FINAL PAPER
9:19 AM 11 May 1999
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COMMUNITY DEVELOPMENT AGENDA
May 11,1999
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TODAY'S ANNOUNCEMENT BUILDS ON PRESIDENT CLINTON'S AND VICE PRESIDENT
GORE'S SIX-YEAR RECORD OF PROMOTING GROWTH AND OPPORTUNITY IN
AMERICA'S COMMUNITIES
Since 1993, President Clinton and Vice President Gore have been committed to tapping the potential of
America's urban and rural communities. They have a demonstrated record of creating new initiatives and
expanding existing initiatives to promote community and economic development. The Clinton-Gore
Administration has worked with the private sector, states, and localities to help revitalize America's
communities by bringing capital, jobs, and opportunity to distressed areas and cleaning up the urban
environment. President Clinton and Vice President Gore have created or expanded the folIowing initiatives
over the last six years:
Helning to Bring Private Enterprise and Capital to Distressed Areas. The Clinton-Gore
Administration has renewed the commitment of the Federal government to help bring private
enterprise into underserved communities and improve access to capital for low-income households,
minorities, and traditionally underserved borrowers.
125 Empowerment Zones and Enterprise Communities.. The Clinton Administration has
announced 105 EZs and ECs across the country. This effort was proposed by President Clinton
and passed by Congress in 1993. The EZ/EC effort has generated more than $2 billion of new
private sector investment in community development activities. The President has also signed into
law a second round ofEZs -- 15 new urban and 5 new rural zones -- which will include tax
incentives, small business expensing, and private activity bonds. In FY 1999, President Clinton and
Congress provided first-year funding of $55 million for the new EZs, and $5 million in first-year
funding for 20 new rural Enterprise Communities announced in January.
Strengthened and Simplified the Community Reinvestment Act (CRA). In April 1995, the Clinton
Administration reformed the CRA regulations to emphasize performance. According to the National
Community Reinvestment Coalition (NCRC), the private sector has pledged more than $1 trillion
going forward in loans to distressed communities - and more than 95 percent of these financial
commitments have been made since 1992. Banks made $18.6 billion in community development
loans in 1997 alone. Lending to minority and low-income borrowers is also on the rise.
Created the Community Development Financial Institutions Fund (CDFJ). Proposed and signed into
law by the President in 1994, the CDFI Fund, through grants, loans, and equity investments, is
helping to create a network of community development financial institutions in distressed areas
across the United States. The CDFI fund was established in 1994. In FY99, funding was increased
19 percent to $95 million from $80 million.
The Economic Development Initiative and Section 108 Loan Guarantee. EDI grants are used to infuse
capital into community development projects, enhancing the debt financing provided by the Section
108 loan guarantee program. Together, the programs support critical economic development in
distressed communities. Estimated jobs supported by EDI and the Section 108 loan guarantee have
grown by 300,000 from 1994 to 1998. During this time period ED! and the Section 108 loan
guarantee program have funded $3.5 billion for more than 650 separate project commitments.
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.community empowerment agenda is helping to bring jobs and opportunity back to distressed areas:
$3 Billion Welfare-to- Work Jobs Initiative. The Clinton Administration fought for a $3 billion
welfare-to-workjobs initiative, as part of the Balanced Budget Agreement. The Administration is
implementing these welfare-to-work grants directly to both cities and states for allocating
additional resources to help long-term, hard-to-serve welfare recipients find and keep jobs.
Welfare-to-Work Tax Credit and Work Opportunity Tax Credit. The Welfare-to-Work Tax Credit,
enacted in the 1997 Balanced Budget Agreement, provides a credit equal to 35 percent of the first
$10,000 in wages in the first year of employment, and 50 percent ofthe first $10,000 in wages in
the second year, to encourage the hiring and retention of long-term welfare recipients. This credit
complements the Work Opportunity Tax Credit (WOTC), which expands eligible businesses to
include those who hire young adults living in Empowerment Zones and Enterprise Communities.
In FY 1999, the President requested and Congress accepted extending the credit through June 30,
1999.
Communitv Development Block Grant (eDBG) Expansion. President Clinton'S FY 2000 budget
included an expansion ofCDBG. The final budget increases funding for CDBG from $4.750
billion in FY 1999 to $4.775 billion in FY 2000, a $25 million expansion this year.
Cleaning Up the Urban Enyironment. The Clinton Administration has launched a landmark effort,
including the Brownfields Tax Incentive, to clean up and redevelop Brownfields sites. In total, the
Brownfields action agenda has marshaled funds to clean up and redevelop up to 5,000 properties,
leveraging between $5 billion and $28 billion in private investment and creating and supporting
196,000 jobs.
PRESIDENT CLINTON AND VICE PRESIDENT GORE ARE BUILDING ON THEIR PAST
ACHEIVEMENTS THROUGH A NUMBER OF NEW INITIATIVES THIS YEAR.
While Americans are enjoying the fruits of our strong economy, we still need to do more to improve
conditions in underserved urban and rural communities. To address this need, President Clinton and
Vice President Gore are working on several fronts:
The New Markets Initiatiye. President Clinton's FY 2000 balanced budget provides a new initiative
designed to create the conditions for economic success by prompting approximately $15 billion in new
investment in urban and rural areas through:
The New Markets Tax Credit. To help spur $6 billion in new equity capital, this tax credit is worth
up to 25 percent for investments in a wide range ofvehic1es serving these communities, including
community development banks, venture funds, and the new investment company programs created
by this initiative (see below). A wide-range of businesses could be financed by these investment
funds, including small technology firms, inner-city shopping centers, manufacturers with hundreds
of employees, and retail stores.
America's Private Investment Companies CAPICs). Just as America's support for the Overseas
Private Investment Corporation helps promote growth in emerging markets abroad, APICs will
encourage private investment in this country's untapped markets, by leveraging up to $1.5 bilion in
investment in new development projects and larger businesses that are expanding or relocating in
inner city and rural areas.
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(SBIC) program has provided roughly $20 billion in equity and debt financing to more than 85,000 ~
different companies, helping them to grow from small businesses to household names, like AOL I II
and Staples. However, too little of the capital invested has benefited our cities and rural distresse~ ~
communities. SBA now will be offering more flexibility and new financing terms for Small 3[
Business Investment Companies (SBICs) that invest in underserved areas. ~~
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