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Introduction to the RC/EZ Initiative

On December 21, 1994, HUD and the U.S. Department of Agriculture (USDA) designated 105 distressed communities as Empowerment Zones and Enterprise Communities (EZs and ECs) and were named as joint lead implementing agencies. HUD would administer the urban part of the Initiative, while USDA would administer the rural portion of the program. In January 1999, the initiative was expanded through a second round of designations to include 15 new urban EZs, 5 new rural EZs, and 20 new rural ECs. In December 2000, the Community Renewal Tax Relief Act of 2000 expanded the initiative further, authorizing 40 Renewal Communities (RCs) and 9 more EZs. On December 31, 2001, HUD designated 28 RCs in urban areas and 12 in rural areas. In 2001, HUD also designated 8 urban Round III EZs and USDA designated 2 rural Round III EZs. HUD planned to designate just 7 Round III EZs, but one more designation was granted because Atlanta, Georgia lost its original EZ designation since the new RC designated shared Census tracts with the original Atlanta EZ area.

The RC/EZ/EC Initiative took an innovative approach to revitalization. It brought communities together through public and private partnerships to attract the investment necessary for sustainable economic and community development. The Initiative recognized that local communities, working together, can best identify and develop local solutions to the problems they face.

The Federal Government had been actively engaged in assisting the designated communities in realizing their revitalization strategies by providing tax incentives, grants, loans, and technical assistance, the Initiative has helped spur private investment in communities that have experienced severe economic decline. The program provided performance-oriented, flexible Federal grant funding so communities can design local solutions that empower residents to participate in the revitalization of their neighborhoods.

The urban EZs have used their Federal seed money to create partnerships that have leveraged more than $12 billion in public and private investment. Strategies resulting from these partnerships have generated jobs; provided business assistance and services; trained and educated youth and families; improved access to childcare, healthcare and transportation; and increased residents' safety and involvement in their neighborhoods.

All ECs that HUD and USDA designated in 1994 expired in 2004. The RC designations expired at the end of 2009. The EZ designations, including the District of Columbia Enterprise Zone, were also set to expire at the end of 2009 but were retroactively extended through December 31, 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312), signed into law on December 17, 2010. No funding was appropriated for the Round I, II, or III EZs through this Bill.

HUD's Role

The Office of Community Renewal (OCR) worked with the leaders of the HUD-designated Renewal Communities and Empowerment Zones to help these areas achieve the economic development made possible by a generous $11 billion tax incentive package. HUD has played an integral role in the planning, development and implementation of the Renewal Communities and Empowerment Zones.

As a lead implementing agency, HUD offered technical assistance on revitalization strategies with the RC and EZ designees. In September 2008, Director of the Office of Community Renewal, Pamela Glekas Spring, toured the New Balance sports laboratory with the City of Lawrence, Massachusetts Community Development Director, Jim Barnes, and RC Program Manager, Sharon Dubois to learn firsthand how the RC incentives fueled business expansion in the Lawrence RC. In 2008, Director Glekas Spring traveled to Chicago to help provide technical assistance and training on the Empowerment Zone and Renewal Community programs to representatives from the City of Chicago, HUD CPD field office staff and the Chicago RC and EZ directors.

On April 24-26, 2007, Ms. Pamela Glekas Spring and other headquarters personnel from the Office of Community Planning and Development visited New Orleans to tour hurricane-destroyed neighborhoods and areas under reconstruction and discussed redevelopment efforts with City officials and HUD field office personnel. Ms. Glekas Spring also helped to lead a discussion on HUD's performance expectations of the New Orleans Renewal Community in marketing special tax incentives to businesses and the RC's obligations in fulfilling economic growth promotion requirements.

In May 2002 and in the spring and fall of 2003, HUD's Office of Community Renewal helped to host six national technical assistance workshops for representatives of the nation's Renewal Communities and Empowerment Zones. Thousands of representatives from more than 75 urban and rural communities attended these workshops, together with U.S. Congressional leaders, business owners, accountants, and local community development leaders. HUD and RC/EZ representatives held dozens of seminars at these workshops on the valuable tax incentives available to businesses in the RC/EZ communities.

HUD's Office of Community Renewal provided technical assistance to the RC/EZ directors through satellite broadcasts and monthly teleconference calls. Representatives of different federal agencies, including the Department of Treasury, IRS, and the Community Development Financial Institutions Fund joined these monthly calls to provide valuable information on technical and financial assistance available to the distressed RC/EZ areas. OCR has also printed and distributed more than 100,000 copies of its valuable Tax Incentive Guide for Businesses to thousands of businesses and community leaders nationwide.

HUD's Office of Community Renewal monitored and evaluated the performance of the RC/EZs using its Internet-based performance measurement system (PERMS). The RC/EZ designees used PERMS to document the projects and programs they were implementing to achieve their local strategic plans and courses of action. They also used the system to submit their annual reports to HUD. PERMS not only cut down on the paperwork burden facing the designees, but it also provided HUD with a low-cost mechanism for continually monitoring the progress of each designee. To review these projects within the annual reports that each RC and EZ designee has submitted to HUD, please visit http://www5.hud.gov/urban/perms/perms.asp

HUD also operates the Enterprise Geographic Information System Address Locator on its web site. This site has become a remarkably popular tool among the 60,000 - 90,000 businesses and agencies who use it each month. The Locator allows businesses to determine if any street address is located within the boundaries of an RC, EZ, Round II Rural EC or the DC Enterprise Zone. Since businesses are eligible for valuable tax incentives if they are located in these areas and hire employees who live in these areas, the Address Locator is critical to more than 300,000 businesses. These tax incentives were worth approximately $11 billion and consisted of employment credits, work opportunity tax credits, commercial revitalization deductions, tax-exempt bond financing, capital gains exclusions, and many other incentives. The locator will remain active for at least three years after the expiration of the EZ/RC/EC designations. Be sure to visit this Address Locator at www.hud.gov/crlocator.