< Back to Search

CED Report to Congress FY 2006

Published: November 20, 2006
Audience:
Community Economic Development (CED)
Category:
Publications/Reports, Report to Congress

Fiscal Year 2006 Report to Congress on Community Services Block Act Discretionary Activities - Community Economic Development (CED) and Rural Community Development (RCD) Programs

 

I. 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 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) 2006.  Persons served by CED projects include recipients of Temporary Assistance for Needy Families (TANF), non-custodial parents, residents of public housing, 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 2006, 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

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.  CSA was abolished, and its programs were placed within the new 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 2006, the CED Program made funding available under the following priority areas:

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 phase of this grant awarded 20 percent of the grantee’s requested amount of funding for the project.  This 20 percent was to be used for development activities.  The grantees have two additional fiscal years in which to apply for the remaining 80 percent of the award to be used to complete the requirements for phase two of the grant.  In order to apply for phase two funding, the grantee must have acquired site control, low-income referral sources, and any necessary non-CED funding to complete the project.  There were no phase one incremental development projects funded in FY 2006.  This Report to Congress reflects only phase two funds awarded to grantees that received their initial award in FY 2004.  The total award could not exceed the maximum funding limit of $560,000. 

Operational grantsThese 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.

Community Economic Development Grants Covered in this Report to Congress

In FY 2006, there were 47 CED projects, however one was a replacement for a grant awarded in FY 2005.  The replacement project received appropriation funds from FY 2005 and, therefore, this Report to Congress covers the status of only 46 projects.  All outcome information provided in this Report to Congress has been self-reported by grantees.

Table 1:  FY 2006 Grant Awards

Priority Area

Maximum Award

Length of Project Period

Number of Grants Awarded

Total Priority Funding

Incremental – non-construction

$560,000

3 years

2

   $680,000

Incremental – construction

$560,000

5 years

3

$1,520,000

Operational – non-construction

$700,000

3 years

10

$7,230,000

Operational – construction

$700,000

5 years

31

$16,320,819

Total Non-construction and Construction Grants

46*

$25,750,819

 


* One operational non-construction project was a replacement for a FY 2005 awarded grant.  The project received FY 2005 appropriation funds and, therefore, this Report to Congress only represents data for 46 projects.

Data in Table 1 reveals that in FY 2006 among all priority areas:

  • Two types of grants were awarded totaling $25,750,819;
  • 12 non-construction grants were awarded for $7,910,000 and
  • 34 construction grants were awarded for $17,840,819

Completion of Grant Projects

As shown in Table 1, this Report to Congress includes data on 46 projects that had varying project periods.  When this report was written, some projects were complete, while others were still in progress.  Completed projects are projects that ended before the writing of this report and have been closed successfully.  Incomplete projects are those that have end dates beyond the date of this report and are still in progress; therefore, they are not expected to have been completed.  Unsuccessful projects were not able to finalize the necessary activities needed to complete a project, such as gaining site control, securing commitments of non-CED funds to complete the project, and/or obtaining referral sources from which the project could receive low-income beneficiaries.  Incomplete projects are not deemed unsuccessful, although they may not have created jobs to date.

Unsuccessful and incomplete projects are reviewed by OCS on a case-by-case basis to determine if the grantee’s inability to complete a successful project was within its control.  If the failure was due to poor performance such as a lack of financial controls or the inability to follow regulations and procedures, then OCS may take action to enforce a suspension of the grant or disallowance of grant funds.  In such an instance, the grantee would be asked to return the funds awarded in part or in whole.  If the failure was at no fault of the grantee, through uncontrollable factors such as not being able to complete the project because of environmental contamination clean-up or local funding being withdrawn due to city or state cutbacks, then OCS would not enforce a suspension of the grant or disallowance of grant funds.  OCS would determine that the grantee performed its best effort to complete a successful project.  There are cases where the grantee could not move forward with their project because the third party had either finalized bankruptcy or the grantee is suing the third party to collect on a loan.  Under these circumstances, the grantee is awaiting a court determination before they can collect the grant funds and OCS cannot closeout the grant without receiving a final financial report regarding the status of grant funds. 

The grant closeout is the process by which ACF determines that all applicable administrative actions, all terms and conditions, and all required work on the grant have been completed by ACF and the grantee.  Closeout offers an opportunity for both parties to complete and reconcile outstanding issues and develop final documentation to support the Federal assistance action.  The closeout procedure requires the grantee to provide a final performance and financial report that covers the full length of the grant’s awarded project period. 

Generally, non-construction grants were allowed three-year project periods, and construction grants were allowed five-year project periods.  Under certain circumstances, grantees could request an extension for up to 12 months.  This might occur when a grantee is unable to secure site control within timelines established in its work plan or when a grantee faced barriers that prevented it from meeting project goals. 

As documented in Table 2:

  • Nine projects were completed;
  • 28 projects have not been completed yet; and
  • 10 projects were unsuccessful.

Table 2:  Status of Grant Projects

Priority Area

Completed Projects

Incomplete Projects

Unsuccessful Projects

Incremental – non-construction

1

--

1

Incremental – construction

--

1

2

Operational – non-construction

3

4*

5

Operational – construction

5

23

2

Total

9

28*

10


*One operational non-construction project was a replacement for a FY 2005 awarded grant.  The project received FY 2005 appropriationfunds and is not represented in this report.

Four incremental development projects were completed.  Five incremental projects began in FY 2004 and received the balance of the project funding in FY 2006 for the second phase. 

During phase one, 20 percent of incremental funding is used for development purposes.  The grantees have two additional fiscal years in which to apply for the remaining 80 percent of incremental funding to complete phase two.  Phase two grant requirements include: 1) gaining site control; 2) securing commitments of non-CED funds to complete the project; and 3) obtaining referral sources from which the project could receive low-income beneficiaries.  This Report to Congress reflects phase two funds of the remaining 80 percent awarded to grantees from FY 2004.

Eight operational projects were completed.  Twenty-three of the construction operational projects were not completed yet because they have project periods ending in FY 2011.  There were seven unsuccessful operational projects.  Historically, operational projects have focused on starting or expanding local community efforts to create new jobs; considering that a large number of these proposals tried to succeed during the worst national economic period in decades, the percentage of failed efforts are considered reasonably low.  Initiatives on assisting organizations with additional Technical Assistance during these times have signaled positive results.

*Incomplete Projects have project periods ending in Fiscal Year 2011. 


Project Outcomes

The three indicators used in this Report to Congress to measure progress or success are: 1) number of jobs created; 2) number of businesses created or expanded; and 3) amount of non-CED funds secured or leveraged by grantees in addition to their CED award to implement the proposed project.  Grantees often secure additional non-CED funds to implement their project; these funds are not required by statute but may be helpful to execute the project.  In tables and project descriptions, “Proposed” refers to the goal described in the grantee’s application.  “Actual” refers to what the grantee subsequently reported as having accomplished

Proposed Versus Actual Outcomes for Fiscal Year 2006

Table 3:  FY 2006 Project Outcomes

Priority Area

Proposed Jobs Created

Actual Jobs Created

Proposed Businesses Created or Expanded

Actual Businesses Created or Expanded

Proposed Funds Leveraged

Actual Funds Leveraged

Incremental

317

82

11

6

$21,264,049

$14,486,277

Operational

2,743

1,692

232

180

$48,844,436

$45,085,370

Total

3,060

1,774

243

186

$70,108,485

$59,571,647

 

Table 3 details data for projects funded in FY 2006; in that fiscal year, 1,774 jobs were created compared with the 3,060 jobs proposed.  This reflects the fact that operational construction grantees have until FY 2011 to complete or exceed their goals.  Because of unanticipated planning, weather variations, leasing, and other challenges, construction projects typically take longer to fully implement.  Therefore, grantees may opt to create jobs in years four and five of their project period. 

Grantees created or expanded 186 businesses compared with the 243 businesses proposed and leveraged 85 percent of the non-grant funds proposed for projects.  They secured over $59 million and additional funds may be leveraged by the projects still operating through FY 2010 and FY 2011.

Table 4:  Proposed Versus Actual Project Outcomes

Project Status

Proposed Jobs Created

Actual Jobs Created

Proposed Businesses Created or Expanded

Actual Businesses Created or Expanded

Proposed Funds Leveraged

Actual Funds Leveraged

Completed

1,447

1,367

116

102

$22,079,136

$16,389,325

Not Completed

1,613

407

127

84

$48,029,349

$43,182,322

Total

3,060

1,774

243

186

$70,108,485

$59,571,647

 

Table 4 shows that completed projects fell short of their job goals by five percent, their business goals by 12 percent, and leveraged 74 percent of the funding anticipated.  Thus far, projects not yet completed have attained about 25 percent of their job creation goals; 66 percent of their businesses created or expanded goals; and met 90 percent of their leveraging goals.  The majority of grantees whose projects were not complete at the time of the writing of this Report to Congress have until FY 2010 or FY 2011 to finish their work.

Types of Proposed Grantee Projects

Forty-seven grantees proposed to develop projects and/or create businesses of varying types in their applications.  Projects and businesses for Incremental Development and Operational grants are those proposed in the grantee applications.

Table 5:  Types of Proposed Grantee Projects

Business Type

Incremental

Operational

Total

Agriculture

--

3

3

Child Care

--

2

2

Equipment Maintenance

--

1

1

Grocery

--

2

2

Health Care

1

1

2

Incubator/Training Services

--

4

4

Manufacturing

1

8*

9*

Miscellaneous

--

3

3

Restaurants

--

1

1

Retail/Commercial

3

14

17

Technology

--

3

3

Total

5

42*

47*

 

* One operational non-construction project was a replacement for a FY 2005 awarded grant. The project received FY 2005 appropriation funds and is not represented in this report. 

As shown in Table 5, the most common types of proposed projects were:  retail/commercial (17), manufacturing (9), and incubator/training services (4).  These projects totaled 65 percent (30 out of 46).  Of the projects proposed, retail businesses included consumer product sales, food restaurants, and drug stores, among other retailers.  Commercial businesses included maintenance and management services, an American Indian Heritage Museum, and professional services. 

CED funds were awarded for four business incubators or training services.  Many incubators were facilities where small businesses could obtain space to develop, grow, and avail their staff to training services for positions in reception, accounting, and telecommunications.  Other incubators served businesses at their locations in the community.  All incubators provided training and technical assistance on business planning, management, and finance. 


Project Descriptions

Brief descriptions of each CED grant project and a summary of its accomplishments to date are provided here.  The descriptions are arranged by grant priority area:  Incremental Development and Operational.  Within each priority area, grants are alphabetized by State.