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The objective of the Empowerment Zone/Enterprise Community Program is to encourage residents, community groups, not-for-profit organizations, businesses, local, State, and federal government agencies and other institutions to coordinate efforts and resources for creating economic revitalization and human development in distressed urban neighborhoods and rural areas. Each area designated as either a federal "Empowerment Zone" (EZ) or "Enterprise Community" (EC) benefits from federal assistance including federal tax incentives and technical support of various kinds, in order to implement locally-developed, holistic strategic plans and "benchmark documents" for achieving long term revitalization.
HHS awarded funds to States, which must award them to federally-specified local governments or other organizations (hereinafter referred to as "Lead Entities"), for activities and services included in locally-produced EC or EC strategic plans which are consistent with broad requirements stipulated in Part IV of the Omnibus Budget Reconciliation Act of 1993, Social Services in empowerment Zones and Enterprise Communities. Each Lead Entity and an agency representing its State signed a "Memorandum of Agreement" (MOA) with either HUD or USDA. The MOAs involve the establishment of a "partnership" relationship between the Lead Entity, the State government, and either HUD or USDA, to ensure successful implementation of the strategic plan and benchmark document.
A. Types of Services Allowed or Not Allowed
-- Compliance Requirement --
The State must: 1) Obligate funds to the Lead Entity or other sub-recipient as stipulated in the EZ or EC strategic plan and benchmark document in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds (Grant Terms and Conditions point #6; 24 CFR 597.200 (12) (iv) (for urban sites); and 7 CFR 25.200 (12) (iv) (for rural sites)); 2) Allow sub-recipients to expend the funds throughout the period of designation in accordance with the EZ or EC strategic plan and benchmark document, (Grant Terms and Conditions point #2); and 3) Abide by the following HHS regulations: CFR 45 Parts 96.11; 96.12; 96.15; 96.30; 96.31; 96.32; 96.33; 96.50; 96.51; 96.52.
The Lead Entity must expend the funds in accordance with its State’s laws and administrative procedures. (45 CFR 96.30)
Statutory Goals
The State must allow the Lead Entity to use the funds for activities that meet the following three requirements: 1) is included in the EZ or EC strategic plan as transposed into a "benchmark document" and amendments thereto; 2) benefits residents of the census tracts comprising the EZ or EC; and 3) is focused on achieving at least one of the three broad statutory goals: a) achieving or maintaining economic self-support to prevent, reduce, or eliminate dependency; b) achieving or maintaining self-sufficiency, including reduction or prevention of dependency; or c) preventing or remedying neglect, abuse, or exploitation or children and adults unable to protect their own interests, or preserving, rehabilitating or reuniting families. (45 U.S.C. 2007)
Examples of Allowed Activities
The statutory goals may be achieved by any of a wide variety of projects and services including, but not limited to, the following activities and program options
Activities: Some examples of the types of activities which may be financed in while or in part with the EZ/EC SSBG award include administrative activities including but not limited to coordination, planning and overhead expenses; community building efforts; community development banking and the establishment of revolving load funds to provide assistance residents, area businesses, or both; economic development and employment creation efforts; environmental clean-up programs; human and social services and programs; infrastructure development such as roadway and sidewalk improvement programs; health services staffing and provision; job tra8ining and education programs; leadership development programs; micro-enterprise development and financing; public safety staffing and projects such as community policing programs; and transportation activities.
Program Options: Program options are more examples of the types of activities Lead Entities my finance with the funds. The program "Application Guide" refers to these as "approved program options," and paraphrases them as follows (Application Guide, p. 30): 1) fund community and economic development services focused on disadvantaged adults and youths, including skills training; transportation services; and job, housing, business, and financial management counseling; 2) support programs and promote home ownership, education, or other routes to economic independence for low-income families, youth, and other individuals; 3) assist in the provision of emergency and transitional shelter for disadvantaged families, youth, and other individuals; 4) provide assistance to nonprofit organizations and community and junior colleges so they will be able to provide disadvantaged individuals with opportunities for short-term training courses in entrepreneurial, self-employment, and other skills that will promote individual self-sufficiency and the interests of the community; 5) fund programs to provide training and employment for disadvantaged adults and youths in construction, rehabilitation, or improvement of affordable infrastructure and community facilities; 6) provide support for residential or non residential drug and alcohol prevention and treatment programs that offer comprehensive services for pregnant women and mothers and their children; and 7) establish programs that provide activities outside of school hours, including keeping school buildings open during evenings and weekends for mentoring and study. (45 U.S.C. 2007(b)) The program options are to be interpreted and defined broadly.
Lead Entities may use the funds to purchase or improve land, or to purchase, construct, or permanently improve any facility if the activity meets at least one of the three broad statutory goals, and if either: 1) the Lead Entity has secured a written "waiver" from the HHS Office of Community Services stating that it may use the funds for purchase or improvement; (45 CFR Part 96.15), or 2) the activity of purchase or improvement is related to any one or more of the program options (45 U.S.C. 2007(b); 24 CFR 597.200(12) (ii) (for urban sites), and 7 CFR 25.200 (12) (ii) (for rural sites)).
-- Suggested Audit Procedures --
Test expenditures and related records.
-- Compliance Requirement --
If the meaning of the terms "benefit", "resident", "disadvantaged", and "low-income" or a process for defining these terms is specified in the EZ or EC strategic plan, benchmark document, and/or operating procedures the State must allow the Lead Entity to determine eligible uses of funds in accordance with these locally-developed definitions and processes.
The Lead Entity may develop distinct definitions for these terms for each activity to be financed with the funds.
-- Suggested Audit Procedures --
Test expenditures and related records.
B. Matching, Level of Effort, and Earmarking Requirements
No requirements
C. Special Reporting Requirements
-- Compliance Requirement --
The Terms and Conditions of the HHS grant to the States outline the fiscal reporting requirements. States are required to prepare reports as follows: 1) annual reports are due 90 days after the end of each grant year. The grant year extends twelve months from the data HHS awarded the EZ/EC SSBG grants to the State. The grant year for the grants to States of ECs runs from December 21, 1994, until December 20, 1995. There are two separate grant years for EZ grants. For the initial grant, the year runs from December 21, 1994 until December 21, 1995. For the second, the grant year runs from October 1, 1995 until September 30, 1996; 2) interim reports are due 30 days after the termination of a federal Empowerment Zone or Enterprise Community designation, whether it is during the first two-year period of the grant program or thereafter; 3) final report is due 180 days after the designation of all federal Empowerment Zones and Enterprise Communities in the State have ended.
The States may choose between any of the following three standard Federal Status Report forms for the required reports: SF-269 (Rev. 4-88), SF-269A (Rev. 4-88), or Standard Form 269 (7-76).
The States may determine the manner and form of reporting by the lead Entities.
-- Suggested Audit Procedures --
See Federal Financial reports in the General Requirements Section of the Compliance Supplement.
D. Special Audit Procedures
-- Compliance Requirement --
A State’s and lead Entity’s fiscal control and accounting procedures for the grant must be sufficient to (a) permit preparation of fiscal reports required by HHS, and (b) permit the tracing of funds to a level of expenditures adequate only to establish that such funds have not been used in violation of the restrictions and prohibitions of the statute authorizing the EZ/EC SSBG award. (45 CFR 96.30)
-- Suggested Audit Procedures --
Determine if applicable fiscal control and accounting procedures will allow the tracing of the funds in order to establish that they have been used for activities that comply with statutory requirements.
-- Compliance Requirement --
States and Lead Entities must abide by the following standards when drawing down and using funds for capitalizing revolving loan funds or other mechanisms used by Community Development Financial Institutions: 1) the revolving loan fund or other mechanism must be part of the Lead Entity’s strategic plan and benchmark document, 2) the revolving loan fund or other mechanism must be structured to benefit residents of the census tracts comprising the EZ or EC, 3) the State and Lead Entity may access EZ/EC SSBG funds for the revolving loan fund or other mechanism only when the entity that will manage the fund or mechanism has been established and is already to conduct business, and 4) the State and Lead Entity should exercise prudent fiscal procedures when accessing the EZ/EC SSBG funds for the revolving loan fund or other mechanism. For example, they should estimate the amount of funds that will be loaned during a quarter and draw down no more than that amount.
-- Suggested Audit Procedures --
State--Review the State’s process for determining the reasonableness of the Lead Entity’s request for cash for capitalizing revolving loan funds and other mechanisms of Community Development Financial Institutions.
Lead Entity--Review selected revolving loan funds and other such mechanisms capitalized with EZ/EC SSBG award funds to determine whether they contain unreasonably large amounts of cash which have never been loaned and which are not likely to be loaned in the relatively near future.
-- Compliance Requirement --
The State must follow its procedure for "obligating" (e.g. awarding to a sub-recipient) the funds in accordance with State laws and regulations within two years of the date HHS awarded the funds.
-- Suggested Audit Procedure --
Test expenditures and related records.
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This document was last modified 6/13/2001 2:06 p.m. EST
