Office of Community Services - Urban and Rural Community Economic Development (CED) Program

Table of Contents

Fiscal Year 2004 Report to Congress on Community Services Block Act Discretionary Activities - Community Economic Development (CED) and Rural Facilities (RF) Programs

COMMUNITY ECONOMIC DEVELOPMENT PROGRAM

Overview

The Community Economic Development Discretionary Grant Program (CED) is authorized under Section 680(a)(2) of the Community Services Block Grant Act of 1981 (Public Law 97-35), as amended by the Community Opportunities, Accountability, and Training and Educational Services Act of 1998 (Public Law 105-285). The Office of Community Services (OCS) awards CED grants on a competitive basis to private, non-profit community development corporations (CDCs) that create employment and business development opportunities for low-income individuals and help move them towards self-sufficiency.

A CDC is an organization governed by a board of directors composed of community residents, business, and civic leaders. It must have as a principal purpose the planning, development, or management of low-income housing or community development projects.

This report provides information on all CED grants awarded in Fiscal Year (FY) 2004. Persons served by CED grants include recipients of Temporary Assistance for Needy Families (TANF), non-custodial parents, residents of public housing, and homeless and other disadvantaged individuals. CED grants fund two types of projects: non-construction and construction. Non-construction projects include investments in sectors such as manufacturing, technology, micro-business, and agriculture. Construction projects often involve purchasing or improving real estate to create anchor buildings for community redevelopment In FY 2004, non-construction projects were funded for periods of up to three years. Construction projects were funded for periods of up to five years.

Program History

CED has its origins in the Federal Government’s “War on Poverty” in the 1960s. Initially referred to as the Special Impact Program, CED was created in 1966. It was administered first by the Office of Economic Opportunity (OEO), the Government’s official anti-poverty agency, but was moved later to the U.S. Department of Labor (DOL). There, the first community economic development project was funded in FY 1967 in the Bedford-Stuyvesant neighborhood in Brooklyn, New York. The project provided job training and jobs to 4,000 low-income neighborhood residents at a cost of $7 million.

In FY 1968, DOL, OEO, the U.S. Department of Agriculture (USDA), and the U.S. Department of Commerce’s Small Business Administration (SBA) jointly administered the Special Impact Program. That fiscal year, OEO made its first direct Special Impact grant to the Hough Area Development Corporation in Cleveland, Ohio. The Hough Area Development Corporation was the first Special Impact grantee to meet the legislative goals of community participation.

In FY 1969, OEO administered a major share of the Special Impact Program, $10 million of which went to support a cadre of CDCs including the Bedford-Stuyvesant Restoration Corporation. In 1970, the entire $30 million in Special Impact funds was placed again under OEO.

In FY 1972, the CED Program’s legislative mandate was “to encourage the development of special programs by which residents of urban and rural low-income areas may, through self-help and mobilization of the community at large, with appropriate Federal assistance, improve the quality of their economic and social participation in community life in such a way as to eliminate poverty and establish permanent economic and social benefits.” In 1973, OEO’s name was changed to the Community Services Administration (CSA).

In FY 1981, Congress established nine block grants, including the Community Services Block Grant (CSBG). The CSBG Act consolidated several categorical programs into a single Federal funding stream. This Act also established CSBG discretionary programs, including CED. These programs are administered by the Office of Community Services (OCS) in the Administration for Children and Families (ACF), U.S. Department of Health and Human Services (HHS).

Community economic development is a process by which a community garners and uses resources to attract capital in order to increase commercial, business development, and employment opportunities for its residents. OCS supports projects that engage local enterprises, create career opportunities with upward mobility for low-income individuals, and facilitate economic growth in low-income communities.

Community Economic Development Discretionary Grant Program Priority Areas

During FY 2004, the CED Program made funding available under the following priority areas:

Planning grants – These grants provided funds to recently established CDCs so that they could acquire the technical expertise and resources to assess their community’s economic needs, determine effective development intervention strategies, and assess the feasibility of potential projects. Grants were limited to CDCs that had existed for no more than three years or had existed longer than three years but had no record of participation in economic development projects.

Public Markets grants – These grants provided operational funds to organizations that had received planning grants in the two fiscal years preceding the award. Once the grants were awarded, CDCs were required to conform to the purposes, requirements, and restrictions that applied to operational grants. These grants were awarded for the first time in 2004.

CED National Philanthropic Institution grants (CED/NPI) – These new grants provided operational funds in two phases to organizations that demonstrated firm and substantial support (financial and other support) for projects where planned neighborhood transformation initiatives are underway in urban areas with at least 250,000 residents. Grants of up to $500,000 were awarded to create jobs and business ownership opportunities for low-income residents. These grants were awarded for the first time in 2004.

Emergency grants – These grants provided operational funds to organizations experienced in CED work and the ability to address special or emergency needs in their targeted areas. Once the grants were awarded, CDCs were required to conform to the purposes, requirements, and restrictions that applied to operational grants. These grants were awarded for the first time in 2004.

Incremental Development grants – These grants provided funds to CDCs that lacked written commitments for non-CED funding, site control, and low-income referral sources from which projects would access low-income beneficiaries for jobs and businesses. The first award was for 20 percent of the grantee’s requested amount of funding for the project. This 20 percent was to be used for development activities. When the grantee had acquired non-CED funding, site control, and low-income referral sources for the project, the grantee could apply for the remaining 80 percent of the award. The total award could not exceed the maximum funding limit of $700,000.

Operational grants – These grants created employment and business development opportunities for low-income individuals, families, and communities. CDCs receiving these grants were experienced in implementing economic development projects and could execute a new project shortly after the grant award.

Training and technical assistance cooperative agreement – This nationwide project provided CDCs with training and technical assistance on capacity building, including planning and project evaluation.