Competition for 20 new Rural and Urban Empowerment Zones

[Center for Public Environmental Oversight <cpro@igc.apc.org>]

(Excerpt from the HUD Press Release)

Businesses in HUD empowerment zones are eligible for the following tax
provision:

    Environmental Cleanup Cost Deduction: Tax incentives for Brownfields
to promote the cleanup and redevelopment of contaminated industrial
sites. A business can deduct qualified environmental cleanup costs in
the tax year the cost is paid or incurred.

Here is some information about today's announcement of competition for
20 New Urban and Rural Empowerment Zones.
-------------------------------------------
Vice President Al Gore today announced a nationwide competition to
designate 20 new Empowerment Zones to create jobs and business
opportunities for residents of economically distressed parts of urban
and rural America ...

The new Empowerment Zones - 15 urban and 5 rural - will join 72 urban
areas and 33 rural communities.

The new Empowerment Zones designated following this competition will be
eligible to receive a variety of new federal tax incentives to stimulate
job creation and economic development in economically distressed areas
of cities and rural communities.
In addition to the tax incentives, the Clinton Administration's FY 1999
budget proposes $1.5 billion in funding over 10 years for social
services in the 15 new Empowerment Zones and $200 million for the 5
rural Zones.

Round II Empowerment Zones will benefit from two new tax incentives --
tax-exempt bond financing and immediate tax-deductibility of the costs
of new machinery and equipment. Empowerment Zones with populations of
100,000 or more will
be eligible to issue up to $230 million in bonds, while smaller Zones
will be able to issue up to $130 million in bonds. This lower-interest
funding, which will not be subject to state caps or limits on the size
of bond issues, should provide communities a significant resource for
stimulating economic activity and thousands of new jobs for residents
within the Empowerment Zones.

Secondly, through an increased Section 179 Deduction, businesses in the
Empowerment Zones will be able to deduct up to $37,500 of all or part of
the cost of qualifying property -- such as machinery and equipment -- in
the year it is placed in service
instead of recovering the cost over a period of years through
depreciation.

TAX PROVISIONS for all Empowerment Zones and Enterprise Communities are
as follows:

     Welfare-to-Work Tax Credit: Providing businesses with incentives to
hire welfare recipients. The maximum credit is $3,500 per employee in
the first year and $5,000 per employee in the second year

     Environmental Cleanup Cost Deduction: Tax incentives for so-called
Brownfields to promote the cleanup and redevelopment of contaminated
industrial sites. A business can deduct qualified environmental cleanup
costs in the tax year the cost is paid or incurred.

     The Work Opportunity Tax Credit: Provides businesses the
opportunity to claim up to a $2,400 tax credit for hiring 18-24 year-old
Zone residents and other hard-to-employ residents. (This credit is
currently set to expire for the hiring of  individuals who start work
after July 1, 1998.)

     Qualified Zone Academy Bonds: Beginning this year, state and local
governments can issue bonds that permit public schools to raise funds
for curriculum development or physical improvements. To be eligible,
schools must have resource commitments from business partners.

In 1994, the Clinton Administration selected nine Empowerment Zones -
six urban and three rural - which entitled them to receive federal tax
incentives and direct funding for physical improvements and social
services. In addition, Los Angeles and Cleveland were designated full
Empowerment Zones by the Administration in January this year.

Cities and rural areas seeking to apply for Empowerment Zone designation
have until October 9, 1998 to develop and submit comprehensive
revitalization strategies, with designations to be made by January 1,
1999. A critical component of the
application process is a dialogue that pulls communities together to
devise a vision for the future, approaches to resolve tough problems and
the development of new partnerships.

Communities may receive more information about how to apply for an
Empowerment Zone and how to attend workshops on the application process
by contacting HUD at 800/998-9999 or the U.S. Department of Agriculture
at 800/851-3403.

Information will also be available on the Internet at
http://www.hud.gov/ezeclist.html or http://www.ezec.gov/round2

HUD's 10 regional training sessions on the Empowerment Zone application
process begin Friday in Columbus, OH.

SOURCE: U.S. Department of Housing and Urban Development