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HomeMy WebLinkAboutIR 7326 : INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7126 #Fw�t+ra %, top To the Mayor and Members of the City Council Dctober 11 , 1988 ��xRgx Subject: FEDERAL ENTERPRISE ZONES On August 9, 1988, the City of Fort Worth established two enterprise zones which were subsequently approved by the State Department of Commerce on August 30, 1988, for recognition in the Texas Enterprise Zone Program. Presently, city staff is analyzing possible federal enterprise zones. While no Council action is required for federal enterprise zones, the purpose of this report is to inform City Council of the status of the federal enterprise zone program and what city staff proposes to implement. BACKGROUND Title VII of the 1981 U. S. Housing and Community Development Act provided the long-anticipated legal precedent for establishing a Federal Enterprise Zone Program. This Title authorizes the Secretary of the Department of Housing and Urban Development to designate as many as 100 enterprise zones based entirely on rank order of economic distress. The implementing rules and regulations for Title VII (Enterprise Zone Development) were published in the Federal Register on August 16, 1988 (vol . 53, no. 158). In these rules, the purpose of the program is stated as: ". ..to encourage business to invest in distressed areas, thereby creating jobs and assisting in the economic revitalization of these areas". No specific Federal incentives for enterprise zones have been set forth. It is anticipated that specific incentives will be established. In a notice published in the September 22, 1988, issue of the Federal Register (vol . 53, No. 184, p. 36899ff.), the U. S. Department of HUD provides additional information on rules for the Enterprise Zone Program. It . sets a 45 day period during which nominations will be accepted, beginning in early October, 1988 (precise beginning date for this short application period to be announced later). Therefore, local jurisdictions must be prepared to move rapidly in making nominations. Eligibility Requirements for Proposed Areas City staff are currently looking into the possibility of nominating one or more areas in Fort Worth for federal consideration. For an area in Fort Worth to be eligible, it must meet the following federal criteria: 1. Must have a minimum population of 4,000. 2. Must have a continuous boundary. 3. Must pass the following tests of economic distress: A. Have an unemployment rate at least 1.5 times the national unemployment rate. B. All areas included must be in U. S. Census tracts which have a poverty rate of least 20%. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS -- INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7326 p.2 Q�soar To the Mayor and Members of the City Council October 11 , 1988 Subject: FEDERAL ENTERPRISE ZONES C. And, in addition, the nominated area must meed or exceed one of the following: -At least 70% of all households have incomes below 80% of the median household income of the city, or -Have a population decline of 20% or more from 1970 to 1980. Should one or more areas in Fort Worth be identified as meeting the federal rules for eligibility, each could be nominated for consideration for the 67 Federal Enterprise Zones to be established in metropolitan areas (33 are reserved for rural * areas) . It is anticipated that competition for designation will be intense. Rules for Selection Among Competing Proposals Federal rules for designation will be based strictly on the rank ordering of applicant areas based on four measures of economic distress as described above: unemployment, poverty rate, income level , and population loss. The first 67 proposed areas in average ranking will be designated as Federal Enterprise Zones. Federal rules require that nominations must be made jointly by a -local and state Government, both jointly certifying that the nominated area meets eligibility requirements. Since Federal Enterprise Zone rules are generally more strict than State rules, many parts of the state-designated zones will not be eligible. Identifying Local Areas for the Federal Enterprise Zone Program The Economic Development Office with the assistance of Research & Economic Development Division, Planning Department , has prepared several area configurations which are recommended as alternatives for Federal enterprise zone nomination. A detailed data base has been developed which permits testing numerous area configurations on the federal eligibility rules. In developing these recommendations for nomination, three primary issues have been addressed in order of perceived importance: 1) Area configurations must meet the tests required by the rules of the Federal Enterprise Zone Program. 2) Areas evaluated for nomination must have some relevance to and coherence with broad goals of economic development in Fort Worth. 3) Area configurations must be designed that will maximize competitive position with respect to other applicants. OP I IISSUED BY THE CITY MANAGER FORT WORTH. TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7326 p.3 #,OTC To the Mayor and Members of the City Council October 11 , 1988 0 q Z5 Subject: FEDERAL ENTERPRISE ZONES Issue 1) cannot be compromised, if we choose to participate. However, issues 2) and 3) may involve some trade-offs and compromises with respect to each other. For example, the city might wish to nominate all areas that meet the minimum Federal eligibility tests, but recognizing that such nominations are likely to be in competition with applicant areas in other cities across the nation which may have been identified in order to maximize their position in this competition. In contrast , Fort Worth might nominate only those areas of extreme economic distress and be more competitive, but left with a zone which cannot hope to compete on the local scene for needed resources. Staff thinks the more realistic approach is one that explores the middle ground between these two extreme positions. CONCLUSION Unless otherwise directed, city staff will prepare applications for one or more nominations for a federal enterprise zone based on the criteria specified in the September 22, 1988, Federal Register. It should be noted that the final rules are under review by Kul) and could be changed. Should there be any significant changes, staff will so advise the Council . Should more information be desired, staff is prepared to discuss this project more fully at a Pre-Council session. Sincerely, ouglas Harman7 City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS