Notice Inviting Applications: Second Round Designation of Fifteen Urban Empowerment Zones

SUMMARY: The Taxpayer Relief Act of 1997 authorizes the Secretary to

designate 15 Round II Urban Empowerment Zones. This Notice invites

applications for designation of nominated areas as Empowerment Zones.

The designation of the new Empowerment Zones will be made in accordance

with the designation process described in this Notice. The new Urban

Empowerment Zones will receive between $130 million and $230 million in

tax-exempt bond authority to create economic opportunity for area

residents and businesses.

APPLICATION DUE DATE: Completed applications (one original and 2

copies) must be submitted no later than October 9, 1998. See below for

specific procedures governing the form of application submission (e.g.,

mailed application, express mail, overnight delivery). No facsimile

(FAX) applications will be accepted for consideration by HUD.

Delivered Applications. Completed applications (one original and

two copies) must be submitted no later than 5:00 p.m. eastern time, on

October 9, 1998. Up until 5:00 p.m. on the deadline date, completed

applications will be accepted at the address and room number specified

below.

Mailed Applications. Applications will be considered timely if

postmarked on or before October 9, 1998 and received by HUD

Headquarters on or before October 19, 1998, at the address and room

number specified below.

Applications Sent by Overnight Delivery. Overnight delivery items

will be considered filed on time if received on or before October 9,

1998, or, as long as the application review process has not been

completed, upon submission of documentary evidence acceptable to HUD,

in its sole discretion, that they were placed in transit with the

overnight delivery service on or before October 8, 1998.

ADDRESSES: Address for submitting applications. Completed applications

(one original and two copies) should be submitted to: the Office of

Community Planning and Development, c/o Processing and Control Unit,

Room 7255, Department of Housing and Urban Development, 451 7th Street,

SW, Washington, DC 20410, by mail or hand delivery.

For Application and Other Materials. For a copy of all EZ Round II

publications, including the Application Guide, Nomination Forms, the

interim rule (24 CFR part 598, published elsewhere in this issue of the

Federal Register), and the ``Guidelines for Use of EZ/EC SSBG Funds''

(which is also provided as an appendix to the interim rule), please

call the Community Connections Information Clearinghouse at (800) 998-

9999. The Round II publications are also available on the HUD web site:

http://www.hud.gov/ezeclist.html. Requests for application materials

should be made immediately to insure sufficient time for application

preparation. Hearing- or speech-impaired persons should use the Federal

Information Relay Service telephone number, (800) 877-8339, to obtain

application materials.

The Round II publications consist of:

--Round II Interim Rule;

--Application Guide for Empowerment Zones Round II (Application Guide);

--Nomination Forms for a Federal Empowerment Zone (Nomination Forms)

(form HUD 40003);

--Strategic Planning Guide;

--Performance Measurement System Guide;

--Federal Programs Guide;

--IRS Publication 954, ``Tax Incentives for Empowerment Zones and Other

Distressed Communities.''

A series of application workshops will be held in several locations

around the country during the months of April and May. Information

about the workshops will be disseminated in several ways, including the

HUD web site, by facsimile, by mail, and by calling the Community

Connections Information Clearinghouse at (800) 998-9999.

FOR FURTHER INFORMATION: For technical questions, contact Elaine

Braverman, Empowerment Zone/Enterprise Community Initiative, Office of

Community Planning and Development, Department of Housing and Urban

Development, 451 Seventh Street, SW, Room 7130, Washington, DC 20410,

(202) 708-6339. Hearing- or speech-impaired individuals may call (800)

877-8339 (the Federal Information Relay Service-TTY).

SUPPLEMENTARY INFORMATION:

I. Summary

A. Purpose and Authority

The Taxpayer Relief Act of 1997 (the Act) authorizes the Secretary

to designate 15 new Urban Empowerment Zones. The new Urban Empowerment

Zones will receive between $130 million and $230 million in tax-exempt

bond authority to create economic opportunity for area residents and

businesses. The Act makes several changes with respect to satisfying

poverty rate criteria. It permits Zones to identify noncontiguous

parcels that are ``developable sites'' that can be used for commercial

and industrial purposes, which need not satisfy the poverty rate and

size criteria applicable to other noncontiguous sites; eliminates the

requirement that some of the tracts have at least 35 percent poverty;

and makes it slightly more difficult for census tracts with small

populations to meet the poverty criteria. Alaska and Hawaii are now

eligible for Empowerment Zone designation and the Act permits Indian

reservations to be included in an area nominated as an Urban or Rural

Empowerment Zone.

B. Available Resources

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 first round of Empowerment Zone and

Enterprise Community designations made in 1994 featured grants from the

U.S. Department of Health and Human Services to States for the

designated Empowerment Zones and Enterprise Communities. While similar

grant funds have not been authorized for the Round II EZs, HUD

anticipates that funding may become available for Round II Urban

Empowerment Zones in Fiscal Year 1999. Should EZ/EC SSBG funds become

available before the application deadline of October 9, 1998, the

Department will issue a notice of the amount of such funds available to

each zone. (Note: If the EZ/EC SSBG funds are made available, an

environmental review for all activities proposed to be funded with EZ/

EC SSBG funds and are not excluded under 24 CFR 50.19(b) will be

performed, as required by applicable law.)

C. Uses of Funds

General guidelines concerning uses of EZ/EC SSBG funds are included

in the Appendix to the Interim rule published elsewhere in this issue

of the Federal

[[Page 19163]]

Register and on the Internet at the following address: http://

aspe.os.dhhs.gov/progsys/HHSguide.htm. Applicants are encouraged to

review the guidelines and ensure that all proposed projects to be

financed with the anticipated grant funds conform to them.

II. Application Preparation

A. Notice of Intent to Participate

Applicants should submit a Notice of Intent to Participate form as

early as possible. The Notice should be submitted on the form provided

in the Nomination Forms publication. Submission of the Notice of Intent

to Participate is not mandatory, but it will ensure that an applicant

receives updated information. The Notice of Intent to Participate may

be mailed, or submitted by facsimile (FAX). The address for submitting

the Notice of Intent to Participate is: U.S. Department of Housing and

Urban Development, Ms. Elaine Braverman, EZ/EC Team, Room 7130, 451

Seventh St., SW, Washington, DC. 20410. The facsimile number is (202)

401-7615.

B. Application Requirements

1. The application must include an original and two copies of the

items listed below. To facilitate review, please submit applications in

such a form that they can be taken apart. Loose leaf binders are

preferable.

2. The application submitted on behalf of a nominated urban area

shall include:

a. Nomination Form Parts I through IV, including the required

certifications and written assurances;

b. A strategic plan which meets the requirements of the Interim

rule, including the content specified in Sec. 598.215 of the rule; and

c. 1990 census maps showing:

(i) The boundaries of the local government(s); and

(ii) The boundaries of the nominated area, including developable

sites, if any.

3. Preferably, the Strategic Plan will contain no more than 150

pages.

4. The application should contain only the necessary documentation.

Appendices or additional information extraneous to evaluation

components will not be reviewed. Examples of such extraneous

information include: meeting sign-in sheets, and copies of applications

for other funds.

C. Strategic Plan Requirements

The Strategic Plan shall conform to the requirements set forth in

Sec. 598.215 of the Interim rule, and the criteria stated in this

Notice. Requirements set forth in the interim rule will be used in the

evaluation process.

III. Designation Process

A. General

HUD will accept for processing those nominations meeting the

submission deadline stated in this Notice, and the Eligibility

Requirements listed in Subpart B of the Interim Rule. Nominating

procedures are described in Subpart C of the Interim rule.

B. Exceptions

The Secretary may waive a non-statutory provision of the Interim

Rule for good cause where it is determined that the application of the

provision would result in undue hardship to the applicant.

C. Application Review

A threshold review will be conducted to ensure the application

requirements in Section II(B) of this Notice are satisfied, and the

applicant meets the eligibility requirements listed below. Applications

determined eligible will receive a technical review under the rating

factors described in Section IV of this Notice. Specific maximum point

scores for each rating factor are listed in Section IV. Applications

will be evaluated against the rating factors, then placed in rank

order. Evaluation and ranking of applications will be made relative to

other applications received.

To review and rate applications, the Department may establish

panels including employees of other Federal agencies to obtain certain

expertise and outside points of view.

1. Eligibility Requirements

a. To be considered for designation, a nominated urban area, with

the exception of areas described below in the Special Rules, must meet

all of the eligibility requirements of Sec. 598.100.

The only sources of census data that will be used in determining

the eligibility of an area are: the 1990 Decennial Census, and

information published by the Bureau of Census and the Bureau of Labor

Statistics. The boundary of an urban area nominated for designation as

an Empowerment Zone must coincide with the boundaries of census tracts.

Census tract means a census tract as the term is used by the Bureau of

the Census, or, if and only if census tracts are not defined for the

area, a block numbering area.

b. A nominated urban area, with the exception of areas described

below in the Special Rules, must demonstrate poverty, unemployment and

general distress, as described in Sec. 598.110. In addition, each

nominated area must satisfy the specific poverty rate criteria in

Sec. 598.115.

c. Special Rules.

(i) A nominated area in Alaska or Hawaii is deemed to satisfy the

criteria of distress, size, and poverty rate detailed in

Sec. 598.100(b), (c), (d), and (f), and Sec. 598.110 if, for each

census tract or block numbering area within the nominated 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).

(ii) An area within an Indian reservation (as defined in section

168(j)(6) of the Internal Revenue Code) 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.

(iii) 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 a

local government.

2. Technical Review

a. General. The technical review will evaluate the quality of the

application against the following rating factors:

(i) Quality of the Strategic Plan; and

(ii) Quality of the Commitments made in connection with the

Strategic Plan.

The criteria against which HUD will measure these factors, and the

maximum points that will be awarded for each factor are described below

in Section IV. An application may receive up to 100 total points.

b. Corrections to Deficient Applications. HUD will notify an

applicant in writing, or by FAX, of any technical deficiencies in the

application, and HUD will maintain a log of such communications.

The notification will specify the date by which HUD must receive

the applicant's correction of all technical deficiencies, which shall

be within 14 calendar days from the date of HUD's notification. If the

fourteenth day falls on a Saturday, Sunday, or holiday, the correction

must be received by HUD on the next business day. The date and time of

receipt of corrections by HUD shall be determined in the same way as

the receipt of the application.

[[Page 19164]]

Technical deficiencies relate to items that:

(i) Are not necessary for HUD review under the rating factors; and

(ii) Would not improve the substantive quality of the proposal.

Examples of technical deficiencies would be a failure to submit proper

certifications or failure to submit an application containing an

original signature by an authorized official.

If any of the items identified in HUD's written notification of

technical deficiencies are not corrected and submitted within the

correction period, the application will be ineligible for further

consideration.

c. Clarification of Application and Request for Additional

Information. The Department may contact an applicant to obtain

clarification of the terms of an applicant's application. Clarification

may include, for example, a request for information to ensure HUD

understanding of the terms of an applicant's application. In obtaining

clarifying information, the Department may contact an applicant

telephonically or in person. The Department will conduct all requests

for clarification from an applicant according to uniform procedures and

will document all requests.

In addition, the Department reserves the right to conduct

independent site inspections of proposed EZ/EC sites to accurately rate

and rank an applicant's application under the selection criteria

provided in this Notice. Should HUD decide to conduct site visits, it

will visit sites according to uniform procedures. The Department will

document site visit findings.

HUD employees involved in the review of applications and the making

of designation decisions will refrain from providing advance

information to any person (other than an authorized employee of HUD)

concerning designation decisions, or from otherwise giving any

applicant an unfair competitive advantage.

D. Designation Announcements

Designations will be made before January 1, 1999. The nominated

urban areas designated as Empowerment Zones will be published in the

Federal Register.

IV. Designation Factors

In choosing among nominated areas eligible for designation, HUD

will consider the following factors:

Quality of the Strategic Plan; and

Quality of the Commitments made in connection with the

Strategic Plan.

The following chart identifies the points that will be assigned to

each rating factor. The criteria HUD will use to rate the applications

on the factors follow the chart.

------------------------------------------------------------------------

Maximum

Rating factors points

------------------------------------------------------------------------

Quality of Strategic Plan (75 points):

1. Vision/Values....................................... 5

2. Community Assessment................................ 10

3. Goals............................................... 10

4. Implementation Plan................................. 35

a. Projects/Programs............................... (15)

b. Tax Incentive Utilization Plan.................. (10)

c. Governance Plan................................. (7)

d. Community Performance Assessment................ (3)

5. Strategic Planning Process Documentation............ 15

------------

Quality of Strategic Plan Subtotal............. 75

============

Quality of Commitments Made in Connection With Strategic

Plan (25):

1. Resources Leveraged................................. 10

2. Resource Commitments Documented..................... 15

------------

Quality of Commitments Subtotal.................... 25

============

Total Points................................... 100

------------------------------------------------------------------------

A. Quality of the Strategic Plan (Maximum Points: 75)

The strategic plan must be developed in accordance with four key

principles, described in Sec. 598.215: strategic vision for change,

community-based partnerships, economic opportunity, and sustainable

community development. The elements required in the strategic plan

reflect the key principles. Innovation and creativity are encouraged in

fulfilling all elements of the plan.

1. Vision and Values (Maximum Points: 5)

This element is a consensus of what the community believes its

future should be. The shared vision of the future should drive the

development of the community's goals. The shared values that guided the

creation of the vision should also be described. HUD will consider the

extent to which this element:

a. States a clear vision for the future;

b. Develops the foundation upon which the goals are established and

specific projects and programs are based;

c. Demonstrates collaboration of the community's diverse

stakeholders in arriving at its vision and values statement;

d. Provides an effective vision for the community's long-term

transformation; and

e. Exhibits innovation and creativity.

2. Community Assessment (Maximum Points: 10)

This element describes and assesses the existing conditions and

trends in the community and the surrounding region. It examines

strengths and assets, as well as issues and problems. In evaluating

this element, HUD will consider the extent to which:

a. The analysis of the strengths and opportunities of the area is

balanced against the area's needs and problems;

b. A variety of resources have been identified to address the needs

and problems;

c. The assessment demonstrates a grasp of the trends that will

affect the community and the surrounding region over the period of the

designation; and

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d. The analysis includes the identification of developable sites,

as appropriate, and an assessment of the opportunities available within

these developable sites.

3. Goals (Maximum Points: 10)

This element describes the comprehensive set of goals to be

achieved over the 10-year program period, along with the strategies

that will be used. In evaluating this element, HUD will consider the

extent to which:

a. The goals serve as the framework for specific strategies;

b. The strategies proposed to achieve the strategic plan goals have

been effectively described, and demonstrate the link between the goals

and proposed projects and programs; and

c. The goals are designed to move the community toward its desired

future.

4. Implementation Plan (Maximum Points: 35)

This element contains a detailed plan of how the community will

implement its strategic plan. The components of the Implementation Plan

are: Projects and Programs, Tax Incentive Utilization Plan, and a

Governance Plan. These components must provide detailed information for

the first 2 years of designation. However, applicants also must provide

a general description of all activities that are proposed for the 10-

year designation period and a description of how all EZ/EC SSBG funds,

if available, will be used.

a. Projects and Programs (maximum points: 15). This element

describes the specific projects and programs to be implemented during

the first two years of the designation. Timelines and budgets must be

provided for the 2-year plan. HUD will evaluate this component

considering the extent to which:

(i) The narrative clearly outlines the specific projects and

programs that will be implemented, including use of any developable

sites, and demonstrates that the projects and programs will result in

the achievement of the community's goals;

(ii) Proposed timelines for implementing identified projects and

programs are appropriate for the 2-year plan;

(iii) The lead implementing entities are identified;

(iv) Innovative partnerships that ensure maximum community

participation and project sustainability are identified;

(v) Proposed budgets are identified for each project or program,

and costs and sources of funding are realistic;

(vi) Baselines and proposed measurable outputs are provided; and

(vii) The component exhibits innovation and creativity.

b. Tax Incentive Utilization Plan (maximum points: 10). This

element addresses a significant aspect of the EZ initiative--the use of

the business tax incentives available to designated Empowerment Zones

to support economic revitalization. If the applicant includes

developable sites, this element must include a statement of how

developable sites will maximize the use of tax incentives. In

evaluating this element, HUD will consider the extent to which the

plan:

(i) Provides an effective strategy for integrating the new business

tax incentives into the nominated area's business development efforts.

The Round II business tax 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.''

(ii) Addresses the involvement of all appropriate segments of the

community and the extent to which their participation will maximize the

use of the business tax incentives;

(iii) Provides a realistic strategy for marketing the incentives;

and

(iv) Exhibits innovation and creativity.

c. Governance Plan (Maximum Points: 7). This element describes how

the strategic plan will be implemented. HUD will evaluate the extent to

which:

(i) The proposed lead implementing entity, has or will have, the

legal status and authority to receive and administer Federal funds;

(ii) The Governance Plan demonstrates that both the lead

implementing entity and other key organizations participating in the

implementation of the strategic plan have the capacity to implement the

plan;

(iii) The proposed composition of governance boards, advisory

boards, commissions or similar bodies that will manage strategic plan

implementation is representative of the EZ area. The representation of

residents and businesses, and the method of selecting members of such

boards should provide a clear picture of the use of partnerships;

(iv) The relationships between the governance structure created and

local governments, and other major community or regional organizations,

such as a metropolitan planning organization, will strengthen the

implementation of the strategic plan;

(v) The Governance Plan includes methods by which stakeholders

within the Zone will be kept informed about Zone activities and

progress in implementing the strategic plan, including an explanation

of how the Governance Board will conduct its meetings in accordance

with applicable open meetings acts. 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;

(vi) The Governance Plan will ensure continuing community and

grassroots participation in the implementation of the strategic plan

and the governance of the Zone's activities; and

(vii) The plan exhibits innovation and creativity.

d. Community Performance Assessment (maximum points: 3). This

element examines the 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 it as appropriate. In

evaluating community performance assessment, HUD will consider:

(i) The process the applicant will use to periodically evaluate its

performance;

(ii) The process the applicant will use to modify its strategic

plan based on the results obtained in (i);

(iii) The participation of stakeholders in (i) and (ii) above.

5. Strategic Planning Process Documentation (Maximum Points: 15)

This element provides a description of the process the community

used to select the boundaries of the proposed Empowerment Zone,

including any developable sites, and the process used to prepare the

strategic plan. In evaluating this element, HUD will consider the

extent to which the documentation:

a. Fully explains how the community participated in choosing the

area, including any developable sites; and how the area ultimately

nominated was selected over other areas considered;

b. Indicates the specific groups, organizations, and individuals

that participated in the production of the plan, describes the history

of these groups in the community, and describes their role in creating

the plan;

c. Explains how participants were selected and provides evidence

that the participants, taken as a whole, broadly represent the racial,

cultural, gender and economic diversity of the community; and

[[Page 19166]]

d. Identifies two or three topics addressed in the plan that caused

the most serious disagreements among participants, and a description of

how those disagreements were resolved.

B. Quality of Commitments Made in Connection With the Strategic Plan

(Maximum Points: 25)

In Sec. 598.210 of the Interim rule, nominated areas are required

to provide written assurances that the Strategic Plan will be

implemented. In addition to the certification, it is essential that HUD

is able to evaluate the breadth and quality of such commitments.

1. Resources Leveraged (Maximum Points: 10)

In evaluating this element, HUD will consider the extent to which

the applicant has leveraged resources, such as funding and/or in-kind

services from governmental entities, business, faith-based

organizations, non-profit organizations, foundations, educational

institutions, and other entities to implement the strategic plan.

2. Resource Commitments Documented (Maximum Points: 15)

The applicant must provide evidence of public and private sector

commitments by including letters of commitment, memoranda of

understanding or agreement, or other documentation indicating the

nature of the participation and the financial and non-financial

resources to be contributed. The letters or agreements must be signed

by an official of the organization able to make such commitments.

V. Period of Designation

The designation period will commence on the date of designation and

will continue for 10 years, closing at the end of the 10th calendar

year, except:

1. When the nominating entities have specified an earlier date; or

2. When the designation is revoked by the Secretary.

VI. Findings and Certifications

A. Information Collection Requirements

The information collection requirements contained in this Notice

have been approved by the Office of Management and Budget on an

emergency basis through August 31, 1998 and assigned control number

2506-0148. See the interim rule on ``Empowerment Zones: Rule for Second

Round Designations'' published elsewhere in this issue of the Federal

Register for additional information on this subject, including the

opportunity to comment including information on the opportunity to

comment on the burden of the information collections.

B. Catalog

The Catalog of Federal Domestic Assistance Program number assigned

to this program is 14.244.

C. Environmental Impact

A Finding of No Significant Impact with respect to the environment

for this Notice 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, SW., Washington, D.C. 20410.

D. Federalism, Executive Order 12612

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this Notice will not have substantial direct effects on

States or their political subdivisions, or on the relationship between

the Federal Government and the States, or on the distribution of power

and responsibilities among the various levels of government. As a

result, the Notice is not subject to review under the Order.

E. Documentation and Public Access Policy

(1) Documentation and public access requirements. HUD will ensure

that documentation and other information regarding each application

submitted pursuant to this Notice are sufficient to indicate the basis

upon which assistance was provided or denied. This material, including

any letters of support, will be made available for public inspection

for a 5-year period beginning not less than 30 days after the award of

the assistance. Material will be made available in accordance with the

Freedom of Information Act (5 U.S.C. 552) and HUD's implementing

regulations in 24 CFR part 15.

(2) Disclosures. HUD will make available to the public for 5 years

all applicant disclosure reports (HUD Form 2880) submitted in

connection with this Notice. Update reports (also Form 2880) will be

made available along with the applicant disclosure reports, but in no

case for a period less than 3 years. All reports--both applicant

disclosures and updates--will be made available in accordance with the

Freedom of Information Act (5 U.S.C. 552) and HUD's implementing

regulations at 24 CFR part 15.

(3) Ethics Related Questions. Applicants or employees who have

ethics related questions should contact the HUD Ethics Law Division at

(202) 708-3815. (This is not a toll-free number.)

Dated: April 10, 1998.

Saul N. Ramirez, Jr.,

Assistant Secretary for Community Planning and Development.

[FR Doc. 98-10131 Filed 4-14-98; 11:41 am]

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