THE WHITE HOUSE
Office of the Press Secretary
TAPPING THE POTENTIAL OF AMERICA'S URBAN AND RURAL COMMUNITIES: PRESIDENT CLINTON'S NEW COMMUNITY EMPOWERMENT FUND
Today, President Clinton will announce another part of his community empowerment agenda. The President's budget will include $400 million for a new Community Empowerment Fund (CEF) to help bring the spark of private enterprise to America's distressed urban and rural communities. The CEF will greatly enhance the ability of local communities to invest in businesses, helping to create jobs and providing strong incentives for the standardization of economic development lending, a crucial first step in creating an effective secondary market for economic development loans. According to the Department of Housing and Urban Development, the $400 million for the CEF is expected to leverage an estimated $2 billion in private-sector loans and will support an estimated 280,000 jobs when projects are completed.
Building on Past Successes:
The Community Empowerment Fund will improve, and combine, two existing HUD programs -- the Economic Development Initiative (EDI) and the Section 108 Loan Guarantee Fund -- to promote economic development in distressed communities with the best proposals to bring economic opportunity to their residents. In the past, HUD's EDI and Section 108 programs have supported several successful projects, including:
Revolving Loan Funds, such as the Ohio's Mahoning Valley Economic Development Fund that is aimed at helping communities retool their economies in the wake of the steel industry's decline, which had once been the backbone of the local economy.
Inner-city shopping centers, such as the Good Hope Marketplace in Washington's DC Anacostia neighborhood, which includes a full-service 55,000-square foot Safeway Food and Drug Store.
Cessna Aircraft's Learning and Work Complex in Wichita, Kansas, a welfare-to-work effort which provides day care and job training for former welfare recipients employed in the company's adjacent industrial facilities.
CEF will improve upon this success by helping reduce the risk to States' and communities' Community Development Bank Grant (CDBG) program funds when undertaking similar projects. It will assist state and local governments to standardize the underwriting and documentation of loans to businesses in distressed areas, expand credit for economic development loans, augment communities' underwriting and loan servicing capacity, and use funds more efficiently for credit enhancement.
CEF will play an important role in assisting former welfare recipients to move successfully from welfare-to-work by supporting economic development and jobs. It will support activities such as revolving loan funds for business expansion or modernization; startup funds for new, small- and medium-sized businesses; the creation, preservation, and expansion of new and existing industrial facilities; neighborhood-based commercial revitalization efforts; and regional economic strategies.
While the EDI program was funded at $138 million last year, it included $100 million in Congressional earmarks. Therefore, the President's request for $400 million in 1999 compares to just $38 million available for competitive EDI grants in 1998.