Community Development: Federal Revitalization Programs Are Being Implemented, but Data on the Use of Tax Benefits Are Limited
Published: 2004-03-05T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Congress established the Empowerment Zone and Enterprise Community (EZ/EC) program in 1993 and the Renewal Community (RC) program in 2000 to provide assistance to the nation's distressed communities. To date, Congress has authorized three rounds of EZs, two rounds of ECs, and one round of RCs. The Community Renewal Tax Relief Act of 2000 mandated that GAO audit and report in 2004, 2007, and 2010 on the EZ/EC and RC programs and their effect on poverty, unemployment, and economic growth. This report describes (1) the features of the EZ/EC and RC programs, (2) the extent to which the programs have been implemented, and (3) the methods used and results found in evaluations of their effectiveness.
section_title: What GAO Found
paragraphs: Both the EZ/EC and RC programs were designed to improve conditions in distressed American communities; however, the features of the programs have changed over time. Round I and II EZs and ECs received different combinations of grant funding and tax benefits, while Round III EZs and RCs received mainly tax benefits. To implement the programs, federal agencies have, among other things, designated participating communities and overseen the provision of program benefits. Since 1994, the Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA) have designated a total of 41 EZs and 115 ECs, and HUD has designated 40 RCs. Available data show that Round I and II EZs and ECs are continuing to access their grant funds and IRS data show that businesses are claiming some tax benefits. However, the Internal Revenue Service (IRS) does not collect data on other tax benefits and cannot always identify the communities in which they were used. Also, efforts by HUD to obtain these data by survey were limited to Round I designees, and EZ and RC officials have had difficulty obtaining such information directly from businesses. The lack of tax benefit data limits the ability of HUD and USDA to administer and evaluate the programs. The few evaluations that systematically collected and analyzed data on EZ/EC program effectiveness used a variety of research methods to study different aspects of the program. The most comprehensive of these studies--the HUD Interim Assessment--found that employment of Round I EZ residents had increased from 1995 to 2000, that larger businesses were more likely to use tax benefits than smaller businesses, and that resident participation in EZ or EC governance has been uneven, among other things.

section_title: Letter
paragraphs: For decades the nation has faced the challenge of revitalizing its distressed  urban and rural communities. To help such communities, the federal  government provides assistance in the form of grants, tax benefits, loans,  and loan guarantees involving more than 100 programs and billions of  dollars. Within the past 11 years, Congress has created two new programs  to help distressed communities—the Empowerment Zone and Enterprise  Community (EZ/EC) program and the Renewal Community (RC) program.  When it was enacted in 1993, the EZ/EC program provided grants to public  and private entities for social services and community redevelopment and  tax benefits to local businesses to attract or retain jobs and businesses in  distressed communities. More recently, this program has provided mainly  tax benefits. Since its enactment in 2000, the RC program has focused on  providing tax benefits to businesses in designated communities to attract  or retain jobs and businesses.
The Community Renewal Tax Relief Act of 2000, which created the RC  program, also mandated that we audit and report in 2004, 2007, and 2010  on the EZ/EC and RC programs and their effect on poverty,  unemployment, and economic growth. This report is the first in a series  examining these programs. Specifically, this report describes (1) the  features of the EZ/EC and RC programs, (2) the extent to which the  programs have been implemented, and (3) the methods used and the  results found in evaluations of the programs’ effectiveness, especially in  terms of poverty, unemployment, and economic growth in the  participating communities.
To determine the features of each program, we reviewed statutes,  regulations, and program documentation and interviewed agency  personnel. To describe the implementation of these programs, we  reviewed program documentation, financial data, and taxpayer data and  interviewed agency personnel, community officials, and experts. To  describe the methods used in and the results of evaluations, we identified  relevant research by conducting several literature searches and  interviewing agency personnel and community development experts. Our  descriptions include analyses of data that have been and could be used to  administer and evaluate the programs. However, we did not evaluate the  effectiveness of the programs or their implementation in this report. We  conducted our work between April 2003 and February 2004 in accordance  with generally accepted government auditing standards. Appendix I  provides additional details on our scope and methodology.
subsections: section_title: Background
paragraphs: The EZ/EC and RC programs target federal grant monies to public and  private entities, tax benefits to businesses, or both in order to improve  conditions in competitively selected, economically distressed  communities. To be considered for these programs, areas must be  nominated by one or more local governments and the state or states in  which they are located. Areas on Indian reservations must be nominated  by the reservation’s governing body.
Congress authorized the EZ/EC and RC programs under four separate acts  of legislation (see table 1). To date, Congress has authorized the  designation of three rounds of EZs, two rounds of ECs, and one round of  RCs. See appendix II for a list of all designated communities.
The Omnibus Budget Reconciliation Act of 1993 authorized the number of  EZ/EC designations to be awarded in the first round of the program, as  well as the benefits that the designated communities would receive. The  legislation authorized the special use of $1 billion in Social Services Block  Grant funds for the EZ/EC program. It also established three tax benefits  for businesses in the designated communities: (1) a tax credit for wages  paid to employees who both live and work in an EZ, (2) an increased  expensing deduction for depreciable property, and (3) tax-exempt bonds.
At the same time that the Department of Housing and Urban Development  (HUD) and the U.S. Department of Agriculture (USDA) announced the  Round I designations, HUD created two additional designations— Supplemental Empowerment Zones and Enhanced Enterprise  Communities. Unlike EZs or ECs, these designations were not legislatively  mandated. Rather, they were awarded to communities that had been  nominated for but did not receive EZ designations. HUD designated two  communities as Supplemental Empowerment Zones and four communities  as Enhanced Enterprise Communities. HUD provided these communities  with certain grants and loan guarantees, which can be used for activities  eligible under the Community Development Block Grant program.
The second round of EZ/EC designations and the benefits those designees  would receive were authorized by two acts of legislation—the Taxpayer  Relief Act of 1997 and the Omnibus Consolidated and Emergency  Supplemental Appropriations Act of 1999. However, neither act authorized  block grant funding for Round II EZs and ECs. Instead, Round II EZs and  ECs received annual appropriations through HUD and USDA  appropriations bills each year from 1999 to 2004.
The Community Renewal Tax Relief Act of 2000 enhanced the tax benefits  available to businesses in newly designated EZs and made these new tax  benefits available to EZs that had been designated in previous rounds, but  not to ECs. The legislation also did not make any appropriations or grant  funds available to Round III EZs or to RCs. However, in January 2004, the  Consolidated Appropriations Act of 2004 appropriated a total of $994,100  to Round III rural EZs. This legislation did not make any funding available  to Round III urban EZs or RCs.
Four federal agencies are responsible for administering the programs:    HUD oversees the EZ/EC program in urban areas, administers the grants  to Round II urban EZs, and oversees the RC program in both urban and  rural areas.
USDA oversees the EZ/EC program in rural areas and administers the  grants to Round II rural EZ/ECs and Round III EZs.
The Department of Health and Human Services (HHS) administers the  Social Services Block Grant funds to communities designated in Round I  of the EZ/EC program.
The Internal Revenue Service (IRS) is responsible for administering the  tax benefits available under the EZ/EC and RC programs.
section_title: EZ/EC and RC Programs Share Similar Goals and Objectives, but Features Vary
paragraphs: Although the EZ/EC and RC programs have similar goals and objectives,  several features of the programs vary within the EZ/EC program by round  and between the EZ/EC and RC programs. The EZ/EC and RC programs  share the goal of improving conditions in distressed communities by  reducing unemployment and fostering investment in designated areas.  However, certain administrative mechanisms, eligibility requirements,  selection criteria, and benefits vary among EZ/EC rounds and between the  EZ/EC and RC programs.
subsections: section_title: EZ/EC and RC Programs Have Similar Goals and Objectives
paragraphs: Although the legislation that created the EZ/EC and RC programs does not  explicitly state the goals for these programs, HUD’s and USDA’s  performance plans suggest that the goals of the programs are similar.  According to HUD’s Annual Performance Plan for Fiscal Year 2004, the  EZ/EC and RC programs are contained within its strategic goal to  strengthen communities. Similarly, in its Fiscal Year 2004 Annual  Performance Plan and Revised Plan for Fiscal Year 2003, USDA includes  the EZ/EC program under the strategic goal to “support increased  economic opportunities and improved quality of life in rural America.”
HUD’s and USDA’s implementing regulations for the EZ/EC program  include a statement of their “objective and purpose,” each of which  generally states that the EZ/EC program is intended to reduce  unemployment and promote the revitalization of economically distressed  areas. HUD’s regulations implementing the RC program do not have an  objective and purpose statement; however, HUD’s guidance states that the  RC program is intended “to foster investment in the designated areas,  which are some of the most severely distressed and development-resistant  areas in the Nation.” Further, HUD program officials have stated that they  regard the RC program as pursuing the same objective and purpose as the  EZ/EC program, but relying on different methods.
section_title: EZ/EC Program Rounds I and II and the RC Program Received Administrative Assistance
paragraphs: Certain features designed to help in the administration of the EZ/EC and  RC programs varied by round in the EZ/EC program and between the  EZ/EC and RC programs. To facilitate federal interagency coordination in  the EZ/EC program, a 26-member Community Empowerment Board was  established in 1993, with the U.S. Vice President as its chair and cabinet  secretaries and other high-ranking federal officials as members. The  board’s function was to consult in the designation of Round I and II EZs  and ECs and coordinate the various federal agency resources that EZs and  ECs would use to implement their strategic plans. For example, the  Community Empowerment Board encouraged other agencies to provide  preference points to EZs and ECs in selection competitions for other  federal programs. The Community Empowerment Board was disbanded  prior to Round III of the EZ program.
In 2000, the legislation creating the RC program established a seven- member Advisory Council on Community Renewal to advise the HUD  Secretary on the selection of designees and the operation of the RC  program. Unlike the Community Empowerment Board, the Advisory  Council does not have federal interagency membership. Instead, the  members of the Advisory Council include individuals from nonprofit and  for-profit organizations who are appointed by the HUD Secretary. The  legislation that created it required the Advisory Council to hold hearings  “as appropriate,” obtain data from federal agencies, and submit a report  containing a detailed statement of the council’s findings and conclusions  and any recommendations to the HUD Secretary by September 30, 2003.  HUD officials expect an interim report from the Advisory Council to be  released sometime in February 2004 and the final report in October 2004.
section_title: The EZ/EC and RC Programs Have Had Different Eligibility Requirements
paragraphs: Communities nominated for EZ/EC or RC designations have been required  to meet certain eligibility requirements based largely on the  socioeconomic characteristics of the residents living in the nominated  areas. Specifically, nominated census tracts have been required to meet  statutory or regulatory requirements for (1) poverty in each census tract,  (2) overall unemployment, (3) total population, (4) total area in square  miles (in the case of the EZ/EC program), and (5) general distress. In  most cases, these requirements were based on 1990 census data. The  levels required for eligibility differed by round, by program, and between  urban and rural nominees. For example, the statutory requirements for  poverty differed between Round I and subsequent rounds of the EZ/EC  program, and between the EZ/EC program and the RC program. In the  absence of statutory guidelines, HUD and USDA regulations defined other  eligibility requirements differently (see table 2). For example, the  requirements for unemployment differed between urban and rural  nominees and between the EZ/EC program and the RC program. The  population requirements also differed between urban and rural nominees  and by program. Finally, communities nominated for the EZ/EC program  were required to meet area requirements, while RC nominees were not.
Nominated communities were also required to show conditions of general  distress. Because the legislation did not define the term “general distress,”  HUD and USDA each provided communities with lists of potential  indicators containing criteria that could be used to meet this requirement.  HUD provided Round I urban EZs and ECs with a list of six indicators and  communities in Rounds II and III of the EZ/EC program and the RC  program with a list of 17 indicators. USDA provided Round I, II, and III  rural EZs and ECs with a list of 14 indicators. For example, USDA’s  Round I list included indicators not included in HUD’s Round I list, such as  a below-average or declining per capita income, earnings per worker, per  capita property tax base, and average years of school completed. USDA, in  turn, did not include homelessness as an indicator of general distress,  while HUD included homelessness.
As a part of the EZ/EC eligibility requirements, nominated communities  were also required to submit a strategic plan. The strategic plan had to  follow the four key principles of the EZ/EC program, which were  established by HUD and USDA in their regulations:    Economic opportunity—including job creation within the community;  supporting entrepreneurship; small business expansion; and job training,  job readiness, and job support services.
Sustainable community development—advancing the creation of livable  and vibrant communities through comprehensive approaches that  coordinate economic, physical, environmental, community, and human  development.
Community-based partnerships—involving the participation of all  segments of the community, including the political leadership, community  groups, the private and nonprofit sectors, and individual citizens.
Strategic vision for change—coordinating a response to community needs  in a comprehensive fashion and setting goals and performance measures.
HUD’s and USDA’s regulations implemented legislative requirements  regarding community participation in the development of their strategic  plans. Nominees were to obtain community input to identify their  communities’ needs and to develop plans for addressing them according to  the four principles. Nominees were also required to describe the role  citizens would play in the implementation of the plans.
To be eligible for the RC program, nominees were required to submit a  “course of action,” in which they committed to carry out four of six  specific legislatively mandated activities:    A reduction of tax rates or fees applying within the RC;    An increase in the level of efficiency of local services within the RC;    Certain crime reduction strategies;    Actions to reduce, remove, simplify, or streamline governmental  requirements applying within the RC; Involvement in economic development activities by private entities,  organizations, neighborhood organizations, and community groups; and   The gift or sale at below fair-market value of surplus real property in the  RC held by state or local governments to neighborhood organizations,  community development corporations, or private companies.
In addition, communities nominated for RC designation had to certify that  they would meet four of five legislatively specified economic growth  promotion requirements, such as repealing or reducing some occupational  licensing requirements, zoning restrictions, permit requirements, or  franchise and other business restrictions. The designees were also  responsible for submitting plans within 6 months of designation for  promoting the use of the tax benefits and for carrying out other state and  local commitments. RCs were required to certify that they had solicited  community input but not that community representatives had been  involved in developing the course of action.
section_title: EZ/EC and RC Selection Criteria Differ
paragraphs: The selection criteria contained in the authorizing legislation for the  EZ/EC and RC programs differed substantially. For the EZ/EC program,  HUD and USDA were required to rank nominees based on the  effectiveness of their strategic plans, the nominees’ assurances that the  plans would be implemented, and additional criteria specified by the  respective Secretary. In Round I of the EZ/EC program, the legislation  also reserved designation for nominees with certain characteristics. In  contrast, the RC selection process did not require a review of the  effectiveness of the planning documents, such as the course of action, that  communities submitted to meet eligibility requirements. Instead, the  legislation authorizing the program required HUD to select the highest  average ranking nominees based on poverty, unemployment, and, in urban  areas, income statistics. HUD was also required to consider the extent of  crime in the area and whether the nominated area contained any tracts  that were identified in one of our reports as being distressed. For the first  20 designations, HUD was to give preference to existing EZs and ECs that  had been nominated and met the eligibility requirements for designation as  an RC; the remaining designations went to the next-highest scorers.
section_title: EZ, EC, and RC Benefits Differed by Round and by Program
paragraphs: As discussed earlier, the authorizing legislation provided EZ/EC and RC  program participants with grants, tax benefits, or both. Over the course of  the three rounds of the EZ/EC program, however, the amount of the grants  available to EZs declined, and the number of tax benefits increased. In  Rounds I and II, ECs received much smaller grant benefits than EZs.  Businesses in Round I ECs were eligible for one tax benefit; however,  businesses in Round II ECs were not eligible for any tax benefits. RCs did  not receive grants, but businesses operating in RCs were eligible to receive  tax benefits. In addition, HUD and USDA provided designated  communities with other benefits. For example, HUD and USDA provided  Round II EZ/ECs with grant funds from their annual appropriations. See  appendix III for a table summarizing the benefits provided to the  designated communities.
subsections: section_title: Grants Were Available to Round I and II EZs/ECs and to Some Rural Round III EZs
paragraphs: Congress appropriated a total of $1 billion in Social Services Block Grants  for the benefit of Round I EZs and ECs (see table 3). These funds were to  be used to (1) prevent, reduce, or eliminate dependency; (2) achieve or  maintain self-sufficiency; and (3) prevent neglect, abuse, or exploitation of  children and adults. In addition, the legislation required that the funds be  used to benefit EZ/EC residents and in accordance with designees’  strategic plans. Like other Social Services Block Grant funds, those  allotted for the EZ/EC program were granted to the states, which were  given fiscal responsibility for them. The legislation authorizing the EZ/EC  program requires that the states obligate these grants for specific EZ or EC  community-based organizations in accordance with state laws and  procedures and within 2 years of the date that HHS awarded the funds.  These block grant funds remain available to finance qualified projects until  December 21, 2004, after which time the grants are subject to state close- out procedures, and all amounts reported as unspent must be returned to  the federal government.
As stated previously, HUD created the Supplemental Empowerment Zone  and Enhanced Enterprise Community designations at the same time as the  Round I EZ/EC designations. HUD awarded $300 million in Economic  Development Initiative grants to the two Supplemental Empowerment  Zones and four Enhanced Enterprise Communities (see table 4). These  grants were designed to enhance the feasibility of certain economic  development or revitalization projects by paying for certain project costs  or providing additional security for loans that finance such projects. The  government entities were required to use these grants in accordance with  the community’s strategic plan and Community Development Block Grant  regulations.
Initially, the administration planned to provide the Round II EZ designees  with the same level of funding as Round I designees. Instead, Round II  EZ/EC designees received funding through annual appropriations for HUD  and USDA in fiscal years 1999 through 2003 (see tables 5 and 6).  According to HUD’s annual appropriations legislation, program grants for  Round II urban designees are to be used in conjunction with economic  development activities consistent with designees’ strategic plans. The  USDA appropriations language did not impose these requirements on  Round II rural designees; however, in March 2002, USDA issued  regulations limiting the allowable uses of Round II grants to those for  Round I EZ/EC Social Services Block Grants. Unlike Round I funds, which  pass through a state agency, Round II EZs and ECs access their grants  directly from HUD or USDA. In most cases, these funds are available to  communities until expended.
As of September 30, 2003, no direct funding was available for Round III  EZs or RCs. However, the Consolidated Appropriations Act of 2004  appropriated $994,100 for Round III rural EZs. It did not appropriate  funding for Round III urban EZs or any RCs.
section_title: Tax Benefits Have Increased Since the EZ/EC Program Began
paragraphs: Businesses operating in or employing residents of EZs and RCs are eligible  for a number of federal tax benefits designed to encourage business  investment (see table 7). Businesses operating in ECs are generally  ineligible for the tax benefits, although state and local governments can  issue tax-exempt bonds for businesses in Round I ECs. Since the initial  legislation authorizing the EZ/EC program, the number of federal tax  benefits has grown. For example, businesses operating in Round I EZs  were originally eligible for three tax benefits: (1) a credit for wages paid to  employees who both live and work in an EZ, (2) an increased expensing  deduction for depreciable property, and (3) tax-exempt bonds. By 2002,  businesses operating in EZs were eligible for several additional tax  benefits, including capital gains exclusions, and more generous tax- exempt bond and expensing provisions. In addition to some of the same  tax benefits available in EZs, businesses operating in RCs were also  eligible for a deduction on commercial property and a different type of  capital gains exclusion. These benefits are generally available until 2009,  when the EZ and RC designations expire.
Taxpayers operating businesses in or employing residents of EZs, ECs, or  RCs can also claim other tax benefits not specific to the federal  designations. Some federal tax benefits are aimed at businesses that  operate or invest in a distressed community or that employ or provide  housing for low-income persons. For example, certain banks, insurance  companies, and corporations that lend money may purchase Qualified  Zone Academy Bonds, which raise funds for public schools located in low- income areas, such as those located in EZs or ECs. Purchasers of these  bonds receive a tax credit in lieu of interest payments. (See app. IV for  examples of federal tax benefits aimed at distressed communities and low- income individuals.) In addition to the federal tax benefits, businesses  operating in federally designated EZs, ECs, and RCs may also be eligible  for tax benefits from the state when a federal designation overlaps with a  state-designated Enterprise Zone. While the specific tax benefits provided  to businesses operating in state Enterprise Zones vary from state to state,  they can include credits on state taxes against withholdings, property tax  reductions, and sales tax exemptions.
section_title: Other Benefits Were Also Available to Certain Designees
paragraphs: In addition to grant monies and tax benefits, certain designees have also  been eligible for other benefits. In Round I of the EZ/EC program, HUD  and USDA guidance invited nominees to request, as an addendum to their  applications, waivers from federal programmatic, statutory, or regulatory  requirements to facilitate their ability to conduct revitalization efforts.  Also, communities designated by HUD as Supplemental Empowerment  Zones or Enhanced Enterprise Communities were provided with a total of  $653 million in Section 108 Loan Guarantees to provide security for loans  that finance economic development and revitalization projects. Finally,  HUD and USDA expect EZs, ECs, and RCs to use their designations to  attract additional investment. In some cases, EZ, EC, and RC designees  were provided with a competitive priority in other federal programs to  help them meet this expectation. Appendix V provides details on these  benefits.
section_title: The EZ/EC and RC Programs Are Well Under Way, but Data on the Use of Some Benefits Are Limited
paragraphs: To date, the federal agencies have selected three rounds of EZs, two  rounds of ECs, and one round of RCs; provided program benefits,  outreach, and technical assistance; and established oversight procedures.  Available data indicate that community organizations and businesses are  using the program benefits; however, certain limitations with tax benefit  data will, among other things, make it difficult to audit or evaluate the  programs and limit the ability of designated communities to report on their  activities.
subsections: section_title: HUD and USDA Have Selected Communities for the EZ/EC and RC Programs
paragraphs: HUD and USDA have implemented three rounds of selection for the EZ/EC  program, and HUD has implemented one round of selection for the RC  program. Following the authorizing legislation for each round, HUD and  USDA released interim rules for designation and formally invited  community nominations through a notice inviting applications or notice of  funding availability. Figure 1 shows a timeline of the selection process for  each of the programs.
The implementation of the selection process varied by round of the EZ/EC  program and between the EZ/EC and RC programs. In Round I of the  EZ/EC program, HUD and USDA used several interagency review teams to  rank nominees based on their strategic plans’ effectiveness and alignment  with the program’s four principles. As a part of their review of nominees  for Rounds II and III of the EZ/EC program, the interagency review teams  assigned point values based on the quality of various characteristics of the  nominees’ strategic plans. In Rounds I and II, nominees that had applied  for an EZ designation but had not been chosen were added to the list of  eligible nominations for EC designations. For the RC program, HUD used  a statistical formula that was based on the eligibility criteria to identify the  eligible nominees with the highest scores. Figure 2 shows the geographic  locations of the designated communities by round.
Communities that had received designations in prior rounds of the EZ/EC  program were permitted to apply for subsequent rounds. Within the EZ/EC  program, communities that had received EC designations in Rounds I and  II were permitted to apply for EZ status in subsequent rounds. If an EC  was chosen to receive an EZ designation, it maintained both designations,  along with the associated benefits. The five Round I ECs that also received  Enhanced Enterprise Community or Supplemental Empowerment Zone  designations maintained their EC status as well. In addition, ECs and EZs  were encouraged to apply for RC designations. However, in contrast to the  EZ program, the authorizing legislation for the RC program required that  the communities forfeit prior designations when they received RC  designation. Table 8 provides more information on the number of  nominations, communities selected in each round, and the number of  designations retained as of September 30, 2003. Figure 3 shows the  geographic locations of the designated communities by designation status  as of September 30, 2003.
The average characteristics of the designated geographic areas in the three  rounds of the EZ/EC program and the RC program had slightly different  poverty and unemployment levels, but their average population, area, and  population density statistics differed more greatly. As noted earlier, with  some exceptions, nominees were directed to use 1990 census data to  qualify for poverty, unemployment, population, and area criteria; however,  the levels required for eligibility varied among rounds of the EZ/EC  program and between the EZ/EC program and RC program. According to  1990 census data, a total of about 8 million people lived in EZs, ECs, and  RCs. Among urban EZs, each round had somewhat lower average  percentages of poverty, but similar percentages of unemployed. The  poverty and unemployment rates of rural EZs were relatively constant,  although unemployment was higher in Round I. ECs did not vary greatly  between rounds in terms of poverty and unemployment. The RCs’ average  percentages in poverty and unemployed are comparable to those of EZ  designees in rounds II or III. However, the average population of the rural  communities designated as RCs was much higher than that of rural EZs or  ECs, and the average population for urban communities was highest in  Round I EZs and in RCs. The average area of the communities varied  among the rounds and between the two programs. The population density  for urban communities remained much higher than that of rural  communities, with urban communities ranging from about 4,000 persons  per square mile to over 10,000 persons per square mile and rural  communities ranging from less than 10 persons per square mile to about 45  persons per square mile. Figure 4 shows the average characteristics of the  communities by designation, round, and urban or rural location.
section_title: Designees Are Drawing Down Grant Funds
paragraphs: As of September 30, 2003, (1) state agencies had drawn down about 71  percent of the Social Services Block Grants authorized for the EZ/EC  program, (2) the eight local government entities that received Economic  Development Initiative grants as part of the Supplemental Empowerment  Zone and Enhanced Enterprise Community designations had drawn down  about 55 percent of the $300 million in Economic Development Initiative  funds that HUD had awarded, and (3) Round II EZs and ECs had drawn  down 42 percent in HUD and USDA program grants appropriated between  fiscal years 1999 and 2003 (see table 9).
section_title: Little Information Is Available on the Use of Some EZ- and RC-Specific Tax Benefits
paragraphs: IRS maintains two principal sources of tax data. The first is an electronic  master file system, which includes a business master file and an individual  master file, each of which contains selected line-item data from business  and individual tax filings. In addition, IRS’s Statistics of Income Division  maintains a second set of data files that are generally based on a sample of  tax returns. IRS maintains selected information on the EZ/EC and RC  programs’ tax benefits in the master file data sets for tax years 1996  through 2002 and the Statistics of Income data set for tax years 1994  through 2001. In addition, the contractor preparing the HUD Interim  Assessment performed a survey of businesses to determine their use of tax  incentives, but these findings are limited to Round I designees.
subsections: section_title: IRS Collects Some Data on the EZ and RC Employment Credit, but Limitations Exist
paragraphs: Currently, IRS can report on the use of the EZ Employment Credit at the  national level. The most readily available IRS data from the Statistics of  Income Division indicate that taxpayers are making some use of this  credit. Nationally, corporations and individuals claimed an estimated total  of $251 million in EZ Employment Credits between 1995 and 2001 (see  figs. 5 and 6).
Businesses were able to begin claiming the RC Employment Credit in  2002, using the same form they use to claim the EZ Employment Credit.  IRS will be able to report on taxpayers’ use of the RC Employment Credit  when some data becomes available in mid-2004. However, because the  same line is used to record the amount claimed for both the RC  Employment Credit and the EZ Employment Credit, IRS will not be able to  distinguish between the amount claimed for RC Employment Credits and  the amount claimed in EZ Employment Credits.
In addition, according to IRS officials, the agency cannot reliably link  businesses claiming the employment credit with specific EZs or RCs due  to two factors. First, according to IRS officials the addresses business  owners list on tax forms do not necessarily correspond with the location  of their business operations, but may be a residence or the address where  the business is incorporated. Second, the IRS form used to claim the EZ  and RC Employment Credits does not require the taxpayer to identify the  EZ(s) or RC(s) where the business operations eligible for the credit are  located.
To identify the amount of employment credits claimed by businesses in  specific EZs or RCs, taxpayers would have to identify the EZs or RCs  where they had business operations. One way to collect this information  would be for IRS to amend its form to request additional information.  Senior IRS officials cited several reasons why amending its tax forms is  not a high priority for the agency. First, they said that IRS’s role is to  administer tax laws, and that collecting more comprehensive data on the  use of these benefits does not help the agency to acheive this objective.  Second, the officials indicated that requesting taxpayers to provide more  information would add to taxpayer burden and IRS workload. Third, IRS  officials told us that they allocate their resources based on the potential  effect of abuse on federal revenue and noted that these tax benefits are  not considered high risk, since the amount claimed is small compared with  revenues collected from other tax provisions or the amount of potential  losses from abusive tax schemes.
section_title: National Use of Tax-Exempt Bonds Has Grown
paragraphs: Between 1995 and 2001, state and local governments issued a total of 36  different series of tax-exempt bonds with an aggregate issue price of $315  million explicitly for the benefit of businesses operating in EZs and Round  I ECs, as well as the D.C. Enterprise Zone. Figure 7 shows the number  and aggregate issue price of tax-exempt bonds issued for the benefit of  businesses operating in these communities between fiscal years 1995 and  2001. The dramatic increase in the amount of bonds issued since 1999 can  be attributed to the issuance of EZ Facility Bonds, which are not subject to  state volume caps and can be issued for generally larger amounts than the  original Enterprise Zone Facility Bonds, and the issuance of D.C.  Enterprise Zone Facility Bonds.
IRS cannot report on the extent to which businesses operating in an EZ or  RC are claiming the increased expensing deduction, the Commercial  Revitalization Deduction, or the Nonrecognition of Gain on the Sale of EZ  Assets, because taxpayers do not report these benefits as separate items  on their returns. In addition, two benefits, the Zero Percent Capital Gains  Rate for RC Assets and the Partial Exclusion of Gain on the Sale of EZ  Stock cannot be claimed until 2007 and 2005, respectively. Table 10  provides a summary of the data available on all nine tax benefits.
The lack of data on the use of some of the tax benefits available to  businesses in EZs and RCs limits the ability of HUD and USDA to  administer the programs. For example, HUD requires EZs and RCs to  report on the extent to which businesses are using certain tax benefits,  such as the EZ or RC Employment Credit, to demonstrate progress in  meeting program outputs. However, EZ and RC officials have had  difficulty in obtaining tax information directly from businesses. As a result,  the lack of data on the use of these benefits limits the ability of the  designated communities to comply with this requirement. Also, the lack of  data on these tax benefits limits the ability of EZs and RCs to use their  designations to attract additional resources, which is a program  expectation. For example, according to tax and community development  specialists, the inability to report on the extent to which some existing tax  benefits are being used limits the ability of EZs and RCs to demonstrate  the effectiveness of their revitalization programs. Moreover, the lack of  data on these benefits limits the ability of HUD, USDA, or others to audit  or evaluate the programs.
section_title: Some Businesses Face Obstacles in Using the Tax Benefits
paragraphs: Although available data show that businesses are using some tax benefits  in EZs, ECs, or RCs, we found that some businesses might face obstacles  in using the tax benefits. In 1999, we reported that businesses cited several  reasons for not taking advantage of the tax benefits, including not  knowing about them, finding them too complicated, not qualifying for  them, and not having federal tax liability. During our current audit work,  research results showed and tax experts expressed similar concerns. For  example, a HUD-sponsored report noted that in 2000 many businesses did  not know about the tax benefits available to them. In addition, one tax  expert noted that businesses must make several complicated calculations  about their business activities to determine whether they satisfy the  requirements for using the tax benefits. IRS officials suggested that the  complexities of the tax code and changes in it over time might prevent  smaller businesses from taking advantage of the EZ or RC benefits,  because smaller businesses may not have access to tax professionals.  Also, one tax expert noted that some businesses, such as farms with assets  greater than $500,000, do not qualify for the tax benefits. Moreover,  businesses can only claim the tax credits against their reported profits.  Since small companies and start-up businesses may not have federal tax  liabilities, they may not be able to claim the EZ or RC credits to the same  degree as larger or more profitable businesses.
section_title: Participating Federal Agencies Have Conducted Outreach and Provided Technical Assistance
paragraphs: HUD, USDA, IRS, and HHS have provided outreach for the EZ/EC and RC  programs through conferences, training, and other resources. HUD and  USDA have sponsored conferences to educate nominated and designated  communities on a variety of subjects. HHS has provided information on its  EZ/EC Web site and has participated in HUD and USDA conferences. Both  IRS and HUD have made efforts to educate businesses about the tax  benefits available to them through educational workshops. HUD sponsors  satellite broadcasts on a semiannual basis on issues pertaining to  performance, tax benefits, availability of funds, regulatory changes, and  other issues. To aid in the designees’ outreach to businesses, HUD has  provided communities with lists of local businesses.
The agencies have also provided technical assistance through a variety of  means, including Web sites, published guidance, and desk officers. HUD,  USDA, and HHS each have Web sites dedicated to the programs that  include links to resources, such as relevant audit guidance, best practices  from designated communities, and online training materials. HUD also  provides an EZ/EC/RC address locator on its Web site that enables  taxpayers to determine whether businesses or employees are located  within a zone and therefore eligible for tax benefits. USDA worked with  HUD to ensure that their rural EZs and ECs were included in this tool. In  addition, HUD, IRS, USDA, and HHS have provided guidance to designated  zones, community groups, and businesses about available benefits. HUD  and USDA have also prepared application guides that explain the  application process and benefits of designation. HUD and USDA have each  published strategic planning guidebooks to help communities through the  required strategic planning process, as well as guidebooks on program  implementation and benchmarking. HUD and USDA also have a group of  desk and field officers available to respond to community inquiries about  the program.
section_title: Participating Federal Agencies Have Developed Oversight Procedures
paragraphs: HUD and USDA are responsible for overseeing the progress of the urban  and rural EZs and ECs, and HUD is responsible for overseeing the  progress of the RCs. The legislated role of HUD and USDA in both the  EZ/EC and RC programs is to ensure that a community (1) does not  modify the boundaries of the designated area and (2) is complying with or  making progress toward the benchmarks of the EZ’s or EC’s strategic plan  or, in the case of HUD, the RC’s course of action and economic growth  promotion requirements. HUD or USDA can revoke a community’s  designation if either of these two provisions is not met.
To implement their oversight responsibility for the EZ/EC program, HUD  and USDA rely on Memorandums of Agreement, benchmark tracking, and  annual progress reports. The Memorandum of Agreement that is signed by  the state and local governments and HUD or USDA states the  responsibilities of the parties for compliance with federal requirements.  HUD and USDA require designees to report annually on the steps they  have taken in conjunction with their strategic plans. RC designees do not  sign Memorandums of Agreement but do have to certify that they will take  certain actions as part of the course of action and economic growth  promotion requirements submitted with the application.
HUD and USDA make determinations as to the progress of the EZs or ECs  in implementing their strategic plans and, when necessary, send warning  letters to the designated communities based on data reported in the  performance management systems. In 1997, HUD issued warning letters to  five EZs and ECs. These warning letters ultimately did not result in any de- designations. As of late 2003, USDA has not sent warning letters to any  rural EZs or ECs.
subsections: section_title: HUD and USDA Have Set Up Systems for Reporting Performance Data
paragraphs: Beginning with the Round II designations in 1998, HUD and USDA began  using Internet-based performance management systems—the Performance  Management System and the Benchmark Management System,  respectively—to track the communities’ performance. These systems  allow each community to enter baseline and benchmark data on funding  and results. Although designated communities update the systems  constantly, an annual reporting deadline exists to provide a firm date at  which a community should have all of its information up to date.
HUD’s Round III EZ and RC annual reporting requirements are less  stringent than those of prior rounds. Since Round III urban EZs and RCs  do not receive grant funds, HUD officials do not expect Round III EZs to  have as many projects as Round II EZs to include in their annual reporting.  The RCs use a much simpler report template that includes sections on  required goals and actions, economic growth promotion requirements, tax  incentive utilization, and other accomplishments. HUD officials have also  said that the use of tax benefits in the Round III EZ and RC programs  makes it difficult to design and execute a way of tracking the programs.  HUD is exploring the idea of developing a data collection method on the  use of the tax benefits. This data collection effort would require approval  from the Office of Management and Budget. HUD officials noted that one  concern in developing a data collection procedure is that potentially the  additional paperwork burden could discourage businesses from using the  benefits. USDA has the same reporting requirements for Round III EZs as  it does for Rounds I and II.
To assess the reliability of the performance data, field staff from HUD and  USDA verify some of the community-reported data in the performance  management systems. As part of its oversight role, HUD also provides field  offices with a grant monitoring checklist, that requires determining  whether (1) the documentation matches the information in the  performance management system, (2) spending is reasonable in relation to  progress, (3) the program and funds serve eligible purposes, (4) the  activity took place within the EZ, (5) the resident benefit data are  accurate, and (6) the EZ has appropriate accounting records and  procedures. USDA state field staff check the reliability of the data entered  by communities, and headquarters staff check for inconsistencies and  outliers. In addition, every 2 years USDA has a “Management Control  Review,” in which headquarters staff verify the accuracy of the state-level  reviews.
section_title: Recent Audits Have Raised Some Concerns About EZ/EC Program Oversight and Data Reliability
paragraphs: In our previous reports, we found weaknesses in program oversight. In  1996, we reported that HUD and the EZs had not yet (1) described  measurable outcomes for the program’s key principles or (2) indicated  how the outputs anticipated from one or more benchmarks would help to  achieve those outcomes. A HUD official reported that the agency  implemented its Internet-based performance measurement system in  response to a recommendation contained in our report. In 1997, we  reported that rural EZ/ECs were not consistently reporting their progress  to USDA and that USDA’s EZ/EC state coordinators were not providing  systematic reporting on the progress of rural EZ/ECs. In response, USDA  officials told us that they addressed this deficiency by adopting a  nationwide community development field training program.
Both HUD’s and USDA’s IGs have raised concerns about the accuracy of  the performance management systems and the adequacy of EZ/EC  program oversight. For example, in a 2003 audit the HUD IG found that  some Round II activities were benefiting people who did not live in the  zones. They also found that 76 percent of the activities in the performance  management system selected for their audit contained inaccurate data.  HUD noted in response that it had developed revised monitoring  procedures and that it was developing regulations to clarify the  requirements for resident benefits. During audits it conducted in 1999 and  2001, USDA’s IG found that data pertaining to a Round I rural EZ and a  Round II rural EC were not accurate or had not been updated as required.  In response to the 2001 audit, USDA officials stated that the agency would  initiate immediate actions to increase training efforts to community  personnel in the areas of reporting, using the performance management  system, maintaining proper accountability, and preparing annual  budgetary reports. In another 2001 audit, which focused on one EZ, the  USDA IG found that USDA staff had not looked at the performance and  progress of any EZ-funded projects and provided little oversight of how  the EZ used program funds. In addition, the audit noted that one funded  project was located outside of the EZ and did not serve the required  number of EZ residents. In response to the audit, USDA stated that the EZ  tracking system would be amended to ensure that residents within the EZ  were benefiting from EZ services but that the EZ was authorized to waive  the resident benefit requirement if the project was deemed important to  the community. USDA officials informed us that limited resources  prevented the agency from performing a 100-percent verification of data  contained in the performance management system.
section_title: Among the Few EZ/EC Evaluations That Have Been Conducted, Research Methods and Results Have Varied
paragraphs: The few evaluations that have systematically collected and analyzed data  on the effectiveness of the EZ/EC program involved a variety of research  methods and reported results that varied depending upon the aspect of the  program studied. In some cases, the methods researchers used depended  on the data available to them. The most comprehensive of these  evaluations—the HUD Interim Assessment—found, among other things,  that employment of Round I EZ residents had increased from 1995 to 2000,  that larger businesses were more likely to use tax benefits than smaller  businesses, and that resident participation in EZ or EC governance had  been uneven. As with all evaluations of community development  programs, these evaluations were also subject to some limitations. In  particular, the researchers faced challenges demonstrating what would  have happened in the communities in the absence of the program.
subsections: section_title: Relatively Few Evaluations Have Been Conducted on the EZ/EC Program
paragraphs: Although 10 years have passed since the first round of communities were  designated, we found only 11 evaluations that systematically collected and  analyzed data on EZ/EC program effectiveness. We found that none of  these evaluations had assessed the effect of the EZ/EC program on  poverty, one had assessed the effects of the EZ/EC program on resident  employment, and three had assessed the effects of the EZ/EC program on  aspects of economic growth in the distressed communities. Further, most  of the evaluations examined the first few years of implementation by  Round I designees. We found only one evaluation that assessed the  effectiveness of Round II EZ/EC designees and no evaluations of the  Round III EZs. In addition, we found that nine evaluations had assessed  the implementation of the EZ/EC program’s community participation and  governance processes. Only the HUD Interim Assessment attempted to  assess on a national scale the effect of the early stages of Round I EZ/EC  implementation on unemployment and aspects of economic growth.  Although USDA, IRS, and HHS each published studies of some aspect of  the Round I EZ/EC designees, we did not find that these agencies had  sponsored or conducted a comparable evaluation. A summary of the 11  evaluations we reviewed, listing the purpose and scope, primary research  methods and data sources, major findings, and major limitations, appears  in appendix VI.
section_title: A Variety of Methods Have Been Used to Evaluate EZs and ECs
paragraphs: Quantitative research methods were generally used to assess the  effectiveness of the EZ/EC program in increasing employment and  promoting economic growth, while qualitative research methods were  generally used to determine the program’s effectiveness in incorporating  community participation and developing governance structures.  Statistical analysis of survey data and existing data (e.g., census data)  were the most common research methods used to assess the effect of the  EZ/EC program on employment and economic growth. Document reviews,  interviews, and comparative analysis were the most frequent type of  methods used to examine site governance structures and community  participation. When multiple program objectives were evaluated,  researchers generally used both quantitative and qualitative methods. For  example, the HUD Interim Assessment used multiple methods and  analytical approaches, such as regression analysis, surveys, and document  reviews, to assess the effectiveness of the federal EZ/EC program in the  first 5 years after the first round of EZ/EC designation.
In some instances, neither qualitative nor quantitative data were available,  requiring researchers to collect original data. For example, because IRS  data on tax benefits cannot be reliably linked to individual designated  communities, some researchers were required to collect data on tax usage  through qualitative methods. According to a HUD official, the HUD Interim  Assessment relied on commercial data and surveys to collect information  on the use of the EZ Employment Credit, because existing IRS data could  not be attributed to individual EZs. He added that without the ability to  attribute the credits to particular EZs, researchers cannot establish the  connection between the businesses’ use of the employment credit and  observable changes in the EZ communities. Some evaluations, such as the  HUD Interim Assessment and our 1998 report, also used surveys of  business owners to assess their attitudes toward the tax benefits and to  gauge the potential influence of the tax benefits on businesses. To collect  qualitative information on the strategic planning process or community  participation, researchers reviewed documents and conducted interviews.  Lastly, several evaluations reported results from agency performance data  on the EZ/EC program; however, both the HUD IG and USDA IG reported  concerns about the reliability of these data.
section_title: Early Evaluations Reported A Variety of Findings
paragraphs: The HUD Interim Assessment found that resident employment within five  of the six Round I EZs had generally increased between 1995 and 2000.  Researchers also found that the employment of residents of four of the six  EZs had grown faster than in similar neighborhoods. In addition, these  researchers found that EZ residents owned an increasing number of the  EZ businesses and that these businesses were more likely to hire other EZ  residents.
Several evaluations reported factors that affected economic growth. For  example, the HUD Interim Assessment found that a variety of factors  influenced the success of businesses (one measure of economic growth) in  a designated community, with the central location of zones in their  metropolitan areas cited as a positive influence and crime and poor public  safety cited as the worst problems. In addition, GAO and the HUD Interim  Assessment found that larger businesses were more likely to use available  tax benefits than smaller businesses.
Results of some evaluations concluded that citizen participation and  influence were greatest during the planning phase of the EZ/EC initiative  and tapered off as the initiative moved into the implementation phase.  Researchers suggested that the decline in citizen participation might have  occurred for several reasons, including a lack of federal supervision during  implementation, the difficulty of implementing projects in reasonable time  frames, and the technical nature of implementation activities, such as  benchmarking reports. Two evaluations concluded that citizen  participation in the EZ/EC program was higher than participation in  similar types of federal initiatives. However, the HUD Interim Assessment  found that local attention to resident participation in zone governance has  been uneven.
section_title: Evaluations of EZs and ECs Were Subject to Some Limitations
paragraphs: The findings of these evaluations provide valuable descriptions of the  early progress of Round I EZ/ECs. However, because of the difficulty of  proving what would have happened in the absence of the program, these  evaluations cannot be used to conclude that the program actually caused  the observed changes. For example, the evaluations found that resident  employment levels had increased, but it is possible that factors other than  EZ/EC designation and the program benefits influenced employment  levels. Although the HUD Interim Assessment attempted to control for  these other factors by comparing EZ/EC employment to employment in  both adjacent and nonadjacent comparison neighborhoods, the authors  could not say conclusively what the employment levels in the zones might  have been if these areas had not been designated as EZs or ECs. If, for  example, the communities selected for the EZ/EC program were those  with the most potential for development from among the eligible areas  within a city, it is possible that these analyses overstated the program  effects.
Many evaluations were unable to make generalizations about all EZ/ECs  because their conclusions were limited to the specific communities that  they studied. For example, the large number of EC sites makes it relatively  difficult to fully investigate the effectiveness of programs in all sites.  Authors of the HUD Interim Assessment and others have noted that  creating an evaluation of the EZ/EC program and its four principles is  difficult, because the program is based on the idea that effective  community revitalization occurs when the strategy is tailored to the local  site. This type of program requires an evaluation design, such as a case  study, that is able to capture changes that result from each site’s specific  strategic plan, but generalizing the results of such evaluations to a larger  population may not be possible. For example, the diverse nature of the  Round I EZ/ECs—in which each EZ/EC may differ in terms of objective,  size of the targeted areas, type of designation, governance structure,  projects used, and strategies for implementation—made it difficult for  researchers to generate general conclusions for the early stages of Round I  implementation.
section_title: Conclusions
paragraphs: HUD, USDA, HHS, and IRS have implemented the EZ/EC and RC  programs. As part of the implementation, HUD and USDA expect  designated communities to report on how program benefits are being  used, both directly and as a method of attracting additional resources.  However, because of the limited amount of data on the use of EZ and RC  tax benefits—which the Joint Committee on Taxation estimates will  reduce federal tax revenue by about $11 billion between 2001 and 2010— EZs and RCs cannot reliably report on their use by local businesses. In  addition, Congress has requested that we audit and evaluate the programs.  Acquiring additional data that can attribute the use of the tax benefits to  particular EZs and RCs would provide information to facilitate an audit of  these programs. Also, additional tax data would be necessary to evaluate  certain aspects of the programs, such as the use of the tax benefits. While  it is difficult to isolate the effects of these programs on improving  conditions in distressed communities, without the ability to attribute the  tax benefits to particular EZs and RCs, researchers cannot begin to  establish the connection between the businesses’ use of the tax benefits  and observable changes in the communities. Such data could potentially  come from a variety of sources, including IRS forms, surveys of  businesses, or commercial databases.
section_title: Recommendation
paragraphs: To facilitate the administration, audit, and evaluation of the EZ/EC and RC  programs, we recommend that HUD, USDA, and IRS collaborate to (1)  identify the data needed to assess the use of the tax benefits and the  various means of collecting such data; (2) determine the cost-effectiveness  of collecting these data, including the potential impact on taxpayers and  other program participants; (3) document the findings of their analysis;  and, if necessary, (4) seek the authority to collect the data, if a cost- effective means is available.
section_title: Agency Comments
paragraphs: We provided copies of a draft of this report for review and comment to  HUD, IRS, USDA, and HHS. These agencies’ written replies are reproduced  in appendixes VII through X, respectively. HUD and IRS agreed with the  report’s descriptions of the EZ/EC and RC programs as well as the  recommendation. HUD generally agreed with our descriptions of the  features of the EZ/EC and RC programs, and the status of their  implementation at the national level. IRS stated that the data they provided  us on the tax benefits available to businesses operating in EZs, ECs, and  RCs were accurately reflected in our report. USDA raised several concerns  about our discussion of the EZ/EC program. In particular, the Acting  Under Secretary for Rural Development stated that our focus on grants  and tax incentives neglected the broader purpose of empowering  impoverished communities to plan for and achieve their own goals  through “holistic means.” HHS’s Administration for Children and Families  had no comments. HUD, IRS, and USDA also provided technical  comments, which we have incorporated into this report where  appropriate.
According to HUD’s Deputy Assistant Secretary for Economic  Development, HUD agrees with the report’s recommendation that HUD,  USDA, and IRS collaborate to examine options for collecting data on the  use of tax benefits available to businesses operating in EZs, ECs, and RCs.  He noted that HUD concurs with the report’s findings, including the  finding that data on the use of the tax benefits is limited at this time, and  added that HUD is currently developing a strategy to use available federal  agency resources to develop the data needed to assess the use of the  EZ/EC and RC tax incentives. In addition, he noted that IRS had assisted  HUD in answering technical questions and participating in HUD training  conferences and workshops. He stated that HUD would continue its  efforts to work with IRS to gather the data needed to measure businesses’  use of tax benefits in designated communities. In response to findings  from its Office of Inspector General, HUD’s Deputy Assistant Secretary  indicated that HUD was taking action to improve program oversight,  including developing guidance on eligible uses of EZ funds and  instructions for reporting on the progress of EZ activities.
The Commissioner of Internal Revenue agreed with our recommendation  to work with HUD and USDA to identify the data needed to assess the use  of the tax benefits and the costs of collecting that data.
The Acting Under Secretary of Rural Development for USDA raised a  number of concerns with our discussion of the EZ/EC program. While he  indicated that USDA welcomed the opportunity to collaborate with IRS  and HUD, he raised concerns that responding to the report’s  recommendation could stretch the agency’s already scarce resources to  produce data of possibly marginal utility and potentially invade taxpayers’  privacy. We believe that the lack of data on the usage of EZ/EC tax  benefits limits the ability of USDA and HUD to administer the EZ/EC  program, and limits the ability of these agencies and others to evaluate  such programs. We stated in our report that data on the use of the tax  benefits could come from a variety of sources, such as IRS forms, surveys  of businesses, or commercial databases. As a result, collecting such  information may not necessarily have a significant impact on USDA’s  resources. Moreover, the recommendation calls for HUD, USDA, and IRS  to determine the cost effectiveness of collecting these data. Any data that  are collected on the use of the tax benefits should be done according to  IRS rules for protecting taxpayer privacy.
In his letter, the Acting Under Secretary also stated that our report  addresses only two program tools (grants and tax incentives) and, by  doing so, neglects the broader purpose behind the program of  “empowering impoverished communities to plan for and achieve their own  goals through holistic means.” To the contrary, the report describes a  variety of program features including, but not limited to, grant and tax  benefits. In particular, the report discusses the programs’ stated goals and  objectives and the key principles nominated communities were required to  include in their strategic plans, including the need for community-based  partnerships that involve all segments of the community. However,  because the report is largely descriptive, it does not examine the extent to  which the objectives and purposes of the EZ/EC program have been met.
In addition, the USDA Acting Under Secretary indicated that our statement  that the lack of data on tax benefits is a limiting factor in communities’  ability to attract additional resources presumes that these data are the  only tool that designated communities have to attract additional resources.  We agree with the Acting Under Secretary’s statement that such data are  not the only means that communities can use to attract additional  resources. However, representatives of EZs and RCs we spoke with stated  that their ability to attract additional resources was limited by not being  able to report on the extent to which the programs’ tax benefits were  being used in their communities.
The Acting Under Secretary also raised concerns about our description of  the agency’s online performance management system. Our purpose in  discussing the system was to describe the efforts USDA has made to  oversee the EZ/EC program. We described the purpose of the system and  the steps USDA takes to verify data contained in it. We also reported the  findings of the USDA IG audits concerning the system and actions USDA  officials reported that the agency had taken in response to the audits. We  did not use data from the system in our report, nor did we evaluate the  reliability of the data contained in it.
Finally, the Acting Under Secretary also noted that our report did not  include all federal programs that provided benefits to communities  designated in the EZ/EC program, such as the AmeriCorps program  benefits that Round I rural EZs and ECs received in the first two years of  the program. As we reported in appendix V, we found that several federal  programs offered preferences to applicants located in EZs, ECs, and RCs.  However, the extent to which these applicants have taken advantage of  these preferences is not known.
We are sending copies of this report to the Secretary of Housing and  Urban Development, the Secretary of Treasury, the Commissioner of the  Internal Revenue Service, the Secretary of Agriculture, the Secretary of  Health and Human Services, and other interested Members of Congress.    We will make copies of this report available to others upon request. In  addition, this report will be available at no charge on the GAO Web site at  http://www.gao.gov.
Please call me on (202) 512-8678 if you or your staff have any questions  about this report.  Key contributors to this report are listed in appendix XI.
section_title: Appendix I: Scope and Methodology
paragraphs: The objectives of this study were to describe (1) the features of the  Empowerment Zone and Enterprise Community (EZ/EC) program and  Renewal Community (RC) program; (2) the extent to which the programs  have been implemented; and (3) the methods that have been used and the  results that have been found in evaluations of the programs’ effectiveness,  especially on poverty, unemployment, and economic growth in the  participating communities. While our descriptions included analyses of the  data that have been and could be used to address these three topics, we  did not evaluate the effectiveness of the programs or their implementation  in this report. We addressed the activities of federal programs in both rural  and urban areas in all three rounds of the EZ/EC program and the RC  program.
To describe the features of each round of the program, we relied on a  review of congressional legislation related to the EZ/EC and RC programs;  the Department of Housing and Urban Development (HUD), the U.S.  Department of Agriculture (USDA), and the Department of Health and  Human Services (HHS) regulations; and HUD, USDA, the Internal Revenue  Service (IRS), and HHS publications. To supplement our understanding of  these documents, we interviewed a number of program officials at these  agencies. We put the available program data and descriptions into data  matrices and spreadsheets in order to summarize, compare, and contrast  the features of the program in each of the rounds.
To describe the implementation of the programs at the national level, we  relied on reviews of legislation, regulations, program publications, Web  sites, and existing Inspector General (IG) studies and interviews with  program officials and other area experts. We analyzed 1990 census data to  report on some characteristics of the designated communities. We also  obtained and analyzed data from HUD, USDA, HHS, and IRS on the  utilization of grants, tax benefits, and loan guarantees. To assess the data’s  reliability, we searched for missing data and values outside an expected  range and assessed the relationship of data elements to each other. As  appropriate, we analyzed a sample of some financial data to confirm their  reliability by comparing the agencies’ financial data with original source  documents. We interviewed knowledgeable agency officials from IGs’  offices, divisions of payment management, and program offices regarding  the work they had done to assess the data’s integrity and the results of that  work. We determined that the data were sufficiently reliable for use in this  report. This report does not include data from HUD’s or USDA’s  performance management systems.
To determine the average characteristics of designated communities, we  used data from the 1990 census. Because census estimates of poverty and  unemployment rates for EZs, ECs, and RCs are estimates based on  probability samples, each estimate is based on just one of a large number  of samples that could have been drawn. Since each sample could have  produced different estimates, we express our confidence in the precision  of our particular sample’s results as a 95 percent confidence interval. For  example, the estimated poverty rate is 45.23 percent for urban Round I EZ  communities, and the 95 percent confidence interval for this estimate  ranges from 44.86 to 45.59 percent. This is the interval that would contain  the actual population value for 95 percent of the samples that could have  been drawn. As a result, we are 95 percent confident that each of the  confidence intervals in this report will include the true values in the study  population. All poverty and unemployment percentage estimates have 95  percent confidence intervals of plus or minus 1.2 percentage points or less,  as summarized in table 11.
In addition to sampling errors, census data (both sampled and 100 percent  data) are subject to nonsampling errors, which may occur during the  operations used to collect and process census data. Examples of  nonsampling errors are not enumerating every housing unit or person in  the sample, failing to obtain all required information from a respondent,  obtaining incorrect information, and recording information incorrectly.  Operations such as field review of enumerators’ work, clerical handling of  questionnaires, and electronic processing of questionnaires also may  introduce nonsampling errors in the data. The Census Bureau discusses  sources of nonsampling errors and attempts to control them in detail.
To address businesses’ use of the EZ Employment Credit, we obtained  information from IRS’s Statistics of Income databases of corporate and  individual tax returns for 1995 through 2001. Although there were some  data available for 1994, we excluded it from our analysis because the  sample was based on a small number of returns in this year and yielded  unreliable confidence intervals. All reported individual return statistics  and the corporate return statistics for years 1995 to 1997 and 2001 are  estimates based on probability samples. Using IRS’s Statistics of Income  Division sampling weights, we estimated confidence intervals for the  estimated number and amount of total credits. These estimates and their  confidence intervals are summarized in table 12.
To identify the methods that have been used and the results that have been  found in assessments of the effectiveness of the EZ/EC and RC programs,  we conducted searches of the literature and interviewed agency personnel  and community development experts. We reviewed more than 1,100 article  and report abstracts to identify outcomes-focused evaluations of the  federal EZ/EC and RC programs. We included evaluations that met the  following criteria: (1) they focused on the federal EZ/EC or RC program;  (2) they were research evaluations that systematically collected and  analyzed empirical data (as opposed to reports of Best Practices/Lessons  Learned or policy discussions of the program); and either (3) they  evaluated the program in terms of its effect on poverty, unemployment,  and/or economic growth consistent with our congressional mandate; or  (4) they evaluated the program’s effectiveness in any of the other program  goal areas. The remaining 11 evaluations, on which we focused our work,  were program evaluations or described the process of implementation that  affected how the program operated.
We conducted our work in Washington, D.C., from April 2003 through  February 2004 in accordance with generally accepted government auditing  standards.
section_title: Appendix II: List of Designated Communities
paragraphs: To date, Congress has authorized the designation of three rounds of EZs,  two rounds of ECs, and one round of RCs. In addition, at the same time  that HUD and USDA announced the Round I designations, HUD created  two additional designations—Supplemental Empowerment Zones and  Enhanced Enterprise Communities. See table 13 for a complete list of  designated communities.
section_title: Appendix III: Federal Benefits Available to EZs, ECs, and RCs at the Time of Designation and as of September 30, 2003
paragraphs: The authorizing legislation for the EZ/EC and RC programs provided  participants with grant and/or tax benefits. A prominent feature of the  EZ/EC program—the Social Services Block Grant—was only offered to  Round I EZ and EC participants. However, Round II EZs and ECs received  grant funds from HUD’s and USDA’s annual appropriations. In addition,  the number of tax benefits increased over the course of the three rounds  of the EZ/EC program and was the main benefit available to RCs. (See  table 14.)
section_title: Appendix IV: Other Tax Benefits Available to Businesses Serving Distressed Communities and Low-Income Individuals
paragraphs: In addition to federal tax benefits that have been specifically available for  businesses in EZs, ECs, and RCs, taxpayers who engage in business in  these communities are typically eligible for other federal tax benefits not  specifically designed for such communities. These benefits include tax  credits and deductions intended to encourage taxpayers to invest in  distressed communities, employ low-income people, and provide housing  for low-income people. (Table 15 provides a list of other federal tax  benefits intended to assist distressed communities.)
section_title: Appendix V: Other Benefits Available to Certain Designees
paragraphs: In addition to grants and federal tax benefits, EZs, ECs, and RCs were  eligible to seek waivers from federal programmatic, statutory, or  regulatory requirements to facilitate their revitalization efforts. However,  nominees made limited use of the waiver initiative and, although still  available to designees, it is no longer considered a primary feature. Also,  communities designated by HUD as Supplemental Empowerment Zones or  Enhanced Enterprise Communities were provided with Section 108 Loan  Guarantees to provide security for loans that finance economic  development and revitalization projects. Finally, in some cases, EZs, ECs,  and RCs received a preference in receiving assistance under a variety of  federal programs. However, the extent to which communities have  received these preferences is unknown.
subsections: section_title: Round I EZs and ECs Made Limited Use of the Waiver Initiative
paragraphs: In Round I of the EZ/EC program, both HUD and USDA guidance invited  nominees to request, as an addendum to their applications, waivers from  federal programmatic, statutory, or regulatory requirements to facilitate  their ability to conduct revitalization efforts. This feature was not  established in the EZ/EC program legislation or regulations; rather, it was  an administrative initiative. In response to a request, HUD and USDA  would offer to work with the communities to seek statutory authority for  broader flexibility of federal programs. For example, nominees could ask  for exemptions, increased flexibilities, or changes in eligibility  requirements for other federal programs.
Available data indicate that Round I designees made limited use of the  available waivers from programmatic and regulatory requirements to  facilitate their ability to conduct revitalization efforts. Program officials  said that many of the nominees requested waivers of statutory  requirements, which HUD and USDA could not provide. The HUD Interim  Assessment examined 244 waiver requests made by 18 urban Round I  EZ/ECs. The HUD Interim Assessment found that the most commonly  requested waivers included requests such as exemption from Davis-Bacon  Act requirements; flexibility in using block grant funds; and changes in  eligibility for federal programs, such as Aid to Families with Dependent  Children, Food Stamps, and Medicaid. The report found that federal  agencies fully or partially approved 5 percent of the requests and denied  33 percent of the requests either because the agencies lacked the authority  to grant them or for other reasons. In addition, 21 percent of the waiver  requests asked for flexibilities that already existed, and the remaining  requests either required more information or the agency reached some  other disposition. Although USDA officials did not quantify the disposition  of waiver requests through an independent study, a USDA official  estimated that fewer than 10 waiver requests had been approved annually.
Because of the Round I experience, both HUD and USDA de-emphasized  the waiver initiative. In the application materials for HUD Round II and III,  and for the RCs, no mention is made of encouraging requests for waivers.  In the USDA Round II application materials, the waiver request initiative is  retained, but in the Round III application, no mention is made of the  opportunity for nominees to request waivers. HUD and USDA officials told  us that designees could still request waivers, but that there was no longer a  formal initiative such as was used in Round I.
section_title: HUD Designees Have Begun to Use Loan Guarantees
paragraphs: After HUD designated the Supplemental Empowerment Zones and  Enhanced Enterprise Communities in Round I, the agency provided them  with a total of $653 million in Section 108 Loan Guarantees (See table 16).  Like the Economic Development Initiative Grants also offered to these  designees, these loan guarantees are to provide security for loans that  finance economic development and revitalization projects. A Section 108  loan guarantee allows local governments to obtain loans for economic  development projects that (1) benefit low and moderate income families;  (2) prevent or eliminate slums or blight; or (3) meet other urgent  community development needs. These loans are secured by a community’s  current and future Community Development Block Grant allocations for  up to five years and carry the full faith and credit of the U.S. government in  the event of a default. This benefit allows a local government entity to  reduce its borrowing costs. The local government entities can also provide  additional security for their section 108 loan repayments or enhance the  feasibility of certain projects by paying directly for certain project  expenses with its Economic Development Initiative grants.
As of September 30, 2003, the eight local government entities that received  Section 108 Loan Guarantees as part of the Supplemental Empowerment  Zone and Enhanced Enterprise Community designations had used about  36 percent of the loan guarantees that HUD awarded (see table 17).
section_title: Designees’ Use of Competitive Preferences Is Unknown
paragraphs: HUD and USDA expect EZs, ECs, and RCs to use their designations to  attract additional investment. Businesses and community organizations in  these communities can seek grants and loans from for-profit corporations,  nonprofit entities, foundations, state and local governments, and other  federal agencies. For example, a bank might help capitalize a community  lending institution or a private foundation might contribute to a  recreational facility for youths. In some cases, organizations or individuals  operating or residing in EZs, ECs, or RCs receive competitive priority for  federal grants, loans, or technical assistance based solely on their EZ, EC,  or RC designations. HUD and USDA officials said that during Round I of  the EZ/EC program the Community Empowerment Board encouraged  federal agencies to provide preferences to applicants from EZs or ECs in  competition for federal funds. For example, communities designated as  federal EZs, ECs, or RCs could receive a competitive preference for the  Environmental Protection Agency’s 2003 National Brownfields  Assessment, Revolving Loan Fund, and Cleanup Grants. In addition, in  2003, the U.S. Department of Education’s Teacher Quality Enhancement  Grants program provided a competitive priority to applicants who  proposed to carry out activities in EZs or ECs. In addition, Congress has  regularly earmarked federal funds, such as grants for low-income housing  repair or direct loans for rural development projects, to projects located in  EZs and ECs.
The extent to which EZs, ECs, and RCs have taken advantage of  competitive preferences is not known. Although HUD and USDA maintain  data in their performance management systems on EZs’, ECs’, and RCs’,  use of other sources of funding, these systems do not differentiate whether  the funding source included a preference for applicants located in EZs,  ECs, or RCs. However, officials from HUD and USDA told us that their  perception was that many federal agencies that provided competitive  preferences to applicants located in EZ/ECs in Round I no longer offer  these preferences. For example, one HUD official told us that the  Department of Justice’s Weed and Seed program, which provides  assistance to communities for reducing crime and drug abuse and bringing  in human services, no longer offers bonus points to applicants located in  EZs, ECs, or RCs. One HUD official noted that the number of preferences  offered might have decreased because the Community Empowerment  Board disbanded.
section_title: Appendix VI: Summary of Evaluations of the EZ/EC Program
paragraphs: Collected data through existing data sources (e.g.,  several concepts (e.g.,  empowerment paradigm, citizen  participation, and inclusion, civil  society) in local sites’ ability to  leverage dollars for sustainable  development.
Chaskin, Robert J. and Clark M. Peters.
The study findings are not generalizable outside of the  board increased, so did the number of women board members  (in this study, women served as a proxy for how “inclusive”  boards were in representing diverse groups). sample studied.
Findings related to dollars leveraged relied heavily on the USDA  little confidence in the accuracy of the performance data.  Therefore, such findings are not reported here. performance management system data.
The study examined only the first year of the functioning of  during the planning phase than during the implementation  phase, because of difficulties of implementing projects in  reasonable time frames. the EZs.
Findings are not generalizable to other EZ/EC rural or urban  sites.
Annual report and executive summary data were self- of the EZ/EC Program; however, recruiting and sustaining  citizen participation over the long term is an on-going challenge  in rural communities. reported and were not independently verified. A lack of  consistency across sites was observed.
Sustained community participation seems to be influenced by  the capacity of existing community-based organizations.
Effective EZ/EC boards are those that represent low-income  communities and lessen the role of typical political players.
Time frames of the study are not completely clear. the participation of local groups, that process was enforced only  in the initial planning phase of the program.
During the implementation of the EZ program in designated  cities, federal supervision diminished and local elites asserted  their control.
The study examined only the first year of the functioning of  the EZs.
One year into the EZ process, there was little evidence that the  program had contributed significantly to the development of  community capacity.
Between 1995 and 2000, employment of EZ residents grew  faster in zones than in demographically similar neighborhoods in  four of the six cities and in the six-city total.
It is not possible to determine whether zone designation  caused employment rates to increase or whether rates  increased for other reasons, such as general economic  conditions or local initiatives. more frequently than smaller businesses.
Many small businesses were not aware of the tax incentives. be biased toward firms that favor the EZ.
Both zone-resident owned businesses and small businesses  located in zones were more likely to hire local zone residents. businesses were unaware of financial incentives, it is not  plausible that these businesses could have been motivated  by the financial incentives of which they were not aware.
Tax Credit and Section 179 Expensing Provision and the  percentage change in the number of residents employed. sample and cannot be generalized to ECs that were not  studied.
Particular cases in the analysis are identified as successes  participate in zone governance has been extremely uneven. or failures, but the criteria for determining success or  failure are not specified.
Residents and community-based organization representatives  combined constitute typically 50 percent of board memberships.
Zone governance was difficult to monitor.
Reviews by HUD’s Inspector General stated that they had  organized associations, to long-term formalized alliances. little confidence in the accuracy of the performance data.   Therefore, such findings are not reported here.
Reported findings on program activities relied entirely on the  HUD performance management system data.
Home loans, measured as the loan activities per 1000 dwellings,  were almost half as prevalent in the 18 EZs/ECs as in their  corresponding Metropolitan Statistical Areas.
No discussion of Home Mortgage Disclosure Act reliability  was included in the report; however, GAO work has found  these data to be sufficiently reliable for similar purposes.
Report findings on commercial lending relied on Small  Business Administration data, for which there is no  knowledge about the reliability of the data.  Therefore,  such findings are not reported here.
The researchers did not control for other factors influencing  the differences in lending activities in the 18 EZ/ECs when  comparing with corresponding Metropolitan Statistical  Areas.
Findings regarding ECs are based on a nonprobability  sample and cannot be generalized to ECs that were not  studied.
Citizens in most communities were able to play a moderate to  substantial role in the governance of their community’s EZ/EC  Initiative.
Because the study covered only the years 1994-1997,  insufficient time had passed when the study was published  to draw definitive conclusions.
In all 18 study cities, citizens had some opportunity to advise  local EZ/EC governing bodies and community development  finance entities.
Empowerment Zone Initiative: Building a  Community Plan for Strategic Change.  Findings from the First Round  Assessment of the Empowerment  Zone/Enterprise Community Initiative.
GAO/RCED-99-253, (Washington, D.C.:  September 30, 1999).
In 11 of the study cities, including all six EZs, citizens were  provided with some means of citizen participation and  involvement in the governance of various community  development initiatives.
There were few instances in which zone residents and  stakeholders actually controlled the allocation of EZ/EC  resources.
Findings regarding ECs are based on a nonprobability sample  government process and evolved into a more community- directed process headed by steering committees of 20 to100  members. and cannot be generalized to ECs that were not studied.
Local sites provided self-reported data to the authors, which  were not independently verified.
The most common governance structure was at least  moderately integrated into the city government and used one  central structure to oversee the Initiative.
Cities with considerable community control over plan  development tended to have an existing citizen participation  structure that could be used as a foundation to initiate planning  efforts.
Citizen influence was greatest in determining site strategies and    Citizen participation decreased as the initiative moved from    Citizen participation was reported to be higher in the EZ/EC  Initiative than in other similar federal initiatives.
Most cities did not have grassroots participation.
Reviews by USDA’s Inspector General stated that they had  little confidence in the accuracy of the performance data.   Therefore, such findings are not reported here.
The employment credit was the most frequently used tax  incentive, especially by the larger businesses.
Because more than half of the large urban businesses and  rural businesses did not respond to the surveys, the survey  results only reflect actual usage of the incentives. somewhat important in their hiring decisions.
The estimates based on the surveys might be imprecise  because of the sampling error associated with estimate. that their employees lived out of the zones or that they did not  know about the credit.
Primary methods and data used  “Citizen Participation in the North Delta Mississippi  Community Development Block Grants,  Empowerment Zones and Enterprise  Communities.”
Planning Practice and Research 13, no. 4 (1998):   443-51.
EC program than in the community development block grant  program. generalized to ECs that were not studied.
Citizen involvement was more extensive and more meaningful  (i.e., participation in strategic planning and decision making) in  the EC program than in the community development block grant  program. participants in each program were representative of the larger  population living in the target areas, and therefore, to what  extent key factors, such as socioeconomic status, might have  influenced citizen participation.
section_title: Appendix VII: Comments from the Department of Housing and Urban Development
section_title: Appendix VIII: Comments from the Internal Revenue Service
section_title: Appendix IX: Comments from the U.S. Department of Agriculture
section_title: Appendix X: Comments from the Department of Health and Human Services
section_title: Appendix XI: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to those individuals named above, Jonathan Altshul, Susan  Baker, Daniel Blair, Mark Braza, Emily Chalmers, Patricia Farrell  Donahue, David Dornisch, DuEwa Kamara, Terence Lam, Alison Martin,  Grant Mallie, John McGrail, John Mingus, Marc Molino, Gretchen Maier  Pattison, Minette Richardson, and Michael Simon made key contributions  to this report.
section_title: Bibliography
paragraphs: Aigner, Stephen M., Cornelia B. Flora, and Juan M. Hernandez. “The  Premise and Promise of Citizenship and Civil Society for Renewing  Democracies and Empowering Sustainable Communities.” Sociological  Inquiry 71, no. 4 (2001): 493-507.
Chaskin, Robert J. and Clark M. Peters. Governance in Empowerment  Zone Communities: A Preliminary Examination of Governance in  Fifteen Empowerment Zone Communities. (Chicago, IL: University of  Chicago, Chapin Hall Center for Children, 1997).
Community Partnership Center. Rural Empowerment Zones/Enterprise  Communities: Lessons from the Learning Initiative. Findings and  Recommendations of the Community Partnership Center EZ/EC  Learning Initiative. (Knoxville, TN: Community Partnership Center,  University of Tennessee, 1998).
Gittell, Marilyn, and others. “Expanding Civic Opportunity: Urban  Empowerment Zones.” Urban Affairs Review 33 no. 4 (1998): 530-58.
Gittell, Marilyn, Kathe Newman, and Francois Pierre-Louis. Empowerment  Zones: An Opportunity Missed: A Six City Comparative Study. (New  York, NY: The City University of New York, The Howard Samuels State  Management and Policy Center, 2001).
Hebert, Scott and others. Interim Assessment of the Empowerment Zones  and Enterprise Communities (EZ/EC) Program: A Progress Report,  prepared for the U.S. Department of Housing and Urban Development.  (Washington, D.C.: November 2001).
Nathan, Richard P. and others. Investing in a New Future: Special Report  on Community Development Financing in Selected Empowerment  Zone/Enterprise Community Sites. (Albany, NY: The Nelson A.  Rockefeller Institute of Government, 1997).  ——Empowerment Zone Initiative: Building a Community Plan for  Strategic Change: Findings from the First Round of Assessment.  (Albany, NY: State University of New York, The Nelson A. Rockefeller  Institute of Government, 1997).
Reid, J. Norman and Karen Savoie Murray. “Empowering Rural  Communities: A Perspective at the Five-Year Point.” Paper presented at  the annual meeting of the Rural Sociological Society, Washington, D.C.,  August 2000.
U.S. General Accounting Office. Community Development: Businesses’  Use of Empowerment Zone Tax Incentives. GAO/RCED-99-253.  (Washington, D.C.: September 30, 1999).
Wang, Fahui, and Joseph A. Van Loo. “Citizen Participation in the North  Delta Mississippi Community Development Block Grants, Empowerment  Zones and Enterprise Communities.” Planning Practice and Research 13,  no. 4 (1998): 443-51.
section_title: Related GAO Products
paragraphs: Community Development: Businesses’ Use of Empowerment Zone Tax  Incentives. GAO/RCED-99-253 (Washington, D.C.: September 1999).
Community Development: Progress on Economic Development Activities  Varies Among the Empowerment Zones. GAO/RCED-99-29 (Washington,  D.C.: November 1998).
Community Development: Information on the Use of Empowerment  Zone and Enterprise Community Tax Incentives. GAO/RCED-98-203  (Washington, D.C.: June 1998).
Community Development: Identification of Economically Distressed  Areas. GAO/RCED-98-158R (Washington, D.C.: May 1998).
Economic Development Activities: Overview of Eight Federal Programs.  GAO/RCED-97-193 (Washington, D.C.: August 1997).
Rural Development: New Approach to Empowering Communities Needs  Refinement. GAO/RCED-97-75 (Washington, D.C.: March 1997).
Community Development: Status of Urban Empowerment Zones.  GAO/RCED-97-21. (Washington, D.C.: December 1996).