EMPOWERMENT ZONE Matching funds would hinder Valley

The federal empowerment zone program will no longer provide grants.
By DAVID SKOLNICK
VINDICATOR POLITICS WRITER
YOUNGSTOWN -- Small urban communities need a break when it comes to consideration for federal empowerment zones, Mayor George M. McKelvey said.
If communities were required to provide a large financial match, it would severely hurt Youngstown-Warren's chances for an empowerment zone, McKelvey said.
"It may be a challenge that we cannot overcome," McKelvey said. "But we'll only be able to know if we can overcome it by applying."
McKelvey said the Youngstown-Warren application will be competitive, but he is concerned about any provision that would require cities to show matching dollar amounts from public and private sources.
Guidelines in progress: The federal government is working on the guidelines for cities to qualify for empowerment zone status and will release them in the spring. The U.S. Department of Housing and Urban Development will designate empowerment zones for seven urban and two rural areas.
Empowerment zones target specific inner-city and other disadvantaged areas in communities by offering financial incentives for businesses to locate there and create jobs.
During the previous two empowerment-zone rounds, the Mahoning Valley cities lost points on their application because of their inability to come up with significant matching funds, McKelvey said.
"It's like telling a homeless person you'll give them $60,000 toward the purchase of a house and all they have to do is come up with $20,000," McKelvey said.
Traficant's effort: U.S. Rep. James A. Traficant Jr. of Poland, D-17th, is asking HUD officials to create a category allowing smaller urban communities such as Youngstown and Warren to compete without the local-match provision or at least not compete against larger cities.
"The congressman is going to make every effort to secure an empowerment zone for the Youngstown-Warren area," said Charles Straub, Traficant's spokesman.
"Matching dollars has been a problem in the past. These larger cities are the only ones able to compete for money, because they can match it."
One way to make the local proposal stronger is to tie in the Youngstown-Warren Regional Airport and the area surrounding it, thus making it a joint application by Mahoning and Trumbull counties, said Warren Mayor Hank Angelo.
"Our aim is to improve on the application, and this could prove to be a great benefit," he said.
Besides working with Traficant, Angelo said the two communities will enlist the aid of Ohio's two U.S. senators, George Voinovich and Mike DeWine.
Final chance: Youngstown and Warren failed to get the zone designations, first in individual applications in 1994 and then in a joint proposal in 1999.
Because President Bush does not support the empowerment-zone process, this will in all likelihood be the final go-around for the program.
In previous years, cities getting the empowerment-zone status received packages of $100 million in federal grants and tax incentives. They were given over two years for cities in Round 1 and were to be given over 10 years for cities in Round 2.
HUD officials say the financial arrangement for Round 3 eliminates federal grants and includes only tax incentives for a 10-year period. The amount of money to be given has not yet been decided.
Smaller packages: Also, HUD will offer smaller tax-incentive packages to 40 cities under a new renewal communities program.
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, HUD officials said.
McKelvey said he did not know if Youngstown and Warren would apply for the smaller renewal communities program because he is concerned it might hurt the cities' chances for getting the empowerment-zone designation.
Not aware: Also, McKelvey and Angelo said they were unaware that the empowerment zone program no longer provided grants and is now a tax-incentive-only program.
"When HUD officials were in town the other week, they didn't say anything about that," McKelvey said. "But we'll apply for whatever is available."
A city receiving the empowerment zone status would receive tax incentives such as wage credit, capital gains credit, brownfield cleanup credits and tax-exempt bond financing for companies located or relocating there, HUD officials said.