Introduction to the RC/EZ Initiative

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The Office of Community Renewal works 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. On December 21, 1994, HUD and USDA designated 105 distressed communities as Empowerment Zones and Enterprise Communities (EZs and ECs). 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. All ECs that HUD and USDA designated in 1994 expired in 2004. The ECs that USDA designated in 1999, as well as all urban and rural RCs and EZs, will expire in 2009. Take a tour through information on all the RC/EZ/EC designated areas.

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. Also, HUD 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 opened because Atlanta, Georgia lost its EZ designation since the new RC designated in Atlanta shared Census tracts with the original Atlanta EZ.

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

The Federal Government has 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 provides 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.

Round I Empowerment Zones

Nine Empowerment Zones in 1994 - six urban and three rural EZs. Each urban EZ received limited tax breaks for businesses and $100 million in social service block grants from the Department of Health and Human Services (HHS); each rural EZ received limited tax breaks and $40 million in HHS grants. The President also announced the designation of two supplemental EZs in Los Angeles, California, and Cleveland, Ohio. The Los Angeles EZ received $125 million in HUD Economic Development Initiative (EDI) grants and $325 million in Section 108 loan guarantee authority. The Cleveland EZ received $87 million in HUD EDI grants and $87 million in Section 108 loan guarantees.

Round II Empowerment Zones

Twenty new Empowerment Zones in 1999 - 15 urban and 5 rural, were designated through the Round II competition. For Fiscal Years 1999 through 2005, Congress has approved a total of approximately $25.6 Million in funding for each of the 15 urban EZs.

Round II Enterprise Communities

In Round II, only rural areas received Enterprise Community designation. A total of 20 rural ECs were designated through Round II. Congress approved $250,000 annually for each Round II rural EC for fiscal years '99 through '01.

Renewal Communities and Round III Empowerment Zones

The Omnibus Consolidation & Emergency Supplemental Appropriations Act for FY 2001 (P.L. 106-554), signed into law on December 21, 2000, enacted the provisions of a number of bills of the 106th Congress. Among them was the Community Renewal Tax Relief Act of 2000 (CRTR Act), which authorized the designation of 9 new Empowerment Zones (7 urban and 2 rural) and 40 Renewal Communities (28 urban and 12 rural). HUD actually designated 8 urban EZs in Round III and USDA designated 2 rural Round III EZs. One more urban designation opened because Atlanta, Georgia lost its EZ designation since the new RC designated in Atlanta shared Census tracts with the original Atlanta EZ.