[Federal Register Volume 60, Number 24 (Monday, February 6, 1995)]
[Rules and Regulations]
[Pages 6945-6957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2313]
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Rules and Regulations
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Federal Register / Vol. 60, No. 24 / Monday, February 6, 1995 / Rules
and Regulations
[[Page 6945]]
DEPARTMENT OF AGRICULTURE
Office of the Secretary
7 CFR Part 25
RIN 0503-AA09
Designation of Rural Empowerment Zones and Enterprise Communities
AGENCY: Office of the Secretary, USDA.
ACTION: Final rule.
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SUMMARY: This final rule implements that portion of Subchapter C, Part
I (Empowerment Zones, Enterprise Communities and Rural Development
Investment Areas) of Title XIII of the Omnibus Budget Reconciliation
Act of 1993 (Pub. L. 103-66, approved August 10, 1993) dealing with the
designation of rural Empowerment Zones and Enterprise Communities. This
rule authorizes the Secretary of Agriculture (USDA) to designate not
more than three (3) rural Empowerment Zones and not more than thirty
(30) rural Enterprise Communities based upon the effectiveness of the
strategic plan submitted by an applicant and nominated by a State or
States and local governments.
The purpose of this program is to empower rural communities and
their residents to create jobs and opportunities to build for tomorrow
as part of a Federal-State-local and private-sector partnership.
Businesses will be encouraged to invest and create jobs in distressed
areas, and comprehensive local strategic plans are to be adopted and
implemented, encouraging entrepreneurship, furthering local self-
development and assisting in the revitalization of these areas.
EFFECTIVE DATE: March 8, 1995.
FOR FURTHER INFORMATION CONTACT:
Sandi Brewster-Walker, Deputy Administrator, Rural Business and
Cooperative Development Service, Reporters Building, Room 701, 300 7th
Street, SW, Washington, DC 20024, telephone 1-800-645-4712, or by
sending an Internet Mail message to: ezecdir.rurdev.usda.gov.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
No new data collection or record keeping requiring Office of
Management and Budget (OMB) approval under the Paperwork Reduction Act
of 1980 are included in this final rule. The reporting and record
keeping burden associated with this rule is approved by the Office of
Management and Budget under OMB No. 2506-0148.
I. Background
The Empowerment Zones program confers upon rural distressed
American communities the opportunity to take effective action to create
jobs and opportunities. The program combines tax benefits with
substantial investment of Federal resources and enhanced coordination
among Federal agencies.
All communities which complete the nomination process will be
strengthened by it; gaining by taking stock of their assets and
problems, by creating a vision of a better future, and by structuring a
plan for achieving their vision. Local partnerships among community
residents, businesses, financial institutions, service providers,
neighborhood associations and State and local governments will be
formed or strengthened by going through the application process.
Communities will be afforded an opportunity to work with these partners
in the creation and implementation of a community-based strategic plan.
Communities that were not designated as Empowerment Zones or
Enterprise Communities are eligible for certain benefits. Under a
separate program directed by the Department of Housing and Urban
Development, Community Development Corporations (CDCs) nominated by the
locality, or the applicant for the Empowerment Zone or Enterprise
Community, will be considered eligible for designation to receive tax
preferred contributions from donors. HUD has committed to designating
eight rural CDCs for this program. Communities with innovative visions
for change will be considered for requested waivers of Federal program
regulations, flexible use of existing program funds, and cooperation in
meeting essential mandates, even if they did not receive a designation
by the Secretary as an Empowerment Zone or Enterprise Community.
Communities that are designated as Enterprise Communities receive a
number of benefits. Enterprise Communities are eligible for new Tax-
Exempt Facilities Bonds for certain private business activities. States
with designated Communities will receive Empowerment Zone/Enterprise
Community Social Service Block Grants (EZ/EC SSBG) in the amount of
approximately $3 million for each rural Enterprise Community to pass
through to each designated area for approved activities identified in
the strategic plans. Enterprise Communities receive special
consideration in competition for funding under numerous Federal
programs, including the new National Service and Community Policing
initiatives. The Federal Government will focus special attention on
working cooperatively with designated Enterprise Communities to
overcome regulatory impediments, to permit flexible use of existing
Federal funds, and to assist these Communities in meeting essential
mandates.
Communities that are designated as Empowerment Zones receive all of
the benefits provided to Enterprise Communities, in addition to other
benefits. States with designated rural Empowerment Zones will receive
Empowerment Zone/Enterprise Community Social Service Block Grants in
the amount of $40 million for each rural Empowerment Zone. Employer
Wage Credits for Empowerment Zone residents are provided to qualified
employers engaged in trade, business, or human service delivery in
designated Empowerment Zones. Businesses are afforded an increased
deduction under section 179 of the Internal Revenue Code for qualified
investments.
The rural part of the program will be administered by USDA as a
Federal-State-local-private partnership, with a minimum of red tape
associated with the application process. Applicants must demonstrate
the ability to design and implement an effective strategic plan for
real opportunities for growth and revitalization, that deal with local
problems in a comprehensive way, and must demonstrate the capacity or
the commitment to carry out these plans. Development of an effective
plan must [[Page 6946]] also involve the participation of the community
affected by the nomination of the rural area, and of the private
sector, acting in concert with the State or States and local
governments. The plan should be developed in accordance with four key
principles, which will also serve as the basis for the selection
criteria that will be used to evaluate the plan. These key principles
reflect the Secretary's intention that Empowerment Zone and Enterprise
Community designations should be based on potential for successful
economic and community revitalization as reflected in the strategic
planning process, participants in the plan, and the quality of the
plan. Poverty, unemployment, and other need factors are critical in
determining eligibility for Empowerment Zone or Enterprise Community
status, but play a less significant role in the selection process. The
four key principles are:
(1) Economic opportunity, including job creation within the
community and throughout the region, entrepreneurial initiatives, small
business expansion, and training for jobs that offer upward mobility;
(2) Sustainable community development, to advance the creation of
livable and vibrant communities through comprehensive approaches that
coordinate economic, physical, environmental, community and human
development;
(3) Community-based partnerships, involving participation of all
segments of the community, including the political and governmental
leadership, community groups, health and social service groups,
environmental groups, religious organizations, the private and non-
profit sectors, centers of learning, other community institutions, and
individual citizens; and
(4) 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 should also set goals and
performance benchmarks for measuring progress and establish a framework
for evaluating and adjusting the revitalization plan.
State and local governments and economic development corporations
that are state chartered may nominate distressed rural areas for
designation as Empowerment Zones (which will also permit their
consideration for designation as Enterprise Communities), or solely for
designation as Enterprise Communities.
Title XIII of the Omnibus Reconciliation Act of 1993 included
Empowerment Zones and Enterprise Communities as a new program.
II. Program Description
General
Pursuant to Title XIII of the Omnibus Reconciliation Act of 1993,
the Secretary of USDA may designate up to three rural Empowerment Zones
and up to thirty rural Enterprise Communities.
Eligibility
To be eligible for designation as a rural Empowerment Zone or
Enterprise Community an area must:
(1) Have a maximum population of 30,000;
(2) Be one of pervasive poverty, unemployment, and general
distress;
(3) Not exceed one thousand square miles in total land area;
(4) Demonstrate a poverty rate that is not less than:
(a) 20 percent in each census tract or census block numbering area
(BNA);
(b) 25 percent in 90 percent of the population census tracts and
BNAs within the nominated area;
(c) 35 percent for at least 50 percent of the population census
tracts and BNAs within the nominated area;
(5) Be located entirely within no more than three contiguous
States; if it is located in more than one State, the area must have one
continuous boundary; if located in only one State, the area may consist
of no more than three noncontiguous parcels;
(6) If the nominated area consists of noncontiguous parcels, each
must independently meet the three poverty requirements;
(7) Be located entirely within the jurisdiction of the unit or
units of general local government making the nomination;
(8) Not include any portion of a census-defined central business
district unless the poverty rate for each population census tract is at
least 35 percent for an Empowerment Zone and 30 percent for an
Enterprise Community; and
(9) Not include any portion of an Indian reservation.
Nomination Process
The law requires that areas be nominated by one or more local
governments and the State(s) in which a nominated rural area is
located. Nominations can be considered for designation only if:
(1) The area meets the eligibility requirements set forth in these
rules;
(2) The area is within the jurisdiction of the nominating local
government(s) and the State(s);
(3) The local government(s) and State(s) provide assurances that
the required strategic plan submitted by the applicant will be
implemented;
(4) All information furnished by the nominating local government(s)
and State(s) is determined by the Secretary of USDA to be reasonably
accurate;
(5) The local government(s) and State(s) certify that no portion of
a nominated rural area is already in an Empowerment Zone or Enterprise
Community or in an area otherwise nominated for designation; and
(6) The local government(s) and State(s) certify that they possess
the legal authority to make the nomination.
The nomination must be accompanied by an application for
designation including a strategic plan, which:
(1) Indicates and briefly describes the specific groups,
organization and individuals participating in the development of the
plan, and describes the history of these groups in the community;
(2) Explains how participants were selected and provides evidence
that the participants, taken as a whole, are broadly representative of
the racial, cultural and economic diversity of the community;
(3) Describes the role of the participants in the creation and
development of the plan and indicates how they will participate in its
implementation;
(4) Identifies two or three topics addressed in the plan that
caused the most serious disagreements among participants and describes
how those disagreements were resolved;
(5) Explains how the community participated in choosing the area to
be nominated and why the area was nominated;
(6) Provides evidence that key participants have the capacity or
how they will develop the capacity to implement the plan;
(7) Provides a brief explanation of the community's vision for
revitalizing the area;
(8) Explains how the vision stimulates economic opportunity,
encourages self-sufficiency and promotes sustainable community
development;
(9) Identifies key needs of the area and the barriers that restrict
the community from achieving its vision, including a description of
poverty and general distress, barriers to economic opportunity and
development and barriers to human development;
(10) Discusses how the vision is related to the assets and
capacities of the area and its surroundings; and
(11) Describes the ways in which the community's approaches to
economic [[Page 6947]] development, social/human services,
transportation, housing, sustainable community development, public
safety, drug abuse prevention, and educational and environmental
concerns will be addressed in a coordinated fashion.
The strategic plan must identify how government resources will be
used to support the plan. Specifically, the plan must indicate:
(1) How Social Service Block Grant (SSBG) funds for designated
Zones and Communities, tax benefits for designated Zones and
Communities, State and local resources, existing Federal resources
available to the locality and additional Federal resources believed
necessary to implement the strategic plan will be utilized within the
Empowerment Zone or Enterprise Community;
(2) The level of commitment necessary to ensure that these
resources will be available to the area upon designation; and
(3) The Federal resources being applied for or for which
applications are planned.
The plan must identify private resources committed to its
implementation, including:
(1) Private resources and support, including assistance from
businesses, non-profit organizations and foundations, that are
available to be leveraged with public resources; and
(2) Assurances that these resources will be made available to the
area upon designation.
The plan must address changes needed in Federal rules and
regulations necessary to implement the plan, including:
(1) Specific paperwork or other Federal program requirements that
need to be altered to permit effective implementation of the strategic
plan; and
(2) Specific regulatory and other impediments to implementing the
strategic plan for which waivers are requested, with appropriate
citations and an indication whether waivers can be accomplished
administratively or require statutory changes.
The plan must demonstrate how State and local governments will
reinvent themselves to help implement the plan, by:
(1) Identifying the changes that will be made in State and local
organizations, processes and procedures, including laws and ordinances,
to facilitate implementation of the plan; and
(2) Explaining how different agencies in State and local
governments will work together in new responsive ways to implement the
strategic plan.
The plan must provide details as to the manner in which the plan
will be implemented and indicate what benchmarks will be used to
measure progress, by:
(1) Identifying the specific tasks necessary to implement the plan;
(2) Describing the partnerships that will be established to carry
out the plan;
(3) Explaining how the strategic plan will be regularly revised to
reflect new information and opportunities; and
(4) Identifying the baselines, benchmarks and goals that will be
used in evaluating performance in implementing the plan.
III. Differences Between Final Rule and Interim Rule
This final rule makes appropriate corrections to the January 18,
1994 interim rule. As will be discussed in the following section of
this preamble, USDA received several good suggestions and
recommendations of matters that the rule should address or expand upon,
or terms that should be defined. These changes are largely directed at
the nomination process, the eligibility process, the contents of the
strategic plans, and evaluations of the strategic plans or policies
associated with the use of EZ/EC funds.
The technical changes made by this final rule are largely directed
to that section of the rule (Sec. 25.200(d)) which addresses the use of
EZ/EC SSBG funds and therefore are relevant even after the designation
process is complete. The following provides a list of editorial/
technical changes made to the interim rule by this final rule.
1. In Sec. 25.200 (Nominations by State and local governments),
USDA sets forth the procedures for nominations by State and local
governments of areas for designation as an Empowerment Zone and/or
Enterprise Community. Paragraph (d) of the section addresses the
elements of the strategic plan which must be developed as part of the
application for designation, and paragraph (d)(12) specifically
addresses how the Social Services Block Grant (SSBG) funds for
designated Empowerment Zones and Enterprise Communities will be
utilized. Several technical errors were made in paragraph (d)(12), and
these are as follows:
a. Paragraph (d)(12)(i)(A) discusses the commitment concerning the
use of EZ/EC SSBG funds. The rule provides for the commitment to be
made by the ``applicant as well as by the State government(s).'' In
this paragraph, USDA inadvertently omitted reference to the full range
of nominating entities that would have to make this commitment, and
only listed ``State governments.'' (Note that Sec. 25.501 provides for
nomination by States and local governments and Sec. 25.502 provides for
nominations by State-chartered economic development corporations.)
Accordingly, the final rule corrects this paragraph to include not only
State governments, but local governments and State-chartered economic
development corporations. The final rule also explains that the
``services or activities'' referenced in this paragraph are the
``services or activities which can be used to achieve or maintain the
goals set forth in paragraph (d)(12).''
b. Paragraph (d)(12)(ii) provides, in error, that Empowerment Zone
or Enterprise Community SSBG funds (EZ/EC SSBG funds) may be used to
achieve certain goals set forth in the paragraph by ``undertaking one
of the below specified options.'' The correct wording should provide
that States and local governments may undertake ``one or more'' of the
options set forth in the paragraph. One option available to States and
local governments for the use of EZ/EC SSBG funds was inadvertently
omitted from the interim rule. This option provides for the use of EZ/
EC SSBG funds to promote the economic independence of low-income
residents, such as capitalizing revolving or micro-enterprise loan
funds for their benefit.
c. In paragraph (d)(12)(ii), the interim rule provides that EZ/EC
SSBG funds ``may'' be used to maintain the goals set forth in paragraph
(d)(12). The rule should have stated that the EZ/EC SSBG funds ``must''
be used to maintain the goals set forth in paragraph (d)(12), and that
the goals ``may be achieved'' by undertaking the program options listed
in (d)(12)(ii).
d. The interim rule inadvertently omitted the paragraph that
provides guidance concerning how designated Empowerment Zones and
Enterprise Communities may meet the goals specified in paragraph
(d)(12). This paragraph does not dictate how the goals may be met, but
offers guidance as to how they may be met. This rule makes this
correction by adding a new paragraph (iii), and by redesignating the
succeeding paragraphs accordingly.
e. In paragraph (d)(12)(v) of the interim rule, the Department
provided that the State must obligate EZ/EC SSBG funds in accordance
with the strategic plan within two years from the ``date of designation
of the Empowerment Zone or Enterprise Community.'' This time frame is
incorrect. This paragraph should have provided that the State must
obligate funds two years from the date ``the funds are paid to the
State.'' This paragraph is also corrected by this
[[Page 6948]] document to add that ``funds not obligated must be
remitted to the Secretary of Health and Human Services.'' This sentence
was inadvertently dropped in the rule text.
f. Two requirements pertaining to the strategic plan were
inadvertently omitted from paragraph (d)(12). One requirement provides
that the strategic plan must indicate how the EZ/EC SSBG funds will be
invested and used for the period of designation, and the second
provides that the strategic plan must provide for periodic reporting of
information by the relevant State. These requirements are now set forth
in (d)(12) (vii) and (viii).
2. In Sec. 25.401 (Periodic Performance Reviews), USDA sets forth
guidelines for evaluation of progress in the implementation of
strategic plans. This section is expanded to include responsibilities
of implementation entities.
3. Editorial corrections are as follows:
a. In Sec. 25.300(b)(1) the second sentence is deleted; ``and;'' is
added.
b. In Sec. 25.302 the numeral `3' is replaced by ``three''.
c. In Sec. 25.401 ``important'' is replaced by ``impartial''.
d. In Sec. 25.504 (b) the sentence ``On a case basis, the Secretary
will grant requests for waiver from the above definition of ``rural''
upon a showing of good cause'', ``above'' is deleted and ``stated in
paragraph (2) of this section'', is added following the word ``rural''.
In the next sentence, ``the above subsection'' is deleted and ``the
definition in paragraph (a) of this section'' is added following the
word ``satisfy''.
The designation of Rural Development Administration has been
changed to Rural Business and Cooperative Development Service.
IV. The Public Comments
General Comments
The January 18, 1994 interim rule provided for a 30-day public
comment period. The public comment period expired on February 17, 1994.
Comments, however, were accepted through March 1, 1994. By this date, a
total of 36 comments had been received. The commenters consisted of the
Federal agencies, labor unions, (insert ``private citizens'') State and
local jurisdictions, state legislators and non-profit organizations.
USDA received several good suggestions and recommendations from
commenters that will be adopted or considered in any future rulemaking.
Other suggestions, although of equal merit, could not be adopted given
the current statutory framework of the EZ/EC Program. Other requests
for changes or clarification were determined to be adequately addressed
by the January 18, 1994 interim rule. The following provides a summary
of the significant issues raised by public commenters and USDA's
response to these issues.
Technical Corrections
Comment: Five commenters highlighted inadvertent omissions in the
text of the interim rule regarding the use of EZ/EC SSBG funds.
Response: Appropriate corrections were adopted in this final rule.
Business Non-Relocation
Comment: The AFL-CIO makes the point that public funds should not
be used to encourage plant relocations from one location to another and
that the Federal government should not be a participant in state and
local programs which only shift employment from one location to
another. The letter called for strengthening regulations by placing the
responsibility on the communities to show that relocations did not
occur and that jobs created in the community are not at the expense of
another location. The following recommendations were made regarding
enforcement of the non-relocation provision: (1) Require firms to
certify that they did not relocate from another area; (2) require
public assistance to firms be paid back if plant relocations occur; (3)
require employers to list annual employment at plant locations so that
relocations could be monitored. Commenters also recommend revocation of
EZ/EC designation if job relocations occur in the approved zones. The
final comment sought the addition of labor unions to the list among
segments of the community that could form community-based partnerships.
Response: The issue of non-relocation of business received
consideration early in the developmental stages of the EZ/EC program.
The regulations include a prohibition against business relocation by
prohibiting any activity in the strategic plan to assist business
relocation to the nominated area from an area outside the nominated
area. According to the Empowerment Zone statute (26 U.S.C. 1391
(f)(2)(F)), expansion of an existing business entity is permitted if
(1) it will not result in a decrease in employment in any area where
the company currently conducts business; and (2) there is no reason to
believe that a new branch is being established with the intention of
closing down the existing business in another area. The issue of non-
relocation can be dealt with in the monitoring and evaluation process.
Comment: One commenter requested clarification on the issue of
relocation of foreign plants/entities to Empowerment Zones or
Enterprise Communities.
Response: The statute does not distinguish between foreign and
domestic businesses in the prohibition against business relocation.
Comments on Census Data Calculations
Comment: One commenter recommended that where calculations are made
to determine eligibility, numbers should be rounded off and in a
direction to favor the applicant. This recommendation would allow
readjustment of the poverty threshold in the case of less than 10
census tracts and rounding off up to 5 percentage points.
Response: USDA disagrees with the commenter. Section 25.103 b(4)
states: ``In making the calculations required by this section, the
Secretary shall round all fractional percentages of one-half percentage
point or more up to the next highest whole percentage point figure''.
There is no authority for special mathematical rounding of the number
of census tracts when there are less than 10 tracts (BNAs) identified.
Comments on Census Tracts and Census Tract Definitions
Comment: Nineteen commenters requested the use of census block data
in lieu of census tract data and to broaden the definition of
population census tracts.
Response: USDA is unable to adopt the suggestions of the
commenters. The statute requires the use of the most recent decennial
census data available. The regulations which govern designation of
Empowerment Zones and Enterprise Communities (part 25, subpart A,
Sec. 25.101(a)) indicate that the data employed to determine
eligibility is based on the 1990 Census and from information published
by the Bureau of the Census and the Bureau of Labor Statistics. Census
tracts or block numbering areas are used to satisfy these requirements.
The census data is reported in terms of census tracts or block number
areas and not for other graphical units.
Comment: Three commenters indicated that the statutory requirement
to limit the area of nominated areas to 20 square miles for urban areas
and 1000 square miles for rural areas imposed undue difficulties for
many areas of the West and Southwest.
Response: USDA is unable to adopt the suggestions of the
commenters. The statute requires the size limitation and
[[Page 6949]] does not permit exclusions as suggested by the
commenters.
Comments on the Definition of Rural Area
Comment: Several comments involved the definition of a `rural
area'. The current definition of rural in the regulation excludes
communities where predominantly rural populations reside within
Metropolitan Areas (MA) or where more than 50 percent of the population
resides within a designated Metropolitan Area. Metropolitan Area does
not have an exact definition in the Bureau of the Census Dictionary of
Geographical Terms. Tracts within MA's are restricted from applying
unless they are contiguous to and part of a multicounty application.
Response: No rule changes are required. Statute Section
1393(a)(2)(B) and Sec. 25.504(b) of part 25 give the Secretary
sufficient discretionary power to define a rural area.
General Comments on the Rule
Comment: Apparent conflict between the EZ/EC rules and the Cash
Management Act of 1990. Concern was expressed that while, under the
Cash Management Act, States drawing Federal monies must make
expenditures within three days of receipt or pay interest, EZ/EC SSBG
funds are transferred to the states to be passed on to the implementing
entities and that the State has two years to obligate these funds to
the implementing entities.
Response: Department of Health and Human Services has advised that
the Cash Management Act does not apply to SSBG funds.
Comment: The Governor of Texas and the Texas Department of Commerce
requested that the application deadline be extended to six months from
the issue date of the Interim Rule to allow time to prepare
comprehensive applications.
Response: USDA disagrees with the commenters. Extension of the
deadline would penalize States that have allocated funds and technical
assistance in order to meet the June 30, 1994 deadline.
Comment: One commenter stated that the interim rule as a whole did
not adequately address the needs of extremely low-income persons.
Response: USDA disagrees with the commenter. The eligibility for
designation as an Empowerment Zone or Enterprise Community requires a
significant level of poverty, and the strategic plan is required to
include various descriptions of how the nominated area would address
the need of low-income persons, for example, through the creation of
economic opportunities, home ownership, education or other route to
economic independence for low-income families, youth and other
individuals. (See Sec. 25.200.)
Comment: One commenter stated that the definition of ``State-
chartered economic development corporation'' was not very clear.
Response: The statute defined this term, and the rule simply
incorporated the statutory definition.
Comment: Three commenters stated that the strategic plan principle
concerning employment should emphasize job creation for low-income
persons. Another commenter stated that the strategic plan principle
concerning employment should emphasize job creation for minority
businesses.
Response: USDA agrees with the commenters and such emphasis will be
considered in future rulemaking that may be necessary for any
additional rounds of designations that may be authorized.
Comment: One commenter raised the concern of possible channeling of
EDA assistance from Economic Development Districts, which may not
qualify the EZ/EC designation, to designated EZ/EC areas.
Response: The intent of the legislation is to provide assistance to
distressed communities by encouraging creation of jobs and
opportunities for local development as part of a Federal-State-local
and private-sector partnership. Although this effort addresses `local'
issues within each community, the context of revitalization applies
nationally. Therefore diversion of programmed assistance from one
distressed area to the designated EZ/EC communities is not consistent
with the purpose of the EZ/EC program.
Comment: One commenter stated that labor union should be added to
the list among the segments of the community that could form Community-
based Partnerships.
Response: While labor unions were not named specifically, they are
included under the regulation. Subpart C (Nomination Procedure)
Sec. 25.200 Paragraph (c)(3) states that ``Community based
partnerships, involve the participation of all segments of the
community groups, health and social service groups, environmental
groups, religious organizations, the private and non-profit sectors,
centers of learning, and other community institutions and individual
citizens.'' The organizations listed are examples of the kinds of
partnerships that could be formed by communities.
Comment: One commenter addressed issues related to the use of
certain statistics in the determination of applicant eligibility for
the EZ/EC program.
Response: These suggestions will be considered in any future
rulemaking needed for a new round of designation.
Comment: Two commenters stated that the rule should allow
designated communities to use funds and other resources identified in
the strategic plans for properties directly adjacent to the boundaries
of the designated census tracts.
Response: The regulation is clear on the use of EZ/EC SSBG funds
for approved EZ/EC activities identified in the community strategic
plans. A issue of this type can be addressed during the approval
process.
V. Other Matters
National Environmental Policy Act
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' It is the determination of USDA
that this action does not constitute a major Federal action
significantly affecting the quality of the human environment and in
accordance the National Environmental Policy Act of 1969, Pub. L. 91-
190, an Environmental Impact Statement is not required.
Executive Order 12866, Regulatory Planning and Review
This rule was reviewed and approved by the Office of Management and
Budget as a significant rule, as that term is defined in Executive
Order 12866, which was signed by the President on September 30, 1993.
The economic analysis required by Executive Order 12866 will be
retained in the public file with the Department's Rule Docket Clerk.
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 the rule will not have a significant
economic impact on a substantial number of small entities. The Act is
intended to encourage Federal agencies to utilize innovative
administrative procedures in dealing with individuals, small
businesses, small organizations, and small governmental bodies that
would otherwise be unnecessarily adversely affected by Federal
regulations. To the extent that this rule affects those entities, its
purpose is to reduce any disproportionate burden by providing for the
waiver of regulations [[Page 6950]] and by affording other incentives
directed toward a positive economic impact. Therefore, no regulatory
flexibility analysis under the Act is necessary.
Executive Order 12611, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12611, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
States or their political subdivisions, or the relationship between the
Federal Government and the States, or on the distribution of power and
responsibilities among the various levels of government. The purpose of
this rule is to provide a cooperative atmosphere between the Federal
Government and the States and local governments, and to reduce any
regulatory burden imposed by the Federal Government that impedes the
ability of State and local governments to solve pressing economic,
social, and physical problems in their communities.
List of Subjects in 7 CFR Part 25
Community development, Economic development, Empowerment zones,
Enterprise communities, Housing, Indians, Intergovernmental relations,
Reporting and recordkeeping requirements.
In accordance with the reasons set out in the preamble, title 7,
subtitle A, part 25 of the Code of Federal Regulations is revised to
read as follows:
1. Title 7, subtitle A is amended by revising part 25 to read as
follows:
PART 25--RURAL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES
Sec.
Subpart A--General Provisions
25.1 Applicability and scope.
25.2 Objective and purpose.
25.3 Definitions.
25.4 Secretarial review and designation.
25.5 Waivers.
Subpart B--Area Requirements
25.100 Eligibility requirements and data usage.
25.101 Data utilized for eligibility determinations.
25.102 Tests of pervasive poverty, unemployment and general
distress.
25.103 Poverty rate.
Subpart C--Nomination Procedure
25.200 Nominations by State and local governments.
25.201 Evaluating the strategic plan.
25.202 Submission of nominations for designation.
Subpart D--Designation Process
25.300 USDA action and review of nominations for designation.
25.301 Selection factors for designation of nominated rural areas.
25.302 Number of Rural Empowerment Zones and Enterprise
Communities.
Subpart E--Post-Designation Requirements
25.400 Reporting.
25.401 Periodic performance reviews.
25.402 Validation of designation.
25.403 Revocation of designation.
Subpart F--Special Rules
25.500 Indian reservations.
25.501 Governments.
25.502 Nominations by economic development corporations.
25.503 Use of census data.
25.504 Rural areas.
Authority: 5 U.S.C. 301; 26 U.S.C. 1391 et seq.
Subpart A--General Provisions
Sec. 25.1 Applicability and scope.
(a) Applicability. This part establishes policies and procedures
applicable to rural Empowerment Zones and Enterprise Communities,
authorized under the Omnibus Budget Reconciliation Act of 1993, title
XIII, subchapter C, part I (Pub. L. 103-66, approved August 10, 1993),
which amended the Internal Revenue Code by adding a new subchapter U,
relating to the designation and treatment of Empowerment Zones and
Enterprise Communities.
(b) Scope. This part contains provisions relating to area
requirements, the nomination process for rural Empowerment Zones and
rural Enterprise Communities, and the designation of these Zones and
Communities by USDA. Provisions dealing with the nominations and
designation of urban Empowerment Zones and Enterprise Communities are
promulgated by the United States Department of Housing and Urban
Development (HUD). USDA and HUD will consult in all cases in which
nominated areas possess both rural and urban characteristics and will
utilize a flexible approach in determining the appropriate designation.
Sec. 25.2 Objective and purpose.
The purpose of this part is to provide for the establishment of
Empowerment Zones and Enterprise Communities in rural areas, to
stimulate the creation of new jobs, particularly for the disadvantaged
and long-term unemployed, and to promote revitalization of economically
distressed areas, primarily by providing or encouraging:
(a) Coordination of economic, human, community, and physical
development plans and related activities at the local level;
(b) Local partnerships fully involving affected communities and
local institutions and organizations in developing and implementing a
strategic plan for any nominated rural Empowerment Zone or Enterprise
Community;
(c) Tax incentives and credits; and
(d) Empowerment Zone/Enterprise Community Social Service Block
Grant (EZ/EC SSBG) funds.
Sec. 25.3 Definitions.
As used in this part--
Applicant means the lead entity that has prepared and will
implement the community's strategic plan, pursuant to the provisions of
Sec. 25.200(c) of this part, for comprehensive economic, human,
community, and physical development within the area; such an entity may
include, but is not limited to, state governments, local governments,
regional planning agencies, non-profit organizations, community-based
organizations, or a partnership of community members and other
entities.
Designation means the process by which the Secretary designates
rural areas as Empowerment Zones or Enterprise Communities eligible for
tax incentives and credits established by subchapter U of the Internal
Revenue Code (26 U.S.C. 1391 et seq.), EZ/EC SSBGS as established by
the Department of Health and Human Services (HHS), and for
consideration for programs of Federal assistance.
Empowerment Zone means a rural area so designated by the Secretary
pursuant to this part. Up to three such zones may be designated.
Enterprise Community means a rural area so designated by the
Secretary pursuant to this part. Up to 30 such communities may be
designated.
EZ/EC SSBG Funds means grants made by the Secretary of HHS to
States containing Empowerment Zones and Enterprise Communities whose
strategic plans are qualified plans as defined in section 13761 of the
Omnibus Budget Reconciliation Act of 1993.
Indian reservation means a reservation as defined in section 3(d)
of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)) or section
4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C. 1903(10)).
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 [[Page 6951]] subdivisions which is
recognized by the Secretary.
Nominated area means an area which is nominated by one or more
local governments and the State or States in which it is located for
designation pursuant to this part.
Population census tract means a census tract, or, if census tracts
are not defined for the area, a block numbering area (BNA).
Poverty means the number of persons listed as being in poverty in
the 1990 Census.
Revocation of designation means the process by which the Secretary
may revoke the designation of an area as an Empowerment Zone or
Enterprise Community pursuant to Sec. 25.403 of this part.
Rural area means any area defined pursuant to Sec. 25.504 of this
part.
Secretary means the Secretary of Agriculture.
State means any State in the United States.
Strategic plan means a strategy developed by the applicant, with
the participation and commitment of local governments, State
government(s), private sector, community members and others, pursuant
to the provisions of Sec. 25.200(c) of this part. The plan must include
written commitments from the local governments and State(s) that they
will adhere to the strategy.
USDA means the U.S. Department of Agriculture.
Sec. 25.4 Secretarial review and designation.
(a) Designation. The Secretary will review applications for the
designation of nominated rural areas to determine the effectiveness of
the strategic plans submitted by applicants in accordance with
Sec. 25.200 of this part. The Secretary will designate up to three
rural Empowerment Zones and up to 30 rural Enterprise Communities.
(b) Period of designation. The designation of a rural area as an
Empowerment Zone or Enterprise Community shall remain in full effect
during the period beginning on the date of designation and ending on
the earliest of:
(1) The close of the tenth calendar year beginning or after the
date of designation;
(2) The termination date designated by the State and local
governments in their application for nomination; or
(3) The date the Secretary revokes or modifies the designation, in
accordance with Sec. 25.402 or Sec. 25.403 of this part.
Sec. 25.5 Waivers.
The Secretary may waive any provision of this part in any
particular case subject only to statutory limitations, for good cause,
where it is determined that application of the requirement would
produce a result adverse to the purpose and objectives of this part.
Subpart B--Area Requirements
Sec. 25.100 Eligibility requirements and data usage.
Eligibility Criteria. A nominated rural area may be eligible for
designation pursuant to this part only if the area:
(a) Has a maximum population of 30,000;
(b) Is one of pervasive poverty, unemployment, and general
distress, as described in Sec. 25.102 of this part;
(c) Does not exceed one thousand square miles in total land area;
(d) Be located entirely within no more than three contiguous
States; if it is located in more than one State, the area must have one
continuous boundary; if located in only one State, the area may consist
of up to three noncontiguous parcels;
(e) Is located entirely within the jurisdiction of the unit or
units of general local government making the nomination;
(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
individual poverty rate of each population census tract in the district
is not less than 35 percent for an Empowerment Zone and 30 percent for
an Enterprise Community; and
(g) Does not include any area within an Indian reservation.
Sec. 25.101 Data utilized for eligibility determinations.
(a) Source of data. The data to be employed in determining
eligibility pursuant to the criteria described in Sec. 25.102 of this
part shall be based on the 1990 Census, and from information published
by the Bureau of Census and the Bureau of Labor Statistics. The data
shall be comparable in point or period of time and methodology
employed.
(b) Use of statistics on boundaries. The boundary of a rural area
nominated for designation as an Empowerment Zone or Enterprise
Community must coincide with the boundaries of census tracts, or, where
tracts are not defined, with block numbering areas.
Sec. 25.102 Tests of pervasive poverty, unemployment and general
distress.
(a) Pervasive poverty. Conditions of poverty must be reasonably
distributed throughout the entire nominated area. The degree of poverty
shall be demonstrated by citing available statistics on low-income
population and levels of public assistance. Poverty is demonstrated by
poverty data from the 1990 census.
(b) Unemployment. The degree of unemployment shall be demonstrated
by the provision of information on the number of persons unemployed,
underemployed (those with only a seasonal or part-time job) or
discouraged workers (those capable of working but who have dropped out
of the labor market--hence are not counted as unemployed), increase in
unemployment rate, job loss, plant or military base closing, or other
relevant unemployment indicators having a direct effect on the
nominated area.
(c) General distress. General distress shall be evidenced by
describing adverse conditions within the nominated area other than
those of pervasive poverty and unemployment. Below average or decline
in per capita income, earnings per worker, per capita property tax
base, average years of school completed; outmitigration and population
decline from 1980-1990, and a high or rising incidence of crime,
narcotics use, abandoned housing, deteriorated infrastructure, school
dropouts and illiteracy are examples of appropriate indicators of
general distress. The data and methods used to produce such indicators
that are used to describe general distress must all be stated.
Sec. 25.103 Poverty rate.
(a) General. Eligibility of an area on the basis of poverty shall
be established in accordance with the following criteria:
(1) In each census tract within a nominated area, the poverty rate
shall be not less than 20 percent; and
(2) For at least 90 percent of the population census tracts within
the nominated area, the poverty rate shall not be less than 25 percent;
and
(3) For at least 50 percent of the population census tracts within
the nominated area, the poverty rate shall be not less than 35 percent.
(b) Special rules relating to the determination of poverty rate.--
(1) Census tracts with no population. Census tracts with no population
shall be treated as having a poverty rate that meets the standards of
paragraphs (a)(1) and (a)(2) of this section, but shall be treated as
having a zero poverty rate for purposes of applying paragraph (a)(3) of
this section.
(2) Census tracts with populations of less than 2,000. A population
census tract with a population of less than 2,000 shall be treated as
having a poverty rate that meets the requirements [[Page 6952]] of
paragraphs (a)(1) and (a)(2) of this section if more than 75 percent of
the tract is zone for commercial or industrial use.
(3) Adjustment of poverty rates for Enterprise Communities. For
Enterprise Communities only, the Secretary has the discretion to reduce
by 5 percentage points one of the following thresholds for not more
than 10 percent of the census tracts, or, if fewer, five population
census tracts in the nominated area:
(i) The 20 percent threshold in paragraph (a)(1) of this section;
(ii) The 25 percent threshold in paragraph (a)(2) of this section;
and
(iii) The 35 percent threshold in paragraph (a)(3) of this section;
Provided that, the Secretary may in the alternative reduce the 35
percent threshold by 10 percentage points for three population census
tracts.
(4) Rounding up of percentages. In making the calculations required
by this section, the Secretary shall round all fractional percentages
of one-half percentage point or more up to the next highest whole
percentage point figure.
(c) Noncontiguous areas. There can be no more than 3 noncontiguous
areas if the nominated area is located within one state; noncontiguous
areas are not allowed in the multistate area. Each such parcel must
separately meet the poverty criteria set forth in this section.
(d) Areas not within census tracts. In the case of an area that
does not have population census tracts, the block numbering area shall
be used for purposes of determining poverty rates.
Subpart C--Nomination Procedure
Sec. 25.200 Nominations by State and local governments.
(a) Nomination criteria. One or more local governments and the
State or States in which an area is located must nominate such area for
designation as an Empowerment Zone or Enterprise Community, if:
(1) The rural area meets the requirements for eligibility described
in Sec. 25.100 and Sec. 25.103 of this part;
(2) The rural area is entirely within the jurisdiction of the
nominating State or States and local government(s); such governments
must have the authority to nominate the area for designation and
provide written assurances satisfactory to the Secretary that the
strategic plan described in paragraph (c) of this section will be
implemented;
(3) All information furnished by the nominating State(s) and local
government(s) is determined by the Secretary to be reasonably accurate;
and
(4) The State(s) and local government(s) certify that no portion of
the area nominated is already included in an Empowerment Zone or
Enterprise Community under this Act or in an area otherwise nominated
to be designated under this section.
(b) Nomination for designation. No rural area may be considered for
designation pursuant to subpart D of this part unless the application
for designation:
(1) Demonstrates that the nominated rural area satisfies the
eligibility criteria set forth at Sec. 25.100 of this part;
(2) Includes a strategic plan, as described in paragraph (c) of
this section; and
(3) Includes such other information as may be required by USDA in a
Notice Inviting Applications, to be published in the Federal Register.
(c) Strategic plan. Each application for designation must be
accompanied by a strategic plan, which must be developed in accordance
with four key principles that will be utilized to evaluate the plan.
These key principles are:
(1) Economic opportunity, including job creation within the
community and throughout the region, entrepreneurial initiatives, small
business expansion, and training for jobs that offer upward mobility;
(2) Sustainable community development, to advance the creation of
livable and vibrant communities through comprehensive approaches that
coordinate economic, physical, environmental, community and human
development;
(3) Community-based partnerships, involving the participation of
all segments of the community, including the political and governmental
leadership, community groups, health and social service groups,
environmental groups, religious organizations, the private and non-
profit sectors, centers of learning, and other community institutions
and individual citizens; and
(4) 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 should also set goals and
performance benchmarks for measuring progress and establish a framework
for evaluating and adjusting the revitalization plan.
(d) Elements of strategic plan. The strategic plan should:
(1) Indicate and briefly describe the specific groups,
organizations, and individuals participating in its production, and
describe the history of these groups in the community;
(2) Explain how participants were selected and provide evidence
that the participants, taken as a whole, are broadly representative of
the entire community;
(3) Describe the role of the participants in the creation and
development of the plan and indicate how they will participate in its
implementation;
(4) Identify two or three topics addressed in the plan that caused
the most serious disagreements among participants and describe how
those disagreements were resolved;
(5) Explain how the community participated in choosing the area to
be nominated and why the area was nominated;
(6) Provide evidence that key participants have the capacity to
implement the plan;
(7) Provide a brief explanation of the community's vision for
revitalizing the area;
(8) Explain how the vision creates economic opportunity, encourages
self-sufficiency and promotes community development;
(9) Identify key community goals and the barriers that restrict the
community from achieving such goals, including a description of poverty
and general distress, barriers to economic opportunity and development,
and barriers to human development;
(10) Discuss how the vision is related to the assets and needs of
the area as well as to the surrounding community;
(11) Describe the ways in which the community's approaches to
economic development, social/human services, transportation, housing,
community development, public safety, drug abuse prevention and
educational and environmental concerns will be addressed in a
coordinated fashion; and explain how these linkages support the
community's vision;
(12) Indicate how all EZ/EC SSBG funds for the designated
Empowerment Zone or Enterprise Community will be utilized.
(i) In doing so, the strategic plan shall provide the following
information:
(A) A commitment by the applicant, as well as by the nominating
state-chartered economic development corporation or State
government(s), and local government(s), that the EZ/EC SSBG funds will
be used to supplement, not replace, other Federal or non-Federal funds
available for financing services or activities which can be used to
achieve or maintain the goals outlined in paragraph (d)(12)(ii) of this
section;
(B) a description of the entities that will administer the EZ/EC
SSBG funds; [[Page 6953]]
(C) a certification by such entities that they will provide
periodic reports on the use of the EZ/EC SSBG funds; and
(D) a detailed description of all the activities to be financed
with the EZ/EC SSBG funds and how all such funds will be allocated.
(ii) The EZ/EC SSBG funds must be used to achieve or maintain the
following goals through undertaking one of the below specified program
options. The goals may be achieved by undertaking one or more of the
following program options:
(A) The goal of economic self-support to prevent, reduce or
eliminate dependencies, through one of the following program options:
(1) Funding community and economic development services focused on
disadvantaged adults and youths, including skills training,
transportation services and job, housing, business, and financial
management counseling;
(2) Supporting programs that promote home ownership, education or
other routes to economic independence for low-income families, youths,
and other individuals;
(3) Assisting in the provision of emergency and transitional
shelter for disadvantaged families, youths, and other individuals;
(B) The goal of self-sufficiency, including reduction or prevention
of dependencies, through one of the following program options:
(1) Providing assistance to non-profit organizations and/or
community and junior colleges that provide disadvantaged individuals
with opportunities for short-term training courses in entrepreneurial,
self employment, and other skills that promote individual self-
sufficiency, and the interest of the community;
(2) Funding programs to provide training and employment for
disadvantaged adults and youths in construction, rehabilitation or
improvement of affordable housing, public infrastructure and community
facilities; and,
(C) The goal of prevention or amelioration of the neglect, abuse,
or exploitation of children and/or adults unable to protect themselves;
and, where appropriate, the goal of preservation or rehabilitation of
families, through one or more of the following program options:
(1) Providing support for residential or non-residential drug and
alcohol prevention and treatment programs that offer comprehensive
services for pregnant women, and mothers, and their children;
(2) Establishing programs that provide activities after school
hours, including keeping school buildings open during evenings and
weekends for mentor and study programs.
(iii) Designated Empowerment Zones and Enterprise Communities may
work to achieve or maintain the goals outlined in paragraphs
(d)(12)(ii)(A) and (B) of this section by using EZ/EC SSBG funds to
capitalize revolving or micro-enterprise loan funds which benefit low-
income residents of the designated Empowerment Zones or Enterprise
Communities. Similarly, grantees may work to achieve or maintain the
goals outlined in paragraphs (d)(12)(ii)(A) and (B) of this section by
using the EZ/EC SSBG funds to create jobs and promote economic
opportunity for low-income families and individuals through matching
grants, loans, or investments in community development financial
institutions.
(iv) If the applicant intends to use the EZ/EC SSBG funds for
program options not included in paragraph (d)(12) of this section, the
strategic plan must indicate how the proposed activities meet the goals
set forth in paragraph (d)(12) (ii)(B) of this section, and the reasons
the any approved program options were not pursued.
(v) To the extent that the EZ/EC SSBG funds are used for the
program options included in paragraph (d)(12) (ii)(B) of this section,
the applicant may use EZ/EC SSBG funds for the following activities, in
addition to those activities permitted by Sec. 2005 of the Social
Security Act (42 USC 1397d):
(A) To purchase or improve land or facilities;
(B) To make cash payments to individuals for subsistence or room
and board;
(C) To make wage payments to individuals as a social service;
(D) To make cash payments for medical care; and
(E) To provide social services to institutionalized persons.
(vi) The State must obligate the EZ/EC SSBG funds to in accordance
with the strategic plan within 2 years from the date of payment to the
state, or remit the unobligated funds to the Secretary of Health and
Human Services (HHS).
(vii) The Strategic Plan must indicate how the EZ/EC SSBG funds
will be invested and used for the 10 year period of designation. The
EZ/EC SSBG funds may be used to promote economic independence for low-
income residents, such as capitalizing revolving or micro-enterprise
loan funds for the benefit of residents. The EZ/EC SSBG funds may also
be used to create jobs and promote economic opportunity for low-income
families and individuals through matching grants, loans, or investments
in community development financial institutions.
(viii) The strategic plan must indicate how all the EZ/EC SSBG
funds will be used or invested for the period of designation of the
Empowerment Zone or Enterprise Community.
(ix) The strategic plan must provide for periodic reporting of
information by the relevant State.
(13) Indicate how tax benefits for designated zones and
communities, State and local resources, existing Federal resources
available to the locality and additional Federal resources believed
necessary to implement the strategic plan will be utilized within the
Empowerment Zone or Enterprise Community;
(14) Indicate a level of commitment necessary to ensure that these
resources will be available to the area upon designation;
(15) Identify the Federal resources applied for or for which
applications are planned;
(16) Identify private resources and support, including assistance
from businesses, non-profit organizations, and foundations, which are
available to be leverage with public resources; and provide assurances
that these resources will be made available to the area upon
designation.
(17) Identify changes requested in Federal rules and regulations
necessary to implement the plan, including specific paperwork or other
Federal program requirements that must be altered to permit effective
implementation of the strategic plan;
(18) Identify specific regulatory and other impediments to
implementing the strategic plan for which waivers are requested, with
appropriate citations and an indication whether waivers can be
accomplished administratively or require statutory changes;
(19) Demonstrate how State and local governments will reinvent
themselves to help implement the plan, by identifying changes that will
be made in State and local organizations, processes and procedures,
including laws and ordinances;
(20) Explain how different agencies in State and local governments
will work together in new responsive ways to implement the strategic
plan;
(21) Identify the specific tasks necessary to implement the plan;
(22) Described the partnerships that will be established to carry
out the plan;
(23) Explain how the plan will be regularly revised to reflect new
information and opportunities; and
(24) Identify baselines, benchmarks and goals that will be used in
evaluating performance in implementing the plan. [[Page 6954]]
(e) Prohibition against business relocation. The strategic plan may
not include any action to assist any establishment in relocating from
an area outside the nominated area to the nominated 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 a 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 conducts business
operations.
(f) Implementation of strategic plan. The strategic plan may be
implemented by the State government(s), local governments, regional
planning agencies, non-profit organizations, community-based
organizations, and/or other nongovernmental entities. Activities
included in the plan may be funded from any source, Federal, State,
local, or private, which agrees to provide assistance to the nominated
area.
(g) Elements of the strategic plan. A strategic plan may include,
but is not limited to, activities that address:
(1) Economic problems, through measures designed to create
employment opportunities; support business startup or expansion; or
development of community institutions;
(2) Human concerns, through the provision of social services, such
as rehabilitation and treatment programs or the provision of training,
education or other services within the affected areas;
(3) Community needs, such as the expansion of housing stock and
homeownership opportunities, efforts to reduce homelessness, to promote
fair housing and equal opportunity, to reduce and prevent crime and
improve security in the area; and
(4) Physical improvements, such as the provision or improvement of
public infrastructure, or the provision or improvement of recreational,
transportation, or other public services within the affected area.
Sec. 25.201 Evaluating the strategic plan.
The strategic plan will be evaluated for effectiveness as part of
the designation process for nominated rural areas described in
Sec. 25.301 of this part. On the basis of this evaluation, USDA may
request additional information pertaining to the plan and the proposed
area and may, as part of that request, suggest modifications to the
plan, proposed area, or term that would enhance its effectiveness. The
effectiveness of the strategic plan will be determined in accordance
with the four key principles set forth in Sec. 25.200(c) of this part.
USDA will review each plan submitted in terms of the four equally
weighted key principles, and of such other elements of these key
principles as are appropriate to address the opportunities and problems
of each nominated area, which may include:
(a) Economic opportunity. (1) The extent to which businesses, jobs,
and entrepreneurship will increase within the zone or community;
(2) The extent to which residents will achieve a real economic
stake in the zone or community;
(3) The extent to which residents will be employed in the process
of implementing the plan and in all phases of economic and community
development;
(4) The extent to which residents will be linked with employers and
jobs throughout the entire area and the way in which residents will
receive training, assistance, and family support to become economically
self-sufficient;
(5) The extent to which economic revitalization in the zone or
community interrelates with the broader regional economies; and
(6) The extent to which lending and investment opportunities will
increase within the zone or community through the establishment of
mechanisms to encourage community investment and to create new economic
growth.
(b) Sustainable community development--(1) Consolidated planning.
The extent to which the plan is part of a larger strategic community
development plan for the nominating localities and is consistent with
broader regional development strategies;
(2) Public safety. The extent to which strategies such as community
policing will be used to guarantee the basic safety and security of
persons and property within the zone or community;
(3) Amenities and design. The extent to which the plan considers
issues of design and amenities that will foster a sustainable
community, such as open spaces, recreational areas, cultural
institutions, transportation, energy, land and water uses, waste
management, environmental protection and the vitality of life of the
community;
(4) Sustainable development. The extent to which economic
development will be achieved in a manner consistent that protects pubic
health and the environment;
(5) Supporting families. The extent to which the strengths of
families will be supported so that parents can succeed at work, provide
nurture in the home, and contribute to the life of the community;
(6) Youth development. The extent to which the development of
children, youth, and young adults into economically productive and
socially responsible adults will be promoted, and the extent to which
young people will be provided with the opportunity to take
responsibility for learning the skills, discipline, attitude, and
initiative to make work rewarding.
(7) Education goals. The extent to which schools, religious
organizations, non-profit organizations, for-profit enterprises, local
governments and families will work cooperatively to provide all
individuals with he fundamental skills and knowledge they need to
become active participants and contributors to their community, and to
succeed in an increasingly competitive global economy;
(8) Affordable housing. The extent to which a housing component,
providing for adequate safe housing and ensuring that all residents
will have equal access to that housing is contained in the strategic
plan;
(9) Drug abuse. The extent to which the plan addresses levels of
drug abuse and drug-related activity through the expansion of drug
treatment services, drug law enforcement initiatives, and community-
based drug abuse education programs; and
(10) Equal opportunity. The extent to which the plan offers an
opportunity for diverse residents to participate in the rewards and
responsibilities of work and service. The extent to which the plan
ensures that no business within a nominated zone or community will
directly or through contractual or other arrangements subject a person
to discrimination on the basis of race, color, national origin, gender,
handicap or age in its employment practices, including recruitment,
recruitment advertising, employment, layoff, termination, upgrading,
demotion, transfer, rates of pay or the forms of compensation, or use
of facilities. Applicants must comply with the provisions of Title VI
of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act
of 1973, and the Age Discrimination Act of 1975, as implemented by
USDA.
(c) Community-based partnerships----(1) Community partners. The
extent to which residents of the strategic plan and their commitment to
implementing it. The extent to which community-based organizations in
the nominated area have participated in the development of
[[Page 6955]] the nominated area have participated in the development
of the plan, and their record of success measured by their achievements
and support for undertakings within the nominated area:
(2) Private and non-profit organizations as partners. The extent to
which partnership arrangements include commitments from private and
non-profit organizations, including corporations, utilities, banks and
other financial institutions, and educational institutions supporting
implementation of the strategic plan;
(3) State and local government partners. The extent to which
State(s) and local governments are committed to providing support to
the strategic plan, including their commitment to ``reinventing'' their
roles and coordinating programs to implement the strategic plan; and
(4) Permanent implementation and evaluation structure. The extent
to which a responsible and accountable implementation structure or
process has been created to ensure that the plan is successfully
carried out and that improvements are made throughout the period of the
zone or community's designation.
(d) Strategic vision for change.-- (1) Goals and coordinated
strategy. The extent to which the strategic plan reflects a projection
for the community's revitalization which links economic, human,
physical, community development and other activities in a mutually
reinforcing, synergistic way to achieve ultimate goals;
(2) Creativity and innovation. The extent to which the activities
proposed in the plan are creative, innovative and promising and will
promote the civic spirit necessary to revitalize the nominated area;
(3) Building on assets. The extent to which the vision for
revitalization realistically addresses the needs of the nominated area
in a way that takes advantage of its assets; and
(4) Benchmarks and learning. The extent to which the plan includes
performance benchmarks for measuring progress in its implementation,
including an on-going process for adjustments, corrections and building
on what works.
Sec. 25.202 Submission of nominations for designation.
(a) General. A separate nomination for designation as an
Empowerment Zone and/or Enterprise Community must be submitted for each
rural area for which such designation is requested. The nomination
shall be submitted in a form to be prescribed by USDA in the Notice
Inviting Applications published in the Fedeal Register, and must
contain complete and accurate information.
(b) Certifications. Certifications must be submitted by the
State(s) and local government(s) requesting designation stating that:
(1) The nominated area satisfies the boundary tests of
Sec. 25.100(d) of this part;
(2) The nominated area is one of pervasive poverty, unemployment,
and general distress, as described by Sec. 25.102 of this part;
(3) The nominated area satisfies the poverty rate criteria set
forth in Sec. 25.103 of this part;
(4) The nominated rural area contains no portion of an area that is
either already designated as an Empowerment Zone and/or Enterprise
Community or is otherwise included in any other area nominated for
designation as a Empowerment Zone and/or Enterprise Community;
(5) Each nominating governmental entity has the authority to:
(i) Nominate the rural area for designation as an Empowerment Zone
and/or Enterprise Community;
(ii) Make the State and local commitments required by
Sec. 25.200(d) of this part; and
(iii) Provide written assurances satisfactory to the Secretary that
these commitments will be met;
(6) Provide assurances the amounts provided to the State for the
area under section 2007 of Title XX of the Social Security Act will not
be used to supplant Federal or non-Federal funds for sevices and
activities which promote the purposes of section 2007;
(7) Provide that the nominating governments or corporations agree
to make available all information requested by USDA to aid in the
evaluation of progress in implementing the strategic plan and reporting
on the use of EZ/EC SSBG funds; and
(8) Provide assurances that the nominating State(s) agrees to
distribute the EZ/EC SSBG funds in accordance with the strategic plan
submitted for the designated zone or community.
(c) Maps and area description. Maps and a general description of
the nominated area shall accompany the nomination request.
Subpart D--Designation Process
Sec. 25.300 USDA action and review of nominations for designation.
(a) Establishment of submission procedures. USDA will establish a
time period and procedure for the submission of application as
Empowerment Zones or Enterprise Communities, including submission
deadlines and addresses, in a Notice Inviting Applications, to be
published in the Federal Register.
(b) Acceptance for processing. USDA will accept for processing
those applications as Empowerment Zones or Enterprise Communities which
USDA determines have met the criteria required under this part. USDA
will notify the State(s) and local government(s) whether or not the
nomination has been accepted for processing. The criteria for
acceptance for processing is that the application as an Empowerment
Zone or Enterprise Community must be received by USDA on or before the
close of business on the date established by the Notice Inviting
Applications published in the Federal Register. The applications must
be complete and must be accompanied by a strategic plan, as required by
Sec. 25.200(c) of this part and the certifications required by
Sec. 25.202(b) of this part.
(c) Evaluation of applications. In the process of reviewing each
application accepted for processing, USDA may undertake a site visit(s)
to any nominated area to aid in the process of evaluation.
(d) Modification of the strategic plan, boundaries of nominated
rural areas, and/or period during which designation is in effect.
Subject to the limitations imposed by Sec. 25.100 of this part, USDA
may request additional information pertaining to the plan and proposed
area and may, as a part of that request, suggest modifications to the
plan that would enhance its effectiveness.
(e) Publication of designations. Final determination of the
boundaries of areas and the term for which the designations will remain
in effect will be made by the Secretary. Announcements of those
nominated areas designated as Empowerment Zones of Enterprise
Communities will be made by publication of a Notice in the Federal
Register.
Sec. 25.301 Selection factors for designation of nominated rural
areas.
In choosing among nominated rural areas eligible for designation,
the Secretary shall consider:
(a) The effectiveness of the Strategic plan, in accordance with the
key principles set out in Sec. 25.201 of this part.
(b) The effectiveness of the assurances made pursuant to
Sec. 25.200(a)(2) of this part that the strategic plan will be
implemented.
(c) The extent to which an application proposes activities that are
creative and innovative. [[Page 6956]]
(d) Such other factors as established by the Secretary, which
include the degree of need demonstrated by the nominated area for
assistance under this part and the diversity within and among the
nominated areas. If other factors are established by USDA, a Federal
Register Notice will be published identifying such factors, along with
an extension of the application due date if necessary.
Sec. 25.302 Number of Rural Empowerment Zones and Enterprise
Communities.
The Secretary may designate up to three rural Empowerment Zones and
up to thirty rural Enterprise Communities.
Subpart E--Post-Designation Requirements
Sec. 25.400 Reporting.
USDA will require periodic reports for the Empowerment Zones and
Enterprise Communities and other applicants designated pursuant to this
part. These reports will identify the community, local government and
State actions which have been taken in accordance with the strategic
plan. In addition to these reports, such other information relating to
designated Empowerment Zones and Enterprise Communities as USDA shall
request from time to time shall be submitted promptly. On the basis of
this information and of on-site reviews, USDA will prepare and issue
periodic reports on the effectiveness of the Empowerment Zones/
Enterprise Communities Program.
Sec. 25.401 Periodic performance reviews.
USDA will regularly evaluate the progress in implementing the
strategic plan in each designated Empowerment Zone and Enterprise
Community on the basis of performance reviews to be conducted on site
and using other information submitted. USDA may also commission
evaluations of the Empowerment Zone program as a whole by an impartial
third party. Where not prevented by State law, nominating State
governments must provide the timely release of data requested by USDA
for the purposes of monitoring and assisting the success of Empowerment
Zones and Enterprise Communities. The implementing entity for
Empowerment Zones/Enterprises Communities will be responsible for EZ/EC
program activities and fiscal management of the EZ/EC funds. They must
demonstrate continual involvement of all segments of the community,
including low income/disadvantaged residents, in the implementation of
the Strategic Plan.
Sec. 25.402 Validation of designation.
(a) Reevaluation of designations. On the basis of the performance
review described in Sec. 25.401 of this part, and subject to the
provisions relating to the revocation of designation appearing at
Sec. 25.403 of this part, USDA will make findings as to the continuing
eligibility for the validity of the designation of any Empowerment Zone
or Enterprise Community. Determinations of whether any designated
Empowerment Zone or Enterprise Community remains in good standing shall
be promptly communicated to all Federal agencies providing assistance
or administering programs under which assistance can be made available
in such Zone or community.
(b) Modification of designation. Based on a rural Zone or
community's success in carrying out its strategic plan, and subject to
the provisions relating to revocation of designation appearing at
Sec. 25.403 of this part and the requirements as to the number, maximum
population and other characteristics of rural Empowerment Zones set
forth in Sec. 25.100 of this part, the Secretary may modify
designations by reclassifying rural Empowerment Zones as Enterprise
Communities or Enterprise Communities as Empowerment Zones.
Sec. 25.403 Revocation of designation.
(a) Basis for revocation. The Secretary may revoke the designation
of a rural area as an Empowerment Zone or Enterprise Community if the
Secretary determines on the basis of the periodic monitoring and
assessments described in Sec. 25.401 of this part, that the applicant
or the State(s) or local government(s) in which the rural area is
located:
(1) Has modified the boundaries of the area;
(2) Has failed to make satisfactory progress in achieving the
benchmarks set forth in the strategic plan; or
(3) Has not complied substantially with the strategic plan.
(b) Warning letter. Before revoking the designation of a rural area
as an Empowerment Zone or Enterprise Community, the Secretary will
issue a letter of warning to the applicant and the nominating State(s)
and local government(s):
(1) Advising that the Secretary has determined that the applicant
and/or the nominating local government(s)and/or State(s) has:
(i) Modified the boundaries of the area; or
(ii) Is not complying substantially with, or has failed to make
satisfactory progress in achieving the benchmarks set forth in the
strategic plan prepared pursuant to Sec. 25.200(d) of this part; and
(2) Requesting a reply from all involved parties within 90 days of
the receipt of this letter of warning.
(c) Notice of revocation. After allowing 90 days from the date of
receipt of the letter of warning for response, and after making a
determination pursuant to paragraph (a) of this section, the Secretary
may issue a final notice of revocation of the designation of the rural
area as an Empowerment Zone or Enterprise Community.
(d) Notice to affected Federal agencies. USDA will notify all
affected Federal agencies providing assistance in a rural Empowerment
Zone or Enterprise Community of its determination to revoke any
designation pursuant to this section or to modify a designation
pursuant to Sec. 25.402 of this part.
Subpart F--Special Rules
Sec. 25.500 Indian reservations.
No rural Empowerment Zone or Enterprise Community may include any
area within an Indian reservation.
Sec. 25.501 Governments.
If more than one State or local government seeks to nominate an
area under this part, any reference to or requirement of this part
shall apply to all such governments.
Sec. 25.502 Nominations by economic development corporations.
Any rural area nominated by an economic development corporation
chartered by a State and qualified to do business in the State in which
it is located, shall be treated as nominated by a State and local
governments.
Sec. 25.503 Use of census data.
Population and poverty rate data shall be determined by the 1990
Census Data.
Sec. 25.504 Rural areas.
(a) What constitutes ``rural''. A rural area may consist of any
area that lies outside the boundaries of a Metropolitan Area, as
designated by the Office of Management and Budget, or, as an area that
is primarily rural and has at least 50 percent of the population of the
nominated area residing outside of a Metropolitan Area.
(b) Exceptions to the definition. On a case by case basis, the
Secretary will grant requests for waiver from the definition of
``rural'' stated in paragraph (a) of this section upon a showing of
good cause. Applicants seeking to apply for a rural designation who do
not satisfy the definition in paragraph (a) of [[Page 6957]] this
section must submit a request for waiver in writing to the Rural
Business and Cooperative Development Service, Empowerment Zone Office,
Department of Agriculture, AG Box 3202, 14th Street and Independence
Avenue, SW, Washington, DC 20250-3200. Requests must include:
(1) The name, address and daytime phone number of the contact
person for the applicant seeking the waiver; and
(2) Sufficient information regarding the area that would support
the infrequent exception from the definition.
(c) The waiver process. The Secretary, in consultation with the
Department of Commerce, will have discretion to permit rural
applications for communities that do not meet the above rural criteria.
Sec. 25.550
Dated: January 25, 1995.
Richard E. Rominger,
Acting Secretary.
[FR Doc. 95-2313 Filed 2-3-95; 8:45 am]
BILLING CODE 3410-01-M
