REAUTHORIZATION OF PUBLIC WORKS AND ECONOMIC DEVELOPMENT
ACT OF 1965
A BILL
To reauthorize and improve the programs authorized by the Public Works and Economic Development Act of 1965.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
Short Title.- This Act may be cited as the `Economic Development Administration Reauthorization Act of 2003'.
SEC. 2. FINDINGS AND DECLARATIONS. Section 2 of the Public Works and Economic Development Act of 1965, as amended ("PWEDA") (42 U.S.C. § 3121), is revised to read as follows:
"SEC. 2. FINDINGS AND DECLARATIONS.
"(a) Findings.- Congress finds that -
"(1) while the fundamentals for growth in the American economy remain strong, there continue to be areas experiencing chronic high unemployment, underemployment, low per capita incomes, and outmigration as well as areas facing sudden and severe economic dislocations due to structural economic changes, changing trade patterns, certain Federal actions (including environmental requirements that result in the removal of economic activities from a locality), and natural disasters;
"(2) sustained economic growth in our Nation, States, cities and rural areas is produced by expanding free enterprise through trade and enhanced competitiveness of regions;
"(3) the goal of Federal economic development programs is to raise the standard of living for all citizens and increase the wealth and overall rate of growth of the economy by encouraging local and regional communities to develop a more competitive and diversified economic base by:
"(A) promoting job creation through increased innovation, productivity, and entrepreneurship; and
"(B) empowering local and regional communities experiencing chronic high unemployment and low per capita income to attract substantially increased private-sector capital investment;
"(4) while economic development is an inherently local process, the Federal Government should work in partnership with public and private local, regional, Tribal and State organizations to maximize the impact of existing resources and enable regions, communities, and citizens to participate more fully in the American dream and national prosperity;
"(5) in order to avoid wasteful duplication of effort and achieve meaningful, long-lasting results, Federal, State, Tribal and local economic development activities should have a clear focus, improved coordination, a comprehensive approach, common measures of success, and simplified and consistent requirements; and
"(6) Federal economic development efforts will be more effective if they are coordinated with, and build upon, the trade, workforce investment, and technology programs of the United States.
"(b) Declarations.- Congress declares that, in order to promote a strong and growing economy throughout the United States:
"(1) assistance under this Act should be made available to both rural and urban distressed communities;
"(2) local communities should work in partnership with neighboring communities, Indian Tribes, the States, and the Federal Government to increase their capacity to develop and implement comprehensive economic development strategies to enhance regional competitiveness in the global economy and support long-term development of regional economies; and
"(3) whether suffering from long-term distress or a sudden dislocation, distressed communities should be encouraged to focus on strengthening entrepreneurship and competitiveness, and to take advantage of the development opportunities afforded by technological innovation and expanding and newly opened global markets.".
SEC. 3. DEFINITIONS.
Section 3 of PWEDA (42 U.S.C. § 3122) is amended as follows:
(1) Subparagraph (4)(A) of this section is amended by striking subparagraph (i) and re-designating successive subparagraphs (ii) through (vii) as (i) through (vi) and revising subparagraph (iv) as re-designated to read as follows:
"(iv) a city or other political subdivision of a State, including a special purpose unit of State or local government, or a consortium of political subdivisions;".
(2) Subparagraph 4(B) is amended by adding at the end thereof a new sentence:
"The requirement under subparagraph (A)(vi) that the nonprofit organization or association is 'acting in cooperation with officials of a political subdivision of a State' does not apply in the case of research, training and technical assistance grants under section 207 that are national or regional in scope.".
(3) Paragraphs (8), (9) and (10) are amended by re-designating them as paragraphs (9), (10) and (11) and a new paragraph (8) is added as follows:
"(8) Regional Commissions.- The term 'Regional Commissions' as used in section 403 of this Act refers to the regional economic development authorities: the Delta Regional Authority (Pub. L. No. 106-554, Sec. 1(a)(4) [Div. B, title VI], 114 Stat. 2763A-268) (7 U.S.C. § 2009aa et seq.), the Denali Commission (Pub. L. No. 105-277, Div. C, title III, 112 Stat. 2681-637) (42 U.S.C. § 3121 note), and the Northern Great Plains Regional Authority (Pub. L. No. 107-171, 116 Stat. 375) (7 U.S.C. § 2009bb et seq.).".
(4) A new paragraph (12) is added at the end to read as follows:
"(12) University center.- The term 'university center' refers to a University Center for Economic Development established pursuant to the authority of section 207(a)(2)(D) of this Act.".
SEC. 4. WORKING WITH NONPROFIT ORGANIZATIONS IN ESTABLISHMENT OF ECONOMIC DEVELOPMENT PARTNERSHIPS.
Section 101 of PWEDA (42 U.S.C. § 3131) is amended as follows:
(1) In subsection (b) strike "and multi-State regional organizations" and insert in lieu thereof "multi-State regional organizations, and nonprofit organizations".
(2) In subsection (d), strike "adjoining" each time it occurs.
SEC. 5. SUB-GRANTS IN CONNECTION WITH PUBLIC WORKS PROJECTS.
Section 201 of PWEDA (42 U.S.C. § 3141) is amended by adding a new subsection (d) as follows:
"(d) Sub-grants.- (1) Subject to paragraph (2), a recipient of a grant under this section may directly expend the grant funds or may redistribute the funds in the form of a sub-grant to other recipients eligible to receive assistance under this section to fund required components of the scope of work approved for the project.
"(2) Under paragraph (1), a recipient may not redistribute grant funds to a for-profit entity.".
SEC. 6. CLARIFICATION OF GRANTS FOR STATE PLANNING.
Section 203 of PWEDA (42 U.S.C. § 3143) is amended as follows:
(1) Revise paragraph (1) of subsection (d) to read as follows:
"(1) Development.- Any State plan developed with assistance under this section shall, to the maximum extent practicable, take into consideration regional economic development strategies.";
(2) Strike paragraph (3) of subsection (d) in its entirety and re-designate paragraphs (4) and (5) as (3) and (4);
(3) Revise re-designated paragraph (3) of subsection (d) by striking "and" at the end of subparagraph (C) and re-designating current subparagraph (D) as (E) and adding a new subparagraph (D) to read as follows:
"(D) assist in carrying out state's workforce investment strategy (as outlined in the State plan required under section 112 of the Workforce Investment Act of 1998 (29 U.S.C. § 2822)); and";
(4) Add a new subsection (e) at the end thereof as follows:
"(e) Sub-grants.- (1) Subject to paragraph (2), a recipient of a grant under this section may directly expend the grant funds or may redistribute the funds in the form of a sub-grant to other recipients eligible to receive assistance under this section to fund required components of the scope of work approved for the project.
"(2) Under paragraph (1), a recipient may not redistribute grant funds to a for-profit entity.".
SEC. 7. SIMPLIFICATION OF DETERMINATION OF GRANT RATES.
Sections 204 and 205 of PWEDA (42 U.S.C. §§ 3144, 3145) are amended to read as follows:
"SEC. 204. COST SHARING.
"(a) Federal Share.- The Secretary shall issue regulations to establish the applicable grant rates for projects based on the relative needs of the areas in which the projects are located. Except as provided in subsection (c) below, the amount of a grant for a project under this title may not exceed 80 percent of the cost of the project.
"(b) Non-Federal Share.- In determining the amount of the non-Federal share of the cost of a project, the Secretary may provide credit toward the non-Federal share for all contributions both in cash and in-kind, fairly evaluated, including contributions of space, equipment, and services, and assumptions of debt.
"(c) Increase in Federal Share.-
"(1) Indian tribes.- In the case of a grant to an Indian tribe, the Secretary may increase the Federal share above the percentage specified in subsection (a) up to 100 percent of the cost of the project.
"(2) Certain States, political subdivisions, and nonprofit organizations.- In the case of a grant to a State (or a political subdivision of a State), that the Secretary determines has exhausted its effective taxing and borrowing capacity, or in the case of a grant to a nonprofit organization that the Secretary determines has exhausted its effective borrowing capacity, the Secretary may increase the Federal share above the percentage specified in subsection (a) up to 100 percent of the cost of the project.
"SEC. 205. GRANTS SUPPLEMENTING OTHER AGENCY GRANTS. (42 U.S.C. § 3145)
"(a) Definition of Designated Federal Grant Program.--In this section, the term `designated Federal grant program' means any Federal grant program that-
"(1) provides assistance in the construction or equipping of public works, public service, or development facilities;
"(2) is designated as eligible for an allocation of funds under this section by the Secretary; and
"(3) assists projects that are-
"(A) eligible for assistance under this title; and
"(B) consistent with a comprehensive economic development strategy.
"(b) Supplementary Grants.- Subject to subsection (c) below, in order to assist eligible recipients to take advantage of designated Federal grant programs, on the application of an eligible recipient, the Secretary may make a supplementary grant for a project for which the eligible recipient is eligible but, because of the recipient's economic situation, for which the eligible recipient cannot provide the required non-Federal share.
"(c) Requirements Applicable to Supplementary Grants.-
"(1) Amount of supplementary grants.- The share of the project cost supported by a supplementary grant under this section may not exceed the applicable grant rate under section 204.
"(2) Form of supplementary grants.- The Secretary shall make supplementary grants by
"(A) the payment of funds made available under this Act to the heads of the Federal agencies responsible for carrying out the applicable Federal programs, or
"(B) the award of funds under this Act which will be combined with funds transferred from other Federal agencies in projects administered by the Secretary.".
"(3) Federal share limitations specified in other laws.--Notwithstanding any requirement as to the amount or source of non-Federal funds that may be applicable to a Federal program, funds provided under this section may be used to increase the Federal share for specific projects under the program that are carried out in areas described in section 301(a) above the Federal share of the cost of the project authorized by the law governing the program.".
SEC. 8. REGULATIONS ON ALLOCATIONS TO ENSURE JOB CREATION POTENTIAL.
Subsection 206 of PWEDA (42 U.S.C. § 3146) is amended by striking "and" at the end of subparagraph (1)(C), inserting "and" at the end of paragraph (2), and adding a new paragraph (3) at the end thereof to read as follows:
"(3) allocations of assistance under this title promote job creation through increased innovation, productivity, and entrepreneurship, and financial assistance extended pursuant to such allocations will have a high probability of meeting or exceeding applicable performance requirements established in connection with extension of the assistance.".
SEC. 9. INCREASED FLEXIBILITY IN GRANTS FOR TRAINING, RESEARCH, AND TECHNICAL ASSISTANCE.
(a) Section 207 of PWEDA (42 U.S.C. § 3147) is amended by striking "and" at the end of subparagraph (2)(F) of subsection (a), re-designating current subparagraph (G) as (H), and adding a new subparagraph (G) to read as follows:
"(G) studies that evaluate the effectiveness of collaborations between projects funded under this Act with projects funded under the Workforce Investment Act of 1998 (29 U.S.C. § 2801 et seq.); and".
(b) Section 207 is further amended by adding a new subsection (c) to read as follows:
"(c) Sub-grants.- A recipient of a grant under this section may directly expend the grant funds or may redistribute the funds in the form of a sub-grant to other recipients eligible to receive assistance under this section to fund required components of the scope of work approved for the project.".
SEC. 10. REMOVAL OF SECTION.
Section 208 of PWEDA (42 U.S.C. § 3148) is stricken in its entirety and insert in lieu thereof: "SEC. 208. [Repealed].".
SEC. 11. IMPROVEMENTS IN ADMINISTRATION GRANTS FOR ECONOMIC ADJUSTMENT INVOLVING REVOLVING LOAN FUND PROJECTS.
(a) Subsection (d) of section 209 of PWEDA (42 U.S.C. § 3149) is amended by striking "an eligible" in each case it occurs in paragraphs (1) and (2) and inserting in lieu thereof "a recipient".
(b) Section 209 of PWEDA (42 U.S.C. § 3149) is amended by adding a new subsection (e) at the end thereof as follows:
"(e) Special provisions relating to revolving loan fund grants.- The Secretary shall promulgate regulations to ensure the proper operation and financial integrity of revolving loan funds established by recipients with assistance under this section.
"(1) Efficient Administration.- In order to improve the ability to manage and administer the Federal interest in revolving loan funds and in accordance with regulations issued for such purposes, the Secretary may amend and consolidate grant agreements governing revolving loan funds to provide flexibility with respect to lending areas and borrower criteria. In addition, the Secretary may assign or transfer assets of a revolving loan fund to a third party for the purpose of liquidation and a third party may retain assets of the fund to defray costs related to liquidation. The Secretary may also take such other actions with respect to management and administration as the Secretary determines to be appropriate to carry out the purposes of this Act, including actions to enable revolving loan fund operators to sell or securitize loans to the secondary market (except that such actions may not include issuance of a Federal guaranty by the Secretary).
"(2) Release of Federal Interests.- The Secretary may release, in whole or in part, any property interest in connection with a revolving loan fund grant after the date that is 20 years after the date on which the grant was awarded, provided that the recipient-
"(A) is in compliance with the terms of its grant and operating the fund at an acceptable level of performance as determined by the Secretary; and
"(B) reimburses the government prior to the release for the amount of the Secretary's investment in the fund or the pro-rata share of the fund at the time of the release, whichever is less.
"Any action taken by the Secretary pursuant to this subsection with respect to a revolving loan fund shall not constitute a new obligation provided that all grant funds associated with the original grant award have been disbursed to the recipient.".
SEC. 12. USE OF FUNDS IN PROJECTS CONSTRUCTED UNDER PROJECTED COST.
Section 211 of PWEDA (42 U.S.C. § 3151) is amended to read as follows:
"SEC. 211. USE OF FUNDS IN PROJECTS CONSTRUCTED UNDER PROJECTED COST.
"In any case in which the Secretary has made a grant for a construction project under sections 201 or 209 of this title, and before closeout of the project, the Secretary determines that the cost of the project based on the designs and specifications that were the basis of the grant has decreased because of decreases in costs-
"(1) without further appropriations action, the Secretary may approve the use of the excess funds or a portion of the funds to improve the project;
"(2) any amount of excess funds remaining after application of paragraph (1) may used for other investments authorized for support under this Act.
In addition to paragraphs (1) and (2) of this section, in the event of construction underruns in projects utilizing funds transferred from other Federal agencies pursuant to section 604 of this Act, the Secretary may utilize these funds in conjunction with paragraphs (1) or (2) with the approval of the originating agency or will return the funds to the originating agency.".
SEC. 13. SPECIAL IMPACT AREAS.
Title II of PWEDA is further amended by adding a new section 214 as follows:
"SEC. 214. SPECIAL IMPACT AREAS.
"Special impact areas.- The Secretary is authorized to make grants, enter into contracts and provide technical assistance for projects and programs that the Secretary finds will fulfill a pressing need of the area and be useful in alleviating or preventing conditions of excessive unemployment or underemployment or assist in providing useful employment opportunities for the unemployed or underemployed residents in the area. In extending assistance under this section, the Secretary may waive, in whole or in part, as appropriate, the provisions of section 302 of this Act provided that the Secretary determines that such assistance will carry out the purposes of the Act.".
SEC. 14. PERFORMANCE INCENTIVES.
Title II of PWEDA is further amended by adding a new section 215 as follows:
"SEC. 215. PERFORMANCE INCENTIVES.
"(a) In accordance with regulations issued for such purposes, the Secretary may award transferable performance credits in an amount that does not exceed 10 percent of the grant amount awarded under sections 201 or 209 of this Act on or after the effective date of this amendment. The Secretary shall base such performance incentives on the extent to which a recipient meets or exceeds performance requirements established in connection with extension of the assistance.
"(b) A recipient awarded a transferable performance credit under this section may redeem the credit to increase the Federal share of a subsequent grant funded under sections 201 and 209 of this Act above the maximum Federal share allowable under section 204 up to 80 percent of the project cost. A performance credit must be redeemed within 5 years of its issue date.
"(c) An original recipient may also sell or transfer the credit in its entirety to another eligible recipient for use in connection with a grant approved by the Secretary under this Act without reimbursement to the Secretary for redemption in accordance with subsection (b) above.
"(d) The Secretary shall attach such terms and conditions or limitations as the Secretary deems appropriate in issuing a performance credit. Performance credits shall be paid out of appropriations for economic development assistance programs made available in the year of redemption to the extent of availability.
"(e) The Secretary shall include information regarding issuance of performance credits in the annual report under section 603 of this Act.".
SEC. 15. COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGIES.
Sub-paragraph (a)(3)(A) of section 302 of PWEDA (42 U.S.C. § 3162) is amended by adding "maximizes effective development and use of the workforce (consistent with any applicable state and local workforce investment strategy under the Workforce Investment Act of 1998 (29 U.S.C. § 2801 et seq.)," between "access," and "enhances".
SEC. 16. DESIGNATION OF ECONOMIC DEVELOPMENT DISTRICTS.
Sub-paragraph (a)(3)(B) of section 401 of PWEDA (42 U.S.C. § 3171) is amended by striking "by each affected State and".
SEC. 17. DISTRICT INCENTIVES.
Section 403 of PWEDA (42 U.S.C.§ 3173) is amended by striking it in its entirety and re-designating sections 404 and 405 as sections 403 and 404. Section 403 as re-designated is amended by adding at the end the following new sentence:
"If any part of an economic development district is in a region covered by one or more other Regional Commissions as defined in section 3(8) of this Act, the economic development district shall ensure that a copy of the comprehensive economic development strategy of the district is provided to the affected regional commission.".
SEC. 18. ECONOMIC DEVELOPMENT INFORMATION CLEARINGHOUSE.
Section 502 of PWEDA (42 U.S.C. § 3192) is amended to read as follows:
" SEC 502. ECONOMIC DEVELOPMENT INFORMATION CLEARINGHOUSE
"In carrying out this Act, the Secretary shall-
"(1) maintain a central information clearinghouse on the Internet with information on economic development, economic adjustment, disaster recovery, defense conversion, and trade adjustment programs and activities of the Federal government, links to State economic development organizations, and links to other appropriate economic development resources;
"(2) assist potential and actual applicants for economic development, economic adjustment, disaster recovery, defense conversion, and trade adjustment assistance under Federal and State laws in locating and applying for the assistance;
"(3) assist areas described in section 301(a) and other areas by providing to interested persons, communities, industries, and businesses in the areas any technical information, market research, or other forms of assistance, information, or advice that would be useful in alleviating or preventing conditions of excessive unemployment or underemployment in the areas; and
"(4) obtain appropriate information from other Federal agencies needed to carry out the duties under this Act.".
SEC. 19. REMOVAL OF UNUSED AUTHORITY.
Section 505 of PWEDA (42 U.S.C. § 3195) is amended by striking it in its entirety and sections 506 and 507 are re-designated as sections 505 and 506.
SEC. 20. PERFORMANCE EVALUATIONS OF GRANT RECIPIENTS.
Section 505 of PWEDA (42 U.S.C. § 3196) as re-designated is amended as follows:
(1) In subsection (c), strike "after the effective date of the Economic Development Administration Reform Act of 1998".
(2) In paragraph (d)(2), strike "and" before "disseminating results" and insert ", and measuring the outcome-based results of the university centers' activities" before the period at the end thereof.
(3) In paragraph (d)(3) of section 506, insert before the period at the end thereof "as evidenced by outcome-based results, including the number of jobs created or retained, and amount of private-sector funds leveraged".
(4) In subsection (e) of section 506, strike "university center or" each occasion it occurs.
SEC. 21. CITATION CORRECTIONS.
Section 602 of PWEDA (42 U.S.C. § 3212) is amended by striking the citations to "40 U.S.C. § 276A-276A-5" and "section 276c" and inserting in lieu thereof, "40 U.S.C. § 3141 et seq." and "section 3145" respectively.
SEC. 22. DELETION OF UNNECESSARY PROVISION.
Section 609 of PWEDA (42 U.S.C. § 3219) is amended by striking subsection (a) in its entirety and striking the subsection designation "(b)".
SEC. 23. GENERAL AUTHORIZATION OF APPROPRIATIONS.
Section 701 of PWEDA (42 U.S.C. § 3231) is amended to read as follows:
"SEC. 701. GENERAL AUTHORIZATION OF APPROPRIATIONS.
"(a) Economic development assistance programs.- There are authorized to be appropriated for economic development assistance programs to carry out this Act $331,027,000 for fiscal year 2004, and such sums as may be necessary for fiscal years 2005, 2006, 2007, and 2008, to remain available until expended.
"(b) Salaries and expenses.- There are authorized to be appropriated for salaries and expenses of administering this Act $33,377,000 for fiscal year 2004, and such sums as may be necessary for each of the fiscal years from 2005 through 2008, to remain available until expended.".
EDA REAUTHORIZATION ACT OF 2003
Statement of Purpose and Need
This legislative proposal reauthorizes the programs of the Economic Development Administration (EDA) within the Department of Commerce for fiscal years 2004 through 2008. EDA was established in 1965 after enactment of the Public Works and Economic Development Act of 1965 (PWEDA). EDA's mission is to help our partners across the Nation (States, regions, and communities) create wealth and minimize poverty by promoting a favorable business environment to attract private capital investment and jobs. EDA provides a wide range of assistance to carry out this mission by funding projects for capacity-building, planning, infrastructure development, research and implementation of strategic initiatives. EDA extends assistance to States, cities, Indian tribes and other eligible organizations in rural and urban areas experiencing high unemployment, low income levels, or other forms of severe economic distress.
The proposal authorizes appropriations in the amount of $331,027,000 for fiscal year 2004 for the economic development assistance programs and such sums as may be necessary for fiscal years 2005 through 2008. In addition, the proposal recommends $33,377,000 for salaries and expenses in FY 2004 and additional sums as necessary for the next four years. As proposed in the FY 2004 Budget, this includes -
In addition to reauthorizing EDA's programs, this legislative proposal recommends several improvements to program authorities. The proposal provides the Secretary with broad authority to issue regulations to improve administration of revolving loan fund (RLF) projects funded under the Economic Adjustment Program. With over $670 million in EDA investments in such projects, EDA wants to ensure that they are administered properly and efficiently, yet in a way that gives the Federal Government the greatest return on its investment from the perspective of creating or preserving jobs in economically distressed areas of the country. Accordingly, the proposal recommends new authority to allow EDA to consolidate grant agreements governing these projects where it makes sense and to enable EDA to approve modifications to allow grantees to address the changing circumstances of borrowers in their project areas. The proposal also recommends new authority to enable EDA to execute a release of the Federal interest in the projects after 20 years upon payment of the amount of its investment or its pro rata share of the project, whichever is less. Given the nature of these projects - the RLF reuses loan repayments to make new loans - EDA potentially has a responsibility to monitor performance on an unending basis as long as performance is satisfactory in meeting program goals. With over 600 RLF projects, EDA is concerned about the burden of monitoring these projects. EDA proposes to use the new release authority to enable it to close out these projects after 20 years of successful operation upon receiving repayment. EDA will provide an incentive to current RLF operators to seek the release by accepting the lesser of the amount of the original investment or its pro rata share of the current value of the fund.
The Department also proposes new authority to establish an incentive program to reward grantees that perform the best in terms of creating jobs in distressed areas of the country. In addition, the Department proposes new special impact area authority to cover those unusual circumstances that arise from time to time and result in special appropriations to meet unanticipated economic development problems. The proposal also recommends a number of technical amendments to remove unused authorities, to simplify the process for establishing grant rates, and to clarify several provisions.
EDA REAUTHORIZATION ACT OF 2003
Section-by-Section Analysis
Section 1. Section 1 provides that the short title for the legislation is the Economic Development Administration Reauthorization Act of 2003.
Section 2. Section 2 revises the findings to reflect the different economy in 2003 compared to 1998 when the Economic Development Administration (EDA) was last re-authorized. The new findings also provide greater emphasis on the need to increase innovation, productivity and entrepreneurship and attract substantially higher private sector capital investment in order to create jobs and sustained economic growth.
Section 3. Section 3 revises the definition of "eligible recipient" in section 3 of the Public Works and Economic Development Act (PWEDA, 42 U.S.C. § 3122). The Department recommends deletion of subparagraph (4)(A)(i) which provides that a "section 301(a) area" is an eligible recipient of assistance under this Act. Section 301 provides criteria for determining whether a given locality is experiencing economic distress, but does not otherwise address who might represent such an area. This paragraph is not needed as EDA looks to organizational status, such as status as a city, State or Indian tribe, to meet the requirements of paragraph (4)(A) of this section.
This section also clarifies that a 'city or other political subdivision of a State' under subparagraph (4)(A)(iv) (as re-designated) includes a 'special purpose unit of State or local government.' We are recommending this change to make it clear that special purpose units of State and local governments, such as port and harbor authorities, public utility districts, and water and sewer authorities, are eligible to receive assistance under this Act. This revision does not change current law as EDA already interprets the section to include such bodies, but rather provides a clarification to conform the subparagraph with current practice.
This section clarifies the current requirement under subparagraph 4(A)(vi) (as re-designated) that ensures that recipients of assistance under the Act have cooperated with local officials. EDA is committed to ensuring that its economic development activities in funding projects are consistent with locally developed strategies and have broad community support. Accordingly, the requirement of this subparagraph is an important one. However, EDA upon occasion extends technical assistance or conducts research in which the focus is not local, but national or regional. In such cases, there is no appropriate local official with whom to cooperate. Accordingly, this section recommends clarifying the applicability of this requirement for such national or regional technical assistance or research projects.
This section also adds a new paragraph (8) which defines "Regional Commissions" for purposes section 403 of the Act. The Regional Commissions are the Delta Regional Authority, the Denali Commission, and the Northern Great Plains Regional Authority. Section 17 of the legislative proposal amends section 403 to require economic development districts to send a copy of their comprehensive economic development strategies to the appropriate Regional Commission as so defined. Section 403 already requires the districts to send a copy of their strategies to the Appalachian Regional Commission if any portion of the district is in the Appalachian region.
A new paragraph (12) is added to include a new definition of "university centers" to rename them as University Centers for Economic Development.
Section 4. Section 4 amends section 101 of PWEDA (42 U.S.C. § 3131) which sets out EDA's authority to cooperate with States and other entities in establishing economic development partnerships that might be appropriate to alleviate economic distress or promote investment in infrastructure and technological development. Currently, the Secretary can work with States, political subdivisions of States, sub-State regional organizations and multi-State organizations, but not other non-profit organizations. EDA recommends amending subsection 103(b) to allow non-profit organizations such as community development corporations to be eligible to receive assistance under this section.
This section also amends subsection (d) of this section which enables the Secretary to enter into cooperation agreements with two or more "adjoining" States or organizations of two or more "adjoining" States. We recommend striking "adjoining" each time it is used in subsection (d) since this restriction precludes the EDA from cooperating with two States that may have common problems in connection with a given matter, but do not adjoin. Texas and Minnesota, for example have common NAFTA issues relating to increased trade and related traffic on Interstate Highway 35. In addition, two or more cities that rely on waterway transportation may find benefit in working together with EDA on port redevelopment issues.
Section 5. Section 5 amends section 201 of PWEDA (42 U.S.C. § 3141) regarding EDA public works program authority to clarify that recipients of assistance have the flexibility to spend the funds directly, or if it would be more efficient, to re-distribute grant funds to a subgrantee otherwise eligible under the Act to fund required components of the scope of work approved for the project. This amendment is patterned after similar authority in connection with the economic adjustment program under section 209 of the Act. Sections 6 and 9 of the proposal make similar changes to the State Planning grant authority under section 203 of the Act and the Training, Research, Technical Assistance authority under section 207 of PWEDA.
Section 6. Section 6 revises section 203 of PWEDA (42 U.S.C. § 3143) to reduce an unnecessarily burdensome requirement under current law that mandates that any State planning assisted by the Secretary under section 203 be done cooperatively by the State and its political subdivisions. We recommend revising this requirement to provide States greater flexibility to adopt planning processes that make the most sense in light of circumstances within the State. The current requirement is infeasible in light of the amount of assistance provided to each recipient and given the number of political subdivisions within each State. In addition, many political subdivisions participate in the economic development district process and other regional economic development planning processes and section 203 will continue to require States to consider such regional economic development strategies. This section also deletes the certification requirement of paragraph (d) (3) of this section in light of the change made in paragraph (d)(1). A new subparagraph (d)(3)(D) is added to require any State-wide planning assisted under section 203 to be part of a comprehensive planning process that also considers the State workforce investment strategy as outlined in the State plan required under section 112 of the Workforce Investment Act of 1998.
Section 7. Section 7 re-works sections 204 and 205 of PWEDA (42 U.S.C. §§ 3144, 3145) which authorizes the Secretary to establish grant rates from 50 percent to 80 percent (and in limited circumstances to 100 percent). EDA currently implements this authority through section 301.4 of its regulations (title 13, Code of Federal Regulations). Section 9 re-works this section to eliminate the two-step process required under current law in which EDA makes a basic grant of 50 percent of project cost and then, depending on the economic distress of the area in which the project is located, may "supplement" its basic grant by 10, 20, or 30 percent, or more in the case of projects of Indian tribes or in certain other limited circumstances such as natural disaster. This section does not alter the substance of current law - grant rates will continue to depend on the relative level of economic distress as 13 CFR § 301.4 requires - but it eliminates the two-step process. As revised, "supplementary" grants will refer to only those projects in which EDA is participating in a multi-agency project and will transfer funds as a "supplement" to a sister agency's funds.
Section 8. Section 8 adds a new paragraph (3) to section 206 of PWEDA (42 U.S.C. § 3146) to require the Secretary in promulgating rules and procedures for grants under title II to ensure that allocations of assistance promote job creation through increased innovation, productivity, and entrepreneurship; and will meet or exceed applicable performance requirements.
Section 9. Section 9 adds a new subparagraph (2)(G) to subsection (a) of section 207 of PWEDA (42 U.S.C. § 3147) to specify that one type of project that the Secretary can fund under this authority is a project to study the effectiveness of collaborations between EDA and the Department of Labor from an economic development-workforce investment perspective.
This section also adds a new subsection (c) to section 207 to provide recipients with flexibility to make sub-grants as noted in section 7 above. In keeping with the eligibility criteria under the definition of "eligible recipient" under subparagraph (4)(B) of section 3 of PWEDA for the section 207 program which can offer assistance to private individuals and for-profit organizations, new subsection (c) does not include the limitation applicable to the sections 201 and 209 programs regarding grant assistance to profit-making organizations.
Section 10. Section 10 repeals section 208 of PWEDA (42 U.S.C. § 3148) as a matter of administrative convenience. Section 208 requires EDA to make a determination, before approving a public works grant under section 201 of PWEDA or an economic adjustment grant under section 209, that the financial assistance will not "increase the production of goods, materials, or commodities, or the availability of services or facilities, when there is not sufficient demand for such goods, materials, commodities, services, or facilities, to employ the efficient capacity of existing competitive commercial or industrial enterprises." While EDA has no intention of supporting investments that contravene this provision, in practice it requires EDA to perform complex studies of the potential economic impact of its investments, even though EDA rarely determines that a potential project implicates such competitive concerns. EDA's criteria and Investment Policy Guidelines provide sufficient safeguards against situations section 208 was intended to prevent. EDA's criteria require local government funds to be used in support of EDA-assisted investments. It is not in local officials' interest to commit local public funds to an endeavor that will adversely impact existing local businesses. In addition, EDA's Investment Policy Guidelines require that all investments be market-based and have the financial support of the private sector. In order to garner the support of the private sector, market conditions must support private sector investment. If the potential grant will result in the creation of excess capacity, the rationale for the private investment will greatly diminish.
Section 11. Section 11 makes a minor wording change to subsection (d) to section 209 of PWEDA (42 U.S.C. § 3149) to strike "eligible" before "recipient" because in the context of the subsection the provision relates to recipients who have been awarded a grant. Section 11 also adds a new subsection (e) to section 209 to improve the administration of economic adjustment grants which establish revolving loan funds (RLFs). EDA has over 600 active RLFs funded with over $671 million in EDA funds. The total portfolio value of the RLFs, which includes the matching local share and interest earned over the years, is estimated at $1 billion.
Many RLFs face serious restrictions unanticipated and unintended at the time of the grant award that affect the operators' ability to perform effectively. Paragraph (1) of new subsection (e) authorizes the Secretary, in accordance with regulations issued for such purposes, to amend individual awards to correct, among other problems, lending area restrictions or borrower restrictions which impede the ability of the RLF to operate in a more efficient manner to respond to changing demands in economically distressed areas. For example, approximately 170 EDA RLFs are operated by about sixty grantees (each operating from two to four EDA RLFs that were funded at different times). Enabling EDA to merge each grantee's RLFs will greatly simplify the administration, operational efficiency and reporting for both the RLF grantees and EDA. Some RLFs, for example, were awarded with EDA "one-year" funds or special disaster or defense appropriations. A recipient may have established a RLF to help small businesses trying to cope with the effects of a natural disaster and the operator of the RLF may have operated the fund successfully over a number of years. The intent of the assistance is to rejuvenate the area affected by the disaster. In many cases, because the grant award may have focused on businesses specifically impacted by the disaster and no such business remains in operation or is in need of, and worthy of credit, the operator of the RLF may have a declining base of outstanding loans even though the area continues to be severely economically distressed for the same or supervening reasons. Because the grant funds were "one-year" funds, EDA is unable to approve modifications to grant award conditions in a manner consistent with current requirements. New paragraph (e)(1) would provide EDA with the necessary legal authority and enable it to approve modifications that can help ensure RLFs will be put to good use by providing capital in economically distressed areas.
New paragraph (e)(1) also allows EDA to transfer RLF assets to third parties when such transfer would assist in the orderly liquidation of a RLF which EDA is terminating for reasons of poor performance or for the convenience of the parties. Because some RLFs have ongoing operations with substantial value, this authority will enable EDA to maximize recovery of the Federal interest in the fund. This paragraph also provides EDA with authority to continue working with its RLF operators to further develop a secondary market for economic development loans. EDA successfully demonstrated several secondary market concepts for EDA RLFs with its 1999 Securitization Demonstration Project. The requested authority will help EDA to better position its RLFs to further engage in this rapidly developing opportunity.
New paragraph (e)(2) authorizes EDA to release its interest in RLF grant assets after 20 years provided that the grantee is in compliance with grant award terms, is operating the fund satisfactorily, and reimburses the Government for its pro-rata share of the fund or the amount of the EDA investment, whichever is less. EDA proposes to provide a release for the lesser of the two amounts as an incentive to the grantees to encourage them to seek such releases. After a period of 20 years, we believe that EDA has obtained more than the full benefit of its investment by providing a source of economic development funds for a long period of time. Currently, EDA's portfolio of RLF grants is cumbersome because EDA potentially retains an obligation to monitor the grant funds on an unending basis as long as the RLF is operating successfully. By encouraging grantees to seek a release of the Government's interest, grantees will be able to pursue business opportunities that meet a community's changing circumstances without EDA involvement, and EDA will be able to close out a number of old grants, thereby reducing its monitoring burden.
This new authority will also help EDA to correct the historic and growing imbalance of finite EDA resources available to monitor and administer an ever-increasing number of RLFs. The gradual reduction of the overall size of EDA's RLF portfolio, either through termination and liquidation of RLFs, where appropriate, or releasing the federal interest in the oldest high-performing RLFs, will have a positive impact by enabling EDA to effectively utilize its staff resources for higher quality grant administration of the remaining portfolio.
Section 12. Section 12 amends section 211 of PWEDA (42 U.S.C. § 3151) to provide additional flexibility in connection with the use of excess grant funds in construction projects. Under the current provision, EDA may approve a request by a grantee to expend grant funds to improve a construction project when the cost of the original project is less than originally anticipated. Any funds remaining after the cost of the improvement are returned to the Treasury. This amendment would provide EDA with the authority to use these excess funds to make additional economic development investments under EDA program authorities (primarily sections 201 and 209 of PWEDA, 42 U.S.C. §§ 3141, 3149) in keeping with the original intent of the appropriations. Where the project is being funded in part by funds transferred to EDA from a sister Federal agency, EDA will seek approval from the originating agency before re-using the funds or will return the funds to the agency at its request.
Section 13. Section 13 amends PWEDA to add a new section 214 to PWEDA to provide additional programmatic flexibility. This section authorizes EDA to extend assistance in special impact areas that are outside areas covered by a Comprehensive Economic Development Strategy or otherwise meet special needs of an eligible recipient that are not adequately addressed by an existing strategy. While EDA remains convinced that the best means of pursuing effective economic development requires the preparation of investment strategies that meet the requirements of section 302 of PWEDA (42 U.S.C. § 3162), applicants occasionally demonstrate special needs that are preventing worthy economic development projects from moving forward because they do not meet the 302 strategy requirements or other requirements, such as in severely distresses rural areas and many Native American areas. EDA is also frequently provided special appropriations to provide needed assistance targeted to these areas in supplemental appropriations. This new subsection provides EDA with authority to provide assistance in these cases outside the normal planning requirements and can help rationalize the appropriations process by providing specific authorization for these types of projects. We would anticipate that EDA would be given direction in the legislative history to the appropriations bills as to the level of support for these special impact areas similar to the way it receives spending targets for its regular programs.
Section 14. Section 14 adds a new section 215 to PWEDA to provide new authority to develop an incentive program. Currently, section 403 of PWEDA (42 U.S.C. § 3173) authorizes EDA to increase the amount of grant assistance for a project that is located in an economic development district by up to 10 percent. Subsection (b) of section 403 instructs the Secretary to review the current incentive system to ensure that the system is administered "in the most direct and effective manner to achieve active participation by project applicants in the economic development activities of economic development districts." EDA believes that establishing a new incentive program based on performance might prove more beneficial to encouraging effective economic development in distressed regions of the Nation. Over the last several years, EDA has been moving aggressively to require its grantees to document performance to ensure that EDA investments are helping improve conditions for economic growth. EDA does not currently have any program to reward those grantees who perform best. EDA is investigating whether providing a tangible incentive might lead to increased performance across the board and lead to better on-time delivery of new job opportunities and private-sector investment in distressed communities. EDA would not make the award until after performance is completed and verified. The award, which could take the form of a 10 percent increase in the grant rate that would otherwise apply to a future project funded by EDA, would be transferable to increase its value to the recipient. EDA would issue new regulations to govern the performance incentive program and would address it specifically as part of the annual report under section 603 of the Act.
Section 15. Section 15 amends paragraph (a)(3)(A) of section 302 of PWEDA (42 U.S.C. § 3162) to require investment strategies to include examination of workforce considerations. A critical element of successful economic development is a workforce development strategy that ensures that workers have the skills needed to fill the jobs needed by the private sector. There are almost 600 local and 54 State-level Workforce Investment Boards in place pursuant to the Workforce Investment Act. These boards are an important resource which can provide a critical opportunity to link workforce development more closely with economic development.
Section 16. Section 16 strikes an unnecessary provision in paragraph (a)(3)(B) of section 401 of PWEDA (42 U.S.C. § 3171). This paragraph requires each affected State to approve the comprehensive economic development strategy of the relevant economic development district. We recommend striking the phrase "by each affected State and" in paragraph (a)(3)(B) as the text of subsection (a) of this section already requires States to concur in the formation of the economic development district in which the district will be located. States have the opportunity to incorporate any conditions they deem necessary before providing such concurrence, including the right to pre-clear the strategy, if they so desire.
Section 17. Section 17 strikes the authority for the district bonus program under section 403 of PWEDA (42 U.S.C. § 3173) in light of the new performance incentive program under section 16 above. The current district bonus program provides up to a 10-percent increase in the grant rate otherwise applicable under the EDA regulations for the area if the project applicant is actively participating in the economic development activities of the district and the project is consistent with the comprehensive economic development strategy of the district. This type of incentive is no longer necessary as it has filled its purpose of encouraging local communities to participate in the district planning process. EDA's Economic Development District planning program is well established in counties throughout the Nation.
Section 18. Section 18 makes minor clarifications to section 502 of PWEDA (42 U.S.C. § 3192) regarding the operation of the economic development information clearinghouse. These changes clarify that the clearinghouse will be maintained on the Internet and delete references to links to local laws and information as beyond what is realistically achievable by EDA.
Section 19. Section 19 strikes section 505 of PWEDA (42 U.S.C. § 3195) which authorizes the Secretary to provide Federal procurement officials with the names of businesses in economically distressed areas. EDA has never received appropriations to implement this section.
Section 20. Section 20 makes minor clarifications to redesignated section 505 of PWEDA (42 U.S.C. § 3196) regarding performance evaluations of grant recipients to emphasize outcome-based performance measures. In addition, it amends subsection (e) of this section to delete the requirement that university center projects supported under PWEDA be subject to a peer-review process. EDA is in the process of developing objective performance criteria to evaluate the performance of the university centers that will eliminate the need for the peer reviews.
Section 21. Section 21 corrects two citations in section 602 of PWEDA to the Davis-Bacon Act and the Copeland Act to reflect changes made by Public Law No. 107-217.
Section 22. Section 22 strikes subsection (a) of section 609 regarding assistance previously authorized under the Act prior to the 1998 amendments. This provision is no longer needed.
Section 23. Section 23 amends section 701 of PWEDA (42 U.S.C. § 3231) to authorize appropriations at a level consistent with the President's budget for FY 2004 and such sums as may be necessary for FY 2005 through FY 2008
1. The remaining $13 million of the $331,027,000 proposed for EDA for its programs in FY 2004 will fund the Trade Adjustment Assistance program for firms under the Trade Act of 1974.