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

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## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** April 16, 1998
- **Citation:** 63 FR 19162

## Text

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

[[Page 19165]]

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]
BILLING CODE 4210-29-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-10131. Public record. Not legal advice.