Federal renewal plan offers hope for city

An outcry from smaller cities across the country led the federal government to create the new program.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- The city is preparing to become competitive in the race for the federal government's top economic development incentives.
The administration is recommending that the city scrap plans to seek a federal empowerment zone designation, as it has the past two times the program was offered.
New program: Instead, the city would apply to be a renewal community under a new federal program modeled on the empowerment zone for cities with 50,000 to 200,000 people.
"The differences in our ability to compete for a renewal community and an empowerment zone are immense," said Jay Williams, director of the city community development agency, which administers Youngstown's federal money. "It is hard to justify applying for the empowerment zone. The renewal community simply makes more sense from every angle."
He outlined the city's reasoning for council members Wednesday:
*Only the largest U.S. cities have won empowerment zones in the past.
Much of the reason was that matching money was important. Large cities had it, smaller ones didnot. For example, Boston had $800 million in investment as a match for the $100 million empowerment program.
Small cities such as Youngstown and Warren, which made a joint application last time, can't get anywhere near that, Williams said. There was such an outcry from smaller cities across the country that the federal government created the new program.
*A big difference in the programs is which cities are competing. Under the renewal program, Youngstown will have a fighting chance at one of the 28 designations, Williams said.
"We can't compete with Boston, Atlanta, New York, Houston," he said.
*Renewal communities will be picked based on severity of need, such as poverty, unemployment and income level. Empowerment zones are picked using more subjective criteria with emphasis on matching money, Williams said.
*The government has eliminated the $100 million grants that came with empowerment zones. Instead, huge federal tax incentives will be offered to businesses in the zones.
Businesses in renewal communities also will be offered big tax incentives, too. The difference between empowerment and renewal incentives is negligible, Williams said.
Certain capital gains taxes would be eliminated for businesses in renewal communities and credit will be given on some wages and expenses related to environmental cleanups, the government has said.
The value of the tax incentives that businesses in such areas would get is unclear.
Switching focus: Williams said that if the $100 million in cash were available, he probably would recommend pursing the empowerment zone yet again. Because it's not, the administration is focused on applying to be a renewal community.
*Empowerment zones give preference to areas that already have federal designations. Becoming a renewal community could help secure a future empowerment zone, Williams said.
*Costs could run $75,000 or more to do an empowerment application, but the U.S. Department of Housing and Urban Development helps with renewal community applications.
No joint effort: Youngstown and Warren can't submit a joint application as before because census tracts in the proposed renewal areas must be connected.
The renewal community application must be ready by Oct. 12. Designations will be awarded in December or January, Williams said.
rgsmith@vindy.com