The Congress established the Empowerment Zone (EZ) and Enterprise Community program in the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66, Aug. 10, 1993). The act also amended title XX of the Social Security Act to authorize the special use of Social Services Block Grant (SSBG) funds for the program. In addition, the act allows businesses located within the EZs to (1) receive tax credits on the wages paid to employees who live and work in the zones; (2) deduct higher levels of depreciation expenses than other businesses; and (3) borrow, at low interest rates, funds raised from the sale of tax-exempt bonds issued by the state or local government to be used for facilities and/or land. Finally, the act specifies that the Secretaries of Housing and Urban Development and Agriculture will designate the communities that are to participate in the program and have the authority to revoke a designation if the boundaries of an empowerment zone or enterprise community are modified, if a designated area is not complying with the program’s requirements, or if a designated area is not making significant progress in implementing the program. Communities that participate in the 10-year EZ program had to (1) meet specific criteria for characteristics such as geographic size and poverty rate and (2) prepare a strategic plan for implementing the program’s four key principles—creating economic opportunity, creating sustainable community development, building broad participation among community-based partners, and describing a strategic vision for change in the community. Each EZ must spend its SSBG funds in accordance with its strategic plan, which includes goals and measures, called performance benchmarks. The progress of each EZ in achieving its goals is to be based on the extent to which it accomplishes its performance benchmarks, not on how much federal money it spends. The benchmarks are set forth in a benchmark document that describes the activities that the EZ plans to implement and includes time lines for their implementation. The document can be modified to accommodate changes in the EZ’s needs or scheduling problems. The benchmark document is to serve the EZ, as well as HUD or USDA, as an important management tool and constitutes the primary basis for evaluating the progress being made. HUD and USDA have each issued regulations and guidance for implementing the EZ program. In addition, they have commissioned studies to help them evaluate the program and have required the EZs to report on their progress in implementation. HUD requires the urban EZs to submit periodic progress reports to its EZ program office. The program office sends these reports to the HUD field offices for assessment. These reports were submitted in the summer of 1996 and the summer of 1997, and the next reports are due by December 31, 1998, according to the coordinator for the EZ program. USDA requires the rural EZs to submit weekly progress reports to the field offices and semiannual progress reports to the headquarters Office of Community Development, which is responsible for the rural program’s overall implementation. Under the Taxpayer Relief Act of 1997 (P.L. 105-34), the Congress authorized a second round of EZs. This act provides for two urban EZs that are to operate under the same rules as the EZs authorized in 1993. In January 1998, the administration selected Los Angeles and Cleveland as the two new EZs. The act also provides for 20 new EZs—15 in urban areas and 5 in rural areas—that are to operate under slightly revised rules set forth in the act. Communities across the nation—including the existing enterprise communities and tribal areas—are eligible to apply for the new EZ designations. In October 1998, the Congress provided $55 million for fiscal year 1999 for the 20 new EZs—$45 million for the 15 new urban EZs and $10 million for the 5 new rural EZs. The six EZs that we visited—Atlanta, Baltimore, the Kentucky Highlands, the Mississippi Mid-Delta, New York City, and the Rio Grande Valley—have reported on their progress in implementing a variety of activities involving economic development, housing, public safety, health care, public transportation, education, and family self-sufficiency. For five of the six EZs, economic development activities (creating jobs, training workers, and providing access to capital) accounted for a larger portion of the planned first-phase expenditures than other activities. All six EZs reported that they are making progress in implementing their economic development activities; however, the extent of their progress varies. Generally, progress was greater in EZs where stakeholders had experience in implementation and could agree on their roles and responsibilities. Each of the six EZs has reported to either HUD or USDA on its progress in implementing the first phase of its planned activities. The reports prepared by the EZs that we visited often emphasized economic development activities (creating jobs and training workers) but usually included activities in other areas, such as housing and public safety. For example, as table 1 shows, the activities in the New York and Kentucky Highlands EZs were classified almost exclusively as related to economic development, while those in the other EZs were classified as both related and not related to economic development. Whereas the New York and Kentucky Highlands EZs focused on creating jobs, developing businesses, training workers, and providing access to capital, the Atlanta, Baltimore, and Rio Grande Valley EZs included activities that provided health care, housing, public transportation, education, family self-sufficiency services, and services for the elderly. The Mississippi Mid-Delta EZ included activities such as community beautification, housing, health care, public safety, and infrastructure improvement; however, almost all of its initial SSBG allocation supported economic development activities. (See apps. I through VI for details on each EZ’s activities as reported in 1997). Activities classified as related to economic development also generally accounted for a larger portion of the EZs’ reported SSBG allocations than other activities. As table 2 shows, the EZs allocated from 31 to 97 percent of their grant funds for economic development activities. The six EZs reported that they are making progress in implementing their economic development activities. However, the extent of their progress varies. Four of the EZs—Baltimore, the Kentucky Highlands, New York, and the Rio Grande Valley—have reported that they have initiated or completed many of their economic development activities. The two remaining EZs—Atlanta and the Mississippi Mid-Delta—have established one-stop capital shops, which are designed to provide comprehensive technical and financial assistance in a single location to small businesses. They also have made several loans and one grant to businesses but have made little progress on other economic development activities. In its performance review, the Baltimore EZ reported completing or initiating action on 17 of its 19 economic development activities. Officials from the EZ governing body confirmed this progress during our visit. Specifically, the officials said that, as of May 1998, they (1) had provided training that contributed to the placement of 100 residents in jobs, (2) had completed the privatization of neighborhood food markets that provide business opportunities within the zone, and (3) will continue their efforts to attract businesses and create or expand job opportunities. They also said that they had worked with Employ Baltimore—a city government employment development initiative—to place more than 1,100 of the zone’s residents in jobs throughout the city. Although the Baltimore EZ has begun to implement its system for getting zone residents into jobs, it is behind schedule largely because the establishment of a community-based structure for identifying potential community employees and offering career counseling, training, and placement services has taken longer than anticipated. The EZ has not yet established a community development bank, which, according to the EZ’s plans, will lend funds for business and residential development within the eastern side of the zone. The Kentucky Highlands EZ reported completing or initiating action on 18 of 20 economic development activities. During our visit, officials from the EZ said that the 1997 performance review generally reflected its progress. They noted that one loan fund had provided loans to businesses, resulting in the creation of 644 jobs as of March 31, 1998. Other activities that had been initiated included developing industrial parks, training workers for jobs in the manufacturing industry, and providing downtown revitalization loans to businesses. Of the two actions that had not been initiated, one was classified as uncertain and the other was found to be infeasible. Specifically, the EZ had not begun developing an airport that would accommodate larger airplanes because, according to EZ officials, funding was hard to obtain and a court ruling found that the airport’s board was improperly organized. The EZ’s efforts to establish a waste recycling plant were terminated after a feasibility study determined that there would not be enough waste available to make the plant cost-effective. Officials from the EZ said that the funds for this activity would be reallocated to other activities. According to its 1997 performance review, the New York EZ has initiated action on 20 of its 38 economic development activities, including (1) establishing a business resource and service center, which, according to the report, has held 26 business seminars and facilitated 27 loans; (2) establishing a credit union for use by the zone’s residents; and (3) revitalizing commercial facilities. Funding has been approved for the 18 activities on which action had not begun at the time the progress report was prepared. EZ officials told us that they had subsequently canceled their plans for an apprenticeship preparation program and had initiated actions on five other activities, including enrolling 233 residents in workforce preparation activities. The remaining economic development activities included efforts to increase tourism and expand workforce preparation initiatives. The Rio Grande Valley EZ reported taking action on all 10 of its economic development activities. These activities included developing training for nursing assistants; training welders to work in the local manufacturing industry; and extending small loans, as part of a one-stop capital shop, to EZ residents to start small businesses. The EZ had also completed a facility, called a business incubator, for fostering new businesses within the zone by providing them with administrative support and work space at a minimal cost. At the time of our visit in March 1998, the Rio Grande EZ had planned 10 additional economic development activities, of which 6 were ongoing. All of the additional activities related to business development and workforce training. Although the Atlanta EZ reported to HUD in its 1997 performance review that it had completed or begun implementing 22 of its 23 economic development activities, EZ officials gave us a March 1998 internal status report showing that action had begun on only 4 out of 7 economic development activities. Specifically, the status report showed that actions were initiated to set up a one-stop capital shop, establish a revolving loan fund, provide funds to develop employment strategies for women, and renovate a vacant building. The report also showed that actions had not yet been initiated to redevelop the Centennial Olympic Business Park, establish another revolving loan fund, or market the EZ’s tax credits. The differences in the progress reported in the 1997 performance review and in the 1998 status report are due to several factors. First, the performance review lists a revolving loan fund as one activity and individual loans issued from that fund as other, separate activities, while the status report lists all of these as a single activity. Similarly, the performance review lists a project related to vacant property and a specific entity that received funds under that project as separate activities, while the status report lists both as a single activity. The performance review also includes activities, such as reconstructing a sports arena and tracking job applicants, that were not included in the status report. In addition, the status report includes only activities that had been approved by the board at the time the report was issued. Finally, the performance review indicates that actions have been initiated on three activities for which the status report shows that no actions have been initiated. The acting executive director of the EZ at the time of our visit told us that he was not involved with the EZ when the performance review was prepared and, consequently, could not explain the differences. The Mississippi Mid-Delta EZ reported starting five of eight economic development activities. For example, the EZ said it had initiated actions to attract and maintain jobs and to strengthen and maintain businesses and industries. The EZ board had approved three other activities—to promote and attract industrial and manufacturing jobs, to help businesses expand within the zone, and to expand and improve training programs for workers. At the time of our visit in April 1998, the EZ said it had added a one-stop capital shop to its list of activities. Officials noted that actions had been initiated on a total of seven activities—the five reported in 1997, the one-stop capital shop, and an activity to attract and maintain jobs at Dollar General Corporation. However, no action had been taken on the other two funded activities at the time of our visit. Officials involved in implementing the EZs told us that two factors facilitated their progress—obtaining agreement among stakeholders and experience in implementing similar economic development activities. For example, officials from the Kentucky Highlands and Rio Grande Valley EZs attributed much of their progress to their multilevel project approval processes, which were established early in the program. Their processes allowed stakeholders to participate at the local level as well as at the zonewide level. Once decisions were approved at the local level, they were then submitted for approval to a zonewide board. Members of this board also made decisions on projects affecting the entire EZ. Conversely, disagreement among stakeholders delayed activities. For example, the New York EZ said that its progress was inhibited until its three major stakeholders (the federal, state, and city governments, each of which contributed $100 million to the EZ) clarified their roles and responsibilities. The EZ has since made steady progress. Similarly, the Atlanta EZ has had difficulty implementing activities because of disagreements among the EZ advisory board, board of directors, and staff over their roles and responsibilities. The Mississippi Mid-Delta EZ also ascribed delays to disagreements over the state government’s role in making SSBG funds available to the EZ. In the absence of written operating policies and procedures, several disagreements have also arisen among this EZ’s executive director, board members, and community representatives. Another factor affecting the progress of the EZs was the extent to which their management organizations had prior experience in implementing similar activities. Officials from the Kentucky Highlands EZ said that the organization managing its EZ has existed for 26 years and had prior experience implementing economic development programs, such as those funded through the Department of Commerce’s Economic Development Administration. Consequently, the people involved were knowledgeable about other federal, state, and local economic development programs and regulations. The Kentucky Highlands executive director attributed his EZ’s progress in implementing the program to this experience. On the other hand, officials in the Baltimore EZ said that they had difficulty locating experienced organizations to implement career centers, which would identify residents’ needs for jobs and provide training to those residents. EZ officials in New York also mentioned that it took longer than expected to involve residents in the implementation process because the residents lacked experience in evaluating proposals to implement projects. Both HUD and USDA said that they use progress reports from the EZs, together with visits by their own field office staff, to monitor the performance of the EZs and evaluate their fitness to continue in the EZ program. In addition, both agencies have sponsored studies, which were performed by organizations that were not involved in implementing the program, to help them monitor implementation efforts. HUD’s coordinator for the EZ program told us that HUD uses the reports from the EZs to help monitor the progress that is being made. The reports are reviewed in headquarters and by field office representatives. For instance, in March 1997, HUD issued reports on each of the communities involved in the program and identified implementation problems at five locations, including one EZ—the Camden portion of the Philadelphia/Camden EZ. On the basis of subsequent reports, HUD determined that improvements were made in all five communities. The official added that HUD would consider revoking a designation, as allowed by the program’s authorizing legislation, if progress was not being made. HUD field staff said that although the EZ program is primarily run by HUD headquarters, they have provided assistance when asked by the EZs and have reviewed progress reports at the request of headquarters. HUD field and headquarters staff told us that under HUD’s management reform initiative, the field offices will have an increased role in assisting the EZs and monitoring their activities. Specifically, the field offices will have (1) community builders, who will be responsible for assisting several HUD programs, including the EZ program, and (2) public trust officers, who will be responsible for monitoring HUD programs, including the EZ program. According to the EZ program’s coordinator, training for the community builders is under way and training for the public trust officers is being developed. In addition, the EZ office in HUD headquarters plans to conduct its own training sessions on the EZ program for community builders and public trust officers. According to USDA officials involved in implementing the EZ program, representatives from the Department’s field offices conduct periodic site visits to rural EZs and are expected to attend EZ board or committee meetings, as well as keep abreast of the zones’ progress in implementing the program. Accordingly, the cognizant USDA rural development field office staff member prepares a weekly report to the headquarters Office of Community Development outlining the EZ’s overall performance. USDA officials told us that they have also brought in a technical expert when (1) they have identified a specific problem or (2) an EZ has requested technical assistance on a particular project. In addition, USDA plans to conduct a comprehensive review of the EZ program about once every 3 years and/or when field office reports identify problems or show that a particular EZ is falling behind in its benchmarks. In May 1998, for example, USDA conducted such a review of the Mid-Delta Mississippi EZ to obtain an overall view of its performance. The review involved meeting with state officials, board members, and the executive director, as well as examining the EZ’s files and planned activities. The results of this review were not available when we were conducting our work. Finally, USDA’s Office of Community Development prepares weekly reports to the Under Secretary for Rural Development that include information on the EZs’ progress and any changes or significant problems. In April 1998, HUD and USDA published notices inviting communities to apply for the new EZ designations by October 9, 1998. They also issued regulations covering the program. HUD and USDA have jointly prepared program and application guides and have each held workshops throughout the country for communities interested in applying for a designation. Specifically, HUD conducted 10 workshops nationwide between April and May 1998, while USDA conducted 14 workshops nationwide between May and June. Workshop topics included how to apply for the program, develop a strategic plan, develop a governance structure, design a performance management system, understand and market EZ tax incentives, develop programs and projects to promote business development, and use job training and job placement services to help residents get jobs. In October 1998, the Congress provided $45 million for the 15 new urban EZs ($3 million for each one) and $10 million for the 5 new rural EZs. USDA officials told us that they will allocate $2 million to each new rural EZ.Both agencies are evaluating communities’ applications for designation. HUD received about 120 applications, while USDA received 169 applications, of which 160 were complete. Program officials from both agencies told us that they expect the designations to be made no later than January 1, 1999, the statutory deadline. We provided a draft of this report to HUD and USDA for review and comment. In addition, we sent the relevant sections of the report to each EZ for its review. HUD generally agreed with the information in the report. However, HUD suggested that the report’s title be revised to reflect its focus on economic development activities. We revised the title of the report as suggested. HUD also said that it planned to increase its monitoring of the EZs and to implement an Internet-based performance measurement system. HUD’s comments are reproduced in appendix VII of this report. USDA generally agreed with the information presented in the report and provided editorial and technical corrections, which we incorporated where appropriate. In general, the EZs provided updated information or clarification on the status of their activities, which we incorporated where appropriate. In addition, the New York EZ provided current information on the funding of its projects. We did not incorporate this information because we did not receive similar information from the other EZs. To determine the progress that the Atlanta, Baltimore, New York, Kentucky Highlands, Mississippi Mid-Delta, and Rio Grande Valley EZs made in implementing their economic development activities and the causes for any delays, we reviewed documents prepared by the EZs, including memorandums of agreement, benchmark documents, and performance reports submitted to HUD and USDA. We did not review the accuracy of the information reported by the EZs in these reports; however, we did review HUD’s and USDA’s methods for ensuring the reports’ accuracy. We also reviewed HUD’s and USDA’s field evaluations for all of the EZs visited, interviewed HUD and USDA headquarters officials and field staff, and reviewed reports from entities that were under contract with HUD and USDA to evaluate the EZ program. During our visits to the EZs, we interviewed their executive directors and toured locations where economic development activities were being implemented. In addition, we interviewed residents and business representatives in the Baltimore, New York, Kentucky Highlands, Mississippi Mid-Delta, and Rio Grande Valley EZs. We also attended meetings of the advisory board or board of directors in the Atlanta, Baltimore, Kentucky Highlands, and Rio Grande Valley EZs. To determine monitoring and evaluation efforts, we interviewed HUD and USDA officials in headquarters and in the field offices we visited, reviewed reports prepared by field office staff, and reviewed training documents provided to HUD’s community builders. To describe the efforts to implement the second round of EZs, we compared the 1993 legislation authorizing the first EZs to the 1997 legislation authorizing the new EZ designations. We also obtained and reviewed HUD and USDA documents on the new EZ designations. In addition, we reviewed other information relevant to the EZs, including the President’s fiscal year 1999 budget request. We conducted our work from December 1997 through November 1998 in accordance with generally accepted government auditing standards. We are sending copies of this report to the appropriate congressional committees and to the Secretaries of Housing and Urban Development, Agriculture, and Health and Human Services. We will also make copies available to others on request. Please call me at (202) 512-7631 if you or your staff have any questions about the material in this report. Major contributors to this report are listed in appendix VIII. The Atlanta empowerment zone’s (EZ) implementation process involves a sequence of steps that include proposing an activity, obtaining approval from the EZ board to proceed with that activity, obtaining approval for funding the activity from the appropriate local and state entities, initiating actions to implement the activity, and completing actions associated with the activity. These steps are referred to as “proposed,” “board approved,” “funding approved,” “ongoing,” and “completed,” respectively. Table I.1 shows each planned economic development activity, its status as reported by the EZ in its 1997 performance review, and the amount of Social Services Block Grant (SSBG) funds allocated to the activity. A March 1998 status report provided by Atlanta EZ officials showed seven activities as planned and indicated that progress was ongoing for four of the activities—the vacant property strategy, the female power demonstration, the one-stop capital shop, and the Atlanta Empowerment Zone Corporation revolving loan fund. The EZ had not yet initiated action on the three remaining activities. (See note in table I.1 for the activities that were included in the status report). The differences in the progress reported in the 1997 performance review and in the 1998 status report are due to several factors: (1) the performance review lists a revolving loan fund as one activity and individual loans issued from that fund as other, separate activities, while the status report lists all of these as a single activity; (2) the performance review lists a project related to vacant property and a specific entity that received funds under that project as separate activities, while the status report lists both as a single activity; (3) the performance review includes activities, such as reconstructing a sports arena and tracking job applicants, that are not included in the status report; (4) the status report includes only activities that had been approved by the board at the time the report was issued; and (5) the performance review indicates that actions have been initiated on three activities for which the status report shows that no actions have been initiated. Table I.1: Atlanta EZ’s Economic Development Activities—Status and SSBG Allocation Marketing Business Incentives—to market EZ business incentives to existing and prospective zone businesses Vacant Property Strategy—to identify and redevelop vacant EZ buildings Old Fourth Ward Commercial Property Redevelopment—to redevelop a building located at 551 Ralph McGill Boulevard Manufactured Housing Study—to assess the use of manufactured housing in the zone Female Power Demonstration—to educate and empower female zone residents to move them toward self-sufficiency through employment Atlanta One-Stop Capital Shop—to provide comprehensive technical and financial assistance in a single location to the area’s small businesses Community Empowerment Advisory Board Revolving Loan Fund—to provide loans of up to $50,000 to home, community-based, and start-up businesses Atlanta Empowerment Zone Corporation Revolving Loan Fund—to provide loans in excess of $50,000 to businesses that locate or expand in the zone Autocraft Body and Paint Shop—to renovate and expand a business in its current location Corporate Courier—to finance businesses that expand in or relocate to the zone Creative Fine Arts—to finance businesses that expand in or relocate to the zone Fulton Cotton Bag Mill—to renovate a vacant property for commercial, retail, and residential use Miss Piggy’s Southern Cuisine—to create a new business in the zone Sweet Auburn Curb Market—to renovate an historic food market Leveraged Loan Fund—to provide loans to existing small businesses that have little or no collateral and are service-oriented Job Training-Career Day—to provide job information and solicit job interests Job Training-Computer Jobs Bank—to identify all jobs available in the state of Georgia Job Training-Renewal Atlanta—to recruit, train, and track applicants for jobs in EZ businesses Ongoing Atlanta Hawks/Atlanta Thrashers Arena—to reconstruct a sports arena Centennial Olympic Park Area Business Park—to redevelop a 1-million-square-foot office park MLK and Ashby Shopping Center—to develop vacant land into a shopping center Turner Field—to renovate the Olympic stadium for use as a baseball field (Table notes on next page) This activity, which is part of the Vacant Property Strategy, is listed as a separate activity in the Atlanta EZ’s 1997 performance review but has no additional funds associated with it. This activity, which is part of the Atlanta Empowerment Zone Corporation Revolving Loan Fund, is listed as a separate activity in the Atlanta EZ’s 1997 performance review but has no additional funds associated with it. Table I.2 lists categories that include the Atlanta EZ’s planned activities that are not related to economic development and shows the amount of SSBG funds allocated to each category. Each category contains multiple planned activities. The Baltimore EZ’s implementation process involves a sequence of steps that include researching and reviewing the activities in the EZ’s original application to develop the program’s design and obtain review and input from an advisory council whose members represent the EZ’s various constituencies, obtaining approval from the EZ board to proceed with an activity, presenting that activity to the state and federal governments for review and acceptance, initiating actions to implement the activity, and completing actions associated with the activity. These steps are referred to as “proposed,” “board approved,” “state and federal government approved,” “ongoing,” and “completed,” respectively. Table II.1 shows each planned economic development activity, its status as reported by the EZ in 1997, and the amount of SSBG funds allocated to the activity. The Baltimore EZ also had planned activities related to improving the quality of life and building community capacity that were allocated $12,423,800 and $7,500,000 in SSBG funds, respectively. The New York EZ’s implementation process involves a sequence of steps that include proposing an activity, obtaining approval from the EZ board to proceed with that activity, obtaining approval for funding the activity from the appropriate local and state entities, initiating actions to implement the activity, and completing actions associated with the activity. These steps are referred to as “proposed,” “board approved,” “funding approved,” “ongoing,” and “completed,” respectively. Table III.1 shows each planned economic development activity, its status as reported by the EZ in 1997, and the amount of SSBG funds allocated to the activity. Table III.1: New York EZ’s Economic Development Activities—Status and SSBG Allocation Neighborhood Trust Federal Credit Union—to create a credit union in the area Harlem USA Operating Company—to build a retail and entertainment center Minton’s Playhouse and Restaurant—to renovate and reopen this restaurant and jazz club Isabella Geriatric Center Nursing Assistant Training—to expose students to health care careers through a school-to-work program Washington Heights/Inwood Development Corporation—to provide capital to small business owners and entrepreneurs Business Resource and Investment Service Center—to establish a one-stop capital shop and technical assistance center Black United Fund of New York—to offer copying, computer, and communications services to individuals and businesses Broadway Video Incorporated—to expand the company’s duplication services division by developing a mass video production facility Alexander Doll Company—to provide training and factory renovation East Harlem Microloan Program—to market small business loans to local businesses that do not qualify for traditional loans Institute for Youth Entrepreneurship—to expose youth to entrepreneurial career paths The Studio Museum in Harlem Store—to expand the museum store’s capacity to increase revenues from tourism Small Business Assistance Initiative—to help businesses construct and maintain proper financial records Central Harlem Commercial Revitalization Program—to provide technical assistance for EZ businesses East Harlem Commercial Revitalization Program—to provide technical assistance for EZ businesses Washington Heights/Inwood Commercial Revitalization Program—to provide technical assistance for EZ businesses Washington Heights Business Improvement District Management Association—to provide technical assistance for EZ businesses (continued) The New York EZ also had planned activities related to child care that were allocated $333,334 in SSBG funds. The Kentucky Highlands EZ’s implementation process involves a sequence of steps that include proposing an activity, obtaining approval from the EZ board to proceed with that activity, obtaining approval for funding the activity from the appropriate local and state entities, initiating actions to implement the activity, and completing actions associated with the activity. These steps are referred to as “proposed,” “board approved,” “funding approved,” “ongoing,” and “completed,” respectively. Table IV.1 shows each planned economic development activity, its status as reported by the EZ in 1997, and the amount of SSBG funds allocated to the activity. The Kentucky Highlands EZ also had planned activities related to community development and project administration that were allocated $7,825,000 and $4,350,000 in SSBG funds, respectively. The Mississippi Mid-Delta EZ’s implementation process involves a sequence of steps that include proposing an activity, obtaining approval from the EZ board to proceed with that activity, obtaining approval for funding the activity from the appropriate local and state entities, initiating actions to implement the activity, and completing actions associated with the activity. These steps are referred to as “proposed,” “board approved,” “funding approved,” “ongoing,” and “completed,” respectively. Table V.1 shows each planned economic development activity, its status as reported by the EZ in 1997, and the amount of SSBG funds allocated to the activity. Table V.2 lists categories that include the Mississippi Mid-Delta EZ’s planned activities that are not related to economic development and shows the amount of SSBG funds allocated to each category. Each category contains multiple planned activities. For the Rio Grande Valley EZ, table VI.1 shows each planned economic development activity, its status as reported by the EZ in 1997, and the amount of SSBG funds allocated to the activity. The status was reported as “ongoing” if actions had been initiated beyond obtaining approvals and funding for the activity. Table VI.2 lists categories that include the Rio Grande Valley EZ’s planned activities that are not related to economic development and shows the amount of SSBG funds allocated to each category. Each category contains multiple planned activities. Kathy R. Alexander Johnnie E. Barnes Nancy A. Boardman Elizabeth R. Eisenstadt Nancy A. Simmons Marc A. Wallace The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. 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Summary: Pursuant to a congressional request, GAO reviewed the Empowerment Zone and Enterprise Community program, focusing on the: (1) progress made by the federal empowerment zones in implementing the program; (2) steps taken by the two responsible federal agencies--the Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA)--to monitor and evaluate the existing zones' progress; and (3) status of steps to designate the second group of empowerment zones. GAO noted that: (1) the six empowerment zones that GAO visited have reported on their implementation of a variety of planned activities in the areas of economic development, housing, public safety, health care, public transportation, education, and family self-sufficiency; (2) while the mix of activities varies among the zones, economic development activities generally account for the largest portion of their planned expenditures; (3) the six zones reported that they are making progress in implementing their economic development activities; however, the extent of their progress varies; (4) four of the zones have initiated or completed many of their economic development activities and two zones have established organizations that provide comprehensive technical and financial assistance in a single location to small businesses; (5) officials involved in implementing the empowerment zone program told GAO that two factors facilitated their progress--experience in implementing activities and agreement among stakeholders; (6) both HUD and USDA have sponsored studies of the empowerment zone program to help them monitor implementation efforts; (7) both agencies use progress reports from the zones, together with visits by their own field office staff, to monitor the performance of the zones and evaluate their fitness to continue in the program; (8) HUD required reports from the urban zones in the summers of 1996 and 1997, while USDA has generally required semiannual reports from the rural zones; (9) both agencies perform field reviews and site visits to check the accuracy of the progress reports; (10) while field staff from both agencies said they provide assistance upon request, the extent of their involvement in monitoring and evaluation has varied; (11) HUD field staff told GAO they have not had a routine role in monitoring and evaluating the program; (12) under HUD's management reform initiative, the field offices will have a greater role in assisting the zones and monitoring their activities; (13) USDA involved its field office representatives in monitoring and evaluating the program by requiring the rural zones to submit weekly progress reports to field office representatives for their review; (14) HUD and USDA subsequently issued regulations covering the program, provided guidance to potential applicants, and conducted informational workshops across the country; and (15) both agencies are currently evaluating communities' applications for designation, and expect them to be made by January 1, 1999.