacing economic dis-
tress with opportunity;
(5) existing Federal community economic devel-
opment programs provide financial assistance, in-
cluding tax credits and loan guarantees, involve pri-
vate investment institutions and universities, and
provide technical expertise for small businesses;
(6) existing Federal community economic devel-
opment programs build upon ongoing efforts to en-
courage economic growth in distressed communities,
helping to create new affordable housing opportuni-
ties, allowing communities to address important pub-
lic safety, infrastructure, and environmental con-
cerns, and providing social services including afford-
able health care, child care, and youth development;
(7) the continuing success of Federal commu-
nity economic development programs will depend in
great measure upon the ability of community-based
organizations and private sector institutions to form
partnerships that connect residents of distressed
neighborhoods to jobs and other opportunities;
(8) the Federal Government administers various
programs that employ the services and capabilities
of community-based organizations to deliver a wide
range of services to residents of distressed commu-
nities;
(9) Federal community economic development
programs help achieve lasting improvement and en-
hance domestic prosperity by the establishment of
stable and diversified local economies, sustainable
development, and improved local conditions;
(10) there is a need for greater cooperation be-
tween the Federal Government, States, and other
entities to ensure that, consistent with national com-
munity economic development objectives, Federal
programs are compatible with, and further the objec-
tives of, State, regional, and local economic develop-
ment plans and comprehensive economic develop-
ment strategies;
(11) while economic development is an inher-
ently local process, the Federal Government should
work in closer partnership with community-based
economic development organizations to ensure that
existing resources are not wasted and all Americans
have an opportunity to participate in the economic
growth of the United States; and
(12) extending technical assistance to commu-
nity-based economic development organizations may
be necessary or desirable to—
(A) alleviate economic distress;
(B) encourage and support public-private
partnerships for the formation and improve-
ment of economic development strategies that
promote the growth of the national economy;
(C) stimulate modernization and techno-
logical advances in the generation and commer-
cialization of goods and services; and
(D) enhance the effectiveness of United
States companies in the global economy.
(b) PURPOSES.—The purposes of this Act are—
(1) to provide Federal funding to enhance the
capabilities of nonprofit, nongovernmental, commu-
nity-based economic development organizations to le-
verage private sector investment as part of an over-
all community development strategy;
(2) to establish educational programs for non-
profit, nongovernmental, community-based organiza-
tions to expand their project development capabili-
ties;
(3) to increase the use of tax incentives to le-
verage private sector investment in community eco-
nomic development projects;
(4) to promote and facilitate investments in
community-based economic development projects
from traditional and nontraditional capital sources;
(5) to encourage partnerships between commu-
nity-based organizations that will expand and en-
hance the expertise of emerging such nonprofit, non-
governmental organizations in utilizing private sec-
tor investment as part of their comprehensive com-
munity development strategies; and
(6) to ensure that viable community economic
development 
projects 
are 
successfully 
pursued
throughout the United States in communities having
a wide range of economic, geographic, and social
characteristics.
SEC. 3. GRANTS TO INCREASE CAPACITY AND EXPERTISE
OF NONPROFIT, NONGOVERNMENTAL COM-
MUNITY-BASED ORGANIZATIONS INVOLVED
IN COMMUNITY ECONOMIC DEVELOPMENT
ACTIVITIES.
(a) GRANT AUTHORITY.—The Secretary of Housing
and Urban Development may make grants under this sec-
tion only to eligible community-based economic develop-
ment organizations only for the purposes under subsection
(c).
(b) ELIGIBLE COMMUNITY-BASED ECONOMIC DE-
VELOPMENT ORGANIZATIONS.—For purposes of this sec-
tion, the term ‘‘eligible community-based economic devel-
opment organization’’ means a community-based economic
development organization (as such term is defined under
section 7) that demonstrates management capacity by
meeting, as determined by the Secretary, two or more of
the following requirements:
(A) SALARIES AND ADMINISTRATIVE EX-
PENSES.—For salaries or administrative ex-
penses of the grantee or an emerging commu-
nity-based economic development organization
that is undertaking a community economic de-
velopment project.
(B) TECHNICAL ASSISTANCE.—To provide
technical assistance to an emerging community-
based economic development organization that
is undertaking a community economic develop-
ment project.
(C) TRAINING AND RESEARCH.—Through
subgrants pursuant to paragraph (2), for train-
ing, research, and technical assistance relating
to community economic development, including
subgrants for program evaluation and economic
impact analyses.
(2) 
EXPENDITURE.—Amounts 
from 
grants
under this section may be used directly by the eligi-
ble community-based economic development organi-
zation receiving the grant or redistributed by such
recipient to other nonprofit, nongovernmental enti-
ties in grants, loans, loan guarantees, payments to
reduce interest on loan guarantees, or other appro-
priate assistance, except that a recipient may not
provide any such assistance from grant amounts to
a private, for-profit entity.
(d) SELECTION CRITERIA.—The Secretary shall issue
rules, guidelines, and procedures to provide for the selec-
tion of eligible community-based economic development or-
ganizations for grants under this section, based upon a
determination of the relative effectiveness of such organi-
zations in carrying out the purposes of this Act. Such
rules, guidelines, and procedures shall provide for consid-
eration of the following factors:
(1) The number of such organizations eligible
to receive assistance under existing programs other
than this section.
(2) The extent to which grant amounts pro-
vided under this section will enhance the capabilities
of community-based economic development organiza-
tions in underserved States and localities.
(3) The extent to which an eligible community-
based economic development organization applying
for a grant does not have access to other traditional
local financial sources.
(4) The extent to which such an organization
represents nonprofit, nongovernmental organizations
that serve low-income communities and persons.
(5) The extent to which such an organization
will recover its cost of operating in underserved
areas.
(6) The extent to which such an organization
will implement a plan to become financially sustain-
able.
(e) AMOUNT.—A grant under this section to a single
grantee shall be in an amount that is not less than
$250,000 and does not exceed $1,000,000.
(f) PROHIBITION OF MATCHING FUNDS REQUIRE-
MENT.—The Secretary may not require a grantee under
this section to provide amounts from sources other than
this section to fund the activities to be carried out with
grant amounts under this section.
(g) ELIGIBILITY FOR COMMUNITY REINVESTMENT
ACT CREDITS.—In assessing and taking into account,
under section 804(a) of the Community Reinvestment Act
of 1977, the record of any regulated financial institution,
the appropriate Federal financial supervisory agency (as
defined in section 803(1) of such Act) may consider as
a factor investments in community economic development
projects of eligible community-based economic develop-
ment organizations in determining whether the institution
is meeting the credit needs of its community for purposes
of such section 804(a).
(h) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There are authorized to be
appropriated 
for 
grants 
under 
this 
section
$75,000,000 for each of fiscal years 2003, 2004,
and 2005.
(2) SET-ASIDE
FOR
TECHNICAL
ASSISTANCE
AND
TRAINING.—Of the amount made available
under this Act for each fiscal year, $10,000,000
shall be available only for technical assistance and
training activities, to be conducted by a national or-
ganization having extensive nationwide partnerships
and experience in working with community-based
economic development organizations, as authorized
by section 4 of the HUD Demonstration Act of 1993
(42 U.S.C. 9816 note), as in effect immediately be-
fore May 1, 2000. Of the amount reserved for use
under this paragraph, not less than $4,000,000 shall
be used for such development organizations in rural
areas.
SEC. 4. ASSESSMENT OF COMMUNITY-BASED ECONOMIC
DEVELOPMENT EXPERTISE.
(a) CAPABILITY STUDY.—The Secretary shall con-
duct a study to assess the capability needs of community-
based economic development organizations, which shall—
(1) analyze, evaluate, and recommend processes
to improve the administrative and operational capa-
bilities of such organizations to acceptable levels of
success in support of the role of the Federal Govern-
ment in community economic development; and
(2) assess the extent to which Federal agencies
can incorporate such organizations into the formula-
tion of the strategic plans of funding agencies and,
if the extent or quality of this type of involvement
is satisfactory, can support the role of the Federal
Government in community economic development.
The Secretary shall submit a report regarding the results
of the study under this subsection not later than the expi-
ration of the 6-month period beginning on the date of the
enactment of this Act.
(b) REPORTS TO CONGRESS.—Not later than the
first March 1 occurring after the end of each fiscal year
for which amounts are made available for grants under
section 3, the Secretary shall submit a report to the Con-
gress, which shall include—
(1) an evaluation of the progress made during
such fiscal year to enhance the administrative and
operational capabilities of community-based eco-
nomic development organizations in support of the
role of the Federal Government in community eco-
nomic development;
(2) an assessment of the extent to which Fed-
eral agencies have, during such fiscal year, involved
community-based economic development organiza-
tions in responsibilities for carrying out community
economic development programs administered by the
agencies and delivering services under such pro-
grams that enhance the operational capabilities of
the organizations; and
(3) a plan for making recommendations for ac-
tions or measures to further involve community-
based economic development organizations in the
strategic operations of Federal agencies in support
of community economic development.
SEC. 5. ADVISORY COUNCIL.
(a) ESTABLISHMENT AND DUTIES.—The Secretary
shall establish an advisory council to be known as the Sec-
retary’s Advisory Council on Community Economic Devel-
opment (in this section referred to as the ‘‘Advisory Coun-
cil’’). The Advisory Council shall make recommendations
to the Secretary on carrying out this Act, including rec-
ommendations on developing plans under section 4(b)(3)
and reviewing and making recommendations on such plans
that have been developed.