[Federal Register Volume 63, Number 73 (Thursday, April 16, 1998)]
[Rules and Regulations]
[Pages 19151-19161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10130]
Federal Register / Vol. 63, No. 73 / Thursday, April 16, 1998 / Rules
and Regulations
[[Page 19151]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 598
[Docket No. FR-4281-I-04]
RIN 2506-AB97
Empowerment Zones: Rule for Second Round Designations
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Interim rule.
-----------------------------------------------------------------------
SUMMARY: This interim rule adds new regulations to govern the
designation of fifteen urban areas as Empowerment Zones. This new rule
is being published to implement the changes made by sections 952-954 of
the Taxpayer Relief Act of 1997. That statute authorized designation of
a second round of Empowerment Zones, which receive special tax benefits
for area businesses. (The Act also authorized HUD to designate two
additional EZs under the criteria specified for the first round, for
which a separate final rule has been issued.) By specifying the new
eligibility criteria to be used in designating a second round of EZs,
this rule lays the foundation for designations to be made in response
to applications submitted in response to the Notice Inviting
Applications published elsewhere in this issue of the Federal Register.
DATES: Effective date: May 18, 1998.
Comment due date: Comments must be submitted by June 15, 1998.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Office of the General Counsel, Regulations Division,
room 10276, Department of Housing and Urban Development, 451 Seventh
Street, SW, Washington, DC 20410-0500. Comments should refer to the
above docket number and title of the rule. Facsimile (FAX) comments are
not acceptable. A copy of each communication submitted will be
available for public inspection and copying during regular business
hours (weekdays 7:30 a.m. to 5:30 p.m. Eastern time) at the above
address. (In addition, see the Paperwork Reduction Act heading under
the Findings and Certifications section of this preamble regarding
submission of comments on the information collection burden.)
FOR FURTHER INFORMATION CONTACT: Elaine Braverman, Empowerment Zone/
Enterprise Community Initiative, Department of Housing and Urban
Development, Room 7130, 451 Seventh Street, SW, Washington, DC 20410,
telephone (202) 708-6339. (This telephone number is not toll-free.) For
hearing-and speech-impaired persons, this telephone number may be
accessed via TTY (text telephone) by calling the Federal Information
Relay Service at 1-800-877-8339 (toll-free).
SUPPLEMENTARY INFORMATION:
I. Background
Section 13301 of the Omnibus Budget Reconciliation Act of 1993
created a new Subchapter U of the Internal Revenue Code, which
authorized the Secretary of Housing and Urban Development (HUD) to
designate not more than six urban Empowerment Zones and not more than
65 urban Enterprise Communities. It also authorized the Secretary of
Agriculture to designate not more than three Empowerment Zones. The two
Departments issued separate but parallel interim rules, following a
standard format, on January 18, 1994 (59 FR 2700). Notices Inviting
Applications were published, and the agencies designated the maximum
number of EZs and ECs authorized. HUD issued a final rule, making only
technical changes to the interim rule, on January 12, 1995 (60 FR
3034). At that time, HUD responded to comments received on the interim
rule. With respect to comments made concerning the designation process,
HUD generally responded that, because the designations had already been
made under the interim rule, changes to those provisions would not have
any effect, but the suggested changes would be considered in any future
rulemaking to implement any additional Congressional authorization for
new designations. HUD has reconsidered the changes requested, as
discussed in the preamble to that final rule, and has decided that they
are inappropriate or unnecessary.
Section 952 of the Taxpayer Relief Act of 1997 (Pub. L. 105-34, 111
Stat. 788, enacted on August 5, 1997) (the 1997 Act) amended section
1391 of the Internal Revenue Code (26 U.S.C. 1391) to add a new
paragraph (g), that changed the eligibility criteria for the 20
additional Empowerment Zones, 15 of which are to be in urban areas,
designated by the Secretary of HUD and 5 of which are to be in rural
areas, designated by the Secretary of Agriculture. The Act expanded the
eligibility criteria slightly, provided different tax incentives
applicable to the new EZs, and made other changes affecting EZs, thus
necessitating changes to the implementing regulations. Section 954 of
the 1997 Act amended section 1392 to revise eligibility criteria with
respect to Alaska and Hawaii, which changes are also reflected in this
interim rule, and section 701 expressly designated a special
Empowerment Zone in the District of Columbia, to last five years
instead of the usual ten.
Two specific changes in the eligibility criteria in the 1997 Act
for new EZs were an increase in the size of zones and elimination of
the requirement that at least half of the nominated area consist of
census tracts with poverty rates of 35 percent. The requirements for at
least a 25 percent poverty rate for 90 percent of the area's census
tracts and at least a 20 percent poverty rate for the remainder
continue to apply, but census tracts with populations under 2,000 get
special consideration for satisfying the 25 percent rate. The
requirement that an urban EZ must be located entirely within no more
than two contiguous States remains unchanged.
The tax benefits that apply to the Round II EZs are the following:
tax-exempt bond financing, welfare-to-work tax credit, work opportunity
tax credit, environmental cleanup cost deduction (``brownfields'' tax
incentive), and up to $20,000 of additional section 179 (accelerated
depreciation) expensing. The Round II EZs are not eligible for the
present-law wage credit enjoyed by the Round I EZs.
The strategic plan submitted by an applicant must describe its
plans for using these tax benefits, in accordance with
Sec. 598.215(b)(4)(ii). (For a full description of the tax benefits,
see IRS Publication 954, ``Tax Incentives for Empowerment Zones and
Other Distressed Communities.'')
When the first round of designations was being made, there was
funding authorized and appropriated for the U.S. Department of Health
and Human Services to award EZ/EC SSBG grants for the Empowerment Zones
and Enterprise Communities. It is anticipated that such funding may
become available for Round II designees in Fiscal Year 1999. See the
Appendix, ``Eligible Uses of EZ/EC SSBG Funds,'' for guidance on uses
of these funds.
For the current fiscal year, however, there is $1.5 million in HUD
funding for planning grants and approximately $502 million in tax
benefits. Each of the 15 areas that receives designation under this
rule as an EZ will be awarded a $100,000 planning grant.
II. New Rule
A. Statutory Changes
The principal change that affects all areas to be nominated for the
second round of designations is the replacement of the existing
criteria
[[Page 19152]]
concerning poverty rate. For the first round of designations, there
were three elements of the poverty rate criterion of eligibility for
Empowerment Zone designation: (1) The poverty rate for each census
tract must be at least 20 percent; (2) the poverty rate for at least 90
percent of the census tracts must be at least 25 percent; and (3) the
poverty rate for at least 50 percent of the census tracts must be at
least 35 percent. The areas designated under the revised authority are
subject to only the first two of these poverty rate criteria. (See
Sec. 598.115(a).)
A new provision excepts up to three ``developable sites''--parcels
that may be developed for commercial or industrial purposes--from
satisfying the two poverty rate criteria that otherwise would be
applicable, but restricts the size of the area given this special
poverty rate treatment to a total of 2,000 acres. There may be up to
three noncontiguous developable sites within a nominated area, which
themselves may be noncontiguous with the parcels that do meet the
poverty criteria.
Treatment of census tracts with small populations has been changed.
Now they must satisfy an additional condition to be treated as if they
have a poverty rate of at least 25 percent (the second criterion
described above): The census tract must be contiguous to one or more
other census tracts that have a poverty rate of at least 25 percent,
determined without regard to this exception. (See Sec. 598.115(b)(2).)
For the first round of designations, the statute (at section
1391(e)(5)) required that States and local governments certify that no
portion of the area nominated is already included in an EZ or in an EC
or in an area otherwise nominated for designation. For this round, the
statute was amended. We interpret the amendment to permit nomination of
areas that were contained in areas nominated for EZ or EC status that
were not granted such status. In other words, the certification for
Round II requires that the nominated area contain no portion of an area
that is part of either an EZ or an area currently being nominated for
EZ designation. (See Sec. 598.210(c).)
In the first round, Indian reservations were not permitted to be
included in an Empowerment Zone. The statute has been changed to permit
them to be included, and to be treated as nominated by both a State and
a local government if it is nominated by the reservation governing
body. Section 598.500 implements this change, permitting the nomination
of the tribal governing body to be treated as a nomination by both a
State and a local government where the area included in the nomination
is entirely within the reservation. If part of the area nominated is
outside the Indian reservation, the State would be required to
participate in the nomination. The statute references a determination
by the Secretary of the Interior with respect to the Indian
reservation's governing body. HUD interprets this to mean that the
Indian organizations from whom HUD should accept nominations are those
that constitute Federally recognized tribes, those specified by the
Department of the Interior. This interpretation is reflected in the new
section.
The States of Alaska and Hawaii are given special treatment with
respect to satisfying the distress, size, and poverty rate criteria in
the revised statute for Round II designations. A nominated area is
treated as satisfying those requirements if 20 percent or more of the
families of each census tract have incomes that are no more than 50
percent of the statewide median family income. (See Sec. 598.515.)
The District of Columbia also is singled out in the statute for
separate designation. Section 701 of the Act designates the existing
Empowerment Zone in DC as the DC special Empowerment Zone, with the
addition of all other census tracts for which the poverty rate is at
least 20 percent. It has special provisions concerning the issuance of
bonds during the period of January 1, 1998 through December 31, 2002,
and concerning treatment of capital gains on DC Zone assets. These
special provisions for the District of Columbia are not included in
this rule, since they are unique to DC. They are being implemented
directly, as specified in the statute. This special EZ status does not
disqualify the District of Columbia from seeking designation as a
standard EZ, which provides benefits over a ten year period.
B. Policy Changes
The language of the rule is being revised to link the EZs to moving
people from welfare to work, since that has become a high priority
after the enactment of welfare reform legislation. See Sec. 598.2.
C. Clarifying Changes
Some terminology used in part 597, the current rule, such as
``population census tract'' seems confusing, and so is modified when it
is replicated in this proposed rule. This rule applies only to Round II
designations, which do not include Enterprise Communities designations.
Consequently, the references to Enterprise Communities do not appear in
this new part.
The section on evaluating the strategic plan that was contained in
the rule for Round I has been removed. That level of detail will be
provided in the Notice Inviting Applications for Round II. The
selection criteria used in making the designations, however, remain in
the rule, in Sec. 598.305. The heading has been changed to
``Designation factors.'' That section echoes the statute in providing
that HUD will choose among applicants that satisfy the eligibility
criteria by evaluating the quality of the strategic plan and other
factors to be specified in the Notice Inviting Applications.
D. Funding Differences
In Round I, the U.S. Department of Health and Human Services (HHS)
awarded EZ/EC SSBG funds to States for each designated Round I EZ and
EC. The HUD rule for Round I included guidance about use of those grant
funds. Similar grant funding has not been authorized for Round II. If
grants are authorized for Round II, HHS will issue guidance about those
funds.
E. Corresponding Sections Between New Rule and Old Rule
The following chart shows the sections of this new part 598 that
correspond to the sections of part 597:
------------------------------------------------------------------------
Part 598 Part 597
------------------------------------------------------------------------
598.1 Applicability and scope......... 597.1 Applicability and scope
598.2 Objective and purpose........... 597.2 Objective and purpose
598.3 Definitions..................... 597.3 Definitions
598.4 Secretarial review * * *........ 597.4 Secretarial review * * *
598.100 Eligibility requirements...... 597.100 Eligibility
requirements * * *
598.105 Data used for elig * * *...... 597.101 Data utilized for
eligibility &
597.503 Use of census data
598.110 Tests of pervasive pov * * *.. 597.102 Tests of pervasive
poverty, * * *
598.115 Poverty rate.................. 597.103 Poverty rate
[[Page 19153]]
598.200 Who nominates an area * * *... 597.200(a)&(b) Nominations by
State and * * *
598.205 What are the requirements * * 597.202 Submission of
*. nominations for * * *
598.210 What certifications must the * 597.200(a)(4), 597.202(b)
* *. Submission of nom * * *
598.215 What are the purpose and 597.200(c)&(d) Nominations by
content * * *. State and * * *
598.300 Procedure for submitting * * * 597.300 HUD action and review
of nomin * * *
598.305 Designation factors * * *..... 597.301 Selection factors for
designation * * *
598.400 HUD grants for planning * * * NEW
598.405 Environmental review.......... NEW
598.410 Public access to materials * * NEW
*.
598.415 Reporting..................... 597.400 Reporting
598.420 Periodic progress 597.401 Periodic performance
determinations. reviews
598.425 Validation of designation..... 597.402 Validation of
designation
598.430 Revocation of designation..... 597.403 Revocation of
designation
598.500 Indian Reservations........... 597.500 Indian Reservations
598.505 Governments................... 597.501 Governments
598.510 Nominations by EDCs or DC..... 597.502 Nominations by EDCs or
DC
598.515 Alaska and Hawaii............. NEW
------------------------------------------------------------------------
III. Findings and Certifications
Justification for Interim Rule
In general, HUD publishes a rule for public comment before issuing
a rule for effect, in accordance with its own regulations on rulemaking
at 24 CFR part 10. However, part 10 does provide for exceptions from
that general rule where the agency finds good cause to omit advance
notice and public participation. The good cause requirement is
satisfied when prior public procedure is ``impracticable, unnecessary,
or contrary to the public interest.'' (24 CFR 10.1.)
HUD finds that good cause exists to publish this rule for effect
without first soliciting public comment, because advance solicitation
of comment is both unnecessary and contrary to the public interest.
The Department has already published a rule for notice and comment
on the subject of designation of Empowerment Zones, which was codified
at 24 CFR part 597. This new rule to implement a second round of
designation of Empowerment Zones is patterned on the prior rule. The
major differences between this rule and the earlier rule are based on
statutory changes, which leave virtually no room for exercise of
discretion. Other additions to the rule reflect HUD's experience with
the first round, clarifying the expectations of the parties to reflect
actual experience. These changes are not controversial and, therefore,
do not signal a necessity for advance public comment.
HUD's finding that it would be contrary to the public interest to
delay the effectiveness of the rule is based on the practical necessity
of preparing an application for designation as an empowerment zone
within the timeframe set by the authorizing statute. The designations
are required by the statute (section 1391(g)(2)) to be made before
January 1, 1999. The governmental entities and other entities that may
work with them in partnership to develop an application for designation
need to know the requirements of the program in time to develop their
strategic plans and apply for designation. Delay in prescribing the
criteria for designating new empowerment zones would delay the
development of these cooperative efforts and make it extremely
difficult for applicants to develop their strategic plans in a timely
fashion.
For these reasons, HUD believes that an interim rulemaking is
justified. HUD is soliciting public comments on this rule and will
consider these comments in the development of a final rule.
Paperwork Reduction Act
The information collection requirements contained in this rule, as
described in Secs. 598.200, 598.205, 598.210, 598.215, 598.415, and
598.430, and the implementing application forms, have been approved by
the Office of Management and Budget under the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2506-
0148. This approval has been granted on an emergency basis through
August 31, 1998. In accordance with the Paperwork Reduction Act, HUD
may not conduct or sponsor, and a person is not required to respond to,
a collection of information unless the collection displays a currently
valid OMB control number.
In addition, HUD will seek an extension of this approval for these
information collections. Therefore, HUD asks for comments regarding the
information collections contained in the sections of this rule stated
above. At the end of the comment period, HUD will submit the proposed
information collections to OMB for approval.
Comments regarding the information collections contained in the
rule must be submitted by June 15, 1998. Comments on these information
collections should refer to the proposal by name and/or OMB control
number and must be sent to: Reports Liaison Officer, Shelia E. Jones,
Department of Housing and Urban Development, 451 Seventh Street, SW,
Room 7230, Washington, DC 20410.
Specifically, comments are solicited from members of the public and
affected agencies concerning the proposed collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility; (2)
Evaluate the accuracy of the agency's estimate of the burden of the
proposed collection of information; (3) Enhance the quality, utility,
and clarity of the information to be collected; and (4) Minimize the
burden of the collection of information on those who are to respond,
including through the use of appropriate automated collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
The following table identifies the components of the information
collection:
[[Page 19154]]
----------------------------------------------------------------------------------------------------------------
Est. ave.
Type of collection Section of 24 Number of Frequency of response time Annual burden
CFR affected respondents response (hrs.) hrs.
----------------------------------------------------------------------------------------------------------------
Application..................... 598.200
598.205
598.210
598.215 225 1 50 11,250
Periodic Reporting.............. 597.400
598.415 87 1 15 1,305
Response to Warning Letter...... 597.403
598.430 5 1 20 100
----------------------------------------------------------------------------------------------------------------
Total Burden--12,655 hours per year.
Environmental Impact
A Finding of No Significant Impact with respect to the environment
for this rule has been made in accordance with HUD regulations at 24
CFR part 50, which implement section 102(2)(C) of the National
Environmental Policy Act of 1969. The Finding of No Significant Impact
is available for public inspection between 7:30 a.m. and 5:30 p.m.
weekdays in the Office of the Rules Docket Clerk, Office of the General
Counsel, Department of Housing and Urban Development, Room 10276, 451
Seventh Street, S.W., Washington, DC 20410.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule will not have a significant
economic impact on a substantial number of small entities as
distinguished from large entities. The rule does not place any mandates
on small entities. It merely authorizes them to seek designation as
Empowerment Zones, as authorized by statute.
The burdens placed on applicants derive from the statute, and
primary among them is the requirement for a strategic plan. The entity
responsible for preparing a strategic plan for HUD funds for a
metropolitan area is the local government that generally would be
seeking the nomination of an area, not the small businesses that are
located or could be located within the area. A small government is
defined by the Small Business Administration as one that has a
population of less than 50,000. It is possible that a government of
that size will seek designation for an area within its boundaries, if
it is part of a Metropolitan Statistical Area, as required by the
statute. The contents of such an entity's strategic plan would be
expected to reflect its size, not the size of a larger applicant.
HUD is sensitive to the fact, however, that the uniform application
of requirements on entities of differing sizes may place a
disproportionate burden on small entities. Therefore, HUD is soliciting
recommendations for how these small entities might fulfill the purposes
of the rule in a way less burdensome to them.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that, although
this rule may have a substantial direct effect on the States or their
political subdivisions that are designated as Empowerment Zones, this
effect is intended by the legislation authorizing the program. The
purpose of the rule is to provide a cooperative atmosphere between the
Federal government and States, local, and Tribal governments, and to
reduce any regulatory burden imposed by the Federal government that
impedes the ability of States and local governments to solve pressing
economic, social, and physical problems in their communities.
Unfunded Mandates
Executive Order 12875 calls for Federal agencies to refrain, to the
extent feasible and permitted by law, from promulgating any regulation
that is not required by statute that would create a mandate on a State,
local, or Tribal government, unless the agency provides funds for
complying with the mandate or the agency first consults with affected
State, local, and Tribal governments. Title II of the Unfunded Mandates
Reform Act of 1995 (12 U.S.C. 1501) established requirements for
Federal agencies to assess the effects of their regulatory actions on
State, local, and tribal governments and the private sector.
This rule does not impose any Federal mandates on any State, local,
or tribal governments or the private sector within the meaning of the
Unfunded Mandates Reform Act of 1995, because it does not mandate any
particular action. The rule just authorizes States, localities, and
tribes to apply for designation of areas within their jurisdiction as
Empowerment Zones, which permits special tax treatment of business
activities within the areas and may make the areas eligible for other
government benefits.
HUD has, nonetheless, had regular contact with the representatives
of the already designated EZs and ECs concerning the effect of the
statutory changes and on possible means for implementation. In
addition, individual citizens, academicians, and members of Congress
have inquired about the possible resolution of issues they identified
with respect to implementing the statutory changes. All of the
information and views provided have been considered in the development
of this rule.
Regulatory Review
The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866, Regulatory Planning and Review. OMB determined
that this rule is a ``significant regulatory action,'' as defined in
section 3(f) of the Order (although not economically significant, as
provided in section 3(f)(1) of the Order). Any changes made to the
interim rule after its submission to OMB are identified in the docket
file, which is available for public inspection in the Regulations
Division of the Office of General Counsel, Room 10276, 451 Seventh
Street, SW, Washington, DC 20410-0500.
Catalog of Federal Domestic Assistance.
The Catalog of Federal Domestic Assistance Program number assigned
to this program is 14.244.
List of Subjects in 24 CFR Part 598
Community development, Economic development, Empowerment zones,
Housing, Indians, Intergovernmental relations, Reporting and record
keeping requirements, Urban renewal.
Accordingly, for the reasons set forth in the preamble, a new part
598 is added to title 24 of the Code of Federal Regulations, to read as
follows:
[[Page 19155]]
PART 598--URBAN EMPOWERMENT ZONES: ROUND TWO DESIGNATIONS
Subpart A--General Provisions
Sec.
598.1 Applicability and scope.
598.2 Objective and purpose.
598.3 Definitions.
598.4 Period of designation.
Subpart B--Eligibility Requirements
598.100 Eligibility requirements.
598.105 Data used for eligibility determinations.
598.110 Tests of pervasive poverty, unemployment and general
distress.
598.115 Poverty rate.
Subpart C--Nomination Procedure
598.200 Who nominates an area for designation?
598.205 What are the requirements for nomination?
598.210 What certifications must governments make?
598.215 What are the purpose and content of the strategic plan?
Subpart D--Designation Process
598.300 Procedure for submitting a nomination.
598.305 Selection factors for designation of urban empowerment
zones.
Subpart E--Post-Designation Requirements
598.400 HUD grants for planning activities.
598.405 Environmental review.
598.410 Public access to materials and proceedings.
598.415 Reporting.
598.420 Periodic progress determinations.
598.425 Validation of designation.
598.430 Revocation of designation.
Subpart F--Special Rules
598.500 Indian Reservations.
598.505 Governments.
598.510 Nominations by Economic Development Corporations or the
District of Columbia.
598.515 Alaska and Hawaii.
Authority: 26 U.S.C. 1391; 42 U.S.C. 3535(d).
Subpart A--General Provisions
Sec. 598.1 Applicability and scope.
(a) This part establishes policies and procedures applicable to the
second round of designations of urban Empowerment Zones, authorized
under Subchapter U of the Internal Revenue Code of 1986 (26 U.S.C.
1391, et seq.), as amended by sections 952 and 954 of the Taxpayer
Relief Act of 1997.
(b) This part contains provisions relating to area requirements,
the nomination process for urban Empowerment Zones, and the designation
and evaluation of these Zones by HUD. Provisions dealing with the
nomination and designation of rural Empowerment Zones are issued by the
Department of Agriculture.
Sec. 598.2 Objective and purpose.
The purpose of this part is to provide for the establishment of
Empowerment Zones in urban areas, to stimulate the creation of new
jobs--empowering low-income persons and families receiving public
assistance to become economically self-sufficient--and to promote
revitalization of economically distressed areas.
Sec. 598.3 Definitions.
In addition to the definitions of ``HUD'' and ``Secretary'' found
in 24 CFR 5.100, the following definitions apply to this part.
Census tract means a census tract, as the term is used by the
Bureau of the Census, or, if census tracts are not defined for the
area, a block numbering area.
Designation means the process by which the Secretary designates
urban areas as Empowerment Zones eligible for tax incentives and
credits established by Subchapter U of the Internal Revenue Code of
1986, as amended (26 U.S.C. 1391, et seq.) and for special
consideration for programs of Federal assistance.
Developable site means a parcel of land in a nominated area that
may be developed for commercial or industrial purposes.
Empowerment Zone means an urban area so designated by the Secretary
in accordance with this part.
EZ/EC SSBG funds means any funds that may be provided to States or
Tribes by HHS in accordance with section 2007(a) of the Social Security
Act (42 U.S.C. 1397f), for use by the designated Round II Empowerment
Zone.
HHS means the U.S. Department of Health and Human Services.
Local government means any county, city, town, township, parish,
village, or other general purpose political subdivision of a State, and
any combination of these political subdivisions that is recognized by
the Secretary.
Nominated area means an area nominated by one or more local
governments and the State or States in which it is located for
designation in accordance with this part.
Revocation of designation means the process by which the Secretary
may revoke the designation of an urban area as an Empowerment Zone .
(See subpart E of this part.)
State means any State of the United States.
Urban area means:
(1) An area that lies inside a Metropolitan Statistical Area (MSA),
as designated by the Office of Management and Budget; or
(2) An area outside an MSA if the jurisdiction of the nominating
local government documents:
(i) The urban character of the area, or
(ii) The link between the area and the proposed area in the MSA.
Sec. 598.4 Period of designation.
The designation of an urban area as an Empowerment Zone will remain
in full effect during the period beginning on the date of designation
and ending on the earliest of:
(a) The close of the tenth calendar year beginning on the date of
designation;
(b) The termination date designated by the State and local
Governments in their application for nomination; or
(c) The date the Secretary modifies or revokes the designation.
Subpart B--Eligibility Requirements
Sec. 598.100 Eligibility requirements.
A nominated urban area is eligible for designation in accordance
with this part only if the area:
(a) Has a maximum population that is the lesser of:
(1) 200,000; or
(2) The greater of 50,000 or ten percent of the population of the
most populous city located within the nominated area;
(b) Is one of pervasive poverty, unemployment and general distress,
as described in Sec. 598.110;
(c) Does not exceed twenty square miles in total land area,
excluding up to three noncontiguous developable sites that are exempt
from the poverty criteria;
(d) Has a continuous boundary, or consists of not more than three
non-contiguous parcels meeting the poverty criteria, and not more than
three noncontiguous developable sites exempt under Sec. 598.115(c)(1)
from the poverty rate criteria;
(e) Is located entirely within the jurisdiction of the unit or
units of general local government making the nomination, and is located
in no more than two contiguous States; and
(f) Does not include any portion of a central business district, as
this term is used in the most recent Census of Retail Trade, unless the
poverty rate for each census tract in the district is not less than 35
percent.
Sec. 598.105 Data used for eligibility determinations.
(a) Source of data. The data to be used in determining the
eligibility of an area is from the 1990 Decennial Census, and from
information published by the Bureau of the Census and the Bureau of
Labor Statistics. Specific information on
[[Page 19156]]
appropriate data to be submitted will be provided in the application.
(b) Use of statistics on boundaries. The boundary of an urban area
nominated for designation as an Empowerment Zone must coincide with the
boundaries of census tracts, as defined in Sec. 598.3.
Sec. 598.110 Tests of pervasive poverty, unemployment and general
distress.
(a) Pervasive poverty. Pervasive poverty is demonstrated by
evidence that:
(1) Poverty, as indicated by the number of persons listed as being
in poverty in the 1990 Decennial Census, is widespread throughout the
nominated area; or
(2) Poverty, as described above, has become entrenched or
intractable over time (through comparison of 1980 and 1990 census data
or other relevant evidence).
(b) Unemployment. Unemployment is demonstrated by:
(1) The most recent data available indicating that the annual rate
of unemployment for the nominated area is not less than the national
annual average rate of unemployment; or
(2) Evidence of especially severe economic conditions, such as
military base or plant closings or other conditions that have brought
about significant job dislocation within the nominated area.
(c) General distress. General distress is evidenced by describing
adverse conditions within the nominated urban area other than those of
pervasive poverty and unemployment. Below average or decline in per
capita income, earnings per worker, number of persons on welfare, per
capita property tax base, average years of school completed,
substantial population decline, and a high or rising incidence of
crime, narcotics use, homelessness, high incidence of AIDS, abandoned
housing, deteriorated infrastructure, school dropouts, teen pregnancy,
incidence of domestic violence, incidence of certain health conditions
and illiteracy are examples of appropriate indicators of general
distress.
Sec. 598.115 Poverty rate.
(a) General. In order to be eligible for designation, an area's
poverty rate must satisfy the following criteria:
(1) In each census tract within a nominated urban area, the poverty
rate must be not less than 20 percent; and
(2) For at least 90 percent of the census tracts within the
nominated urban area, the poverty rate must be not less than 25
percent.
(b) Special rules relating to the determination of poverty rate--
(1) Census tracts with populations of less than 2,000. A census tract
that has a population of less than 2,000 is treated as having a poverty
rate that meets the requirements of paragraphs (a)(1) and (a)(2) of
this section if more than 75 percent of the tract is zoned for
commercial or industrial use, and the tract is contiguous to one or
more other census tracts that have an actual poverty rate of not less
than 25 percent.
(2) Rounding up of percentages. In making the calculations required
by this section, the Secretary will round all fractional percentages of
one-half percent or more up to the next highest whole percentage
figure.
(c) Noncontiguous parcels. (1) Noncontiguous parcels that are
developable sites are exempt from the poverty rate criteria of
paragraph (a) of this section, for up to three developable sites.
(2) The total area of the noncontiguous parcels that are
developable sites exempt from the poverty rate criteria of paragraph
(a) of this section must not exceed 2,000 acres.
(3) A nominated urban area must not contain a noncontiguous parcel
unless such parcel separately meets the criteria set forth at
paragraphs (a)(1) and (2) of this section, except for up to three
developable sites.
(4) There must not be more than three noncontiguous parcels, except
that up to three developable sites are not included in this limit.
Subpart C--Nomination Procedure
Sec. 598.200 Who nominates an area for designation?
Applicants for empowerment zone designation must be nominated by
the State or States and one or more local government(s) in which the
area is located, except as provided in Secs. 598.500, 598.510, and
598.515. The nomination must be submitted in a form to be prescribed by
HUD in the application and in the document announcing the initiation of
the designation process, and must contain complete and accurate
information.
Sec. 598.205 What are the requirements for nomination?
(a) General. No urban area may be considered for designation in
accordance with subpart D of this part unless:
(1) The urban area is within the jurisdiction of a State or States
and local government(s) that have the authority to nominate the urban
area for designation and that provide written assurances satisfactory
to the Secretary that the strategic plan described in Sec. 598.215 will
be implemented, and these governments submit its nomination;
(2) All information furnished by the nominating State(s) and local
government(s) is determined by the Secretary to be reasonably accurate;
and
(3) The application for designation is complete, as described in
paragraph (b) of this section.
(b) Contents of application for designation. The application for
designation of an urban area as an Empowerment Zone must do the
following:
(1) Demonstrate that the nominated urban area satisfies the
eligibility criteria set forth in subpart B of this part;
(2) Include a strategic plan, as described in Sec. 598.215;
(3) Include the certifications described in Sec. 598.210;
(4) Include the 1990 census maps showing the following:
(i) The boundaries of the local government(s): and
(ii) The boundaries of the nominated area, including any
developable sites; and
(5) Include such other information as may be required by HUD in the
application or in the document announcing the initiation of the
designation process.
Sec. 598.210 What certifications must governments make?
Certifications must be submitted by the State(s) and local
government(s) requesting designation stating that:
(a) The nominated urban area satisfies the boundary tests of
Sec. 598.100(d);
(b) The nominated urban area is one of pervasive poverty,
unemployment and general distress, as prescribed by Sec. 598.110;
(c) The nominated urban area contains no portion of an area that is
included in an Empowerment Zone or any other area currently nominated
for designation as an Empowerment Zone (but it may include an
Enterprise Community);
(d) Each nominating governmental entity has the authority to:
(1) Nominate the urban area for designation as an Empowerment Zone;
(2) Make the commitments required of nominating entities by
Sec. 598.215(b); and
(3) Provide written assurances satisfactory to the Secretary that
the strategic plan will be implemented.
(e) Provide assurances that any Round II EZ/EC SSBG funds that may
be provided to the State for the area will not be used to supplant
Federal or non-Federal funds for services and activities that promote
the purposes of section 2007 of the Social Security Act;
[[Page 19157]]
(f) Provide that the nominating governments or corporations agree
to make available all information requested by HUD to aid in the
evaluation of progress in implementing the strategic plan and reporting
on the use of EZ/EC SSBG funds; and
(g) Provide assurances that the nominating State(s) agrees to
distribute any EZ/EC SSBG funds that may be awarded to it for use by a
designated Empowerment Zone for programs, services, and activities
included in the Empowerment Zone's strategic plan to the extent they
are consistent with section 2007(a) of the Social Security Act as well
as other applicable Federal, State, and local laws and regulations.
(h) Provide assurances that the nominating governments will
administer the Empowerment Zone program in a manner which affirmatively
furthers fair housing on the bases of race, color, national origin,
religion, sex, disability, and familial status (presence of children).
Sec. 598.215 What are the purpose and content of the strategic plan?
(a) Principles of strategic plan. The strategic plan, which
accompanies the application for designation, must be developed in
accordance with four key principles:
(1) Strategic Vision for Change, which identifies what the
community will become and a strategic map for revitalization. The
vision should build on assets and coordinate a response to community
needs in a comprehensive fashion. It also should set goals and
performance benchmarks for measuring progress and establish a framework
for evaluating and adjusting the revitalization plan;
(2) Community-Based Partnerships, involving the participation of
all segments of the community, including the political and governmental
leadership, community groups, local public health and social service
departments and nonprofit groups providing similar services,
environmental groups, local transportation planning entities, public
and private schools, religious organizations, the private and nonprofit
sectors, centers of learning, and other community institutions and
individual citizens;
(3) Economic Opportunity, including job creation within the
community and throughout the region, entrepreneurial initiatives, small
business expansion, job training and other important job readiness and
job support services, such as affordable child care and transportation
services, that may enable residents to be employed in jobs that offer
upward mobility;
(4) Sustainable Community Development, to advance the creation of
livable and vibrant communities through comprehensive approaches that
coordinate economic, physical, environmental, community and human
development. These approaches should preserve the environment and
historic landmarks, address ``brownfields'' clean-up and redevelopment,
explore the economic development advantages of energy efficiency and
use of renewable energy resources, and improve transportation,
education, public safety, and enhanced access to information and
technology among all segments of the community.
(b) Elements of strategic plan. The strategic plan must include the
following elements:
(1) Vision and values: The community's strategic vision for
change--a statement of what the community believes its future should
be, and a statement of the community's values that guided the creation
of the vision. Explain how the vision creates economic opportunity,
encourages self-sufficiency and promotes sustainable community
development.
(2) Community assessment: A comprehensive assessment of existing
conditions and trends within the community, which includes, as a
minimum:
(i) Assessment of problems and opportunities. A description and
assessment of the trends and conditions within the community and of the
surrounding region that form the basis of the strategic plan. The
assessment will include an analysis of the strengths and assets of the
community and region, as well as needs and problems, and should include
a description of poverty and general distress, barriers to economic
development and barriers to human development; and
(ii) Resource analysis. An assessment of the resources available to
the community, including potential resources outside the nominated
area, to address identified problems and needs, and maximize
opportunities that exist within the community. Such resources may
include financial, technical, human, cultural, educational, leadership,
volunteerism, communications, transportation and commerce centers, rail
and mass transit linkages, redevelopable land (including land, such as
ports, that can be designated as ``developable sites'' under the
additional 2,000 acres available), public space, infrastructure, and
other community and regional assets that form the basis for the
formulation and implementation of the strategic plan.
(3) Goals: A statement of a comprehensive and holistic set of goals
to be achieved through implementation of the strategic plan throughout
the 10-year implementation period, and a statement of the strategies
the community proposes to use to achieve the strategic plan goals, and
the identification of priority objectives.
(4) Implementation plan: A detailed plan that outlines how the
community will implement its strategic plan. The plan will include:
(i) Projects and programs. Provide, for the first two-year
implementation period, the following:
(A) A narrative outlining the specific projects and programs that
will be implemented that will result in the achievement of the
community's goals;
(B) Proposed timelines for implementing identified projects and
programs;
(C) Identification of lead implementers of identified projects and
programs, along with innovative partnerships that will be utilized to
insure maximum community participation and project sustainability;
(D) Proposed budgets for each identified project or program,
including projected costs, and sources of funding. Information on
sources of funding will include whether the funding is anticipated or
committed, and whether funding is conditioned upon the designation of
the community as an Empowerment Zone. Evidence of committed funding is
required, and may include letters of commitment, resolutions of
support, or similar documentation as outlined in paragraph (b)(6) of
this section. Funding may include cash and in-kind support from
Federal, State and local governments, non-profit organizations,
foundations, private businesses and other entities that will assist in
the implementation of the strategic plan. Budgets will also include
details about proposed uses of any Round II EZ/EC SSBG funds that may
become available from HHS, in accordance with Guidelines on Eligible
Uses of EZ/EC SSBG Funds.1
---------------------------------------------------------------------------
\1\ The Guidelines were published as an appendix to the interim
rule on Empowerment Zones; Second Round Designation, published in
the Federal Register on April 16, 1998.
---------------------------------------------------------------------------
(E) Baselines and proposed measurable outputs;
(ii) Tax incentive utilization plan. A plan for integrating the new
business tax incentives that are available to designated Empowerment
Zones into the nominated area's business development efforts. The Round
II tax
[[Page 19158]]
incentives include Tax-Exempt Bond Financing, Increased Section 179
Deduction, Welfare-to-Work Credit, Environmental Cleanup Cost Deduction
(i.e., ``Brownfields Tax Incentive''), and the Work Opportunity Tax
Credit. For a description of the tax incentives, see IRS Publication
954, ``Tax Incentives for Empowerment Zones and Other Distressed
Communities'';
(iii) Developable sites plan. If the nominated area is to include
developable sites, a plan to describe how the use of these parcels
would benefit residents and businesses of the nominated area;
(iv) Governance plan. A Governance Plan for the administration of
the strategic plan implementation process, which will include the
following:
(A) The name of the proposed lead implementing entity, and other
major administrative entities and their proposed or actual legal status
and authority to receive and administer Federal funds. The strategic
plan may be implemented by the local governments(s) and/or by the
State(s) nominating an urban area for designation and/or by
nongovernmental entities identified in the strategic plan;
(B) Evidence that the lead implementing entity and other key
entities participating in the strategic plan implementation have the
capacity to implement the plan;
(C) Proposed composition and date of establishment of any
governance boards, advisory boards, commissions or similar bodies that
will be established to manage the implementation of the strategic plan.
Specific information will be included regarding representation of
residents and businesses of the proposed Empowerment Zone area, and how
members of the boards or commissions will be selected;
(D) The relationship between any governance structure created and
local governments and other major community or regional organizations,
such as a metropolitan planning organization, operating in the same
geographic area;
(E) The methods by which stakeholders within the Zone will be kept
informed about Zone activities and progress in implementing the
strategic plan, including a description of plans for meetings open to
the public. The community should utilize modern communication
techniques and incorporate the Internet in order to enhance the
communication and access to information among all stakeholders and
participants; and
(F) The methods and procedures that will ensure continuing
community and grassroots participation in the implementation of the
strategic plan and in the governance of the Zone's activities.
(v) Community performance assessment. Methods the community will
use to assess its own performance in implementing the strategic plan,
and the process it will use to continually review the plan and amend as
appropriate.
(5) Strategic planning process documentation: A description of the
process the community used to select the boundaries of the proposed
Empowerment Zone, including the developable sites, and to prepare the
Strategic Plan. The documentation will:
(i) Explain how the community participated in choosing the area
that is being nominated and why the area was nominated;
(ii) Indicate and briefly describe the specific groups,
organizations, and individuals participating in the production of the
plan and describe the history of these groups in the community;
(iii) Explain how participants were selected and provide evidence
that the participants, taken as a whole, broadly represent the racial,
cultural, gender, and economic diversity of the community;
(iv) Describe the role of the participants in the creation,
development and future implementation of the plan; and
(v) Identify two or three topics addressed in the plan that caused
the most serious disagreements among participants and describe how
those disagreements were resolved; and
(6) Documentation of commitments: Letters of commitment,
resolutions committing public or private resources, and other
documentation that will demonstrate the level of public and private
resources, both inside and outside the nominated area, that will be
available to implement the Strategic Plan and increase economic
opportunity in the nominated Empowerment Zone.
(c) Prohibition against business relocation. The strategic plan may
not include any action to assist any establishment in relocating from
one area outside the nominated urban area to the nominated urban area,
except that assistance for the expansion of an existing business entity
through the establishment of a new branch, affiliate, or subsidiary is
permitted if:
(1) The establishment of the new branch, affiliate, or subsidiary
will not result in a decrease in employment in the area of original
location or in any other area where the existing business entity
conducts business operations; and
(2) There is no reason to believe that the new branch, affiliate,
or subsidiary is being established with the intention of closing down
the operations of the existing business entity in the area of its
original location or in any other area where the existing business
entity conducts business operations.
Subpart D--Designation Process
Sec. 598.300 Procedure for submitting a nomination.
(a) Establishment of submission procedures. HUD will establish a
time period and procedures for the submission of nominations for
designation as Empowerment Zones, including submission deadlines and
addresses, in a document announcing the initiation of the designation
process.
(b) Acceptance for processing. HUD will accept for processing those
nominations for designation as Empowerment Zones that HUD determines
have met the criteria required by this part.
(c) Publication of designations. Announcements of those nominated
urban areas designated as Empowerment Zones will be made by publication
in the Federal Register.
Sec. 598.305 Designation factors.
In choosing among nominated urban areas eligible for designation,
the Secretary will consider:
(a) Quality of strategic plan. The quality of the strategic plan
(see Sec. 598.215(b));
(b) Quality of commitments. The quality and breadth of the
commitments made in connection with the strategic plan (see
Sec. 598.215(b)); and
(c) Other factors. Other factors established by HUD, as specified
in a Federal Register notice.
Subpart E--Post-Designation Requirements
Sec. 598.400 HUD grants for planning activities.
(a) HUD will award planning grants up to $100,000 to each of the
Empowerment Zones designated in accordance with this part.
(b) Eligible recipients for these grants are the lead unit of
general local government that received designation under this part, or
its designee. These recipients may subgrant all or part of the planning
grant to qualified subgrantees, such as community organizations,
agencies of local government, regional planning authorities, or
planning consultants.
[[Page 19159]]
(c) Eligible planning activities include: hiring and development of
staff, consulting services, publication of materials, community
outreach and participation, governing board training, and similar
activities that are intended to:
(1) Expand the planning capacity of the designee local government,
the governing board, and/or participating entities, such as community
organizations;
(2) Help the designee plan the implementation of the strategic
plan; and
(3) Help the designee to develop its performance measurement
process.
(d) The document announcing the initiation of the designation
process describes the procedures for award of these planning grants,
post-award reporting requirements with respect to the grants, and the
uniform requirements applicable to all Federal grants.
Sec. 598.405 Environmental review.
Where an empowerment zone's strategic plan or any revision thereof
proposes the use of EZ/EC SSBG funds for activities that are not
excluded from environmental review under 24 CFR 50.19(b), an
environmental review will be performed as required by applicable law.
Sec. 598.410 Public access to materials and proceedings.
After designation, an area designated an EZ must make available to
the public copies of the strategic plan and supporting documentation
and must conduct its meetings in accordance with applicable open
meetings statutes. HUD may make the strategic plan and supporting
documentation available to members of the public.
Sec. 598.415 Reporting.
(a) Empowerment Zones designated in accordance with this part must
submit periodic reports to HUD. These reports must identify the
community, local government and State actions that have been taken in
accordance with the strategic plan and provide notice of updates and
modifications to the strategic plan. In addition to these reports, such
other information relating to designated Empowerment Zones as HUD
requests from time to time, including information documenting
nondiscrimination in hiring and employment by businesses within the
designated Empowerment Zone, must be submitted promptly.
(b) The States must submit periodic reports to HUD, demonstrating
compliance with the certifications it is required to submit in
accordance with this part.
Sec. 598.420 Periodic progress determinations.
HUD will regularly evaluate the progress of implementation of the
strategic plan in each designated Empowerment Zone on the basis of
available information. HUD also may commission evaluations of the
Empowerment Zone program as a whole by an impartial third party, at
such intervals as HUD may establish.
Sec. 598.425 Validation of designation.
(a) On the basis of the periodic progress determinations described
in Sec. 598.420, and subject to the provisions relating to the
revocation of designation in Sec. 598.430, HUD will make findings on
the continuing eligibility for and the validity of the designation of
any Empowerment Zone.
(b) HUD may approve an Empowerment Zone's request for boundary
modification, subject to the requirements specified in subpart B of
this part.
Sec. 598.430 Revocation of designation.
(a) Basis for revocation. The Secretary may revoke the designation
of an urban area as an Empowerment Zone if the Secretary determines, on
the basis of the periodic progress determination described at
Sec. 598.420, that the State(s) or local government(s) in which the
urban area is located:
(1) Has modified the boundaries of the area without written
approval from HUD;
(2) Has failed to make progress in implementing the strategic plan;
or
(3) Has not complied substantially with the strategic plan.
(b) Letter of warning. Before revoking the designation of an urban
area and an Empowerment Zone, the Secretary will issue a letter of
warning to the nominating State(s) and local government(s), with a copy
to all affected Federal agencies of which the Secretary is aware;
(1) Advising that the Secretary has determined that the nominating
local government(s) and/or State(s) has:
(i) Modified the boundaries of the area without written approval
from HUD; or
(ii) Is not complying substantially with, or has failed to make
progress in implementing the strategic plan; and
(2) Requesting a reply from the nominating entities within 90 days
of the receipt of this letter of warning.
(c) Notice of revocation. To revoke the designation, the Secretary
must issue a final notice of revocation of the designation of the urban
area as an Empowerment Zone, after allowing 90 days from the date of
receipt of the letter of warning for response, and after making a
determination in accordance with paragraph (a) of this section.
(d) Notice to affected Federal agencies. HUD will notify all
affected Federal agencies of which it is aware, of its determination to
revoke any designation in accordance with this section.
(e) Effect of revocation. Upon revocation of an EZ's designation,
the designation and remaining benefits may be awarded to the next
highest ranked Round II applicant.
(f) Publication. The final notice of revocation of designation will
be published in the Federal Register, and the revocation will be
effective on the date of publication.
Subpart F--Special Rules
Sec. 598.500 Indian reservations.
(a) An area within an Indian reservation (as defined in section
168(j)(6) if the Internal Revenue Code, 26 U.S.C. 168(j)(6)) may be
included in an area nominated as an Empowerment Zone by State and local
governments. An area completely within an Indian reservation may be
nominated by the reservation governing body and, in that case, the area
is treated as if it also were nominated by a State and a local
government. Where two (or more) governing bodies have joint
jurisdiction over an Indian reservation, the nomination of a
reservation area must be a joint nomination.
(b) For purposes of paragraph (a) of this section, a reservation
governing body must be the governing body of an Indian entity
recognized and eligible to receive services from the Bureau of Indian
Affairs, United States Department of Interior.
Sec. 598.505 Governments.
If more than one State or local government seeks to nominate an
urban area under this part, any reference to or requirement of this
part applies to all such governments.
Sec. 598.510 Nominations by economic development corporations or the
District of Columbia.
Any urban area nominated by an Economic Development Corporation
chartered by the State in which it is located or by the District of
Columbia shall be treated as nominated by a State and local government.
Sec. 598.515 Alaska and Hawaii.
A nominated area in Alaska or Hawaii is deemed to satisfy the
criteria of distress, size, and poverty rate detailed
[[Page 19160]]
in Sec. 598.100(b), (c), (d), and (f), and Sec. 598.110 if, for each
census tract or block numbering area within the area, 20 percent or
more of the families have income that is 50 percent or less of the
statewide median family income (as determined under section 143 of the
Internal Revenue Code).
Dated: March 27, 1998.
Saul N. Ramirez, Jr.,
Assistant Secretary for Community Planning and Development.
Appendix--Guidelines on Eligible Uses of EZ/EC SSBG Funds
(1) Background
This appendix includes general guidance about allowed uses of
any Round II EZ/EC SSBG funds that may be made available for Round
II Empowerment Zones (EZs). It is based on the assumption that any
Round II EZ/EC SSBG funding will be subject to the same statutory
restrictions as the Round I EZ/EC SSBG grants. The U.S. Department
of Health and Human Services (HHS) will issue further guidance
regarding any Round II EZ/EC SSBG funds soon after it is authorized
to award the funds.
(2) Awards to States
(a) HHS will award Round II EZ/EC SSBG grants to each State that
nominated a designated Round II EZ. HHS will award the funds for
each Round II EZ to the State agency that typically receives Social
Services Block Grants, unless the EZ Lead Entity and its State
request HHS to award them to a different agency.
(b) The HHS Terms and Conditions of the Round II EZ/EC SSBG
grants will direct the recipient State agency to provide the funds
to the appropriate Round II EZ Lead Entity(ies) for activities
specified in the EZ's strategic plan and benchmarks/implementation
plan. It is expected that the EZs will revise their plans and
benchmarks from time to time.
(3) Allowed Uses of Round II EZ/EC SSBG Funds
(a) The Round II EZs may use Round II EZ/EC SSBG funds for a
wide variety of programs, services and activities directed at
revitalizing distressed communities and promoting economic
independence for residents. Allowed programs, services and
activities include, but are not limited to:
Community and economic development programs and efforts
to create employment opportunities;
Job training and job readiness projects;
Health programs such as public health education,
primary health care, emergency medical services, alcohol and
substance abuse prevention and treatment programs, and mental health
services;
Human development services such as child, youth and
family development programs, services for the elderly, and child
care services;
Education projects such as after-school activities,
adult learning classes, and school-to-work projects;
Transportation services;
Environmental clean up programs;
Policing and criminal justice projects such as
community policing efforts and youth gang prevention programs;
Housing programs;
Projects providing training and technical assistance to
the EZ Lead Entity, its board and committee members, and other
organizations; and
Projects to finance community-focused financial
institutions for enhancing the availability of credit such as loan
funds, revolving loan funds, and micro-enterprise loan funds as well
as other activities for easing financial barriers faced by social
services entities, housing organizations and other organizations
serving EZ residents.
(b) Round II EZs may use the Round II EZ/EC SSBG funds for
projects supported in part with other Federal, State, local or
private funds, and they may allocate a portion of the funds to the
State grantee agency for its administrative and grant oversight
costs. Round II EZs may not use the funds as the source of local
matching funds required for other Federal grants.
(c) Round II EZs must ensure that each proposed use of Round II
EZ/EC SSBG funds is: Directed at one or more of the EZ/EC SSBG
statutory goals; included in the strategic plan; structured to
benefit EZ residents; and in compliance with all applicable Federal,
State and local laws and regulations.
(d) The statutory goals for uses of EZ/EC SSBG funds are as
follows:
(1) Achieving and maintaining economic self-support for
residents, to help them develop and retain the ability to support
themselves and their families economically;
(2) Achieving and maintaining self-sufficiency for residents, to
enable them to become and remain able to care for themselves in
daily activities and in the long-term; and
(3) Preventing Neglect and Abuse and Preserving Families, to
protect children and adults, who are unable to protect themselves
from neglect, abuse or exploitation, and to preserve, rehabilitate
or reunite families living in the designated neighborhoods.
(e) All programs, services and activities financed in whole or
in part with Round II EZ/EC SSBG funds must be included in the
strategic plan and benchmarks/implementation plans. Each project
description must indicate the EZ/EC SSBG statutory goal it is
attempting to achieve and how it will benefit EZ residents.
(f) All programs, services and activities financed in whole or
in part with Round II EZ/EC SSBG funds must be structured to
primarily benefit EZ residents; the programs, services and
activities may also benefit nonresidents.
(g) To the extent consistent with the local strategic vision,
localities may use Round II EZ/EC SSBG funds to finance programs,
services and activities for addressing any of the following broad
statute-based ``program options.'' EZs that use the funds for any of
the program options will have more flexibility in uses of funds.
(See section (h) below). The EZs are not required to use the funds
for the program options, and may use Round II EZ/EC SSBG funds to
finance programs, services and activities addressing other issues.
The program options are as follows:
(1) To provide residential or nonresidential drug and alcohol
prevention and treatment programs that offer comprehensive services
for residents, particularly for pregnant women and mothers and their
children;
(2) To support: (A) Training and employment opportunities for
disadvantaged adults and youths in construction, rehabilitation, or
improvement of affordable housing, public infrastructure, and
community facilities; and
(B) Nonprofit organizations such as community and junior
colleges providing short-term training courses for disadvantaged
adults and youths about entrepreneurism and self-employment, and
other types of training that will promote individual self-
sufficiency and the interests of the community.
(3) To support projects designed to promote and protect the
interests of children and families outside of school hours,
including keeping schools open during evenings and weekends for
mentoring and study.
(4) To support:
(A) Services designed to promote community and economic
development and job support services such as skills training, job
counseling, transportation services, housing counseling, financial
management, and business counseling;
(B) Emergency and transitional housing and shelters for families
and individuals; or
(C) Programs that promote home ownership, education, and other
routes to economic independence for families and individuals.
(h) To the extent a program, service or activity in the
strategic plan and benchmark/implementation plan document is a
statutory program option listed in section (g) above, the EZ may use
the Round II EZ/EC SSBG funds to implement that activity including
to:
(1) Purchase or improve land or facilities;
(2) Make cash payments to individuals for subsistence or room
and board;
(3) Make wage payments to individuals as a social service;
(4) Make cash payments for medical care; and
(5) Provide social services to institutionalized persons.
(i) To the extent a program, service or activity in the
strategic plan and benchmark/implementation plan document is not a
statutory program option listed in section (g) above, the EZ may use
Round II EZ/EC SSBG funds for the following purposes as a component
of that activity only after receiving approval from the U.S.
Department of Health and Human Services :
(1) Purchase or improve land or facilities;
(2) Make cash payments to individuals for subsistence or room
and board;
(3) Make wage payments to individuals as a social service;
(4) Make cash payments for medical care; or
(5) Provide social services to institutionalized persons.
(j) To the extent a program, service or activity in the
strategic plan and benchmark/implementation plan document is not one
of
[[Page 19161]]
the program options listed in section (g) above, the plan must
include a statement explaining why the locality chose that project.
[FR Doc. 98-10130 Filed 4-14-98; 11:41 am]
BILLING CODE 4210-29-P
