Empowerment Zone/Enterprise Communities Program: Overview of Rounds I, II, and III

Publication Date: October 2002

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Social conditions

Type:

Abstract:

In 1993, Congress set in motion a major economic development initiative designed to revitalize deteriorating urban and rural communities. The Empowerment Zone/ Enterprise Communities (EZ/EC) program targeted federal grants for social services and community redevelopment, and provided tax and regulatory relief intended to attract and retain businesses in designated areas. It embraced a two-tier designation process. Originally, six urban and three rural areas were designated Empowerment Zones (EZs). They enjoyed the bulk of the tax and grant incentives. An additional 60 urban and 30 rural areas were designated Enterprise Communities (ECs); they received a smaller package of federal incentives. In 1997, Congress created a Round II of the EZ/EC program, authorizing the designation of 20 additional EZs (15 urban, 5 rural). Round II EZs were given a different mix of tax incentives. And, unlike for the Round I EZs, the enabling legislation for Round II zones did not include Social Service Block Grant (SSBG) funding. Instead of mandatory SSBG funding, Congress has appropriated some discretionary funding for Round II EZs from FY1999 through FY2002.

At the end of the post-election session, the 106th Congress passed P.L. 106-554 which included authorization for the Secretaries of HUD and Agriculture to designate nine additional EZs (seven urban and two rural). Round III EZs were announced (see [http://www.hud.gov/news/release.cfm?content=pr02-008.cfm].) on January 15, 2002. The Consolidated Appropriations Act also included provisions that significantly affect Round I and Round II EZs. This report provides an overview of the EZ/EC program--including funding issues--as well as a summary of EZ-related provisions of P.L. 106-554. It will be updated as events warrant.