oversight

Rural Development: New Approach to Empowering Communities Needs Refinement

Published by the Government Accountability Office on 1997-03-31.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Committee on Agriculture,
                 Nutrition, and Forestry, U.S. Senate



March 1997
                 RURAL
                 DEVELOPMENT
                 New Approach to
                 Empowering
                 Communities Needs
                 Refinement




GAO/RCED-97-75
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Resources, Community, and
      Economic Development Division

      B-276194

      March 31, 1997

      The Honorable Richard G. Lugar
      Chairman
      The Honorable Tom Harkin
      Ranking Minority Member
      Committee on Agriculture,
        Nutrition, and Forestry
      United States Senate

      The Empowerment Zone/Enterprise Community (EZ/EC) program was
      created by the Congress in 1993 to help distressed communities develop
      comprehensive approaches for dealing with their social and economic
      problems. The program is unique in its reliance upon the participating
      communities’ own approaches and strategic plans for improvement. In
      addition, the program fosters partnerships between a variety of social
      service and economic resources, including those available through federal
      and state programs, private and nonprofit organizations, and others. Of the
      227 rural communities nationwide that applied to the program, the
      Secretary of Agriculture, in December 1994, designated three rural areas as
      EZs and 30 as ECs, primarily on the basis of their strategic plans.1 Over a
      10-year period, both the EZs and the ECs will receive federal assistance
      through EZ/EC Social Services Block Grants (SSBG) and special tax
      incentives, technical assistance, and special consideration in many federal
      competitive grant and loan programs. Each of the EZs will receive
      $40 million over the 10-year life of the program; each of the ECs will
      receive about $3 million. Additionally, the businesses located in the EZs are
      eligible for more tax incentives than the businesses in the ECs. Several
      proposals have recently been introduced into the Congress to expand or
      revise the EZ/EC program.

      This report responds to your request that we review selected aspects of
      the rural EZ/EC program. Specifically, you asked that we (1) estimate the
      federal funding levels of the rural EZ/EC program over the 10-year life of the
      program, (2) determine the status of the implementation of the program,
      (3) identify the difficulties that the communities have encountered in
      implementing their plans, and (4) examine the U.S. Department of
      Agriculture’s (USDA) oversight of the program. We visited all 3 of the rural
      EZs and 5 of the 30 rural ECs. Additional information about the
      communities we visited is provided in appendix I.


      1
      This report focuses on rural areas. We reported on the status of urban EZs in Community
      Development: Status of Urban Empowerment Zones (GAO/RCED-97-21, Dec. 20, 1996).



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                   We estimate that federal funding for the rural EZ/EC program will total
Results in Brief   more than $1 billion over the 10-year life of the program. This amount
                   includes the $208 million in EZ/EC funds from the Social Services Block
                   Grant program and an estimated $428 million from tax incentives.
                   Estimates for direct funding from federal, state, and local programs as well
                   as private sources are not generally available. However, one federal
                   agency, USDA, reports that it plans to provide about $246 million to the
                   rural EZs and ECs over the first 4 years alone and that its funding for the
                   10-year life of the program could reasonably be expected to reach
                   $600 million.

                   The status of the communities’ implementation of the EZ/EC program
                   varies. All 33 rural EZs and ECs have established the basic organizational
                   structures and procedures necessary to implement their strategic plans. In
                   terms of implementing the projects contained in these plans (such as day
                   care services, emergency 911 services, and job training), some
                   communities have made considerable progress and some have made very
                   little.

                   The rural EZs and ECs have experienced a number of difficulties that have
                   slowed their initial efforts, continue to impede their progress, or both.
                   These difficulties include the short time frames provided for applying to
                   the program and the initial misinformation provided by officials at USDA
                   headquarters about the program’s basic operations. While some of these
                   difficulties have been or are in the process of being resolved, two issues
                   continue to be of concern. These issues are (1) a lack of clarity about
                   which federal regulations are applicable to the construction projects
                   funded by EZ/EC Social Services Block Grants and (2) the conflict between
                   the verbal guidance and the written guidance that the Department of
                   Health and Human Services has provided to the states on their
                   responsibilities for ensuring that funds are reasonably and prudently
                   spent.

                   Under the EZ/EC program, USDA is responsible for overseeing the progress
                   of the rural EZs and ECs; the Department is to accomplish this oversight
                   through reviews of the periodic reports submitted by the EZs and ECs and
                   by site visits conducted by USDA field personnel, known as EZ/EC state
                   coordinators. However, USDA cannot adequately fulfill its oversight
                   responsibilities because the EZs, the ECs, and the EZ/EC state coordinators
                   do not provide USDA with complete and systematic progress reports.
                   Consequently, USDA lacks the basic management information for
                   identifying problem areas.



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             The Congress established the EZ/EC program in the Omnibus Budget
Background   Reconciliation Act of 1993 (P.L. 103-66, Aug. 10, 1993). Under the act, the
             communities that wanted to participate in the program had to (1) meet
             specific criteria for characteristics such as geographic size and poverty
             rate and (2) prepare a strategic plan for implementing the program. The
             act also specified that the Secretary of Agriculture could designate up to 3
             rural EZs and 30 rural ECs on the basis of their strategic plans.

             The act also amended title XX of the Social Security Act to authorize the
             use of the EZ/EC SSBG funds for the program and placed increased authority
             for funding decision-making with the local EZ/EC governance structures.
             Historically, the funds from the SSBG program that were allocated to the
             states could be used only for social service activities, such as programs to
             assist and feed children. However, under the EZ/EC program, the act
             expanded the permissible uses of the SSBG’s funds by allowing their use for
             such activities as purchasing or improving land and facilities or for
             providing cash payments to individuals for medical care.

             In addition to the EZ/EC SSBG funds, all of the designated communities are
             expected to receive several types of federal assistance. The businesses
             located in the EZs and the ECs are eligible for low-interest loans, resulting
             from the tax-exempt bonds issued by the state or local governmental unit,
             to be used to provide facilities and land for the businesses in the
             communities. In addition, the businesses located within EZs (1) are eligible
             to receive tax credits on the wages paid to the employees who live and
             work in the EZ and (2) may deduct higher levels of depreciation expenses.
             A number of federal departments and agencies also made a commitment
             to give all EZs and ECs special consideration in the competitions for funds
             from many other federal programs and to work cooperatively with them in
             overcoming regulatory impediments.

             The federal assistance received by the EZs and ECs must be spent in
             accordance with the communities’ strategic plans. These plans outline
             how the communities would achieve their goals, including ensuring the
             active participation of the members of the community, the local private
             and nonprofit entities, and the federal, state, and local governments. The
             EZs’ and ECs’ progress in achieving their goals is to be based on the
             performance benchmarks established by the communities, not on the
             amount of federal money spent. These benchmarks explain in some detail
             how the locality intends to achieve its goals. The benchmark document,
             which becomes a part of the overall plan, includes the specific projects
             that the EZ or EC will undertake and timelines showing when the projects



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                              will be instituted or completed. The benchmark document, which
                              generally looks ahead 2 years, requires continuous review and
                              modifications to accommodate the changes in the community’s needs as
                              well as scheduling problems. These benchmark projects are to serve the
                              EZs and ECs, as well as USDA, as an important management tool and provide
                              the primary basis for evaluating the progress being made.

                              The Department of Health and Human Services (HHS), USDA, and the states
                              play key roles in administering the program.2 HHS makes grants to the
                              states, and the designated state agency obligates the funds to the EZs and
                              ECs as it receives, reviews, and approves requests from them to draw down
                              funds for a particular benchmark project. In addition, the state must
                              ensure that the requested expenditure is allowable under the state’s
                              standards. USDA, as the lead federal agency for the rural EZ/EC program, is
                              responsible for helping the rural EZs and ECs achieve their goals by
                              evaluating their progress and providing technical assistance.


                              The federal funds invested in the rural EZ/EC program, including loans,
Federal Funding for           grants, and forgone tax revenues, will far exceed the $208 million in EZ/EC
the Rural EZ/EC               SSBG funds allocated to the program. In fact, we estimate that federal funds

Program Is Likely to          exceeding $1 billion will be invested in the program over its 10-year life.
                              This estimate includes the EZ/EC SSBG funds,3 plus an estimated $428 million
Total Over $1 Billion         from tax incentives and about $600 million from USDA’s loan and grant
                              programs. This $1 billion estimate does not include the other significant
                              sources of investments in the program that will be provided by other
                              federal agencies. Estimates from these sources were not available. If the
                              program is successful, some offsetting benefits, such as loan repayments,
                              increased tax revenue, and reduced welfare costs, should occur in the
                              communities.


Federal Tax Incentives Will   The EZ/EC program has made three tax incentives available to the
Be About $428 Million         communities for economic development. The first two, available only to
                              EZs, are (1) the Empowerment Zone Employment Credit, which provides
                              qualified employers with a tax credit of up to $3,000 for each employee
                              who lives and works in the EZ, and (2) the Empowerment Zone Expensing


                              2
                               In addition to HHS and USDA, at least 13 other agencies have agreed to support the program. The
                              federal agencies involved in the program meet periodically through a Community Empowerment
                              Board, chaired by the Vice President, to exchange information on the program’s operations.
                              3
                               By December 1996, the entire $208 million was obligated by the participating states. As of that date,
                              the 33 EZs and ECs had drawn down $36 million of the $208 million.



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                             Allowance, which allows a qualified business to take a special
                             depreciation deduction of up to $20,000 (for an annual total of up to
                             $37,500) for equipment purchases each year. The third incentive, available
                             to both the EZs and the ECs, is the Enterprise Zone Facility Bond, which
                             provides up to $3 million in tax-exempt bond financing to qualified
                             businesses for buildings or equipment.

                             Using the data and assumptions from the Internal Revenue Service, we
                             estimate that the cost of the EZ/EC tax incentives in rural areas will be
                             about $428 million over the 10-year period. The EZs’ employment credit
                             will account for $406.5 million of that total; the facility bonds and the
                             expensing allowances will make up the remainder at $4.3 million and
                             $17.2 million, respectively.


Incomplete Information Is    USDA, HHS, and 13 other federal agencies have agreed to give special
Available on the Extent of   consideration to eligible EZ/EC applicants by giving them preferential
Preferential Treatment       treatment for funds from the agencies’ existing funding sources over the
                             life of the program. Most federal agencies had not estimated the amount of
                             support they expect to invest in the rural EZs and ECs over the 10-year life
                             of the program. USDA, however, indicated that it alone intends to provide
                             about $246 million to rural EZs and ECs over the first 4 years through
                             existing funding sources such as its Rural Business Enterprise Grant
                             program and the Water and Waste Disposal Loan and Grant programs. If
                             this funding level is maintained over the 10-year life of the program, an
                             assumption that USDA officials consider a reasonable expectation, USDA will
                             provide about $600 million to EZ/EC communities. USDA officials noted that
                             these funds, as well as those from the other agencies that have pledged to
                             provide special consideration to EZ/ECs, represent existing appropriations
                             that would be expended—not new moneys.

                             In addition to the funds provided by federal agencies, the rural EZs and ECs
                             are expected to obtain assistance from state, local, and private sources.
                             Some EZs and ECs are using the EZ/EC SSBG funds as seed money to attract
                             even larger amounts from nonfederal sources, such as foundations. USDA
                             provided data showing that for the 3 EZs and 25 of the ECs, the
                             communities were receiving more than one dollar from their state and
                             local governments and from private and nonprofit organizations for every
                             dollar of EZ/EC SSBG funds received. To the extent that the loans are repaid
                             and that new jobs result in increased tax revenues and reduced welfare
                             payments, the federal investment in the rural EZ/EC program will be offset.




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                          The 33 EZs and ECs have established the structures and procedures needed
EZs and ECs Vary in       to implement their strategic plans. Nevertheless, the boards of directors
Their Progress            for two of the ECs we visited were experiencing problems that could
Toward Implementing       hinder their progress toward completing their benchmark projects.
                          Overall, progress on these projects has varied widely.
the Program
Most EZs and ECs Have     According to USDA officials, all communities have taken the initial
Created the Basic         necessary actions to manage and begin implementing their strategic plans,
Foundation for Managing   such as establishing a board structure and basic operating principles.
                          These actions had to be formally agreed upon by the community, the state,
Development               and USDA in a memorandum of agreement. In order to complete a
                          memorandum of agreement, the communities had to, among other things,
                          establish their benchmarks and develop a budget for the first 2 years of
                          implementation; create the bylaws and/or articles of incorporation for the
                          group, known as the lead entity, that will manage the EZ or EC program;
                          and establish the EZ’s or EC’s board structure. In addition, USDA reviewed
                          the documents prepared by the lead entities to ensure that they had a
                          policy to prevent conflicts of interest and strategies for ensuring broad
                          participation within the community.4

                          We visited all three EZs and found that they were generally well-organized
                          to manage the implementation of their strategic plans. For example, while
                          the geographical boundaries of all of the EZs cut across several local
                          government boundaries, such as county lines, they had all developed
                          mechanisms for overcoming the potential problems in having the EZ work
                          with more than one political entity. One EZ that spanned parts of four
                          counties created four subzone boards to overcome the political divisions
                          inherent in its organization. These subzones consider the communities’
                          proposals for implementing the benchmark projects that originate in their
                          area. The proposals approved at the subzone level are then considered by
                          the EZ’s full board. As of June 1996, nearly 1 year after the memorandum of
                          agreement, the EZ reported some progress toward 45 of the 49 projects
                          serving the subzones. Some of these projects served several subzones,
                          while others served only one.

                          Although the EZs appear to be well organized, two of the ECs that we
                          visited were experiencing problems. For example, at one EC we visited, the
                          board members were in such disagreement with the lead entity over the

                          4
                           As of January 3, 1997, USDA was able to document that these actions had been completed for 23 out
                          of the 33 communities. However, USDA could not locate the files for all of these actions for the
                          remaining 10 ECs. As a result of our review, USDA officials told us that they will take steps to create a
                          central filing system for the reports submitted by the EZs and ECs.



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                      control of the EC funds that little business has been conducted, and the
                      program has not been moving forward. At another EC, the state agency
                      found that the board members were, among other things, submitting
                      applications for projects that would benefit them financially.


EZs and ECs Vary in   USDA  requires EZs and ECs to report periodically on the progress they are
Implementing Their    making toward implementing the benchmark projects. These projects
Benchmark Projects    include such things as constructing child care facilities, initiating job
                      training programs, beginning 911 emergency response services, and
                      improving wastewater systems. While USDA has not received complete
                      progress reports from all communities, the progress made by those that
                      have reported varied widely.

                      USDA  had sufficient centralized information on 14 communities for us to
                      determine whether (1) progress had been made toward implementing the
                      benchmark projects scheduled to start before December 1996 and (2) the
                      projects that were scheduled to be completed prior to December 1996 had
                      in fact been completed.5 Progress, by these measures, varied widely
                      among the 14 communities we examined. For example, one community
                      reported that it had made at least some progress toward implementing all
                      of the benchmark projects scheduled to start prior to December 1996 and
                      that one project had been completed. On the other hand, two communities
                      reported that either no progress had been made on projects or that they
                      had not finished any of the projects scheduled for completion prior to
                      December 1996. Overall, 8 of the 14 communities reported that they had
                      not started or completed at least 50 percent of their benchmark projects
                      on time.

                      Appendix I presents information on selected benchmark projects at the
                      eight communities we visited.




                      5
                       We found that 21 communities had at least partially reported on their progress as of January 1, 1997.
                      We did not include 7 of the 21 communities in our analysis because they had reported on their
                      progress for less than 60 percent of their projects or had met less than 60 percent of their planned start
                      and end dates.



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                           The rural EZs and ECs have experienced difficulties that have slowed their
EZs and ECs Have           initial efforts, continue to impede their progress, or both. The difficulties
Faced a Number of          were the short time frame allowed for applying to the program and the
Difficulties in            misinformation provided by officials at USDA headquarters about the
                           program’s basic operations. While these difficulties have been or are in the
Implementing Their         process of being resolved, two other issues continue to be of concern.
Plans                      These issues are a lack of clarity about which standards the communities
                           should follow for construction projects when using EZ/EC SSBG funds and
                           the disparity between HHS’ verbal guidance and written guidance to the
                           states on their responsibilities for releasing the EZ/EC SSBG funds to the
                           communities for the EZ/EC program.


Short Time Frames Caused   Officials at each of the rural EZs and ECs we visited commented that the
Organizational and         period for preparing an application for the EZ or EC designation was too
Planning Concerns for      short for the amount of work required. The communities applying for the
                           program had 5-1/2 months after the President announced the program to
Communities                submit an application. During that time, they had to achieve grass-roots
                           involvement, gain consensus on the needs and vision of the community,
                           elect a board of directors, produce a strategic plan, and prepare to begin
                           operating. These tasks were particularly difficult to carry out in rural areas
                           that often (1) did not have organized coalitions or the expertise available
                           to articulate a vision and develop a complex strategic plan and (2) are
                           spread out over a large geographical area, which makes putting together
                           all parts of the application more difficult.

                           While the communities met their application deadlines, some officials
                           believe that a longer period to organize would have allowed them to better
                           galvanize the public’s support and involvement and that, in some
                           instances, they would have been better able to identify their needs and
                           establish appropriate goals.

                           USDA  and HHS officials acknowledged that the communities faced short
                           time frames. Some USDA officials stated that the short time frames required
                           that the rural communities act quickly both to generate local involvement
                           and to create the vision and strategic plan required to meet the application
                           deadline. They noted that the federal agencies involved faced
                           organizational pressures as well. The EZ/EC program’s timetable required
                           the federal agencies to develop their coordination strategy, perform
                           detailed planning, hire and train staff, and begin operating the program
                           within the 16 months between the passage of the legislation and the
                           designation of the EZs and the ECs.



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                           HHS and USDA officials generally agreed that, should a second round of EZs
                           and ECs be authorized, it may be beneficial to allow the communities a
                           somewhat longer time to apply in order to facilitate broader public
                           involvement and a fuller consideration of the vision and the steps needed
                           to accomplish it. Furthermore, some officials said that, if a second round
                           is authorized, the federal government may need to provide more guidance
                           on how to prepare the application documents to ensure a somewhat
                           greater uniformity than they had experienced in the current program.


Early Misstatements by     At seven of the eight rural EZs and ECs we visited, officials noted that
USDA Officials             erroneous information, provided primarily by officials from USDA
Contributed to             headquarters at meetings around the nation, caused misunderstandings
                           about the operations of the EZ/EC program. At some of the meetings, the
Implementation Problems    federal headquarters officials said that the EZs and ECs would receive the
                           EZ/EC SSBG funds directly. Two of the EZs expected to receive the total
                           amount of the EZ/EC SSBG funds—$40 million—in two consecutive annual
                           payments, while some ECs believed that they would receive their total
                           payment of about $2.9 million shortly after they were selected. In fact, as
                           we discussed earlier, the communities are receiving their funding
                           incrementally through the state agency as needed to pay for benchmark
                           activities. Furthermore, some communities were told, incorrectly, that
                           they did not have to get approval from any federal or state entity to use the
                           funds for projects that were consistent with the strategic plan.

                           The incorrect information provided by USDA officials caused difficulties for
                           several state agencies and rural communities. For example, one EC had to
                           revise its plan when it learned how the funds were actually to be
                           distributed. The community had planned to obtain the lump-sum payment,
                           put it into an interest-bearing account, and use the interest, which would
                           have been considerable, to fund some part of certain projects. Since no
                           lump sum was made available, the EC revamped its plan to obtain
                           alternative sources of funding for some of its projects.


HHS Has Not Provided       Several of the EZs and ECs that we visited have encountered some difficulty
Clear Guidance on the      in sorting out which federal standards apply to certain types of projects
Applicability of Federal   financed with EZ/EC SSBG funds. Those funds can be used for construction
                           projects, such as water and sewer proposals, if the projects are related to
Standards                  one of the program’s goals, such as providing training to disadvantaged
                           youth. However, the act did not specify any standards for these new




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                              allowable uses. As a result, the communities have been deciding for
                              themselves which construction standards they will follow.

                              The communities have taken different approaches to address this
                              difficulty. For example, officials at one EZ seeking to build a water system
                              told us that they were unable to get guidance from HHS and decided to
                              follow the environmental regulations that they considered most
                              appropriate—those governing the use of the Department of Housing and
                              Urban Development’s Community Development Block Grant program—for
                              that project and for any other project that might involve environmental
                              issues. Faced with a similar dilemma, another EZ took a different
                              approach, deciding to follow the environmental regulations associated
                              with the primary funding source for a given project.

                              Some rural EZ officials seeking clarification on this issue contacted HHS,
                              which oversees the EZ/EC SSBG funds. According to these officials, HHS did
                              not indicate what construction standards should be used. Consequently,
                              the community officials have used their best judgment on how to proceed
                              with specific projects and activities. Some EZ officials added that they are
                              concerned that they may be legally liable if they choose to follow an
                              incorrect standard and may have to replace such things as improperly
                              sized water or sewer pipes, thereby incurring considerable costs and
                              causing disruption.


HHS’ Verbal Instructions to   According to the HHS regulations and the Terms and Conditions of the
the States on                 EZ/EC program, the financial standards that the states are to apply in

Administering EZ/EC           administering the EZ/EC SSBG funds are the standards that they use for
                              expending their own state funds. However, officials in three of the states
SSBG Funds Appear to          we visited told us that HHS program officials had verbally appealed to them
Conflict With HHS’            to be flexible in applying their standards.
Regulations
                              This conflicting guidance has led to disagreements between some of the
                              state agencies and the EZs and ECs over who has oversight responsibility.
                              For example, when one EC requested a drawdown of funds for expenses
                              that included liquor, the state agency disallowed payment for the liquor.
                              The state agency argued that Office of Management and Budget Circular
                              A-87, the standard adopted by the state, did not allow expenditures of
                              federal funds for liquor. State agency officials told us that HHS verbally
                              asked the state agency to be flexible and allow the expenditure and
                              advised them not to worry about having to repay the expenditure at a later
                              date. The state agency officials told us that they wanted to cooperate with



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                        HHS in the EZ/EC program, but they also wanted the state to comply with its
                        own regulations, including Circular A-87. The state ultimately disallowed
                        the expenditure.

                        In another state, the EZ submitted 22 project proposals to the state agency
                        for its review prior to a formal request to draw down funds. According to
                        state agency officials, the proposals did not meet the state’s fiscal
                        standards in that most of the proposals had budgets that were inconsistent
                        with reasonable and prudent business practices. These budgets reportedly
                        included such items as salaries and fringe benefits that were above the
                        industry’s average. State officials told us that HHS had appealed to them on
                        numerous occasions to be more flexible in their reviews of the EZ’s
                        proposals. As of February 3, 1997, the state had approved no funds for
                        these 22 proposals.


                        Under the EZ/EC program, USDA’s Office of Community Development is
USDA Cannot             responsible for overseeing the participating rural EZs and ECs. It is to carry
Adequately Oversee      out its responsibilities through site visits by USDA state coordinators6 and
the Implementation of   USDA headquarters’ reviews of the progress reports periodically submitted
                        by the EZs and ECs. However, USDA cannot adequately fulfill its oversight
the EZ/EC Program       responsibilities because it has not received complete progress reports
                        from all of the USDA state coordinators or the EZs and ECs.

                        USDA’s EZ/EC state coordinators do not provide systematic reporting on the
                        progress of rural EZs and ECs. Among other things, the state coordinators
                        are responsible for reviewing all benchmark changes to ensure the
                        communities’ participation and conformance with the strategic plan. They
                        are also involved with the initial approval of these changes. Most of these
                        coordinators, who were chosen from the existing staff at the USDA state
                        offices, have had little experience in overseeing the broad range of a
                        community’s economic and social development projects and have not
                        received training in how to monitor and report on the communities’
                        progress. USDA officials agreed that their EZ/EC state coordinators needed
                        training but told us that funding constraints prevented them from
                        developing and offering oversight training.

                        Oversight is further hampered because the EZs and ECs are not consistently
                        reporting their progress to USDA. USDA’s regulations require the EZs and ECs
                        to report their progress at least annually. However, as noted earlier, the

                        6
                         Although the state coordinators have the primary responsibility for site visits, USDA headquarters
                        staff also perform site visits for community review and intervention purposes.



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                     information provided is inadequate. Only 14 of the 33 communities had
                     provided systematic information on their progress as of January 1, 1997.


                     As a new approach to providing development assistance to rural areas, the
Conclusions          EZ/EC program has faced a number of problems, several of which were
                     associated with the program’s start-up and are no longer of immediate
                     concern. However, some issues related to the guidance for the program
                     continue to cause confusion among the program’s participants and could
                     hamper the program’s progress. These issues include (1) the absence of
                     written guidance defining the standards to be followed when using EZ/EC
                     SSBG funds for construction-related projects and (2) conflicting guidance
                     about the fiduciary responsibilities that the participating states should
                     exercise for ensuring that the EZ/EC SSBG funds are spent in accordance
                     with the appropriate financial standards.

                     Additionally, in view of the significant level of federal funds supporting
                     rural EZs and ECs, it is important that USDA have a sufficient capability to
                     oversee the progress that these communities are making in implementing
                     the program. USDA’s current oversight system, however, provides only
                     piecemeal information on the EZs’ and ECs’ progress. As a result, USDA lacks
                     the systematic information necessary for overseeing the program,
                     including identifying problems and helping the communities to develop
                     solutions.


                     To reduce confusion about the program’s guidance on the uses of and
Recommendations to   financial controls over the EZ/EC SSBG funds, the Secretary of Health and
the Secretary of     Human Services should direct the Assistant Secretary for Planning and
Health and Human     Evaluation to (1) clarify which construction-related standards the EZs and
                     ECs should follow in using the EZ/EC SSBG funds and (2) eliminate the
Services             conflicts between the Department’s verbal and written guidance on the
                     states’ fiduciary responsibility for the EZ/EC SSBG funds.


                     To improve USDA’s oversight of the EZ/EC program, the Secretary of
Recommendation to    Agriculture should instruct the Director of the Office of Community
the Secretary of     Development to upgrade the Office’s monitoring system so that it can
Agriculture          routinely provide the necessary information for assessing the progress of
                     the EZs and ECs in implementing the program. This action could be
                     accomplished by more strictly enforcing the EZs’ and ECs’ current




                     Page 12                                      GAO/RCED-97-75 Rural Development
                     B-276194




                     self-reporting requirements and by developing more systematic reporting
                     requirements for USDA’s EZ/EC state coordinators.


                     We provided copies of the draft report for review and comment to USDA
Agency Comments      and HHS. These agencies’ written comments and our responses appear in
and Our Evaluation   appendixes III and IV, respectively.

                     In commenting on the draft, USDA noted that it concurred with our
                     conclusions and was implementing changes in response to our
                     recommendation. USDA also made a number of comments about the
                     difficulties of beginning a new kind of program, and we have revised our
                     report, where appropriate, to reflect these comments. In particular, USDA
                     concurred with our finding that the time frames for communities to apply
                     for EZ/EC status were short and that should a second round of EZs and ECs
                     be authorized, the Department would expect to be more fully staffed and
                     able to better assist the applicants, both through direct guidance and with
                     a more structured application format. USDA also made a number of
                     comments about our analysis of the federal investment in the EZ/EC
                     program and provided additional information about the Department’s
                     future anticipated financial support of rural EZs and ECs. We have included
                     this additional information and revised our estimates in consultation with
                     USDA program officials.


                     In their comments on the draft report, HHS officials stated that they will
                     work to clarify several issues raised in the report, including the
                     applicability of construction standards and federal fiscal standards to the
                     program. HHS officials also suggested a number of changes to the report
                     that would, among other things, clarify local, state, and federal roles in the
                     EZ/EC program. Furthermore, these officials emphasized the need for
                     flexibility in administering the program so that it can achieve its full
                     potential. We incorporated these comments where appropriate.

                     We also sent the detailed information on each EZ and EC we visited (as
                     presented in app. I) to the cognizant local officials for their review and
                     comment. We made several technical changes in response to the
                     comments we received. In addition, we sent the sections of the report
                     describing the problems resulting from the conflict between HHS’ written
                     and verbal guidance on financial standards to the cognizant state
                     government officials for review and comment; these officials concurred in
                     our presentation of the issues discussed in the report.




                     Page 13                                        GAO/RCED-97-75 Rural Development
              B-276194




              We conducted our review from June 1996 through February 1997 in
Scope and     accordance with generally accepted government auditing standards. Our
Methodology   scope and methodology are discussed in more detail in appendix II.


              As agreed with your offices, unless you publicly announce its contents
              earlier, we plan no further distribution of this report until 15 days from the
              date of this letter. At that time, we will send copies of this report to the
              House Committee on Agriculture, other interested congressional
              committees, the Secretaries of Agriculture and Health and Human
              Services, the Director of the Office of Management and Budget, and other
              interested parties. We will also make copies available upon request.

              If you have any questions about this report, please call me at
              (202) 512-5138. Major contributors to this report are listed in appendix V.




              Robert A. Robinson
              Director, Food and
                Agriculture Issues




              Page 14                                        GAO/RCED-97-75 Rural Development
Page 15   GAO/RCED-97-75 Rural Development
Contents



Letter                                                                                          1


Appendix I                                                                                     18
                        Kentucky Highlands Empowerment Zone                                    18
Description of the      Mid-Delta Empowerment Zone Alliance                                    20
Empowerment Zones       Rio Grande Valley Empowerment Zone                                     22
                        Central Savannah River Area Enterprise Community                       24
and Enterprise          Crisp/Dooly Enterprise Community                                       26
Communities GAO         City of Lock Haven Enterprise Community                                28
Visited                 North Delta Mississippi Enterprise Community                           30
                        City of Watsonville Enterprise Community                               32

Appendix II                                                                                    34

Objectives, Scope,
and Methodology
Appendix III                                                                                   35
                        GAO Comments                                                           39
Comments From the
Department of
Agriculture
Appendix IV                                                                                    41
                        GAO Comments                                                           47
Comments From the
Department of Health
and Human Services
Appendix V                                                                                     48

Major Contributors to
This Report
Figures                 Figure I.1: Kentucky Highlands Empowerment Zone                        18
                        Figure I.2: Mid-Delta Empowerment Zone Alliance                        20
                        Figure I.3: Rio Grande Valley Empowerment Zone                         22
                        Figure I.4: Central Savannah River Area Enterprise Community           24
                        Figure I.5: Crisp/Dooly Enterprise Community                           26




                        Page 16                                   GAO/RCED-97-75 Rural Development
Contents




Figure I.6: City of Lock Haven Enterprise Community                     28
Figure I.7: North Delta Mississippi Enterprise Community                30
Figure I.8: City of Watsonville Enterprise Community                    32




Abbreviations

EC         Enterprise Community
EZ         Empowerment Zone
HHS        Department of Health and Human Services
SSBG       Social Services Block Grant
USDA       U.S. Department of Agriculture


Page 17                                    GAO/RCED-97-75 Rural Development
Appendix I

Description of the Empowerment Zones and
Enterprise Communities GAO Visited


Kentucky Highlands
Empowerment Zone
Figure I.1: Kentucky Highlands Empowerment Zone

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Governance                                              The Kentucky Highlands Investment Corporation is the lead entity for the
                                                        Empowerment Zone (EZ); this Corporation was created in 1968 to foster
                                                        economic development in the area. A steering committee consisting of
                                                        representatives from each of the three subzone areas was established; an
                                                        effort was made to ensure that the committee was balanced in terms of
                                                        geographical representation, income, and expertise. The steering
                                                        committee also includes representatives from the Board of Directors of
                                                        the Kentucky Highlands Investment Corporation, local and state
                                                        governments, economic development agencies, universities, and local
                                                        residents. The steering committee has the overall responsibility for
                                                        implementing the strategic plan and for providing guidance throughout the
                                                        implementation of the plan.




                                                        Page 18                                                            GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




Funding              The Empowerment Zone/Enterprise Community Social Services Block
                     Grant (EZ/EC SSBG) funds for the EZ pass through the Kentucky Department
                     of Financial Incentives to the Kentucky Highlands Empowerment Zone for
                     its use. As of December 31, 1996, the EZ had obtained about $7.4 million of
                     its allocated EZ/EC SSBG funds for use in its projects.


Strategic Plan       The EZ’s strategic plan sets forth a four-pronged approach to revitalizing
                     the communities included within the Zone: developing economic
                     opportunity; promoting tourism; building infrastructure; and enhancing
                     the quality of life. The EZ has 24 benchmarks. The projects include the
                     following:

                 •   establishing a development venture capital fund to invest in businesses
                     located within the EZ;
                 •   starting 150 home-based businesses in each of the three subzone areas,
                     including training the home keyers to perform data entry work and
                     assisting them in purchasing the computer equipment;
                 •   building and equipping four rural fire stations within the EZ; and
                 •   expanding a county library and increasing its telecommunications
                     capacity.




                     Page 19                                       GAO/RCED-97-75 Rural Development
                                                            Appendix I
                                                            Description of the Empowerment Zones and
                                                            Enterprise Communities GAO Visited




Mid-Delta
Empowerment Zone
Alliance

Figure I.2: Mid-Delta Empowerment Zone Alliance
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                                              AAAA AAAA AAAA  AAAAAAAA AAAA AAAA    AAAA AAAA
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                                                                                              AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA    AAAA AAA
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                                                                                         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAA
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                                                County                              AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA           AAA
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                                                                                    AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAA
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                                                                                         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA    AAAA
                                       AAAA
                                         AAAA
                                            AAA
                                              AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA                                                                            AAA




                                                            Page 20                                                              GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




Governance           The Mid-Delta Empowerment Zone Alliance originated in January 1994 as
                     a collaborative arrangement between The Delta Foundation and The Delta
                     Council, representing poor minority and more affluent white interests,
                     respectively. These two organizations came together to develop a strategic
                     plan to benefit all citizens of the area, to apply for the EZ/EC program, and
                     to establish the Alliance.

                     The Mid-Delta Empowerment Zone Alliance Commission was formed in
                     April 1994; it includes representatives from—among other
                     elements—businesses, churches, colleges, community groups, low-income
                     groups, and public schools from all areas of the zone. The Commission
                     reviews and votes on all proposals for projects to address the benchmark
                     projects on the strategic plan.


Funding              The EZ/EC SSBG funds pass through the Mississippi Department of Human
                     Services to the Mid-Delta Empowerment Zone Alliance for its use. As of
                     December 31, 1996, the EZ had obtained about $221,000 of its allocated
                     EZ/EC SSBG funds for use in its projects.



Strategic Plan       The EZ’s strategic plan focuses on three themes: building community in the
                     Mississippi Delta, increasing economic opportunity in Mississippi Delta
                     communities, and sustaining community and economic development in
                     Mississippi Delta communities. The EZ has 41 benchmarks. Specific
                     projects for the EZ include the following:

                 •   expanding and strengthening businesses and industries by providing
                     assistance in accessing capital, business and technical assistance, and
                     marketing;
                 •   improving the quality and accessibility of health care by seeking to
                     increase the number of doctors serving the Mid-Delta region;
                 •   improving race relations by creating a race relations council; and
                 •   promoting community beautification through the creation of a recycling
                     program.




                     Page 21                                       GAO/RCED-97-75 Rural Development
                                                             Appendix I
                                                             Description of the Empowerment Zones and
                                                             Enterprise Communities GAO Visited




Rio Grande Valley
Empowerment Zone
Figure I.3: Rio Grande Valley Empowerment Zone
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                       AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA   AAAA  AA AAAA
                                                                             AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
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                                                                             AAAA
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                                                                             AAAAAAAA
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                                                                                            AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AA
                                                                             AAAA    Empowerment
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                                                                                     Zone   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AA
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Governance                                                   The lead entity is the Rio Grande Valley Empowerment Zone Corporation,
                                                             which was created to manage the EZ and implement the strategic plan; the
                                                             corporation is headed by a chief executive officer who manages a small
                                                             staff. The Corporation reports to a 19-member board of directors, the
                                                             majority of whom were appointed by the county judges of the four
                                                             counties. The board members include two directors from each of the four
                                                             counties’ subzone advisory committees. Each of the four counties appoints
                                                             a subzone advisory committee for advocating matters within the subzone;
                                                             two of the four subzones have also allocated funds to administration to
                                                             employ a full-time professional subzone manager to oversee the day-to-day
                                                             operations within the subzone.




                                                             Page 22                                                                GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




Funding              The EZ/EC SSBG funds pass through the Texas Health and Human Services
                     Commission to the Rio Grande Valley Empowerment Zone for its use. As
                     of December 31, 1996, the EZ had obtained about $4.9 million of the EZ/EC
                     SSBG funds for use in its projects.



Strategic Plan       The EZ’s strategic plan focuses on 10 objectives, including (1) improving
                     the quality of life to discourage outmigration from the area, (2) providing
                     programs for literacy and living skills, (3) initiating regional business
                     development, and (4) improving the availability of housing by providing
                     new housing and increasing access to the existing housing. The EZ has 49
                     benchmarks. Specific projects include the following:

                 •   establishing a small business incubator;
                 •   developing a historical district for small businesses;
                 •   implementing a flood control project; and
                 •   establishing a community elder care/youth recreation center.




                     Page 23                                       GAO/RCED-97-75 Rural Development
                                                            Appendix I
                                                            Description of the Empowerment Zones and
                                                            Enterprise Communities GAO Visited




Central Savannah
River Area Enterprise
Community

Figure I.4: Central Savannah River Area Enterprise Community

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                                                                                                                                                   AAAA      AA
                                                                                                                                                           AAAA
                                                                                                                                                        AAAA AA
AAAAAAAA
     AAAAAAAA
         AAAAAAAA
              AAAAAAAA
                  AAAAAAAA
                       AAAAAAAAHancock
                            AAAAAAAA
                                 AAAAAAAA
                                     AAAAAAAA
                                          AAAAAAAA
                                               AAAAAAAA
                                                   AAAAAAAA
                                                        AAAAAAAA
                                                            AAAAAAAA
                                                                 AAAAAAAA
                                                                      AAAAAA
                                                                           AAAAAA
                                                                             AAAAAAAA
                                                                                   AAAAAAAA
                                                                                        AAAAAAAA
                                                                                             AAAAAAAA
                                                                                                  AAAAAAAA
                                                                                                       AAAAAAAA
                                                                                                            AAAAAAAA
                                                                                                                 AAAA
                                                                                                                  AAAAAAAA
                                                                                                                      AAAA
                                                                                                                       AAAAAAAA
                                                                                                                           AAAA
                                                                                                                            AAAAAAAA
                                                                                                                                AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                     AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                          AAAA
                                                                                                                                           AAAAAA
                                                                                                                                               AAAAAA
                                                                                                                                                 AAAAAAAA
                                                                                                                                                      AAAAAAAA
                                                                                                                                                           AAAA
AAAA                                                                                                              AAAA AAAA AAAA AAAA AAAA AAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAA
                               CountyAAAA AAAA AAAAAAAA AAAAAAAA AAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                                                                   AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                 AAAA
                                                                                                                  AAAA
                                                                                                                       AAAAAAAA
                                                                                                                      AAAA
                                                                                                                       AAAA
                                                                                                                            AAAAAAAA
                                                                                                                           AAAA
                                                                                                                            AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                AAAA
                                                                                                                                 AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                     AAAA
                                                                                                                                      AAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
                                                                                                                                          AAAA
                                                                                                                                           AAAAAAAAAA AAAA AAAA
AAAA
AAAA AAAAAAAA AAAAAAAA AAAAAAAA  AAAAAAAA AAAAAAAA AAAAAAAA AAAAAAAA  AAAAAA AAAA
                                                                             AAAAAAAA
                                                                                   AAAAAAAA
                                                                                        AAAAAAAA
                                                                                             AAAAAAAA
                                                                                                  AAAAAAAA
                                                                                                       AAAAAAAA
                                                                                                            AAAAAAAA
                                                                                                                  AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                           AAAAAA
                                                                                                                                               AAAAAA
                                                                                                                                                 AAAAAAAA
                                                                                                                                                      AAAAAAAA
AAAAAAAA
     AAAAAAAA
         AAAAAAAA
              AAAAAAAA
                  AAAAAAAA
                       AAAAAAAA
                            AAAAAAAA
                                 AAAAAAAA
                                     AAAAAAAA
                                          AAAAAAAA
                                               AAAAAAAA
                                                   AAAAAAAA
                                                        AAAAAAAA
                                                            AAAAAAAA
                                                                 AAAAAAAA
                                                                      AAAAAA
                                                                                                                 AAAA AAAA AAAA AAAA AAAA AAAA             AAAA
                                                                           AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA     AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAA  AAAA
                                                                                   AAAA AAAA
                                                                                        AAAA AAAA
                                                                                             AAAA AAAA
                                                                                                  AAAA AAAA
                                                                                                       AAAA AAAA
                                                                                                            AAAA AAAA
                                                                                                                  AAAA
                                                                                                                 AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAA
                                                                                                                      AAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAA
                                                                                                                           AAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAA
                                                                                                                                AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAA
                                                                                                                                     AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                          AAAA
                                                                                                                                           AAAAAAAAAA AAAA AAAA
AAAAAAAA AAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA  AAAAAAAAAAAAAAAAAAAAAAAAAAAA   AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA  AAAAAAAAAAAAAAAAAA
                                                                                                                                      AAAAAAAA AAAAAA AAAA AAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAJefferson AAAA
                                                                      AAAA AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA
                                                                           AAAAAAAAAAAAAAAAAAAAAAAAAAAAAABurke   AAAA
                                                                                                                  AAAA
                                                                                                                 AAAA AAAA
                                                                                                                       AAAA
                                                                                                                  AAAAAAAA AAAA
                                                                                                                            AAAA
                                                                                                                       AAAAAAAA AAAA
                                                                                                                                 AAAA
                                                                                                                            AAAAAAAA AAAA
                                                                                                                                      AAAA
                                                                                                                                 AAAAAAAA AAAA
                                                                                                                                           AAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
                                                                                                                                      AAAAAAAA AAAAAA AAAA AAAA
AAAAAAAA AAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
                                                                                                                                               AAAAAA AAAA
AAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAACounty    AAAAAAAAAA   AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                 AAAA
                                                                                                                  AAAA
                                                                                                                       AAAAAAAA
                                                                                                                      AAAA
                                                                                                                       AAAA
                                                                                                                            AAAAAAAA
                                                                                                                           AAAA
                                                                                                                            AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                AAAA
                                                                                                                                 AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                     AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAAAAAAAA AAAA
                                                                                                                                                           AAAA
                                                                                                                                                           AAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA                                County
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAAAA
                                                                                   AAAAAAAA
                                                                                        AAAAAAAA
                                                                                             AAAAAAAA
                                                                                                  AAAAAAAA
                                                                                                       AAAAAAAA
                                                                                                            AAAAAAAA
                                                                                                                  AAAA
                                                                                                                  AAAAAAAA
                                                                                                                 AAAA  AAAA
                                                                                                                       AAAAAAAA
                                                                                                                      AAAA  AAAA
                                                                                                                            AAAAAAAA
                                                                                                                           AAAA  AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                AAAA  AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                     AAAA  AAAA
                                                                                                                                           AAAAAA
                                                                                                                                          AAAA AAAAAA
                                                                                                                                                 AAAAAAAA
                                                                                                                                                      AAAAAAAA
                                                                                                                                                           AAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA             AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
                                                                                                                                               AAAAAA AAAA
AAAAAAAA
     AAAAAAAA
         AAAAAAAA
              AAAAAAAA
                  AAAAAAAA
                       AAAAAAAA
                            AAAAAAAA
                                 AAAAAAAA
                                     AAAAAAAA
                                          AAAAAAAA
                                               AAAAAAAA
                                                   AAAAAAAA
                                                        AAAAAAAA
                                                            AAAAAAAA
                                                                 AAAAAAAA
                                                                      AAAAAA
                                                                             AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA     AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA             AAAA
AAAA
AAAA                                                                       AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
                                                                                                                                               AAAAAA AAAA
AAAAAAAA
     AAAAAAAA
         AAAAAAAA
              AAAAAAAA
                  AAAAAAAA
                       AAAAAAAA
                            AAAAAAAA
                                 AAAAAAAA
                                     AAAAAAAA
                                          AAAAAAAA
                                               AAAAAAAA
                                                   AAAAAAAA
                                                        AAAAAAAA
                                                            AAAAAAAA
                                                                 AAAAAAAA
                                                                      AAAAAA
                                                                             AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA     AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA             AAAA
                                                                           AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
                                                                                                                                               AAAAAA AAAA
AAAA
AAAAAAAA
     AAAAAAAA
         AAAA AAAA
              AAAAAAAA
                  AAAA AAAA
                       AAAA AAAA
                            AAAA AAAA
                                 AAAAAAAA
                                     AAAA AAAA
                                          AAAA AAAA
                                               AAAAAAAA
                                                   AAAA AAAA
                                                        AAAAAAAA
                                                            AAAA AAAA
                                                                 AAAA AAAA
                                                                      AAAA AA
                                                                           AA
                                                                             AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                                                             AAAA  AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                 AAAA
                                                                                                                  AAAA
                                                                                                                       AAAAAAAA
                                                                                                                      AAAA
                                                                                                                       AAAA
                                                                                                                            AAAAAAAA
                                                                                                                           AAAA
                                                                                                                            AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                AAAA
                                                                                                                                 AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                     AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                                           AAAA
AAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA               AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA  AAAAAAAAAAAAAAAAAA
                                                                                                                                      AAAAAAAA AAAAAA AAAA AAAA
AAAAAAAA
AAAA AAAAAAAA
         AAAAAAAA
              AAAAAAAA
                  AAAAAAAA
                       AAAAAAAA
                            AAAAAAAA
                                 AAAAAAAA
                                     AAAAAAAA
                                          AAAAAAAA
                                               AAAAAAAA
                                                   AAAAAAAA
                                                        AAAAAAAA
                                                            AAAAAAAA
                                                                 AAAAAAAA
                                                                      AAAAAA
                                                                           AAAAAA
                                                                             AAAAAAAA
                                                                                   AAAAAAAA
                                                                                        AAAAAAAA
                                                                                             AAAAAAAA
                                                                                                  AAAAAAAA
                                                                                                       AAAAAAAA
                                                                                                            AAAAAAAA
                                                                                                                 AAAA
                                                                                                                  AAAAAAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAAAA
                                                                                                                                           AAAAAAAAAA
                                                                                                                                                 AAAAAAAA
                                                                                                                                                      AAAAAAAA
                                                                                                                                                           AAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAAAAAAAA AAAA AAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAAAAAAAA AAAA AAAA
AAAA
AAAA AAAA
     AAAAAAAA
         AAAA AAAA
              AAAAAAAA
                  AAAA AAAA
                       AAAA AAAA
                            AAAA AAAA
                                 AAAAAAAA
                                     AAAA AAAA
                                          AAAA AAAA
                                               AAAAAAAA
                                                   AAAA AAAA
                                                        AAAAAAAA
                                                            AAAA AAAA
                                                                 AAAA AAAA
                                                                      AAAA AA
                                                                           AAAAAA
                                                                             AAAA  AAAA
                                                                                   AAAA AAAA
                                                                                        AAAA AAAA
                                                                                             AAAA AAAA
                                                                                                  AAAA AAAA
                                                                                                       AAAA AAAA
                                                                                                            AAAA AAAA
                                                                                                                  AAAA
                                                                                                                 AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAA
                                                                                                                      AAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAA
                                                                                                                           AAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAA
                                                                                                                                AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAA
                                                                                                                                     AAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAA
                                                                                                                                          AAAA
                                                                                                                                           AAAAAA
                                                                                                                                               AAAAAA
                                                                                                                                                 AAAA AAAA
                                                                                                                                                      AAAA AAAA
                                                                                                                                                           AAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAAAAAAAA AAAA AAAA
AAAA
AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAAAAAA
                                                                                                                            AAAAAAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                           AAAAAAAAAA AAAA AAAA
     AAAAAAAA AAAAAAAA AAAA AAAA AAAAAAAA AAAA AAAAAAAA AAAAAAAA AAAA AAAA AAAAAA  AAAA AAAA AAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                                                                                  AAAA AAAA AAAA AAAA
                                                                                                                  AAAAAAAA
                                                                                                                       AAAA
                                                                                                                  AAAAAAAA
                                                                                                                           AAAA
                                                                                                                            AAAA
                                                                                                                       AAAAAAAA
                                                                                                                                AAAA
                                                                                                                                 AAAA
                                                                                                                            AAAAAAAA
                                                                                                                                     AAAA
                                                                                                                                      AAAA
                                                                                                                                 AAAAAAAA
                                                                                                                                          AAAA
                                                                                                                                           AAAA
                                                                                                                                           AAAAAAAAAAAAAAAAAA
                                                                                                                                      AAAAAAAA
                                                                                                                                               AAAAAA AAAA
                                                                                                                                                           AAAA



Governance                                                  As of January 1997, the EC was in the process of reincorporating and
                                                            negotiating revisions to the memorandum of agreement. At the time of our
                                                            visit, the EC was governed by a board drawn from the 10 Census tracts
                                                            comprising the EC. In addition, each of the 10 subzone areas had
                                                            established local EC boards to oversee projects within the subzone. The
                                                            Central Savannah River Area Regional Development Center was the lead
                                                            entity for the EC.


Funding                                                     The EZ/EC SSBG funds pass through the Georgia Department of Community
                                                            Affairs to the Central Savannah River Area Enterprise Community for its



                                                            Page 24                                                              GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




                     use. As of December 31, 1996, the EC had obtained about $429,000 of the
                     EZ/EC SSBG funds for use in its projects.



Strategic Plan       The EC’s strategic plan emphasizes seven goals: (1) agriculture, business,
                     and economic development; (2) human development, health, and public
                     safety; (3) education; (4) housing; (5) arts, recreation, and cultural
                     tourism; (6) public infrastructure; and (7) community organizing,
                     coalitions, and partnerships. The EC has 12 benchmarks. Specific projects
                     include the following:

                 •   operating general education degree classes for the EC’s residents;
                 •   establishing family service centers providing such services as youth
                     recreation and leadership classes and adult literacy classes; and
                 •   training community outreach organizers to foster community involvement.




                     Page 25                                      GAO/RCED-97-75 Rural Development
                                                         Appendix I
                                                         Description of the Empowerment Zones and
                                                         Enterprise Communities GAO Visited




Crisp/Dooly
Enterprise
Community

Figure I.5: Crisp/Dooly Enterprise Community
A
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AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAA
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                                                                                                                         AAAAAAAA
                                                                                                                              AAAAAAAA
                                                                                                                                   AAAAAAAA
                                                                                                                                        AAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAA
  AAAAAAAA
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                              AAAAAAAA
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                                                                                                                         AAAAAAAA
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                                                                                                                                        AAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA             AAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA
                                                                                  Dooly    AAAA
                                                                                        County  AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAA
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                              AAAAAAAA
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                                                                                      AAAAAAAA
                                                                                           AAAAAAAA
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AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
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                                            AAAAAAAA
                                                AAAAAAAA
                                                     AAAAAAAA
                                                          AAAAAAAA
                                                              AAAAAAAA
                                                                  AAAAAAAA
                                                                       AAAA AAAA
                                                                            AAAAAAAA
                                                                                 AAAAAAAA
                                                                          Enterprise  AAAAAAAA
                                                                                           AAAAAAAA
                                                                                                AAAAAAAA
                                                                                                     AAAAAAAA
                                                                                                          AAAAAAAA
                                                                                                               AAAAAAAA
                                                                                                                    AAAAAAAA
                                                                                                                         AAAAAAAA
                                                                                                                              AAAAAAAA
                                                                                                                                   AAAAAAAA
                                                                                                                                        AAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                             Georgia                                      Community
                                                                                                                                        AAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
A AAAA
  AAAA AAAA
       AAAA AAAA
            AAAA AAAA
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                              AAAA AAAA
                                   AAAA AAAA
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                                                AAAA AAAA
                                                     AAAA AAAA
                                                          AAAAAAAA
                                                              AAAAAAAA
                                                                  AAAA AAAA
                                                                       AAAA AAAA
                                                                            AAAA AAAA
                                                                                 AAAA AAAA
                                                                                      AAAA AAAA
                                                                                           AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA                  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                                                                      AAAACounty
                                                                                    Crisp
                                                                                                AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA             AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAA
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                              AAAAAAAA
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                                                          AAAAAAAA
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                                                                            AAAAAAAA
                                                                                 AAAAAAAA
                                                                                      AAAAAAAA
                                                                                           AAAAAAAA
                                                                                                AAAAAAAA
                                                                                                     AAAAAAAA
                                                                                                          AAAAAAAA
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                                                                                                                    AAAAAAAA
                                                                                                                         AAAAAAAA
                                                                                                                              AAAAAAAA
                                                                                                                                   AAAAAAAA
                                                                                                                                        AAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
A AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA
A
AAAAA
  AAAAAAAA
       AAAAAAAA
            AAAAAAAA
                 AAAAAAAA
                     AAAAAAAA
                         AAAAAAAA
                              AAAAAAAA
                                   AAAAAAAA
                                        AAAAAAAA
                                            AAAAAAAA
                                                AAAAAAAA
                                                     AAAAAAAA
                                                          AAAAAAAA
                                                              AAAAAAAA
                                                                  AAAAAAAA
                                                                       AAAAAAAA
                                                                            AAAAAAAA
                                                                                 AAAAAAAA
                                                                                      AAAAAAAA
                                                                                           AAAAAAAA
                                                                                                AAAAAAAA
                                                                                                     AAAAAAAA
                                                                                                          AAAAAAAA
                                                                                                               AAAAAAAA
                                                                                                                    AAAAAAAA
                                                                                                                         AAAAAAAA
                                                                                                                              AAAAAAAA
                                                                                                                                   AAAAAAAA
                                                                                                                                        AAAAAA
A
AAAAA
  AAAAAAAA
       AAAAAAAA
            AAAAAAAA
                 AAAAAAAA
                     AAAAAAAA
                         AAAAAAAA
                              AAAAAAAA
                                   AAAAAAAA
                                        AAAAAAAA
                                            AAAAAAAA
                                                AAAAAAAA
                                                     AAAAAAAA
                                                          AAAAAAAA
                                                              AAAAAAAA
                                                                  AAAAAAAA
                                                                       AAAAAAAA
                                                                            AAAAAAAA
                                                                                 AAAAAAAA
                                                                                      AAAAAAAA
                                                                                           AAAAAAAA
                                                                                                AAAAAAAA
                                                                                                     AAAAAAAA
                                                                                                          AAAAAAAA
                                                                                                               AAAAAAAA
                                                                                                                    AAAAAAAA
                                                                                                                         AAAAAAAA
                                                                                                                              AAAAAAAA
                                                                                                                                   AAAAAAAA
                                                                                                                                        AAAAAA
A
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAA




Governance                                               The Crisp/Dooly Partnership, Inc., is the lead entity and is responsible for
                                                         implementing the enterprise community’s strategic plan. The Crisp/Dooly
                                                         Partnership reports to a 32-member board consisting of representatives of
                                                         Crisp and Dooly counties, 16 from each county, and are drawn from such
                                                         organizations as economic development councils, chambers of commerce,
                                                         and boards of education as well as from law enforcement groups,
                                                         churches, and low-income residents.


Funding                                                  The EZ/EC SSBG funds pass through the Georgia Department of Community
                                                         Affairs to the Crisp/Dooly Joint Development Authority, which is fiscally



                                                         Page 26                                                             GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




                     responsible for the EZ/EC SSBG funds. The Crisp/Dooly Joint Development
                     Authority consists of a separate board of eight directors who are
                     appointed by the Crisp and Dooly county governments and who, in turn,
                     release the funds to the Crisp/Dooly Partnership, Inc., for the
                     implementation of the strategic plan. As of December 31, 1996, the EC had
                     obtained about $215,000 of its EZ/EC SSBG funds program for use in its
                     projects.


Strategic Plan       The EC’s strategic plan emphasizes five goals: (1) social and economic
                     empowerment for developing innovative community services,
                     (2) development of Crisp/Dooly counties’ economic partnership to
                     coordinate economic development initiatives, (3) human and community
                     development through improved community relations, (4) improving
                     education, and (5) improving the quality of life and of the environment.
                     The EC has 37 benchmarks. Specific projects include the following:

                 •   building a postsecondary vocational-technical center;
                 •   establishing an adult literacy program; and
                 •   developing a rural transportation system.




                     Page 27                                     GAO/RCED-97-75 Rural Development
                                                            Appendix I
                                                            Description of the Empowerment Zones and
                                                            Enterprise Communities GAO Visited




  City of Lock Haven
  Enterprise
  Community

  Figure I.6: City of Lock Haven Enterprise Community
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AAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA  Enterprise
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  Governance                                                The lead entity for the EC is the City of Lock Haven City Council; a
                                                            full-time Federal Enterprise Coordinator was hired by the city to manage
                                                            the day-to-day operations of the EC. A Federal Enterprise Committee
                                                            oversees the EC; several subcommittees, such as the economic
                                                            development subcommittee and health and human services subcommittee
                                                            report to the EC Committee.




                                                            Page 28                                                             GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




Funding              The EZ/EC SSBG funds pass through the Pennsylvania Department of Public
                     Welfare to the City of Lock Haven Enterprise Community for its use. As of
                     December 31, 1996, the EC had obtained about $456,000 of the EZ/EC SSBG
                     funds for use in its projects.


Strategic Plan       The EC’s strategic plan states that its main goal is to promote economic
                     development through job creation and retention. The EC has 36
                     benchmarks. Specific projects include the following:

                 •   establishing a micro-revolving loan fund to assist small and start-up
                     businesses;
                 •   establishing a partnership among the city, Clinton County, local banks and
                     lending institutions, local housing nonprofit organizations, and housing
                     developers to expand the supply of affordable housing for elderly and
                     low-income residents; and
                 •   assisting in the renovation of a job training facility and in funding job
                     training workshops in such subjects as computer skills.




                     Page 29                                      GAO/RCED-97-75 Rural Development
                                                         Appendix I
                                                         Description of the Empowerment Zones and
                                                         Enterprise Communities GAO Visited




North Delta
Mississippi Enterprise
Community

Figure I.7: North Delta Mississippi Enterprise Community

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  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAA
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                     AAAA AAAA
                          AAAAAAAA
                              AAAA
                                   AAA
                                   AAAA
                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA                 AA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
  AAAA
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                              AAAA
                                   AAA
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                                   AAA AAAA
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                                             AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA
                                   AAA AAAA  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                                  AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAA
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                                   AAA  AAAAAAAA
                                        AAAA AAAAAAAA
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                                                                       Tallahatchie
                                                                           AAAA      AAAAAAAA
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  AAAA
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                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAA
                              AAAAAAAA
                                   AAA
                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA
                                                                           AAAA
                                                                       County   AAAA
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  AAAA
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                                   AAA
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                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA
                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                        AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA
  AAAA
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                                   AAA
                                   AAAA                                                                                                       AA
  AAAA                             AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                        AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA
  AAAAAAAA
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                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
                                                                                                                                              AA
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                                   AAAA      AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                        AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAA
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  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA
                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                        AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA
  AAAAAAAA AAAA AAAA AAAA AAAAAAAA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAA
                                   AAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
                                                                                                                                              AA
  AAAA
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                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                              AAAAAAAA
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                                                                                                    Mississippi AAAA
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                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA
                                   AAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                        AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA
  AAAAAAAA
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                                   AAA  AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
                                                                                                                                              AA
  AAAAAAAA AAAA AAAA AAAA AAAAAAAA AAA
                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAA AAAA AAAA AAAA AAAAAAAA AAA
                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAA AAAA AAAA AAAA AAAAAAAA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAA
                                   AAAA
                                   AAA  AAAA
                                        AAAA AAAA
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  AAAA
  AAAAAAAA AAAA AAAA AAAA AAAAAAAA AAA
                                   AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA AA
  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
      AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAAAAAAAAAA AAAA AAAA AAAA AAAA AAAA
                                                                                                                                              AA


Governance                                               When the EZ/EC program was announced in 1994, a group of 22 citizens
                                                         from this very poor area of Mississippi came together to discuss applying
                                                         for designation as an EZ or EC. With the assistance of an established local
                                                         Planning and Development District, they applied for and were
                                                         subsequently designated as an EC. In November 1995, this group was
                                                         incorporated as the North Delta Mississippi Enterprise Community
                                                         Development Corporation. A 22-member board, consisting of the citizens
                                                         who had been involved in the preparation of the strategic plan, was
                                                         installed and authorized to determine the major personnel, fiscal, and
                                                         program policies and the overall program plans and priorities and to give
                                                         final approval to all corporate initiatives.




                                                         Page 30                                                             GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




Funding              The EZ/EC SSBG funds pass through the Mississippi Department of Human
                     Services to the North Delta Enterprise Community for its use. As of
                     December 31, 1996, the EC had obtained about $25,000 of the EZ/EC SSBG
                     funds for use in its projects.


Strategic Plan       The EC’s strategic plan focuses on four areas: (1) economic and community
                     development, (2) empowerment through the ability of the EC to solve its
                     own problems and create its own opportunities, (3) human services and
                     physical development, and (4) natural resources and environmental
                     concerns. The EC has 16 benchmarks. Specific projects include the
                     following:

                 •   developing parks,
                 •   recommending state legislation for a tax-incentive program,
                 •   providing small business training, and
                 •   increasing the availability of safe and affordable housing.




                     Page 31                                     GAO/RCED-97-75 Rural Development
                                                       Appendix I
                                                       Description of the Empowerment Zones and
                                                       Enterprise Communities GAO Visited




City of Watsonville
Enterprise
Community

Figure I.8: City of Watsonville Enterprise Community
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         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
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         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
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         AAAA
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         AAAAAAAA
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         AAAAAAAA
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         AAAA
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         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
         AAAA
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         AAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
         AAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA
                                                                 Santa   AAAA
                                                                          CruzAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAA
         AAAA AAAAAAAA
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                                                               AAAA AAAAAAAA
                                                                 County
                                                                    AAAA AAAAAAAA
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                                                                                                                                                        AAA
         AAAA
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                                                                                                                                                        AAA
         AAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAA
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         AAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA  AAAA AAAA AAAA AAAA
                                                                                                  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
                                                                                                       AAAA
                                                                                                Enterprise  AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAA
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                                                                                             AAAA AAAA
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                                                                                                Community   AAAAAAAA
                                                                                                                 AAAAAAAA
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                                                                                                                                                        AAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
         AAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAAAAAA
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         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA
         AAAA
         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
              AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAA AAAAAAA




Governance                                             The City Council of Watsonville is the lead entity for the EC; the deputy city
                                                       manager has the day-to-day responsibilities for the EC. An advisory
                                                       steering committee represents the residents of the EC; however, the city
                                                       council has decision-making responsibility.


Funding                                                The EZ/EC SSBG funds pass through the California Department of Social
                                                       Services to the City of Watsonville Enterprise Community for its use. As of
                                                       December 31, 1996, the EC had obtained about $250,000 of the EZ/EC SSBG
                                                       funds for use in its projects.




                                                       Page 32                                                              GAO/RCED-97-75 Rural Development
                     Appendix I
                     Description of the Empowerment Zones and
                     Enterprise Communities GAO Visited




Strategic Plan       The main emphasis of the EC’s strategic plan is youth development. The EC
                     has 15 benchmarks. Specific projects include the following:

                 •   establishing youth job training, including teaching basic job-seeking
                     strategies;
                 •   expanding and renovating recreation facilities for at-risk youth in several
                     impoverished parts of the city;
                 •   building and operating a small business retail incubator in conjunction
                     with the new transit center; and
                 •   improving the downtown area by refurbishing retail businesses’ facades.




                     Page 33                                       GAO/RCED-97-75 Rural Development
Appendix II

Objectives, Scope, and Methodology


              To estimate the cost of the rural EZ/EC program, we reviewed information
              on the resources available to the EZ/EC program from the U.S. Department
              of Agriculture (USDA), the Department of Health and Human Services (HHS),
              and 13 other federal agencies. We also obtained tax-incentive information
              from the Internal Revenue Service and spoke with officials in the Office of
              Tax Assessment.

              To review the status of the EZ/EC program’s implementation and identify
              the difficulties that communities have encountered, we talked with
              officials and obtained information at all 3 rural EZs, 5 of the 30 rural ECs,
              six states, and the two principal agencies, USDA and HHS. We selected ECs
              that are located in the same state as the EZs and added ECs from three
              other states to provide geographic distribution. During our visits to these
              communities, we visited selected projects to discuss the EZ/EC program
              with the individuals most directly involved at the local level. We also
              reviewed the strategic plans, benchmarks, status reports, and funding
              documents for the eight EZ/ECs visited, as well as information maintained
              by USDA on the remaining 25 rural ECs. We also examined the progress
              reports available at USDA’s headquarters.

              To evaluate USDA’s oversight of the EZ/EC program, we reviewed the
              applicable regulations, discussed the roles of the USDA state coordinators
              with USDA headquarters officials, examined USDA’s central files on progress
              reports, and requested reports from USDA’s State coordinators. We also
              interviewed the USDA state coordinators in the six states we visited.

              We performed our work in accordance with generally accepted
              government auditing standards from June 1996 through February 1997.




              Page 34                                        GAO/RCED-97-75 Rural Development
Appendix III

Comments From the Department of
Agriculture

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.

See comment 2.




See comment 1.




                             Page 35   GAO/RCED-97-75 Rural Development
                 Appendix III
                 Comments From the Department of
                 Agriculture




See comment 3.




See comment 4.




                 Page 36                           GAO/RCED-97-75 Rural Development
                 Appendix III
                 Comments From the Department of
                 Agriculture




See comment 5.




See comment 6.




See comment 7.




See comment 8.




                 Page 37                           GAO/RCED-97-75 Rural Development
Appendix III
Comments From the Department of
Agriculture




Page 38                           GAO/RCED-97-75 Rural Development
               Appendix III
               Comments From the Department of
               Agriculture




               The following are GAO’s comments on the U.S. Department of Agriculture’s
               letter dated March 10, 1997.


               1. We agree with USDA that the EZ/EC program is different from traditional
GAO Comments   federal programs and that the program challenges communities to engage
               in activities with which they have little experience. We have modified our
               report accordingly.

               2. While we recognize that this program required a steep learning curve for
               all participants, we still believe that USDA has had a sufficient amount of
               time—42 months after the passage of the authorizing legislation—to have
               put into place systematic oversight of the program.

               3. We believe the commitment and actions outlined by USDA to address the
               recommendations in our report go a long way toward correcting the
               problems we noted concerning the need to upgrade the Office of
               Community Development’s monitoring system.

               4. We have modified our report to include USDA’s concurrence that all
               parties agreed that the initial time frames permitting communities to apply
               for EZ or EC status were inadequate.

               5. We have deleted the references to supplantation in the report. A
               discussion of supplantation was not needed to illustrate our concern about
               the possible conflicts between verbal instructions and written regulations
               on administering EZ/EC SSBG funds.

               6. We have added statements about USDA headquarters staff members’
               visits to rural EZs and ECs and about the responsibilities of the state
               coordinators.

               7. We agree with USDA that situations such as the one portrayed in our
               report will arise. This is precisely the reason why we believe that USDA
               needs a strong oversight capability, i.e., one that will identify problems
               early on and help focus the assistance, training, and consultation needed
               to help the EZs and ECs resolve the problems.

               8. We have clarified the language to recognize that the report’s estimates
               of total EZ/EC funding includes funds that would not represent additional
               appropriations but, rather, a special targeting of appropriations that would
               have been made in any case in order to support rural communities under



               Page 39                                       GAO/RCED-97-75 Rural Development
Appendix III
Comments From the Department of
Agriculture




the various programs of the participating agencies. We have also added
language to the report which notes that there may be some offsetting
benefits to the government, such as increased tax revenues, resulting from
the creation of new jobs. Finally, USDA’s statement that funds are
approximately $30 million less than GAO’s estimate was in response to a
prior GAO estimate. USDA agrees with the estimates contained in this report.




Page 40                                      GAO/RCED-97-75 Rural Development
Appendix IV

Comments From the Department of Health
and Human Services

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




Now on pp. 1, 3, and 5.




                             Page 41   GAO/RCED-97-75 Rural Development
                          Appendix IV
                          Comments From the Department of Health
                          and Human Services




See comment 1.
Now on pp. 1, 3, and 5.




See comment 2.



Now on p. 3.




See comment 3.




See comment 4.



Now on p. 4.




                          Page 42                                  GAO/RCED-97-75 Rural Development
                 Appendix IV
                 Comments From the Department of Health
                 and Human Services




See comment 5.




Now on p. 8.




See comment 6.




Now on p. 10.


See comment 7.




                 Page 43                                  GAO/RCED-97-75 Rural Development
                 Appendix IV
                 Comments From the Department of Health
                 and Human Services




Now on p. 10.




See comment 8.




Now on p. 10.




Now on p. 10.




                 Page 44                                  GAO/RCED-97-75 Rural Development
                 Appendix IV
                 Comments From the Department of Health
                 and Human Services




Now on p. 11.




See comment 9.




                 Page 45                                  GAO/RCED-97-75 Rural Development
Appendix IV
Comments From the Department of Health
and Human Services




Page 46                                  GAO/RCED-97-75 Rural Development
               Appendix IV
               Comments From the Department of Health
               and Human Services




               The following are GAO’s comments on the Department of Health and
               Human Services’ letter dated March 17, 1997.


               1. We have revised the report to consistently use the term “special
GAO Comments   consideration.”

               2. We have revised the report to clearly note that EZ/EC SSBG funds are to be
               spent in accordance with the communities’ strategic plans.

               3. We have revised the report to highlight the authority that local
               governance structures were given under the amended SSBG program.

               4. We do not believe that the additional information on HHS’ guidance was
               necessary to understand the report’s findings. Therefore, we did not
               include it as an appendix.

               5. We have added more detail on USDA’s role in the EZ/EC program.

               6. We have revised the report to recognize that HHS officials believe that
               the short application period created planning and organizational
               difficulties.

               7. We have revised the report as suggested to note that the 1993 act
               provided the authority to use the EZ/EC SSBG funds for a wider variety of
               purposes than was previously permitted.

               8. Our report is not intended to question the ability of local officials to
               make decisions. Rather, it merely points out that local officials told us that
               they need additional guidance on what standards to apply to the EZ/EC SSBG
               funds.

               9. We have deleted the references to supplantation in the report. A
               discussion of supplantation was not needed to illustrate our concern about
               the possible conflicts between verbal instructions and written regulations
               on administering EZ/EC SSBG funds.




               Page 47                                        GAO/RCED-97-75 Rural Development
Appendix V

Major Contributors to This Report


               Robert C. Summers, Assistant Director
               John K. Boyle, Project Leader
               Clifford J. Diehl
               Carol Herrnstadt Shulman
               Patricia A. Yorkman




(150424)       Page 48                                 GAO/RCED-97-75 Rural Development
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