Economic Development Administration

NADO Center for EDA Rulemaking

House CJS Mark Increases EDA By $24 Million

July 2, 2010--The FY2011 Commerce-Justice-Science spending bill (unnumbered) provides $317.85 million for the U.S. Economic Development Administration (EDA). The House CJS Appropriations Subcommittee recommendation is $24.85 million above the FY2010 level and $31.66 million above the administration’s request. The full breakdown, along with committee report language, of the House bill will not be available until the measure moves to full committee later this summer.

In February, NADO was honored to have three witnesses testify before the House CJS subcommittee in support of additional budget resources for EDA, including an increase for Economic Development District planning grants. The association also helped coordinate a House “Dear Colleague” letter sponsored by Reps. Mike McIntyre (D-NC) and Bill Shuster (R-PA) that called for an increased appropriations for EDA, including the EDD planning grant program.

Since FY2004, NADO has helped secure two major increases in the EDD planning grant program – the first increases since 1972. The program has grown from $24 million to $31 million in FY2010. These additional resources allowed the agency to reduce significantly the backlog of designated-but-unfunded EDDs (program jumped from 320 EDDs to 380 today) and to provide an additional $10,000 each year for all existing EDDs. For the upcoming fiscal year, NADO has been pushing for an additional $4 million so the agency could provide each EDD with an additional $10,000, bringing the average planning grant to $73,000 (plus local match).

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Subcommittee Scrutinizes EDA’s FY2011 Budget Request

May 14, 2010--On May 6, the House Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings and Emergency Management held a hearing to examine the FY2011 budget request for the Economic Development Administration (EDA) and the Federal Emergency Management Agency (FEMA). The hearing specifically focused on the agencies’ abilities to respond to disasters and economic disruptions.

In his testimony, EDA Assistant Secretary John Fernandez indicated that after a disaster, the agency’s is on promoting long-term economic recovery in affected communities. He also stated that the key to the agency’s success in responding quickly and effectively to disasters and economic disruptions is its economic adjustment assistance program, which is designed to provide maximum flexibility in the array of projects it can fund.

In its FY2011 budget request, the agency is seeking to shift more than $90 million from its public works program to the economic adjustment assistance program.

In her opening statement, Subcommittee Chair Eleanor Holmes Norton (D-DC) was critical of EDA's budget request, which proposes to reduce funding roughly $7 million under current spending. She also “failed to understand” how the agency would be able to respond during this recession with fewer resources. She expressed frustration that the administration didn’t seem to “really support” EDA and it was left to Congress to appropriate additional funding for the agency during the economic downturn.

The subcommittee also received testimony from FEMA Administrator Craig Fugate. He indicated that the agency’s Disaster Relief Fund (DRF), which currently has less than $1 billion available, is expected to run out of funds in June. However, the drawdown rate is expected to increase rapidly as FEMA responds to flooding in Tennessee.

Currently a backlog of more than $1 billion in recovery and mitigation projects exists and could be funded immediately if additional resources were provided to the DRF.

To view the hearing and testimony, visit http://transportation.house.gov/hearings/hearingDetail.aspx?newsid=1178.

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EDA Unveils Reauthorization Proposal

May 4, 2010--On April 29, the Economic Development Administration (EDA) released its official legislative proposal to reauthorize the agency. The measure proposes to reauthorize the agency through FY2015 and proposes several new initiatives.

First, the proposal establishes a program to fund the development and construction of science and research parks “to promote the clustering of innovation through high technology activities.” The agency would provide grants of up to $750,000 to develop feasibility studies and plans for the construction of new research parks or the renovation of existing ones. The proposal authorizes the establishment of a loan guarantee program of up to $50 million per applicant for the construction, renovation or expansion of science park infrastructure.

Second, the proposal allows EDA to release the U.S. government’s interest in a revolving loan fund (RLF) grant seven years after the date the original grant was made.

Finally, the bill establishes a sustainable economic development program, which would essentially authorize the agency’s existing Global Climate Change Mitigation Incentive Fund. The program would fund “activities which will employ economic development practices that contribute to the preservation and enhancement of environmental quality by limiting the nation’s dependence on non-renewable fuels, enhancing energy efficiency, curbing greenhouse gas emissions, protecting natural systems, and promoting development and redevelopment on previously developed land.”

The Senate Environment and Public Works Committee approved its EDA reauthorization bill (S. 2778) in November 2009. The bill is currently awaiting floor consideration. The House has not yet developed its version.

To access the administration’s EDA reauthorization proposal, visit http://www.eda.gov/NewsEvents/PressReleases/2010Reauthorization. For more information, contact NADO Director of Government Relations Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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NADO Members Participate in EDA Budget Hearing

February 4, 2010--On February 3, The House Appropriations Subcommittee on Commerce, Justice and Science held a hearing on the U.S. Economic Development Administration (EDA) - the first hearing dedicated exclusively to EDA's annual budget in nearly a decade. NADO was pleased to have four representatives as hearing witnesses. Click on their names to read their written statements. Michael King of the North Country Council (NH), John Brown of the Brooke-Hancock-Jefferson MPC (WV-OH), Chuck Wemple of the Houston-Galveston Area Council (TX) and Mayor Bradford of Muscle Shoals (AL) representing the Northwest Alabama Council of Local Governments.

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Senators Seek EDA Funding Increase in 2011 Budget

January 8, 2010--On December 22, 19 Senators signed a letter urging President Obama to provide “robust funding” for the Economic Development Administration (EDA) in the FY2011 budget request, scheduled to be released on February 1.

The letter was sponsored by Sen. Jeff Merkley (D-OR), and signed by Sens. Daniel Akaka (D-HI), Christopher Bond (R-MO), Barbara Boxer (D-CA), Sherrod Brown (D-OH), Roland Burris (D-IL), Benjamin Cardin (D-MD), Kirsten Gillibrand (D-NY),Tim Johnson (D-SD), Amy Klobuchar (D-MN), Mary Landrieu (D-LA), Patrick Leahy (D-VT), Carl Levin (D-MI), Robert Menendez (D-NJ), Bernard Sanders (I-VT), Arlen Specter (D-PA), Debbie Stabenow (D-MI), Tom Udall (D-NM), Mark Warner (D-VA), and Sheldon Whitehouse (D-RI).

NADO thanks those regional development organizations that contacted their Senators to urge them to sign the letter. Regional development organizations are encouraged to formally thank those Senators that showed their support for EDA.

To view the letter, visit www.nado.org/legaffair/edawh11.pdf.

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House Passes Jobs Legislation, Excludes EDA Funding

December 18, 2009--On December 16, the House passed a $150 billion bill (HR 2847) designed to help spur job creation. The second fiscal stimulus package contains roughly $48.3 billion for infrastructure projects as well as $26.7 billion to prevent public sector employees from being laid off. The remaining $75 billion is to provide assistance through unemployment benefit and workforce assistance programs to the unemployed while they seek work.

Specific funding in the bill includes:

  • $27.5 billion for highway projects (to be apportioned in the same fashion as the ARRA legislation – 50 percent according to the existing STP formula and 50 percent according to the FY2008 obligation limit ratio)
  • $8.4 billion for transit projects (apportioned in identical fashion as ARRA – 80 percent via the section 5307 formula; 10 percent via the section 5340 formula; and 10 percent via the section 5311 formula)
  • $4.1 billion in Department of Education school renovation grants
  • $2 billion for the Department of Energy to support renewable energy and electric transmission initiatives
  • $2 billion for the Environmental Protection Agency’s Clean Water and Safe Drinking Water State Revolving Funds ($1 billion each)
  • $1.25 billion for training and employment services of the Department of Labor
  • $500 million for the Airport Improvement Program
  • $1 billion for the Department of Housing and Urban Development’s (HUD) Housing Trust Fund

The measure would also extend current funding for surface transportation programs through September 30, 2010. In addition, the bill would remove a prohibition blocking the Highway Trust Fund (HTF) from earning interest in balances and transfer $20 billion to the HTF from the General Fund.

The Senate is not expected to begin assembling its version of the bill until January. NADO will continue to work with Senate leaders to press for inclusion of funds for the Economic Development Administration in any jobs-related stimulus legislation.

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Senate Panel Moves EDA Reauthorization Bill

November 20, 2009--On November 18, the Senate Environment and Public Works Committee approved legislation (S. 2778) reauthorizing the Economic Development Administration (EDA) at $500 million annually through FY2013. The bill now awaits floor consideration in the full Senate. The House Transportation and Infrastructure Committee has not yet developed a companion measure, but is expected to begin developing the legislation in January 2010.

The five-year Senate reauthorization bill makes several significant changes. These include:

  • Restoring the federal share for EDA projects to their pre-2006 levels. During the 2006 rulemaking, EDA lowered the federal share for projects based on distress making it more difficult for communities to qualify for a higher federal share. The Senate bill relaxes the qualifying criteria and, for the first time, puts EDA’s match rates into law. Currently, EDA match rates exist solely in regulation. (See link below for a comparison of match rates based on the Senate bill, current regulations and the 1999 criteria).
  • Outlining specific roles and responsibilities for Economic Development Districts (EDDs). By placing the roles and responsibilities of the EDDs in statute, the functions of EDDs are protected from revision during the regulatory process as was attempted during the rulemaking that succeeded the 2004 reauthorization bill.
  • Increasing funding for planning grants if the agency’s overall budget increases during the annual appropriations process. This provision is intended to include upward adjustments in EDD partnership grants.

During the mark up, Sen. Benjamin Cardin (D-MD) offered an amendment supported by NADO and co-sponsored by Sens. Christopher Bond (R-MO) and Jeff Merkley (D-OR) that would increase EDA’s minimum level of planning to $34.4 million and reserve “no less than” $30 million for EDDs. Under current law, the mandatory funding level for planning is $27 million while the actual FY2009 appropriations level was set at $31 million.

Sen. Cardin withdrew the amendment after securing a commitment from Committee Chair Barbara Boxer (D-CA) to support a floor amendment to increase planning support for the EDDs. In the coming days, Sen. Cardin plans to circulate a “Dear Colleague” letter urging Senators to support an amendment to increase EDD planning funds when the reauthorization comes up for floor consideration.

NADO thanks EDDs for contacting their Senators serving on the Environment and Public Works Committee and urging them to co-sponsor the Cardin amendment. NADO will continue to work to include the amendment’s provisions during floor consideration of the Senate bill. Access additional information and resources on the reauthorization measure on the NADO Web site:

For more information, contact Jason Boehlert, NADO Director of Legislative Affairs, at 202.624.8590 or email jboehlert@nado.org.

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Department of Commerce Announces New Innovation and Entrepreneurship Offices

October 2, 2009--On September 24, the Department of Commerce announced plans to create a new Office of Innovation and Entrepreneurship and launch a National Advisory Council on Innovation and Entrepreneurship.

The Office of Innovation and Entrepreneurship will be focused on the first step in the business cycle: moving an idea from someone’s imagination or from a research lab into a business plan.

The National Advisory Council on Innovation and Entrepreneurship will advise the department on policy relating to building small businesses and help to keep the department engaged in a regular dialogue with the entrepreneurship and small business communities. The council is expected to be comprised of successful entrepreneurs, innovators, investors, non-profit leaders and other experts.

For more information, go to www.commerce.gov.

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White House Names EDA Assistant Secretary

July 7, 2009--On July 6, President Obama announced his intention to nominate John Fernandez to serve as Assistant Secretary of Commerce for Economic Development. The appointment requires Senate confirmation.

From 1996 to 2003, he served as Mayor of Bloomington, Indiana. He unsuccessfully ran for Indiana Secretary of State in 2002.

He currently serves in the Indianapolis-based law firm Krieg Devault where he advises private and governmental organizations on economic development, public finance and public policy issues, according to the White House.

He also serves as senior vice president with Bloomington-based First Capital Group, where he leads the real estate investment firm's new development and acquisition team.

To view the administration’s notice, visit www.whitehouse.gov/the_press_office/President-Obama-Announces-More-Key-Administration-Posts-7-6-09/

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NADO Testimony Supports EDA Reauthorization

May 21, 2009--NADO Immediate Past President Leanne Mazer, Executive Director of the Tri-County Council for Western Maryland, testified today before the Senate Environment and Public Works Committee in support of a multi-year reauthorization bill for the Economic Development Administration (EDA). During the hearing, several Senators expressed their strong support for EDA, including Chairwoman Barbara Boxer (D-CA), Ranking Member James Inhofe (R-OK), Sen. Ben Cardin (D-MD), Sen. Tom Udall (D-NM) and Sen. Jeff Merkley (D-OR).

Chairwoman Boxer noted that the committee plans to draft and move a multi-year EDA reauthorization bill in the next few weeks. She expressed strong interest in exploring the reauthorization changes offered by NADO. The issue of addressing the local cost share rates for distressed communities was at the top of the list for Senators. In addition, Senator Inhofe was interested in learning more about NADO’s ideas for establishing stronger incentives for regional collaboration.

Below is a brief overview of the NADO policy recommendations:

  • Modify local cost share rates for projects in distressed communities. While the 2004 EDA reauthorization bill did not intend any changes, the agency made significant revisions by regulation to the cost share requirements for distressed areas. It is now much more difficult for distressed communities, especially small urban and rural areas, to meet the revised EDA match requirements. As a result, many regions and communities remain unable to implement the infrastructure projects necessary to support private sector businesses. These changes run counter to the agency’s mission of providing seed capital and gap financing to the nation’s most economically distressed communities.
  • Local control and ownership of EDA’s nearly 600 Revolving Loan Funds (RLFs). EDA’s RLF program has the unique distinction of being one of the only federal grant programs that never loses its federal identity. The initial RLF grant and any income and interest derived from it are considered federal property, indefinitely. As a result, RLF intermediaries are required in perpetuity to comply with costly reporting and audit requirements. Ownership of EDA RLFs should be fully transferred to the local intermediary once all of the initial funds have been loaned out, repaid and fully revolved. This would significantly reduce EDA’s management burden while still ensuring local accountability and transparency is maintained. RLF capitalization investments should be treated like a grant to intermediaries, as it is named, rather than a loan program to intermediaries, as it is currently operated.
  • Implement stronger incentives to reward regional collaboration, partnerships and initiatives among public and private leaders through EDDs. While the 2004 EDA reauthorization bill established two new performance award programs, these initiatives are very limited in scope and have demonstrated very limited impact. As concluded in numerous international and national policy studies in recent years, federal programs such as EDA need much broader and more aggressive funding incentives to foster regional approaches to economic competitiveness. Congress should build upon the existing set of EDA-designated EDDs to facilitate, support and implement regional development projects and initiatives.
  • Increase funding for EDA’s core programs. Public works and economic adjustment assistance programs should remain the primary focus of EDA. These includes sustaining and increasing funding and resources for the agency’s traditional programs, as well as authorizing additional funding for newer initiatives such as the administration’s proposed regional innovation clusters initiative. Funded at roughly $272 million in the FY2009 Omnibus Appropriations Act, the agency’s budget has declined nearly 35 percent since FY2001. The funding authorization for EDA’s core programs should start at the FY2008 level of $500 million and be increased each year to account for rising construction costs, mounting infrastructure improvement needs and increasing global competition. Declining resources for EDA’s key economic and infrastructure program translates into fewer jobs created and fewer private sector dollars leveraged in our nation’s distressed and underserved communities.
  • Adjust baseline funding for the EDD partnership planning program. The 2004 EDA reauthorization law set the mandatory minimum funding level for the EDA partnership planning program at $27 million. This account provides invaluable matching funds for EDDs, Tribes and local communities to pursue regional economic development goals and strategies. The demands on EDDs have increased significantly due to the current economic downturn, as well as new mandates by EDA and the evolving nature of the global economy. The program account should be raised to $34 million to provide additional assistance to distressed regions.
  • Restore EDA’s Professional Staff Capacity in Regional and Headquarters Offices. Since 2002, the agency has undergone a significant downsizing of its professional workforce. As a result, EDA is starting to experience more difficulties in providing oversight and technical assistance and delays in grant processing. This affects not only the timely delivery of investment resources to distressed communities, but translates into increased costs. The longer communities are forced to sit and wait while EDA reviews and processes applications, reimbursement requests and program extensions, the more expensive it becomes to build and develop the infrastructure necessary to create sustainable jobs. Therefore, NADO encourages Congress to take actions necessary to maintain and rebuild the agency’s six regional offices, including Economic Development Representatives (EDRs), and to restore the professional career staffing capacity needed at its headquarters office.

Click here to view the full testimony.

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NADO Members Testify on EDA Reauthorization Bill

March 10, 2009--Sharon Juon, President of the National Association of Development Organizations (NADO) and Executive Director of the Iowa Northland Regional Council of Governments, urged Congress to enact a broad-based reauthorization bill for the Economic Development Administration (EDA). Juon represented the association at an EDA performance and oversight hearing on March 10, conducted by the House Transportation and Infrastructure Subcommittee on Economic Development, Emergency Management and Public Buildings.

Juon was joined by two NADO members, Robert Clark, Executive Director of the Northern Maine Development Commission and Carolyn Dekle, Executive Director of the South Florida Regional Planning Council, who focused on local EDA project examples, success stories and policy recommendations. Clark focused on the value of EDA planning, infrastructure and business lending programs in rural regions, while Dekle highlighted her organization’s success in working with EDA to transfer and consolidate multiple, underutilized Revolving Loan Funds (RLFs) under the RPC/EDD umbrella.

In her testimony, NADO President Juon focused on several NADO policy priorities that Congress should consider as part of the EDA reauthorization process, including:

  • Modifying local cost share rates for planning and projects investments in distressed communities
  • Strengthening local control and ownership of EDA’s more than 500 Revolving Loan Funds (RLFs) after funds have been lent out, recaptured and fully revolved at least once
  • Implementing stronger incentives to reward regional collaboration among public and private leaders through the national network of 378 Economic Development Districts (EDDs)
  • Providing EDA with the program flexibility needed to assist emerging industries and firms in distressed regions, including advanced manufacturing, green and technology industries
  • Increasing the funding authorization level for EDA’s core programs, including raising the minimum funding level for the EDD partnership planning program from $27 million to $34 million
  • Restoring EDA’s professional staff capacity in regional and headquarters offices

Link to Juon Testimony.

Link to Dekle Testimony.

Link to Clark Testimony.

For additional information on the hearing, visit the U.S. House Transportation and Infrastructure Committee Web site at http://transportation.house.gov/hearings/hearingDetail.aspx?NewsID=845.

For additional information on NADO’s positions and activities, please contact NADO Executive Director Matthew Chase at 202.624.7806 / mchase@nado.org, or Jason Boehlert, Director of Legislative Affairs, at 202.624.8590 / jboehlert@nado.org.

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EDA Releases Proposed RLF Regulations

November 19, 2008--On October 22, the Economic Development Administration (EDA) published Interim Final Rules for its Revolving Loan Fund (RLF) program.

In March 2007, the Department of Commerce’s Office of Inspector General published an evaluation of EDA’s management of the RLF program (see www.oig.doc.gov/oig/reports/2007/EDA-OA-18200-03-2007.pdf). According to the Federal Register notice, the rules are designed to update existing regulations and to “synchronize RLF regulation” with guidance developed by the agency to improve the program's performance and oversight, as outlined in the Inspector General’s report.

The interim rules are effective immediately. Comments may be submitted to EDA’s Office of Chief Counsel no later than December 22, 2008. To access the complete Interim Final Rules, visit www.nado.org/legaffair/rlf.pdf).

Specific changes to existing RLF regulations proposed under the Interim Final Rules include:

Section 301.4 – Investment Rates: The rule modifies the investment rates to indicate that a project located in a region demonstrating a 24-month unemployment rate at least over a percentage point over the national average is eligible to receive a maximum allowable investment rate of 50 percent.

Section 301.10 – Application Requirements: Clarifies that EDA is not required to provide an appeals process to applicants whose applications for assistance are denied.

Section 307.8 – Definitions: Eliminates the term “Guaranteed Loan” and no longer allows RLF recipients to use RLF capital to guarantee loans. The regulations indicate that “while this authority has been used extremely frequently throughout the four-decade history of the RLF program, EDA has determined that loan guarantees are too risky and of limited utility.” In addition, the term “Reporting Period” is modified to indicate that there are new semi-annual reporting periods for RLF recipients. This is to be consistent with EDA’s new Form ED-209 that must now be submitted by all RLF recipients and will cover a six-month reporting period.

Section 307.9 – Revolving Loan Fund Plan: All RLF recipients shall manage RLFs in accordance with an RLF plan, which must be submitted in an electronic format, unless EDA approves a paper submission. The plan must summarize and be consistent with the CEDS or EDA-approved economic development plan for a region. The RLF recipient must submit an updated plan every five years.

Section 307.14 – Revolving Loan Fund Semi-Annual and Annual Reports: As mentioned above, EDA has completely revised its regulations governing the reporting requirements of RLF grantees. All RLF recipients, “including those receiving recapitalization grants for existing RLFs,” are required to submit to EDA a semi-annual report in electronic format “unless EDA approves a paper submission.” RLFs that use either 50 percent or more (or more than $100,000) of RLF income for administrative costs in a six-month reporting period are required to comply with additional reporting requirements.

Section 307.15 – Prudent Management of Revolving Loan Funds: The regulations amend several requirements regarding loan documentation, including the submission of the board of directors’ meeting minutes and a signed bank turn-down demonstrating that credit is not available. The regulations establish a “dual interest rate floor” where the interest charged by an RLF operator cannot be less than the lower of “four (4) percent or 75 percent of the prime interest rate listed in the Wall Street Journal.” In addition, “EDA may institute a new requirement, whereby all RLF recipients will have to undergo a mandatory certification program to enhance their ability to administer RLF grants in a prudent manner.” If required to complete a certification program, the RLF operator “may consider the cost of attending the certification courses as an administrative cost.”

Section 307.16 – Effective Utilization of Revolving Loan Funds: EDA will “take steps necessary” to document and assess an RLF recipient’s loan default rate and may request information from the RLF to determine whether it is collecting loan repayments and complying with the financial obligations under the RLF grant. This includes a written analysis of the RLF recipient’s portfolio, a corrective action plan subject to EDA’s approval, and a quarterly status report indicating the RLF’s programs on achieve benchmarks outlined in the corrective action plan. In addition, if the RLF recipient fails to satisfy the capital utilization period for two consecutive reporting periods, EDA may require the RLF to deposit excess funds in an interest-bearing account. Interest earned in the account will be remitted to the U.S. Treasury.

Section 307.21 – Termination of Revolving Loan Funds: Adds additional grounds for termination or suspension of an RLF grant, which now include failure to: submit an updated plan; submit timely progress, financial and audit reports in the required format; manage to RLF grant in accordance with Prudent Lending Practices; sequester excess funds or remit the interest on EDA’s portion of the sequestered funds to the U.S. Treasury; submit the documentation requested by EDA for loan defaults and collection efforts; comply with audit requirements; and comply with an EDA corrective action plan.

To view NADO’s complete side-by-side analysis comparing the existing regulations, released in 2006, with the interim final rules, visit www.nado.org/legaffair/rlf08.pdf. RLF operators are asked to provide feedback and comments on the interim final rule. For more information or to submit feedback, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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